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Thread: Value Added to Society by Idle Shareholders and Landlords

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    Hall of Fame Member weldone's Avatar
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    Value Added to Society by Idle Shareholders and Landlords

    We often hear this expression 'A well-functioning capitalism rewards those who add value to society'.

    I want to hear views from members about what value the following two classes of people are adding to society. How are they actively contributing to society, for which they are being (sometimes very highly) rewarded?

    1. Idle shareholders (I'm not talking about the Elon Musk or Larry Page type as they are clearly not idle - they are actively contributing to the Company)
    2. Landlords of all type.
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    Cricketer Of The Year Ausage's Avatar
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    They're assuming the risk of a failed investment.
    Fighting for peace is like screwing for virginity.

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    Cricket Web: All-Time Legend vcs's Avatar
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    I kind of feel the same way about bitcoin TBH. I'm sure the entire block-chain system they've devised is extremely sophisticated and ingenious, but bitcoin mining uses a huge amount of computational power and cooling equipment, for what is basically counting.
    Quote Originally Posted by benchmark00 View Post
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    Cricketer Of The Year Ausage's Avatar
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    The value in cryptocurrencies is in the inability for their value to be altered arbitrarily. You can't just print bitcoin or add a few 00s to a database somewhere.


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    Spanish_Vicente sledger's Avatar
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    Can't add value to something that does not exist.

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    Spanish_Vicente sledger's Avatar
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    Quote Originally Posted by sledger View Post
    Can't add value to something that does not exist.

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    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by Ausage View Post
    They're assuming the risk of a failed investment.
    How does the society benefit from it?

    1. Idle Shareholders: When a Company fails, most of the employees lose their jobs anyways. Idle shareholders 'assuming the risk' doesn't help people working on the ground in such situations. As you surely know, in most such cases, employees incur far greater losses than idle shareholders in the long-run. An idle shareholder with a diversified portfolio incurs limited loss. But the employee with only one job loses his livelihood. Therefore, the main risk is being borne by the people who are actively contributing rather than those who are partaking in speculative investments.

    2. Landlords: What is the use of 'assuming the risk' of the market value of a property? What does the society lose if the 'market value' of a house drops? Nothing. What is the use of bearing such an imaginary loss that doesn't impact the society?
    Last edited by weldone; 06-03-2019 at 05:44 AM.

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    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by sledger View Post
    Can't add value to something that does not exist.
    What doesn't exist? Society? Again don't drag me into the semantics in yet another debate - what if I change the word 'society' to 'civilization' or 'humankind'? Will you say human civilization doesn't exist? I hope not.

    Right. So, how are idle shareholders and landlords contributing to human civilization?

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    Shareholders help the company raise capital, which (in most cases) benefits society.

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    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by Daemon View Post
    Shareholders help the company raise capital, which (in most cases) benefits society.
    Most shareholders participating in the secondary market absolutely don't help the company raise capital.

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    Hall of Fame Member harsh.ag's Avatar
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    Quote Originally Posted by weldone View Post
    How does the society benefit from it?

    1. Idle Shareholders: When a Company fails, most of the employees lose their jobs anyways. Idle shareholders 'assuming the risk' doesn't help people working on the ground in such situations. As you surely know, in most such cases, employees incur far greater losses than idle shareholders in the long-run. An idle shareholder with a diversified portfolio incurs limited loss. But the employee with only one job loses his livelihood. Therefore, the main risk is being borne by the people who are actively contributing rather than those who are speculating.

    2. Landlords: What is the use of 'assuming the risk' of the market value of a property? What does the society lose if the 'market value' of a house drops? Nothing. What is the use of bearing such an imaginary loss that doesn't impact the society?
    What you're basically undervaluing here is that capital comes from savings and efficient allocation of capital is important for an economy to thrive in the long run. It doesn't have to be perfectly efficient, and savings can come from domestic sources or from abroad. You're also missing the wealth effect on consumption and savings, esp for landowners, since, for most people, their house is their one big asset.

    Also, the employees lose their jobs temporarily. The shareholder loses his money permanently.
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    Hall of Fame Member harsh.ag's Avatar
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    Quote Originally Posted by weldone View Post
    Most shareholders participating in the secondary market absolutely don't help the company raise capital.
    If the market makers go away, you'll find stock indices declining. Liquidity and price discovery matter. You're taking a lot for granted here.

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    Quote Originally Posted by weldone View Post
    Most shareholders participating in the secondary market absolutely don't help the company raise capital.
    They do, because without them, there exists a greatly diminished capital market for initial shareholders.

    IPOs would raise a lot less if there was no secondary market to offload your shares to.

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    International Captain the big bambino's Avatar
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    Yeah indeed. Its the same reason why we should despise customers. I mean when weldone buys a car what the **** did he ever do to build the company or product?

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    Spanish_Vicente sledger's Avatar
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    Quote Originally Posted by weldone View Post
    What doesn't exist? Society? Again don't drag me into the semantics in yet another debate - what if I change the word 'society' to 'civilization' or 'humankind'? Will you say human civilization doesn't exist? I hope not.

    Right. So, how are idle shareholders and landlords contributing to human civilization?
    It's not a case of semantics. I was just alluding to the fact that the so-called "public good" is a mythical and fanciful concept that has no real meaning, and is only invoked in situations where no other compelling justification for something can be produced.

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