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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.

#51
Not native english speaker here. My comment is probably of very limited value, but mostly for my personal improvement :).

When I read "the wrong kind of entrepreneurs flourish in America" it surprises me to not see: "the wrong kind of entrepreneurs flourishes in America". I understand that "kind" should be the subject of the sentence, not the entrepreneurs. I have seen this construct several times (e.g. "this type of errors are very common", etc) and I'm wondering if it's correct, or simply one of these errors that are so common that they become the de facto rule.

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

#52

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?

Hardly. I mean it does look that way at first, but as long as there are good competitors around, the price of SaaS products won't be exorbitant. Besides, technology seems to have a very cyclical progression: we went from time sharing computing on big vendors' computers, to personal computing, and now back to hosting with big vendors, via cloud. I'm gonna go out on a limb and say that future progress would once again make having one's data with oneself more attractive.

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

#53
post #45
post #40

Earlier quoted context omitted.

> "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.

And yet, people swear by them as though they have the same validity as physics. I never really understood that mentality.

That's because they're what people _believe_ - their politics - an act of faith not dissimilar from religion. The set of econ axioms people espouse demonstrates their own world view - what they stand for.

In a previous age, these would be moral principles and social norms - now it's political beliefs.

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

#54

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…

Knowingly providing incentives for people to do something unethical is itself unethical.

The corporations aren't blameless here.

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

#55

Earlier quoted context omitted.

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.

AWS is currently minting money. Amazon and Google don't offer no subsidies, Amazon at least, invests all its profits back into the business, which is def not a subsidy in any sense of the term.

As the competition heats up and providers become more efficient, I actually expect prices to go down even further.

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

#56

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…

Since you seem knowledgeable about this, what is the amount of credit card debt available to the median American above what they already carry?

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

#57

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?

Can someone care to enlighten me on how SaaS can qualify as rent extraction? I'm sure there is a lot of fudge, but the US is a "capitalist" society—in that I mean you're not required to continue paying for a SaaS product if you deem it's not worth the money. How is this 'rent extraction'?

Assume for a moment you have 10 000 employees and 10 years worth of business correspondence in Gmail, Outook.com or similar. Now for email, there is usually at least one or two open apis for getting that data (pop/imap) - but even so, migration is a costly affair.

You could move all new correspondence to a new (eg: on premises) system - but you'd have to keep paying to retain the same access to your business history.

Take any of the many business/crm-apps, where there's no clear migration path (you'd want both history and business process rules) - and it's easy to see how SaaS might easily facilitate "rent extraction"?

As others have mentioned the problem isn't unique to SaaS - but with an on premise solution, you might be able to move some terabytes of data by simply moving some physical drives - or at least have local access via you SAN. With a cloud provider, many businesses would struggle to get at the data at a higher rate than 100mbps even with the help of the SaaS provider.

And there's often no option to keep access to "old" system/data without paying rent, unlike some on premise solution (keep the old system, on it's own network segment, ticking along for historical records (or: in a VM).

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

#58

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 perspective is whole ignorant of the consequences of not having a mechanism for protecting people's outputs and value. Are you incented to work if someone else gets paid for that work? Why would you think that is any different with regard to patents, copyrights, and trademarks, etc.

I get that there are abuses and even grotesque distortions, but that theory is fully and clearly false. Yes, you should have protection, no you should not have abusive protecting as it exists right now in basically every single field and sector.

No, you should not be allowed to lease mineral rights and then just sit on them for free. No you should not be able to copyright something essentially forever. No, patents should not even be awarded for basic inevitable things that a corporations simply had the financial ability to copyright first. No, you should not be able to keep exponential gains from the value and environment a society created without also paying exponential taxes to compensate and contribute due to that success. But there has to be a fundamental right and ability to keep the value from what one has earned and created. That may seem an anathema to the recent generation infested by communism and ideologically subverted by islam, but the alternative is the collapse of society.

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

#59
post #26
post #22

Earlier quoted context omitted.

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.

we don't have capitalism in US we have corporationism. free market would have been a good thing before automation and AI, but it won't work for the future. but you can't convince people to go toward socialism in this country. but left and right agree that problem is crony capitalism ! let's start from there and do something!!!

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

#60
Many of our regulatory bodies have been utterly captured by biggest companies that they are supposed to regulate, and they are tamping down innovation (which creates jobs), increasing prices, and decreasing quality. Both the Democrats and Republicans have been engaging too heavily in crony capitalism for decades, and this is the result.

How it works: Regulations that are supposed to protect the public end up being a cudgel with which to beat down small companies that can't afford to deal with an onslaught of often unjustified demands for regulatory compliance. When the only companies who can afford to comply are the big ones, it squeezes out new market entrants. This decreases competition. It's bad for all but a handful of people.

How it should work: Generally (not always), there should be a direct relationship between company size and the amount of regulations which apply (i.e. more regulations as you get bigger, fewer if you're small).

We need a heavy injection of honesty into our regulatory agencies. Restoring balance to the system would unleash a wave of economic growth.

When I was shilling for Senator Sanders in 2015 and 2016, I often said that I was equally excited for both his policies and the fact that he would make a lot of good appointments, which would clean a lot of crap out the rent-seeking regulatory system, which would be great for the economy.

Unfortunately, we're going to have to wait. But I hope this gets on more people's radars as one of the reasons why the middle class has been shrinking and real incomes going down for four straight decades.

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