174 Comments
founding

Back at the beginning of the 60's, "When America was Great", there was the recognition that laissez-faire capitalism required regulation to avoid its seamier side.

And the top marginal tax rate was over ninety percent.

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I am so glad that I was able to read the entire third piece about the censorship and eventual demise of the Aspen Times. It casts a very frightening light on what is happening to printed journalism today. Will we ever have unbiased reporting again, available for everyone? It certainly doesn’t seem so.

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JVL, strong start to the work week. Gonna be tough to top today’s Triad.

re #3: alternative single sentence teaser “One afternoon, a white guy with dreads to his waist was racking a mountain bike on his Jeep when he spotted me, raised a fist, and said, “First Amendment, bro. Thank you.””

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Never count out sociopaths super-empowered by money. (Tom) Sawyernomics at work.

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All the capital gleaned from widening the productivity vs. wage gap had to go somewhere. Pity they can't find something responsible or productive to do with it.

Wait, which side of this makes capitalism look bad again?

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founding

Agree that this is a systems problem in which too often the system is being gamed whether it's politics (e.g., Trump) or business (e.g. Neumann). For every good leader who cares about building enduring communities of significance, it seems like that there are 1,000 "Professor Harold Hill" types eager to convince people that they have an original and simple answer for all of life's challenges.

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The WeWork and Flow saga illustrates what has been the case for almost two decades: the investment banks, venture capital funds and private equity firms are awash in capital, and they are desperate to find productive uses that money. Of course, the Larry Kudlows of the world will rant and rave that any move to raise capital gains or marginal tax rates, or institute a tiny tax on share buybacks (corporate treasuries are also bulging with cash) will result in the destruction of capital formation.

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I tend not to think of it as capitalism. Boondoggles are parts of all systems. People stink and no system of economics can fix that. At best, it channels it productively. The mystery is people rushing to give him money again. But some people never learn.

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Yiddish proverb: If you have money, you are wise and good looking, and can sing well too.

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I always heard the line as "don't piss down my back and tell me it's raining". Maybe it's a regional difference, or a class joke in the Midwestern version.

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Plus, just like with WeWork, there's nothing actually disruptive about the Flow business model. It was at least 20 years ago that I heard the CEO of one of the largest apartment REITs describe his business as "owning cubes full of consumers."

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Aug 22, 2022Liked by Jonathan V. Last

We have created structures and institutions that allow the various abuses, scams, and outright frauds that give capitalism a bad name. I don't think we are actually any worse now than we once were, it is just more visible now. There were a LOT of shenanigans involved in the building of the transcontinental RR, for example.

The big problem is that we have a culture that often lionizes and celebrates these behaviors that can often be summed in the phrase... it isn't personal, it's just business. As though business should be free of the moral strictures that we apply to the rest of life.

And that's the rub--we do have the attitude that the moral aspect of business (and of businessmen) is rightly different--if not in word, at least in deed (meaning we will say things are wrong or bad, but do mothing substantive).

We do the same thing for politics.

I learned my first political lesson in middle school, running for student government. That lesson was to lie and tell people that you were going to do things that had zero percent chance of happening, to tell people what they wanted to hear, no matter how unrealistic or dishonest. I did not do that (being naive and honest) and went down to resounding defeat.

Dishonesty wins votes (so long as you appear sincere).. and the same type of dishonesty seems to garner investors, so long as your slide deck looks good.

We condemn dishonesty and corruption and yet vote for it--as though it was necessary, as though we had no choice. We abandon agency that we need not abandon.

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Real-estate and hucksters? Really? Who would have thunk it.

Add to that I've always been amazed at bankers who will keep giving money to idiots with a good story.

Something else. As a neighborhood activist and a small time landlord, I've noticed a big change in the rental industry. A number of wallstreet types have been buying into the single family rental market. This used to be a mom and pop type market. Now a lot of the housing is being managed by a Management company with the ownership being corporate and out of state and mostly untouchable when it comes to forcing them to adhere to basic zoning and codes regulations.

So that a huckster would go into residential real-estate, that is not surprising. There is a lot of them out there. especially ight now.

Jack

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If the Saudis and the Gulf States want to give a crazy person like Masa $100B, he's going to go around giving other crazy people like Adam Neumann $10B for their overvalued startups, and that's going to make crazy stuff happen in the economy.

Should we pass a law to prevent crazy foreign investors from throwing huge amounts of dumb money at unprofitable American companies? I don't know.

We SHOULD be raising interest rates and ending QE (which we are, in fact, doing, as JVL pointed out) because that will reduce the amount of domestic dumb money sloshing around. Andreessen Horowitz (henceforth abbreviated a16z) raised its fund during the boom, so what's happening today doesn't affect the money they've already raised, but it could affect the future.

[Side note - I heard from a founder / CEO of a crypto company that some VCs won't invest in crypto startups unless a16z is also investing. Andreessen has like a $4.5B web3 fund or something like that, which is perhaps an outright majority of all VC funding available to crypto startups. The concern is that if a16z likes your product but doesn't like you, they can give someone else $100m build the same thing and destroy you quite easily.]

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founding

Charlie Hall comments here that "It is people like Adam Neumann who create Communists." Gotta' love that. Props.

Might we generally add to that people like Martin Shkreli (aka Pharma Bro) and include the generic label 'extremists'?

Apples and oranges in a way. But when you have an arrogant and literally criminally greedy hedge fund manager raising by hook and crook the price of a cheap lifesaving drug by 5K+% and attempting to completely block any generic competition, the folks directly affected by that - and no doubt no small number who weren't but were aware of it - just might start to get the idea that capitalism just ain't working for them all that well, never mind the fact that, unlike Neumann, there was actually some comeuppance for that little shit in the end.

Perception of how a social / economic system is working goes right along with how it actually is working. Pharma Bro was a relatively 'small' failure in the system that ultimately was 'corrected', at least to some degree. But the media amplified it, as the media is wont to do, and it is the failure that is remembered, not the correction. Which does nothing to burnish the upside of capitalism.

Rinse, spin and repeat enough times, throw in a few larger 'system failures' of some kind, and more than just a bit of serious burnishing might be required.

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