Overpaid mapmakers, non-government bloat, and an ode to sharks.

We aren't living in a free market, and it shows...

Yesterday I wrote about the importance of understanding that the map is not the territory, and the importance of keeping that fact firmly in mind.

In response, I got a very entertaining and informative email from a reader. He’s a high-level engineer who spent many years working for big tech companies like Google and Facebook.

He says these big firms just love to throw money at articulate and inspired mapmakers — who are also completely full of crap.

He tells of one fellow (adored by upper management, whose asses he smooched expertly) who was paid over $750,000 a year to generate and promote “roadmaps” describing where the company is, where it’s going, and how it’ll get there.

Sweet map, bro. Even sweeter salary.

Trouble is, each and every “boots on the ground” engineer knew it was complete nonsense. This guy was just spinning yarns, wasting time, fawning over the bosses, and driving good engineers away from the company with his time-wasting nonsense.

Studying economics as I do, I expect this kind of destructive, bureaucratic nest-feathering and bloated waste in government institutions. But the marketplace is supposed to provide incentives against this stuff, isn’t it? What gives?

Well, part of the answer is that we don’t have a free market. Ours is a “mixed economy”, heavily hampered by government-created barriers to entry and impediments to competition. Because of this, many politically-connected companies can shield themselves from competitive forces.

But I don’t think that’s what is happening in these big tech companies — not exclusively anyway. I think there’s another process at work, and it reminds us that a free market is a process, not a panacea. Incentives move market actors towards ever-shifting equilibria. It takes a little time, and it’s never quite “finished”.

It’s dynamic, not static. And this aspect of how markets work is even more pronounced when we have periods of massive innovation — as we do now.

Early entrants into brand new markets who become hugely successful have a lot of cushion from competition — for a while, anyway. In time, other entrants will come along and force these firms to either innovate further (a good thing) or lower costs to compete (another good thing).

But this process can take a while. In the meantime, you’re going to see a lot of really big firms operating in very stupid ways. Just consider all the weird management practices and employee perks you’ve heard about at these huge tech companies.

Don’t fall for the hype. The vast majority of that nonsense is counter-productive.

Oh, and there’s another barrier to the market working “efficiently” in this area. It’s that meddling government has seriously screwed up the market for corporate control. It used to be a lot easier for an “outsider” who observes corrupt (or stupid) behavior of a company’s management team to just swoop in and take the company over.

If a management team is screwing over the shareholders, then the stock price will be deflated. That provides an opportunity for a smart speculator to buy up that stock, fire the management team holding the company back, rescue the stockholders, and make a tidy profit doing so.

But corruption is the name of the game in Washington DC. Congress and the SEC did the bidding of well-heeled management cronies and made that maneuver much more difficult to pull off anymore.

Think of the corporate “sharks” portrayed in Wall Street by Michael Douglas, or Other People’s Money by Danny DeVito. These are both great movies, and they depict an aspect of the free market that has been seriously hampered by legislation in recent decades.

The plots of those movies don’t make sense any more. Most of those market processes used to take over mismanaged companies have been made illegal.

It’s a big problem. The market for corporate control is a very important check on the power of management to fleece the shareholders.

That’s why what Elon Musk did with Twitter(X) was so exciting. It took a literal billionaire to do something that used to be much more common.

Free markets are amazing things that provide benefits to average Joes and Janes like you and me that we never even think of.

We should start thinking of them. We should appreciate what free markets are and what they do. And we should demand that those we send to Washington to serve our interests don’t instead opt to serve the interests of cronies.

Demand freedom instead.

Unless you like overpaying for stuff so charming charlatans can make almost $1M a year peddling false maps to upper-level management twits.

Naturally,

Adam