Implicit in our trust in "the market" is this idea that the market is intelligent. Everyone wants to make as much money as possible so the market is supposed to be more powerful than nepotism, than fake products and scam companies that don't deliver what they promise. The market is supposed to reward efficiency, pragmatism, planning for the future and above all it is theorized to support some version of broad public good and through competition reward innovation.
0 Boosts
0 Likes
@futurebird I wish we had terminology that was more nuanced than "the market." The market that we know today is---as you describe---hugely distorted by the actions of the rich. But, a real market, like a farmers' market, is an egalitarian place, because the power of the buyers and the sellers is pretty much equal.
I'm not the first to observe that capitalists hate open markets, because they hate competition. What they want is a seller's market.
How intelligent is a million dollars?
A million dollars in the hands of 1000 people with $1000 each will have many carefully considered impacts on a wide range of companies and ventures.
A million dollars in the hands of a single person is much less intelligent.
It's just not going to be spent as carefully. The primary concern is more likely to be simply be earning interest rather than comparing products.
The theory that people who are rich are smarter than everyone else doesn't quite make up this gap. And I think it's reasonable to question that theory.
But even assuming it were true money seeking a place to be invested just isn't doing the same work to shape the economy as money spent on products. In a way, this money is along for the ride, depending on those consumer choices to highlight the best places to park. Freeloading.
@futurebird My theory is that one rich person looking around and trying to justify how they earned their money, comes up with the idea that they're smart. And that kind of works until they start trying to apply their knowledge to areas outside their expertise. (Which nowadays doesn't take very long.)
But multiple rich people looking around and trying to justify how they earned their money, look at themselves and say, "what do we have in common?" And the answer is that they are white men. At that point there's no attempt to apply smarts to anything they do. It's all about protecting the white race.
The few times I have attempted to make stock decisions based on what I knew about the actual state of the company, I failed miserably.
As far as I can tell, at this point all stocks are meme stocks; running entirely on belief systems.
The intelligence of the market is drawn from the collective cognitive power of individuals and institutions making purchasing decisions.
Sometimes the market fails. The most profitable company isn't the one providing the best product or service, it is the largest players who have destroyed all possible competition.
This is the idea behind anti-trust laws and enforcement actions.
But vast concentrations of wealth can have a similar impact to monopolies.