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Capital Is No Longer Scarce

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Re: Capital Is No Longer Scarce

#31

Post by bluetomcat »

sanxiyn wrote: post #30
hellbanner wrote: post #29

Earlier quoted context omitted.

When Value is defined as "more money", then this will happen. Money often functions as a lack of efficiency and is prone to re-produce itself. For example: if cancer was cured with a pill, forever, the total revenue from curing cancer is pill sales price * people born, which would be less than current treatment costs. Maybe https://en.wikipedia.org/wiki/Gross_National_Happiness isn't such a bad idea.

So pill will disrupt treatment market, like Red Hat disrupted Unix market. Free market encourages such efficiency.

The problem is that technological disruptions like this pose a threat to the economy as it is organised and run today. In particular, modern economy cannot cope with unemployment. The masses of laid-off people would either have to engage in yet more pointless jobs, or "disrupt" the social order. This is very unlikely to increase efficiency overall.

Re: Capital Is No Longer Scarce

#32

Post by mohanmcgeek »

The article overlooks the sovereign debt. The world has a total sovereign debt of about 50 trillion. The Government bonds and their derivatives account for most of the difference between available capital and GDP.

"Capital is no longer scarce" sounds very absurd. There will always be more people chasing limited resources and whenever less men (labor) are required for a task, the society directs that "capital" to either arts or research

Re: Capital Is No Longer Scarce

#33

Post by laotzu »

sanxiyn wrote: post #30
hellbanner wrote: post #29

Earlier quoted context omitted.

When Value is defined as "more money", then this will happen. Money often functions as a lack of efficiency and is prone to re-produce itself. For example: if cancer was cured with a pill, forever, the total revenue from curing cancer is pill sales price * people born, which would be less than current treatment costs. Maybe https://en.wikipedia.org/wiki/Gross_National_Happiness isn't such a bad idea.

So pill will disrupt treatment market, like Red Hat disrupted Unix market. Free market encourages such efficiency.

What's a free market?

Re: Capital Is No Longer Scarce

#34

Post by [deleted] »

yummyfajitas wrote: post #25
cryptica wrote: post #20

Misallocation is a massive problem. I think a significant amount of money is going into advertising, pointless startups, entertainment and social media. Basically, we are spending huge amounts of money getting numbed out of our minds instead of solving real fundamental problems. In general, I think it reveals a deeper problem about capitalism; none of us understand value anymore (we have more junk in our lives than w…

It's not about 5 year return, it's about the fact that the potential cancer cure simply has low returns and huge risks. People are absolutely willing to make long term bets (e.g. snapchat, which has negligible revenue right now, and is entirely just hope for the future), they just need to be good bets. Molecular targets are getting harder to find. Getting a drug through the FDA is insanely difficult, costs huge amoun…

[deleted]

Re: Capital Is No Longer Scarce

#35

Post by laotzu »

Ashendar wrote: post #23
cryptica wrote: post #20

Misallocation is a massive problem. I think a significant amount of money is going into advertising, pointless startups, entertainment and social media. Basically, we are spending huge amounts of money getting numbed out of our minds instead of solving real fundamental problems. In general, I think it reveals a deeper problem about capitalism; none of us understand value anymore (we have more junk in our lives than w…

' I think a significant amount of money is going into advertising, pointless startups, entertainment and social media.' My suspicion is that a lot of it is going into housing, driving up the costs for home buyers with no productive benefit for the economy.

Well that is obvious after 2008. Last I checked there are around 5 vacant houses for every homeless person in America. According to anthropologist David Graeber, the real original (pun intended) meaning of the phrase "real estate" was royal estate, referring to the British monarchies' royal estate in the 17th century.

Re: Capital Is No Longer Scarce

#36

Post by tootie »

mohanmcgeek wrote: post #32

The article overlooks the sovereign debt. The world has a total sovereign debt of about 50 trillion. The Government bonds and their derivatives account for most of the difference between available capital and GDP. "Capital is no longer scarce" sounds very absurd. There will always be more people chasing limited resources and whenever less men (labor) are required for a task, the society directs that "capital" to eith…

But are they really chasing a limited resource? If investors think you're product is going to be profitable, you're virtually guaranteed to get funding. The only reason chasing capital is difficult is because that's frequently a hard sell. Lots of capital doesn't mean investors are going to throw money at losing propositions.

Re: Capital Is No Longer Scarce

#37

Post by badsock »

And yet there's a 50% tax break for capital gains in my country. What possible reason is there for such a massive subsidy for something that we don't need, other than corrupt influence on the political system by the wealthy to give themselves a tax break?

Re: Capital Is No Longer Scarce

#38

Post by tpeo »

The author seems to be referring to financial definitions of capital rather than an economic definition of capital. It would surprise me if the physical capital stock of any country weren't at least 5 times larger than it's GDP. A global capital stock of USD 100 trillion against a world GDP of USD 80 trillion strikes me as too low.

Also, how does one add up the values of financial instruments? The capital he's referring to includes stocks, bonds and loans. What if I take a loan so that I might buy some bonds?

Lastly, not all assets are traded in each period, and some might never be sold, such that their values cannot be observed in financial markets.

Re: Capital Is No Longer Scarce

#39

Post by merpnderp »

cryptica wrote: post #20

Misallocation is a massive problem. I think a significant amount of money is going into advertising, pointless startups, entertainment and social media. Basically, we are spending huge amounts of money getting numbed out of our minds instead of solving real fundamental problems. In general, I think it reveals a deeper problem about capitalism; none of us understand value anymore (we have more junk in our lives than w…

Capitalism has never been about making the world a better place. All systems deal with humans and humans inevitably prefer helping out themselves and people close to them over others, which leads to corruption regardless of the system. And capitalism seems the best method for controlling innate human corruption (see China's incredible economic growth once socialism was all but abandoned for capitalism in the 80's pulling a billion people out of abject poverty).

As for investors preferring Snapchat to curing cancer? The amount of money invested in cancer dwarfs Snapchat's investments by magnitudes. You don't just cure "cancer" you find cures for the hundreds of different diseases that fall under the umbrella of cancer. There's so much money invested in cancer there are often not enough candidates for a new clinical trials.

If we have a shortage of anything, it is medical research scientists. And the way to get more of those is to change the regulations so there is more room for profit medical research.

Re: Capital Is No Longer Scarce

#40

Post by Retra »

forgetsusername wrote: post #19
endymi0n wrote: post #8

Earlier quoted context omitted.

Oh, and another round of "we HF-Traders are just misunderstood benefactors of the general public and helping markets being more efficient". There are heaps of evidence HFT ruins markets, economies and nations, so I call BS. http://www.zerohedge.com/news/2015-03-20/how-hft-destroys-ma...

> There are heaps of evidence HFT ruins markets, economies and nations, so I call BS. HFT itself isn't "bad", period. Does it have bad actors, stupidity, corruption, inefficiencies and is sometimes a waste? Yes. What industry is immune to this?

Immunity isn't what you should be concerned about. Incentives are the issue here.
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