Animal shelters stuffed full of abandoned dogs. Musicians earning 0.005 cents per song. It might be easy to blame these things on cold-hearted pet owners or cheap music fans. That’s a distraction. Scratch just beneath the surface and you can clearly see there is a dangerous systemic problem plaguing both industries — and many others. It’s an extraction story, as old as clear-cutting and strip mining, dressed up in modern finance, painted over with a veneer of techno-magic. And it’s a story that’s poisoning our pseudo-free-market, Gotcha Capitalism economy.
It’s hard to think of two more beautiful professions than musician or veterinarian. Those who’ve read my stories for a while know I have a deep and abiding love for both music and pets, so I have many dear friends in both these honorable careers. Thanks to the extraction economy that America has quietly become, both professions are at risk of disappearing, destroyed by small groups of people who are abusing their markets and grabbing every last dollar off the table — dollars that should be earned by the people doing the hard work. Instead, the people doing the real work fight — each other — over crumbs.
I’ve long called this the heroes and a$$holes economy. The middle class in most professions is rapidly disappearing. It’s harder and harder to earn a decent living as an author, or a musician, or a veterinarian. You either earn a $10 million advance as a superstar writer, or a supergroup, or you buy up a set of vet offices — or you work for pennies. Let me explain.
CNBC ran a heartbreaking story this week about dog shelters closing their doors around the country, as they are overrun by abandoned pets. The reason: it’s not selfish millenials. Owning a dog is just too expensive.
“As the cost of living and pet care rises, animal shelters across the country are at critical capacity dealing with an influx of surrendered pets, oftentimes due to the price tag associated with their care. An estimated 5.8 million animals filled up facilities last year, according to the nonprofit Shelter Animals Count’s national database,” the story says.
I’m glad CNBC took on this critical topic, but since it’s CNBC, I wish the business network dug just a little deeper into the why of it all. Google “expensive vet care” and you’ll find dozens of headlines explaining the rising cost of vet care: private equity.
- Why Your Vet Bill is so High:Corporations and private-equity funds have been rolling up smaller chains and previously independent practices
- Vets fret as private equity snaps up clinics, pet care companies
- ‘Life and Death’ for Pets: Elizabeth Warren Targets Firm Buying Veterinary Offices
Small, privately-owned vet offices are slowly being slurped up by spreadsheet-wielding, finance-friendly firms that see a perfect target — an industry where “impulse” buys reign supreme, where pet owners often find themselves in desperate situations, willing to spend enormous amounts of money out of love and kindness. No need to create high-pressure sales moments; they are ever-present. Closing sales in free markets where consumers comparison shop is difficult! But maximizing profits when many decisions are made under enormous time and emotional pressure is easy.
Let me make clear — there are many, many individual vets who work in PE-owned clinics that do amazing, caring and fair work. But many vets who work at these facilities have expressed concerns over high-pressure sales tactics. Meanwhile, the old path of a young vet setting out her or his own shingle is quickly disappearing. Small vet offices that provide a decent life to a beloved doctor who cares for a neighborhood of local animals are disappearing. Gigantic corportations backed by vulture capitalists that make a tiny group of shareholders and executives rich have taken their place.
Sounds like the music business!
Take 20 minutes to watch this new video about the Spotify effect published by More Perfect Union and hosted by Liz Pelly. Streaming service executives are becoming fabulously wealthy — Spotify CEO Daniel Ek is estimated to be worth billions of dollars — while musicians quite literally earn fractions of pennies from their performances. In this video, you’ll hear from a viral sensation who earned about $1,000 from a million-download song, for example.
More to the point, most musicians have no idea how their streaming royalties are calculated — an insane business model, ripe for abuse. For this, we made Napster illegal?
Middle-class music jobs have long been in decline. Your grandparent or great grandparent might have made a decent living playing piano at a local theatre, for example. But even just a few years ago, Chuck Mangione’s brother Gap could play in upstate New York jazz clubs, and teach, and raise a family as a locally famous musician. Talk to any working musician today and you’re going to find that model is just about extinct. Music is mostly a volunteer effort with a lottery ticket attached. The heroes and a$$holes economy.
The streaming story isn’t exactly the same as the private equity vet story, but they all work on the same crushing mathematics. If a few people extract most of the money from an industry, there won’t be much left for everyone else. There’s only so much food on the table. If your family barbecue has 25 people, and dad eats 24 steaks, the rest of you only share one, and you’ll all be hungry. I know, economists will giggle at my rough metaphor and dish out econ-babble about efficiencies and productivity gains lifting all boats. Spoken like a dad full of steak. Or something else.
I could tell this story about dozens of other professions, too. In fact, I’ll keep doing that as time passes. But I use these two examples today to illuminate an important point. Extraction economies crush today’s middle class, and maybe even worse, create risk of extinction-level events. Even if you think that’s hyperbole, it’s hard to deny what’s on display in just about every corner of America — people who do the hard work are not reaping the rewards.
This is not new, of course. Unbridled capitalism has always encouraged extraction. The moment someone figures out how to cut down trees quickly and sell them, they cut down as many trees as they can until guardrails are put in place. Of course they do. You’d probably do that, too. But one person shouldn’t get to profit from hundreds of years of forest growth. Just like one person shouldn’t get to earn all the profit from decades of music training and practice, and or years of medical school and life-saving surgeries. It’s not fair, and pretty soon, all the trees and the music are pets are gone. That’s a world we really don’t want.
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