The Parasite Economy

I read a lot of econ stuff, mostly for entertainment purposes. That habit started back in the go-go 90’s when the new economy was belching forth one new dot-com firm after another. Most of these new companies made nothing, fixed nothing and provided no service anyone would want. The dot-com boom was, in many respects, a big waste of time and money. But, I got a lot of laughs listening to lectures about how things were different in the new economy.

After the crash and the dust settled, we were left with a parasite economy. By that I mean the only people making money were doing so by leeching off of someone doing real work. Google is a case in point. A search engine is not much use without the infrastructure of the Internet and the billions of content providers. Google provides nothing, other than a convenient way to find some of the sites. Mostly what they do is operate as a protection racket.

It used to be that if you built a better mouse trap, the world would beat a path to your door. Today, building a better mouse trap means a whole bunch of freeloaders and highwaymen litter that path to your door, robbing all those folks trying get your better mousetrap. Television is a good example of this. It used to come over the air free. Now, you pay the cable guy and then you pay the tax man for the abatement the cable company needs. You have to rent a special box and maybe sign up for other services like telephone and Internet to get television.

Maybe it has always been thus and I’m just catching on now that I’m in my old age, but that’s what came to mind with the news the court was busting up Aereo. Conceptually, I love the idea of local channels over the Internet. I’ve moved around a lot and getting the home town news, for example, would be worth a  few bucks a month. Getting the local football games or hockey games, even though you’re not local, would be great. The technology to do it is in place and mature, but the local broadcasters don’t do it. That’s where Aereo thought they could make some money.

That’s also where the problem starts. They don’t own the internet and they don’t own the content. They were borrowing it and renting it out to their customers without getting permission from the owner. That’s generally called theft, but in the new new new economy, it is called “disruptive.” The court called it illegal and our nine robbed masters are the final say in the matter.

That may or may not be the right answer, but there’s no doubt that Aereo is (was) a parasite company trying to make money from other parasite companies. The local broadcasters get special rights not available to everyone. They strike deals with the cable companies who have struck special deals with state and local government. Between you and the guy making your favorite show is a long line of rentiers. I spend more in a month on telecom than my father spent in his lifetime.

Now, that’s not to say no one is doing real work. It’s just that the big money seems to be in coming up with a way to transfer your cost of doing business onto others and charging rents for access to the work of others. Facebook is a great example. They don’t pay a dime to the ISP’s and telcos. You pay for the mobile access and you pay for the Internet. They harvest your personal data and sell it to others. Their big contribution is to provide a crude interface for you to see pictures of the grandkids.

It’s all perfectly legal and maybe even moral. I don’t know. I do know you can’t have an economy based on it. Someone has to be making stuff and fixing stuff. Someone has to actually be making better mousetraps. Instead we have our best minds working on new ways to charge you for television. At some point, the system has to be overloaded with middle-men, rentiers and scammers.

3 thoughts on “The Parasite Economy

  1. I too read a lot of econ stuff, STRICTLY for entrainment purposes. Too bad much of it is adulterated by Political Science propaganda.
    So far, the most useful piece I’ve seen was a series in the Sunday Papers. Prince Valiant ran a series, in essence, “What happens when “suddenly” there’s no salt supply”(consider the time period)
    MOST of the “academically acclaimed”, or “award winning” stuff I’ve been reading(usually in the hammock/moxie/afternoon nap laboratory) involves “Well, it’s COMPLICATED!”, when in fact, it’s been purposely MADE to be over complicated.
    Personally, I show more consternation for the nice folks that go out of their way to shut down “other peoples” innovation, than the parasitic rent seekers and patent trolls that feed off them.
    “Tucker” comes to mind, although many people have foolishly gained hundred thousand dollar pay offs for “rights” to producing, or quashing, trillion dollar “Why didn’t I think of that!” stuff.
    Also See: Bell Labs, IBM, Ron Popiel(Ronco)

  2. I was thinking the other day about how so many who now own or manage these billion dollar enterprises that operate in virtual land don’t actually make or do anything substantive. And I thought of how so many of these appear to disdain or simply ignore those who possess the skills that make and keep the material world around them running. All of these new titans of wealth (the term “titan of industry” simply doesn’t apply as “industry” implies real production of real products and services} wear shoes, use toilets, drive autos and in general interact with the real world and expect – indeed – demand that the real world measure up to their standards. Ask any of them about the cobbler, plumber or mechanic and I doubt many, or any, of them could tell you what they do or have a clue as to how they do it. Yet there is complete reliance on the truly skilled manipulators of the material world and if these should suddenly become unavailable or vanish altogether the “titans” would very quickly find themselves stuffing cardboard in their shoes to plug the holes, crapping into buckets or holes in the back yard because the water ceased to run long ago and walking to get anywhere because the family Benz won’t start and the knowledge of how to hitch up Molly the mule was lost 5 generations back.

    There are people out there who believe they are important and vital and special and who just know that they have something of great value to contribute to the world who couldn’t change a spark plug if their lives depended on it. There are people out there in our government and running large companies that produce only words in the virtual world who know they know better than the “common man” how life should be lived and thoughts should be thought but have no idea how to repair a leak in the walls of their grand estate or put together a ladder from wood scraps. These sort think the world needs them to function but truth be told when the poop backs up in the toilet they are totally dependent on some guy who knows which end of a pipe wrench to grip.

    Henry Ford could build an auto from the ground up. A man like Edison could rewire the house or the entire town if he wanted to. There are still men around who can make and do things but they don’t seem to be heard from much. Too many of our “betters” are in reality dependent children. And like children they make a lot of noise but not much of anything of substance.

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