Does capitalism promote wasted human energy?

[Lost_Wanderer]

I’m talking about everybody competing against one another, instead of cooperation where all one’s effort goes to the common good.

Competition is actually another form of cooperation. How do you know you have the better idea? You test it against what’s currently on the market. Even in your collectivist society, one cannot invent the best tractor if they can’t have a current model to work against.

Sure rivalries can get bitter and out of hand at times. That doesn’t take away the fact that you can’t improve something without knowing what’s wrong with it. It’s inevitable. No matter how scared or tired you are of competition, inefficiencies will always reveal themselves and demand to be addressed. And as I already demonstrated, such flaws are what drives competition because you can’t have progress unless you’re willing to challenge the status quo.

 

[Lost_Wanderer]

How many different auto manufacturers do we need? Do they need to change their designs every year? I, for one, would prefer a cheaper, well built car than have such a wide selection of ever-changing models.

Well ain’t this a classic? Define ‘well-built car.’ Good luck doing that without competing against the models of Toyota, Mercedes, GM, and anyone else who’s actually had a hand in designing beyond four wheels and an engine.

See that’s the beauty of variety and competition (and how it beautifully destroys the possibility of a collectivist hive mind ). We humans always have our own unique, individual preferences. That’s why we innovate according to what suits our needs/wants (or select the vendor who does it best). My sister likes chicken while I like beef. Don’t be surprised if we prefer the wide selection you grow so tired of.

 

[saintjohnxxiii]

Last year I had a 20% return on my 401k and17% on my Edward Jones account. You call that wasted time and energy?

The market as a whole was up 32% last year, so it could be a waste depending on your asset allocation. If you were all stocks, then your return was a waste.

No its not a waste when you make more money than you started with. Especially considering that nobody can invest in the market as a whole (cost of investing in the WHOLE market).

 

[stinkcat_14]

No its not a waste when you make more money than you started with. Especially considering that nobody can invest in the market as a whole (cost of investing in the WHOLE market).

Actually you can invest in the whole market. Look up symbols spy or VTI to see an example. If a person could easily get 32% and they only got 15%, then they lost an opportunity to earn an extra 15%. That opportunity cost that they gave up is a waste.

 

[Robert_Sock]

Last year I had a 20% return on my 401k and17% on my Edward Jones account. You call that wasted time and energy?

Did you actually ‘earn’ that money? What about all the people who lose money when the stock market is down? The stock market is not really a business, but a senseless game where people with spare money gamble. The time and energy that goes into the stock market does not, in itself, produce anything that promotes the common good.

LOVE!

 

[nmgauss]

Did you actually ‘earn’ that money? What about all the people who lose money when the stock market is down? The stock market is not really a business, but a senseless game where people with spare money gamble. The time and energy that goes into the stock market does not, in itself, produce anything that promotes the common good.
LOVE!

Losses and gains in the stock market materialize when people sell their stock. As long as you do not sell, you have not experienced loss.

The Catholic Church has billions of dollars invested in corporations. The corporations have that money available to use for production of “common good” items. Do you regard finances as being inconsequential?

 

[Timothysis]

Did you actually ‘earn’ that money? What about all the people who lose money when the stock market is down? The stock market is not really a business, but a senseless game where people with spare money gamble. The time and energy that goes into the stock market does not, in itself, produce anything that promotes the common good.

LOVE!

The stock market is a means of allowing people to invest in companies that produce things for human use and consumption. The money made by the corporation is often distributed to shareholders through the payment of dividends. This promotes the common good because it allows a large number of people to share in the success of a company. Did I “earn” those dividends? You bet your bottom dollar I did. I earned them by buying into the company. If you think that the stock market doesn’t promote the common good then I suggest you look in other areas of the world where there does not exist a vibrant economy that allows people with low amounts of money to participate. And as already stated, the Holy See, religious orders, charitable organizations and local diocese all throughout the world have investments that generate capital in order to finance undertakings. Does this not promote the common good?

 

[Timothysis]

What facts are getting in the way of the narrative? My numbers may be a bit off from the other poster, but it is likely because I was using total return data.

The narrative is that if one doesn’t return 100% then they have experienced waste. I am far from knowledgable about the intricacies of the stock market but I do know that not all stocks rise or gain. Many stocks are labelled as a “sell” because knowledgeable opinion does not think that the current direction of the company is likely to produce a gain (Sprint comes to mind). You may call it a waste but I am plenty happy with my 17% return over the past 15 months. I have made more money in this short time than I have made in over 30 years of bank interest and that includes the old days when a money market account would pay 13%.

 

[Timothysis]

Actually you can invest in the whole market. Look up symbols spy or VTI to see an example. If a person could easily get 32% and they only got 15%, then they lost an opportunity to earn an extra 15%. That opportunity cost that they gave up is a waste.

VTI has a 4.27% yearly return. It is near its 52 week high and has fluctuated nearly 20% over the past year. How is it going to return 100% what the market returns? BTW, it is down today, so there goes the chance of returning 100%.

 

[Robert_Sock]

The stock market is a means of allowing people to invest in companies that produce things for human use and consumption. The money made by the corporation is often distributed to shareholders through the payment of dividends. This promotes the common good because it allows a large number of people to share in the success of a company. Did I “earn” those dividends? You bet your bottom dollar I did. I earned them by buying into the company. If you think that the stock market doesn’t promote the common good then I suggest you look in other areas of the world where there does not exist a vibrant economy that allows people with low amounts of money to participate. And as already stated, the Holy See, religious orders, charitable organizations and local diocese all throughout the world have investments that generate capital in order to finance undertakings. Does this not promote the common good?

The point of this thread is whether or not capitalism promotes wasted human energy. You fail to make a case that the stock market is efficient in today’s world.

Again, the stock market does nothing to promote the common good in and of itself. This in no way means that money made from the stock market cannot be put to good use.

LOVE!

 

[Timothysis]

The point of this thread is whether or not capitalism promotes wasted human energy. You fail to make a case that the stock market is efficient in today’s world.

Millions of people make many millions of dollars every year based on the performance of the stock market. Please explain to me how that isn’t efficient, whatever that means.

 

[Robert_Sock]

Millions of people make many millions of dollars every year based on the performance of the stock market. Please explain to me how that isn’t efficient, whatever that means.

It’s legalized gambling, and produces nothing of its own.

Is the stock market an efficient use of human energy? How well does it promote the welfare of society, as a whole, compared to mechanisms in other potential economic systems?

LOVE!

 

[Timothysis]

It’s legalized gambling, and produces nothing of its own.

Investing in the stock market is not gambling, Robert. It can be a gamble, yes, but it is not by its nature a game of chance. Would you say that buying a house is “gambling” since it is possible for the value of the house to decrease?

well does it promote the welfare of society, as a whole, compared to mechanisms in other potential economic systems?

The stock market’s purpose is not to promote the welfare of society; it is to increase the capital that has been invested in it. You could easily ask how the production of double-sided tape promotes the welfare of society.

 

[Robert_Sock]

Investing in the stock market is not gambling, Robert. It can be a gamble, yes, but it is not by its nature a game of chance. Would you say that buying a house is “gambling” since it is possible for the value of the house to decrease?

If you are buying the house as an investment, then yes, it is a form of gambling.

The stock market’s purpose is not to promote the welfare of society; it is to increase the capital that has been invested in it. You could easily ask how the production of double-sided tape promotes the welfare of society.

If an institution does not promote the general welfare of society, it is a waste of human energy. Double-sided tape is not an institution.

(Timothy, I type using just two fingers, and you’re wearing them out! )

LOVE!

 

[nmgauss]

Actually you can invest in the whole market. Look up symbols spy or VTI to see an example. If a person could easily get 32% and they only got 15%, then they lost an opportunity to earn an extra 15%. That opportunity cost that they gave up is a waste.

You are talking about stock index funds. The WHOLE Market is more than just stocks. You have made no mention of bonds, REIT’s, ETF’s, etc.

 

[stinkcat_14]

The narrative is that if one doesn’t return 100% then they have experienced waste.

Please quote me where I said that. I never said any such thing. What I said, was that if you were going to invest in a portfolio of stocks the reason to invest in a portfolio of stocks was to do better than the market portfolio. If the market portfolio returned 32% and your portfolio returned 17% you wasted an opportunity to get a 15% higher return. On $10k that is $1500 you gave up, not insignificant.

I am far from knowledgable about the intricacies of the stock market but I do know that not all stocks rise or gain. Many stocks are labelled as a “sell” because knowledgeable opinion does not think that the current direction of the company is likely to produce a gain (Sprint comes to mind).

One can question how knowledgeable those opinions are. I would search for the bogleheads website and you will learn more there.

You may call it a waste but I am plenty happy with my 17% return over the past 15 months. I have made more money in this short time than I have made in over 30 years of bank interest and that includes the old days when a money market account would pay 13%.

Even doing badly in the stock market beats what you would earn in savings accounts over the long run. But you never answered my question, why is your portfolio preferred to a market portfolio, i.e. SPY or VTI?

 

[stinkcat_14]

You are talking about stock index funds. The WHOLE Market is more than just stocks. You have made no mention of bonds, REIT’s, ETF’s, etc.

I made no mention of bonds because we were talking about stock portfolios.

What I said was:

It is a concept in economics we call opportunity cost. The basic idea is that in the stock market I can always get the market return by investing in the market portfolio. For example, if you put your money in spiders you would have made 32% last year. Now, if you can easily get the market return from spiders, why would you invest in a different portfolio than the market portfolio?

So bonds and other assets weren’t part of the discussion.

 

[jeannetherese]

What kind of society mandates that only people of high moral character are allowed to be successful? Should the legitimate authority be able to seize your bank account if you are discovered be of low moral character?

Well, there are a few laws permitting confiscation of the ill-gotten gains of criminals,
and laws saying that criminals attempting to profit from previous criminal activity (book/movie deals) may not keep the proceeds from such deals.

 

[stinkcat_14]

It’s legalized gambling, and produces nothing of its own.

Is the stock market an efficient use of human energy? How well does it promote the welfare of society, as a whole, compared to mechanisms in other potential economic systems?

LOVE!

What mechanism would you suggest instead of the stock market to move capital from those who have it to those who need it?

 

[Robert_Sock]

What mechanism would you suggest instead of the stock market to move capital from those who have it to those who need it?

Perhaps the government. Perhaps banks.

LOVE!