Comment by stretchwithme | Hacker News Reader

Comment by stretchwithme | Hacker News Reader

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I don't think it's capitalism. The resource certainly is not property owned and managed for profit. It's a community owned resource whose users aren't paying for what they use.

Even if it were owned by a group of 100 people, if all had the right to use as much as they want and it will eventually be used up, the incentives for such a resource make it a tragedy of the commons.

It would be better if all the existing users or all the residents of the region became shareholders in a corporation that charged everybody for what they use. Owners have an incentive to not let their resource be all used up at low prices. No, they want to conserve a resource and charge higher prices if they can.

The everybody-owns-it model means people only pay for the cost of pumping the water, without any regard for what water will cost once the resource is gone. A resource with sensible ownership, on the other hand, would incentivize conservation, because customers are more likely to pay a price that reflects the future value of the water, not just the cost to pump it.

So, no, I don't think the current situation is capitalism. It is a situation that property rights has not been properly applied to yet.

That works fine if the owners are invested in preserving the resource.

This doesn't square well with publicly traded companies who have to ensure their operation is maximally profitable in the short term. They'd pump the place dry, then find a way to turn sand into money.

If you own a resource, you have incentive to preserve it. Or at least you have an incentive to not sell all it off now at a cheap price. If it's the only water where you live, this is especially true.

If you are a shareholder in a corporation set up to own the resource and you want to maximize your profit, you might sell your shares rather than push the corporation to dump all the water for cash now.

A recent study found that real restate agents take longer to sell their own houses than they take to sell other people's. Why don't they sell quick so they can have more cash quick? Because they know it pays to wait.

Every resource has a current value and future value. If a resource will fall in value over time, you'd want to sell it all now. If water is scarce in an area, this is very unlikely to be true, especially if its population is increasing.

Still, I can't see that working in a world where corporations have diverse sources of income, where investors are not necessarily invested in a given resource (or a given people/economic class), and where short term competitiveness is crucial for corporate survival.

A lot of people don't understand the value of having a stream of income versus a wad of money in their hands now.

That's why J. G. Wentworth is in business, to profit from people who understand it.

But in business and most every discussion I can recall about business models, having a reliable stream of income is valued. People buy real estate and rent it out to establish such a stream of income.

And, if you are able to avoid earning all your cash now and instead earn o=it over time, you reduce and defer your taxes too.

I think you mean Tragedy of the Commons situation?

I fail to see the distinction in meaning. I phrase it the way Wikipedia does. It can happen on the Jersey Shore, I suppose.

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

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