7 ms·

I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes rea

I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes really need to happen, but since everyone is chasing a buck as a matter of survival, a bunch of stupid stuff occurs. I don't have any brilliant solutions to bring about the Roddenbury-style economy, but it is infuriating to look at a scale problem you describe and trace the major causes back to the money. Are the cars going to vanish if the debts aren't paid for a year? Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape! And here we are, watching people sell off rental car fleets because assets will be seized unless the money changes hands in the right way.

sideshowb 5y ago
Money is not really the root cause though, any more than tcp/ip is meaningful interpersonal communication. It's just a signal. They sold their fleets because other people (the buyers) wanted them more, in the short term. Now they want to buy because they want a fleet again. It's a time horizon problem, or perhaps an uncertainty problem - how were they supposed to know how long the pandemic would last? Or perhaps a premature optimization problem because the business was predicated on a pandemic not happening. But I don't see it as a money problem, any more than a tcp/ip problem.
- lordnacho 5y ago
  I don't know, if you look at "money" as the wider financial system, then maybe it is a root cause. Another commentator downthread mentions the fragility vs efficiency tradeoff, and that's certainly something encouraged by financializing the economy. By making it possible to easily switch between stocks and flows (capital/income in this case pay in full / pay debt) and encouraging whatever makes firms look good in the short term, the financial system helps cause this kind of thing. We get towers built higher but not necessarily safer.
  - sideshowb 5y ago
    Sure, I agree having a financial system predicated on growth causes a whole lotta problems. I guess I define "money" more narrowly as we could use it as a component in a very different system.
  - lazide 5y ago
    The financial system is very efficient, and allows tuning and scaling to an extent never before possible. That allows folks to squeeze pennies or build leveraged business models that previously would have not been possible. Which is great, when things fit the model (the stocks or bonds involved pay retirees longer, make people wealthier, etc), but also allow people to build much higher castles of cards than they previously could have before something toppled them over. Panics, crashes, defaulting on debt, etc. have been around as long (and probably longer) than we have historical records, but wow does the modern system take the cake for scale!
    - deleted 5y ago
      [deleted]
  - imtringued 5y ago
    It's a whole system of problems but it's not a hugely complicated system, at least not compared to all the bandaids that are necessary if you do not address the problems at their root. https://youtu.be/ZFRVfXeIaek https://youtu.be/ZFRVfXeIaek https://www.youtube.com/watch?v=xkQn56Dtslk https://www.youtube.com/watch?v=xkQn56Dtslk https://www.youtube.com/watch?v=j5l_Oeg6kMo https://www.youtube.com/watch?v=j5l_Oeg6kMo https://youtu.be/mhr4JGbozTA https://youtu.be/mhr4JGbozTA
- gary_0 5y ago
  > It's just a signal. I think quacked's point was that sometimes it's not a very good signaling system. Neither is TCP/IP in some cases, and sometimes neither are cytokines (to use a biology example). These are all evolved systems, to some degree; maybe they're the best we can hope for, but we should still keep an eye out for "version 2.0".
  - quacked 5y ago
    It's not even that I think it's realistic to expect version 2.0, although I would really like that. It's more that it's impossible to get many people to even admit that the current system is flawed in a way that is technically controllable. It is insane to me that we all have to shrug and admit that "well, we can't fix X problem because the money's not there" over and over again, when we have all of the labor hours and intellectual capital to do whatever we want as a collective species organism. With the right coordination, we could make every city look like a Miyazaki lake town. Or Disneyland. Or an exact copy of ancient Rome. We could scan every person alive every year and see whether or not they've got cancer. We could clean every river and every lake. We could send everyone a Nintendo Switch. That whole "bullshit jobs" memo gets circulated on HN all the time; how much of us could do actually cool shit if we didn't have to worry about paying for other people to help maintain society for us? I don't know, but it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz, a car rental company, can rent out cars. (And I'm not blaming them for it- they're deadlocked in the same standoff everyone else is.)
    - WalterBright 5y ago
      > it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz More like worried about bankruptcy and going out of business.
    - sideshowb 5y ago
      (Gp here) I for one certainly admit flaws in the system! ...maybe we're splitting hairs over whether that system is called money or something bigger. One of my research interests is trying to make a contribution to what you call version 2.0, through better measures of subjective wellbeing.
- twistedpair 5y ago
  Isn't is more of an existential issue? If you're a rental company, looking at ~$0 income for the next year, and the need to pay for, maintain, and garage their car fleets, then you're top priority is to shore up the balance sheet and keep your corp afloat. What the car buyer's market will be in 18mo is a more distant concern.
  - admax88qqq 5y ago
    To a point though. Selling your only operating assets just because they're not operating at the moment seems pretty short sighted. Creditors may have forced their hand a degree, but to me it feels like a factory selling their machinery because demand is down this year. If you're going to sell all your cars as a rental company, might as well liquidate your whole company and close up shop.
    - eldavido 5y ago
      The whole issue is the general prudence of taking on debt. It's a question of efficiency. Too little and you miss out on opportunities to produce and grow, too much and you're super-fragile. Over-indebted companies is a very Anglo (US/UK) and Japanese thing. There are plenty of companies in continental Europe (Germany, Italy, France) who operate with much less debt than their US counterparts. A good example is Aldi. They have no debt on their balance sheet anywhere, not even for inventory. By the standards of American business culture, that is 100% absurd. I'm really not sure who's right. It's optimization vs survival.
      - admax88qqq 5y ago
        There's also a question of just how fragile they truly were. Sure the pandemic messed them up, but that was really a once in a generation at most event. If thats what it took to sink your businessz I wouldn't call it very fragile. I also think they and their creditors made poor decisions. Selling your only operating assets in order to balance the books is a suicidal move no matter the industry. It's selling off your only way of making money. It's like a software engineer selling their workstation when times are tough.
mschuster91 5y ago
> I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes really need to happen, but since everyone is chasing a buck as a matter of survival, a bunch of stupid stuff occurs. Resiliency against interruptions costs a lot of money: warehouses to store parts, logistics to rotate these parts, paying suppliers for these parts earlier than the parts are needed, waiting until you have enough cash to buy stuff outright... The core point is: governments, businesses and individuals have historically always had these costs - but at least the Western world has been enjoying a couple decades without major interruptions like war on the home territory, oil crises or the looming threat of the Cold War getting hot (and causing interruptions as a result), which means everyone got incredibly complacent. After all, when there are no interruptions to expect in the near term, why spend cash in the near term to guard against them? And so, when Corona hit, everyone got hit. > Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape! The existing buildings may not go crumbling, but planned/under-construction buildings are getting put on hold when the banks' income stream vanishes and as a result of that, in turn, the workers can't work, ... <insert recursive ripple effects here>.
- quacked 5y ago
  Right, I certainly don't disagree with your analysis, but your recursive ripple effects all aren't caused by physical laws, they're caused by people refusing to work because they can't guarantee that other people in turn will work for them, which is all that money is- a representation of a guarantee in exchanged goods or services. In a theoretical closed-loop 3-person model, the farmer grows, the doctor treats, and the builder builds. The farmer can feed the other two, the doctor can treat the other two, and the builder can build for the other two, and in a micro-community they don't really need to pay each other. As we increase the number of people participating, the likelihood that each person would choose to work without being paid drops. That's why we see such degradation in economically affected areas; everyone could just work all day cleaning up, patching up buildings, etc. but they don't, because no one's paying them to do so. I am not naive enough to believe that any amount of propaganda or state control could fix the money problem, but I am frustrated to be willing to participate in such a theoretical economy with no outlet for it besides helping people in whatever free time I have.
cjfd 5y ago
I don't know man.... it actually seem rather smart to me.... Like the smartness of an organism trying to cope as well as it can with disruptions in the environment. What would you like to do it better without causing huge waste of resources? I am not sure there is much I can think of....
Invictus0 5y ago
It's not money, it's efficiency. Too much efficiency results in a lack of resiliency.
exporectomy 5y ago
Isn't the reason the shortages persits due to the chip shortage caused by a few non-financial disruptions to the highly concentrated chip makers, like a fire? How would barter or communism or whatever isn't money fix that? By being more wasteful all of the time? Keep in mind this isn't really a serious problem. Cars still exist, and can even still be rented, they just smell a bit. That's it. Smelly cars. First world problems!
b9a2cab5 5y ago
> are the cars going to vanish if the debts aren't paid for a year? No, but the retirees who depend on the income from bonds packaged from those debts will be screwed. Also, cars might not vanish but they do depreciate regardless of whether money exists. That's still a cost incurred by the rental company even though no money changes hands when it happens. Ultimately the car companies were overleveraged and were forced to exit before their "positions" in cars became profitable. There's nothing short of the state propping you up that can solve that. Even the Soviet Union had money and had to deal with economical realities. One of the reasons they collapsed was because of increasing grain production deficits causing an imbalance of trade. You can't legislate your way out of the market because the market's invisible hand will always show eventually, even if you can stave it off via state control of everything.
- quacked 5y ago
  Yeah, but the retirees depending on the income is just a second-order effect that's also screwed up due to money. Retirees don't depend on money changing hands, they depend on crops getting grown, shelter being refurbished (or built), and defense under the law. The only reason people agree to do all of those actions for the retirees is that money changes hands. I'm not necessarily saying that I think money is a bug. It might be a feature. But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. If everyone chose to keep doing the same physical actions they're doing today except we stopped swapping money, nothing observable in reality would change; people would die at the same rate, food would be stored at the same rate, etc. "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. The grocer could theoretically choose to continue to man the store 12 hours per day, and then the doctor could theoretically choose to treat the grocer when he gets sick, and the truck driver could theoretically choose to ship the medication from the plant to the hospital, and the floor worker could theoretically choose to...
  - WalterBright 5y ago
    > But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. Nobody has found a better way, though they often try. > "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it. It's much better to swim with that current than against it.
imtringued 5y ago
The problem you are talking about is rigidity. Contracts are just promises and predictions. Reality is always different. This is why we let people go bankrupt and write off their debt, to add the necessary amount of flexibility to account for the real world being unpredictable. Following pieces of paper down to their very letter will make people abandon perfectly fine businesses. A lot of profitable businesses would have to shut down if they had to pay extortionate interest rates. Positive interest rates simply reward short term thinking. Let's imagine a hypothetical scenario where interest rates are 5% (don't confuse this with the federal funds rate) across the board but it's only the rental car companies that have been hit by covid. A bean counter would see that shutting down the rental car company and using the capital for something else would be a better idea than to keep the rental car company. Next year everyone wants rental cars and the returns increase above 5%. The point is that we make decisions in the present yet most of the money is going to be earned in the future. What we need is patience and patience means low interest rates, as close to zero as possible and maybe negative if we want 0% inflation.

sideshowb 5y ago

Money is not really the root cause though, any more than tcp/ip is meaningful interpersonal communication. It's just a signal. They sold their fleets because other people (the buyers) wanted them more, in the short term. Now they want to buy because they want a fleet again. It's a time horizon problem, or perhaps an uncertainty problem - how were they supposed to know how long the pandemic would last? Or perhaps a premature optimization problem because the business was predicated on a pandemic not happening. But I don't see it as a money problem, any more than a tcp/ip problem.

lordnacho 5y ago
I don't know, if you look at "money" as the wider financial system, then maybe it is a root cause. Another commentator downthread mentions the fragility vs efficiency tradeoff, and that's certainly something encouraged by financializing the economy. By making it possible to easily switch between stocks and flows (capital/income in this case pay in full / pay debt) and encouraging whatever makes firms look good in the short term, the financial system helps cause this kind of thing. We get towers built higher but not necessarily safer.
- sideshowb 5y ago
  Sure, I agree having a financial system predicated on growth causes a whole lotta problems. I guess I define "money" more narrowly as we could use it as a component in a very different system.
- lazide 5y ago
  The financial system is very efficient, and allows tuning and scaling to an extent never before possible. That allows folks to squeeze pennies or build leveraged business models that previously would have not been possible. Which is great, when things fit the model (the stocks or bonds involved pay retirees longer, make people wealthier, etc), but also allow people to build much higher castles of cards than they previously could have before something toppled them over. Panics, crashes, defaulting on debt, etc. have been around as long (and probably longer) than we have historical records, but wow does the modern system take the cake for scale!
  - deleted 5y ago
    [deleted]
- imtringued 5y ago
  It's a whole system of problems but it's not a hugely complicated system, at least not compared to all the bandaids that are necessary if you do not address the problems at their root. https://youtu.be/ZFRVfXeIaek https://youtu.be/ZFRVfXeIaek https://www.youtube.com/watch?v=xkQn56Dtslk https://www.youtube.com/watch?v=xkQn56Dtslk https://www.youtube.com/watch?v=j5l_Oeg6kMo https://www.youtube.com/watch?v=j5l_Oeg6kMo https://youtu.be/mhr4JGbozTA https://youtu.be/mhr4JGbozTA
gary_0 5y ago
> It's just a signal. I think quacked's point was that sometimes it's not a very good signaling system. Neither is TCP/IP in some cases, and sometimes neither are cytokines (to use a biology example). These are all evolved systems, to some degree; maybe they're the best we can hope for, but we should still keep an eye out for "version 2.0".
- quacked 5y ago
  It's not even that I think it's realistic to expect version 2.0, although I would really like that. It's more that it's impossible to get many people to even admit that the current system is flawed in a way that is technically controllable. It is insane to me that we all have to shrug and admit that "well, we can't fix X problem because the money's not there" over and over again, when we have all of the labor hours and intellectual capital to do whatever we want as a collective species organism. With the right coordination, we could make every city look like a Miyazaki lake town. Or Disneyland. Or an exact copy of ancient Rome. We could scan every person alive every year and see whether or not they've got cancer. We could clean every river and every lake. We could send everyone a Nintendo Switch. That whole "bullshit jobs" memo gets circulated on HN all the time; how much of us could do actually cool shit if we didn't have to worry about paying for other people to help maintain society for us? I don't know, but it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz, a car rental company, can rent out cars. (And I'm not blaming them for it- they're deadlocked in the same standoff everyone else is.)
  - WalterBright 5y ago
    > it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz More like worried about bankruptcy and going out of business.
  - sideshowb 5y ago
    (Gp here) I for one certainly admit flaws in the system! ...maybe we're splitting hairs over whether that system is called money or something bigger. One of my research interests is trying to make a contribution to what you call version 2.0, through better measures of subjective wellbeing.
twistedpair 5y ago
Isn't is more of an existential issue? If you're a rental company, looking at ~$0 income for the next year, and the need to pay for, maintain, and garage their car fleets, then you're top priority is to shore up the balance sheet and keep your corp afloat. What the car buyer's market will be in 18mo is a more distant concern.
- admax88qqq 5y ago
  To a point though. Selling your only operating assets just because they're not operating at the moment seems pretty short sighted. Creditors may have forced their hand a degree, but to me it feels like a factory selling their machinery because demand is down this year. If you're going to sell all your cars as a rental company, might as well liquidate your whole company and close up shop.
  - eldavido 5y ago
    The whole issue is the general prudence of taking on debt. It's a question of efficiency. Too little and you miss out on opportunities to produce and grow, too much and you're super-fragile. Over-indebted companies is a very Anglo (US/UK) and Japanese thing. There are plenty of companies in continental Europe (Germany, Italy, France) who operate with much less debt than their US counterparts. A good example is Aldi. They have no debt on their balance sheet anywhere, not even for inventory. By the standards of American business culture, that is 100% absurd. I'm really not sure who's right. It's optimization vs survival.
    - admax88qqq 5y ago
      There's also a question of just how fragile they truly were. Sure the pandemic messed them up, but that was really a once in a generation at most event. If thats what it took to sink your businessz I wouldn't call it very fragile. I also think they and their creditors made poor decisions. Selling your only operating assets in order to balance the books is a suicidal move no matter the industry. It's selling off your only way of making money. It's like a software engineer selling their workstation when times are tough.

mschuster91 5y ago

> I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes really need to happen, but since everyone is chasing a buck as a matter of survival, a bunch of stupid stuff occurs. Resiliency against interruptions costs a lot of money: warehouses to store parts, logistics to rotate these parts, paying suppliers for these parts earlier than the parts are needed, waiting until you have enough cash to buy stuff outright... The core point is: governments, businesses and individuals have historically always had these costs - but at least the Western world has been enjoying a couple decades without major interruptions like war on the home territory, oil crises or the looming threat of the Cold War getting hot (and causing interruptions as a result), which means everyone got incredibly complacent. After all, when there are no interruptions to expect in the near term, why spend cash in the near term to guard against them? And so, when Corona hit, everyone got hit. > Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape! The existing buildings may not go crumbling, but planned/under-construction buildings are getting put on hold when the banks' income stream vanishes and as a result of that, in turn, the workers can't work, ... <insert recursive ripple effects here>.

quacked 5y ago
Right, I certainly don't disagree with your analysis, but your recursive ripple effects all aren't caused by physical laws, they're caused by people refusing to work because they can't guarantee that other people in turn will work for them, which is all that money is- a representation of a guarantee in exchanged goods or services. In a theoretical closed-loop 3-person model, the farmer grows, the doctor treats, and the builder builds. The farmer can feed the other two, the doctor can treat the other two, and the builder can build for the other two, and in a micro-community they don't really need to pay each other. As we increase the number of people participating, the likelihood that each person would choose to work without being paid drops. That's why we see such degradation in economically affected areas; everyone could just work all day cleaning up, patching up buildings, etc. but they don't, because no one's paying them to do so. I am not naive enough to believe that any amount of propaganda or state control could fix the money problem, but I am frustrated to be willing to participate in such a theoretical economy with no outlet for it besides helping people in whatever free time I have.

cjfd 5y ago

I don't know man.... it actually seem rather smart to me.... Like the smartness of an organism trying to cope as well as it can with disruptions in the environment. What would you like to do it better without causing huge waste of resources? I am not sure there is much I can think of....

Invictus0 5y ago

It's not money, it's efficiency. Too much efficiency results in a lack of resiliency.

exporectomy 5y ago

Isn't the reason the shortages persits due to the chip shortage caused by a few non-financial disruptions to the highly concentrated chip makers, like a fire? How would barter or communism or whatever isn't money fix that? By being more wasteful all of the time? Keep in mind this isn't really a serious problem. Cars still exist, and can even still be rented, they just smell a bit. That's it. Smelly cars. First world problems!

b9a2cab5 5y ago

> are the cars going to vanish if the debts aren't paid for a year? No, but the retirees who depend on the income from bonds packaged from those debts will be screwed. Also, cars might not vanish but they do depreciate regardless of whether money exists. That's still a cost incurred by the rental company even though no money changes hands when it happens. Ultimately the car companies were overleveraged and were forced to exit before their "positions" in cars became profitable. There's nothing short of the state propping you up that can solve that. Even the Soviet Union had money and had to deal with economical realities. One of the reasons they collapsed was because of increasing grain production deficits causing an imbalance of trade. You can't legislate your way out of the market because the market's invisible hand will always show eventually, even if you can stave it off via state control of everything.

quacked 5y ago
Yeah, but the retirees depending on the income is just a second-order effect that's also screwed up due to money. Retirees don't depend on money changing hands, they depend on crops getting grown, shelter being refurbished (or built), and defense under the law. The only reason people agree to do all of those actions for the retirees is that money changes hands. I'm not necessarily saying that I think money is a bug. It might be a feature. But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. If everyone chose to keep doing the same physical actions they're doing today except we stopped swapping money, nothing observable in reality would change; people would die at the same rate, food would be stored at the same rate, etc. "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. The grocer could theoretically choose to continue to man the store 12 hours per day, and then the doctor could theoretically choose to treat the grocer when he gets sick, and the truck driver could theoretically choose to ship the medication from the plant to the hospital, and the floor worker could theoretically choose to...
- WalterBright 5y ago
  > But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. Nobody has found a better way, though they often try. > "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it. It's much better to swim with that current than against it.

imtringued 5y ago

The problem you are talking about is rigidity. Contracts are just promises and predictions. Reality is always different. This is why we let people go bankrupt and write off their debt, to add the necessary amount of flexibility to account for the real world being unpredictable. Following pieces of paper down to their very letter will make people abandon perfectly fine businesses. A lot of profitable businesses would have to shut down if they had to pay extortionate interest rates. Positive interest rates simply reward short term thinking. Let's imagine a hypothetical scenario where interest rates are 5% (don't confuse this with the federal funds rate) across the board but it's only the rental car companies that have been hit by covid. A bean counter would see that shutting down the rental car company and using the capital for something else would be a better idea than to keep the rental car company. Next year everyone wants rental cars and the returns increase above 5%. The point is that we make decisions in the present yet most of the money is going to be earned in the future. What we need is patience and patience means low interest rates, as close to zero as possible and maybe negative if we want 0% inflation.