Sunday, November 18, 2018

Hell Hath No Fury Like a Liberal Scorned: The Media Turns on Facebook and Google

Here's the ugly truth: Facebook and Google are profit-maximizing quasi-monopolies who will do anything to protect their monopolies.
Of the many remarkable trend changes of the past year, few are more striking than the fawning embrace of Facebook et al. by Big Media turning to an enraged sense of betrayal. Facebook and Google--by their own self-definitions, shining beacons of liberalism and goodness (we're not evil, we're fantabulous!)-- were viewed by the famously liberal Big Media as allies in the fight against Trump, illiberalism, populism, deglobalization, etc.
Now, to their horror, Big Media has discovered that not only did their Big Tech sweethearts betray their affection and trust, they're just another bunch of predatory profit-maximizing monopolies who will stab anyone and everyone in the back who gets in their way to higher profits and more power.
It would be sad if it wasn't so pathetic. Poor Big Media, so anxious to be hip and with it, so anxious to impress social media while trying to exploit its reach to prop up their own dying business model. Big Media, so easily seduced by Big Tech: we're liberal, too, and together we'll lead the world out of darkness into light, blah blah blah.
Then Big Media discovered its virtue-signaling liberal sweetheart, Big Tech, is just as threatened by liberals as by conservatives, and it turns its firepower on liberals with the same savage abandon as it does on independent and conservative media.
The bitter rage of the previously besotted and now betrayed suitor is evident in these recent articles in The Atlantic, New York Times and Washington Post, all bastions of virtue-signaling self-righteous defense of the state-cartel Empire, a.k.a. liberalism.
The high dudgeon of WaPo is especially amusing to those us blacklisted by the faux-liberal Washington Post's witch-hunting promotion of a bogus list of "Russian propaganda" sites in 2016. As I noted recently, some observers suspect Facebook is using this same baseless, fact-free libelous list in its shadow banning of independent journalists and commentators.
That Facebook would stick a knife in neoliberal globalist George Soros (gasp!) to mask its calumny might have been an eye-opener for the enamored liberals who foolishly believed the facile PR of Facebook, Google et al. Nobody's more offended that the chump who falls for the obvious scam, a scam that any streetwise person would have spotted a mile away.
Big Media so desperately wanted a partner in its faux-liberal virtue-signaling that it overlooked the abundant evidence that Facebook and Google are only interested in reaping billions of dollars in ever greater concentrations of wealth and power. These are corporations, after all, and just like the corporations that own Big Media, maximizing profits is their sole raison d'etre, self-congratulatory preening claims of public service wonderfulness aside.
Here's the ugly truth: Facebook and Google are profit-maximizing quasi-monopolies who will do anything to protect their monopolies. Just like all the other monopolies that had to be busted up to protect the public from their predatory power.
I just received this email from the Wall STreet Journal: the Big media war on Facebook just opened a new front, and it looks like a take-no-prisoners conflict now:
With Facebook Under Siege, Zuckerberg Adopts More Aggressive Style
Mark Zuckerberg gathered roughly 50 of his top lieutenants earlier this year and told them that Facebook was at war and he planned to lead the company accordingly.
Mr. Zuckerberg’s new approach is causing unprecedented turmoil atop Facebook, driving several key executives from the company, according to people familiar with the matter.
I've written a lot about these issues: here's a selection of recent essays:



My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.
Read the first section for free in PDF format.


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Friday, November 16, 2018

The Political Rebellion Gathers Momentum

When was the last time a monopoly or quasi-monopoly was broken up? A generation ago, or was it two generations ago?
The Ruling Class that wants us to love our servitude incites us to seek divisions: between red and blue, left and right, progressive and conservative, and so on. The Ruling Class in the mainstream media, in Washington D.C. and in Silicon Valley are experts at manipulating language and terminology to divide and conquer.
But beneath the superficial red-blue divide they are hawking, a broad-based political rebellion against the Oligarchy and their Ruling Class nomenklatura is gathering momentum. People left, right and center are awakening to two painfully obvious realities:
1. the political-social-economic system no longer works for the bottom 95%
2. the system is intrinsically unfair--rigged to benefit the few at the expense of the many.
The bottom 95% lack the political influence of the Oligarchy, and so their only means of expressing their disapproval is at the ballot box, by rejecting the approved mainstream candidates in favor of candidates who might move the needle in a rigged system.
What are the core economic issues that people are trying to solve at the ballot box?
1. The systemic lack of fairness: the growing sense that opportunities are not being distributed as widely or fairly as they once were; ruling elites now have advantages the “rest of us” don’t.
This advantage is very basic: capital has accrued most of the gains of the past decade’s growth and asset appreciation, labor’s share of the GDP continues to slide.
Much of the wealth is controlled by corporate-state cartels operating rentier skims: prices rise while quality and quantity of goods and services remains the same or decline. This is more akin to extortion than a free-market competitive market.
The pathway to middle-class security that was viewed as a birthright no longer works: go to college, get a secure job, buy a house, etc. A university diploma now saddles students with the equivalent of a mortgage in many cases, while housing in strong job markets has soared out of reach of all but the top 5%.
2. In response, people seek a political solution to systemic unfairness. In general, there are two solutions being offered:
A. Establish political limits on globalization, which is viewed as rewarding the few at the expense of the many. Opponents of deglobalization label this “nationalism” to tar it with unsavory connotations but this misses the point: globalization can indeed be exploitive and benefit the few at the top. The notion that “a rising tide raises all boats” overlooks the asymmetric distribution of globalization’s gains.
B. Establish QE for the People policies, which broadly speaking are political policies designed to more fairly redistribute the nation’s wealth and income that’s increasingly concentrated in the hands of the top few.
QE for the People policies include higher infrastructure spending (as that creates jobs and benefits all of society), tax credits for the working poor, Universal Basic Income (UBI), and ideas such as publicly owned banks.
To pay for QE for the People policies, proponents seek higher taxes on the wealthy and higher public spending, even if it is funded by debt (selling bonds).
Political solutions to embedded unfairness / inequality / rigged systems / diminished opportunities (i.e. asymmetric gains and unfair advantages) may be politically sound but economically unsound, that is, these policies might have unintended consequences: for example, borrowing large sums to pay for UBI and other costly programs might create inflation, raising the government’s borrowing costs and squeezing social spending while reducing the purchasing power of household earnings.
If we conclude that asymmetric gains, unfair advantages and rising inequality are systemic, then political policies should address the fundamental structural problems: for example, anti-trust enforcement that breaks up the stranglehold of cartels and rentier arrangements in healthcare, higher education, media, Silicon Valley, national defense, etc.
When was the last time a monopoly or quasi-monopoly was broken up? A generation ago, or was it two generations ago? The Oligarchy now has such a tight grip on the centers of power, the traditional limits on concentrated wealth and power have been fatally enfeebled.
In response, the bottom 95% are rebelling. Loving your servitude sounds wonderful if you're in the top 5% reaping the gains of aiding and abetting the Oligarchy's tightening stranglehold on power, but the bottom 95% are sick and tired of a rigged, dysfunctional system that's destroying the social contract to further enrich the few and their technocrat enablers.
In other words, policies that limit the exploitation/predation of the Oligarchy and their enforcers do more than redistribute income: they rebalance the tilted playing field and widen competition and opportunity rather than merely distribute “free money.”
Gordon Long and I discuss these topics in a new video program:
Election Takeaways (32:12 min):



My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.

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Thursday, November 15, 2018

Does Any of This Make Sense?

Does any of this make sense? No. But it's so darn profitable to the oligarchy, it's difficult to escape debt-serfdom and tax-donkey servitude.
We rarely ask "does this make any sense?" of things that are widely accepted as beneficial-- or if not beneficial, "the way it is," i.e. it can't be changed by non-elite (i.e. the bottom 99.5%) efforts.
Of the vast array of things that don't make sense, let's start with borrowing from future income to spend more today. This is of course the entire foundation of consumer economies such as the U.S.: the number of households which buy a car or house with cash is near-zero, unless 1) they just sold a bubble-valuation house and paid off their mortgage in escrow or 2) they earned wealth via fiscal prudence, i.e. the avoidance of debt and the exultation of saving.
Debt has this peculiar characteristic: it has to be paid back with interest.Depending on the rate of interest and the length of the loan, this translates into a mind-numbing reality: borrowing $100 can cost $200 once interest is factored in.
One might reckon that people would be cautious about paying two or three times more for something by using debt rather than cash. But consumer economies are based not just on debt, but on TINA (there is no alternative) and on the timeless seduction of getting something now and paying for it later.
College students are frightened by scary stories of permanent impoverishment and social degradation if they don't borrow a small fortune to buy a diploma (never mind if you actually learn anything remotely useful or wise; you're not buying an education, you're buying an accreditation of your ability to grind through a bureaucratic system without any unhealthy questioning if "higher education" actually makes any sense. Hint: it doesn't, unless you're skimming wealth off the poor students.)
The higher education debt scam is classic TINA: there is no alternative to borrowing a small fortune to buy a (mostly worthless) diploma, unless you favor living in a cardboard box the rest of your life.
TINA drives the trillion-dollar deficits of the US government as well: the entrenched self-serving interests feeding at the public trough would quickly ramp the political pain to 11 if their share suffered any cuts, and so There Is No Alternative to funding every parasitic, predatory cartel with its maw in the public trough (healthcare, higher education, banking, national defense, etc.)
Tragically, for a lot of low-income working poor households, there really isn't any alternative to high-interest debt. When the tire on the gets-me-to-work vehicle blows, the expense has to be financed, either at the tire shop or with a credit card.
Equally tragically, fiscal prudence, i.e. the avoidance of debt and the exultation of saving, is not taught in our educational system. As those of us who work in construction know, many blue-collar tradescraft folks earn good pay, but they mis-spend it on needless consumption or over-borrow to buy stuff they could easily live without.
I could list dozens of personal histories of earned wealth squandered on painfully frivolous consumption or "investments" that never seem to actually increase the owner's wealth.
What's not taught in our educational system--perhaps because it would undermine Consumption Funded by Debt?) --is opportunity cost: when you buy the $100 item and end up paying $200 or $300 because the purchase was funded by debt, the opportunity cost is: what else could you have done with the money squandered on interest, penalties, late fees etc.?
This opportunity cost separates those with decent earnings and little productive wealth and those who earned the same income but acquired real wealth. The flip side of debt (paying interest) is earning interest on savings/ capital. Those with capital can earn a return on their capital while those with only debt are debt-serfs, devoting much of their future earnings to the repayment of debt with interest. (Late fees and other charges can triple the cost of the initial purchase in short order.)
Pre-easy-credit, people couldn't borrow money for the simple reason they were poor credit risks. Credit has always existed, but it was generally linked to collateral and / or a transaction that would soon settle the debt in cash, for example, a loan extended by a wholesaler who will get paid off once the end-customer pays.
With public debt, the collateral is the tax-donkey's obligation to pay taxes, and with private-sector debt, the borrower's future income. If the tax-donkey closes down his/her business and sells his/her house, the obligation to pay taxes vanishes into thin air (after the tax-donkey pays the transfer taxes, of course, and any capital gains on the sale of the house.)
The debtor who has no collateral other than his/her future income has a trick card to play: bankruptcy. Since there's no real-world asset for the lender to repossess (or in the case of used cars, the repo'd vehicle is typically worth less than the outstanding loan), the borrower can stiff the lender.
But since the lenders own the political machinery, bankruptcy will cost you. In the case of student loan debt, it's not easy to get out from underneath student loan debt. In the case of credit card debt default, the lenders will cut the defaulted borrower off from access to credit: it's cold turkey withdrawal from credit, Baby. TINA no longer matters; there's no credit available except from loan sharks, and their rates guarantee poverty (or very unfortunate "accidents".)
Does any of this make sense? No. But it's so darn profitable to the oligarchy, it's difficult to escape debt-serfdom and tax-donkey servitude. Interestingly, when there really is no alternative, people tend to get creative / innovative. But when easy credit is available, they default to taking the easy way out, which is to borrow from future earnings without questioning the opportunity cost of debt-serfdom and tax-donkey servitude.
Remember: every dollar of debt is an expense to the borrower but a source of income to the lender. Keep that in mind as you study these charts of student loan debt and federal debt:
Future income devoted to paying interest is money that can't be invested productively. On a national scale, that guarantees falling productivity, soaring wealth inequality and eventually, widespread impoverishment.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.
Read the first section for free in PDF format.


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Wednesday, November 14, 2018

The Implicit Desperation of China's "Social Credit" System

Other governments are keenly interested in following China's lead.
I've been pondering the excellent 1964 history of the Southern Song Dynasty's capital of HangzhouDaily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government's unprecedented "Social Credit Score" system, which I addressed in Kafka's Nightmare Emerges: China's "Social Credit Score".
The scope of this surveillance is so broad and pervasive that it borders on science fiction: a recent Western visitor noted that train passengers hear an automated warning on certain lines, in Mandarin and English, that their compliance with regulations will be observed and may be punished via a poor social score.
In the Song Dynasty, arguably China's high water mark in many ways (before the Mongol conquest changed China's trajectory), social control required very little force. The power of social control rested in the cultural hierarchy of Confucian values: one obeyed the family's patriarch, one's local rulers and ultimately, the Emperor.
Author Edward Luttwak made the distinction between force and power in his fascinating book The Grand Strategy of the Roman Empire: From the First Century CE to the Third: power is persuading people to cooperate, force is making them obey.
Power is people choosing of their own accord to comply, for reasons they find sound and that serves their self-interest; there is little need for the application of force.
Power is highly leveraged; a relatively small police/military and judiciary is all that's needed. Force, in contrast, doesn't scale: it's enormously costly in capital and labor to monitor an entire populace and impose control and obedience.
While the Song Dynasty had a police force, a judiciary and an army, the populace generally managed itself via an internalized secular religion that placed the father, civil authorities and the Imperial state at the top of a natural order that enabled the harmony of Heaven and Earth. To disobey would be to threaten the harmony that served everyone.
In the early days of the Communist revolution (1949 to 1965), the majority of China's populace embraced the values and authority of the Communist regime, despite the monumental hardships and setbacks of the Great Leap Forward (millions dying needlessly of starvation) and other centralized incompetencies.
But the Cultural Revolution that was launched with Mao's blessing in 1966 was only embraced by the youthful Red Guards. The rest of the society had to be monitored and forced to comply with the mercurial injustices and arbitrary nature of the Cultural Revolution, which imprisoned millions of China's most accomplished citizens in various forms of forced deprivation: house arrest (the most mild); forced relocation to rural labor, re-education (i.e. torture) and imprisonment. Many were killed without even the semblance of a judicial process.
In broad brush, the Cultural Revolution broke the social power of the Communist Party and government. Thereafter, the Party and the state only had force at their disposal.
The rise of broadly distributed prosperity (Deng's "to get rich is glorious") replaced the failed power of Communist ideology with a new social contract:obey the party and the state and you'll become prosperous.
If this new contract were considered rock-solid power, why would China's government need the vast surveillance system they're putting in place for fine-grained control of the populace?
It suggests to me that the leadership (Xi and his cabal) are aware that the prosperity is not permanent, nor is it being distributed evenly enough to harmonize Heaven and Earth. Sensing their lack of social power, they are turning to technology to create a vast system of coercion (force).
Force is not a substitute for power. For this reason, the "Social Credit Score" system smacks of desperation. But China's history is clear: the culture and the people prefer a system in which power is maintained through social norms, not force. With Communist ideology a dead force, and prosperity about to wither, what's left? A system of forced obedience backed by Orwellian technology.
Other governments are keenly interested in following China's lead. "Prosperity" isn't just phantom and asymmetrically distributed in China; it's phantom and asymmetrically distributed almost everywhere, and so other governments are just as desperate to protect their elites and control their restive populaces.
Centralized force has limits. Like everything else we reckon has god-like powers, it works until it doesn't.



My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition.
Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Ross M. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.
 
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