Tyler Cowen almost makes a good case against Mega Corporations, unfortunately falls short
Tyler Cowen recently wrote an opinion article for Bloomberg titled:
What happens when a nation built on the concept of individual property ownership starts to give that up?
Cowen’s primary claim seems to be that property ownership gives individuals a stake in the system, and decreasing rates of property ownership in the US is eroding our collective “stakes” in the system. Here’s the quote emphasized in the larger context of the paragraph:
Each of these changes is beneficial, yet I worry that Americans are, slowly but surely, losing their connection to the idea of private ownership. The nation was based on the notion that property ownership gives individuals a stake in the system. It set Americans apart from feudal peasants, taught us how property rights and incentives operate, and was a kind of training for future entrepreneurship. Do we not, as parents, often give our children pets or other valuable possessions to teach them basic lessons of life and stewardship?
This conclusion, that property ownership gives individuals a “stake in the system,” reflects a historically inaccurate analysis of the relationship between property owners and the larger community they live within. Cowen seem to unknowingly refute his own position throughout the piece.
Take these examples:
We used to buy DVDs or video cassettes; now viewers stream movies or TV shows with Netflix […] Music lovers used to buy compact discs; now Spotify and YouTube are more commonly used to hear our favorite tunes.
The great American teenage dream used to be to own your own car. That is dwindling in favor of urban living, greater reliance on mass transit, cycling, walking and, of course, ride-sharing services such as Uber and Lyft.
By definition if an individual doesn’t outright own the property they are using, like in his examples, then they are relying on some “system” to ensure their access to it. In other words, you are heavily bought in, or have stakes in, some “system” when you pay for Netflix, Spotify, YouTube or Uber.
This is partly a problem of definitions, as Cowen’s “System” that we’re implored to have stakes in is poorly defined. Is the “System” the one that is controlled by states, like public transport or roads that facilitate trade? Is it the “system” that is controlled by mega-corporations like our personal computing hardware, modern agricultural producers or medical providers? Is it some commingled public-private “system” like fiber optic network infrastructure, water utilities or energy production, where subsidies and private companies are working in conjunction?
I think really, what Cowen is trying to do is to use the growing popularization of the “sharing economy” as a harbinger of some nefarious ideological trend toward collectivization.
Take this quote for example:
[T]he more commonsensical, broad libertarian intuitions of the American public encapsulate a more brutish and direct sense that some things we simply own and hold the rights to.
Those are intuitions which are growing increasingly disconnected from reality, and no one knows what lies on the other side of this social experiment.
Aside from the No true Scotsman-ing of “Libertarian,” it seems like a pretty clear worry that as our commercial services go, so goes the nation’s institutions. Said another way, Cowen is worried that the more collectivist our services seem to be, the more collectivist our base impulses-and thus organizational demands-will be.
Cowen is right though, there is a power imbalance between lessors and owners in today’s world. However the argument that Uber, Spotify, AirBnB etc… offer even a patina of collectivization couldn’t be further from the truth. In fact it’s largely the inverse.
Workers provide their own capital (cars, homes) and property (music) to intermediaries which then monopolize trade between users and providers through an onerous terms of service. Thoreau would recognize such a state as being a “slave-driver of yourself.”
On the user side, you’re beholden to the owners of the platform to allow your paid access to the producer’s work, which they can revoke at any time for any reason, with little recourse from the user.
The sharing economy taken as a whole, looks a lot more like a command economy than a free market, with a cabal of corporations and financiers following each other’s lead in how they implement the commanding. All with consent and choice by users and workers alike.
The problem however is not that our impulses are becoming more collectivist in nature. It’s that the number of property owners is shrinking, and the remaining ones are not accountable in any real sense to workers and consumers. Cowen’s own examples show that power is massively imbalanced in favor of Corporations, not collectivist groups or governments generally. These massive private organizations create increasingly consolidated barriers to access to what were previously privately owned property, and their management of such access remain beyond scrutiny or reach of the user because of their outsized legal capabilities and regulatory capture.
For example, if you are an up and coming solo artist and want your music to reach a huge audience, releasing your music for digital download on your own site or CD, isn’t a pathway to success because the majority of listeners use Spotify or Apple Music. The market has spoken and it doesn’t support being outside of the mega-corporate distribution system.
Cowen is so close to making a cogent anti-mega-corporatist argument, but either doesn’t want to believe that “free-enterprise” has led to a massive power imbalances or doesn’t see it. There’s a case to be made that crony capitalism has led to this state which I would suppose he is more apt to make.
Entrenchment, capital accumulation, information asymmetry and consolidation of services and products into a handful of companies, has effectively removed any ability for consumers to “vote with their feet.” Possibly competitive products or services are absorbed or killed before they mature as competitors.
To give credit where due, this state of affairs is the result of supremely effective and efficient organizational management by corporate heads. They used the tailwinds of their massively successful products to invest and diversify wisely, hire strategically and prevent being disrupted by consistency disrupting themselves. It’s genius. It is however devastating to a robust and flourishing distribution of economic power.
Cowen’s promotion of “Empire Builders” that seek to monopolize industries, is actually what America was built on, and what we’re seeing now is simply an extension of hundreds of years of rent seeking. Only now, this growth of consolidation is moving so fast, our organizations for collective action (Unions, Government Organizations, Advocacy Groups) are so weak, and the smartest people in the world are joining these massive companies to such an extent that there is nothing to stop them. Not even other potential empire builders, as investors and lenders are increasingly less willing to invest in new companies competing in those verticals because they are afraid that major corporations will kill them.
So Cowen is right, there is a problem, but that problem isn’t an increased impulse to collectivize in the sense that a right-libertarian is worried about — though it might seem like it from the way some young people talk today. The problem is that the “system” is forcing us collectivize around inscrutable and increasingly powerful corporate systems just to live and get along in modern society.
Cowen should be promoting shared ownership of firms, which promotes the distribution of gains to employees. Those employees will then have the capital to start their own firms and the cycle of creative destruction and socially distributed ownership can continue.
Promoting the concept of “own more of the stuff you use, don’t be a collectivist” is just a distraction. We should be moving to more intentional distributed ownership of firms to correct this imbalance and it’s possible to do that without coercive structures in a way that is fair to firms and individuals. It’s important to honestly identify the right boogeyman here first though.