That seems like a rather inefficient use of resources. How long will a fund typically keep that on the books before they have to offload the asset or declare bankruptcy? At a certain point, that smells like a scam with a real estate business attached to it.
Commercial real estate lending typically has a clause that allows pausing of payments during a vacancy and letting the interest accrue into the balance of the loan - effectively, the banks are giving the property owners a free option to try and get the vacancy cleared without affecting long-term incomes and asset prices.
America has a long history of privatizing profits and socializing costs.
Market economies are clearly preferable over demand economies (like, no question about it), but Late Stage Capitalism is bad for everybody except the oligarchs.
John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.
With AI and Robotics looming over us, we would be very well served to re-examine our economic systems while we still have a chance.
> That seems like a rather inefficient use of resources.
Inefficient for society? Yes. But for the capital providers aka investment (and let's be clear: retirement) funds and banks? Definitely not.
The fundamental problem at the root of all of it is how the US does pensions. In contrast to most European countries that operate in a redistribution system, aka the current workers pay the pensions of the current pensioners in exchange for "IOU tokens", the US has everyone responsible for themselves... which leads to a constant influx of cash into all kinds of asset markets, no matter the market conditions.
And that is bad, for multiple reasons.
- it ties general economic downturns to people's pensions. That in turn factually prevents politics from doing what is right (e.g. restrict climate gas emissions), because a lot of companies make a lot of money by abusing the environment and cracking down on that would lead to them losing value.
- it creates a lot of perverse incentives. When you got almost 50 trillion dollars in total retirement funds [1] with hundreds of billions of dollars in new savings each year... that money has to go somewhere where it is backed by a physical asset or a consumption in the end. A lot of that money ends up in government bonds, which "allows" the US to cut taxes for the ultra-rich without limitations and balloon the national debt without consequences because guess what, the US can "always" borrow money. It's just as bad as Japan, only less openly exposed. What does not end up in bonds ends up primarily on the real estate market, driving the nonsense we're discussing here, and what remains goes into crap like Yo [2].
- it disincentivizes the forces of the free market from holding bad actors accountable. Under "normal" conditions, the AI bubble or Tesla would simply have run out of cash years ago because no one would give them more money, but when the scam is so large it ends up in the S&P 500, cash will flow in automatically from all the dumb money that is going into ETFs and other pension investment vehicles. Once you are in, you stay in.
- To make it worse, people are increasingly going from "moderate" managed funds to the extremes: either purely tracking funds that have virtually no fees deducting profits (and, in exchange, do not exercise voting rights) or into high-yield "activist investor" funds that love to do exploitative shit like forcing companies to redistribute their liquidity reserves as dividends (robbing the company of resilience against economic downturns) or engage in LBOs, buy-and-break-apart schemes and the likes. These almost always offload the consequences of making money for investors onto society at large... like, for example, malls falling apart because anchor stores fell victim to the vultures. Toys'R'Us is one particularly nasty example.
> At a certain point, that smells like a scam with a real estate business attached to it.
The entire pension based economy in the US is the true scam - in the end, it's all IOUs just like our "pension points" in Europe. If there is no economy around due to demographic collapse or whatever, the IOUs become just as worthless.
Normally I wouldn't even care, but unfortunately, the US pension market is so large that a lot of dollars flow out elsewhere, including our healthcare system, and I'm sick and tired of American vultures buying up everything in Europe Just Because They Can.
This is broadly accurate, but it can be a little easier to point the finger at the actual culprits, which is Wall Street.
The problem is the financialization of everything, and the insistence on ensuring high rates of return above all other goals. Which is highly related to the dynamics that you mentioned here, so we're agreeing.
But other countries don't do this because the government stops them. In this country, the financial sector is more powerful and can override democracy through a couple of obvious means that we've all seen.
The result is effectively the plundering of a previously strong economy for the benefit of a couple of people.
Ask yourself why General Motors is taking the many billions of dollars in cash that they generate from their business operations and literally sending it directly to Wall Street bankers through the form of stock buybacks rather than investing in the next generation of electric cars. It's an obvious mistake, and eventually the bill will come, but maybe not in the lifetimes of the people who profit from it. Certainly not before they have a chance to buy another summer home.
China doesn't do this. They keep savings rates high and returns low, which means the money goes into building factories and infrastructure and lots of other things that ultimately make the country much, much wealthier.
> Ask yourself why General Motors is taking the many billions of dollars in cash that they generate from their business operations and literally sending it directly to Wall Street bankers through the form of stock buybacks rather than investing in the next generation of electric cars.
Hmm, putting aside others issues (e.g. stock-manipulation to make quarterly numbers) stock-buybacks might be viewed similar to repaying a loan and reclaiming the stock that was put up as collateral...
Although I suppose if the loan is zero-interest, why would one want to do that? Even if somehow all spending options are terrible today (but might improve tomorrow) one could just sit on the cash.
All spending options are not terrible today. That's the point. Without reinvestment, the companies will fall behind and die.
The decisions by major companies to prioritize stock buybacks over capital investment in the next generation of products and innovation is the absolute core of why the financialization of everything threatens to destroy us as an industrial economy and, by extension, our prosperity and way of life.
The flip side is redistributive pensions require an ever growing population and most European pension systems will go bankrupt within a couple of decades given current birth and immigration rates.
> The flip side is redistributive pensions require an ever growing population
Stonk market based pensions require that as well! Someone has to work in the future and earn dollars so that he can give me these dollars for my stonks. And that falls apart when the working population drops - either due to demographics or because the world splinters apart and the age of global trading ends. Stonks are just as much IOUs as "pension points" are.
And no, automation isn't a panacea either, because an economy not just requires workers to do work, but also people having money to buy things - that's already setting our time's economy on fire as more and more people have to expend more and more money just to make rent.
> And no, automation isn't a panacea either, because an economy not just requires workers to do work, but also people having money to buy things
Automation is the whole reason people have money to buy things. Before we had automation everyone lived on farms and sewed their own clothes. Only noblemen could afford to pay for clothes. Your intuition is plain wrong, I'm sorry.
AI may take away purpose if it takes away literally everyone's jobs. The wealth and productivity of the economy doesn't go away. It becomes more concentrated. De-concentrating it is a political problem.
> Automation is the whole reason people have money to buy things. Before we had automation everyone lived on farms and sewed their own clothes. Only noblemen could afford to pay for clothes. Your intuition is plain wrong, I'm sorry.
Every industrial revolution to this day produced insane amounts of job losses and suffering. In fact, that's how we got the labor rights almost a century ago. Affected workers literally got shot up over labor action.
And I'm sick and tired of that cycle always repeating and governments not giving a single shit about helping affected people and redistributing the wealth gain.
> And I'm sick and tired of that cycle always repeating and governments not giving a single shit about helping affected people and redistributing the wealth gain.
You're right. And I suggested a way to make it happen this time.
Every industrial revolution to this day produced insane amounts of job losses and suffering.
(Shrug) Things were worse before. That's the part of the argument that the Luddites and their fellow travelers simply can't hand-wave their way out of.
This implies that at every stage, the best choice for the most people was to move ahead with the revolution, instead of trying to stop it.
Americans save at a much lower rate than Europeans (5% US vs. 15% EU), which I think makes your whole thesis backwards. Maybe Americans SHOULD be saving more for retirement, but they aren't!
> most European countries that operate in a redistribution system
The Netherlands does not. [1] It is also considered one of the best-run pension systems in the world.
> the current workers pay the pensions of the current pensioners in exchange for "IOU tokens", the US has everyone responsible for themselves
US Social Security works in the manner you described - current workers pay for current pensioners. This doesn't work great as we already know.
Making assets instead of workers pay for pensions isn't a bad idea per se. It makes no sense to load workers down with taxes to pay for seniors. The math only works as long as the population of workers grows or if you tax workers more and more.
Workers' labor produces ever-increasing surpluses every year. Use those surpluses aka higher productivity to support seniors.
One could feasibly make their debate topic that the U.S. is not actually a functioning country but instead has morphed into an extensive financialization scheme, and they could win that debate.
Pensions are not investment funds (for the individual employee/retiree). They are distinct from 401ks and their ilk. GP explicitly spoke about "pensions", which have almost no requirement to diversify - at least one I know of was discovered to be "invested" in luxury rugs and furniture for the CEO (Their value will go up!!! /s).
The entire industrialized world has the exact same problems with commercial real estate and rents for small businesses and people.
The common denominator across continents and political systems and economic factors and social factors: all the ownership is in the hand of the olds. Whether directly or indirectly through any kind of bank-and-funds-and-government schemes that can be dreamed up.
The Failure to Launch episode about Qian, the Cultural Revolution, and the brief inter-departmental war and attempted "coup" at the defense research institute where he worked... was quite something.
Someone turned me onto this podcast several months ago and, after a few episodes, my takeaway was they seem to be against every book they review. I couldn't find a single book they actually liked.
Assuming you're not joking, that's the point of the podcast... hence the title "If Books Could Kill". They're reviewing bad and possibly dangerous books.
Did they review the original text of the 1930s book that captures the intent of the writer or the scrubbed latest version which washes away the sexist, racist and problematic text written by the original author?
He was as nice as they can be for a white man living in 1930. Good for fellow white men, not good for anybody female or a different skin tone.
But the book has been changed over time to make it seem like he was always an "pretty alright guy"
The Maximegalon Institute of Slowly and Painfully Working Out the Surprisingly Obvious (MISPWOSO) is a fictional research institution from Douglas Adams' The Hitchhiker's Guide to the Galaxy series.
Oh, do you perhaps mean Theodore Payne Foundation at https://theodorepayne.org/ ? I was just searching Thomas Payne Foundation and that was what came up
I assume nobody removed it and the revenue is just added to some Google Adsense balance sheet, and reports go to some Gmail account that will expire one day.
When I learned that this person was one of the RISD art students who started Fort Thunder, it all made a lot of sense to me. That was by all accounts a very strange and unique intentional space for people who didn't want to live in a conventional manner.
Here's an archive of the old Fort Thunder website:
It's amazing that so many "leaders" (esp. in tech) seemed to not worry about or even tacitly/openly supported the Trump admin, when so many other folks could clearly see the disaster looming on the horizon.
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