Bradel's New Economics I – Crowdfunding is Awesome · 12:42pm Aug 27th, 2015
After reading some of the things bookplayer and Applejinx have been posting lately, I wanted to write up a blog on why you should care about networking, and why it's not a dirty word. I wanted to do a whole discussion of new economic ideas. I wanted to talk about Kim Stanley Robinson, the Mondragón Cooperative Corporation, and a Guardian article from last month.
And then I realized that I can't write that blog without doing one or two others first—not without making it a ten-thousand-word behemoth nobody's going to want to read. So this blog is not about post-capitalist economic theories, left-wing libertarianism, or the intersection of democracy and economics (not much, anyway). It's about crowdfunding.
You know what's awesome? Patreon.
I'm sure most of you guys know about it, and have known about it for a long time now. It's a website that exists solely for the purpose of transferring money from consumers of art to artists. In a sense, it's the internet's way of crowdsourcing the old renaissance idea of patronage. Well, pre-renaissance. Ancient world, really. Maybe before that.
Why is it awesome? Well, that's kind of a long story—and it involves me digging into an area I find interesting, but one where I'm woefully undereducated: economics.
I think capitalism sucks. As a system it is at best amoral, but people brandish it about like the new path to enlightenment. It incentivises sociopathic behaviors (see: Wall Street, 2008). The steady state of capitalism is monopoly—all of the good aspects of capitalism come from marketplace competition, but capitalist actors have a vested interest in avoiding competition. To work ideally, capitalism needs perfectly informed consumers who pay attention to their economic choices—so of course, producers have a vested interest in misinforming and misdirecting consumers, if they can do that at less cost than it would take to position themselves where perfect consumers would want them to be. Capitalism concentrates power and influence. It's shockingly un-democratic, which is one reason I'm always darkly amused by the degree to which it's become dogma in most modern democracies.
Have you unfollowed me yet? No? Okay, then let's continue.
So here's the thing. However I feel about capitalism, it's undeniably had a "rising tide lifts all boats" effect. But I just can't get over the fact that it's intrinsically inimical to most of the things that make it useful. Regulated capitalism—the only type of capitalism you actually see in practice—is basically a patchwork designed to force the system away from its worst excesses (monopolies, wild financial speculation, etc). And regulated capitalism works pretty well, but it's still got some obvious power-and-influence-concentration issues.
Patreon breaks through some of those, in a really interesting way.
One of the things that drives me up the wall with capitalism is the idea that markets are a good way of setting labor costs. Again, in an ideal state, this totally works—but our markets are nothing like free. Because of power-and-influence-concentration (I'm going to start abbreviating that PAIC), certain actors have more ability to determine what the markets should do than others. I tend to disagree very strongly with some of the values espoused by labor markets, and I'll bet I'm not alone in that. Here are a couple examples that I think a lot of people will agree with. To my mind, this is a very non-exhaustive list.
Issue One: the financial sector. There's a really good reason why financial analysts get rich: they work in the heart of the wealth-creation engine. But as far as I can tell, most of their work doesn't seem to have any positive social role. Sure, they can help with liquidity for businesses, but credit default swaps and day-trading don't seem to be about liquidity so much as they're about finding ways to gamble using other people's money. If you want to earn a fortune on the stock market, you don't do it by investing in companies and watching them succeed. You do it by identifying companies whose stock is incorrectly valued in the short run, buying or selling that stock, and waiting for the valuation to correct itself before selling off or buying back.
Issue Two: collegiate sports. This one cuts two ways. On the one hand, we've got college sports coaches, who are often the highest-paid public employees in their state. I've got a problem with that right off the bat, because I don't care one bit about what these guys do. But many people do care about college sports. But if you think college sports are a thing the marketplace should support, then you have to deal with the fact that college athletes aren't paid and can't unionize. Either way, this system seems screwed up. Who do we have to thank for it? PAIC.
Patreon opens markets up in a way that lets consumers have more direct say in the value of the products they consume. And it's not alone in making the move toward "pay what you want"—Humble Bundle is another good example. So are Kickstarter and Indiegogo. But Patreon is my favorite, because Patreon lets me say "here's what I think your work is worth, to me."
The way I use Patreon makes me a pretty shitty capitalist. I basically throw money at people because I like them, and I don't ask for anything in return. Capitalism says I ought to be looking out for myself and maximizing my own profits. Capitalism doesn't really like it when people voluntarily overpay. But voluntarily overpaying is one of the ways PAIC already breaks the system. When a country subsidizes an industry to make it more competitive, with the goal of gaining market share and being able to raise prices in the long term, that's a similar type of overpayment. One could argue the government is getting something back, in the long run—a newly competitive industry may be of widespread benefit. A rising tide lifts all boats, after all.
If we're going down that route, though, I'd argue that the way I'm using Patreon does get me something. It gets me a better marketplace, one that more closely matches my own notions of what human progress means. And fundamentally, I care so much more about human progress than my own personal well-being that even tiny pay-outs on that scale are worth a substantial investment from me. (That's also why I'm spending two hours writing this blog at six o'clock in the morning.)
I'm trying to blog at least once a week midweek, so you can expect a follow-up to this around Tuesday next week, I expect. I'm not sure if I'll get to the topics I wanted to cover then, or if I'll need to go back and do some more groundwork on my ideas like I did here. I guess you'll just have to tune in then if you want to find out.
Well, this is fascinating thus far. I look forward to more.
Patreon is a fascinating thing, really.
Always fun to look and see what the various rewards are, yeah?
~Skeeter The Lurker
God no, I am right there with you.
It's all down to disposable income, however. I do not use Patreon, or things like it, especially in the way you describe, because I absolutely cannot afford to dispose of my money in such a way. Certainly not while supporting two other people, with a blue collar job that cannot and will not ever unionize (partly because everyone has been thoroughly tuned to the idea that unions are the worst thing that ever happened.) and underpays, while my house is actually literally falling apart. But to be honest it would be difficult even in better circumstances. And I don't want to undercut the system either, as that feels remarkably unfair to those who make the works I enjoy. While your actions here are certainly admirable sounding, I can't help but feel it is a bit naive as well.
The other problem is there are plenty of people who don't feel bad undercutting the system. And that is partly due to having a system that encourages that behavior of course.
I can't give you a proper response right now because I'm on a cellphone, but you are extremely wrong about most of what you wrote about capitalism. In particular, monopolies are impossible in capitalism without outside coercion, and capitalism isn't so much a system as much as a reality of any situation where free agents are able to trade with each other in an unrestricted manner. There can be no real democracy without capitalism.
So the full scholarship with room and board and a free full-ride 5-year education at a big-name university, paid travel across the country, exposure on national TV, and (if we're talking Division I) a shot at playing pro, are... what? Trivial side benefits? Minor perks?
While, as you know, I tend to agree with 3350788 [1], I think you're absolutely right about crowdfunding being an amazing tool that helps to free up the markets and move towards a capitalist "meritocracy.[2]" And I don't think that your "giving to people you like" thing is anti-capitalist at all[3]. You use your money to support something that adds value to your life. That something happens to be people. If those people stopped adding value to your life-- if they dropped off the face of the internet and wouldn't speak to you anymore, or if they suddenly became neo-Nazis and started spouting off racist rhetoric -- you would probably eventually stop liking them, and stop supporting them. I know this isn't a conscious thing on either end (I promise I'm not fighting back any neo-nazi urges to maintain your support), but these are calculations it's healthy to make in any relationship, and when they're out of balance we consider the relationship unhealthy (more generously with people we care about more.)
[1] Excepting, as you also know, my theory that more communal economics work within a small monkey sphere where people not only usually like to, but are mentally capable of acting generously in a cost-effective and actually helpful manner.
[2] Well, meritocracy in as much as "people who make people want to pay them more deserve to be paid more."
[3] Not that I have a lot of room to talk, as a direct beneficiary.
This is exciting.
3350788
There is a tendency for discourse on this subject to conflate emergent systems with designed systems. Where most people seem to characterize "the system" as something that someone thought up and imposed on everyone instead of the organizational patterns that form as the result of the interaction of a large collection of people, provided they share a certain set of axiomatic values. Thus, at it's core, for "capitalism" to form, you simply need a large group of people who all subscribe to the concept of ownership. This results in trade, which results in the development of a monetary system, which further results in the development of the idea of loans and investment, and further abstractions proceed from there.
This makes assertions about the system, such as "monopolies are impossible" patently absurd. First, because it assumes the idea of an "ideal system", which gives rise to what I'll term a "no true Scotland" argument, wherein you can argue that any system that displays traits you don't like can be disregarded as being an impure example of such a system, which is only valid in the context of a designed system, which, as established above, capitalism is not, and furthermore, you yourself stated as much immediately afterward by describing capitalism as an emergent system. Secondly, no such system exists in a vacuum, so stating that "it wouldn't happen without outside influence" is meaningless, as the system can only exist as a pattern of behavior in a world taken as a whole. Thirdly, of course, monopolies are not impossible because they can and do exist, and if I were to make some baseless speculation for a moment, it seems perfectly reasonable to me that they should form within the pattern of capitalism because markets favor incumbents who have been in business for some time and can afford to undercut new competitors due to their established position and acquired capital. In fact, monopolies are only prevented by "outside coercion" in the form of government regulation. (Though based on what I've said above you could argue that that isn't really "outside", as the government is also part of the system, being supported by and operating through the economy.)
3350795
This is actually a fairly uninformed opinion, which I really wish was right. College athletes' education plays second fiddle to their sporting "career" (which in of itself isn't really a long-term benefit, if you look at how often these players make it into a pro league). The student athletes are expected to spend so much time in training, that hardly any is left for classwork, and on top of that many universities have been caught giving college students (especially ones with lower grades than their standards allow) "summer courses" that they don't even attend, to give them false grades to bump up their gpa and flesh out their course load. On top of that, these "scholarships" are tied the sports program, so if they receive an injury that prevents them from being able to play, then that is removed, and the fact that they don't get to unionize or even get recognized as "workers" means that some student athletes that end up getting injured are not even eligible for basic compensation—they just get dumped by the wayside, injured and with no one to help them recover. Between the way NCAA treats student athletes and how complicit universities sometimes are, it's really a shitty situation.
And all of this ties back in to the capitalism discussion. A lot of people, myself included, are not nearly as well informed as they should be, and it's up to us being informed, and having avenues to acquire that information which are crucial.
This is true for a lot more than just capitalism. It's true for democracy. In an ideal example, we would need perfectly informed consumers exercising their informed choices, and holding elected representatives accountable for the regulation of businesses. What tends to happen instead is businesses get more profits when they invest in buying politicians and controlling what regulations they have to follow, and what information we receive, or how we perceive it. And in order to improve how informed we are, we need transparency and effective journalism, and even that has been getting attacked in recent years by the trend of "native advertising", which in turn comes back to how we fund things.
Patreon is great. I kind of wish we had more avenues to support people and services. I'm not sure how it would work, but it's interesting to think about. While I'm terribly reluctant to engage in political discussions on this site—I like to keep my politics and my friendship horses separate—I do think that bookplayer's blog and recent spin-offs are drumming up some really excellent discussions.
I'm gonna wait on 3350788 to have more time/availability to write something, but 3350880 is pretty much capturing my thought process on all this.
It is, however, worth mentioning one of the bits I cut out of this blog here—which was a discussion of non-capitalist systems. As much grief as I'll give capitalism (and I think it deserves a lot of it), it's also better at existing as an emergent system than any other major cohesive proposal out there. Communism sounds really nice in its idealized state, but as an emergent system it's tended to suck a lot in almost all iterations, and without the nice "a rising tide lifts all boats" feature. And there's a reason modern capitalism displaced mercantilism back in the day.
I think as a society, we can do better. And I'd like to think that notion is both unsurprising and uncontroversial—why would we think we've stumbled into the One True Economic System now, when the history of human economic systems is one of change, as in all the rest of human endeavor? I think that capitalism has some nice features, though, that capture important bits of human behavior and distill them into economic ideas that are both useful and cool to play around with (competition and market behavior, mainly). And I think that capitalism does a better job than most systems at making the emergent system match the designed system, largely because of the adversarial structure inherent in it and the fact that most people seem to have figured out that anarcho-capitalism is like playing Russian Roulette with six loaded chambers.
Anyway, like I said, I want to give Soge a chance to say his piece before I spout off too much more. But I think it's important to acknowledge that capitalism manages to accomplish a lot of good things, and it almost certainly manages to fit the idealized system better in practice than most economic systems. I just think that a necessary part of evaluating any system is looking at the pressures it creates and the easiest ways for those pressures to be resolved, which is where my comment on monopoly being the steady-state comes from.
The way you use Patreon gives you satisfaction, both directly from making sure something you like continues to exist in the market, and indirectly by allowing you to feel a sense of agency. That satisfaction is an economic good that you're purchasing with your money. A good modern economist will nod sagely at the whole business, because being good at economics these days means understanding how people take very rational economic steps to satisfy their emotional and social needs as well as their physical ones.
You often see a disconnect, because some people have not caught on that this counts as economic behavior--especially when not catching on would serve a rhetorical point.[1] You're not voluntarily overpaying, though--you're arriving at a price that you feel maximizes your satisfaction. Since part of your satisfaction is the feeling that you're helping ensure the long-run success of the system (or so I gather), it can look like an overpayment to someone who is only looking at the short run.
And there, I fear, is the edge of a much, much larger topic.
[1] One of the more pernicious things I see is people being persistently obtuse about how various out-groups spend their money. "They're poor, why do they have X?" Because X gives them enough non-tangible economic benefits in something like social standing in their community that they feel it's worthwhile to purchase it.[2]
[2]Or often enough, because X actually has an extremely important tangible economic benefit that the speaker is deliberately ignoring or is too much of a dinosaur to think of--see cell phones and job seekers.
3350880
I like this a lot.
3350795
Works quite well for most of the non-revenue sports. It's football in particular where the battle is taking place for, I think, two main reasons: concussions and the huge amount of money being made off it.
3351034
It's certainly more complex than I laid out. Externally it does seem like they're being paid in benefits rather than cash. It also seems at a cursory level that it's risk vs. reward: they know going in that this scholarship might not last, that they could be injured, and that their degree could be perceived as "tainted" if they got it via athletic scholarship. This seems less like an issue with student-athletes getting paid cash on top of their scholarships than with holding the NCAA and the universities accountable for taking care of these students and treating them fairly. That includes holding them to the same academic standards as both other students and other student-athletes who aren't Division I football and men's basketball participants.
Starting next week I'll be glued to college football every Thursday and Saturday through December. I'm a fan (GO DAWGS!) and my wife is a college professor so I'm very familiar with grade inflation, phantom classes, phoney majors, stand-ins for tests, and having student-athletes sign up for classes in "Weight Training 303" which basically gives them an A+ if they show up for football practice. They get the shaft, especially if they're not megastars to begin with. Worse that student-athletes in schools that are academically rigorous (c'mon Vandy, let's shoot for 6-and-6 and a bowl game!) are as I said "tainted" by association. I'd rather see the NCAA as a rules-governing body only, not a TV-rights empire.
Patreon has done me favors, and I am a little shamed to say that I have not given back to Patreon as much it gives me. This is because I want it to be an income stream at this point in my life. (Crowd funding of various types is the only reason I was able to meet you in Baltimore this year.) This makes me a better capitalist and arguably a worse human being than you.
Still, I do like to throw a buck at people's "name your price" Bandcamp albums for the reason listed above; I enjoy their music and want to encourage them (however trivially) to keep doing things I like.
3350795
I should be clear going into this that I'm focusing exclusively on college athletes in sports with high-profile leagues those athletes are trying to get into. I think your points are probably pretty fair for someone on a swimming scholarship or a lacrosse scholarship.
Yeah, I'm pretty cool calling those things trivial side benefits or minor perks—though at the same time I feel like I ought to acknowledge that I probably put more value on those things than the entire edifice of college athletics.
Most college athletes don't turn pro. A few lucky/talented ones do, but for most, college is the peak of their sporting career. So "access" to be hired into the pros feels like an odd and pretty minor perk—it's not like the professional leagues could exist without some sort of method for screening candidates to bring in, and if they didn't have college athletics, they'd find another way like running baeball-style farm teams. If anything, an enhanced focus on only picking students from college athletics programs seems like it basically creates a company-store style problem. If you want a shot at the brass ring, you have to put up with whatever the NCAA tells you to do. That goes back to PAIC.
TV exposure doesn't even seem like much of a perk to me. You get your name known in a particular context, but beyond your ability to make it into the pros that doesn't seem to count for much. You can't take advertising contracts while you're a player, and obviously nobody's going to care about you after you finish playing, unless you go pro. You might get a free round of drinks at the local bar, depending on whether you stay close to the college after leaving, and you get a "fifteen minutes of fame" rush, but neither of those seem very valuable.
Travel around the country seems like it's probably even less valuable to me. What are you getting to do with that travel? I could be wrong, but I don't get the impression that college athletes get much time for sightseeing on these trips. Unless you really get a kick out of being on planes or in busses, this seems like it's just using up a lot of time you could be devoting to more useful endeavors.
The free five years of education is the one thing that sounds good, and the one thing they can really offer IMO. But it's kind of undermined by the fact that their (mandated, I believe) participation in college athletics often directly conflicts with their education. The Forbes article I linked reports that for some schools, male basketball players wind up missing a quarter of all class days in their spring semester. But at least the players for whom that happens should, logically, have a better probability of landing an NBA contract once they're done. The article also reports that Division I college football players spend an average of 43.3 hours per week on football-related activities. As a grad student, I work half time and take a lower course load than undergraduates (though admittedly I have harder classes). These guys are being expected, on average, to work more than a full-time job in addition to dealing with their studies. That doesn't sound like much of a free ride.
And speaking of the Forbes article, I think it does a great job expressing what I see as the real issue here: comparative value added. College athletics, especially Division I football and basketball, bring in tons of money to a university. No, wait, they usually have separate budgets, so that money stays inside the athletics program. Where it doesn't go to the players. But the colleges still benefit, through increased undergraduate applications and an ability to select a higher caliber of student for admissions—so the athletics programs are managing to give back to the university even while keeping all the money they earn (and all alumni donations earmarked to them). There's a very good reason college coaches make so much money.
So sure, you've got a few up-and-coming superstars in the mix—but in college athletics you've also got a vast underclass of not-quite-good-enough athletes who will never be paid for playing their sport (despite the physical tolls it can take), who are effectively working to pay their way through college (but with no ability to control the money they generate), and who create lots of added value (that all goes to other people).
They get paid exactly what the market says their labor is worth: nothing.
This... is one of those times I really wish I could like and favorite blog posts.
Or I could have just reloaded my comment stream and been all, "Yeah, what 3351034 said."
And then it sounds from 3351080 like we're not that far apart anyway, so... meh.
3351080
I think we can agree on that. I personally think that we can't keep student athletes in this limbo between being a paid professional and an "amateur athlete" (as all their contracts make explicitly clear that they are). They need actual support for situations where physical injury would take them out of commission, and they need regulation so that if they are only getting paid in an education, at least make sure that it's something that they can actually acquire.
3351058
This is the point at which I feel like our ideas of capitalism are diverging. I'm paying what I think is appropriate for the benefit I receive, I completely agree with that point. But the market has clearly set a lower price on these things than I'd consider appropriate, and I think it's fair to say that I could get all the benefits I want with less money than I pay. Well, sort of? It's getting into sticky territory because one of the key benefits I want is to try to rescale what the market thinks is appropriate, so literally anything I could pay could be considered a fair payment.
Once you get down into the weeds of "How do I feel about myself for making a $1 contribution, versus a $5 contribution, versus a $25 contribution", you're getting into some really sticky economic territory in my mind, because any price you pay can be seen as inherently self-justifying, and thus dissociated from any real sort of market. How is anyone else supposed to influence the prices I'd set in my head on how much enjoyment I get for giving money?
I'm glad that economists are starting to try to account for things like altruism, but I don't know if I believe they'll fit into the system nicely. In essence, I don't know if there's any good way to falsify an hypothesis about altruism providing a subjective economic benefit. (But then again, I spent a lot of time studying psychology; I have to admit somebody might be able to figure this one out.)
3350816
Jawohl Mein Fuhrer. We will keep your secret in-check against the masses and their uneducated minds until your master plan can take effect.
Apologies if someone's already said this, but it actually means you're the best kind. In pure free-market capitalism, there is no "wrong" way to use capital, unless it directly harms someone. The Internet in general, with Patreon as an example, is the only place where free-market capitalism still happens on a large scale.
Politicians often give capitalism a bad name by preaching free-market rhetoric, then doing the opposite in their policies. Since few people look into these details, or even make sure the proper terms are being used, they assume they live in capitalist societies, when in fact they do not.
The Western world has not had widespread pure capitalism for many generations, and the last vestige of it died with four words: "Too big to fail." If you had capitalism, there would have been no bailouts in 2008. What you had instead was a merger of state and corporate power, which (WARNING: CONTROVERSIAL STATEMENT) is the definition of fascism, according to Benito Mussolini. And he, of all people, would know.
Don't be fooled: Not all fascism looks like 1930s Italy.
3351113
One of the more cynical ways to account for altruism is to attribute it to non-altruistic motives. You may notice that I sort of did that to you just now--I phrased it in terms of satisfaction bought, when some of that satisfaction comes from the fact that you're being altruistic. I actually kind of hate this, on a philosophical level, but I find it very difficult to refute, and it keeps being a useful tool for making altruism fit into economic models. Altruism "buys" satisfaction, or an assurance of social stability, or social standing, or even self-righteousness or something. It's economic behavior because you're still making the fundamental economic judgement about opportunity cost when you choose to be altruistic, and deciding that you like being altruistic more than you like having the opportunity that the money represents.
Economics bleeds right into psychology when you're talking about individual actors, because that opportunity cost judgement is often so subjective. It depends on how that person feels, and what they value. Every decision to buy anything ends up coming down to a subjective judgement that weighs the utility of holding on to the money against the utility of buying the thing. Part of the utility of holding money is the feeling of security of knowing you have options. Part of the utility of buying the thing is an emotional payoff. That's why we buy tasty food instead of Bachelor Chow--we value the pleasure of the taste over the marginal extra security from holding an extra $10 or the other pleasures that $10 could buy us, like a game on Steam. It's also why we don't buy (much) Kobe beef--the extra pleasure just isn't worth the asking price, when there are other things we could do with that money.
3351159
Stream of consciousness incoming.
I see your point here, I think—and I obviously do choose a price-point I'm comfortable with when I give money, because how could I do otherwise. But I'm still having a hard time seeing how this interfaces with the idea of markets (which is perhaps my bad, because I'm really the one who made that connection myself, in the blog).
If I've got a product I want to sell, it's relatively easy to consider what price point will get the most profit if you know what the demand curve will look like. But if I'm making decisions about how to spend money on things that other people can't buy (e.g. my own personal happiness), then that seems to exist outside the conventional paradigm of market action, because supply and demand seem effectively static. I suppose you could say I make a lot of these choices and self-norm, so you can consider all these choices together—but at the same time, the choices are not really exchangeable since I'd consider them all differently.
The most interesting piece here, to me, is the way what I just said parallels the various interpretations of probability (classical, frequentist, subjective). A classical market theory seems like it ought to be one that supposes an intrinsic value of the goods in that market. A frequentist approach, which seems to be the norm in my experience and is what I'm working with, would be the standard idea of long-run trade-offs in supply and demand leading to a balance point in the value of goods. A subjective approach would be for every individual to work with their own internal ideas of the value of goods, and to effectively spend their money according to either that valuation or some hybrid between their subjective valuation and what they see as the larger collective valuation of goods.
That's a really interesting notion right on its face, and worth further exploration I'm sure. In fact, I'm betting it's already a well-discussed idea I just wasn't aware of before now.
Oh gods. I swore off arguing about capitalism & left-libertarianism years back, but this is getting me all ruffled inside.
Big fan of patreon, though. Even thought I haven't got around to it yet.
3351156
Why on Earth would uses of capital that directly harmed others be "wrong"? That seems to imply some moral component to capitalism which doesn't seem to have a whole lot of connection to the economic ideas—though like I said, this isn't a topic on which I'm particularly well-informed.
I've always assumed that in a capitalist system, the goal would always and naturally be the acquisition of more capital—and that action that caused an actor to gain capital would be "good", whereas any action that caused an actor to lose capital would be "bad". My beef with capitalism mostly comes from the fact that a lot of the best actions from a capitalist standpoint seem like they're pretty shitty actions from a humanitarian standpoint—for example, the generation and exploitation of monopolies, and misleading advertising.
Heh. I have a far, far less philosophical take on Patreon. (I am not a very philosophical person. My answer to the classic "glass half full or glass half empty?" question is to drink the water because I'm thirsty and who the heck cares?) People keep telling me to start one for my writing, and at this point the mention of Patreon gets a knee-jerk cringing away reaction from me. I have monetized several of my hobbies, and while in many ways it's been a positive thing, it has had the net result of making me kind of hate those hobbies. If I for some reason stopped being paid to make plushes, it would probably be years before I made one "for fun" again. I don't want to ruin writing like that. But people keep saying I should.
3351310 This is something that consistently terrifies me, and a major reason why I've never opened my Patreon and stopped doing commissions. The problem is that not getting paid for my hobbies means having to get paid for not doing them, and feeling like all of my time is being wasted all the time. I have no way of determining whether I would have been happier had I just gone ahead and let people pay me to draw, but my current situation, despite being for all outward appearances generally positive, has given me a great deal of angst. Maybe misery is just a constant and you'll have it no matter what you do.
As was once said:
The same thing applies to capitalism, really.
The reality is that democracy is bad and capitalism is bad, but all the alternatives are far worse, so what ends up being done is that we create systems based on capitalism and democracy and then sort of slap plaser over the cracks. The US is a democracy, but most of the useful work done by the government is done by the least democratic parts of the government - the bureaucracy and the court system.
Interestingly, this is rather the opposite of capitalism, where the bulk of the best work AND the worst work is both done by highly capitalistic entities (on the good side, Google and Microsoft. On the bad side, investment banks), while the government's welfare programs have questionable outcomes at best (LBJ's War on Poverty). It is also interesting to note that the government supporting broken capitalistic instruments (see again: investment banks) which tends to result in the worst outcomes.
The irony is that capitalism is actually a MORE altruistic system than most other systems. The reason is that in capitalism, altruism is mandatory; if you aren't doing socially useful work that other people will give you money for, you'll starve. Conversely, in a system where people can freeload, many people will choose to do so instead of doing useful work. Capitalism ENFORCES altruism, it just does it on the opposite end of the equation - it forces you to work.
It also is much more respectful of individual liberty than other economic systems. It is meritocratic, at least to an extent.
The primary problem with capitalism is that things require capital - as in, start-up costs, before you can start generating income. In a market where there are no capital investments, you'll see pretty ideal behavior; the larger capital investments are required, the less well a system tends to work. Most of the breakdowns of capitalism are a direct result of the fact that there are start-up costs and up-front investments you need to make, all of which are what allows things like monopolies to rise up and banks to grub money and all sorts of negative things. It creates inefficiency. Alas, we live in real life, so capital is a necessity - and often, capital beyond individual means.
Ironically, the problem of capital is why all other systems actually function even worse than capitalism does - centrally planned economies don't work very well because it requires the government to make correct decisions about just about everything, with much more limited autonomy, which allows you to drive your country straight off the side of a cliff, as seen in the Great Leap Forward. Basically, central control allows you to more or less take the inevitable screw-ups in what to fund and multiply them.
A secondary issue (which arises from the primary one) is inherited capital, which is also bad.
The sad reality is that the stock market is necessary (indeed, investments are one of the end-runs around the problem of capital) but while companies selling stock is useful, people selling stock to other people is not. Almost all stock trade activity takes the form of people selling stock to other people, but without that secondary market, the primary market of investing in companies wouldn't exist to the extent that it does (and it would be a lot less democratic than it is).
The issue with not allowing financial instruments to fail sufficiently often is a secondary issue, but I think that letting investment bankers lose their shirts is a good thing.
I suspect that is going to change because the players are cottoning on. That said, the idea that players "aren't paid" is false; players are in fact paid a considerable amount in the form of free college educations, living stipends, often admission to universities they aren't qualified to attend, ect. It is more that they are underpaid relative to what they are worth, whereas professional athletes are getting a much better bargain.
I think the largest flaw in our present system is executive pay; executives are being wildly overpaid relative to their value added, and executive pay needs to be heavily slashed across the board. CEOs are horribly overpaid relative to their value in most cases - there are some CEOs, your Steve Jobs and Lee Ioccocas who are worth more than their weight in gold (literally, in fact; I did the calculations). But most executives are largely interchangable and not terribly valuable or competent, and should be remunerated accordingly (i.e. at a low level). Frankly, the stockholders SHOULD basically set the boards and CEOs on fire for taking so much money, and are not acting in their own best interests. The goverment will probably have to step in at some point and deal with this.
Incidentally, as 3350816 points out, capitalism doesn't actually say you shouldn't fund things that you want done - in fact, it rather says the opposite, that if you don't do so, they won't get done. Patreon is a means of providing for public goods via a significantly more meritocratic system than the government - it is, in effect, voluntary direct taxation, except that you're paying for services rendered in many cases. If the marginal value of whatever you're paying to people on Patreon is great enough, then it is an entirely logical capitalistic decision to give them money to support said good.
Indeed, this is the exact same logic which underlies taxation, though taxation is involuntary direct support of public institutions which is enforced at the societal level to make sure no one is skimping too much on providing for the common welfare and making sure that the country remains stable.
3351034
The thing is, this isn't actually true.
Or, I should say, it isn't true in the way that you think it is.
The amount of time they spend training is not excessive, and is comparable to them working and attending school - something many people do, in fact, do.
The main reason that this sort of thing happens is because many student athletes are simply not qualified to go to the universities that they're going to. Because the NCAA is a scholarship program, what you see is massive fraud, as these "student atheletes" are actually "atheletes we're pretending are students".
Actual student atheletes - the students who actually DO take advantage of the educational opportunities they're provided - are just fine and dandy. The cheating inherent in the system doesn't hurt them, and the fact that they get personal tutors is actually super awesome for them. A student athlete who is actually taking their classes - and many of them DO - is reaping the full benefits of the system.
However, many student athletes aren't this. The reason that these fake classes exist, and the cheating exists, is because they're simply not qualified to go to the university they're attending. One study found 20% of football players at some universities can't read at the 5th grade level and are functionally illiterate. Obviously, these people going to college is a farce - someone who reads at the 5th grade level is simply not going to be capable of completing college-level coursework.
So, they cheat, and they pretend like these athletes are students. And these athletes go along with it because they see it as their shot at making the pros. They are, in fact, being remunerated for their efforts, but the guy who gets a degree in nuclear engineering while he's playing football is benefitting a lot more than the guy who is getting a fake degree - the latter will be unable to perform in the real world, and because many of them fail to make the pros, have basically spent four or five years competing while gaining nothing more than a piece of paper without the training that went along with it - and everyone knows it, these days.
But this cheating is largely voluntary on behalf of the students - many of these people simply don't care, which is why it happens.
The people who do care don't sign up for rocks for jocks.
It is true that the lack of insurance for these athletes is problematic, and it is probably true that many of them are not being adequetely remunerated. A larger issue lies in the fact that a lot of this is fundamentally subsidized public entertainment masquerading as education funding, which is bad.
I will note that most of the worst abuses exist in the big money sports - football is probably the worst in this regard, though basketball and baseball are also problematic. You seldom hear controversy over schools' polo teams or track and field squads.
A lot of people focus on regulations, but frakly, that's not the major avenue of corruption. Yes, regulations are sometimes unduly influenced by commercal interests, but it is worth noting that sometimes commercial interests have a better understanding of some of these systems than the government does, which actually makes them at least being consulted important - you need to know if the regulations you are proposing are meaningful and realistic, as well as understanding the costs and benefits associated with them.
For instance, a company I used to work for, Energ2, produced extremely little waste. What little wastewater we produced was from our boiler - indeed, it was ALL from our boiler. The problem was that boiler water has to be treated to prevent the boiler from degrading, which meant that because we eliminated essentially all other forms of wastewater apart from condensation drips from refrigeration units, which is, as you might imagine, essentially no water. And in fact, the wastewater from our boiler was incredibly marginal in quality - we're talking on the order of gallons per day, most of the time.
The problem was that this water had a pretty high pH, which would violate the city's wastewater codes, so we had to jump through a bunch of hoops towards neutralizing a few gallons of water per day, which was such a marginal amount that the sewer system would never notice it - and it was only very marginally above the pH limit to begin with. If you were to mix it with an equal amount of ordinary water, it would meet the standards (though I'll note, intentionally diluting it was illegal - that would just be wasteful of water, after all).
The whole thing was an example of someone creating a standard, and then not thinking of corner cases and how it might effect things, and create undesirable consequences in some situations.
The main avenue of corruption is actually government contracting. Government contracts are how companies rip off the government the most - and a lot of it isn't even corruption on the government's part, but just the companies in question ripping off the government because of how the government works and because a lot of juries are extremely unsympathetic to the government when contractors rip them off. Still, there are plenty of cases where friends of politicians propose self-serving programs that feature their company doing something for the state and being paid for it.
3351048
I think the main argument for this is that we've done a lot of iterating, and it is unlikely we're actually vastly far off as far as economic systems go - we can observe economic systems across the planet, and every developed economy follows a similar model. They aren't identical, but the fact that they're basically all mixed economies with a lot of aspects in common suggests to me that whatever the "one true economic system" may be, it either isn't wildly divergent from present day systems, or it is reliant on systems which don't exist yet or have only just come to exist.
Another issue is that a lot of future trends in technology seem to point towards better conditions for capitalism. The Internet has made long-tail production much more plausible, because it is much easier to find the audience for your long tail product than it was historically. Customization has become increasingly feasible over time, and custom products to suit end-consumer needs are precisely the sort of thing which tends to be good for a capitalistic system.
I think whatever "one true economy" exists, it is very unlikely that it doesn't rely on capitalism, because a number of the core tenants of capitalism (meritocracy, individual choice, public valuation, distribution of capital towards more efficient players) are just so good. I don't think there's any other system which intrinsically favors those things.
Capitalism exploits natural selection, which probably makes it a powerful system.
3351080
I approve of this evaluation of my Alma Mater's football team.
Ironically, you can probably estimate how abusive a football program is by its win-loss record.
3351099
It isn't a free ride. Student athletes are, in essence, being paid to be student athletes.
Which, frankly, is totally fine to me. I don't have a problem with it, so long as they're being adequetely remunerated. And really, a lot of universities offer work-study programs.
A student athlete actually making use of their college education is largely on their own shoulders. Students who do so are, in fact, getting a pretty reasonable reward, especially if they go somewhere like Stanford, which they probably wouldn't have gotten into otherwise. Or if they're going to Vanderbilt, would have gotten into otherwise, but now don't have to pay $40k+ per year to go there.
A student athlete who doesn't make use of their college education is pretty much getting free room and board for four or five years, which is a pretty lousy bargain.
3351113
You seem to be confused about how capitalism works. Capitalism takes into account the idea that individuals might set different valuations on things, and thus be willing to pay different prices for it; this is, in fact, the heart of the supply-and-demand curve. Paying more means that you're fundamentally saying "I want more of this from this producer", which is not irrational economic behavior at all. In fact, this is pretty much why people pay more for goods produced by certain manufacturers; they feel like they're getting more value out of it.
If you want Bookplayer to blog, it makes sense to pay bookplayer to do so. The fact that I blog for free (at the moment, anyway) doesn't mean that your economic decision to support bookplayer is any less rational. Indeed, it probably means my own behavior is irrational as a producer, supplying something people would be willing to pay for for free.
But there's no requirement that people don't just give stuff away.
3351159
This is the correct way to account for the emergence of altruistic behavior from an evolutionary standpoint. Pure altruism is actually very bad. But reciprocal altruism - that is to say, altruism where the person who recieves altruism is expected to behave altruistically in return - is actually a highly successful evolutionary model.
In fact, it is suspected that one of the major drivers - possibly THE major driver - of the human brain is the fact that we are social animals, and we basically ended up in a situation where we employed ever more sophisticated and convoluted forms of deception and detection of altruistic behavior. Ancestors who were good at decieving others but also good at detecting freeloading and who behaved in an altruistic manner passed on their genes at a higher rate than their competitors. Being able to model other people drove ever more sophisticated cognitive modelling, which resulted in runaway selection towards ever-greater levels of intelligence to both be better at shorting others and to be better at detecting sothers tricking you.
Systems which are purely altruistic are actually bad because of the free-loader problem.
Patreon - by paying people for producing stuff - is really a form of reciprocal altruism. You supply them with goods, and they supply you (and the community) with services.
This is a frikkin' awesome post and has generated some very thoughtful responses. I can't wait to see where you're going with this. I'm particularly interested in your thoughts about Kim Stanley Robinson and the Mondragon corp.
As a not entirely unrelated aside, I'd like to point out that MLP has shown us one of the clearest examples of the capitalistic concept of Supply and Demand that I've ever seen: In the episode where Fluttershy is trying to buy cherries for Angel's salad, everyone remarks that the cherry-seller is "being mean" to Fluttershy. But he's really just being a good capitalist. He has a low Supply (the last two cherries left) and Fluttershy has a high Demand (Angel is gonna smack a pony if he doesn't get them), so the price rises dramatically in accordance to the basic economic principle. Pure capitalism, mot meanness at all! (Yes... there is a bit of my tongue in my cheek at the moment.)
3351156
But Trump does look an awful lot like Mussolini. I've seen the picmemes!
But, seriously;
Why does harming someone make it wrong? (I'm talking capitalism here, not ethics; as far as I know, capitalism contains no inherent moral judgements.) Artificially inflating prices for a critical, monopolized commodity causing one's customers to lack the capital for other necessities is something that occurs all the time. It demonstrably does harm, but makes higher profits for the corporation holding the monopoly. Yes, I would consider it ethically wrong, and in fact, such practices are mostly illegal, but that's because of regulations added to pure free-market capitalism. The system of pure free-market capitalism drives it to such practices because they generate more profit, and "harm" has no place on a balance sheet.
3351283
You're tickling along an important thing here, and that is that microeconomics is a pretty sizable umbrella. There's bigger-picture market-level or larger stuff that relies on statistics, and close-in individual-level stuff that can be thought of as "The Psychology of Money". I've been addressing altruism in terms of individual psychology, and you're wondering about its place in the market.
A single person making subjective value decisions is statistical noise. The shape of the demand curve is dictated by a big group of people all making their subjective value decisions. Once you've got enough of those people to be statistically relevant, you have a demand curve. The demand curve is inherently pricing in the fact that happiness is part of the purchased product--part of what it's saying is something like, "on average, this product makes people this happy, so we can expect demand to be that much higher at a given price point than physical utility would suggest." So it's not really meaningful to talk about a market for your happiness--it's more that happiness is a distributed component of all markets.
3351360
Oh, I know the arguments and the evolutionary reasoning. There's a reason I went straight for this theory of altruism when I wanted to actually analyze it, and that's that it works very well. But as a life-long Eugene resident and Star Trek fan (IE dirty nerdy hippie), that doesn't mean I have to completely like it.
People are very wired to think in the short term, and to be extremely risk-averse. Altruism seems like a counterbalancing instinct that encourages us to make long term and/or risky investments in our social group, which are necessary for its cohesion. I worry sometimes that if altruism is widely consciously thought of in reciprocal terms, it will lead to less altruism overall, because it will lead to people evaluating their altruistic actions with the decision-making systems that are biased toward short-term, risk-averse thinking.
3351310
It just struck me that Patreon is not a new model. Public radio and television have done essentially the same thing for decades, and there is a critical difference that speaks to your fear of the model sucking all the fun out of your art.
With Patreon,[1] one gives money to support a person, and then enjoys whatever they produce without any (or much) control over that content. With public radio, the "membership" is much the same, except that most stations evolved a method to know what sort of content people were willing to pay for, and started weighting their programming accordingly. Seems like a good idea, right? But the consequence was that quirky programs that only appealed to a minority of the listeners started disappearing. Things that made stations unique and fun went away, to be replaced by the programming designed to appeal to the widest audience. (And, of course, rake in the most membership dollars.) Most public radio programs were rebroadcast across the nation, and regional stations lost much of their uniqueness.
Not that I'm condemning such models of support,[2] after all, producers of content need money to do what they do. It's just that it seems to me that the more an artist (or distributor of art) concentrates on the money, the less they concentrate on being creative, playful, and experimental... which is where all the best art comes from, IMHO.
Are Patreon artists doing polls of their supporters to determine what sort of project they'll work on next? If they aren't now, they soon will be.
---------------
[1] Please excuse me for any errors regarding Patreon; I don't have an account myself, so I don't have firsthand experience with its mechanics.
[2] Okay, maybe I am, a little bit.
3351308
Good questions.
Ethical concerns aside, harming others for profit is a bad long-term business plan, unless the perpetrator has the support of the state. Without bailouts, state violence, and regulations bought and paid for by large business interests, the corrupt Wall Street companies would have failed. Besides, word gets around, and no one in his right mind will do business with a corrupt company or person, unless forced by the state.
However much an individual or company may seek to harm the life, liberty and property of others for profit, the extent to which they can do so on their own is dwarfed by the wars, taxation, and restrictive laws perpetrated by nation-states. Nation-states simply have better PR. If you think the government is any better than big businesses, stop paying taxes and see what happens.
If you don't like how a company does business, you can take your business elsewhere, or even compete with them, as people often do when state regulations do not prevent it. But if you don't like the way the state spends your forcefully-extracted tax money (say, on wars or for-profit prisons) then you have to move to another country... whose government will also extract your wealth by force.
Free-market capitalism is not built up or enforced by government decree. It simply happens, much to the frustration of mercantilists and socialists, who can't understand why people try to improve their own lives by trading goods, labor, etc. for mutual benefit. Ever see a kid with a lemonade stand? Capitalism at work.
Your concern is that the accumulation of wealth makes humanitarianism impossible. But the truth is, wealth accumulation is what makes it possible at all. Allow me to explain.
In this fandom, we see charities like Bronies For Good, as well as huge donations that roll in whenever one of us is ruined by bad luck. It's not longer a surprise when actual donations far exceed the needed amount. We see that people need no coercion to help each other. But people need more than the mere will to help each other. They need the means. They need to have accumulated extra wealth in the first place. If you only make enough money to get by, you can't help others without ruining yourself.
In the interest of brevity, here is a presentation that explains the core concepts of what I'm getting at:
Does that help?
Well, this escalated quickly.
3351373
True. The trouble with this sort of debate is that the semantics are regularly muddied by people with vested interests, or well-meaning people who don't know any better. Yes, I only speak in the defense of the Free Market.
3351393
I believe most of your concerns are addressed here. But on the specific subject of monopolies and price fixing...
Most people believe that regulation prevents these things from getting worse. In actual fact, regulations are essential to maintaining the monopolies' status quo. They are a big part of the reason why most small startups fail within the first few years. Therefore, little room is left for healthy competition.
It's reached the point where kids' lemonade stands are regularly shut down by police for not following regulations. These laws are supported by well-meaning people, but this is the unintended result.
...
You realize, of course, neither of us is ever going to convince the other, right?
Well, the lurkers can decide for themselves. The Internet is a free marketplace for ideas, after all.
3351466
Let's take a real-world example: Enron. Because of its virtual stranglehold, California had no choice to go elsewhere for energy. Enron artificially inflated prices by circle-selling through cooperative (colluding) companies, and that left the California government with two choices: Pay the extortionate price for electricity or turn the lights off. (Not an option.)
Government uncovered the collusion and corrected the problem, (No more Enron.) but not before the harm was done to California's economy and citizens.
The option to "not deal with" corrupt companies only comes into play when consumers know about the corruption,[1] or aren't trapped by a de facto monopoly.[2]
As for such practices being harmful and self-defeating in the long run... yes, they really are. But corporate culture rewards immediate gains, not long-term strategic planning. A mission statement is the gnat in front of the quarterly earnings report windshield.
Bottom line: Tyranny is bad 'mkay? Doesn't matter if it's corporate or government tyranny. Both governments and corporations can be beneficial or harmful, and forming a philosophy that demonizes one while exalting the other is the road to handing over total control to that entity, ensuring a tyrannical rule. Balance is better.
----------
[1] Something that corrupt companies expend a great deal of effort and expense to hide from consumers.
[2] Something that any purely capitalistic corporation aspires to.
3351283
All economic decisions are like this. When you buy a washing machine, you're choosing whether or not to buy a washing machine for yourself, not for the world in general. Supply and demand curves are the result of aggregate data - you are just one data point.
3351420
People already do this with things like social programs. Its necessary.
3351466
Sure, but this is a form of mandatory altruism - everyone in a society benefits from the protection and stability of the state, police, fire protection, roads, currency, a military, environmental regulations, ect. so everyone is forced to pay for them.
No man is an island, as they say, and it isn't really wrong to do this - many of these things would not be done at all, or would only be done locally or haphazardly, and without the power of the state behind it, environmental controls are pretty difficult to enforce short of violence or arson. The government doesn't have to spend its money perfectly to still be just in doing what it is doing on the whole.
The US actually tried a super-libertarian experiment at its founding, and it was a disaster. It is why the US is the way it is today.
3351496
Looks like we cross-posted!
The lemonade stand effect you mentioned is a thing. In fact, the California government shut down a bunch of neighborhood street vendors for selling queso fresca without being inspected and licensed food vendors. Turns out that those vendors had poisoned quite a number of people with botulism. Maybe those inspections had a purpose besides crushing the little guy for the Big Queso monopoly?
There is a balance point between lawless capitalism and total government regulation. It's never been hit exactly, providing ammunition to both sides in the argument. But when, in the history of the world, has a simplistic, extreme ideology been good for anyone?
3351571
That's good to hear about Patreon. I would much rather see people[1] be rewarded for doing what they love and are good at, rather than pandering to customers for money. It would be interesting to do a survey of Patreon users to see how (or if) it's changed their work habits.
------------------------
[1] Artists, I should have said. Some people might love drinking until they pass out, and be demonstrably good at it.
3351496
And just to assure you that I am not dismissing your stated concerns, yes I can see the government has propped up quite a number of monopolies, and is doing great harm in quite a number of economic arenas. But that just means that government is being done poorly, not that the idea of governing and regulation is bad in and of itself.
Almost any system will function to the benefit of everyone involved if it is run by people of good will. Conversely, those same systems will become great evils if run by people guided solely by their baser instincts.
So much of modern political discourse is pointing to a villain attached to a particular party/ideology that one dislikes and claiming that the fault lies with the system, not the individual(s). Sadly, there will never be any shortage of villains, and such a tactic for the sake of "winning" will never be of benefit when trying to chart a reasonable plan for the future.
3351571
I respond with, "That's what my heroin dealer says."
3351080 Meh, I'd rather them just go ahead and make the Football team a for-profit minor league thing with licencing rights from the college and free tuition as a perk for players.
3351156 Fuck, you're right.
3351585
Don't you step on my dreams!
3352051
Love your user name, BTW. Dunsany rocks!
No, no, you're not a bad capitalist at all. You're not 'throwing money away with no hope of any return' - you have found individuals who supply a good that you want, and have decided to invest in their ability to produce it.
Also, I am very interested in hearing how 'networking' is not a dirty word - at best, I've managed to view it as a necessary evil.
Hey, reading this comment section wasn't as horrible as I thought it would be. Reasoned and polite intelligent-sounding disagreement. That's nice.
My own view of economics in the future are it will be interesting to see what happens to the current version of capitalism currently in use in mainstream America (for example, though it's widespread across more of the world than that) when there is enough wealth and the technology to easily provide comfortable living and where creative work can be had for free, but there is enough wealth and living is so cheap that an artist can have that basic level of survival when only one person in a thousand actually pays them for what they do. When people can easily make a basic living doing what they enjoy, as opposed to having to work as a cog in the system just to run in place, a lot of our current economic infrastructure and assumptions start to fall apart.
Wanted to share this, though this is over a week after you posted this and only tangentially related to the general discussion of capitalism, this is one of the most interesting articles on a more focused area of economics I've ever read. Now that I've been reminded about it, there is a lot there that applies to the crowdfunding avenues that have been in mainstream use in recent times.
Camels and Rubber Duckies by Joel Spolsky