Discussion about this post

User's avatar
David Simmons's avatar

I'm not sure if I follow you -- are you saying that if you invest in financial markets and make $1000 (adjusted for inflation), then it means the world has created $1000 worth of resources (on average) that it wouldn't have created if you hadn't invested? Maybe this is really basic but it's not obvious to me why this should be true -- intuitively it seems like it could depend a lot on what kind of investment you are making.

Edit: Would another way to put it be: as an oversimplification, things people do can be divided into investment and consumption. If everyone was a perfect utilitarian that valued everyone equally with no discounting, they would only invest and not consume, since consumption benefits them now but investment benefits future generations more. But since they aren't, they consume as well as invest. By investing in financial markets, a trust fund would be increasing the fraction of the world that is investing rather than consuming, and as a side-effect the fraction of the world's resources that are controlled by the trust fund would increase. When the trust fund matures and releases its resources to the world, this cancels the side-effect but the resources created by investment still exist.

As an intuition pump, we could imagine the trust fund eventually grows to become OmniCorp which basically controls all economic activity, and does so with the goal of maximizing productivity without care for the happiness of the workers, who might consequently perceive its existence as dystopian. However, this is supposed to be good because it means that it's that much sooner that humanity can effectively use all of the resources in the galaxy, and once that happens OmniCorp will stop demanding productivity and will allow everyone to consume the resources they've produced.

Expand full comment
Robin Hanson's avatar

We economists are almost always talking about real resources, instead of just money.

Expand full comment
73 more comments...

No posts