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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.

#31

Post by jbooth »

jackcosgrove wrote: post #17
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?

No because on-premise software has not been regulated by SaaS providers. Customers are choosing SaaS. SaaS is indicative of greater concentration and the possibility of oligopoly, though. I think it's only a matter of time before the cloud platforms begin coordinating price rises beyond the value they provide. If they try to regulate on-premise software then it's time to break the glass.

It doesn't have to be regulated to be rent extraction. You just need to make the switching costs really high, no help needed from the legal system.

Look at Oracle.

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

#32

Post by GlennS »

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?

Only when vendor lock-in and inaccessible data silos comes into play.

And that's not a problem specific to SAAS.

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

#34

Post by TimPC »

Lawsuits aren't always rent seeking sometimes they are necessary economic activities. Economic models can be poor when they (implicitly) define redress for illegal actions as rent-seeking behaviour, and cutting a competitors cables as valid economic activity -- for example the lawsuit against Comcast that alleges driving a competitor out of business with malicious construction.

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

#35

Post by balls187 »

dreamdu5t wrote: post #11

You can't get $10k to start a hot dog stand but you can get billions of dollars with literally no plan for profit if you're already rich or seeking VC. But want to start a normal business? No capital for you! And your taxes will pay for the banks and VCs when they screw up.

I get that this is hyperbole, but:

1. There are plenty of US Government (i.e. tax payer funded) programs to help people get "normal" ideas off the ground. From grants, to loans, the money is there. It's hard to imagine someone destined for success being stopped by not being able to raise $10k. $10k in credit card debt is nothing for the average american.

2. Success breeds success. If you're rich, you may already have your own skin in the game, or you may have proven yourself capable of using capital effectively.

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

#36

Post by danesparza »

It's interesting to me that the word "wrong" is used in the title. This is assigning a moral code to capitalism and I think that is misplaced.

It's fine to have a moral code. It's fine to be a capitalist. Just don't expect capitalism to always fit in a moral code.

I think the article's main unspoken gripe is about bad actors (folks acting in a non-altruistic way) in human society in general.

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

#37

Post by saas_sam »

It's interesting to me how this article frames crony capitalism as a use or abuse of government by corporations, almost as if the government is a victim. But it's the government that has all of the power in this context. There's something to be said for corporate money influencing elections, but even there it's elected officials who are deciding on policies after getting there, and if they are making decisions based on how to most easily keep their job (ex. take corporate money for reelection campaign), that's their unethical doing, not the corporations.

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

#38

Post by dsfyu404ed »

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…

I wonder if anyone has written software that takes Amazon Prime listings and copies them to eBay with a tiny markup then automates the payment transfer.

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

#39

Post by zackmorris »

I think the great problem of our time is that the challenges get easier to solve every day but we mostly spend our time making rent. And not the kind of rent mentioned in the article - just plain old fashioned too-much-month-not-enough-money kind of rent. When we’re desperate, we grovel and do whatever work we need to to survive. This is akin to how researchers spend inordinate amounts of time applying for grants rather than, you know, saving the world and all that. This is because any free capital in the economy gets vacuumed up by a few large players who only divvy it out through "sanctioned" channels that most people no longer have access to.

In the olden days, the main force balancing this was taxation. Even if you look at it as a purely zero-sum game, any money paid by the very wealthy had to go somewhere, and that somewhere was the masses. This didn't sit right with the very wealthy and they rigged the system to such a degree that I've never seen an appreciable tax increase in my lifetime, even in the face of trillion dollar deficits and the loss of the middle class in the US. Mathematically, trickle-down economics has given us just exactly the system it was designed to. I mourn for the millions (billions) of people left out, but for whatever reason a lot of people don’t even see them.

Maybe the great problem of our time is ignorance..

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

#40

Post by arcanus »

jbooth wrote: post #28
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".

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

It is worse than that, because at least physics is validated by experimental data.

Much of (macro in particular) Economics is a set of axioms that are seldom predictive.

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