[bilbo0s]

Why is this bad now?

To be clear, the American economy has always had a "Big 5" of Real Estate, Finance and Insurance, State and Local Government, Health Care, and then Durable Goods manufacture. That hasn't really changed. (At most maybe Lawyering and IT combined could knock off Finance? I seriously doubt either Legal or Tech could knock off even Durable Goods on their own.)

Point is, we've been operating like this for at least a century and a half now. Why are the big intangible transfers in Finance and Insurance, or Health Care, or even sometimes Real Estate* all of a sudden a problem now?

* Finance, Insurance, Health Care, and Real Estate are the intangible transactions that still dominate the economy today. Transactions for legal services or computer/tech type services could not even approach any of the Big 5 in terms of scale. Again, maybe if you combined them? But even then, I doubt they would be number one. There's no way they challenge Real Estate.

[rtpg]

If a lot of money is just flowing in circles between a small group of people, then that's effectively taking money out of circulation.

I'm not a fan of money going into a bunch of real estate, but given that our society is built around certain kinds of transactions (financing stuff via income/property/sales taxes, plus... y'know, paying people wages and having wages go up eventually) having a bunch of people use their stockpiles of money to just shift stuff between each other in m&a deals doesn't get us far.

[doctorpangloss]

It's almost as though we already live in the high tax society Paul Graham hates so vehemently, with all its supposed inefficiencies. The taxes are just paid to private, unelected elite instead.

[hi5eyes]

and you hit the nail on the head

>The taxes are just paid to private, unelected elite instead.

of which tesla bears use as a point when writing about the company, tesla/boring/spacex/the defunct solarcity are all vehicles for elon to "burn tax money" on his own megalomaniacal ideas, of which the arguments are about his companies and whether or not they... change anything about their industries

[akiselev]

> Why are the big intangible transfers in Finance and Insurance, or Health Care, or even sometimes Real Estate all of a sudden a problem now?

Because those transfers are becoming less and less attached to tangible transactions of value while increasingly allowing the middlemen to embed themselves into the economy through regulatory capture. That's not to say they weren't a slowly growing problem before, but there was enough productivity to be gained through low hanging fruit to justify many middlemen who could claim to efficiently allocate it while taking a cut. Lawyers who can navigate complex regulatory schemes, investors who can free up capital by stripping companies in a dying industry for capital to invest in a growing one, bankers who let companies hedge their bets and trade their extreme highs for less risk of a catastrophic low, insurance companies to do the hard work of data collection so that risk/reward can be accurately priced, and so on.

There is a lot of room for all of these industries to act as middlemen while providing value, but just like a bunch of farmers can grow so much of one vegetable that they all collapse economically (taking the food supply with them), so can these middlemen go too far and bring the entire system down with them.

Take health care for example: we spend more of our GDP on healthcare than the vast majority of developed nations with worse outcomes despite the fact that the majority of research and development for drugs/devices/therapeutics is financed and carried out in the US. How much of that money is going to health insurance middlemen who structure the system to obfuscate pricing from consumers through layers of bureaucracy? How much of that money went (and continues to go) to corrupting the nation's politicians to prevent proper reform of our healthcare system? How much longer can we go with out of control healthcare costs before there is a reckoning like Medicare for all that wipes out the medical insurance industry - essentially putting everyone in the terrible spot of trading the livelihood of millions for the livelihood of millions?

That has always been a problem and it's only getting bigger.