The capital life extension query

From Arjun Narayan:

Loyal reader here and I’ve been pondering an altered version of your post [the other day] -You have the power to grant 100% more capital (that they deployed in their lifetime) to a person or institution who prematurely ran out of capital too soon. Who do you pick?

It’s worth considering the counterfactual: Elon Musk almost ran out of money in 2008 and was bailed out by Daimler. we would be far worse off on a few dimensions (lithium ion battery production, but also the urgency with which every carmaker is now attacking the transportation electrification problem). Who else should we go back in time and similarly bail out?

My answer is the companies that built the NYC subway which went bankrupt – the BMT, IRT, and IND. After the city takeover in ~1940, construction slowed over a generation, and no infrastructure has been built since. It’s unclear if infrastructure will ever be built in NYC again. It’s clear to me that the only time to build was right then and there, and we should have “overbuilt” to the maximum extent possible when we could.

And in terms of returns to society, what is the value of 10% more efficient subway service (faster/longer/more frequent)? 20? 50%? We could absorb more population (NIMBYs notwithstanding), and as the largest city in the US, the agglomeration effect means it is most impactful here.

I am very curious what your answer would be!

I do not have a better answer than that, unless you start getting into military scenarios.  If you are allowed to consider cyclical scenarios, how about more money to bail out U.S. banks in the 1929-1932 period?  More funds to limit the German deflation before Hitler, or alternatively to bail out the Weimar government so hyperinflation and later social collapse does not come?  But I take those possibilities as beyond the initial question.

Could a cash infusion alone have kept Intel active and successful in the high-quality chips market?  Somehow I doubt that.  More money for Novavax in 2020-21 as a contender?  That could have helped the rest of the world a good deal, given how slow they have been to convert their very important science into an actual product.



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