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Capital Is No Longer Scarce

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Re: Capital Is No Longer Scarce

#61

Post by fnovd »

joshuaheard wrote: post #46
badsock wrote: post #37

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?

Letting you keep your own money is not a subsidy. That being said, labor and capital should be taxed at the same rate, there being no reason to distinguish them for tax purposes.

>Letting you keep your own money is not a subsidy.

While this is semantically true, reducing taxes as a vehicle to put money in the right hands is by all means a subsidy.

Re: Capital Is No Longer Scarce

#62

Post by dragonwriter »

joshuaheard wrote: post #46
badsock wrote: post #37

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?

Letting you keep your own money is not a subsidy. That being said, labor and capital should be taxed at the same rate, there being no reason to distinguish them for tax purposes.

Doing so selectively is absolutely a subsidy, and calling it anything else is sophistry.

Re: Capital Is No Longer Scarce

#63

Post by ChuckMcM »

Retric wrote: post #57
ChuckMcM wrote: post #51

Earlier quoted context omitted.

I don't think you can look at a subset of capital expenditures and then conclude "capital is misallocated." You would have to look at all the businesses funded and see where the money is going. Also I would caution you about falling into the trap of confusing "valuation" with "capital". SnapChat might have had a $16B valuation but really only "allocated" a bit more than a billion dollars. If you subscribe to the 'too…

If you see a large amount of money (as in 100+ of billion) flow in and significantly substandard returns then it was misallocated. The VC industry has seen substandard returns over the last 20+ years. So, it's not a good allocation of money. PS: Some people get rich at Vegas, that does not mean gambling is a good investment.

I don't disagree but would like to understand your metric, "substandard returns" suggests you have a metric in mind, how do you arrive at the 'standard' ?

Re: Capital Is No Longer Scarce

#64

Post by [deleted] »

amelius wrote: post #58
erikpukinskis wrote: post #41

Earlier quoted context omitted.

> capitalism seems the best method for controlling innate human corruption Capitalism seems better than past failures. But it is surely a local maximum. We have thousands of years of social evolution in front of us. Experiments have hardly been exhaustive, and material conditions seem to be changing faster than ever.

The best way to control corruption is transparency. Eventually, IT systems will solve large-scale corruption.

[deleted]

Re: Capital Is No Longer Scarce

#65

Post by ci5er »

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…

> Molecular targets are getting harder to find.

Is this because we've already harvested the low-hanging fruit? Are there any new paradigms on the horizon that could change this?

> If you want more cancer cures, make it easier to become very rich by selling them.

It's an odd thing about Americans, though. They really don't seem to mind if Jobs or Zuckerberg get insanely rich (although there was some grumbling about Gates back in the day), but they loose their collective fecal matter if an evil capitalist with a cure for cancer even tried to recoup the capital invested in its development.

"People are dying because it is not free!", they would screech. And the (US) government would cap the price because by that time they will be the sole domestic channel for any new therapy's delivery and done and done. Big pharma knows this, and if they don't, their investors do. Better off improving female viagra or something.

Re: Capital Is No Longer Scarce

#66

Post by veb »

[deleted] wrote: post #64
amelius wrote: post #58

Earlier quoted context omitted.

The best way to control corruption is transparency. Eventually, IT systems will solve large-scale corruption.

[deleted]

This is not very constructive. I can tell you're being sarcastic, but if you disagree with the parent comment, then perhaps you could enlighten us why?

Re: Capital Is No Longer Scarce

#67

Post by merpnderp »

bko wrote: post #45
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…

Why would a cure for cancer be a small return on investment? You're assuming that the only people who could enter the market and find a cure would be the current players who are profiting from the current treatment or some global conspiracy to keep the cure hidden. If someone were to discover a very effective treatment, they would surely profit nicely. Hepatitis C was recently cured, a brutal disease that affected so…

Whenever I think of profit motives being a good thing I'm reminded of the Steve Job biography where it speaks of his time at a commune. He would sleep under the kitchen table and watch people sneak in at night to take food from the fridge which was supposed to be shared. People want as much as they can get for their work, and not a single apple less.

Re: Capital Is No Longer Scarce

#68

Post by Retric »

ChuckMcM wrote: post #63
Retric wrote: post #57

Earlier quoted context omitted.

If you see a large amount of money (as in 100+ of billion) flow in and significantly substandard returns then it was misallocated. The VC industry has seen substandard returns over the last 20+ years. So, it's not a good allocation of money. PS: Some people get rich at Vegas, that does not mean gambling is a good investment.

I don't disagree but would like to understand your metric, "substandard returns" suggests you have a metric in mind, how do you arrive at the 'standard' ?

Risk adjusted ROI. The bond market is the classic example, if you look at the class of bonds paying 10% vs 2%. If your risks where in line with the 10% bonds, but the payouts where inline with the 2% bonds it's a low ROI investment.

Now, looking ahead you don't know what the risks are. But, you can examine the ROI for 1990 investments and you can see which 2010 investments have already failed.

Re: Capital Is No Longer Scarce

#69

Post by gherkin0 »

vlehto wrote: post #4

High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY. High frequency trading is this, but with very high speeds and lots of competition. Thi…

> High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance.

1. That's a valuable evening out prices may be a valuable function, but one reason HFT gets shat on is because of the enormous effort put into attempts to arbirage over shorter and shorter time intervals. How does society actually benefit if the prices are equalized over a 1ms interval vs a 1s interval?

2. There are other, more parasitic HFT strategies than arbitrage. One I read about consists of the HFTs putting small tripwire sell orders on some exchanges to detect buy activity, then front running big orders by buying up all the stock on other exchanges and offering it at a higher price. The HFT performs no function besides inserting themselves as a middleman. It's like being on Amazon, clicking buy on a $10 item from seller A, then either having your order fail or be filled by seller B (who themselves just bought from seller A) at a higher price.

https://en.wikipedia.org/wiki/Front_running

https://en.wikipedia.org/wiki/Flash_Boys

Re: Capital Is No Longer Scarce

#70

Post by [deleted] »

DannoHung wrote: post #14
vlehto wrote: post #4

High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY. High frequency trading is this, but with very high speeds and lots of competition. Thi…

Oh give it a break. If you had to rest orders for a second, then HFT would evaporate.

[deleted]
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