The Scam Economy
Only a few hours are left before the unstoppable assault of texts, emails, snail mail, even phone calls from innumerable political actors and groups begging for money that mostly goes into their pockets rather than to the candidate or cause they purportedly support finally abates. In the 2020 election, Trump scammed over $100 million from unsuspecting donors using prechecked boxes for recurring donations. The media loves election years because they can charge exorbitant rates for ad space and that encourages creating horse race coverage rather than policy discussions. Turning the democratic process into a Wild West of scams seems a unique feature of late-stage American capitalism, largely enabled by the Roberts Supreme Court. In other corrupt countries, they try to bribe voters for their ballot; here we just rip our voters off. But it is indicative of the scam economy that we now live in.
Of course, the biggest election scam is the fact that many of these candidates have been bought and paid for by the billionaires already. The top 20 political donors this year will have given over $2 billion of the approximately $11 billion spent on these elections. But the scams don’t stop when the election is over. Every day, I’m almost guaranteed to get some sort of phishing email or phone call warning me about some dire emergency with the IRS, Social Security, my bank, or my credit card that can only be resolved by giving them my personal information. If I’m lucky, the scam will be presented as a windfall for me, like a big insurance settlement or a refund I’m “entitled” to.
Every day, I’ll get some solicitation from non-profits also asking for our money. Many of them are as bad or worse than the election PACs and “committees” that have barraged us over the last few months. Non-profits like the Humane Society and even the Red Cross are now notorious for having the vast majority of the donor funds go to “administrative and overhead” costs rather than provide the help the donors expected. And there is the daily blast of emails about products I’ve purchased in the past but no longer need that keep coming no matter how many times I unsubscribe.
Today, I will spend some time scrolling through my healthcare options in order to make a choice before what’s known as the “open enrollment” period ends. Every year I am forced to go through this charade because my payments and coverage will all change, often drastically, based on the insurers’ whims. This year, my current insurer dropped virtually every hospital in my area from being “in-network”, essentially telling me they don’t want my business. Now I have to scan multiple plans to see if my primary care doctor, the specialist I’ve gone to for a few years, the drugs I take, and even my local hospital is in-network in order to avoid even more charges. I will also go through a similar process to find the most cost-effective electricity provider since virtually all of them offer cheap rates for a certain period and then jack that rate up when it renews. They essentially count on you to let the automatic renewal go through in order to screw you.
The healthcare and electricity renewals are a subset of the subscription/lease scam. We’ve all heard the horror stories about how impossible it has become to cancel a subscription once you’ve signed up. The Verizon and Planet Fitness cancellation stories are legendary. Mercedes Benz leases the heated seats in their car. Housing is difficult enough to find these days, yet all the new apartments going up in my area are lease only. This robs young people of a chance to build wealth and has resulted in the median age of a first home buyer being a record 40 years old. Software you bought a few years ago won’t work on the new operating system that you were forced to upgrade to because the old version is no longer supported, so you have to lease the new version. That lease cost grows as the company forces new features that you never needed and don’t want, such as AI, down your throat.
The gig economy is in many ways similar to the lease economy. Companies don’t want the responsibilities of employees, which requires things like providing healthcare, instead preferring disposable laborers. Amazon famously dictates all aspects of their delivery services but none of them are “employees”. Fast food chains dictate operating standards at their franchises but avoid the liability of abuses occurring there. Probably the most successful corporate scam is the social network platform. Creators constantly get screwed by the platform’s shifting algorithms, shrinking payouts, and threshold rules. Musicians on Spotify are lucky if they earn half a cent per stream while the platform owners rake in the dough. I will be luck to make a dollar for this post across the platforms I put it on, but it is just more content for the platform owners’ to exploit.
Another classic corporate trick is to get you to do the work for free, or close to it. The classic example is an “internship”, where the intern is paid a pittance if he/she gets paid at all. Grocery stores are only too happy to get you to do the checkout for them at those scanning machines rather than pay someone to actually do that work. The fact that every time I buy something that needs to be weighed I am forced to wait for some employee to come over and authorize that scan by checking that I’m not ripping the store off is just my time being wasted.
The unpaid intern and the creator rip-off are variations on the ultimate play in the scam economy – outright theft. Many companies and platforms now force you to allow your content to be used to train AI if you want to use their service. So much of these AI models have been built off of intellectual and copyrighted data that has been outright stolen. Outright wage theft is rampant in the food service and construction industries, with mandated off-the-clock work, unpaid overtime, and job misclassification being the most common tactics. An example of just how ingrained this type of theft is in our culture, it wasn’t until this year that airlines paid flight attendants for their time and work during boarding, and even that is at half the rate they get once the plane doors close.
We are all ripped off by monopoly power. I get charged outrageous prices for my internet connection and get bad service and support in return. Big Pharma pays to keep generics from being developed, costing us as a country over $3 billion a year. The top three hospital networks handle of three quarters of all hospital admissions, inflating health care costs and creating hospital deserts that affect one sixth of the country. Farmers are caught between the seed and chemical monopolies and the grain and beef processing monopolies. The big tech companies conspired to keep wages down. The beef oligopoly is accused of price fixing and market manipulation. I could go on and on.
The scam economy is more than just being monetarily ripped off. Like waiting for my scan to be authorized at the grocery store, it is stolen time. It takes time to figure out which PAC and/or non-profit will actually use most of my money for its intended target as opposed to ending up in some consultant’s pocket. I probably spend at least half of an hour a day deleting emails and texts from companies and people I don’t want to hear from, some of them clear scams, even with an enormous block list. Over the next few weeks, it will probably take a few hours of my time to find the right healthcare plan and electricity provider. Telecom companies are notorious for their lack of customer service and inability to reach an actual human being to help resolve your problem. On election day, people will stand in line for hours to cast their vote simply because the government refuses to provide sufficient polling stations and/or machines. Republicans have turned the time and effort to fulfill the requirements of means-tested programs, such as the Medicaid work rules, into such a laborious and time-consuming process that it effectively locks people out from the aid they are entitled to.
The last piece of the scam economy is the clear evidence that the rules are different for a certain subsection of our society. The justice system is itself part of the scam. You can get elected and go to Washington or even some state houses and become a millionaire through what would be treated as bribery or insider trading in any other environment. If you’re close enough to the President, you can engage in insurrection, rape, pedophilia and still be pardoned. If you have enough money, you can drag out cases long enough that the government will just settle or the statute of limitations will run out.
The largest conundrum for social scientists and the pundit class since the end of the pandemic is reconciling the strong economic data with the abysmal consumer sentiment. Certainly, part of this is an inflation story but I think the greater story is that, for most of us, the economy is just not working FOR us; it only works for the few. The K-shaped economy is not just about the haves getting more than the have nots, the exploiters and the exploited. It’s about workers getting the smallest share of income since records began being kept in 1947, while corporations bank record profits. It’s about rich people and corporations being able to work the system to pay far less in taxes than the average worker. It’s about being forced to use some crappy app to get something you used to be able to get by mail or in person. As companies adopt AI for customer service and hiring decisions, it’s about the feeling that your very existence is of no concern, or even an annoyance. It’s about the time and effort that it takes to just simply go about your daily life without fearing or feeling that you are getting, or about to be getting, scammed in some way. But the scam economy IS the economy we have today and it has been very purposefully built over the last half century. The challenge of the next decade will be undoing it.