>I think his claim to be a beneficial 'allocator of capital' is bogus. He tends to invest in established exploitative companies. His investments have been made on an almost exclusive basis of growing wealth, which in the end is a very sterile end to aim for.
How do you separate this from a more general critique of capitalism? How should capital allocation work?
The majority of Warren's investments are in the secondary market. These transactions are effectively just transferring ownership and don't actually make cash infusions into the companies at all.
He makes some primary market investments and allocates capital between his fully owned subsidiaries. But I think many people naturally wonder the value to society of getting rich by buying and selling things in a secondary market. No products or services are produced and his gains(over the market return) come from a zero sum game between buyers and sellers.
> But I think many people naturally wonder the value to society of getting rich by buying and selling things in a secondary market.
Obviously, buying and selling stuff in a secondary market is enormously beneficial to the people doing the buying and selling (or else they wouldn't be doing it)... For instance, if I start a business, I want to be able to sell it to Warren Buffet. When that doesn't happen, I want to be able to buy a slice of the businesses that he has invested in under the assumption that he does a pretty good job (as I don't have time/ability/money) to do that myself. Beyond personal utility, the value to society comes in the form of more businesses, more products, more services when its easier to buy and sell abstract ownership in businesses.
What counterfactual would get rid of Berkshire but keep YC?
I think your question conflates the primary and secondary markets. If you start a company and sell all or part to Buffet, that would be a primary market, and money goes into the company which can be used to grow. Same for YC. On the other hand, if you buy stock from another private investor, the company sees no money
I am sympathetic to your viewpoint and will give it some more thought. That said, my immediate thought would be that a fluid and healthy secondary market is necessary for a primary market to exist at all. Also, a secondary market allows growth companies to channel revenue into investment instead of paying out dividends. Last and relatedly, the overall secondary market return makes it nonzero and this incentivizes investment in lieu of dividends.
How do you separate this from a more general critique of capitalism? How should capital allocation work?