RichardGibbons

Oddly enough, about a decade ago, I wrote a piece on who was the better billionaire.... It seems kind of apropos now. http://www.fool.com/investing/value/2005/12/07/buffett-vs-trump.aspx

Interesting point. I kind of feel like within a thousand years, we'll probably figure out how to create arbitrary compounds and possibly arbitrary elements. If that's the case, I would think the main limiting resource would be energy, which I imagine we could get from the sun. On the other hand, I have no evidence for that feeling, so who knows. It would be quite bad if we only have a 200 year runway.

Is this supposed to mean human life? Because life's been around for 4B years, so another 400M years to get off planet doesn't seem like a big deal. If they mean dinosaurs, that's still over 200M years, so another 20M years seems like quite a long time, too. (I agree with your main point. It's a bad idea to trash the earth in an attempt to leave. I'm just curious about the point the original author (not you) was making when they referenced 10% of time left. )

I suspect this isn't true because the average house price in bubbilicious Canada is up 28% during that time, and real estate is frequently leveraged. So, I'd guess the gap has increased. That said, I think now is a really bad time to measure average wealth in Canada because of the housing bubble.

So to summarize the conversation: Richard: Doesn't a gold standard lead to deflation which is a bad thing? Or am I missing something? Petec: Yeah, it could lead to deflation, but deflation isn't necessarily a bad thing. Richard: I see. That's outside the mainstream view, but the mainstream view seems to have major problems so there might be something to what you say. wachtwoord: Bitcoin exists, therefore good! Evil Keynesians! Religious dogma! Stupid fiscal policies! And education is bad! Avoid text books! Richard: Uh, what? You know that I'm actually thinking petec might be correct, right? Your zealous foamings are not actually providing any insight. wachtwoord: I have no patience for people who ask questions when they don't understand! You're attacking me and you haven't made an argument either. Richard: I'm trying to understand what petec's saying. Not make an argument. Your "Bitcoins are better than gold" statement is actually coherent and relevant. Thanks for that.

You're honestly telling me that you are criticizing someone about Bitcoin without realizing that, in terms of growth, its properties are similar to gold with respect to supply? Worse, actually, since there is a finite supply. Or are you just ignorant about how Bitcoin actually works? Umm, I was asking a question because I was curious about the pro-deflation reasoning and how people account for the fall in demand. Petec's response was very useful in explaining it to me, much more so than "Wrong! Stupid! blah blah religious dogma! blah blah not science! blah Keynesian!" His response has persuaded me that there's something to be said for not discarding the idea just because it leads to deflation. Yours has persuaded me that many people are religious zealots when it comes to this topic, and, even if the idea might be right, they harm the credibility of the idea by being unable to communicate anything beyond their fervour. Thanks for trying. (And thanks for succeeding, petec--you've enlightened me and I'm coming around to that point of view.)

Interesting argument--very different than what I've seen from mainstream economists, who mostly seem to vilify deflation as destroying the economy by reducing demand. On the other hand, building demand through constantly growing debt doesn't seem particularly sustainable either, but they seem enthusiastic about doing that recently. Thanks petec.

I'm curious about your reasoning here. Why is this the scariest part? You don't think a president should act on non-public information? Or you think that it's important that a president release confidential information to the public to justify their actions? Or do you think that because no public information exists, it also means no confidential information exists? Am I missing something obvious about why this should be really scary? Or am I misunderstanding, and you just don't like the escalation of an online conflict into the physical world? (That one scares me a bit--I'm not totally sure how I feel about it.)

What's the alternative to fiat money? Physical commodities don't seem to work, because the growth of the supplies of the physical commodity might not match the growth of the actual economy. (Like, if gold supplies grow by 1.6% a year, and the economy grows by 3% a year, it seems like you have a problem--constant deflation. Or, if you're getting too much of the physical commodity relative to the economy, you get inflation.) So is there a better alternative I'm missing, or is something wrong with my reasoning here?

There's actually a relatively active subreddit dedicated to these sorts of paths: https://www.reddit.com/r/DesirePath/ I find it strangely compelling. It makes me think that, when building anything new, they shouldn't bother paving for a year. Then, they should just pave anywhere there's a path. (And, to add a political element to the post, you don't actually see that many paths like this in the real world. I guess that means that rkbabang thinks centrally planning mostly works.... :) )

I think slashing the tax rate is hard for a couple reasons: 1. Everything related to the tax code is a political football. Recently, even really minor, but necessary funding changes are hard to pass (e.g. see Zika). Even with a Republican Congress, Senate, and President, I think it would be hard to make big changes to the tax code, and that's a huge change. 2. Figuring out what to cut is hard. I have no idea how much tax revenue would be lost by doing this, but let's assume that it's 35% (assuming similar cuts to payroll taxes). So where do we cut the budget? Defence is 16% now, but Trump says he wants to boost defence. So let's say he's increasing that to 20%. Then we need to find 39 percentage points of cuts. Interest payments are 6%. Defaulting on the debt is a really stupid idea. Maybe Trump would do it, but it seems unlikely, and it only saves 6%, so let's assume he wouldn't. Discretionary is 16%. Let's cut that. No more EPA, no more Department of Education, no more FDA, no more SEC, no more budget office, no more Federal Parks or Federal Courts or Prisons or Veteran Affairs, no more help in the next earthquake or hurricane, all that sort of stuff. I think people might object to some of this, and we'd have criminals running around everywhere, no way to enforce laws or contracts, so that wouldn't be easy, but screw it. So now we need another 23 percentage points of our budget cut. We have another 49 percentages points in healthcare and social security and 13 percentage points in other mandatory spending like unemployment compensation and child tax credits. So, to get these 23 percentage points, he'd have to cut 37% of social security and healthcare benefits. So we're taking a program that people supposedly paid into, and are relying on for their retirement, and screwing them over. A big chunk of these benefits largely accrue to Trump's "old white men" base, and Medicare is hugely popular with both this base and the electorate generally. Plus, watching dear old grandma starve to death on the street on national TV would upset people. So, I think he'd have a hard time doing that too. To me, this implies that it's really hard to make big tax cuts, not really easy. Not to say it couldn't be done. Rather, if it were done, I think it would probably lead to civil war. I think ObamaCare could be cut. It hasn't been out long enough and has had enough problems that people probably wouldn't fight for it strongly. Really, the right strategy is to cut ObamaCare and replace it by single payer--same outcomes as privatized healthcare at two-thirds the price. This might be a way to achieve your tax cut, if you are able to take all the money put into privatized medicine and toss it into the federal budget while shifting to a single payer system. But the healthcare lobby is too strong for that to realistically happen, either. Besides, it's nice that Americans are willing to grossly overpay for healthcare, since it results the development of technology that wouldn't get created otherwise, benefiting everyone.

Thanks for your response, muscleman. In terms of things you missed, Trump slashing the tax rate from 35% to 15% seems implausible to me--not easy at all. I'd compare it to trying to scale Everest naked. Nevertheless, I find it interesting to read about the reasons you like him, and I'm glad that someone actually feels passionately positive about a candidate in this election.

This is an interesting statement, because I think almost everyone I've heard from portrays this election as a choice between bad and worse. Out of curiosity, is there anyone on the board who is sincerely delighted with either Trump or Clinton being a nominee and thinks they'll do a great job as president? (And I don't mean from a libertarian perspective like "this candidate will do so badly at the job that they'll bring down the whole political system, and that'll be great!")

Thanks for the interesting discussion, wachtwoord. I think we've both made our best cases within the limitations of the time we were willing to put into an Internet thread. It was fun! :)

Nice post Perks. I agree that you've basically covered it, and covered it well.

Wachtwoord, it's not that I don't understand your points. It's that I think they're wrong, and I'm providing counterexamples to show why. I can understand why it bothers you though. When a counterexample proves that you wrong, you either have to modify your ideology or whine, and people almost never modify their ideology. I'm still curious about your evidence of "The vast majority of the social safety net money goes to people who contribute zero (at best) to society. So no they don't have jobs. Ever." Seriously. If you've got something, I'm really curious. (And if you have nothing, then.... Really? The core tenet of your beliefs, and you have nothing? Come on, you gotta have something. Please.) Sys, I think LC has largely got it, except that I also think it's like the problem in politics. For most issues, most people care a bit, but not that much, while the lobbyists care a lot about the issue. So, the lobbyist expend way more effort and mostly get their way, even if it's not what the vast majority wants. It's the same way with executive pay.

Do you have a source for that stat? I haven't seen anything to that effect ever, so I'm curious where you got it from. (Or is this just some "Look! They're all retirees and disabled veterans" deal?) I'm seriously curious about this.... The thing that I find interesting about this argument is that you almost certainly can't imagine living like that--doing nothing and having someone else take care of you. Neither can I. And I have a hard time believing anyone actually wants to live that sort of life. I think pretty well everyone wants to have a high standard of living, and I think I've never met someone who doesn't actually care. So I'm curious where all these lazy bums are hiding. If I could see these legions upon legions of people without ambition, I think it would be much easier for me to come around to your "let them starve" point of view. It's interesting to take this premise--that stuff is naturally divided up by skill--and see where it takes you. The median black household in the USA makes $35K a year, while the median white household makes about $60K. I assume in your world, that basically means that blacks are intrinsically less skilled? In my world, the most likely explanation is that it's the result of bad luck (much of that bad luck being the genetic lottery.) Exactly. Now you're starting to come around to my point of view! Your laissez-faire system wouldn't create these great outcomes. Let's go back to my first comment on this thread: You wouldn't have invested in it, and that's a terrible thing for society. Relying on capitalism to decide everything results in considerably non-optimal outcomes. Without this social program, we wouldn't have a new business creating goods that consumers want and providing jobs to people who make those goods, all of it increasing our standard of living. A total win!

Parasite definition: person who receives support, advantage, or the like, from another or others without giving any useful or proper return. The problem is that you aren't talking about edge cases. Poor people aren't edge cases--most of the poor are working or contributing to society. You really think that a bunch of poor people are sitting around home, watching TV? Almost everyone's trying to get ahead--the edge case is the person who isn't. To me, if you're raising kids well, you're certainly contributing a lot to society. Most of the poor have jobs. So I think maybe you consider poor people parasites not because they aren't contributing to society, but rather because they get support. The crux of the definition is whether the poor give any useful or proper return. You seem to assume because they're poor, they don't. That said, if you haven't given Sanjeev money for this board, then according to your definition you're a parasite (though I don't consider you one.) I was referring to this comment. I consider starving someone to death torture. I guess you just consider it murder? I didn't portray you as rich. I'm reasonably wealthy now (though not super wealthy), and one of the conditions leading to that wealth was the social safety net. If I didn't live in a country with a socialized medical system, it would have been irresponsible to start a business when a single adverse medical event could destroy my family. Because I knew that I was covered in the case of bad luck, I was able to start a company. So, I guess I was a parasite for several years. Then I paid the government millions in tax. Does that make me less of a parasite, or is it the case of "once a parasite, always a parasite"? Can I get my parasite label retroactively removed because I paid taxes that would more than pay for any costs I incurred? Do I still not deserve food, or do I get to eat now that I'm one of the people being stolen from, rather than one doing the stealing? (I think I must still be a parasite, because otherwise how do you justify starving to death people like JK Rowling when they're in the process of writing one of the most beloved series ever and becoming a billionaire? Man, figuring out the implications of your worldview is really confusing.)

As a meta comment, this sort of discussion makes me wonder about the impact of Fox News. I'm concerned that because there's no real debate on Fox, right wingers and libertarians are losing the ability to understand what sorts of arguments are strong and what arguments are weak. This could result in them having problems creating strong cases espousing their positions. (e.g. Libertarians are right that taxes are extortion. But jumping up and down and yelling about thieves isn't going to persuade many people). One potential result could be a block of die-hard conservatives who are unable to convince others that their positions are reasonable, simply because they don't have skills to argue it effectively. This could lead to a disproportionate degree of rule by left-wing governments, and the rise of people like Bernie Sanders. To me, this is quite problematic. I think the center is the best place to be, combining the power of capitalistic economic incentives with rules reducing inequality to improve the quality of life for everyone, and reduce the chance of the rich being killed by the poor. But if the right are unable to argue their positions effectively, I'm worried we'll actually end up with a socialist like Sanders calling the shots to everyone's detriment. I don't know the solution to this, but I'm hoping that the rise of Trump will be a wake-up call that convinces the broader right-wing to return to rational arguments rather than black-and-white ideology.

LOL, by definition? Earning money is the only definition of contributing? So, for instance, you'd view a stay at home mom raising a family as a parasite? A Walmart employee living below the poverty line isn't contributing? A doctor volunteering for Doctors without Borders is a parasite? So no, I don't admit this is factual. Kind of twisted, I think. That said, you've also said that we should torture thieves to death. So, I guess your view of the world is pretty skewed. The most amusing thing in this discussion is that StahleyP, Jurgis and I almost don't need to say anything to refute your reasoning. You almost do it yourself. I think perhaps your next argument should be that we should exterminate all kids because they're nothing but leeches.

Yeah, it's all greed! The laid-off autoworker without health insurance who doesn't want to die when his appendix ruptures! Greedy lazy bum! The single mother working two full-time jobs who wants enough time to see her children and raise them right. Greedy mother! The baby of a crack whore who wants adequate nutritious food and a loving household so they don't end up stunted and mentally unstable. Greedy baby! You're right. It's all about greed. Especially that baby. How horrific that someone might stop you from buying your fourth Ferrari just to give a stupid kid food. If she wants food, she should buy it herself. Fixed that for you.

Yep, you read it right. Based on data comparing both countries and states, outcomes for things like health, mental health, drug abuse, and violence both the rich and the poor are worse in rich countries with greater degrees of inequality. That said, I imagine that it's optimal to have some degree of inequality, and I think most people believe this. The idea that people will magically do something just because it's in their best interest is silly. If you really believe this, why do we have any drug users at all? Workaholics? People who stay with abusive spouses?

No. Inequality causes envy. The reason one would want to reduce inequality is because life is better for everyone, even the rich, with more equality. And, if inequality gets too high, the poor sometimes rise up and kill the rich. Thus, there's value in discussing how to design the world optimally to reduce the horrible outcomes resulting from bad luck. That say, since you are a libertarian, you're going to have a really hard time contributing something useful a conversation that isn't based around your "might makes right" ideology.

Of course, since we're just talking about terminology, everyone's right--one can define "value investing" any way one likes. Your last statement pretty much sums it up, Buffett admitted he drifted away from BG and more towards Fisher and Munger. So his definition of value has changed. I agree that Buffett moved away from Ben Graham toward Fisher and Munger, but I don't think that implies that his definition of value has changed to assign value to growth. Heck, contrary to your implication, Ben Graham assigned value to growth. His 1962 formula for the intrinsic value of a stock was EPS * (8.5+2*(growth rate)). (To me, that transition from Graham to Munger was mostly a recognition of the incredible power of a long-term moat.) Do you have any evidence that Buffett ever thought that growth shouldn't be taken into account when valuing stocks? I suspect there is no such evidence, but I'd find it really interesting if evidence does exist. To me, ignoring growth is a terrible idea. I think one should spend a huge amount of effort looking for companies with competitive advantages that enable them to grow for a long time, and then try to buy them cheaply. Richard

Interesting perspective. I think ignoring growth in value investing is a bad idea because growth often has a huge impact on the value, particularly long-term value. Buffett's perspective in his 1992 letter seems to match my perspective (his italics, not mine): Of course, since we're just talking about terminology, everyone's right--one can define "value investing" any way one likes.