Additional Coverage:
- Expert reveals why US economy has that ‘weird feeling of something you like becoming worse’ (marketrealist.com)
Expert: US Economy Feels Like Your Favorite Things Are Getting Worse
Ever get that nagging feeling that things you once enjoyed are slowly, but surely, declining in quality or costing an arm and a leg? You’re not alone. Tim Wu, a Columbia Law School professor and former “architect of antitrust policy” for the Biden administration, suggests that this “weird feeling” is a symptom of a deeper shift in American capitalism.
In a recent interview with Fortune, Wu, discussing his new book “The Age of Extraction,” highlighted a pervasive sense of “economic resettlement” across the nation. He connects this feeling to the “K-shaped” economy, where the wealthy thrive while many others struggle with rising costs and stagnant wages.
Wu argues that modern businesses have strayed from the goal of creating quality products that consumers want to buy. Instead, he sees a trend towards companies seeking to “find power over someone and suck as much as they can out of them.”
This shift, he notes, is an economy-wide problem that is eroding consumer confidence. “Everything kind of just creeps.
It’s that weird feeling of something you like becoming worse,” Wu explained, adding that his “understanding of America is that it’s the place where things are supposed to get better.”
His book delves into the concept of “extractors” and the “extracted,” a dynamic that mirrors the K-shaped economy where the rich are getting richer, and the less affluent are grappling with increasing expenses. Wu posits that the focus of business models has shifted towards “the accumulation of market power and then extraction,” which, by its very nature, leads to a significant upward redistribution of wealth. He observed that many industries once serving the middle and upper-middle classes are being diminished in favor of a select few that generate outsized returns.
This trend is largely driven by wage growth that has outpaced inflation only for the top earners, as reported by Forbes. Meanwhile, lower-income households continue to bear the brunt of post-pandemic inflation and escalating costs, effectively negating any wage gains they might have seen and impacting their spending habits.
Despite the gloomy outlook, Wu offers an intriguing perspective on a potential solution. He points to sports leagues like the NFL, which have implemented market structures that allow smaller teams to acquire top players, thereby improving the overall league.
He expresses hope that America can avoid becoming a nation solely for “extractors,” stating, “I think we can do better. I’m a big believer, frankly, in business.
I think we need a return to this idea, you can reap what you sow, that your investments will get you somewhere.”