If you could get every American to send you a dollar, you'd have about $330 million overnight.
I made the above quote a long time ago to illustrate how it is possible to get very rich by taking a little money from a lot of people, as opposed to taking a large sum from one person. In those "caper" movies, the thieves meticulously plan a bank job or casino heist, to get away with millions. But, as illustrated in the sequel to Ocean's 11, the people with large amounts of money have large amounts of power - and will track you down and punish you.
The Police will go after a bank robber who steals a large amount of money from a storied American institution. They will laugh in your face when you tell them that a telcom swiped a buck from your account. The best you can hope for is a class-action lawsuit, and we know who wins those. The lawyers make millions, while the victims get pennies.
"So," you ask, "how do I go about stealing a buck from every American?" Good Question. And the answer is to find a choke-point in the economy and exploit it, before the great unwashed masses figure out what you are up to and get regulations passed limiting your fun.
What sort of choke points? Well, let's look at the historical record. Transportation is one of these choke points. You may have a field full of crops, and in the city 100 miles away are hungry customers. How do you connect the two? Roads was one way - and back in the 1800's, there were "Corduroy" roads made of logs, which you could drive a wagon on, provided you paid a toll. Over time, governments got into the business of road-building, and indeed, politicians ran on platforms of "good roads."
Roads became free for the public, although the toll road still remained in part - and is seeing a resurgence in the last 20 years or so. We even have private toll roads again - the "free market" people have won again. But nothing is free in the free market.
Cornelius Vanderbilt made his first fortune in shipping, controlling enough of the market to control shipping prices. Of course, while you might be able to control the ships, local governments control the ports, and port fees, taxes, and duties can add to the cost of shipping. "Smuggling" as it first emerged, meant simply bypassing official ports to avoid paying duties. Small boats could row ashore to "Smuggler's Cove" and bring in the goods at a lower price (and higher profit) than by going through official channels, if you'll pardon the pun.
Vanderbilt famously sold off all his shipping interests to amass vast holdings in railroads. Railroads were the "Next Big Thing!" and allowed freight to be move vast distances in a short period of time. As America expanded, railroads were key to economic growth. Railroads were granted vast tracts of land out west, which they sold to farmers, who in turn used the railroads to ship crops to city markets.
Farmers did well, initially, until the railroads raised rates to the point the farmers were losing money. Vanderbilt and others found a choke-point and exploited it. Eventually, the government stepped in and regulated rates through the Interstate Commerce Act, to make rates just and fair. Those damn regulations! Spoiling all the fun for would-be Millionaires. What's next? An income tax?
Of course, over time, new forms of transportation emerged. Young people today romanticize train travel and the old trolleys, but my parent's generation couldn't wait to get their hands on an automobile and be free of high fares and limited schedules. My Dad learned to drive on a Model-T - it was not that long ago! Roads, including the Interstate Highway System, were paid for with tax dollars, and America took to the car, by choice. Gas was cheap and the highway beckoned. Air travel was the final nail in the coffin. Passenger train service was now unprofitable and by the 1970s, the major railroads gave up their passenger services to the government to form money-losing AMTRAK.
It is a trend that goes on worldwide, too. While our overseas friends have far more (and better) train service than we do, they are building more and more highways and closing more and more train lines. We saw this in Japan three decades ago, as well as in Europe. They still rely on public transportation a lot, but car travel, worldwide, has ratcheted up. China is the best example - only a few decades ago, bicycles crowded the streets. Now it is the largest market for cars in the world.
I digress, but lighting is another example of a choke point. In the colonial era, candles were the thing, often home-made by settlers boiling down bear fat to make tallow or some such. Whale oil emerged as a bright and clean alternative and was in such a demand that whalers could make a fortune overnight with just one voyage - and entire species of whales were driven to near-extinction.
Crude oil was discovered in Pennsylvania and it was found it could be distilled down to kerosene, with nuisance byproducts like gasoline simply thrown away. Some tried to dilute their wares with junk gasoline, which could cause a Dietz lantern to explode. A young John D. Rockefeller came up with his "Standard Oil" which was guaranteed to be free of contaminants. He bought up competing oil companies and formed a monopoly - a choke-point - in the kerosene lighting business.
It is interesting to note that his real fortune was created almost by accident. Just as some laud Bill Gates or Elon Musk as visionaries who saw the future and invested accordingly, the reality is, people can get lucky by making the right choices without even realizing it. The invention of the automobile could not have been envisioned in the kerosene lamp era. The rise of the automobile caused gasoline to go from a nuisance byproduct to a highly valuable commodity.
Once again, regulators stepped in, and Standard Oil was "broken up" (but later reformed as Exxon/Mobil only a few decades later). Needless to say, however, our reliance on oil is the new choke point in our economy - one that has been around for a long, long time.
The automobile infrastructure is largely open-sourced. Roads are largely funded by tax dollars, not tolls. Cars are bought by individuals in an open market, where competition keeps prices down and profits at a minimum. Tesla was valued more than Ford for the simple reason that Tesla made more money per car (and more money with emissions credits) that Ford did. On a good day at General Motors, we would be ecstatic with a 5% profit margin. GM went bankrupt since then, Chrysler did, twice, and Ford nearly went under.
No, the choke point in transportation today is in the fuel. In 1973, we had our first oil shock as OPEC cut production. We came to realize that we had become dependent on cheap oil, using it for everything, even power generation and home heating. One of my professors at GMI pointed out that, at the time, it would take a half-a-cup of crude oil to produce a cup of milk. Between the energy needed to run the farm (from a oil-fired power plant to a diesel-burning tractor) to the transportation costs (diesel fuel for trucks and trains) to refrigeration for storage and so on, a lot of energy is needed to make even one cup of milk appear at your grocery store. And at the time, most of that energy came from oil.
Some things have changed since then, others have not. We use a lot more natural gas these days - supplanting or converting coal or oil-fired electric plants. Other, renewable energy sources have come online. And today, our country produces more oil than it consumes - so we should be insulated from overseas disruptions in supply, right?
Well, not exactly. The oil market is a world market, and when supplies are cut off, everyone bids up the price of oil, worldwide, to try to get a share. American producers aren't going to sell to America for far less than what they could get overseas, so the price of oil in America goes up with the rest of the world.
More than a half-century since the Arab Oil Embargo, they still got us by the balls. The Strait of Hormuz is the new choke-point, or should I say, has been a choke-point for a long time. Periodic attacks on ships in this region have been going on for some time, now. Maybe those were just test runs. Attacks on Oil infrastructure in the Middle-East as well as in Russia (and sanctions) mean the supply of oil, worldwide, might be cut in half - or worse.
Meanwhile, Americans, once again, were lured into buying large, gas-hog vehicles, by the siren song of low gas prices. To make things worse, the rest of the world is catching up with the American standard of living. As I noted before, China is now the world's largest car market, and even our European and Japanese friends are embracing the car. Meanwhile, Germany is rethinking its decision to shut down all its nuclear plants. Say, do you think they fell victim to a Russian disinformation campaign?
But I digress.
There are, of course, other choke-points in the economy, and the Internet has become one. Early on, the Internet was a free-for-all, with no one group, company, or person really controlling the whole thing. I remember when "browsers" became a thing - no more dialing up in "terminal mode" to type in ASCII characters on a CRT monochrome terminal. It was an advance, yes, but I sensed we were losing something at the same time.
Today, Google controls a huge part of the Internet, and initially, it wasn't such a bad thing. But then they decided to "enshittify" everything, by putting ads all over the place and making search results one big ad or AI-slop responses. And there ain't much we can do about it, as we are pretty embedded at this point. The Blogsite I am typing on is, of course, owned by Google. Damn your eyes, Google! I love you! I hate you!
Our European friends are wisely looking for ways to "de-google" themselves, but it ain't easy. I can understand their concerns - their entire communications network is dependent on companies headquartered in a country which has shown to be an erratic, untrustworthy ally. Maybe it is time to move on - to Internet X.0
Speaking of silicon valley, that is nothing more than a host of choke-points today, or choke-point wanna-bes. Want to take a taxi somewhere? Uber has pretty much sewn up that market, and even taxi services in far-flung foreign countries, pay tithes to silicon valley firms. But for how long? Eventually, people go looking for lower-cost alternatives, and if you tighten the screws too much, people will jump ship eventually - or demand the government step in.
And the government has stepped in, time and time again. We have regulated utilities today, simply because we realize that the anarchy of the "free market" isn't going to work for something that everyone relies upon, 24/7. I noted how the ICC regulated railroads, but they also regulated trucking lines at one time. And of course, during the glory days of airline regulation, you could pay as much for an airline ticket as you would for a good used car - and fly almost alone on a 727 jet from Syracuse to Hartford, as I did once as a teenager.
Deregulation of trucking and airlines changed all that. Flying is more affordable today, of course, but a lot less pleasant, to be sure. Truckers are no longer the "Knights of the Road" as Anne Landers once described them, but quite likely to be texting-while-driving or engaging in road-rage with a 50,000-lb battering ram. There are pluses and minuses, here.
If it is any consolation, these choke-points don't exist for long, at least not on a cosmic scale. "The Market Abhors a Monopoly" Economists chant, and to some extent, they are right. Either the people get pissed-off and demand the government take action, or the price increases force people to seek out lower-cost alternatives.
Despite his bitter hatred of wind farms and solar cells, Trump's ill-advised war will raise oil prices - for some time - to the point where solar and wind and other alternatives (nuclear, hydro, gas) seem far more attractive. Rather than stamping out alternative energy, Trump has supercharged it.
Of course, the war in Iran could go both ways. After all, after 20 years, trillions of dollars, and hundreds of thousands of deaths, we brought Democracy and Peace to both Iraq and Afghanistan, and finally eliminated the scourge of the Taliban, once and for all.
I am, of course, being sarcastic. But the record of these interventionist wars - going back as far as Vietnam, is that after a couple of decades of insurgency, death, and debt, we declare victory and go home, with our tail between our legs. And it ain't just us! Afghanistan bankrupted the Soviet Union more than a decade before we stepped into that bear trap.
It's not that Iran is a bad actor on the world stage or that they treat their own people badly, but that the idea that we can defeat them easily might be flawed - at least based on our own track record.
Recall that one reason we stopped going to the moon and scrapped billions of Apollo hardware was that the US Government was being bled to death by the costs of the Vietnam war.
I doubt that will be different this time around.
