[AnthonyMouse]

> Meanwhile the bottom 7 lowest-margin industries other than LiDAR and aircraft leasing (CRISPR, gene therapy, hydrogen fuel cell, genomics and mRNA therapeutics) arguably have some of the greatest potential to improve quality of life and help the planet.

You're missing how the calculation works.

Suppose you work in a lab doing genomics etc. You get paid, say, $100,000/year, and you require some equipment which costs another $100,000/year to pay off and which goes to pay the salaries of the people who invented or manufactured it. Then your lab has $210,000/year in revenue, which means $10,000 in profit and a margin of ~5%, which isn't super high.

That's good! It means the people paying for your services aren't paying a huge margin on top of your salary to receive your services so more people can afford it. Or it means you're getting paid $100,000 instead of $60,000, the latter of which would have quintupled the investors' profit but reduced your incentive to do that work, reducing the quality of the people they can attract to do it.

Whereas industries with high net margins are the ones that are the most dysfunctional or captured by incumbents. It's no surprise that all the finance stuff is there at the top since that's the most thoroughly captured industry in the country. But that doesn't mean you want other things to be like that, it means you want those things to be more competitive so the money is going to customers as lower prices or workers as higher wages instead of going to fat cats as higher margins.

[ghiculescu]

This is true. But there’s another side to it too, which is that if the industry was more profitable it would (probably) attract more investment, specifically in the form of new companies.

[AnthonyMouse]

That depends what the startup costs look like. If the barriers to entry are low then you don't need a lot of investment to enter the market -- which is one of the things that causes margins to be lower, because otherwise people would keep doing it until the returns fell below the normal market rate of return.

The industries with excessive margins are the ones where the incumbents make it prohibitively expensive for anyone to invest in those industries by entering them as a new business, as opposed to buying the stock of the incumbents. Which is one of the risks to their investors -- their stock prices are thereby inflated and they're running the risk both that voters will never get mad enough to actually push through regulatory reform and that the huge market incentive to find a way to disrupt them will never actually find a way do it.

[ghiculescu]

This is true. Banking is a great example of this.