zhdc1

> I think my problem is that the last few decades the returns on stocks and property has vastly exceeded economic

I agree that speculative returns are higher now than they have been in some/many historical periods. It's very likely that this will depress returns in the future, but to what extent is anyone's guess.

However, it's hard to construct a thesis that has US equity returns at or below 0 over a long period fo time. For that to happen, some combination of the following would also have to occur:

1. Population decline leading to a corresponding decline in economic activity. US demographics are projected to be better than most other developed countries for the next several decades. The US is also a destination for highly educated immigrants. Finally, large US companies are international and can (and will) take advantage of growing markets in South Asia and Africa.

2. Severe economic decline brought about by war, civil unrest, or an existential crisis. This is extremely hard to imagine. Short of a conflict with China or another pandemic, there is little reason to believe that economic activity in the US collapse in the immediate future.

3. Speculation was so high that a resulting return to the mean significantly reduces long term equity prospects. I agree that there is a certain amount of speculation in the market (although the mechanisms are different from what happened in the early-00s). However, valuations are no longer significantly high by historical standards. High, yes, but not to the point where mean reversion would suggest a multi-decade depression in equity returns.

The underlying issue with "saving" is that the monetary system is setup in a way that forces you to invest in productive assets.

Cash, as a store of value, is awful. You're guaranteed to lose 2-3% a year.

The question becomes what, exactly, can you do with cash. In countries where most or all industries are at their or near their productivity frontiers, you have two options. You either try to push the productivity frontier out and capture as much of the resulting value as you can, or you "lend" your assets to other people or groups of people who are attempting to do so.

The issue with either option is that innovation is inherently difficult. Failure is a real possibility and success generally requires a sustained level of effort.

The benefit that the second option gives you is the opportunity to place a large number of bets without having to also actively engage in the actual innovation. That is, you have the opportunity to passively invest in a diversified portfolio.

Now, if you take the second option, the question becomes how, exactly, do you invest. There are a couple of different options here. First, you can invest in an organization that captures rents from all of the economic activity according to some criteria. This is what you do when you invest in government bonds. You're essentially placing a bet that tax revenue will grow over time, which itself is a bet that - all else being equal - the economic activity of all of the individuals and companies that pay taxes will also grow over that period of time.

Second, you can attempt to purchase individual assets. Here you're making a directional bet that the value produced by that asset will grow over time. Real estate falls into this category (although real estate is by no means passive), as do corporate bonds and stocks.

The issue with this option is that the distribution of companies that successfully create additional economic value is extremely skewed. A small number of companies succeed. Those that succeed generally don't continue to do so over time. The rest either tread water or go out of business. Now, the other issue is that there is little to no evidence that individuals are able to successfully pick in advance which companies will actually to generate additional economic value - before - others do so. That is, it's extremely difficult to outperform the market.

Third, you can invest in a large number of companies according to some screen or criteria. This is essentially what you're doing when you invest in a total market fund. That is, knowing that a large number of organizations are trying to expand their productivity frontiers and that most of them will either fail to innovate or capture the resulting value, you 1. eliminate those that are most likely to fail and 2. place a bet that some percentage of the remaining companies will succeed. This approach has historically produced returns of around 6% in the United States.

> As a non-American I can't believe how much faith people put in the stock market here. I think they're going to be a rude shock the next few decades.

Going back to my original point, money is a bad store of value. Given that almost all investable assets (including government debt) are somehow tied to economic growth, it's just a question of where in the value chain do you want to place your bets, and do you feel that you're competent enough to successfully place directional bets on individual assets (evidence shows that, without active involvement, this is essentially a loser's bet).

You have to invest in something. The question is, what, exactly, are you going to invest in?

> As a retail investor, the most challenging part of investing is psychology, and DCA can help in that regard.

Agree 100%.

You can use Portfolio Visualizer (portfoliovisualizer.com) for this.

> Has anyody done a thourough calculation with statistics and all?

Yes. There's a lot of research comparing dollar cost averaging with lump sum investing. Lump sum investing in a diversified portfolio (total market ETF) almost always wins, even in periods where markets are 'overpriced' (e.g., high CAPE 10 ratios).

Dollar cost averaging works when you have a steady stream of income that you're contributing to your investments and you have a heavily diversified portfolio.

The reason being that, over a 5+ year investment horizon, a total US market portfolio will average about 6% after inflation.

However, going off of empirics, dollar cost averaging is less preferable when you have a single lump sum. While it's possible that you 'time' the market wrong with your investment, the odds that you'll happen to invest immediately before a sharp down turn are lower than the odds that you'll miss out of rather significant gains by not being invested.

This all assumes that you have a diversified portfolio. If you're trying to invest in single stocks, good luck.

Metaverse != Horizon Worlds != Augmented/Virtual Reality

AR/VR is going to be an absolute game changer once someone produces an acceptable wearable that achieves mass adoption. Whether or not Meta is the company that succeeds at doing this is another question altogether.

However, the benefits from getting it right, even if it's a long shot, justifies Meta's investment in VR.

> Driving along on cruise control, if a long downhill is encountered, the car will shift down to engine brake. That's cool.

You can also downshift in a manual...

Had a LackRack(ish) running in my closet for a year or so.

It's a good and dirty way to free up space on top of your server(s) for a monitor and keyboard.

> It is about 2-3x higher

It's really not, at least when you compare OECD countries with one another.

For instance, per capita healthcare spending in the US is 11.4K. The OECD average is around 5.7K

Now, there are a lot of reasons for this gap:

1. Salaries are higher in the US. Health care workers are much better compensated there than, say, in France or Spain.

2. The US has a much lower population density. There are a lot of fixed costs with health care. There are real cost advantages to having a large majority of your population in dense urban areas.

3. The US is first to market/first to adoption for a lot of medical innovation. The R&D costs for anything health care related are enormous. Early adopters bear the brunt of these costs.

4. The US has a hybrid health care model. The two countries that use this model, the US and Switzerland, are one and three respectively for per capita health care spending.

> The ONLY way to prevent this is to either stop offering loans or force savings in some way (taxes, etc). But apparently both those options are off the books.

This is how the system is actually designed. Social security is a mandatory annuity/savings and disability insurance program. Many countries also have mandatory contributions into their 401K (OECD Pillar 2) equivalents.

Even in the US, where these contributions are mandatory, the tax code is set up to make them extremely desirable for the employer and the employee.

> loans for everything is standard now

Stopping this would be as simple as having an indebtedness line added to the tax code. In many countries, there is a maximum level of debt that a person is allowed to carry. Companies aren't allowed to issue new debt if the repayment for all of their current debt exceeds some percentage of their income.

> Housing is (along with healthcare in the US) a big part of why most people in the so-called "rich world" are in fact dismally poor, only one missed paycheck or turn of bad luck away from life becoming unlivable.

Not really.

Let's set up a quick boundary condition. Since you mentioned most people, you're talking about the lower-middle and middle classes. Let's keep the discussion on them. The working poor have it bad almost everywhere, and I think we both agree that there's more that can be done in most countries to support them.

For someone with a median household income, it's still very much possible to finding housing that is less than 25-30% of their household income. This is true even in high cost of living (HCOL) areas. Now, there are some cities or sections of cities that are unaffordable for someone with a median income, but these are very much the exceptions.

To put it simply, if you have a median household income for your country, in almost all locations in almost all OECD countries, you earn enough to follow a household budget that allows you to save 15-20% of your take home pay. If you can't save a portion of your income and you're not living off of a below-average wage, it's very likely that you either made decisions that aren't conducive to saving (e.g., you're house poor, car poor, or your discretionary spending is too high).

> along with healthcare in the US

Quality health care is expensive in most countries. The US has its own set of issues that make health care more expensive than in most other countries (e.g., population density), but it's not orders of magnitude higher. It's also offset by the higher salaries that people in the US earn over, say, the average EU state.

> The fix is to enable builders to build enough housing, and not just single family detached housing, by removing regulations which allow NIMBY-ism.

This is the short term fix, and I completely agree with you.

The long term fix is, aside from letting local governments make minor regulatory changes to facilitate denser urban construction, to simply do nothing.

Cities are expensive. People will (and are) moving away from HCOL areas because of this. Businesses are adapting (e.g., with remote work) to hire people living in MCOL and LCOL areas. At the same time, new economic agglomerations are springing up in these areas to support growing populations.

Given enough time, two things will happen. Many of these MCOL and LCOL areas will become more expensive. Some will urbanize. Some wont. Second, eventually, people living in the areas that don't urbanize will realize that they actually would enjoy living in a HCOL area. And the cycle will continue.

> Landlords don't create added value. I'm skeptical that it is a necessary service; housing is necessary, but is renting housing necessary? Why would that be?

There are many cases where this isn’t true. Many (most) residents in urban areas are transient. They stay for a couple of years, get married, then move to the suburbs or another city to start a family.

There are a bunch of other reasons why someone wouldn’t want to stay in a location for a long period of time.

Rentals absolutely make sense in this situation.

> What would be your proposed solution to this problem, as in how would you remake the real estate market in the US?

Higher capital gains tax for investment properties to discourage speculation.

The rationale being that it’s perfectly fine to own investment real estate as long as it’s being occupied. Short term speculation incentivizes unrented property (look at any city in East Asia). Incentivizing longer holding periods makes it more likely that the property will be used to extract rents (that is, actually house people, which is what you want).

> Doesn't anyone feel uneasy about it, that more and more people are looking at real estate as a financial tool, not a basic human right to have a roof over one's head?

It’s always been viewed this way, at least in the west. Land ownership quite literally defined western social power structures for a very long time.

That said, the use case for housing is housing. Ownership generally isn’t that relevant, to the extent that prices are still set by supply and demand. If there are enough units on the market, prices or rents will be reasonable. If not, prices will go up.

My suspicion is that the attraction of single family houses as an investment asset on this scale are going to partially fade away. It’s driven by the fact that real estate is somewhat uncorrelated with equities and unleveraged returns have historically been comparable to the SP500. However, historical performance does not necessarily reflect future performance, and single family homes cost a lot to maintain.

> I mean how is this going to affect Silicon Valley since this is different than the dot-com boom/bust?

It's hard for an organization to justify paying 4x to Person A when Person B has the same background.

So, it comes down to whether the final salaries for both employees merge closer at the former or the latter.

Given cost of living expenses in the Bay area and the benefit of having some in person employees, my suspicion is that pay will likely remain relatively high for organizations that can afford it.

Now, here's the caveat. Most employers aren't paying their software engineers 200K. The organizations that are paying 200K+ for talent have the resources to do so. Only a relatively small number of companies can sustain and justify these employee burn rates over a long period of time.

All together, given that the actual median nation-wide salary for software engineers is closer to what you would reasonably expect to see for an educated, highly trained professional. In other words, the salary floor for remote employees is likely higher than what most people expect, but lower than what most people exposed to Bay area salaries are used to.

> And yes that's 200 vs 50 for the same level, say a Senior Software Engineer, one in San Francisco, the other in say Brazil.

This isn't an apples to apples comparison. Salaries are set by market influences. As long as there is sufficient friction to push American companies to favor US-trained talent, the floor for remote work salaries will be the expected salary range for a software engineer in the US.

Some companies can, have, and will continue to exploit salary differences. Many (most?) don't have the expertise or willingness to do so. So could I see remote work having some negative drag on salaries in the Bay area? Sure, but the floor is still going to be at or around six figures.

> That reasoning makes sense to me. Do you think there actually _is_ some material disadvantage to co-operatives that leads them to be less economically successful than companies where shareholders have all the power and ownership?

This is hard to say. I think there are two competing trends: 1. Co-operative ownership is becoming more prevalent. This is particularly true in situations where entrepreneurial bricolage (making do with what you have on hand) is a factor. 2. However, there aren't that many examples of legitimate co-operative ownership in larger corporations. They do exist, but the sample size is small.

As far as I'm aware, employee co-ownership is more associated with the concept of 'psychological ownership', where the organization tries to make an employee feel like they own a portion of the company. This can come from actual ownership via RSUs or stock options, or through other factors, such as company culture. The idea here being that psychological ownership increases employee effectiveness.

The issue is that 1. top management generally has more influence than owners and 2. it's not always (or usually) in the best interest of the employee to have more than a small percentage of their net worth tied up in their employer.

Think about it this way. In a (greatly simplified model of) democracy, voters essentially "own" the government. However, the politicians they elect as well as an employed bureaucracy are the ones generally calling the shots. Democracy works because it provides a floor where, if performance falls to a certain point, the top management layer is replaced by a different set of managers.

However, corporations are not governments. Governments (especially local governments) - and bureaucracies - last a very long time, to the extent that they generally survive well after whatever state they were originally part-of goes away. In other words, they're robust. You can have a bad set of elected, or unelected, officials and regardless of what happens, odds are that the entity they represent will still be around decades if not centuries later.

Corporations are the opposite. The failure rate is sizable. Like I wrote in my previous post, a small number of larger companies are adding economic value, while the rest are in the process of fading away. The question here is whether a co-operative model provides enough of a benefit beyond the standard corporate ownership structure to provide some benefit to either of these phases.

My guess is that the answer is no for the growth phase and, depending on the organization/industry, maybe or a slight yes for the later maintenance phase. That said, the sample size of employee owned co-operatives in growth-oriented industries is so small that I don't know if the data exists to take a shot at answering either question.

> After all, shouldn't those who actually form the workforce of a company and shape the products and services it offers be in control? Why not have those who actually do the work collectively control the fate of the company, instead of having to hand over that power to someone else?

That is viable in some cases.

The underlying issue is that distribution of corporate growth is relegated to a small percentage of all organizations out there. To put it simply, a small percentage of companies above a certain size grow quickly while the rest are slowly dying. As a result, not only are the distribution of outsized monetary rewards highly biased in favor of a small percentage of companies, but the fight to maintain position once that period of growth is over is intense. Modern companies growth fast, survive for a time, and then go away.

This leads to an unfortunate dynamic where any competitive advantage that leads to either growth or survival matters. If a top-down managerial structure where rewards inside of the company are distributed to a small layer of top level managers and owners provides even a slight economic advantage over an employee-owned structure, the former is going to win out.

This may sound unfair, and it likely is, but the question becomes: if I am a worker at 'traditional corp.' with a 100K salary and a funded 401K, will I do better than if I was a worker at 'employee-owned corp.' with the same salary but an ownership share? The deciding point being that traditional corp. has a 20% chance of going away over the next ten years while employee-owned corp. has a 20%+ chance of going away over the same period of time.

> when there are other solutions that are way more efficient

I was explicitly clear that I was commenting on proof of work blockchains. Crypto has a whole host of other issues, but I agree that there are other blockchain/crypto-like solutions that fit - some - of the touted use cases (e.g., GNU Thaler for digital currencies and currency-backed transactions).

The issue, however, is that for good or bad, crypto is currently dominated by Bitcoin. The parent comment is relevant and meaningful in this context, and should not have been flagged.

> Yes, there is a question over the representativeness of Mechanical Turk workers.

There are more fundamental issues. Having run several studies either with MTurk or panel providers who use MTurk to source some/most of their respondents, I have trouble trusting any study with an MTurk sample that doesn't explicitly show 1. how they verified respondent location and demographics and 2. how they controlled for bots and mindless click-throughs.

Even though they used a convenience sample, issues like reading comprehension (which you can get from non-native English speakers VPN'ing through a US-based IP) and participants trying to get through the study as quickly as possible - or automating their responses altogether - absolutely matter.

> So why are we still talking about PoW then?

Outside of speculation and regulatory evasion, has there been a sufficient use-case for Bitcoin and other proof of work chains that justify the costs, inconvenience, and disruptive impacts that go along with it?

> His point was that it's not the electricity consumption (e.g. PoW mining) itself that pollutes.

Yes, because demand doesn't drive supply...

https://eurasianet.org/kazakhstan-energy-operator-cuts-crypt...

It depends on what you're implying.

You're simply not going to find good, consistent, loyal talent for $50K USD.

That said, you should be able to find it at a higher price point under $200K.

The simple fact is that most companies aren't paying this much for either in-person or remote work. The average salary for an IT professional is still under $100K in the US, and well under that in many other countries.

As far as why a company may pay $200K for talent, some employees are simply worth that much (or a lot more).

That it's even grown to be even that large is surprising.

> Burning coal is also not really nice for the environment, so maybe we should all stop using electricity?

We should, in fact, consider phasing out coal power generation.

Which is what almost every OECD country has been doing for more than a decade: https://ukcop26.org/end-of-coal-in-sight-at-cop26/.

> Rely on taxes that can't be evaded

I think this is the underlying issue.

Anonymity is good and all, but the moment a known intermediary comes into the picture, it becomes a target for government enforcement.

If you need a service like Tornado Cash to preserve anonymity, as long as there is a physical name attached to that service, government regulation becomes enforceable.

In other words, there's still a long way to go before salary payments or other forms of taxable money transfers become evasive enough that they're unenforceable. The small number of exceptions (e.g., tech-savvy remote workers taking payments through blockchain) are not large enough to set the rule.

> Is this an uniquely American angle?

Who knows. Financial transactions seems to be a solved issue in most countries, so maybe there's a relationship.

This comment shouldn't be flagged.

The OP makes a very valid point with satire which, in this case, is relevant.

Proof of work blockchain is horribly energy-inefficient. It's hard to justify it - on a number of grounds - as a solution for a large majority of legitimate use cases.

There are $146B USD of daily transactions that go through the automated clearing house (ACH) system.

While Visa doesn't give a daily transaction amounts, going off of sources online, in 2018, it looks like they processed around or slightly more than 1B credit and debit transactions with an average value of $80.

$3.5B in daily transactions is nothing to sneeze at, but it's a relatively (very) small slice of the monetary system.