Who owns the capital for those future investments? Who will receive returns on those investments?
replySpeculation or actual investment? Assuming that the allocation of capital is somehow aligned with what’s optimal for the economy/society seems naive
replyIt's not naive, it's near optimal. The system rewards people who've done well at capital allocation with more capital to allocate, and takes capital away from those who've done poorly at it. And there's no better predict of future performance at allocating capital than past performance.
replyWell my point was that it might be optimal for the one doing the allocation and maximize their returns. That does not mean its optimal for the economy and society on the whole.
replyActually it does mean it is optimal for the economy as opposed to a central planner who somehow has all the information and does planning with precision. These are mainstream views in economics.
replyActually markets are always rational, perfectly efficient and there are no speculative bubbles? Of course not.
replySo its obviously suboptimal, only question if there is a more optimal system.
> central planner who somehow has all the information
Every developed country is balancing that with free markets and its the mainstream view that a balanced system is optimal (the exact ratio is of course something’s that not quite settled).
Yes and going back to the your original question
reply> Assuming that the allocation of capital is somehow aligned with what’s optimal for the economy/society seems naive
The empirical facts are that the disposable real wages have gone up by more than 50% over the last 20 years. People are way richer now than before and the growth in USA is much higher than any other developed nation other than small edge cases.
The causal link between those two data points is not exactly obvious.
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