<story><title>The Rent Is Too Damn High: The Enormous Cost of Letting Finance Rule</title><url>https://www.jacobinmag.com/2014/02/the-rent-is-too-damn-high-2</url></story><parent_chain></parent_chain><comment><author>soup10</author><text>&amp;quot;Those who work in banking, venture capital, and other financial firms are in charge of allocating the economy’s investment resources. They decide, in a decentralized and competitive way, which companies and industries will shrink and which will grow. It makes sense that a nation would allocate many of its most talented and thus highly compensated individuals to the task.&amp;quot;&lt;p&gt;The simple flaw with this idea is that wall street is squarely focused on making more money. Not making society better.  Not allocating capital effectively.  Not even on creating wealth(which is distinct from money).  The single guiding equation for all deals and transactions is &amp;quot;how can we make as much money as possible with as little risk as possible and also stay out of jail&amp;quot;.&lt;p&gt;That wall street occasionally invests in companies that actually do create wealth and allocate capital to the betterment of society is more a case of broken clock sometimes being right.</text></comment>
<story><title>The Rent Is Too Damn High: The Enormous Cost of Letting Finance Rule</title><url>https://www.jacobinmag.com/2014/02/the-rent-is-too-damn-high-2</url></story><parent_chain></parent_chain><comment><author>api</author><text>The rich are simply not smart enough to intelligently allocate their capital. Things like rent extraction schemes (formulaic investment patterns) and bubbles (indicative of simple herd behavior) dominate because they are easy, dumb ways to make more money off existing money. You don&amp;#x27;t see big investments in new technology, science, infrastructure, or other complex and difficult areas because by and large the financiers do not &lt;i&gt;understand&lt;/i&gt; these things. But they do understand finance itself, as well as big dumb markets like real estate.&lt;p&gt;These schemes are dumb because they contain the seeds of their own destruction. Rent extraction eventually kills the golden goose or provokes a populist revolt, while bubbles are basically casino gambling.&lt;p&gt;The libertarian anti-tax&amp;#x2F;anti-government revolution was largely predicated on the idea that private capital would be so much smarter and more agile than state capital. What we&amp;#x27;re seeing is that this isn&amp;#x27;t the case. Private capital is every bit as stupid as the state; Goldman Sachs is not that different from a Soviet planning bureau.</text></comment>