If you are a tenant farmer, you aren't being "oppressed" by not someone not selling you land. If you offer me £20 for my house, are you being "oppressed" if I don't sell it to you?
The Church of England, Anders Povlsen, and others have all acquired huge amounts of land recently (that is why there is so much complaining about landowners from England who only come up to shoot). There is tons of forestry to bid on, and if you offer the right price then you will find willing sellers...if you offer the right price.
If some aristocrat’s great-great-...-grandpa was a thug soldier in a conquering army or the screwup third son of some foreign noble who the king owed a favor to or possibly a merchant who made a fortune in the slave trade and then married into a noble family (or whatever, pick your favorite backstory), and the aristocrat’s tenant farmers’ ancestors were the local people pressed into involuntary labor who then literally built everything nearby with their own hands over the subsequent few centuries, why should the family whose main claim to fame is aggressive use of force sometime in the distant past continue to own everything, while the ones doing all the work own nothing?
This is exactly why the US [used to] have a meaningful inheritance tax.
Without such a tax, compound earnings on investments implies that over time, a very small fraction of the population will control the vast majority of all economic resources.
At the Federal level there is a progressive estate tax up to 40%.
I don’t believe the rates have changed much, but the base amount which is excluded has increase to ~$5.5million per person, $11m per married couple.
Why do you say “used to”? This is not nearly so much of an exclusion amount as to approach an effect where “a very small fraction of the population will control the vast majority of all economic resources.”
Why should they continue to own it? So that some other account can't write a four-line paragraph and tell us to take what you own. We protect other peoples' property rights in order to secure our own.
Large inheritances are inherently unjust. Citizens should not be accumulating dynastic aristocratic fortunes. Small groups of people should not – based on accidents of history – end up inheriting the accumulated wealth of the whole society.
This is not about opposition to private property. I’m fine if people own a house, or a family farm, or a small business, or even a controlling stake in a large business they built from nothing. (Though it would be great if at that point the public had transparency into their self-serving political activities.)
But passing billions (and the derived political power) down to descendants several generations removed who did nothing themselves to deserve it is ultimately a recipe for a deeply broken society. It creates perverse incentives away from long-term thinking towards large-scale fraud and abuse, and entrenches the political influence of an aristocratic class whose primary goal is to maintain their fortunes rather than contribute to the society.
Why are they unjust? I don't see how wealth transferring from one person to another is the same as "inheriting the accumulated wealth of the whole society". Did the heirs also steal everyone else's things when the wealth was passed on? How does that happen?
If inequality is very high (say 1% own 40% of the resources), and a child inherits almost a percentage of the _entire society’s wealth_ just by birth then that select group of inheritances is receiving incredible portions of the accumulated wealth of society by birth becomes an aristocracy.
Yes that's true, but the actual percentage of ownership hasn't changed, it stays the same. But the bigger issue is that the economy is not really a finite thing. Owning a certain amount of land, maybe by inheritance is not the same as owning a never changing percentage of all the resources. A good counter example might be something like inheriting shares of Google, or Amazon. Those people might never have owned any significant percentage of land but that did not stop them from owning something else that is more valuable than the land. So the resources change over time and I don't really see why land ownership is being used as a proxy for everything. Now, also, you may have not been making that point yourself but just clarifying. I just want to talk people down from the land confiscation movement because it seems destructive and pointless.
1% of 1 million people is 10,000 people, who will be roughly half kids and young adults — the heirs.
So you’re talking 0.00008% of the wealth being passed down, roughly. That’s still pretty unequal in a society with a lot of people, but I’m also not sure smashing any granule of accumulated wealth leads to a vibrant society — the inter generational transfer of structures is essential for culture.
Capitalism is fundamentally just highly mobile aristocracy, though — and that may be the best we can do.
So there are a couple issues here. Taxes(on the rich), economic opportunity(from monopolies and corruption), land ownership, and implicitly a notion of fairness and these all become merged in to one issue but I don't think they really are all the same at all.
Land ownership seems like a much more mundane part of the economy actually but it is being equated with the entire economy. So what does land ownership have to do with monopolies, corruption, and the rich paying proper taxes? What are proper taxes for the rich to pay?
To me the land ownership issue is being used as a wedge to reinforce a different idea that a tiny percentage of people have economically disenfranchised everyone else. I really don't think land ownership should be equated with that however. At this point, the argument is very different. It's gone from why we should confiscate people's land to what tax rates should be, or who the "rich" are, or why real estate prices are what they are. To me the land confiscation case seems like scapegoating of landowners for things like real estate prices or economic inequality.
Really? I'd say that taking peoples' stuff in the name of social justice is inherently unjust.
> But passing billions (and the derived political power) down to descendants several generations removed who did nothing themselves to deserve it is ultimately a recipe for a deeply broken society.
I actually don't disagree with this. But we're talking about England here, and even if you stop the money, you still have the class structure and the connections, which still lead to political power.
But even more, while I agree that the problem is real, I disagree with your solution. "Lets just take it from them, and give it to those who have less" is such a seductive dream, but it destroys societies and economies where it is tried.
> I'd say that taking peoples' stuff in the name of social justice is inherently unjust.
You have people like Buffett, Gates even Andrew Carnegie and many other billionaires saying that their wealth should go back to society instead of their kids, are they all wrong?
> I'd say that taking peoples' stuff in the name of social justice is inherently unjust.
Saying it's your stuff, is the misnomer. It was found by your because it was someone else's stuff, but there's supposed to be some moral virtue of you receiving it, because you benefited from it during your upbringing.
Being offended by a perceived slight in Procedural justice is a matter of circumstance - ie altering the principles you were born under for Distributive justice, even if you don't think it's as equitable based on your experience. From a pragmatic point of view, inheritance causes Capitalism to fall into anarchy in the long term...making it inherently immoral, as a practice. Unless you want to dispense with capitalism, in which case it's still immoral to a lesser degree (lesser evil against a greater evil).
It doesn't sound like the inheritance is the problem but the concentrstion of power. A simple and fair solution would be to not allow a single person to inherit more than 50% of the wealth of their parent! Therefore every generation splits the wealth among two or more people which leads to a reduction in wealth concentration.
In romanian history I know 2 positive examples where land was confiscated and redistributed with positive effects: one by Alexandru Ioan Cuza who confiscated most land owned by church(roughly 25% of the country) and another instance during ww1 when the King decreted every peasant fighting in the war will be alloted land by the state.
Nothing bad came from that, the people were already working the land, they just got to take home the fruits of their labor more.
Of course, you are conveniently forgetting a much more recent example of land redistribution from Romanian history: the forced collectivization after the WW2.
The effects were predictably horrifying, with families starving while their land was forcibly taken and misused by people more friendly with the new system.
Because when the state CAN take everything from you, it's up the "wise statesmen" if the taking is for the good or for the bad of the society. You have no saying it is, but one thing is for sure: it’s bad for you and always good for said statesmen and their tools.
But the collectivisation was the exact opposite: it took land from everybody and gave it to the state.
My point was, land/wealth redistribution, can and often is a good thing, it's not a sacrilege that aytomatically ends in dissaster as some die-hards make it to be.
Everybody?! The communist propaganda was very careful to underline that they only took from those "who had too much" to give to those "who needed" for the "betterment of everybody".
Too bad if you (dirt poor and uneducated) went to fight in WW1 to get some land and then spent the years after WW1 working that land like crazy to buy more land because you believed that gave your children a better chance in life than you had.
Because that's what happens when you don't have principles (like "private property is sacred") and you replace them instead with nebulous beliefs that sometimes it's OK to steal from others, as long as they have more than you do and you get some of that booty.
That was just propaganda. They took priate property away from everyone that had something. Even if you had two cows, they took that away and made it state property. The process is quite nicely illustrated in the Morometii sequel that came out last year:
That's still the work of the USSR. The communists siezed power in Romania under Russian occupation after WW2. The recipe was similar to what Putin used in Crimeea some years ago but at least there they had some popular support whereas in Romania they used intimidation and massive election fraud.
The people digging in my grand parent's garden to find&take their hidden winter children clothes and provisions were 100% Romanians, locals from that tiny village, previous lazy losers freshly empowered into dedicated tools of the communist regime.
It was roughly the same during the French Revolution and giving public land to veterans is a practice since the Roman Empire. But in the USSR during Stalin, colectivised agricultural land amounted to 91%. The blosheviks took land from everyone who owned land, big or small. Add to that other private property such as livestock, means of production.
I agree that Cuza's secularisation of monastic estates was a good thing.
Land reforms and redistribution never work. It just disrupts the current social order, pisses off people from which the land has been taken, pisses off people who didn't get as much as their neighbor and eventually, roughly within 50 years, leads to similar social structure as before the reform. Only with different social class becoming the owners. The old aristocracy gets displaced by new oligarchic aristocracy. This has happened all over Eastern Europe.
The actual solution is capturing of the rent as the land value increases. The increase on land value is due to society contributing, but the beneficiary is the landlord sitting on it. Tax the consumer, not the producer of the value. Tax land, not labor and business.
The aristocratic power law society has to be broken in order to fix the system. Bolsheviks didn't understand this. Or they did and they organized the coup just to become the new bosses.
Without this understanding our society will still be very primitive and suffer from revolutions and aristocracy cycles. At least in ancient times they understood basic ethics in terms of ethics of ownership and how destructive debt was on a society. It seems like today we are blessed with all these new technologies but live more and more in some medieval dark age dystopia.
The oligarchs are generally former Communist managers who cashed out as the Soviet Union crashed. So really not that different from William the Conqueror etc.
> We protect other peoples' property rights in order to secure our own.
And from there follows a simple equation - when the distribution of benefit from recognizing existing property rights is too skewed in favor of the few, the gains to be had by the rest from refusing to recognize those rights anymore exceed the risks of not being able to secure your own.
When elites forget about this equation for too long, revolutions happen.
Property rights beyond "what you can defend is yours" are a purely human invention; there's nothing innate to the world that says that the property rights regime that exists now is the right one.
There are other ways you could approach it that would distribute ownership and political power in a more egalitarian way, and as ownership (and political power) become increasingly concentrated in the hands of a few, more and more people will realize that "we protect others' property rights to secure our own" is not meaningful. There's nothing of our own to secure, and never will be in a significant way.
This sort of refiguring of property rights can happen incrementally and peacefully (through tweaking taxes, etc), or suddenly (revolution). We've seen both lots of times in history.
Where we go next is the question; but ending the discussion the way you wanted to isn't all that practical or interesting.
Look, if you want an inheritance tax, I don't object, even if it's 50%. (I might at 90%, though. And if you're going to rely on an inheritance tax, you also probably have to tax trusts...)
I just object to the "they have to much, so we should take it from them" rhetoric, on the principle that, once they're done taking what the rich have, then they're going to decide that those who have the most at that time are now the rich, and the process will continue. And it won't stop until they decide that I'm the rich, and they should take what I have. In the process, they'll destroy the economy of the country. I really would prefer that that particular genie stays in the bottle...
The UK's landowners have already destroyed the economy of the country. The country has food banks, literal starvation, and barely functional health, education, and transport systems. Industry has been almost completely sold off, and services are following in due course.
Overt this period the landowners have accumulated more personal wealth than at any time since the Enclosures.
Your point is naive first-order thinking about a third-order problem. "If we let people take billionaire stuff they may take my stuff" is nonsense.
What actually happens in redistributive economies is high taxation leads to high stability combined with high opportunity - not the false rhetoric of opportunity hiding a reality of very poor social mobility, which is what the US has, but genuine social mobility and business opportunity.
Huge inequalities are actually more like to result in revolution and war than stable economies where wealth is more evenly distributed.
Beyond a certain point massive inequalities are inherently politically unstable and almost guaranteed to result in a seismic social dislocation.
This isn't even a moral point - it's simply empirical.
Labour rhetoric. The UK isn't "barely functional", that's a ludicrous communist fantasy that can be traced back right to Marx, who tried to convince his readers of the dire near apocalyptic state of England by committing various kinds of fraud - like making up quotes and attributing them to the PM, or relying on obsolete government reports into factory conditions. Those conditions had long since been fixed by the government's factory acts, but Marx couldn't mention that without undermining his central thesis that democratic capitalism was in a death spiral and couldn't improve the workers conditions, so he pretended he was citing contemporary documents.
Nor have "landowners already destroyed the economy of the country". The UK economy is the fastest growing in Europe right now (of the rich nations), unemployment is at record lows despite a long term massive influx of immigrants: its economy is literally the opposite of destroyed. You're lying about the reality of the UK, whilst criticising others for being naive.
Shooting down your trad-Marx rhetoric with economic facts is easy so I'd like to focus primarily on this oft-cited belief:
Beyond a certain point massive inequalities are inherently politically unstable and almost guaranteed to result in a seismic social dislocation. This isn't even a moral point - it's simply empirical.
But it is a moral point. The people who perform "seismic social dislocation" in response to (perceived or actual) economic inequality have a long history of performing that dislocation by shooting peaceful people, stealing all their stuff, building forced labour camps, liquidating all their political opposition and then turning their countries into hellholes. The communists who did all these things absolutely deserve moral condemnation and their acts cannot simply be whitewashed away as some sort of mechanical inevitability, no more than someone could excuse the Nazis as some sort of mechanical inevitability given the inequalities imposed on Germany by the Treaty of Versaille.
Compare the fate of every country where your views have gained critical mass vs America. The latter is one of the world's most successful countries, if not the most. The others are all slowly recovery from absolute poverty, and recovering only because they finally turned their back on your Corbynite views.
> Those conditions had long since been fixed by the government's factory acts, but Marx couldn't mention that without undermining his central thesis that democratic capitalism was in a death spiral and couldn't improve the workers conditions, so he pretended he was citing contemporary documents
I've heard most of the anti-Marx stories - some invented, some just rumor, a few true. Never heard this one before. Not sure what one of these jibes you are referring to.
Marx traced the history of capitalism in England. Actually in his studies he showed how working conditions had gotten better in some respects. He was writing a history, so of course he referred to "obsolete...long since reports".
You are correct that he predicted capitalism was in a death spiral. Just as he had observed feudalism in a death spiral, and knew about the Roman slave latifundia economy's death spiral before that.
Corporate America going to the taxpayer to bail out "too big to fail" deregulated banks is precisely the kind of thing Marx predicted. Marx said eventually that would lead to the end of capitalism.
Who knows, the amount of carbon poured into the atmosphere increases every year, perhaps capitalism and humanity will both end at the same time before Marx's visions could be realized.
> ...once they're done taking what the rich have, then they're going to decide that those who have the most at that time are now the rich, and the process will continue. And it won't stop until they decide that I'm the rich...
Doesn’t mean it’s right either. Taken from the link you cited:
> One reason why I am skeptical has to do with the difficulty of the causal reasoning needed to establish that a slope really is slippery; most slippery slope arguments make little or no attempt to do this hard work. Moreover, it is difficult even in retrospect to tell whether a slippery slope mechanism has actually been at work.
I see no attempt on the part of the commenter I replied to, to make this kind of effort. And to save them the effort of doing so- even if they had established the presence of a slippery slope, they’d still need to prove it was the causal agent of the consequences they described.
Short of evidence to prove in advance that action A will lead to consequence B, this comes across as scaremongering.
The flaw here is talking about the 'rich'. You can divide rich into absentee landlords collecting hight rents and stifling the economy down and the actual rich who became so through entrepreneurship or other positive impact activities.
I think the sequence of events you're proposing is implausible, on the order of likelihood of a zombie apocalypse or the apes rising up to overthrow mankind.
"If we decide that billionaires represent a policy failure that has allowed a few to concentrate wealth and power and society collectively wrests some of that back from those with such a disproportionate power and wealth, then that means eventually 'they' will come after my inconsequentially meager possessions."
I saw an interesting documentary recently about the British Royal art collection, and it included the interesting quote: "At the root of every great fortune is a crime".
The original British Royal art collection was confiscated in 1649 by Cromwell and it's putative owner was put to death! Almost all of it was sold off, with some parts later returned after the restoration and then glorious revolution (which was more or less a coup). The subsequent collection was built up significantly by the Hanoverian's.
I expect that the crime being referred to was the execution of Charles 1st?
In the documentary they were examining a famous piece from the collection depicting Ceasar's conquest of Gaul (France), which, according to the documentary, was effectively a genocide.
A quote attributed to Honoré de Balzac, but when I went to use it a few years ago I wanted a citation and found that his actual words were neither so pithy nor so broadly implicative:
"Le secret des grandes fortunes sans cause apparente est un crime oublié, parce qu’il a été proprement fait."
The secret of great fortunes without apparent cause is a forgotten crime, because it was properly/cleanly done," is my fairly literal translation, but I am not really fluent enough to capture subtleties.
Ignoring the fact that a lot of the land has changed hands since then (the issue is concentration not identity of owners...a dangerous conflation): are you saying that a morality test should be applied to the family tree of all property purchasers?
I am sure this is attractive to you because you are a member of the "virtuous class" no doubt, but have you checked your family tree? How far back? What genetic crimes prohibit property ownership? Class traitor? Rightist? Capitalist Roader? Perhaps religion?
And why do these people still own land? Presumably you aren't personally being pressed into involuntary labour, so why do you as someone who is doing "all the work" still have nothing? These inbred landowners are presumably so feckless they would take anything (certainly, lots of these estates go for sale every year).
If you go far enough back in my family tree of European peasants, I’m sure there are plenty of bastard children of feudal lords in there. Not to mention thieves, killers, psychopaths, abusers, and so on. Likewise, I’m sure there are plenty of aristocrats (both historically and today) who are lovely people who treat their servants pleasantly and pay them above market wages, and so on.
That’s not the point. The point is that a small group today shouldn’t be the inheritors of the entire society’s wealth. We shouldn’t be judging people today based on the actions of distant ancestors. And the way to avoid that judgement is for the majority of absurdly wealthy people’s property to devolve to the state when they die.
> And the way to avoid that judgement is for the majority of absurdly wealthy people’s property to devolve to the state when they die.
That just makes the state the owner of most of the society's wealth--which in practice means the small group of people who control the state own it. How is this better?
Because it’s far easier for someone with a great vision about how to use the state’s wealth for everybody’s benefit to get themselves elected to the governing body than it is for them to get themselves reincarnated as an aristocrat.
Is it though? In the US, I think, it’s far easier for someone to make a billion dollars, and thus be able to buy a bunch of land or whatnot, than it is for a president or major politician to be elected with a clear enough vision to do something.
I base this on the number of new billionaires vs the number of major new political initiatives.
I think it’s quite easy to have a vision, but very difficult to filter those through the will of the people. In the sense that a great vision is very subjective and may not be believed by the large number of people necessary to change things in a constitutional republic.
> someone with a great vision about how to use the state’s wealth for everybody’s benefit
History shows that such people are much, much rarer than people who have a great vision about how to use wealth they have either inherited or built up themselves for everybody's benefit. Or, to put it another way, people with a great vision that will actually work are far more likely to become entrepreneurs than politicians. Bill Gates is eradicating malaria using his own wealth while governments have failed to do so for centuries.
I agree. But it can be made simpler than that. If the owner actually wants his land property to be inherited, why shouldn't he pay for the property protection over his life himself? If he convinced the society that he really is the owner this way, I don't think the society would have found this private
land property or inheritancee unethical.
What they find disturbing though is that they as a society have to pay for all these property related services like internal protection (police, courts, law system) like external protection (army) and give these to the sitting and do-nothing landlords for free. While paying for them from their pocket through income taxes and receiving nothing back.. Actually the landlords are then so kind as to increase their home rents as a Thank you.
Okay, that isn't the point...but that is what you said: "why should the family whose main claim to fame is aggressive use of force"...how else is this supposed to be interpreted? Because of someone's ancestors, this group shouldn't own property. If you want to make a different point, then make it.
And it isn't random. You can acquire this property if you want. But be aware, you seem to be expecting to acquire the "entire society's wealth"...most of this land isn't that valuable and that land that is requires work (which is why it is valuable).
Again, I don't understand what your point is here beyond anger that someone else has something you want?
EDIT: Are you actually familiar with the population distribution and density in Scotland? A good chunk of this land is just agriculture and rough grass that has few economic uses. This isn't land that anyone wants to live on. The main concern of the govt, as I understand it, is to encourage forestry (which will mean more large owners, not less).
...yep, and the fact that the population of Scotland is tiny and over 50% of that population live in the Central belt.
Afaik, the only solid evidence against is an apparent lack of "participation" from local communities on land use. Unfortunately, this is an issue that applies as much to council as private landowners in Scotland and also tends to elicit opinions on what "should" be the case, rather than what is actually possible (i.e. people who live in the middle of nowhere complaining about the lack of economic development, complaining that the landowner isn't selling them a house at a cheap enough price, complaining that the landowner only comes up from England to shoot, etc.)
There has been an abundance of loose reasoning on that is justified only by the perception that of unfairness (and, unf, a bit of light bigotry about the English). One of the sources for the rather brief Land Commission report was some political theory on power and participation (https://landcommission.gov.scot/wp-content/uploads/2019/03/R... - Section 5 - I studied Politics postgrad btw, theory shouldn't be used this way...it is basic). Madness.
It's not really a "perception" of unfairness... it's a long rooted and fossilised class system, acting to the detriment of the entire country. (Hopefully your politics postgrad included the clearings.) England at least had the Civil War to equalise things a bit, Scotland has never had any kind of revolution or similar to break very old land ownership structures.
Scotland's second biggest problem is England, in the form of unbalanced monetary transfers from borrowing from London, and the brain drain to England, and for that matter the rest of the world. But its greatest problem is itself, and the domination of control in a few families hands.
You've repeatedly crossed into personal incivility in your HN posts. We've had to warn you about this before. We ban accounts that do this, so if you'd please review https://news.ycombinator.com/newsguidelines.html and follow the rules when posting here, we'd appreciate it.
"...someone who is poor in Scotland can become rich..."
Five minutes of casual googling didn't yield Scotland's current measure of social mobility. The Great Gatsby Curve is a rule of thumb suggesting that inequity & mobility are strongly correlated. Further, the members of the commission responsible for the Elite Scotland report (meant to update the measurements) all resigned in protest, which is probably a bad sign.
> It is amazing that you aren't able to distinguish between your opinion and reality.
This is snark, and is not welcome here.
> my politics postgrad most certainly did not "include" the clearings (I am not even sure what this means
neffy is referring to the Highland Clearances which were a brutal and iniquitous time for tenants in the Highlands. I'm quite surprised that given your chastising tone and appeal to authority by bandying around your politics postgrad studies you hadn't heard of this.
> the result of the Civil War for Scotland was imposition of govt from England.
Whilst there may have been some ripples down through history as a result of the Civil War, there are more conclusive reasons why Scotland became governed from England. Perhaps you should read some Scottish history. In particular the bits about the Union of Crowns and the 1707 Act of Union.
I'd also suggest grabbing a copy of Andy Wightman's "The Poor Had No Lawyers"[1], he explains land ownership in Scotland and the reasons why it is difficult for ordinary folks to make inroads into fair land ownership here.
> It not only reeks of bigotry but is a self-destructive pattern of thought. Scotland's decline is a function of the nation and it's people. These "stab in the back" myths only help the weak-minded find (empty) solace in their failure.
Hoo boy....I'm shouldn't even grace this with a response it's so ludicrous and ill-informed; and I'd suggest you not accuse others of bigotry as it's downright rude.
Politically (not culturally) England has always been a problem for Scotland. I highly doubt you're a member of the SNP (I am and your claim from the comments above fail the sniff test), maybe you meant the BNP?
You've broken the site guidelines badly yourself in this comment. Please don't cross into personal attack and name-calling, regardless of how another commenter has behaved.
The reality is the opposite. In the long-term, you are screwed with this voting structure. This structure exists because right here and now, Zuckerberg looks like a good choice. Over the long-term, bad things happen. Human nature is what it is, and the company will be unable to respond (just based on what he has already done, he looks like a below-average manager).
Also, most institutions aren't particularly short-term in their outlook (if you are an institution buying a stock that has a valuation like FB...you have to be taking the very long view). Where the short-term "meme" comes from is analysts (whose bark significantly outweighs their bite) and the pressure that failing companies get to preserve shareholder value (and the real-world evidence here is that managers win close to 100% of the time and take shareholder's money down with them).
In my experience, I have seen countless companies decimated by unaccountable managers (no super-voting shares to my recollection, just weak oversight). I am not aware of any public company harmed by short-term thinking. The only possible exceptions are private equity (but for different reasons, still terrible) and acquisitions...but in the latter case, this happens for a ton of other reasons too. In most cases, there is no pressure.
Tbh, I don't even understand the logic...you can invest heavily, and that isn't showing up on your income statement immediately. It is true that most investors don't understand the difference between ROI and marginal ROI (these situations probably represent a good chunk of my lifetime returns) but companies feel limited in what they can disclose (and I have had conversations with non-US companies to that effect) and, in the end, the market always works it out.
She pissed off most of the staff. She introduced a weird iteration of "fire the bottom performers every year". She bailed out Dan Loeb (who had hired her but changed his mind after she refused to do almost anything she promised). She didn't get a particularly good price in the eventual sale. She got paid hundreds of millions for nothing (her pay alone was ~5% of the eventual sale price...one person). Terrible acquisitions. Terrible hires. She also appears to have rubbed almost everyone she met up the wrong way (I know people who met her and got a bad impression, imo she came across very poorly to investors and was preoccupied with perception/spin...I believe she gave an interview a few years ago in which she even blamed Carl Ichan...truly odd).
Most people are, I think, quite forgiving when it comes to failing in these situations. The issue often is that some people, most in my experience, have no idea how to behave when things go wrong (and, given enough time, something will always go wrong).
From everything I know about Marisa Meyer's tenure at Yahoo!, it seems like she was truly terrible. What I'm curious about, though: what was her tenure like at Google? How did she move up so fast and get such a high profile job so quickly?
> In Silicon Valley, it is widely known that Mr. Page had dated Marissa Mayer, one of the company’s first engineers who later became chief executive of Yahoo.
Just to note first about the other answers: the EU Parliament is really not very important. Most decisions are made within the Council, which as said elsewhere, votes based on population weight. The Parliament does seem to exercise real power over the Commission but beyond that...not much.
Germany is influential because they have a large population i.e. high vote weight in the Council AND they lead a bloc of other nations with similar values (Austria, Belgium, Netherlands, etc.).
It is worth noting though: the UK leaving the EU will likely change this (they usually voted with Germany and had a 13% weight of the EU population). Germany will likely retain some moral leadership but, at the very least, a blocking minority vote (35% of population and 4 members) is possible (the most likely scenario is a France/Italy combination with two other minor members).
In this case, the parliament and council are equally important as they both have to adopt identical versions of the proposal as per the ordinary legislative procedure.
Most UK banks offer apps, Monzo is not doing anything particularly new. Their success has been in convincing investors that the competition is "ossified" whilst dropping tons of their money and failing to actually gather deposits.
You can buy £400bn of deposits with Lloyds for £40bn (and get paid 5%/year for the pleasure). Or you can pay £1bn for a loss-making company with £100m in deposits...it is pretty simple.
Monzo offers push notifications within 5 seconds of card payments. Customers love that feature. Traditional banks don't offer it, probably because none of their batch computer systems can do anything in 5 seconds. That has been the status quo for 5+ years, and I don't see it changing.
Here in the UK Amex do that too: instant push notifications from the Amex app or from Google Pay, even if you used the physical card.
Monzo did offer the novel feature of convenient, temporary, self service card disabling / enabling (useful if you lose it then find it again) but loads of traditional banks have now copied it.
That is nothing special though, just most UK banks are using decades old technology. Five years ago I was living in country where my bank would send me an SMS as soon as I authorised a transaction on the chip&pin machine.
I like Monzo for what they do, but I don't really see why they are considered so valuable. The real value in consumer banking is offering credit, and that's where it starts to get complicated.
...why do I care about push notifications? By "customers love that feature" you mean, you like that feature. Most people aren't interested in having an app at all but the ones that are just want to be able to look at their balance, make payments, and cash cheques.
If I want to see if I have made a payment, I just open the app...which takes 10 seconds instead of a 5 second push notification.
* I get an independent confirmation that money has actually left my account (eg we’ve all shopped on websites when the payment pages crash and you don’t know if something has gone through or not)
* it’s comforting knowing that if for some reason someone else was illegally using your card, you’d be getting instant push notifications about it.
Monetary policy is everything. Read financial history.
VCs aren't some unique species that have cracked investing. Human nature is the same as always: people will do stupid stuff. If someone turns up with a check for $100m, you don't check to see whether you can invest it safely. You become a true believer, you gather assets, and if you weren't a true believer at the start you will be after you make enough...it always ends badly but this is why cycles happen.
In fact, the last cycle has been particularly unusual because we have actually see the bad firms driving out the good ones (I don't know about VC but it is happening everywhere else). And this is definitely due to monetary policy.
You are right. At the level of the investment, people aren't saying we should seed this company because of monetary policy...but no-one says this in any bubble. Rather what happens is that the demand for securities goes up and finance finds ways to fill this demand. Human nature being what it is, this always ends badly.
To say this another way: people will find endless ways to rationalise a bad decision. And if someone is paying you to make bad decisions sound good...well then, what do you think will happen?
Btw, just generally, I think VCs are less sophisticated than the average investor. The current environment has just been very forgiving. I don't think we will see anything like this again (if central bankers lose control which seems inevitable), literally firms with billions in cumulative losses trading for $10bn+. These IPOed firms will probably destroy hundreds of billions in capital alone.
I studied financial history extensively. I wrote a paper in law school about the origins of the financial crisis and studied most economic and financial panics for 200 years. Monetary policy is rarely the most important factor. Trade policy, Fiscal policy (government spending across national, state, local and community), Regulatory incentives, technological changes whose importance is overestimated or underestimated, Social demographics, and human psychology are all way more important than monetary policy both in contributing to bubbles and fixing the crisis that follows.
Your answer itself hints at how important human psychology is. 'People do stupid stuff'. Robert Schiller won a Nobel price and said basically that.
Go look at the interest rates every year in the 90s and tell me that they causes the dot com bubble. Then ask yourself if maybe investors overestimated the possible success of many business and were willing to pay crazy multiples above earnings because the 'normal rules of business don't apply to internet firms'. When the stock was skyrocketing, psychology and greed take over as it feels like confirmation that the original thesis is correct. Bitcoin recently followed a similar dynamic. In neither case was monetary policy the major driver.
Cool, you wrote a paper in law school. I wrote two dissertations at UG and PG level.
Monetary policy is essential, none of the things you mention are more important. Why? Because the boom can't occur without monetary policy (this is usually not obvious to people who have only looked at US financial history where capital markets are developed).
Lots of reasons are given ex-post to rationalise these movements i.e. changing technology "caused" the Canal boom...but technology is always changing. And human nature is certainly interesting...but it is an invariant (just like technological change). The enabling factor is always money. Btw, this isn't to say that, for example, regulation wasn't a factor in 2008...it was but the thing is that regulation is always a problem because when money gets loose then regulations follow.
Examples of booms without bubbles: post-WW2 in the US, financial conditions were stable in the few decades (not strictly true but for our purposes) because the the main concern of monetary policy was government finance. Another example: Japan 1960s-1992, MOF had total control over lending so no bubble (only popped when they lost it).
In these cases, you need to really understand how money is being created and intermediated. If you understand this then you understand why bubbles do and do not occur. If you look at unimportant things like technology, you only have reasons why bubbles do occur (this is the kind of terrible history that you presumably learn at law school).
You also picked one of the absolute worst examples to demonstrate your point. The Greenspan Put was vital, "irrational exuberance" and the contrast between that approach and that of a McChesney Martin (for example) is important. Even just the change in policy under Greenspan...really bad example. I tried but was unable to think of an actual example...
No-one cares about Bitcoin. We are talking about financial history, not Beanie Babies.
Bitcoin is a good example because many people view it as an alternate to fiat currency that is “manipulated” by central bank monetary policy. Yet human psychology created a boom and a bust. We are talking about the history of asset bubbles and misalignment of capital. Why are bitcoin and beanie babies excluded examples of asset bubbles in your mind? They seem to show that People do stupid things regardless of monetary policy
My point is there is no one factor that is primarily responsible for all bubbles. There may be similar sets of factors that reoccur, but to say that monetary policy emerges as the singular most important factor throughout history doesn’t seem to me to be defensible.
Post-WW2 was a unique context because vast amounts of capital were being used to literally rebuild Europe. The US was basically the only manufacturer of scale, so I make sense that there wouldn’t be an asset bubble when there were vast numbers of projects that required capital and that were economically and financially stable rather than hype driven.
I will have to think about Japan as an example, I haven’t read the history in quite some time, I am definitely open to it being an example of a bubble cycle driven by monetary policy. My impression was that trade with the US and demographics seemed to be more a driver but I’ll look into it and post if I am persuaded.
Lets keep it civil. You suggested to “read history”. I responded with evidence that I have in fact read relevant history thoughtfully and arrived at a different conclusion.
You provide no evidence that the factors I list matter less than monetary policy. I actually think the Greenspan Put (ie low interest rates to stimulate the economy) is a good example because many people, including, it seems, you, identify that as the most causal and important factor in creating the subprime crisis. This type of monetary policy is relatively new, yet asset bubbles have existed throughout history, even where there wasn’t even a unified currency let alone a Federal Reserve that set such policy.
In fact, evidence suggests that it was driven by a new financial business model, securitization, where loans were no longer held by banks but placed into a special purpose companies with shares of that SPV sold to investors.
Underwriting began to be meaningless as the companies originating loans wanted more volume because they got fees and held no risk. Investors were told that financial engineering meant these assets were AAA and safe.
Also throw in the fact that investment banks that were doing the financial structuring were no longer general partnerships (where individual partners are personally liable for partnership debt) but for the first time limited liability companies or corporations, and you get a clear picture of psychological, and new business model innovation, driving the bubble.
Similar story with the savings and loan crisis. Monetary policy is easy to blame until you look deeper. As in the financial crisis, you had financial innovation “Junk Bonds”, and regulation changes that let S&Ls take risks and deploy capital where they were previously restricted. All while monetary policy was tightened drastically, which should deflate asset bubbles not create them.
Further it is a good counter example to the Greenspan Put because monetary policy was exactly the opposite of Greenspan; Volker was jacking up interest rates to kill inflation and yet Savings and Loans were taking crazy risky bets and created real estate and junk bond bubbles. If you’re theory is valid, it should have a prediction on what monetary policy would create. Simply saying “it is the most important factor” gives no information. What happens when monetary policy is tight and rates are high. What happens when it’s the opposite.
Lastly, you seem to imply that someone controls monetary policy. The financial crisis made it clear that shadow banking, derivatives, and general flow of funds between banks was orders of magnitude bigger than any thing the Fed controlled. These monetary instruments were the real driver of the mortgage bubble, not any monetary stimulus through low interest rates.
Is monetary policy important. Yes. Does it explain why Uber and Lyft and every other unicorn are getting investment easily. No. Does it predict or cause most bubbles. No. I am open to being convinced otherwise.
I am confused. Is Meituan's ticker 3690? This looks like the company referred to and the actual operating loss is 11bn RMB (so about ~$1.5bn)...which is a lot but revenue doubled, and this is kind of a scale-ish business...so?
The number quoted by Bloomberg (quoting from Nikkei) is comprehensive income including the conversion of pre-IPO securities...so not really reflective of operations.
What is kind of staggering is the cumulative losses to equity ~170bn RMB or $25bn. And presumably, there are options and all sorts. Tbh, I am not even sure how this number is correct given the business isn't even ten years old...I don't look at HK companies very often (and I am aware funny stuff happens in HK)...but how the equity account be wrong?
Yeah buddy, that isn't right. That is comprehensive income (most of the financial websites just report the simple line items, which are usually right but very wrong when they are misleading).
As said though, I have no idea if I am looking at the right company (you sometimes find that there is a holding company or a stock with a similar name or something). Pretty sure it is the same Meituan...but maybe not (and if it is, I still don't understand the losses they booked to equity).
This paper fails to separate out the effect of disemployment effects caused by offshoring, muted demand and robots.
I've seen this in a few other papers on this topic too (e.g. Ball state university, 2017)
I'm also a bit suspicious of their rationale for not looking at German data (German adoption of automation isn't much different, but the disemployment levels are wildly different).
I saw that and that would be fair if they were saying that automation was a principle driver (which seems reasonable). It would also gel well with saying that more focus on automation will just make things worse.
It's the statement that AI is causing the current issues that I find unsubstantiated. Unless they're including current manufacturing robotics as AI which is quite a stretch.
No, the reason why was France pegging to gold at a very favourable rate in the 1920s. The UK, obviously, was not short of colonies but got absolutely rolled in this period because they pegged to gold at their old rate instead of devaluing. This led to huge unemployment issues (even before the GD). Germany suffered because they were heavily reliant on flows of US capital causing bank failures (there was a tremendous boom between 25-29).
The Church of England, Anders Povlsen, and others have all acquired huge amounts of land recently (that is why there is so much complaining about landowners from England who only come up to shoot). There is tons of forestry to bid on, and if you offer the right price then you will find willing sellers...if you offer the right price.