In the same = way I could say that decreasing the value of the company I spoke of (was = ERIM, became Veridian, now is GD-AIS, a subset of General Dynamics), = decreases wealth because you have to measure the decreased happiness of = the employees decreased efficiency of their research and decreased = synergy of their research group because so many of them left to go = elsewhere. The stock market, which paid the CEO (Peter Banks) through = the nose for doing so failed to correctly assign value for this process = and gave away a ton of money because of it. Sure, it may correct itself = in the long run, over 5-10 years as GD stock goes down, but that's too = late, the damage is done.

You also cannot properly = measure benefit to society by what people are willing and able to pay. I = know it's the American way to ignore what's good for poor people and = only focus on what's good for rich people, but the poor people in the DC = area benefit quite a bit (increased social welfare) for having access to = top quality museums and exhibits such as are there, and the rest of us = rich people who have enough money to throw around benefit also because = we live in a more educated society as a result. If you charged full cost = for admission to cover the facilities, those people would stop going. = The same thing is true of education at most levels. The people who can't = afford it are the ones who need it the most. If you charged fair market = value for elementary school, most kids wouldn't go, and it would destroy = our society. In the long run obviously this increases wealth, but only = over a very long term in a very difficult to measure way- which is why = noone in our country is willing to pay as much as they should be for = education. You can't show increased wealth resulting on a balance sheet, = you can't easily prove how it's benefiting society. So people claim to = be in favor of it but won't actually pay for it and it's suffering as a = result- because we're too focused on only the creation of wealth. We're = too dumb to figure it out. What a pretty cycle that is.

With slavery, again, you're = self defining yourself to be right. Now you're creating this new element = of freedom- how is that not a subset of social welfare? How is that not = a perfect example of how losing money is better than making money, if = it's made the wrong way? If it hurts more people than it helps in the = process. Clearly we agree there's good profit and bad profit. Good = profit is where both people benefit and feel happier in the tradeoff = made. Bad profit is where people don't realizing they're getting hurt as = a consequence. Yet it happens all the time.=A0Capitalism does not = respect basic human rights. You and I do, and the socialist laws of our = country do, to keep Capitalism in check. We have to continue to evolve = such laws as capitalism evolves in order to keep pace and keep the = appropriate balance. People are definitely continuing to optimize the = capitalist component of our society, so we must continue to optimize the = socialist component as well.=A0 =A0 =A0I suggest that perhaps we could = identify ways in which the stock market enables and encourages bad = profit and find ways to check that without removing it's capability of = enabling and supporting good profit. I think the answer lies somewhere = in the time scale of things, that you could probably conclude that most = forms of good profit take a fair bit of time, while most forms of bad = profit happen very quickly. There would be exceptions to both of course, = and therefore costs, but perhaps a solution could be found where the = aggregate good is significantly increased?

The stock market shares the = blame because of what it enables. No profit could have been made from = the destruction of ERIM. Or much less. Or maybe not- that's part of why = I bring this discussion to this group. Obviously I haven't found a way = to modify the stock market to prevent this problem, and I challenge you = to do so. Maybe this particular example was an example of something = different, unrelated to the stock market really. I'm not = sure.

And an extreme version of = what you're saying would be if it doesn't make money we shouldn't do it- = like the mental hospital for the poor which got closed down because it = wasn't profitable, to the point where the company running it threatened = to arrest the doctors who were in there cleaning it up after the storms = trying to re-open it, because if it was wrecked they had an excuse to = not have to run it anymore. Because all they cared about was creation of = wealth. I like to think we'd both agree that this was a bad thing. = Fortunately we'll neither of us take our positions to the extreme and = only judge them on that, but rather look for actual reasonable = implementations in the real world.

Aiming for not outlawing = any consensual crime is a good goal, but overly simplistic. In reality = for a functioning society you have to make one set of laws for everyone = in the spheres in which they interact. This necessitates that you will = have regulations which prevent some people from doing what they want to = do in order to prevent other people from not having done to them what = they don't want to have done to them. =A0 =A0As fun as it would be to = eliminate all the speed limits and guard rails in the country, most = people want them, so those of us that don't have to suffer through it.=A0 = =A0Perhaps those who make their living studying and trading on the stock = market might have to accept that they are not able to buy and sell to = each other exactly how they want if it means that the majority of people = who do so casually, or only with their retirement accounts or otherwise = at levels of large distraction, can do so more safely and reliably. I = don't know, that's not really the right analogy, but if I had the right = solution I would have started this thread with it.

I mean geez, why do you so = much want the terrorists to win? ;-)

On Aug 29, = 2007, at 6:59 PM, Daniel Reeves wrote:

I consider my challenge unanswered!=A0 Read on...

How about establishing the = environmental protection agency?

The = value of saving a forest or preventing x tons of pollution can and must = be valued in dollars.=A0 = Refusing to quantify it leads to more environmental = damage.

So the EPA, if done right (levying pollution = taxes!), always increases wealth by incentivizing the right = trade-offs.=A0 [See also = Kevin's response]

=
All the national museums in = downtown DC?

If a museum can't cover its = costs through donations and admissions (or admissions that people would = have been willing to pay even if you choose not to actually charge = admission) then is it good for society to have that museum?=A0 Not at all clear.=A0 If the answer is yes then = where do you draw the line between what's worth it for the good of = society and what isn't?

But perhaps a museum that we = expect future generations to have a lot of value for could be an = example.=A0 The real point = of my challenge was to assert that wealth and welfare are the same thing = (as far as public policy is concerned).=A0 This museum example doesn't = refute that but may be an example of when we should take a leap of faith = and do something for the sake of future wealth that there is no way to = measure yet.=A0 But in = fact, it's not so hard to measure.=A0= How much do we currently value museums our ancestors = maintained?

=
Abolishing slavery?
=

Ah, good one.=A0= But this doesn't count because the principle of freedom trumps = both wealth and welfare.=A0 = (Kevin's point was that abolishing slavery doesn't necessarily = increase net welfare -- maybe the utility of the slave owners increased = more than the slaves' utility decreased.)
Slavery = is just intrinsically immoral.=A0 = Let's stick to the universe of policies that respect basic human = rights.

=
The CEO who got rich = destroying the non-profit research company was a snake oil salesman at = every step of the way. [...] got rich while the illusion lasted, and now = is in California on the beach and people here are looking for new jobs. = [...] Encouraged supported and enabled by the way the stock market = works.

We agreed that swindling is = stealing and should be illegal.=A0 = I still don't follow your argument that the stock market shares = any blame.=A0 I second = Kevin's request for the name of this company.

An = extreme form of your position would seem to be "no selling things = because sometimes it might be snake oil" or perhaps "no selling oils = because they might be from snakes".=A0= To restate my point from before: laws that limit the consensual = behavior of individuals do more harm than good.

Also, = it's unamerican!

On Aug 28, 2007, at 12:46 AM, Daniel Reeves = wrote:

=
I challenge you to name a = public policy that increases net welfare (ie, utility) while decreasing = total wealth.
PS: The snake oil case is = simple: no swindling -- it's the same as stealing.=A0 I see no analogy with = short-sighted stock trading or overcompensating CEOs.=A0 Also, outlawing snake oil = increases total wealth. (The snake oil salesperson gets richer by $50, = the sucker gets poorer by $50, sucker gets 0 benefit, both parties lose = $5 of time: total wealth =3D 50 - 50 + 0 - 5 - 5 =3D -10.=A0 If that 0 were more than 10 = then wealth would have been created.)
--- \/ = =A0 FROM Dave Morris AT = 07.08.27 14:54 (Today) =A0 = \/ ---

I do = agree that one should err on the side of less government and less = regulation as a general rule, as a goal to be aimed for. But that = shouldn't paralyze us from action if we don't have a perfect or = perfectly known solution but we know we have real problems. No, the free = market is not an engineered system. But it is one we can influence, and = one that many are trying to influence all the time. The default is that = people will try to influence our system to maximize their ability to = profit, which is not always in line with maximizing social good. So we = have many good regulations on capitalism in place and should continue = to. Even though they hurt people sometimes, on the whole they're worth = it.=A0 We don't allow snake = oil salesman to peddle their trade anymore (selling products claiming to = have one effect and really having none), even though it's consensual and = profitable. I think perhaps we should look at some stock deals and some = CEOs that way as well, perhaps requiring more openness about who makes = how much, etc., so that motivations are more clear when people take = charge of companies and start changing them around.
I'd agree with reducing the level of corporate = welfare and protection, which starts with reducing the lobbying = influence on our government. That would be great, and I'm far more = confident in the value/safety of this action than any change to the = stock market.
But simultaneously, when a small = number of people like those who took charge of the not-for-profit = research company I spoke of, are able to for personal profit, manipulate = the lives of a great number of people without their consent or control- = that needs to be regulated.=A0 = To do this, like the war on drugs which I agree has problems, you = need to take a multi-pronged approach to the sticky and difficult to = resolve situation. Mostly you target prosecution of the actual crimes = (theft, by drug users or CEOs), but also you increase awareness of the = issue via education and email chains like this one, and also you try to = reduce the motivation for the crimes to break the chain from the other = side. (thus my proposal to look at the stock market and maybe place some = controls there- I don't have a good war on drugs analogy here = :-))
Sure there are some companies = that benefit from selling out. But I think there are also many that are = hurt by it. We could argue without resolution for days because there are = so many examples in both directions. But specifically with YouTube, I'd = argue that college students would put together sites like that for free = because they're sweet, without any motivation of profit. The open source = software movement is great proof of this. And I'd further argue that = while yes, venture capital and Google have provided the site with the = resources to handle the load it currently has, I personally would guess = that it would not be as good of a product if it had started off as a = corporate profit driven venture. There would probably be registrations = and more advertisements and more limitations to guarantee profits, and = less just free functionality.
There will = never be a perfect solution. The balance between capitalism and = socialism will always lead to individual cases where something is being = over or under regulated. The real target is to reach a point where we = have just as many problems pointing towards a need to go more capitalist = as more socialist, and then we're at a pretty good point. So don't be = too afraid of a solution that might slow down profit, slow down = corporate growth, or slow down creation of wealth from time to time and = in some cases. Those things are not the end of the world. Sure, creating = wealth is good, and we should maximize that. But we should prioritize = maximizing the creation of social welfare more.
So I think it would be worth the risk to look into = ways to tone down the stock market a bit.
On Aug 24, 2007, at 11:51 PM, = Daniel Reeves wrote:

You're thinking in terms of more government = interference.=A0 I think = the answer is less.=A0 = Telling people how much they can pay each other or what they can = buy from who when is dangerous territory.=A0 Even if you don't have a = philosophical problem with it (I kind of do) it simply tends to = backfire. Getting rid of corporate welfare and legal privileges for = corporations is a better place to start.
And I = just don't buy the point of your not-for-profit company example, = Dave.=A0 Not that I deny = that something went awry in that instance.
The = prospect of getting bought out is what motivates many brilliant = startups.=A0 That's why we = have flickr and youtube.=A0 = Certainly it motivated them to add the polish and scale to = support millions of users.
I feel there = is a fallacy implicit in proposals along the lines of Dave's and = Trixie's:=A0 thinking of = the economy as an engineered system to be tweaked (or in Trixie's case = reengineered altogether).=A0 = Trying to conceptualize it that way leads to the dark side! = :)
Consider the fundamental difference between a = law like "no stealing" and a law prohibiting/limiting consensual = behavior, in Dave's case buying and selling stocks from each other or = paying each other to run companies. Laws like that require a very = careful argument. For example, "no buying drugs because you'll become an = addict and turn to crime."=A0 = And of course even that turns out to be an incredibly bad = idea.=A0 Focusing our = enforcement effort on actual crime (as opposed to behavior that may or = may not cause indirect harm to society) would be far more = effective.
Dave, I do concede the meta = argument about falsifiability.=A0 = Well said.
--- \/ =A0 FROM Dave Morris AT 07.08.24 = 13:58 (Today) =A0 \/ = ---

I guess = disagreement with that would be my whole point. The CEOs benefit hugely, = but the company is less effective than it was before at providing = valuable research to society, and the individuals involved are less well = off too, so how does society benefit by the company getting screwed? The = example I speak of was a small research company that was doing its job = very well as a not-for-profit entity, not a failing company or one that = was getting left behind by the changing times. It was a valuable entity = that no-one was getting rich off of, that one person saw the opportunity = to get rich off of because of how the stock market works, and so they = did so, without thought for long term benefit to the company or society. = The stock market enabled this.
In support of = capitalist society, ways to regulate this such as controlling CEO = salaries or stock deals could benefit long term shareholder value, and = thus benefit society in the long run by optimizing value/wealth creation = over time. (the ideas created by this company ended up being used by = government programs, DoD, and others, so the value was getting out to = society when it was being created, even if no one individual was getting = rich because of it)
Extended point- the = maximization of profit and shareholder value is not synonymous with the = maximization of benefit to society, and in fact is often quiet opposite. = But I guess we'd be doomed in coming to any useful conclusions if I = expand this thread into that other conversation as well. :-)
I don't have a solution- I haven't come up with = specific suggestions that would improve the stock market really, and I'd = readily acknowledge that our system works better than any that anyone = else is using at the moment. I just see a potential for improvement to = occur.=A0 Figuring out how = to do it is the whole point of this list, yes? :-)
Dave
On Aug 23, = 2007, at 12:16 PM, Kevin Lochner wrote:

but you're forgetting my point, = which was that even if some companies are getting "screwed over", said = screwing may benefit society on the whole.
=
--=A0
http://ai.eecs.umich.edu/= people/dreeves=A0 - = -=A0 search://"Daniel = Reeves"
"As far as I know, this computer = has never had an undetected error."

Dave = Morris
cell: 734-476-8769
http://www-personal.umich.= edu/~thecat/

--=A0
http://ai.eecs.umich.edu/= people/dreeves=A0 - = -=A0 search://"Daniel = Reeves"

Absurdity, n.:
=A0 =A0 =A0 =A0 A statement or = belief manifestly inconsistent with one's own
opinion.
=A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 = -- Ambrose Bierce, "The Devil's Dictionary"

Dave = Morris

cell: 734-476-8769

http://www-personal.umich.= edu/~thecat/