Corrupt Banks, Corrupt Copyright Industry: Why Do They Get To Externalize Business Problems?

Corruption: We are in a trend where politicians believe that some business failures are everybody’s problem, but when the same businesses succeed, they get to keep all the profits. This is a ridiculous and counterproductive way to build a functioning economy, and it also threatens fundamental civil liberties. The banking industry and the copyright industry stand out as the most parasitic malcreants in this area.

The perverse arrangement where banks get bailed out by tax money every time they would otherwise go bankrupt has been accentuated by recent events – and how absurd it is that the banks get to keep profits for themselves, and get any losses covered by tax money.

In economy lingo, this is called externalizing – that you move certain aspects of your business outside of your organization, so that you don’t have to deal with them. Industry pollution, for instance, is a typical case of externalizing a problem: if you have toxic sludge as a byproduct of a manufacturing process, and can dump it in a nearby river, that’s externalizing, because you don’t need to pay for the cleanup. The taxpayers (and the killed river) does.

The fact that banks get to externalize losses creates horribly skewed incentive mechanisms where extreme risk-taking is rewarded, because there’s never any loss. There’s only the potential of huge profits. It’s a bit like if you were immortal and couldn’t hurt yourself – imagine what crazy stunts you would do that didn’t follow normal behavior of mortality? That’s the corporate situation that banks are in.

So is the copyright industry. They have a distribution monopoly on some pieces on knowledge and culture (which can, and should, be debated in itself). But unlike other monopolies, where the monopoly holder has to sue in a court of law, the copyright industry has managed to externalize the business problem of enforcing their monopoly – for it is a business problem – and gotten society’s police force to enforce their business rules on their behalf, by extending this business monopoly – the copyright monopoly – into criminal law.

In other words, non-support of a business model has been put on the same legal footing as harming a fellow human being – and this has been done by politicians who are dangerously clueless. They have allowed the copyright industry to externalize their business problems to let the taxpayers take the bill of enforcing an already-immoral monopoly.

That is obscene. That needs to end.