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> We forcibly allocate capital less efficiently Efficiency with regard to what goal? The current allocation of capital in the US is quite inefficient if we're

by bccdee 2y ago

> We forcibly allocate capital less efficiently Efficiency with regard to what goal? The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. Billionaires have far more capital than they know what to do with, and since they're unaccountable for their investment choices, they strongly tend to steer the economy toward vanity projects. Meanwhile, many families can't put food on the table, and infrastructure is falling apart. Whatever it is about this system that you find "efficient," I don't find it valuable. The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades. A mixed economy where private capitalists are not solely responsible for investment choices, and where ownership of that capital is more evenly distributed among the public, could fix a lot of problems.

blackhawkC17 2y ago
> The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades. The Chinese government has spent massive amounts on vanity projects. A lot of government funds have also been looted by CCP honchos. Thanks but no. I’ll take American capital allocators over the Chinese any day. Most importantly, I don’t want to live in a dictatorship.
- hgomersall 2y ago
  There's a big range between living in a dictatorship and having only private entities allowed to invest in things.
  - hellojesus 2y ago
    Is take the American system every day. What is the moral justification for a state stealing private property? Billionaires get to invest however they want because it's their property. What you see as a vanity project actually employs workers, feds families, and generates tax revenue. They are massively contributing to the economy.
    - bccdee 2y ago
      > What is the moral justification for a state stealing private property? I think it'd be good, is why. Non-intervention with private property is extremely low on my list of moral priorities. If someone's starving, I don't think you really have a right to keep food away from them. > What you see as a vanity project actually employs workers, feds families, and generates tax revenue. …and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important.
      - hellojesus 2y ago
        > If someone's starving, I don't think you really have a right to keep food away from them. I believe in private charity, which would solve this. But I do not believe the state gets to steal from some people to give to others. The only reason for taxiation is to fund public goods. > …and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important. Who gets to define importance? This argument always devolves into state controlled economies which are charactetized by deadweight loss, corruption, and poor incentives. I'll take my access to private property every time.
        hgomersall 2y ago
        Taxation in a sovereign state doesn't fund anything. The state creates the money to pay for stuff. The tax frees the resources so they can be purchased and simultaneously imbues the currency with value, which makes people want to accumulate it. As an aside, do you also believe in private knocking-you-on-the-head-to-take your-food-you-don't-think-they-deserve?
    - hgomersall 2y ago
      As a matter of accounting, all the net money in the system was first created by the state before the private sector could accumulate it. You're welcome.
- bccdee 2y ago
  > A lot of government funds have also been looted by CCP honchos. Yeah, because they're corrupt and undemocratic. I certainly don't endorse China. But they do put to rest the idea that the freer the market, the stronger the economy.
  - blackhawkC17 2y ago
    No they don’t. China got richer when they implemented free market reforms, proving the idea. Unfortunately Xi is now focused on saber-rattling about national security and bullying neighbors. He has cracked down on free markets, and China’s economy is suffering due to his incompetence.
    - bccdee 2y ago
      It's not a binary. If we say market freedom is a spectrum with the USSR at 0 and the US at 10 (reductive, but let's pretend) then China moved from 0 to 5 and became a global power within a couple decades. This is a strong argument in favour of a level-5 economy, not a level-10 economy..
  - hollerith 2y ago
    What are your reasons for thinking that the Chinese economy is well-performing? Chinese per-capita income is slightly less than that of Mexico, and you wouldn't use Mexico as an example of a well-performing economy. China is strong because of its massive population combined with an economy that performs better than the only other country with a similarly massive population.
apantel 2y ago
The system is not perfectly efficient because humans aren’t efficient. I think the idea is, keeping a market relatively free (with a sane amount of regulation) allows capital to seek returns. This leads to a lot of independent, decentralized value production, like startups popping up out of nowhere because some founders have an idea and attract capital. The thing is, people who pile up capital don’t have to be efficient with it. They can basically do whatever they want with their money. They can build giant vanity estates, which you could certainly call inefficient — who needs 20,000 square feet for a family of 3? But… we also care about freedom, so we let people do inefficient things. The only difference between rich people and poor people is they have more money so their inefficiencies are louder. But everybody spends money on senseless wants and vanity. Who needs manicures and hair extensions? Arguably nobody. The “poor” spend on vanity too. And we let them because we care about freedom. If you wanted to implement a perfectly-efficient system, would that mean banning the fulfillment of any desire that wasn’t strictly a need? I don’t think anyone would want to live in such a system.
- hellojesus 2y ago
  Efficiency is measured exactly by people maximizing their utility subject to their preferences and constraints. What you see as vanity, such as hair extensions, may be a high utility item for others. Consider the hair extensions make them a more attractive mate and provide them the opportunity to breed with a better stock, for example. Similarly, consider that 20k ft sq mansion in context: all the prior owner(s) of that property were traded revenue for the land. And the construction workers were paid. And now the gov gets taxes. At every step, each contributor to the end product voluntarily participated and maximized their outcomes. That is maximally efficient, economically speaking.
  - apantel 2y ago
    Yeah I’m all for these things that I was calling “vanity”. I was only using the word vanity because the comment I was responding to used it pejoratively: “vanity projects”.
  - bccdee 2y ago
WalterBright 2y ago
Without American billionaires, there would be no SpaceX. YCombinator is billionaires investing in startups.
- andrepd 2y ago
  This is literally like a peasant in the middle ages saying "without your Lord you wouldn't have a mill".
  - WalterBright 2y ago
    Mills flourished in colonial America without lords. They're not that hard to construct.
    - andrepd 2y ago
      Exactly. So you're agreeing with me
- bccdee 2y ago
  I already addressed this: > Billionaires tend to steer the economy toward vanity projects. Musk's only meaningful contribution to SpaceX was money. We could just have raised NASA's budget instead, but we didn't. There are lots of things that we need to spend money on. Space is not our top priority. Musk, however, is independently wealthy and can spend his money on whatever he wants. So he spent it on rockets, as a vanity project. Yes, some useful innovations came out of that. But what was the opportunity cost? Was this where the money was best spent? I have no reason to believe so.
  - WalterBright 2y ago
    > Musk's only meaningful contribution to SpaceX was money. It was a heck of a lot more than that. See "Elon Musk" by Vance. > We could just have raised NASA's budget instead He did it for a tiny fraction of NASA's budget. > So he spent it on rockets, as a vanity project He's reached cash flow positive. > Was this where the money was best spent? I have no reason to believe so. Becoming the richest man in the world through his investing is a whopper of a reason that it was well spent.
Aerroon 2y ago
>The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. The welfare of the public today is not the same as the welfare of the public for all time. The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there. It turned out that computers could be used for a lot more than what people thought of at the time. Drug R&D and patents lead to enormous profits for companies, because they can charge outrageous prices for the drugs. But the benefit to the public is that now those drugs and the knowledge about them exist. That's going to have a cumulative positive effect for hundreds of years in the future.
- bccdee 2y ago
  You assume pharmaceutical profits are all funnelled to R&D, rather than to shareholders. I see no reason why we shouldn't slash profit margins on medicine and offer the money back in earmarked grants. So you see, I'm actually radically in favour of R&D.
  - Aerroon 2y ago
    No, I'm not assuming that. The profit motive is why they get the capital to do the R&D. I'm not just talking about developing an entirely novel drug but also manufacturing and testing it. Without the possibility of this outrageous profit we would just get less drug research done. That money would then be invested in something else. Drug prices wouldn't be so outrageous (probably), but we probably also wouldn't have as many treatment options. They might be too expensive now, but there's a chance they won't be in 50 years.
    - bccdee 2y ago
      > The profit motive is why they get the capital to do the R&D. A massive amount of research is funded by public grants. iPhones are a famous example of a private-sector product almost entirely created off the back of public research. It is absolutely not true that private investment is required for pharmaceutical R&D.
- 2y ago

by bccdee 2y ago

blackhawkC17 2y ago

> The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades. The Chinese government has spent massive amounts on vanity projects. A lot of government funds have also been looted by CCP honchos. Thanks but no. I’ll take American capital allocators over the Chinese any day. Most importantly, I don’t want to live in a dictatorship.

hgomersall 2y ago
There's a big range between living in a dictatorship and having only private entities allowed to invest in things.
- hellojesus 2y ago
  Is take the American system every day. What is the moral justification for a state stealing private property? Billionaires get to invest however they want because it's their property. What you see as a vanity project actually employs workers, feds families, and generates tax revenue. They are massively contributing to the economy.
  - bccdee 2y ago
    > What is the moral justification for a state stealing private property? I think it'd be good, is why. Non-intervention with private property is extremely low on my list of moral priorities. If someone's starving, I don't think you really have a right to keep food away from them. > What you see as a vanity project actually employs workers, feds families, and generates tax revenue. …and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important.
    - hellojesus 2y ago
      > If someone's starving, I don't think you really have a right to keep food away from them. I believe in private charity, which would solve this. But I do not believe the state gets to steal from some people to give to others. The only reason for taxiation is to fund public goods. > …and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important. Who gets to define importance? This argument always devolves into state controlled economies which are charactetized by deadweight loss, corruption, and poor incentives. I'll take my access to private property every time.
      - hgomersall 2y ago
        Taxation in a sovereign state doesn't fund anything. The state creates the money to pay for stuff. The tax frees the resources so they can be purchased and simultaneously imbues the currency with value, which makes people want to accumulate it. As an aside, do you also believe in private knocking-you-on-the-head-to-take your-food-you-don't-think-they-deserve?
  - hgomersall 2y ago
    As a matter of accounting, all the net money in the system was first created by the state before the private sector could accumulate it. You're welcome.
bccdee 2y ago
> A lot of government funds have also been looted by CCP honchos. Yeah, because they're corrupt and undemocratic. I certainly don't endorse China. But they do put to rest the idea that the freer the market, the stronger the economy.
- blackhawkC17 2y ago
  No they don’t. China got richer when they implemented free market reforms, proving the idea. Unfortunately Xi is now focused on saber-rattling about national security and bullying neighbors. He has cracked down on free markets, and China’s economy is suffering due to his incompetence.
  - bccdee 2y ago
    It's not a binary. If we say market freedom is a spectrum with the USSR at 0 and the US at 10 (reductive, but let's pretend) then China moved from 0 to 5 and became a global power within a couple decades. This is a strong argument in favour of a level-5 economy, not a level-10 economy..
- hollerith 2y ago
  What are your reasons for thinking that the Chinese economy is well-performing? Chinese per-capita income is slightly less than that of Mexico, and you wouldn't use Mexico as an example of a well-performing economy. China is strong because of its massive population combined with an economy that performs better than the only other country with a similarly massive population.

apantel 2y ago

The system is not perfectly efficient because humans aren’t efficient. I think the idea is, keeping a market relatively free (with a sane amount of regulation) allows capital to seek returns. This leads to a lot of independent, decentralized value production, like startups popping up out of nowhere because some founders have an idea and attract capital. The thing is, people who pile up capital don’t have to be efficient with it. They can basically do whatever they want with their money. They can build giant vanity estates, which you could certainly call inefficient — who needs 20,000 square feet for a family of 3? But… we also care about freedom, so we let people do inefficient things. The only difference between rich people and poor people is they have more money so their inefficiencies are louder. But everybody spends money on senseless wants and vanity. Who needs manicures and hair extensions? Arguably nobody. The “poor” spend on vanity too. And we let them because we care about freedom. If you wanted to implement a perfectly-efficient system, would that mean banning the fulfillment of any desire that wasn’t strictly a need? I don’t think anyone would want to live in such a system.

hellojesus 2y ago
Efficiency is measured exactly by people maximizing their utility subject to their preferences and constraints. What you see as vanity, such as hair extensions, may be a high utility item for others. Consider the hair extensions make them a more attractive mate and provide them the opportunity to breed with a better stock, for example. Similarly, consider that 20k ft sq mansion in context: all the prior owner(s) of that property were traded revenue for the land. And the construction workers were paid. And now the gov gets taxes. At every step, each contributor to the end product voluntarily participated and maximized their outcomes. That is maximally efficient, economically speaking.
- apantel 2y ago
  Yeah I’m all for these things that I was calling “vanity”. I was only using the word vanity because the comment I was responding to used it pejoratively: “vanity projects”.
- bccdee 2y ago

WalterBright 2y ago

Without American billionaires, there would be no SpaceX. YCombinator is billionaires investing in startups.

andrepd 2y ago
This is literally like a peasant in the middle ages saying "without your Lord you wouldn't have a mill".
- WalterBright 2y ago
  Mills flourished in colonial America without lords. They're not that hard to construct.
  - andrepd 2y ago
    Exactly. So you're agreeing with me
bccdee 2y ago
I already addressed this: > Billionaires tend to steer the economy toward vanity projects. Musk's only meaningful contribution to SpaceX was money. We could just have raised NASA's budget instead, but we didn't. There are lots of things that we need to spend money on. Space is not our top priority. Musk, however, is independently wealthy and can spend his money on whatever he wants. So he spent it on rockets, as a vanity project. Yes, some useful innovations came out of that. But what was the opportunity cost? Was this where the money was best spent? I have no reason to believe so.
- WalterBright 2y ago
  > Musk's only meaningful contribution to SpaceX was money. It was a heck of a lot more than that. See "Elon Musk" by Vance. > We could just have raised NASA's budget instead He did it for a tiny fraction of NASA's budget. > So he spent it on rockets, as a vanity project He's reached cash flow positive. > Was this where the money was best spent? I have no reason to believe so. Becoming the richest man in the world through his investing is a whopper of a reason that it was well spent.

Aerroon 2y ago

>The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. The welfare of the public today is not the same as the welfare of the public for all time. The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there. It turned out that computers could be used for a lot more than what people thought of at the time. Drug R&D and patents lead to enormous profits for companies, because they can charge outrageous prices for the drugs. But the benefit to the public is that now those drugs and the knowledge about them exist. That's going to have a cumulative positive effect for hundreds of years in the future.

bccdee 2y ago
You assume pharmaceutical profits are all funnelled to R&D, rather than to shareholders. I see no reason why we shouldn't slash profit margins on medicine and offer the money back in earmarked grants. So you see, I'm actually radically in favour of R&D.
- Aerroon 2y ago
  No, I'm not assuming that. The profit motive is why they get the capital to do the R&D. I'm not just talking about developing an entirely novel drug but also manufacturing and testing it. Without the possibility of this outrageous profit we would just get less drug research done. That money would then be invested in something else. Drug prices wouldn't be so outrageous (probably), but we probably also wouldn't have as many treatment options. They might be too expensive now, but there's a chance they won't be in 50 years.
  - bccdee 2y ago
    > The profit motive is why they get the capital to do the R&D. A massive amount of research is funded by public grants. iPhones are a famous example of a private-sector product almost entirely created off the back of public research. It is absolutely not true that private investment is required for pharmaceutical R&D.
2y ago