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The venture capitalist's dilemma

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Re: The venture capitalist's dilemma

#41

Post by ambientenv »

surgical_fire wrote: post #26
cornholio wrote: post #15

Capital is just another name for power and powerful people fight to maintain and accumulate more power - welcome to the world, summer child. It's woefully naive to expect individuals to give that power up for social-positive goals, it practically never happened throughout human history. We achieve social-positive goals by behaving as a society and limiting what the powerful can do with their power - democracy, market…

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

Exactly. Democracies, it turns out, are actually very difficult to fully implement for a plethora of reasons. We, for the most part in the "west" live in a technocracy to which governing bodies are subservient and acquiescent. My personal desire is that as our current world continues to unravel, enough people wake up to this fact and say, "no more". That would be a grand step towards a better democracy.

Re: The venture capitalist's dilemma

#42

Post by fweimer »

ncallaway wrote: post #9
roenxi wrote: post #6

I broadly like the things Molly is bringing attention to, but there are some problems here: 1) This is presenting a bank run like it is a bad outcome for the people involved. It isn't obvious why that would be so; SVB is now one of the safest banks to park money in, and the dust hasn't settled but it seems plausible to me that the bank equity holders and directors are part of some incestuous Silicon Valley relationsh…

> If the game is set up so that everyone rich gets a bail out, you'd have to be an idiot not to take the bailout. But that's explicitly *not* how the game was set up. The game was set up so everyone gets insured up to a limit, and if you're rich enough to be beyond that limit, then you should be paying market rate for insurance on those funds (which is, like, a thing they could have done). They chose to forego insura…

I don't understand why there is so much focus on the insurance limit. I'm not sure if such limits are reasonable in the first place because they create somewhat problematic incentives: Assume a bank has plenty of assets, but is temporarily out of liquidity. Why wouldn't an insurer like FDIC force the bank to trigger the insurance policy, cap all deposits at the limit, and realize huge profits after taking over the bank and bridging the liquidity gap?

Re: The venture capitalist's dilemma

#43

Post by di4na »

Nevermark wrote: post #19

By the time it gets out that a bank is too illiquid to cover its deposits, the situation is already too unstable for any kind of careful coordination of thousands of parties with real concerns about their valuable resources. Imagine the results of an email sent to everyone in Silicon Valley: — “So the local bank screwed up and can’t cover all its deposits. But let’s get together to see if we can all agree to wait thi…

You do realise that no bank ever have had enough liquidity to cover its deposits? That is what a bank is for...

Re: The venture capitalist's dilemma

#45

Post by JoeJonathan »

foverzar wrote: post #29
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

> the rich and powerful quite often are gifted loopholes for the profits to not be taxable. Those loopholes aren't free and their nature is typically temporary. One example would be tax cuts in exchange for committing to provide N jobs.

They’re not free, but they’re cheaper than taxes.

Re: The venture capitalist's dilemma

#46

Post by tobias3 »

surgical_fire wrote: post #26
cornholio wrote: post #15

Capital is just another name for power and powerful people fight to maintain and accumulate more power - welcome to the world, summer child. It's woefully naive to expect individuals to give that power up for social-positive goals, it practically never happened throughout human history. We achieve social-positive goals by behaving as a society and limiting what the powerful can do with their power - democracy, market…

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.”

Applies to the democracy + capitalism combination, as well.

We can try to improve upon it, but should be carefull to not kill the goose that lays the golden eggs.

Re: The venture capitalist's dilemma

#47

Post by JumpCrisscross »

surgical_fire wrote: post #26
cornholio wrote: post #15

Capital is just another name for power and powerful people fight to maintain and accumulate more power - welcome to the world, summer child. It's woefully naive to expect individuals to give that power up for social-positive goals, it practically never happened throughout human history. We achieve social-positive goals by behaving as a society and limiting what the powerful can do with their power - democracy, market…

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

> naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable

This is not how I read OP. You’re reading a Panglossian “we’re in the best of all worlds.” I read we’ve found a good solution, but it’s a work in progress.

Democracy alone has evolved through the centuries, ranging from electoral fetishism to enlightened autocracy. Progressive taxation, meanwhile, is a mostly modern invention. Yes, it’s easier to take a cheap shot at how the rich are powerful, but that’s OP’s other point, the rich are always powerful. How they are incentivised to use that power, and how they accumulate it, is a much more productive (and intellectually challenging) discussion than pointing out we aren’t in a utopia. (We know that. Everyone knows that.)

Re: The venture capitalist's dilemma

#48

Post by Eddy_Viscosity2 »

tobias3 wrote: post #46
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.” Applies to the democracy + capitalism combination, as well. We can try to improve upon it, but should be carefull to not kill th…

"Except for all the others, democracy is the worst form of government"

Re: The venture capitalist's dilemma

#49

Post by JoeJonathan »

cornholio wrote: post #33
matthewdgreen wrote: post #20

Earlier quoted context omitted.

We didn’t just “come up with that society”: many aspects of it were deliberately constructed because previous iterations failed badly. Deposit insurance, which is the subject of this post, was a depression-era phenomenon that came into existence because many banks failed catastrophically. Many other aspects of our modern society, from old-age pensions to welfare to our global defense alliances, were also born of simi…

Of course it didn't all spontaneously emerge, it was a result of a long political struggle of the masses against those in power; I was condensing for brevity and specifically mention existing room for improvement. I disagree though with your the read of the article. In the author's own words: > I would probably argue that venture capitalists are not good for society regardless of what they’re investing in. ... I am f…

She’s not proposing legislation. She’s saying these guys are hypocrites who privatize the wins and socialize the losses.

Re: The venture capitalist's dilemma

#50

Post by [deleted] »

ambientenv wrote: post #41
surgical_fire wrote: post #26

Earlier quoted context omitted.

> And it just so happens that the current system we came up with - a mixed market with a strong, democratically elected public authority, yet freedom for individuals to pursue taxable profits This is naive to the point of absurdity, when the rich and powerful quite often are gifted loopholes for the profits to not be taxable, with a wink and a nudge from the "democratically elected public authority". I would certainl…

Exactly. Democracies, it turns out, are actually very difficult to fully implement for a plethora of reasons. We, for the most part in the "west" live in a technocracy to which governing bodies are subservient and acquiescent. My personal desire is that as our current world continues to unravel, enough people wake up to this fact and say, "no more". That would be a grand step towards a better democracy.

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