4 ms·

My undergrad is in finance. IMO the problem is that we don't really teach what wealth is as Adam Smith defined it. A wealthy nation is not the one with the grea

by boppo1 2y ago

My undergrad is in finance. IMO the problem is that we don't really teach what wealth is as Adam Smith defined it. A wealthy nation is not the one with the greatest stockpile of gold, but the one with the most quality goods and services easily available to its average citizens (I'm paraphrasing a bit, but you understand). Smith really stresses that profit is a measurement of the good provided to society by an activity. But in my studies, there was no concern for this quality of profit. The attitude was that any way net income (profit) could be increased was strictly to be understood as a net positive for society. I had professors explain that war is profitable because people are employed building tanks etc. and they use their wages to stimulate the economy. When I asked 'what if instead of sending a few million dollars of steel and circuitry to the desert to get exploded, those workers used the same resources on a hospital?' I recieved the answer that if the NPV of the tank is higher than the hospital, it must be the better use of the resources.

didgeoridoo 2y ago
You had finance professors who were unfamiliar with Bastiat’s parable of the broken window? Or unable to apply it to the military-industrial complex? Our universities may be in worse shape than I thought.
- boppo1 2y ago
  >Bastiat’s parable of the broken window Never heard of it. Admittedly it wasn't a highly ranked university. Edit: Having familiarized myself, thank you for the introduction. This is not the first time my education has disappointed me.
imtringued 2y ago
War is profitable in capitalism, because the dogma is that capital is productive and must net a positive return. In the underutilized capital scenario, idle capital incurs costs, but no benefits. It must be destroyed. The easiest way to maintain the facade is to send the capital to war. If you acquire new land, congratulations, the "investment" paid off. If it doesn't, then the destruction of capital at least maintains the profitability of domestic capital. War is really that simple. If you had a war for any other reason, everyone involved would see the stupidity after the first few skirmishes.
- Perceval 2y ago
  Ahistorical Marxist "analysis" on HN? War has existed since the dawn of humanity, thousands of years prior to the advent of capitalism, and has been fought by societies with every kind of socioeconomic and political configuration. War is a human institution and not contingent upon a particular economic arrangement.
- lesostep 2y ago
  I do believe that people from the USA are extremely more likely to view war as profitable and not a huge money sinc. And I have to wonder is there a connection to WW2, where USA exported about $32.5 billion worth of goods through Lend-Lease, indebting a number of nations in the process, while having almost zero repair damage (yes, Perl Harbor, of course a tragedy, but it was a small town, and Europe had cities that were bombed for years, and that had to be rebuild almost from scratch) The process of repairing Europe costed a lot. Not to mention paying back the land-lease! So yeah huge money sink for everyone who are on a continent the war is on. And profitable for leasers because everyone actively at war is kinda forced to take the deal.
- mnky9800n 2y ago
  War is good for business. It's the 34th rule of acquisition. https://youtu.be/pgUA1tluVmE?si=H_XON7YHc7peHSs7 https://youtu.be/pgUA1tluVmE?si=H_XON7YHc7peHSs7

by boppo1 2y ago

didgeoridoo 2y ago

You had finance professors who were unfamiliar with Bastiat’s parable of the broken window? Or unable to apply it to the military-industrial complex? Our universities may be in worse shape than I thought.

boppo1 2y ago
>Bastiat’s parable of the broken window Never heard of it. Admittedly it wasn't a highly ranked university. Edit: Having familiarized myself, thank you for the introduction. This is not the first time my education has disappointed me.

imtringued 2y ago

War is profitable in capitalism, because the dogma is that capital is productive and must net a positive return. In the underutilized capital scenario, idle capital incurs costs, but no benefits. It must be destroyed. The easiest way to maintain the facade is to send the capital to war. If you acquire new land, congratulations, the "investment" paid off. If it doesn't, then the destruction of capital at least maintains the profitability of domestic capital. War is really that simple. If you had a war for any other reason, everyone involved would see the stupidity after the first few skirmishes.

Perceval 2y ago
Ahistorical Marxist "analysis" on HN? War has existed since the dawn of humanity, thousands of years prior to the advent of capitalism, and has been fought by societies with every kind of socioeconomic and political configuration. War is a human institution and not contingent upon a particular economic arrangement.
lesostep 2y ago
I do believe that people from the USA are extremely more likely to view war as profitable and not a huge money sinc. And I have to wonder is there a connection to WW2, where USA exported about $32.5 billion worth of goods through Lend-Lease, indebting a number of nations in the process, while having almost zero repair damage (yes, Perl Harbor, of course a tragedy, but it was a small town, and Europe had cities that were bombed for years, and that had to be rebuild almost from scratch) The process of repairing Europe costed a lot. Not to mention paying back the land-lease! So yeah huge money sink for everyone who are on a continent the war is on. And profitable for leasers because everyone actively at war is kinda forced to take the deal.
mnky9800n 2y ago
War is good for business. It's the 34th rule of acquisition. https://youtu.be/pgUA1tluVmE?si=H_XON7YHc7peHSs7 https://youtu.be/pgUA1tluVmE?si=H_XON7YHc7peHSs7