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Comment by quacked | Hacker News Reader

I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes really need to happen, but since everyone is chasing a buck as a matter of survival, a bunch of stupid stuff occurs.

I don't have any brilliant solutions to bring about the Roddenbury-style economy, but it is infuriating to look at a scale problem you describe and trace the major causes back to the money. Are the cars going to vanish if the debts aren't paid for a year? Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape! And here we are, watching people sell off rental car fleets because assets will be seized unless the money changes hands in the right way.

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> are the cars going to vanish if the debts aren't paid for a year?

No, but the retirees who depend on the income from bonds packaged from those debts will be screwed. Also, cars might not vanish but they do depreciate regardless of whether money exists. That's still a cost incurred by the rental company even though no money changes hands when it happens.

Ultimately the car companies were overleveraged and were forced to exit before their "positions" in cars became profitable. There's nothing short of the state propping you up that can solve that.

Even the Soviet Union had money and had to deal with economical realities. One of the reasons they collapsed was because of increasing grain production deficits causing an imbalance of trade. You can't legislate your way out of the market because the market's invisible hand will always show eventually, even if you can stave it off via state control of everything.

Yeah, but the retirees depending on the income is just a second-order effect that's also screwed up due to money. Retirees don't depend on money changing hands, they depend on crops getting grown, shelter being refurbished (or built), and defense under the law. The only reason people agree to do all of those actions for the retirees is that money changes hands.

I'm not necessarily saying that I think money is a bug. It might be a feature. But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior. If everyone chose to keep doing the same physical actions they're doing today except we stopped swapping money, nothing observable in reality would change; people would die at the same rate, food would be stored at the same rate, etc.

"The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it. The grocer could theoretically choose to continue to man the store 12 hours per day, and then the doctor could theoretically choose to treat the grocer when he gets sick, and the truck driver could theoretically choose to ship the medication from the plant to the hospital, and the floor worker could theoretically choose to...

> But the "market's invisible hand" relies on people being more motivated by their wealth stash than their behavior.

Nobody has found a better way, though they often try.

> "The economy" is in reality a giant standoff where every member of the standoff would just stop maintaining society unless they get paid for it.

That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it. It's much better to swim with that current than against it.

> Nobody has found a better way, though they often try.

This I agree with.

> That's an immutable fact of human nature. Even cradle to grave propaganda doesn't change it.

This I disagree with. Past societies saw far more social cohesion at points than our modern one. Especially on certain smaller scales, people were more willing to assist one another in the act of remaining alive without being compensated financially.

For instance- many people now think it would be unreasonable to help a friend move without some form of reward (money, food, etc.) This sort of value exchange for reward would be considered disrespectful in many past cultures and even some present cultures. Unwillingness to work without immediate reward not an immutable fact of human nature.

Helping out your friends and locals now and then is also normal human behavior. But it does not extend to running a society that way, and never has. It is rooted in building a network of mutual obligation, a common trait in small communities. It's not really considered a "reward" or payment.

> Unwillingness to work without immediate reward not an immutable fact of human nature.

Yeah, it is, as no society has managed to make that work as an organizing principle. Even the Israeli kibbutzen have failed. Altruism rarely extends beyond family and close friends, and even then, it isn't reliable.

Altruism basically means you are working for favors instead of money. However, people are much more likely to default on favors owed to you because it is harder to compare the value of one favor to another, and this creates opportunity to return a favor that is worth less than the one you were given.

>” However, people are much more likely to default on favors owed to you”

I’ve never thought about it this way before, and it’s a pretty profound quote.

The weird thing about reciprocity (exchanging favors) is the value of the favor is rarely considered. For example, the exchange of pizza for help in moving.

Of course, if you're too cheap over too long a period, people may stop doing favors for you.

Better ways have been found a long time ago in ancient egypt:

https://en.wikipedia.org/wiki/Demurrage_%28currency%29

The great thing about using ancient Egypt to support social theories is that there's no evidence there.

For example, we still don't know if the workers who build the pyramids were slaves or freemen. Kind of a big deal for that society.

On the one hand, yes of course the economy is all about specialization and then exchanging the fruits of specialized production between people. This last can happen via money, or barter, or a dictator (benevolent or not) confiscating everything and redistributing it, or some mix of the above, and maybe other methods.

One of the hard problems here is what to specialize in and to what extent. This is a hard problem to solve even in a static economy, and even harder if circumstances keep changing...

The "standoff" description seems to assume a static economy. If circumstances change, maybe we as a society need a grocer for only 4 hours a day but could use an extra half-shift truck driver. But how to discover that?

I have absolutely no idea how or even if that could be discovered, which is why my original comment was more about expressing frustration than offering a solution.

I do know that several things going on currently will make it more impossible to discover: increased financialization of commodities, outsourcing, destruction of culture via removal of differentiating markers, etc. If any society is going to discover the half-shift truck driver economy, they're going to be one that is almost entirely self-sustaining and committed to perpetuation of itself, not one that is leveraged up to the eyeballs, suffers from a total lack of manufacturing expertise within its component citizens, and relies on cheap foreign labor to make everything.

It seems like you're focusing on a loss of money as a "stick" (punishment) and saying we could ignore that and just keep operating as usual. But it's also the "carrot" (motivation) signalling the demand and value placed on the activity by others.

In the end, aren't all the money and ledgers are just a way to simplify the ridiculously complex trades required to make modern society work? We don't want to have to exchange sacks of rice and live chickens when we see the doctor and he doesn't want to have to get those chickens converted into barley or whatever it is the medical supply company owner wants this week.

If you remove this signal, you don't just remove a threat of stagnation. You also remove efficiency signals to curtail under-valued work. Just as easily, the participants could do other absurd things instead. The grocer could keep performing shelf-stocking actions while the shelves and back storage area are empty. The doctor could decide they prefer to drive around in an empty delivery truck, while the truck driver decides to sit in the clinic and talk to patients about the weather. Etc.

>You also remove efficiency signals to curtail under-valued work.

I'd argue that the typical diffuse ownership structures you find in most consumer-facing businesses today has the same effect, if not as absolute. The people who see the economic signals and they people with on-the-ground knowledge are split up: a sort of business logic hemispherectomy.

Money itself isn't the bug. It's the ability to abuse money to disconnect yourself from the real economy. How easy it is to abuse money depends on how it is designed. When people save money perishable goods like food are sitting on the shelves waiting to be bought, then money will outstay its welcome. The food is gone but the money is still there.

“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. So we must make money worse as a commodity if we wish to make it better as a medium of exchange." — Silvio Gesell, “The Natural Economic Order”

> make money worse as a commodity if we wish to make it better as a medium of exchange

This describes inflation, in so many words. That's why central banks targeting a low level inflation is an excellent idea - it makes people spend money, rather than save. Spending can include investment to stave off inflation's effects - which, in turn, makes for increases in productivity over all.

Inflation incentivizes debt, debt leads to fragility, and then we're surprised when things break.

This is sort of a reply to several of your comments in this thread about how we could still do all the things we do if money didn't exist. Your point reminds me of something a co-worker once said; he pointed out that "profit" is another name for "inefficiency." That is, in another context or agnostic of value-judgements, the difference between input and output which forms "profit" would be looked at as an inefficiency or defect in any other system.

>notice how weakened this entire process is as a result of revolving around money

>not necessarily saying that I think money is a bug. It might be a feature.

Yup, looks to me like the problem is not the existence of money, rather its nonexistence.

Financial problems don't actually occur when there is no lack of money.

>No, but the retirees who depend on the income from bonds packaged from those debts will be screwed.

I agree that retirees are wholly dependent on others to work for them and therefore I recognize their right to save for retirement. However, if your investment/savings turn out to be worthless then that is on you. It's better to signal these failures as soon as possible so that people are aware of the risk.

Think about it this way. You acquire "healthcare coupons" during your working age and then all the businesses accepting "healthcare coupons" have shut down. The coupons are worthless. Yet when you replace "healthcare coupons" with money, people insist that even if there aren't enough workers to work in healthcare, that money must maintain its value and they should even be owed more than they saved even though there is nobody to provide those services. This is why inflation is a necessary evil. It tells you what's really going on in the world. People will present inflation as theft but the truth is that your money is losing its value because it should be losing its value.

Just because e.g. gold is free of inflation doesn't mean that there will be healthcare services waiting at the start of your retirement to accept that gold. It's just pure speculation.

Money is not really the root cause though, any more than tcp/ip is meaningful interpersonal communication. It's just a signal.

They sold their fleets because other people (the buyers) wanted them more, in the short term. Now they want to buy because they want a fleet again. It's a time horizon problem, or perhaps an uncertainty problem - how were they supposed to know how long the pandemic would last? Or perhaps a premature optimization problem because the business was predicated on a pandemic not happening. But I don't see it as a money problem, any more than a tcp/ip problem.

I don't know, if you look at "money" as the wider financial system, then maybe it is a root cause.

Another commentator downthread mentions the fragility vs efficiency tradeoff, and that's certainly something encouraged by financializing the economy. By making it possible to easily switch between stocks and flows (capital/income in this case pay in full / pay debt) and encouraging whatever makes firms look good in the short term, the financial system helps cause this kind of thing.

We get towers built higher but not necessarily safer.

Sure, I agree having a financial system predicated on growth causes a whole lotta problems. I guess I define "money" more narrowly as we could use it as a component in a very different system.

The financial system is very efficient, and allows tuning and scaling to an extent never before possible. That allows folks to squeeze pennies or build leveraged business models that previously would have not been possible.

Which is great, when things fit the model (the stocks or bonds involved pay retirees longer, make people wealthier, etc), but also allow people to build much higher castles of cards than they previously could have before something toppled them over.

Panics, crashes, defaulting on debt, etc. have been around as long (and probably longer) than we have historical records, but wow does the modern system take the cake for scale!

It's a whole system of problems but it's not a hugely complicated system, at least not compared to all the bandaids that are necessary if you do not address the problems at their root.

https://youtu.be/ZFRVfXeIaek

https://www.youtube.com/watch?v=xkQn56Dtslk

https://www.youtube.com/watch?v=j5l_Oeg6kMo

https://youtu.be/mhr4JGbozTA

> It's just a signal.

I think quacked's point was that sometimes it's not a very good signaling system. Neither is TCP/IP in some cases, and sometimes neither are cytokines (to use a biology example). These are all evolved systems, to some degree; maybe they're the best we can hope for, but we should still keep an eye out for "version 2.0".

It's not even that I think it's realistic to expect version 2.0, although I would really like that. It's more that it's impossible to get many people to even admit that the current system is flawed in a way that is technically controllable.

It is insane to me that we all have to shrug and admit that "well, we can't fix X problem because the money's not there" over and over again, when we have all of the labor hours and intellectual capital to do whatever we want as a collective species organism. With the right coordination, we could make every city look like a Miyazaki lake town. Or Disneyland. Or an exact copy of ancient Rome. We could scan every person alive every year and see whether or not they've got cancer. We could clean every river and every lake. We could send everyone a Nintendo Switch. That whole "bullshit jobs" memo gets circulated on HN all the time; how much of us could do actually cool shit if we didn't have to worry about paying for other people to help maintain society for us? I don't know, but it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz, a car rental company, can rent out cars. (And I'm not blaming them for it- they're deadlocked in the same standoff everyone else is.)

> it sure is frustrating watching Hertz sell off their fleet because their board is more worried about its share price than it is about whether or not Hertz

More like worried about bankruptcy and going out of business.

(Gp here) I for one certainly admit flaws in the system! ...maybe we're splitting hairs over whether that system is called money or something bigger.

One of my research interests is trying to make a contribution to what you call version 2.0, through better measures of subjective wellbeing.

Isn't is more of an existential issue?

If you're a rental company, looking at ~$0 income for the next year, and the need to pay for, maintain, and garage their car fleets, then you're top priority is to shore up the balance sheet and keep your corp afloat. What the car buyer's market will be in 18mo is a more distant concern.

To a point though.

Selling your only operating assets just because they're not operating at the moment seems pretty short sighted.

Creditors may have forced their hand a degree, but to me it feels like a factory selling their machinery because demand is down this year.

If you're going to sell all your cars as a rental company, might as well liquidate your whole company and close up shop.

The whole issue is the general prudence of taking on debt. It's a question of efficiency. Too little and you miss out on opportunities to produce and grow, too much and you're super-fragile.

Over-indebted companies is a very Anglo (US/UK) and Japanese thing. There are plenty of companies in continental Europe (Germany, Italy, France) who operate with much less debt than their US counterparts. A good example is Aldi. They have no debt on their balance sheet anywhere, not even for inventory. By the standards of American business culture, that is 100% absurd.

I'm really not sure who's right. It's optimization vs survival.

There's also a question of just how fragile they truly were.

Sure the pandemic messed them up, but that was really a once in a generation at most event. If thats what it took to sink your businessz I wouldn't call it very fragile.

I also think they and their creditors made poor decisions.

Selling your only operating assets in order to balance the books is a suicidal move no matter the industry. It's selling off your only way of making money. It's like a software engineer selling their workstation when times are tough.

dying later is always better than dying early. And may be there's some miracle that could help that you wouldn't get if you died early.

Not always the case.

Dying now and cashing out is better than burning money for a few years and cashing out for less then.

They paid down their debt on the cars, but they have lots of other financial obligations and operating costs that will be ongoing if they continue to operate, and they now have a hugely diminished capacity to make revenue.

The problem with climate change is that 'once in a generation' events are now happening more like once a decade - I would not expect this to be the last global pandemic causing major whiplash in demand and supply in our lifetimes.

I'm honestly curious to find out whether most of us will even still be driving cars powered by fossil fuels by the time the next pandemic hits - as tech goes, it's only been around for a few generations. People will find other transit solutions if cars themselves get phased out. Or maybe we'll still have 'cars' with something dramatically different going on under the hood that car owners of today would barely recognize.

> "A good example is Aldi. They have no debt on their balance sheet anywhere, not even for inventory. By the standards of American business culture, that is 100% absurd."

Firstly, Aldi is a private company (actually two entirely separate private companies, ALDI Nord and ALDI Süd, who share the brand name). So AFAIK they do not publish annual financial reports like a public company would be required to do. So how do you know there's no debt on their balance sheet?

Companies House filings for ALDI Süd's UK subsidiary, ALDI Stores Limited, do show debts and interest expenses so it's certainly not correct to say they "have no debt on their balance sheet anywhere"[1]

[1] https://craft.co/aldi-uk/metrics

> I can't help but notice how weakened this entire process is as a result of revolving around money. In terms of manpower and expertise, none of these changes really need to happen, but since everyone is chasing a buck as a matter of survival, a bunch of stupid stuff occurs.

Resiliency against interruptions costs a lot of money: warehouses to store parts, logistics to rotate these parts, paying suppliers for these parts earlier than the parts are needed, waiting until you have enough cash to buy stuff outright...

The core point is: governments, businesses and individuals have historically always had these costs - but at least the Western world has been enjoying a couple decades without major interruptions like war on the home territory, oil crises or the looming threat of the Cold War getting hot (and causing interruptions as a result), which means everyone got incredibly complacent. After all, when there are no interruptions to expect in the near term, why spend cash in the near term to guard against them?

And so, when Corona hit, everyone got hit.

> Are the physical Hertz buildings going to crumble if the banks aren't satisfied? No, currency changing hands has nothing do with reality passively changing shape!

The existing buildings may not go crumbling, but planned/under-construction buildings are getting put on hold when the banks' income stream vanishes and as a result of that, in turn, the workers can't work, ... <insert recursive ripple effects here>.

Right, I certainly don't disagree with your analysis, but your recursive ripple effects all aren't caused by physical laws, they're caused by people refusing to work because they can't guarantee that other people in turn will work for them, which is all that money is- a representation of a guarantee in exchanged goods or services.

In a theoretical closed-loop 3-person model, the farmer grows, the doctor treats, and the builder builds. The farmer can feed the other two, the doctor can treat the other two, and the builder can build for the other two, and in a micro-community they don't really need to pay each other. As we increase the number of people participating, the likelihood that each person would choose to work without being paid drops. That's why we see such degradation in economically affected areas; everyone could just work all day cleaning up, patching up buildings, etc. but they don't, because no one's paying them to do so.

I am not naive enough to believe that any amount of propaganda or state control could fix the money problem, but I am frustrated to be willing to participate in such a theoretical economy with no outlet for it besides helping people in whatever free time I have.

The problem you are talking about is rigidity. Contracts are just promises and predictions. Reality is always different. This is why we let people go bankrupt and write off their debt, to add the necessary amount of flexibility to account for the real world being unpredictable.

Following pieces of paper down to their very letter will make people abandon perfectly fine businesses. A lot of profitable businesses would have to shut down if they had to pay extortionate interest rates.

Positive interest rates simply reward short term thinking. Let's imagine a hypothetical scenario where interest rates are 5% (don't confuse this with the federal funds rate) across the board but it's only the rental car companies that have been hit by covid. A bean counter would see that shutting down the rental car company and using the capital for something else would be a better idea than to keep the rental car company. Next year everyone wants rental cars and the returns increase above 5%.

The point is that we make decisions in the present yet most of the money is going to be earned in the future. What we need is patience and patience means low interest rates, as close to zero as possible and maybe negative if we want 0% inflation.

I don't know man.... it actually seem rather smart to me.... Like the smartness of an organism trying to cope as well as it can with disruptions in the environment. What would you like to do it better without causing huge waste of resources? I am not sure there is much I can think of....

It's not money, it's efficiency. Too much efficiency results in a lack of resiliency.

Isn't the reason the shortages persits due to the chip shortage caused by a few non-financial disruptions to the highly concentrated chip makers, like a fire? How would barter or communism or whatever isn't money fix that? By being more wasteful all of the time?

Keep in mind this isn't really a serious problem. Cars still exist, and can even still be rented, they just smell a bit. That's it. Smelly cars. First world problems!

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