So it’s relatively well-discussed nowadays that upwards mobility is basically dead. What’s less discussed is the opposite—that is, downwards mobility for the incompetent mega-rich—is.
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.
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.
Really good visualisation of thepaid by the (American) rich in contrast to everyone else.
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.
From a longer article looking at how billionaires are desperately, desperately trying to justify both themselves and the institutions that gave them their wealth…
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.
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…
As someone who suddenly started thinking things like, “If I get milk from the corner store it’s $2 more expensive but it saves me ten minutes and based on my hourly rate the TCO of that would be…” this post onreally, like. Speaks to me, man.
Soon the execrable Monopoly: Socialism has made me wonder what an actual, good-faith version of the game would look like. And by “good faith” I mean “relatively true to basic real-world socialist models, while still having the capacity to go horribly wrong for the players”.
So technically this is an article about how Australian Millennials-and-younger are 1 but mostly it was about me looking at the article photo and thinking, “Lol no way that guy’s fort– oh gods he totally is he just doesn’t look it because I’m also ancient.”than previous generations
- And no, it’s not the avocado lattes… [↩]
Today’s billionaires are the real citizens of nowhere. They fantasise, like the plutocrats in Ayn Rand’s terrible novel Atlas Shrugged, about further escape. Look at the “seasteading” venture funded by Paypal’s founder Peter Thiel, that sought to build artificial islands in the middle of the ocean, whose citizens could enact a libertarian fantasy of escape from the state, its laws, regulations and taxes, and from organised labour. Scarcely a month goes by without a billionaire raising the prospect of leaving the Earth altogether, and colonising space pods or other planets.
Those whose identity is offshore seek only to travel further offshore. To them, the nation state is both facilitator and encumbrance, source of wealth and imposer of tax, pool of cheap labour and seething mass of ungrateful plebs, from whom they must flee, leaving the wretched earthlings to their well-deserved fate.
Defending ourselves from these disasters means taxing oligarchy to oblivion.
George Monbiot on.
Hey you remember that time in the post-Depression era when the top marginal tax rates in the US and UK were in the 90% range? And how that funded the post-war economic booms that did everything from build massive of public infrastructure and (at least in the UK) funded the public health system? And how even to this day conservatives seem to spend all their time promoting the post-war era as a halcyon time of middle-class bliss while simultaneously dismantling every single public institution that helped bring it about?
Yeah. Funny, that.
There were basically two ways to make money in the [World of Warcraft] Auction House: be a supplier or be a commodities guy.
A supplier would be the person that used professions (leatherworking, blacksmithing, gathering, fishing, etc) to gather or create valuable items and would then sell them on the AH. Most people start here, and few ever do more than this. Much like workers in real life, these people create all of the economy’s value.
Commodity traders exploited that value to inflate margins and make profit.
Capitalism and the finance industry explained… WoW-style.