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The reason that markets work is that people can expect to profit from them. There is no separating "people have different wealths" from functioning markets.
by aetherson 4y ago
The reason that markets work is that people can expect to profit from them. There is no separating "people have different wealths" from functioning markets.
- pbhjpbhj 4y agoSo if 1000 people profit, that's not motivation, but if 1 person profits that is? Do companies with more shareholders seek profit less than single-owner entities? It seems the contrary that when founder-owned companies become more widely owned they become far more profit led.
- koheripbal 4y agoWhat's important is that people who make good investment decisions make more money than the people who make poor or no investment decisions. That is required for capital markets to work.
- jojobas 4y agoThe initial distribution of shares doesn't really matter, wealth will concentrate anyway.
- nicoburns 4y agoNot if the system itself is actively redistributive (such as via a basic income)
- jojobas 4y agoThe more you redistribute the more you remove the incentive to produce value.
- nicoburns 4y agoThat's also true the less you redistribute at the extremes. The sweet spot is somewhere in the middle. I frankly don't believe that created value is close to accurately rewarded in modern society.
- RcouF1uZ4gsC 4y agoHow much does $100 motivate you? How about $100,000 How about $5 spread over 1 million people? How about $5 million?
- adrianN 4y agoYou can limit how much different people's wealth is without preventing markets from working.
- WalterBright 4y agoThe more you limit it, the less well the markets work.
- Slava_Propanei 4y ago[dead]
- adrianN 4y agoIf you limit it too little the market stops working too, because cleptocracies form.
- nickpp 4y agoAny examples?
- johngladtj 4y agoNot true
- vkou 4y agoThey'd work just as well if the expected rates of profit were lower, due to profit taxes. Money is invested because people with money chase yield, if yields are positive, but lower across the board, that money would still be making the exact same investments.
- somethingreen 4y agoYea, the stumble is usually at the step of gaining control of the whole board or keeping money in the chunk of the board you control.
- aetherson 4y agoI don't want to sound like an extremist here: reasonable capital gains taxes are on net good. But it's certainly not the case that people make the "exact same" investments with or without taxes, especially of course as taxes get higher. Money will shift out of investment to consumption as expected profits decrease, or indeed out of the tax regime to other areas or to black markets.
- pas 4y agothat's absolutely not a problem, quite the opposite. the goal is to have investments that serve broad interests. instead of investing in better yachts, supercars, jets, etc. instead of investing into Amazon to dropship fake shit for quick bucks our economic surplus ought to go into developing better actually useful appliances, tools, technologies for example, instead of OralB and Philips bamboozling us with sonic this and that with smart AI toothbrush marketing we ought to actually figure out dental care. okay, sure, higher taxes on the wealthy doesn't guarantee more conscious consumerism, but might at least give it a chance.
- aetherson 4y agoI'm afraid that in fact the kind of consumption encouraged by high cap gains taxes are things like yachts, supercars, and jets (which are not investments).
- kibwen 4y agoThe problem is that markets also stop functioning when wealth inequality passes a threshold and becomes too severe. The reason that markets work is because participants have "skin in the game", and losing money would hurt them, so they want to avoid losing money, so they try to make good decisions, and those that don't lose their money and are disempowered in the process. But once you reach a state where you're so wealthy that money no longer matters, you are able to distort the market at will, making it irrational (and thus inefficient) and destroying its ability to efficiently allocate scarce resources. I wish more people understood this. You don't need to go full communism and make everyone's wealth equal, but if you want markets to work you do still need to make sure that the wealthiest are not so wealthy that they won't suffer from making poor financial decisions.
- WalterBright 4y ago> I wish more people understood this. Please provide a case history.
- pyuser583 4y agoEven the wealthiest man in the world is a few hands of poker away from poverty.
- katbyte 4y agoPeople don’t need the incentive or billions to make markers work. 99% of the population will never make more then a couple million and are well motivated to participate.