4 ms·

Perhaps you realize this, but the way the economy grows 2.5% is through lots of entities growing faster than that. Growth comes from innovation, and innovators

Perhaps you realize this, but the way the economy grows 2.5% is through lots of entities growing faster than that. Growth comes from innovation, and innovators get rewarded with faster growth as non-innovators decline.

inigyou 4mo ago
If so many entities are declining, why shouldn't I expect that my entities will also decline? Why should I expect them to be the ones that go up?
- Noumenon72 4mo ago
  You don't. This only explains what was asked: how any entities can go up by 15% if the average is 2.5%. How to be the one to do that is hard.
analog31 4mo ago
I would say it slightly differently: The average rate of growth comes from the average of the successful and unsuccessful innovators and non-innovators.
ElProlactin 4mo ago
> Growth comes from innovation... I suppose it depends on how broadly you define "innovation". Lots of companies grow because of, among other things: regulatory capture, regulatory arbitrage, questionable use of other people's IP, offshoring, misclassification of employees/contractors, profit shifting and transfer pricing, subsidized predatory below-cost pricing, dark patterns, aggressive collection and monetization of user data, acqui-hires to stifle competition, implementing high-switching costs to create vendor lock-in, round-tripping, channel-stuffing, business models that intentionally externalize costs, outright fraud.
UncleMeat 4mo ago
Bill Gates' wealth grew much more after he left Microsoft than while he was CEO. Was that wealth earned through innovation? No. He simply owned something that became more valuable as other people labored to innovate.
- ElProlactin 4mo ago
  [dead]
- CityOfThrowaway 4mo ago
  So what? He owned the stock, he gets to share in the gains. If we believed that the only people who should be morally allowed to benefit from asset appreciation are the people who actively work for that company, the entire economy would collapse. For example, every pension fund, endowment, retirement fund, etc. are all invested in financial assets that they had NO role in. All they do is own something that become more valuable as other people labor and innovate! Shall we cast them as evil capitalists?
  - UncleMeat 4mo ago
    I don’t find “we need billionaires because 401ks” to be a compelling argument. We can build a different system. AOC’s criticism is that “own stock, share in gains” is not the same as earning money.
- Noumenon72 4mo ago
  Institutional innovation continues to pay off after you leave. You will make more over time if you build a company with a moat, if you set up a farm team system so your company can continue to innovate, if you eschew cash grabs in favor of solid customer service. If you take away the incentive to set up a continuous wealth generator, you will see founders spend their last year as CEO looting the company instead.
  - UncleMeat 4mo ago
    It is factual that ownership continues to pay after you are no longer laboring. My position is that this is not a good thing.
    - Noumenon72 4mo ago
      When I build something for myself, a main goal is for it to work without my constant input so I can do something else. This is especially important for people who are capable of creating institutions. What if Elon Musk was stuck babysitting PayPal, or would lose all the payout from Neuralink the second he wanted to move on? Also, a large share of the value I add to society is attributable to the person who set up the institution I'm working in. I work hard and am friendly but without someone setting up an organization that employs programmers usefully, the most I can do for you is fix your Wifi. I would vote to keep paying the builders after they leave.
smallmancontrov 4mo ago
No mention of Piketty or r>g? Look, I know this is a tech forum and we don't claim to be good at the social sciences, but this is a central debate and r>g, the idea that the rate of return to capital tends to exceed economic growth over the course of history, is a major result from Piketty's Capital In The 21st Century that people interested in "grow the pie" vs "trickle down" really ought to be familiar with. Even if you disagree, you ought to be able to articulate why, and "the average includes winners and losers" ain't it. "But life has improved, r>g couldn't have been true forever" -- last time the inequality bubble popped because of a great depression and two world wars. The capital was incinerated, metaphorically and literally. It's a cautionary tale and we should aspire to do better.
- dnautics 4mo ago
  > It's a cautionary tale and we should aspire to do better. Why is it a cautionary tale? Sounds like we should have a bunch of incinerations of capital, ideally let the capital mobilizers that are actually competent survive.
  - tikhonj 4mo ago
    "Let's have more world wars" isn't a great thing to aim for.
    - dnautics 4mo ago
      I'm suggesting deflationary contractions, but okay. Note that deflationary contractions in 1930 sucked because we didn't have solid supply chains, modern agriculture, liquid asset markets turbocharged with rapid information interchange etc. Might be worth trying in the 20X0s
      - ericd 4mo ago
        The populist blowbacks from that were a major cause of the second world war.
popalchemist 4mo ago
Growth does not ONLY come from innovation. It can come from bad actor or even simply non-innovaive strategies such as acquistition (which can lead to monopoly, as capital tends to amass in large centers / the hands of the few, per Marx). Other bad faith / anti-competitive / non-innovative strategies include regulatory capture, lobbying, doing illegal things (and hoping to not get caught / paying a slap-on-the-wrist fine that would be impossible for smaller companies), etc.

inigyou 4mo ago

If so many entities are declining, why shouldn't I expect that my entities will also decline? Why should I expect them to be the ones that go up?

Noumenon72 4mo ago
You don't. This only explains what was asked: how any entities can go up by 15% if the average is 2.5%. How to be the one to do that is hard.

analog31 4mo ago

I would say it slightly differently: The average rate of growth comes from the average of the successful and unsuccessful innovators and non-innovators.

ElProlactin 4mo ago

> Growth comes from innovation... I suppose it depends on how broadly you define "innovation". Lots of companies grow because of, among other things: regulatory capture, regulatory arbitrage, questionable use of other people's IP, offshoring, misclassification of employees/contractors, profit shifting and transfer pricing, subsidized predatory below-cost pricing, dark patterns, aggressive collection and monetization of user data, acqui-hires to stifle competition, implementing high-switching costs to create vendor lock-in, round-tripping, channel-stuffing, business models that intentionally externalize costs, outright fraud.

UncleMeat 4mo ago

Bill Gates' wealth grew much more after he left Microsoft than while he was CEO. Was that wealth earned through innovation? No. He simply owned something that became more valuable as other people labored to innovate.

ElProlactin 4mo ago
[dead]
CityOfThrowaway 4mo ago
So what? He owned the stock, he gets to share in the gains. If we believed that the only people who should be morally allowed to benefit from asset appreciation are the people who actively work for that company, the entire economy would collapse. For example, every pension fund, endowment, retirement fund, etc. are all invested in financial assets that they had NO role in. All they do is own something that become more valuable as other people labor and innovate! Shall we cast them as evil capitalists?
- UncleMeat 4mo ago
  I don’t find “we need billionaires because 401ks” to be a compelling argument. We can build a different system. AOC’s criticism is that “own stock, share in gains” is not the same as earning money.
Noumenon72 4mo ago
Institutional innovation continues to pay off after you leave. You will make more over time if you build a company with a moat, if you set up a farm team system so your company can continue to innovate, if you eschew cash grabs in favor of solid customer service. If you take away the incentive to set up a continuous wealth generator, you will see founders spend their last year as CEO looting the company instead.
- UncleMeat 4mo ago
  It is factual that ownership continues to pay after you are no longer laboring. My position is that this is not a good thing.
  - Noumenon72 4mo ago
    When I build something for myself, a main goal is for it to work without my constant input so I can do something else. This is especially important for people who are capable of creating institutions. What if Elon Musk was stuck babysitting PayPal, or would lose all the payout from Neuralink the second he wanted to move on? Also, a large share of the value I add to society is attributable to the person who set up the institution I'm working in. I work hard and am friendly but without someone setting up an organization that employs programmers usefully, the most I can do for you is fix your Wifi. I would vote to keep paying the builders after they leave.

smallmancontrov 4mo ago

No mention of Piketty or r>g? Look, I know this is a tech forum and we don't claim to be good at the social sciences, but this is a central debate and r>g, the idea that the rate of return to capital tends to exceed economic growth over the course of history, is a major result from Piketty's Capital In The 21st Century that people interested in "grow the pie" vs "trickle down" really ought to be familiar with. Even if you disagree, you ought to be able to articulate why, and "the average includes winners and losers" ain't it. "But life has improved, r>g couldn't have been true forever" -- last time the inequality bubble popped because of a great depression and two world wars. The capital was incinerated, metaphorically and literally. It's a cautionary tale and we should aspire to do better.

dnautics 4mo ago
> It's a cautionary tale and we should aspire to do better. Why is it a cautionary tale? Sounds like we should have a bunch of incinerations of capital, ideally let the capital mobilizers that are actually competent survive.
- tikhonj 4mo ago
  "Let's have more world wars" isn't a great thing to aim for.
  - dnautics 4mo ago
    I'm suggesting deflationary contractions, but okay. Note that deflationary contractions in 1930 sucked because we didn't have solid supply chains, modern agriculture, liquid asset markets turbocharged with rapid information interchange etc. Might be worth trying in the 20X0s
    - ericd 4mo ago
      The populist blowbacks from that were a major cause of the second world war.

popalchemist 4mo ago

Growth does not ONLY come from innovation. It can come from bad actor or even simply non-innovaive strategies such as acquistition (which can lead to monopoly, as capital tends to amass in large centers / the hands of the few, per Marx). Other bad faith / anti-competitive / non-innovative strategies include regulatory capture, lobbying, doing illegal things (and hoping to not get caught / paying a slap-on-the-wrist fine that would be impossible for smaller companies), etc.