Do you think banks should exist?
this post was submitted on 19 Sep 2023
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Sure, central national banks that are publicly owned should exist.
But not private loaning? Should the government charge interest on their investment?
Probably, because interest is a tool to get the loan paid back. The interest shouldn't be used to make someone rich though. It should be used for the public good.
That's right, I think private loaning and capital should be illegal. Every business could be run as a cooperative owned by the workers, and the central bank could play the role of VCs by giving the initial capital to people who wish to start a cooperative business.
Governments have historically been incredibly conservative about what forms of business they support. To achieve the same innovation in new sectors like tech, the government would need to be much much more risky in who it gives loans to. They'd need to provide the utility of discerning good investments from bad ones that the public sector currently provides. And they'd need to be really good at it, since efficient allocation of capital is uber important to producing what needs to be produced.
There is absolutely no reason why private investors are better at discerning good investments from bad ones. In fact, empirical evidence shows that they're objectively terrible at it. the other problem is of course that private investors invest in ventures with the primary purpose of creating profit with any other considerations being secondary. This means that many of these investments result in things that are harmful to society, but are profitable for investors. The opiod epidemic in US is a good example of this dynamic. Government investments are far more likely to result in ventures that produce positive social value.
The idea that private investment is necessary for innovation is also a fallacy. USSR pioneered a lot of technologies and it had no private business or investing. Likewise in the west, most fundamental research is done on public funding and then given away to companies to commercialize.
In fact, empirical evidence shows that they're objectively terrible at it
That sounds like it's taking about hedge funds and profile managers, not investors/bankers in general.
it gives some examples of hedge fund and profile managers, but the point it makes is very much a general one.
The study is only of those though. So it's not evidence for overall.
The study shows that people doing private investing aren't very good at it. If you have a study showing the opposite then feel free to share it.
This means that many of these investments result in things that are harmful to society, but are profitable for investors.
That's why you need to internalize the externalized costs with taxes and regulation.
USSR pioneered a lot of technologies and it had no private business or investing.
I should have clarified, the application of new technologies and innovations is better in free market systems. The USSR invented the cell phone for example, but it couldn't be widely spread because the bureaucracy underestimated the benefit.
That’s why you need to internalize the externalized costs with taxes and regulation.
We have over a century of evidence that you can't because the government fundamentally represents the interests of the class that holds power. In a capitalist society it's the capital owning class because wealth directly translates into influence.
I should have clarified, the application of new technologies and innovations is better in free market systems. The USSR invented the cell phone for example, but it couldn’t be widely spread because the bureaucracy underestimated the benefit.
Markets aren't in any way at odds with what I'm suggesting though. Markets are perfectly compatible with a socialist system.
Free market investing is what promotes the wider application of innovations. A government owned investing apparatus is worse at that. That's what I meant by free market.
Again, there's little evidence to show that private investment drives socially useful innovation in practice. In fact, we can contrast the kind of innovation we see in western countries where investment is largely private and in China where the government plays a large role and much of the industry is state owned. China now has the best high speed rail network in the world, it dominates in renewable energy, has developed thorium nuclear reactors, it's leading in electric vehicles, and so on. That's meaningful innovation that's directly improving the lives of people.
What about Credit Unions? They’re cooperatives owned by the members. Despite not having a handful of shareholders collecting profits, they’re usually not that much different than dealing with a bank. Services and rates are usually pretty comparable.
I think credit unions are fine, and I'd treat them as a form of public ownership since they are cooperatively owned.
You again! Do you post more tame content on lemmy.ml and keep the bonkers on lemmygrad? If so, that's appreciated.