When visiting Shrewd'm with a laptop, it can be pleasant to hold Command (or Ctrl with Windows) and '+' a few times. The site scales to allow any font size, and the larger font can be pleasant to read even for Shrewds with perfect sight! For luxury Shrewdness, you can combine that with setting the browser to full screen. You'll then find yourself Shrewding a lot.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 9
Gift link to an article in today’s NYT. Curiously, when I read it a few hours ago the title was “How Capitalists Destroyed Capitalism” (at least that’s how I best remember it.) When I went looking for it again the headline has changed to
“The Finance Industry is a Grift. Let’s Start Treating It That Way” https://www.nytimes.com/2026/02/06/opinion/capital...The piece is written by the Chief Economist at a Conservative Think Tank (American Compass), and both liberal and conservative mantras and heroes come in for scorn. I have to say it’s one of the most interesting and insightful pieces I’ve read in recent months.
It begins with a humorous - and explanatory - walk through a song in “Mary Poppins”, and proceeds from there to shred the current “financialization” of everything, to the detriment of, well, what capitalism used to do, which is to build things and make life better.
Now it’s often used to strip assets, defranchise actual builders of things in favor of rent seeking, and widen the economic gaps on which our society is based.
I hope you read it, it’s really that good. Sample from the intro:
If you’ve taken an economics course — or if you at least enjoy classic family movies — you probably remember the scene: Young Jane and Michael Banks have come to visit the bank where their father works. When the bank’s chairman, Mr. Dawes Sr., snatches Michael’s tuppence, the boy shouts: “Give it back! Gimme back my money!” Overhearing the kerfuffle, a customer assumes the institution is refusing to return a customer’s deposit. Next thing you know, the bank run is on.
The incident nicely eases economics students into both the complex plumbing of the financial system and the important and unpredictable role of human psychology in markets. But it’s the preceding scene we care about here. That’s the one where the old bankers sing to Michael that instead of spending his tuppence, he should give it to the bank to “invest as propriety demands” in “railways through Africa” and “dams across the Nile.”
“Tell them about the ships!” Dawes shouts to his fellow bankers. “Fleets of ocean greyhounds … majestic self-amortizing canals … plantations of ripening tea, all from tuppence, prudently, thriftily, frugally, invested in the, to be specific, in the Dawes Tomes Mousley Grubbs Fidelity Fiduciary Bank.”
Not the catchiest song, but a compelling account of the economic engine that powered the British Empire and financed modernity: real, honest-to-goodness banking. People gave their savings to bankers. The bankers invested the capital, creating actual productive assets in the real world. Those useful endeavors generated profits, a portion of which were returned to the bankers, who paid some as interest and kept some for themselves, well earned for their consolidation and productive allocation of resources.
Since Mary Poppins’s day, the financial sector as a whole — investment banks, hedge funds, private equity firms, cryptocurrency platforms and all the rest of it — has exploded as a share of the United States’ gross domestic product. It now claims the highest share of corporate profits and attracts the highest share of top talent from top schools, in part by offering the highest compensation. But actual business investment has declined, to an average of 2.9 percent of G.D.P. over the past decade from 5.2 percent in the 1960s, when the film was released.
No. of Recommendations: 2
About the time you were typing this, Goofy, I had a text exchange with a palliative care colleague who is relatively young. We'd been discussing the practical clinical use of a newer medical AI agent, 'Open Evidence'
Young palliative care physician: I asked OE to make an opioid titration plan and it was wrong [describes a relatively common clinical vignette]. Not dangerously wrong, but not optimized at all. My job is safe
Old, fed-up, happily retired oncologist: Anyone who tries to exchange the careful judgement of an experienced physician with a box is a lazy stupid venal bean-counter.
We're lucky the American health care system filters them out well before they get promoted into positions where they can do real damage.
-- sutton
No. of Recommendations: 1
Replace the bean-counter with AI--far cheaper.
No. of Recommendations: 1
thanks for the free link, that was a good read.
No. of Recommendations: 1
The author is young, born in 1983. I am not a technical analysis practitioner, but if I was looking at his link for actual business investment (
https://fred.stlouisfed.org/graph/?g=qjj#) the year 1980 looks like the start of a trend. I wonder what happened.
No. of Recommendations: 8
ajm101 wrote, " if I was looking at his link for actual business investment (
https://fred.stlouisfed.org/graph/?g=qjj#) the year 1980 looks like the start of a trend. I wonder what happened."
Good question.
Let's look at two related charts.
All Employees, Manufacturing
https://fred.stlouisfed.org/series/MANEMPManufacturing Sector: Real Sectoral Output for All Workers
https://fred.stlouisfed.org/series/OUTMSThe trend in business investment from 1980 to the present is generally downward. Investment was strong between 1990 - 2000 which included the robotics, telecom and internet buildout. Real output in manufacturing increased during those years.
Manufacturing employment dramatically declined, especially after 2000. Real output stagnated after the 2008-9 recession as manufacturing shifted to China. Current output is slightly lower than in 2017.
The OP in this thread is about the shift of management toward financialization instead of production.
I was shocked to read in a friend's MBA management textbook that the objective of any corporation is to maximize shareholder value. Not innovation, not producing a quality product, not meeting customer needs, not maintaining and expanding productive capacity.
With management trained to that standard, it's no wonder that they shifted production to China instead of maintaining their American factories and sold out to private equity investors who borrowed against company assets to buy the company, milked it, then ran it into the ground.
Wendy
No. of Recommendations: 7
...1980 looks like the start of a trend. I wonder what happened.
My view: mismeasurement.
A lot of people bewail the crash in business investment, but they are looking too locally. What's one country in the grand scheme of things? Capex soared in China, fell modestly elsewhere, in aggregate it rose a lot.
It doesn't show up on the books of many US firms because they outsourced it, but it's still the capex that supported those same firms' sales.
Jim
No. of Recommendations: 0
Lower corporate taxes in the US created less of an incentive to reinvest.
It also lowered pollution in the US.
All very purposeful.
We can also go the other way, invest here and pollute here. We are in that process.
The country with the economies of scale creates the most internal wealth. It is time we do so.
No. of Recommendations: 13
You and Wendy are both right. Durable capex reduces margins and corporate profit at the expense of generational and societal wealth.
To some degree this was enforced by law and regulation. 1980 marked a culture shift in corporations and a deregulation in finance that result in every damn complaint in the author's NYT oped.
Wendy, to your point they stopped doing that because in a capitalist system the strong eat the weak. Investing long term meant you were on the receiving end of the LBO. Ethical business managers were at a distinct disadvantage. It is the same reason why every is bribing and otherwise taking a knee to this administration. They have made it clear it is a survival imperative and the business leadership class dutifully fell in line, again. The problem is ethics and regulation.
Jim, to your point about mismeasurement, the Mary Poppins analogy fell down there quite badly because as Dawes, Sr (also played by Dick Van Dyke) proudly stated, the capital was employed around the world. Granted, the British colonial model would take the counterpoint very far into the weeds. At any rate, the wealth the US amassed post-war needed to be shared for global stability, but when unconstrained wealth captured the regulatory process they realized the could exploit both the overseas labor and the domestic consumer equally, strip mining the wealth accrued on the prior decades. Optimal in a very short term, just like eating one's seed corn or prion misconfiguration. The author comes off somewhat insular in that regard, even if I sympathize with the broader point.
Deregulation in the 1980s is what happened. A conservative think tank complaining in the NYT about the state of things while ignoring the elephant in the room is, frankly, entirely on-brand and expected.
No. of Recommendations: 0
warren buffett popularized independent thinking, and it would serve his cult quite well to consider whether this model he popularized over generations is flawed :
support capital-light industries ->
de-industrialize america of many tangible asset sectors retrospectively deemed 'critical' ->
tell everybody to 'buy american'
No. of Recommendations: 6
It's true that he has pointed out that a company that is asset light--doesn't require massive amounts of new capital each time they expand--is usually a better investment. And their stock portfolio has several big positions like that, e.g. Coke and Amex. (also oil majors and ketchup makers). I don't think one can blame a single fella too much for the economy's problems because he invested in the best companies he can identify : )
But interestingly that isn't how Berkshire's own capital is deployed. They run utilities and railroads, aircraft part and railway car factories, not a software download site.
Only about 10-12 companies have higher annual tangible capex, even now during the AI boom, about 1/39th of all the capex in the S&P 500. The overwhelming majority of it is spent in the US if you like that sort of thing.
Jim
No. of Recommendations: 0
Article title: “How Capitalists Destroyed Capitalism.”
Destroyed? News to the millions of households with some of the highest median incomes on Earth.
By median household income (PPP) — AKA money in the typical family’s pocket — the U.S. still ranks ~#2 in the entire OECD.
Only Luxembourg is higher, and it's a tiny financial microstate with half of Europe commuting into it. And the #3 ranking country is considerably behind.
Capitalism as exists in the US has some flaws to be sure.
But “destroyed”? If this is destruction, most countries would gladly sign up for it.
No. of Recommendations: 31
By median household income (PPP) — AKA money in the typical family’s pocket — the U.S. still ranks ~#2 in the entire OECD.
If I am not greatly mistaken, median household net income at PPP after tax, transfers, and health care costs is considerably higher in Canada than in the US.
Without a doubt the US has a higher average household income--but that's mainly because it has a bunch of resident plutocrats. Good for them, and I don't begrudge them their success, but the typical Joe does better in Canada. Median household net wealth is a little shy of twice the US figure at current exchange rates. An even bigger ratio at PPP.
Can't ignore skew.
Or plutocrats : )
Jim
No. of Recommendations: 0
sorry, warren's 'aw shucks' folksy front doesn't fly for this one.
buffet's promulgation of cap-lite may not have been original , but probably became the most adopted philosophy among professionals.
i would go as far as to say it was more widely adopted than all of his behavioral investing advice combined.
i do not deny many were better companies. nor do i deny the outcome of broad cap-lite popularity has de-industrialized america, regardless of BH's opportunistic hard asset grabs. but it's not like warren doesn't wish he did different instead (see numerous balks at google).
i challenge you to 'buy american' when it comes to personal consumption, not only american HQ'd stocks.
No. of Recommendations: 6
No. of Recommendations: 3
If I am not greatly mistaken, median household net income at PPP after tax, transfers, and health care costs is considerably higher in Canada than in the US.Good point: that figure does not include social transfers from the government, and in some countries, that's not insignificant. Though it's not insignificant in the US either...
I found this: Gross household disposable income per capita (including social transfers in kind):
https://en.wikipedia.org/wiki/Disposable_household...This seems to include transfers including health care, but the US still comes in at #1 at $67,438 PPP and Canada comes in #13 at $47,737 PPP.
Now, those income numbers are averages and not median, so I'd expect the median numbers to be closer to each other for those two countries since the income spread is much larger in the US. But how much closer?
Surprisingly, according to the friendly neighborhood LLM, social transfers in kind per capita in the US are actually higher than Canada's, $9K-$12K vs. $7K-9K; an unexpected result attributed to Canada's lower healthcare costs requiring less transfers/support to cover spending. If that's true though, it suggests the US may still be in the lead.
(Not that it matters - the point wasn't to claim the US is better than Canada, but rather that capitalism can hardly be broken in a country that continues to lead in virtually every conceivable income/wealth of the average joe metric against almost 200 other countries; a country that (until recently anyway) led the world in highest net immigration every year for the last 35+ years.
No. of Recommendations: 4
Now, those income numbers are averages and not median...
Yes, and even the actual billionaire wealth (how much each billionaire is worth) skews widely to the U.S., which in turn skews average v. median income: the U.S. billionaire wealth is many times larger than Canada’s — more than 30x higher in total dollar terms.
Pete
No. of Recommendations: 2
Good for them, and I don't begrudge them their success,
Begrudging them is a non-issue.
It had been 30k dying uninsured or underinsured. That is now moving up over 100k per year.
The word begrudge does not apply to murderers for money.
Oh, they are not murderers, but on their watch, the early death rate is rising...on purpose. If you come from a medical family, you know innocent people are dying for their bank balances to rise.
No. of Recommendations: 11
Good for them, and I don't begrudge them their success,
...
Begrudging them is a non-issue.
It had been 30k dying uninsured or underinsured. That is now moving up over 100k per year.
The word begrudge does not apply to murderers for money...
Well, I was bending over to be polite as it was a discussion about the distribution of incomes rather than causality. The income and wealth distributions are rather flatter in Canada, so when comparing countries there's quite a difference between using medians and averages.
As for the difficulties of the uninsured, you're preaching to the choir. I'm a Canadian who intends never to set foot in the US again.
Jim
