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Are statements like ā€œ5% is a reasonable interest rate, 10% is usurious and extractive rent-seekingā€ meaningful? What if the numbers were 5 and 6? 5 and 5.5? 5 and 50? How well-posed and precisely determinable is the concept of rents when applied to cost of capital?
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Economic rents imply inefficient pricing and/or monopolistic pricing power. With capital, both apply. A phrase like ā€œcapital seeking returnsā€ suggests investors competing on risk and information, but I’m increasingly convinced capital markets seek pure rents, not returns on risk
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This kind change in risk culture exists across a wide range of sectors. It's hard to describe how infuriatingly risk-averse the Marine Corps Air Wing deployed to Afghanistan at the same time as myself had become; despite the USMC culture notionally being extremely risk tolerant.
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I found it ironic that the more capital sunk into air power (to make it super-dominant and relatively immune to risks), the less risk-tolerant air power became. They simply refused to fly any mission that was not 100% assured of safety, on the basis of the risk to $200M planes.
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Meanwhile, ground forces were risking life and limb daily, by the dozens and hundreds, because of the low per-capita cost of loss. But the cost added up in the aggregate, not to mention still paying the cost of all that investment in unused airpower.
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Sorry to hijack things to say the obvious "strategy in Afghanistan sucked"; but my point is that there's a broader phenomenon across sectors: the larger and more powerful any actor becomes, the less utility that power actually provides. Cooperation of small powers > great power
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My kind of nerdery hijack 🤣
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Replying to @muddletoes
Yeah it’s a delicate tradeoff. I was at a talk once on why Global Hawk ended up flying so high and having such costly cameras. Runaway cost curve because you fly higher to avoid ground fire but now your cameras are costlier, so now the value at risk is higher. So fly even higher.
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I recall when I was researching UAVs, the slogan was to let the robots do the dull, dirty, and dangerous work to save the humans for the interesting, clean, and safe work. Looks like the exact opposite is happening šŸ˜‚
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