RandomRanger
Just build nuclear plants!
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User ID: 317
Do we actually have a financial system that directs resource allocation to prosocial ends? Are people with great ideas and potential getting capital directed to their endeavours? To some extent, yes.
But safe returns can also be found in 'house prices up only!' lending, which directly undermines the demographic sustainability of civilization and transfers wealth from young to old. Or SEO/adtech/addictive mobile games.
What about the returns of offshoring industrial capacity? Or standard MBA-tier 'cut investment, cut R&D' wrecking? This kind of sabotage can be very lucrative for well-connected individuals but is corrosive to the national interest as a whole. Or cynically favouring mass immigration to lower wages and thus stalling automation and productivity growth. Privatized gains, socialized costs.
Just because there are smart people in finance, it doesn't mean the sector as a whole is doing a good job. Very smart people can do tremendous damage, more than any idiot robber or murderer.
RandomRanger
Just build nuclear plants!
13hr ago
The Iranians can make hypersonic missiles, they can easily make H-bombs if they want them. It's really not that hard.
Since Iran doesn't have nuclear weapons, hasn't tested, it's because they judge it wouldn't be too helpful strategically. It would spur Saudi nuclearization and perhaps invite a nuclear disarming strike. That situation may change, so they want some latent nuclear capability.
Mortgage lending is important. But there's a distinction between lending for new builds to expand supply and foster development vs fuelling property bubbles and land speculation. It's not impossible to make houses cheaply - financial resources could be directed to replicate the postwar baby boom era of cheap housing and industrial development. That's how it happened in the first place, financial repression and capital controls. Credit was directed into creating new housing stock.
This doesn't happen naturally. It is often more profitable to buy houses in desirable areas since they're not making any more land. Elastic credit, inelastic supply - prices rise. It can be a lot 'safer' than lending to industry, from the perspective of the bank. If a business fails the money can be lost, whereas you can always repossess a house.
In 17 advanced economies, the share of mortgage loans in banks' total lending portfolios roughly doubled over the past century from 30% in 1900 to about 60% in 2014. More productive industrial investment has been crowded out.
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