There are two major ways that people do large expensive projects: private sector or the government.
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There are two major ways that people do large expensive projects: private sector or the government.
The number of public companies has been shrinking. New companies with promising futures are quickly bought out. Gold is up, real estate is up, there is too much money that wants to be invested and not enough opportunities to invest.
The market has too much money not enough ideas.
And not enough of these private sector operations will build infrastructure or really get anything productive done.
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There are two major ways that people do large expensive projects: private sector or the government.
The number of public companies has been shrinking. New companies with promising futures are quickly bought out. Gold is up, real estate is up, there is too much money that wants to be invested and not enough opportunities to invest.
The market has too much money not enough ideas.
And not enough of these private sector operations will build infrastructure or really get anything productive done.
Consider the rail road boom. In many ways it was similar to what we are seeing now, but at least they were manufacturing trains and laying rail.
What are we going to have when the dust settles?
Data Centers.
Couldn't we at least build power plants instead?
There is nothing magic about "The Market" sometimes it produces competitive circumstances that may drive innovation, sometimes it can distribute resources somewhat effectively. But it can also simply fail to do those things.
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Consider the rail road boom. In many ways it was similar to what we are seeing now, but at least they were manufacturing trains and laying rail.
What are we going to have when the dust settles?
Data Centers.
Couldn't we at least build power plants instead?
There is nothing magic about "The Market" sometimes it produces competitive circumstances that may drive innovation, sometimes it can distribute resources somewhat effectively. But it can also simply fail to do those things.
What if every company that needs public investment has already raised as much money as they possibly need? What if there simply isn't any real need for more money to go into the stock market? If there isn't a company with a need to buy something, or build something so they can pay dividends in the future when they make a lot of money then maybe the stock market is full.
What happens when the stock market is full?
Anyway it's time to raise taxes and build things with government money.
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There are two major ways that people do large expensive projects: private sector or the government.
The number of public companies has been shrinking. New companies with promising futures are quickly bought out. Gold is up, real estate is up, there is too much money that wants to be invested and not enough opportunities to invest.
The market has too much money not enough ideas.
And not enough of these private sector operations will build infrastructure or really get anything productive done.
There’s also a problem with the private sector and infrastructure. In general, infrastructure is stuff that makes something else more efficient. At a society level, infrastructure is typically a cost centre, but the existence of infrastructure makes other things more profitable (in the abstract sense of reward exceeding effort, rather than a specifically market-based definition).
Having a transport network makes it possible for producers of any kind of physical goods to reach more consumers. An information network does the same thing for less tangible goods. Telecommunication networks allow expertise to be consulted from a larger pool and reduce information asymmetry when trying to pair producers and consumers. Readily available drinking water in houses reduces the amount of time people need to spend going to wells or collecting rainwater and boiling it and decreases the amount of time spent sick. Similarly, good sewage systems reduce illness and deaths. Electric lighting means people can spend more time awake.
But none of these things are necessarily profitable. And, often, making them operate at a profit is a net drain. Charging for public transport often ends up reducing tax revenue by more than you gain from the ticket fees, for example. Water and electricity are natural monopolies (so competition doesn’t work), but making them cheaper almost always increases economic activity.
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F myrmepropagandist shared this topic
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There’s also a problem with the private sector and infrastructure. In general, infrastructure is stuff that makes something else more efficient. At a society level, infrastructure is typically a cost centre, but the existence of infrastructure makes other things more profitable (in the abstract sense of reward exceeding effort, rather than a specifically market-based definition).
Having a transport network makes it possible for producers of any kind of physical goods to reach more consumers. An information network does the same thing for less tangible goods. Telecommunication networks allow expertise to be consulted from a larger pool and reduce information asymmetry when trying to pair producers and consumers. Readily available drinking water in houses reduces the amount of time people need to spend going to wells or collecting rainwater and boiling it and decreases the amount of time spent sick. Similarly, good sewage systems reduce illness and deaths. Electric lighting means people can spend more time awake.
But none of these things are necessarily profitable. And, often, making them operate at a profit is a net drain. Charging for public transport often ends up reducing tax revenue by more than you gain from the ticket fees, for example. Water and electricity are natural monopolies (so competition doesn’t work), but making them cheaper almost always increases economic activity.
It's impossible to make money in transportation. People forget this over and over again, but there are social pressures that keep it from being profitable and overtime, the more useful the network, the less profitable it is.
And this is a good thing.
It's also where a government can play a positive role.
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It's impossible to make money in transportation. People forget this over and over again, but there are social pressures that keep it from being profitable and overtime, the more useful the network, the less profitable it is.
And this is a good thing.
It's also where a government can play a positive role.
the more useful the network, the less profitable it is.
This is the key part and it’s also true in reverse: reducing profit typically increases utility (at least, as long as it’s done by reducing cost to users, not just cutting maintenance). This even works for roads: toll roads encourage people to use other roads, for example. That may be the desirable outcome (if you use the tolls to encourage people to take the train instead, rather than caring about the profit that they make).
You can make profit on transport, but doing so reduces the utility of the transport network.
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It's impossible to make money in transportation. People forget this over and over again, but there are social pressures that keep it from being profitable and overtime, the more useful the network, the less profitable it is.
And this is a good thing.
It's also where a government can play a positive role.
@futurebird @david_chisnall It’s impossible to make money transporting passengers. Freight can be profitable—the rail network in the US is privately built and maintained.
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@futurebird @david_chisnall It’s impossible to make money transporting passengers. Freight can be profitable—the rail network in the US is privately built and maintained.
The same applies to freight. A universal freight carrier makes the rest of industry more efficient. Governments tend to subsidise last-mile delivery because, without that, companies will focus on only the profitable bits (towns and cities)l but there’s a systemic hit if delivering to people outside these regions is too expensive. When they then allow competition, private companies compete only in the most profitable areas and that drives up costs for whoever has universal service obligations (the same applies to phone and Internet services).
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There are two major ways that people do large expensive projects: private sector or the government.
The number of public companies has been shrinking. New companies with promising futures are quickly bought out. Gold is up, real estate is up, there is too much money that wants to be invested and not enough opportunities to invest.
The market has too much money not enough ideas.
And not enough of these private sector operations will build infrastructure or really get anything productive done.
@futurebird I feel profoundly sad about the fundamental economics of financial and entrepreneurial black holes bending all economic activity into eventual assimilation
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@futurebird I feel profoundly sad about the fundamental economics of financial and entrepreneurial black holes bending all economic activity into eventual assimilation
Everyone is feeling so crushed by layoffs. We could really use some new companies with real new ideas, or even just the bravery to try to do something that's already being done just a little better.
But, what a horrible environment to start a company. Unless you start it with the aim of getting it bought. That's how everyone seems to think about it now and I think it's very dysfunctional.
