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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,

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.
- s1artibartfast 2y ago
  I just dont see the global capitalist conspiracy to not make money in what you are saying. What is the investor ROI for a typical homeless person? Are you claiming they hate homeless more than they like making money? >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. I think you are conflating efficiency of allocation and the availability of opportunities and rules of the system. Investors are allocating as efficiently as they can given the investment opportunities available. There are are huge policy problems preventing the better opportunities. Central planning of the interest rate and 40% government spending is not an allocation selected or determined by the market, it is a policy choice. Markets operation within the rules and incentive established by policy. What you are calling market failure is policy failure.
  - roenxi 2y ago
    I don't think there is a point of disagreement on any of those matters; I never said it was a market failure. I'm complaining about the US's persistent decades-long policy failures. It seems self-evident to me that if investors are being corralled into P/E ratios up near 30 it is policy driven. Left to their own devices investors don't choose to invest in things with 30-year payback periods, they invest in things with 15-20 year paybacks. > What is the investor ROI for a typical homeless person? High? They're in a terrible negotiating position so anyone who can get them a better job & lifestyle can probably extract usurious profits. Finding and mobilising pools of cheap labour is one of the more reliable paths to prosperity. Market-driven capitalism is a heartless, brutal and effective machine for taking people like that and pushing their living standards up. I doubt it'd be easy to do, but California's housing market happens to be a very obvious example of capital allocation failure right on the doorstep of the likes of Google.
    - s1artibartfast 2y ago
      If I'm an investor with 1million, how do I make money by helping a homeless person in California given the current laws and policies? There is no option to allocate the capital to make money. That's why I think the problem is lack of options,not allocation. Allocation failure means a failure of investors to select an available option.
      - roenxi 2y ago
        There seems to be a disagreement on terminology here. Would you agree that a hypothetical extremely communist society is automatically allocating capital correctly? Because under the definition you seem to be arguing for there is only one investor (the state), that investor has exactly one option under existing regulatory policy (the state's choice [0]) and therefore cannot misallocate capital. That seems to be a weird understanding of capital allocation to me and my follow up if I'm reading you right is how would you describe a failure of central planning? They have capital, they misallocate it and get terrible results relative to the free market. Assuming that isn't capital misallocaiton to you, what is it? It is hard for me to see how you'd even have a concept of capital misallocation that isn't implicitly "relative to a free market". Otherwise it'd be extremely challenging to even detect it even if capital was being deployed in a horribly stupid way. [0] Noting that there are only administrative differences between the tax office taking $1 and spending it on something vs. the legislature telling someone that they have to spend $1 on the thing and that line of logic means that the state could implement its policies by directing investors.
geysersam 2y ago
Why do you expect efficient capital allocation? Market economic theory predicts efficient capital allocation but only under the assumption of relatively even distributed buying power. On a national level that assumption might or might not hold, but globally it just doesn't.
- s1artibartfast 2y ago
  I don't think either of the things you said are true. Economists have understood that markets are not perfectly efficient for more than 100 years, even Friedman. Similarly, buying power is not a prerequisite for the efficiency they do have. I have no idea where you got those ideas.
  - geysersam 2y ago
    > Economists have understood that markets are not perfectly efficient for more than 100 years Of course. Never said they don't? What I'm saying is not new it's perfectly ordinary. Widely distributed buying power/equality is a prerequisite for market efficiency. Proof: If all buying power is concentrated in a fraction of the population, the market will not consider the needs of the rest, regardless of how cheap their needs would be to satisfy and how grave their needs are. That's not efficient. In practice there's an empirical question how much equality you need to have a market that's efficient enough.
    - s1artibartfast 2y ago
      What does the needs of the rest have to do with market efficiency? They could all be die and it might not impact market efficiency. Market efficiency is a technical term, and I think you are using it for something completely different. It has nothing to do with equality, or satisfying the masses.
      - geysersam 2y ago
        In my book market efficiency is utility produced / utility that could have been produced. What is your definition?

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.

s1artibartfast 2y ago
I just dont see the global capitalist conspiracy to not make money in what you are saying. What is the investor ROI for a typical homeless person? Are you claiming they hate homeless more than they like making money? >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. I think you are conflating efficiency of allocation and the availability of opportunities and rules of the system. Investors are allocating as efficiently as they can given the investment opportunities available. There are are huge policy problems preventing the better opportunities. Central planning of the interest rate and 40% government spending is not an allocation selected or determined by the market, it is a policy choice. Markets operation within the rules and incentive established by policy. What you are calling market failure is policy failure.
- roenxi 2y ago
  I don't think there is a point of disagreement on any of those matters; I never said it was a market failure. I'm complaining about the US's persistent decades-long policy failures. It seems self-evident to me that if investors are being corralled into P/E ratios up near 30 it is policy driven. Left to their own devices investors don't choose to invest in things with 30-year payback periods, they invest in things with 15-20 year paybacks. > What is the investor ROI for a typical homeless person? High? They're in a terrible negotiating position so anyone who can get them a better job & lifestyle can probably extract usurious profits. Finding and mobilising pools of cheap labour is one of the more reliable paths to prosperity. Market-driven capitalism is a heartless, brutal and effective machine for taking people like that and pushing their living standards up. I doubt it'd be easy to do, but California's housing market happens to be a very obvious example of capital allocation failure right on the doorstep of the likes of Google.
  - s1artibartfast 2y ago
    If I'm an investor with 1million, how do I make money by helping a homeless person in California given the current laws and policies? There is no option to allocate the capital to make money. That's why I think the problem is lack of options,not allocation. Allocation failure means a failure of investors to select an available option.
    - roenxi 2y ago
      There seems to be a disagreement on terminology here. Would you agree that a hypothetical extremely communist society is automatically allocating capital correctly? Because under the definition you seem to be arguing for there is only one investor (the state), that investor has exactly one option under existing regulatory policy (the state's choice [0]) and therefore cannot misallocate capital. That seems to be a weird understanding of capital allocation to me and my follow up if I'm reading you right is how would you describe a failure of central planning? They have capital, they misallocate it and get terrible results relative to the free market. Assuming that isn't capital misallocaiton to you, what is it? It is hard for me to see how you'd even have a concept of capital misallocation that isn't implicitly "relative to a free market". Otherwise it'd be extremely challenging to even detect it even if capital was being deployed in a horribly stupid way. [0] Noting that there are only administrative differences between the tax office taking $1 and spending it on something vs. the legislature telling someone that they have to spend $1 on the thing and that line of logic means that the state could implement its policies by directing investors.

geysersam 2y ago

Why do you expect efficient capital allocation? Market economic theory predicts efficient capital allocation but only under the assumption of relatively even distributed buying power. On a national level that assumption might or might not hold, but globally it just doesn't.

s1artibartfast 2y ago
I don't think either of the things you said are true. Economists have understood that markets are not perfectly efficient for more than 100 years, even Friedman. Similarly, buying power is not a prerequisite for the efficiency they do have. I have no idea where you got those ideas.
- geysersam 2y ago
  > Economists have understood that markets are not perfectly efficient for more than 100 years Of course. Never said they don't? What I'm saying is not new it's perfectly ordinary. Widely distributed buying power/equality is a prerequisite for market efficiency. Proof: If all buying power is concentrated in a fraction of the population, the market will not consider the needs of the rest, regardless of how cheap their needs would be to satisfy and how grave their needs are. That's not efficient. In practice there's an empirical question how much equality you need to have a market that's efficient enough.
  - s1artibartfast 2y ago
    What does the needs of the rest have to do with market efficiency? They could all be die and it might not impact market efficiency. Market efficiency is a technical term, and I think you are using it for something completely different. It has nothing to do with equality, or satisfying the masses.
    - geysersam 2y ago
      In my book market efficiency is utility produced / utility that could have been produced. What is your definition?