Item — HN Reader

"In fact, this is a general problem of capitalism: over any interval, people who provide money to an operation at the beginning reap rewards far above the value of any managerial abilities they contribute."

This is not a general problem of capitalism at all. If in a venture, you don't like the actions or lack of them on the part of investors, provide your own resources or choose another investor. Who is to say how rewards should be allocated or deserved, other than by agreed local free and fair negotiation on the part of the people who created the enterprise.

1 comments

What if you don't have any resources and your situation and skills aren't suited to bootstrapping? That's true for the vast majority of workers in a capitalist system.

I'm not saying traditional investment isn't valuable. Maybe it's the best way of amortizing risk, for example. I just think that it would probably be better, even from a purely consequentialist standpoint, if, in general, there was somewhat less ability to control things in perpetuity just by virtue of having money at the beginning. And maybe that sort of thing actually does partly occur with stock dilution, stock options, etc. I don't know.

Look on the bright side. Never before in human history have there been opportunities as abound today for finding resources, acquiring & leveraging skills and changing situations. Yes, there can be local difficulties. For instance I live in Romania where there seems to be a conspiracy against those creating and running small and medium businesses or start-ups. That's part of the reason why the country is so poor. Talented young Romanians emigrate in large numbers. Here, the dead hand of the state is all too evident. It is also increasingly prevalent in Western Europe and the UK. I contend that it is the ever-growing bureaucratic controls (mostly dictated by folk who have no appreciation of how wealth is created but are comfortably financed by those who do) that have created a massive disinclination for wealth creation on the part of the workers in the capitalist system.

I notice that nobody mentions the much higher risk involved in early state investments - that's why early stage investors require higher rates of return.