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Crony capitalism may be cannibalizing productive capitalism in the U.S.

bloomberg.com

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Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#21

Post by devoply »

projectramo wrote: post #18

There is a theory that all above market profits are generated by government granted monopolies. So, for instance, software is protected by patents, oil and gas is protected by mineral rights, drugs are protected by patent law, entertainment is protected by IP rights, and so on. In so far as there is competition, it often arises when the rent-seeking motivates people to disrupt the government protection by making it u…

Lots of innovation in tech happened despite patents because of ideologues like Stallman and the gpl/open source movement which left lots of software which could be used to disrupt monopoly. Not because it moves fast. If people were playing that game companies like Google would not exist or at least be much much slower in growth and what they have been able to accomplish.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#22

Post by mars4rp »

bogomipz wrote: post #12

From the article: >"Because it’s just a transfer from one person to another, rent doesn’t necessarily make an economy less efficient -- it’s just often unfair. " I would argue that "rent" does make the market more inefficient. The more rent these companies can extract from consumers the larger their lobbying budget and the more campaign donations they can make at all level of government. Political lobbying is the big…

problem is with political system, lobbying and campaign contributions!

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#23

Post by abakker »

leggomylibro wrote: post #19
metalliqaz wrote: post #8

> Crony capitalists seek to generate profits without producing anything of value. If they are generating profits, then they are doing something valuable. Are they sucking cash out of the government? Maybe, but it's valuable to somebody. You want to fix it? Don't try to fix the entrepreneurs, fix the goddamn government. Most of these Comcast-type rent-seekers are complete and total assholes, I agree, but I'm not about…

Kind of reminds me of that episode of Always Sunny in Philadelphia where Danny DeVito's character comes out of retirement to save his former company. "So what do we make here, Frank?" "What d'you mean? We make money." "Right, yes, but what do we actually create?" "We create wealth." "Okay, but like, what do we produce, what do we manufacture, what do we design?" "Manufacture? Leave that to the c&$%^s, we produce prof…

Alternatively, I am willing to pay a very small amount in absolute terms for the convenience of not ordering 500 breadboards :).

Bulk ordering has always been an accepted way to pay less in unit costs, but it helps move the risk from the manufacturer/wholesaler to the buyer. If you want to take the inventory risk, then you charge the customers for doing so, and the wholesaler cuts you a deal for reducing their risk in a concomitant way.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#24

Post by balls187 »

I read the opening paragraph, them skimmed through the rest of the article looking for concrete examples of "Wrong Kind" of Entrepreneurs.

I have a hard time imagining tech entreprenuers are the "wrong kind."

They may disrupt by circumventing the law, but I don't buy the argument that they're not producing something of value in return.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#25

Post by subverter »

"Crony" is so often followed by "capitalism", but it's really just cronyism that's the issue. You can find it in capitalism and you can find it in government. But they go best hand-in-hand. I'd argue that most crony capitalism is made possible only because they can leverage the monopolistic power of their crony allies in government for mutual gain.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#26

Post by ue_ »

mars4rp wrote: post #22
bogomipz wrote: post #12

From the article: >"Because it’s just a transfer from one person to another, rent doesn’t necessarily make an economy less efficient -- it’s just often unfair. " I would argue that "rent" does make the market more inefficient. The more rent these companies can extract from consumers the larger their lobbying budget and the more campaign donations they can make at all level of government. Political lobbying is the big…

problem is with political system, lobbying and campaign contributions!

Although privileges granted by the State to "crony capitalists" excarberates issues, I do not consider it the root of issues, and to me, capitalism would have the same issues even without a government, or with minimal government. I think we're fixing the wrong part of the bottleneck by arguing for a completely free market.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#27

Post by dv_dt »

Does it seem to anyone else that the finance industry is increasingly distracted from actually matching up capital to fundamentally productive companies, especially new companies?

Looking at the stock market, there are few IPOs, and after IPO, being public only provides access to limited access vis issuance of new stock...

Some capital flows to VCs, but it seems the more capital flows to large VC funds, the more the criteria becomes look for a sure thing and filter more for large scale opportunities - all while small scale fundamental development receives poor access to the vast amount of capital sloshing around (and settling in places like unused real estate...).

To me it seems that investment in direct development of productive tech and/or process is competing against profitability of short term financial manipulation - and causing a drop in overall delivery of new productivity improvements to the general economy. But even further, the very financial industry isn't really creating or maintaining a channel for money to open opportunities to develop that kind of company - certainly not a large scale needed or possible today.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#28

Post by jbooth »

projectramo wrote: post #18

There is a theory that all above market profits are generated by government granted monopolies. So, for instance, software is protected by patents, oil and gas is protected by mineral rights, drugs are protected by patent law, entertainment is protected by IP rights, and so on. In so far as there is competition, it often arises when the rent-seeking motivates people to disrupt the government protection by making it u…

That theory falls under the Econ 101 fallacy -- assuming perfect information dispersal, instant job-switching, instant production ramping..

"First, let's assume the cow is a sphere".

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#29

Post by ben_jones »

deathhand wrote: post #4
frgtpsswrdlame wrote: post #2

Just to kick off some discussion. Do you guys think that the shift from on-prem to SaaS is indicative of a move towards rent extraction?

Not necessarily as overhead operational costs are lowered with the SaaS model and that's not true 'rent'. Licensing fees would be considered 'rent' but obviously necessary as a motivator for production.

Isn't that a case of "get everyone hooked then raise the prices"? How much is pricing currently subsidized by VC and early access promotions (like GCP, AWS, Uber) which will go away over the next ~10 years.

Re: Crony capitalism may be cannibalizing productive capitalism in the U.S.

#30

Post by leggomylibro »

abakker wrote: post #23
leggomylibro wrote: post #19

Earlier quoted context omitted.

Kind of reminds me of that episode of Always Sunny in Philadelphia where Danny DeVito's character comes out of retirement to save his former company. "So what do we make here, Frank?" "What d'you mean? We make money." "Right, yes, but what do we actually create?" "We create wealth." "Okay, but like, what do we produce, what do we manufacture, what do we design?" "Manufacture? Leave that to the c&$%^s, we produce prof…

Alternatively, I am willing to pay a very small amount in absolute terms for the convenience of not ordering 500 breadboards :). Bulk ordering has always been an accepted way to pay less in unit costs, but it helps move the risk from the manufacturer/wholesaler to the buyer. If you want to take the inventory risk, then you charge the customers for doing so, and the wholesaler cuts you a deal for reducing their risk i…

Me too, but there are services for ordering off of Taobao in Western nations which will collect your orders somewhere on the mainland, send you pictures of each item and allow you to return things that don't match, and then package them into a single shipment. You pay a ~10% commission and a bit more on shipping, but it still comes out to much much less money, if you're okay with waiting a week or two.
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