Tim Wu

What is inchidification, Corey?

So extraction is actually a technical economic term that refers to the ability of any entity or any firm with market power, monopoly power, to take wealth or other resources far in excess of the value of the good being provided.

Not only the value being provided, but also its cost to provide it.

That's the technical definition.

You know, outside of tech, it might be a pharmaceutical company.

They have, you know, there's a rare disease.

They have the only treatment for it.

And, you know, maybe they're extracting as much as they can.

You know, $100,000 a year is about the usual.

They pin those kind of diseases down.

That's the definition.

I think the idea of it comes from a sense, something I get from teaching a business school sometime, is that American business has, in my view, moved increasingly to focus its efforts on trying to find points of extraction as a business model.

as opposed to, say, improving the product or lowering the price.

You know, try to find the pain points where your customers really have no choice and then take as much you can, kind of like in a poker game when you go all in because you got the good hand.

Now, there's always been a little bit of that in business or maybe a lot, like in the Gilded Age.

But the question is, what is the ratio and how much of business is providing good services for good prices?

You know, making a profit, that's fine.

And how much is just that different thing of extraction?

So Tim, I want to, before I move on to Corey, zoom in on something you said there, because a lot of that definition seemed to turn on how you define value.

And I mean, a lot of economists would say price is a method of discovering value.