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No, I don't have a problem in general with returning capital to shareholders. I'm not making an anti-capitalist argument here. I'm saying. For humanity, net goo

by mlsu 2y ago

No, I don't have a problem in general with returning capital to shareholders. I'm not making an anti-capitalist argument here. I'm saying. For humanity, net good. Facebook could do a stock buyback with all of that H100 money. It's a significant amount of money. As a human, complete non facebook shareholder except in ETFs, I would rather they buy H100's and train huge neural nets and then release them for free. Maybe I've bought the kool-aid but I think I believe that Zuckerberg genuinely wants to move humanity forward with this one (of course, it's also a business move). A lesser chairman of the board would have not spent huge capex on GPUs, and instead simply issued a fat dividend or what have you to shareholders who eventually would buy a newer nicer house in Marin or whatever. And indeed, it's only Zuck's unique position with preferential shares that allows him to do this; at a different company, he'd have been shot down and dividends it would be. On the whole, which is better? What moves the needle in terms of bringing humanity forward? And this is kind of true of companies in general. "Returning money to shareholders" is not created equal, even though it's all money in the end. Sports betting companies are also returning basis points of GDP to shareholders. Is that a worthwhile thing to do? Net good? (Please, dear reader, do not make the argument that sports betting is actually a good thing because hey we all make free market choices.)

deleted 2y ago
[deleted]
eru 2y ago
Well, I don't particularly like sports betting, but it doesn't seem worse than any other form of entertainment. Titanic had a 200 million dollar budget in the 1990s to produce about 444,600 movie frames and a bit of sound. Was that a good use of resources? Though to come back to the main argument: you seem to be comparing Apples to Oranges here? So the first thing is: how are those companies making money? That could be via Facebook ads, or via sports betting, etc. The second question is: what are those companies doing with the money. That could be investing in eg training neural nets, or returning it to shareholders. When you invest money, that's the same as spending resources. That's only worthwhile, when in expectation you get sufficiently more resources out later than you put in now. In contrast, when you return money to shareholders, no resources have been spend. It's up to the shareholders what they want to do with their 'resource-coupons' (ie their money). From the point of view of Facebook, dividends vs investment both look like spending money. From the point of view of the economy, the former is a mere transfer of resources, the latter is spending of resources. (You could argue that it's better in some sense for Mr Zuckerberg to control these resources than for the average investor to have that control. I'm sympathetic to that argument, especially if you carefully state what sense you have in mind.) > On the whole, which is better? What moves the needle in terms of bringing humanity forward? Dividends only move money around. They don't move the needle one way or another. It depends on what the shareholders are doing with the money. Btw, Amazon and Tesla show that 'the markets' can be extraordinarily patient with companies that they believe in. It's just that most managers don't have nearly as much charisma. Anyone can (and does!) say they have great long term plans, but it's hard to tell the charlatans from the true visionaries. So as a safe default, markets often prefer hard-to-fake signs of progress, like dividends.
- piva00 2y ago
  > Well, I don't particularly like sports betting, but it doesn't seem worse than any other form of entertainment. Titanic had a 200 million dollar budget in the 1990s to produce about 444,600 movie frames and a bit of sound. Was that a good use of resources? Sports betting is non-productive, money goes into a sink and gets absorbed without production. The production of Titanic had to hire hundreds to thousands of professionals through multiple companies to produce something, those people and businesses get paid and spend it back in the general economy (both to produce their product and the surplus that gets generated goes back into investments for the next project). Productive activities are always much better for society than non-productive ones like sports betting.
  - eru 2y ago
    When you get some money, it doesn't really matter whether you spend it or put it under your mattress or even burn it. If you remove it from circulation, your central bank will just print more money to hit their inflation targets. (Of course, your central bank doesn't check in your garden whether you buried some money. They follow price and spending statistics in aggregate.) If you dig up your money, the central bank will print less money or even remove money from circulation by selling assets from their balance sheet. It does make some difference whether you consume or invest. But that's because of a difference in how resources are used. If you burn your money in a big fire, that's approximately equivalent to a donation to your central bank. If you bury it, and dig it up ten years later, that's approximately equivalent to an interest free loan to your central bank. --- Production isn't useful by itself. Production is what we do to enable consumption. We don't need to worship production nor put it on a pedestal. Both sports betting and producing the Titanic spends some resources to entertain people. If sports betting spends less resources for each unit of entertainment, that would be great. (In a competitive market, that would drive down the cost of sports betting, eg bookies would compete by offering tighter spreads or more exciting bets or whatever. Alas, I don't know enough about sports betting to tell what people find enticing about it.) But the resources spend on both running the sports betting systems and on producing Titanic are gone. Those work hours of those thousands of professionals that worked on Titanic don't come back. They are a cost, not a benefit.

by mlsu 2y ago

deleted 2y ago

[deleted]

eru 2y ago

Well, I don't particularly like sports betting, but it doesn't seem worse than any other form of entertainment. Titanic had a 200 million dollar budget in the 1990s to produce about 444,600 movie frames and a bit of sound. Was that a good use of resources? Though to come back to the main argument: you seem to be comparing Apples to Oranges here? So the first thing is: how are those companies making money? That could be via Facebook ads, or via sports betting, etc. The second question is: what are those companies doing with the money. That could be investing in eg training neural nets, or returning it to shareholders. When you invest money, that's the same as spending resources. That's only worthwhile, when in expectation you get sufficiently more resources out later than you put in now. In contrast, when you return money to shareholders, no resources have been spend. It's up to the shareholders what they want to do with their 'resource-coupons' (ie their money). From the point of view of Facebook, dividends vs investment both look like spending money. From the point of view of the economy, the former is a mere transfer of resources, the latter is spending of resources. (You could argue that it's better in some sense for Mr Zuckerberg to control these resources than for the average investor to have that control. I'm sympathetic to that argument, especially if you carefully state what sense you have in mind.) > On the whole, which is better? What moves the needle in terms of bringing humanity forward? Dividends only move money around. They don't move the needle one way or another. It depends on what the shareholders are doing with the money. Btw, Amazon and Tesla show that 'the markets' can be extraordinarily patient with companies that they believe in. It's just that most managers don't have nearly as much charisma. Anyone can (and does!) say they have great long term plans, but it's hard to tell the charlatans from the true visionaries. So as a safe default, markets often prefer hard-to-fake signs of progress, like dividends.

piva00 2y ago
> Well, I don't particularly like sports betting, but it doesn't seem worse than any other form of entertainment. Titanic had a 200 million dollar budget in the 1990s to produce about 444,600 movie frames and a bit of sound. Was that a good use of resources? Sports betting is non-productive, money goes into a sink and gets absorbed without production. The production of Titanic had to hire hundreds to thousands of professionals through multiple companies to produce something, those people and businesses get paid and spend it back in the general economy (both to produce their product and the surplus that gets generated goes back into investments for the next project). Productive activities are always much better for society than non-productive ones like sports betting.
- eru 2y ago
  When you get some money, it doesn't really matter whether you spend it or put it under your mattress or even burn it. If you remove it from circulation, your central bank will just print more money to hit their inflation targets. (Of course, your central bank doesn't check in your garden whether you buried some money. They follow price and spending statistics in aggregate.) If you dig up your money, the central bank will print less money or even remove money from circulation by selling assets from their balance sheet. It does make some difference whether you consume or invest. But that's because of a difference in how resources are used. If you burn your money in a big fire, that's approximately equivalent to a donation to your central bank. If you bury it, and dig it up ten years later, that's approximately equivalent to an interest free loan to your central bank. --- Production isn't useful by itself. Production is what we do to enable consumption. We don't need to worship production nor put it on a pedestal. Both sports betting and producing the Titanic spends some resources to entertain people. If sports betting spends less resources for each unit of entertainment, that would be great. (In a competitive market, that would drive down the cost of sports betting, eg bookies would compete by offering tighter spreads or more exciting bets or whatever. Alas, I don't know enough about sports betting to tell what people find enticing about it.) But the resources spend on both running the sports betting systems and on producing Titanic are gone. Those work hours of those thousands of professionals that worked on Titanic don't come back. They are a cost, not a benefit.