Perverse Incentives Have Created a Runaway Media Monster

A Monster Id of self-reinforcing perverse incentives is gathering strength with every click, every data point collected and every unseen algorithmic adjustment of the addictive dosage.

Much of what we rightly decry as dysfunctional is the result of perverse incentives built into systems not from malice but from the self-reinforcing nature of self-interest: whatever mechanisms serve self-interest are reinforced by those benefiting the most from their institutionalization as "the way the world works."

What started out as of self-evident utility--for example, fee for service healthcare--slowly transmogrified from a common-sense model of modest costs into a monstrous industry with an insatiable appetite for revenues, profits and the political influence needed to further its permanent expansion.

Though the system goes by the same name--fee for service--it bears no resemblance to its initial incarnation. The mechanisms of self-enrichment now dominate the entire system via the perverse incentives that have been codified by regulations and institutionalized in vast corporate cartels.

This same self-reinforcing progression from a modest model with promise to a corporate-dominated monstrosity that enriches the few at the expense of the many has now reached its perverse-incentives perfection in the media, from mainstream to social media.

The Web as a means of distributing content to every user started with decentralized, self-organizing mechanisms such as bulletin boards and web-hosting of websites and blogs. The machinery of generating revenue was limited to display adverts. Search was organic, meaning search engines were designed to crawl the Web and return the most relevant external links as search results.

The advent of online auctions for key words and search placement (Overture et al.) transformed search from an organic service funded by display adverts to a vast revenue generation machine powered by auctioning search placement to the highest bidders.

With the introduction of centralized social media platforms, the Web's center of gravity shifted from self-organizing message boards, commercial sites and wildly diverse blogs unaffected by centralized surveillance, monitoring and censorship via ill-defined community standards to a model of users generating content for free while the revenues generated by collecting and selling users' data flow to the corporate owners of the platform.

An insignificant percentage of this vast flow of revenues is distributed to a tiny sliver of users who manage to attract millions of views / listens, i.e. engagement. For example, content creators who pile up one million views earn a magnificent $10 for their ceaseless efforts in promoting the content enriching the corporate owners of the social media platforms.

Where advertising networks once paid a meaningful share of display advert revenues to the sites that hosted the ads, once Big Tech gained centralized, network-effects dominance, these revenues dwindled to insignificance for all but the handful of sites with massive audiences. Most of the advert revenue is collected by the search and social media platforms which now dominate user content creation and engagement.

This arrangement is fueled by radically perverse incentives for all participants. The content creators are incentivized to post the most "engaging" content, which due to human nature tends to be sensationalized, exaggerated, emotion-triggering content that is indistinguishable from propaganda, misinformation and slop.

AI has incentivized the reach by content creators for higher revenues via posting ever greater volumes of videos, audio and text content. As it becomes harder to distinguish authentic content from AI slop, the platforms' overall content is inevitably degraded / debauched.

The platforms have every incentive to increase the addictive powers of their algorithms and the content generated by users, as the greater the user engagement, the more data they can collect and sell--and use to tailor what's delivered to individual users to maximize their profits.

Faced with this endless spew of intentionally addictive, sensationalized Ultra-Processed content, mainstream media outlets have increased the density of their display adverts to the point that it's no longer worth the effort required to scroll through ads to find the content, which has also been sensationalized to compete with the content posted on social media by users desperate to expand their own audience by any means available-- including slop of every description.

These perverse incentives have created a media monster, seeking revenues and profits not by creating content of self-evident value (what was labeled DBI in the traditional media--dull but important) but by following social media down the wormhole of sensationalized click-bait, "lifestyle" fluff and "sponsored content," i.e. promotional content commercial interests pay to place in high-visibility niches folded into other content.

The traditional media prided itself on maintaining implicit standards of integrity and objectivity in reporting. These standards have largely been abandoned or debauched in favor of raw partisanship or click-bait sensationalism. As circulation and advert revenues decline, traditional media has responded by segmenting content subscriptions to milk more income out of subscribers: want to read the sports section? That's an extra subscription now.

In effect, a Monster Id of self-reinforcing perverse incentives is gathering strength with every click, every data point collected and every unseen algorithmic adjustment of the addictive dosage. As longtime correspondent Peter K. noted, sensationalism, certainty and grandiose claims of hidden / profound insight all scale, as these activate our hard-wired attention receptors.

Not only are these exaggerations of marginal value; they actively misdirect and scatter our attention, fragmenting our capacity to make sound assessments and focus on matters of actual importance in planning and organizing our own lives.

Honest expressions of uncertainty and careful reporting of complex issues don't scale.

Fostering addictions to endless scrolls of slop to maximize profits is--like a "health" system dominated by SickCare / Ultra-Processed Food cartels--the worst of all possible worlds, a world devoid of any redeeming value.



I have been a content creator / writer since 1988, and I've experienced every step of this devolution, from the good old days of free-lancing for mainstream media newspapers and journals with the entire Gatekeeper machinery of editors, pitches, invoices, etc., to the Wild-West early Web of blogs and independent ad-funded journalism, to the domination of search and social media platforms and the present near-total reliance of creators on subscribers and the sales of content directly to the public.

I haven't changed my content, even though I recognize my niche doesn't scale, and will never scale. I'm adapting to changes in distribution, but I'm sticking with standards that enable integrity and pride in my work. If this dooms me (and other creators like me) to permanent marginalization, so be it, because playing to "win" as measured by money in a realm ruled by perverse incentives is in effect selling your soul.

Any mention that souls can be nurtured by integrity or squandered for lucre dooms one to a lean-to hovel in Digital Siberia, for anything other than focusing on maximizing profits by any means available is now considered an incomprehensible form of insanity.

Of related interest:

The War


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Things Change

In periods of uncommon volatility, crises and transitions manifest in unexpected ways.

Things change, sometimes tumultuously. The unevenness of change has generated a number of memorable descriptions, from the pivotal role crises play in ushering in dramatic changes ("There are decades where nothing happens; and there are weeks where decades happen" (V. Lenin) to the asymmetric distribution of epochal changes ("The future is already here--it's just not evenly distributed" (William Gibson) to philosophic commentaries on the permanence of impermanence, change is the one constant, the world is in perpetual flux: ("No man ever steps in the same river twice, for it's not the same river and he's not the same man" (Heraclitus).

In the modern era, we are accustomed to technological changes, and laud the overthrow of previous ways of living as "creative destruction," though the changes might be more destruction than creative.

Though these are unwelcome, we understand changes wrought by natural events (earthquakes, pandemics, etc.) and war.

Some of the least understood manifestations of change are social changes, which are complex in having numerous inter-connected sources which operate in different spheres and on different time lines.

For example, wartime demands for additional labor as males entered military service en masse in World War II brought females into the labor force in unprecedented numbers and roles, an economic change that added new dynamics to longstanding expansions of women's rights to own property as individuals, vote, etc.

There are no perfect models of social change, but the most insightful and universal in my view is the have-nots begin agitating for a rebalancing of asymmetric arrangements favoring the Haves. The Haves naturally view their perquisites and privileges as natural birthrights that cannot be challenged because this is the way the world works: our perquisites and privileges are as natural and permanent as gravity.

The marginalized Have-Nots, possessing the benefits of a clear view from the cheap seats, see the perquisites and privileges as intrinsically unfair arbitrary constructs which not only could be modified, but should be modified to widen the opportunities of all those marginalized in a repressive status quo that favors the Haves.

I explore these dynamics in my new book Investing In Revolution.

These pressures to loosen repression of opportunity for the disenfranchised/ marginalized are influenced, positively and negatively, by technological, economic and political forces. New technologies can disrupt the status quo, opening fissures for upward social mobility, or they can enhance the power of the Haves, who naturally reckon all changes should enhance their wealth and power, and are horrified if they loosen their dominance.

Over time, these pressures build, and a crisis has the potential to trigger an avalanche of changes that were as inevitable and unpredictable as change itself. There are many asymmetries between groups of Haves and Have-Nots, and what makes this an especially precarious moment in history is some of the Have-Nots expected to join the Haves as their birthright / the natural order of things, and their marginalization will not be accepted passively.

At the same time, technological changes have breached many of the status quo's barriers, unleashing highly disruptive torrents in communication, the balance of capital and labor, employment, and social norms / expectations. The Have-Nots are keenly aware that their diminished opportunities may suffer further degradation, while the Haves tend to see these torrents as fueling the expansion of their capital / economic dominance.

That they might be the biggest losers in the tumult being unleashed as their asymmetric dominance increases the potential for a structural rebalancing not in their favor--this is not a common concern.

In periods of uncommon volatility, crises and transitions manifest in unexpected ways. What was deemed impossible or outlandish a few years before becomes normalized as the Vital Few--the Pareto Distribution's 4%--influence the 64%, and things change more rapidly than anyone thought possible.

Steering for calmer waters becomes more problematic. Sails tend to shred, masts tend to snap, and rudders tend to break.




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The War

That I don't have an analysis or insight to offer doesn't mean I don't care. It simply means there are limits on what we know, and what we do know suggests circumspection.

War seems to demand some response--opinion, analysis, insight--lest it seem that we're uncaring or detached from events so consequential. But if there is anything we can say with any certainty about war, it's that nobody outside the inner circle knows anything, and the inner circle's knowledge is partial, contingent, and prone to the interpretive distortions of group-think.

The other thing we can say with certainty is the primary task of those in charge of the war is perception management, to shape-shift the fog of war into narratives supported by images and statistics that lend an air of factual certainty to something that was as carefully curated as an advert campaign designed to persuade us to buy into whatever story of the war suits those in charge.

Since nobody has a truly comprehensive grasp of what's going on--and what passes for comprehension has been filtered, either purposefully for perception management, or by the biases born of previous experience--any opinion, analysis, or insight is a claim for some measure of certainty that dismisses the inherent contingencies of fast-moving events that depend to some irreducible degree on where one is standing.

War fighting, perception management, analysis and policy-making are professions that are fraught with biases, group-think, blind spots and all the unknowns, from the known-unknowns to the unknown-unknowns, and everything in between. One of the few certainties is that no one involved is anxious to publicly admit they made a mistake.

Another thing we can surmise with reasonable certainty is that few of those in charge of war have any high-quality understanding of the enemy. In a recent weekend post that referenced the Vietnam War, I discussed the consequences of the American leadership's profound ignorance of Vietnam's complex history, politics or culture, and their catastrophic belief that surveillance photos and statistical analyses were substitutes for actual knowledge.

Consider the experience of Admiral Isoroku Yamamoto of the Imperial Japanese Navy prior to World War II. He attended Harvard for two years, and served as a naval attache in Washington, D.C. for years. He traveled extensively in the U.S., taking special interest in the oil fields of Texas and the industrial infrastructure of Detroit.

This on-the-ground experience informed his hesitancy to engage in a long war of attrition with the U.S. and his view that a surprise attack that crippled American power in the Pacific was the best chance of securing a negotiated peace. But this proved to be a false reading of the American character, as the one thing a surprise attack took off the table was a negotiated peace.

It's remarkably easy to drift into an abstract, view-from-orbit take on war. First-hand accounts of war tend to bring us back to Earth. One of our elderly Japanese friends was drafted as a teen to work in an underground munitions factory late in World War II. High-born to a wealthy family, she was given a Naval rank and uniform at 16 years of age, supervising the old men and boys assembling artillery shells in tunnels bored deep into the mountain to escape American bombs.

I have a copy of my uncle's list of his 33 B-24 and B-17 missions over Germany and German-occupied territory in the 8th Air Force in World War II, all in 1944 and early 1945. Given the fierce flak and German fighters, serving on a bomber crew was to some degree often akin to a suicide mission, as losses were so high that by one estimate only 24% of crew members came through their 30 missions (later boosted to 35) alive and uninjured. Depending on the phase of the air campaign, estimates of casualties approach 50%. The 8th Air Force had more KIA (killed in action) casualties--26,000--than the entire U.S. Marine Corps, which endured horrendous casualties in its numerous island-hopping campaigns in the Pacific.

A friend of mine served as a Loach helicopter pilot in the peak years of the Vietnam War. The Loach (Hughes OH-6 Cayuse) was a Light Observation Helicopter crewed by a pilot and gunner. The missions demanded flying at low altitude and therefore being exposed to ground fire, including shoulder-launched weaponry. Once again, these were to some degree often akin to a suicide mission.

The casualty rate was so high that my friend said the old hands didn't even bother learning the names of the new pilots. My friend was shot down twice and had numerous near-misses with death.

We don't do 50% casualty rates any more, as war--along with everything else--has gone high-tech. This greases the slide to war as an abstraction to be discussed as bloodlessly as a chess game or the price of oil.

I don't have an analysis or insight to offer because I know nothing of any credible value. I suppose if one had access to the combined intel of Russia, China, the U.S., Israel, Turkey, Saudi Arabia and other regional interests, one might fashion a fairly coherent view of things on the ground. But even this would be contingent on events of the following day, and on the workings of people who are out of sight or lost in the inevitable summarizing of complex events.

The irony here is I don't have an analysis or insight to offer because I know too much--not about this particular war, but about war in general. I understand the casino's tables are taking bets on the price of oil, and other tables are taking bets on other eventualities, but given that people are risking their lives to do their duty, I'm not interested in the casino. It reminds me of the Star Trek episode The Gamesters of Triskelion where disembodied pulsing brains bet quatloos on life and death combat.

That I don't have an analysis or insight to offer doesn't mean I don't care. It simply means there are limits on what we know, and what we do know suggests circumspection.




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The Decay of our Quality of Life No Longer Aligns with the Narrative

It's not just how much money you have, it's whether you still have access to everything of immeasurable value that's destroyed in being monetized.

I've set aside our standard of living in favor of our quality of life because standard of living is so easily gamed with financial statistics. You know the drill: as life becomes increasingly unaffordable and precarious, we're inundated with statistics purporting to back up the claim that life is getting better, every day, in every way, because Progress is, well, progressing, and AI is soon going to make everything better in ways we can't even imagine.

This narrative is straight out a pulp science-fiction story circa 1956: there will soon be orbiting data centers, a base on the moon, it will be fantastic Progress, with a capital P.

That the quality of our lives is in freefall here on Earth and orbiting data centers and a base on the moon will do nothing to change that trajectory is both obvious and taboo, taboo because it undermines the happy-story narrative that technological Progress of any kind will generate wonderful things for everyone if we just let it run wild.

Meanwhile, a truly astounding number of Americans want to move from the US to somewhere with a higher quality of life: more affordable, safer, less precarious, less manic, less divisive. Americans Are Leaving the U.S. in Record Numbers More citizens are replanting overseas, drawn by a quality of life made easily affordable by the US's enviable salaries. (WSJ.com)

Yes, a lot of this is unrealistic fantasy, but there is also a realistic appraisal here, too. There are plenty of stories of expats dreaming of a perfect life abroad who sour on the reality, and plenty of expats who have no desire to return to the US.

What's becoming undeniable is the decay of our quality of life, a decay that doesn't lend itself to easy measures like GDP. Who cares about GDP if the quality of one's daily life is deteriorating? If life is increasingly unaffordable, does GDP rising 3% offset that? The answer is no.

The real-world experiences that make up the quality of life no longer align with the sci-fi narrative that as long as there is some new technology afoot then life will inevitably get easier and better. In the real world, a realistic appraisal of decaying quality of life leads people to vote with their feet, to move domestically or internationally.

There are two ironies here. One is the relative strength of the "doomed to collapse to zero" US dollar in lower-cost nations, and the other is the disruption unleashed by the arrival of relatively wealthy Americans snapping up real estate and driving up prices--negatively impacting the quality of life of locals.

These factors also play out domestically, as Americans made rich by owning real estate in left / right coast metropolitan areas are overwhelming desirable small cities and towns in less populous states, pushing home prices out of reach of locals.

What our elites, public and private-sector, cannot admit because it reflects on the failure of their leadership, is life is getting harder in America except for the wealthy. This is why overseas millionaires are moving to the US: taxes are lower and everything is affordable here if you're rich.

Meanwhile, back in the real world: A $44,000 Bill Shows the Dysfunction in California's Home-Insurance Market (WSJ.com)

While the top 10% benefiting from credit-asset bubbles are incentivized to promote the sci-fi narrative, everyone else is resorting to gambling as their last best hope of "making it" in America. America's elites can't tell the truth--that essential sectors such as healthcare are broken--because they have no solutions, as real solutions would drain the punchbowl of entrenched, politically powerful interests.

Quality of life isn't a statistic, it's an experience. It's not just how much money you have, it's whether you still have access to everything of immeasurable value that's destroyed in being monetized.



The decay in our quality of life no longer aligns with the narrative, and so the gulf between the happy-story statistics / pulp-science-fiction narrative and the real world widens. In response, people are either gambling or voting with their feet.


My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)


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How We Got Here: Moral Flexibility Leads to Moral Decay

Moral flexibility accumulates. Over time, it leaves you compromised.

This is a guest essay by correspondent 0bserver. This series focuses on the realities of self-employment. In my view, everyone is self-employed to some degree now, whether they're aware of it or not.

At some point, I learned to draw a line. I do not do business with people who publicly signal virtue while treating their employees poorly. I do not care what their politics are. I do not care what causes they promote. If the public posture and the private behavior do not match, I am not interested.

That decision costs money. I accept that.

I have already been down the other path.

What I eventually realized is that this is not about strategy, branding, or long-term thinking. It is about an internal moral line. A point where you stop asking whether something is legal, profitable, or defensible, and ask whether you should be involved at all.

Once that line is crossed, everything else becomes negotiable. Saying yes becomes easier. Saying no starts to feel naive. The damage does not happen all at once. It happens incrementally, as each compromise makes the next one feel smaller. That is the line I am not willing to cross.

For a long time, I worked inside systems where absorbing other people's bad behavior was treated as normal. Complaints became leverage. Entitlement was reframed as customer service. You were expected to endure it quietly and keep things moving.

It leaves a residue.

You feel it before you can fully articulate it, a physical sense that something is off. Over time, you learn to override that signal. You tell yourself it is temporary. That it is necessary. That this is simply how business works.

It is not.

This is how moral flexibility becomes routine.

When you are responsible for your own business, the excuses disappear. If a customer has a legitimate issue, it is your responsibility to make it right. That is not weakness. That is ownership. But when someone continues to complain after a good-faith attempt at repair, clarity matters. The relationship ends, not out of anger, but out of orientation.

Boundaries are not punishment. They are information. I do not do business with people I do not respect. Craft matters as well. If the work itself lacks integrity, that matters.

What matters most is how people use power. Insecurity in employees is human. Abuse from owners is not. When someone humiliates staff, yells, or treats people as disposable, it is not a management style. It is a signal. Whatever someone is willing to do to those beneath them, they will eventually do to those beside them.

You inherit the moral residue of the people you choose to work with. The right way, for me, is simple: providing a service to qualified customers.

If I have to explain what the product is or why it matters, we are misaligned. If the interest is vague, performative, or rooted in signaling rather than use, we are misaligned.

I am not here to convince people. I am here to serve people who already know what they want and value it.

That disqualifies many potential customers. That is intentional.

At a certain scale, people stop being real. Names blur. Context drops out. Consequences diffuse. When that happens, behavior becomes easier to justify because no one feels present anymore.

Shrinking the circle fixes this.

When you deal with a small number of real people, people you recognize and whose reputations actually travel, abstraction disappears. Actions carry weight. There is no place to hide behind process or posture. The lights are on.

This does not mean avoiding growth. It means avoiding the kind of growth that requires moral distance. I will scale within the boundary, not beyond it.

People will say this approach is limiting. That it slows growth. That it leaves money on the table.

That is true.

I traded comfort for this deliberately. If I am going to struggle on my own, I want to know I did it the right way. If I wanted the opposite, I could take a job and make more money.

I chose discomfort because it was the only way to remain antifragile and survive market shifts.

Integrity is not something I perform. It is practical.

Integrity means I can look in the mirror without lying to myself.

Moral flexibility accumulates. Over time, it leaves you compromised.




My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)


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