[FoRK] Capitalism's Fatal Flaw

Ken Ganshirt @ Yahoo ken_ganshirt at yahoo.ca
Sun Nov 8 08:16:50 PST 2009

--- On Sun, 11/8/09, Jeff Bone <jbone at place.org> wrote:
> Becoming a billionaire by creating e.g. the next Google is,
> to a too-large degree, luck;  it entails not merely
> success, but avoidance of failure induced by any of the
> myriad folks out there who might otherwise tank your venture
> regardless of how big and valuable your idea or how novel
> your technology.  And guess what, Startup Johnny? *You*
> can't control that!  OTOH, blocking-and-tackling your
> way to "only" an order-magnitude less wealth by applying
> your technical skills in the finance industry is (rather
> ironically) *far* less subject to the same kinds of random
> externalities and failure modes.  That increasing
> numbers of the best-of-the-best would seek these financial
> pursuits that are higher-paying on a risk-adjusted basis is
> no surprise whatsoever.  It's not a systemic failure
> with the ideas of free choice and reward, i.e.
> capitalism.  It's a failure of certain elements of the
> existing capital markets to function effectively.
> Looking for "Capitalism's fatal flaw?"  Too
> easy:  start with VCs.

Okay, you suckered me. Shame on me. You forced me to go back and reread the article to see if we had read the same one. I guess we did but you apparently took away something far different than I did.

With reference to your comments, her point wasn't that the phoney finance industry was sucking people away from the venture capital industry. It's that the rewards for speculation and moving money around are sufficiently great tht they are sucking our talented young people away from the fields they would otherwise have gone into. Fields which actually produce useful stuff.

That's quite a different position than you portray.

Mitra's concern is that capitalism's fatal flaw is its dependence on integrity in its leaders. She states there is a distinct lack of it. 

She offers this drain of talent into the pixie dust industry from the fields that would produce usefulness -- science, technology or some entrepreneurial pursuit --  as a negative consequence of the lack of integrity that rewards speculation and outright destruction over more creative works.

Criticize her for confusing a failing of capitalism with a failing of capital markets if you will (a mistake most of us would make). But I think you've misunderstood her comments about a consequence of this failing.


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