The Flipped Economy, Pt 1.

A few days ago, on the phone with a friend, I found a sentence coming out of my mouth that I wasn't sure I agreed with.  I don't remember the exact words I used; it was something like "The chief shortage in today's economy is access to enterprise buyers," but here's what I meant:

We have enough stuff.  We have stuff coming out of our ears!  But this cheers no one; what we are actually concerned about is cash flows.

A basic economics class talks about capital investment in this way:  a company, to become more efficient, invests in equipment, or factories, or technology, and thus creates more goods, or the same goods at a cheaper price, etc.  This is what "economic progress" supposedly looks like.

Except..."stuff" isn't what people actually buy.  Most people's expenses go into rent, food, education, and health care.  To be sure, "stuff" is an input to the prices of those things, but...is it?  Really?  The real expense of rent isn't that it's hard to build buildings, but the usage rights of desirably situated land.  Food is dirt cheap.  Education is free over the internet and now serves mainly as positional credentialing system.  Healthcare is expensive not because it uses stuff, but because the insurance system has driven pricing out of whack, because we demand that our doctors go through an educational gauntlet, our drugs be extensively tested, and because it's labor-intensive.  Stuff doesn't really come into it.  It's telling that when someone stumbles into an emergency room but can't pay, we begrudge the doctors' and nurses' time, not the drugs.

The thing is:  if we model the economy as "how we organize to produce stuff," with efficiency and technology as our allies, then this is in theory a positive-sum game.  Everyone can play, everyone can win.

But I think reality has deviated from this model, toward another, darker one:  "The economy is how we referee Hobbesian power games."

53. The great secret that Cain discovered was the power to transmute another man's life into property

Wage labor, student loans, mortgages, intoxicants, pornography, video games - subtler & subtler means of extraction, but all echoes of this curse

— Bennett's Demilich (@jcbonthedl) August 12, 2019

Look at FAANG:

1. Facebook:  Ads.  In other words, facebook sells cash flows.  It "buys" ads (eyeballs) by selling people's own social network back to them.
2. Apple:  Apple actually does better than most here!  However, Apple products' dual use as conspicuous consumption is worrisome.
3. Amazon:  Amazon is mainly a wealth-extraction scheme built on monopoly of distribution.  What does it provide to sellers?  The promise of cash flows. AWS is useful, but only as much as the applications to which it's being put are.
4. Netflix:  Netflix serves no ads, but exactly how much entertainment can we use?  In the ideal future, how many hours/day are spent watching Netflix?
5. Google:  Ads.  Search is obviously useful, and Google offers some good utilities in the form of Maps, Gmail, etc---but it is, at the end of the day, an ad company.

In other words, 3/5 of these companies sell nothing---that is, they sell cash.  And what is cash?  What do people use it for?  For most people, it's food, and the ability to get other people to do things for you.  And cash, of course---what did you think all that education was for?

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I'll pick this up later---it gets more optimistic in a few posts, I promise!.  Readers may want to check out David Graeber's essay, "On the Phenomenon of Bullshit Jobs."