Read on Twitter
1) Thread: The biggest blind spot of the Democratic Party. Even amongst the anti-monopoly segment of the party, most Democrats don’t seem to understand the significance of the monopoly problem.
2) There are two ways to make money. Positive-sum and zero-sum games. In business, the former invest heavily, have a lot of competition and are light on profits. The latter invest lightly, have high barriers-to-entry and huge profits.
3) For stock investors, the former is the plague. Nobody wants capex - even if it helps the aggregate economy. Instead, investors like Buffett want the former. Big barriers-to-entry so capex is light and profits big.
4) But this thread is about politics, not stocks. If we observe these two types of firms, where are they located? A large percentage of the huge monopolistic firms are in the US blue state urban cores (and a few other global cities) where all the liberals live.
5) What about the narrow margin firms that operate in competitive markets and don’t make much money? They are more concentrated in the red state periphery where the Republicans live. These firms don’t have monopolies. They compete against the low land prices in Asia. Tough break.
6) Monopolies exploit pricing power in many ways, but let’s look at Google. Customers don’t pay, but if you are a product firm and want to advertise online, FB & Google are the only game in town. So product firms are stuck paying big. Google’s margin is someone else’s obligation.
7) So how does this play out over time? The market power of the urban monopolies steadily shifts incomes away from the periphery. Smart people from the periphery leave their hometowns for the urban core, making the problem worse. The periphery culture deteriorates.
8) The high income urbanites, flush with monopoly spoils, observe the cultural deterioration of the periphery and wonder why they are so backward. Increasingly, these vile creatures of the periphery start acting less like humans, and more like animals.
9) So the key problem with the Democratic Party is that most of them don’t understand that the racist mouth-breather in the hills of West Virginia isn’t the bad guy in this story. He’s the prey. He might say a lot of dumb shit, but good people don’t pick on the weak.
10) The bad guys in this tale are the monopolistic firms funneling incomes to the urban cores & landowners capturing those gains. Many of these people hide this nefarious activity behind a veil of social liberalism. How can they be bad when the W Virginia guy said a racist thing?
11) I’m not saying fascism isn’t a real threat - it is. But the fascists are a consequence, not a cause. They’re here notifying us we f’ed up. We can’t stop the fascists by telling them to play nice while we keep extracting monopoly rents.
12) We have to stop the fascists by looking at ourselves in the mirror, and understanding that we are the enemy.
