#profits

What You Give Is A Seed

When you give your time, heart, money, effort, you sow seeds. The Bible tells us that the seed you sow will bring you profits. Be a cheerful giver.

I'm coming to DEFCON! On Aug 9, I'm emceeing the EFF POKER TOURNAMENT (noon at the Horseshoe Poker Room), and appearing on the BRICKED AND ABANDONED panel (5PM, LVCC - L1 - HW1–11–01). On Aug 10, I'm giving a keynote called "DISENSHITTIFY OR DIE! How hackers can seize the means of computation and build a new, good internet that is hardened against our asshole bosses' insatiable horniness for enshittification" (noon, LVCC - L1 - HW1–11–01).

Here's a weird consequence of our societal shift from capitalism (where riches come from profits) to feudalism (where riches come from rents): increasingly, your rights to your actual property (the physical stuff you own) are trumped by corporations' metaphorical "intellectual property" claims.

That's a lot to unpack! Let's start with a quick primer on profits and rents. Capitalists invest money in buying equipment, then they pay workers wages to use that equipment to produce goods and services. Profit is the sum a capitalist takes home from this arrangement: money made from paying workers to do productive things.

Now, rents: "rent" is the money a rentier makes by owning a "factor of production": something the capitalist needs in order to make profits. Capitalists risk their capital to get profits, but rents are heavily insulated from risk.

For example: a coffee shop owner buys espresso machines, hires baristas, and rents a storefront. If they do well, the landlord can raise their rent, denying them profits and increasing rents. But! If a great new cafe opens across the street and the coffee shop owner goes broke, the landlord is in great shape, because they now have a vacant storefront they can rent, and they can charge extra for a prime location across the street from the hottest new coffee shop in town.

The "moral philosophers" that today's self-described capitalists claim to worship – Adam Smith, David Ricardo – hated rents. For them, profits were the moral way to get rich, because when capitalists chase profits, they necessarily chase the production of things that people want.

When rentiers chase rents, they do so at the expense of profits. Every dollar a capitalist pays in rent – licenses for IP, rent for a building, etc – is a dollar that can't be extracted in profit, and then reinvested in the production of more goods and services that society desires.

The "free markets" of Adam Smith weren't free from regulation, they were free from rents.

The moral philosophers' hatred of rents was really a hatred of feudalism. The industrial revolution wasn't merely (or even primarily) the triumph of new machines: rather, it was the triumph of profits over rent. For the industrial revolution to succeed, the feudal arrangement had to end. Capitalism is incompatible with hereditary lords receiving guaranteed rents from hereditary serfs who are legally obliged to work for them. Capitalism triumphed over feudalism when the serfs were turned off of the land (becoming the "free labor" who went to work in the textile mills) and the land itself was given over to sheep grazing (providing the wool for those same mills).

But that doesn't mean that the industrial revolution invented profits. Profits were to be found in feudal societies, wherever a wealthy person increased their wealth by investing in machines and hiring workers to use them. The thing that made feudalism feudal was how conflicts between rents and profits cashed out. For so long as the legal system elevated the claims of rentiers over the claims of capitalists, the society was feudal. Once the legal system gave priority to profit over rent, it became capitalist.

Capitalists hate capitalism. The engine of capitalism is insecurity. The successful capitalist is like the fastest gun in the old west: there's always a young gun out there looking to "disrupt" their fortune with a new invention, product, or organizational strategy that "creatively destroys" the successful businesses of the day and replaces them with new ones:

https://locusmag.com/2024/03/cory-doctorow-capitalists-hate-capitalism/

That's a hard way to live, with your every success serving as a blinking KICK ME sign visible to every ambitious person in the world. Precarity makes people miserable and nuts:

https://pluralistic.net/2024/04/19/make-them-afraid/#fear-is-their-mind-killer

So capitalists universally aspire to become rentiers and investors seek out companies that have a plan to extract rent. This is why Warren Buffett is so priapatic for companies with "moats and walls" – legal privileges and market structures that protect the business from competition and disruption:

https://finance.yahoo.com/news/warren-buffett-explains-moat-principle-164442359.html

Feudal rents were mostly derived from land, but even in the feudal era, the king was known to reward loyal lickspittles with rents over ideas. The "patents royal" were the legally protected right to decide who could make or do certain things: for example, you might have a patent royal over the production of silver ribbon, and anyone who wanted to make a silver ribbon would have to pay for your permission. If you chose to grant that permission exclusively to one manufacturer, then no one else could make it, and you could charge a license fee to the manufacturer that accounted for nearly all their profit.

Today, rentiers are also interested in land. Bill Gates is the country's number one landowner, and in many towns, private equity landlords are snappinig up every single family home that hits the market and converting it to a badly maintained slum:

https://pluralistic.net/2024/05/22/koteswar-jay-gajavelli/#if-you-ever-go-to-houston

But the 21st Century's defining source of rent is "IP" – a controversial term that I use here to mean, "Any law or policy that allows a company to exert legal control over its competitors, critics and customers":

https://locusmag.com/2020/09/cory-doctorow-ip/

IP is in irreconcilable conflict with real property rights. Think of HP selling you a printer and wanting to decide which ink you use, or John Deere selling you a tractor and wanting to tell you who can fix it. Or, for that matter, Apple selling you a phone and dictating which software you are allowed to install on it.

Think of Unity, a company that makes tools for video-game makers, demanding a royalty from every game that is eventually sold, calling this "shared success":

https://pluralistic.net/2023/10/03/not-feeling-lucky/#fundamental-laws-of-economics

Every time one of these conflicts ends with IP's triumph over real property rights, that is a notch in favor of calling the world we live in now "technofeudalist" rather than "technocapitalist":

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

Once you start to think of "IP" as "laws that let me control how other people use their real property," a lot of the seemingly incoherent fights over IP snap into place. This also goes a long way to explaining how otherwise sensible people can agree on expansions of IP to achieve some short-term goal, irrespective of the spillover harms from such a move. Hard cases make bad law, and hard IP cases make terrible law.

As nobody's writing a Restoration Plan for the US, our National Political Poet is doing it himself.

Intro: After WW2, US workers became ever more productive - growing our economy, profits & Stock Market.

For 30 years, wages kept up with production.

Then, Reagan's presidency - with its lie of Trickle Down economics - started breaking down the working class!

From 1979 til 2019, our productivity grew 4X faster than worker's pay...

That means up to $9 per hour were stolen from production & sucked upwards to the Bosses.

Minimum wage workers, alone, were owed up to $18,000 - for every year!!

American Foundation Act: Economic Fix -

• Entry Level Minimum Wage must match the Productivity to Wage Ratio - from 1980.

• Further, Wages are Tied to Inflation & automatically adjusted Every Year - that way, Congress doesn't have to fight about it.

• Federally Paid Family Leave for full employees - starting with 3 Months & growing (for years) up to 12 Months.

• Federal Ban on Right to Work Laws - because it allows workers to be fired without any legal recourse.

• Corporate Taxes based on the Ratio of CEO pay to Average Worker Pay - high enough to Not pay Golden Parachutes or Billion Dollar 'Compensation' to any CEOs.

(If these CEOs leave - fine! We can teach & grow better replacements.)

Housing Intro: Once, 20 year-olds could buy Starter Homes.

Today, Home Purchasers are pushing into their 40s & their numbers have been cut in Half!

The National Association of Realtors says that delaying Home Buying - just by 10 years - costs the buyers some $150,000 in Lost Equity!!

Fix:

• Ban on Corporate Landowners - which would open up a massive supply of Single Family Homes!

(Tim Scott, a Republican, & Elizabeth Warren, a Democrat, have passed a law abolishing Corporate Landowners thru the Senate.)

• Add a $25,000 1st Time Buyer Tax Credit: $20,000 to help with the Down Payment & $5,000 more - a year later.

Note: This is the 2nd posting on the American Foundation Act - the 1st served as a general introduction.