After Paid

In an interesting move, Square, the Jack Dorsey company, has acquired AfterPay, an Australian Buy Now, Pay later (BNPL) company that has been going from strength to strength on the back of the Corona pandemic, which has seen consumption and debt increase massively. The deal is worth 29 billion dollars (the largest Australian acquisition ever), quite a figure for a company that is only seven years old and has only 16 million customers around the world. This indicates the real value of debt encouragement.

With no end to this wealth transfer pandemic in sight, the value of the companies in the business of debt encouragement, management and collection are likely going to increase as inevitably, when more take on debt, more are going to fail to manage their debt. Unsurprisingly, the number of people seeking advice for financial distress and debt management services is increasing.

According to Jack Dorsey:

“We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles,” he said in a statement. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”

fair, accessible, and inclusive

These words sound great, but it should always be remembered who they are aimed at. One thing that I believe everyone should always remember is, No company cares about you. No matter the advertising, the pretty pictures, the rhetoric that the individual matters - you are just a number. Every move a company makes is designed with the express purpose of increasing shareholder wealth and has nothing to do with making the world or you better. The good things that are accomplished are done are done because they support increasing profits, not because they are the right thing to do.

If for example, environmental laws were to be taken away globally and there was no punishment for corporate pollution, regardless of what we know about it now, companies would very quickly make changes to their production to cut out the unnecessary costs of environmental consideration. If child slave labor was legal, they would be using it for as long as it made financial sense to do so. The only thing that stops companies acting worse than they do is, legal and customer consequence, and both don't seem to be very effective as the legal ramifications are generally less costly than the profits made and the consumer base only cares about getting what they want cheap and conveniently.

The incentives in the economy are very badly aligned to improve conditions for the average person, but very well aligned for extracting wealth from the average person and directing it to the wealth peaks. This isn't just at the financial level, the entire social network ingrained in society is directed toward consumption and consequently, increasing debt as various forms of peer pressure and social proofing that keep driving consumer spending on what largely adds little more than entertainment value.

There is nothing wrong with entertainment value, however when so many people are suffering in other ways, perhaps there might be more value in dealing with the causes of hardship instead, which ironically, is probably the focus on entertainment for many. Finding a balance can be a challenge these days, especially since there has been further disruption to our normal lives.

What is interesting, is that every individual seems to think that they are able to beat the system, that they are smarter than the companies and can come out on top. Yet, the numbers tell the story, as the corporations make record profits on top of record profits and household debt keeps increasing. These companies have everything they need to beat us, as they have all the data on how we behave and what we want, as well as hold the platforms with mechanisms to drive our behavior available to them.

The more debt we have, the less we can invest and the more we fall behind. But, those who can invest into what offers the best profit model, the greatest return on their investment, which are the industries and companies that are able to extract the most wealth. This means that those who beat the system and aren't sucked into the average consumer behavior, benefit the most from those who are. As said, the incentives are poor for general level improvement, because they are aligned in a way that the most effective way to generate wealth is to encourage others to give theirs up to the point they are taking loans and then, benefit on the interest earned on the debt.

The picture I have used for this article is of a slot machine, one of the many that are all over Finland in corner stores, takeaways and shopping centers. Every person who plays these games assumes that they are going to beat the game, that they have a chance to win and the more they play, the more wrong they become, as the algorithms tighten to return precisely what they are designed to return. The stories we hear of people "beating the system" give us confidence that we can too and it is our confidence that makes us largely blind to all the ways we are losing.

While bit by bit we are being chipped away at, it is happening globally on a mass scale and we can see this in the increasing speed that the wealth gap is growing. But because we only consider us as an individual in the economy, we are much like the proverbial frog in a pot, and the water is getting warmer.

It is funny, so many people fear the risk of investment, yet are confident gambling on the belief they can beat the corporations. The only way to do so, is not to engage. But, they are consolidating more and becoming increasingly integrated across platform, invading every space we interact and consume from, so keeping distance is easier said than done.

Taraz
[ Gen1: Hive ]