4 ms·

> if you’re not trying to make profits, what are you trying to do ? Like if working with a profit incentive is doing social good.

by wiz21c 6y ago

gimmeThaBeet 6y ago
My response has some holes in it, but my view there is that profit/value has a pretty good feedback mechanism that social good doesn't. If you are a normal business, your customers basically give you a mandate to continue, maybe even grow. It may be a substandard metric to control for with regards to society, but at least it is a control system. The mechanics of social benefit feel a lot more complicated, I don't really know how to sum them up in one way without just being like, "the government pays for things it finds beneficial". The issue is that a valuable endeavor doesn't have to be good, e.g. maybe social media.
- HarryHirsch 6y ago
  This will be a bit poorly thought out, but the response goes like this: why invest in corporate R&D with uncertain returns when you can invest in index funds with guaranteed return? The stock market is supported by ample goverment intervention, the rest of society not at all. Just consider the major stock market indices and compare that with continuing unemployment claims. Now you have a feedback mechanism that supports investment banking at the expense of everything else, and here we are.
  - sgt101 6y ago
    Ummh - Index funds definitely do not have guaranteed returns.
    - HarryHirsch 6y ago
      There's "too big to fail" and network effects, can't let Bank of America or Boeing go bankrupt and wipe out shareholders, especially pension funds are major shareholders. There is so much government backstop going around that returns are certain. Compare that to bringing a new pharmaceutical compound into the clinic. The time from discovery to approval is ten years, with a billion spent over the lifetime of the project, and the success rate is ~ 30 %, most compounds fail. For innovative projects this is compounded by the fact that you need to do target discovery and validation, something you can't patent but every competitor will make use of. No surprise the pace of innovation has slowed down.
      - sgt101 6y ago
        Crumbs - I've never heard anyone say "returns are certain" before everyone gets stripped, ever, in any financial setting. Huge chunks of the indexes are now made up of a small handful of stocks, and as the stocks (FANNGS) go up so the indexes buy more, and guess what. They go up. And this will carry on, and on, until at some point a structural failure will occur. This may well be fraud, it may be government (not even the US government) intervention, it may be a supply chain failure or a market destruction. For example in November there may be a civil war in the USA... At that point the stocks will fall and if they fall disproportionately (which they will if the artificial pump that is floating them up turns off) then the indexes will unwind their positions... in fact they have to unwind. And this will glut the market, which will force more unwinding. This is made worse by how the indexes actually track the market - you see, guess what! They (often) don't actually buy the stock! They trade synthetic securities over the movements of the stock with counterparties... and these counterparties never ever ever fail - they are solid players like investment banks, like Bear Stearns and Lehman Brothers, and Merrill Lynch and RBS. So - safe as houses.
  - JamesBarney 6y ago
    > The stock market is supported by ample goverment intervention, the rest of society not at all. Mind clarifying this with specifics?
    - HarryHirsch 6y ago
      Have you looked at what the Federal Reserve has been buying since March? Compare that to the extra 600 dollars in unemployment benefits that ran out last month, and also consider the complete fuckedupness that the public health response has been in large tracts of the nation.
thu2111 6y ago
It's pretty close. The idea that profits and social good are opposites was tested to destruction by communism. Profits mean that at least some people, somewhere, find your work more than worth the effort in a very real sense (they gave up some money to get it). Social good is undefined, so it ends up meaning whatever the speaker wants it to mean. Lots of university professors think critical theory is socially good, and lots more people strongly disagree. There's no actual way to resolve that dispute because academia is disconnected from any kind of reality check.
JamesBarney 6y ago
So making a profit most of the time means that you have 100,000 customers whose live are better off because of what you're doing. Sometimes this breaks down because you make other people's lives worse in order to make the 100,000 better, i.e. externalities. But continuing to get funding for doing a social good means you're convincing someone you're making someone's else's life better(i.e. nonprofits). The problem is sometimes this convincing is entirely unrelated to actually making people's lives better. Or you're convincing a beaurocrat that you'll make his life better. And hopefully the incentive structures are aligned such that this involves making someone's else's life better. But this can be incredibly tricky with the layers of reporting up to some political appointee who reports to a politician who reports to the people. And any break in incentives or more likely attention along the way can misalign the work with social good.

> if you’re not trying to make profits, what are you trying to do ? Like if working with a profit incentive is doing social good.

by wiz21c 6y ago

> if you’re not trying to make profits, what are you trying to do ? Like if working with a profit incentive is doing social good.

gimmeThaBeet 6y ago

My response has some holes in it, but my view there is that profit/value has a pretty good feedback mechanism that social good doesn't. If you are a normal business, your customers basically give you a mandate to continue, maybe even grow. It may be a substandard metric to control for with regards to society, but at least it is a control system. The mechanics of social benefit feel a lot more complicated, I don't really know how to sum them up in one way without just being like, "the government pays for things it finds beneficial". The issue is that a valuable endeavor doesn't have to be good, e.g. maybe social media.

HarryHirsch 6y ago
This will be a bit poorly thought out, but the response goes like this: why invest in corporate R&D with uncertain returns when you can invest in index funds with guaranteed return? The stock market is supported by ample goverment intervention, the rest of society not at all. Just consider the major stock market indices and compare that with continuing unemployment claims. Now you have a feedback mechanism that supports investment banking at the expense of everything else, and here we are.
- sgt101 6y ago
  Ummh - Index funds definitely do not have guaranteed returns.
  - HarryHirsch 6y ago
    There's "too big to fail" and network effects, can't let Bank of America or Boeing go bankrupt and wipe out shareholders, especially pension funds are major shareholders. There is so much government backstop going around that returns are certain. Compare that to bringing a new pharmaceutical compound into the clinic. The time from discovery to approval is ten years, with a billion spent over the lifetime of the project, and the success rate is ~ 30 %, most compounds fail. For innovative projects this is compounded by the fact that you need to do target discovery and validation, something you can't patent but every competitor will make use of. No surprise the pace of innovation has slowed down.
    - sgt101 6y ago
      Crumbs - I've never heard anyone say "returns are certain" before everyone gets stripped, ever, in any financial setting. Huge chunks of the indexes are now made up of a small handful of stocks, and as the stocks (FANNGS) go up so the indexes buy more, and guess what. They go up. And this will carry on, and on, until at some point a structural failure will occur. This may well be fraud, it may be government (not even the US government) intervention, it may be a supply chain failure or a market destruction. For example in November there may be a civil war in the USA... At that point the stocks will fall and if they fall disproportionately (which they will if the artificial pump that is floating them up turns off) then the indexes will unwind their positions... in fact they have to unwind. And this will glut the market, which will force more unwinding. This is made worse by how the indexes actually track the market - you see, guess what! They (often) don't actually buy the stock! They trade synthetic securities over the movements of the stock with counterparties... and these counterparties never ever ever fail - they are solid players like investment banks, like Bear Stearns and Lehman Brothers, and Merrill Lynch and RBS. So - safe as houses.
- JamesBarney 6y ago
  > The stock market is supported by ample goverment intervention, the rest of society not at all. Mind clarifying this with specifics?
  - HarryHirsch 6y ago
    Have you looked at what the Federal Reserve has been buying since March? Compare that to the extra 600 dollars in unemployment benefits that ran out last month, and also consider the complete fuckedupness that the public health response has been in large tracts of the nation.

thu2111 6y ago

It's pretty close. The idea that profits and social good are opposites was tested to destruction by communism. Profits mean that at least some people, somewhere, find your work more than worth the effort in a very real sense (they gave up some money to get it). Social good is undefined, so it ends up meaning whatever the speaker wants it to mean. Lots of university professors think critical theory is socially good, and lots more people strongly disagree. There's no actual way to resolve that dispute because academia is disconnected from any kind of reality check.

JamesBarney 6y ago

So making a profit most of the time means that you have 100,000 customers whose live are better off because of what you're doing. Sometimes this breaks down because you make other people's lives worse in order to make the 100,000 better, i.e. externalities. But continuing to get funding for doing a social good means you're convincing someone you're making someone's else's life better(i.e. nonprofits). The problem is sometimes this convincing is entirely unrelated to actually making people's lives better. Or you're convincing a beaurocrat that you'll make his life better. And hopefully the incentive structures are aligned such that this involves making someone's else's life better. But this can be incredibly tricky with the layers of reporting up to some political appointee who reports to a politician who reports to the people. And any break in incentives or more likely attention along the way can misalign the work with social good.