alt Hacker NewsI've been thinking about this recently. The centrality of the stock market, while historically a great tool to allocate resources efficiently, might actually be a big weakness for the USA today. A capable adversary, like China, can kill entire strategic sectors in the US using the stock market. If they undercut the US companies and are willing to accept low returns on their investments, then the respective USA competition will be driven out of business by their investors, because there will be other sectors to invest in, with higher RoI. Do this at various points in strategic value chains, and over a decade or so it might kill entire verticals in strategic sectors, leaving the US economy vulnerable to any kinds of shocks.
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We’re already there when it comes to having the industrial base necessary to fight a protracted conventional war with china. Which leaves a large ? over the US dominance over the pacific.
Y-yeah. HYPOTHETICALLY, this is something an adversary to the USA might attempt to do, and it would really kneecap the US if they were successful.
But would only happen if USA decided to totally financialize all sectors of its economy and make a small set of oligarchic corporations THE load-bearing element of its strategic capacity, leading us to chase market returns even if those returns totally kneecapped our ability to build anything at all of actual value.
Good thing we haven't done that!
> while historically a great tool to allocate resources efficiently
Any empirical support for that?
Do you need the stock market to undercut industries though? I'm not sure it's necessary
> a great tool to allocate resources efficiently
Sorry but... WTF are you talking about?
It rewards self-destructive behavior in favor of short-term gains. Shareholders have *zero* commitment to the companies they buy shares from and will happily switch their entire portfolios on a whim. It's essentially people chasing the new shiny thing every single day.
Let's not forget it's a known fact that people with insider knowledge will profit over everyone else.
How is that efficient in any shape or form?
> If they undercut the US companies and are willing to accept low returns on their investments, then the respective USA competition will be driven out of business by their investors, because there will be other sectors to invest in, with higher RoI.
You're basically explaining one of the reasons stocks are a horrible idea for distributing resources.
It has nothing to do with whether or not it's central or distributed, it's merely the incentives they create. It's essentially Goodhart's law on steroids.
As someone who is essentially financially illiterate, what does this mean, "allocate resources efficiently?" Nobody's investing in companies that promise to cure world hunger or alleviate childhood suffering. They're investing in technologies that can extract the most wealth from the population, regardless of externalities. Is that desirable?
Then again, I can't fathom what people would be doing with their money if the stock market weren't there. I imagine they might naturally wind up with some sort of...stock market.