The point of the popcorn example is that most trades create a little value, and I don’t see why the trades which would happen as a result of your long term investment are more valuable than the trades that would happen as a result of you buying a lot of popcorn.
When you buy popcorn, someone else gives you popcorn. That required labor and resources, that don’t benefit them directly. Others are worse off, except for the part where they now have some extra green slips of paper. You are better off.
When you invest, someone else gives you money. So at least they believe they are ending up with more stuff than they started with (in expectation). Yes, they might have gotten more stuff by taking someone else’s, e.g. if you invested in a criminal enterprise, or an advertising company, but that’s completely disanalogous to the popcorn case where you always make other people worse off even if there are no externalities.
In this case, past you is worse off, and the current world is better off.
Both consumption and investment also incidentally create some extra value, e.g. because the popcorn vendor has some monopolist power or because there are economies of scale. Those parts of the trades are analogous. But that’s not the main mechanism by which investment makes future people better off.
[Popcorn vendors] are worse off, except for the part where they now have some extra green slips of paper.
That’s a weird way to say that they’re better off.
In this case, past you is worse off, and the current world is better off.
Suppose that paulfchristiano invests $1000 into my company. Suppose that I then spend it all on popcorn. And suppose I later return him $1001. Is the world better off? Surely, this case is exactly like the case where I buy popcorn myself, except that I am now $1 worse off. Who knows, maybe I worked extra hard to earn that $1? Is that where the new value comes from?
My point is that investment is not inherently good. The way investment creates value is by enabling useful consumption. It’s possible that other people know how to use money better than me, but that’s not necessarily true.
When you buy popcorn, someone else gives you popcorn. That required labor and resources, that don’t benefit them directly. Others are worse off, except for the part where they now have some extra green slips of paper. You are better off.
When you invest, someone else gives you money. So at least they believe they are ending up with more stuff than they started with (in expectation). Yes, they might have gotten more stuff by taking someone else’s, e.g. if you invested in a criminal enterprise, or an advertising company, but that’s completely disanalogous to the popcorn case where you always make other people worse off even if there are no externalities.
In this case, past you is worse off, and the current world is better off.
Both consumption and investment also incidentally create some extra value, e.g. because the popcorn vendor has some monopolist power or because there are economies of scale. Those parts of the trades are analogous. But that’s not the main mechanism by which investment makes future people better off.
That’s a weird way to say that they’re better off.
Suppose that paulfchristiano invests $1000 into my company. Suppose that I then spend it all on popcorn. And suppose I later return him $1001. Is the world better off? Surely, this case is exactly like the case where I buy popcorn myself, except that I am now $1 worse off. Who knows, maybe I worked extra hard to earn that $1? Is that where the new value comes from?
My point is that investment is not inherently good. The way investment creates value is by enabling useful consumption. It’s possible that other people know how to use money better than me, but that’s not necessarily true.
Do you also mean to be saying that it’s not good on average, in expectation. Or just that it’s not always, necessarily good?
The latter. We can have high confidence that investment is good on average. And so is consumption.