The Point of Finance

The social end of finance, according to economists, is to make sure society’s money is going to the most worthy projects. In technical terms, to equalize the risk-adjusted return on capital across projects.

(Of course, if “worthy” is measured solely in pecuniary return, then much is missed. That’s why economists want externalities to be priced into the market.We hope to make The Good = The Profitable.)

Investors allocate their savings to projects. If the project gets funded, it gets done. And there are a lot of things that need to get done.

  • stringing up power lines
  • removing waste from houses
  • shipping things across oceans, deserts, through jungles, up mountains, and sometimes into outer space
  • describing what products are
  • stocking snack machines
  • planning
  • putting things where they should go in stores
  • complying with the law
  • inspiring people
  • printing books
  • pouring ingots
  • cutting machine tools
  • researching new pharmaceuticals
Advertisements

Tags: , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: