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Comment by slipperydippery | Hacker News Reader

I’ve seen nobody talking about this, so it’s probably wrong, but I can’t shake the feeling that a lot of the seemingly-nuts things we’ve seen the last 20ish years, from house prices going to the moon to LOLWTF P/E ratios sustained for years on end, and even the magnitude of VC activity, are an outcome of having way too large a proportion of our money in capital, desperately seeking investments to buy, with an underlying economy (ignore stock prices and net-drag economic activity like over-paying for healthcare, I mean actual productivity) that hasn’t grown anywhere near fast enough to give that money anything useful to do.

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Every independent economist has been saying this for the last 10 years- see for example "Capital in the Twenty-First Century", a book written by French economist Thomas Piketty.

Time flies, and he’s been on my to-read list for… a while. Need to finally get around to it I guess.

He recently released a book that's kind of an abridged version. Capital in the 21st Century is 800 pages, so I don't blame you!

What's it called?

It's very good, to be fair. Even if you disagree with his politics, the data he collected is very illuminating.

What is your definition of "independent economist"?

Claiming that even a majority or plurality of economists overall agree with Piketty, who advocates for some wildly unpopular economic policies and is a literal socialist, is absurd, so your group of "independent economists" must be pretty homogeneous and small.

Independant economist: one tenured by an independent university as opposed to being employed by a lobby group or think tank to promote a specific agenda.

When even Adam Smith supports the regulation of capital, this can be considered a fairly mainstream position.

Summarizing Piketty's recommendations as "the regulation of capital" is absurd.

I can point to dozens upon dozens of independent economists (by your definition) that disagree with the use of confiscatory income tax rates and wealth taxes, so I don't know what your argument is here.

I've had the exact same thoughts, so if you're wrong you aren't alone. I personally believe this is due to the imbalance of wealth. Where money isn't circulating properly and we end up with these massive funds that move from one investment type to another destroying everything in their wake

Haven't we been talking about that for a long time? Even the whole "go to college to make more money" was premised on the idea of people leveraging college research facilities to create new opportunities for money in recognition of the walls closing in. The game of telephone saw that turn into "go to college to get a job" with few compelling creations to come from it and, thus, stagnant incomes, but you can only lead the horse to water...

I know we are at ground zero here on HN, and ironically HN is pretty good evidence of this, but

The pros of software are so OP that it hard to justify investing in anything else. Software has incredibly low cap-ex and incredibly high margins. Five humans with five laptops can create a lawn maintenance app worth tens of millions.

To get that same value from, say, building lawn mowers, you need a factory...annnd already the value prop is "nope".

Take note that there is no hardware version of Hackernews. There is no hardware/manufacturing VC scene. Hell even the hardware that is produced today is just a vessel to sell a $19.99/mo software subscription to use the product. Look at what Tesla did, they are getting a reality check on their cars, but Ah!, Tesla is now a software company developing a software package that turns hardware (their cars) into reoccurring profit machines!

Software has eaten the first world, and this is what is looks like. A hyper inflated tech scene where all innovation is happening, and a totally anemic everything-else scene (except finance, that's huge too).

>Five humans with five laptops can create a lawn maintenance app worth tens of millions.

And

>totally anemic everything-else scene

A lot of the 'growth' we've seen seems to be consolidation and bilking of the consumer by rents. If we look at other countries with actual competition in manufacturing like China we see tons of brands with quality everywhere from use once and throw away to actually really good products. The profit chasing will eventually kill us as we have nothing that will produce actual value.

(Also I love how you're getting voted down for pointing out the obvious).

My bet is that there is a hardware Hacker News, but it's in Mandarin.

Note that while five humans with five laptops may create an app about lawn maintenance, the app won't actually maintain your lawn. We'd expect apps to have less value than they do.

I agree with this to some extent, but I honestly believe the capital markets would look VASTLY different had the Fed not rescued them with unprecedented money printing in 2002-3, 2008-15 and 2020-1. Yes, software is important and changing the economy, but it doesn't rewrite the basic rules of finance and valuation. The Fed did that.

The hardware HN is also HN. There's just nowhere near as much stuff, and as you say the capex barrier to entry makes that a much smaller business.

It seems like this would be a pretty good argument for increasing taxes on the high end and having large public works projects to drive forward particular useful goals on a national level (ignoring whether or not a particular governmental organization is currently capable of this, more just focusing on that as a backstop that allows prioritization of economic goals).

I think you're on the right track there. Stock markets used to be a place for developers of Things (initially, railways) to acquire money for investments too large and/or too risky for a single bank, for companies to acquire money for growth, and for farmers / their customers to get reasonable pricing for their goods.

The problem is, once the gold standard fell and the rise of fiat money began, the financial markets became self-serving, with hordes of middlemen extracting the tiniest amounts of profits along the path, speculative trading driving up food prices, and people's care in old age no longer backed by the government in the form of a "societal contract" but by, essentially, betting on the economy ever growing and growing.

The gamble went on decent for a few decades, partially powered by ruthless exploitation of natural resources, but in the end the fundamental and long ignored issue of infinite growth being impossible (as anyone who ever played Paperclip should know) is now coming home to roost. The domestic resources of many countries are effectively exhausted (coal, gas and oil in Western Europe), leading to unhealthy dependencies on those countries that still do have these resources, and the consumer markets are either already saturated with cheap foreign-made goods or simply don't have enough money any more because rents are extracting too much money out of the people.

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