Rent-seeking as a service

March 27, 2019 (1117 words) :: The geniuses of Silicon Valley have become the thing they fear the most: tax collectors.
Tags: public-services, inequality, big-tech

This post is day 86 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.

There’s no shortage of acerbic terms out there used to describe the people at the very top echelons of Silicon Valley. The new robber barons. The boy kings. Our tech overlords.

The power of these terms lies in the way they implicitly form an “us” vs “them”. The image of a robber baron conjures the image of its opposite: the people being robbed. There are the kings or overlords who rule, and then there are those who are ruled.

To be the latter is, clearly, undesirable. But to be the former - to be the one in charge, to have untold wealth and power, to be someone special rather than part of the unwashed masses - is, to a certain kind of person, quite desirable. There’s something thrilling about the possibility of ascending to those ranks. And once you’re far up enough along that ladder, the insults hurled at you by the rabble below don’t even so much as sting. Instead, the epithets might even bolster your view of yourself; after all, if someone tells you you’re basically a king, then that’s either a compliment, or a defensive barb that stems from jealousy (they wish they were king).

I think we need new language to describe the behaviour of Jeff Bezos et al. The problem with relying on terms like “robber barons” and “boy kings” is that they assume the perspective of those on the bottom (those who suspect they will never be the rulers, or do not want to, and thus take it for granted that they should be skeptical of power). This is obviously an important perspective, and one that applies to like 95% of the population, so I’m not saying that this language should be discarded. But for the 5% who genuinely have a claim to being “rulers”, or who think they could be one day, the derision here falls flat. Even if they’re aware of the mainstream connotations of the terms, they don’t evoke the desired negative emotional reaction, because the dominant paradigm under capitalism glorifies the idea of becoming the ruler.

So let’s take the perspective on those on top for a second. Can we exploit the contradictions in their worldview to make them feel bad about their neverending pursuit of power? Is there a way to demonstrate that the values they hold are belied by the very ends they seek?

Tech executives (and those close to them) tend to hate taxes. They might acknowledge the utility of taxes in paying for roads, schools, the judicial system, etc, but in practice, they do everything they can to avoid paying them. They’ll donate tons of money against a ballot proposition to slightly raise revenue taxes (by approx 0.5%) for companies grossing $50m in San Francisco. They’ll move their money through extremely byzantine international shell corporation schemes like the “double Irish, Dutch sandwich” to elide the corporate taxes they’re already supposed to pay. They take advantage of tax breaks offered on the state and municipal level (e.g., San Francisco) even though they would have probably relocated there anyway.

What if we thought of some of the most lucrative tech companies as essentially tax collectors, but privately-run (and thus not democratically accountable)? Economists call this rent-seeking, and what we’re seeing with a lot of tech companies is that their telos is little more than “rent-seeking as a service”. It’s basically baked in to their business model. Once you’ve fully developed the technology underpinning your service - be it coordinating food delivery, or processing payments, or displaying intrusive ads to people who just want to read a goddamn page on the Internet without being entreated to buy stuff - then your whole schtick then becomes collecting taxes on a whole ecosystem of economic activity.

So maybe we should consider an alternative perspective to describing tech moguls as monarchs, because not everyone seems to realise that monarchy in the abstract is bad. Instead, we should describe them as if they’re tax collectors. Nobody likes tax collectors, and Silicon Valley billionaires least of all.

What’s worse, these tax collectors are operating according to terms set by people who are not democratically accountable in any way. (At best, they are accountable to other people who have tons of money and power.) And so they’re spending the taxes they collect in really dumb ways that any of us would object to if done by the state (like spending $100m for a private vacation retreat in Hawaii …). They’re certainly not building roads - they’re even, sometimes, closing roads (true story).

In the long run, I actually don’t like the idea of enshrining taxation as a means of funding public services, which I’ve sort of touched on in a previous fragment. I think the best use case for taxation is as a tool for decreasing economic inequality, and that its use should be gradually phased out over time as a transitional step. In the long run, you’d want an emphasis on predistribution over redistribution - i.e., preventing markets from distributing income so vastly unequally in the first place.

In the meantime, though, taxation is an important tool for correcting the severely myopic levels of inequality we’re facing right now. (To take this analogy perhaps a step too far: it’s like glasses or contact lenses that you’ll have to wear every day, as opposed to laser eye surgery to improve things permanently.) In any case, our economic system today still behaves as if tax revenue should be treated as the funding mechanism for public services. As undesirable as that may be in the long term, it may actually clarify things in the short term, because it gives us another way to think of the huge fortunes amassed in the tech industry - paper fortunes in the case of the execs, but actually massive cash hoards for companies like Apple.

What are these fortunes but unspent taxes paid by the public? The fact that this degree of wealth concentration still exists tells us that private enterprise enterprise is not capable of finding a productive use for these funds - that they are unable to efficiently allocate tax revenue. I suspect a more democratic mode of governance will do the trick.

Don’t let these people convince you that it’s their money, and that they should have the right to dispense (or not) with it as they please. They’re tax collectors, after all. This is our tax money - they’re just holding on to it for us. If they refuse to use it, then maybe it’s time for a change in governance structure.

Thanks to Jason Prado for suggesting the comparison to tax collectors.

« See the full list of fragments