Sunday, April 29, 2018

The Cosby Status Quo: A Facade of Wholesomeness Masks Feudal Exploitation

In America's feudal society/economy, there are two systems of "justice".
The conviction of Bill Cosby for sexual exploitation/assault serves as a useful metaphor for our entire status quo, which projects a wholesome PR facade (free market capitalism, win-win, democracy, meritocracy, anyone can grow up to win American Idol, etc.) which masks a predatory culture of exploitation.
The most important aspect of the Cosby case is that dozens of reports of his drugging and assaulting women were routinely ignored for decades. The facade of wholesomeness, generated to protect the profit-generating machinery of the Cosby brand, buried accusations with a blizzard of legal and PR maneuvers.
The only difference between the predations of Cosby and those of Harvey Weinstein is that Weinstein had no need for a facade of wholesomeness because his brand/core business did not generate profit from a pretense of wholesomeness like Cosby's. Weinstein's predations were an open secret because he reckoned his power and connections rendered him invulnerable. In other words, he was nobility in a feudal society/economy.
In America's feudal society/economy, there are two systems of "justice": one for the wealthy and powerful oligarchs generating profits for Hollywood and Corporate America, and an overcrowded gulag of serfs forced to plea-bargain in the other.
The predation and the hollowness of the wholesome image were well-known to those serving the nobility. Hundreds of insiders knew the truth, just as hundreds of insiders with top secret clearance knew about the contents of the Pentagon Papers, and thus knew the Vietnam War was little more than an accumulation of official lies designed to protect the self-serving elites at the top of the power pyramid.
Only one analyst of the hundreds with access to the truth had the courage to risk his career and liberty to release the truth to the American public: Daniel Ellsberg.
If you want to understand why the status quo is unraveling, start by examining the feudal structure of our society, politics and economy: the endemic corruption, predation and exploitation of the privileged nobility at the very top, the well-paid class of self-serving sycophants, toadies, lackeys, hacks, apologists, flunkies, careerists and legal-team mercenaries who toil ceaselessly to protect their oligarch overlords from exposure and the exploited, powerless serfs at the bottom.
As Orwell observed about a totalitarian oligarchy, some are more equal than others.That is the definition of an exploitive, predatory feudal society.



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Thursday, April 26, 2018

The Blowback Against Facebook, Google and Amazon Is Just Beginning

This is how we end up with a neofeudal society that benefits the Protected Few at the expense of the powerless, exploited Many.
Blow-out earnings from Facebook and Amazon have cheered Wall Street, but institutional owners might want to focus not just on blow-out earnings but rising blowback against the tech superpowers (Facebook, Google and Amazon).
The blowback is social and political: people are starting to question the social and political costs of these tech darlings' dominance and the billions in profits they reap.
The typical corporation can buy political influence, but Facebook and Google are manipulating the machinery of democracy itself. That's a much more dangerous type of power than buying political influence or manipulating public opinion by openly publishing biased "news."
We all understand how Corporate Media undermines democracy: recall how every time Bernie Sanders won a Democratic primary in 2016, The New York Times and The Washington Post "reported" the news in small typeface in a sidebar, while every Hillary Clinton primary win was trumpeted in large headlines at the top of page one.
But this sort of manipulation is visible; what Google and Facebook do is invisible. I recently addressed these invisible (but oh-so profitable) mechanisms in a series of essays:
Here's a selection of recent articles on related topics:
Amazon is the embodiment of numerous destructive dynamics:
1. Zero-sum cannibalism being passed off as "growth." Amazon is growing its sales by cannibalizing the retail, distribution, transport, computer services and advertising sectors. How many jobs have been lost as Amazon has consumed its victims? Shall we guess that Amazon's 560,000 employees replaced 1,000,000+ retail/distribution employees who lost their jobs?
It isn't just jobs, of course: it's local taxes, local retail stores that attracted pedestrians and other enterprises--the built environment and social spaces of our cities and towns. As those are gutted and replaced by Amazon warehouses in the boondocks, much more is being lost than retail jobs.
Amazon's "growth" is not actually "growing" the economy in any useful way; it's simply consolidating a number of sectors into one quasi-monopoly.
2. Amazon is now flexing the political power of its wealth. Anybody with cash can buy political influence. But few organizations have the billions of profits to spend on political favors and protection that Google, Amazon and Facebook have.
3. The founder of Amazon, Jeff Bezos, is now likely worth more than all his 560,000 employees combined. Divide $134 billion--Bezos' personal stake in Amazon stock-- by 560,000, and you get $239,285. How many of Amazon's employees (average pay is around $28,000 annually) have a net worth of $240,000 or more? Vanishingly few below the top layer of techies and managers.
The theory of the happy union of capitalism and democracy rests on capitalism creating secure middle-class employment for millions of citizens. Once capitalism only creates a peon-debt-serf class and a 5% technocrat / manager / financier / entrepreneur / speculator class that harvests 70% of the wealth and income, then democracy dies by the slow poison of rising inequality and ever greater asymmetries of wealth and political power.
No wonder we read that Jeff Bezos Booed By Amazon Workers.
I am sure there are thousands of well-paid tech/managerial employees of Amazon, but there are also thousands of part-time employees like the Camperforce: Meet the Camperforce, Amazon's Nomadic Retiree Army (Wired)
The blowback is just getting started, as people awaken to the dangers posed by these fast-metastasizing tech quasi-monopolies. The most dangerous dynamics in America are the erosion of the mechanics of democracy by wealth/corporate power, and the erosion of middle-class employment in favor of maximizing corporate profits by any means available.
This is how we end up with a neofeudal society that benefits the Protected Few at the expense of the powerless, exploited Many. Facebook, Google and Amazon are each accelerating this erosion not by accident, but as a direct consequence of their business model and sources of profit.



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Tuesday, April 24, 2018

How Far Down the Big Data/'Psychographic Microtargeting' Rabbit Hole Do You Want to Go?

Anyone claiming they are impervious to this sort of analysis and delivery of "content" is deluding themselves.
Maybe you've seen a notice like this when you log into your Facebook account:did you read it carefully? Please read the one I received:
Protecting Your Information
We understand the importance of keeping your data safe, because we sell it for billions of dollars to anyone with cash. We are making it easier for you to believe that you control which apps you share information with.
You can go to the Apps and Websites section of your settings anytime to see the apps and websites you've used Facebook to log into. You can also remove the ones you don't want connected to Facebook anymore. None of this makes any difference in how much data we collect about you, but we understand it makes you feel better to maintain the illusion of control.
Wait a minute--you didn't get the same notice that I did? What's going on here? You mean Facebook, Google, et al. can tailor not just adverts and content to each user, but the messages they feed us?
Welcome to the wonderful world of 'Psychographic Microtargeting' in which buyers of data harvested by Facebook et al. tailor the "product" being delivered-- marketing, political campaigning, narratives, etc.-- to individuals based on a Big Data/AI analysis of the data collected on the individual and tens of millions of other users.
Here is GFB's exploration of this rabbit hole:
--"Give me access to the Facebook/Google aggregated data
--give me access to social media 'influencers' I can hire
--give me a modest budget -
and I can make the color green the most disliked color on the planet in under a year.
Since Facebook is essentially agnostic as to the uses of their aggregated data - although they claim it’s changing now, I would bet money still walks (you got the cash - here it is) - the government of, oh let’s say China - wants to change public opinion on certain issues. Facebook (or its Chinese counterpart) is the way to do so.
And so far, all we have seen is that Facebook served up ads and content that could, if you squint hard enough and look sidewise might be detected as ads or propaganda - what happens when they take it to the next level? They take some content and each of the readers could get a slightly modified version of the content that is dictated by the sold aggregated data, who bought it, and what they want to do with it.
In other words, Facebook subscriber A receives a slightly modified version of the content that is different than Facebook user B.
Since I don’t think Facebook users compare word for word the content that they receive in their feed . . . . no one will ever know."
For those individuals profiled as someone with a scientific bent, the "content" delivered about a particular Big Pharma medication will be chock-a-block with Phase III results and a statistical analysis of the results.
The average plebeian with little background in science or statistics will receive "content" emphasizing the joys of getting a few more years to enjoy the grandkids if they pester their physician to prescribe the new "miracle" medication.
It's not difficult to discern the facility modern marketers have in terms of tailoring messages. GFB submitted this auto advert with this comment: "notice it says nothing about the car at all except that if you buy it your dreams will come true."
Indeed. But if your profile indicates you are concerned about safety, then the "content" delivered to you will stress the many enhanced safety features of the vehicle.
If you just had your second child, the "content" will show happy parents settling their toddlers into kid-safe seats in the vehicle. And so on, in a nearly infinite regress to profiles not just of group gradients but of individuals and households.
"Rugged individuals" who reckon they're impervious to advertising will get an extra special "content" feeding their ego. Anyone claiming they are impervious to this sort of analysis and delivery of "content" is deluding themselves.
It kind of makes you wonder why we passively accept a distribution of wealth and income that is so heavily skewed to the top 1/10th of 1% of households: it must be mere coincidence, right?
How far down the Big Data / AI analysis / 'Psychographic Microtargeting' rabbit hole are you willing to go?
Editor's Note: the above notice from Facebook was altered by the author to make a point. The text as written above was not actually delivered by Facebook.


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Read the first section for free in PDF format.


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Sunday, April 22, 2018

Connecting the Dots of Big Data, Soaring Corporate Profits and Trade Wars

It's self-evident that we cannot possibly understand trade, soaring corporate profits, Facebook's data collection or the economy without understanding the core role played by Big Data in reaping outsized profits and pushing narratives.
Let's connect the dots between these two comments from longtime correspondents: the first is on the model of collecting and selling data (Big Data), and the second on trade:
GFB:
"If I had a lot of money, would I want to do:
A) --invest in the exploration forbidding areas of the globe for oil reserves with a 50/50 chance of no results
--negotiate leases for the areas of the planet I want to extract oil in and have to negotiate with corrupt and unstable governments
--Pay for the oil extracting and transportation infrastructure
--deal with the fluctuating market values - which may make my whole investment worthless
OR
B) set up a low cost trap that has millions of people handing me for free, and with their acknowledged permission, their preferences, tastes, beliefs, and aspirations . . . which I can re-sell at almost no cost to a long list of buyers, with a price that I can set as I have the data.
Why I keep thinking we’ve moved past 'the sky is falling' to 'the sky fell' with this is that we haven’t yet seen what happens when next generation AI gets a hold of this data and starts using it.
That’s no concern of anyone in the data mining, acquisition, or aggregation business now - as their goal is very simple: get as much data as possible from any kind of source that you can beg borrow or steal from - as the AI and algorithms of the future will find more and more uses for this data.
Data will only become more valuable. I don’t think there is an equivalent 'substance' in our universe, that no matter what happens, the data holder will be wealthier and wealthier.
Data doesn’t expire, rust, need maintenance, go in or out of fashion, need to fed, require medical care . .
I thought it was very telling that there were numerous reports recently that the Senators grilling Supreme Leader Zuckerberg clearly, by the nature of their questions 1) did not understand what Facebook does and why this is and issue, and 2) didn’t want to piss Zuck off as they are going to need to use Facebook's data in their next campaign, as their opponents surely will."
Mark G.:
"Perhaps one way to underline this for readers (i.e. that corporations have benefited from "free trade" far more than consumers and workers) is to see what wasn't outsourced and offshored. This is control of the product marketing and distribution channels. This is the sector the "Free Traders" have maintained a death grip on.
Even with Alibaba in place the Chinese have still made almost no progress in market penetration in North America, Europe or Pacific Oceania.
If we totaled up the proverbial '80%' of retail value in any class of products I'm certain we'd be staring at a series of oligopolies that generally have fewer than ten members in any category, and often fewer than five."
Here's how I'm connecting the dots of data collection/data mining and the new model for maximizing profitability: the entire model of "capitalism" (maximizing return on capital and labor) has shifted from getting rich making stuff/providing services to distributing/marketing goods and services in a cartel structure.
In this economy, the essential role is played by big data/data mining. Wal-Mart, Amazon, Facebook, Google et al have no interest in where the goods and services are made/generated; the big profits are in the distribution/marketing (i.e. exploiting large data sets) and gathering and selling these large data sets.
Let's stipulate that those corporations whose entire value proposition is manufacturing expertise will continue to extract profits from manufacturing. But this doesn't mean that this manufacturing remains exclusively in the domestic economy, or that Big Data isn't increasingly a core value-generator for manufacturers.
Boeing is a good example. In terms of trade, it's noteworthy that Boeing is careful to have major airliner components manufactured in major markets for its aircraft: Japan and China come to mind.
Since Boeing's value is increasingly based on how well it meets the needs of its airline customers (setting aside its government defense contracts for the moment), then the value proposition shifts to Big Data /data mining and analysis of passengers, routes, etc. by the airlines. Thus Big Data informs what they want from Boeing, and Boeing is thus as reliant on data mining as any politico seeking to exploit large data sets mined by Facebook.
GFB made an important point in one of our many email exchanges on these topics: small data sets are a dime a dozen. What's truly valuable is data sets covering tens of millions or hundreds of millions of individuals.
There are of course beneficial uses for large data sets: pharmaceutical and healthcare R&D is informed by large data sets about patients and their responses to lifestyle changes, medications, etc.
To Mark's point: to identify what is most profitable, look at what isn't offshored, and what is most zealously guarded by political/regulatory moats.
Alternatively, to identify what's low-value and not very profitable, look at what's offshored. That would be manufacturing and assembly.
To GFB's point: given a choice between an intrinsically risky enterprise such as discovering and extracting oil in harsh landscapes and unstable nations (pretty much all that's left to explore/extract), and extracting the value from large data sets, which is more profitable and lower risk?
Mark invokes the 80/20 rule (Pareto Distribution) as a basic guideline to the concentration of wealth and power: 20% of the firms in any sector reap 80% of the profit. If we go one step further, and take 20% of the 20% and 80% of the 80%, we get the 64/4 Rule: 4% of enterprises/individuals reap 64% of the profits/income.
This extraordinary concentration of income and profits is reflected in the data on corporate profits and IRS income data.
This connects the dots linking trade, the value of Facebook's "business model," and the tremendous demand by corporations and political campaigns for large data sets that can be analyzed and exploited to market products, services and political narratives/candidates.
It's self-evident that we cannot possibly understand trade, soaring corporate profits, Facebook's data collection or the economy without understanding the core role played by Big Data in reaping outsized profits and pushing narratives--in Noam Chomsky's phrase, manufacturing consent.
Big Data, Big Government, Influencers / Marketers, Corporate America and politicos never had it so good. As for the rest of us--not so much.


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Read the first section for free in PDF format.


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Thursday, April 19, 2018

The War between Public Pensioners and Tax Donkeys Is Heating Up

The migration is only beginning, but that's only half the story.
You know it's serious when the newspaper of record finally reports it: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash (New York Times).
It's a long article but the summary is brief: corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost.
Public pension obligations are rising so fast that even repeated tax increases can't keep up.
This is setting up a second front in the war between entitled Baby Boomers and younger taxpayers who pay most of the federal and local taxes. Public pensioners are a subset of the entitled Baby Boomers, but their pensions can't be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.
So there is a war brewing between public pensioners and the Tax Donkeys: the Unprotected who pay local property taxes on their homes, state and local taxes on their incomes, sales taxes on their purchases, junk fees on local government services, and so on.
Corrupt politicos created the war by over-promising benefits to public employees and ignoring fiscal realities. By the time the bill comes due, the politicos who rubber-stamped the unaffordable promises are themselves gorging at the public-pension retiree trough.
Not every public employee is receiving gold-plated pensions and benefits, of course, but that doesn't negate the reality that nationally, public pensions are increasing faster than government revenues and the returns earned by the pension programs.
If the stock and bond markets suffer multi-year declines, even modest declines, the pension war will move from skirmishes to open political combat.The 2008-09 Global Financial Meltdown was a taste of the reality facing public pension programs: once annual returns slip from +7% annually to -7% annually, the pension plans are soon insolvent.
Like virtually all wars, there are asymmetries between the two combatants: in the war between public pensioners and the Tax Donkeys, the pensioners can't switch pension programs, but the Tax Donkeys can move to lower-tax states.
Allow me to summarize for those who aren't too squeamish: a lot of cities and counties are going to go broke, slashing services and jacking up taxes, all to no avail. The promises made by corrupt politicos cannot possibly be kept, despite constant assurances to the contrary, and those expecting services and taxes to remain untouched will be shocked by the massive cuts in services and the equally massive tax increases that will be imposed in a misguided effort to "save" politically powerful constituencies and fiefdoms.
These dynamics will power a Great Migration of the Tax Donkeys from failing cities, counties and states to more frugal, well-managed and small business-friendly locales. I've sketched out the migration in this graphic: the move by those who can from incompetently managed and/or corrupt cities/counties/states to more innovative, open, frugal and better managed locales.
Unlike Communist regimes which strictly control who has permission to transfer residency, Americans are still free to move about the nation. This creates a very Darwinian competition between sclerotic, corrupt, overpriced one-party-dictatorship states whose hubris-soaked political class is convinced the insane housing prices, tech unicorns, abundant services, and a high-brow culture ruled by an artsy elite are irresistible to everyone, and locales that are low-cost, responsive to the Tax Donkey class, welcoming to new small businesses, employers and talent, unbeholden to a politically-correct dictatorship and conservatively managed, i.e. not headed for insolvency, are no match for their elitist fiefdoms.
Not everyone can move. Many people find it essentially impossible to move due to family roots and obligations, kids in school, and numerous other compelling reasons.
Many people who are able to move are the Tax Donkeys who are paying the most taxes: self-employed entrepreneurs, mobile creatives, those with scarce skills and those who earn substantial incomes from royalties, patents and other forms of capital.
These Tax Donkeys can live pretty much anywhere they please. They don't need to stay in NYC, Boston, L.A., San Francisco or Chicago.
This is the model for many half-farmer, half-X refugees: people who are moving to homesteads or small towns with the networks and skills needed to earn a part-time living in the digital economy. In a lower cost area, they only need to earn a third or even a fourth of their former income to live a much more fulfilling and rewarding life.
Not that hubris-soaked politicos and elites have noticed, but only the top few percent of households can afford to own a home in their bubble economies.Paying $4,000 a month in rent for a one-bedroom cubbyhole in San Francisco may strike the elites living in mansions as a splendid deal, but to the people who have surrendered all hope of ever owning anything of their own to call home--not so much.
Though this chart is based on national data, there are many regional variations. When it takes a year just to obtain a permit to open an ice cream shop (in San Francisco), how much will the insolvent "owner" have to charge per ice cream cone to make up a year in hyper-costly rent paid for nothing but the privilege of being a scorned peon in a city ruled by privilege and protected fiefdoms?
Not that hubris-soaked politicos and elites have noticed, but the Tax Donkeys are getting fed up: their local schools have been stripped of enrichment programs, the cash-strapped local governments are demanding taxpayers pass $100 million bonds to fill potholes and repair schools' leaking roofs, parking tickets now cost more than a restaurant meal for the entire family, and the increases in fees and taxes are coming fast and furious.
If the real estate and stock/bond bubbles pop, the pension bubble pops, too.Once property taxes start declining even as rates are jacked up, the public pensioners will lose the war. Once the stock and bond portfolios of the pension programs are shrinking rather than growing, the the public pensioners will lose the war. Which American Cities Will File Bankruptcy Next?
There is a feedback loop to raising taxes to pay for skyrocketing public pension obligations: the higher taxes rise, the more Tax Donkeys will migrate away from high-tax states and cities. As those paying the majority of the taxes leave, the high-tax states and municipalities have no choice but to raise taxes even more aggressively, which only accelerates the migration of high-income, entrepreneurial Tax Donkeys that are the engines of growth.
The migration is only beginning, but that's only half the story: those who can't leave for whatever reason can opt out: close their businesses, quit their high-stress, high-paying job, move back to the family home, retire and start living as close to the ground as possible.
Those who opt out are in effect moving from those contributing the most to those contributing the least.
Right now, hubris-soaked politicos and elites can entertain the fantasy that NYC, Boston, LA, San Francisco, Chicago, etc., are irresistible: they're not.They're great for those feeding at the trough but not so great for those filling the trough. As astonishing as it will be to hubris-soaked politicos and elites, the straws that will break the back of the Tax Donkeys' will to put up with the ever-increasing burdens are many.


My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.
Read the first section for free in PDF format.


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