The profit-seeking startup can raise $30M with a pitch deck because investors believe it has a good enough chance to return 10x in a couple of years. It's always as simple as that. The business environment isn't the way it is because of unreasonable forces, but because it has evolved to prefer and facilitate the ways of doing business that are most conducive to profit. And Airbnb and Uber's founders' gestures towards prosocial/inclusive governance, if they were ever sincere in the first place, likewise died when it became clear what was needed to maximize profit, etc. And to belabor the point, even if the SEC starts allowing co-op-like corporate forms, they largely will be outcompeted because the form hampers (is designed to hamper) profit maximization.
Of course, maximizing profit through commons-depleting practices is bad. But that badness is likely to continue unchecked, other than in physical commons where the consequences of depletion are "people dying" level bad.
Well, but I would argue, it's not quite as simple as that. You say: "Startup can raise $30M with a pitch deck because investors believe it has a good enough chance to return 10x in a couple of years"—> That very equation is determined by government policy.
As Nathan says in this interview, venture capital didn't take off until the late 1970s when specific policy changes enabled it. The current incentive structure is not some natural law, it's a policy artifact that we created that incentivizes that behavior. Other countries don't.
For instance, capital gains adjustments could fix a lot of this right away. For instance, no capital gains if you sell your company to employees or a trust, a lot if you sell to PE or another company. No capital gains if you roll investments into a cooperative or EOT, a lot if you don't. That would change what people invest in immediately.
You're right that even if Airbnb and Uber were benevolent, they wouldn't be fully "good" in all the ways we would prefer, but better incentive structures would force them to act good because it's the most profitable way to be. That, I think, is the goal.
What I'm arguing is precisely that the US's policies are the way they are not because of some evil conspiracy or misguided decisions, but in order to facilitate the accumulation of profit. And economists, for all they get wrong, get this one right: artificially meddling with incentives and trying to battle the logic of "capital flows where the profit is" is an error-prone and often self-defeating endeavor, resulting in less business, sluggish growth, less prosperity. Having founded startups in the US, Brazil and Europe, I can certainly tell you from experience that "ease of doing business and of raising money" is crucial (not that the US is perfect in this regard, or that the causal chain is unambiguous -- far from it).
Sure, there may be improvements at the margin. For instance, I don't disagree that capital gains taxation can help in theory. But how much exactly? If the average status quo, VC-fueled, high-growth, extractive-by-default startup creates returns at a rate more than 2% per year greater than its co-op counterpart, no capital gain exemption will make a difference. Etc.
The profit-seeking startup can raise $30M with a pitch deck because investors believe it has a good enough chance to return 10x in a couple of years. It's always as simple as that. The business environment isn't the way it is because of unreasonable forces, but because it has evolved to prefer and facilitate the ways of doing business that are most conducive to profit. And Airbnb and Uber's founders' gestures towards prosocial/inclusive governance, if they were ever sincere in the first place, likewise died when it became clear what was needed to maximize profit, etc. And to belabor the point, even if the SEC starts allowing co-op-like corporate forms, they largely will be outcompeted because the form hampers (is designed to hamper) profit maximization.
Of course, maximizing profit through commons-depleting practices is bad. But that badness is likely to continue unchecked, other than in physical commons where the consequences of depletion are "people dying" level bad.
Well, but I would argue, it's not quite as simple as that. You say: "Startup can raise $30M with a pitch deck because investors believe it has a good enough chance to return 10x in a couple of years"—> That very equation is determined by government policy.
As Nathan says in this interview, venture capital didn't take off until the late 1970s when specific policy changes enabled it. The current incentive structure is not some natural law, it's a policy artifact that we created that incentivizes that behavior. Other countries don't.
For instance, capital gains adjustments could fix a lot of this right away. For instance, no capital gains if you sell your company to employees or a trust, a lot if you sell to PE or another company. No capital gains if you roll investments into a cooperative or EOT, a lot if you don't. That would change what people invest in immediately.
You're right that even if Airbnb and Uber were benevolent, they wouldn't be fully "good" in all the ways we would prefer, but better incentive structures would force them to act good because it's the most profitable way to be. That, I think, is the goal.
What I'm arguing is precisely that the US's policies are the way they are not because of some evil conspiracy or misguided decisions, but in order to facilitate the accumulation of profit. And economists, for all they get wrong, get this one right: artificially meddling with incentives and trying to battle the logic of "capital flows where the profit is" is an error-prone and often self-defeating endeavor, resulting in less business, sluggish growth, less prosperity. Having founded startups in the US, Brazil and Europe, I can certainly tell you from experience that "ease of doing business and of raising money" is crucial (not that the US is perfect in this regard, or that the causal chain is unambiguous -- far from it).
Sure, there may be improvements at the margin. For instance, I don't disagree that capital gains taxation can help in theory. But how much exactly? If the average status quo, VC-fueled, high-growth, extractive-by-default startup creates returns at a rate more than 2% per year greater than its co-op counterpart, no capital gain exemption will make a difference. Etc.