Thanks Matt for the best explanations I've read anywhere for what's going on and a framework for how to understand it. Your book is a must read for how we got here and exactly comports with my 67 years of watching this mess unfold.
I'm a retired physician in a medium sized rural red state town and, as happens, live in a neighborhood populated with well-off folks from a variety of careers. Tragically they all (ALL) view the world in terms of how great their wall street retirement funds are doing and can't see past it - and will only vote for more of it. Or it's their offspring benefitting from same. And me bringing this issue up just sets hair on fire.
I have no idea how, short of collapse, the country will find our way out of this when the top 10% refuse to change the system geared toward them and is more than enough to run the system more or less completely. Even more tragically they don't need the money but can't wean themselves from the greed.
And no, we don't participate in Wall Street and live just fine.
How do you have income while being retired without participating in Wall Street? I assume it's possible, but only in very unique circumstances. Genuinely asking.
Annuities, bonds, and rental properties can provide stable income. Though with interest rates the way they are annuities and bonds aren't that great anymore. Rental properties however are great, depending on location, and many owners hire a management firm so they don't have to do anything.
Well - I'm happy to answer. First we've always paid our bills so we own our home and have no debt - and it's been this way for us for a long time allowing substantial savings. Our vehicles extend back to 1999 and run fine. SS when you've been paying in at the top rate for a long time isn't bad - and we have two of them and is more than enough to cover what we purchase along with all taxes etc. Finally waiting until CD interest rates were over 3% and laddering savings in for up to 5 years adds to our final pot. Nothing unique or exotic - but it does require financial discipline and timing. It may be 'unique' in that I suspect most people don't do this.
It's true, annuities and bonds are by and large no longer practical, and benefit goes primarily to the large financial institutions that underwrite them. The CDC mandated rent freeze hasn't been terribly kind to residential property owners.
Not to worry, Rich, the collapse is all but locked in now.
With an overextended military empire, rising inflation, massive debt piled on massive debt from 14 years of Fed QE, a stock market in the stratosphere, and an upcoming debt ceiling, coupled with a needed continuing resolution to keep funding government, we may see it begin to happen before the end of September.
"I have no idea how, short of collapse, the country will find our way out of this when the top 10% refuse to change the system geared toward them and is more than enough to run the system more or less completely."
Laws putting worker representatives on boards of directors would help. Laws promoting employee stock ownership would help even more. And laws forbidding companies from creating second-class stock with lesser voting rights would help too.
Sorry, I can't help myself. Another very interesting example of monopolistic practices disrupting supply chains can be found in the ground handling industry at major airports.
Ground handling consists of two components: ramp handlers and CFS/GHA's. Ramp handlers execute the physical loading and offloading of cargo into and out of the planes. The Ground Handling Agents process the phase immediately prior to this, which is the receipt of cargo from semi trucks into a ramp-side warehouse, then screening and building the Unit Load Devices.
A single ramp handler, Shanghai International Airport Services, provides services for 17 international airlines at PVG. A single employee at SIAS tested positive for COVID-19 last month. The entire workforce, over 200 people, was subsequently forced into quarantine. With no other firms able to handle planeside cargo loading, 50-60% of available airfreight capacity into PVG was taken offline in a single week, as these airlines redirected planes into alternative ports.
Rates tripled in 2 days. The situation has normalized somewhat in recent days, but it was a massively significant disruption that profoundly impacted airfreight flows into and out of Shanghai for several weeks. It very simply went ignored in the mainstream press.
This sort of thing happens all the time, it's a different mini-crisis every quarter.
Why isn't more being made about the connection between the pandemic shortage of hospital beds and consolidation? Hospitals all over are issuing press releases about Covid-19 related ICU crunches...but when I dig in I keep seeing sentences like this: “The average pediatric I.C.U. in the U.S. has 12 beds...In a system that small, even a few patients can quickly overrun the capacity." I don't at all mean to minimize rise of Covid cases, but so much of the story right now is about hospitals running out of beds -- when it seems to me they were already operating at or close to capacity pre-Covid, thanks to consolidation and hedge fund acquisitions.
I agree with you 100 percent...surge capacity was reduced by hospital chain consolidation and hospital closings over the last decade--one result: Gov. DeSantis' Interferon treatments for COVID are being given in the local Greek Orthodox Church here in Clearwater because no room in local hospitals...
Beds isn't the limiting supply in medical care, it's the doctors and especially qualified nursing staff that is the bottleneck. You could expand that pediatric icu from 12 to 120 beds and it wouldn't make a difference for patients. Training a nurse takes 4+ years. Training a doctor takes 11+ years. And outside a couple specialties, they are all underpaid, yes, including the doctors.
You're correct about the reason being consolidation/hedge fund acquisitions - and for those rare systems like the one I practiced in 501c3 city/county owned it's just as bad trying to fend off competitors from being part of that system.
I'm sure you know Bob but others may not - an 'ICU bed' is a complex expensive thing requiring highly specialized physicians/nurses to maintain so systems find a 'low equilibrium' for them in non-COVID times - and they can't be ramped up quickly or at all in COVID times - it's exactly the supply chain problem Matt lays out.
Whether computer chips or box cars or ICU beds - it's all the same these days.
It's even worse. So-called progressives have now become like Right-wing bean counters in that they worry more about hospital over-crowding and doctor over-commitments tan in treating a surge of Covid patients by building more hospitals and hiring/training more doctors. The latter is the true progressive position - spend the money to get the stuff that people truly need, not cut the service to coerce people into getting vaccinated so they won't get sick in the first place. Of course people should follow the science and do the best thing for their health as well as society, but since when do we refuse care because people make bad health decisions? If we did that, we'd have to empty half the hospital beds, maybe more! I wrote about this some more here: https://www.opednews.com/articles/The-Incohenrence-of-the-Le-by-Scott-Baker-Covid-19_Left-Debates_Left-Versus-Right_Left-Wing-210912-626.html
It's worse than that--Obamacare actually drove experienced physicians to close their private practices and retire due to low reimbursement rates...I lost two of my doctors. My 91-year old mother in law is on a waiting list to see her new doctor until November, after her old one retired. Unbelievable that nobody makes an issue of this during a pandemic--less available experienced medical care than ever before. Telemedicine is just not the same thing as seeing a doctor in person.
JIT has substantially reduced costs of stuff though so it isn’t all bad - and in the old way the extra supplies weren’t necessarily in the right place.
Besides in a lean process you can still have emergency stocks to cover emergencies - most likely controlled by the government.
One that seems like a small thing except it effects millions of people is that canning jar lids are in scarce supply at retailers. You can buy them online lids only, however you can only buy them at retailers if they come with rings or with jars adding to the cost and the wasteful duplication of the lids and jars canners already have.
Kerr and Ball are the largest names. I am not sure what the corporate pedigrees are. I talked to our local retailers and they have had standing orders for kids only but the get a little here and a little there all the while you can order online.
Your articles are sooo good. They're well written (just like Goliath is...hint hint to other subscribers...) and expose a part of society I was as blind to as the economists you described.
Your substack is also dynamite b/c of the caliber of your readership- the comments here are thoughtful, and disagreements are civil rather than polemic.
This is very true. Here in New Zealand, most big organizations are monopolies, duopolies or oligarchies. This is why when there is lockdown, the supply chain disruption is particularly acute and while the profits go to a select group, the pressure to deliver also increases. These structures also reduce the ability of the government (assuming they can think about it or want to do it) to impose "smart" lockdowns. If often think about courier delivery during these times. If this sector was opened up to individual drivers (instead of 1-3 main corporate players) so many non-contact e-commerce activities could've been carried on in lockdown. Of course lockdows are neither the norm nor a particularly agile way to deal with issues but they do magnify counterfeit capitalism (love the term).
Uber and Lyft are bad examples of the forces at work. While taxis in D.C. might have been fine, that was not the case in many (most?) other cities. This was due to another monopoly - on medallions. This led to a massive shortage of taxis versus what was needed, an increase in prices, and terrible service. And then those monopolized medallions moved into the hands of monopoly owners. It was literally impossible to get a cab at rush hour in NY. When I needed to get to the airport for a flight, I had to pre-book a car service - you had no choice.
I observed the same thing. Small towns didn’t have taxi services at all, because no cab company had the interest in them. Only the technology developed by companies like Uber and Lift made it possible and viable to have taxi service anywhere. What we need is to regulate their service so everyone can benefit from it, not only Wall Street.
The same is true with village shops. When women didn’t work them only being open 9-5 and shutting on Wednesday afternoon was fine. Now everyone works (which is generally good) then those stores need to stay open longer and the chain stores are much better at organising shift work so the shops are open 7am-11pm or at least 8am-8pm.
To be sure, the monopolists are doing what they do best. But what of 'we the people,' the ones who happily grab those Ubers when the price is right, then bemoan what 'they' (Uber and the evil monopolists) did to those nice middle-class taxi cab jobs we too happily stopped supporting. Truth be told, we didn't notice - or care - until the lines for those Ubers got awfully long, just as we didn't notice or care when gobs of other middle-class jobs got wiped out by the monopolists until we couldn't find toilet paper or cat food.
I am a logistics professional. My specialty is international air cargo. I work for a very large ($20 billion+ market cap) freight forwarder with very advanced transportation software, so I have pretty decent visibility on the flow of freight across different trade lanes.
I really love this newsletter. If any readers are curious to learn more about the supply chain bottlenecks Mr. Stoller references, feel free to AMA. I see a lot of them first hand, across multiple commodities on multiple trade lanes. I'm pretty small fry personally, but maybe I can help elucidate even a little bit.
Incidentally, we use a sort of "Keurig shortage" in the freight forwarding game. The specific mechanism is a digital communication protocol called EDI - Electronic Data Interchange. It connects our Transportation Management Software directly to the ERP used by our clients. So the data generated by the shipments we handle is uploaded directly into the software our clients use to structure their supply chains and plan their order flow. Building an EDI connection is expensive and time consuming, so only the larger forwarders can invest in the required tech and personnel. Once the EDI connection has been established, our clients' supply chains planning (both upstream and downstream from the shipping phase) becomes dependent upon the data generated by this linkage, making it very difficult to switch to a different logistics provider.
At the risk of mentioning something you already know, the mechanism Stephen describes is known as either "customer lock-in" or "vendor lock-in" depending on perspective. Far from unusual, it is at the top of the playbook in all big software companies. Sometimes I've heard marketing people describe it as "customer loyalty taken to the next level." I mean, I guess..., like slaves are loyal to their masters.
Companies will go to the point of reinventing the wheel just to orchestrate lock-in (usually an inferior wheel in my experience). They also hope to reap the side PR benefit of the appearnce of "innovation."
The most prevalent shortage today globally, at least in the developed economies, is honesty and integrity of political and business leaders, manifesting in their symbiotic partnership/coalition to screw this constituents while blatantly violating their respective laws and constitutions! Let some self appointed a***hole fact check this!
Thanks for these details. The parallels between our economic system and the board game Monopoly are instructive. Indeed, the board game was modelled on our economic system.
Many have played the board game, but few have read all the rules. The winner is not properly identified until all the other players have mortgaged their properties and lost them to the winner. When the winner owns it all, the game is won.
Time to recognize the winers, pass out some prizes, pack up the Game and play something else. Clearly our times call for a balancing of human activity with the life-supporting systems of the Earth - Sustainability.
Agree completely with all you've said. But you've left out a critical piece of our specific current instance of the Monopoly game. In the *board game*, one person (or a few) doesn't get to sit next to the box of bills, and whenever in trouble, just reach in and grab a bunch of fresh $500s. But that's the version of Monopoly we've been playing in this country for at least the last 30 years. Maybe more like 40 years. (Actually, it is now world wide. But arguably, the rest of the world started playing this way more recently.)
If the game is played that way, guess what? I can tell you before you even start who is going to win. Even if the bills taken from the box are *eventually* paid back "with interest," the winner will be the guy with easy access to the money. Shoot, he'll just go back to the box for more when he needs to come up with interest payments. AND, this "free money" guy doesn't even need to be a smart player -- not even close.
In Matt's original WeWork article (which I have forwarded to countless people), I think he distilled the evils of *Counterfeit* Capitalism down to this: "[it] enables competition purely based on access to capital." That's why so many people who invested their lives in being competent at doing actually useful stuff are really frustrated with where we are now. (And it's also kind of the root cause of shortages.) This observation is super important when you mention the idea of "recognizing the winners." OK, they won at *something* all right. Is that "something" really anything that deserves to be rewarded?
Hasbro releases new "Cheaters Edition" of Monopoly
Great game design change! I wonder if Hasbro has considered it.
And yet, it's even weirder in our country somehow because the buying of politicians is mostly not done with straight out cash. In that Simon Johnson piece I posted, he says this:
"And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.... Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption - envelopes stuffed with $100 bills - is probably a sideshow today,... Instead, the American financial industry gained political power by amassing a kind of cultural capital - a belief system. ... [it] did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world."
That's why I feel like the best hope now for non-catastrophic reform lies in comment sections like this one -- or what they could potentially evolve into. Still a long shot, but I have some ideas.
Thanks Matt for the best explanations I've read anywhere for what's going on and a framework for how to understand it. Your book is a must read for how we got here and exactly comports with my 67 years of watching this mess unfold.
I'm a retired physician in a medium sized rural red state town and, as happens, live in a neighborhood populated with well-off folks from a variety of careers. Tragically they all (ALL) view the world in terms of how great their wall street retirement funds are doing and can't see past it - and will only vote for more of it. Or it's their offspring benefitting from same. And me bringing this issue up just sets hair on fire.
I have no idea how, short of collapse, the country will find our way out of this when the top 10% refuse to change the system geared toward them and is more than enough to run the system more or less completely. Even more tragically they don't need the money but can't wean themselves from the greed.
And no, we don't participate in Wall Street and live just fine.
How do you have income while being retired without participating in Wall Street? I assume it's possible, but only in very unique circumstances. Genuinely asking.
Annuities, bonds, and rental properties can provide stable income. Though with interest rates the way they are annuities and bonds aren't that great anymore. Rental properties however are great, depending on location, and many owners hire a management firm so they don't have to do anything.
There are a variety of income generating local investment ideas on this page (only some of the 24 ideas are income generating): https://www.resilience.org/resources/24-ways-to-invest-locally/
Well - I'm happy to answer. First we've always paid our bills so we own our home and have no debt - and it's been this way for us for a long time allowing substantial savings. Our vehicles extend back to 1999 and run fine. SS when you've been paying in at the top rate for a long time isn't bad - and we have two of them and is more than enough to cover what we purchase along with all taxes etc. Finally waiting until CD interest rates were over 3% and laddering savings in for up to 5 years adds to our final pot. Nothing unique or exotic - but it does require financial discipline and timing. It may be 'unique' in that I suspect most people don't do this.
It's true, annuities and bonds are by and large no longer practical, and benefit goes primarily to the large financial institutions that underwrite them. The CDC mandated rent freeze hasn't been terribly kind to residential property owners.
Not to worry, Rich, the collapse is all but locked in now.
With an overextended military empire, rising inflation, massive debt piled on massive debt from 14 years of Fed QE, a stock market in the stratosphere, and an upcoming debt ceiling, coupled with a needed continuing resolution to keep funding government, we may see it begin to happen before the end of September.
"I have no idea how, short of collapse, the country will find our way out of this when the top 10% refuse to change the system geared toward them and is more than enough to run the system more or less completely."
Laws putting worker representatives on boards of directors would help. Laws promoting employee stock ownership would help even more. And laws forbidding companies from creating second-class stock with lesser voting rights would help too.
Sorry, I can't help myself. Another very interesting example of monopolistic practices disrupting supply chains can be found in the ground handling industry at major airports.
Ground handling consists of two components: ramp handlers and CFS/GHA's. Ramp handlers execute the physical loading and offloading of cargo into and out of the planes. The Ground Handling Agents process the phase immediately prior to this, which is the receipt of cargo from semi trucks into a ramp-side warehouse, then screening and building the Unit Load Devices.
A single ramp handler, Shanghai International Airport Services, provides services for 17 international airlines at PVG. A single employee at SIAS tested positive for COVID-19 last month. The entire workforce, over 200 people, was subsequently forced into quarantine. With no other firms able to handle planeside cargo loading, 50-60% of available airfreight capacity into PVG was taken offline in a single week, as these airlines redirected planes into alternative ports.
Rates tripled in 2 days. The situation has normalized somewhat in recent days, but it was a massively significant disruption that profoundly impacted airfreight flows into and out of Shanghai for several weeks. It very simply went ignored in the mainstream press.
This sort of thing happens all the time, it's a different mini-crisis every quarter.
Is there a link to that story @stephen?
Sure, try this Loadstar article:
https://theloadstar.com/cargo-logjam-building-after-covid-disrupts-handling-at-shanghai-pudong-airport/
They've provided good coverage on the situation. A lot of my info comes from talking to airline reps and such folks.
Thx
Why isn't more being made about the connection between the pandemic shortage of hospital beds and consolidation? Hospitals all over are issuing press releases about Covid-19 related ICU crunches...but when I dig in I keep seeing sentences like this: “The average pediatric I.C.U. in the U.S. has 12 beds...In a system that small, even a few patients can quickly overrun the capacity." I don't at all mean to minimize rise of Covid cases, but so much of the story right now is about hospitals running out of beds -- when it seems to me they were already operating at or close to capacity pre-Covid, thanks to consolidation and hedge fund acquisitions.
I agree with you 100 percent...surge capacity was reduced by hospital chain consolidation and hospital closings over the last decade--one result: Gov. DeSantis' Interferon treatments for COVID are being given in the local Greek Orthodox Church here in Clearwater because no room in local hospitals...
Beds isn't the limiting supply in medical care, it's the doctors and especially qualified nursing staff that is the bottleneck. You could expand that pediatric icu from 12 to 120 beds and it wouldn't make a difference for patients. Training a nurse takes 4+ years. Training a doctor takes 11+ years. And outside a couple specialties, they are all underpaid, yes, including the doctors.
You're correct about the reason being consolidation/hedge fund acquisitions - and for those rare systems like the one I practiced in 501c3 city/county owned it's just as bad trying to fend off competitors from being part of that system.
I'm sure you know Bob but others may not - an 'ICU bed' is a complex expensive thing requiring highly specialized physicians/nurses to maintain so systems find a 'low equilibrium' for them in non-COVID times - and they can't be ramped up quickly or at all in COVID times - it's exactly the supply chain problem Matt lays out.
Whether computer chips or box cars or ICU beds - it's all the same these days.
It's even worse. So-called progressives have now become like Right-wing bean counters in that they worry more about hospital over-crowding and doctor over-commitments tan in treating a surge of Covid patients by building more hospitals and hiring/training more doctors. The latter is the true progressive position - spend the money to get the stuff that people truly need, not cut the service to coerce people into getting vaccinated so they won't get sick in the first place. Of course people should follow the science and do the best thing for their health as well as society, but since when do we refuse care because people make bad health decisions? If we did that, we'd have to empty half the hospital beds, maybe more! I wrote about this some more here: https://www.opednews.com/articles/The-Incohenrence-of-the-Le-by-Scott-Baker-Covid-19_Left-Debates_Left-Versus-Right_Left-Wing-210912-626.html
It's worse than that--Obamacare actually drove experienced physicians to close their private practices and retire due to low reimbursement rates...I lost two of my doctors. My 91-year old mother in law is on a waiting list to see her new doctor until November, after her old one retired. Unbelievable that nobody makes an issue of this during a pandemic--less available experienced medical care than ever before. Telemedicine is just not the same thing as seeing a doctor in person.
JIT has substantially reduced costs of stuff though so it isn’t all bad - and in the old way the extra supplies weren’t necessarily in the right place.
Besides in a lean process you can still have emergency stocks to cover emergencies - most likely controlled by the government.
Except apparently they don't have sufficient emergency stocks.
I don’t disagree!
Ironically, I believe that requirement was lifted in April and it's now 0%
One that seems like a small thing except it effects millions of people is that canning jar lids are in scarce supply at retailers. You can buy them online lids only, however you can only buy them at retailers if they come with rings or with jars adding to the cost and the wasteful duplication of the lids and jars canners already have.
I keep hearing about this. Do you know who makes canning jar lids?
Kerr and Ball are the largest names. I am not sure what the corporate pedigrees are. I talked to our local retailers and they have had standing orders for kids only but the get a little here and a little there all the while you can order online.
Your articles are sooo good. They're well written (just like Goliath is...hint hint to other subscribers...) and expose a part of society I was as blind to as the economists you described.
Your substack is also dynamite b/c of the caliber of your readership- the comments here are thoughtful, and disagreements are civil rather than polemic.
This is very true. Here in New Zealand, most big organizations are monopolies, duopolies or oligarchies. This is why when there is lockdown, the supply chain disruption is particularly acute and while the profits go to a select group, the pressure to deliver also increases. These structures also reduce the ability of the government (assuming they can think about it or want to do it) to impose "smart" lockdowns. If often think about courier delivery during these times. If this sector was opened up to individual drivers (instead of 1-3 main corporate players) so many non-contact e-commerce activities could've been carried on in lockdown. Of course lockdows are neither the norm nor a particularly agile way to deal with issues but they do magnify counterfeit capitalism (love the term).
This is an awesome article
New bicycles are on back order 7 to 9 mths here in Michigan, suburbs of Detroit. Merchants can’t explain why.
Same here in New Hampshire.
Great read, Matt. Knowledge is power right?!!……right?
Yes! Uh. Yeah?
You can't reply Matt?
It doesn't say much about your ability to mount a cogent argument, but that's understandable...
Yes, we all know, Austrian economics is a complete failure, even in theory, let alone in practice, which has never happened, and never will happen.
You "Libertarian" sophists are just too laughable for words.
Matt... can I ask, are you a rusted-on supporter of "Austrian" economics?
Seriously though, we’ve got to get this shitshow under control and then reversed.
Uber and Lyft are bad examples of the forces at work. While taxis in D.C. might have been fine, that was not the case in many (most?) other cities. This was due to another monopoly - on medallions. This led to a massive shortage of taxis versus what was needed, an increase in prices, and terrible service. And then those monopolized medallions moved into the hands of monopoly owners. It was literally impossible to get a cab at rush hour in NY. When I needed to get to the airport for a flight, I had to pre-book a car service - you had no choice.
I observed the same thing. Small towns didn’t have taxi services at all, because no cab company had the interest in them. Only the technology developed by companies like Uber and Lift made it possible and viable to have taxi service anywhere. What we need is to regulate their service so everyone can benefit from it, not only Wall Street.
The same is true with village shops. When women didn’t work them only being open 9-5 and shutting on Wednesday afternoon was fine. Now everyone works (which is generally good) then those stores need to stay open longer and the chain stores are much better at organising shift work so the shops are open 7am-11pm or at least 8am-8pm.
To be sure, the monopolists are doing what they do best. But what of 'we the people,' the ones who happily grab those Ubers when the price is right, then bemoan what 'they' (Uber and the evil monopolists) did to those nice middle-class taxi cab jobs we too happily stopped supporting. Truth be told, we didn't notice - or care - until the lines for those Ubers got awfully long, just as we didn't notice or care when gobs of other middle-class jobs got wiped out by the monopolists until we couldn't find toilet paper or cat food.
Great article. Was expecting an image of an almost empty set of shelves save some cheerios.
You know I may just have to read this Goliath book of yours at some point. I'll try not to get Gladwell's book by accident. :)
Reading books is for chumps.
BWHAHAHAHA. I had to read the notification 2x before realizing YOU posted it.
It's a deep dive. Matt's incredibly thorough. He's also a good writer, so he keeps it interesting and human.
I am a logistics professional. My specialty is international air cargo. I work for a very large ($20 billion+ market cap) freight forwarder with very advanced transportation software, so I have pretty decent visibility on the flow of freight across different trade lanes.
I really love this newsletter. If any readers are curious to learn more about the supply chain bottlenecks Mr. Stoller references, feel free to AMA. I see a lot of them first hand, across multiple commodities on multiple trade lanes. I'm pretty small fry personally, but maybe I can help elucidate even a little bit.
Incidentally, we use a sort of "Keurig shortage" in the freight forwarding game. The specific mechanism is a digital communication protocol called EDI - Electronic Data Interchange. It connects our Transportation Management Software directly to the ERP used by our clients. So the data generated by the shipments we handle is uploaded directly into the software our clients use to structure their supply chains and plan their order flow. Building an EDI connection is expensive and time consuming, so only the larger forwarders can invest in the required tech and personnel. Once the EDI connection has been established, our clients' supply chains planning (both upstream and downstream from the shipping phase) becomes dependent upon the data generated by this linkage, making it very difficult to switch to a different logistics provider.
Thanks, this is fascinating. Can you send me an email? mstoller at economicliberties.us?
At the risk of mentioning something you already know, the mechanism Stephen describes is known as either "customer lock-in" or "vendor lock-in" depending on perspective. Far from unusual, it is at the top of the playbook in all big software companies. Sometimes I've heard marketing people describe it as "customer loyalty taken to the next level." I mean, I guess..., like slaves are loyal to their masters.
Companies will go to the point of reinventing the wheel just to orchestrate lock-in (usually an inferior wheel in my experience). They also hope to reap the side PR benefit of the appearnce of "innovation."
A PhD course in the structures of 21st century capitalism.
Including the observation about the 'smartest guys in the room'
"They too stuff just kind of shows up in stores...reflects the intellectual habits borne from not having to think about the flow of stuff."
Thank you!
The most prevalent shortage today globally, at least in the developed economies, is honesty and integrity of political and business leaders, manifesting in their symbiotic partnership/coalition to screw this constituents while blatantly violating their respective laws and constitutions! Let some self appointed a***hole fact check this!
Thanks for these details. The parallels between our economic system and the board game Monopoly are instructive. Indeed, the board game was modelled on our economic system.
Many have played the board game, but few have read all the rules. The winner is not properly identified until all the other players have mortgaged their properties and lost them to the winner. When the winner owns it all, the game is won.
We are in the mopping up stag of the Global Monopoly Game: www.sustainwellbeing.net
Time to recognize the winers, pass out some prizes, pack up the Game and play something else. Clearly our times call for a balancing of human activity with the life-supporting systems of the Earth - Sustainability.
Agree completely with all you've said. But you've left out a critical piece of our specific current instance of the Monopoly game. In the *board game*, one person (or a few) doesn't get to sit next to the box of bills, and whenever in trouble, just reach in and grab a bunch of fresh $500s. But that's the version of Monopoly we've been playing in this country for at least the last 30 years. Maybe more like 40 years. (Actually, it is now world wide. But arguably, the rest of the world started playing this way more recently.)
If the game is played that way, guess what? I can tell you before you even start who is going to win. Even if the bills taken from the box are *eventually* paid back "with interest," the winner will be the guy with easy access to the money. Shoot, he'll just go back to the box for more when he needs to come up with interest payments. AND, this "free money" guy doesn't even need to be a smart player -- not even close.
In Matt's original WeWork article (which I have forwarded to countless people), I think he distilled the evils of *Counterfeit* Capitalism down to this: "[it] enables competition purely based on access to capital." That's why so many people who invested their lives in being competent at doing actually useful stuff are really frustrated with where we are now. (And it's also kind of the root cause of shortages.) This observation is super important when you mention the idea of "recognizing the winners." OK, they won at *something* all right. Is that "something" really anything that deserves to be rewarded?
Hasbro releases new "Cheaters Edition" of Monopoly
https://civicskunk.works/monopoly-now-wants-you-to-cheat-just-like-real-capitalists-3a12909cac88
Makers and Takers: The Rise of Finance and the Fall of American Business
https://evonomics.com/the-rise-of-finance-and-the-fall-of-american-business/
Great game design change! I wonder if Hasbro has considered it.
And yet, it's even weirder in our country somehow because the buying of politicians is mostly not done with straight out cash. In that Simon Johnson piece I posted, he says this:
"And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.... Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption - envelopes stuffed with $100 bills - is probably a sideshow today,... Instead, the American financial industry gained political power by amassing a kind of cultural capital - a belief system. ... [it] did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world."
That's why I feel like the best hope now for non-catastrophic reform lies in comment sections like this one -- or what they could potentially evolve into. Still a long shot, but I have some ideas.