The KOA Economic Initiative begins with a radical lucidity assessment: we do not live in a market economy of production, but in a System of Everyday Extraction.
Our research defines this problem through two core concepts: the loss of Exit Power and the measurement of the Extraction Wedge.
1. The Core Concept: "Exit Power"
Freedom is often defined legally, but in practice, it is economic. [cite_start]We define Exit Power as the practical ability to refuse terms without suffering severe loss[cite: 47].
If you cannot quit a toxic job because you have zero savings, you lack Exit Power.
If you cannot switch banks because of hidden penalties, you lack Exit Power.
If you cannot move neighborhoods because rent is artificially inflated, you lack Exit Power.
The Consequence: When Exit Power is low, "consent" becomes a formality. [cite_start]Markets shift from voluntary exchange to Systematic Surplus Capture[cite: 45].
2. The Metric: The Extraction Wedge
[cite_start]We quantify exploitation as the "Extraction Wedge": the measurable gap between the wealth a household should retain in a competitive market versus what they actually retain[cite: 3].
[cite_start]This wedge is not abstract; it is a sum of money drained from your pocket every month through five specific channels[cite: 17, 50].
Channel A: Wage Suppression (The Monopsony Tax)
In a healthy market, employers compete for workers, driving wages up to productivity levels. In Canada, Employer Concentration and the decline of unions have broken this link.
[cite_start]Mechanism: When there are only one or two "real" employers in a sector, they set wages below the marginal product[cite: 62].
Result: Workers produce more value than ever, but real wages remain stagnant.
Channel B: Product Markups (The Oligopoly Tax)
Canadians pay some of the highest prices in the world for data, banking, and air travel. This is not due to "inflation," but Oligopolistic Markups.
[cite_start]Mechanism: "Superstar" firms in essential sectors (groceries, telecom) use their market power to price far above cost[cite: 65, 113].
[cite_start]Impact: This acts as a private tax on survival, hitting lower-income households hardest[cite: 66].
Channel C: Finance Charges (The "Troll Tax")
The financial sector extracts massive value through "shrouded" attributes—fees that are hidden or punitive.
[cite_start]NSF & Overdrafts: Penalties that effectively criminalize poverty, charging 4,000% APR on liquidity shortfalls[cite: 69, 121].
[cite_start]High-Cost Credit: Payday loans and Buy-Now-Pay-Later schemes that target those with the least Exit Power[cite: 21].
[cite_start]Interchange Fees: Hidden transaction costs (1-3%) embedded in the price of every retail good you buy[cite: 122].
Channel D: Public Transfers (The Regressive State)
Even public institutions have become extractive.
[cite_start]Crown Corporations: Entities like Hydro or Lotteries often generate massive surpluses that act as regressive taxes on users, rather than providing services at cost[cite: 33, 134].
[cite_start]Subsidies: Public money is transferred to private corporations (via grants or tax credits) without requiring wage increases or price reductions in return[cite: 9, 32].
Channel E: Payout Extraction (Financialization)
[cite_start]The modern corporation has shifted from "Retain and Reinvest" to "Downsize and Distribute"[cite: 138].
[cite_start]Mechanism: Companies spend record amounts on Stock Buybacks and dividends to boost share prices for executives[cite: 73].
[cite_start]Cost: This cash is diverted directly from worker wages and tangible investment (R&D, machinery)[cite: 34].
3. The Aggregate Impact
When you sum these five channels, you see why the middle class is shrinking. It is not a failure of personal responsibility; it is a structural failure of the market.
The Conclusion
We cannot "regulate" our way out of this easily, because the extractors own the regulatory process. We must Compete our way out.
The goal of the Solidarity Network is to build a zone of "Zero Extraction"—a parallel economy where these five wedges are structurally impossible.
Next Steps
Now that the problem is defined, explore the engineered solution.
