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> [...] these days, so as time passes, removing their stock price from the price at IPO, their stock price becomes based on perception--not even perception of t

> [...] these days, so as time passes, removing their stock price from the price at IPO, their stock price becomes based on perception--not even perception of the reality [...] John Maynard Keynes developed this idea (that came to be known as Keynesian beauty contest[1]) in 1936. This isn't a new property of the market, it has always been the case. > when companies do pay dividends or buy back stock, it's sometimes done by borrowing money It's not clear that this is a problem, given that cash is basically free (though they do have to pay back the principal). I'd be interested to see what proportion of dividends and buybacks comes from borrowed cash. I suppose calculating such a thing would be very difficult, but it'd be interesting to see some analysis on this. > if 90% of people pull out of the stock market, it's quite possible for the stock market to go up What if 90% significantly cut consumption? Ultimately the companies have to sell their products to somebody. [1] https://en.wikipedia.org/wiki/Keynesian_beauty_contest https://en.wikipedia.org/wiki/Keynesian_beauty_contest

schkkd 6y ago
They have to sell something only if the Fed don't give them money (and dilute the share of the lower 90% as a side effect).
kerkeslager 6y ago
> What if 90% significantly cut consumption? Ultimately the companies have to sell their products to somebody. Well, that's almost the interesting question. A certain percentage of what the 90% consume, they can't stop consuming. You have to eat. You have to wear clothes. You have to live somewhere. You have to go to the doctor. So there's a whole big chunk that the 90% really can't stop consuming. And if you want to be in the upper parts of that 90%, you need a computer, a car, a cell phone, college... So there's a bunch more of that where the 90% could stop consuming, but it would be a pretty significant sacrifice. And for the remainder, there's an entire marketing industry manipulating us to make sure we don't stop consuming. Even as someone who actively tries be aware of marketing and remove marketing from my life I catch myself sometimes falling for it, and buying things I don't want or need. And I'm sure there are times it happens when I don't notice it. A significant part of Hacker News thinks advertisers are just out to help us find products we need! The proles will never revolt, Winston. The interesting question isn't really whether people will voluntarily cut consumption. It's more, "What will happen if the bottom 90% loses the income necessary to consume?" Cynically, I think that won't happen, and the top 10% will just make enough concessions to keep the 90% alive and not revolting. We already see that in things like Amazon's $15 minimum wage: it's not a meaningful wage when Bezos is making $9 million/hour, but they can always make arguments like, "We're paying more than our competitors" and "We're preventing homelessness". And that's not necessarily a bad thing: I want to see change, but I'd rather see it happen slowly through education and care than quickly with blood running in the streets.

schkkd 6y ago

They have to sell something only if the Fed don't give them money (and dilute the share of the lower 90% as a side effect).

kerkeslager 6y ago

> What if 90% significantly cut consumption? Ultimately the companies have to sell their products to somebody. Well, that's almost the interesting question. A certain percentage of what the 90% consume, they can't stop consuming. You have to eat. You have to wear clothes. You have to live somewhere. You have to go to the doctor. So there's a whole big chunk that the 90% really can't stop consuming. And if you want to be in the upper parts of that 90%, you need a computer, a car, a cell phone, college... So there's a bunch more of that where the 90% could stop consuming, but it would be a pretty significant sacrifice. And for the remainder, there's an entire marketing industry manipulating us to make sure we don't stop consuming. Even as someone who actively tries be aware of marketing and remove marketing from my life I catch myself sometimes falling for it, and buying things I don't want or need. And I'm sure there are times it happens when I don't notice it. A significant part of Hacker News thinks advertisers are just out to help us find products we need! The proles will never revolt, Winston. The interesting question isn't really whether people will voluntarily cut consumption. It's more, "What will happen if the bottom 90% loses the income necessary to consume?" Cynically, I think that won't happen, and the top 10% will just make enough concessions to keep the 90% alive and not revolting. We already see that in things like Amazon's $15 minimum wage: it's not a meaningful wage when Bezos is making $9 million/hour, but they can always make arguments like, "We're paying more than our competitors" and "We're preventing homelessness". And that's not necessarily a bad thing: I want to see change, but I'd rather see it happen slowly through education and care than quickly with blood running in the streets.