Re:Why Dumb Ideas Capture Smart and Successful People
by Tainnor on Tuesday November 21, 2023 @02:37PM
(#38368851)
First, I don't think that "capital efficiency" is something that we absolutely need to optimise for regardless of any other concerns, and even if I would concede that, there's an argument to be made that concentrating capital in the hands of more people leads to more diverse markets that cater to more, and more different, people's needs. The thesis that a few number of people are just naturally more efficient at everything seems questionable to me.
It's true that there are a lot of natural centralizing forces, such as network effects. Not sure how to resolve those.
However, getting back to the original point, no matter how you think about it, capital efficiency requires that 'a few' manage the capital, because naturally there are 'a few' who manage capital better than the rest. The problem is selecting those few. I think it's a misconception to argue that capital shouldn't centralize in principle, or that it's a morally bad thing.
Also, efficiency in a free market is really about fulfilling the needs of people according to their free will in the most efficient way possible. There's no forcing function to produce more if people don't want to consume more. In Soviet Union, they were very efficient at producing some stuff, but they made stuff that no one needed (they made lots of cheap shoes in big factories, which no one wanted). I.e. there's a difference in being efficient in isolation, and efficient at fulfilling needs of the market.