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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#311

Post by lwb »

BenoitEssiambre wrote: post #239
lwb wrote: post #215

Earlier quoted context omitted.

His assertion here is that "Endless money-losing is a variant of counterfeiting". I just don't see how that claim stands up to any real scrutiny. Counterfeiting is a totally different thing. To your point about negative real returns: just because it's been that way in the past doesn't mean that it's not a tragedy or that it's not possible to have reliable assets that keep their value over time. This is an especially…

>This is an especially desirable quality in currencies This is an especially UNdesirable quality in currencies. A deflationary currency cannot become mainstream without causing a huge amount of instability. Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity. When this trend becomes widespread enough, it causes global production capaci…

I'd love to hear some research on these claims.

Especially this:

> Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity.

I am deeply skeptical of this claim. I would still rather invest in a real business than get a 0% return on my stash. If a free market for currency existed, no way in hell would I choose to store my wealth in a depleting asset.

Plus, any argument about hoarding cash should consider the multitude of billionaires that exist and whose presence is not crashing economies around the world. (Yes, most billionaires have most of their wealth in business investments, but they still have bigger piles of cash than you or I can reasonably fathom.)

What you're espousing seems to be standard Keynesian economics but you should know there are other schools of thought :)

Re: WeWork and Counterfeit Capitalism

#312

Post by RodgerTheGreat »

dredmorbius wrote: post #273
RodgerTheGreat wrote: post #132

Earlier quoted context omitted.

On the contrary, given the author's myopic and rosy perspective on surveillance capitalism as espoused in the article "Privacy Fundamentalism"[1] (and apparently amended in a follow-up which is paywalled), I find it hard to take anything on that blog seriously. [1] https://stratechery.com/2019/privacy-fundamentalism/

Even a viewpoint or philosophy you disagree with strongly can be useful as insight into "the other side's" thinking. Stratechery is hit or miss in my view. It epitomises the definition: "An expert is a person who avoids the small errors while sweeping on to the grand fallacy." I'd recommend giving it the occasional gander.

A valid point.

Re: WeWork and Counterfeit Capitalism

#313

Post by dredmorbius »

disjhshava wrote: post #193
RodgerTheGreat wrote: post #132

Earlier quoted context omitted.

On the contrary, given the author's myopic and rosy perspective on surveillance capitalism as espoused in the article "Privacy Fundamentalism"[1] (and apparently amended in a follow-up which is paywalled), I find it hard to take anything on that blog seriously. [1] https://stratechery.com/2019/privacy-fundamentalism/

You're bringing up an unrelated article to make an ad-hominem attack on the author. Seems like a fundamentalist response to a heretic.

Reputation and past records are not ad homs. They're reputation and past records.

That's a valid heuristic for assessment in cases where quality is hard or expensive to measure or value. Information acquisition is not itself free.

Re: WeWork and Counterfeit Capitalism

#314

Post by phlakaton »

unreal37 wrote: post #246
crumpets wrote: post #225

Earlier quoted context omitted.

>No, because at this point the barrier to entry is substantial. Not really. Unless the product has a powerful network effect, people can easily enter. If that weren't the case, starbucks would have run every coffee shop out of business by now.

OK, well then go open book store. Online or brick and mortar. There's no money in it, because Amazon has such as HUGE advantage in mindshare, pricing and delivery that you can't compete. Does a book store have a network effect? No. But it's hard to sell something for more than the dominant competitor without a compelling reason.

My mother-in-law did just that and is doing fine, thank you very much. May not be the world-beating "money in it" as you define it, but for the small business she's running it's viable.

Re: WeWork and Counterfeit Capitalism

#315

Post by dmoy »

perl4ever wrote: post #293
dmoy wrote: post #176

Earlier quoted context omitted.

Treasuries and money markets basically return zero after inflation. So, at least more than zero.

I never understood how anything can return more than zero after inflation "in the long run". If it did, then over time people with that asset would have all the wealth. But if they did, then they would buy things with it, raising prices of everything else.

You may want to peruse some of the econ stuff from mit ocw:

https://ocw.mit.edu/courses/economics/

Things don't return a lot over zero in the long run. Maybe 5-7% in the absolute best case for long term returns. Enough that even a million dollars generates maybe less than $40k of reliable income.

Most people need to expend so much of their income just to live that this mostly doesn't affect the average person.

But yes, the rich get richer. They don't always buy things proportionally more, some of it just sits there.

Re: WeWork and Counterfeit Capitalism

#316

Post by clairity »

anongraddebt wrote: post #245
clairity wrote: post #110

Earlier quoted context omitted.

> “This is a big topic in business school - never compete on price for that exact reason.” no. business school teaches you that you can compete on price (cost strategy), or on value (differentiation strategy). if you compete on price, you’re betting that you are, or will be, the most efficient provider in the market (e.g., walmart and its supply chain dominance). it’s completely viable/acceptable to compete on price.…

Technically it's not competing on price. It's competing on cost, a result of which is often, but not necessarily, a lower price point. Business strategy courses explicitly teach you that simply competing on price (that is, simply lowering prices in hopes that you'll beat the competition), will blow up in your face. A classic example (presented to my MBA class) was the two adjacent pizza parlors in NYC competing on pr…

well, it's not so black and white as only competing on cost or price. it's true that your competitive advantage has to come from lower costs (via operations, marketing, finance, or whatnot), so you do compete with other market participants on cost.

but you also compete on price in the marketplace--not so much as to ignore your costs, as you note, since negative margins generally don't lead to viable businesses, but price competition nonetheless.

your example is the simplest game-theoretic version of price competition, which is more of a teaching model than a practical application.

(dynamic) price discrimination and other marketing tactics are typically employed to ensure positive margins even as you compete on price in the marketplace (e.g., airline seats).

Re: WeWork and Counterfeit Capitalism

#317

Post by BenoitEssiambre »

lwb wrote: post #311
BenoitEssiambre wrote: post #239

Earlier quoted context omitted.

>This is an especially desirable quality in currencies This is an especially UNdesirable quality in currencies. A deflationary currency cannot become mainstream without causing a huge amount of instability. Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity. When this trend becomes widespread enough, it causes global production capaci…

I'd love to hear some research on these claims. Especially this: > Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity. I am deeply skeptical of this claim. I would still rather invest in a real business than get a 0% return on my stash. If a free market for currency existed, no way in hell would I choose to store my wealth in a deplet…

Yes but what about the not so rare times explained in my original comment when returns on tangible private marginal assets become negative (on a risk adjusted, liquidity adjusted basis)? During the financial crisis of 2008, the tailor rule put the natural rate (a rate correlated with private marginal safe asset returns) at as low as -4%. In those conditions, having a currency that returns 0% risk free gets you way above market returns and blocks a lot of private market assets from existing. It's indirectly, a huge subsidy to people shutting down projects, laying off people and hoarding government paper instead. It's basically the government shielding savings from the private markets and causing untold economic damage through economic idleness and unemployment. It's a subsidy on job destruction.

At least a private currency like bitcoin or gold will tend to become volatile in these conditions (which increases its risk and reduces its "risk adjusted" return). But if ever crypto coins were to become popular enough for governments to deem it worth it to use their powers to reduce their volatility, it could certainly put the economy into a gridlock like it did when they tried to artificially stabilize gold.

The fact that crypto coins in a free market tend towards increasing volatility makes them not very good as a medium of account to negotiate contracts and conduct business. It makes them not useful as a currency.

Re: WeWork and Counterfeit Capitalism

#318

Post by AdrianB1 »

janee wrote: post #78
legitster wrote: post #35

> WeWork then used this cash to underprice competitors in the co-working space market, hoping to be able to profit later once it had a strong market position in real estate subletting or ancillary businesses. > This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market. This is wrong, wrong, wrong. The difference is Amazon saw what the marginal costs coul…

> with the idea of profiting later on via the surviving monopoly I don't understand...if you undercut your competitors so you're the sole survivor, I don't see how profiting is a obvious end result. When you return prices to market value wouldn't competitors just appear again. Is predatory pricing really such a bad thing, I'd assume the market would just corrects itself later?

I work in a sector where to build a single factory it takes many billions of dollars and half a decade; if you wipe the competition, for the next 5 years you are free to ask for any price you want, by the time competition appears you are loaded with cash to kill them again.

Re: WeWork and Counterfeit Capitalism

#319

Post by sumedh »

rchaud wrote: post #200
dehrmann wrote: post #186

I got halfway through, but I'm stopping. There's some valid points in here, but I don't find the author credible. > If you know Dimon’s actual reputation, him getting suckered isn’t surprising. Jamaie "doesn't give a shit about Bitcoin" Dimon. So he won't just hop on any bandwagon. > [Masayoshi Son is] an owner of Sprint, and he’s currently trying to force an illegal merger of Sprint with T-Mobile Not sure how it's "…

What the rich and powerful say in public is often different from what they do in private. People at Dimon's level are absolutely invested in crypto, they're just quiet about it so they don't spook the markets. Warren Buffet often spouts folksy sounding wisdom like "I don't like businesses I don't understand", and then talks about Heinz Ketchup or General Mills. But at the end of the day, he extended Goldman Sachs a $…

> he extended Goldman Sachs a $5bn lifeline

Not sure what your point is, he extended Goldman a lifeline because he understood what he was getting into and he was getting a good deal.

Are you implying that he does not know what Goldman does?

Re: WeWork and Counterfeit Capitalism

#320

Post by anonu »

This article is on fire. I got a particularly good laugh out of this bit:

>> Dimon is a mediocrity who essentially got lucky his bank was too slow to get in on the subprime scam in 2006; he then used his bank’s incompetence at getting into the bubble as justification for how prudent he was.

I have never heard this theory floated. But to say JPM failed because it didn't fail like all the other banks is the most contorted sort of logic you can find anywhere...

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