#96: Space Dust

Matt Stoller has an excellent newsletter called Big about monopolies and market concentration. This week he summarized the history of private equity’s role in the American economy since the 1970s—a topic I’m more and more interested in—and supported my hunch that private equity is the secret reason why many good things have seemingly gotten worse over the past few decades. Stoller’s basic thesis is that private equity transforms corporations from institutions that make things and employ people into vehicles for extracting value, shifting that value toward a company’s owners, and then discarding whatever’s left. When you hear complaints about the “financialization” of American society, there’s a good chance that private equity is responsible for the most negative of those connotations. I collect examples of this: A private equity firm hilariously (but sadly) bought Chuck E. Cheese and eliminated the animatronic band that is synonymous with the chain. A lot of what the industry does looks like market distortion to a casual observer, but beneath that surface lies a highly rational extractive process.

Private equity embodies a broader contemporary phenomenon that I call “despatialization,” in which various technological processes (not just the internet) undermine the role of place and destabilize physical communities by doing so. In a follow-up to his essay, Stoller shared a reply from a reader, who pointed out, “One other consideration is the effect that successful companies have on their communities (philanthropy, spin-off new companies, creating civic and leadership opportunities). Private equity acquisitions where the owners are largely absentee kill these benefits.” This echoes the grievances of towns that became optimal for large-scale Bitcoin mining, which delivered abstract economic activity without the associated jobs or tax revenues. Capital and its positive side effects, just like other forms of information, are increasingly disembedded from their physical containers, which makes them fluid, fungible, and despatialized. In this climate, value of any kind is hard to confine to bounded places, even though much of the infrastructure of our society is still set up to operate under that assumption.

Resisting despatialization, at a glance, feels futile or even counterproductive, if the geopolitical trend toward Brexit-style isolationism is one such response. But we must acknowledge that place still matters at the most local levels, however much it’s been unsettled, and that our brains as well as the actual spaces we inhabit are still hardwired for physical context to matter. If the covert siphoning of wealth and agency away from its traditional repositories isn’t convincing enough, Jenny Odell makes an eloquent case for “a movement downward into place” in her book How to Do Nothing, contrasting the benefits of immersion in local context—which edify individuals and communities—with the placelessness of platforms like Facebook, which don’t just distract us but reorient the same locally-generated efforts toward their global corporate objectives. In the social as well as economic domain, then, physical place is a bulwark of freedom, a way to decouple from absentee forces that have goals for you that you may not even know about.