Honest question, because it’s something I’ve been thinking a lot about: what is a “good” economy vs. a “bad” economy?
A good economy is also relatively stable. Big booms with a crash following are very devastating to not-rich people. In a crash rich people lose a lot of paper money but not-rich people may have trouble affording shelter or food. Or middle class may lose their savings.
This penalizes economic dynamism and moves economic decision making from risk taking to whoever defies the baseline distribution.
> A good economy is also relatively stable. Big booms with a crash following are very devastating to not-rich people
Not necessarily–plenty of social systems let the market boom and bust without causing social distress. And again, smoothing out the business cycle penalizes risk taking.
If the odds (and pay-outs) are 10,000:1 and you cap pay-outs at 1,000:1, you've made a high-risk/high-reward risk unworkable in your economy. Systems that target a distribution tend to wind up in that mode, with the risk takers taking their risks (and producing their rewards) outside the system.
Keeping distributions stable means capping upsides. There are better ways to redistribute wealth.
The wealthy are shielded from most negative consequences of their degenerate gambling. The working class ends up bearing the full cost of their reckless actions, literally every time. What the modern world needs isn't insane risk-taking, it's robust chains of prductions that can accomodate a shifting climate, while redistributing the global production more fairly.
Huge difference between boom and bust and gambling. (As there is a difference between a business cycle and total boom and bust.)
Healthy ecologies have an overpopulate-underpopulate cycles. It turns out it's a good strategy for finding and efficiently filling niches in a dynamic environment.
> What the modern world needs isn't insane risk-taking, it's robust chains of prductions that can accomodate a shifting climate, while redistributing the global production more fairly
This is the myth of central planning. Like, yes, if you could predict the future this would be better. But you're always going to be constrained by your leadership's assumptions about what the world will look like. It works–sometimes fabulously–until the context changes. A new technology. A new climate. A new idea. Then the system, overoptimised for the past, reveals itself as the brittle thing it always was.
Forests beat golf greens.
Also, I don't think we should model our economies and societies after actual jungles. Let's strive for a system where everyone gets enough instead of chasing perfect efficiency and leaving a large part vulnerable to be crushed by any moderately strong wind.
> This is the myth of central planning. Like, yes, if you could predict the future this would be better. But you're always going to be constrained by your leadership's assumptions about what the world will look like. It works–sometimes fabulously–until the context changes. A new technology. A new climate. A new idea. Then the system, overoptimised for the past, reveals itself as the brittle thing it always was.
I am not advocating for central planning or any form of communism. I'm just noticing that nowadays, it takes remarkably little for things to go horribly wrong, and we ought to address that somehow.
The speculation I’m describing is entrepreneurship. That is the core risk taking that makes market systems competitive. To the extent stock markets support that, they’re socially useful. (In America, liquid stock markets support liquid private markets that support entrepreneurship pretty directly.)
> it takes remarkably little for things to go horribly wrong, and we ought to address that somehow
I’d argue the opposite. The economy is doing remarkably well given we’re at war (kinetic and trade) and just getting over Kristi Noem.
That aside, I suspect the problem is leverage.
All I see is bailouts where risk should have wiped out at least some of these so-called risk takers.
Sure. I’m not saying we have a great system right now. Just that swinging to the other end is also a bad idea. You want risk takers to enjoy their fruits when they win and suffer their losses when they lose.
One that is growing sustainably with broad benefits.
Restrictive zoning and the lack of walkable neighbourhoods makes it very difficult for small businesses that rely on personal service. This isn't just a slight inconvenience, but it completely changes the fabric of society. But in American libertarian circles taxation takes up all the oxygen in the room. People are generally blind to opportunity cost.
In a good economy, value can flow from source (supply) to destination (demand), easily. You have plenty of opportunities to sell your labour, and the compensation you recieve is good enough to buy you the things you need like housing and food
Everything else derives from that
A good economy is one where there is lots of value for the consumers. How does value flow to consumers? Through a price signal. A price signal which is accurate is one where the flow of money in one direction is commensurate with the flow of value in the other direction. One can think of the flow of money as if it were a nervous system: the nerves send signals, and the muscle moves.
In a competitive marketplace (such as restaurants), the most successful restaurants are almost always the ones with the best food, the best ambiance, etc. Money flows away from bad restaurants and to good restaurants, because there is a lot of market competition between restaurants. If you serve bad food, you're out of business. The muscle is well controlled by the nerve.
Now, in the US economy, in many sectors, there is no real competition. For example, in online advertising, there is only two companies that one can use. In groceries, there is only 3 major grocery chains. In insurance, in food, etc etc. There is functionally no competition in those sectors and very frequently there is outright collusion.
In this case, the signal is far less meaningful. What signal does it send to Google, if I drop them for Facebook? The answer is, not much of a signal, because there's not meaningful competition between these two entities. They both suck and they both know that they won't lose customers if they degrade their services, commit fraud, or stagnate.
Many many swathes of the American economy are like this. The obvious ones, like healthcare, are so monopolized that your signal means absolutely nothing. They will do nothing to keep you as a customer. They will do nothing to meaningfully improve their services. You will still pay. This is like a muscle that sucks nutrients but is completely disconnected from the nervous system.
That is a "bad" economy. Of course, the market value of these companies has never been higher. Why? Because there are very few sectors of the economy where capital can flow that are actually competitive. This has knock-on effects, like having capital flow into other assets like bitcoin or housing, in search of returns.
It's not that these corporations are "too wealthy" by some ethical definition. They are too concentrated, which makes them inefficient. Dealing with a large health insurance company today is not unlike dealing with USSR bureaucracy in 1970. Our economy is slowly being transformed into one where a very small group of private central planners manage the allocation of the whole of social resources. This quite predictably impoverishes everyone.
The USA economy today is like a paraplegic. We can still get around but there is a lot of dead nerves.
One that we can walk away from without necessarily risking premature death or enslavement for doing so.