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Comment by wyager | Hacker News Reader

I often wonder to what extent scams like this have positive externalities, insofar as the people who get scammed were perhaps unlikely to allocate capital in socially efficient ways.

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Are the scammers now in possession of $7.7B likely to "allocate capital in socially efficient ways"?

Perhaps more likely than the scammed. For example, the scammers may purchase equities.

Would be quite funny if the scammers were hard-core Bogleheads dumping everything into ultra-low-fee index funds.

In an economy where companies prefer to invest in R&D with credit and buy back stock, purchasing equities seems less beneficial than stimulating demand by just buying stuff.

“Stimulating demand” is nonsense - applied Broken Window Fallacy.

The net effect of equity investment is to increase the amount of capital targeted towards the production of capital goods; i.e. deferring consumption makes humanity richer in the long term.

They now have a public, cryptographically protected record of their activities, available for inspection using automated tools by anyone who's interested, including law enforcement.

Sure. https://en.wikipedia.org/wiki/Cryptocurrency_tumbler

From a game theory perspective, I believe that dishonest players are always a net negative for all other players. It might seem that it's good when capital transfers from stupid to smart people, but actually it moves from honest to dishonest people, which results in less efficiency. All this capital is now used to perpetrate more scams, which means that more capital will be allocated to these scammers instead of something honest. And because of these scammers, all honest people have now less capital to work with.

A fair point - unless scams tend to be one-shot, it’s relatively likely that the capital accumulated from a scam will go towards unproductive ends (other scams). However, I still think it’s plausible that the allocation of scam profits is better than the allocation of scamee wealth. The sort of people who buy into NFT monkey rugpulls or whatever might just spend any surplus wealth on a new TV or something.

Interesting point. Would you rather have few unscrupulous, enterprising individuals have a significant proportion of wealth, or have this distributed between many people who are mentally challenged (easily conned)...

> people who are mentally challenged (easily conned)...

I think the biggest predictor for being conned is not low IQ but high greed.

I didn’t think of that but you are totally right! I’d say greed has much more to do with it than IQ

People who are smart and greedy have much more effective ways of satisfying their greed than investing in fly-by-night crypto schemes. This typically looks like selecting a career path based primarily on its expected return.

Define "socially efficient ways", because that sounds like a dog whistle.

Perhaps you have tinnitus.

Eugenics-like slippery slope, there.

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