This is a fascinating book and relevant to some critiques that pop up on HN from time to time.
Too much of the US economy these days has become about wealth extraction or speculation, rather than real wealth creation. We’ve outsourced large portions of our manufacturing ecosystem while arguing that design, services and finance will make up for it.
This book traces the root of the problem back to changes in how Economics analyzes and measures economic activity, and examines some industries through this lense, including VC.
Notably, prior to the development of Marginal Utility, economists from Adam Smith to Karl Marx and everyone in between were concerned with the distinction between productive and unproductive economic activity.
For example, manufacturing was productive and wealth-creative, while rents levied by the landed gentry were unproductive and extractive. Any form of cornering a market and extracting rent is assumed extractive, unless proven otherwise.
The term they used was the Production Boundary, with productive activities on one side and unproductive on the other. A few, like law, that were inherently unproductive but that were necessary inputs to productive activity, are situated on the border.
Marginal Utility made value subjective rather than objective. If a product or activity has demand for any reason and could thus fetch a price on a market, then it has value and is productive. This made economics more mathematically tractable as well, and became the dominant Economic theory. But it has also enabled extractive and speculative activities to claim to be productive, and thus gain political acceptance and support.
The book argues this is the root of the problem facing the US and other developed countries, and that solving it requires new economic measurements and theories that restore the distinction between productive activity vs extractive or speculative activity.
I really think economics is undergoing a sea change - a lot of what was mainstream theory is getting overturned (as a lay person looking from the outside) what with MMT and the above (see also Josh Ryan-Collins). I am watching an interesting series from UCL (cannot find it right now)
Edit: search "rethinking capitalism" UCL on youtube there is a list (mix?) of twenty videos. It seems to be an undergraduate course aimed at people in public policy. Include the above Marianna Mazzucato as well
Edit edit : mainstream their overturned is probably a bit rich - let's say now-liberalism is getting cut out
agreed on the lament about us getting away from distinguishing productive/unproductive uses (an argument i've made a lot and am glad to see getting more light of day), but your critique sounds overly pessimistic about marginal utility, which is a fairly value-neutral concept that's been pressed into the service of politics and ideology.
value will never be purely objective (at least not in our lifetimes or many, many after), but we can ground it in bedrock shared values like fairness and industry.
kinda figured, but by submitting the link and quoting it that way, it seems you agree, or at least are pursuaded somewhat? or have different takes on these things?
a lot of politicoeconomic theory over the last many decades has been a one-sided push to justify rentierism, consolidate wealth/power, and corner sources of wealth extraction (e.g., globalism, trickle-down, labor movement vilification, etc.). it's a slow boil toward fascism, which is concerning to say the least.
I agree with the book’s analysis of the problem. Not sure about the solution yet, which I think will need to incorporate and extend marginal utility rather than discard or replace it.
This book is in my to read list for some time. I believe it touches the kernel of the problem about economy as a field. The definition of Value. A good book and easy to read book that touches in this subject is Yanis Varoufakis's excellent "Talking to My Daughter about the Economy: A Brief History of Capitalism"
It seems silly perhaps but for true value I have a kind of thought experiment: If we took everything away from you what would you want the most? Breathable oxygen is nice to have. Second? Probably water. 3rd probably a comfortable enough place to sleep. 4th would be some kind of food. Here it gets less obvious but opinions shouldn't vary to much. 5th at least some cloths? 6th a roof over your head? (depends on the climate ofc) 7th someone to talk with? 8th a partner perhaps? 9th a decent pair of shoes?
If we don't look at things that way we might think that there is so much air and so much clean drinking water that it doesn't have value. You can just keep taking it in unlimited amounts until it gets scarce enough to create a market for it self. At that point we might argue the economy is growing.
We also love to tell [mainly ourselves] comforting stories about well being that exclude those who are not doing well. I mean, your life isn't all that valuable to me is it? If I can have shoes and you would have to go without air it would be hard to turn down the shoes? Economically shoes are a great idea?
> manufacturing was productive and wealth-creative, while rents levied by the landed gentry were unproductive and extractive
This seems like a commonly made distinction, and maybe it's an honest and correct one, but the phrasing does seem a little slanted to me. Couldn't we also say that the gentry providing workable land to farmers is productive use of capital, and the prices charged for manufactured goods are unproductive rents? I suppose it doesn't hold together quite as well, but focusing on different sides of the ledger (and bringing class into the discussion) makes me question if the argument holds together as well when considered soberly.
> Couldn't we also say that the gentry providing workable land to farmers is productive use of capital, and the prices charged for manufactured goods are unproductive rents?
You could say that, but it would be wrong or meaningless? You've not defined terms or made an argument, you've just swapped the labels like a guy trying to swap product barcodes so he can cheat the store.
Also fails to cover how the land was "provided" in the first place, and who was taking it at sword point..
It is over a vast period of time as well and was both raw exploitation and a legitimate service essentially. When the lords were able to provide meaningful protection against vikings raiding that was a legitimate service - militias alone didn't cut it compared to a professional warrior elite.
Now when they were the source of instability with feudal squabbles they can't be said to even be helping except maybe in a power vacuum potentially leading to even worse outcomes.
I think that's my point. If the structure of the soundbite doesn't argue for its case then it's a useful short-hand for people who know the economic definitions, but it otherwise isn't enlightening. If the purpose of making the distinction between productive and unproductive activity is to inform, then a reason needs to be given for activities being called one or the other.
Without that reason, the framing looks more like politics than economics.
As for "provided": leaving aside the moral question of how the status quo obtained (which, I'll grant, was likely not moral at all), the landlord has land that can be used for farming, but also for polo or fox hunting or whatever. The farmers have time and energy that can be used for farming, but also for football and arm-wrestling competitions etc. I'm not saying they're the same, I'm just saying that if they're different we need to do more than just assert it.
Keep in mind that government tax laws wield enormous influence over how markets operate.
If you want more of something, subsidize it. If you want less, tax it. It's trite, of course, but few take it into account when formulating tax/subsidy policy.
For example, the Seattle City Council has passed what they themselves called an "Amazon Tax". Amazon has seen the writing on the wall and is moving their headquarters to Bellevue.
There are more people holding equity than ever before. If we raised capital gains taxes, would people sell? Would they hold until capital gains taxes lowered?
If capital gains taxes are raised, would equity prices rise, because fewer people are selling? Would more people sell, causing prices to fall? Would fewer people buy, because they anticipate paying those taxes in the future?
Would rising prices attract more people to buy equities? So that would mean, rising capital gains taxes could cause an even higher rise in equity prices, because both fewer people are selling and more people are buying in response to rising prices?
Doesn't someone have to sell their equities, into cash, in order to have a gain? Is it a complete picture to just count, "market value = shares outstanding * last price paid?" If no one is selling are those returns real?
If capital gains taxes are increased, and fewer people sell, is revenue offset by the increase in equity prices? Or not? What does it mean, for your theory about taxes?
These are extremely basic questions about how markets operate.
Anyway, my point is, you have no idea how tax laws wield influence of how markets operate. You're totally right about how trite you are.
In my experience researching these questions, the answers are inconclusive, and cannot at all be predicted from some kind of first principles understanding of taxes or economics.
For my own investments, capital gains taxes certainly cause me to trade less, because each trade is a taxable event. Trading less means I stay invested much longer in less productive investments.
In the tax regime before Reagan, tax rates were so high that people found it worthwhile to invest instead into poorly performing tax shelters. Reagan's deal was to trade lowering marginal rates for eliminating the shelters. It was a good deal, as shown by increased GDP growth rate.
Tax policy is why employers offer health insurance.
Tax policy is why we have estate planners, trusts, etc.
Tax policy is why we have 401ks.
So yeah, I do have an idea how tax laws influence how markets work.
All I'm trying to say is, it would seem logically and empirically, at least from your personal experience, that higher capital gains is associated with higher equity prices, because fewer people, including you, are selling.
Which means higher capital gains are, in an important sense, making you more money. That is totally and utterly surprising if our typical feelings about taxes are that they make us less wealthy. It is indeed possible that taxes make us more wealthy.
Higher capital gains tax would mean fewer people investing in equities, since their gains would be diminished by taxation. Fewer equity buyers means lower equity prices. People already in the markets must find a buyer to exit and realize those gains.
There may be other factors I am missing, of course, but as Walt said: tax something if you want less of it.
I wonder, could we automate the hell out of everything, do audits, valuations of all assets etc, tax total wealth in real time and get rid of the transaction taxes? Perhaps give people a choice and make it financially attractive enough?
Top comment, hands down. Thank you for explaining the subject clearly.
An objective standard definition for what is productive and that which is not seem impossible to me, at least once you get past the basic necessities of life. Food is plentiful. Shelter has problems directly stemming from rent seeking. Healthcare is increasingly costly. Yet electronic entertainments are ridiculously cheap.
I also highly recommend Rana Foroohar's two books 'Makers and Takers: The Rise of Finance and the Fall of American Business' (2016) and 'Don't Be Evil: How Big Tech Betrayed Its Founding Principles -- and All of Us' (2019). These are both easy to read, highly informative and well thought through.
"In this scathing indictment of our current global financial system..."
Ugh. Lost me right there. I even agree with nearly everything it says in the summary, but if there's one thing I'm _not_ looking for, it's a book of "scathing indictment" of anything. I get plenty of anger and vicious conversation for free on the internet, unasked for, to want to seek out more.
Calm, reasoned analysis would be welcome. If this book is actually "scathing" (and that's not just some publisher's idea of what people are looking for), I can do without, thanks.
> The book uses case studies–from Silicon Valley to the financial sector to big pharma–to show how the foggy notions of value create confusion between rents and profits, a difference that distorts the measurements of growth and GDP.
This also reads like the book was written with the conclusions already in mind, and the case studies cherry picked.
That’s a possibility, but the build up in explaining those conclusions is in depth and comprehensive. The exploration of the problem space is worth reading, even if you disagree with the conclusions and solution proposals.
Agreed, however calm, reasoned analysis doesn't generate political will. It just becomes fodder for the demagogues to slice and dice in service of their own influence.
We're at a point that our societal and economic structures are not incentivized to solve the hard problems of scaling our civilization. I don't think polarized rhetoric is the way, but neither does anyone have time for the nuanced and deliberate thinking necessary to solve these kinds of complex structural problems.
By this point nunaced and deliberate thinking on its own won't cut it.
We need to reconsider serveral implied assumptions going back hundreds of years. But doing this in a way such that people (and institutional persons) don't take it as an attack on what they are seems (and probably is) impossible.
I've not read anything from Mazzucato that his hyperbolic, so let me say that your immediate dismissal of her work based on one comment is not necessary.
Sorry, you may be right, but I think a lot of other people will have the same reaction, and just never say so. It's better to voice what's a turnoff, I think, though I probably should have sent that comment to the publisher.
That’s just a copy-writer or reviewer comment. The actual book is more scholarly, calm and reasoned, starting with a tour of how the economic theory of value evolved and the impact of it on real economic activity.
You would think that by now that the professional wordsmiths writing reviews and book-jacket comments would realize people are developing cognitive immunities and resistances to inflammatory language like that, and that it’s losing its effectiveness.
These types of books should all be under 'identify problems, offer unrealistic solutions' category.
It's really not that hard to identify problems. Weaving them into a somewhat coherent narrative is a little more work. Having realistic solutions is the real kicker.
Take Windows, the operating system. It is not unlike a political system - full of problems. Imagine people writing books about where it went wrong and how we need to rethink operating systems to fix it. Wat?
Here's a quote from the books' page:
> The lesson here is urgent and sobering: to rescue our economy from the next, inevitable crisis and to foster longterm economic growth, we will need to rethink capitalism, rethink the role of public policy and the importance of the public sector, and redefine how we measure value in our society.
The lesson is that we need to rethink something? Very cool, we are going to rethink our way out of living in a dysfunctional plutocracy...
"These types of books should all be under 'identify problems, offer unrealistic solutions' category."
I tend to agree. Marx was right in many aspects of his analysis but his solution wasn't correct.
However, we shouldn't dismiss people who identify problems correctly but offer unrealistic solutions. We should accept that these problems exist and look for solutions even if the author themselves doesn't get it right. The current ruling class likes to shout down everything that doesn't benefit them.
Identifying a problem and offering a solution is very different things. The latter might not fit the scope of the book. Another reason is that if one doesn't offer a comprehensive solution, but rather a shallow one, too many people will just shut-off and discard it as utopian "anti-capitalist" or "socialist".
The weird thing is that this usually makes people throw out both the diagnosis and the proposed solution, even if the former is accurate.
Agreed. This seems to be a case where despite understanding the problem, the solution is not readily apparent. The author does a good job of exploring the problem, and states that any solution will need to include reformulating economic theory of value.
But I think a viable reformulation will extend or build on marginal utility rather than replacing it, perhaps with differences in second order effects of different activities on value creation.
I love how the author complains about wealth extraction but the author's last book opined about the brilliant entrepreneurial ability of govts.
Just a guess but I never got the impression that the author understood anything about capitalism or what companies in the private sector do.
You can complain about finance and make all kinds of statements with horrible historical parallels...the fact remains: this isn't like law, if something isn't valuable in some way then you don't get paid for it. The definition of value is what someone else will pay. The govt, by contrast, is the ultimate wealth extraction vehicle.
Yes, which is why I said it wasn't like law. Law is the price of the system, the price to train lawyers, the intentional complexity of law so that there is more work, time, and complexity.
Saying that there is extortionate pricing in finance is hard to prove given the level of competition. The areas of lowest competition, like deposit banking, are generally not "high finance", big salary stuff. And most of the barriers to entry in those areas are imposed by govt, not some natural consequence of finance (again, the author has an amazing ability to pick and choose what facts are relevant). Indeed, the main reason why the industry has consolidated was govt intervention after the GFC.
I think what people mean is: oh, this person makes more money than I THINK they should have (pretty much inevitable with academics). But that is something else. Empirically, this line of thought also found no success in the 20th century. Lots of people have thought that another group of people make too much money. I am not aware of any instance where they were able to take that money costlessly (i.e. they were wrong). The point of capitalism is these decisions being decentralised, and we don't need to rely on the self-appointed geniuses to tell us who is making too much money (spoiler: they will think anyone who has more money is an evil extractor, and that they should have some for pointless work...quite why the author doesn't think they are an extractor is worth examining).
> if something isn't valuable in some way then you don't get paid for it
They say "The market can stay irrational longer than you can stay solvent." Naturally that's a sword that cuts two ways -- many "correct" early Wirecard short-sellers lost money, but also many "incorrect" Wirecard bulls got rich on its rise. The weighing machine can take a long time to do its job, and in the meantime a lot of wealth destruction can take place.
Not that I think there's a better solution, just that the system is imperfect and is improved by many of the baseline regulatory functions of government. Government isn't all a money-pit :p
Right but the baseline regulatory function actually increases costs and prices. Extractive firms love these regulations because they create rents (i.e. law). The irony is too much.
And the problem with Wirecard is that people don't ask what would have happened otherwise. Wirecard had the govt suing people for them (basic regulatory function I suppose? lol). The point of markets isn't that the price is always right but that by creating a venue for people to disagree, you get an efficient outcome in the end. Fund managers who owned the stock get rinsed and will probably not get more capital. Fund manager who shorted the stock got more capital.
Btw, the reason why Wirecard didn't blow up instantly was the govt. Regulators are tasked with a limited set of functions. They choose not to perform them. The failure wasn't the market, it was regulation (the fraud itself was ludicrously childish, it is the kind of thing you see in China).
> The definition of value is what someone else will pay.
The whole point of the book is explaining why this is wrong. Maybe you should actually read it so you can actually understand the argument she's making and offer a serious critique.
Yep, I have read both books. And I have also read the multiple books which were written in the 19th century which also said this...how did that wisdom end up working?
Again, the idea that there is a small group of people extracting wealth from everyone else in society is one of the oldest ideas in the world. It substantially predates capitalism, it is also wrong.
Could you link a book that has shaped your thinking on this? Or some keywords to search? I'm not too informed on economics but the distinction between productive and unproductive economic activity sounds plausible to me.* Do you disagree with this distinction itself?
* Naive examples of what I think of as "unproductive activity" are high frequency trading, gambling, and most advertising.
Marx, Adam Smith, Ricardo, pretty much every early economist wrote about this...I think Aristole even wrote about this (very briefly: the statement that some industries are extractive is saying that the price they charge isn't related to production costs, asking where value came from was economics until the late 19th century).
And if you go back further, any period in which there was economic turmoil saw attempts to make this distinction. If you look at the late 16th century, when population pressure is starting to build up after the Black Death, you had engrossing laws. Some of these were regulations for product quality (i.e. the wheat content of bread iirc) but some of this was just plain, old: oh, these traders are evil. The most obvious historical example would be the regularity of genocides against certain groups (Jewish people, Chinese, Armenians...all were accused, very successfully I might add, of predatory behaviour).
Gambling isn't unproductive...that makes no sense. That is like saying restaurants or making films is unproductive. Advertising isn't unproductive either...that is an even worse mistake than gambling.
HFT is difficult because...is sub-second liquidity actually valuable? Probably not. Definitely, we need liquidity providers, definitely we need someone looking at prices and trying to react to information faster...but a lot of HFT is just mindless nonsense where you work out the price of X based on the price of everything else. In bad times, these relationships break down, liquidity dissolves, and you are seeing real fragility in markets even with information that moves globally (tbf, that isn't only HFT but bad regulation...ironically, these were intended to stop traders making too much money...classic). But has it lowered costs? Yes. Massively (investing two decades was nothing like today, even over the last five years the amount costs have fallen is staggering). Has it made trading easier? Yes. Massively. And do we need liquidity providers regardless? Yes (ppl forget, if you aren't paying HFT guys a fraction of a penny/share, you are paying the broker a few dollars/share).
Btw, everyone says these are unproductive because they don't see the hard work that goes into them. It is easy to throw stones when you think only the things you do has value.
> Btw, everyone says these are unproductive because they don't see the hard work that goes into them. It is easy to throw stones when you think only the things you do has value.
I'm sure it is hard work. The question I'm more interested in is whether it's work that should be done at all, and it's not obvious that "it's worth doing if people are willing to pay for it" is the right answer. That's more of an ethical concern than an economical one, though; I'm probably conflating "labor that is good/bad for individuals/society" with "productive/unproductive labor" since other comments mention exploitative pricing and rent-seeking, which weren't what I had in mind.
Finance is subject to the same dichotomy. Some activities, like identifying lending to productive endeavours, are of some value. As are derivatives for producers looking to lock in prices. Then there is also the rentier side, such as lending to non-productive enterprises. People will say, as they do with everything now, "who can make the distinction". Adam Smith could. I think we can.
Not trying in case we accidentally inhibit a few rich financiers from become even more rich, where the prize of extricating ourselves from what is fast becoming a nightmare mess is left untouched, is a mistake.
Regulations are legal vs illegal, they do not attempt to disambiguate wealth creation vs wealth appropriation.
I'd encourage banks to lend into productive industries by taxing land, not labour (and properly tax externalities like pollution) , capturing publicly created location value and allowing wealth creators to retain more (all?) of the value they create.
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Replying to the sibling comment as yet again after typing "rent seeking" => "you're submitting too fast". Surprise!
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I think we should tax things that have an opportunity cost or externality.
If you keep gold in a vault, assuming there is enough for industrial production (if not you have a lot of gold!), then please continue to do so. It doesn't impact me.
If you hold land I and others cannot use it. You did not create it, society should be compensated via a tax, as the land itself has value due to society at large. A square plot in the middle of nowhere is worth considerably less than a square plot in NY.
If you dump sewage into a river or burn lots of coal, you are also damaging the common wealth.
I think the single greatest change would be an AMT style wealth tax. Hypothetically, set to say 1%/year and owning non productive assets is highly discouraged. That acts as a release valve on endlessly escalating virtual wealth in favor of productive activity. Aka a stock with a 7% dividend sees zero change, but owning a vault of gold becomes a significant expense.
While it might seem to rob the global economy of vast wealth overnight, all physical and intellectual assets are still around. So, if anything it’s simply aligning the economy more closely with reality which should increase efficiency.
A vault of gold does nothing but sit there. A factory produces things that people actually want to use. I'd prefer to live in a society filled with factories versus a society filled with gold vaults.
Isn't that just a tautology? The vault of gold is valued because it is culturally valued? The only "durability" is due to irrationally viewing the potential for a stock or factory to no longer produce anything while ignoring that gold already produces nothing. Like judging ashes as the better fuel since it can't be depleted.
This just illustrates the warped perception most have about what constitutes economic value.
What is more useful? A factory that makes shoes for your population or a vault of gold? Gold has a role, but factories are king. This is why the USA is so, so screwed in handing over manufacturing to China. Americans usually criticize China by stating that they will stop consuming and what will China do? Nuts.
I have a friend who opened a coffee shop a year ago. It's gone really well, she's been profitable beyond expectations, etc (this is not in the U.S. by the way, if it were I'd imagine there's a good chance COVID lockdown would've killed the business, but I digress).
I said "wow you're doing really well, have you thought about opening a second location?"
Her response? "I thought about it, but it's a lot of work. I actually wish that instead of opening this coffee shop, I had used that money instead to buy an apartment. I would've made more money on the price appreciation doing nothing than what I've made so far on this coffee shop."
I was so shocked and disappointed to hear this, but at the same time I couldn't blame her. And to me this basically sums up the problem with modern capitalism.
The incentives are all wrong. Our top university graduates overwhelmingly want to work in finance and consulting. Living the "dream" is owning 15 rental properties and living off "passive" income. Nobody wants to do actual work, and even worse, there's often even a negative stigma with doing real work, as if managers and executives are "above" labor.
When "making money" is equated to "providing value", it incentives and morally rationalizes the vain pursuit of money, even if at society's expense. I'm guessing this mental gymnastics rationalizing and even glorifying money making and price gouging is a big reason why in the U.S. we still haven't fixed the skyrocketing cost of healthcare and higher education.
EDIT: Since apparently people are misconstruing the point of the story, my point is not that the world needs more coffee shops and worker bees doing busy work, my point is that our system incentivizes the wrong things - namely financial asset speculation and wealth extraction over real work (the whole point of the book in this thread). Flipping a condo contributes nothing to society.
She'd have to sell the apartment to get the cash from that appreciation.
If she liked where she is living, is she going to sell that apartment at the "right time?" And then move?
Maybe she's talking about an apartment she wouldn't live in.
If she wanted to buy to rent, and it's in an attractive neighborhood, isn't the price going to reflect its attractiveness? And then, are neighborhoods always going to get more attractive in the future?
Isn't a coffee shop going to be successful in the same neighborhood rented property would? Wouldn't it fail in a correlated way to property?
If it's so easy and obvious, haven't all the good deals in buy-to-rent been bought? Are you going to do a better job than someone marginally more effective a land lord? What about the #1 landlord?
What if the neighborhood gets less attractive, and you must sell below what you paid for? What if it's the same attractive, but everyone sells at the same time so prices go down anyway? This happened a lot recently in markets like Miami.
No of course what she's saying makes no sense. It's got this... low-information Robinhood Reddit level of finance knowledge that just doesn't reflect how few rags-to-riches landlord millionaires there are. They conflate hindsight with insight.
There's the extremely narrow group of people, who won lottery tickets by living in houses in shitty neighborhoods that suddenly gentrified and yes, now they can sell their homes and move and become very wealthy.
In California this is enshrined in Prop 13 and it is the single most important reason your friend could never achieve what she's saying here: she would be outcompeted by lotto ticket winners who pay basically no taxes and therefore enjoy margins on rent radically higher than she ever could. In places around the world things like Prop 13 are the actual economic advantages that make capital intensive businesses like property ownership effective.
She was talking about an investment property, so yes a rental property.
Of course hindsight is always 20-20 - anyone can say "I wish I had invested in Apple in 2003". I really don't understand the point of your comment. The point of my story was that our system incentives the wrong things, not that we're all investment geniuses.
I could elaborate on how the choosing of the coffee shop location itself was an investment in the location after a ton of research and a lifetime of growing up in that city and knowing it inside and out, all of which worked out beyond expectations, but really that's totally missing the point here.
Another interpretation is that the system clearly incentivized the right things, because she decided to start a cafe and not do something unproductive and buy property?
The concept we are doing is to incentivize education so that people see the point of it. If real estate investments work much better and/or education is bad enough the formula stops working.
She couldn't afford to buy an apartment at the time, opening the coffee shop was way cheaper (about 1/6 the cost).
In the country she's in, it's big news that rich people and celebrities are buying expensive real estate and flipping it shortly after making millions without doing any actual work.
You're saying management isn't real work, but you're also decrying the work ethic of someone who considers management too much work compared to passive ownership.
You're implying that society would be better with more sacrifices to keep coffee shops running, but doesn't this take away from improving healthcare and education? Don't we have enough coffee shops and neighborhood restaurants, in the big picture?
And the basic human factors of greed and laziness are not caused by an -ism, they're things that any -ism has to deal with.
What would you think if someone claimed that a major problem in society is small business owners who are not lazy enough? People like your friend are making it harder for all of the competitors and their employees by working long hours for little money, so it becomes a "tragedy of the commons". It's not a result of ideal free markets and things inherent in capitalism, but a result of people not being ideal economically rational actors because they value fuzzy things like "independence" and "self-determination" too much.
Wow you're taking the story way too literally if your takeaway from my story is that you think I was saying that the world needs more coffee shops. The whole point is that our society rewards financial speculation and rentiership / wealth-extraction over labor, the topic of the book in this thread.
I never said that management isn't work. I'm saying that society overly glorifies managers and underappreciates workers, as evidenced by CEOs getting paid 271x the average worker. Everyone can't be a manager, financier, or passive business owner, someone has to do the actual work.
> What would you think if someone claimed that a major problem in society is small business owners who are not lazy enough? People like your friend are making it harder for all of the competitors and their employees by working long hours for little money, so it becomes a "tragedy of the commons"
Sounds like you're blaming a systemic problem on individuals.
Sad that people are misinterpreting my little story to think my takeaway is that everyone needs to work harder. If it were up to me, we'd have a universal basic income and anybody could do as they please without having the threat of destitution constantly looming under them.
> Rentier capitalism is a term currently used to describe the belief in economic practices of monopolization of access to any kind of property (physical, financial, intellectual, etc.) and gaining significant amounts of profit without contribution to society
A UBI recipient has not monopolized anything. UBI is just a citizen's dividend (eg. see Henry George) for forgoing access to their share of land/natural resources and allowing landlords/capital to monopolize them. Or alternatively, the payments landlords/rentiers pay to society in exchange for the privilege of their monopoly.
But really the argument for a UBI is more about just having a more robust safety net so that nobody has to face destitution and people have the freedom to pursue whatever work they want and take greater risks (eg. starting businesses, research), especially as automation eliminates vast swaths of the labor market. Clearly this is completely different in both spirit and effect from say a minority class of private landlords leeching off workers and contributing nothing to society.
> How can you say "someone has to do the actual work" in the same comment you end by advocating UBI?
Why can't I say that? You think everyone is going to stop working if we implement a UBI?
> I can't disagree with you per se when everything you write seems to cancel out in a vague cloud of doublethink.
Hard to discuss anything with you when you haven't written a coherent argument. If you have something meaningful to say, then say it, don't just list a bunch of vague random questions and try to put the burden on me to figure out what your point is.
I'm not sure I understand. You could equally say a shareholder of public company stock hasn't monopolized anything in exactly the same way, no? That's what the word share means. If you have Apple stock, you're not monopolizing any of their assets.
So are you saying that there's an essential difference between someone who owns an apartment or two and rents them out vs. someone who owns an equal amount of an investment fund (whether real estate or not) and makes the same amount of money? Is the former a "rentier" and the latter not?
It's an interesting idea, that modern finance is largely socialist, and the remaining work to be done is to eliminate all the small time capitalists that own actual means of production rather than shares, and redistribute the shares equally.
But there is all this romanticization of "small businesses" that has to be undone to get to that socialist paradise.
> So are you saying that there's an essential difference between someone who owns an apartment or two and rents them out vs. someone who owns an equal amount of an investment fun
Yes, the difference is that land was not created by anyone, it is given to us by the earth. Thus everyone is entitled to their fair share of the land. Land ownership itself is the exclusion of land from everyone else - a monopoly. Any profit made off of the land value itself is unearned income, and should be taxed.
> my point is that our system incentivizes the wrong things - namely financial asset speculation and wealth extraction over real work
The actions of the Federal Reserve over the past three decades have contributed to these incentives. We’ve experienced plentiful supply of money during a period when productivity gains have kept consumer prices low, so money has flowed toward a steady upward pressure on asset prices and a golden age for asset owners.
It's worth revisiting Thiel's, "You are not a lottery ticket" (2013) https://www.youtube.com/watch?v=iZM_JmZdqCw, in which he outlines a compelling model for reasoning about the present world and the future: Outlook can be located on a grid where:
- y-axis: optimistic/pessimistic
- x-axis determinate/indeterminate
The key point is that we could interpret the US in 1982-2007 as an historical moment where the general mindset was optimistic-indeterminate i.e. we assumed the future will be better but we had no idea exactly what concrete steps to take to make it better. In such an environment, finance and law are the dominant industries (while engineering and art decline).
After 2008, there was a shift in mindset to pessimistic-indeterminate in which there is a large increase in discretionary expenditure on insurance/savings (with education being a form of insurance, thus the education bubble: "I don't know what my degree is for, but I had better get it anyway to avoid falling through the ever larger cracks in society."), while real investment in novel/radical projects declines.
It really worries me that people try to understand economics or society by starting with how things should be and labeling anything else "wrong". We've had 1000s of cults and ideologies on this basis. Today we get weird long diatribes and books pushing conspiracy theories.
The truth is humans are an efficient market: if someone finds a better way of doing things, it spreads and takes over, this are the way they are because we tried other ways and they were worse. If something is bad, its either because we can't get rid of it without making other things worse or because people themselves are bad and like it this way.
This theory is very boring, but overwhelmingly accurate imho.
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[ 3.2 ms ] story [ 185 ms ] threadToo much of the US economy these days has become about wealth extraction or speculation, rather than real wealth creation. We’ve outsourced large portions of our manufacturing ecosystem while arguing that design, services and finance will make up for it.
This book traces the root of the problem back to changes in how Economics analyzes and measures economic activity, and examines some industries through this lense, including VC.
Notably, prior to the development of Marginal Utility, economists from Adam Smith to Karl Marx and everyone in between were concerned with the distinction between productive and unproductive economic activity.
For example, manufacturing was productive and wealth-creative, while rents levied by the landed gentry were unproductive and extractive. Any form of cornering a market and extracting rent is assumed extractive, unless proven otherwise.
The term they used was the Production Boundary, with productive activities on one side and unproductive on the other. A few, like law, that were inherently unproductive but that were necessary inputs to productive activity, are situated on the border.
Marginal Utility made value subjective rather than objective. If a product or activity has demand for any reason and could thus fetch a price on a market, then it has value and is productive. This made economics more mathematically tractable as well, and became the dominant Economic theory. But it has also enabled extractive and speculative activities to claim to be productive, and thus gain political acceptance and support.
The book argues this is the root of the problem facing the US and other developed countries, and that solving it requires new economic measurements and theories that restore the distinction between productive activity vs extractive or speculative activity.
Edit: search "rethinking capitalism" UCL on youtube there is a list (mix?) of twenty videos. It seems to be an undergraduate course aimed at people in public policy. Include the above Marianna Mazzucato as well
Edit edit : mainstream their overturned is probably a bit rich - let's say now-liberalism is getting cut out
value will never be purely objective (at least not in our lifetimes or many, many after), but we can ground it in bedrock shared values like fairness and industry.
a lot of politicoeconomic theory over the last many decades has been a one-sided push to justify rentierism, consolidate wealth/power, and corner sources of wealth extraction (e.g., globalism, trickle-down, labor movement vilification, etc.). it's a slow boil toward fascism, which is concerning to say the least.
But talking about rentiers on hacker news == instant downvotes.
Extra downvotes? Mention VCs.
Even more downvotes? Mention landlords.
Probably won't be able to reply to comments as normally in these threads I get "you're submitting too fast" due to a mod flag.
If we don't look at things that way we might think that there is so much air and so much clean drinking water that it doesn't have value. You can just keep taking it in unlimited amounts until it gets scarce enough to create a market for it self. At that point we might argue the economy is growing.
We also love to tell [mainly ourselves] comforting stories about well being that exclude those who are not doing well. I mean, your life isn't all that valuable to me is it? If I can have shoes and you would have to go without air it would be hard to turn down the shoes? Economically shoes are a great idea?
This seems like a commonly made distinction, and maybe it's an honest and correct one, but the phrasing does seem a little slanted to me. Couldn't we also say that the gentry providing workable land to farmers is productive use of capital, and the prices charged for manufactured goods are unproductive rents? I suppose it doesn't hold together quite as well, but focusing on different sides of the ledger (and bringing class into the discussion) makes me question if the argument holds together as well when considered soberly.
You could say that, but it would be wrong or meaningless? You've not defined terms or made an argument, you've just swapped the labels like a guy trying to swap product barcodes so he can cheat the store.
Also fails to cover how the land was "provided" in the first place, and who was taking it at sword point..
Now when they were the source of instability with feudal squabbles they can't be said to even be helping except maybe in a power vacuum potentially leading to even worse outcomes.
Without that reason, the framing looks more like politics than economics.
As for "provided": leaving aside the moral question of how the status quo obtained (which, I'll grant, was likely not moral at all), the landlord has land that can be used for farming, but also for polo or fox hunting or whatever. The farmers have time and energy that can be used for farming, but also for football and arm-wrestling competitions etc. I'm not saying they're the same, I'm just saying that if they're different we need to do more than just assert it.
If you want more of something, subsidize it. If you want less, tax it. It's trite, of course, but few take it into account when formulating tax/subsidy policy.
For example, the Seattle City Council has passed what they themselves called an "Amazon Tax". Amazon has seen the writing on the wall and is moving their headquarters to Bellevue.
If capital gains taxes are raised, would equity prices rise, because fewer people are selling? Would more people sell, causing prices to fall? Would fewer people buy, because they anticipate paying those taxes in the future?
Would rising prices attract more people to buy equities? So that would mean, rising capital gains taxes could cause an even higher rise in equity prices, because both fewer people are selling and more people are buying in response to rising prices?
Doesn't someone have to sell their equities, into cash, in order to have a gain? Is it a complete picture to just count, "market value = shares outstanding * last price paid?" If no one is selling are those returns real?
If capital gains taxes are increased, and fewer people sell, is revenue offset by the increase in equity prices? Or not? What does it mean, for your theory about taxes?
These are extremely basic questions about how markets operate.
Anyway, my point is, you have no idea how tax laws wield influence of how markets operate. You're totally right about how trite you are.
In my experience researching these questions, the answers are inconclusive, and cannot at all be predicted from some kind of first principles understanding of taxes or economics.
In the tax regime before Reagan, tax rates were so high that people found it worthwhile to invest instead into poorly performing tax shelters. Reagan's deal was to trade lowering marginal rates for eliminating the shelters. It was a good deal, as shown by increased GDP growth rate.
Tax policy is why employers offer health insurance.
Tax policy is why we have estate planners, trusts, etc.
Tax policy is why we have 401ks.
So yeah, I do have an idea how tax laws influence how markets work.
Which means higher capital gains are, in an important sense, making you more money. That is totally and utterly surprising if our typical feelings about taxes are that they make us less wealthy. It is indeed possible that taxes make us more wealthy.
There may be other factors I am missing, of course, but as Walt said: tax something if you want less of it.
An objective standard definition for what is productive and that which is not seem impossible to me, at least once you get past the basic necessities of life. Food is plentiful. Shelter has problems directly stemming from rent seeking. Healthcare is increasingly costly. Yet electronic entertainments are ridiculously cheap.
Is it any different that the way Western middle class plundered the developing world resources?
It's just the wheel going round :( SAD!! :(
Ugh. Lost me right there. I even agree with nearly everything it says in the summary, but if there's one thing I'm _not_ looking for, it's a book of "scathing indictment" of anything. I get plenty of anger and vicious conversation for free on the internet, unasked for, to want to seek out more.
Calm, reasoned analysis would be welcome. If this book is actually "scathing" (and that's not just some publisher's idea of what people are looking for), I can do without, thanks.
This also reads like the book was written with the conclusions already in mind, and the case studies cherry picked.
We're at a point that our societal and economic structures are not incentivized to solve the hard problems of scaling our civilization. I don't think polarized rhetoric is the way, but neither does anyone have time for the nuanced and deliberate thinking necessary to solve these kinds of complex structural problems.
We need to reconsider serveral implied assumptions going back hundreds of years. But doing this in a way such that people (and institutional persons) don't take it as an attack on what they are seems (and probably is) impossible.
You would think that by now that the professional wordsmiths writing reviews and book-jacket comments would realize people are developing cognitive immunities and resistances to inflammatory language like that, and that it’s losing its effectiveness.
It's really not that hard to identify problems. Weaving them into a somewhat coherent narrative is a little more work. Having realistic solutions is the real kicker.
Take Windows, the operating system. It is not unlike a political system - full of problems. Imagine people writing books about where it went wrong and how we need to rethink operating systems to fix it. Wat?
Here's a quote from the books' page:
> The lesson here is urgent and sobering: to rescue our economy from the next, inevitable crisis and to foster longterm economic growth, we will need to rethink capitalism, rethink the role of public policy and the importance of the public sector, and redefine how we measure value in our society.
The lesson is that we need to rethink something? Very cool, we are going to rethink our way out of living in a dysfunctional plutocracy...
I tend to agree. Marx was right in many aspects of his analysis but his solution wasn't correct.
However, we shouldn't dismiss people who identify problems correctly but offer unrealistic solutions. We should accept that these problems exist and look for solutions even if the author themselves doesn't get it right. The current ruling class likes to shout down everything that doesn't benefit them.
The weird thing is that this usually makes people throw out both the diagnosis and the proposed solution, even if the former is accurate.
But I think a viable reformulation will extend or build on marginal utility rather than replacing it, perhaps with differences in second order effects of different activities on value creation.
I would certainly be interested in reading these books, even if they don't offer an implementation of an actual operating system.
https://stt.wiki/wiki/Great_Material_Continuum_Texts
Just a guess but I never got the impression that the author understood anything about capitalism or what companies in the private sector do.
You can complain about finance and make all kinds of statements with horrible historical parallels...the fact remains: this isn't like law, if something isn't valuable in some way then you don't get paid for it. The definition of value is what someone else will pay. The govt, by contrast, is the ultimate wealth extraction vehicle.
Never heard of extortionate pricing?
Sometimes a large part of the price we pay for a good is actually the price of the system, not the price of the good.
Saying that there is extortionate pricing in finance is hard to prove given the level of competition. The areas of lowest competition, like deposit banking, are generally not "high finance", big salary stuff. And most of the barriers to entry in those areas are imposed by govt, not some natural consequence of finance (again, the author has an amazing ability to pick and choose what facts are relevant). Indeed, the main reason why the industry has consolidated was govt intervention after the GFC.
I think what people mean is: oh, this person makes more money than I THINK they should have (pretty much inevitable with academics). But that is something else. Empirically, this line of thought also found no success in the 20th century. Lots of people have thought that another group of people make too much money. I am not aware of any instance where they were able to take that money costlessly (i.e. they were wrong). The point of capitalism is these decisions being decentralised, and we don't need to rely on the self-appointed geniuses to tell us who is making too much money (spoiler: they will think anyone who has more money is an evil extractor, and that they should have some for pointless work...quite why the author doesn't think they are an extractor is worth examining).
They say "The market can stay irrational longer than you can stay solvent." Naturally that's a sword that cuts two ways -- many "correct" early Wirecard short-sellers lost money, but also many "incorrect" Wirecard bulls got rich on its rise. The weighing machine can take a long time to do its job, and in the meantime a lot of wealth destruction can take place.
Not that I think there's a better solution, just that the system is imperfect and is improved by many of the baseline regulatory functions of government. Government isn't all a money-pit :p
And the problem with Wirecard is that people don't ask what would have happened otherwise. Wirecard had the govt suing people for them (basic regulatory function I suppose? lol). The point of markets isn't that the price is always right but that by creating a venue for people to disagree, you get an efficient outcome in the end. Fund managers who owned the stock get rinsed and will probably not get more capital. Fund manager who shorted the stock got more capital.
Btw, the reason why Wirecard didn't blow up instantly was the govt. Regulators are tasked with a limited set of functions. They choose not to perform them. The failure wasn't the market, it was regulation (the fraud itself was ludicrously childish, it is the kind of thing you see in China).
The whole point of the book is explaining why this is wrong. Maybe you should actually read it so you can actually understand the argument she's making and offer a serious critique.
Again, the idea that there is a small group of people extracting wealth from everyone else in society is one of the oldest ideas in the world. It substantially predates capitalism, it is also wrong.
* Naive examples of what I think of as "unproductive activity" are high frequency trading, gambling, and most advertising.
And if you go back further, any period in which there was economic turmoil saw attempts to make this distinction. If you look at the late 16th century, when population pressure is starting to build up after the Black Death, you had engrossing laws. Some of these were regulations for product quality (i.e. the wheat content of bread iirc) but some of this was just plain, old: oh, these traders are evil. The most obvious historical example would be the regularity of genocides against certain groups (Jewish people, Chinese, Armenians...all were accused, very successfully I might add, of predatory behaviour).
Gambling isn't unproductive...that makes no sense. That is like saying restaurants or making films is unproductive. Advertising isn't unproductive either...that is an even worse mistake than gambling.
HFT is difficult because...is sub-second liquidity actually valuable? Probably not. Definitely, we need liquidity providers, definitely we need someone looking at prices and trying to react to information faster...but a lot of HFT is just mindless nonsense where you work out the price of X based on the price of everything else. In bad times, these relationships break down, liquidity dissolves, and you are seeing real fragility in markets even with information that moves globally (tbf, that isn't only HFT but bad regulation...ironically, these were intended to stop traders making too much money...classic). But has it lowered costs? Yes. Massively (investing two decades was nothing like today, even over the last five years the amount costs have fallen is staggering). Has it made trading easier? Yes. Massively. And do we need liquidity providers regardless? Yes (ppl forget, if you aren't paying HFT guys a fraction of a penny/share, you are paying the broker a few dollars/share).
Btw, everyone says these are unproductive because they don't see the hard work that goes into them. It is easy to throw stones when you think only the things you do has value.
I'm sure it is hard work. The question I'm more interested in is whether it's work that should be done at all, and it's not obvious that "it's worth doing if people are willing to pay for it" is the right answer. That's more of an ethical concern than an economical one, though; I'm probably conflating "labor that is good/bad for individuals/society" with "productive/unproductive labor" since other comments mention exploitative pricing and rent-seeking, which weren't what I had in mind.
Thanks for the reply.
And there are less and less incentives to contribute in making / selling things vs. just making more money out of money for a living.
It's an important debate that the MM is trying to facilitate. And actually quite a good historic recap of the term value over time.
But while the finance economy 'feels morally wrong' (especially when being on the loser side), that doesn't make for a convincing argument yet.
Not trying in case we accidentally inhibit a few rich financiers from become even more rich, where the prize of extricating ourselves from what is fast becoming a nightmare mess is left untouched, is a mistake.
We already do. Finance is an extremely heavily regulated industry. The regulations make all kinds of distinctions.
The hard part is deciding what the regulations should be. What, specifically, would you change?
I'd encourage banks to lend into productive industries by taxing land, not labour (and properly tax externalities like pollution) , capturing publicly created location value and allowing wealth creators to retain more (all?) of the value they create.
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Replying to the sibling comment as yet again after typing "rent seeking" => "you're submitting too fast". Surprise!
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I think we should tax things that have an opportunity cost or externality.
If you keep gold in a vault, assuming there is enough for industrial production (if not you have a lot of gold!), then please continue to do so. It doesn't impact me.
If you hold land I and others cannot use it. You did not create it, society should be compensated via a tax, as the land itself has value due to society at large. A square plot in the middle of nowhere is worth considerably less than a square plot in NY.
If you dump sewage into a river or burn lots of coal, you are also damaging the common wealth.
While it might seem to rob the global economy of vast wealth overnight, all physical and intellectual assets are still around. So, if anything it’s simply aligning the economy more closely with reality which should increase efficiency.
What is more useful? A factory that makes shoes for your population or a vault of gold? Gold has a role, but factories are king. This is why the USA is so, so screwed in handing over manufacturing to China. Americans usually criticize China by stating that they will stop consuming and what will China do? Nuts.
I said "wow you're doing really well, have you thought about opening a second location?"
Her response? "I thought about it, but it's a lot of work. I actually wish that instead of opening this coffee shop, I had used that money instead to buy an apartment. I would've made more money on the price appreciation doing nothing than what I've made so far on this coffee shop."
I was so shocked and disappointed to hear this, but at the same time I couldn't blame her. And to me this basically sums up the problem with modern capitalism.
The incentives are all wrong. Our top university graduates overwhelmingly want to work in finance and consulting. Living the "dream" is owning 15 rental properties and living off "passive" income. Nobody wants to do actual work, and even worse, there's often even a negative stigma with doing real work, as if managers and executives are "above" labor.
When "making money" is equated to "providing value", it incentives and morally rationalizes the vain pursuit of money, even if at society's expense. I'm guessing this mental gymnastics rationalizing and even glorifying money making and price gouging is a big reason why in the U.S. we still haven't fixed the skyrocketing cost of healthcare and higher education.
EDIT: Since apparently people are misconstruing the point of the story, my point is not that the world needs more coffee shops and worker bees doing busy work, my point is that our system incentivizes the wrong things - namely financial asset speculation and wealth extraction over real work (the whole point of the book in this thread). Flipping a condo contributes nothing to society.
If she liked where she is living, is she going to sell that apartment at the "right time?" And then move?
Maybe she's talking about an apartment she wouldn't live in.
If she wanted to buy to rent, and it's in an attractive neighborhood, isn't the price going to reflect its attractiveness? And then, are neighborhoods always going to get more attractive in the future?
Isn't a coffee shop going to be successful in the same neighborhood rented property would? Wouldn't it fail in a correlated way to property?
If it's so easy and obvious, haven't all the good deals in buy-to-rent been bought? Are you going to do a better job than someone marginally more effective a land lord? What about the #1 landlord?
What if the neighborhood gets less attractive, and you must sell below what you paid for? What if it's the same attractive, but everyone sells at the same time so prices go down anyway? This happened a lot recently in markets like Miami.
No of course what she's saying makes no sense. It's got this... low-information Robinhood Reddit level of finance knowledge that just doesn't reflect how few rags-to-riches landlord millionaires there are. They conflate hindsight with insight.
There's the extremely narrow group of people, who won lottery tickets by living in houses in shitty neighborhoods that suddenly gentrified and yes, now they can sell their homes and move and become very wealthy.
In California this is enshrined in Prop 13 and it is the single most important reason your friend could never achieve what she's saying here: she would be outcompeted by lotto ticket winners who pay basically no taxes and therefore enjoy margins on rent radically higher than she ever could. In places around the world things like Prop 13 are the actual economic advantages that make capital intensive businesses like property ownership effective.
Of course hindsight is always 20-20 - anyone can say "I wish I had invested in Apple in 2003". I really don't understand the point of your comment. The point of my story was that our system incentives the wrong things, not that we're all investment geniuses.
I could elaborate on how the choosing of the coffee shop location itself was an investment in the location after a ton of research and a lifetime of growing up in that city and knowing it inside and out, all of which worked out beyond expectations, but really that's totally missing the point here.
In the country she's in, it's big news that rich people and celebrities are buying expensive real estate and flipping it shortly after making millions without doing any actual work.
You're saying management isn't real work, but you're also decrying the work ethic of someone who considers management too much work compared to passive ownership.
You're implying that society would be better with more sacrifices to keep coffee shops running, but doesn't this take away from improving healthcare and education? Don't we have enough coffee shops and neighborhood restaurants, in the big picture?
And the basic human factors of greed and laziness are not caused by an -ism, they're things that any -ism has to deal with.
What would you think if someone claimed that a major problem in society is small business owners who are not lazy enough? People like your friend are making it harder for all of the competitors and their employees by working long hours for little money, so it becomes a "tragedy of the commons". It's not a result of ideal free markets and things inherent in capitalism, but a result of people not being ideal economically rational actors because they value fuzzy things like "independence" and "self-determination" too much.
I never said that management isn't work. I'm saying that society overly glorifies managers and underappreciates workers, as evidenced by CEOs getting paid 271x the average worker. Everyone can't be a manager, financier, or passive business owner, someone has to do the actual work.
> What would you think if someone claimed that a major problem in society is small business owners who are not lazy enough? People like your friend are making it harder for all of the competitors and their employees by working long hours for little money, so it becomes a "tragedy of the commons"
Sounds like you're blaming a systemic problem on individuals.
Sad that people are misinterpreting my little story to think my takeaway is that everyone needs to work harder. If it were up to me, we'd have a universal basic income and anybody could do as they please without having the threat of destitution constantly looming under them.
How can you say "someone has to do the actual work" in the same comment you end by advocating UBI?
How much lower can capital returns go compared to labor when most of the developed world is seeing near zero or even negative interest rates?
You write "I never said that management isn't work" and then your next sentence says exactly that management isn't work. Again.
Also is "taking the story way too literally" an admission that it's fictional?
A UBI recipient has not monopolized anything. UBI is just a citizen's dividend (eg. see Henry George) for forgoing access to their share of land/natural resources and allowing landlords/capital to monopolize them. Or alternatively, the payments landlords/rentiers pay to society in exchange for the privilege of their monopoly.
But really the argument for a UBI is more about just having a more robust safety net so that nobody has to face destitution and people have the freedom to pursue whatever work they want and take greater risks (eg. starting businesses, research), especially as automation eliminates vast swaths of the labor market. Clearly this is completely different in both spirit and effect from say a minority class of private landlords leeching off workers and contributing nothing to society.
> How can you say "someone has to do the actual work" in the same comment you end by advocating UBI?
Why can't I say that? You think everyone is going to stop working if we implement a UBI?
> I can't disagree with you per se when everything you write seems to cancel out in a vague cloud of doublethink.
Hard to discuss anything with you when you haven't written a coherent argument. If you have something meaningful to say, then say it, don't just list a bunch of vague random questions and try to put the burden on me to figure out what your point is.
I'm not sure I understand. You could equally say a shareholder of public company stock hasn't monopolized anything in exactly the same way, no? That's what the word share means. If you have Apple stock, you're not monopolizing any of their assets.
So are you saying that there's an essential difference between someone who owns an apartment or two and rents them out vs. someone who owns an equal amount of an investment fund (whether real estate or not) and makes the same amount of money? Is the former a "rentier" and the latter not?
It's an interesting idea, that modern finance is largely socialist, and the remaining work to be done is to eliminate all the small time capitalists that own actual means of production rather than shares, and redistribute the shares equally.
But there is all this romanticization of "small businesses" that has to be undone to get to that socialist paradise.
Yes, the difference is that land was not created by anyone, it is given to us by the earth. Thus everyone is entitled to their fair share of the land. Land ownership itself is the exclusion of land from everyone else - a monopoly. Any profit made off of the land value itself is unearned income, and should be taxed.
I'm just relaying Henry George's Land Value Tax
>Why can't I say that? You think everyone is going to stop working if we implement a UBI?
No more than you think everyone is presently "a manager, financier, or passive business owner".
The actions of the Federal Reserve over the past three decades have contributed to these incentives. We’ve experienced plentiful supply of money during a period when productivity gains have kept consumer prices low, so money has flowed toward a steady upward pressure on asset prices and a golden age for asset owners.
- y-axis: optimistic/pessimistic
- x-axis determinate/indeterminate
The key point is that we could interpret the US in 1982-2007 as an historical moment where the general mindset was optimistic-indeterminate i.e. we assumed the future will be better but we had no idea exactly what concrete steps to take to make it better. In such an environment, finance and law are the dominant industries (while engineering and art decline).
After 2008, there was a shift in mindset to pessimistic-indeterminate in which there is a large increase in discretionary expenditure on insurance/savings (with education being a form of insurance, thus the education bubble: "I don't know what my degree is for, but I had better get it anyway to avoid falling through the ever larger cracks in society."), while real investment in novel/radical projects declines.
The truth is humans are an efficient market: if someone finds a better way of doing things, it spreads and takes over, this are the way they are because we tried other ways and they were worse. If something is bad, its either because we can't get rid of it without making other things worse or because people themselves are bad and like it this way.
This theory is very boring, but overwhelmingly accurate imho.