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Markets aren’t designed to reward raw intelligence or raw talent in specific individuals. Nor should they be. Giving all the money to the best sculptor or best

Markets aren’t designed to reward raw intelligence or raw talent in specific individuals. Nor should they be. Giving all the money to the best sculptor or best mathematician does nothing for the rest of us. Markets are designed to reward people who take risk to create useful things for other people. Are there inefficiencies where markets don’t properly reward useful activity? Of course. But markets trend towards efficiency, so those cases are slowly shrinking. And obviously since markets reward risk, luck plays a role, but the findings of the author’s model completely contradict real world data. Their model claims grant money, VC dollars, etc. should just be distributed at random. Yet, in real world data, the same handful of VC firms generate all the returns in venture capital every single year. And it’s not due to a lack of capital at the other firms. It seems their simplified computer model doesn’t account for the network effects and momentum bias of real world activities that involve humans. When humans are all interlinked nodes that influence each other via contagious imitation, clearly you'll never have a normal distribution. Hence why everything from wealth to coronavirus is better calculated on a log (exponential) scale. You don’t catch coronavirus at random, and you don’t decide to start buying products at random either.

thefz 5y ago
> Markets are designed to reward people who take risk to create useful things for other people. This is just simply not true. Take Elon Musk, started with millions in hand-me-down money so the risks for him were very very low. It's obvious that already wealthy families have a higher chance to have wealthy and successful offspring because of the safety net they can provide. > But markets trend towards efficiency, Markets trend towards money efficiency, or biggest gain if you want, otherwise we wouldn't have goods made in China sent to South America to be packaged for sale in Europe. Or tell me how BTC tends towards efficiency that is not profit efficiency.
GDC7 5y ago
> Markets are designed to reward people who take risk to create useful things for other people. This is an illusion. Recency bias due to technological advancements in the recent past. But through the history of our specie it was social phenomenons which made people rich, not giving people what they want. And it's still the case. Take the 20 years long war on terrorism. It costed 2 trillion of real cash (not phony marketcap, again real cash) which ended up in the pockets of few people and institutions. The Subprime/housing bubble is another example. It's a viral idea , meaning a social phenomenon that prompted people to think real estate was always gonna appreciate The Japanese bubble of the 90s, the dot-com bubble of the late 90s, the Russian debt crisis of 96, the European debt crisis of 2011.. Markets reward those who can buy low and sell high. Period. It's not about creating a good or a service as much as it is about riding the waves of ideas and shifts in public opinion, as well as being able to closely follow viral social trends which prompt people to flow in/out of a determined asset.
notacoward 5y ago
> Markets are designed to reward people who take risk Markets can be (and often have been) designed to reward whoever or whatever the designers wish. Free markets aren't designed to reward anyone in particular, and that's their beauty. Free markets facilitate exchange. Who and what they reward should be a result of participants' actions, not the design of the market itself.

thefz 5y ago

> Markets are designed to reward people who take risk to create useful things for other people. This is just simply not true. Take Elon Musk, started with millions in hand-me-down money so the risks for him were very very low. It's obvious that already wealthy families have a higher chance to have wealthy and successful offspring because of the safety net they can provide. > But markets trend towards efficiency, Markets trend towards money efficiency, or biggest gain if you want, otherwise we wouldn't have goods made in China sent to South America to be packaged for sale in Europe. Or tell me how BTC tends towards efficiency that is not profit efficiency.

GDC7 5y ago

> Markets are designed to reward people who take risk to create useful things for other people. This is an illusion. Recency bias due to technological advancements in the recent past. But through the history of our specie it was social phenomenons which made people rich, not giving people what they want. And it's still the case. Take the 20 years long war on terrorism. It costed 2 trillion of real cash (not phony marketcap, again real cash) which ended up in the pockets of few people and institutions. The Subprime/housing bubble is another example. It's a viral idea , meaning a social phenomenon that prompted people to think real estate was always gonna appreciate The Japanese bubble of the 90s, the dot-com bubble of the late 90s, the Russian debt crisis of 96, the European debt crisis of 2011.. Markets reward those who can buy low and sell high. Period. It's not about creating a good or a service as much as it is about riding the waves of ideas and shifts in public opinion, as well as being able to closely follow viral social trends which prompt people to flow in/out of a determined asset.

notacoward 5y ago

> Markets are designed to reward people who take risk Markets can be (and often have been) designed to reward whoever or whatever the designers wish. Free markets aren't designed to reward anyone in particular, and that's their beauty. Free markets facilitate exchange. Who and what they reward should be a result of participants' actions, not the design of the market itself.