Note: There is a new Taki post, as per usual. This week the topic is the relative gap between the Cloud People and Dirt People. For podcast fans, there is a new Sunday Thoughts up behind the green door, along with some other items. Of course, you can always buy a beer for the hardest working man in dissident politics.
The boom-bust economic cycle that came with the industrial age has been a primary focus of economics for close to two centuries. Marx was the first to notice that these periodic economic crises were an inherent part of the system. He theorized that over-production was the cause, which lead to a destruction of capital. The economist Joseph Schumpeter picked up on this and gave us the term “creative destruction” to frame the busts as corrections to inefficiencies.
It is one of those truths that still haunt the modern economy. The reason the down cycle is terrifying is that economics is really about politics. When the busts come, the people get angry at the politicians. Worse yet, they can get angry at the rich people and start demanding a share of the loot. It’s why economics has evolved to prevent the bust at any cost. Seven trillion in new money was created over the last year in response to the Covid panic in order to keep people pacified.
We still have the boom-bust issue, just in small scale. A new idea goes through a familiar cycle. At first it is highly profitable for the owner. They ramp up their production to meet demand. Soon, others come up with similar products that cut into his market, thus undermining his profits. In time the profits are reduced to the barest minimum as the product becomes a commodity. In time the value to the original creator of the new product drops to zero. It is a commodity.
This is generally considered a good thing by modern economics, as it means the relative cost of goods continues to fall. It also means intellectual capital is naturally forced to innovate. The company with the hot new product knows they will have to keep coming up with hot new ideas. Otherwise, their profits will fall. On the other hand, they might seek a monopoly like we see with the tech oligarchs, which allows them to artificially maintain their profit margin.
There is another angle to this that is unique to this age. The technological revolution has created a new form of capitalism that is rooted in the creation of new ideas, particularly in the entertainment space. Like the imitators who draft on the creations of the innovators, this new process in the technological economy is dependent on the initial creative energy of an innovator. Unlike the old industrial age imitator, this new form of economic activity is highly profitable.
It works like this. The new idea for something like a movie or a type of popular music is expensive and difficult to create. It requires smart and creative people to try different things until they get a concept that works. Then they have to convince investors or an audience, often both, to give it a look. In the case of a movie, it means the risk of a box office bust. In the case of music, it means years of failure, while living on cat food. The new idea promises profit, but mostly risk.
If the new thing does well, then this is where the new entrepreneur steps into the picture and realizes the big profit. That hit movie becomes a franchise. Soon, there is a remake which is very profitable. Then subsequent remakes, reboots and spin-offs that have declining profits. Eventually, they reached a point where there is no profit in the franchise. At this point, the original concept has lost its value and often has a negative value, due to the terrible imitations that came after it.
Recent examples of this in Hollywood are legion. The Terminator franchise has become a joke due to the many sequels. So desperate to squeeze the final pennies from the idea, they have the 70-year-old Arnold Schwarzenegger playing a geriatric robot named Carl who is an interior decorator. The Alien franchise is mostly known for the idiotic reboots and spin-offs that are easily mocked. These are two ideas drained of all value, like the corpse after a vampire has drained the blood.
This happens with other things like pithy phrases. Back in the Obama years, someone used the term “crony-capitalism” to describe the tightening bonds between global corporations and the government. The phrase caught on and was in the mouth of every right-wing pundit. In time it sounded like some of them had a form of Tourette’s, in which they burped out that phrase uncontrollably. Today we have “deep state” and “globalist” getting the same treatment from the same crowd.
The thing is, these vampires who prey on new ideas are not without talent. They have a useful set of skills, in that they are able to drain every last drop of value from an intellectual property. They do so without regard to their own reputations or the reputation of the original creator. They are proud to be vampires and they are handsomely rewarded for their skill. In fact, they do better than the originators, who are often looking for the next concept or ignored by the imitators.
This is not confined to entertainment. A new bit of software can expect the same treatment, as most of Silicon Valley is now tuned to rapidly replicate and consume every new idea that comes along. The cable chat shows are festooned with ads for “apps” that are copies of some original. Facebook, in fact, is just a cheap knock-off of an original idea lost to the mists of time. It now is being cloned and copied by those looking to find some remaining profit from the idea.
A few years ago, an “entrepreneur” came up with the scheme to convince people that buying shaving products was difficult. Instead you should subscribe to a mail order service for razors. There was no new product or an effort to change the demand for razors and shaving products. The whole scheme was about fooling people into thinking there was a razor conspiracy. The goal was to get them to expose their neck so the vampires could get a clear shot at the artery.
Of course, this “innovation” has come in for the same treatment. The airwaves are full of ads claiming there is an underwear conspiracy that can only be solved by bespoke undergarments from a boutique maker. Instead of coming up with a better mousetrap, genius is finding a way to trick people into paying for the same mousetrap. Once the blood has been drained from that deception, it will be onto some new scheme to provide less for more, under the guise of innovation.
This has created a world that selects for the type of person able to suck every last drop of blood from a new idea. In a world where you make as much or more money from copying the ideas of others, it makes sense that people will go into that line of work, rather than the creative end. Hollywood is now full of vampires, looking to drain the blood from the next new idea. There are no “new ideas” in the movie world, because there is no one there interested in being sucked dry by his fellow vampires.
If these selection pressures exist long enough and are widespread enough, then eventually you have a world of too many vampires and too few victims. Those vampires have to feed, so they will move onto other victims. That may be where we are now in the late stages of empire. Everywhere you look the remaining bits of the original spirit are covered with vampires, looking for a clear bit of neck into which they can sink their fangs and suck some blood. Ours is a vampire economy now.
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