This article describes the classic failure modes of a centrally planned economy, but for some reason calls it "overcapitalization" instead. Whatever you call it, the tech part is a distraction. This is what happens in any society, at any time when money is assigned by caprice
The untold part of the story is how the move to central planning destroyed the greatest seedbed of innovation in American history, the tech startup economy. The startups are still there, but the only thing they innovate in is telling investors compelling stories
It's not like Softbank came along and ruined everything, either. We've had this pathology for a decade now. Remember Color, with 41M in funding for nothing? Yo, a joke company that raised $1.5M? Secret, whose founder looted a fair chunk of $35M?
The whole tech economy since 2008 has been trickle-down economics disguised in a robot costume
Remember Path, who raised $66 million, mined everyone's address book, and then went up in a cloud of nothing? Path was a lifestyle business par excellence—its founder now enjoys a comfortable tech retirement in Helena, where he of course dabbles in angel investment.
I'm mentioning these companies not because they failed—that's how the game is supposed to work—but because at no point did any of them (except a reluctant Quora) try to make any money.
