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When people say “hoarding cash” we mean something a little more nuanced than literally stuffing it into a vault: just because the wealthy are investing, doesn’t

When people say “hoarding cash” we mean something a little more nuanced than literally stuffing it into a vault: just because the wealthy are investing, doesn’t mean it’s beneficial. The desperate search for any returns means tons of cash is getting plowed into things like real estate in expensive cities (which prices out more people) and startups like Wash.io that crash and burn because they have no market but in the process take down tons of small businesses with them which cannot bounce back because of the hysteresis involved. A lot of the “investing” done by the wealthy is at best useless if not actually a net negative to society, and a lot of that money would have more social benefit if it was middle- or working-class people spending on goods and services instead.

WalterBright 5y ago
> just because the wealthy are investing, doesn’t mean it’s beneficial. Investments flow to the most productive use of the money. Your hypothesis is that the most productive use is not the most beneficial. That's a pretty tough case to demonstrate. > is at best useless if not actually a net negative to society If people prefer to buy stuff from Amazon, how is that not of benefit to those people? As for real estate, there is only so much real estate in the cities. There is not enough for everyone. Who gets it? There has to be some distribution mechanism.
- triceratops 5y ago
  > Investments flow to the most productive use of the money. Investments flow to the highest-returning investment. Sometimes that's productive (new factories, infrastructure, research), but sometimes it's pure speculation (land, gold, crypto) or an active drain on health and productivity (patent trolls, telemarketing, tobacco).
  - mikem170 5y ago
    > Investments flow to the most productive use of the money. Also investments propped up by regulatory capture (like zoning, which limits the supply of housing) and corporate buyouts (eliminating the competition) don't seem to be the most productive uses of money, unless you measure only short term gains for the super rich and the politicians they give money to.
    - WalterBright 5y ago
      Government regulation can and certainly does result in inefficient and mis-allocation of resources. Complaining about people who do follow such rules to make money is misplacing your ire.
      - deleted 5y ago
        [deleted]
      - deleted 5y ago
        [deleted]
      - mikem170 5y ago
        > Complaining about people who do follow such rules to make money is misplacing your ire. I'm not sure if I understand what you are saying. Am I not supposed to point out that the politicians who are supposed to represent the people are too often influenced by those with more money?
  - WalterBright 5y ago
    > Investments flow to the highest-returning investment. Which is the most productive. > speculation is the process of finding the value of something, which is productive. > patent trolls are unintended consequences of poorly conceived laws, not free markets.
    - triceratops 5y ago
      >> Investments flow to the highest-returning investment. > Which is the most productive. That's just a tautological statement. "It's more productive because it returns more money. Why does it return more money? Because it's more productive." And you go on to contradict yourself about 2 sentences later when you say: >> patent trolls > are unintended consequences of poorly conceived laws, not free markets. Which means not every investment that makes money is productive. In a hypothetical free market where every actor has perfect agency, it might be true that money follows productivity. But just like "true socialism has never been tried" (scoff) there has never been a true "free market". In the market we actually operate in, wealth accumulation can be zero-sum. > is the process of finding the value of something, which is productive. Depends on the thing. IMO if the underlying thing (such as crypto or gold) isn't productive in and of itself, speculation on it is also zero sum. Land may or may not be productive, depending on how it's being used. Poorly conceived laws also make it possible to achieve massive profits through real estate speculation without "producing" any wealth - which is zero-sum. I reject the reductive view that someone only earns money when they increase productivity. Productivity increases will create new wealth. But wealth accumulation for individual actors is possible without providing any productivity increase whatsoever. Every market participant is a neural network whose objective is to increase its own wealth. How this is done is rarely part of the equation.
      - WalterBright 5y ago
        > you go on to contradict yourself Not at all. Please read more carefully. > crypto Can be productive. After all, people find many uses for it. But I think I'll check out of this. Seems to me you're just being argumentative. I'll leave you with the last word.
nickpp 5y ago
Investments are just as good if they are made by the rich or by the poor (say your pension fund). Savings add an incredible value to our society, no matter who makes them. Remember, one of the pillars that created Silicon Valley and made it hard to copy was availability of funding.
MR4D 5y ago
You realize your argument is a strawman, right? Essentially, excess profits can only go into one a a few places: - retained earnings (cash in the company's bank account) - reinvest in the company (either capex or opex) - paid out as dividends (giving cash to shareholders) - buy back shares (again, giving cash to shareholders, but in a different form) - pay off debt (giving cash back to bondholders) - spend more on labor (hire more workers, or pay workers more) Realistically, there is nothing in this list that can increase or decrease "usefulness" without another variable. Poorly run companies don't reinvest in the right things (or at the right times). Poorly run companies buy back shares when they are expensive, or pay out dividends when they should be building the balance sheet or reinvesting into the company. And paying workers more only makes sense if it increases output (maybe happy workers make better shopping websites). To use one wealthy person as an example, Jeff Bezos' billions are somewhat illusory. They give him control of the firm (which, is probably better served in his hands than yours or mine). He can't spend those shares. He can sell them for cash, or give them away to charity, but he cannot spend them in current form. He has chosen to invest them in charities, and more obviously, Blue Origin. But really, he first reinvested potential earnings back into Amazon, at a time when almost everyone thought he was stupid. His investing took awhile, but it created the largest, most capable retail firm in history. So the results of his "investing" seem to have been pretty impressive. I'm not sure about you, but I din't have the kind of foresight to make the decision (otherwise I would have owned Amazon stock back then!) And personally, I like the idea of being able to buy a TV without having to hop into a car and be stuck in traffic for 20 minutes or more. SO the benefit to me is I saved at least 20 minutes when I bought a TV. You don't have to like this - nobody needs to "like" this. But picking on wealthy people because they've made money is definitely not a productive use of anyone's output.

WalterBright 5y ago

> just because the wealthy are investing, doesn’t mean it’s beneficial. Investments flow to the most productive use of the money. Your hypothesis is that the most productive use is not the most beneficial. That's a pretty tough case to demonstrate. > is at best useless if not actually a net negative to society If people prefer to buy stuff from Amazon, how is that not of benefit to those people? As for real estate, there is only so much real estate in the cities. There is not enough for everyone. Who gets it? There has to be some distribution mechanism.

triceratops 5y ago
> Investments flow to the most productive use of the money. Investments flow to the highest-returning investment. Sometimes that's productive (new factories, infrastructure, research), but sometimes it's pure speculation (land, gold, crypto) or an active drain on health and productivity (patent trolls, telemarketing, tobacco).
- mikem170 5y ago
  > Investments flow to the most productive use of the money. Also investments propped up by regulatory capture (like zoning, which limits the supply of housing) and corporate buyouts (eliminating the competition) don't seem to be the most productive uses of money, unless you measure only short term gains for the super rich and the politicians they give money to.
  - WalterBright 5y ago
    Government regulation can and certainly does result in inefficient and mis-allocation of resources. Complaining about people who do follow such rules to make money is misplacing your ire.
    - deleted 5y ago
      [deleted]
    - deleted 5y ago
      [deleted]
    - mikem170 5y ago
      > Complaining about people who do follow such rules to make money is misplacing your ire. I'm not sure if I understand what you are saying. Am I not supposed to point out that the politicians who are supposed to represent the people are too often influenced by those with more money?
- WalterBright 5y ago
  > Investments flow to the highest-returning investment. Which is the most productive. > speculation is the process of finding the value of something, which is productive. > patent trolls are unintended consequences of poorly conceived laws, not free markets.
  - triceratops 5y ago
    >> Investments flow to the highest-returning investment. > Which is the most productive. That's just a tautological statement. "It's more productive because it returns more money. Why does it return more money? Because it's more productive." And you go on to contradict yourself about 2 sentences later when you say: >> patent trolls > are unintended consequences of poorly conceived laws, not free markets. Which means not every investment that makes money is productive. In a hypothetical free market where every actor has perfect agency, it might be true that money follows productivity. But just like "true socialism has never been tried" (scoff) there has never been a true "free market". In the market we actually operate in, wealth accumulation can be zero-sum. > is the process of finding the value of something, which is productive. Depends on the thing. IMO if the underlying thing (such as crypto or gold) isn't productive in and of itself, speculation on it is also zero sum. Land may or may not be productive, depending on how it's being used. Poorly conceived laws also make it possible to achieve massive profits through real estate speculation without "producing" any wealth - which is zero-sum. I reject the reductive view that someone only earns money when they increase productivity. Productivity increases will create new wealth. But wealth accumulation for individual actors is possible without providing any productivity increase whatsoever. Every market participant is a neural network whose objective is to increase its own wealth. How this is done is rarely part of the equation.
    - WalterBright 5y ago
      > you go on to contradict yourself Not at all. Please read more carefully. > crypto Can be productive. After all, people find many uses for it. But I think I'll check out of this. Seems to me you're just being argumentative. I'll leave you with the last word.

nickpp 5y ago

Investments are just as good if they are made by the rich or by the poor (say your pension fund). Savings add an incredible value to our society, no matter who makes them. Remember, one of the pillars that created Silicon Valley and made it hard to copy was availability of funding.

MR4D 5y ago

You realize your argument is a strawman, right? Essentially, excess profits can only go into one a a few places: - retained earnings (cash in the company's bank account) - reinvest in the company (either capex or opex) - paid out as dividends (giving cash to shareholders) - buy back shares (again, giving cash to shareholders, but in a different form) - pay off debt (giving cash back to bondholders) - spend more on labor (hire more workers, or pay workers more) Realistically, there is nothing in this list that can increase or decrease "usefulness" without another variable. Poorly run companies don't reinvest in the right things (or at the right times). Poorly run companies buy back shares when they are expensive, or pay out dividends when they should be building the balance sheet or reinvesting into the company. And paying workers more only makes sense if it increases output (maybe happy workers make better shopping websites). To use one wealthy person as an example, Jeff Bezos' billions are somewhat illusory. They give him control of the firm (which, is probably better served in his hands than yours or mine). He can't spend those shares. He can sell them for cash, or give them away to charity, but he cannot spend them in current form. He has chosen to invest them in charities, and more obviously, Blue Origin. But really, he first reinvested potential earnings back into Amazon, at a time when almost everyone thought he was stupid. His investing took awhile, but it created the largest, most capable retail firm in history. So the results of his "investing" seem to have been pretty impressive. I'm not sure about you, but I din't have the kind of foresight to make the decision (otherwise I would have owned Amazon stock back then!) And personally, I like the idea of being able to buy a TV without having to hop into a car and be stuck in traffic for 20 minutes or more. SO the benefit to me is I saved at least 20 minutes when I bought a TV. You don't have to like this - nobody needs to "like" this. But picking on wealthy people because they've made money is definitely not a productive use of anyone's output.