alt Hacker NewsAgreed! I recently listened to a podcast (video) from the "How Money Works" channel on this topic:
"How Short Term Thinking Won" - https://youtu.be/qGwU2dOoHiY
The author argues that this con has been caused by three relatively simple levers: Low dividend yields, legalization of stock buybacks, and executive compensation packages that generate lots of wealth under short pump-and-dump timelines.
If those are the causes, then simple regulatory changes to make stock buybacks illegal again, limit the kinds of executive compensation contracts that are valid, and incentivize higher dividend yields/penalize sales yields should return the market to the previous long-term-optimized behavior.
I doubt that you could convince the politicians and financiers who are currently pulling value out of a fragile and inefficient economy under the current system to make those changes, and if the changes were made I doubt they could last or be enforced given the massive incentives to revert to our broken system. I think you're right that it will take a huge disaster that the wealthy and powerful are unable to dodge and unable to blame on anything but their own actions, I just don't know what that event might look like.
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I disagree. Those place the problem at the corporate level, when it's clearly extended through to being a monetary issue. The first thing I would like to see is the various Fed and banking liquidity and credit facilities go away. They don't facilitate stability, but a fiscal shell game that has allowed numerous zombie companies to live far past their solvency. This in turn encourages widespread fiscal recklessness.
We're headed for a crunch anyway. My observation is that a controlled demolition has been attempted several times over the past few years, but in every instance, someone has stepped up to cry about the disaster that would occur if incumbents weren't shored up. Of course, that just makes the next occurrence all the more dire.
One need only look at 1929 to understand what's in store. Of course, the rich/powerful will say "who could have seen this coming?"
Stupidity, greed, and straight-up evil intentions do a bunch of the work, but ultimately short-term thinking wins because it's an attractor state. The influence of the wealthy/powerful is always outsized, but attractors and common-knowledge also create a natural conspiracy that doesn't exactly have a center.
So with AI, the way the natural conspiracy works out is like this. Leaders at the top might suspect it's bullshit, but don't care, they always fail upwards anyway. Middle management at non-tech companies suspect their jobs are in trouble on some timeline, so they want to "lead a modernization drive" to bring AI to places they know don't need it, even if it's a doomed effort that basically defrauds the company owners. Junior engineers see a tough job market, want to devalue experience to compete.. decide that only AI matters, everything that came before is the old way. Owners and investors hate expensive senior engineers who don't have to bow and scrape, think they have to much power, would love to put them in their place. Senior engineers who are employed and maybe the most clear-eyed about the actual capabilities of technology see the writing on the wall.. you have to make this work even if it's handed to you in a broken state, because literally everyone is gunning for you. Those who are unemployed are looking around like well.. this is apparently the game one must play. Investors will invest in any horrible doomed thing regardless of what it is because they all think they are smarter than other investors and will get out in just in time. Owners are typically too disconnected from whatever they own, they just want to exit/retire and already mostly in the position of listening to lieutenants.
At every level for every stakeholder, once things have momentum they don't need be a healthy/earnest/noble/rational endeavor any more than the advertising or attention economy did before it. Regardless of the ethics there or the current/future state of any specific tech.. it's a huge problem when being locally rational pulls us into a state that's globally irrational
What is wrong with stock buybacks?
Genuine question, I don't understand the economics of the stock market and as such I participate very little (probably to my detriment) I sort of figure the original theory went like this.
"We have an idea to run a for profit endeavor but do not have money to set it up. If you buy from us a portion of our future profit we will have the immediate funds to set up the business and you will get a payout for the indefinite future."
And the stock market is for third party buying and selling of these "shares of profit"
Under these conditions are not all stocks a sort of millstone of perpetual debt for the company and it would behoove them to remove that debt, that is, buyback the stock. Naively I assume this is a good thing.