[ExI] Americans are poor drivers

[Rafal Smigrodzki]

On Thu, Jul 9, 2009 at 12:07 AM, Stathis Papaioannou<stathisp at gmail.com> wrote:
> 2009/7/9 Rafal Smigrodzki <rafal.smigrodzki at gmail.com>:
>
>> ### Is it a a monopoly sustained by the threat of force against new
>> entrants (people who try to build and sell their own roads)? If yes, I
>> wouldn't care, since this "company" would be just a new name for a
>> state. If no (i.e. this is competitive company, one among many), I
>> would look at the competitors and rather buy their shares.
>
> The roads are in a large, established city. There isn't much
> opportunity for new entrants. However, new entrants are welcome to buy
> the existing roads, if the company shareholders restructure so as to
> allow it.

### You mean, there is a monopoly, and no way of challenging it,
except if the monopolist deigns to divest itself of his holdings?

-------------------
>
>> Obviously,
>> being unable to trade shares greatly limits my options - I cannot
>> salvage my capital if the company starts losing money, I cannot
>> capitalize on an increase in value of shares if the company starts
>> making more money, I cannot shift my capital to other uses should I
>> change my preferences (for example when I grow old and want to use it
>> up for some retirement fun and to strengthen my cryonic trust), I am
>> basically stuck with whatever happens.
>
> So you would vote to change the shares so that they could be traded;
> but the rest of the shareholders might prefer to leave things as they
> are, on the grounds that roads are better as a public resource and
> selling them might result in the few profiting at the expense of the
> many, or some other perverse and infuriating reason.

### Are you asking if I would buy these shares in an initial public
offering? Probably yes, and I would immediately vote to impose very
high, revenue-maximizing prices for road use, and of course I would
demand to have almost all profits disbursed to owners. Since I know
that a large fraction of the population would not buy the shares but
would still use roads, having very high prices for road use would
produce a net gain for me - I would get more in dividends than I pay
in road fees. I would also vote never to sell roads to other entities,
and I would vote to prevent dilution of shares, and to allow trading
of shares. Trust me, these value- and revenue-maximizing decisions
would be made by almost all share owners, nobody sane would leave
things as they are - there is just too much money to be made by
co-owning a monopoly and being able to squeeze it for all its worth.
Just ask politicians and their backers, the majority owners of the
state violence monopolies. That's why politicians almost always try to
screw you up once they get elected, and that's why share owners would
vote to screw up everybody else too.

If the stock was somehow distributed among all the population for
free, without the options of changing the game outlined above, I
wouldn't care either way.

The reason why most companies are better at everything they do than
governments is pluralism, choice and responsibility. When you produce
an accounting fiction like non-tradable stocks in a road monopolist,
you will decouple decisions about roads from other political issues,
which is good, but the improvement will be minimal, precisely because
there is still no pluralism, no individual responsibility, and no
consumer choice.

To summarize, all you need to do is to substitute the word(s) "greedy
or stupid monopolist asshole" for every time you see the word
"public", and the reasoning becomes crystal clear.

----------------------
>
>> Not to be disrespectful but  your question sounds like you have never
>> made an investment in your life - obviously, non-vested stock is
>> inferior to fully vested, tradable stock, this is a no-brainer.
>
> Nevertheless, there is a place for multiple types of stock in modern
> finance: preference shares, options, non-voting shares, partly-paid
> shares, convertible notes, and so on. They are all perfectly
> legitimate legal instruments, and if no-one wanted them they wouldn't
> exist.

### Non-tradable stock is always less valuable than than tradable
stock, and that was the question you asked.

Rafal