- nik walser
- Marina Del Rey, CA
- United States
Financial Services - Risk, Fraud, and Compliance Consultant,
This conversation is closed.
Can we think of a better set of incentives to maximize economic efficiency by directly focusing on maximizing economic "intensity"?
Various economic systems have tried to determine the best allocation of goods, services, and capital (which includes labor, money, natural resources, land, etc). Capitalism allocates capital based on who can think of the most profitable use for that capital. This encourages risk-taking and discourages equality. In this system, people who grow wealthy by taking smart risks with their capital "deserve" the resulting profits. People who go bankrupt by taking dumb risks "deserve" that too.
One unfortunate side effect of wealth-creation under this system is that some people stop making smart capital-allocation decisions and become capital hoarders. They don't care that they are creating little value out of the capital, either because they expect the value to go up, or because they have sufficient personal wealth to meet their own needs and wants without squeezing the maximum value out of each asset.
In this case, capital becomes inefficiently allocated to the detriment of the "have nots." Second homes sit empty while homeless people sit on the street. Farmers in developed countries are paid to NOT grow crops while whole villages in developing countries starve. In other words, the usage of that capital (the "intensity") is lower than it could be.
So my challenge to my fellow TEDsters is: how could we revise the incentive mechanisms to encourage maximum capital "intensity" while preserving those components of the system which encourage the necessary innovation, risk-taking, and reward-reaping?
Closing Statement from nik walser
Sadly, there wasn't much participation on this question. Perhaps TEDsters aren't quite ready to think about the esoterics of economic systems.