Getting and spending: Facebooking the Future

I just heard a report on the coming IPO of Facebook, possibly at a value of $100 billion.  What could justify such an enormous sum assigned to a social networking site?  It gives a price to earnings ratio of 100 or more.  That is, investors, if they give it that value, are betting that its profits will double every year for many years, so said the financial analysts.

Why would they assume this?  Because Facebook is pitching itself as the ultimate of advertising pitchmen, with a new system that integrates the members of its network, and all the information it holds about them, to create ads based on links between people.  That is, I buy a toaster, FB knows who I know, ads appear at those nodes for toasters and whatnot that I and they like.  We all become elements in the grand scheme of managed buying, selling, consumption.  Am I wrong to find this a bit dispiriting?

Remember the days when the Internet was new, and people were dreaming of how it would create a completely different sort of social network?  It has!  And it’s all based upon sales!

Wordsworth’s poem.

Cranky on Consumerism…

crank   (krngk) n.

– A device for transmitting rotary motion, consisting of a handle or arm attached at right angles to a shaft.

– Informal:   A grouchy person; An eccentric person, especially one who is unduly zealous.

Back to one of my favorite topics for complaint:  It seems that every time I look at the news, especially the business news, everything is about the Internet.  (Surprise!)  I just want to find out whether the UK and Europe are imploding and all I see are articles about startups and IPOs for outfits selling gizmos that help us spend money, waste time, and gain access to more information, most of which is of no use to us, except as a way to help us spend more money and waste more time.  In the NYTimes, one academic jocularly speculated:

Perhaps in the not-too-distant future, he went on, you won’t have to shop at all. Your vast piles of shopping data would be instead collected, analyzed and used to tell you exactly what you need: a new motorcycle from Ducati, perhaps, or purple rain boots in the next size for your growing child. Money will be seamlessly taken from your account. A delivery will arrive at your doorstep.

And if we could just figure out how to have machines make all the stuff for us, grow our food, and tend our bodies without having to move, we could just plug in and live virtually!

Don’t get me wrong – I love stuff.  I just spent hours shopping for a new pair of shoes made of Tyvek – looks really cool.  But I wouldn’t be destroyed if all these opportunities were taken away.  Is it my age?  I had a roommate once who thought of nothing but making money and buying. “That’s what man is,” he, a resolutely unphilosophical person told me.  “Man is a consumer.  He buys things.”

When I was thirteen, I got a full set of the Encyclopedia Britannica. I recently discarded it, but I kept the A and Z volumes just as a reminder of happy times gone by.  I would start off looking something up, it would lead to something else, and something else again in another volume, and pretty soon hours had gone by while I ‘surfed’ the expanse of human culture, and I was left sitting on the floor surrounded by opened volumes.  Now I do it online.  I rather like doing it online, but I don’t kid myself that my experience is essentially any better.  Just faster, and more rich in media.  Some things I can find now with ease that I would have had to go far out of my way to get then…but that was part of the fun of it!  Something gained, something lost.  This is the way of life, but, not on the business pages.  How long before people start to get jaded?

A minority opinion, but not a solitary one.  The caveman at the left is the logo of Uncivilized Books, a small publisher of comics, that I discovered in Atomic Books in Baltimore, MD.  Yes, an actual store!  This comics artist, Tom Kaczynski, seems to be thinking the same sort of thoughts.  And I love that logo!  That’s me, but I wear a collar and carry a laptop as I face the day’s challenges of scratching a living from the earth.

In one of his comics, Kaczynski talks about Richard Florida, and his books on the rise of The Creative Class…new to me. But at the symposium I attended Friday at the Regional Plan Association in NYC, I felt like I was hearing what he was describing, at least at the morning session.  Bike paths, cultural diversity, cafes, restaurants (for the record:  I like all that stuff) capital chasing all those smart, talented, hip-and-with-it highly educated technology workers…  What must a city do to woo them to come and live in its precincts?  And what about the not-so-smart and not-so-hip or talented?

Mayor Bloomberg gave his “NYC is Great” (and so it is) speech, and remarked that the RPA has been around giving us great plans since 1929!  1929 gave us so many great things – he rattled off a few, including Scotch Tape.  Was it a subtle joke on his part that he omitted The Crash?

Once again, mes pauvres lecteurs, I call your attention to this brilliant piece of social commentary:  Flaubert on the Internet.

OWS – End the Fed?

At the Occupy Wall Street demonstration, there is a small and vocal contingent that consistently stakes out the northeast corner of the park.  They hold signs and distribute clever tokens advocating the elimination of the Federal Reserve Bank, a return to the gold standard, and the opening up of currency to a ‘free market.’  I’ve spoken with a couple of them, and they are articulate and intelligent.  This recalls to my mind, once again, the quip by George Orwell that, Some ideas are so stupid only an intelligent person could believe them.

Okay, there are a lot of criticisms you can make of the Fed:  from the right, that it is too easy on the money supply, ‘printing money’ to pay for wars and welfare, or to bolster employment; and from the left, that it is too tight with money, preferring to worry about inflation more than unemployment.  These criticisms are about how the Fed does its job, not whether it should exist.  For most of American history, the tight money guys, the economic elite and the bankers have had their way.  They’re the ones who created the system, after all.

What is truly striking and bizarre about this group is that they see themselves as populists, seeking to free America from the tyranny of the banking cabal.  They cry about how the Fed is “debasing the currency,” or “making our dollars worthless!”  This, in a time when inflation is extremely low, interest rates are too, and many are worried about deflation!  They see the common man as oppressed by the banking community, rightly so, and their solution?  The gold standard!  Have they not heard of William Jennings Bryan, the great 19th century populist, and his speech about how the Eastern money men “shall not crucify the American people on a cross of gold!”  (He wanted a silver standard.)

As John K. Galbraith describes in his book Economics in Perspective, in the chapter called The Separate Personality of Money, during much of American History, the general population favored easy money.  (True, so did absolute monarchs, who used it to fuel their wars once they learned how – John Law and the Mississippi Bubble being Exhibit A)  They wanted paper money, they liked inflationary monetary policies – it made their debts less crushing!  They, the Jacksonian Democrats, and Andrew Jackson attacked Biddle and the Hamiltonians for their planned National Bank because they knew it would end their free use of paper, and impose a gold standard.  The West was settled with paper money. So why are these End the Fed folks carrying signs praising Andrew Jackson?  They are against the Fed for totally different reasons!

One fellow I spoke with also was upset that the Fed has a monopoly on printing money.  He’d like there to be ‘free money,’ another Jacksonian idea.  This seems in rather stark contradiction to his desperate desire to keep inflation and debased currency at bay.  After all, if a variety of currencies are available with which to pay one’s debts, wouldn’t the natural tendency be to use the worst currency available and keep the best for yourself?  I believe this is Gresham’s Law.  So, am I missing something, or are these people intellectually incoherent?

Antidote

…instead of studying how to make it worth men’s while to buy my baskets  I studied rather how to avoid the necessity of selling them.

Thoreau, Walden

Harvard – Bought and Paid For

Inside Job is an excellent documentary about the financial crisis of 2008.  The basic point, very well documented, is that an extremely small group of people with lots of money managed to tweak the economic system of the country, to divert huge sums of cash their way.  Some timely deregulation legislation, carried forward by a thirty-year drumbeat of intellectual support from influential economists, made it happen.

In the end, the vast collective wealth of the United States, and much of the world economy, became the gambling stake of these people, and when it all crashed, they walked away with their loot, and were free from any consequences.  The people in charge now, under Obama, are the same ones who made it possible, and who made it happen:  it’s a Wall Street administration, as one critic in the film says.  As Mr. Rosewater says in Kurt Vonnegut’s novel, God Bless You, Mr. Rosewater, getting rich in America is largely a matter of positioning yourself to get your straw into the money stream:  These people had very big straws.

Towards the end of the film, there is a section in which various heavyweight academic economists are interviewed about the possible conflicts of interest inherent in consulting and publishing articles for firms that were pursuing extremely risky behavior.  These firms crashed and burned, despite the intellectuals’ assertions that they were sound, a good idea, helping stabilize the economy, etc.  The opinions of these people, from Columbia, Harvard, and other schools, were extremely influential.

In one stunning sequence, the chairman of the Harvard Economics Department, John Campbell, is asked if he thinks it’s relevant that people like Larry Summers, Obama’s economic advisor and a Harvard economist, made tens of millions of dollars from finance firms while he was writing papers and pushing policies extolling their virtues and efficiency.  “No, I don’t see why it’s relevant at all.”  The interviewer asks a hypothetical question:  What if a medical researcher published and spoke about the importance of using a certain drug, and then it was found that 80% of his income was from the company that manufactures that drug?  Is that relevant?  What follows is a series of ums, aahs, and hmms… as Campbell looks away from the camera and finally offers in a mumble, “Well, I think this is very different…“

As I was saying…

Administration defends credit rating…
Let’s start with S.& P.’s lack of credibility…

Greek Massacre

When Eugene Delacroix painted his allegorical image of Greece lamenting the atrocities against her citizens by the Turks, and his equally famous Massacre at Chios, he was keen to create support for the Greek independence fighters.  Today, Greece suffers a new onslaught, not from the Turks, not from the East, but from the West, the global institutions of neo-liberal capitalism.  The Greeks are getting slaughtered.

Yesterday, their politicians, a corrupt and elite class that regularly changes places with the financial sharks circling in the Aegean waters, voted to accept the ‘austerity’ measures that the EU and the IMF demanded.  Those Greeks – they don’t work very hard, and they expect the state to do everything for them.  Why, I have heard, hairdressers retire at fifty!  I wonder…

I wonder too why the bondholders who made absurdly risky loans, with the connivance of the politicos, never seem to get called to account.  (Here in the USA, Goldman Sachs is riding high.  Why didn’t it go under with AIG?  Remember this quote from when Bear-Stearns went under?) Somebody must pay, and it might as well be those ‘little people,’ the ones who don’t have a lot of money and who spend it like water. All those bankers and financiers?  They have the interests of the global financial system at heart, which is to say, their interests!

Obama Seeks to Win Back Wall St. Cash

The post’s title is the headline of a NYTimes article today.  In case you are wondering why the reign of the Bankers and Rentiers seems so secure.  The President and the Congress seem as one on this point.  No change you can believe in.

Alas, poor suckling public servants, sometimes there are more pigs than teats!

Plutocracy is here.

All money, all the time.  As Gore Vidal remarked, there is only one political party in the USA, the party of money.  And now, as we edge towards complete plutocracy, we have a ‘visionary’ president acting as a ‘bridge’ between the ‘two parties.’  That’s the reactionary Republicans, and the Democrats, who have become the left-wing of the reactionary Republicans.

Reform of the financial bad-actors?  Pretty much dead.  Health care reform?  An incremental fix to a jury-rigged system that works badly except for the insurance companies who make piles off of it.  Budget?  Cut, cut, cut…but don’t raise taxes on the wealthy and the corporations.  They are already high enough, at least on paper.  Nobody pays those rates, though.  Wasn’t it Leona Helmsley who said, “Taxes are for little people?”

And those plutocrats, they are not ashamed to hold out their hand for me, after all, they paid for it!  What are all those campaign contributions for?  They squeeze mega-bucks out of the most vulnerable and least affluent sectors of the economy with credit card flim flam, mortgage flim flam, and every other trick in the book.  And they skim mega-billions off of the economy through financial speculation.  How would they do this if there were no economy?  The economy that they ransack is the collective production of all citizens, but they game the system for themselves.  And they, through the Tea Party surrogates, call for Big Government to get off the backs of the citizens.  How convenient.

Not much good news out there.