Archive for the ‘capitalism’ Category

The Internet and all the hardware and servers on the Internet as well as the computer you’re using to read this were created by hundreds of thousands of ordinary middle class engineers and programmers and installers and technicians who wrote the code, designed the computers and routers, and built and installed the hardware all the way out to where you’re typing this. Yet virtually none of these people own any of their work. It almost all belongs to the super-wealthy, because of the divine rights of kings. Or something.

Generations from now, people will look back upon our current gilded age with the same revulsion that people today have when they look back upon the days when kings could behead people just on whim and lived lives of luxury while their people starved in rags.

— Badtux the Democratic Socialist Penguin

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A science fiction writer of my acquaintance claimed that he was an anarcho-capitalist. I pointed out that he was ignoring the central problem of anarchy theory. And that central problem of anarchy theory is the problem of power.

“Pure” anarchism wants to remove anything in society that could be possibly a source of power. Unfortunately people have inherent power due to their physical abilities, and thus inherent differences in power, a large man skilled in fighting has much more power than a small woman not skilled at fighting. Add in weapons and weapons skills and character traits like sociopathy and ruthlessness (a ruthless sociopath will always win a gunfight, because he’ll just shoot you in the back without a thought before you even know you’re in a gunfight), and clearly there must be power structures to regulate all of this, otherwise you have the most ruthless and vicious sociopaths ruling everything at gunpoint. Anarchists do a lot of hand-waving about voluntary self defense associations yada yada, but that’s not what has ever happened. Instead you get warlordism, rule by the most ruthless and vicious sociopaths ruling everything at gunpoint, because the ruthless sociopaths are the ones willing to shoot their way through innocents to get to the top.

Now, add in capitalism, which is yet another source of power — power grows from the barrel of a gun, as Mao put it, and capital buys lots of guns — and the need for power structures to regulate everything becomes even more dire. Now, what is that power structure going to look like? The only way to do it without rule of gun (which leads to atrocity since only the most ruthless and vicious win that leadership contest) is to get buy-in from the majority of the people, i.e., democracy. At which point you no longer have anarchism, since people then vote for things that will make more comfortable for themselves and their neighbors and relatives — as they should, since that’s sort of the whole point of a society.

All of which is just a long way of saying that pure anarcho-capitalism cannot work as a system because it would end up with warlordism, like in Somalia or Afghanistan. And since warlords get their power by being vicious sociopaths, it’s generally not a happy fun time for the population involved. Capitalism is good because it is the best way we have of creating wealth, and wealth is good for people and for a society (both Dan and I know the former from personal experience), but it is also a source of power, and like all sources of power has to be regulated. At that point the anarcho is gone, and what you have is just capitalism.

– Badtux the Capitalist Penguin

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By which I mean, Karl Marx.

May 5th was the 200th anniversary of the birth of Karl Marx.

Hard-core Marxists are fond of saying “true Marxism has never been tried.” Well, there’s a reason for that. It’s because true Marxism is unworkable. That was the biggest reason why Communism arose — as it became clear that real people just don’t behave in ways that make Marxism workable, the creators of the Communist Revolution in Russia decided that what was needed was a dictatorship of the proletariat to train the people, over the generations, to behave in the ways needed for Marxism to work. In the end that dictatorship became a self-propagating mechanism that completely forgot about why it was created in the first place. After all, what dictator really wants to relinquish power?

Still, none of that changes the fact that Karl Marx correctly diagnosed the problems of the capitalist system of his era, a capitalist system that monopolized the output of workers at gunpoint into the hands of leeches who would be bankrupt if not for the output they stole from workers at gunpoint, a capitalist system that viewed workers as disposable, safety nets as dangerous weakness, and old people should just die, already, as useless eaters. His policy prescriptions for dealing with those problems were unworkable and eventually distorted into something horrific (the Communist system that killed tens of millions of people worldwide, maybe even hundreds of millions, over the roughly hundred years that it was extant), but his observations were correct — and are becoming true again. Alas.

– Badtux the History Penguin

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Those things have to arise elsewhere, because they are not natural attributes of capitalism or markets. As the following example makes clear.

So, you’re a retailer. A hurricane has hit your city and the city water plant was wiped out. The water won’t be back on for weeks at the earliest.

You have four cases of water in your store. Four people come into your store:

Person A: A wealthy banker with $250,000 in the bank and $500 cash in hand who wants to buy all four cases of water at $80 apiece.
Persons B,C,D: Three single mothers with two kids making $400/month at a minimum wage job while living in subsidized housing. Most of her money goes to food, utilities, or the car that is all that allows her to get to her job, and she has a total of $20 cash left over from paying that month’s bills. She wants to buy a case of water at the normal $4.95 price in order to keep her family alive until FEMA water deliveries start.

What do you do?

If you’re a follower of Ayn Rand, a worshipper of capitalism, you say “Sell the water to the wealthy banker.” It’s what gets you the most money. Which is the whole point of capitalism, right?

If you’re a worshipper of the Free Market Fairy, you’ll say “well, I’m sure those mothers will find some resources *somewhere* to buy water if they really need it,” and shrug your shoulders. If they don’t find water elsewhere, or can’t raise the money in any way, well, they must not have tried hard enough, right?

If you’re a typical economist, you say “well, there’s not enough water to fulfill demand, so high prices ration it amongst the multiple parties.” Ignoring the fact that the rich person can buy more water than he needs because he has money coming out of his ears, while the single mothers even combining all their resources can’t even afford $80 for the single case of water that one of their families needs to stay alive. But dead single mothers aren’t a concern of economists, they’re all about abstractions. Ignoring the fact that their rationing abstraction ends up with 75% more people dead than if the rationing was done according to need rather than according to wealth.

If you’re a Republican sociopathic lizard person (but I repeat myself), you say “those poor people don’t contribute anything to the economy, while the rich man does, so I’ll sell it to the rich man because he’s the only one who deserves to live.” Ignoring the fact that the average rich person would starve to death if it wasn’t for all those poors stocking shelves and cashing out people at supermarkets, and waiting tables and cooking the food at restaurants.

If you’re a moral person, you ration the water — you give each person who comes through a fixed amount that they need to get through the next couple of days, and that’s that. So you sell one case of water to each single mother at the regular price, and one case of water to the rich banker at the regular price, and four people survive to live to see FEMA come in, rather just one. Four people surviving is more moral than only one person surviving, right?

But there seems to be fewer and fewer moral people each year. Perhaps what we need to be selling are moral compasses. Sadly, the vast majority of them seem to be defective right out of the box. Maybe because we outsourced production to China. In the absence of a moral compass, we rely on government to impose morality on the market via, e.g., anti-profiteering laws. When government doesn’t do that… we get dead bodies.

And nobody seems to care.

– Badtux the Morality Penguin

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This could well be the motto of Google. Eight years ago, Google Voice was introduced. For eight years, people have been asking for a “mark all as read” option for their Google Voice inbox. For eight years, Google just replies with stone silence. Because they’re Google. They don’t care, they don’t have to. When you have 85% market share in the search engine and related market, well.

I’ve been playing with Amazon’s Postgres RDS. Access to Postgres servers is dictated by a file called pg_hba.conf. It turns out that Amazon’s default settings don’t work with pgpool-II, the main way to scale across Postgres clusters. People have been asking for access to pg_hba.conf ever since Postgres RDS was introduced three years ago. The response from Amazon has been… [crickets]. Because they’re Amazon. They don’t care. They don’t have to. When you have 85% market share in the cloud services market, well.

This is the problem with building these gigantic “too big to fail” companies. They lose touch with their customers, and competitors get stomped flat by their sheer scale so there’s no real competition. This despite the fact that they’re in unregulated sectors of the economy and thus Libertopians whine, “if people don’t like them, they can just go to the competition!” I’ve looked at the competition to AWS. The only one that is competitive on price is Microsoft Azure, and Microsoft isn’t finished building out Azure yet (it’s still missing some critical services that I need, the most important being DNS and auto-registration of instances with DNS when they’re spawned). Where is this mysterious competition that the Libertopians cry will arise, arise I say, at any moment? Could it be that very few companies have a spare $5 billion to spend on creating a large scale cloud service, and nobody in their right mind wants to go up against Amazon while Amazon has a 50% gross margin on their cloud products yet still can sell cloud for less than anybody who has to amortize that $5 billion that Amazon amortized long ago?

Goddamn it, where the fuck did that free market fairy go, anyhow? Oh wait, yeah, I remember, here he is….


Yeah, looks like the Free Market Fairy is a bit… hairy. And not very pretty. And not very effective once someone gets 85% of a market. Libertopians may suck the free market fairy’s little hairy, but that ain’t producing a competitor to AWS. Funny, huh? Yeah, funny like a goddamn broken leg, if ya ask me…

– Badtux the Reality Based Penguin

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The Free Market Fairy preparing to wave his/her magic wand of Free Market Fairy Dust

The Free Market Fairy preparing to wave his/her magic wand of Free Market Fairy Dust

Oh wait, let me retract that. I want every Libertarian to invest all their dollars in bitcoins and store them somewhere like Mt. Gox or Bitstamp. Then they can come to me and whine about how government regulations are evil, especially those government regulations about things like financial institutions, and unnecessary in Libertopia because the Magic of the Market(tm) a.k.a. the Free Market Fairy will automatically wave his/her magic wand and make institutions like Mt. Gox and, now, Bitstamp, be careful with people’s money. Snerk. Bwahahaha!

Meanwhile, those of us who realized that the American dollar will never become worthless because both your taxes and your oil require dollars in payment for them, not turnips, not seashells, not bitcoins, are laughing all the way to the (FDIC-insured government-regulated) bank as bitcoins that people thought they owned are plundered left and right. See, that’s the downside of an anonymous currency, compared to a very-much-not-anonymous bank account. You have no way of proving that you own the money, so if it gets stolen from the bitcoin banks, that’s that. Meanwhile, if your money gets stolen from a FDIC-insured government-regulated dollar bank, well. No big deal. You’ll get your money. It might be a few months, but you’ll get it.

See the difference?

– Badtux the Libertopian-poking Penguin

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How did the Rich get their Wealth? By stealing the Labor and Wealth of the Poor.

I’ve repeatedly noted that Richard Branson, billionaire owner of Virgin Airlines, would have nothing if not for the pilots, mechanics, flight attendants, and myriad other people who actually make the planes fly. So why is he the billionaire and they are not, when every single dime made by Virgin Airlines is due to the labor of these pilots, mechanics, flight attendants and so forth? Well that’s simple. He’s a billionaire because he has laws that say he can take the product of their labor for himself and leave them pennies. And if they object and take for themselves the wealth that they’re currently producing for Mr. Branson, he can call out government guns to enforce his edicts at gunpoint and put them in prison for theft of “his” property — even though he created not a single bit of it with his own two hands.

Capitalism is, at its core, legalized theft of the product of the labor of the workers who actually creates wealth. Steve Jobs did not create a single iPhone. He instead took ownership of the designs created by other people inside Apple and reaped the profits for himself, meaning he died a billionaire while most of Apple’s engineers can’t even afford to buy a house (I estimate that over 75% of Apple’s engineers do not make the median income needed to afford a home here in the Silicon Valley).

Does this mean that I’m a Communist? No. Communism has its own issues, in particular it is very inefficient in matching supply and demand (that and the word “communism” got a bad rap because of the tyrants who used the word to seize absolute power for themselves, but that’s a different issue). What it *does* mean is that I have little patience for those who say that the government (a.k.a. We The People) should not be involved in redistributing wealth from the rich to the poor. The government is already involved in redistributing wealth from the poor to the rich — using government guns to enforce little pieces of paper claiming ownership by the rich of the wealth produced by workers– so why *not* balance that out by using those same government guns to move money the opposite way also?

But hey, that makes Ayn Rand’s Corpse cry, so it’s bad. Because stealing wealth is only okay if it’s the rich stealing from workers. If it’s workers getting back some of the wealth they created… why, how horrible! Why do eeevil lie-berals wanna make Baby Jesus cry by mentioning such a thing?!

– Badtux the Snarky Penguin

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One thing to remember in the whole health insurance discussion is that back in those days, you went to work for a corporation and you were working for that corporation for the next 30-40 years of your life. So the company had an incentive to keep you healthy, because if you got sick you were less productive. But nowadays companies view workers as disposable, so much so that when the CTO of my (small) employer retired recently, as in, voluntarily decided that he’d had enough of that “work” stuff and it was time to play bocce and build his replica of the Tardis that he’s been designing for the past couple of years (the main thing he’s missing is the inside, the part that makes it go, but that part’s in use by someone else somewhen else right now ), everybody was in shock because *nobody* retires nowadays — *nobody*. They get laid off, then work contracts until they’re dead or no longer can find contracts. They don’t voluntarily leave, unless they’re going to another employer — it just doesn’t work that way!

So anyhow, that’s that. If your employees are disposable, you have no incentive to keep them healthy — you just throw them away and find someone else to use up, or import someone from India or elsewhere if you’ve already used up all your local people. So the whole paradigm of employer-paid health insurance is just a sick joke now, because they don’t care if you get sick and die — they’ll just hire someone else. The only reason they offer it is because of taxes and competitive benefit, and that’s hardly an incentive for them to offer effective health insurance, as in, health insurance that actually will pay for expensive treatments, given that it’s impossible for you the (maybe potential) employee to know ahead of time whether the insurer will actually pay if you get leukemia or will deny deny deny until you’re dead…

Basically what we have here is a new sharecropping system. Here’s how the sharecropping system worked: The oligarchs in the Deep South managed via hook or crook to gain ownership of the vast majority of productive land. Sometimes it was by crook — a common strategy was to burn down the county courthouse with all its recorded deeds, then record their own forged titles in the courthouse to “prove” that they owned land they wanted. And by paying for brutal sheriff’s departments that would kill for pleasure and by buying judges, they managed to enforce these forged deeds at gunpoint. Sometimes it was by simple monopoly power — by cooperating with other oligarchs to interfere with the ability of the little guys to buy seed and fertilizer, gin their cotton, or get their cotton to market, they could bankrupt the little guys and take over their land. Sometimes it was simply a case of economies of scale and redundancy — if a levee breaks and floods a field, that would bankrupt the little guy who owned that field, but if a big guy owned that field he’d shrug and harvest crops from his other fields, the ones that *didn’t* flood. So anyhow, the end result is that the oligarchs ended up owning most of the productive land of the South.

Thing about oligarchs is that they’re lazy. They had all this land, but they certainly didn’t want to (and physically couldn’t) work it all themselves. So instead, they told the disenfranchised hungry landless farmers, “I’ll let you farm on some acres of my land — but I get 75% of the crop.” The farmer either had to swallow his pride and do it, or starve to death. So the planters got rich on crop output produced by others who did the actual work of growing the crop — not because they were more industrious (no, they were uniformly lazy), but because they managed to grab a legal monopoly on the productive assets of the Southern economy and use that to take the wealth produced by the actual workers via threat of starvation.

The top 5% now owns over 75% of the capital assets of America. Think about that. The top 1% by themselves own over 50% of the capital assets of America. This is no different from the Southern sharecropping system, in the end. We who are engineers, factory workers, construction workers, we who create actual real wealth as vs legal bullshit, we’re all sharecroppers, creating wealth for our massa, but getting to keep a dwindling small percentage of what we create. By basically owning the “land” of a modern economy, our modern-day oligarchs have created a system where they don’t have to actually soil their own hands with work — instead, they merely take an increasingly large percentage of what others produce, and if you don’t like it, well, you can just die, already.

Of course, the downside of a sharecropping system is that nobody wants to be a sharecropper. That is a fact which oligarchs don’t like at all, because if the majority owned their own land (i.e. were self-employed using their own resources), they would no longer be available labor to use for sharecropping. But by monopolizing so many of the productive assets of the nation, buying laws transferring wealth from the majority to them, and by importing labor from other countries whenever they can’t find enough sharecroppers willing to work for massa on ye olde plantation, they’ve managed to implement a system that, at least for now, seems fairly stable. It took the twin shocks of the Great Depression and WW2 to disrupt the old sharecropping system. I haven’t the foggiest idea what it will take to disrupt the new one.

— Badtux the Sharecropper Penguin

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Bryan recently mourned the death of a woman who was simply a good human being. While millions mourned the death of Steve Jobs, a flaming asshole who refused to acknowledge his own illegitimate daughter until forced to do so by a court and ran his company more like Captain Bligh than Mother Theresa, this woman was mourned by only a few local people. Because, see, being good is not what gets you rewarded in this neo-liberal capitalist society. Rather, being a flaming asshole is what gets you rewards — money, fame, acclamation.

And that’s pretty much true for all people who’ve been rewarded by this society. A poor person, if you’re down and out, will give you the shirt off his back. Some yuppie mom in an SUV? Not a chance. And stats show this is true society-wide — the poor give a far larger percentage of their income to charity than the well-off do, despite the fact that they can afford it least. But see, the poor haven’t been rewarded (yet?) for being flaming assholes. The well-off? By and large, they’ve been rewarded for being flaming assholes, not for being generous, caring, and giving. People by and large behave in a way that gives them the most rewards, that’s just a fact of biological monkey nature, and if what gets people rewards is being a flaming asshole… is it any wonder that America has become a land of flaming assholes who begrudge teachers their tenure and pensions, who begrudge poor people their food stamps, who say “stick it to them!” to poor kids trying to get a college education, who say we don’t need all those overpaid cops and firefighters and teachers and librarians and libraries with all those heretical books in them, in short, a land of people who act like complete Pharisees rather than like the caring and generous Jesus of the Bible? Hey, they’re just going along with the flow, it wasn’t *their* idea to set up society this way, and they don’t know any other way that a society could be organized ’cause this be the way it ‘spozed to be ’cause, like, it’s always been this way, right?

And don’t say “well, then we should start rewarding being caring and generous”, because being rewarded for being selfish and stingy is inherent in neoliberal capitalism. Unless you change how society is organized, you might as well say “water should start being dry.” It’s simply a violation of the fundamental nature of the beast that is neoliberal capitalism to behave in any other way — selfishness is a core principle of this way of organizing an economy. The evil philosophy of Ayn Rand that “greed is good and selfishness is a virtue” is fundamental to the entire way our economy operates, and most people just go along with what society rewards. This has been papered over from time to time with regulations to reign in the worst of capitalism’s abuses, but capitalism as currently comprised by its very nature rewards those who are most greedy and venal.

The problem… the problem is that this is not long-term sustainable. You can only loot and pillage so far before the whole ball of wax collapses. I don’t know what the solution is to reform a system of evil incentives that most people apparently never question, but the end point of where we’re currently going is hell on Earth, a dystopia that will make George Orwell’s 1984 look optimistic, and I’m tired of being in this handbasket.

— Badtux the Cranky Penguin

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How to lose money

Here’s a sure-fired recipe for losing money:

  1. Build a business and a brand around a wildly popularly product that has an almost 50% *net* profit margin — a ridiculously high return on investment in today’s world. Count your dough and gloat.
  2. Suddenly decide you don’t want to be in that business — that you want to be in *another* business, that is more fashionable but which has never made money.
  3. Deride the customers of your “legacy” product — the wildly profitable one — as old-fashioned, and do your best to keep new customers from buying your “legacy” product, instead forcing them to buy your new unprofitable “fashionable” product before you’ll let them buy your profitable “legacy” product.
  4. Profit! Err…. *NOT*.

Netflix has done the sure-fired recipe for losing money mentioned above, and whadya know, they lost money! Whocuddapredicted, eh?

— Badtux the Snarky Penguin

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