How, exactly, did this game lead to a more efficient product or marketplace?
Along with many seasoned investors, he was snared in a “short squeeze” after betting that shares in Volkswagen, Europe’s largest automaker, would fall.
Porsche, however, which is taking over the company, had secretly cornered nearly 75 percent of VW stock. This created a scarcity that sent VW shares to more than $1,200, giving the company, briefly, the highest market value in the world.
Or this: “At the same time, Mr. Merckle was using some of his companies mainly to reap tax and financial benefits — as opposed to building things, which is more valued by the Mittelstand and many Germans.”
There are immaterial things with social value – e.g., Unix, feminism, music – and then there are phantoms, things which are not. Things with no value. I think it’s fair to say that wealth that disappears was not. We can say it was destroyed but by what? A fire? A better idea? None of these things.
update
Ron writes:
But doesn’t this just get to the question of monetary value in general? What is the value of paper money, or stock, or credits on an account in the bank? These things have “value” as long as others are willing to accept or redeem them in exchange for other things (or other markers or “value”), but when that comes to an end, so does the exchange value of this stuff. Most forms we have of marking and measuring monetary value today (e.g., data) have no intrinsic or use value of their own.
Very few things that matter to us have an intrinsic value. I’m concerned, primarily, with social value. By definition, money has a social value.
I am arguing that the games that Porsche played with Volkswagen stock or the one that Mr. Merckle played appear to have produced no lasting value. They were games based on the unanticipated uses of tools. It would be like building a basketball strategy on technicalities. It’s possible to play and even win a few games that way but eventually you’ll run out of people with whom to play. That is what has happened over the last decade or so.
I am reminded of children who learn how to cheat for the first time. Yes, trust is an amazing thing. Yes, it has limits.