Monday, September 18, 2017

What Is Real Wealth?

As for acquiring capital--the most important types of capital don't require much money.
What is real wealth? Money, right? Currency, gold, quatloos, you name it. Money is real wealth because you can use it to buy whatever you want.
I would argue money in any form is only the means to acquire real wealth, which is the agency, opportunity and time to pursue your life's work.
The conventional view of wealth is money and leisure has it all wrong. Let's imagine the owner of a vault of conventional treasure: jewels, gold coins, etc.
If the "wealth" stays in the vault, what's the point of owning this "wealth"? The secret satisfaction of being "wealthy"?
If "wealth" is only an internal state, then let's measure friendship and being needed/wanted as the metrics of "wealth." You see the point; if "wealth" is merely an internal state of satisfaction, then a vault full of "money" is a poor metric.
What money buys that is real wealth is freedom and control of one's life. This control over one's life is called agency. Agency is defined as "the capacity of an actor to act in a given environment." This may not seem like a profound concept, but another way to describe agency is that agency is the opposite of powerlessness.
People with agency define themselves and their identity; they shape the world they inhabit rather than passively await whatever circumstances deliver up.
In the real world, people with agency move on when things no longer work for them in a particular situation. Agency is not just the opposite of feeling powerless; it's also the opposite of victimhood, i.e. the state of being in which others are held responsible for all of one's travails and difficulties.
Agency and responsibility are two sides of the same coin: each manifests the other.
Opportunity is a form of wealth--and so is the wherewithal to take opportunities that arise. Though there is a random element to opportunity--i.e. getting lucky--the wherewithal to take the opportunity is not a matter of luck. It requires a specific appetite for risk, perseverance, the ability to discern how best to use the opportunity, and access to the capital required to exploit the opportunity.
Capital is a type of wealth that isn't limited to "money": Character traits are capital, social networks are capital, experience is capital, knowledge is capital. All of these forms of capital are often more important than "money" capital.
As for "money" buying leisure--leisure in abundance is a disaster for the vast majority of people. Humans are designed to be needed by others, to be part of something greater than themselves, and to gain dignity and pride by doing useful work--whether they are paid "money" for this work or not.
This is why so many of those with the "money" to have endless leisure are miserable. Their lives are an endless treadmill of frivolous consumerism, neurotic pettiness, hypochondria, expressing their infinity of heartaches to counselors, and saddest of all, medications in abundance to relieve the ennui and the dead weight of their purposeless existence.
"Money" is only useful if it is a means to acquire real wealth, which is the agency, opportunity and time to pursue your life's work. There are many people who can spend $600,000 a year on various things (i.e. their "lifestyle") who don't feel "wealthy"--and if they don't have agency and time for work that's meaningful to them, they aren't wealthy: they're as impoverished as the person earning a fraction of their income.
Real wealth doesn't actually require a vast horde of "money." It requires some money, but how much depends on the cost of agency, opportunity and time. For those with few needs and the right priorities, the cost of agency, opportunity and time needn't be all that high.
As for acquiring capital--the most important types of capital don't require much money; determination, self-discipline, organization, a voracious appetite for knowledge and work, an insatiable curiosity, a generous heart, a knack for friendship, the purposeful pursuit of goals-- these are the tools to acquiring real wealth: agency, opportunity and time to fulfill one's life work.
I explain how to amass the most empowering forms of capital in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.


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.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Sunday, September 17, 2017

Are Facebook and Google the New Colonial Powers?

To qualify as colonial powers, Facebook and Google must effectively limit the choices and power of users, and punish or coerce those who question or resist their power.
I was struck by a phrase from a recent essay on advertising and social media,You Are the Product: As Taplin points out, that remark 'unwittingly revealed a previously unspoken truth: Facebook and Google are the new colonial powers.'
As you've no doubt noticed, the dominance of Facebook and Google in online advertising is now "in the news" for a variety of reasons: the possibility that agents of other governments influenced U.S. elections with media buys on Facebook; anti-trust concerns; the potential for these advert-tech giants to effectively silence legitimate online voices under the guise of limiting "fake news", and of course, the ongoing issues of click fraud and the underperformance of digital ads.
The phrase that captures this broad narrative is: When an online service is free, you're not the customer. You're the product.
In other words, if you're not paying for the service or content, then your information (harvested by Google, Facebook, et al.), your time online (i.e. your attention, a.k.a. eyeballs) and the content you create and post for free (videos of your cute cat, etc.) are the products being sold to advertisers at a premium.
The characterization of the two dominant digital-advert giants as new colonial powers is interesting on a number of fronts. To get a handle on a few of the issues, I recommend reading these two essays:
And watching this video on the archiving of digital information on individuals--including meta-data, that is, data about your behaviors, transactions, posts, etc. that have been scrubbed of your identity markers (name, account numbers, etc.)
Haunted by Data - Maciej Ceglowski (via GFB)
The key dynamics of colonialism for the residents are 1) a lack of choice and 2) a lack of power: the colonial power imposes a regime, either formally or informally, that limits the choices enjoyed by residents and limits their power to bypass or replace the colonial regime.
In the classic Plantation Economy of overt colonialism--a topic I've discussed numerous times here--residents are stripped of any options other than working on the plantation and buying their goods at the plantation store. This coercion need not be direct; the colonial regime can strip residents of choice and power by making it impossible to live without cash, for example, and then providing one source of paid work: the plantation.
Once cash is necessary to live, then credit is introduced--but only if you buy at the company store.
I've also written extensively about the Neo-Colonial Model in which corporations and banks bring the colonial model of exploitation to the home country, stripmining the domestic populace via dependence on credit.
This model is also used in the developing world, where it has replaced the old overt form of Colonialism with the new and improved credit-based version.
To qualify as colonial powers, Facebook and Google must effectively limit the choices and power of users, and punish or coerce those who question or resist their power. As the dominant corporations in search, social media and digital advertising, Facebook and Google limit the options of users simply by being essential due to their dominance.
As for punishing users--the potential to do so is what's worrying observers. The cover for silencing or banning critics is opaque: non-compliance with guidelines. So who's to say that users who criticized or questioned the policies of Facebook and Google aren't silenced along with click-fraudsters, "fake news" purveyors, etc.? Who gets silenced is completely up to the companies, and there is no recourse to the corporation's opaque judgment.
The Orwellian possibilities are real enough.
Here's a look at the digital advert market:
And the dominance of Google/Facebook:



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Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Thursday, September 14, 2017

Hey Advertisers: The Data-Mining Emperor Has No Clothes

When a big advertiser pulls its online adverts and its sales remain unchanged, that tells everyone who's paying attention something important.
It's an article of widespread faith that data-mining enables advertisers buying online adverts to target consumers with laser-like precision. Vast warehouses of servers grind through billions of records of consumer profiles and transactions and with a bit of algorithmic magic, distill all this data down to the prime target audience for whatever good or service you're selling: probiotic goo, battery-powered back-scratchers, Zombiestra(tm), investment newsletters based on darts tossed by monkeys, etc.
And everybody knows online media is the place every advertiser wants to be and needs to be. By some measures, online advertising exceeded television advert spending in 2016 (around $70 billion each). Unlike traditional media advertising, which is stagnating or declining, online advertising is still expanding smartly--especially in mobile media.
Combine the promise of god-like targeting via data-mining with fast-growing online platforms, and you've got advertisers falling over themselves in their rush to spend billions more on online advertising.
As if that wasn't enough to get advertisers salivating, the time consumers spend online continues to expand as well:
There's one little problem with this narrative: online adverts don't work as well as they're advertised. Proctor and Gamble recently announced that a significant reduction in their online social-media advert spending had no measurable effect on sales.
The only possible conclusion (unless you're selling online adverts for a living) is: online adverts don't work.
There's another little multi-billion-dollar fly in the ointment of online advertising known as click-fraud-- the clicks on adverts may not be humans actually interested in the product being advertised but automated bots skimming money from advertisers or competitors.
So all those clicks aren't from actual consumers; they're bots clicking on click-farm sites which send a small fee for every click to the owner of the site, which just so happens to be the owner of the bots clicking on the adverts.
Or an advertiser finds they owe $100,000 in click-fees for the tens of thousands of clicks their adverts garnered--but most of the clicks were generated by competitors seeking to bleed the advertiser of revenues and introduce false data points.
Click-fraud is the industry's dirty little secret, and the numbers are kept secret lest the reality that the Emperor has no clothes gets out. Despite all the hoopla about mobile adverts, fast-growing market, blah blah blah, there is precious little real-world evidence that online adverts actually do the intended job of generating new sales and attracting new loyal customers.
Just look at the online advertising you're being served. Do you get adverts promoting airline tickets to destinations you've just been to and that you'll never return to, adverts promoting wrenches after you've just bought the only wrench you're going to need in this life, etc.?
If this contextual advertising is the best that data-mining can do, it's pathetically ineffectual. Assuming you haven't installed ad-blocking software (another industry reality that is rarely mentioned), have you ever clicked on any of the adverts in the sidebars of your social media or email websites--except by accident?
But what about all those thousands of data-points Big Data has collected on us all? All our purchases, all our credit history, how much time we spend online, the sites we visit most often, and all the rest of the mind-numbing details of every day life.
All of this data-mining is predicated on a false assumption: that my past purchases predict my future purchases. Other than the most brain-dead conclusions--yes, I will buy gasoline again somewhere in the near future, probably at Costco, using either the Costco credit card or an airline mileage credit card--this data has little or no effective predictive value because our spending is tightly limited, controlled and prioritized, so there's near-zero leeway for impulse buys or unplanned purchases.
Spending can be constrained by modest levels of disposable income (i.e. cash left after paying all the essential bills, existing debt, etc.) or by budgeting.
As for enticing me to buy gasoline elsewhere than Costco, or switching credit cards--you're wasting your money. Giving me $1 off each gallon would work, but only as long as I got this enormous discount--a discount that will bankrupt the issuer in short order.
As for enticing me to switch credit cards--I tear up multiple card offers every week, and have done so for years. So the card offers are batting zero despite literally thousands of pitches via mail, print and online adverts. No "targeted ad" based on data-mining is going to change that.
I might switch if you give me back 10% of all purchases in cash, but that's an offer that will bankrupt the card issuer.
The fantasy that's repeated in every account of the staggering effectiveness of mobile advertising is this: I'm walking past a pizza shop and my mobile phone displays a coupon for that very pizza shop. Wow! Imagine the power of combining location with all the treasure trove of big-data-mining about little old me!
Here's a credit card purchase from three years ago for a pizza shop--this guy is a pizza fan, no doubt about it. This advert is a statistical winner.
Nice, except that 1) I rarely eat pizza, and when I do, it's generally at home; 2) I never buy meals on impulse, since that ruins my diet/fitness regime (and I'm too thrifty to buy meals on impulse anyway) and 3) my phone is often not with me, off or otherwise disabled.
What this tired narrative never includes is my dismissal of the advert as a matter of habit, and the possibility the advert alienates me in longlasting ways. Most of us never look at ads, and the more you make them intrusive, the more we hate the website, the advertiser and whatever product/service is being pitched.
Advertisers may have unwittingly poisoned themselves and their product/service. The net result of the data-mined, contextual, statistically targeted advert may well be a consumer who blacklists the pizza shop from then on.
This alienation is of course completely opaque to the data-mining software: there are no data traces left by blacklists/ alienation.
But the flaws in data-mining-yields-advertising-success are much, much deeper than this: human behavior is contingent on events that have yet to happen, and the decision process is completely invisible to data mining and algorithms.
Here's some examples from my recent purchase history.
I recently bought an airline ticket to Switzerland. Whatever inferences the data-mining software might extract from this will necessarily be false, as the motivation was completely contingent and unpredictable: my brother was in a motorcycle accident, and he needed my help as his wife was hundreds of kilometers away caring for the grandkids.
Whatever inferences the data-mining software extracted from the meal I purchased at an Italian cafe a week later would also be intrinsically useless/ false as the only reason we went to that cafe was it was the only restaurant my brother could reach on foot with his cast and cane.
What inference could any software extract from this that would be useful because it was accurate? None. The situation, the motivation, every single part of the decision was intrinsically opaque to any data-mining software.
As for what else I bought in town--groceries, paid in cash--another zero for the data-mining software.
The only item of any value that I did buy, I bought through my brother's account--another layer no software could possibly penetrate. Software will wrongly attribute the purchase to his profile, not mine, a totally false projection.
Virtually every inference that automated software attempted to extract from my spending would be worse than useless, as it would be misleading. The only inferences with a shred of accuracy--here is a consumer who randomly buys an airline ticket to Europe--is utterly useless to advertisers.
The only adverts that have any chance of working are the traditional variety that assume only one in 10,000 people will have a contingency-based need or desire for the product or service being advertised. So the adverts attempt to reach 1 million people in the hopes that a hundred might be interested and a handful might proceed further.
What advertisers who are shaking themselves out of the online-advert trance are discovering is that the data-mining advert Emperor has no clothes. The industry as it stands can't identify which clicks are fraudulent or accidental, which ads actually trigger a sale, or which ads actually alienate potential customers.
When a big advertiser pulls its online adverts and its sales remain unchanged, that tells everyone who's paying attention something important: the industry isn't doing a very good job for the billions it's being paid.


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.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Wednesday, September 13, 2017

Dear Jamie Dimon: Predict the Crash that Takes Down Your Produces-Nothing, Parasitic Bank and We'll Listen to your Bitcoin "Prediction"

This is the begging-for-the-overthrow-of-a-corrupt-status-quo economy we have thanks to the Federal Reserve giving the J.P. Morgans and Jamie Dimons of the world the means to skim and scam the bottom 95%.
Dear Jamie Dimon: quick quiz: which words/phrases are associated with you and your employer, J.P. Morgan? Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized losses, low interest rates = gift from savers to banks, bloviating overpaid C.E.O., propaganda favoring the financial elite, tool of the top .01%, destroyer of democracy, financial fraud goes unpunished, free money for financiers, debt-serfdom, produces nothing of value to society or the bottom 99.5%.
Jamie, if you answered "all of them," you're correct. The only reason you have a soapbox from which you can bloviate is the central bank (Federal Reserve) saved you and your neofeudal looting machine (bank) from well-deserved oblivion in 2008-09, and the unprecedented, co-ordinated campaign by global central banks to buy trillions of dollars of bonds and stocks.
This 8-year long central bank intervention has:
1) transferred billions in what were once interest payments earned by savers and pension funds to banks such as J.P. Morgan
2) boosted your sales by flooding the financial system with low-cost credit
3) lifted your stock far above its value in an unmanipulated market and thus
4) awarded you immense stock-option and bonus-based wealth for doing nothing but letting the central banks enrich J.P. Morgan and its peers.
In other words, your claim of "financial genius" is based solely on central bank intervention. J.P Morgan would have done very well in the past eight years if they'd replaced you with a crash-test dummy. In fact, the shareholders would have done much, much better if the crash-test dummy had a Post-It note on its chest reading "buy bitcoin."
Compare the return for an investor who believed your shuck-and-jive claim to "financial genius" and "bought the dip" in J.P. Morgan stock (JPM) at $57 in early February 2016 and the investor who bought bitcoin (BTC) at $376 at the same time.
The buyer of JPM has certainly done well, earning a return of around 77% over the 19 months (JPM has risen from $57 to $91, a gain of $44, not counting dividends), but the buyer of bitcoin has earned a more than 10-fold increase, gaining $3,525 per bitcoin at the current price around $3,900. (A few weeks ago, the owner of BTC could have skimmed an additional $1,000 per coin.)
The buyer of 1,000 shares of JPM for $57,000 gained $44,000 plus dividends, yielding a total of around $93,000, while the buyer of $57,000 worth of bitcoin at $376 (roughly 150 BTC) gained $528,000 and has a total of $585,000.
The buyer of JPM could sell his shares, pay the capital gains tax and buy a modest mid-sized car with the gains. The buyer of bitcoin could sell his bitcoins, pay the capital gains tax and buy a very nice house or flat in all but the most over-valued markets with his gain, and buy a brand-new vehicle with whatever cash is left.
This is the begging-for-the-overthrow-of-a-corrupt-status-quo economy we have thanks to the Federal Reserve giving the J.P. Morgans and Jamie Dimons of the world the means to skim and scam the bottom 95%: an economy undermined by a vast and widening gulf between the Jamie Dimons (crony-capitalist toadies) and everyone else.
Dear Jamie: if you want us to listen to your incoherent ranting about bitcoin as "financial genius," first predict the timing of the crash that takes down your parasitic bank. If you pull that off with amazing accuracy, then maybe we'll pay attention to your "prediction" about bitcoin.


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.
Check out both of my new books, Inequality and the Collapse of Privilege($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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.
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