Is growth in the financial sector good for the economy?

Re:Is growth in the financial sector good for the economy? by fennecfoxen on Monday July 20, 2015 @08:42AM (#9915584)

The biggest problems with central planning were never quite as much about the lack of computing power, but more about the incentives that go with that power structure. Politically, the central planner gets to reward all his friends and punish his enemies and deprive them of resources and opportunities. Even aside from the obvious implications on political liberty, getting the opportunity to do business in that environment is a matter of political connection, not merit, leading to stagnation.

I suppose, though, that you could at least use sufficiently advanced algorithms to monitor supply levels and inventories and sales to adjust prices so you can bring back some measure of the price-signaling mechanism that central planning has traditionally lacked... if the guy in charge isn't tempted to fiddle with prices for political reasons. Looking at some extant central-planning huggers like Tom Steyer (who wants to investigate/punish/tax oil firms because California regulations make gas more expensive than elsewhere in the nation) you can color me skeptical of the premise.

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Re:Is growth in the financial sector good for the economy? by sillygeese on Monday July 20, 2015 @11:09AM (#9916543)

Then there's the fact that no one can know what any given person wants to buy at a given time, and therefore central planning is doomed to failure because you can't centrally plan "the right" prices for everything, and then you'll end up vastly misallocating resources, and there will be widespread destitution ala Soviet Union.

In conclusion, central planning ultimately just completely fucks up any economy. Check out Venezuela for a recent example.

So if 100% central planning results in a total catastrophe, then there should be no central planning at all, because any extent of central planning is harmful compared to less (or ultimately none at all).

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Re:Is growth in the financial sector good for the economy? by danieltillett on Monday July 20, 2015 @09:39PM (#9920147)

This problem applies to a non-central planned economy too. Someone somewhere has to make a decision of what people want to buy and make it in advance of the item being purchased (hence inventory). This is why most business use central planning. If they get the planning wrong they lose money and potentially go out of business. The question is can this be scaled up now economy wide now that we have much more advanced computational tools to predict and react swiftly to demand changes. I don’t know :)

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Re:Is growth in the financial sector good for the economy? by sillygeese on Tuesday July 21, 2015 @12:22AM (#9920552)

However you might want to define "central planning", there's a massive difference. The business people are using their own money, but central planners use everyone else's.

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Re:Is growth in the financial sector good for the economy? by danieltillett on Tuesday July 21, 2015 @12:45AM (#9920606)

Actually most large businesses are using someone else's money - the shareholders. The same sort of agency problems that exist in centrally planned economies also exist in large public companies.

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Re:Is growth in the financial sector good for the economy? by sillygeese on Tuesday July 21, 2015 @05:54AM (#9921220)

You got the point though, so it's kind of pointless to keep arguing, right? Whatever money is lost is someone's own money.

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Re:Is growth in the financial sector good for the economy? by danieltillett on Tuesday July 21, 2015 @05:34PM (#9925983)

I didn’t think we were even arguing, just discussing an interesting idea :)

Our current economic system is remarkably similar to the centrally planned economy the socialist dreamed of creating. Most productive enterprises have no controlling owners - the ownership of most public companies is highly dispersed and much of it in the hands of pension funds, etc. About the only difference between a socialist “paradise" and what we have now is that the indirect ownership of the means of production is not evenly distributed within society.

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Re:Is growth in the financial sector good for the economy? by panic on Monday July 20, 2015 @06:57PM (#9919654)

I don't think your argument works. If I drink a swimming pool full of water, I will die. Does that mean I should drink no water at all?

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Re:Is growth in the financial sector good for the economy? by sillygeese on Tuesday July 21, 2015 @12:18AM (#9920542)

Maybe it was poorly phrased. Here's another attempt.

Any degree of central planning is harmful to us because: 1) it always represents an opportunity cost compared to people making choices themselves, and 2) the choices made by central planners are not made to benefit the masses (because otherwise they'd just let people make the choices themselves)

What would be the point of being in a position to make decisions for other people, if you were just going to do your best to benefit others, instead of yourself?

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