From: Robert J. Bradbury (bradbury@aeiveos.com)
Date: Mon Jul 15 2002 - 07:08:54 MDT
On the issue of going to space, I'd have to agree with Greg
and other recent comments regarding SeaLaunch. Kistler
Aerospace is another example that comes to mind. We *have*
had people try to produce "private" space launch capability.
Its simply too expensive unless a larger market can be
developed. If a private launch industry is going to
develop, the most likely place for it would seem to be
China since they seem likely to have the lowest labor
and manufacturing costs for the next few decades.
Now, On Mon, 15 Jul 2002, Technotranscendence wrote:
> Anyhow, if your attack on free markets is based on the current stock
> market scandals, you would do well to remember that these scandals took
> place inside the sphere of highly regulated market AND that the upswing
> in the market that made so many people act foolishly with their money
> was basically created by the Federal Reserve -- a government agency, no?
I think one should write off the foolishness to a combination of
(a) a generation of inexperienced investors suddenly moving into
the market when they heard about all of the money to be made in
day trading, the dot.com boom, etc.; and (b) a "new new" thing
in the whole internet/dot.com "concept" that caused people to
believe that fundamental valuation principles could be ignored.
When corporate P/E multiples get to 50 and above you have to start
asking yourself *why* is that the case? Sometimes that can be
because you have too much money available. Other times it can be
because one expects the corporations to grow rapidly. But you need to
look seriously at whether business models like "HomeGrocer.Com" are
*ever* going to work. (Let's see, I transfer my time and energy
costs of driving to the grocery store and actually selecting the
food to the grocery store for approximately the same prices I now pay...
Anyone who knows the low margins grocery stores normally operate at
*knows* that model *isn't* going to work.)
> -- lowering interest rates during the late 1990s (and again lowering
> them in 2000 and 2001). This created a moral hazard -- as people took
> risks they normally wouldn't take.
I'm not going to let this slip by. Interest rates are now lower than
they have been in 30 years and one doesn't see people behaving "foolishly".
And I know serious investors that didn't behave foolishly during the
whole dot.com era and still have their capital as a result.
> I.e., absent government intervention in the market, these scandals
> probably would not have happened or would have been much more limited in
> scope. (Granted, they are not as big as some are making them to be.
I disagree. I think the scandals arose primarily due to conflicts
of interest. Conflicts between the *private* accounting firms auditing
arms and their consulting arms; conflicts between the brokers' investment
banking activities and their analytical activities; and conflicts between
the personal financial interests of corporate executives and their fiscal
and moral responsibilities to their shareholders and employees.
Now I know Daniel would say that there should be "private" firms who make
these conflicts known to the public. I would argue that is inefficient
and insufficient. I prefer a government passing laws so that there
are *real* consequences, i.e. jail time, for people who "cook" things
to their own advantage. When millions of dollars are at stake the
incentives for single individuals to attempt to get away with their
"clever idea" are just too high to resist temptation.
Interestingly, there would seem to be an incentive for increasingly
"risky" fiscal behaviors as the singularity approaches -- if the
singularity really does allow for exponential growth, then you can take
"foolish" risks and be bailed out by the growth enabled by the
singularity. That suggests we are going to need increased punishments
for "bad" behavior as we progress through the singularity.
> It's funny how a few companies cook the books this is seen as the worst
> evil ever -- and granted it is wrong -- while when the government does
> this no one notices and some call for increased taxes and public
> spending.)
Perhaps true. So the solution would be to work for more accountability
on the part of the government. The Freedom of Information act is out
there. All one has to do is use it.
Robert
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