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312 pages, Hardcover
First published September 27, 2022
If a corporation is a “person,” it’s an immortal colony organism that treats human beings as inconvenient gut flora.
It doesn’t have a personality and it doesn’t have ethics. Its sole imperative is to do whatever it can get away with to extract maximum economic value from humans and the planet.
—Ch 19
If you learned your economics from Heinlein novels or the University of Chicago, you probably think that “free market” describes an economic system that is free from government interference—where all consensual transactions between two or more parties are allowed.
But if you went to the source, Adam Smith’s Wealth of Nations, you’ll have found a very different definition of a free market: Smith’s concern wasn’t freedom from governments, it was freedom from rentiers. ...
A rentier is someone who derives their income from “economic rents”: revenues derived from merely owning something. With a factory, you have workers who contribute labor, you have investors who build and maintain the physical plant, and you have the landlord, who siphons off some of the revenues derived from this activity because of his title to the dirt underneath the factory.
Every dollar the landlord extracts is a dollar that can’t go to the workers as wages, or be rolled into the factory’s upkeep and improvement, or enrich the people who build and maintain the plant. ...
One of the most powerful ways to extract economic rents is to have a monopoly. A ferryman who charges high prices isn’t necessarily extracting rents because someone else can build a bridge or run a rival ferry service. But if the ferryman uses his profits to successfully lobby for a ban on bridges and competing ferry services, then he’s extracting rents, because the price his passengers pay is high merely because there’s no alternative.
Monopolies are self-reinforcing. Canny monopolists hold back some of these rents for special projects, like bribing politicians to secure favorable treatment, buying out competitors, or securing those competitors’ doom with predatory pricing and other dirty tricks. Thus, the ferryman might use his monopoly rents to poach all the rival’s key employees. Or he might lower ticket prices to below the cost of operating, subsidizing the fare out of his monopoly rent war chest until the competitor goes bust and sells out at pennies on the dollar, and then put the price back up.
The ferryman might also spend some of his excess profits on lobbying lawmakers to pass rules mandating a minimum number of boats be operating at any one time—making it hard for any new operator to start up. Where a person or corporation seeks to increase their profits through more favorable regulation, it’s called rent-seeking.
We saw how regulatory capture can harm creative producers in the context of radio: changes to ownership laws allowed Clear Channel to buy its way to a dominant position, use that position to crush rivals, and use some of the resulting profits to maintain its outrageous advantage in not having to pay recording artists or labels for their music.
A market is “free” if what’s for sale and how much it costs are set by the capabilities of producers and the desires of buyers. Every rent collected in the market whittles away that freedom, as choices about what to sell and what to buy disappear into the pockets of rentiers who own things instead of making things.
Apple, with its App Store, is a rentier.
—Ch 9 (emphasis mine)
For the past forty years, regulation has been in decline as a means of fixing problematic corporate behavior. Rather than seeing ourselves as citizens who deserve a say in how our society is structured, we’ve been urged to view ourselves as consumers, a kind of ambulatory wallet whose influence on society extends only to a series of buy/don’t buy decisions.
The story of the consumer rights movement isn’t just about neutralizing the power of the public—in its early days, when markets were more competitive, boycotts and bad press could successfully drive a company to change its ways. But the early promise of “consumer rights” became hollow once industries began to consolidate. Instead, consumerism became a way to shift the blame for harms caused by large, profiteering firms onto their customers: if you don’t like climate change, get rid of your car! (Which would be great, if the monopolized auto sector hadn’t used its excess profits to lobby against public transit.) If you’re worried about landfill, just switch to a brand that uses recyclable packaging (never mind that both brands are owned by one of three companies, which simply charges a premium for the “green” alternative while continuing to manufacture the high-waste version).
When the system is working—when firms are competing for both suppliers and customers—individual choices really can make a difference. But once the system is busted, your individual choices cease to matter to firms’ bottom lines.
—Ch 12 (emphasis mine)