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I see this as one of the most fundamental problems the next generation will need to face. How do we build better models to give access to wealth creation outsid

by dulse 9y ago

I see this as one of the most fundamental problems the next generation will need to face. How do we build better models to give access to wealth creation outside a small number of highly leveraged technology companies to a wider group of society? Recent trends in the gig economy, AI, and medicine make me worry more we are slipping toward a super asymmetrical world like Gattica or Altered Carbon -- which is not the world we should want to live in. We should want to preserve a strong path to the American middle class for everyone. Despite the hype, I'm bullish on cryptocurrency tokens on potentially being a model of a more equitable design for firm returns. If done correctly, the returns of firms could go to the early participants in the network, instead of the VCs and early accredited investors that have special access. The ICO world today isn't there yet (a lot of pre-sale discount tokens to those privileged VCs; lots of ICOs aimed at the larger public are scams, and it's hard to tell the difference between them) but I think we have the tools to create more equitable models, if we only have the will.

nerfhammer 9y ago
isn't that what the 1999 dot-com bubble was? firms could go public almost right out of the gate and then Joe Average investors could buy and sell equity of these immature firms?
- montrose 9y ago
  Yes. And the wildly varying returns achieved by these retail investors surely increased rather than decreased economic inequality.
bargl 9y ago
It would be nice if there was a VC that could operate like the stock market was supposed to. You invest in the VC and you get a share out. But that share can be really really small. 100$ or less. And you get an ROI. I've thought about that before but I have no clue how or what shape that would take with my limited knowledge of the legality behind VC funding.
- theseatoms 9y ago
  How is this different than the stock market?
  - bargl 9y ago
    VC has access to these stocks before they are available on the stock market. These are also stocks that aren't traded in micro transactions so they can't be gamed by Machine Learning.
- twic 9y ago
  Is this assuming that the venture capital industry outperforms the general stock market? I don't think it consistently does. I don't have massive or recent data, but here's a report from a few years ago: https://nvca.org/pressreleases/venture-capital-outperformed-major-stock-indices-third-quarter-2014/ https://nvca.org/pressreleases/venture-capital-outperformed-... Despite the headline, if you compare the venture capital indexes with the S&P 500, there's no clear winner. Except at the 50-year time horizon, where the early-stage index went to the moon. Good luck investing in that.
  - bargl 9y ago
    I was more thinking that the stock market is being gamed by a massive amount of computers where as I don't see that happening in VC yet.
    - tonystubblebine 9y ago
      A lot of VC returns are based on eyeballs and a lot of eyeballs are actually giant Bot networks.
    - currymj 9y ago
      HFT has a lot of impacts and may be good or bad overall, or socially useless, or whatever. but it undeniably does result in a better deal for a normal person trying to make small investments -- they've replaced the old market makers but charge much less for the job.
youdontknowtho 9y ago
All that energy and money could be put into good governance and public programs. It has worked before. EDIT: Totally agree on ICO's, but I also think new kinds of private funding are interesting.
skookumchuck 9y ago
> How do we build better models to give access to wealth creation outside a small number of highly leveraged technology companies to a wider group of society? We have one - the stock market. $100 invested in Amazon the day it started trading would be worth something like $20,000 today. Investing in the market has become very democratized. Online brokers offer inexpensive access to everyone, and you can start investing for $100 or less.
- fungiblecog 9y ago
  So gambling is your solution? It's easy to identify Amazon after the fact just like it's easy to identify the winner of a horse race. Go back to the dawn of Amazon and invest $100 in some of the other startups that look just as likely to be big and now your $100 is $0
  - charlesdm 9y ago
    Everything in life is gambling and probability. Take a job? You might get fired tomorrow. Start a business? It might fail. Invest in a company? It might turn out to be worth a billion, or $0. Borrow money from a bank? They might try to screw you over at some point, or not. The economy might tank tomorrow. The market might tank tomorrow. An astroid might hit the world in six months.
    - manjushri 9y ago
      Seems like a strawman argument. Sure, metaphorically "everything" might be gambling, but the point is to play games with better odds for everybody except the casino.
  - skookumchuck 9y ago
    > So gambling is your solution? Gambling has a mathematical downward bias. Investing has a mathematical upward bias. (That's my definition of the difference.) I find it rather unfair to argue that wealthy people make money off of investments, but that non-wealthy people shouldn't invest because positive returns are not guaranteed. Well, they aren't guaranteed for wealthy people, either, but they invest anyway.
golergka 9y ago
If I may ask, why do you see that as a problem?
- dulse 9y ago
  I think super asymmetric societies are less just. I'm not sure I'm a Utilitarian in all things, but I think we should try to make as many people as happy and content as possible, not the 1% or 0.1% of society. I'm OK with there being unhappy or less privileged people, but a just world should be closer to a normal distribution (and your outcome should be based on the content of your character, not your birthright). Maybe something closer to the Star Trek vision of the future (vs. the other two sci fi visions I mentioned).
  - golergka 9y ago
    > a just world should be closer to a normal distribution That completely contradicts my subjective experience with people: 90% of them are insufferable. > and your outcome should be based on the content of your character, not your birthright And this goes again any parent's wish to use all his resources to help his child succeed and outcompete others.
cortesoft 9y ago
I really don't see how crytocurrency is going to solve this problem at all. It does not prevent the problem of a few people having way more wealth/power than others; at best, it just chooses a different set of people to be the wealthy ones.
- manjushri 9y ago
  While it's not a silver bullet and has a long way to go, advances in alternate models of money distribution such as cryptocurrency do seem to be moving us towards a more decentralized monetary system
  - cortesoft 9y ago
    Right, but the question is what reason do we have to believe that a decentralized monetary system will be more equitable? Being decentralized is no protection against inequality.
    - JoeAltmaier 9y ago
      Yes; I've always been baffled by the idea that an unmanaged currency will be better. Either tragedy-of-the-commons, or some gorilla(s) exploiting it, seems the very likely outcome.
      - cortesoft 9y ago
        Right? Anyone who gains power or wealth can utilize that power to accumalate more and/or prevent others from also gaining power and wealth. It doesn't matter if it is centralized or decentralized. However, by being decentralized it prevents any mechanism of checking the power gained. Yes, centralization can be used as a means of maintaining power, but it can also be used as a way of checking power. Decentralization has no way of checking power.
    - manjushri 9y ago
      >what reason do we have to believe that a decentralized monetary system will be more equitable? For the same reason that democracy is more equitable than a dictatorship or a monarchy
deleted 9y ago
[deleted]
raiflip 9y ago
This is a very upper-middle class view of the economy because it very much represents the difference between most people and upper middle class - those in the upper middle class tend to be employees of successful tech or medical companies, and that makes sense since most people here fall into that category. However looking at the data there is another section of the economy where the 1% and .1% reside, i.e those who own mid to large size companies or are high up exectives. In that section you'll see owners of companies like Walmart, Target, really any successful company. Doesn't have to be tech or medicine. The point being those sectors of the economy have been hit the worst by de-unionization because they aren't necessarily booming (even if they earn a profit) so without a union employees have very little bargaining power. If you want to really reduce inequality you have to compress those sectors of the economy by leveling the field between employees and business owners.

by dulse 9y ago

nerfhammer 9y ago

isn't that what the 1999 dot-com bubble was? firms could go public almost right out of the gate and then Joe Average investors could buy and sell equity of these immature firms?

montrose 9y ago
Yes. And the wildly varying returns achieved by these retail investors surely increased rather than decreased economic inequality.

bargl 9y ago

It would be nice if there was a VC that could operate like the stock market was supposed to. You invest in the VC and you get a share out. But that share can be really really small. 100$ or less. And you get an ROI. I've thought about that before but I have no clue how or what shape that would take with my limited knowledge of the legality behind VC funding.

theseatoms 9y ago
How is this different than the stock market?
- bargl 9y ago
  VC has access to these stocks before they are available on the stock market. These are also stocks that aren't traded in micro transactions so they can't be gamed by Machine Learning.
twic 9y ago
Is this assuming that the venture capital industry outperforms the general stock market? I don't think it consistently does. I don't have massive or recent data, but here's a report from a few years ago: https://nvca.org/pressreleases/venture-capital-outperformed-major-stock-indices-third-quarter-2014/ https://nvca.org/pressreleases/venture-capital-outperformed-... Despite the headline, if you compare the venture capital indexes with the S&P 500, there's no clear winner. Except at the 50-year time horizon, where the early-stage index went to the moon. Good luck investing in that.
- bargl 9y ago
  I was more thinking that the stock market is being gamed by a massive amount of computers where as I don't see that happening in VC yet.
  - tonystubblebine 9y ago
    A lot of VC returns are based on eyeballs and a lot of eyeballs are actually giant Bot networks.
  - currymj 9y ago
    HFT has a lot of impacts and may be good or bad overall, or socially useless, or whatever. but it undeniably does result in a better deal for a normal person trying to make small investments -- they've replaced the old market makers but charge much less for the job.

youdontknowtho 9y ago

All that energy and money could be put into good governance and public programs. It has worked before. EDIT: Totally agree on ICO's, but I also think new kinds of private funding are interesting.

skookumchuck 9y ago

> How do we build better models to give access to wealth creation outside a small number of highly leveraged technology companies to a wider group of society? We have one - the stock market. $100 invested in Amazon the day it started trading would be worth something like $20,000 today. Investing in the market has become very democratized. Online brokers offer inexpensive access to everyone, and you can start investing for $100 or less.

fungiblecog 9y ago
So gambling is your solution? It's easy to identify Amazon after the fact just like it's easy to identify the winner of a horse race. Go back to the dawn of Amazon and invest $100 in some of the other startups that look just as likely to be big and now your $100 is $0
- charlesdm 9y ago
  Everything in life is gambling and probability. Take a job? You might get fired tomorrow. Start a business? It might fail. Invest in a company? It might turn out to be worth a billion, or $0. Borrow money from a bank? They might try to screw you over at some point, or not. The economy might tank tomorrow. The market might tank tomorrow. An astroid might hit the world in six months.
  - manjushri 9y ago
    Seems like a strawman argument. Sure, metaphorically "everything" might be gambling, but the point is to play games with better odds for everybody except the casino.
- skookumchuck 9y ago
  > So gambling is your solution? Gambling has a mathematical downward bias. Investing has a mathematical upward bias. (That's my definition of the difference.) I find it rather unfair to argue that wealthy people make money off of investments, but that non-wealthy people shouldn't invest because positive returns are not guaranteed. Well, they aren't guaranteed for wealthy people, either, but they invest anyway.

golergka 9y ago

If I may ask, why do you see that as a problem?

dulse 9y ago
I think super asymmetric societies are less just. I'm not sure I'm a Utilitarian in all things, but I think we should try to make as many people as happy and content as possible, not the 1% or 0.1% of society. I'm OK with there being unhappy or less privileged people, but a just world should be closer to a normal distribution (and your outcome should be based on the content of your character, not your birthright). Maybe something closer to the Star Trek vision of the future (vs. the other two sci fi visions I mentioned).
- golergka 9y ago
  > a just world should be closer to a normal distribution That completely contradicts my subjective experience with people: 90% of them are insufferable. > and your outcome should be based on the content of your character, not your birthright And this goes again any parent's wish to use all his resources to help his child succeed and outcompete others.

cortesoft 9y ago

I really don't see how crytocurrency is going to solve this problem at all. It does not prevent the problem of a few people having way more wealth/power than others; at best, it just chooses a different set of people to be the wealthy ones.

manjushri 9y ago
While it's not a silver bullet and has a long way to go, advances in alternate models of money distribution such as cryptocurrency do seem to be moving us towards a more decentralized monetary system
- cortesoft 9y ago
  Right, but the question is what reason do we have to believe that a decentralized monetary system will be more equitable? Being decentralized is no protection against inequality.
  - JoeAltmaier 9y ago
    Yes; I've always been baffled by the idea that an unmanaged currency will be better. Either tragedy-of-the-commons, or some gorilla(s) exploiting it, seems the very likely outcome.
    - cortesoft 9y ago
      Right? Anyone who gains power or wealth can utilize that power to accumalate more and/or prevent others from also gaining power and wealth. It doesn't matter if it is centralized or decentralized. However, by being decentralized it prevents any mechanism of checking the power gained. Yes, centralization can be used as a means of maintaining power, but it can also be used as a way of checking power. Decentralization has no way of checking power.
  - manjushri 9y ago
    >what reason do we have to believe that a decentralized monetary system will be more equitable? For the same reason that democracy is more equitable than a dictatorship or a monarchy

deleted 9y ago

[deleted]

raiflip 9y ago

This is a very upper-middle class view of the economy because it very much represents the difference between most people and upper middle class - those in the upper middle class tend to be employees of successful tech or medical companies, and that makes sense since most people here fall into that category. However looking at the data there is another section of the economy where the 1% and .1% reside, i.e those who own mid to large size companies or are high up exectives. In that section you'll see owners of companies like Walmart, Target, really any successful company. Doesn't have to be tech or medicine. The point being those sectors of the economy have been hit the worst by de-unionization because they aren't necessarily booming (even if they earn a profit) so without a union employees have very little bargaining power. If you want to really reduce inequality you have to compress those sectors of the economy by leveling the field between employees and business owners.