There's a lot stuff flowing up with no return, but I will note that honest management fees on mutual funds involve the provision of real services, investment analysts doing work the investors won't or can't do, assembling bundles of securities, watching them, buying and selling at the right time, etc. That's real work. Likewise a guide to take you through the bureaucracy is certainly providing real services.
There are problems when management or service fees are inflated because there's no real competitive market to set objective standards -- in a paper I am writing I am arguing that this happens a lot with class action plaintiffs' attorney's fees. (Never mind Enron or Prudential-Bache style outright theft and fraud.) Another problem is when executive compensation goes through the roof when there is no evidence that this contributes to profit, shareholder value, or accrues in any way to the benefit of the company,
But the real exchange of something for nothing is the return on investment due to mere ownership, which adds nothing to value of a good or service and is merely an entitlement to an income stream. And that is nothing new,it is as old exploitation itself.
--- Andy F <andy274 at gmail.com> wrote:
> On 3/7/07, andie nachgeborenen
> <andie_nachgeborenen at yahoo.com> wrote:
>
> > However, it's a very bad mistake to confuse
> > deindustrialization, which is one problem, with
> smoke,
> > mirrors, lies, and fraud, which is another. We may
> not
> > be able to thrive on honest and properly valued
> > production of services while offshoring
> manufacturing
> > and farming (though it is an huge exaggeration to
> say
> > we don't do a lot of both or that we won't be
> doing a
> > lot of both for a long time), but if it's honest
> and
> > properly values it's not going to come down like
> Enron
> > -- even though there will be other Enrons that
> will
> > come down. And it's also a mistake to think that
> > physical production is the only kind that counts.
>
> I thought Chuck's point wasn't so much about the
> sacredness of honest
> toil as much as how much of what gets counted in the
> economy is money
> flowing up the wealth scale in return for nothing at
> all -- no
> research, no management, no accounting, nothing.
> Woj seems to have
> made this point in terms of the cultivation of
> transaction costs.
> 401k fees vs. SS, the 30 or so % of health spending
> that goes to
> bureaucracy in the US system. It would be
> interesting to figure out
> how much of that goes to burning the raw materials
> that Mr. Heartfield
> takes as an index of national wellbeing.
>
> (Here's a bonus example: even in areas that provide
> some degree of
> services for special needs children, figuring out
> how to obtain these
> services can be daunting, requiring knowledge of the
> system, where to
> look, what to ask for, how to answer questions, etc.
> So you can hire
> an "advocate" to navigate the system for you and get
> you your gummint
> services.)
>
>
>
>
> --
> Andy
> ___________________________________
>
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>
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