HOW TO SAVE THE WORLD:
FREE PERSONAL SECRETARIES ORGANIZE GROUP BUYS
Economists often disagree but they all do agree that there are three economic systems:
1. Monopoly economy (Communism)
2. Cartel economy (Corporatism)
3. Free market economy
Historically a monopoly economy has been very rare because its inefficiencies quickly destroy any advanced economy. This happened in the Soviet Union during War Communism in 1918-21, in China during the Great Leap Forward 1954-7, in Cambodia during the Khmer Rouge 1975-79 and in North Korea during the Arduous March 1994-98.
Historically pure free market economies have also been quite rare. They have only existed in frontier areas. Famous examples include some American frontier areas and especially Medieval Iceland that was truly virgin land. However, the era of freedom never lasts very long because politics always creates privileges such as monopolies and cartels. For example, the production of financial mediums (money) and various services (banking, arbitration/law, media, education and health) have almost always been either monopolized or cartellized by the state. By controlling money, banking, laws, medicine and ideas the rulers have tried to cement their power over the people.
In Antiquity and the Middle Ages the rulers further increased their income by selling monopoly and cartel privileges to various producers and traders. Only after some of the monopolies and cartels over the production of food and industrial products were relaxed was it possible for the Industrial Revolution to start in the 1700s.
It was enough to create the Industrial Revolution and raise living standards by merely eliminating some monopolies and relaxing some cartels. Just imagine what would happen if all monopolies and cartels were eliminated in the production of both products and services? One thing is certain: That would not be in the interest of the monopolists and cartellists. It is in their interest to not only maintain but to expand their cartels by manipulating the political process. This is precisely what is happening. Big Business is becoming global and creating a global corporatist cartel economy.
The multinational companies are taking over to such an extent that various sectors of the economy are dominated only by a handful of companies. It is not an exaggeration to talk about Big Banks, Big Tech, Big Media, Big Pharma and even Big Agro. These Big Businesses are now so powerful that they dare to determine what monies, drugs, food or even websites you are allowed to use. Lately they have become so brazen that they are telling you what opinions you are allowed to have and what news you are allowed to watch. Big Business is not your servant anymore but your master.
How to stop Big Business? It seems almost impossible because Big Business can always manipulate the politicians and control the government for their own ends. First Big Business achieved regulatory capture and now they have achieved state capture. In this way they have also achieved control over the money machine (fractional reserve banking system) that creates money out of nothing. How can you possibly defeat an opponent who has his own money machine?
Strategy 1: Libertarian politics
Libertarians believe that people will have to be educated about the dangers of monopolies and cartels. People have to realize that we are all living in a cartel economy dominated by the Big Banks and Big Businesses. But how can you educate the people when Big Business can buy or manipulate the media and even the schools and universities?
Simple: You cannot. You lose. You have no chance against the ruling elite that has its own money machine. However, there is a small chance. Big Banks and Big Business might get too greedy and print too much money out of nothing. This could create a Great Depression and people might wake up. Or not if Big Business has managed to create a police state that crushes all dissent.
The libertarian strategy seems paradoxical. It starts from the correct premise that the problem is the statist political process that grants various privileges such as monopoly and cartel privileges. It then concludes that monopolies and cartels can only be eliminated by politicians controlling the state. Paradoxically only the enemies of the market economy can save it.
This paradox has led to the strange phenomenon that the opponents of the state try to infiltrate and take over the state. You have to devote your life to politics in order to save the world from politics. Those most disgusted by politics have to become the most fanatical politicians. And somehow they have to manage not to get corrupted by politics.
The libertarians have to conduct a desperate fight against Big Business. Their only hope is that the Great Depression comes and makes it possible to help people rise before they are totally brainwashed and enslaved by the police state. Needless to say this does not sound like a winning strategy.
Strategy 2: Cooperatives
But what if there is an alternative strategy? What if it is possible to bypass the monopolies and cartels? What if people refuse to patronize Big Business and instead patronize small local businesses and producer controlled cooperatives? This has happened to some extent in many countries and especially in Europe where the cooperative movement is rather strong with cooperative owned retail businesses, insurance companies and credit union banks. The cooperative movement is usually allied with political parties defending the interests of the small farmers.
There is just one problem. The cooperatives do not usually generate as big profits as the normal joint stock companies. Moreover credit union banks do not generate as much credit as normal banks. Credit unions and other cooperative businesses are usually more stable in the long run but most people are more interested in getting faster profits and more credit. Cooperatives cannot challenge the Big Banks and Big Business. And even if they could challenge the Big Business it would still have the huge advantage of being allied with the Big Banks in control of the money machine.
Strategy 3: Consumer activism
It is relatively easy for cooperative businesses to find loyal customers because the producers, their families and local communities all know each other personally. It is much more difficult to convince strangers to join together into loyally patronizing more faceless joint stock companies even if they do challenge Big Business. Fortunately some people do compare businesses and try to stay loyal to the more freedom minded and ethical businesses. However, the vast majority of people do not bother. They do not want to be consumer activists especially since patronizing small businesses often cost more time and money than buying from big retail shops like Walmart or Target.
It would be easy to join consumer groups, share information about businesses and even create group buys but all this would also take time and effort. Most people want an easy life. They do not want the extra hassle of challenging Big Business. They are happy to work for a multinational company, go to Walmart, deposit their money in Citibank and watch the major television networks. Why be a rebel? Just go with the flow. After work visit Walmart, rest on your sofa, enjoy your Budweiser and turn on the CNN.
For most people it is simply requires too much time and effort to be loyal to ethical and freedom minded businesses. In other words the information costs are too high for most people.
Strategy 4: Electronic group buying
Fortunately there is now one way to easily and drastically decrease information costs: Internet. Why not create a website or a network of websites that makes it easy for people to tell what products and services they want? Computer programs would then automatically create group buys. Prices could be drastically reduced.
Group buying is quite common in China where it is used to buy everything from food and apparel to cars and houses.
Group-buying, or tuangou, became popular in China as early as 2005. Chinese consumers formed groups that would bargain for goods ranging from household supplies to automobiles.
According to Han Zhen Hua from Beijing Foreign Studies University, a local participant, groups of individuals interested in group-buying auctions would gather in homes or conference rooms to bargain with vendors, purchasing items in large quantities to receive substantial discounts. Han once participated in a tuangou for home construction materials where food and tea were served to all. The crowd cheered whenever negotiations heated up and evolved into yelling matches between the negotiators and suppliers.
Although news of group-buying activities initially spread through word-of-mouth, online forums and blogs soon became the main form of communication. The concept of tuangou took off in China due to both the Chinese culture of bargaining and the burgeoning number of online users. .. (The Groupon Effect in China)
So why is not group buying popular in the West? Well, there is Costco. It offers bulk discounts in its warehouse shops. However, you have to be a member which costs minimum 60 dollars per month. In this way Costco and other similar member warehouse shops basically organize primitive group buys and can radically cut prices.
According to a Consumers’ Checkbook survey published by the not-for-profit Center for the Study of Services, BJ’s prices were on average 29 percent lower, Costco’s 30 percent lower, and Sam’s 33 percent lower than the largest supermarket chains. (Does it pay to be a warehouse club member?)
In 2008 Groupon followed the Chinese and started to offer group discounts online. Soon the company made a record of being valued at over 1 billion in just 16 months in business.
Recent Chicago promotions have included a $35 coupon for $75 worth of food at a local restaurant, 40 percent off three custom-labeled bottles of wine and $75 worth of tennis lessons for $35 bucks.
Customers are told at the outset how many participants are needed to make an offer fly. They provide credit card information with the understanding that if a deal craters – that’s a rarity – there is no charge. Speed is often essential as popular offers sell out fast. (Virtual Tipping point leverages group deals)
Costco and Groupon are big companies but most people have never heard of them or other group buying companies. Why? The problem with Costco and even Groupon seems to be that they offer bulk discount deals only on a few select items. This cannot be a universal business model for the simple reason that they are mostly offering people deals that they do not want. It takes a lot of time and effort for the consumers to hunt for the right deal. And even if you manage to find a few good daily deals you still have to visit the local Walmart or other retail shop to find most of the items you need. So most people just don’t bother with group buying. They rather only visit Walmart or other retail shop where they can quickly find what they want even if it costs more money. This is completely rational because leisure is also a consumer good.
So why not just ask millions of people what sort of purchases they would like to make from food to cars? It would be relatively easy to deliver those commodities to them at discount with the help of collective buying. There exists many big social media platforms that have hundreds of millions of users. Why don’t they ask from their users what sort of purchases they want and then organize group buys? There seems to be no clear answer.
It seems that social media platforms are more interested in selling user information to Big Business so that it can then push its products and services to consumers. This is most obvious with information services. Big Tech is not interested to hear what sort of news and other information you would like to consume. In fact it often prohibits you from consuming and spreading the information you want. If you do not comply you will be banned from the platform.
So why not create a new independent social media platform that starts to organize group buys? Because it would face the same hurdle as many other new platform businesses: Network effect. After all, the platform becomes appealing only after others are also using it. Why join a social media platform unless others are already there? The difficulty of creating a large network effect explains why it is almost impossible for new social media platforms to compete with the likes of Facebook, Twitter and Instagram.
Even if by some miracle and huge investments an independent social media company manages to create a large network effect, reach the critical mass of users and become big it will soon be bought or infiltrated by the agents of Big Business. Especially since it is also in the interest of the government to make sure that there are no truly libertarian large social media that could challenge the power of the government and Big Business. National security of the military-industrial complex requires that all Big Tech and Big Media are co-opted by the ruling elite.
Strategy 5: Free personal secretary
It seems to be impossible for a group-buy platform to gather tens and hundreds of millions of loyal users without the support of the Big Business. But perhaps there is another solution: New social media platforms could develop a special service that does not require the network effect. There seems to be at least one such service: Free personal secretary.
But are not personal secretaries very expensive? Only millionaires can afford them! Yes, that used to be the case. But now with the help of the internet and video calls it could be possible for the personal secretary to serve up to 100 clients. In this way the personal secretary services would cost only 25-50 euros/dollars per month. For example, an hour of service per month would mean an average 15 minutes video call per week per customer. The time could be efficiently used if the client has already answered many automated questions on the social media platform. In other words, the personal secretary services would be largely automated. The user of the social media platform would in effect have both a robot secretary and a personal secretary.
But why need a personal secretary at all if the social media platform could ask questions and organize group buys automatically? Because there is a need for the human touch. Moreover, personal secretary can understand the needs of the client much better than a computer. It would also be quite easy for the personal secretary to persuade the client to concentrate his purchases in certain shops, service providers and other businesses.
In this way even small group buys with 100 buyers could be possible. First the monthly savings for the client would be only a few percentage points of monthly expenses but the cut for both the robot and personal secretary would be enough to compensate for the time spent serving the client. From the perspective of the client the personal secretaries would cost nothing. Even better: The free personal secretary would help to create savings and thus make money for the client. (Naturally the most popular personal secretaries could demand fixed monthly fees or serve only few high-income customers.)
In this way the social media platform would need only a few hundred loyal users to be profitable. But this would be only a start. Free personal secretaries would attract thousands and even millions of users. At this point it would be possible to organize very large group buys and generate 10-50 % savings on all purchases. This would attract billions of users. Now it would be possible to challenge not only other big social media platforms but Big Business itself.
In the best case scenario, Big Business would cooperate with the new social media platform and its personal secretaries by together organizing group buys. Consumer prices would be radically reduced while business profits would increase. Everyone would benefit. Instead of manipulating the political process, Big Business would concentrate on serving consumers. Real democracy would be restored. At the same time many would opt out of inefficient government-provided services by using affordable arbitration courts, health care and schooling organized by their personal secretary. Taxes could be greatly reduced and the government would at most provide security nets and external defense of the country though even there insurance companies could play a role. Freedom and prosperity would reign at last.
In the worst case scenario, Big Business could first try to buy out the new social media platform. Or Big Business – including Big Media – could demonize it and erect many legal and regulatory hurdles. The government could try to limit the use of cryptocurrencies, arbitration courts and alternative medicine and media because they present a threat to its power. However, it would be impossible for the government to outlaw the use of small social media platforms and free personal secretaries. At most government could create a licensing process and accept only pro-government questionnaires and personal secretaries. But even in this case prices would be cut radically and the power of the Big Business would be greatly reduced.
The cat is out of the bag. The development of the internet and social media continuously lowers information costs and makes it ever more easier to create free personal secretary services and group buys. In a few years big social media companies will most probably start offering them. If they do not then some new social media platform will. In fact one such company has recently started operations though its operation is still mostly limited to Finland: Norminet.
Do you know any other group buy platforms offering free personal secretaries? Tell us in the comments.
[Disclaimer: The writer does not own any shares in the Norminet company.]