Like 1 chinchilla + 2 chinchillas=3 chinchillas?
Nah, they got rich the old fashioned way:
Monopoly.
You want me to provide a cite for something I’m saying isn’t happening? Umm…okay…go to Google, hit the random website link, and if that website doesn’t say it is happening then it’s a cite. I’ll admit it may take you a while to get enough cites to establish a pattern.
Or I can ask you to prove me wrong. Give me some counterexamples of major new developments that were funded by people who already owned a billion dollars when they first invested in the new development. And buying up an existing archive with established worth and collecting the royalties off its use is not an example of a major new development. It’s like saying that buying Toyota stock is a risk because there’s a chance that next year people might decide to stop buying cars - technically true but realistically Toyota stock is a safe investment.
Spend your way to wealth! Consume your way to prosperity!
Wealth is not created through consumption. Consumption consumes wealth. Stimulating consumption is only a good idea if you’ve had such a drastic cutback that factories that will be productive in the future are sitting idle and therefore shutting down. In other words, if the lack of consumption kills your productive base, then maybe stimulating consumption will help.
This was not the problem in 2001. There was a rather mild recession, due primarily to the dot-com crunch. Stimulating consumption would certainly have caused a temporary economic boost, but only until the money is spent.
As I recall, the dot-com crunch was already history in 2001. In fact, the economy had been in recession for a quarter or two before Bush was even elected.
Let’s rephrase: If the tax money had been put in the hands of people who don’t do productive work with it, you would have been better off than having it put in the hands of people with a demonstrated track record of using it to build wealth. Is that about it?
As for using up spare inventory, what actually happened was a rational downsizing of excess production from the dot-com boom. That inventory got used up pretty fast, and then companies started investing again. Had you stimulated consumption, companies might have seen their additional sales as a signal to boost production, and then when the stimulus goes away you still have a structural problem.
People with a limited understanding of how the free market works often appear to believe that wealth is a sign of infallibility. When a critic points out that a company is doing something that is a bad idea, the defender will say that’s impossible - the free market only promotes good ideas. Which is nonsense - the free market says lots of ideas are bad - it just assumes that if ideas are allowed to compete the good ideas will triumph over the bad ideas.
A lot of people right now are thinking I’m building a strawman - they’re going to indignantly complain that they never said any such thing. And they probably didn’t as a general principle. But they often act as if they believe it in their specific statements.
For example, Renob wrote: “These are the folks driving the economy. Without their capital and risk-taking, workers would be worse off.” Really? All of them? Every one of them is making the workers better off? None of them are following a bad idea and are driving the economy off a cliff?
Obviously, some of these people are wrong. Some of them are doing nothing for the economy at best and some of them are doing damage to the economy. The hope is that the ones doing good to the economy will do enough good to outweigh the ones doing bad. Historically, that’s been the case.
But the system relies upon choices being available. The more players in the game the better. An economy works better when you have millions of people making the decisions rather than thousands of people doing so. Because a few hundred bad ideas among a million people is a blip; a few hundred bad ideas among a thousand people can take root.
Do you deny that a proper balance between production and consumption is required for economic health? You might read Frederik Pohl’s Midas Plague, a society with so much production that consumers are forced to consume, like it or not.
May I suggest you take off your ideological blinders for a second. I was right in the middle of the dot com bust. Factories standing idle was exactly what happened, as I well knew as an unhappy Solectron stockholder. Not to mention me seeing the little bit of manufacturing capability my company hadn’t outsourced standing idle, and the manufacturing engineers laid off. I’m a realist, and know that stimulating consumption is not always the answer. You should be one too, and understand that in 2000-2001 it was.
My area of the country had a much worse recession than many - we also had a bigger boom, so I’m not complaining. I can measure that by the crash in the commercial real estate market which we’re not yet out of, judging by the number of office complexes that are still empty near where I work in the heart of Silicon Valley.
What would the mass of people do with the money? Buy stuff, which would require more production, which would mean people would be hired, which would accelerate employment - which if you recall was not even at the level needed to take in new workers until about 2004. Like I said, what was done with the money? I’m not sure, but no one in my industry was expanding capacity no matter how much they got. That would be idiotic. Not just pet food sellers messed up - I heard a VP of Intel make a prediction for the server market that was wildly optimistic.
Do you deny that there was overcapacity? I could explain why there was, if you want.
You remember incorrectly. However, you are right that Bush had nothing to do with it. But, its affects were more well pronounced for those of us in the middle of it, not for those of you who read about it in the papers.
I assure you, you don’t know what you are talking about. There was an immense amount of inventory on the used market at the time. Who would buy new computers when you can buy leftovers from a dot.com at half the price? What eventually pulled things out - mostly - was moving to the next generation of technology. I assure you, inventories are watched very, very carefully. Modern manufacturing processes try to minimize inventory until it is needed (like Dell does very well.) Like I said, the CMs got hurt even worse than the OEMs, since the CMs buy the parts. My company didn’t have to write off a lot of stuff, but like I said, Cisco did. They’re pretty smart also.
You clearly are of the opinion that it makes sense to produce things when no one can afford to buy them.
Yes, production got cut. So why did a tax cut meant to encourage investment in production at the same time companies were shedding production make sense again?
If I try really hard, I might be able to dig up someone who struck gold twice. But mostly I agree. Billionaires do invest in start-ups, but not enough to put their wealth at risk. They aren’t usually very successful. (Remember NeXt?) In another thread there was talk of survivor bias - this is a great example. If you look at people who made a fortune, it is easy to convince yourself they are all brilliant, instead of lucky. That is, until their next try falls flat.
Remember the Tom Peters books? He profiled all these great companies who were supposedly going to teach us management secrets. He of course profiles companies who were doing great. Most of them collapsed soon after. It pretty much became a joke after a while.