A Wave of Fear in American Commerce
mattstoller.substack.com
mattstoller.substack.com
When they sell the mortgage they collect the commission but life of mortgage is 30 years.
Nasim Taleb has a great book about this called skin in the game
Executives and senior domain experts make a lot of stupid decisions borne out of overconfidence and attempts to do flashy things for bonuses or promotions.
It’s extremely tenuous and would require huge evidence to argue this sort of thing is malicious or criminally negligent, as opposed to just someone sincerely doing their job in a way that leads to a mistake or is punished by market trends or competitor advancements or whatever.
If you wanted every such type of mistake to be susceptible to crimimal or civil litigation, boy, you’d be legislating morality for one (deciding exactly when someone can value money or believe a certain risk is worthwhile), and have almost no way to enforce it (how can you prove a sincere mistake I “learned from” vs negligence I never cared about, without something like smoking gun email admissions or something?), and further no competent people will agree to do these jobs if they feel they cannot have a perfectly healthy and normal process of making mistakes without great risk someone will try to turn it into a lawsuit or criminal charges?
You might say these are all matters of degree, and you just use targeted legislation to make it punishable according to specific guidelines, but it’s just a giant slippery slope, and very susceptible to political subversion for people who have the same malicious intent only operating on the regulatory or legislative side rather than in private firms.
It’s a huge moral hazard problem, but one that can really only be solved by rare, upstanding management, and hardly ever by litigation.
I guess that's the problem, but at least for people who are competent today, they got there by failing and learning.
> If you wanted every such type of mistake to be susceptible to crimimal or civil litigation
No I don't, that's bad for all the reasons you said.
Rather I'm all for letting people deal with the consequences of their decisions so that they learn over time. That's a structural change. Some examples:
* Engineers who write the code should also test/debug it
* UX designers should regularly see new users trying their products
I haven't thought too much of the case for CEOs but I imagine it's similar. At least in the startup world CEOs with a failed company under their belt are more valued than those with no experience.
The overall problems of the program - a massively overweight orbiter, compromises on spec, the failures of the ceramic tiles... these are examples of mistakes to learn from.
Launching challenger outside of the design envelope? In a deep sense the lesson was: use the knowledge of engineers, hard won over 300 years and behave professionally. 7 people did not have to die for us to know this - we KNEW THIS ALREADY.
Learning from blowing up a large company by overloading its balence sheet is equivalent to learning that sticking a fork in your eye is likely to hurt. The fact that the "learners" end up with £5m or more stuck in their bank accounts indicates that there is little or no incompetence, and frankly a gallon of bad.
I'm not sure it's possible to tell on a case by case basis. Certainly the incentives are not aligned, but I myself don't see the point of blaming individual actors for taking advantage when the system itself is broken.
The better solution would be to align incentives (by legislation if the market won't) and you'll magically see people acting "morally" out of self interest.
I think the author is pretty spot-on in the implicit conclusion that this is the natural result of increasingly centralized businesses running pseudo-monopolies in key industries.
I feel like this is usually discussed on the micro-level (e.g. an employee's fear of whistleblowing on her boss), but not so much on the macro-level.
Preferential attachment begets winner takes all.
Internet begets fewer, larger markets, meaning fewer, larger players.
Engagement driven revenue begets outrageous content.
I don't have a problem with these three natural phenomenon. It's just two maths and one psychology.
The two differences today are a) scale and b) the combination is far more potent. As Stalin praised, quantity has its own quality.
My issue is the willful ignorance (Freedom Markets™ ideology) thwarting any kind of reasonable counterbalance.
I'd like the world of commerce to be more NFL and less MLB.
He seems to be applying the concept of fear in an inconsistent manner that ends up just reducing down to “things are happening I don't like" and then noting that people experienced the normal human emotion of fear relating to that list.
Like is manufacturers being worried about about being undercut by a competitor for a big contract a wave of terror? As unpleasant as I could imagine that is for the small supplier, that's a pretty healthy way for that transaction to work.
It just seems like fear is another way of saying, not everyone gets what they want and this article is simply a list of things this guy doesn't like. It's not even a bad list it just doesn't really say much of anything.
"I am not going to let you sell your widget through Tamazon" is unfortunate and potentially crippling for the supplier, but as you've pointed out that's business.
"I am not going to let you sell your widget through Tamazon... in the event you make disparaging remarks about Tamazon in any public forum or divulge any information about our agreements" is very different.
In the later case, the last mile is threatening to retaliate in the event the supplier does anything they don't like.
Which, as a supplier, you rightly wonder "What can I do to avoid getting on Tamazon's naughty list?" To which Tamazon replies with a wink and a smile, "Just be careful what you say and to who, and I'm sure it won't come to that."
Absent legal protections and methods of redress, this dynamic is likely to exist in any market where the aggregator captures a sizable customer share. The size disparity is simply too great.
But then the union bit and the anecdote about bidding the contract just seemed totally off topic except for the fact that someone felt scared at some point.
I honestly don't hate the article but it ended up feeling like he was fishing for some story where someone was scared.
That said, brave suppliers are capable of shifting the balance of power. Think about it, if "Tamazon" drops an efficient supplier for one of their competitors, Tamazon is going to expose themselves to a competitor who picks up that supplier - likely a competitor who's trying to break Tamazon's monopoly.
Then, suddenly, Tamazon's competitor is offering the consumer a superior purchase option.
If I was the supplier, I wouldn't get afraid, I'd get even. I'd go to every Tamazon competitor I could find and convince them to offer my product at wholesale and then give a scathing testimony to the anti-trust regulator.
He is dishonest because his very nature is selling favors. Remember, we are not talking about an entrepreneur or engineer who create things that are exchanged for value. This is a guy that everyday when he was in office, his sole objective was literally to pick winners and losers. They dont create value. They literally destroy it AND get a cut of the action in the process.
Every single problem he comments on (central bank, monopolies etc) are a direct result of legislation that he (or someone like him) helped draft.
Only a bureaucrat can complain in the same article about Unions losing power and american enterprise being fearful of outsourcing. They simply cannot connect the dots.
So if the article seems disonest is because it is. You cant say something is bad when you have no skin in the game (alt currency vs hyperinflation) and you also enabled its creation (amazon via USPS, tax breaks, etc).
90% of reality has been filtered out and you're being fed a constant stream of "poor white man persecuted for wrongthink" stories to keep you clicking.
Without wading into the weeds, one casualty of these American political times is the loss of intellectual conservatism as a tenable public position.
We are all made greater having our convinctions tested with honest debate, and lesser for the lack of it.
The end result is a polarized society driven by a stagnant discourse of self-indulgent moral platitudes.
Edit: meanwhile in Oregon the conservatives have fled to break a quorum rule and are issuing press releases with armed anti-government groups. As the Maoists discovered, who needs intellectuals when you have guns and slogans?
Maximizing personal economic freedom and unrestricted international trade, for two.
So I would say there are certainly platform points that are more alternatives than forward vs backwards. Or were.
Fox has consolidated the right-leaning audience. Anyone who complains about them should always follow the complaint asking why there aren't more conservative news networks to keep them honest.
As another commenter pointed out, the only thing that can be tought of as "left-wing" with them is that they are to the left of Fox News.
To go back to basics, left means distributing profits more equally, having built-in methods of solidarity, and giving power to the people (all of them).
In USA. But nowadays is more complicated than this. There is also CCTV and Al Jazeera for example that have a mix of USA and non-USA watchers largely exceding the number of USA population.
In your world george bush jr. is a socialist lefty.
Always cumbersome when our frameworks of language and thought break down, and stop fitting observable reality.
Why would they be worried about being labeled a racist, unless of course they are saying racist things.
Am I missing something here?
We live in a time where slander carries virtually no penalty and big corporations are terrified of being seen as anti-PC.
The mainstream media and internet outrage mobs can very easily ruin anyones day. It doesn't matter if they are right or not. Sometimes the "news" are entirely fabricated.
Unfortunately we don't have ways of reasonable exchange of opinions in our populism times.
What makes someone upset is not the same what is unjust.
I even made a throwaway because I am scared of being viewed as a racist in my workplace.
Author has not lived into high inflation market or lack awareness of people who suffer under these everyday. If Libra can free a multitude from this menace, we should support it indeed.
In the future we will have strong criticisms of the US Dollar. It historically has not been stable over long periods of time. However, the US government has nearly forced every country to doing business in USD.
This is great for ease of business, but given how low interest rates are, I expect a historic inflation of USD in my lifetime.
Given its impossible to hire someone at Minimum Wage(2019), I believe we have inflation that is not being recorded with the US federal reserve. 2%/yr seems... fake.
"I’ve heard from venture capitalists frightened to talk for fear they can’t sell portfolio companies to big tech"
So you want to profit from selling out to big tech, but you're afraid of them because they've become so big and powerful - in part by buying other companies...
- IPO : good luck
- Sale on revenue and clients : boring, competitive and comparably low return for founders. Invest 10-15 years at comparatively low compensation with high risk of total failure , and huge opportunity cost.
- Sale on IP and team : quick, high return.
Founders often build category 2 opportunites without knowing, and are removed after a short time, with no compensation and several years of their lives missing!
"...could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls."
Read 'emerging' as 'failed centrally planned economy'. The self-described anti-monopolist is defending an failed state monopoly.
"After many mistakes, we have learnt that we want a central bank to act to increase or decrease the monetary supply in moments of contraction or expansion."
Yet he is railing against monopolies fueled by artificially cheap credit and stock buy backs.
> The sponsors are right that a liquid, stable currency would be attractive to many in emerging markets. So attractive, in fact, that if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls.
Easy to counter. The government can declare that Libra is illegal and stop its banks from converting Libra into Fiat. Sure you could probably get around it by a P2P marketplace.
Countries that have done this are: China, Russia, Vietnam and others [0].
> Unless regulators jump in quickly, these for-profit companies will set the standards for identity verification, at least in the short run, as well as defining the rules and enforcement around the privacy of transactions and what to do in case of theft.”
No there are already defined and in place rules for banks to adhere too. Companies cannot just set these standards. They'll be fined until they are told by the regulators to close shop.
> “That’s sort of the most dangerous consequence of this kind of concentration is the ability to exclude rivals, put them out of business, diminish innovation, diminish entrepreneurship, diminish choices for consumers,” he said.
This is one thing that regulators will look at with regards to Libra. There's just one wallet. Who are the competitors. In the case of banking there are many competitors. If Chase closes your account, you can move over to TD Bank. But if say Stripe closes your account because they take umbrage with you, does your wallet also get closed down? What happens also with your Libra coins? These questions must be answered in precise detail for consumer protections and this right there, consumer protections determines the progress of Libra.
I do think Libra is a good idea. But a few things must be brought up to the fore.
- FB must open source their tech. Have other companies [or even groups of people once they are certified] run other groups of nodes. If these conglomerates of Stripe, Paypal, etc which have a history of banning people just because. Have the built-in ability that someone can move over to another provider.
- Have FB ensure that standards are met in terms of banking regulations and fine heavily if they don't. Make them feel the pain. Have some teeth when fining them.
[0]: https://www.investopedia.com/articles/forex/041515/countries...
Because of this, the judicial system is being stacked with ultraconservatives with lifetime appointments. They’re mostly filling seats that opened under the Obama administration.
“Majority rules” is becoming a bad joke in the US. Even after demographics shift enough to vote the republicans out, the senate and executive branch will still be blocked by the judiciary. There are ways to fix the supreme court, but that won’t change the fact that the lower federal courts are politically driven kangaroo courts.
Tl;dr: minority radicals intentionally broke the federal government, and it will take at least 30 years to fix (short of rewriting the constitution).
They both killed more than an order of magnitude more people than the Tiananmen Square (and related) massacres.
One actually had a standing army for this purpose. The other is hiring.
The thing about governments is that they have basically zero accountability to anyone except a better-armed government. We talk a good game here in the US, but it's certainly playing out differently.