Home/Tag: economics


Yet another way to recognize power is the intentional foregoing of selling your product to customers in order to capture market power elsewhere, or what is known as vertical foreclosure. This is most apparent in the new service Disney is rolling out called Disney Plus, which will bundle all of Disney’s massive trove of content into a Netflix-like bundle. In some ways, this looks like [Disney CEO Bob] Iger’s end game in the strategy for global dominance. Disney can produce must-have branded content, force theaters to show all of its branded content, and then leverage that across its global network of theme parks and its dominant streaming service. It is vertically integrated from production lot to the end consumer.

Iger’s strategy is to do what Netflix is trying to do, except with more raw power. Netflix’s strategy is to produce so much content and sell it at a loss through subscriptions, in the hopes it can drive its competitors out of business. One it has a large base of subscribers and no competitors, it can then raise prices on its subscribers (as it is doing in the U.S.) and pay its talent less money. Where else are they going to go?

Matt Stoller on monopoly culture.

The whole article is worth reading and, yeah yeah, no ethical consumption under capitalism and all that, but


2019-12-12T09:13:58+11:0028th March, 2020|Tags: economics, pop culture|

Public investment.

But the reality is that if we had a bigger public sector today, we would be better prepared to weather the health and economic crises triggered by the coronavirus. Hopefully, by the time we come through this, we will have learnt that lesson once and for all. Because nobody thinks “the market” is best placed to tackle the coronavirus. Nobody thinks governments should step back and let the private sector step in. One of the first casualties of Covid-19 in Australia is the neoliberal rhetoric about government spending being a “cost” to the economy.

As China has shown, if you are interventionist enough, and crush economic activity hard enough, you can stop the spread of Covid-19. As Italy has shown, if you are laissez-faire, you will overwhelm your hospitals. There is no avoiding this choice. Delay and dissembling will deliver the worst health and worst economic outcomes.

But neoliberalism is all about delay and dissembling. For decades, we have been told that if we cut spending on health and welfare today, we can grow the pie and all be better off in the future. Of course, in reality, if we had spent a lot more on the health system, we would be better off today and in the future.

Richard Denniss on government.

2020-03-25T08:50:14+11:0025th March, 2020|Tags: coronavirus, COVID-19, economics, politics|

Extraction economics.

Here’s how it works in practice. On Wednesday March 18, the Australian government announced a $715 million rescue package for the nation’s stricken aviation sector. Qantas management, grateful for the assistance, immediately sacked 20,000 workers, cushioning the blow for their investors by casting two thirds of its employees into the street. Amazon—a trillion dollar company run by the world’s richest and least interesting man—is doing an online fundraiser to get other people to support its desperate workforce. The dynamic is familiar everywhere: a tax-avoiding queue of investors and oligarchs miraculously redeveloping a taste for the social safety net they’ve been hacking away at for four decades.

Since the mid-1970s, the ethic of public health, public welfare and mutual aid has been under sustained attack by the same people now desperate for a public bailout. The doctrine of neoliberalism views our whole society as a rich site of extraction: healthcare systems to be broken up and run for profit, public transport degraded in favour of private cars, welfare systems converted into poverty traps to ensure a pool of desperate low-wage labour. It goes well outside the boundaries of greed into the realm of the actively parasitic. Run down the public hospitals, set up private ones and then get taxpayers to subsidise them. Do the same thing with schools. It’s an ideology that allowed private interests to mine the childcare and aged care sectors for profit, blew a massive crater in the national broadband network, and even in the wake of the bushfires was seething with hatred for public broadcasters.

They’ve spent four decades trying to convert what should be universal essential services into a for-profit free-for-all, and now we’re staring at the consequences. It’s not just taking from the trailer and not putting anything back; it’s cleaning it out and then selling us back what they took.

Scott Ludlam on the pandemic bastards.

2020-03-28T08:47:48+11:0023rd March, 2020|Tags: coronavirus, COVID-19, economics, politics|


Moreover, billionaires’ extravagant wealth is by and large not spent, as Zuckerberg suggests, on cutting edge research and philanthropic efforts. After they’ve bought up enough yachts and private jets they mainly invest in making themselves richer through casino-style financial speculation and in luxury real estate in starkly unequal cities like San Francisco, Miami and New York, where mostly vacant homes act as safety deposit boxes to shield wealth from taxation. Their money might also end up in tax havens like the Cayman Islands, where it can sit undisturbed by the long arm of the state. Very little of that ever trickles down to the 99%, where inequality has skyrocketed and wages have stagnated.

Zuckerberg’s plea for the billionaire class is above all else deeply anti-democratic, casting doubt on the huddled masses’ ability to decide what’s best for themselves while repeating myths that the public sector is doomed to be wasteful and stagnant

Kate Aronoff on innovation.

I always think it’s worth pointing out Zuckerberg and Facebook have contributed exactly zero in the form of “innovation”; social media existed prior to Facebook, and the closest new technology the site has contributed to the industry is React (which… yeech). I suppose you could argue Facebook “innovated” the data collection/resale and adtech industries but… honestly if that’s what you’re reaching for… ye-ee-ee-eah. Nah.

2019-12-04T11:17:00+11:0018th March, 2020|Tags: economics, tech|

The end of the end of history.

After the fall of Soviet communism in 1989, and China’s embrace of the market, crowned by the nation’s entry into the World Trade Organization in 2001, it seemed, for a brief flicker of human history, that the world was converging on a political economy of free markets in liberal democracies. As it turned out, markets spread, but without necessarily bringing more democracy or liberalism along with them.

Capitalism without democracy was assumed to be at most a passing phase. Eventually, so western liberal thinking went, China and other Asian nations adopting what [economist Branco] Milanovic calls “political capitalism” – free markets, but authoritarian politics – would have to adopt liberal political institutions, too. But, so far, the liberalization thesis remains unproven. China has successfully adopted a market system – and, even more importantly, a market culture – without liberal democratic institutions.

Richard V. Reeves on liberal folly.

This essay is a broader look into the global failure of liberalism in general, though this particular quote illustrates something that’s been coming up A Lot recently. That is, how did we get to a point where so many supposedly “liberal”, usually American, companies are getting themselves in such shit over their operations in countries like China and, to a lesser extent, Russia? How did, say, we get to a point where literally almost everything we rely on for a modern, functioning society (e.g. computer infrastructure, oil, etc.) is being manufactured by countries that are “frenemies” at best and outright hostile, politically, at worst?

Well, surprise; there’s actually an answer to that and the answer that it was a deliberate political program, mostly credited to Bill Clinton but supported by every regime since. And it’s all based on the conceit that economic capitalism and social liberalism (and thus democracy) were necessary conditions for one another, and that fostering one would, therefore, bring about the other. And thus it was in the interest of the global good for American companies to outsource and manufacture and find huge markets in countries like China. It wasn’t just making them zillions of dollars! It was Doing Good. A win-win.

China, of course, knew exactly what a crock of shit this paternalistic, neocolonial attitude really was, which is exactly why they did nothing to dissuade it. And…

Well. Here we are.

2019-12-02T09:59:06+11:0013th March, 2020|Tags: economics, politics|

Whose value?

The financial crisis of the late 2000s shook the foundations of the sprawling market economy and bared some of its uglier consequences: an enormous and widening gulf between the über-rich and the working poor, between the ample rewards of capital and the stagnating wages of labor, between the protected few and the vulnerable many. Compounding these inequities, moreover, was a sweep of disruptive business technologies that began to come of age in the wake of the crisis—from digitization to robotics to A.I.—and that made vulnerable workers feel ever more so.

The reaction against “the system” was both broad and shocking in scale—particularly among younger people. A 2016 Harvard study found that 51% of U.S. respondents between the ages of 18 and 29 did not support capitalism; one-third, meanwhile, favored a turn to socialism. A 2018 Gallup poll of the same cohort found a similar rejection—only 45% viewed capitalism positively, a 23 percentage point drop from 2010, when Americans were still in the murky shadow of the Great Re­cession.

Alan Murray on failing systems.

From a longer article looking at how billionaires are desperately, desperately trying to justify both themselves and the institutions that gave them their wealth…

2019-11-28T08:51:27+11:009th March, 2020|Tags: culture, economics, politics|

Endless counterfeit.

This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market. And Amazon has spawned a host of imitators, including WeWork. It has also reshaped venture investing. The goal of [WeeWork investor Masayoshi] Son, and increasingly most large financiers in private equity and venture capital, is to find big markets and then dump capital into one player in such a market who can underprice until he becomes the dominant remaining actor. In this manner, financiers can help kill all competition, with the idea of profiting later on via the surviving monopoly.

Engaging in such a strategy used to be illegal, and was known as predatory pricing. There are laws, like Robinson-Patman and the Clayton Act, which, if read properly and enforced, prohibit such conduct. The reason is very basic to capitalism. Capitalism works because companies that thrive take a bunch of inputs and create a product that is more valuable than the sum of its parts. That creates additional value, and in such a model companies have to compete by making better goods and services.

What predatory pricing does is to enable competition purely based on access to capital. Someone like [WeWork’s Adam] Neumann, and Son’s entire model with his Vision Fund, is to take inputs, combine them into products worth less than their cost, and plug up the deficit through the capital markets in hopes of acquiring market power later or of just self-dealing so the losses are placed onto someone else. This model has spread. Bird, the scooter company, is not making money. Uber and Lyft are similarly and systemically unprofitable. This model is catastrophic not just for individual companies, but for their competitors who have to *make* money. I’ve written about this problem before. Amazon has created a much less competitive and brittle retail sector. Netflix’s money-losing business is ruining Hollywood.

Endless money-losing is a variant of counterfeiting, and counterfeiting has dangerous economic consequences. The subprime fiasco was one example. Another example was the Worldcom fraud in the late 1990s, which forced the rest of the U.S. telecom sector to over-invest into broadband. Competitors have to copy their fraudulent competitors. It’s a variant of Gresham’s Law, which says that “bad money drives out good.” If you can counterfeit something for cheap, the counterfeit will eventually take over the entire market and drive out the real commodity. That is what is happening in our economy writ large, a kind of counterfeit capitalism as ‘leaders’ like Neumann are celebrated and actual leaders who can make things and manage are treated like dogshit.

Matt Stoller on counterfeit capitalism.

Long quote, but I think this is something that doesn’t get discussed a lot and yet is pretty core to, like. Everything going on right now…

2019-11-27T10:36:40+11:007th March, 2020|Tags: economics|