Skip to comments.Where the Body Is, The Vultures Are Gathered, or, For Whom the Toll Peals Part III
Posted on 12/20/2011 11:37:52 PM PST by grey_whiskers
In my first piece, Where the Body Is, The Vultures Are Gathered, or, For Whom the Toll Peals Part I, I introduced the work of Hilaire Belloc and his predictions for a post-Communist/post-Capitalist society, and began the discussion of the economics of simple purchases, using the example of a blacksmith shop. In the next piece, Where the Body Is, The Vultures Are Gathered, or, For Whom the Toll Peals Part II, I discussed the complications which intrude when one considers the presence of either multiple blacksmiths, or the presence of assistants, and presented counterexamples to the Marxist labor theory of value, and introduced the concept of automation in lieu of assistants. In this piece, I extend the concept of automation further, and look at different possible buyer/seller arrangements, and extend the treatment to the presence of Vultures.
In the last essay, the concept of automation was introduced, and it was demonstrated how the presence of automated production lowered the contribution of the individual worker to the finished product while increasing the quantity of product available for sale. In doing this, it was demonstrated that the value represented by a purchase is inherent in the demand for the product, and not the effort which went into it. This situation is one possible method by which automation may affect a typical market scenario. But there is another. Instead of removing the *worker* from the equation, what if the presence of technology effectively eliminates the *supervisor*? How can this happen? Think of an example which is familiar to most people by now, that of the internet revolution. Not only the dot-bomb companies, but companies which survived, or which came into being through the internet. Think of a company such as Cafe Press, where an individual armed only with their own PC and a graphics program can design, advertise, and sell their own products to a large number of people, without ever talking to them or meeting them directly. All the typical functions of management (production, procurement, scheduling, delivery, billing, and the like) are done by Cafe Press according to predefined templates largely invisible to the worker and the consumer. Just fire and forget. In this case, since the prices for placing merchandise on Cafe Press are fixed and not a flexible, negotiable market; and since Cafe Press charges the *seller* a fixed fee whether or not end users ever buy the product; in effect, Cafe Press effectually disappears into the background: the apprentice has become, for our purposes, the owner of the business, and is entitled once again to a lions share of the profits, the fruit of his own labor. We have come full circle. Almost.
For the exchange typified by Cafe Press (and similar) is not truly that of a sole proprietor selling to customers, simply because Cafe Press is still involved -- in setting up the framework and terms, in organizing the setup and scope of the exchange, setting up the meeting place (the website, dont you know), and charging a flat fee for their service. If they were merely supplying a good or service, they would be just one more vendor; but since they are intimately involved in the process, and the exchange between buyer and seller would NOT happen in its current form without them, they have a unique role, hitherto undefined. They may be called a gatekeeper -- a person or group or entity who is not intrinsically necessary for an exchange between other parties to take place, but who has (by fortune, design, or other means) interposed themselves into the very heart of the transaction to the extent that the transaction will not happen without them; and who (usually) charges a fee (a toll, shall we call it?)
The scary thing to realize, is that while mechanization and automation first increased the choice of goods available to the consumer, while lowering prices (all the while lowering the power of the worker); and that the process of automation, taken further, allowed the worker to remove power once again from the owner and restore a semblance of a direct exchange between producer and consumer, via the development of gatekeepers and toll-takers, there is a third step. That is, what happens when gates are created, ostensibly for purposes of efficiency and ease of transactions, but with the dual purpose of enriching the gatekeeper for producing relatively little and forcing themselves into the transaction (always taking a toll for each transaction along the way)? This doesnt sound bad, especially if efficiency and convenience really are improved at first by the presence of the gatekeeper. But the insidious thing is that, just as there is a clarion call to move up the so-called value chain by moving from hand production, then to mechanized production, then to move out of production into planning, logistics, and other higher-value-added activities, there exists also a great temptation to remove the costs of a physical plant altogether (well, almost all: computers are so cheap that they scale trivially for most things), and to make ones profits acting primarily as a gatekeeper interposing into others activities. Think of all of the examples: Internet Search Engines, Automated Stock Exchanges (with Dark Pools and algorithmic trading, doing nothing but placing a straw into the wallet of civilian, non-specialist users of the automated tool, and sucking a portion of money out with each transaction, and provide relatively little of value (to the other parties) in return? The situation becomes even worse when the presence of the gatekeeper and the toll is sanctioned, or worse yet, required at the behest of governmental authorities, whether through busybody politicians or as the result of intense lobbying by the would-be gatekeepers to award *them* the important new
And of course, such an action, such a request, would not be foreign to the government, as detailed licensing and clearances and approvals (all thoughtfully provided at *such* a reasonable price) are the stuff of which government wet dreams are made of. Not to mention the ultimate gatekeepers, that is, the IRS. Sure, the politician says in response to the lobbyists requests. We understand you, for you speak our language.
And so it goes: where wealth is created, first there is competition, then there is jockeying for position, then those who do not wish to be sullied by work come in and begin feasting on the lifeblood of the business. After a time, other parasites join in, including gatekeepers for business processes, as well as in the government. And in time, with enough wealth siphoned out, and with customers impoverished (remember? the employees of one company become the customers of another) by the cuts in raises, the enterprise cannot continue, and it must fall.
Where the body is, there the Vultures are gathered.
Conservatives don't necessarily believe all government gate keeping is bad. I think that's the problem with our modern economy. At some level, every single law or regulation makes some sort of sense. It seems we can't leave any transaction alone for whatever reason. It's easy enough to accept liberty when one agrees with the action taken. It's something entirely different to allow people to do things one doesn't necessarily think is wise. However, the latter is where true liberty lies.
As far as government goes, some gate keeping is actually an economic multiplier. For example, government could enforce the contract between blacksmith and customer, provide police protection if customer decides to grab a horseshoe, or send firemen to put out fires in the smithy.
A little bit of gate keeping is good, but where does one draw the line? In an economy as complex as ours, how does one determine which types of gate keeping are bad and which types are good, and how do we even quantify good or ill effects in the first place? Should we consider just the economic impact or include social and cultural issues?
Conservatives are probably focused on government gate-keeping’s bad effects. The left, assuming good motives, sees only the good. That is why they will never stop trying to expand government, for it can be safely said someone always benefits from the various programs and regulations. Our challenge is to elect leaders who are willing to accept a few bad outcomes without writing another law.
Some parasites feed and leave, some gorge. In both cases, however, they multiply. When the parasites overwhelm the host the outcome is bad for both. Economists can learn from the natural sciences.
That was going to be my segue into another couple of essays.
...grumble grumble, who do people think they ARE, stealing my thunder like that? etc. etc. :-)
...oh, and Merry Christmas.
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