Wednesday, January 23, 2019

The Ruling Elites Love How Easily We're Distracted and Turned Against Each Other

No wonder the ruling elites love how easily we're distracted and divided against ourselves: it's so easy to dominate a distracted, divided, blinded-by-propaganda and negative emotions populace.
Let's say you're one of the ruling elites operating the nation for the benefit of the oligarchy. What's the best way to distract the populace from your self-serving dominance in a blatantly neofeudal system?
1. Provide modern-day versions of Bread and Circuses to distract the commoners from what actually matters: "the golden age of TV" and binge-watching; a cultural obsession with glorifying oneself via selfies posted on Facebook and Instagram; tweeting outrage and indignation on Twitter; a corporate-state media which magnifies insignificant events into social crises, political "leaders" who intentionally inflame polarization and conflict and so on.
Combine all these distracting circuses into one 24/7 system-overload, and what do you get? A populace so distracted, so stressed, so emotionally dazed that they are unable to focus on the predatory exploitation of the ruling elites, much less figure out how to change the neofeudal status quo.
2. Divide the populace with calculatedly divisive cultural issues and turn the commoner class against itself: with no middle ground and no shared class identity allowed, the populace is easily sliced and diced into angry, disaffected tribes who blame whomever media propaganda has targeted as "the other" for the nation's woes.
Correspondent Jonathan Twombly recently posted a description of this divide-and-conquer strategy of the ruling elites:
I eschew conspiracy theories because I don't feel humans are smart enough or cohesive enough to pull them off. Usually self-interested people pulling in the same direction create the conditions that some people view as conspiracies.
With that preface stated, it seems to me that Right and Left elites, who share the common goal of making the world work for themselves, and who do not have to live with the consequences of their policies, have co-opted non-elite people with cultural and social issues meant to distract them from what's going on economically.
Right elites take the bread out of the non-elites mouths by coopting non-elites on the right with the circuses of religion and nationalism. At the same time, the left elites have done the same by coopting left non-elites with the circuses of political correctness, multiculturalism, etc.
None of these things - religion, nationalism, political correctness, multiculturalism, feminism, anti-racism, etc. - are necessarily bad in themselves, particularly in moderation. However, to distract people from having the economic wool pulled over their eyes, they need to be amped up into a public shouting match, which is what we see happening in media outlets controlled by, you guessed it, the elites.
The Old Left was concerned with bread and butter issues and extracting a bigger piece of the economic pie from the elites. The Old Right, in turn, was concerned with order and the stability of the system, and was prepared to give up some of the pie in order to stave off the pitchforks.
However, the stateless super-rich of the New Left-Right Elite Alliance no longer need to buy off the non-elites with money. They have no fear of the pitchforks because they can flee behind bodyguards (private armies as in the Middle Ages are coming) or gated communities, or they can flee the country in an instant if they need to, taking with the large chunks of their wealth, which is now either offshore or mobile thanks to international banking. They have become insulated from the consequences of their policies.
The non-elites are mad as hell, but don't know exactly where to direct their anger, because the social and cultural issues the elites have used to co-opt the non-elites are also incredibly effective at keeping the left and right non-elites in a constant state of anger at each other. The Elite's greatest fear is that left and right non-elites realize who their real enemies are, and that their fighting with each other over cultural issues is what the Elites want them to be doing.
Well said, Jonathan, thank you for the succinct summary of these control mechanisms.
The era we're entering--a disintegrative winter--lends itself to discord and the decline of common ground, as I addressed two years ago in A Disintegrative Winter: The Debt and Anti-Status Quo Super-Cycle Has Turned (December 5, 2016)
We can see this is the rise of cultural, social, financial and political polarization:
Huxley spoke of loving our servitude: if we let the ruling elites distract and divide us, then we will in effect be choosing to love our servitude.
No wonder the ruling elites love how easily we're distracted and divided against ourselves: it's so easy to dominate a distracted, divided, blinded-by-propaganda and negative emotions populace.


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print): Read the first section for free in PDF format.


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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Tuesday, January 22, 2019

Gentrified Urban America Will Be Hit Hard by the Recession

Combine sky-high commercial rents in homogenized, gentrified urban areas and sharp declines in the incomes of the limited populace who can afford gentrified urban areas and what do you get?
A number of macro dynamics have set up gentrified urban America for a big fall in the coming recession. What does gentrified mean? Gentrified means only the gentry (top 10%) can afford to enjoy the urban amenities as commercial rents and the cost of doing business in desirable urban areas have skyrocketed along with residential rents.
As a result, low-margin businesses have been squeezed out of desirable urban neighborhoods along with lower-income residents. The top 10% is the only demographic who can afford to live in gentrified urban America.
As noted in What’s Really Happening to Retail?Only Amazon-proof businesses can now survive in brick and mortar. And that quickly boils down to high-cost, high-margin food and drinks--cafes, bars, restaurants-- and mega-corporate chains: Walgreens, Starbucks, Chipotle, etc. and smaller chains that cater to the needs/obsessions of the top 10%: fitness centers, etc.
On a per capita basis, America is grossly over-supplied with commercial real estate. But within the desirable urban cores, commercial rents have soared due to the relative scarcity of commercial space. As a result, landlords and property managers are asking exorbitant rents, and many are leaving spaces empty rather than rent them for less.
The net result is desirable urban zones are being homogenized: niche retailers and other small service providers can no longer afford the rents (unless they also own the building) and the only businesses that can afford the nosebleed rents are high-margin food-beverage establishments or corporate chains.
The irony is two-fold: the very diversity and novelty that attracted the top 10% is being eroded, while the reliance on free-spending young wage earners in the top 10% (or even top 5% in pricey urban zones) makes such gentrified urban areas extremely vulnerable to any downturn that trims the population, salaries and bonuses of the top 10%.
Drive out all the small businesses that the top 50% can afford and all that's left is high-cost businesses only the top 5% can afford.
Even worse, the vast majority of these high-cost businesses are discretionary:nobody really needs a $5 coffee, $5 bagel, fitness center membership, etc., and buying a couple rolls of toilet paper and some instant noodles at Walgreens ins't going to generate the per-square-foot sales Walgreens needs to keep the high-rent store in a gentrified urban neighborhood open.
Corporations have been able to pay high salaries and bonuses to top employees because sales and profits have continued marching higher for a decade. Once a recession cuts revenues and profits, corporate managers have no choice but to slash expenses.
All the low hanging expenses were cut a decade ago--fixed overhead, janitorial services, automation of lower-skilled workers, etc.
All that's left to slash and burn is the top 10%. First, cut bonuses. Next, move the software-eats-the-world automation up the food chain, and outsource whatever's still soaking up money in corporate HQ.
In effect, the top 10% is ripe for the disruptions of globalization and automation that have already laid waste to the bottom 90%. Here's one way this works: Human Resources lays off 20% of the workforce making $100,000 or more, and then hires back some percentage at $75,000 because they know everyone else is laying off the same talent.
It's called over-supply / over-capacity. There's too many people with PhDs, Masters degrees, JDs, 10 years experience and so on, and not enough slots for everyone who's overqualified.
And don't forget, global corporations can't afford loyalty to anyone or anything except their major shareholders. If someone in Singapore can do a job for half of what it costs in Silicon Valley, NYC, Austin or Atlanta, bye-bye job in high-cost USA.
How much of a decline in sales will it take to sink high-fixed costs cafes, bistros, fitness centers, etc.? I'm guessing a 15% decline in revenues will sink an outsized number of these enterprises, as their fixed costs won't drop by much while their operating margins will drop into the red (losses).
Greed is sticky, meaning commercial landlords won't drop their rents enough to be meaningful until bankruptcy is staring them in the face, and by then it's too late to find any tenants.
Charts: let's start with commercial space per capita: the US has way too much:
The Creative Class is one way of describing the top 10% of wage earners:
The top 10% now take home as much as the bottom 90%:
Incomes have only risen for the top 5% and the next 15%:
Combine sky-high commercial rents in homogenized, gentrified urban areas and sharp declines in the incomes of the limited populace who can afford gentrified urban areas and what do you get? A tidal wave of small businesses closing and very few takers for all that empty commercial space.


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print): Read the first section for free in PDF format.


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.

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Monday, January 21, 2019

Want to Heal the Internet? Ban All Collection of User Data

The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.
I've been commenting on the cancerous disease that's taken control of the Internet-- what Shoshana Zuboff calls Surveillance Capitalism--for many years. Here is a selection of my commentaries:
800 Million Channels of Me (February 21, 2011)
If you've followed any of my analyses, it will come as no surprise that I've concluded the only way to restore the health of the Internet is to ban all collection of user data. That's right, a 100% total ban on collecting any user data whatsoever.
We need to distinguish between customer/supplier data and user data. If a social media or other corporation wants to collect data from people who pay it money for services rendered, or from suppliers that it pays for services, then that process of data collection should be 100% transparent.
A customer pays for a service in cash; a user pays nothing. A company might want to collect data from its paying customers in order to upsell them or serve them better, and corporations who produce goods and services might want to collect data from the suppliers they pay.
Banning the collection of any data from users would of course destroy much of the revenues of companies such as Facebook, Google , Twitter, Instagram et al. It would also destroy the perverse incentives these corporations have institutionalized and excused as "garsh, you can't stop the advance of technology," as if their pursuit of Surveillance Capitalism were somehow an inevitable outcome of the Internet rather than a malign disease that's undermining democracy and the free flow of diverse opinions and dissent that is the foundation of functional democracy.
By banning the collection of any and all user data, the social media/search giants would become quasi-public utilities, providing whatever service they offer for free and collecting revenues from other businesses for services such as display advertising--advertising which cannot be targeted at specific groups of users because there is no data on users to exploit.
If you think this is unrealistic, look at craigslist. Craigslist is free to individual users, and it doesn't collect and sell user data to make billions of dollars. It sells adverts to businesses such as auto dealers and companies placing employment ads. These income streams are more than enough to fund the operational expenses and reap the owners a substantial profit.
Surveillance Capitalism is all about creating the illusion of privacy controls. The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.
Keep it simple: ban all collection of user data--no exceptions. That will be easy to enforce and easy for all participants to understand.
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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Sunday, January 20, 2019

Two Ways the System Is Rigged: HFT and Oligarchic Inheritance

The net result of a rigged system is the vast majority of the gains in income and wealth flow to the very tippy-top of the wealth/power pyramid.
We often hear how the system (i.e. our economy) is rigged to benefit the few at the expense of the many, but exactly how is it rigged? Longtime correspondent Zeus Y. recently highlighted two specific mechanisms that favor the top 0.01%: high frequency trading (HFT) and oligarchic inheritance, the generational transfer of immense wealth and the power it buys.
High frequency trading (HFT) is a mechanism only available to the few at the top of the wealth/power pyramid to skim money from markets--please watch the videos below for further explanation of how HFT works.
As for inheritance--we're not talking about leaving a house or a small business to one's offspring, or even a couple million of dollars; we're talking about tens of millions or hundreds of millions of dollars. Some states impose an estate or inheritance tax, but at the federal level, the exemption of $11 million per person means a married couple can leave $22 million tax-free.
The number of people with more than $11 million to pass on is extremely small:
In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. As a result, only approximately 2,000 people (or 0.0006% of the population) in the US are currently liable for estate tax.
The mega-bucks families and billionaires practice the fine art of philanthro-capitalism, leaving their vast fortunes in so-called charitable trusts that enable power and wealth to be transferred generationally.
Here are Zeus's video recommendations and comments:
These two videos, four and two years old, brought something that had escaped my attention about the fundamental distortion of high frequency trading (HFT). These consequences have not come due yet, but it is a preview for how it will happen (flash crash).
Here is another video (Bill Moyers interviewing Paul Krugman) on Thomas Picketty's book Capital in which Krugman admits he did not see the most important feature of systemic inequality-- inherited wealth, which combined with the above, since wealth gives access to asymmetric information that blatantly rigs the system, generates oligarchy.
Both of these points really forecast a financial collapse in which the separation and concentration of wealth reaches critical levels, and as Yanis Faroukakis says "idle cash" has no where to go, as all the avenues of wealth generation are monopolized by predators and regular people either become moribund or victimized.
This goes back to what my book Transforming Economy: From Corrupted Capitalism to Connected Communities forecast that the real change and turn will come when people are "exhausted" in two senses:
1) "used up" as all pension funds become savaged to pay fees and pretend to be solvent without having backing capital to meet obligations when people actually start drawing on them (which creates sell orders, received first by HFT and then amplified as they sell first, leading into a death spiral), and
2) "being tired" as in fatigued to play and hope to win and stay in a rigged game, thus bringing down the illusion of a sunny retirement. This is just a matter of time, which is always the case when fundamentals no longer exist and are increasingly substituted with opportunistic illusion. As with all con schemes and pyramid games, they become unmasked and the illusory wealth evaporates to be replaced by IOUs that can never be paid.
Once that happens, it will be interesting to see how we respond.
I don't think we have very many years until this reckoning thanks to Trump's almost autistic savant abilities to unmask and blow up the facades surrounding the global elites.
This does not mean I favor him or the inevitable pain that will result from this unmasking, but I can appreciate anything that casts light on our currently bankrupt system.
The net result of a rigged system is the vast majority of the gains in income and wealth flow to the very tippy-top of the wealth/power pyramid where it concentrates ownership of productive assets and political power.
Please note that this is an apolitical reality; neither party has made any serious move to eliminate HFT and similar skimming operations, or limit philanthro-capitalism or onshore/offshore tax evasion--another mechanism that's only available to the top .01% and above.
Net Worth Percentile   2016 Dollar Cutoff
90.0%                           $1,182,390.36
95.0%                           $2,377,985.22
99.0%                           $10,374,030.10
99.5%                           $16,115,373.00
99.9%                           $43,090,281.00
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, January 18, 2019

The West's Descent into 'Cultural Revolution'

The goal of the Cultural Revolution isn't to persuade, it's to enforce compliance.
A Cultural Revolution is a movement designed to preserve the political and financial power of a ruling elite by social rather than political or financial means. Thus the primary tools of a Cultural Revolution are not redistributing power via elections (politics) or financial reforms; the primary tools are public shaming and denouncements, purges of those in positions of authority, show trials, guilt-by-association, wholesale denouncements of entire classes and widespread accusations of anti-progressive ("counter-revolutionary") tendencies in which guilt is defined by all-or-nothing litmus tests of one's loyalties to the Cultural Revolution's strict ideology.
You haven't memorized Mao's Little Red Book? Off to re-education camp you go. Or house arrest, banishment, beatings, imprisonment or if the mob's blood lust demands it, execution.
The key dynamic of a Cultural Revolution is the oppressors appropriate the language of liberation as their favored tool of suppressing dissent, denouncing opponents and fueling widespread purges of anyone who might harbor the slightest potential to question the social suppression of dissent.
Now, more than a half-century after the Cultural Revolution began, there is little public discussion of that period in China. What some have called the nation’s collective amnesia has only gotten worse in recent years as leaders have walked back efforts to reckon with the country’s modern history.
To those launching a Cultural Revolution, the solution to a diversity of opinion is to crush dissent and narratives that threaten the ruling elites' power. This is of course the exact opposite of democracy and Enlightenment-era liberalism. But the point of a Cultural Revolution isn't to broaden political enfranchisement or representation--the point of the anti-Deplorables / anti-Brexit / anti-yellow vest campaigns is to strip dissenters (those who disagree with the ruling neoliberal elites) of political and social representation.
The goal of the Cultural Revolution is to render all those who resist the ruling elites politically and socially invisible. The goal isn't to play nice and share power and wealth with the losers of financialization-globalization; the goal is to liquidate their influence in politics and society via relentless negative stereotyping by the elite-controlled mass media and an Orwellian reversal of identity that makes the dissenters into threats to democracy while elevating the elitist oppressors into selfless guardians of democracy--the exact opposite of reality.
In China's Cultural Revolution, the Red Guards mindlessly destroyed much of China's priceless cultural heritage as part of the deranged agenda of destroying whatever was traditional and valued by "counter-revolutionaries." Out with the old, in with the new--the time-honored pattern of power grabs masked by utopian goals.
If in doubt, purge, destroy, denounce. This is the Inquisition nature of all Cultural Revolutions.
China's ruling elites don't want any unedited history of the Cultural Revolution to leak into the public sphere because virtually everyone who was killed, tortured, imprisoned or denounced was innocent. Virtually every one of the millions of victims of the Cultural Revolution was a loyal cadre or average citizen going about their lives. "Counter-revolutionaries" were an illusory, fabricated threat.
Since we have many friends in China, we've heard the reality of the Cultural Revolution in private conversations, spoken in low tones even in the U.S. Nobody dares speak openly about what happened or the Party's role. One friend's father was an officer in the People's Liberation Army, a man whose loyalty was unquestioned. He was imprisoned. Another friend's father was put in house arrest for years because he'd visited Eastern Europe (at the Party's behest, of course) and was therefore suspect.
In Cultural Revolutions, the "crimes" are fabricated but the destruction is real.Take a look at the mainstream media coverage in France, the U.S. and the U.K. of the yellow vest dissenters. Make a list of all the public officials, intellectuals, actors, media pundits etc. who publicly defend the yellow vests and how many denounce them. Did you find any articles on the yellow vests on Page One? What percentage of the corporate-state media depicted the yellow vests as violent, unreasonable, and so on?
If you pursue an objective survey, you'll find few public figures supporting the yellow vest movement and little mainstream media coverage that presents the yellow vest movement in a positive light.
That's how Cultural Revolutions roll. The Nobility in our neofeudal system will work all the levers of power to marginalize, demonize, stereotype and disenfranchise any threats to their power.
The goal of the Cultural Revolution isn't to persuade, it's to enforce compliance. Virtue-signal your compliance in social media every day (i.e. wave your Little Red Book publicly) or you become suspect. Nobody cares what you actually believe, the point is to prove your compliance and complicity to those enforcing compliance and complicity.
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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