Special to L. Neil Smith’s The Libertarian Enterprise

Sometime ago I mentioned here the concept of corrupt markets.

You guys fanned out—as you will—across the web to look for the concept and couldn’t find it. I’ve had penciled in, on my wall, to write a post about it, so maybe one of you guys (I know at least one) who have a doctorate in economics or related disciplines can research it and do it up in proper format.

Yes I’m ABD but the papers I was taught to do was on literature analysis.

And btw my master thesis was on the intersectionof the biography of the author and the work they wrote. One particular author, of course, but that’s a long story to go into here, as it involved getting older books from the US. And I did it that way because at least when I went through—that was almost forty years ago, so it might have changed—the experts were adamant that the biograhy of the author had nothing to do with the work. That is, authors are widgets and what comes through them unbiden isn’t shaped by what they know or do. This idea strikes me as madness, and while I disagree with “write only what you know” I disagree equally hard with “the author doesn’t shape the work. Anyway, I still got the degree, but it’s important to note that this idea of the author as widget was out there, in academia, when I came through. By the time I broke into publishing it was in publishing, too, in the last phase of a corrupt market. And I became intimately acquainted with how corrupt markets work.

I’d seen it before in Portugal, as various governments didn’t give a hangnail for what people wanted and forced things on them from above. That too is a corrupt market.

In fact, if you really want to look at it this way, 2020 was the year we learned all our politics—governments, institutions, even our tech giants, have become corrupt markets. I was so horrified at the realization that my mind shut down, which accounts for the horrible year.

Let’s start with a definition, okay: Market is not just a way to make money (though it is that too.) Any human endeavor designed to facilitate human life is a market. Sure, you selling your apples to aunt Mimmy (I had an aunt Mimmy, G-d rest her soul) is a market. But you making regulations for your little town saying, for instance, no piles of rotten apples on the front porch is also a market.

Both succeed or fail to the extent that you meet the needs of the customer/community. If aunt Mimmy is violently allergic to apples, and yet you insist on selling her apples in a normal market you’re going to fail. If you insist on telling everyone they have to fill their front porches with rotten apples, in a functioning market you’re going to fail.

This is why politicians talk of “explaining” things to the people or “getting their buy in”. Well, used to. Because every polity has a Mandate of Heaven. Even absolute kings could be brought down by management so bad that people feel it. In Medieval Europe when things went very bad, kings built Cathedrals and did penance to restore the Mandate of Heaven. This had mixed results, unless the penance involved a copious amount of alms that stopped the famine, or whatever. If things continued going wrong the king was deposed openly or covertly.

But of course, feudal monarchy was to an extent a corrupt market, and there were violent revolutions and widespread famines to prove it.

In the same way, in the very early twentieth century, the publishers might sneer at the pulp flowing out of their pens, and they might—did, they were after all the educated “elite”—consider themselves above it all, but if the books failed, they didn’t eat, and so with some amount of corruption, the market toddled on. It was only after, when they divorced and insulated themselves from the failure of what they published, that the market became corrupted.

So, let me give you a definition: a corrupt market is that in which the supplier has divorced himself from demand by some means that allows him to continue supplying what he (she, it, whatevs) wants to provide regardless of what the demand for the product is: whether the market is books, apples, hamsters or laws and regulations, it doesn’t matter.

The follow on that is “there are no non-corrupt markets.” And I’ll explain why. The ideal market is one on one. I.e. you sell you apples to aunt Mimmy who can’t get enough of your apples. You know she can’t get enough of your apples, because she tells you so. So every morning, you harvest apples and bring them to her by the bushel load. And she pays you a good price because she loves your apples.

You see, a perfect uncorrupted market requires perfect information. You know exactly what people want, and you provide it.

To some extent that does not and cannot exist at a scale. Because your information is never going to be perfect. Btw, this is why the wise men who crafted our constitution made it so that the biggest power is at local level, where those governing can see the immediate effects of their governance and immediately feel the wrath of the constituents when they decide everyone needs a pile of rotten apples on the front porch. At that level, too, unless all your constituents are on hard drugs, you know when the voting (which is the currency in representative governments) is falsified. Because let me tell you, everyone in the village knew who the two monarchist votes were and in general what the trend of the voting was. You gossiped with neighbors, you knew what they thought of the asshole in chief. (If you are thinking this has to do with the Great Muzzling of 2020 give yourself a star. Or don’t. They will soon enough. And we won’t like it.)

So while perfectly uncorrupted markets are impossible, completely corrupted markets—those in which the consumer of apples, books or governance has no say—are things of absolute and total horror. In the case of apples and books they fail very hard, and if you’re lucky a new market develops and explodes. Well, in the case of governance, too. But before that happens utterly corrupt market for governance has a case of the mass murders, and most of the consumers end up in mass graves for failing to be the right market for the supply that those in power are SURE is the right one.

One of the first tells of a corrupt market is that the supplier couldn’t care less what the consumer wants. This is why I panicked when, a couple of years into my professional career, I found out that the publishers had no mechanism—other than sales, and that was corrupt in various ways I’ll explain—to find out what people ACTUALLY wanted to read. And the bookstores were in the process of aggregating their data (already corrupt, and yes, I’ll explain) into meaningless sets. Because large enough aggregates of data will tell you exactly nothing about each individual market. And for reading markets are very individual, having to do with the tastes of little hammlets, villages and small towns as much or more than with those of big cities, where many forms of entertainment are available that have nothing to do with reading, and where people are usually young, working crazy hours and socializing after, and not having much time to read. In fact one of my “Oh, sh*t” moments was when the publishers (when I had just turned forty) informed me they were trying to capture the 20 something market because people older than that didn’t read. It made me goggle at them, since I and all the moms with younger kids I knew read. There’s a lot of time spent waiting outside schools, or while supervising play, where you really can’t do much of anything else.

How did they know this? They didn’t. Someone in their marketing team had decided that younger people didn’t read as much and therefore they were a vast untapped market. And since their numbers were in a straight fall, this must be the market they needed to survive.

Because the publishers did no survey, no consumer research, nothing so simple as asking the readers what they wanted more of. (To the extent Baen resisted the rot longer, it was due to the Baen Bar, and publishers who paid attention. As imperfect and non-scientific an instrument as that was, it was better than absolutely no market knowlege and giving yourself a lot of excuses for failure.)

But Sarah, you’ll say, they had sales numbers! Waggles hand back and forth. Kind of, maybe? Sort of? The sales numbers are really good at measuring stunning success. I’d say stunning failure, too, but that can be obscured in a lot of ways. Like at one point they found out, in real numbers, after returns a fetted bestseller had sold four books.

How is that possible? Weren’t they paying out royalties? Well, sure. But the market was corrupted all the way through. Look, sure, they sort of knew how many books sold. Sort of because they didn’t even (forty years ago) know exactly how many books were printed. Apparently the machinery was of such calibre, that when you pushed “stop at 1k books) you might have 993 or 1012. With bigger numbers for large print runs. I’m not sure they know now, because a a publisher informed in 2003, “We’re really now all small batch print on demand.” Oh, and printruns of less than a hundred don’t get reported to the publisher.

So, it starts with “we don’t know how much supply is in play” and then it gets stupider (totally a word and appropriate in this case.) How much more stupid does it get? Oh, dear.

Well, because of the accommodations done for WWII and never withdrawn, all books are put in bookstores on consignment. In theory when they don’t sell, the front cover is stripped out of paperbacks, and they’re tossed. (In theory because in the eighties and early nineties, when it wasn’t print on demand, you found these for sale in every used bookstore, to the point they started printing warnings inside the book that you were reading what amounted to a stolen copy.) Hardcovers, in principle, get returned for full credit, and then put in pallets to be sent to those dollar bookstores.

Except there’s a lot of play in all of that. There is a large amount of shoplifting in books, as in all small objects. And then in the nineties the publisher decided it was okay not to return the covers. “Just tell us how many books you’re tossing.” Yeah.

But Sarah! There are counters on the point of sale that tell them exactly how much they sold. Sure there are. Kind of. You see, it is only in some bookstores, mostly in large cities. It excludes 90% or so of the places where books get sold in the country: Most indie bookstores, most supermarkets, most new-and-used bookstores, most military stores, most comic book stores.

So, say, you have a property that mostly appeals to the military? It’s going to seem to underperform the other books massively, even if that’s nonsense.

What the publishing houses do to pay you royalties (I SWEAR I’M NOT MAKING THIS UP) is take the point-of-sale count and average it out according to a formula over the entire country. This is why at one point I was getting royalty statements from 3 publishers, and the books the same age—say, had come out three years ago—though completely different genres, subgenres and voice, had all sold the exact same and completely impossible number: something like 176 copies per book. Which…. I live with a mathematician, okay? When he looks at numbers, be they royalty reports or election numbers and starts laughing till he cries it’s a BAD sign.

BUT counting what sold is only part of the problem. The other part is the book availability. One year—I THINK 2010—I had ten books released. You couldn’t find them on a single shelf in the whole country. They were on Amazon. And given that, it’s shocking some earned out. BUT the casual shopper in 2010 was still largely a “walk in bookstore and browse” and for that, none of my books had a chance of selling a single copy.

“BUT Sarah, if they didn’t give you shelf space, surely they asked the store that told them they wouldn’t sell.” Sure. Except that’s not how any of this works. In 1995—and it was the same sort of experience as the 2012 election for me. I realized the rot was very far advanced, even though I couldn’t quite process it. Or didn’t want to—I happened to be in Chinook bookstore in downtown Colorado springs, browsing a shelf when the book rep for a house (I want to say it was Berkley Ace, but I no longer remember clearly) was talking to the bookstore rep.

For those of you who never knew the Chinook, it was a lot like the Tattered Bookcover in Denver now. Upscale, a little nose in air, beautiful surroundings and hushed tones. So I could hear the conversation perfectly well.

The book rep had a catalogue of covers. And he was telling the store how many of which book they’d take. Take a deep breath, take that in for a minute. They were telling the bookstore how much of each book they’d take. The exception was a mega bestseller, whom the store wanted. Actually what the rep said was “You’ll want a hundred of book x, of course. We’re printing 150k,” (Or some equally absurd number.) Oh, and if the store wanted those 100, they had to take 20 each of three books that the house was going big on, and give them big displays. And then there were pages, and pages and pages that he said, “You may look through those and see how many you want.” The store manager flipped through quickly and sometimes ordered a couple of books for the shelf. But he didn’t have to, and the reason he did it might have to do with cover, name that caught his fancy, whatever. These people are what they call the “midlist” and when you hear that the “midlist just doesn’t sell” remember, this is how the midlist used to be treated.

The second part of my enlightenment was when I was invited to go the …. I have no clue what it’s called anymore, call it the Book Expo in Denver. This is where the book reps met with the BIG bookstore chain reps around 2002. At this place, I found I’d been invited because the book rep had actually chanced to read my first Shakespeare book, and was outraged it wasn’t getting more play. BUT the corollary of this? They normally didn’t read the books. They just took the “level of excitement at the house” usually translated by how many books the house SAID it would print. And from that they pushed “you want so many of these.”

As you imagine, there was plenty of money floating around, particularly since Amazon didn’t count for “how many books you sold.” And they could be attributed in royalty to “It must have sold x number.” Usually the books that appeal in big cities, college neighborhoods, ect. In fact, the same books the publishers and editors (who are usually graduates of good colleges with degrees in impractical liberal arts crap—I should throw stones, right—) prefer.

The market was so thoroughly corrupted they really had no idea which books had done well, and could attribute the “win” to the books they chose to attribute it. And then this reinforced their choices for the next batch.

Which is—ladies and gentlemen—the average print run has gone down from something like 100k to something like 7k since the seventies.

“But it’s a very different world. People have more options for entertainment. People don’t read as much.” Poppycock. As a reader, I had fallen through genre after genre, widened my net of “things I’ll read” and was still coming up dry most of the time by the late 90s. And I wasn’t alone. There are some number of passionate readers (not very high, but much higher than is met even now) whose needs were not being met. At the same time, the books that were being put out, and particularly those pushed, were unapetizing to 90% of those readers.

And yet, the information the publishers and editors received—particularly because of the people they talked to/lived among were mostly their colleagues and people of similar background—reinforced the choices that were making the supply more maladaptive to the demand.

BTW, one of the funny things—if you like dark jokes—is that the traditional publishers finally did a market survey. Sometime in the 10s they did a survey on whether people preferred ebooks or paper books, and trad or indie. It came back as a resounding trad and paperbooks….

Which is completely belied by the market. At a guess the surveys were done in groups and by show of hands. And probably on college campuses. (I looked at the internals at the time and they were skimpy. I no longer remember where to find the study.) Traditionally published and paper is the virtue signal. It makes you sound smart and up scale. But every author I know—of fiction, non fiction is different—sells ten times the number of ebooks to paperbooks Because they’re cheaper, and it’s instant gratification, of course.

But the traditional publishers believed that survey like gospel and set their course by it.

Two notes: they might have no clue how many ebooks they’re selling. While this is trivially easy (if opaque. We don’t see INSIDE Amazon’s book keeping, for instance) for self-published or single-author indie houses to know how much they sell, it’s almost impossible for houses with several authors. No, I don’t fully understand how or when, but when we were running a small publisher (which we’re doing again, because we’re insane) husband looked at the internals, tore out his hair, and built a complex program to keep track of the sales per author. He now uses it, freelance, to do books for small publishers (and is available for hire. Within limits. He’s working crazy hours at private job right now.) I don’t understand it, of course, but listening in on his discussions with a client: most houses have no idea how much they’re selling of what. The ebook money comes in and acts as a giant slush fund, which further corrupts the market by divorcing publishers from their disastrous choices.

Second, as far as we can tell, the tastes of readers haven’t chanced at all since the 1920s. No, I haven’t done a survey. Those are tricky and would need to be calibrated to discount virtue signal. BUT most of the people doing exceptionally well are telling pulp stories with pulp structure.

And I can’t be the only one who figured that out, as there’s a glut of books on “how to write fiction the pulp way.”

So, a completely corrupt market is one in which the information gathering means is so messed up as to be non-existent (in the case of books, for instance, the sales data is the only information, and it’s corrupted/messed up at every level.) This is the market in which you bring bushels and bushels of apples to aunt Mimmy and when she only buys half a bushel, you decide it’s out of your control, and the market for fruit is just tanking, and it’s not your fault, without ever asking her if she also would like some oranges or some berries. The end result of this is that other people start selling aunt Mimmy oranges and berries, and your market diminishes some.

HOWEVER, if you are a government, and your market is just as corrupt because you messed the elections with rampant fraud, say, and silenced opposing voices, you can make Aunt Mimmy buy five bushels of apples every morning, even if she’s allergic to apples, and the people next door would love it.

I knew there was rampant fraud in American elections after poll washing in 2012. I knew that the Republicans refused to fight it or even mention it. I didn’t know if there was enough fraud nation wide to sway a national election.

I realized it when they picked China Joe and the Ho as the standard bearers for the democratic ticket. I realized it when I watched the democrats debate, and they kept promising open borders and money and free health care to illegal immigrants, which is the equivalent of giving bushels of apples to Aunt Mimmy who is allergic to apples.

I knew it for ABSOLUTE sure when Zhou Bai Den was campaigning from his basement or not at all.

The only reason to run a potemkin campaign is that you knew you couldn’t lose. Even if a single American voted for you, you had it in the bag.

Let’s be glad, I guess, that their guess of the opposing party votes was too low and they had to fraud last minute and in plain sight. Not that it matters, since the corrupt system spit out the information.

But for what it’s worth, just like the publishers deciding that people really wanted more “literary hardcovers” from a flawed survey, our current Junta is really really bad at measuring the temperature of the country.

Which, in the end, might shorten our time in hell.

The problem is that when electoral markets are corrupted, all hell breaks lose. Particularly when it’s a big, central government that thinks itself invulnerable. And where people can communicate ONLY in their little cliques, never looking outside those, so their wrong information is forever magnified and reinforced.

Which brings us to…

Corrupted governamental markets bring about death. Lots and lots of death. There are no famines under a representative government, for instance, but they exist under every other market.

There is only one remedy: we must make this a representative republic again.

But there is only one way, long term, to make the government not become a corrupt market: most of the power has to devolve to small, local governments.

The bigger the government, the easier it is to insulate yourself from the consequences of your malgovernance and what you do to the governed. I guess this is why the left wants global government, which would be well-nigh uncorrectable. It would also have near no power at local level, and unleash utter anarchy, but the left doesn’t care about that, as they view themselves as Lords of creation.

So, whether it’s book publishers putting out stories only on the latest leftist preoccupations, or facebook pushing a new interface no one wants, or the government shutting down fracking and making energy “necessarilly skyrocket”, when a system acts as if it doesn’t care what the demand is, it’s because those making the decisions think that it doesn’t matter what people want. They’ll take what they get.

In markets, this usually leads to massive crashes and start-up replacements.

In government…. It usually ends in blood. Lots and lots of blood. Faster in the measure of how corrupt the market is.

Be not afraid, but be prepared.

Keep your clothes and weapons where you can find them in the dark.

 

Posted on According to Hoyt for February 9, 2021