41–50 of 263 posts
For example. When insurance companies jack-up rates or impose customer "unfriendly" terms, they are not acting within the "free market." They are exploiting "crony'esque" rules that limit competition by restricting insurance companies from competing across state-lines.
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…
This gets weird with software businesses as these companies tend to insulate from losses relatively well. This coupled with the fact that in some markets there is no way to generate additional value without a huge public investment happening upstream (utilities) is why a lot of VC goes so crazy for it. Keeping the cash flowing is the only way to avoid being taxed profusely – All you can do in some situations is raise rents and spend hastily, for better or for worse.
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 rat…
In the agricultural age, if you fucked up a harvest, you and your family could starve.
Before agriculture, if you fucked up a hunt, your whole kin-clan could starve.
Nowadays, if you fuck up the housing market, and millions of people go bankrupt, nothing gets broken enough to turn a concern into a crisis, so we never fix anything, and nothing ever changes.
Earlier quoted context omitted.
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.
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.
Just as anti-trust laws are necessary, there will be drives for measures to encourage and even force companies to put their cash piles to use. Cash is the life of an economy, it needs to flow and flow.
Earlier quoted context omitted.
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.
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…
This is somewhat controversial to posit, but I believe the corruption in the financial industry is extraordinarily entrenched because of the Fed. Before you call me a lunatic, smart and good people from Aaron Schwartz to Sanders have said things like this: that it should be eliminated, or that it is nothing more than socialism for the rich while hurting the poor.
The most obvious problem with it is that it creates astronomical moral hazard by protecting and guaranteeing the big banks.
After the Fin Crisis Krugman was talking a lot about making banking boring again, and run like utility companies. You can still have VCs, hedge funds, or whatever you want--but it's not funded by and guaranteed with anything other than the money you put in it, and it's separated from vanilla banking, ie Glass Steagall.
But then we had Dodd Frank and sometime after Krugman never went back to talking about that again.
Unfortunately, the dogma about the Fed is so entrenched in mainstream economics--so much so that speaking against it is immediately written-off.
Nearly 1.5 centuries ago, all the banks were actually betting against Lincoln to lose his war. So he used the constitutionally-granted right to print the nation's own currency, and won the war with it. The point is, there's no reason we can't do this if we really wanted to (and if you care about poor and working class, and eliminating cronyism from the world, you should want to).
The concept of "crony capitalism" is a misnomer. "Crony" is not a type of capitalism, it's the antithesis of capitalism. It's enabled by giving too much power to government. For example. When insurance companies jack-up rates or impose customer "unfriendly" terms, they are not acting within the "free market." They are exploiting "crony'esque" rules that limit competition by restricting insurance companies from compet…
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?
However, as a software developer, calling it rent-extraction glosses over architectural differences and value derived from not having servers tucked away in an office closet. Flexibility and capacity on the server-end, as well as huge benefits of software distribution over web-browser reducing support costs. I derive a ton of value in never having to drive to a data-center and paying EC2 by hours-used seems reasonable since there is actually a server (albeit virtual) running for my money.
However, it's certainly rent-extraction when the only thing thats going on via the Internet is a licensing check.
Adobe Photoshop switched to the cloud model, so graphic designers now pay 30-$70/month for the entirety of their career. Yeah it's always an up to date version, but before the shift to a SaaS model, it was some $600 but it would keep working for years if you couldn't scrape together the cash for the latest version.