6 ms·

>on making more money. Not making society better. Not allocating capital effectively. The simple flaw in your argument is that you assume that these things are

• terio 13y ago
  Warren Buffet likes to argue that he does not make risky investments. With that in mind and under the light of how profits are made by the financial sector, it is pretty clear that when they make risky investments it is mostly with the client's money. The rest is just friction, like a toll booth.
  • ForHackernews 13y ago
    This is the key point. The wealthiest people on Wall Street are glorified middlemen gambling with somebody else's money and skimming cream off the top.
• revscat 13y ago
  > People pay for things because they want them, because it makes their lives better. More often than not, people pay for things because they must. Food is not optional, nor is clothing, shelter, or health care. For the majority of American population gasoline, auto insurance, and related transportation expenses are similarly non-optional. Similarly electricity and water. For much of the population you can add in child support or day care. There is not much money, if any, left over for discretionary spending. The point is that you seem to believe that all spending is voluntary. This is flatly not true, and smacks of willful ideological naïveté.
  • randyrand 13y ago
    The distinction between want and need and likewise between discretionary spending and mandatory spending is completely irrelevant to the point I was making. I'm not even sure how to respond.
    • _delirium 13y ago
      The point is that many people are wasting money on gasoline because they're forced to by the way infrastructure currently works, since you need a car to drive to work and you need to drive to work if you want to eat. Not because they actually prefer spending money on gasoline and hate public transit, say, and this is their vote for "I love cars and buying gasoline". Most individuals have very constrained choices, and the emergent effects of those choices are not in any necessary sense optimal for society. Jumping out of their short-term local optimum ("driving to work is better than losing my job, so I gotta drive") to other preferences ("it'd be nice if I could get to work without owning a car") is often non-trivial and requires large-scale coordination (such as through political or cultural change). On the other hand, they might love driving! But the mere fact that they spend money to drive to work doesn't prove it. If you're interested in complex-systems theory, you can try out implementing various simple simulations yourself. It's actually pretty hard to come up with one, even with hilariously optimistic assumptions, where each agent individually optimizing actually leads to a globally optimal outcome! It's even pretty hard to come up with one that works in any reasonable sense at all: you quickly get swamped by system-endogenous effects and all sorts of weird oscillations and attractors that have nothing to do with the utility function. Fun times living in emergent-effects-land!
• selmnoo 13y ago
  > People pay for things because they want them, because it makes their lives better. Nope. I could really want a cigarette, bottle of alcohol, or a large cheese burger with 2 patties, doesn't mean it would make my life better. In fact, it's likely to make my life worse. So, really there isn't a flaw in grandparent post's argument, the things 'best' for society really don't tend to make the most money.
  • randyrand 13y ago
    Give me one example of a successful company that is bad for society and I'll give you 100 that are good. p.s. not actually, I should be working. p.p.s see my note on my above comment for a proper response to this.
• dba7dba 13y ago
  > People pay for things because they want them Stop right there. With jobs moving abroad and wage that is not going up, how would people pay for things they want.
• Jare 13y ago
  > The things that are "best" for society also tend to make the most money. People pay for things because they want them, because it makes their lives better The things that make the most money are the things most desired by the people with the most money to spend. That group of people can only be equated with "Society" if that group of people does in fact form the majority of the society. That's why a large middle class is so important, and why growing differences in income are so threatening.
  • jmadsen 13y ago
    The things that make the most money are the things that money has built the best marketing for. People pay for things they want out of the choices they are aware of. "Analysts" - politicians, Joe College, HN posters - tend to use an overly simplified economic model, based primarily on the "Turn Lemons into Lemonade" 3rd-grade economics primer they read as a child.
    • Jare 13y ago
      Certainly - and that's not even entering the argument that what people desire and what is good for them (us) are not the same thing; especially in the long term (which imho is the only sane way to consider whether something is good or bad for society).
• locopati 13y ago
  "Things that are 'best' for society also tend to make the most money." You can make an awful lot of money in the short term doing things that are horrible for society. Look at natural gas extraction by fracking - are we saying that polluting the water table, the air and ground in an is best? Or look at the defense industry. The make a lot of money too. Is taking our great intelligence and devoting it to weapons and destruction best for society? Best might be best for a small group, but is rarely best for society.
  • jpadkins 13y ago
    > Look at natural gas extraction by fracking - are we saying that polluting the water table, the air and ground in an is best? Yes, it's better than the alternatives. Cleaner and less CO2 than coal, cheaper than solar/wind/nuclear. It has never polluted the water table. For North American energy, what's better? > Or look at the defense industry. Since the power WWII superpower era, death and destruction has gone way down. Overwhelming force and vastly superior weapons are making large scale wars a thing of the past. We are actually living in the most peaceful time of human history, from a bodycount perspective. I agree too much money is spent on defense, but thats a political problem not a banking/investment problem.
    • dkuntz2 13y ago
      Your argument is that it's cheaper than solar, wind, and nuclear, and that makes it better? Isn't that the opposite of things that are best for society making the most money, which was your original point? Wouldn't society be benefited almost infinitely more if it could harness an almost infinite supply of energy?
    • bitcrusher 13y ago
      It has never polluted the water table? Oh really? http://www.usatoday.com/story/money/business/2014/01/05/some-states-confirm-water-pollution-from-drilling/4328859/ http://www.usatoday.com/story/money/business/2014/01/05/some... That's the first hit on a google search.
      • 13y ago
• Florin_Andrei 13y ago
  1. "rational" self-interest 2. (magic happens) 3. the greater good What I've noticed is that two categories of people believe in such schemes: libertarians, and primary school children.
  • ArkyBeagle 13y ago
    This doesn't happen in a vaccuum. You need the law, too. The Anarchist version of Libertarianism is mostly speculative fiction, although it can be good spec. fic. David Friedman's one of the best people I've ever read. The "magic" is called "consumer surplus" and it's one of the few defensible things in macroeconomics. It's quite real. The paradox is that explicitly trying to do things for the greater good very often backfires - although not always. But as a "control law" - in the sense of running a distributed, massive system - self-interest produces measurably better results than Soviet-style central planning. This rests on information-theoretic foundations and it's early days yet. We're pathetic at macroeconomics, and it's a lot captured by both whim of the moment. Of course, now we have a lot of hybrids, some that work much better than free markets, some that don't. That's quite new, assuming nothing bad happens to them.
• deleted 13y ago
  [deleted]
• glesica 13y ago
  To me, the problem with this argument is that there is, in fact, no connection between what is best for society and what is profitable. In theory, there should be, but it isn't an intrinsic thing, it's created deliberately and must be maintained. When you have the money, you make the rules. That sums up the problem. Markets are not magical creatures, they exist within the context of social rules and norms. Selling human beings was once seen as rather profitable. Then society decided that selling human beings was wrong, even though it was profitable. You clearly understand this, we banned slavery, we didn't just ban investing in slavery-related businesses. What I think you are missing is that there are a ton of things that are between "good for society" and something along the lines of slavery that is clearly a bad thing. The problem with these middle "bads" is that they aren't bad enough to be universally and energetically rejected. This means that there is plenty of room for people with money to get these things made legal, or kept legal, and it is these things that often seem to be more profitable than other, more socially beneficial, activities (possibly because fewer people are morally willing and able to do them). I think of this sort of thing as "meta-competition" because it is competition among those with money to most efficiently turn their money into influence and power that can be used to allow them to make even more money. As long as money can be converted to power, you can't assume, as you have done, that whatever is legal is socially beneficial (or at least not socially destructive).
  • WalterBright 13y ago
    > Then society decided that selling human beings was wrong, even though it was profitable. More interestingly, society decided that slavery was wrong after it became unprofitable. The same goes for child labor.
    • dllthomas 13y ago
      "More interestingly, society decided that slavery was wrong after it became unprofitable." Someone should really inform the human traffickers.
      • WalterBright 13y ago