Competition was never about protecting consumers.

I became suspect of the “competition protects consumer” narrative way back in 1987. In the spring of that year I started work part-time at a gas station. On the first day my manager explained to me how the gas station determined its gas prices. I told him I was under the impression that the station used some type of mathematical pricing formula ala what I learned in college as an economics major. “Bless” his heart. I can still see the look on his face when I laid that “what I learned in the classroom” nonsense on him. “No”, he said. “That’s not how you do it. What you do is each morning look across the street and see what the other station is charging and then change our prices to reflect theirs.”

It was a rude awakening for a 23-year old: that the theoretical stuff you learned as an undergrad was so much nonsense. That consumers of gas station fuel were being taken on a roller coaster ride of gas pricing based on what the gas station across the street was charging.

Of course, there are other factors that contribute to the changes in gasoline prices at the pump; the supply of oil, the price of a barrel of oil, decisions by oil supplying cartels, i.e. OPEC, the barriers to entering the local retail gas market, and regulations against price gouging. If local regulations allowed more retail gas operations to enter the market, in theory prices should fall. And if antitrust rules are enforced, retailers would be prohibited from acting in concert to raise prices. For the past 130 years this alleged consumer centric view of competition has dominated economic and legal thinking. As Americans left the farm and moved to the city, their self-reliance values were replaced by consumerist values. Americans became targets for a progressive philosophy that replaced self-reliance with the narrative of government protection. Trusts, large monopoly firms, had to be broken up to ensure that the emerging consumer class was not taken advantage of via high prices or low quality of services. “Competition” was to be the rallying cry.

But is competition as we know it today realistic or just a coopting of a term for political gain? What are firms really competing for and who does the promotion of competition actually benefit? In a corporate-capitalist system, analysis of any economic issue should begin with a question concerning the preferences of those holding capital. The entrepreneur and investor choose an activity that may result in increasing the amount of capital they hold at the end of the day. For the investor in particular she is concerned not primarily with consumer choice but with the ability of her capital to be placed and optimized in as many markets via as many opportunities as possible.

For the holder of capital, real competition is synonymous to the wealthy person in the Book of Matthew who gave his serfs a certain amount of talents and required that each one of them maximize returns on those talents. He wanted them to compete with each other like an episode from “The Highlander” with the victor receiving a portion of the returns in exchange for the labor they expended in generating those returns.

And the consumer’s role in this vendor competition? Simply, the consumer’s role is to be “coined.” Once the consumer gave up their willingness to be self-reliant, he put himself at the mercy of the entrepreneur and the investor. The consumer protection narrative is designed to ensure his comfort with exchanging personal and economic liberty with the convenience of having his needs provided by the capitalist. The illusion of choice makes him available for exploitation in the vendor competition scenario. The greater the number of consumers available for exploitation, the greater the opportunity for the entrepreneur to demonstrate to capital that it has the ability to maximize returns on and to capital. For the investor, this means that the larger the number of consumers, the more the market can be segmented and greater segmentation creates greater opportunities for creating monopolies within sub-markets. A monopoly structure leads, per microeconomic theory, to opportunities to increase prices. Contrary to the progressive narrative that a competitive market structure is the most desirable, a monopoly market structure is the ideal for entrepreneur and investor.

Consumer protection is valid only to the extent that it makes a buyer available for entrepreneur and investor exploitation. To limit the level of exploitation, the consumer should pursue self-reliance in as many areas of economic life as possible. It will require embracing more inconvenience in return for more peace and liberty.

Can Blacks use the law of discovery to carve out new territory and capital?

One of the failures of black leadership is its unwillingness to pursue a truly self-interested agenda for the people they allegedly represent. The current narrative of assimilation does not work. It puts blacks in an unequal and weak position compared to whites and other non-white populations who have pursued a capital acquisition policy first versus a political empowerment/assimilation approach still preferred by most blacks. It never discusses in any significant way the acquisition of productive capital around which communities can be built. Rather, the assimilationist argument centers on fluffy subjects such as social justice, membership of degreed blacks on the boards of white-owned corporations, and affirmative action in the workplace and in colleges and universities.

To be fair, a number of grass roots advocates do bring up the topic of access to capital by black-owned firms, but the problem is that business capital, whether in the form of loanable funds or equity investment is small compared to the number of black businesses in need of funding. Also, there is the risk that terms and conditions underlying the funding of black enterprise firms may not representative of the black population primarily because the boards that direct these underwriters are probably not members of the community in the first place. Just take a look at the names and faces of the members of the typical executive committee or board of directors and you see my point.

Blacks, as a people, simply are not calling their own shots. If you listen to the rhetoric of current black political leaders, liberty and freedom as it pertains to capital, are not a part of the lexicon. Black political leadership is more concerned with keeping blacks available to vote for white Democratic Party candidates as opposed to self-reliance. Probably in the minds of black political leadership, self-reliance would be akin to self-determination or nationalism and these leaders are afraid that such an approach would sever their attachment to America. But the attachment to America is false one, as I have argued before, because blacks did not come here voluntarily and apply the law of discovery.

To summarize Chief Justice John Marshall, the European came to North America but while acknowledging its Native American occupants, the law of discovery, of showing up first, gave title to the country making the discovery. That Native Americans were there first was irrelevant. Once, say England, made its discovery of what would later become the United States, it created a title that excluded claims by any other European power. Establishing this “title” over the land meant of course establishing control over its natural resources; land, air, water, minerals, the stuff that supports production, transportation, communications, energy generation and distribution.

To the activities that land, water, air, minerals, paid, indentured, and enslaved labor supported, the European was able to attach “coin”; to monetize. He would later create a centralized banking system to underwrite his government’s issue of debt as well as serve as the lender of last resort to commercial banks. The European’s financial system would, in conjunction with public sector investment, underwrite technological innovations that would further spur the design and production of consumer goods and services.

Blacks have been left largely out of the ownership of productive capital in the American political economy and as I have discussed in previous posts, it is too late and probably impractical to attempt any action under the laws of discovery for the purpose of acquiring the natural resources that underpin an economy that would support 43 million people on a self-sustainable, self-reliant way. But I do not think this is impossible.

Cyberspace provides “territory” that blacks can conquer and extract capital from. From the time I immigrated to the mainland I have always believed that blacks had the intellectual resources to construct their own vibrant economy. It boils down to a willingness of the black population to use broadband technology to connect to and import resources from outside of the United States and mixing those resources with the access to land, air, minerals, and water that blacks have here in the United States. It means the black population using its engineering skills to build a renewable energy infrastructure that provides electricity to its population. It means building communications networks using unlicensed to spectrum to tie black households to basic services. It means using the black population’s legal talent to advocate for laws that protect the importation of items into the United States that can be processed by plants designed and built in the U.S. by black engineers. It means using financial talent to reinvest these proceeds back into the black population and further growing its resources and income.

The great thing about applying the “law of discovery” to cyberspace is that no one has to be kicked out or enslaved. There is still plenty of territory to carve up; to reverse colonize but this time with equitable results.

Citizenship is not property

Everyone’s citizenship i.e., license for occupancy, can be revoked. How you got your license determines the length of time it takes for revoking it. Having an occupancy license doesn’t provide you with much sway as to whether a license to occupy should be extended to another person. Nor does having a license provide you any basis of authority for commenting on the form of occupancy another occupant holds. The license is not exclusive.
 
In short, your license was issued to you by a stroke of luck and the stroke of a pen. It is not your property, this thing called citizenship. You didn’t earn it. It was given to you because like any tax and customs farm, a good farmer (politician, capitalist, economist) knows that the higher the population of occupants, the greater the amount of tax receipts and number of potential voters.
 
Hell. You haven’t even taken a few minutes, like any mature, self-actualized person would do, to ask yourself why should you need a license of occupancy i.e., citizenship, permanent residency, visa, etc., to live anywhere?

If you needed the internet that bad, you would have created it yourself

Monday 11 June 2018. We will see a repeat of the weeping and wailing that Hillary Clinton’s supporters did as they witnessed what they thought was impossible: an electoral loss to Donald Trump. Advocates for the treatment of broadband access as a telecommunications service will weep and wail not because of the loss of internet service, but because they will be out of bullets when the scare tactics imposed on millions of consumers do not come to fruition. As June goes into July into August into election season into Kwanzaa, another argument for attracting anti-Trump voters will fade away.  As the tyrannical Fake Left jump onto social media and create new forums and hashtags for the next rally, they will soon take for granted that the internet still works after all.

What I find disconcerting is the emotion attached to internet access. “If everyone is not connected, we will all sink into the pits of Hades.” “If I am not online, I am inconsequential.” “The internet is crucial to our daily living and well-being.”  None of this is true. Unlike water and energy, internet access is not a necessity for the continuation of life. Approximately 11% of Americans do not use the internet, according to data from Pew Research. More than likely, these individuals are getting information they determine as pertinent to their lives from old tried and true sources: first hand observation, published news sources, direct contact with government agencies, family and friends. These data sources are not as fast or as glitzy, but they have worked for centuries and more than likely were used by the individuals who built this digital world.

I expect the percentage of Americans not using the internet to fall over time when you consider that in 2000 approximately 48% of Americans were not online.  Our children are already internet savvy and this use of online services will only continue as they get older. As we on the tail end of the Baby Boom enter retirement, we may find ourselves using it more to connect with fellow Boomers who, unfortunately, may not be up to travel for various reasons.

What we need to avoid is allowing political factions such as the Fake Left to play on the emotions stemming from the belief that without net neutrality rules, consumers won’t be able to get to the websites of their choice, see speeds from their favorite websites slow down, or have their data sold to third parties they did not approve.  This narrative should be seen for what it is; another way to get votes.

If the Fake Left were really concerned about protecting your privacy and the speed at which you access data, they would tell you that you are responsible for reading the fine print of every service agreement for every information service provider you access. Arguing that terms and conditions are written in “legalese” is no excuse for skipping over disclosures and subjecting your privacy to abuse.  If, as the Fake Left argues, the internet is that crucial to everyday living, so crucial that it should be treated like a utility, then equal fervor should be applied to the consumer who decides to use online services.  In other words, the Fake Left should stop encouraging people who can’t fly to buy an airplane and attempt to fly it without bearing the consequences.

If you can’t get what your want from an information service provider in terms of privacy or speed, then maybe you should invest in consumer encryption services such as a virtual private network, or using a heavily encrypted network or browser such as TOR.

There are also the old methods of information gathering: a telephone (landline) and a newspaper, from which you can access by paying cash, the ultimate form of encrypted currency. Bottom line, there are ways to protect your individual privacy without implementing more onerous rules on society.

Courts and regulatory agencies as markets

For most of us every day folk, courts are places where we want a judgment that says, “We are right.” But courts are also “rules markets.” Rules markets are where frameworks for how we engage each other going forward are produced and depending on how broad the issue is defined, those rules may be forcibly consumed by others who were not a party to the conflict that brought the original rule producers together in the first place.

The recent U.S. Supreme Court ruling in Masterpiece Cakeshop v. Colorado Civil Rights Commission provides an example. While the issue in that case focused on whether Colorado’s equal rights agency applied its civil rights rules in a neutral manner where civil rights violations were alleged, some Americans questioned why the consequences of that case should spill outside of Colorado and impact citizens and businesses in other states. The short answer is that externalities, whether positive or negative, from a court ruling enter society because of the structure of our legal system. The legal structure is centralized and the ripple effect of legal decisions spreads out to more citizens the higher up the legal rule production hierarchy you go. The interpretation as to what the rule should be for governing a relationship or conflict becomes the “law of the land” where the highest court becomes the market for producing legal rules.

I heard some of this concern from every day folk during a CSPAN session the day after the Masterpiece Cakeshop ruling. “Why did this conflict have to escalate?” some asked. It escalated because a centralized legal system provides opportunities for individuals occupying a minority class to extend its views on how society should work to the rest of America by accessing and participating in the rule making process.

Conflict is a high cost for entering this “centralized rules” market, but a higher price is paid by the rest of society where we are subjected to rules produced by a small number of participants seeking to produce rules that favor their behavior and the detriment of limiting or modifying everyone else’s.

In my opinion, the limitation of the behavior of others as a result of rules produced in a centralized market is a negative externality or negative benefit. No matter the noble intent of the rule producers, where the rule produced impacts my behavior, it impacts my liberty.

One way to limit the negative externalities of centralized rulemaking is for parties to enter into voluntary agreements, agreements limited to the parties resolving the immediate conflict. It would be a lot cheaper for parties in actual conflict or anticipating conflict if the rules were produced as a result of voluntary engagement designed to head off conflict versus the other way around. It would also be less expensive for members of society who are not direct parties to the conflict since they would not be subject to rules that they did not produce.

Collectivism dampens your ability to be a high-value individual

As a libation-centered population, members of the African Diaspora tend to call on memories of those who have passed on when assessing our reality. Lineage is important because it helps identify and locate family members that can contribute to the economic and financial needs of individuals or households under duress. Blacks, in my opinion, take the story of Jesus’ sermon on the mountain more seriously than other ethnic groups; probably too seriously. Collectivism is so incorporated into the DNA of blacks in America that blacks focus too much on what they can allegedly do as a group versus as individuals.

For the person with mouths to feed, can she say that enough economic and financial benefits have flowed through the black population to the extent that she can say that collective political and economic action has created wealth or opportunities to pursue wealth?

Collectivism is a political or economic theory advocating collective control especially over the means of production and distribution.  Emphasis is placed on the collective versus individual action or identity. In the black population, the framework for collectivism has been passed down by ancestors through a prism of historical pain and economic and political suffering. This view of the world lays at the base of black group reliance with the nuclear family at the core of this reliance.  It is a view that has sustained us but is it a view upon which blacks can thrive? Given the historical wealth position of the black population, the answer is no. We may have a people sharing collective pain and suffering but we are not a people optimizing a collected resource.

One solution may be for the individual to use lineage as a backbone or spine for a network where each individual along the spine is a plugged-in, high-value information node. Rather than sit at the family table drawing down limited resources by virtue of your last name, each family member is expected to learn a trade or skill, develop and plug into additional networks and labor markets, use income and information garnered to sustain herself, and share excess income and information with her lineage.

This may sound like collectivism, but the difference is the emphasis on each node being individualistic. Each node follows it own value system and manages its resources as it sees fit without interference from other family members. The goal should be to avoid being monolithic in thinking and approach to political, economic, and social events. By attaining true diversity in thought and action, each node along the lineage conduit helps bring true diversity to their populations.

As new information is brought into the population, and individuals increase their social, political, economic wealth, there is greater incentive to procure more knowledge and create resources around which a real community can be built.  As I shared in an earlier blog, blacks are part of a population, not a community. Blacks have no resource or substantive economic activity that they control that provides residuals off of which they can survive and thrive. To attain community status, more members of the population must engage in outside-the-box thinking and this involves encouraging more free thought which is better derived via more individuality.

Free thought and individuality creates the high-value information human nodes that the black population needs.

For the individual, the political economy is micro.

Individuals have to act like foragers even in this technology dependent society. By forager I don’t mean having to grope around in the soil looking for roots, climbing trees for fruit, or hunting for fresh game. I mean that the approach to obtaining and using resources should be a microeconomic approach versus a macroeconomic approach.

The media especially persuades individuals that attention should be paid to the macroeconomy, whether domestic or global. Is national gross domestic product improving? How many millions were employed last month? How many more people applied for unemployment benefits? Did the President’s latest tweeted announcements lead to an uptick in the financial markets?

On the ground, particularly within the black population, I don’t hear chatter about the illusionary macroeconomy. The chatter is about the nominal prices faced by a shopper, whether the costs of food fits their budget, whether an employer has reduced a consumer’s work hours, and whether a family member can help out with a few extra bucks. People are preoccupied with managing the resources that are actually on hand.

It’s probably why macroeconomists sound so ivory tower, their policy proposals so pie in the sky. The average person in my population couldn’t relate to them if they tried because the positions of the macroeconomist sound so detached.

The late James Gapinski wouldn’t take kindly to hearing one of his former students writing off his branch of the economics profession so brusquely and being a fan of Diane Swonk (yes, some economists do have groupies), I cannot say that as people or professionals that macroeconomists don’t empathize with the everyday person. I believe most do. At best they present data about changes in the prices of commodities i.e. copper, corn, wheat, cocoa, oil, etc., that directly impact an individual’s microeconomy, but if global trade were curtailed would that mean the end of my existence or simply mean seeking alternative resources within closer proximity?

So where does the “foraging” come in? What do we mean by foraging? It is my term for self-sustainability. We should consider producing our own energy at a minimum, enjoying the benefit of less reliance on the grid along with lower costs per kilowatt hour of consuming electricity. Supplementing our food purchases with food that we can grow at home would provide an additional benefit of lower food costs.

The self-sustainable approach also makes us less susceptible to not only changes in the macroeconomy, but less susceptible to the transmission of macro rhetoric. Media and politicians would have less fear and uncertainty upon which to leverage their narratives and messaging. The political landscape would either be less noisy or we may see political packages that better align with the increased freedom garnered from self-sustainability.

The second scenario is less likely, unfortunately, because providing political packages that enhance personal freedom is out of sync with the goals of the State which is to create and maintain a dependent collective. Self-sustainability and certainty is a potent competitor to fear and uncertainty and the State would rather not aid the former.