(Roughly) Daily

The estimable Brad DeLong has observed that Marx was right: “all that is solid melts into air”…

Since 1870, worldwide, on average, according to our flawed standard measures, every thirty years about 4/5 of the economy have improved in technology and productivity by roughly 25%, at a rate of roughly 0.8% per year. And 1/5 of the economy has quintupled in technology and productivity, at a rate of about 5.4% per year. That leaves average productivity, worldwide, roughly twice what it was a generation before. And it is a different, although overlapping, share of the economy that undergoes this massive leading-sector push every generation.

And so, since 1870, we have seen successive Steampower, Applied-Science, Mass Production, Globalized Value-Chain, and now Attention Info-Bio Tech modes, with these transformations occurring faster and more completely in today’s rich countries and slower and incompletely in today’s poor countries, but with life even in poor countries being substantially transformed vis-à-vis life 150 years ago…

… For most people, a generation sees (i) some change in their roles as producers in the organization and productivity of their jobs and the pieces of the societal division of labor that they do, some change in their roles as consumers and utilizers of most of the products of the human division of labor, but about one-fifth or so of their life as consumers and utilizers of the products of the human division of labor completely upended, largely in a good way. And then there are the 1/5 of people whose jobs and whose roles as producers were caught up in the Schumpeterian creative-destruction leading-sector technology tsunami, for whom little is the same as it was thirty years before. That change is to their substantial detriment if they tried to do the old thing in the old way: their real incomes then would be only 1/4 or so of what they would have expected. But that change would have been to their substantial benefit had they found a way to successfully surf the wave.

To summarize: Since 1770, the modern economy changes by puncture, not glide. Every thirty years these days, a sector explodes—lifting productivity, reorganizing firms, and scrambling career ladders. Roughly four-fifths inch forward, while one-fifth quintuples and redefines the frontier. Those leading sectors—steam, mass production, information—rebuild institutions and stress politics as they march. Most people experience partial gains in consumption and workflow; the unlucky fifth face brutal displacement unless they pivot fast. Past waves forged industry, mass production, suburbia, microelectronics; each remapped the social order, often painfully. Average living standards rise, but the distribution is jagged, and the politics volatile. Today’s leading edge runs through data centers and cognitive work: prompts, context engineering, evaluation, and synthesis. The liberal arts—long buffered—now sit at ground zero. Survival means translation: turn judgment, clarity, and taste into leverage over machines and markets, while rebuilding public capacity to manage the turbulence…

– “All That Is Solid Melts into Air”: Since 1870, Roughly One-Fifth of the Economy Is Transformed Every Thirty Years,” from @delong.social

And how’s that going? Two dispatches from the front, on separate but fundamentally-related phenomena emerging in our current “puncture.” First, Luke Goldstein on the way in which a great many major corporations — from airlines to social media platforms — now aspire to become unregulated banks. As he explains, “bankification” today accounts for the highest profit margins in the US economy, crippling productive capacity and setting the stage for the next crash…

The US economy is turning into one giant bank.

Starbucks holds nearly $2 billion of customers’ money in its rewards program. That’s more than the total deposits managed by 85 percent of chartered banks, making the coffee chain one of the biggest financial institutions in the country.

Conversely, Capital One, one of the world’s top banks, now operates its own cafes on city street corners.

Airlines are now little more than flying banks, given that they make more money from selling frequent-flyer points to credit card companies than they do flying passengers.

More Americans than ever are in debt to their nearby grocery store due to predatory “buy now, pay later” loans offered during checkout.

As you’re wheeled into an emergency medical procedure, the nurse may ask if you’d prefer to pay on a deferred-payment loan plan, an increasingly common way to finance health care expenses.

And if you can’t pay your rent on time, it could soon become common for your apartment building owner to lend you the money, putting you in debt to your landlord.

These are snapshots of the new wave of financialization sweeping across the country, where the lines between finance and commerce are being blurred.

Upward of 40 percent of Americans now pay for basic items like groceries and health care using borrowed money — and this excludes credit cards. A third of younger Americans hold their savings on nonbank tech platforms like Venmo, and industries from retail to transportation derive anywhere from 14 percent to half of their profits from partnerships with credit card companies.

While this new type of financialization takes many different forms, the endgame is the same: Most major corporations now aspire to become unregulated banks, opening up new avenues to make even more money hand over fist. Banks operating credit cards are the highest-profit-margin enterprises in the economy. Every company wants a share of the loot, amassed from high fees and low overhead costs.

This development has been supercharged by the Silicon Valley investor class, under the Orwellian term “embedded finance.” Others call it “bankification.”

The peddlers of embedded finance promise a world of “frictionless transactions,” providing consumers efficiency and convenience by integrating financial and nonfinancial services.

But these new profit streams come with a range of potential harms….

– “Everything Is Becoming a Bank” from @jacobinmagazin.bsky.social

Next, Ted Gioia on the rise of our gambling culture. He begins by recounting the grimy details of the recent gambling bust that rocked professional basketball (includsing the roles of ESPN and the NBA itself… though…)..

… It’s not just sports. Two weeks before the FBI arrests, the New York Stock Exchange invested $2 billion in the Polymarket betting operation. As Gordan Gekko says in the movie Wall Street: “It’s all about bucks, kid.”

Does the NYSE now count as the sixth family running gambling in New York?

No, it’s not that simple. There are lots of gambling businesses in New York, starting with the government. The NY State Lottery brings in more cash than all the Mafia families combined. So the NYSE is a johnny-come-lately to the gaming tables, like country rubes visiting the Statue of Liberty…

[Gioia unpacks the “ideas”seven rules of casino design and management” of casino design expert Bill Friedman (“a former gambling addict who wrote a very influential (and expensive) book on casino design”]

… Of course, the real insidious process is happening online, where every big web platform is imitating a gambling casino. And they rake in gangsta profits bigger than any gangsta has ever made.

How bad is it? Consider this fact: Among the eight largest companies in the world, at least half of them promote addiction with screen interfaces that mimic slot machines…

– “Why Is Everything Turning into a Casino?” from @tedgioia.bsky.social

The last word, which applies to both pieces, from Gioia:

Of course, none of this demands your participation. You can leave the casino at any moment—or never enter in the first place. Even if gambling is addictive, most people refuse the bait.

That’s especially true right now. Las Vegas tourism has fallen dramatically. And when you interview consumers, they will tell you why—they are upset at the casinos. The gambling business has become too exploitative and manipulative.

So people just walk away.

The exact same thing is starting to happen with social media. And for the same reason—folks are fed up with the apps. Many stop using them, and brag about it to their friends. So the trend of walking away feeds on itself…

… Maybe businesses need to find a different role model than a casino. It’s not hard to think of a few examples.

So let me close with a wild idea.

Perhaps they can design web apps to serve people—instead of controlling, manipulating, and surveilling them. After all, many businesses once thrived with that simple formula. It’s not too late to return to that practice…

By way of understanding “casino design and management” techniques at work online, see also “Catalog of Dark Patterns, “a variety of dark pattern examples, sorted by category, to better understand deceptive [consumer experience] design practices,” from Dark Patterns.

And by way of context: “The Invisible Economic Crisis,” (Louis Hyman interviewed in TNR), “It Is Trump’s Casino Economy Now. You’ll Probably Lose,” from Kyla Scanlon. and Scanlon’s follow-up piece in her newsletter: “How Bible Sales and Chipotle Explain the Economy.”

* Costas Lapavitsas

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As we just say no, we might recall that it was on this date in 1834 that the first mention of the card game poker was published, a reference to an account by English actor Joseph Cowell, who reported that the game was played in New Orleans and on Mississippi River boats (as recounted in Jonathan H. Green‘s book, An Exposure of the Arts and Miseries of Gambling.

Poker itself originated in the late 18th century, and had probably spread throughout the Mississippi River region by 1800. It was played in a variety of forms, with 52 cards, and included both straight poker and stud. 20 card poker (the variety referenced by Cowell) was a variant for two players. (It is a common English practice to reduce the deck in card games when there are fewer players). 

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