The Zero-sum Treadmill

June 15, 2016

Sometimes you come across comments online that are Internet gold. Here’s one from a discussion on Hacker News the other day that provides the single best explanation for why interest rate suppression techniques in use in almost every developed nation around the world right now are not resulting in the economic supercharge that was promised (but also, how they’re working exactly as the powerful would like), and why despite them prices are still going up:

What we call “capitalism” is a perverted incarnation with low interest rates and extremely high monetary inflation. This eliminates the ability to save for the lower class, and pushes in the middle class into wall street’s fake “investments” where they can be scavenged by management fees, insider gaming, and bubbles caused by the surplus of dumb money.

Despite what the inflation acolytes preach, prices should be downward trending because price is the primary metric that an economy optimizes for! Gains in productivity should be directly reflected in the price of goods (eg computer technology, which has been advancing strong enough to resist the forced inflation). Instead, these gains are inflated out of sight and the corresponding new money is distributed to the gatekeepers of monetary creation.

In a functioning economy, workers should be able to gradually save some surplus, decreasing their reliance on weekly income, and giving them more bargaining power. This should cause wages to rise, creating a feedback cycle where workers demand to work ever less (as their marginal utility per extra dollar drops).

Instead, extremely low interest rates create a zero-sum treadmill for any modern necessity that can be financialized (eg housing, healthcare, cars, education), leaving us to compete against one another for minute changes in standing while the banksters collect the surplus as rent.

Then again, perhaps my argument is just a no true Scotsman similar to the ones defending communism, and any fiat capitalistic system will eventually succumb to itself and centralize in this manner (deprecate wealth in favor of income).

What I do definitely know is we’re not going to get there by demanding top-down change, because the top retains power for itself regardless of what paradigm it promises. We must secure our freedom through technological means and build a better system from the ground up.

The news item being commented upon was a poll being run by Mozilla to see what people wanted to see most in their Internet (e.g. privacy, freedom, universal access, etc.). This quickly lead to a discussion about Internet monetization, then about how income inequality and capitalism cause the perverse incentive to push boundaries as far as they will go, even if that means attriting users.

The Zero-sum Treadmill was published on June 15, 2016.

Find me on Twitter at @brandur.

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