4 ms·

There is - humans have a finite horizon for their investments to pay back on for it to be useful to them in this lifetime and we have reason to believe it is, i

by roenxi 2y ago

There is - humans have a finite horizon for their investments to pay back on for it to be useful to them in this lifetime and we have reason to believe it is, in practice, around 10-20 years. In theory maybe we could have enough capital to get it arbitrarily high but that isn't remotely the situation we're in right now. Globally we have a couple of billion people who need more stuff and in the Western economies we are facing a concerning prosperity problem (the political situation seems to be flashing bright red lights at us and we're being out-competed by Asia). Nothing here is screaming excess capital. If anything we seem to have some serious capital misallocations playing out (my slogan for the month has been China seems to have built >1 US real economy in the time it took the US to build 0 new US economies - you can't tell me the US is efficiently allocating capital with results that bad).

s1artibartfast 2y ago
Can you explain your slogan more? What time frame are you talking about with respect to China and the US? If you benchmark say the 1940s, the US economy has expanded about 4.5 times, and the Chinese economy has increased about three US economies in that same frame. Questions of capital allocation of course depend on what variables you consider available for change. To me it's not at all clear that there are excellent investment opportunities available in the West which are being overlooked
- roenxi 2y ago
  I look first and foremost at energy [0] and would typically measure from 1970 since that seems to be the last time we had a major change in economic regime [1]. Although admittedly the US has grown since the 70s, stagnation didn't set in until around the 2000s. So as far as sloganing it'd have to be sometime around then. And I don't think the US is growing at all. The energy picture and GDP/M2 [2] both suggest it is treading water at best although the situation is hopefully a little better than those timeseries suggest since there should be some efficiencies from better tech. But the political situation to me is the most telling. We shouldn't be seeing the sort of slow-motion collapse of the polity that we are in the US unless there was also serious slow-burn economic pressure. EDIT I can't decide which follow up comment to respond to so I'll just put it here: The energy efficiency argument isn't really valid - improvements in energy efficiency tend to cause usage to increase; it is a textbook case of Jevons' paradox [3]. [0] https://ourworldindata.org/grapher/primary-energy-cons?tab=chart&country=OWID_WRL~CHN~USA https://ourworldindata.org/grapher/primary-energy-cons?tab=c... [1] I have actual arguments, but I don't think it is controversial so https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ gets the point across. [2] https://fred.stlouisfed.org/graph/?g=eTtE https://fred.stlouisfed.org/graph/?g=eTtE [3] https://en.wikipedia.org/wiki/Jevons_paradox https://en.wikipedia.org/wiki/Jevons_paradox
  - whynotminot 2y ago
    Energy usage seems like a pretty bad indicator to start with, given vast efficiency improvements in nearly every aspect of industry? As a contrary example, we might well see energy usage massively surge here in the short run due to generative AI. And at this point there’s not much evidence there’s actually much real GDP value creation yet in any of that at all.
  - bobthepanda 2y ago
    Primary energy consumption would matter if energy efficiency did not exist. Generally speaking all sorts of industries use electricity way more efficiently in the US, which is why that number has not really budged; it is not really providing economic output to replace all our LEDs to inefficient incandescents, for example. China's graph looks substantially different because it started from an extremely low base living standard.
  - s1artibartfast 2y ago
    I don't necessarily want to disagree with the you on your no growth claim. what I want to know is why you think that is evidence of for poor Capital allocation, and not evidence of poor opportunities for Capital allocation. It seems like the evidence supports both (no growth). The main difference is that the poor allocation hypothesis requires the additional assumption that investors are too stupid to figure it out or dont want to make a return.
    - roenxi 2y ago
      The first result I get when I search for "us homeless tent city" is https://www.latimes.com/california/story/2024-08-03/as-san-francisco-clears-homeless-camps-where-will-people-go https://www.latimes.com/california/story/2024-08-03/as-san-f... . That looks to me like a population who could make use of a bit more allocated capital. I don't buy the idea that capitalism is done in any country that still has substantial homeless populations; there is obviously a need for more something. And I don't think the investors are confused by the situation; I mean, I know about it. I'm an investor and I'm claiming the trend is so big I can spot it from more than a continent away. ~40% of the US economy is government spending and there is a central planning committee that was publicly committed to keeping interest rates at 0% up until about 2 years ago which, funnily enough, makes it damn hard for rational people to make their voices heard on where money should go. The structurally important thing since '07 is positioning to be in the path of government largess and to be near the front of the queue for bailouts when the losses are realised. That isn't an environment where efficient capital allocation is possible. Since efficient capital allocation is probably impossible, I don't expect it to be happening. It doesn't seem to be happening either, there are obviously opportunities, there is a huge and increasingly upset political constituency in the US who are screaming that the current situation isn't working for them.
harimau777 2y ago
Can you point me to any discussion of it being 10 to 20 years? I'd like to read more about that because it feels like that could provide insight into politics/policy more broadly. For example, if someone came up with a solution for the housing crisis but it would take more than 10 to 20 years, would people view that as effectively no solution at all?
- Jensson 2y ago
  > if someone came up with a solution for the housing crisis but it would take more than 10 to 20 years, would people view that as effectively no solution at all? If it made things worse short term, absolutely! Rent control is the opposite, it makes things worse long term but better short term, and people love to vote for that, so we already know the answer.
  - simoncion 2y ago
    > Rent control is the opposite, it makes things worse long term but better short term... In general, rent control regulation is SUPER, SUPER BAD and absolutely will turn everything to shit. However, local conditions and the particulars of what is being called rent control matter A LOT. The only rent control laws I'm intimately familiar with are those in San Francisco. I'm also somewhat familiar with the history that caused such regulations to be enacted in major cities in the state. About the regs in SF: * The rent control regulation in SF is more-correctly called "rent stabilization". Once all original tenants (termed "master tenants" in the regs) on the lease move out, the covered unit can be rented at any price. Until all master tenants move out, the base rent for the unit may only be increased by 60% of the Urban CPI in the Bay Area. Many other costs may be passed through at 100%. * SF's Rent Stabilization only applies to residential buildings built BEFORE 1979. [0] Construction NEWER THAN 1979 IS NOT COVERED by Rent Stabilization, unless the owner of the building chooses to be covered by it. [1] Commercial non-residential buildings are NOT COVERED by SF's Rent Stabilization. * It is super duper not permitted for a particular human to be a "master tenant" in more than one apartment. If you do this, are discovered, and someone complains to the Rent Board, you will quickly find yourself paying whatever the landlord cares to charge for all of those apartments. About the history of Rent Control in California: Two words: "Proposition Thirteen". Wind back to the mid-to-late 1970s in California. Rents are spiraling upwards, out of control, and have been for years. Folks are getting extremely worried about being able to pay the rent. Proposition 13 is proposed as a solution... landlords SWEAR that they can't do anything BUT increase the rents because property valuations are SOARING. If only Californians could vote to limit annual property tax increases to no more than 2% per year (unless that property changes hands... except for a "few" exceptions), then landlords would finally be able to keep rents in control. Mix those promises in with a few commercials and full-page ads about "How will granny keep her house if she can't pay the tax man??" and Prop 13 passes. Well, some time passes and rents keep spiraling out of control. Turns out the landlords were full of shit. So, to match landlords' new, shiny "Property Tax Control", major cities enacted various Rent Control and Rent stabilization ordinances. Two things I super want to point out here: Prop 13 applies to ALL property in the state, residential, non-residential, commercial, and non-commercial built at ANY time. SF's Rent Stabilization regs ONLY apply to residential property that's being rented to tenants, and ONLY buildings built before 1979. SF's rent control regs are absolutely NOT why SF has been failing and continues to utterly fail to build even a tiny fraction of the housing required to meet local demand. [0] Nor does it apply to buildings being used as single-family homes, nor to many-to-most condominiums. [1] It's my understanding that this has happened exactly once. Trinity Place is a very large apartment complex. In order to build it, a much smaller motel-style pre-1979 apartment building with like ten or twenty apartments needed to be demolished. The owner of the land and the building reached an agreement with the city to forever subject ten or twenty units in his new building to the Rent Stabilization regs so as to provide the residents of the motel-style building (and any and all future tenants of those units) with 1:1 replacements for the Rent Stabilized apartments. All other apartments in the big-ass complex are "market rate" apartments.
geysersam 2y ago
> we seem to have some serious capital misallocations People are too zealous about the virtues of market economy to see plain truths staring them in the face. The China example is excellent. There's no lack of investment opportunities with huge roi (industrializing, infrastructure, etc parts of the world not having western living standards) but the market is unable to prioritize them above hype and incremental improvements for already well off populations.
- s1artibartfast 2y ago
  I dont think there is a conspiracy where all capitalists refuse obvious profits that can be made in the 3rd world, and not one of them is greedy enough to go for it. Instead, I think there are some very real barriers to returns in these locations making them much less profitable and worse investments.
  - geysersam 2y ago
    Yes, there are barriers that can not be overcome by rational actors in market. That's a systemic problem. It's not a conspiracy, just bad economics.
    - s1artibartfast 2y ago
      Economics is just economics. It is bad policy which leads to bad market incentives and undesirable equilibrium.
- ffgjgf1 2y ago
  > The China example is excellent How to mismanage your real estate sectors even to a higher extent than Western countries were ever able to?

by roenxi 2y ago

s1artibartfast 2y ago

Can you explain your slogan more? What time frame are you talking about with respect to China and the US? If you benchmark say the 1940s, the US economy has expanded about 4.5 times, and the Chinese economy has increased about three US economies in that same frame. Questions of capital allocation of course depend on what variables you consider available for change. To me it's not at all clear that there are excellent investment opportunities available in the West which are being overlooked

roenxi 2y ago
I look first and foremost at energy [0] and would typically measure from 1970 since that seems to be the last time we had a major change in economic regime [1]. Although admittedly the US has grown since the 70s, stagnation didn't set in until around the 2000s. So as far as sloganing it'd have to be sometime around then. And I don't think the US is growing at all. The energy picture and GDP/M2 [2] both suggest it is treading water at best although the situation is hopefully a little better than those timeseries suggest since there should be some efficiencies from better tech. But the political situation to me is the most telling. We shouldn't be seeing the sort of slow-motion collapse of the polity that we are in the US unless there was also serious slow-burn economic pressure. EDIT I can't decide which follow up comment to respond to so I'll just put it here: The energy efficiency argument isn't really valid - improvements in energy efficiency tend to cause usage to increase; it is a textbook case of Jevons' paradox [3]. [0] https://ourworldindata.org/grapher/primary-energy-cons?tab=chart&country=OWID_WRL~CHN~USA https://ourworldindata.org/grapher/primary-energy-cons?tab=c... [1] I have actual arguments, but I don't think it is controversial so https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ gets the point across. [2] https://fred.stlouisfed.org/graph/?g=eTtE https://fred.stlouisfed.org/graph/?g=eTtE [3] https://en.wikipedia.org/wiki/Jevons_paradox https://en.wikipedia.org/wiki/Jevons_paradox
- whynotminot 2y ago
  Energy usage seems like a pretty bad indicator to start with, given vast efficiency improvements in nearly every aspect of industry? As a contrary example, we might well see energy usage massively surge here in the short run due to generative AI. And at this point there’s not much evidence there’s actually much real GDP value creation yet in any of that at all.
- bobthepanda 2y ago
  Primary energy consumption would matter if energy efficiency did not exist. Generally speaking all sorts of industries use electricity way more efficiently in the US, which is why that number has not really budged; it is not really providing economic output to replace all our LEDs to inefficient incandescents, for example. China's graph looks substantially different because it started from an extremely low base living standard.
- s1artibartfast 2y ago
  I don't necessarily want to disagree with the you on your no growth claim. what I want to know is why you think that is evidence of for poor Capital allocation, and not evidence of poor opportunities for Capital allocation. It seems like the evidence supports both (no growth). The main difference is that the poor allocation hypothesis requires the additional assumption that investors are too stupid to figure it out or dont want to make a return.
  - roenxi 2y ago
    The first result I get when I search for "us homeless tent city" is https://www.latimes.com/california/story/2024-08-03/as-san-francisco-clears-homeless-camps-where-will-people-go https://www.latimes.com/california/story/2024-08-03/as-san-f... . That looks to me like a population who could make use of a bit more allocated capital. I don't buy the idea that capitalism is done in any country that still has substantial homeless populations; there is obviously a need for more something. And I don't think the investors are confused by the situation; I mean, I know about it. I'm an investor and I'm claiming the trend is so big I can spot it from more than a continent away. ~40% of the US economy is government spending and there is a central planning committee that was publicly committed to keeping interest rates at 0% up until about 2 years ago which, funnily enough, makes it damn hard for rational people to make their voices heard on where money should go. The structurally important thing since '07 is positioning to be in the path of government largess and to be near the front of the queue for bailouts when the losses are realised. That isn't an environment where efficient capital allocation is possible. Since efficient capital allocation is probably impossible, I don't expect it to be happening. It doesn't seem to be happening either, there are obviously opportunities, there is a huge and increasingly upset political constituency in the US who are screaming that the current situation isn't working for them.

harimau777 2y ago

Can you point me to any discussion of it being 10 to 20 years? I'd like to read more about that because it feels like that could provide insight into politics/policy more broadly. For example, if someone came up with a solution for the housing crisis but it would take more than 10 to 20 years, would people view that as effectively no solution at all?

Jensson 2y ago
> if someone came up with a solution for the housing crisis but it would take more than 10 to 20 years, would people view that as effectively no solution at all? If it made things worse short term, absolutely! Rent control is the opposite, it makes things worse long term but better short term, and people love to vote for that, so we already know the answer.
- simoncion 2y ago
  > Rent control is the opposite, it makes things worse long term but better short term... In general, rent control regulation is SUPER, SUPER BAD and absolutely will turn everything to shit. However, local conditions and the particulars of what is being called rent control matter A LOT. The only rent control laws I'm intimately familiar with are those in San Francisco. I'm also somewhat familiar with the history that caused such regulations to be enacted in major cities in the state. About the regs in SF: * The rent control regulation in SF is more-correctly called "rent stabilization". Once all original tenants (termed "master tenants" in the regs) on the lease move out, the covered unit can be rented at any price. Until all master tenants move out, the base rent for the unit may only be increased by 60% of the Urban CPI in the Bay Area. Many other costs may be passed through at 100%. * SF's Rent Stabilization only applies to residential buildings built BEFORE 1979. [0] Construction NEWER THAN 1979 IS NOT COVERED by Rent Stabilization, unless the owner of the building chooses to be covered by it. [1] Commercial non-residential buildings are NOT COVERED by SF's Rent Stabilization. * It is super duper not permitted for a particular human to be a "master tenant" in more than one apartment. If you do this, are discovered, and someone complains to the Rent Board, you will quickly find yourself paying whatever the landlord cares to charge for all of those apartments. About the history of Rent Control in California: Two words: "Proposition Thirteen". Wind back to the mid-to-late 1970s in California. Rents are spiraling upwards, out of control, and have been for years. Folks are getting extremely worried about being able to pay the rent. Proposition 13 is proposed as a solution... landlords SWEAR that they can't do anything BUT increase the rents because property valuations are SOARING. If only Californians could vote to limit annual property tax increases to no more than 2% per year (unless that property changes hands... except for a "few" exceptions), then landlords would finally be able to keep rents in control. Mix those promises in with a few commercials and full-page ads about "How will granny keep her house if she can't pay the tax man??" and Prop 13 passes. Well, some time passes and rents keep spiraling out of control. Turns out the landlords were full of shit. So, to match landlords' new, shiny "Property Tax Control", major cities enacted various Rent Control and Rent stabilization ordinances. Two things I super want to point out here: Prop 13 applies to ALL property in the state, residential, non-residential, commercial, and non-commercial built at ANY time. SF's Rent Stabilization regs ONLY apply to residential property that's being rented to tenants, and ONLY buildings built before 1979. SF's rent control regs are absolutely NOT why SF has been failing and continues to utterly fail to build even a tiny fraction of the housing required to meet local demand. [0] Nor does it apply to buildings being used as single-family homes, nor to many-to-most condominiums. [1] It's my understanding that this has happened exactly once. Trinity Place is a very large apartment complex. In order to build it, a much smaller motel-style pre-1979 apartment building with like ten or twenty apartments needed to be demolished. The owner of the land and the building reached an agreement with the city to forever subject ten or twenty units in his new building to the Rent Stabilization regs so as to provide the residents of the motel-style building (and any and all future tenants of those units) with 1:1 replacements for the Rent Stabilized apartments. All other apartments in the big-ass complex are "market rate" apartments.

geysersam 2y ago

> we seem to have some serious capital misallocations People are too zealous about the virtues of market economy to see plain truths staring them in the face. The China example is excellent. There's no lack of investment opportunities with huge roi (industrializing, infrastructure, etc parts of the world not having western living standards) but the market is unable to prioritize them above hype and incremental improvements for already well off populations.

s1artibartfast 2y ago
I dont think there is a conspiracy where all capitalists refuse obvious profits that can be made in the 3rd world, and not one of them is greedy enough to go for it. Instead, I think there are some very real barriers to returns in these locations making them much less profitable and worse investments.
- geysersam 2y ago
  Yes, there are barriers that can not be overcome by rational actors in market. That's a systemic problem. It's not a conspiracy, just bad economics.
  - s1artibartfast 2y ago
    Economics is just economics. It is bad policy which leads to bad market incentives and undesirable equilibrium.
ffgjgf1 2y ago
> The China example is excellent How to mismanage your real estate sectors even to a higher extent than Western countries were ever able to?