Not what I said.
Is what I said.
Theft has existed as long as there have been humans, and long before that. Sealing things up in annoying plastic boxes which do damage all along the way from their creation to their disposal and afterwards is a very recent phenomenon. We managed without it for nearly all of our existence, and can do so again.
For a lot of that time, we avoided shoplifting by using more labor, that is, the goods were behind a shelf and the shopkeeper fetched them for you and kept an eye on them.
One thing that’s come across is that the structural drivers of growth don’t change physical reality. Of course not all growth comes from physical assets, there is also non-physical production. The knowledge of how to get more pumpkins out of a plot of land is itself an important economic product that can relax (but not eliminate) the constraints of the physical world. Knowledge isn’t free either, but it scales a lot better than dirt.
But to be clear, when structural growth mandates run up against the limits of physical extraction, or waste deposition, we are cooked. As far as ways around this problem, all of them are theoretical and highly disruptive. Banning disposable packaging or legislating the allowable number of breakfast cereal brands isn’t a way out of it, even theoretically. We are in deep trouble, non-theoretically, right now in the present.
Anyway, relating it to pumpkins, let’s say the pumpkin patch produces 80 pumpkins one year and 100 another year due to seasonality of water flows. I want to build an irrigation canal so I can ensure the water supply, but I need your labor. This year’s harvest covers strictly my family’s needs, but the irrigation innovation will produce a small surplus, so I’m able to promise you 5% of next year’s harvest. Or if you like, a share of the water for your own crops. That’s a contractual obligation, it has to happen. If you don’t believe the harvest will grow, then you’re not going to help me, because I have nothing to offer that makes building my ditch a better prospect for you than growing potatoes or whatever it is that you do. Incidentally, this problem applies to socialism or communism or other systems. The dictator of the economy won’t force the collective to work if they don’t expect the investment to grow the economic output, because otherwise it will be a loss.
This is a stripped down explanation about how growth makes the economy as we understand it continue to work. If you want to have something that you don’t have right now, it takes resources that are secured by expectations of growth. This applies to investing, credit, and even savings, because interest is predicated on future growth expectations, and if you can’t expect growth, there’s no reason for you not to hoard or spend. If you don’t bank your money, nobody else can use it, so it can’t be loaned, and nothing new can happen that doesn’t somehow reuse the resources we already have.
And of course it should be underscored that in this example, greed never really came into it. I wanted to improve my food security, I needed your help, you could only afford to help if I could extend you a credible promise that you’ll share in the fruits.
Thank you. I still don’t fully understand, but that clarifies a lot for me.
Not the setup in most stores during the large part of my lifetime that involved a whole lot less packaging. And several local retailers have told me they’d like to get the products without the packaging, but the wholesalers won’t provide them that way.
But in any case: what are the extra people who were employed now doing? Telemarketing? Making plastic packaging? Working at trying to clean up the damage caused by plastic packaging?
Much of the stock market today appears not to be operating on people buying stock in companies they think will make profits providing something useful, but simply as a gambling market, buyers trying to guess whether the stock will be up or down next year or next month or even next minute. The investment isn’t in the long term healthy production of the company and may even work against it. I don’t know whether there’s a good way to structure an investment market so that that doesn’t happen; but I don’t think it was the original intent.
Every kind of investment is prone to speculation. I would say that speculation about price changes ultimately is in some way connected back to an expectation that the investment will have a return, but some stocks are valued in ways that suggest an ROI that’s hundreds or even thousands of years in the future. Nothing can be reliably predicted that far out.
To me this doesn’t point to a problem in equities markets. The problem it points to is, an investment horizon of 100 years suggests the existence of investors who can comfortably park their money for 100 years without being affected (at least for that particular investment).
It’s bad for society that people have claims on future production (money) that run hundreds or thousands of years in the future. A wealth tax would be the fix here. It can be lenient. Assume that every family has 100 mouths to feed. When you possess enough money to feed them all for the next 100 years, you’re done, you’re not allowed to accumulate more than that. Let someone else bank a few years of security. True, it’s outrageously lenient, but it’s infinitely better than what’s going on now. And billionaires will still scream persecution.
I think though that in a lot of cases people aren’t thinking that way at all. They’re thinking can I sell this for more next Tuesday? And that’s not based on whether the company will actually produce more wealth by Tuesday. It’s just based on whether they think some piece of news or talk or the sale of something else or an expectation of shortage or oversupply (which may not appen) will affect what somebody else will pay for it next Tuesday.
Stocks were introduced to handle problems like the ones referred to by @HMS_Irruncible, to create capital for projects too large and costly to be financed by an individual or small group. The intent may not have been speculation, but that quickly followed. A casual observer can easily think that the entire history of stocks has been a series of wild speculative booms followed by busts, recessions, and misery spread across millions who were not speculators. These happened everywhere at every time, not just in modern day America.
Speculation runs rampant in all markets, not just stocks. Land, minerals, bonds, even the famed tulip mania. Seizing the potential for quick and easy money appears built deeply into human nature, and existed long before capitalism. There are ways to mitigate speculative booms, but the people who are making money fight them every step. Look at the way that protections built into the financial system in the U.S. after the Depression have been systematically reduced or removed in the past decades.
Strictly, stocks are ultimately for avoiding personal liability for failed economic ventures. A corporation is a legal entity in its own right and its assets (and liabilities) are not the personal property either of the people who run it or the people who invested in it. If a corporation files for bankruptcy it gets either sold or dismembered and any proceeds pay off what portion of its debts that can be covered; but the former CEO doesn’t have his home foreclosed on to settle the corporation’s debts and neither do the stockholders. Contrast this to traditional businesses in for example Britain where a “Company” represented its owners and partners, who could lose everything if things went sour.
Well yes, of course. Day trading exists, and what a stock does from moment to moment often is not obviously connected to the fundamentals, or is connected in some oblique way (what happens to some other stocks, what happens to derivatives like options). But all of the information that drives daytrading does come from some piece of news somewhere that informs expectations about whether the share will eventually pay off. Individuals may have incomplete or even mistaken ideas about the profitability.
But in the large, this is how markets process information about future expectations (not just the stock market, but markets in general). Markets are great servants in this way, helping to process information about future profitability. But they are poor masters, and they simply cannot help with things that cannot be easily priced (i.e. how do we value the only known planet we can live on? it’s literally priceless).
No you are confusing stocks with corporations. They are not the same thing. There are for example “corporations sole” or “companies limited by guarantee” which are legal entities that avoid personal liability but don’t have shares (stocks).
Stocks are for fundraising.
LLC’s have become very common even for very small businesses.
I’ve never heard of the converse: a company that you can buy publicly traded shares of that you DO assume liability for its debts, unless that’s a standard partnership.