A weird monopoly I found recently is a company called Immersion Corp.
Immersion holds a patent thicket of over 3500 patents on haptic feedback and force feedback. Force feedback is particularly interesting - imagine a flight simulator where you actually feel like you are flying a plane from vibrations and movements in the controller.
Immersion doesn't seem to produce any tangible products of its own except litigation and licensing fees. The frustrating thing is the patents are comically vague. It's like an "ideas guy" came up with a bunch of ideas and patented them. I suggest reading some of them:
Great post. To kill the casino, just phase out the tax deduction for interest expense. Would reorient the economy toward greater percentage share of equity financing, reducing speculation and adding resilience.
May 19, 2022·edited May 19, 2022Liked by Matt Stoller
Giving the bailout money to everyone was a big mistake. If they had spent it on the lower income percentiles, and on towns and cities with low tax revenue and higher unemployment rates, it would not have been spent on baseball cards and what not.
That said, most of the inflation i guess is through monopolization and energy prices shooting through the roof after the Ukraine invasion.
In that sense the Cantillon comparison is apt, since he lived in a time where production was very limited. Upscaling after an influx of money/gold was just not possible. These days we could produce of anything as much we want, but it doesn't happen because of all the reasons written about on this substack which prevent capitalism from working as it normally would.
Great post, as usual. I have one remark though. I reckon central banks get too much attention for the predicament we find us in, vs fiscal policy. Since the Reagan-Thatcher era, US and UK governments have been running heavily pro-cyclical fiscal policies, leaving it to the central banks to compensate every time the cycle turns. The current over heated economy is more down to political choices than CB policy, imho.
The part about imports is EXTREMELY INTERESTING. Aristocrats hate paying for anything, and especially hate paying the uncouth local tradesmen. No prestige value in keeping the local economy healthy.
Taken together with other current trends and factors, is this broad-based decline across many sectors indicative of the entrance into the territory of collapse? Has the economy entered a downward spiral at this point? Perhaps this isn’t the right question to ask, or an oversimplification. Fantastic write-up, as always.
On one hand, I completely agree with the point you have made many times that politicians on the "left" have abdicated responsibility by claiming that they want to change the system, but are powerless in the face of broader forces like globalization. This claim ignores that politicians do in fact have substantial power, they simply are choosing to either not use or it, or to actively use it in favor of capital.
But, at the same time, we live in a very different world than that the 1930s where we had a decisive movement against capital and in favor of labor. Back then, only 10% of the population owned stocks. Now, while liberal commentators correctly point out that the stock market is overwhelmingly owned by the wealthy, slightly more than half of the population owns stocks in some form. Even if in reality the benefits of the bubble go overwhelming to the richest, there are a very large number of people who are relying on 'the stock market' for a significant share of their retirement income.
Sorry, as good as Kanter may have been in the past with regards to monopolies I see somethings that I don't like. For one he was with the FTC, then lawfirms, and now he is back again working with the Federal Government. I see a revolving door that is, or maybe, very lucrative for him and his firm. In addition to this he is working for the very corrupt DOJ. If he remains to be an honest man and try to do his job for the benefit of the American people I think we will see him hog-tied by the Biden administration (if he knows whats good for him and his family).
Good to see John Rawls mentioned in a post. The only problem is that our leaders ignorance, rom Obama, the Clintons, and Biden, to Trump, McConnell and Cruze, is much thicker than a veil.
Matt. Seriously. You're all happy about Jonathan Kanter, but aren't all those folks like him going to get canned the microsecond the Republicans take back the House and Senate. And the "conservative" majority on the Supreme Court hasn't met a monopoly it doesn't like (except when the likes of Google take down the more outrageous conspiracy theories off YouTube). And The Donald, if elected again, certainly doesn't care about antitrust. Is this not about to be the perfect storm?
What was this PE bail out at the beginning of the pandemic? My lived experience was issuing guidance across the portfolio to NOT participate in the PPP loan program. Mostly because we didn't want reputational blow back from taking government money like there was from TARP (which was great investment for the taxpayer though...). We weren't unique as that sentiment was shared across the industry so I'm surprised to hear this characterization that PE got "bailed out".
Billionaire net worth closely tracks public market valuations. I don't think there's really a unique "us" versus "them" angle to what's happening right now. Their stock portfolio sucks as much as your average American's does. Your billionaire list above consists of entrepreneurs, not financiers, so I think you may be conflating the threads a bit.
Many companies are private and all of them have shareholders. How would you like them to transact? It's easy to shit on PE but, like, nobody is forcing anyone to do anything here. LP's willingly give money to PE (or buy TPG/Apollo's public listings), shareholders of companies willingly sell to PE firms, and the returns have been great. Who's being scammed here?
I skimmed the Phalippou paper on PE returns and I largely agree with the rebuttals. Again, buy the market if you want. I would note that while it's obvious to everyone today that buying the S&P is the best investment strategy ever, VOO wasn't even founded until 2010. Hindsight is 20/20. We're all consenting adults in this market so participate however you want but PE returns have been the best among asset managers over the past 4ish decades. Phalippou's choice of vintage and methodology looks like he has a strong agenda. I wouldn't hold your breath for a broad PE blow up during this recession (growth equity and commercial real estate will probably take it on the chin though).
Another great post! As far as I am concerned, my ROI in this site makes this one of the best investments I have made :)
I think you are channeling Alexander Hamilton's 1791 "Report on the Subject of Manufactures" whose principles built our industrial strength - before they were essentially dismantled 200 years later - but everything old is new again and its time to resurrect these ideas - so go for it, Matt!
I would count the dot com collapse as a 21st phenomenon, even though the bubble was created in the 90s. That’s an unprecedented 3 financial collapses in 2 decades. No?
A weird monopoly I found recently is a company called Immersion Corp.
Immersion holds a patent thicket of over 3500 patents on haptic feedback and force feedback. Force feedback is particularly interesting - imagine a flight simulator where you actually feel like you are flying a plane from vibrations and movements in the controller.
Immersion doesn't seem to produce any tangible products of its own except litigation and licensing fees. The frustrating thing is the patents are comically vague. It's like an "ideas guy" came up with a bunch of ideas and patented them. I suggest reading some of them:
https://patents.justia.com/assignee/immersion-corporation
https://www.immersion.com/
They are widely disliked in in the flight simulator/gaming community
https://www.reddit.com/r/hotas/comments/80106n/so_this_is_the_patent_troll_company_that_held/
Love your work Matt!
Great post. To kill the casino, just phase out the tax deduction for interest expense. Would reorient the economy toward greater percentage share of equity financing, reducing speculation and adding resilience.
Giving the bailout money to everyone was a big mistake. If they had spent it on the lower income percentiles, and on towns and cities with low tax revenue and higher unemployment rates, it would not have been spent on baseball cards and what not.
That said, most of the inflation i guess is through monopolization and energy prices shooting through the roof after the Ukraine invasion.
In that sense the Cantillon comparison is apt, since he lived in a time where production was very limited. Upscaling after an influx of money/gold was just not possible. These days we could produce of anything as much we want, but it doesn't happen because of all the reasons written about on this substack which prevent capitalism from working as it normally would.
Excellent and highly understandable by non-econ expert!
Great post, as usual. I have one remark though. I reckon central banks get too much attention for the predicament we find us in, vs fiscal policy. Since the Reagan-Thatcher era, US and UK governments have been running heavily pro-cyclical fiscal policies, leaving it to the central banks to compensate every time the cycle turns. The current over heated economy is more down to political choices than CB policy, imho.
The part about imports is EXTREMELY INTERESTING. Aristocrats hate paying for anything, and especially hate paying the uncouth local tradesmen. No prestige value in keeping the local economy healthy.
Taken together with other current trends and factors, is this broad-based decline across many sectors indicative of the entrance into the territory of collapse? Has the economy entered a downward spiral at this point? Perhaps this isn’t the right question to ask, or an oversimplification. Fantastic write-up, as always.
Your discussion of housing vastly understates the role of state and local land use policies.
In some places in America, homes sell for a bit more than their cost of production, like any normal manufactured good in a competitive market.
In other places, homes prices reflect casino finance.
The difference is state and local land use policies.
I do think it's a tricky situation.
On one hand, I completely agree with the point you have made many times that politicians on the "left" have abdicated responsibility by claiming that they want to change the system, but are powerless in the face of broader forces like globalization. This claim ignores that politicians do in fact have substantial power, they simply are choosing to either not use or it, or to actively use it in favor of capital.
But, at the same time, we live in a very different world than that the 1930s where we had a decisive movement against capital and in favor of labor. Back then, only 10% of the population owned stocks. Now, while liberal commentators correctly point out that the stock market is overwhelmingly owned by the wealthy, slightly more than half of the population owns stocks in some form. Even if in reality the benefits of the bubble go overwhelming to the richest, there are a very large number of people who are relying on 'the stock market' for a significant share of their retirement income.
Sorry, as good as Kanter may have been in the past with regards to monopolies I see somethings that I don't like. For one he was with the FTC, then lawfirms, and now he is back again working with the Federal Government. I see a revolving door that is, or maybe, very lucrative for him and his firm. In addition to this he is working for the very corrupt DOJ. If he remains to be an honest man and try to do his job for the benefit of the American people I think we will see him hog-tied by the Biden administration (if he knows whats good for him and his family).
CBDCs will provide the means to run this scam a while longer.
Antitrust actions by this government would be for show, only.
Good to see John Rawls mentioned in a post. The only problem is that our leaders ignorance, rom Obama, the Clintons, and Biden, to Trump, McConnell and Cruze, is much thicker than a veil.
Matt. Seriously. You're all happy about Jonathan Kanter, but aren't all those folks like him going to get canned the microsecond the Republicans take back the House and Senate. And the "conservative" majority on the Supreme Court hasn't met a monopoly it doesn't like (except when the likes of Google take down the more outrageous conspiracy theories off YouTube). And The Donald, if elected again, certainly doesn't care about antitrust. Is this not about to be the perfect storm?
A couple of questions/thoughts:
What was this PE bail out at the beginning of the pandemic? My lived experience was issuing guidance across the portfolio to NOT participate in the PPP loan program. Mostly because we didn't want reputational blow back from taking government money like there was from TARP (which was great investment for the taxpayer though...). We weren't unique as that sentiment was shared across the industry so I'm surprised to hear this characterization that PE got "bailed out".
Billionaire net worth closely tracks public market valuations. I don't think there's really a unique "us" versus "them" angle to what's happening right now. Their stock portfolio sucks as much as your average American's does. Your billionaire list above consists of entrepreneurs, not financiers, so I think you may be conflating the threads a bit.
Many companies are private and all of them have shareholders. How would you like them to transact? It's easy to shit on PE but, like, nobody is forcing anyone to do anything here. LP's willingly give money to PE (or buy TPG/Apollo's public listings), shareholders of companies willingly sell to PE firms, and the returns have been great. Who's being scammed here?
I skimmed the Phalippou paper on PE returns and I largely agree with the rebuttals. Again, buy the market if you want. I would note that while it's obvious to everyone today that buying the S&P is the best investment strategy ever, VOO wasn't even founded until 2010. Hindsight is 20/20. We're all consenting adults in this market so participate however you want but PE returns have been the best among asset managers over the past 4ish decades. Phalippou's choice of vintage and methodology looks like he has a strong agenda. I wouldn't hold your breath for a broad PE blow up during this recession (growth equity and commercial real estate will probably take it on the chin though).
Another great post! As far as I am concerned, my ROI in this site makes this one of the best investments I have made :)
I think you are channeling Alexander Hamilton's 1791 "Report on the Subject of Manufactures" whose principles built our industrial strength - before they were essentially dismantled 200 years later - but everything old is new again and its time to resurrect these ideas - so go for it, Matt!
I would count the dot com collapse as a 21st phenomenon, even though the bubble was created in the 90s. That’s an unprecedented 3 financial collapses in 2 decades. No?