Tag Archives: Monopolies

A Low-Trust Society Is an Impoverished Society

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By Charles Hugh Smith

Source: Of Two Minds

The sole remaining reservoirs of trust in American life are personal networks, local enterprises and local institutions.

It’s not exactly news that social trust has declined significantly in the United States. Surveys find that public trust in institutions and the professional classes that dominate those institutions has cratered. (see chart below) Social trust–our confidence that other people are trustworthy–has also fallen to multi-decade lows.

This was not the case in decades past. Americans maintained high levels of trust in their institutions, government and fellow citizens. The decline in social trust is across the entire spectrum: our trust in institutions, professional elites and our fellow Americans has declined precipitously.

The causes of this decay of social trust can be debated endlessly, but several factors are obvious:

1. Institutions forfeited the trust of the citizenry by withholding / editing realities to serve the interests of hidden agendas and insiders’ careers. The Vietnam War was pursued on fabrications, as was the second Gulf War to topple Saddam. Watergate eroded trust on multiple levels, as did the Church Committee’s investigation of America’s security agencies’ domestic spying / over-reach.

2. The managerial / professional elites at the top of the nation’s institutions no longer put the citizenry’s interests above their own. The public’s trust has eroded as institutions are primarily viewed as vehicles for self-enrichment and career advancement: healthcare CEOs pay themselves millions, higher education is bloated with layers of non-teaching administration, defense contractors and the Pentagon have greased the revolving door to the benefit of incumbents and insiders, and so on, in an endless parade of self-serving cloaked with smirking PR claims of “serving the public.”

The shift from a high-trust society to a low-trust society is consequential economically, politically and socially. Low-trust societies have stagnant economies, as nobody trusts anyone they don’t know personally or through personally trusted networks, and nobody trust institutions to function effectively or fulfill their stated mission to serve the public good.

Faced with incompetent, unaccountable, corrupt bureaucracies and a culture overflowing with scams, frauds, imposters and get-rich-quick schemes, people give up and drop out. Rather than start a business and accept all the risks just to get dumped on or ripped off, they don’t even try to start a business. Given the financial insecurity that is now the norm, they decide not to get married or have children.

The vast trading networks of the Roman Empire were based on personal trusted networks and trust in Rome’s functionaries / institutions. The owners of trading ships dealt with trusted captains and merchants, who then paid duties to Roman functionaries in Alexandria and other major trading ports.

In other words, tightly bound personal trusted networks work well as long as the state institutions that bind the entire economy are trusted as fair and reliable–not perfect, of course, but efficient and “good enough.”

But when public institutions are viewed as unfair, unreliable, corrupt or incompetent, the entire economy decays. Even personal trusted networks cannot survive in an economy of unfair, unreliable, corrupt or incompetent state bureaucracies and private institutions.

The American economy is now dominated by enormous privately owned and managed monopolies and cartels that are the private-sector equivalent of self-serving state bureaucracies. Big Tech, Big Pharma, Big Healthcare, Big Ag, Big Finance, etc., are even worse than state bureaucracies because there are no legal requirements for transparency or recourse. Try getting a response from a Big Tech corporation when you’ve been shadow-banned or sent to Digital Siberia.

The sole remaining reservoirs of trust in American life are personal networks, local enterprises and local institutions. These are not guaranteed, of course; in many locales, even these reservoirs have been drained. But in other locales, enterprises and institutions such as the county water utility, the local newspaper, the local community college, etc. continue to earn the trust of the public by performing the services they exist to provide effectively and at a reasonable cost.

The larger the institution and the greater its wealth and power, the lower the social trust–for good reasons. The greater the influence of the managerial elites, the greater the disconnect from the everyday experiences of the citizenry and customers, and the more extreme the self-serving PR.

Sure, I trust Big Tech, Big Pharma, Big Healthcare, Big Finance–to rip me off, profiteer, send me obfuscating bills, jack up junk fees, make it impossible to contact them, and send me to Digital Siberia if I complain.

The divide between the elites and the commoners should prompt us to examine the low-trust path we’re sliding down:

In a society in which everything is phony, low quality or fraudulent, you’re taking a chance trusting anyone you don’t know personally–and even that can be risky now that self-aggrandizing flim-flam is the last remaining path to financial security for non-elites.

A low-trust society is an impoverished society, economically stagnant and socially threadbare. That’s where we are now, and the more fragmented, greedy, self-serving, desperate and deranged we become, the lower the odds that we’ll find the means to rebuild trust.

Sadly, we already know that anyone claiming to “rebuild trust” is spouting PR designed to mask self-enrichment. We also know that the vast army of well-paid flacks, factotums, enforcers, happy-story apologists, lackeys, toadies and sell-out minions are declaring “everything’s great!”

Just mumble, “Uh, sure” and continue to Tune in (to degrowth), drop out (of hyper-consumerism and debt-serfdom) and turn on (to self-reliance and relocalizing capital and agency).

Amazon, “Economic Terrorism” and the Destruction of Competition and Livelihoods

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By Colin Todhunter

Source: Off-Guardian

Global corporations are colonising India’s retail space through e-commerce and destroying small-scale physical retail and millions of livelihoods.

Walmart entered into India in 2016 with a US$3.3 billion take-over of the online retail start-up Jet.com. This was followed in 2018 with a US$16 billion take-over of India’s largest online retail platform, Flipkart. Today, Walmart and Amazon control almost two thirds of India’s digital retail sector.

Amazon and Walmart have a record of using predatory pricing, deep discounts and other unfair business practices to attract customers to their online platforms. A couple of years ago, those two companies generated sales of over US$3 billion in just six days during Diwali. India’s small retailers reacted by calling for a boycott of online shopping.

If you want to know the eventual fate of India’s local markets and small retailers, look no further than what US Treasury Secretary Steven Mnuchin said in 2019. He stated that Amazon had “destroyed the retail industry across the United States.”

AMAZON’S CORPORATE PRACTICES

In the US, an investigation by the House Judiciary Committee concluded that Amazon exerts monopoly power over many small- and medium-size businesses. It called for breaking up the company and regulating its online marketplace to ensure that sellers are treated fairly.

Amazon has spied on sellers and appropriated data about their sales, costs and suppliers. It has then used this information to create its own competing versions of their products, often giving its versions superior placement in the search results on its platform.

The Institute for Local Self-Reliance (ILSR) published a revealing document on Amazon in June 2021 that discussed these issues. It also notes that Amazon has been caught using its venture capital fund to invest in start-ups only to steal their ideas and create rival products and services.

Moreover, Amazon’s dominance allows it to function as a gatekeeper: retailers and brands must sell on its site to reach much of the online market and changes to Amazon’s search algorithms or selling terms can cause their sales to evaporate overnight.

Amazon also makes it hard for sellers to reduce their dependence on its platform by making their brand identity almost invisible to shoppers and preventing them from building relationships with their customers. The company strictly limits contact between sellers and customers.

According to the ILSR, Amazon compels sellers to buy its warehousing and shipping services, even though many would get a better deal from other providers, and it blocks independent businesses from offering lower prices on other sites. The company also routinely suspends sellers’ accounts and seizes inventories and cash balances.

The Joint Action Committee against Foreign Retail and E-commerce (JACAFRE) was formed to resist the entry of foreign corporations like Walmart and Amazon into India’s e-commerce market. Its members represent more than 100 national groups, including major trade, workers’ and farmers’ organisations.

JACAFRE issued a statement in 2018 on Walmart’s acquisition of Flipkart, arguing that it undermines India’s economic and digital sovereignty and the livelihoods of millions in India. The committee said the deal would lead to Walmart and Amazon dominating India’s e-retail sector. It would also allow them to own India’s key consumer and other economic data, making them the country’s digital overlords, joining the ranks of Google and Facebook.

In January 2021, JACAFRE published an open letter saying that the three new farm laws, passed by parliament in September 2020, centre on enabling and facilitating the unregulated corporatisation of agriculture value chains. This will effectively make farmers and small traders of agricultural produce become subservient to the interests of a few agrifood and e-commerce giants or will eradicate them completely.

Although there was strong resistance to Walmart entering India with its physical stores, online and offline worlds are now merged: e-commerce companies not only control data about consumption but also control data on production and logistics. Through this control, e-commerce platforms can shape much of the physical economy.

What we are witnessing is the deliberate eradication of markets in favour of monopolistic platforms.

BEZOS NOT WELCOME

Amazon’s move into India encapsulates the unfair fight for space between local and global markets. There is a relative handful of multi-billionaires who own the corporations and platforms. And there are the interests of hundreds of millions of vendors and various small-scale enterprises who are regarded by these rich individuals as mere collateral damage to be displaced in their quest for ever-greater profit.

Thanks to the helping hand of various COVID-related lockdowns, which devastated small businesses, the wealth of the world’s billionaires increased by $3.9tn (trillion) between 18 March and 31 December 2020.

In September 2020, Jeff Bezos, Amazon’s executive chairman, could have paid all 876,000 Amazon employees a $105,000 bonus and still be as wealthy as he was before COVID. Jeff Bezos – his fortune constructed on unprincipled methods that have been well documented in recent years – increased his net wealth by $78.2bn during this period.

Bezos’s plan is clear: the plunder of India and the eradication of millions of small traders and retailers and neighbourhood mom and pop shops.

This is a man with few scruples. After returning from a brief flight to space in July, in a rocket built by his private space company, Bezos said during a news conference:

I also want to thank every Amazon employee and every Amazon customer because you guys paid for all of this.”

In response, US congresswoman Nydia Velazquez wrote on Twitter:

While Jeff Bezos is all over the news for paying to go to space, let’s not forget the reality he has created here on Earth.”

She added the hashtag #WealthTaxNow in reference to Amazon’s tax dodging, revealed in numerous reports, not least the May 2021 study ‘The Amazon Method: How to take advantage of the international state system to avoid paying tax’ by Richard Phillips, Senior Research Fellow, Jenaline Pyle, PhD Candidate, and Ronen Palan, Professor of International Political Economy, all based at the University of London.

Little wonder that when Bezos visited India in January 2020, he was hardly welcomed with open arms.

Bezos praised India on Twitter by posting:

Dynamism. Energy. Democracy. #IndianCentury.”

The ruling party’s top man in the BJP foreign affairs department hit back with:

Please tell this to your employees in Washington DC. Otherwise, your charm offensive is likely to be waste of time and money.”

A fitting response, albeit perplexing given the current administration’s proposed sanctioning of the foreign takeover of the economy, not least by the unscrupulous interests that will benefit from the recent farm legislation.

Bezos landed in India on the back of the country’s antitrust regulator initiating a formal investigation of Amazon and with small store owners demonstrating in the streets. The Confederation of All India Traders (CAIT) announced that members of its affiliate bodies across the country would stage sit-ins and public rallies in 300 cities in protest.

In a letter to PM Modi, prior to the visit of Bezos, the secretary of the CAIT, General Praveen Khandelwal, claimed that Amazon, like Walmart-owned Flipkart, was an “economic terrorist” due to its predatory pricing that “compelled the closure of thousands of small traders.”

In 2020, Delhi Vyapar Mahasangh (DVM) filed a complaint against Amazon and Flipkart alleging that they favoured certain sellers over others on their platforms by offering them discounted fees and preferential listing. The DVM lobbies to promote the interests of small traders. It also raised concerns about Amazon and Flipkart entering into tie-ups with mobile phone manufacturers to sell phones exclusively on their platforms.

It was argued by DVM that this was anti-competitive behaviour as smaller traders could not purchase and sell these devices. Concerns were also raised over the flash sales and deep discounts offered by e-commerce companies, which could not be matched by small traders.

The CAIT estimates that in 2019 upwards of 50,000 mobile phone retailers were forced out of business by large e-commerce firms.

Amazon’s internal documents, as revealed by Reuters, indicated that Amazon had an indirect ownership stake in a handful of sellers who made up most of the sales on its Indian platform. This is an issue because in India Amazon and Flipkart are legally allowed to function only as neutral platforms that facilitate transactions between third-party sellers and buyers for a fee.

UNDER INVESTIGATION

The upshot is that India’s Supreme Court recently ruled that Amazon must face investigation by the Competition Commission of India (CCI) for alleged anti-competitive business practices. The CCI said it would probe the deep discounts, preferential listings and exclusionary tactics that Amazon and Flipkart are alleged to have used to destroy competition.

However, there are powerful forces that have been sitting on their hands as these companies have been running amok.

In August 2021, the CAIT attacked the NITI Aayog (the influential policy commission think tank of the Government of India) for interfering in e-commerce rules proposed by the Consumer Affairs Ministry.

The CAIT said that the think tank clearly seems to be under the pressure and influence of the foreign e-commerce giants.

The president of CAIT, BC Bhartia, stated that it is deeply shocking to see such a callous and indifferent attitude of the NITI Aayog whch have remained a silent spectator for so many years when:

…the foreign e-commerce giants have circumvented every rule of the FDI policy and blatantly violated and destroyed the retail and e-commerce landscape of the country but have suddenly decided to open their mouth at a time when the proposed e-commerce rules will potentially end the malpractices of the e-commerce companies.”

Of course, money talks and buys influence. In addition to tens of billions of US dollars invested in India by Walmart and Amazon, Facebook invested US$5.5 billion last year in Mukesh Ambani’s Jio Platforms (e-commerce retail). Google has also invested US$4.5 billion.

Since the early 1990s, when India opened up to neoliberal economics, the country has become increasingly dependent on inflows of foreign capital. Policies are being governed by the drive to attract and retain foreign investment and maintain ‘market confidence’ by ceding to the demands of international capital which ride roughshod over democratic principles and the needs of hundreds of millions of ordinary people. ‘Foreign direct investment’ has thus become the holy grail of the Modi-led administration and the NITI Aayog.

The CAIT has urged the Consumer Affairs Ministry to implement the draft consumer protection e-commerce rules at the earliest as they are in the best interest of the consumers as well as the traders of the country.

Meanwhile, the CCI probably will complete its investigation within two months.

Why Don’t Billionaires Pay the Same High Tax Rates the Rest of Us Pay?

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By Charles Hugh Smith

Source: Of Two Minds

The truth is America has lost its way if commoners pay a rate of 40% but its billionaires pay next to nothing.

As with everything else in polarized America, billionaires proclaiming space tourism is the next big thing for humanity neatly divides opinion into two camps: those who laud the initiative, hard work and innovations of the billionaires as examples of the American Can-Do Dream, and those who wished the billionaire space tourists had taken a one-way flight to a distant orbit of blissful silence.

Setting aside that bitter divide, let’s explore another divide: how our two-tier tax system enables billionaires to become billionaires while the rest of us get poorer. Whenever I discuss the taxes of the non-billionaire self-employed, armies of apologists leap to the defense of the status quo with various quibbles: the 0.9% Medicare surcharge only kicks in above $200,000, the cap on Social Security taxes is $142,800, and so on.

Setting aside the quibbles–and recall the tax code with regulatory notes is thousands of pages–let’s deal with the real issue, which is that billionaires and their corporations pay a thin slice of taxes as a percentage of total income/gains if they pay any at all, while self-employed and small business pay extraordinarily high tax rates.

To all the quibblers: please add the 15.3% Social Security/Medicare tax rate (self-employed / sole proprietors pay both the employee and employer share of this tax) to the federal tax rate of 24% for income above $85,520. It’s 39.3%.

Just how hard would it be to conclude that everyone earning more than $142,000 should pay at least the same rate the rest of us pay? Aren’t we demonstrating all those same laudable traits of the billionaires, just on a smaller scale? Why should we pay 40% and the billionaires pay essentially zero?

Gee, do you reckon paying no taxes might help folks become richer? Garsh, nobody ever asked that question before. And do you reckon paying 40% of your income might make you poorer over time? Golly gee, how come the talking heads worshiping the billionaires never ask these questions?

Since Social Security and Medicare/Medicaid are the bedrock of America’s social safety net, why shouldn’t billionaires pay to support these programs? Well, why not? Just how lame do the excuses have to be to be recognized as laughably self-serving?

Here’s the trick billionaires use to evade taxes. There are countless ways for the super-wealthy to evade taxes–funnel earnings through an Irish post office box, buy a tax break in Washington DC, slide the money into one of dozens of global tax havens, and so on.

But a simple one is to report no income and live large off borrowed money. As the billions of dollars in capital gains pile up as the billionaire’s stock holdings soar (thanks, Federal Reserve, for the free trillions; awful swell of you to give us all that free money), there’s no income generated until the billionaire sells some shares. No sale, no income. Just pay yourself $1 a year in salary, borrow against your billions at super-low rates of interest, and voila, you’re tax-free while you build your super-yacht, buy your private island, and so on.

Just as a thought experiment, suppose the first $50,000 in earnings for everyone were tax-free, and a 40% tax rate was collected on all income above $1 million, both earned and unearned (capital gains), not when the gains were realized in a sale but at the end of every tax year, whether the shares that rose in value were sold or not.

So Billionaire Space Tourist reaped $10 billion in capital gains from the appreciation of stocks held, then the Billionaire pays 40% of those gains: $4 billion. There is a way to not pay any taxes on capital gains–have your portfolio lose value. No gains, no taxes. And to close all the loopholes, the tax rate is on all assets and income connected in any way, shape or form with the U.S. First they pay the U.S. taxes, then if they want to pay other nations’ taxes as well, be my guest. But the 40% is due and payable regardless of any other conditions.

You don’t like it, then stop selling any products in the U.S. or holding any assets in the U.S. Why should billionaires get to set up immensely profitable monopolies, quasi-monopolies, cartels and corporations in the U.S. but pay near-zero in taxes? Why should billionaires be free to profit from America’s economy but pay nothing to support its citizenry?

What precisely is the logic of reducing taxes on the wealthiest few to near-zero? If there is no logic, then we’re left with corruption: America is a moral cesspool.

The truth is America has lost its way if commoners pay a rate of 40% but its billionaires pay next to nothing. Please note Karma and Divine Retribution are not controlled by the billionaire’s lackeys and apparatchiks in the Federal Reserve. The pendulum of exploitation has reached its extreme, and the reversal to the opposite extreme is underway.

Sacrifice for Thee But None For Me

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By Charles Hugh Smith

Source: Of Two Minds

The banquet of consequences for the Fed, the elites and their armies of parasitic flunkies and factotums is being laid out, and there won’t be much choice in the seating.

Words can be debased just like currencies. Take the word sacrifice. The value of the original has been debased by trite, weepy overuse to the point of cliche. Like other manifestations of derealization and denormalization, this debasement is invisible, profound and ultimately devastating.

Consider the overworked slogan of implied shared sacrifice: we’re all in this together. Pardon my cynicism, but doesn’t this sound like what the first class passengers in the lifeboats shouted to the doomed steerage passengers on the sinking Titanic?

Here is the ice-cold reality of America in 2020: Sacrifice for Thee But None For Me. This isn’t a new trend, of course. Any measurable sacrifices shared by all the socio-economic classes ended with World War II in 1945, and since then it’s been one long slide to Sacrifice for Thee But None For Me.

We’ve seen this slide to decay and collapse many times in history. The elites who once gained social status and political power by making real sacrifices on behalf of the nation / empire become entirely self-serving, accumulating ever greater wealth and power by transferring all the sacrifices and risks onto the lower classes.

Peter Turchin, author of War and Peace and War: The Rise and Fall of Empires, describes how civic virtue is gradually replaced by personal greed and self-interest.

This excerpt perfectly captures the current zeitgeist:

“Virtus included the ability to distinguish between good and evil and to act in ways that promoted good, and especially the common good. Unlike Greeks, Romans did not stress individual prowess, as exhibited by Homeric heroes or Olympic champions. The ideal of hero was one whose courage, wisdom, and self-sacrifice saved his country in time of peril.

Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome’s total manpower, perished in the battle of Cannae, as mentioned previously, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….

The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion’s payroll….

The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen.”

Now compare that to the situation in Late Antiquity when

“An average Roman noble of senatorial class had property valued in the neighborhood of 20,000 Roman pounds of gold. There was no ‘middle class’ comparable to the small landholders of the third century B.C.; the huge majority of the population was made up of landless peasants working land that belonged to nobles. These peasants had hardly any property at all, but if we estimate it (very generously) at one tenth of a pound of gold, the wealth differential would be 200,000! Inequality grew both as a result of the rich getting richer (late imperial senators were 100 times wealthier than their Republican predecessors) and those of the middling wealth becoming poor.”

Compare this to the America of World War II and the America of today. Wealthy, politically influential families such as the Kennedys could only retain their influence if their sons served in positions of combat leadership, and Joe Kennedy was killed in the European theater after volunteering for a highly risky air mission. John F. Kennedy very nearly lost his life in the South Pacific.

And how do our era’s crop of presidents and presidential contenders fare by comparison? The idea that flesh and blood should ever be at risk in defense of the nation /empire–perish the thought.

As Turchin sagely observed, it’s not just the limitless greed and avoidance of sacrifice of the elite that generates destabilizing inequality–it’s the eradication of the middle class as all the risks and sacrifices were shifted from the self-serving top to the middle and lower classes.

As I’ve often noted, risk cannot be made to disappear, it can only be transferred to others. In the grand scheme of things, the inherent risks of globalization and financialization have all been transferred to the middle and working classes (however you define them). The elite class enjoys the near-infinite support of the Federal Reserve and it’s ability to print near-infinite sums of currency to bail out the greediest, most self-serving scum of parasites and speculators.

Meanwhile, all the sacrifices required to support this unfair, corrupt, predatory system have been transferred to the middle and working classes via sleight of hand. The sacrifices weren’t transparent and up front; they were cloaked in the decline of job security, in ever-higher costs, in the decline of social mobility and the erosion of the purchasing power of wages.

The elites’ economist flunkies and factotums claimed that bailing out the freeloaders, parasites and speculators would benefit “the little people” because the grand trade-off delivered by the Federal Reserve (as correspondent R.J. pointed out to me) was: no more financial panics, which caused much misery in the working class due to business failures causing layoffs and unemployment.

But globalization, financialization and the rise of cartel-state monopolies have eviscerated the middle and working classes far more effectively and permanently than any brief financial panic, while greatly enriching the elite class–a rise in wealth that is backstopped by the Federal Reserve: profits are the elites to keep while their losses are socialized, i.e. transferred to the lower classes.

Job security, the purchasing power of wages and social mobility–nothing vital to the middle or working classes is backstopped by the Fed; the Fed’s one and only job is backstopping the wealth of our parasitic, predatory elite.

Sacrifice for Thee But None For Me. The banquet of consequences for the Fed, the elites and their armies of parasitic flunkies and factotums is being laid out, and there won’t be much choice in the seating.

No, This Is Not Another 1929, 1973, 1987, 2000, or 2008

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By Charles Hugh Smith

Source: Of Two Minds

Basing one’s decisions on analogs from the past is entering a fool’s paradise of folly.

Like addicts who cannot control their cravings, financial analysts cannot stop themselves from seeking some analog situation in the past which will clarify the swirling chaos in their crystal balls. So we’ve been swamped with charts overlaying recent stock market action over 1929, 1987,2000 and 2008–though the closest analogy is actually the Oil Shock of 1973, an exogenous shock to a weakening, fragile economy.

But the reality is there is no analogous situation in the past to the present, and so all the predictions based on past performance will be misleading. The chartists and analysts claim that all markets act on the same patterns, which are reflections of human nature, and so seeking correlations of volatility and valuation that “worked” in the past will work in 2020.

Does anyone really believe the correlations of the past decade or two are high-probability predictors of the future as the entire brittle construct of fictional capital and extremes of globalization and financialization all unravel at once?

Here are a few of the many consequential differences between all previous recessions and the current situation:

1. Households have never been so dependent on debt as a substitute for stagnating wages.

2. Real earnings (adjusted for inflation) have never been so stagnant for the bottom 90% for so long.

3. Corporations have never been so dependent on debt (selling bonds or taking on loans) to fund money-losing operations (see Netflix) or stock buybacks designed to saddle the company with debt service expenses to enrich insiders.

4. The stock market has never been so dependent on what amounts to fraud–stock buybacks–to push valuations higher.

5. The economy has never been so dependent on absurdly overvalued stock valuations to prop up pension funds and the spending of the top 10% who own 85% of all stocks, i.e. “the wealth effect.”

6. The economy and the stock market have never been so dependent on central bank free money for financiers and corporations, money creation for the few at the expense of the many, what amounts to an embezzlement scheme.

7. Federal statistics have never been so gamed, rigged or distorted to support a neofeudal agenda of claiming a level of wide-spread prosperity that is entirely fictitious.

8. Major sectors of the economy have never been such rackets, i.e. cartels and quasi-monopolies that use obscure pricing and manipulation of government mandates to maximize profits while the quality and quantity of the goods and services they produce declines.

9. The economy has never been in such thrall to sociopaths who have mastered the exploitation of the letter of the law while completely overturning the spirit of the law.

10. Households and companies have never been so dependent on “free money” gained from asset appreciation based on speculation, not an actual increase in productivity or value.

11. The ascendancy of self-interest as the one organizing directive in politics and finance has never been so complete, and the resulting moral rot never more pervasive.

12. The dependence on fictitious capital masquerading as “wealth” has never been greater.

13. The dependence on simulacra, simulations and false fronts to hide the decay of trust, credibility, transparency and accountability has never been so pervasive and complete.

14. The corrupt linkage of political power, media ownership, “national security” agencies and corporate power has never been so widely accepted as “normal” and “unavoidable.”

15. Primary institutions such as higher education, healthcare and national defense have never been so dysfunctional, ineffective, sclerotic, resistant to reform or costly.

16. The economy has never been so dependent on constant central bank manipulation of the stock and housing markets.

17. The economy has never been so fragile or brittle, and so dependent on convenient fictions to stave off a crash in asset valuations.

18. Never before in U.S. history have the most valuable corporations all been engaged in selling goods and services that actively reduce productivity and human happiness.

This is only a selection of a much longer list, but you get the idea. Basing one’s decisions on analogs from the past is entering a fool’s paradise of folly.

Of Course Billionaires Shouldn’t Exist

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By HipCrime Vocab

There’s apparently a row over whether billionaires should exist. That is, whether or not billionaires should be a thing in our society.

What a stupid question. Of course billionaires shouldn’t exist! But the reason has nothing to do with Socialism.

Rather, under a properly-functioning free-market capitalist system, billionaires shouldn’t exist. And that would have also been the opinion of the “Classical Liberals” so favored by the Right these days: Adam Smith, David Ricardo. Thomas Malthus, John Stuart Mill, and so on.

Billionaires are a sign of market failure.

Let me say that again: billionaires are a form of market failure! You cannot simultaneously be both pro-Market and pro-billionaire.

I’m amazed at how few people get this!

In a truly competitive market, excess profits would be competed away. Someone would come along and undercut outsize profits. That’s exactly how the Classical Liberals assumed free markets would work. In this, they saw markets as instruments of greater equality, not inequality, and certainly not as a way to construct a new and improved aristocracy even more powerful than the old one.

The Classical Liberals wrote in opposition to the main power centers of their day: aristocratic government and chartered monopolies like the East India Company. They didn’t see the purpose of their writings as defending privilege and power. One can dispute the end results, but that was not their goal. Quite the contrary. The idea that a single, solitary individuals would possess more wealth than the kings and pharaohs of old under a functioning free market system would have been unthinkable to them.

In their time, much of the national wealth was monopolized by a landed aristocracy who gained their wealth through disproportionate ownership of the country’s productive land. The other major source of wealth came from large joint-stock companies that were granted royal monopolies due to their political connections. Yet another source of unearned wealth came from the holders of bonds (gilts)—essentially loaning money to the state and getting the government’s tax revenues funneled to them via interest payments.

Classical English Liberals felt that competitive markets would do away with a good portion of the unearned and unproductive wealth common in Great Britain at the time. They believed that “free and open” markets would channel wealth and activity to more productive ends. That is, they would break up large pools of wealth and unproductive money. The kind of obscene fortunes that they saw in their day would no longer be possible thanks to competition, they assumed, and that British society would become more equal than it was under landed aristocracy, not less. We can dispute their logic (and I have issues with it), but I think we can safely say that this is what they believed, rightly or wrongly.

An inherent part of their conception of free markets is the possibility of failure. Unproductive or inefficient businesses would be competed away, they assumed, and the fortunes earned through such activities would disappear. But that is not the case today. Billionaires have so much money they can literally never lose it! That’s not capitalism, that’s aristocracy. I read recently that someone like Bill Gates literally cannot give away money to his pet causes fast enough to reduce his fortune even if he tried. In fact, he’s grown wealthier even while giving away billions.

The important point about [Adam] Smith’s system, on the other hand, is that it precluded steep inequalities not out of a normative concern with equality but by virtue of the design that aimed to maximize wealth. Once we put the building blocks of his system together, concentration of wealth simply cannot emerge.

In Smith, profits should be low and labor wages high, legislation in favor of the worker is “always just and equitable,” land should be distributed widely and evenly, inheritance laws should partition fortunes, taxation can be high if it is equitable, and the science of the legislator is necessary to thwart rentiers and manipulators.

Political theorists and economists have highlighted some of these points, but the counterfactual “what would the distribution of wealth be if all the building blocks were ever in place?” has not been posed. Doing so encourages us to question why steep inequality is accepted as a fact, instead of a pathology that the market economy was not supposed to generate in the first place.

Contrary to popular and academic belief, Adam Smith did not accept inequality as a necessary trade-off for a more prosperous economy (LSE Blogs)

Yet today the people who call themselves the heirs to “Classical English Liberals” emphatically defend the existence of billionaires and extreme inequality at every turn. Such people are not pro-market or pro-capitalism as they like to portray themselves; they are simply pro-wealth, or—to use a less complementary term—bootlickers. They are not defending capitalism or Markets; what they really are defending is oligarchy, power, privilege, and hierarchy. As Corey Robin opined, “The priority of conservative political argument has been the maintenance of private regimes of power,” with all the soaring rhetoric about markets and freedom being just a smokescreen and a cover for defending hierarchies and power imbalances. Their defense of billionaires is proof positive of this. This is true of presidential candidates as well.

The existence of obscene fortunes and extreme inequality are not a sign of capitalism’s success; they are a sign of capitalism’s failure.

This is pointed out by Chris Dillow:

“I don’t think anyone in this country should be a billionaire” said Labour’s Lloyd Russell-Moyle yesterday, at which the BBC’s Emma Barnett took umbrage. The exchange is curious, because from one perspective it should be conservative supporters of a free market who don’t want there to be billionaires.

I say so because in a healthy market economy there should be almost no extremely wealthy people simply because profits should be bid away by competition. In the textbook case of perfect competition there are no super-normal profits, and in the more realistic case of Schumpeterian creative destruction, high profits should be competed away quickly.

From this perspective, every billionaire is a market failure – a sign that competition has failed. The Duke of Westminster is rich because there’s a monopoly of prime land in central London. Would Ineos’ Jim Ratcliffe be so rich if pollution were properly priced, or if his firm faced more competition?

The Right’s Mega-Rich Problem (Stumbling and Mumbling)

How is this rectified? How do they square their supposed love of fair competition and free and open markets with the presence of outsize fortunes?

They don’t.

And the sad thing is how many people buy into their nonsense. Everyone seems to think that a defense of billionaires is a defense of capitalism.

It’s not. It’s the opposite.

What is a billionaire?

Billionaires are only made possible through monopolies and tollbooths. Period. And such monopolies are more possible than ever before thanks to technology.

This is argued by Matt Stoller, an expert on monopolies, in a post entitled, What Is A Billionaire?:

Most people think a billionaire is someone with a lot of money, a sort of Scrooge McDuck who goes swimming in a pool of gold coins. And why wouldn’t we? The name billionaire has the word billion contained within it, so clearly it means having a net worth of at least ten figures. And in a sense, that is technically true. But if you look at the top ranks of the Bloomberg billionaire index, you’ll notice that nearly all of the leaders are people who own a corporation with substantial amounts of market power in one or more markets.

Billionaires use market power to extract revenue the way that a tollbooth operator does. If you want to drive on a road, you have to pay for the privilege. It costs the tollbooth operator nothing, he/she just has a strategic chokepoint for extraction. Billionaire Warren Buffett, for instance, has such a ‘tollbooth’ strategy for investing, though he uses the term ‘moat’ because it sounds charming and quirky rather than rapacious.

Put another way, the Bloomberg billionaire index isn’t a list of the most important Scrooge McDuck’s, it’s a list of the biggest tollbooth operators in the world.

What he’s saying is that one becomes a billionaire only by short-circuiting the competitive market economy. Then their profits cannot be competed away. Only by gaming the system can one “earn” over a billion dollars. No one person is that valuable.

Stoller goes on to elucidate the operational tactics used by both Bill Gates and by his predecessor John D. Rockefeller, and finds that even though the industries are radically different, the techniques of short-circuiting and circumventing market competition are the same. Whether it’s horizontal and vertical integration, or using market influence to price out rivals, or exclusive contracts, the techniques are the same regardless of industry or time period:

In 1976 and 1980, Congress allowed the copyrighting of software. IBM had been under aggressive antitrust investigation and litigation since 1967, so when it built a personal computer, it outsourced the operating system – MS-DOS – to Gates’s company and allowed Gates to license it to other equipment makers. (Gates’s upbringing didn’t hurt; the CEO of IBM at the the time knew his mother.) Such a relationship with a vendor was a shocking change for IBM, which had traditionally made everything in-house or tightly controlled its suppliers. But IBM treated Microsoft differently, transferring large amounts of programming knowledge to the small corporation. IBM also did this with the microprocessor company Intel, which IBM protected from Japanese competition.

And yet, in 1982, the Department of Justice dropped the antitrust suit against IBM, signaling a new pro-concentration framework. Bill Baxter, Reagan’s antitrust chief, did not want to bring monopolization suits, and did not. The new fast-growing technology space of personal computers would be a monopolized industry. But it would not be monopolized by IBM, which had kept control of the computing industry since the 1950s, because IBM’s corporate structure was now skittish about the raw use of power. And it would not be monopolized by AT&T, which was kept out of the computing industry by a 1956 consent decree that lasted until 1984. Gates, in many ways, had a greenfield, an environment friendly to monopoly but one in which all the old monopolists had been cleared out by antitrust actions.

In the case of Amazon, even though it theoretically has competition, through vertical and horizontal integration it can effectively control online e-commerce to a large degree. The result is a fortune greater than that of entire nation-states controlled by a single individual. One hardly imagines that Adam Smith would approve.

I read an interesting concept, and I forget where it came from. It was that networks are natural monopolies. This explains things like Facebook, Apple, Amazon, etc. It’s entirely possible that the online world, due to features inherent in the technology, simply cannot be regulated by normal competition the way the market for goods and services can. Yet all our theories pretend that it can. It’s delusional.

Under these scenarios,’ profits’ are really a form of tribute (or perhaps plunder). In fact, we really shouldn’t even use the word ‘profits’ to describe them (just like we shouldn’t use ‘trade’ to describe global wage arbitrage).

And there are many more examples of competition being limited by deliberate legal policy. Much of Microsoft’s profits come from the fact that other people can’t copy their software—which they’ve arbitrarily labeled “piracy”—without facing legal repercussions enforced by the state and its legal system. In that sense, outsized fortunes are a consequence of laws, and not a feature inherent to technology:

…inequality is not in fact driven by technology, it is driven by our policy on technology, specifically patent and copyright monopolies. These forms of protection do not stem from the technology, they are policies created by a Congress which is disproportionately controlled by billionaires.

If the importance of these government granted monopolies is not clear, ask yourself how rich Bill Gates would be if any start-up computer manufacturer could produce millions of computers with Windows and other Microsoft software and not send the company a penny. The same story holds true with most other types of technology. The billionaires get rich from it, not because of the technology but because the government will arrest people who use it without the patent or copyright holder’s permission.

This point is central to the debate on the value of billionaires. If we could get the same or better technological progress without making some people ridiculously rich, then we certainly don’t need billionaires. But in any discussion of the merits of billionaires, it is important to understand that they got their wealth because we wrote rules that allowed it. Their immense wealth was not a natural result of the development of technology.

Farhad Manjoo promotes billionaire ideology in proposal to get rid of billionaires (Dean Baker, Real World Economic Review)

Baker has also pointed out that outsized salaries in many fields are determined by limiting competition though things like wildly expensive education and licensing requirements, which are ultimately determined by the government. Doctors and lawyers do not have compete against the wage rates in India or China thanks to the legal system, for example. Everyone else, however, is required to compete against the entire world for jobs.

On a global level, most billionaires are not the result of “hard work” or doing things beneficial for their society:

The vast majority of the world’s billionaires have not become rich through anything approaching ‘productive’ investment. Oxfam has showed that, approximately one third of global billionaire wealth comes from inheritance, whilst another third comes from ‘crony connections to government and monopoly’.

Why on Earth Shouldn’t People Be Able to Be Billionaires? (Novara Media)

And the monopolies that allow billionaires to exist are not good for the economy as a whole. In fact, they are highly detrimental, as Chris Dillow further points out:

What’s more, monopoly pricing is a form of tax – a tax which often falls upon other, smaller businesses…In this sense, not only are billionaires a symptom of an absence of a healthy competitive economy, but they are also a cause of it: their taxes on other firms restrict growth and entrepreneurship…

Tories are wrong, therefore, to portray attacks on the mega-rich as the politics of envy. It’s not. The existence of billionaires is a sign and cause of a dysfunctional economy…

In fact, logically, it is rightists who should be most concerned by the concentration of wealth. We lefties can point to it as evidence that the system is rigged. But Tories should worry that it undermines the legitimacy of the existing order not only because people don’t like inequality, but because it slows down economic growth and so encourages demands for change.

Furthermore, their existence is detrimental politically:

Controlling society’s wealth effectively gives the wealthy the right to plan economic activity. Billionaires – and the people who manage their money – determine which governments can access borrowing, which companies deserve to grow, and which ideas should be researched. This gives them an immense amount of political, as well as economic, power – allowing billionaires to provide favours to those politicians who helped them get rich in the first place.

Ultimately, the monopolisation of society’s resources by a tiny, closed-off elite means that most of society’s resources are used for dirty, unsustainable and unproductive speculation.

Why on Earth Shouldn’t People Be Able to Be Billionaires? (Novara Media)

In fact, the proliferation of billionaires in the developed world has accompanied a period of slow growth and stagnation, not rapid growth. As has been pointed out ad nauseum, yet still fails to sink in, America’s fastest period of growth came when there were fewer billionaires and tax rates ranged from 50 to 90 percent. There is no evidence that the proliferation of billionaires has benefited society as whole. And now, billionaires are attempting to buy political offices outright, making a joke of democracy.

People defending billionaires are only defending raw power, not capitalism, not democracy, and certainly not free markets.

Stoller concludes:

[Billionaires] are not people with a bunch of dollar bills stacked to the moon, they are (largely) men with a strategic position of power protected by public laws and rules. They aren’t better or smarter than anyone else, they are simply politically adept and in the right place at the right time. There’s no reason we have to enable such people to run our culture. At the end of the day, tollbooths are nothing but bottlenecks on a road on which we would otherwise travel faster and more freely.

What is a Billionaire? (Matt Stoller)

So, should there be billionaires? The answer is no. And you should believe that if you consider yourself a libertarian free marketeer or a democratic socialist. Anyone asserting anything else is just a bootlicker or a toady.

Addendum:

Here’s a good piece explaining how billionaires are basically mad kings:

…one of civilization’s great challenges stems from millionaire rhyming with billionaire. In holding them in the same linguistic corner of our minds, we conflate them, yet they’re so mathematically distinct as to be unrelated. A millionaire can, with some dedicated carelessness, lose those millions. Billionaires can be as profligate and eccentric as they wish, can acquire, without making a dent, all the homes and jets and islands and causes and thoroughbreds and Van Goghs and submarines and weird Beatles memorabilia they please. Unless they’re engaging in fraud or making extremely large and risky investments, they’re simply no match for the mathematical and economic forces—the compounding of interest, the long-term imperatives of markets—that make money beget more money. They can do pretty much whatever they want in this life, and therein lies the distinction. A millionaire enjoys a profoundly lucky economic condition. A billionaire is an existential state.

This helps explain the cosmic reverence draped over so many billionaires, their most banal notions about innovation and vision repackaged as inspirational memes, their insights on markets and customers spun into best sellers. Their extravagances are so over the top as to inspire legend more often than revolution…

The Gospel of Wealth According to Marc Benioff (Wired)

One of the most potent demonstrations that the modern-day rich are mad kings, comes form the story of Adam Neumann of WeWork. This is the impression I got from the Behind the Bastards podcast on Neumann: The Idiot Who Made, and Destoryed, WeWork (Podtail)

Counting Jeff Bezos’s fortune using 1 grain of rice = $100,000
byu/GallowBoob innextfuckinglevel

Data governance and the new frontiers of resistance

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The 21st century corporation is using algorithmic-based intelligence to accumulate data on a massive scale. Social movements need to grasp this change quickly.

By Anita Gurumurthy and Nandini Chami

Source: ROAR

Four centuries after the East India Company set the trend for corporate resource extraction, most of the world is now in the grip of unbridled corporate power. But corporate power is on the cusp of achieving “quantum supremacy” and social movements in the digital age need to understand this in order to shift gears in their struggles. The quantum shift here comes from “network-data” power; the ingredients that make up capitalism’s digital age recipe.

Contemporary capitalism is characterized by the accumulation of data-as-capital. Big Tech, as digital companies are collectively known, use the “platform” business model. This model provides a framework for interactions in the marketplace by connecting its many “nodes” — consumers, advertisers, service providers, producers, suppliers and even objects — that comprise the platform ecosystem, constantly harvesting their data and using algorithms to optimize interactions among them as a means to maximize profit.

The platform model emerged as a business proposition in the early 2000s when internet companies offering digital communication services began extracting user data from networked social interactions to generate valuable information for targeted advertising. It is estimated that by 2025, over 30 percent of global economic activity will be mediated by platform companies, an indication of the growing “platformization” of the real economy. In every economic sector, from agriculture to predictive manufacturing, retail commerce and even paid care work, the platform model is now an essential infrastructural layer.

Control over data-based intelligence gives platform owners a unique vantage point — the power to shape the nature of interactions among member nodes. Practices such as Amazon’s segmenting and hyper-targeting of consumers through price manipulation, Uber’s panoptic disciplining of its partner drivers, and TripAdvisor’s popularity ranking algorithm of listed properties, restaurants and hotels are all examples of how such platforms mediate economic transactions. The accumulation of data that feeds algorithmic optimization enables more intensified data extraction, in a self-propelling cycle that culminates in the platform’s totalizing control of entire economic ecosystems.

Amazon for instance, is no longer an online book store, and was perhaps never intended to be. With intimate knowledge about how the market works, Amazon is a market leader in anticipatory logistics and business analytics, providing both fulfillment and on-demand cloud-based computing services to third parties. Not only has it displaced traditional container-freight stations in port cities, it has begun to look increasingly like a shipping company. The dynamics of an intelligence economy have led to large swathes of economic activity being controlled by a handful of platform monopolies.

Studies suggest that in a matter of a couple of decades, platform monopolies have overtaken oil, automobile and financial corporations in market capitalization. Today, platform-based business models account for seven of the world’s top eight companies ranked by market capitalization. The pan-global platform corporation, with its DNA of data-based intelligence, has replaced the trans-national industrial corporation as the Leviathan of our times.

Enter the intelligent corporation

As the dominant form of economic organization in the capitalist world order, the corporation has always wielded power, not just in the market but also in political and socio-cultural realms. The rise of the “intelligent corporation” defined by the political economy of data capital has produced qualitative shifts in the exercise of corporate power, including the following.

From dominating the market to becoming the market

Like its predecessor, the intelligent corporation also aims at complete market domination. In platform-based capitalism, local business models based on intimate contextual knowledge are completely displaced by the data-based intermediation of marketplace and social transactions. It is by eliminating these disparate pockets of capital accumulation that platform owners maximize their profits.

The intelligent corporation also goes a step further, moving beyond “dominating the market” to “becoming the market.” Integrating across business lines, these companies both operate a platform and promote their own goods and services on it. This places them in direct competition with the businesses that use their infrastructure, and creates a conflict of interest. For example, Amazon uses its product marketplace data to consolidate its private labels, launching high-demand products at prices that undercut third-party sellers.

In this new strategy for acquiring market power, long-term market monopolization is privileged over the ability to break-even in the short run. The ecosystem that a platform seeks to capture has room only for one winner with the wherewithal to forgo immediate profits and invest in business integration — through aggressive acquisition — and systematic data-layer development. Other competitors are destined to fall by the wayside.

From cheap labor to freedom from labor

In the capitalist economy, the key contradiction is between capital and labor. Capital is in a perennial quest for freedom from labor through labor-substituting technological advances and territories to shift production to reduce labor costs. In the intelligence economy, capital seems to have come very close to realizing its primordial pursuit.

Using 360° surveillance, the intelligent corporation creates a self-optimizing ecosystem, manipulating each node, expanding its captive network, accumulating data capital and entrenching its dominance. It is able to achieve a global operational footprint with few assets and a minuscule employee base. Think Uber. Uber drivers are not considered to be employees in most places where the company runs its business. With a god’s eye view of the city and its roads, the customers and the driver, Uber takes over city transport, often without owning a single taxi. Passing off the liability to the driver, who must take a high-interest loan to acquire a vehicle to become Uber’s coveted “partner,” the corporation extracts from the driver more than just labor time.

In traditional labor-intensive manufacturing and services sectors, data capital is slowly but surely affecting far-reaching transformation. Projections show that automation based on artificial intelligence (AI) will eventually displace labor. It is estimated that over 40 percent of the global workforce will lose their jobs in AI-led disruption of manufacturing over the next 15–25 years. A limited number of high-paying jobs may open up for individuals with advanced skills in the development of data and AI technologies. But most of the labor force will end up in low-paid, personalized service work.

For countries in the Global South, the challenge will be especially pernicious. As rising wages erode the comparative advantage of labor in these economies, the shift to AI technology is likely to trigger a re-shoring trend whereby factories are relocated to richer countries that offer more sophisticated infrastructural support for deployment of AI systems. According to the World Bank, over two-thirds of the workforce in developing countries are likely to lose jobs. It is not clear how these changes will shift gender-based segmentation and gender hierarchies in labor markets. However, going by current trends, women seem to be the first to lose their jobs in this transition, with a reversal of both pay and status gains.

Planetary-scale time-space enclosure

Capturing previously non-commodified time and place has always been a central strategy of capitalist expansion. In the intelligence economy, we are witnessing a new phase of such “primitive accumulation” – through “data dispossession.” The expropriation of data from everyday social exchanges through the platform business model is comparable to the expropriation of natural resources for capitalist production in a previous age. The pervasive data extraction by platform companies has transformed data-mined social interaction into a factor of production, just as invaluable a resource as land for the creation of goods and services. The centralization of wealth and power today, derives from an unprecedented quality and scale of dispossession.

The dynamic of data dispossession is self-propelling. It is now well understood that platforms aggressively pursue a strategy of locking-in users, offering instant gratification in exchange for data and making it costly for them to leave a platform. The Chinese “super-platforms” WeChat and Meituan-Dianping combine news, entertainment, restaurant reviews, food delivery and ride-hailing, along with cross-cutting applications such as payment systems and digital wallets, demonstrating a “stickiness” that is almost addictive.

When participation in the platform on the platform owner’s terms becomes de facto the only choice for economic actors, data extractivism is normalized. Similar to the predatory practices of historical colonialism, the platform tactics of the intelligent corporation function as a neo-colonial project. The difference is that this time around, rather than European companies, the US and Chinese platform companies are in the driving seat.

A profoundly unsustainable exploitation of the natural world accompanies the rapid inroads of the intelligent corporation. Take the case of the vast ecological footprint of the online food-delivery sector. According to a 2018 study published in the science journal Resources, Conservation and Recycling, door-to-door fast-food delivery in China accounted for a nearly eightfold jump in packaging waste between 2015 and 2017, from 0.2 to 1.5 million tonnes. This has coincided with the exponential growth of the sector in the country, where the number of customers using food-delivery platforms has gone up from zero in 2009 to 406 million by the end of 2018! The intelligence economy is a veritable resource guzzler whose network data devices are expected to be consuming about one-fifth of global electricity by 2030 just to keep going.

The loss of self-determination for individuals and communities in these new intelligence-based modes of production reflects an asymmetry in power that was previously impossible. This is the route through which the brand-new corporation colonizes bodies and nature, takes control of production and social reproduction, and intensifies accumulation on a global scale.

The “deep corporate” and the death of the social contract

It is no secret that in the digital era, the deep state has had a makeover. Edward Snowden’s revelations and witness testimonies from China’s Uighur-dominated Xinjiang have exposed the dark workings of the contemporary military–industrial complex, the unholy nexus between Big Tech and the state. Trade justice activists have constantly pointed to the “hidden hand” of Silicon Valley and Chinese corporations using their governments to bat for their interests, reducing policy decisions to executive fiats for entrenching their power.

But what is only recently coming to light is the rise of the “deep corporate” — the extension of the Kraken-like tentacles of intelligent corporations into the heart of public life. The subsuming of social life by platform capitalism has distorted the political space thanks to the echo chambers of the automated public sphere. The contagion of mispropaganda and informational warfare in political campaigning has become impossible to contain in a public sphere determined by algorithmic filters. In this scenario, deliberative democracy itself is under the threat of extinction.

The social credit system being developed by China in partnership with eight tech companies takes the “corporatization” of governance to a whole new level. Access to benefits and citizens’ guaranteed rights are now predicated on behavioral scoring on the basis of online purchase history, financial transactions and social media connections on the partnering platforms. With the archetypal “good consumer” becoming the deserving citizen, citizenship is thus dislocated from political claims. The “deep corporate” acquires the formal authority to mediate the social contract.

Living with the intelligent corporation

We are living through a phase in capitalism that is marked by extreme market concentration, unprecedented inequality in wealth and the declining share of labor in global income; a state of affairs that has led even the IMF to express caution. It is no coincidence that this period of intensified economic injustice has coincided with the rise of platform capitalism and its real-world vehicle, the intelligent corporation.

What does living with the intelligent corporation mean?

What is new about this phase of capitalism that has spawned the intelligence economy is a deeply qualitative shift. Datafication and data capital transform the way capitalist “accumulation by dispossession” happens. “Intelligencification” makes plausible a planetary-scale colonization and commodification of everyday life by the new corporation in ways previously impossible. Both nature and caring bodies are trapped in a planetary enclosure insofar as everything and everybody can be turned into data.

It also feeds off and emboldens the financialization apparatus that runs the neoliberal economy. Through the perverse confluence of data and finance, the intelligent corporation universalizes and naturalizes its authority, destroying the marketplace of things and ideas.

Through data extractivism, the intelligent corporation ravages sociality, taking the ideological project of neoliberalism all the way to the expropriation of the political. This is a deep take-over, an “ontological encroachment” of human subjectivity.

Where does all this leave us?

As UNCTAD has highlighted, the pace of concentration of market power is extremely worrying. Consider this: Amazon’s profits-to-sales ratio increased from 10 percent in 2005 to 23 percent in 2015, while that of Alibaba increased in just four years from 10 percent in 2011 to 32 percent in 2015.

Policymakers across the world are struggling to reform their legacy laws to rein in the intelligent corporation. Even the domestic governments of powerful US and Chinese platform corporations are struggling to contain their excesses. The US Federal Trade Commission (FTC) is currently investigating Amazon and Facebook for abuse of market dominance while the US Justice Department is probing Google. The state of California is facing massive resistance from Uber and Lyft to its new regulation for labor rights of “gig” workers, with the two companies currently leading a $60 billion ballot initiative to extricate themselves from employer’s liability. In November 2019, the state administration for market regulation in China had to hold a meeting with Alibaba and other online retail platforms about their strong-arming of third-party vendors, in violation of existing regulations to curb anti-competitive conduct.

The loopholes of pre-digital taxation laws based on a physical presence in a given country have been effectively exploited by platform companies to escape tax liability, through profit shifting to low-tax jurisdictions. Similarly, when faced with liability for unfair market practices in overseas markets, it is very easy for platform companies to shift liability to their parent company outside the jurisdiction. For instance, Uber in South Africa resorted to the defense that its partner drivers were employees of the parent company headquartered in the Netherlands and not the South African subsidiary, in order to evade its liabilities under existing labor laws. The lack of binding international regulations governing cross-border data flows has also aided rampant data extractivism,

More recently, in the wake of malpractice lawsuits brought against Big Tech by their own employees; exposes about founding CEOs who have enjoyed a godly status; and public disenchantment with multiple revelations of clandestine data mining and algorithmic gaming, the early sheen seems to be wearing off. Google’s parent company Alphabet can no longer use its “Do the right thing” motto without irony. Facebook has been forced to switch to the “too big to fail” defense from the “protector and defender of the freedoms of the global community” line. Alibaba may not be able to proclaim its commitment to the development of small and medium enterprises in Africa for much longer. The façade has crumbled. And this rupture in the discursive hegemony of the intelligent corporation in which we are currently situated is the right moment to mount a collective challenge.

So, resist we must, so that the wealth of data and of networks can be appropriated and used to create a just and humane society. This means taking the intelligent corporation by the horns, and forging a movement that is able to grapple with the ethical–political boundaries of digital intelligence.

Taming the Leviathan and reclaiming the planet

Given the enormous economic and political clout of the modern corporation in the age of data, unshackling people and the planet from corporate power is an urgent task. Struggles against the extreme unfairness of the global trade and intellectual property regime by transnational social movements have shown the necessary connection between the agenda for development justice and the dismantling of corporate power.

Building alliances among movements has become a vital strategy in halting TNCs’ inexorable plunder. The trade justice movement against corporate globalization, the environment movement’s quest for sustainable development, feminist struggles to reclaim the body and the sphere of social reproduction from capital and workers’ struggle against the intensified squeeze on labor and the dismantling of social protection in neoliberal globalization are inspiring examples in this regard. Transnational civil society has painstakingly built alliances and solidarities across these movements to expose corporate excess, bringing pressure on the UN for a global binding treaty on TNCs’ human rights obligations in the face of near-insurmountable odds.

In the digital age, as corporate power assumes indomitable proportions — with tech CEOs carving out data dominions that they rule over — current frameworks of power analysis and action may not go very far. A concerted and coherent strategy is urgently needed in order to enable a more equitable distribution of the gains of data-based intelligence. The Digital Justice Manifesto released in November 2019 by the Just Net Coalition — through a process of strategic and sustained dialogue between digital rights, trade justice, feminist, environmental, labor and human rights groups and activists — outlines such a roadmap. As the Manifesto underlines, we need immediate action along three broad fronts to reclaim digital power from the intelligent corporation:

(a) Wrestling back ownership of our personal and collective data and intelligence by instituting an economic rights framework for data resources.

(b) Governing critical platform infrastructures as public utilities.

(c) Enforcing a local-to-global governance model for digital and data infrastructure that supports local economies and democratic self-determination of collectivities, preventing the enclosure of entire market and social ecosystems by a centralized intelligence. In other words, the governance of tech infrastructure must enable the flourishing of disparate local economies and make room for multiple platform models to function — co-operatives, social enterprises, public etc. — challenging the totalizing impetus of global intelligence capitalism.

Neoliberal globalization and financialization have led to profoundly unequal societies. The impunity of the TNC has been central to this dynamic. Social movements have placed several creative proposals to counter this: mandating charter renewal every five years overturning the principle of corporations’ perpetual legal existence; taxing stock trade on the basis of the holding period to contain excessive financial speculation; placing a cap on the individual assets of founders/CEOs and so on.

“Intelligencification” demands a new frontier for resistance. The power of the intelligent corporation must be contained through tactics small and big in political and cultural realms. A new wisdom about the governance of data must be explored for a truly emancipatory future for all.

Costs Are Spiraling Out of Control

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By Charles Hugh Smith

Source: Of Two Minds

And how do we pay for these spiraling out of control costs? By borrowing more, of course.

If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I’ve often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power.

But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.

The costs of education are spiraling out of control, stripping households of income as an entire generation is transformed into debt-serfs by student loan debt. The soaring costs of healthcare are a core driver of higher costs in the education complex (and government in general), and to cover these higher costs, counties raise property taxes, which add additional cost burdens to households and enterprises as rents rise.

Rising rents push the cost structure of almost every enterprise and agency higher.

Then there’s the asset inflation created by central bank ZIRP (zero interest rate policy) which has inflated a second echo-bubble in housing that has pushed home ownership out of reach of many, adding demand for rental housing that has pushed rents into the stratosphere in Left and Right Coast cities.

The increasing dominance of monopolies and cartels has eliminated competition in sector after sector. Monopolies and cartels skim immense profits even as the value, quality and quantity of their products and services decline: The U.S. Only Pretends to Have Free Markets From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Thanks to their political influence, monopolies and cartels have legalized looting, raising prices and evading anti-trust regulations because they can pay whatever it takes in our pay-to-play political system.

Let’s look at a few charts that illustrate the relentless rise in costs:

Do you reckon these two charts are connected–soaring costs and ballooning administrative payrolls?

Student loan debt is soaring above $1.5 trillion, guaranteeing profits to lenders and debt-serfdom to the students exiting with degrees that are in over-supply, i.e. possessing little scarcity value in an over-credentialed economy:

The echo housing bubbles in many locales exceed the nosebleed valuations of the previous bubble:

And how do we pay for these spiraling out of control costs? By borrowing more, of course:

Even at low rates of interest, the cost of servicing skyrocketing debt increases, leaving less net income to support additional borrowing.

What will it take to radically reduce the cost basis of our economy? A fundamental re-ordering that breaks up all the cartels and monopolies that push prices higher even as they deliver lower quality goods and services would be a good start.