Comment by WalterBright
3 days ago
Profit maximization is a continuous process that has generated our high standard of living.
P.S. I welcome all attempts to prove me wrong!
3 days ago
Profit maximization is a continuous process that has generated our high standard of living.
P.S. I welcome all attempts to prove me wrong!
No, the process has impeded even higher standard of living, because it misallocates resources from value generation to value appropriation. It's the extreme short term profit maximization that makes the economy a zero sum game. Otherwise it is not.
Do you really think the economy is zero sum?
For example, who was Elon Musk's wealth transferred from?
What do you think about all that money being invested into AI? Is that "extreme short term profit maximization"?
I don’t know who his wealth was transferred from, exactly. But I do know what he’s using it for now: as a gravitational force to unilaterally screw with public institutions and systems the rest of us depend on.
Even if you agree with some of DOGE projects’s goals, the way it operated was wildly thoughtless about consequences beyond Musk’s personal wishes, and almost completely unaccountable.
I’m honestly sick that my personal Model Y purchase helped add to that power.
And I say that as someone who was a huge Musk fan for years, despite the warning signs — the Thai “pedo” comments, and his very public turn during COVID.
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I don't know but I will speak:
Cantillon Effect
How much does your bread cost and how much did it cost in the 90s? Where do you think all that value gone? Has bread some what become much better quality or something? Are they lacing it with gold?
They are stealing from your pocket, in many ways than one.
Another point to consider is that musk wealth is on paper only, real value if he wanted to cash out would turn much smaller, it's all hypothetical.
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What is the point on Musk you are making? The monetary success does not neccesserily correlate to the common good they have created. In case of Musk there is a lot of governement subsidies, lots of market manipulation and false claim s. So not all activieties that bring profit to the richest are good to the rest. And stats on inequality just highlights that trend
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On the short term every economy is effectively zero sum. Even if you invented something magical that is worth trillions, the economy can't pull trillions of dollars out of nowhere in any short period of time without devaluing everything else.
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These two positions are not mutually exclusive:
- Over-optimizing for short term profit can hurt innovation and value creation.
- The economy is not a zero sum game and new value is created out of thin air.
Partly this is because total global debt is 3x global GDP.
It transferred from the S&P-493, obviously :) .
When it comes to what actually matters, people's standards of living, what matters most is percentages, which are zero sum. In a simplified economy where 10 people have $100 each, everyone is worth 10% of the economy, have about equal buying power, equal standards of living, equal political power, and so on.
If one of those people suddenly "creates wealth" and now has $100,000, then the average value of the dollar goes down and the cost of everything goes up. Person X can trivially afford the increase, but the other nine now have lower buying power, lower standards of living, and the $100,000 now can exert coercive control over those with less.
We are all slightly worse off every time there is a new billionaire.
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Musk got a huge leg up through the government, whether it be tax credits, incentives, side-stepping regulations, etc.
Bezos ran at a loss for so long it drove out actual and potential competitors.
Most (or all?) of the recent titans seem like each has his own company town. (See https://en.wikipedia.org/wiki/Company_town )
While their activities certainly fall in the realm of capitalism, and are just blips at longer time scales, it certainly feels like capitalism has been a bit under the weather for the past couple decades.
Regarding the money invested in AI, it all gives me "irrational exuberance" vibes.
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I would argue that profit maximization has had very many effects.
On the one side, it has succeeded at reducing costs, which has indeed given rich societies unprecedented access to consumer goods.
On the other, it has outsourced from us both jobs and knowledge, which has resulted in higher unemployment and dissatisfaction, with as consequences the political dominoes we see falling internationally. That and the shoddy US health system (which the rest of the world seems to have decided to follow, for some reason).
And there is the small fact that we're in the process of optimizing the planet to death, and that not-so-rich countries (as well as formerly-rich ones) have starved to death for this high standard of living.
So, let's appreciate our standard of living, but not assume that it's necessarily a good thing in the grand scheme of things.
Outsourcing happens when it is cheaper to build something somewhere else. Tariffs can compensate for that.
Where are the starving people in capitalist countries?
The US health care system is pretty much run by the government. It is not a result of free markets.
A large part of profit maximization (i.e. optimizing) usually means reducing the amount of material needed. Isn't that a good thing?
The people who "rough it" in the wilderness still seem to be backpacking in hi tech equipment. I read about the kit that Lewis & Clark carried. No thanks. (Even on that "Alone" show, they bring hi tech equipment.)
> Outsourcing happens when it is cheaper to build something somewhere else. Tariffs can compensate for that.
Is that free market?
> Where are the starving people in capitalist countries?
The first example from the top of my head is Argentina.
> A large part of profit maximization (i.e. optimizing) usually means reducing the amount of material needed. Isn't that a good thing?
This very much depends on the industry. In software, for instance, it's exactly the opposite.
> The people who "rough it" in the wilderness still seem to be backpacking in hi tech equipment. I read about the kit that Lewis & Clark carried. No thanks. (Even on that "Alone" show, they bring hi tech equipment.)
No idea what you're talking about.
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"Profit maximization" on its own would have left most people working 12+ hours a day 6 days a week, like it was very common in the 19th century. Luckily, it's never been the only force shaping our societies.
Working long hours was necessary in those days because productivity was much lower.
Productivity has gone up so much people can work a lot less, and vast part of the population doesn't work at all.
Sure, productivity increase is hugely important, but if you only pursue profit maximization, then all the productivity increase goes into profits, which means that the general population doesn't increase their well being much if at all.
The 40hr work week didn't come by as a consequence of the profit maximization mentality, but as a consequence of hard fought battles by the workers/employees against that mentality. And when I say "hard fought" I mean in the literal sense, with at least 1,000 workers killed just in the US in those days. https://en.wikipedia.org/wiki/List_of_worker_deaths_in_Unite...
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Depends what you mean by work.
Most people do a lot of work themselves that the Richie Rich would pay somebody else to do, like cooking, cleaning, childcare, gardening, etc. If it counts as work when you hire somebody to do it, it should equally count as work if you do it yourself.
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Working long hours was not necessary in those days, it was forced upon people by declining wages as profit was transferred from individuals, families, and small businesses towards the capital class. The entire movement to introduce the 40 hour work week was based on people wanting to reduce their hours towards what their grandparents worked and survived on. The entire luddite movement was based on declining wages and worsening work conditions compared to the generations before them.
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I think it's more accurate to say it is a process that has resulted in our high standard of living faster than other processes... so far.
There is no guarantee it will keep working for the majority of us going forward; as is becoming very clear all around the world, it also has downsides especially without checks and balances (which was predicted and observed in the past, which is why other processes were conceptualized in the first place!)
As a trivial example, profit maximization is directly responsible for the enshittification we're seeing everywhere, which definitely is negatively impacting our standard of living.
> I think it's more accurate to say it is a process that has resulted in our high standard of living faster than other processes... so far.
Nobody has found a better process. Not even close.
> As a trivial example
It's not an example, it's a generalization. If you have a specific example, let's have a look at it!
Have you ever wondered why communist countries never exported products?
Also, if you want better products and believe people will want to buy them, go into business making them and make yourself wealthy!
> Nobody has found a better process. Not even close.
Maybe, but as they say, "Past Performance Is Not Indicative of Future Results." The point was, this process may work up to a point, then it may work more against the interests of the population.
I mean, history is already littered with examples of the downsides of this process, like all the rampant anti-worker things profit maximizers tried to get away with that had to be fought literally with blood. Without that bloodshed it is highly likely the average standards of living of the general population would be much, much lower.
You don't even have to look at history, the process is literally playing out right now in various countries.
> It's not an example, it's a generalization. If you have a specific example, let's have a look at it!
I thought enshittification was a pretty specific example? You can find the many articles written about the various ways things are degrading on the Internet with a Google search (the experience of which is probably an even more specific example in itself ;-))
I chose that example because I think it's a microcosm of this process: in the beginning, the profit motive creates great innovation and products. But at some point, like when the market is saturated or monopolized, the profit incentive creates anti-consumer dynamics because companies turn to extractive methods rather than innovative ones.
Your line of reasoning misses the clear example that China pulled 1.4 billion people out of poverty creating mass-literacy before embracing capitalism.
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Which country experiencing communism at any point in time didn't export any products?
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