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Comment by untog | Hacker News Reader

With regard to that 10%, don't forget that much of it is spent on the salaries of the individuals actually allocating capital

This, in itself, is worth considering. This 10% doesn't disappear from the economy- a good part is distributed to salaries, which are in turn spent on the economy. Not as efficiently as it could be of course, but still.

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Wrong way to look at it. Paying a brilliant guy 300k/yr to execute noops is a 300k/yr waste even if he uses the money to support himself. The broken window fallacy.

"waste" yes, but no wealth is being destroyed.

except the wealth that could be created if the brilliant guy spent the year on other pursuits instead of noops

Well by that logic, we shouldn't work for startups that have the potential to fail... because you could be creating negative value!

The expected return of a startup is usually higher than the expected return of a bigco job and almost always higher than doing nothing. The actual return is more often lower, but sometimes turns out to be really high.

Which is why you should evaluate the risk/reward of a start up carefully.

It's also why, for example, bank robberies aren't worth it.

True, but the key point is that it is his brilliance that is being wasted, not the 300k.

The problem isn't that the currency disappears when you pay it. We aren't suffering from a lack of currency! The problem is that expenditure of money represents an expenditure of resources, namely, the time and attention of these individuals allocating capital, some of whom maybe just have rich daddies but many of whom actually have to be among the best and brightest to win those positions; and as a result, those brilliant people are not able to spend their time and attention doing something that would actually be productive for society, such as sending rockets to Mars, inventing new ways to harness solar energy, remediating nutritional deficiencies that turn poverty into mental retardation, or writing peer-to-peer discussion-group software.

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