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WEF poster

The World Economic Forum's catchphrase you'll own nothing and be happy was widely mocked as an eyebrow-raising vision of a "sharing economy" future without the implicit agency granted by full ownership.

Renting stuff that one needed only for one-time use has long been a market, and car-sharing makes sense for urban dwellers who only need a vehicle on occasion.

But to own nothing still implies powerlessness and poverty, not happiness, which continues to be associated with owning income streams and nice things, i.e. wealth.

Given our dependence on software / digital rights and the phantom wealth of credit-asset bubbles,"how much do we actually own?" is a fair question. Consider the recent New York Times article Why Tech Companies Are Not Your Friends: Lessons From Roku, which was reprinted in other publications with the more accurate title Our Gadgets Are Not Ours.

The gist of the article is that since we don't own control of the software, our "ownership" of the device is illusory. Here is an excerpt:

More than a decade ago, when we bought a TV it was just that--a big screen that let you plug into it whatever you wanted. Nowadays, the vast majority of TVs connect to the internet and run the manufacturer's operating system and apps. Even though you bought the TV, the software component, a major part of what makes the product work, remains controlled by the company.

Changes to the product's software interface and data collection practices can happen at any moment. In extreme examples, a device can stop working. In 2020, for instance, Amazon deactivated the Echo Look, a camera that helped people organize their wardrobes. It issued a promotional credit for owners to buy a different Amazon gadget that lacked similar features.

The less extreme, more common situation is when companies stop supporting older products because they need to sell new gadgets. Apple's original Apple Watch from 2015, for example, no longer gets software updates and now barely works.

This issue is not new but has grown more problematic as more of our devices rely on apps and internet connections, said Nathan Proctor, a director for the U.S. Public Interest Research Group, a consumer advocacy organization. With computers, consumers could modify their machines by installing a different operating system. But with many other types of electronics with locked-down software systems, from streaming devices to e-book readers, those modifications are typically not possible."When you get to the core of it, do you even own it anymore?" he said.

Indeed. Now think about the "ownership" of software-dependent systems such as vehicles and Smart Homes, and income streams running through software platforms such as Stripe. Payment software platforms can block your access to your money and delete whatever illusion of control you might have had by informing you that you violated their "terms of service," which are open-ended and cannot be questioned.

One's "ownership" of money and income streams turns out to be highly contingent.As for vehicles, if the software fails (or is rendered inoperable), your vehicle becomes an expensive brick. So what exactly do we own if the vehicle is inoperable?

Widening the scope of our inquiry, consider our ownership of a house that is mortgaged. If the fine print doesn't preclude the lender calling the mortgage, then should the lender (or current owner of the mortgage) call the loan, the "owner" must pony up the sum owed or the "ownership" reverts to the lender.

Given the valuations' dependence on phantom capital asset bubbles, we might say that "ownership" of a mortgaged house is more an option bet on future valuation than actual ownership, for should the Everything Bubble pop and the house value drops below the mortgage owed, then "ownership" means "ownership" of an asset with negative value, i.e. it's worth less than zero as the "owner" owes more to the lender than the property is worth.

If the house is in a high property tax state / county, "ownership" includes a hefty annual payment which may well have no upper statutory limit. If the "owner" owes $20,000 in annual property tax, the "ownership" is in effect a lease, as non-payment of the taxes/"lease" eventually leads to confiscation of the property as a means of collecting back-taxes.

The same dynamic occurs in condominium "ownership" when common-area fees and special assessments have no statutory limits and must be paid. This article on outsized special assessments being mandated for older condo buildings raises the question, what exactly does the owner own, and what is in essence an open-ended lease?

New Florida Law Roils Its Condo Market Three Years After Surfside Collapse: More units are being dumped on the market because of six-figure special assessments tied to repairs for older buildings.

Ivan Rodriguez leapt at the chance to buy a unit at the Cricket Club, an exclusive bay-front condominium in North Miami. In 2019, he liquidated his 401k retirement account to purchase a nearly 1,500-square-foot unit with water views for $190,000.

But because of a recent state law that requires older buildings to meet certain structural safety standards, the condo board recently proposed a nearly $30 million special assessment for repairs, including roof replacement and facade waterproofing. It would amount to more than $134,000 per unit owner.

Rodriguez, 76, didn't have the money. So he reluctantly put his two-bedroom condo up for sale, joining dozens of others in the building who are doing the same. After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it.

Every time a potential buyer learned of the assessment, he said, "they'd run in the opposite direction.

Maybe we should rephrase the slogan to you'll appear to own things you don't actually control and be happy. Does that generate the intended warm and fuzzy feeling?


Charles Hugh Smith is a contributing editor to PeakProsperity.com and the proprietor of the popular blog OfTwoMinds.com. He is the author of numerous books, including Why Everything Is Falling Apart: An Unconventional Guide To Investing In Troubled Times.


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