Are the rich good for anything at all?

It used to be considered that the wealthy had some use because they would benefit society via philanthropy by supporting the arts, funding libraries, cultural centers, charities, and so on. It was a kind of trickle down mentality, that they would use some of their surplus wealth to benefit the broader community, if not out of a sense of altruism, at least to head off potential resentment and anger.

Benjamin Wallace-Wells writes in a review of a book by Italian historian Guido Alfani that the new billionaire class does not have the social function that they were once considered to have .and are now increasingly becoming seen as a menace as inequality increases.

In the past generation, the ranks of the super-rich have grown dramatically. Between 1990 and 2020, the number of billionaires in the U.S. increased ninefold. In China, the growth of the super-wealthy has been more explosive still: in a single year, between 2020 and 2021, that country’s billionaire count grew by sixty per cent. Private fortunes of this scale are fundamentally transnational and less moored to individual nations that might make demands of them.
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A big legal win for consumers

Before she became a Massachusetts US senator and while she was still an academic, Elizabeth Warren proposed the creation of a watchdog government agency that would look after the interests of consumers when it came to financial matters. That agency, known as the Consumer Financial Protection Bureau, became a reality in 2010 during the Obama administration in the teeth of fierce opposition from business interest and the Republican party.

The CFPB was meant to ensure that people would be treated fairly by “banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and other financial companies”. In order to ensure greater independence, the legislation creating the CFPB required that it be funded through the Federal Reserve and not through annual Congressional appropriations, where it could be eliminated during the budgetary process.
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Good riddance to non-compete clauses

When people are hired, their contracts can sometimes include what are called non-compete clauses. These were originally designed to prevent someone from learning trade secrets at one company and then switch to another company or start their own business using that knowledge to the detriment of the original employer. As you can imagine, the only people who are likely to know valuable insider information are high-level employees. But companies realized that they could use those clauses to keep many more of their workers captive and started extending the clauses to cover lower and lower level employers, thus preventing them from finding better jobs.

Now the Federal Trade Commission under the admirable leadership of Lina Khan has forbidden the use of such clauses for all but top-level employees. As Kevin Drum says:

The vote was 3-2 in favor of banning noncompete agreements for new workers and voiding them for all existing workers (except C-suite executives). This will eliminate the ridiculous practice of fast food chains hiring sandwich makers and then prohibiting them from quitting and going to work for a different fast food chain—and giving their valuable, proprietary sandwich making expertise to the competition.

Corporate America has only itself to blame for this. Noncompetes used to be limited to high-end jobs like coders or lawyers. But then, as usual, some bright boys got the idea of expanding the idea to poor shlubs working minimum wage jobs. That was outrageous enough that it finally produced support for killing noncompetes completely.

A Labor Department study published in June 2022 estimated that 18 percent of Americans are bound by noncompete agreements, while other research suggests it could be closer to 50 percent. They are used in a wide range of industries, including technology, hairstyling, medicine and even dance instruction, while imposing restrictions on both high- and low-wage earners.

The FTC estimates that banning noncompete agreements could create jobs for 30 million Americans and raise wages by nearly $300 billion per year.

All good free-market capitalists—as opposed to those who are merely shills for big corporations—should be happy about this. The United States will do nothing but benefit from it.¹

Apparently California banned these clauses over a century ago and and despite that has had a booming economy.

How Trump can make money from his money-losing social media company

Serial sex abuser Donald Trump (SSAT) has had his Truth Social company go public by merging with a publicly traded shell company Digital World Acquisition Corp. Under the deal SSAT owns nearly 79 million shares, about 58% of the total. While the share price peaked at $79.38 on March 22, making his shares worth about $6.3 billion, it has since dropped precipitously, and as of yesterday was trading at $33, making its worth about $2.6 billion.

David Cay Johnson writes that the true value of the stock in Trump’s company is zero since it lost $58 million last year and had revenues of just $4 million with no sign that revenues will rise. Johnson says that because the stock is highly over valued, it is the target of so-called ‘short sellers’, who make money by betting correctly that a stock’s price is going to fall.
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Voters seem to be wising up to the stadium con

One of the worst things about professional sports in the US is that the owners of teams extort local communities to foot the bill for fancy new stadiums by threatening to take the teams elsewhere if they do not receive massive taxpayer subsidies. Studies have shown that the economic benefits that the stadiums supposedly provide are often wildly inflated and in reality bring nowhere near the amount that the public puts up. The team owners have pulled off this scam many times but it looks like citizens are getting wise to this extortion racket and refusing to pay.
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The negatives of food delivery services

Many people take advantage of the convenience of food delivery apps like Uber Eats, GrubHub, and Door Dash. Their popularity soared during the Covid lockdown era when people were reluctant to go out and they were a boon to restaurants struggling to stay afloat then. But they have stayed popular even after things returned to almost normal as people had got used to the convenience and. continued to use them. It definitely helps those who for whatever reason are unable to cook their own food or are unable to go out.

In his latest episode of Last Week Tonight, John Oliver takes a close look at this business and finds that the two categories that we think benefit most from this model (restaurants and delivery workers) are in fact benefiting the least.

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Temu: A rival to Amazon

Amazon has become a retail behemoth, driving out much of the retail competition. It did this by providing low prices for an immense array of goods and fast delivery, and with those methods managed to develop a huge customer and supplier base. The way it did that was by selling below cost and offering incentives to sellers and in the process running up huge deficits in the initial years. By those methods, it persuaded manufacturers and other retailers to sell through the site. I read about a company that sold diapers online and was doing well. Amazon tried to buy the company but when the company turned down its offer, Amazon cut the prices of its own diapers well below cost and drove the rival out of business. That kind of tactic is only possible for companies with large cash reserves or huge amounts of venture capital and other financing.

Initially, both manufacturers and consumers got a good deal. But once they all got hooked and Amazon became almost a monopoly, Amazon started squeezing them by raising prices. It is an old trick. Since manufacturers who sold through it had to guarantee that their product would not be available cheaper anywhere else, what they did was raise the price of their product everywhere outside of Amazon to be higher. Someone I know recently went looking for a part to fix his dishwasher. He found that Amazon had the lowest price but that the part at the manufacturer’s own site was a few cents more.

The Federal Trade Commission is currently suing Amazon for this and other monopoly practices.
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The crash of the NFT market

These days one does not hear many breathless reports of new NFTs (non-fungible tokens) being sold for huge amounts and being touted by celebrities. There is a reason for this. This site has examined the state of the NFT market and found that they have crashed in value with most of them now worth nothing.

The hype around NFTs peaked in the 2021/22 bull run that saw nearly $2.8 billion in monthly trading volume recorded in August 2021. From this, NFTs captured the collective imagination worldwide with multiple news reports of million-dollar deals for sales of certain NFT assets.

People were excited about this new type of online asset and something of a goldrush appeared to start. Fast forward to today… and the NFT market is starkly different.

Data from the Block reveals a weekly traded value of around $80 million in July 2023, just 3% of its peak back in August 2021.

Using data provided by NFT Scan, we have compiled a comprehensive analysis of over 73 thousand NFT collections (73,257, to be exact) in order to identify key trends, assess the health of the market, determine the factors contributing to successful projects, and hopefully gain insights into the potential future trajectory of the NFT ecosystem.

The results were shocking, to say the least.

Of the 73,257 NFT collections we identified, an eye-watering 69,795 of them have a market cap of 0 Ether (ETH).

This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments. Having looked into those figures, we would estimate that 95% to include over 23 million people who’s investments are now worthless.

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The NFT racket

I was skeptical about cryptocurrency and was utterly baffled by the appeal of NFTs. The former seemed risky and the latter felt very much like a speculative bubble driven by hype in which the underlying entity being bought and sold had no intrinsic value. So I was not surprised by the collapse of various cryptocurrency endeavors like FTX and even less surprised by the recent lawsuit filed against Sotheby’s auction house, accusing them of fraud in inflating the value of the ugly Bored Ape BFT and using celebrities to hype it.
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The rise and fall of neoliberalism

The term ‘neoliberal’ is used quite a lot these days (including by me), usually in a pejorative sense but like all umbrella political and economic labels, its boundaries that determine what falls under the umbrella and what does not, are a little fuzzy. In a review of the new book The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market by Naomi Oreskes and Erik M. Conway, Louis Menand traces the history of the neoliberal ideology and movement, in an essay that has the same title as this post.

What’s “neo” about neoliberalism is really what’s retro about it. It’s confusing, because in the nineteen-thirties the term “liberal” was appropriated by politicians such as Franklin D. Roosevelt and came to stand for policy packages like the New Deal and, later on, the Great Society. Liberals were people who believed in using government to regulate business and to provide public goods—education, housing, dams and highways, retirement pensions, medical care, welfare, and so on. And they thought collective bargaining would insure that workers could afford the goods the economy was producing.

Those mid-century liberals were not opposed to capitalism and private enterprise. On the contrary, they thought that government programs and strong labor unions made capitalist economies more productive and more equitable. They wanted to save capitalism from its own failures and excesses. Today, we call these people progressives. (Those on the right call them Communists.)

Neoliberalism, in the American context, can be understood as a reaction against mid-century liberalism. Neoliberals think that the state should play a smaller role in managing the economy and meeting public needs, and they oppose obstacles to the free exchange of goods and labor. Their liberalism is, sometimes self-consciously, a throwback to the “classical liberalism” that they associate with Adam Smith and John Stuart Mill: laissez-faire capitalism and individual liberties. Hence, retro-liberalism.
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