The Death of Text?

 

The following short essay was published in the NY Times feature called The Fate of the Internet. Frankly, it’s difficult to take these arguments too seriously, despite the transformative effects of technology.

Welcome to the Post-Text Future

by Farhad Manjoo, NY Times

I’ll make this short: The thing you’re doing now, reading prose on a screen, is going out of fashion. [Which means what? It’s popularity is fading as a communication channel?]

We’re taking stock of the internet right now, with writers [Hmm, what’s a writer without a reader?] who cover the digital world cataloging some of the most consequential currents shaping it. If you probe those currents and look ahead to the coming year online, one truth becomes clear. The defining narrative of our online moment concerns the decline of text, and the exploding reach and power of audio and video. [Yes, but where does real “power” really reside? In cat videos and selfies? Those behind the curtain are really smiling.]

This multimedia internet has been gaining on the text-based internet for years. But last year, the story accelerated sharply, and now audio and video are unstoppable. The most influential communicators online once worked on web pages and blogs. They’re now making podcasts, Netflix shows, propaganda memes, Instagram and YouTube channels, and apps like HQ Trivia.

Consider the most compelling digital innovations now emerging: the talking assistants that were the hit of the holidays, Apple’s face-reading phone, artificial intelligence to search photos or translate spoken language, and augmented reality — which inserts any digital image into a live view of your surroundings.

These advances are all about cameras, microphones, your voice, your ears and your eyes.

Together, they’re all sending us the same message: Welcome to the post-text future. [No, they are welcoming us to the distractions of circuses. That’s what entertainment is.]

It’s not that text is going away altogether. Nothing online ever really dies, and text still has its hits — from Susan Fowler’s whistle-blowing blog post last year about harassment at Uber to #MeToo, text was at the center of the most significant recent American social movement.

Still, we have only just begun to glimpse the deeper, more kinetic possibilities of an online culture in which text recedes to the background, and sounds and images become the universal language.

The internet was born in text because text was once the only format computers understood. Then we started giving machines eyes and ears — that is, smartphones were invented — and now we’ve provided them brains to decipher and manipulate multimedia. [Yes, but civilization was not born with the ASCII computer language. Computers are becoming clever tvs, but they still deliver a lot of trivia as content and video formats probably amplify that. Perhaps we are seeing the trivialization of popular culture? Has it ever not been trivial?]

My reading of this trend toward video as a substitute for text applies to certain types of media and content. Certain commentators have adapted readily to YouTube channels to transmit knowledge and ideas and the educational potential is just being tapped. But true power in the world of ideas is controlled by those who know how to manipulate text to understand abstract intellectual ideas that govern our world.

The question is, is technology turning us into sheep or shepherds? Because for sure, there are wolves out there.

As John Maynard Keynes wrote,

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back…

Dennis_The_Menace-11-6-09-240x300

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Order vs. Chaos: How We Choose

(The Towers of San Gimignano)

Below is a thought-provoking essay by historian Niall Ferguson examining the fluid structure of societies that swing from hierarchies to decentralized networks.

Anyway, this is a subject dear to my heart, as it is the overriding theme of several of my fiction books. See interjections below…

In Praise of Hierarchy – The Wall Street Journal
https://apple.news/A3UEyEvI-SnuHNdt8fLLjzg (paywall)

The Saturday Essay
Established, traditional order is under assault from freewheeling, networked disrupters as never before. But society craves centralized leadership, too.

It is a truth universally acknowledged that we now live in a networked world, where everyone and everything are connected. The corollary is that traditional hierarchical structures—not only states, but also churches, parties, and corporations—are in various states of crisis and decline. Disruption, disintermediation, and decentralization are the orders of the day. Hierarchy is at a discount, if not despised.

Networks rule not only in the realm of business. In politics, too, party establishments and their machines have been displaced by crowdfunded campaigns and viral messaging. Money, once a monopoly of the state, is being challenged by Bitcoin and other cryptocurrencies, which require no central banks to manage them, only consensus algorithms.

But is all this wise? In all the excitement of the age of hyper-connection, have we perhaps forgotten why hierarchies came into existence in the first place? Do we perhaps overestimate what can be achieved by ungoverned networks—and underestimate the perils of a world without any legitimate hierarchical structure?

True, few dare shed tears for yesterday’s hierarchies. Some Anglophile viewers of “The Crown” may thrill at the quaint stratification of Elizabeth II’s England, but the nearest approximations to royalty in America have lately been shorn of their gilt and glamour. Political dynasties of the recent past have been effaced, if not humiliated, by the upstart Donald Trump, while Hollywood’s elite of exploitative men is in disarray. The spirit of the age is revolutionary; the networked crowd yearns to “smack down” or “shame” each and every authority figure.

Nevertheless, recent events have called into question the notion that all will be for the best in the most networked of all possible worlds. “I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,” Evan Williams, a co-founder of Twitter, told the New York Times last May. “I was wrong about that.”

Far from being a utopia in which we all become equally empowered “netizens,” free to tweet truth to power, cyberspace has mutated into a nightmare realm of ideological polarization, extreme views and fake news. The year 2016 was the annus horribilis of the liberal internet, the year when the network platforms built in Silicon Valley were used not only by Donald Trump’s election campaign but also by the proponents of “Brexit” in the United Kingdom to ends that appalled their creators. In 2017, research (including some by Facebook itself) revealed the psychological harm inflicted by social media on young people, who become addicted to the network platforms’ incessant, targeted stimuli.

Most alarming was the morphing of cyberspace into Cyberia, not to mention the Cyber-caliphate: a dark and lawless realm where malevolent actors ranging from Russian trolls to pro-ISIS Twitter users could work with impunity to subvert the institutional foundations of democracy. As Henry Kissinger has rightly observed, the internet has re-created the human state of nature depicted by 17th-century English philosopher Thomas Hobbes, where there rages a war “of every man against every man” and life (like so many political tweets) is “nasty, brutish, and short.”

We should not be surprised. Neither history nor science predicted that everything would be awesome in a world of giant, online networks—quite the contrary. And now that it becomes clear that a networked world may be an anarchic world, we begin to see—as previous generations saw—the benefits of hierarchy.

The word hierarchy derives from ancient Greek (hierarchia, literally the “rule of a high priest”) and was first used to describe the heavenly orders of angels and, more generally, to characterize a stratified order of spiritual or temporal governance. Up until the 16th century, by contrast, the word “network” signified nothing more than a woven mesh made of interlaced thread.

For most of history, hierarchies dominated social networks, a relationship exemplified by the looming Gothic tower that overshadows the Tuscan town of Siena’s central piazza.

DSC_1483_2

Siena’s torre

This is roughly how most people think about hierarchies: as vertically structured organizations characterized by centralized and top-down command, control and communication. Historically, they began with family-based clans and tribes, out of which more complicated and stratified institutions evolved: states, churches, corporations, empires.

The crucial incentive that favored hierarchical order was that it made the exercise of power more efficient. Centralizing control in the hands of the “big man” eliminated or at least reduced time-consuming arguments about what to do, which might at any time escalate into internecine conflict. The obvious defect of hierarchy—in the mid-19th century words of Lord Acton, “power corrupts, and absolute power corrupts absolutely”—was not by itself sufficient to turn humanity away from the rule of “big men.”

There have been only two eras of enhanced connectedness, when new technology helped social networks gain the upper hand. The second is our own age. The first began almost exactly half a millennium ago, in 1517, and lasted for the better part of three centuries.

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The epic story of chaos vs. order during the Savonarola-Machiavelli era, foreshadowing Martin Luther.

When the printing press empowered Martin Luther’s heresy, a network was born. Luther’s dream was of a “priesthood of all believers.” The actual result of the Reformation he inspired was not harmony, but 130 years of polarization and conflict. But it proved impossible to kill Protestant networks, even with mass executions. Hierarchy had to be restored in the form of the princely states whose power the Peace of Westphalia affirmed, but this restoration was fleeting.

Like the Reformation, the 18th-century Enlightenment was a network-driven phenomenon that challenged established authority. The amazing thing was how much further the tendrils of the Enlightenment extended: as far afield as Voltaire’s global network of correspondents, and into the depths of Bavaria, where the secret network known as the Illuminati was founded in 1776.

In Britain’s American colonies, Freemasonry was a key network that connected many of the Founding Fathers, including George Washington and the crucial “node” in the New England revolutionary network, Paul Revere.

IGWT Cover12 6x9 large 2017

Freemasons in today’s Washington, D.C.?

At the same time, the American revolutionaries—Franklin, Jefferson, Lafayette—had all kinds of connections to France, land of the philosophes. The problem in France was that the ideas that went viral were not just “liberty, equality and fraternity,” but also the principle that terror was justifiable against enemies of the people. The result was a descent into bloody anarchy.

 

Those who lived through the wars of the 1790s and early 1800s learned an important lesson that we would do well to relearn: unless one wishes to reap one revolutionary whirlwind after another, it is better to impose some kind of hierarchical order on the world and to give it some legitimacy. At the Congress of Vienna, the five great powers who defeated Napoleon agreed to establish such an order, and the “pentarchy” they formed provided a remarkable stability over the century that followed.

Just over 200 years later, we confront a similar dilemma. Those who favor a revolutionary world run by networks will end up not with the interconnected utopia of their dreams but with Hobbes’s state of nature, in which malign actors exploit opportunities to spread virus-like memes and mendacities. Worse, they may end up entrenching a new but unaccountable hierarchy. For here is a truth that is too often glossed over by the proponents of networked governance: Many networks are hierarchically structured.

Nothing illustrates this better than the way the internet has evolved from being an authentically distributed, decentralized network into one dominated by a few giant technology companies: Facebook, Amazon, Netflix and Alphabet’s Google—the so-called FANGs. This new hierarchy is motivated primarily by the desire to sell—above all, to sell the data that their users provide. Dominance of online advertising by Alphabet and Facebook, coupled with immunity from civil liability under legislation dating back to the 1990s, have create an extraordinary state of affairs. The biggest content publishers in history are regulated as if they are mere technology startups; they are a new hierarchy extracting rent from the network.

The effects are pernicious. According to the Pew Research Center, close to half of Americans now get their news from Facebook, whose incentive is to promote news that holds the attention of users, regardless of whether it is true or false, researched by professional journalists or cooked up by Russian trolls. Established publishers—and parties—were too powerful for too long, but is it really a better world if there are no authorities to separate real news from fake, or decent political candidates from rogues? The old public sphere had its defects, but the new one has no effective gatekeepers, so the advantage now lies not with leaders but with misleaders.

The alternative is that another pentarchy of great powers recognizes their common interest in resisting the threat posed by Cyberia, where jihadism and criminality flourish alongside cyberwarfare, to say nothing of nuclear proliferation. Conveniently, the architects of the post-1945 order created the institutional basis for such a new pentarchy in the form of the permanent members of the United Nations Security Council, an institution that retains the all-important ingredient of legitimacy, despite its gridlocked condition throughout the Cold War.

It is easy to be dismissive of the UNSC. Nevertheless, whether or not these five great powers can make common cause once again, as their predecessors did in the 19th century, is a great geopolitical question of our time. The hierarchical Chinese leader Xi Jinping likes to talk about a “new model of great power relations,” and it may be that the North Korean missile crisis will bring forth this new model. But the crucial point is that the North Korean threat cannot be removed by the action of networks. A Facebook group can no more solve it than a tweet storm or a hashtag.

Our age may venerate online networks, to the extent of making a company such as Facebook one of the most valuable in the world. Yet there is a reason why armies have commanding officers. There is a reason why orchestras have conductors. There is a reason why, at great universities, the lecturers are not howled down by social justice warriors. And there is a reason why the last great experiment in networked organization—the one that began with the Reformation—ended, eventually, with a restoration of hierarchy.

There is hope for hierarchies yet. “The Crown” is not mere fiction; the hierarchy of the monarchy has continued to elevate the head of the British state above party politics. In a similar way, the papacy remains an object of authority and veneration, despite the tribulations of the Roman Catholic Church. Revolutions repeatedly sweep the countries of the Middle East, yet the monarchies of the region have been the most stable regimes.

Even in the U.S., ground zero for disruptive networks, there still is respect for hierarchical institutions. True, just 32% of Americans still have “a great deal” or “quite a lot” of confidence in the presidency and 12% feel that way about Congress. But for the military the equivalent percentage is 72% (up from 50% in 1981), for the police it is 57%, for churches 41%, and for the Supreme Court 40%. By comparison, just 16% of Americans have confidence in news on the internet.

We humans have been designed by evolution to network—man is a social animal, of course—but history has taught us to revere hierarchy as preferable to anarchy, and to prefer time-honored hierarchs to upstart usurpers.

Mr. Ferguson’s new book, “The Square and the Tower: Networks and Power, from the Freemasons to Facebook,” will be published by Penguin Press on Jan. 16.

 

Policies vs. Values

It’s difficult to make sense of American politics these days, though not for lack of trying! The following article published in Yahoo News presents some evidence that is more widely confirmed but also introduces some interpretations that are contradicted by that evidence (see blog comments). Most of the mainstream reporting seems to be suffering from these contradictions.

To begin, American voters are not divided so much by policy issues, as the head of the survey institute proclaims. Empirical evidence of voting patterns shows that most of the voting preferences are explained by urban vs. rural and suburban policy interests and household formation, with married voters contrasted against singles, with children or not.

The remainder (about 1/3, but growing) is probably explained by the moral values/ideological divide on which Jon Haidt has done so much research (see my The Righteous Mind review). People who lean left or right in ideology seems to have different value priorities that are reflected in how they view politics. Haidt classifies six moral values with their opposites as 1) care/harm; 2) liberty/oppression; 3) fairness/cheating; 4) loyalty/betrayal; 5) authority/subversion; 6) sanctity/degradation.

He goes on to show that liberals value the first three only and suspect the last three so that they focus on care and fairness as the foundation of a free society more than loyalty, authority and sanctity. Conservatives employ all six in designing their moral foundations. Haidt readily recognized this advantage for conservatives but suggests it is more a tactical advantage rather than a fuller understanding of a sound moral society.

Identity politics seems to have turned differences in moral value priorities into tribalism. So we have a Left tribe, referring to themselves as Progressives, and a Right tribe, calling themselves conservatives and libertarians. These tribes have developed two different cultures that appear incompatible. This cultural divide is far more distinct than race, ethnicity, or gender, despite what the media might proclaim. (MAGA is a cultural clarion call, not a racial or ethnic dog whistle.)

Of course, different cultures need not be antagonistic or adversarial, especially since they can evolve over time to share many of the same values, priorities, and mores. One error I see promoted by the liberal urban media and Democrats is the firm belief that their opponents are regressive and that progressivism must be proselytized. Voting results do not substantiate this belief and voting patterns show a majority of Americans embrace both traditionalism and tolerance for differences. Any friction is caused by the socio-economic disruption due to the rapid pace of change. It’s a mistake to push that pace of change merely for its own sake. Instead, we should manage it more judiciously without alacrity and judgment. People resist change instinctively and they need help adapting. That’s the role for politics and policy.

Unfortunately, truth and accuracy are the first victims of tribalism, and that seems to be the source of our present dysfunction.

Divided by symbols, Americans see a ‘serious threat’ across the aisle

Yahoo News,  Jon Ward, Senior Political Correspondent

An annual survey of American attitudes about politics and values released Tuesday found, to no one’s surprise, that the nation’s divisions are growing dangerously deep and wide.

American Values Survey

More than half the people in both the Republican and Democratic parties see the other side as a “serious threat to the country,” the American Values Survey by the Public Religion Research Institute (PRRI) found. At a panel discussion at the Brookings Institution to discuss the poll findings, Henry Olsen, a senior fellow at the Ethics and Public Policy Center, said a “pre-Spanish Civil War mentality” was taking hold among voters.

The word “war” itself was mentioned numerous times by the panelists, in reference to the way both left and right see politics now as a zero-sum fight.

The good news — or the bad, depending on how one views it — is that the divisions are mostly not about policy, but symbolism.

“When you’re at war symbols begin to matter more,” said Robert Jones, CEO of PRRI. “Confederate monuments, flags … the [border] wall is part of that.”

But, he added, “If you talk policy, Americans are pragmatic.”

He cited a finding in the latest values survey, which PRRI has conducted for eight years in a row, that around half of Republicans support a path to citizenship for undocumented immigrants. He contrasted that with the political rhetoric from President Trump about building a wall along the U.S.-Mexico border.

“It’s the symbolic issues that are animating more than the actual policy issues,” Jones said. “When you turn from symbols to policy, there’s less polarization.”

There was agreement among the panelists Tuesday, including the conservative Olsen, that Trump fuels the conflict by highlighting the most inflammatory public issues.

But the deeper question is, why are Americans so focused on symbols rather than substance when it comes to choosing and following political leaders? Is it a recent phenomenon, brought on by the age of entertainment over information that has dominated the world since the advent of television? Or is it a natural human instinct?

Joy Reid, a panelist who hosts a weekend show on MSNBC, said that the election of former President Barack Obama in 2008 and 2012 was a symbolic act for many black Americans, and that Trump voters — most of them white — engaged in counter-symbolism. [The problem with this interpretation is that the Rust Belt states flipped from Obama to Trump, indicating that symbolism was probably “trumped” by policy results.]

Trump is “almost a flip-side, bizarro-world Obama,” Reid said. “For a lot of hardcore Obama supporters, Obama was the point. It wasn’t specifically that he would do some specific economic thing,” Reid said. “It was the symbolism of having somebody who was not white, somebody who has international roots in his family, somebody who represented a changing America.” [We don’t see a problem here? Voting for someone because they are “not white,” does what for whites in a material sense? Of course, the non-white Obama could never have won an election without the support of a significant plurality of whites. Casting this history in terms of race is probably not helpful.]

Similarly, Reid said, “For a lot of Trump supporters Trump is the point. It isn’t his policies. It’s not what he’s going to do even for them.” [I would agree that it is less about Trump’s policies in a positive sense and more a reaction against Obama’s policies and divisiveness. This extends into the backlash against political correctness that Trump instigated.]

“Just having that man, who is white and very ethno-nationalist in his whitenesss … very proactive about putting forward his gender and racial identity and saying I represent this and I’ll attack the people who in your view are detriments to it … that’s kind of the point,” she said. [There it is again – ethno-nationalism and whitenesss – instead of patriotic sovereignty through Americanism that mischaracterizes the Trump opposition. This is not to say Trump did not take advantage of this mischaracterization.] 

Reid said that Democrats who want to “convert” Trump voters may be chasing a lost cause. “I’m not sure that can be done,” she said. “He has a power over at least a third of the country that I don’t think anything can break.”

But while the PRRI study found 15 percent of Trump supporters said there’s nothing he could do to lose their support, there were twice as many confirmed opponents of the president. PRRI asked those who disapprove of Trump if there was anything he could do to win them over, and 33 percent of them said there was not.

E.J. Dionne, a Washington Post columnist who was also on the panel, disagreed with Reid that no Trump voters could be won over. “To me, these numbers show that there are a substantial number of Trump voters or supporters who can be converted,” he said, citing Trump’s approval numbers, which are down to 39 percent in the average of all polls, while 56 percent disapprove.

“This is a substantial drop-off from where Trump stood on Election Day 2016,” Dionne said. A year ago, right after he was elected, Trump had a 44 percent approval rating, and a 50 percent disapproval rating. [Mr. Dionne is wrong as he views our politics from within the liberal media bubble, advocating that democratic politics is a zero-sum game: For Democrats to win, Trump has to lose. The country’s voters are not really in sync with this approach, which is why that urban media bubble is subjected to such criticism.]

Olsen’s explanations for the victory of symbolism over substance, and the rise of Trumpism, had more to do with a loss of what Jones called “cultural dominance” combined with economic vulnerability for some of the president’s supporters. [This makes far more sense.]

Trump’s voter base “feeds on fear,” Olsen said.

But he cautioned against dismissing them, saying that would only increase the risk of violence.

“If you’re educated and well-off, you tend to look at these reactions as being hopelessly naive, out of touch, racist, irrational and consequently worthy of being ignored,” Olsen said. “If that’s the response, you shouldn’t expect them to give up their arms. … If the answer is basically to build a wall around populism, what you simply do is build up tension, build up the partisanship. And then, if you go through some sort of economic decline that makes even more people despairing, you raise the possibility of a much more dangerous counterreaction.” [This is the danger that anti-Trump forces want to deny or disregard. They will not avoid blame for any future chaos that results.]

_____

The Mysteries of Leonardo’s Mona Lisas…

A nude sketch that bears a striking resemblance to the Mona Lisa may have been drawn by Leonardo da Vinci, experts have said.

Scientists at the Louvre in Paris, where the painting is held, have been examining a charcoal drawing known as the Monna Vanna, which had been attributed to the Florentine master’s studio.

The “nude” Mona Lisa

The Prado Mona Lisa

Read the story behind the history…Saving Mona Lisa

Health Care Fantasies

A couple of articles today outlining how far apart from reality are the pro and con arguments for different possible reforms. This is going to matter at some point soon, if not now.

Socialized Medicine Has Won the Health Care Debate

The first article, by Sarah Jaffe published in The New Republic, suggests that “socialized” healthcare has won the policy debate. Citing opinion polls (for which all questions display a certain bias), the author claims that the American public favors government-run socialized medicine. (Here’s a good example of survey bias: “Do you favor free healthcare for all?” – How many No’s do you think that question elicits?)

Ms. Jaffe explains away Obamacare’s unpopularity with this, “What people don’t like are the inequities that still prevail in our health care system, not the fact that “government is too involved. …The law didn’t go too far for Americans to get behind. It didn’t go far enough. And while single-payer opponents continue to evoke rationed care, long lines and wait times, and other problems that supposedly plague England or Canada, the public seems well aware that the reality for many Americans is far worse.”

Really?

What’s more, what makes her think that government control removes inequalities rather than make them worse according to different selection criteria?

Finally, she proclaims, “This is now an American consensus. And if socialism is the medicine our system needs, the country is ready to embrace it—even by name.”

At no point does Ms. Jaffe discuss the associated costs, who is going to pay them, and what kind of trade-offs this will impose on citizens and taxpayers. This is an argument motivated by political ideology, not reality.

***

This brings us to the second article, by Sally Pipes in Investor’s Business Daily (this should give us a clue that Pipes actually plans to address money issues).

Sanders’ Single-Payer Fairy Tale

Ms. Pipes first gives us an indication of polling bias: “The idea is … enchanting ordinary Americans. Fifty-three percent support single payer, according to a June 2017 poll from the Kaiser Family Foundation. But this supposed support is a mirage. According to the same Kaiser poll, 62% would oppose single-payer if it gave the government too much power over health care. Sixty percent would reject it if it increased taxes.”

Sen. Sanders estimates that “Medicare for all” would cost an extra $14 trillion over 10 years, while the Urban Institute’s analysis of the plan puts the figure at $32 trillion. Our current annual health spending is $3.2 trillion, so Medicare at minimum would double that spending level, with no viable way to pay for it, with taxes or otherwise.

Medicare for the 65+ crowd is already a deficit buster, so the nation will not be affording such care for the entire population and promises to do so are a dangerous fantasy. We do know what will happen – the “free” care we expect will never be delivered and the politicians who sell such snake oil will be long gone.

The real problem with our health care debates is that they focus solely on distribution and not on the real problem, which is adequate supply. If no one is producing health care goods, what is there to distribute?

Constitutional Crisis?

The following was a provocative essay published in the NYTimes. Since it touches on the nexus of economics and politics, I deemed it an appropriate topic for this blog.

Our Constitution was not built for a country with so much wealth concentrated at the very top nor for the threats that invariably accompany it: oligarchs and populist demagogues.

No. It wasn’t.

But we can never seem to anchor our attention on the true determinants of economic power. The distribution of wealth is tilted toward those who control society’s primary productive resources. In feudal and agrarian societies it is land; in industrial and post industrial societies it is energy and finance capital; in the information society it is information data and finance capital.

The imperative for a liberal democracy is to democratize land, to democratize finance, and, especially in the 21st century, to democratize big data. There are trade-offs implied (especially the necessary democratization of investment risk), but the objective must be liberty and justice, not national wealth, because sustainable wealth is only derived from liberty and justice.

Aside from economic inequality there is a related but different plague upon the body politic these days. That is the anti-democratic ideology of identity politics and multiculturalism. These ideologies probably arose as a response to the frustration of economic inequality and power that demanded a division into victims and victimizers. The victimizers, of course, were corporate, white, and male, while the victims were all other identity groups not so defined: ethnic and racial minorities, women, LBGTs, etc.

But a constitution based on compromise through participation cannot possibly manage identity groups based on biology and genetics.  There is no compromising our biological identity, there are only zero-sum battles with winners and losers. Thus, the rule of the victimizers must be torn down, though it cannot end there. Coalitions of identity groups do not hold together after the common enemy has been vanquished, so they turn on each other until we see the complete Balkanization of democratic polities.

We will need to solve both these problems – economic inequality and identity Balkanization – in order for our democracy to restore itself and guarantee liberty and justice for all. Unfortunately this professor, and most of our political leaders in the oligarchy, don’t really have any promising ideas about how to go about that.

There are other things the Constitution wasn’t written for, of course. The founders didn’t foresee America becoming a global superpower. They didn’t plan for the internet or nuclear weapons. And they certainly couldn’t have imagined a former reality television star president. Commentators wring their hands over all of these transformations — though these days, they tend to focus on whether this country’s founding document can survive the current president.

But there is a different, and far more stubborn, risk that our country faces — and which, arguably, led to the TV star turned president in the first place. Our Constitution was not built for a country with so much wealth concentrated at the very top nor for the threats that invariably accompany it: oligarchs and populist demagogues.

From the ancient Greeks to the American founders, statesmen and political philosophers were obsessed with the problem of economic inequality. Unequal societies were subject to constant strife — even revolution. The rich would tyrannize the poor, and the poor would revolt against the rich.

The solution was to build economic class right into the structure of government. In England, for example, the structure of government balanced lords and commoners. In ancient Rome, there was the patrician Senate for the wealthy, and the Tribune of the Plebeians for everyone else. We can think of these as class-warfare constitutions: Each class has a share in governing, and a check on the other. Those checks prevent oligarchy on the one hand and a tyranny founded on populist demagogy on the other.

What is surprising about the design of our Constitution is that it isn’t a class warfare constitution. Our Constitution doesn’t mandate that only the wealthy can become senators, and we don’t have a tribune of the plebs. Our founding charter doesn’t have structural checks and balances between economic classes: not between rich and poor, and certainly not between corporate interests and ordinary workers. This was a radical change in the history of constitutional government.

And it wasn’t an oversight. The founding generation knew how to write class-warfare constitutions — they even debated such proposals during the summer of 1787. But they ultimately chose a framework for government that didn’t pit class against class. Part of the reason was practical. James Madison’s notes from the secret debates at the Philadelphia Convention show that the delegates had a hard time agreeing on how they would design such a class-based system. But part of the reason was political: They knew the American people wouldn’t agree to that kind of government.

At the time, many Americans believed the new nation would not be afflicted by the problems that accompanied economic inequality because there simply wasn’t much inequality within the political community of white men. Today we tend to emphasize how undemocratic the founding era was when judged by our values — its exclusion of women, enslavement of African-Americans, violence against Native Americans. But in doing so, we risk missing something important: Many in the founding generation believed America was exceptional because of the extraordinary degree of economic equality within the political community as they defined it.

Unlike Europe, America wasn’t bogged down by the legacy of feudalism, nor did it have a hereditary aristocracy. Noah Webster, best known for his dictionary, commented that there were “small inequalities of property,” a fact that distinguished America from Europe and the rest of the world. Equality of property, he believed, was crucial for sustaining a republic. During the Constitutional Convention, South Carolinan Charles Pinckney said America had “a greater equality than is to be found among the people of any other country.” As long as the new nation could expand west, he thought, it would be possible to have a citizenry of independent yeoman farmers. In a community with economic equality, there was simply no need for constitutional structures to manage the clash between the wealthy and everyone else.

The problem, of course, is that economic inequality has been on the rise for at least the last generation. In 1976 the richest 1 percent of Americans took home about 8.5 percent of our national income. Today they take home more than 20 percent. In major sectors of the economy — banking, airlines, agriculture, pharmaceuticals, telecommunications — economic power is increasingly concentrated in a small number of companies. [Don’t we need to discuss why before we embark on solutions?]

While much of the debate has been on the moral or economic consequences of economic inequality, the more fundamental problem is that our constitutional system might not survive in an unequal economy. Campaign contributions, lobbying, the revolving door of industry insiders working in government, interest group influence over regulators and even think tanks — all of these features of our current political system skew policy making to favor the wealthy and entrenched economic interests. “The rich will strive to establish their dominion and enslave the rest,” Gouverneur Morris observed in 1787. “They always did. They always will.” An oligarchy — not a republic — is the inevitable result.

As a republic descends into an oligarchy, the people revolt. Populist revolts are rarely anarchic; they require leadership. [See Trump AND Sanders.] Morris predicted that the rich would take advantage of the people’s “passions” and “make these the instruments for oppressing them.” The future Broadway sensation Alexander Hamilton put it more clearly: “Of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people: commencing demagogues, and ending tyrants.”

Starting more than a century ago, amid the first Gilded Age, Americans confronted rising inequality, rapid industrial change, a communications and transportation revolution and the emergence of monopolies. Populists and progressives responded by pushing for reforms that would tame the great concentrations of wealth and power that were corrupting government.

On the economic side, they invented antitrust laws and public utilities regulation, established an income tax, and fought for minimum wages. On the political side, they passed campaign finance regulations and amended the Constitution so the people would get to elect senators directly. They did these things because they knew that our republican form of government could not survive in an economically unequal society. As Theodore Roosevelt wrote, “There can be no real political democracy unless there is something approaching an economic democracy.”

For all its resilience and longevity, our Constitution doesn’t have structural checks built into it to prevent oligarchy or populist demagogues. It was written on the assumption that America would remain relatively equal economically. Even the father of the Constitution understood this. Toward the end of his life, Madison worried that the number of Americans who had only the “bare necessities of life” would one day increase. When it did, he concluded, the institutions and laws of the country would need to be adapted, and that task would require “all the wisdom of the wisest patriots.”

With economic inequality rising and the middle class collapsing, the deep question we must ask today is whether our generation has wise patriots who, like the progressives a century ago, will adapt the institutions and laws of our country — and save our republic.

Ganesh Sitaraman, a professor at Vanderbilt Law School, is the author of “The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens Our Republic.”

QE Pains and Gains

Reprinted from Bloomberg.

The Unintended Consequences of Quantitative Easing

Asset inflation doesn’t have to be bad. Flush governments could invest in education and infrastructure.
August 21, 2017, 11:00 PM PDT

Quantitative easing, which saw major central banks buying government bonds outright and quadrupling their balance sheets since 2008 to $15 trillion, has boosted asset prices across the board. That was the aim: to counter a severe economic downturn and to save a financial system close to the brink. Little thought, however, was put into the longer-term consequences of these actions.

From 2008 to 2015, the nominal value of the global stock of investable assets has increased by about 40 percent, to over $500 trillion from over $350 trillion. Yet the real assets behind these numbers changed little, reflecting, in effect, the asset-inflationary nature of quantitative easing. The effects of asset inflation are as profound as those of the better-known consumer inflation.

Consumer price inflation erodes savings and the value of fixed earnings as prices rise. Aside from the pain consumers feel, the economy’s pricing signals get mixed up. Companies may unknowingly sell at a loss, while workers repeatedly have to ask for wage increases just to keep up with prices. The true losers though are people with savings, which see their value in real purchasing power severely diminished.

John Maynard Keynes famously said that inflation is a way for governments to “confiscate, secretly and unobserved, an important part of the wealth of their citizens.” Critically, inflation creates much social tension: “While the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at the confidence in the equity of the existing distribution of wealth.”

Asset inflation, it turns out, is remarkably similar. First, it impedes creative destruction by setting a negative long-term real interest rate. This allows companies that no longer generate enough income to pay a positive return on capital to continue as usual rather than being restructured. Thus the much-noted growth of zombie companies is one consequence of asset price inflation. Thus also the unreasonable leverage and price observed in real estate, with the credit risks it entails for the future.

Second, it also generates artificial winners and losers. The losers are most found among the aging middle class, who, in order to maintain future consumption levels, will now have to increase their savings. Indeed, the savings made by working people on stagnant wages effectively generates less future income because investable assets are now more expensive. The older the demographics, the more pronounced this effect. Germany, for instance, had a contraction of nearly 4 percent of gross domestic product in consumer spending from 2009 to 2016.

The winners are the wealthy, people with savings at the beginning of the process, who saw the nominal value of their assets skyrocket. But, as with consumer inflation, the biggest winner is the state, which now owns through its monetary authority, a large part of its own debt, effectively paying interest to itself, and a much lower one at that. For when all is accounted for, asset inflation is a monetary tax.

The most striking similarity between consumer price inflation and asset inflation is its potential to cause social disruption. In the 1970s workers resorted to industrial action to bargain for wage increases in line with price increases.

Today, the weakened middle class, whose wages have declined for decades, is increasingly angry at society’s wealthiest members. It perceives much of their recent wealth to be ill-gotten, not resulting from true economic wealth creation [and they are correct], and seeks social justice through populist movements outside of the traditional left-right debate. The QE monetary disruption almost certainly contributed to the protest votes that have been observed in the Western world.

The central banks now bear a large responsibility. If they ignore the political impact of the measures they took, they will exacerbate a politically volatile situation. If, on the other hand, the gains made by the state from QE can be channeled to true economic wealth creation and redistribution, they will have saved the day.

This is entirely possible. Rather than debating how and how fast to end quantitative easing, the central bank assets generated by this program should be put into a huge fund for education and infrastructure. The interest earned on these assets could finance real public investment, like research, education and retraining. [That’s fine, but it does little to compensate for the massive transfer of existing wealth that is causing the political and social dislocations, such as unsustainable urban housing costs.]

If the proceeds of QE are invested in growth-expanding policies, the gain will help finance tomorrow’s retirements, and the government-induced asset inflation can be an investment, not simply a tax.

Economic Inequality??

One can easily misrepresent or exaggerate reality with a few select statistics and come to conveniently chosen conclusions. This doesn’t really help the conversation.

The distribution of wealth and income has become a social, economic, and political problem in recent decades. And not only in the US. But the question is why and what to do about it.

First, we should notice the timeframe of the comparison: 1980 vs. 2014. During these years there has been a massive credit bubble with low to zero interest rates and low inflation, especially over the past 16 years. This has disproportionately rewarded asset holders and debt-driven consumption and the income shares in industries associated with that, like FIRE.

The cheap credit has also led to massive investments in technology and biotech, where income levels have far exceeded those in other industries. This is not necessarily a bad thing, especially for aggregate growth, but it does have distributional consequences for wealth and income. Globalization, through outsourcing, trade and labor migration, has also served to keep labor costs low in developed nations.

So, what to make of this? I would have differences with the suggestions of the author as stated here:

Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation. 

First, the problem with the tax code is that it creates barriers for asset accumulation for those without assets. In other words, it favors the haves over the wannabes, even if the wannabes are more deserving. So we need to reduce those barriers. Not by making it harder to get rich, but by making it harder to stay rich and idle sitting on assets that have ballooned in value through no effort on the owners of those assets. Thus, we should look more toward wealth taxes as opposed to income or capital taxes. We should also make capital taxes more progressive so that the have-nots are not doomed to remain so. Have you seen your interest on savings lately?

Second, a better functioning education system is always a deserved policy priority, but it won’t fix this income distribution problem. The cost of education is becoming prohibitive and elitism is turning top universities, where costs are in the stratosphere, into branding agents rather than educating institutions. In other words, the Ivy League degree is more valuable as a signalling device than anything a student may or may not have learned there. Thus we are biasing favoritism over meritocracy.

Third, the focus on wages and organized labor is completely misguided.  Most workers in growth industries in the 21st century eschew labor unions in favor of equity participation and risk-taking entrepreneurship. Does that mean manufacturing labor has no future? Not at all. But it should be bargaining for equity in addition to a base wage. Competing solely on wages means workers are competing with the global supply of labor, which is a losing proposition for developed countries’ workers.

The inability of policymakers to see clearly how the world has changed and how ownership and control structures must adapt to the information economy leads them towards the rabbit hole of universal basic incomes, which fundamentally is a universal welfare program to support consumption. One thing we’ve learned over the past 60 years is that nobody wants welfare, but many become addicted to it. It’s not a solution or even a short-term fix.

Refer to the NYT website link to view the graphs…

Many Americans can’t remember anything other than an economy with skyrocketing inequality, in which living standards for most Americans are stagnating and the rich are pulling away. It feels inevitable.

But it’s not.

 

A well-known team of inequality researchers — Thomas Piketty, Emmanuel Saez and Gabriel Zucman — has been getting some attention recently for a chart it produced. It shows the change in income between 1980 and 2014 for every point on the distribution, and it neatly summarizes the recent soaring of inequality.

 

The line on the chart (which we have recreated as the red line above) resembles a classic hockey-stick graph. It’s mostly flat and close to zero, before spiking upward at the end. That spike shows that the very affluent, and only the very affluent, have received significant raises in recent decades.

 

This line captures the rise in inequality better than any other chart or simple summary that I’ve seen. So I went to the economists with a request: Could they produce versions of their chart for years before 1980, to capture the income trends following World War II. You are looking at the result here.

The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.

 

The post-inflation, after-tax raises that were typical for the middle class during the pre-1980 period — about 2 percent a year — translate into rapid gains in living standards. At that rate, a household’s income almost doubles every 34 years. (The economists used 34-year windows to stay consistent with their original chart, which covered 1980 through 2014.)

 

In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else.

 

The basic problem is that most families used to receive something approaching their fair share of economic growth, and they don’t anymore.

 

It’s true that the country can’t magically return to the 1950s and 1960s (nor would we want to, all things considered). Economic growth was faster in those decades than we can reasonably expect today. Yet there is nothing natural about the distribution of today’s growth — the fact that our economic bounty flows overwhelmingly to a small share of the population.

 

Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation.

 

Remarkably, President Trump and the Republican leaders in Congress are trying to go in the other direction. They spent months trying to take away health insurance from millions of middle-class and poor families. Their initial tax-reform planswould reduce taxes for the rich much more than for everyone else. And they want to cut spending on schools, even though education is the single best way to improve middle-class living standards over the long term.

 

Most Americans would look at these charts and conclude that inequality is out of control. The president, on the other hand, seems to think that inequality isn’t big enough.

The Bubble Economy

This is where the easy credit goes. A slush fund for Wall St. and Silicon Valley…

Full article here.

Money, money, money: Silicon Valley speculation recalls dotcom mania

Venture capitalists and private equity investors keep the bubble going with their millions

by Rana Foroohar

Financial Times
July 17, 2017

…It’s a bubble that is different — but the same — as the last time. In 2000, start-ups like pets.com were able to go public and jack up share prices even as they were losing hundreds of millions of dollars. The digital ecosystem has since grown, changed and deepened. Today it is harder for companies to receive funding just by sticking “.com” behind their names.

But now, as then, you do not necessarily need profits or paying customers to draw investor interest but rather “users” in a hot market niche. Compelling narratives develop around these sectors (wearables, electric cars, the “sharing” economy). Companies send market signals about their own “value” with announcements that play off these narratives, for example, Uber’s $680m purchase of self-driving truck firm Otto).

Venture capitalists and private equity investors keep the bubble going by buying into it at higher and higher valuations. The smartest ones guarantee their own success by taking rich advisory fees along the way and exiting before disaster via the secondary market for private shares. And this is, as behavioural economist Peter Atwater recently pointed out to me, unusually liquid thanks in part to central bank-enabled easy money.

The virtual money, generated by valuations that are based as much on narrative as fact, is used to salaries: it can cost upward of $2m in cash and stock options to recruit a driverless-car engineer in the Valley. These then distort the price of property, services and labour. You’ll weep when you see the prices of depressing ranch-style homes off Highway 101, which runs through Silicon Valley. The whole cycle is straight-up “madness of crowds”, as described by Charles Mackay in 1841.

UBI, or Something Better?

What’s odd about this discussion on Universal Basic Income below is that nobody successful in Silicon Valley participates in a UBI scheme, nor would they. They rely on risk-taking, equity, and reward. Not sure why they don’t advocate this for everybody – after all, because of the way risk is assigned to asset ownership, labor ends up taking all kinds of risk, yet almost never participates in the rewards to that risk. Instead they get a one-time bonus or profit-sharing.

But Zuckerberg would never accept those terms, either now or before he made his first dollar. It looks to me that Silicon valley tech supports redistribution in order to make their outsized gains from network effects more politically palatable.

Unfortunately, this critic of Zuckerberg and Silicon Valley in general wants to double down on failed tax and redistribution schemes instead of empowering people to participate in the risks and rewards of capitalist entrepreneurial success.

“He (or She) who is without capital in a capitalist society is little more than a wage slave and a captive consumer.” 

Another truism about the future: In a world run by robots, he who owns and controls the robots is king. Make sure you own your robot!

Original article here.

What Mark Zuckerberg Gets Wrong About UBI

New Republic, July 7, 2017

By Clio Chang

It’s no secret that tech bros love universal basic income. Sam Altman of Y Combinator is funding a UBI pilot program in Oakland, California, in part because he was inspired by Star Trek. Tesla’s Elon Musk supports the policy because he realizes that the aggressive automation caused by the tech industry will make UBI “necessary.” This week, as part of his “I’m-not-running-for-president” tour around the country, Mark Zuckerberg visited Homer, Alaska, which resulted in him writing a Facebook post lauding the merits of the state’s Permanent Fund as a model for a national form of basic income.

UBI, a concept that dates back centuries, is the idea that every person should receive some amount of money so that no one dips beneath a basic standard of living. For those on the left, it’s seen as an alternative to our country’s woefully limited cash welfare system. For libertarians, a basic income is lauded as a slimmer, less intrusive way to deliver government benefits. It is the rare utopian idea that people of different political stripes can agree on—Zuckerberg himself made sure to note the “bipartisan” appeal of the policy in his post.

But Zuckerberg reveals exactly why the left should be alarmed that Silicon Valley is taking the lead on this issue.

First, the idea that UBI has bipartisan appeal is disingenuous. The left would have a policy that redistributes wealth by funding UBI through a more progressive tax scheme or the diverting of capital income. But libertarians like Charles Murray argue for a UBI that completely scraps our existing welfare state, including programs like Medicare, Medicaid, and housing subsidies. This would be extremely regressive, since money currently directed towards the poor would instead be spread out for a basic income for all. And certain benefits like health insurance can’t effectively be replaced with cash.

Second, Zuckerberg asserts that Alaska’s Permanent Fund—which uses the state’s oil resources to pay a dividend to each Alaskan and is seen as one of the few examples of an actual UBI-like policy—is advantageous because it “comes from conservative principles of smaller government, rather than progressive principles of a larger safety net.” But a UBI policy can only reflect small government principles if one envisions it eating into the country’s existing welfare state, rather than coming on top of it. In this respect, Zuckerberg’s advocacy of UBI “bipartisanship” starts to look more like a veiled libertarian agenda.

This attitude echoes other pro-UBI tech lords like Altman, who sees basic income as providing a “floor” but not a ceiling. In his ideal scheme, no one will be very poor, but people like Altman will still be free to get “as rich as they fucking want.” The tech vision of the world is one where it can wash its hands of the rising joblessness it will generate through automation, but where those at the top can still wallow in extreme wealth. As Altman told Business Insider, “We need to be ready for a world with trillionaires in it, and that’s always going to feel deeply unfair. It feels unfair to me. But to drive society forward, you’ve got to let that happen.”

This is deeply telling of the tech UBI mentality: driving society forward doesn’t mean reducing inequality, but rather fostering more entrepreneurship. The former is viewed as unnecessary and the latter as an inherent good.

Zuckerberg also compares Alaska’s Permanent Fund to running a business—a very specific one:

Seeing how Alaska put this dividend in place reminded me of a lesson I learned early at Facebook: organizations think profoundly differently when they’re profitable than when they’re in debt. When you’re losing money, your mentality is largely about survival. But when you’re profitable, you’re confident about your future and you look for opportunities to invest and grow further. Alaska’s economy has historically created this winning mentality, which has led to this basic income. That may be a lesson for the rest of the country as well.

The idea that a “winning mentality” is what is going to lead to a basic income in the United States reveals how little Zuckerberg understands about politics. This is a pervasive ideology among tech leaders, who believe the lessons that they have gleaned from their own industry are applicable to all of the country’s problems. But remember the last time a disrupter said he was going to step into the political arena and run our country like a business?

For moguls like Zuckerberg, there is never any deep consideration of, say, the fact that racism, sexism, and classism are deeply intertwined with our country’s policies and are some of the biggest obstacles to implementing a highly redistributive policy like a UBI. Nor is there any attempt to consult with lifelong organizers and activists on the issue.

At the end of his post, Zuckerberg states that the “most effective safety net programs create an incentive or need to work rather than just giving a handout.” This echoes the “personal responsibility” rhetoric that drove workfare policies in the 1990s, which ended up kicking millions of people off of welfare rolls, leaving them in extreme poverty. The line also directly undermines the push for a UBI, which is quite literally a handout that can help liberate people from the “need to work.”

It would appear that Silicon Valley’s support for a basic income comes from self-interest. As Jathan Sadowski writes in the Guardian, “the trouble comes when UBI is used as a way of merely making techno-capitalism more tolerable for people, when it is administered like a painkiller that numbs the pain and masks the symptoms of economic injustice without addressing the root causes of exploitation and inequality.”

Tech moguls may seem like tempting allies for UBI advocates, but their vision of an ideal social safety net does not look anything like the left’s. If it did, they wouldn’t be pushing just for a basic income, but also for things like universal health care, free public education (not just for engineers!), and strong labor unions. For Silicon Valley, UBI is a sleek technological means to a very different end.

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