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Friday 6 November 2009
Capitalism's Fundamental Flaw

But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the fundamental flaw that our celebrated system rewards speculators much more than creators. A relatively junior hedge-fund manager or a bond trader on Wall Street makes a great deal more money in his career than Charles Kao, who invented the basic physics making optical communication a reality. Dr. Kao, now 73, won the Nobel Prize this year, but his net worth would not compare favorably with that of George Soros.

Yet, who added the real value? Soros or Kao?

In 2009, 30 million people sit unemployed in America. Yet, the speculators have managed to lift the stock market up, and the media pretends that we’re having a recovery.

We’re not having any recovery. We need the innovators, the entrepreneurs, the creators, the scientists, the technologists—those who build value, those who create jobs—to lead us out of this nightmare. Not a bunch of speculators who make money regardless of whether value gets created or destroyed. In fact, many of them are incentivized to destroy value by spreading fake rumors about companies and stocks, and they do so often. Some get caught, most don’t.

And our talented youth gets seduced by this profession of speculation known for its easy and abundantly flowing financial rewards, avoiding those that require much greater intellectual capacity. Most importantly, very early in their lives, our talented youth come to realize that fields that may earn them a Nobel Prize—cancer research or multi-core computing—may not make them rich. But moving money from here to there will.

And thus, we lose Berkeley Ph.Ds in nuclear physics to hedge funds and MIT computer scientists capable of delivering computing to 6 billion people to derivative manipulation on Wall Street.

Notes

  1. stocassticity reblogged this from cloois
  2. cloois reblogged this from dalasverdugo and added:
    But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the...
  3. joshuajabbour reblogged this from buchino
  4. lojkyelo reblogged this from dalasverdugo and added:
    But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the...
  5. buchino reblogged this from azspot
  6. mrmuerto reblogged this from dalasverdugo
  7. yumwatch reblogged this from dalasverdugo and added:
    I kind of love this. I don’t usually talk politics/economics/religion on this here bloggy cause I know most people just...
  8. sweetpath reblogged this from figuremeout
  9. dalasverdugo reblogged this from azspot and added:
    Spot on. And I’m pleased to see this comes from Forbes and not some fringe blogger.
  10. vcbsjr reblogged this from figuremeout and added:
    I don’t mean to be rude, but guess what: Life’s not fair. It never was, and it’s never going to be. Also, since when has...
  11. figuremeout reblogged this from laurakelly00 and added:
    The most enlightening point on education is not what you can teach, but more or less how one learns and takes...
  12. sinnersaint reblogged this from azspot
  13. kjartanthemagnificent reblogged this from shorterexcerpts and added:
    azspot: But there is another less obvious bug in capitalism that...don’t believe...
  14. dianlovesit reblogged this from yummymandoo and added:
    But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the...
  15. abcsoupdot reblogged this from azspot and added:
    But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the...
  16. yummymandoo reblogged this from azspot
  17. shorterexcerpts reblogged this from azspot and added:
    And I find it darkly ironic how many Ayn Rand fans praise the speculators these days…
  18. azspot posted this

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