Last gasps of the rent seeking class?

> The best anyone can hope for is a free market, with everything properly priced. But for decades, the American market has not been free. It’s used purposefully added friction to exploit a time asymmetry between the business and you. And due to things like call centers, this has been very profitable for the businesses. Cable companies and insurance rely on the fact that your time is more valuable than theirs. They can hire people in India at scale to waste your time.

That is the market being free, George.

> But for decades, the American market has not been free.

The grand, boneheaded naivete to fail to understand that middlemen are an emergent and intrinsic property of free markets in practice.

"But like people who are good with computers, the models want a terminal, not some candy ass iPad UI."

Back before the iPhone I used to get into arguments with HCI specialists that phones could be like butlers and should know with all the sensors that they have that you put it in your bag and behaved accordingly. I was told that was impossible then but it seems more possible now. Had the world gone at all that way we'd have a freakin' API to make a restaurant reservation and wouldn't have to go through multimodal hell.

I'm not sure I buy the "everyone will be AI coding to replace things that cost money with their own apps" idea. I only have so much limited time in my day (and only so many tokens on my claude account per week). It's probably going to make more sense for me to buy a tool that's been given human attention over the span of weeks over something i prompt into existence in a few hours (especially if I need 10 such tools to accomplish something).

Like self-driving taxis where the business model is to stop paying drivers so we can pay more to big tech companies. Viva la revolution!

Methinks this post conflates “rent seeking” with “return on investment” just a tad.

Economic rent is the extra money you can charge for owning a scarce resource. ML models are not waterfront real estate, they are IP. Other people can make more models if they can/want to.

Now, whether IP should be legally protected is a totally separate question, and while we in the West tend to assume the answer is obvious geohot would certainly not be the first person to suggest broadly applying private property rights to information makes questionable sense.

Im starting to believe that the biggest moats will be in the application layer, and that people are starting to realize traditional saas moats apply to those companies too

network effects, distribution, proprietary data, systems of record

companies like opencode have none of the above

cursor's distribution has been faltering and they're hard pivoting to training their own models with their proprietary data to try to build their moat back

> Enter AI, the great equalizer of time.

Enter Terms of Service, monopolies and duopolies, and maybe even cybercrime statutes.

There’s no law that says AT&T can’t just ban your account if you hook up your “talk to customer service” bot to their AI/overseas customer service phone tree army.

Or, they can just lock your account for “safety” reasons.

I wish I could be this optimistic. The reality is that as we speak the average consumer doesn't have access to cheap electricity or affordable inference hardware or powerful models that work out of the box on existing computers. The only realistic option for the 99% is to buy a $20-$200 monthly AI subscription, and I don't see that changing anytime soon.

A couple decades ago people used to think that since anyone can build a website internet businesses will never have a moat. In a hyper-capitalist system the top players will always find a way to dig a moat.

> Over the past fifty years, the U.S. economy built a giant rent-extraction layer on top of human limitations: things take time, patience runs out, brand familiarity substitutes for diligence, and most people are willing to accept a bad price to avoid more clicks. Trillions of dollars of enterprise value depended on those constraints persisting. – Citrini Research

Agentic commerce will render Amazon and the rest of the rent seeking marketplaces obsolete given enough time. Because LLMs can literally go straight to the seller and perform checkout, do market research to make sure the seller is legit, and the seller can sell for lower than on the marketplace since they aren’t paying a 15-20% cut.

This is a highly sensational take that is basically fan fiction. From "the era of purposefully frustrating humans is over", to "the added bonus of the collapse of the US economy. Frankly, it’s well deserved." and "everyone in the world is rooting for the Chinese models"; nothing of that is grounded in reality.

The Chinese models are open source because they are not state of the art. Once they catch-up or lead, they will likely close them down by a government mandate. Just like Meta was fine with Llama being open source but once they started to get close to OpenAI/Google/Anthropic, they shifted their language to "maybe we won't keep doing that."

The idea that AI will end the "rent-seeking class" that has effectively existed for thousands of years is... not going to happen! The business model just adjusts. And if AI is going to be an economy-shaping super disruptor, the cloud-hosted models will continue evolving beyond what you could ever run at home under the desk.

I think self driving cars are important for a couple of reasons:

1. Demographics - Aging population needs transportation. God knows we certainly don't need really old people driving themselves. We got a taste of the future in West Portal in that regard not long ago.

2. Human Capital - The US has pretty much demonstrated that there is little desire to import low skilled labor. Where do these theoretical Taxi drivers come from? Or welders or plumbers. Labor is going to become increasing expensive no matter how you slice the pie.

3. Younger US citizens are going to gravitate to non-manual labor jobs. It is not just that every one is being steered toward college. Physical labor (trades) take a toll on the body. I know - I have work in them - and you quickly extrapolate what that will be like when you are 50.

>Third party marketplaces sprung up for reservations, and idk it’s been a while since I went to fancy dinner, but I imagine the restaurants have just started charging. Or at least the first party reservation sites do.

Yes, this is what Tock is for. It's not clear to me that it's a bad thing. It replaces the old $20 in a handshake I used to do with the maitre d at the front of the restaurant. Democratizes opportunity and improves transparency

Let's not gloss over the electrical supply. These chips won't work for free.

> How often do you diligently check Uber and Lyft and select the cheaper one?

Almost always nowadays lol. Shit I’ve gotten poorer over the past few years.

It seems like the rent seeking class is just moving to selling you access to LLMs in data centers by the token. In the past, the "rent-seeking class" being described here was at least part of the middle class. Now a few billionaires are going to capture all of the value, but the rent-seeking isn't going away.

Betteridge's Law of Headlines hard here.

> The era of purposefully frustrating humans is over. The Chinese open source model running on the box under my desk can pass the Turing Test. When you call, e-mail, text, or show me an ad, you’ll never know if it’s me or my model seeing it.

But at some point, you're going to want to do something, like, e.g., buy something. Then you're right back to the problem in the opening quote:

> things take time, patience runs out, brand familiarity substitutes for diligence, and most people are willing to accept a bad price to avoid more clicks.

& we're already seeing AI used to do this. E.g., Amazon listings where product photos are AI generated. (… not that many product photos weren't "bad photoshop of product onto hot sexy model who is obviously not using our product" before … but now it's AI!) Whereas before someone would have had to spend a modicum of time badly using Photoshop, now AI can just churn out the same fraudulent result in a fraction of the time.

Now, if I have a problem with a product, instead of just calling a number, browsing a phone tree, getting put on hold, and finally having to struggle to get some human to understand the basic logistics of "I paid for X, I did not get X, I demand X or refund", I get to do all that but with the extra step of "forced engagement with an AI that is incapable of actually solving my problem". (This somehow still manages to apply even when the problem is seemingly trivial enough that I find myself thinking "… this actually should be something an AI can do" but inevitably, no, the AI is "sorry", it cannot do that.)

And besides, calls, emails, etc. are already handled without AI: I (and everyone I really care about) have either allowlisted all inbound comms, or abandoned the medium altogether. Moreover, any communications medium is useful because it is not infested with spam, and will eventually be destroyed by spam. At least until we grow laws for mediums like phone/email, maybe named things like "Do Not Call" or "CAN-SPAM" and those laws are enforced. But the GOP has no interest in enforcing any level of consumer protection, so here we are.

> Agentic commerce will render Amazon and the rest of the rent seeking marketplaces obsolete given enough time. Because LLMs can literally go straight to the seller and perform checkout, do market research to make sure the seller is legit, and the seller can sell for lower than on the marketplace since they aren’t paying a 15-20% cut.

Right.

You'll just end up paying the 15-20% cut to the people who train the model and keep it updated and run the agents that you rent from them.

> The best anyone can hope for is a free market, with everything properly priced. But for decades, the American market has not been free. It’s used purposefully added friction to exploit a time asymmetry between the business and you. And due to things like call centers, this has been very profitable for the businesses.

I just think this analysis is wrong from the start. The "proper" pricing structure, the one tracking the actual costs involved, would be that you don't get to talk to a human being at all unless you pay for their time. Human frictions are what allow no-charge customer support to exist.

To me it seems like the rent seeking is everywhere and getting strong in all facets of our lives. Tech companies, utilities, marketplaces, car companies, appliance companies - everyone is pushing subscriptions, gate keeping features and milking every possible dime.

I find it amusing and, IDK, charming how “rent-seeking” has become a general purpose pejorative, like “bourgeoisie” was at one time.

>Not to mention the added bonus of the collapse of the US economy. Frankly, it’s well deserved. Nobody should build an economy based on rent seeking and increasing friction. I pray the collapse will be swift and legible so that reconstruction (in the right way) can begin as soon as possible.

Insane take for a bunch of reasons, the destruction of the US economy would necessarily entail the destruction of the world economy. Hopefully I don't have to explain why that would be bad. Furthermore, a ton of the "rent seeking" Citrini Research was discussing isn't traditional rent seeking but the cognitive services previously necessary. Software engineering, for instance, falls into that bucket.

> The best anyone can hope for is a free market, with everything properly priced. But for decades, the American market has not been free. It’s used purposefully added friction to exploit a time asymmetry between the business and you.

A free market that is "properly priced" is a not a real state of existence.

Resource and information asymmetry, and the exploitation by the those with resource and information privilege of those without it has been present from the very beginning. A free market is just a tool (among many) to achieve a goal for a society.

For some, that goal is explicitly the concentration of wealth and welfare in very few hands. This is oligarchy.

For others, it's the advantaging the welfare and dignity of their "tribe" at the cost of welfare and dignity to perceived outsiders.

And for yet others, it is the advancement of universal welfare and dignity.

Neither a free market nor socialism gets you any of these. What gets you there are the shared narratives that utilize tools like free markets, regulation, and redistribution.

I don't understand how you can look at LLMs and how you think they will result in less time wasting bureocracy? Sure the users can use LLMs to talk to call centers, but businesses will absolutely block the sun with the amount of LLMs they'll throw back at you, try to literally do anything on the phone, it's starting to be all LLMs.

In an LLM arms race, corporations will win bud, sorry.

It's undeniable that technology over the past decades has increased democratization in something every step of the way.

YouTube destroyed Hollywood's monopolization of entertainment. Anyone with a smartphone now has a shot at becoming a full-time creator. Prior to this, it was gate kept by Hollywood execs.

Smartphones destroyed Microsoft's monopolization of apps.

Not a leap to believe this will happen to some extent with AI (and it's already happening to some degree).

ah yes, capitalism is over because the chinese are benevolent people that just give away the goose that lays golden eggs out of the goodness of their hearts

this will continue forever and no rugs, chinese or otherwise, will ever be pulled

we know that because the label on the rug says "open source"

It's going to be the same asymmetry with different tooling. Why does he think people will be the only ones with these tools? Companies will utilize them, as they already are, and will also have more time to fine-tune, manage, and improve them.

It's going to be your bots vs theirs. Theirs will have more resources. Net result? probably fewer jobs and wealthier companies yet again.

This argument is a bit scattered. "Rent seeking" is being misused here. It's a relatively new term (~50 years old) but it has a lot of history behind it, specifically with enclosures. The Enclosure Acts [1] were a series of laws that took what was common property open to all and made them private property. This was embryonic capitalism [2].

Anyway, I remember that Google demo of making restaurant reservations. I believe it was scripted and had a human fallback. Little did we know that Google would drop the bag on the whole transformer thing that came out soon after. I wouldn't be surprised if it was some of the same people involved.

What the author is talking about isn't rent-seeking per se but a moat. The entire proposition of OpenAI is that they can build a moat and recoup the billions of investment. I'm not convinced that's true, which is part of the author's point, for some of the same reasons:

1. Cost of hardware and training and tokens keeps going down. We saw the same thing with Bitcoin mining. I wonder if we'll see ASICs enter the fray here too; and

2. China will make sure no one company owns this future. DeepSeek was a shot across the bow of OpenAI, Google and Anthropic. It is a national security issue for China.

Where I disagree is that this will be an end for the rent-seeking class. I think we're bouldering towards a dystopian future of even more wealth concentration where most people get displaced by automation and AI, which suppresses wages and ultimately leads to a situation where a handful of people have all the money and almost everyone else has no money.

[1]: https://en.wikipedia.org/wiki/Inclosure_act

[2]: https://medium.com/@jrcoleman97/the-hidden-origins-of-capita...

> The best anyone can hope for is a free market, with everything properly priced. But for decades, the American market has not been free. It’s used purposefully added friction to exploit a time asymmetry between the business and you. And due to things like call centers, this has been very profitable for the businesses. Cable companies and insurance rely on the fact that your time is more valuable than theirs. They can hire people in India at scale to waste your time. They can use procedure and big data to design protocols to drive you just to the point of frustration at little cost to them. How often do you diligently check Uber and Lyft and select the cheaper one?

> Enter AI, the great equalizer of time.

I didn't read any futher: this article is dumb. If a company has the capability to hire literal people to waste your time, they can deploy more AI than you to waste the time of your AI.

Or they just use price to limit access instead of time. Which means you're totally SOL if you have time but no money. Pay to win, that game everyone loves /s!

AI doesn't flatten asymmetries, it exacerbates them.

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1. This gentleman appears to write with an optimism that befits a sliver of society.

2. Anthropic does not care about what models and hardware he is running under his desk.

3. When you look behind the cupboard—Anthropic is "rent seeking" on a level well above consumers.

4. I've got "AI safety" + "Capitalism" + "Military-industrial complex" bound together on my mental corkboard.

>The best anyone can hope for is a free market, with everything properly priced

This is an oxymoron.

"But like people who are good with computers, the models want a terminal, not some candy ass iPad UI."

Giving functionally illiterate people computers with GUIs should be regarded as a mistake.