While Keith Stokes might be the one to have lost his job and Curt Schilling might lose his business, the person most responsible for the 38 Studios financial fiasco is former Governor Don Carcieri.
The CEO governor billed himself as having the business background necessary to boost the economy and create new jobs. But as it turned out, Carcieri was the worst steward of the state’s fiscal situation in a generation or more.
He’ll now be forever remembered as the one who wanted the now-infamous guaranteed gamble/guaranteed loan to 38 Studios which seems almost guaranteed to fail. And this comes on the heels of Rhode Island finally recognizing that his aid cuts to cities and towns simply pushed the burden onto local property taxes, an added expense that the poorest cities in the state couldn’t withstand.
Carcieri’s credibility is literally vanishing before Rhode Island’s eyes.
Almost as soon as mayors and media pundits started to blame Carcieri’s cuts for the financial struggles of our highly distressed cities, his swan song and biggest economic achievement, the dreaded 38 Studios deal, seems likely to enter the annals of fiduciary disasters.
The last guy to cause Rhode Island so much fiscal pain was Joe Mollicone, and he only made off with $13 million. Carcieri’s got that beat more than five times over. In fact, Carcieri’s ill-fated decision to invest nearly $100 million in an ex-baseball player’s ability to develop video games could cost the state about a quarter of what it saved on pension reform this year.
Speaking of which, there are those who blame Carcieri for exacerbating the pension problems in Rhode Island, too. When he laid off state workers, he drastically reduced the number of people paying into the retirement system while more people were retiring than ever.
One has to wonder what Carcieri was thinking – I mean, I can’t imagine he would have made this loan when he was working in the private sector at Old Stone Bank so why did he do so when he was working for the public sector? Was he star struck by Schilling? Is he a secret video game junkie? Did he actually think this was a good deal for the state? Of course hindsight is 20/20, but it seems the only thing that makes sense is that Schilling sold him snake oil.
Ironically enough, prior to the 38 Studios debacle, Carcieri’s biggest public blunder was having the Narragansett Indians beat up for not paying taxes on cigarettes they were selling while opposing their efforts to develop a casino. But a casino would have generated twice the number of jobs as 38 Studios and the taxes the smoke shop owed paled in comparison to what Carcieri invested in 38 Studios.
It’s all evidence that CEO’s don’t necessarily make for good government leaders. The two jobs just aren’t the same. Carcieri was a great executive (and he’s a really nice guy) but he was a disaster as a governor. It will be interesting to see if he remains a visible part of Mitt Romney’s presidential campaign. Romney, another CEO governor, had the good sense to at least act like a moderate while he was the governor of Massachusetts. Carcieri never seemed to realize that politics is the art of the possible, not of the ideological.
Credibility? He wasn’t called Disaster Don for nothing.
Thanks for remembering me Pat.
Sorry Bob, but “The Don” might very well have made this kind of loan when he was working in the private sector. Don’t forget, his bank collapsed. In fact, there really wasn’t anything in The Don’s background that would lead someone to believe he was reasonably successful or intelligent. Those were simply attributes assigned to him by the Providence Journal and local talk radio personalities.
The way that Don Carcieri and the GA Leadership has choked the small businesses and the municipalities in this state over the years is atrocious – it is solid proof that these people don’t give a damn about working people.
This deal in particular is disgusting on so many levels. Anyone who had anything to do with this deal is a stupid asshole as far as I’m concerned. Sorry, but there’s just no way to sugar coat this one.
Plenty of blame to go around. Governors don’t pass laws.
I’m waiting for the resignations of everyone else who played a major role in this deal, but I won’t hold my breath.
This underscores the fact that the EDC has all the wrong incentives in place to take big bets with public money. It should be shut down immediately before it can do any more damage to the economy. That failing, everyone on the EDC who supported or voted for this should be publicly shamed and ousted, including those from organized labor and progressive circles.
Well, that’s a typical right-wing over-reaction. Right-wingers want to do away with anything that they perceive doesn’t work, which is rather ludicrous. Let’s just get rid of everything!
I’d be happy to see some common sense reforms where the EDC spreads out several small- to medium-sized loans to businesses, especially local businesses.
Furthermore, your focus on progressives and labor is kind of weird. The major players in this deal were clearly right-wingers and a Democratic leadership which is and has been clearly fiscally right-leaning.
You’re guilty of precisely what you accuse me of doing by extrapolating my specific recommendation on the EDC to all scenarios. Some things can be fixed with minor tinkering but not when there is a fundamental flaw in the design of a program. As long as there is an unelected EDC of political insiders and self-proclaimed experts picking winners and losers in the state economy with public funds in a top-down control scheme, we are going to see these same inefficiency problems crop up again and again. It is the fundamental folly of central economic planning. The only thing that will dimish by reducing the size of the loans or putting restrictions on the board is the degree of harm when the investments fail. Or there could be unintended consequences and it could actually be made worse.
“Furthermore, your focus on progressives and labor is kind of weird.”
I’m not “focusing” on progressives and labor. I am simply including the involved parties that this blog is happy to leave out of its analysis on this debacle for political reasons. The narrative has predicably become “look at what big business and the Republican governor have done,” and I don’t disagree with that in the slightest, but an honest analysis would acknowledge that that’s only half the story. The EDC had unions and progressives pushing this loan as well, and the Democratic General Assembly made the final decision to pass the bill.
“It is the fundamental folly of central economic planning.”
A loan from an EDC is in no way an example of central economic planning. You are misusing this term.
”I’m not “focusing” on progressives and labor.”
You’re not, ‘Right to Work’? On the contrary, you are a huge troll of progressives and labor. There is nothing to any of your posts but trolling of progressives and labor, which is precisely why your handle is ‘Right to Work’. It’s also why you are deliberately misusing the term ‘central economic planning’.
Your whole post is nothing but an exercise in disingenuousness.
“You are misusing this term.”
My use is consistent with the way it is understood by most contemporary economists. As I already pointed out, it’s not an ”all or nothing” condition and is properly discussed as a matter of degree. I’m not getting into another endless semantic argument with you, which has long been your goal for every one of my posts. Even if I was misusing the term, which I’m not, so what? It has nothing to do with whether the EDC is a good idea or not. This is a good illustration of how you always focus on the most irrelevant components of a debate and drag down the conversation instead of moving it foward.
“On the contrary, you are a huge troll”
Says the biggest troll on this site who never saw a post by a free market advocate he could pass up torpedoing with personal insults and irrelevancies. Even if you disagree with me on policy issues, I do make substantive comments. You just take pot shots at people and create a “nuh uh” yelling match in every thread you post in.
“My use is consistent with the way it is understood by most contemporary economists.”
No. You cannot cite a single contemporary economist who refers to a loan from an EDC as an example of central economic planning.
Nor can you provide a definition of central economic planning that would include a loan from an EDC as an example of central economic planning.
This is why you have not referred to Wikipedia or Time magazine or TV Guide or whatever it is that passes for an economic authority for you. You have no standard behind your use of the term central economic planning.
“Even if I was misusing the term, which I’m not, so what?”
This would be a good time for you to deliver one of your semantic hygiene lectures.
Even though your semantic hygiene lectures have an unsettling psycho-sexual character, your past presentation of them, alongside your current semantic sepsis, demonstrates that you have no commitment to any standards of reasoned debate.
By abandoning any standard of logic or reason now, you show that you have no purpose her other than mere rhetorical attack.
“I do make substantive comments”
You do not. As you have just demonstrated by stating that it does not matter whether you use the terms of any given debate correctly or not.
“Nuh-uh”
“Uh-huh”
“Nuh-uh”
“Uh-huh”
- How every thread in which turbo comments inevitably ends.
How are those citations and accepted definitions coming along?
Economic planning (also central planning and central economic planning) refers to any directing or planning of economic activity by the state, in an attempt to achieve specific economic or social outcomes.
I’d say a loan from the EDC is clearly an example of central economic planning (kind of the whole point of the EDC).
I’d have to agree that imho most if not all economists would call it that. Where they’d differ is whether it’s appropriate or desirable for the state to do that type of planning.
Hehe, look at me! Agreeing with RTW!
Thank you for the support, PinkHat. Good karma for you in the next life. Unfortunately, in this life all arguing with Turbo will get you are headaches and cyclical arguments without end based on irrelevancies, juvenile name-calling, and faulty logical distinctions based upon faulty logical distinctions with no point ever being conceded as a matter of principle, regardless of how objectively indefensible it may be.
As you can see, if you reference the basis for your statements, he accuses you of laziness and ridicules whatever the source happens to be. If you do not reference the basis, he accuses you of plagiarism. This is his modus operandi. It’s a no-win scenario from the outset, which is of course by design.
While it’s not really worth breaking down his argument in the first place, since it is entirely constructed upon bad-faith misrepresentation and faulty logic, obviously in this scenario what he has done is chosen one specific type of central economic planning and excluded all other types of central economic planning from his completely arbitrary definition so that our explanation falls outside of it. Thus he can continue to rage against us by constantly changing his definition regardless of how we define our terms. It’s the same dead-end, back-and-forth semantic argument in which all disputes with this Turbo end. Best to just ignore him and allow him to be shown for what he is: a bad-faith attack troll interested only in destroying any and all threads in which free market advocates have made constructive points.
“I’d say a loan from the EDC is clearly an example of central economic planning”
You might say that, but no economists do.
Nor do economists conflate all economic planning with central economic planning, as you do in the definition you have taken from babylon.com.
“I’d have to agree that imho most if not all economists would call it that. ”
What economists do or do not do is not a matter of your humble opinion.
You have provided no examples of any economist referring to EDC loans as central economic planning, nor can you, because economists use the term central economic planning to refer to a very specific kind of economic activity, which does not cover loans made by EDCs.
To be clear: central economic planning involves deciding what goods and services a society needs and then arranging the economy to deliver those goods and services.
Examples:
The Soviet Union.
The United States during the Second World War.
North Korea.
When Stalin says, ‘We need a million tanks to fight the Nazis,’ and then commands the Soviet Union to produce those tanks–a huge economic investment–that is central economic planning.
When Rhode Island says, ‘Market inefficiencies are letting good investment opportunities slip by, and so we should invest public money in opportunities the market is ignoring,’ what you have is a technocratic attempt to manage a market economy.
In other words, economic develoment corporations do not even exist in central economic planning.
The closest the U.S. comes to central economic planning is in things like military R&D. The government decides that the country needs more jet fighters or whatever and then arranges things to deliver that particular product.
The EDC did not direct Curt Schilling to make video games. The EDC invested money in his video game company in attempt to capitalize on a perceived market inefficiency.
You can argue, as other, slightly better-informed commenters have done, that the EDC wasn’t good enough at its job to identify such an opportunity, but you cannot say that, when the state acts like a kind of venture capitalist, it really acts like a communist central committee.
“The EDC did not direct Curt Schilling to make video games.”
Actually some of payments are tied specifically to project milestones for Copernicus, so I think that’s a questionable statement.
I’d also note that the EDC made the loan in the hopes we’d to attract more of the these businesses to the area. That’s an attempt at directing the state economy. Heck, zoning commisions do the same thing, for instance with the maritime/industrial zoning along Allens Avenue. Only certain types of businesses need apply.
Saying that’s equivalent to a command economy is of course riduculous, but that’s essentially what you’re doing when you insist that all economic planning is synonymous with planned economies. The examples you give are of planned economies (centralized economic planning carried to an extreme).
I’m not so sure why you have such an aversion to the term. The world “central” obviously is intended to evoke images of the Soviets, but I don’t see why we should shy away from the reality that the EDC is involved in economic planning. The horror!
We use different terms to describe different things. There are different kinds of economic planning and different terms to denote the different kinds.
The kind of incentives created by an EDC loan could at the very most be described as indicative planning, which is meant to rectify market inefficiencies by non-compulsory means and is clearly distinguished from central economic plannning.
Though, even this characterization goes overboard, as RI has no actual plan to develop its economy by these means.
“I’m not so sure why you have such an aversion to the term”
I bet you’re quite sure why.
“The world “central” obviously is intended to evoke images of the Soviets”
My bet pays off.
“I don’t see why we should shy away from the reality that the EDC is involved in economic planning”
How come you didn’t say ‘central economic planning’ here?
The EDC is involved more in economic hoping than in economic planning. This is why it is accurate to compare an EDC to venture capital and inaccurate to compare an EDC to central economic planning.
Making investment conditional on targets such as “payments are tied specifically to project milestones” is exactly the kind of thing venture capital firms do.
Do you want to say that every venture capital firm engages in central economic planning?
No, you do not, because it is important in life to make distinctions between things that are different. It helps you to understand what you are actually doing.
EDCs operate within severe constraints. They have no directive power. They don’t really have plans. They are entirely creatures of capitalism. They cannot exist outside of a capitalist system. To characterize them as some kind of artifact of central economic planning is not only absurd, but absurd in the direction of propaganda.
You are going happily along with the idea that any involvement by the state in the market is tantamount to central economic planning, which is to say tantamount to state ownership and direction of the means of production.
I don’t know why you have signed up for this duty, but there you are.
Hey, RTW! Did you come with evidence that contemporary economists define EDC loans as central economic planning?
No?
Oh well!
“Do you want to say that every venture capital firm engages in central economic planning?”
Actually I have made a similar comparison with regard to intrafirm and intra-industry corporate planning. I’m not sure every VC qualifies. Perhaps those with public funds (thinking Slater Technology Fund).
It’s notable that the strings tied to this loan (creating x number of jobs, locating the business in RI) would be very unusual for a private VC. If a VC firm was doing that, then I’d say that likely would qualify.
“I have made a similar comparison ”
No, you haven’t. You have nowhere said that corporate planning is tantamount to central economic plannning.
“If a VC firm was doing that, then I’d say that likely would qualify.”
As central economic planning???
You’re saying that a venture capital firm–venture capital–can somehow act as a central economic planning authority?!?
Look, you are going completely off the rails here.
I’m going to try to help you out. The ideas you are putting forward are essentially those of J.K. Galbraith’s New Industrial State, at lest with regard to corporate planning.
Here’s the thing: it’s absolutely vital to these ideas to understand how corporate planning differs from central economic planning. If you cannot separate the two systems, then you will wind up totally confused, which may account for your condition at this moment.
The EDC has no directive power. It cannot use the power of the state to make Curt Schilling do anything. The EDC offers conditional incentives in exactly the way that venture capital firms do. This structure is entirely different from what goes on in central economic plannning and somewhat similar to what goes on in indicative planning.
I don’t understand why you are so insistent on ignoring this distinction. Rhode Island did not set any goals for the production of video games, nor did it compel anyone to go to work in a video game factory. It never determined there to be some kind of video game gap between Rhode Island and other states. There is simply no aspect of the operation thatbresembles any part of central economic planning.
“No, you haven’t.”
Well, I have on that other blog.
“You’re saying that a venture capital firm–venture capital–can somehow act as a central economic planning authority?!?”
I don’t see why not if they we’re trying to direct the economy towards specific outcomes. I think there may be some social venture funds that are doing that now.
“it’s absolutely vital to these ideas to understand how corporate planning differs from central economic planning”
Well, now you’re sounding like RTW! I don’t see any reason to distinguish between governmental and nongovernmental planning if they seek to direct or in some cases control aspects of the economy.
As for “indicative planning,” that’s just a form of central economic planning. The Netherlands coordinnated their indicative planning with… wait for it… the Central Planning Bureau, which we can assume had nothing to do with central economic planning.
It’s clearly economic planning and “central” in economics just means that it’s being conducted in a top-down manner by some kind of single authority, which is the state in this case. He seems to be making a number of irrelevant distinctions, such as that the board is advisory to the GA in nature and the company is not run directly by government. None of this alters the fact that the state is investing public funds in certain firms and industries that it has determined through a centralized planning board would be good growth sectors in the state economy.
He’s just trolling and trying to burn the thread to the ground. Turbo is the quintessential tar baby – the more you argue with him, the more you become entangled in his antagonistic nonsense and just play into his hands. I’m amazed that Bob Plain tolerates this kind of thread-jacking and egregious trolling behavior, which is banned on most blogs because it’s such membership-poison, but that’s entirely his prerogative to do so.
“ I don’t see any reason to distinguish between governmental and nongovernmental planning ”
You realize RTW is going to revoke his creepy karma points, because you are now making the case that state coercion and corporate coercion are the same?
“ As for “indicative planning,” that’s just a form of central economic planning”
No. It isn’t. That’s why there are two different terms for the two different kinds of planning and why economists separate the two in their discussions of economc planning.
““central” in economics just means that it’s being conducted in a top-down manner by some kind of single authority, which is the state in this case.”
No. The term does not have this kind of meaning in general, and you have provided no evidence that any economist anywhere has ever used it in this way, nevermind that all or even most economists do.
Nor can you show that this usage applies to the term ‘central economic planning’ which, according to your definition, now does not necessarily mean state planning.
Just as you cannot provide even a single example of a contemporary economist describing a loan from an EDC as an example of central economic planning.
It’s abundantly clear that you’ve been searching desperately for precisely this kind of evidence, but have come up short. If you had found anything–anything!–to back up your case, you would have presented it already. You live for that moment when you drop the hard evidence on some poor commenter, and it pleases me a great deal that you are positively burning up over the fact that you’ve got nothing to throw in my laughing face.
Ha ha!
I’m not certain whether these help or hurt your argument, but:
“A centrally planned economy is one in which the total direction and development of a nation’s economy is planned and administered by its government. The antithesis of central planning is capitalism which is characterized by private sector control of production, distribution, and consumption.”
www.referenceforbusiness.com/encyclopedia/Ca-Clo/Centrally-Planned-Economy.html#b#ixzz1vJy67EQF
“Definition of ‘Centrally Planned Economy’
An economic system in which economic decisions are made by the state or government rather than by the interaction between consumers and businesses. Unlike a market economy in which production decisions are made by private citizens and business owners, a centrally planned economy seeks to control what is produced and how resources are distributed and used. The production of goods and services is undertaken by state-owned enterprises.”
www.investopedia.com/terms/c/centrally-planned-economy.asp#ixzz1vJyb1Nt3
“An economy primarily based on central planning is a planned economy; in a planned economy the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. “
en.wikipedia.org/wiki/Economic_planning
There seems to be some room for interpretation, as well as differences of degree. Interestingly, the two sources with the least ambiguity are relatively conservative, business-oriented sources. The explanation of the term in Wikipedia, considered by many (not I) to be very liberally-biased, seems to provide the most ‘wiggle room’ to include lesser degrees of government involvement in economic decisions within the term.
Bottom line: the definition of the term is unimportant. The main point here is that our Conservative Republican former Governor – who was elected primarily due to his supposed business acumen – is largely responsible for the decision to issue a government guarantee for the start-up loan for this private business. Was it a good decision for the State? At present it certainly doesn’t look like it.
“where the EDC spreads out several small- to medium-sized loans to businesses, especially local businesses. ”
How about instead, the private industry does that? If it’s a good idea, then why wouldn’t VCs and angel investors do just that? Why does the government need to?
If we need an EDC, which we shouldn’t, their only role should be facilitating and coordinating. Not picking who is worthy of their money or co-signing.
Why does the government need to be involved? Because it’s in the government’s interest to take action to generate revenues.
That’s like somebody asking why they should have to swear loyalty to a king and being told, “Because it’s in the king’s interest for you to swear loyalty to him.” Okay, that’s the literal reason behind it, but it’s tautological and doesn’t address the more fundamental questions involved. He’s really asking, “Why should we *allow* government to play venture capitalist?”
“If it’s a good idea, then why wouldn’t VCs and angel investors do just that? Why does the government need to?” VCs and angels invest money where it is most likely to benefit themselves. The EDC (at least should) invest money where it is most likely to benefit the people of RI. Big difference. The other problem as someone who has actually raised angel investments is the difficulty in locating interested angels. Would that there were more seed captial funds, perhaps something else the EDC should be promoting.
“VCs and angels invest money where it is most likely to benefit themselves.”
Which is to say they invest money in things which they think can turn a profit, which is to say that they invest in things which they think people will buy, which by definition means those buyers’ lives are improved.
In essence they’re trying to achieve the same thing, but since the EDC isn’t using its own money, there is less incentive to do the same level of due diligence that would come from a VC who uses his own money.
“a VC who uses his own money”
A mythological creature.
No, a minotaur is a creature of myth. The people who donate to kickstarter projects, however, are not.
oh, now it’s only kickstarters?
Let’s see if that’s what you said: ”a VC who uses his own money”.
No, it isn’t. You said, definitively, that a venture capitalist invests his own money. Not kickstarter investments specifically, not crowd funding, but venture capitalists in general.
Venture capitalists in general do not invest their own money, as can be seen in, well, the funding structure of Kickstarter.
Further, not everyone who puts ten bucks into a kickstarter gets the title venture capitalist.
So, let’s hear you say what you said. Don’t take this weasel’s path of trying to qualify your statement after the fact. You want to say that venture capital itself works better than an EDC because venture capitalists invest their own money. That’s your point. Why don’t you have the courage of your convictions and stand by it, even though you’re obviously, outrageously wrong?
A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion. You said they were mythical creatures. You are wrong. Why won’t you admit that?
Justin Bieber is a venture capitalist. It would seem to me that someone who contributes to a kickstarter project would also fit the definition of a venture capitalist. But of course, you’ve already tried to narrow the definition to exclude small amounts (though no such qualification exists in the definition) so that you can claim I’m wrong.
Now you’re comparing EDC to Justin Bieber? I really don’t know what to make of this.
No. Your point is to compare the EDC to a venture capital fund, which is the proper comparison.
Unfortunately, because you are ignorant of how venture capital funds operate, you tried to make the point that venture capitalists–the people who run venture capital funds–invest their own money, while the people who run EDC do not invest their own money. For this reason, you argue that venture capitalists produce results superior to those of the people who run EDCs.
Again, unfortunately for you, you are wrong: the venture capitalists who run venture capital funds do not invest their own money. They invest the fund’s money, which comes from other people.
In short, by the criteria you’ve just set out, a venture capital fund is no better or worse than an EDC, and both are inferior to kickstarter funds and Justin Bieber.
You are now beyond parody.
“No. Your point is to compare the EDC to a venture capital fund, which is the proper comparison.”
I don’t need to make such a comparison. There exists more than 1 type of VC, and I was specifically referring to the VC who funds ventures with his own money, the kind you specifically claimed don’t exist. I have now provided 2 examples that prove your statement false.
The fact that there exist venture capitalists who invest their own money is blatantly obvious to any observer. Your assumption has been that the person with whom you are arguing is debating in good faith. This is not a correct assumption. He is interested only in derailing the conversation through meaningless semantic arguments, insulting any and all free market advocates who post here, and being the last commenter standing in an unwinnable argument of attrition. This is how literally every one of his threads ends.
@RTW… I have to stop feeding the troll :)
I give him a lot of credit, truth be told, because he’s a very good troll. If you look at his earlier posts, he started out doing the usual sloppy troll thing which was to just throw out a lot of incendiary buzzwords against conservatives in every post – Karl Rove, Bush, Glenn Beck, Ron Paul, cryptofacists, racists, etc., But he was called out on that and realized it wasn’t going to play here. Now he uses a much more sophisticated trolling technique, which is to bait you with a half-baked argument laden with insults while ending each post with a dare that you to prove him wrong. When you do then correct him, he sucks you into an endless semantic debate about irrelevancies and 30 comments later, nothing is resolved but everyone’s forgotten the point you were originally making. It took me a few long threads to see his pattern and realize he’s just trying to threadjack and destroy all comments by free-market advocates. He should be banned, but he’s a progressive troll, so he won’t be.
“I don’t need to make such a comparison.”
Yes, you do.
Otherwise, everything that you’re saying about EDCs applies equally to venture capital funds.
And there’s simply no way you’re going to argue that venture capital funds are not good at allocating capital.
You are making an argument in bad faith.
”I have now provided 2 examples that prove your statement false.”
You have not. You have provided two willfully perverse attempts at stretching the definition of ‘venture capitalist’ beyond recognition.
@turbo
“Yes, you do.”
Laf. No, I don’t. You didn’t start this thread by claiming my assertion was inaccurate, you claimed that individual VC’s who put up their own money are mythological creatures. Therefore that is all I must focus on. I have since proven your claim false. But as RTW noted, you lack the basic ability to cede even the most obviously wrong position, taking idiocy to a comical extreme with this next gem:
“You have provided two willfully perverse attempts at stretching the definition of ‘venture capitalist’ beyond recognition.”
Is that so? Why don’t you google the term “venture capitalist definition” and note the 1st result returned.
And with that, I’m done feeding this troll. Turbo, if you’d like to have an actual debate in the future, I may be interested, but if all you’re going to do is be a complete jackass for the sake of being a complete jackass, then I wish you the best.
“they invest in things which they think people will buy, which by definition means those buyers’ lives are improved. “
Not necessarily, and certainly not ‘by definition’ are buyers’ lives improved because they buy something. You have never struck me as being naive at all, but one would have to be to think that such a statement is universally or even mostly true in any sense. Marketing influences people to buy useless or unnecessary products and services all the time. Some products and services are actually harmful to the buyer – those buyers’ lives certainly were not improved by their purchases.
Human nature means that unfettered capitalism generally and VC in particular is focused on profits for the investors (and those who control the investments) with no regard for the welfare of the ultimate consumer. The consumer in such circumstances has only limited economic power to influence the market, and then only to the extent that they collectively agree that a product or service is worthwhile and affordable (or not).
No modern economy can ever be purely capitalist or purely planned. Neither system works. The trick is to find and implement the best compromised aspects of both and continuously adjust the mix as needed.
“certainly not ‘by definition’ are buyers’ lives improved because they buy something.”
If a buyer did not believe he would be made better off by engaging in the transaction, then the transaction wouldn’t have occurred. Though I agree that the actual net benefit may be a different story.
“with no regard for the welfare of the ultimate consumer.”
It’s economic self-interest that drives people to serve their fellow man. It’s the profit motive that gives us more of what we do want and less of what we don’t. Is it perfect? No, not buy a long shot, but I’ll take an economy planned by the many any day over an economy planned by the few.