[OT]America. The land of the not-so-free (economy)
Greg Rundlett
greg at freephile.com
Sat Jan 8 11:14:01 EST 2005
Derek Martin wrote:
>On Fri, Jan 07, 2005 at 07:59:28AM -0500, Will Johnson wrote:
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[snip]
>>> <>
>>> (Why am I getting dragged into this? Why?)
>>
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I'm getting dragged back into it because I started the whole OT thread
;-) Nice to see a lively discussion.
>>1. The Social Security system is insurance, not a savings account. It
>>spreads the risk of uncertain health and longevity over the population.
>>
>>
>
>Exactly. Only the insurance companies actuaries do a much better job
>of managing the risks (money outflow) against the premiums (money
>in-flow).
>
A national 'insurance' or 'pension' plan will always outperform the
*average* individual (privatized) account. The average person is in no
position to manage investments[period]. Fiduciary responsibility (and
the laws that define it) dictate that money is invested wisely on behalf
of investors when money is managed (by say a pension fund
administrator). The proponents of privatization in the past have mocked
the investment returns of the SS fund at a time when the stock market
was on fire, and everyone thought that they too could be a millionaire.
Those criticisms have died down now that the average person has lost
their shirt in the stock market since 2001. I'm not giving you a
political opinion, but rather my opinion based on years of experience in
the financial markets that individually managed investment accounts are
a bad idea. Generally, the more you can pool investment resources, and
place the management of those resources in the hands of a dedicated
professional, the better off everyone is.
Actually, I believe computers are akin to money in this way. We all
have to use money/computers, and we all should have a solid base of
competence in handling money/computers, but by no means should everyone
have to be expert in money/computers.
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>>3. Capitalism depends on growing markets or increased consumption to
>>give an investor dividend. What happens when the population saturates
>>and the natural resources wane? Might that not happen in your time?
>>
>>
There are huge challenges ahead due to global population growth and
demand for finite natural resources (like solving where to put all the
trash... no doubt we *will* be sending trash into space soon).
However, Fred's 'zero-sum gain' argument about the stock market is quite
misleading. Like plants convert the sun's energy into physical
material, companies convert work energy into physical assets and
'equity'. As long as people show up to work, there will be companies
which are growing. Some fail, some decrease in value because the cost
of the work exceeds the value of the output (and some plants in the
garden wither and die), but I think this is a clearer picture of how
stock 'tokens' can increase in value without being confined to some
maxim that says somebody somewhere else had to lose. Which token to
buy, at what price etc. are nearly impossilbe short-term decisions,
which is why long-term diversified invesments are the best way to
achieve the best risk-adjusted returns.
I could easily bore everyone (if I haven't already) with more of my
experiences and opinions regarding the stock market, but instead, I'll
throw in a curveball that brings my post on-topic: Isn't it ironic that
Wall Street was among the earliest and widest adopters of Free
Software? All the major brokerages and financial institutions are using
Linux. You just can't ignore the value equation of free labor (like
sunshine) producing tangible value when that tangible value (Linux)
outperforms other available options at any price.
Well, in case I've managed to bring this post back on topic, feel free
to change the subject line.
-Greg
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