America’s New Oligarchs—Fwd.us and Silicon Valley’s Shady 1 Percenters

800px-Zuckerberg_meets_Obama.jpg

When Steve Jobs died in October 2011, crowds of mourners gathered outside of Apple stores, leaving impromptu memorials to the fallen businessman. Many in Occupy Wall Street, then in full bloom, stopped to mourn the .001 percenter worth $7 billion, who didn’t believe in charity and whose company had more cash in hand than the U.S. Treasury while doing everything in its power to avoid paying taxes.

A new, and potentially dominant, ruling class is rising. Today’s tech moguls don’t employ many Americans, they don’t pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas. 

Outsource Manufacturing, Import Engineers

Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny. Google employs 50,000, Facebook 4,600, and Twitter less than 1,000 domestic workers. In contrast, GM employs 200,000, Ford 164,000, and Exxon over 100,000. Put another way, Google, with a market cap of $215 billion, is about five times larger than GM yet has just one fourth as many workers.

This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.

While Facebook and Twitter have little role in the material economy, Apple, which continues to collect the bulk of its profit from physical goods—computers, iPads, iPhones and so on—has outsourced nearly all of its manufacturing to foreign companies like Foxconn that employ workers, often in appalling conditions, in China and elsewhere. About 700,000 people work on Apple’s physical products for subcontractors, according to the New York Times, but almost none of them are in the U.S. “The jobs aren’t coming back,” Jobs bluntly told President Obama at a 2011 dinner in Silicon Valley.

Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. Andrew Carnegie and Henry Ford exploited workers in Pittsburgh and Detroit, and had to deal with the political consequences; the risks are much less if the exploited are in Chengdu and Guangzhou.

"There doesn't seem to be a role" for unions in this new economy, explained Internet entrepreneur and venture capitalist Marc Andreessen, because people are "marketing themselves and their skills.” He didn’t mention what people without skills in demand at tech companies might do.

But Americans with those skills shouldn’t rest easy, either. These same companies are always looking to cut down their domestic labor costs. Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push “comprehensive immigration reform” (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the company’s bottom line.

Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers here—a notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for “guest workers”—who already take between a third and half of all new IT jobs in the States—is that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebook’s lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a “good faith” effort to hire Americans first.

The Valley of the Oligarchs

Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new tech–related jobs—leaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end.

The good jobs that are being created are also heavily clustered in one region, the west side of the San Francisco peninsula—a distinct and geographically constrained zone of privilege. The area boasts both formidable technical talent and, more important still, roughly one third of the nation’s venture funds along with the world’s most sophisticated network of tech-savvy investment banks, publicists, and attorneys.

But little of the Valley’s wealth reaches surrounding communities. Just across the bridge to the East Bay are high crime rates and an economy that’s lost about 60,000 jobs since 2001 with few signs of recovery. Inland, in the central Valley, double-digit unemployment is the norm and local governments are cutting police and other core services and even trying to declare bankruptcy.

“We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google’s Schmidt boasted to the San Francisco Chroniclein 2011. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in a daily discussion, because their issues are not our daily reality.”

Inside the bubble zone, centered around the bucolic university town of Palo Alto, employees at firms like Facebook and Google enjoy gourmet meals, child-care services, even complimentary house-cleaning. With all these largely male, well-paid geeks around, there’s even a burgeoning sex industry, with rates upwards of $500 an hour.

Those at top of the tech elite live very well, occupying some of the most expensive and attractive real estate in the country. They travel in style: Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. They have even proposed an $85 million flight center, called Blue City Holdings, to manage airplanes belonging to Google’s founders, Larry Page and Sergey Brin, and its executive chairman, Eric Schmidt. Like the Russian oligarchs, currently making a run on Tuscany’s castles and resorts, the Valley elite have embraced conspicuous consumption, albeit dressed up in California casual. In San Francisco, San Mateo, and Santa Clara counties combined, luxury vehicles accounted for nearly 21 percent of new car registrations from April 2011 to March 2012, more than twice the national average. Home prices in places like Palo Alto and the fashionable precincts of San Francisco go for well over a million—and routinely trigger all-cash bidding wars.

We’re the best thing happening in America,” one tech entrepreneur told the Los Angeles Times. Even a reporter for the New York Times, usually worshipful in its Valley coverage, described the spending as “obscene.” An industry party he attended included a 600-pound tiger in a cage and a monkey that posed for Instagram photos.

But past the conspicuous consumption, the most outstanding characteristic of the new oligarchs may be how quickly they have made their fortunes—and how much of the vast wealth they’ve held on to, rather than paid out to shareholders or in taxes. Ten of the world’s 29 billionaires under 40 come from the tech sector, with four from Facebook and two from Google. The rest of the list is mostly inheritors and Russian oligarchs.

Tech oligarchs control portions of their companies that would turn oilmen or auto executives green with envy. The largest single stockholder at Exxon, CEO and chairman Rex Tillerson, controls .04 percent of its stock. No direct shareholder owns as much as 1 percent of GM or Ford Motors. In contrast, Mark Zuckerberg’s 29.3 percent stake in Facebook is worth $9.8 billion. Sergey Brin, Larry Page and Eric Schmidt control roughly two thirds of the voting stock in Google. Brin and Page are worth over $20 billion each. Larry Ellison, the founder of Oracle and the third richest man in America, owns just under 23 percent of his company, worth $41 billion. Bill Gates, who’s semi-retired from Microsoft, is worth a cool $66 billion and still controls 7 percent of his firm. 

The concentration of such vast wealth in so few hands mirrors the market dominance of some of the companies generating it. Google and Apple provide almost 90 percent of the operating systems for smart phones. Over half of Americans and Canadians and 60 percent of Europeans use Facebook. Those numbers dwarf the market share of the auto Big Five—GM, Ford, Chrysler, Toyota, and Honda—none of whom control much more than a fifth of the U.S. market. Even the oil-and-gas business, associated with oligopoly from the days of John Rockefeller, is more competitive; the world’s top 10 oil companies collectively account for just 40 percent of the world’s production.

Greater Representation with Minimal Taxation

Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman. Facebook paid no taxes last year, while making a profit of over $1 billion. Apple, “a pioneer in tactics to avoid taxes,”has kept much of its cash hoard abroad, out of reach of Uncle Sam. Microsoft has staved off nearly $7 billion in tax payments since 2009 by using loopholes to shift profits offshore, according to a recent Senate panel report.

And now, these 1 percenters—who invested heavily in Obama—are looking to help shape the “public good” in Washington and, as with Fwd.us, what they’re selling as good for us all is what aligns with their interests.

There’s been a huge surge of Valley investment in Washington lobbying, not just on immigration but also on issues effecting national, industrial, and science policy. Facebook’s lobbying budget grew from $351,000 in all of 2010 to $2.45 million in just the first quarter of this year. Google spent a record $18 million last year. In the process, they have hired plenty of professional Washington parasites to make their case; exactly the kind of people Valley denizens used to demean.

The oligarchs believe their control of the information network itself gives them a potential influence greater than more conventional lobbies. The prospectus for Fwd.usheaded up by one of Zuckerberg’s old Harvard roommates—suggests tech should become “one of the most powerful political forces,” noting “we control massive distribution channels, both as companies and individuals.”

One traditional way the wealthy attain influence is purchasing their own news and media companies. Facebook billionaire and former Obama tech guru Chris Hughes (who owes his fortune to having been another of Zuckerberg’s college roommates) has already started on this road by buying the New Republic. (His husband, perhaps not incidentally, is running for the New York State Assembly.) Leaving old-media legacy purchases aside, Yahoo is now the most-read news site in the U.S., with over 100 million monthly viewers, and the Valleyites are also moving into the culture business with both Google-owned YouTube and Netflix getting into the entertainment-content business.

Great wealth, and high status, particularly at a young age, often persuades people that they know best about the future and how we should all be governed. Twitter founder Jack Dorsey, a 37-year-old resident of San Francisco, recently announced on 60 Minutes that he’d like to be mayor—of New York, a city he’s never lived in.

Expect more of this kind of hubris from the new oligarchs. Some cities, ranging from Seattle, where Amazon is leading the charge, to Las Vegas and even Detroit now are counting on tech giants to expand or restore their damaged central cores.

But if those oligarchs do come, they will have little interest in retaining or expanding blue-collar jobs in construction or manufacturing, which they see as passé; the housing they build and even the public amenities they invest in will be for their own employees and other members of the “creative class.” The best the masses can hope for are jobs cutting hair, mowing grass, and painting the toenails of the oligarchs and their favored minions. You won’t see much emphasis, either, on basic skills training and community colleges, which are critical to auto manufacturers, oil refiners, and other older businesses and can provide opportunity for upward mobility for middle- and working-class youth.

Yet these limitations will not circumscribe the ambitions of the new oligarchs, who see their triumph over cyberspace as a prelude to a power grab in the real world, a proposition they’ve tested over the last three presidential cycles. “Politics for me is the most obvious area [to be disrupted by the Web],” suggests former Facebook president and Napster founder Sean Parker.

If You're the Customer, You're the Product

Perhaps an even bigger danger stems from the ability of “the sovereigns of cyberspace” to collect and market our most intimate details. Moving beyond the construction of platforms for communication, the oligarchs trade on the value of the personal information of the individuals using their technology, with little regard for social expectations about privacy, or even laws meant to protect it. Google has already been caught bypassing Apple’s privacy controls on phones and computers, and handing the data over to advertisers. The Huffington Post has constructed a long list of the firm’s privacy violations. Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebook’s pervasive privacy breaches—culling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity.

As Google’s Eric Schmidt put it: "We know where you are. We know where you've been. We can more or less know what you're thinking about."

But while Facebook and Google have been repeatedly cited both in the United States and Europe for violating users’ privacy, the punishments have been puny compared to the money they’ve made by snatching first and accepting a slap on the wrist later. 

It's no surprise then that Silicon Valley firms have been prominent in trying to quell bills addressing Internet privacy, both in Europe and closer to home. Washington is where big firms have always gone to change the rules to protect their own prerogatives and pull the ladder up on smaller competitors. Like previous oligarchical interests, the Valley, predictably, has become a regular and crucial fundraising stop for Obama and other Democrats crafting those rules.

Al Gore—who owes much of his Romney-sized fortune to lucrative positions on the board of Apple and as a senior adviser to Google, as well as to energy investments heavily backed by federal funds—has emerged as the symbol of the lucrative, if shady, intersection of those two worlds.

Green is an easy sell in the Valley. If California electricity is too unreliable or expensive, firms will just shift their power-consuming server farms to places with cheap electricity, such as the Pacific Northwest or the Great Plains. Middle-class employees who, in part due to green “smart growth” policies, can no longer afford to live remotely close to Palo Alto or in San Francisco, can be shifted either abroad or to more affordable locales such as Salt Lake City, Phoenix, or Austin, Texas. Meanwhile, with supply restricted, the prices on houses owned by the oligarchs and their favored employees continue to rise into the stratosphere.

What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.

But today’s new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as “progressive” and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the The Daily Beast.

Official White House Photo by Pete Souza.



















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Oligarchs and oligarchy

is better than plutocrats and plutocracy as descriptive terminology. Thanks for using it.

Luke Lea

Joel Kotkin Hates The Tech Business

For once I actually find myself strongly disagreeing with Joel. I've blogged about it here: http://trotskyschildren.blogspot.com/2013/05/joel-kotkin-hates-tech-busi...

They set out to change the world, instead the world changed them

Joel Kotkin has eloquently told the unsavory truth about Silicon Valley, and how the people who set out to "Change the world!" were instead changed by the world. What a disappointment to those of us who once-upon-a-time believed so passionately in the Information Revolution and the new age of peace and prosperity that it persistently preached with evangelical zeal.

It's like the reaction we get from watching Star Trek: The Next Generation. Yes, we are wowed by all the gee whiz technology. But ultimately, we are disappointed when we notice that the civility of the intergalactic life of the future is not much improved over life on earth today—we were hoping for so much more. We are reminded of the lament of a Jewish prophet long ago. Commenting on harbingers of the end of history and the dawning of a new order of existence, he cautioned that there would be "…wars and rumors of wars…but the end is not yet." And whereas Silicon Valley and Washington DC arrogantly boast of the coming of a new world order effected by high technology and global governance, the prophet of old was less optimistic regarding human achievement and only envisioned a supernal new order beyond the reach of any thing that we could accomplish within the natural order of things.

The Valley's failure to fulfill its promise seems to be due precisely to this: it lacks, shuns even, any appreciation for that which cannot be measured or valued in quantitative terms. All the qualitative longings of the human soul to reach above and beyond to something spiritual; all that the poets and the mystics have mused about; anything other than status, power, money, image, dominance, and elegant technique; all that belongs to what psychologists like to call the affective domain; all the finer things of human life that distinguish us from both ape and computer; all those ideals like romance, compassion, love, kindness, graciousness, beauty, human rights, and the simple affectations of the smell of a rose or nostalgia for the past; all this and much more the Valley has left unattended in its single-minded obsession with and ruthless pursuit of the refinement of technique. For in the Valley, higher technology automatically means more progress. Every human challenge is to be viewed as some kind of technical brainteaser that can ultimately find a technological solution—and it better make somebody filthy rich, and make it snappy, too!

A new literacy is necessary

I agree as far as your comments re. how romance and access to the inner soul is left out of our technology through commerce, but the tech industry has made a practice of meeting us where we are, in terms of how we understand technology, because they have seen no other way to survive. There were early efforts to create what you describe, in the context of our technology, but people didn't buy it. A big part of that was probably a mismatch between the ideas, the immaturity of the technology, *and its financial cost*. Economics has played a huge role in shaping our technological tradition. Since early computer technology was so expensive, utilitarian purpose was seen as a more valuable use for it. Since we are still early in the history of computing (compare the 60 years digital computers have been around with the age of the printing press), that tradition has remained strong. I think there's reason to be optimistic that at some point in the future what you desire in computing will emerge, and it will be economically viable.

The first hurdle we have to get over as a society is understanding that computing is a new medium that is not yet fully realized. Imagine you're back in Gutenberg's time, the book is just being discovered by society, and the only use that's widely recognized is copying bibles for the clergy to use at mass, since the parishioners are illiterate. We are in much the same place today with respect to what computing can be. I am not suggesting that a religion is the culprit. The notion that a power hierarchy in this realm has been constructed obtains, though. We have modern day "clerics" who have some semblance of literacy, and set "the rules" for the use of the medium. The rest must comply. To continue the religious analogy (without religion), what we need is something akin to the Protestant Reformation, and what that was able to achieve in making literacy more available. It's worth noting that in doing so, the Reformation did not water down the content in spreading literacy. Instead the goal was to raise people's understanding so that they could read and understand what had been the sole province of clerics and priests.

Money Still Talks, Nobody Walks

Great commentary, Mark, and lots to respond to. But in the interest of time (and space) I'll try to approach you along just one avenue. So here goes.

You write: ”...but the tech industry has made a practice of meeting us where we are, in terms of how we understand technology, because they have seen no other way to survive." I have a mixed reaction to this statement, not because I disagree but because I agree!

Yes, Silicon Valley (which I otherwise refer to as "sillyConValley") has gone through a shift, a shift that could have and perhaps should have been predicted. If we begin our story with Steve Jobs, in the late 1970s he had announced a coming new world characterized by information at everyone's fingertips. His game plan was to decentralize information by taking it away from Big Brother -- IBM. Placing all information on everyone's desktop would inexorably result in the kind of global participative democracy that many in the 60s counterculture had longed for, but failed to achieve through the political process. Recall that Jobs own roots sunk deep in the counterculture. "We can change the world!" How? By the simple propagation of the personal computer. Hmm.

In the early years this idealistic optimism, energized primarily by Job's insistent evangelical zeal, was truly quite innocent, pure, and free of the furtive motives of "the world." But by year 2000, while being interviewed for a consulting gig at Microsoft TV, we were openly confessing that the Valley had become as corrupt as any other sector of our modern world. The former purity and innocence of the Information Revolution had been swallowed up by the same Big Money that drove Wall Street and IBM. The whole notion that the Valley would change the world or human nature was no longer really believed by anyone except a few die-hards. Valley Marketing chiefs, yes, indeed continued to use the language of "revolution" and we "worker bees" would go along with it, but not because we believed it, only because it was part of our job description.

So, what went wrong? Well, all you have to do to answer that question is follow the odyssey of Steve Jobs himself. He and "the Woz" have not hidden the fact that they never trusted "the suits" who came to Apple to fund rapid expansion of its user base. In fact, at one point, Jobs was kicked out of Apple by the suits and other corporate types who were more interested in accelerating Return on Investment than changing the world or human nature. This is simply the way the system works. And technology cannot change that.

As you eloquently write "...the tech industry has made a practice of meeting us where we are, in terms of how we understand technology, because they have seen no other way to survive." Translated into corporate language Apple's Chairman of the Board might say today: "In order to maximize profits as quickly as possible and optimize our assets, we must develop and market products and services that appeal to the lowest common denominator." Apple must do this, because as soon as sales tail off even just a few points, the stock takes a nosedive and the shareholders come for you with a chain saw. "They have seen no other way to survive."

One bright spot is social media. As I've written about here at newgeography.com, social media has the technical potential to unite people across national, racial, and religious boundaries in ways where they could co-operate for their own interests. To some extent, this is already occurring. The real test, however, will come when these global movements of "the 99%" assume real political power. When that point is reached how will "the 1%" respond? Keep in mind that, ultimately, they control the Internet.

What determines "how we use the fruits of progress"?

Really insightful comment, Mark. Martin Luther was opposed to the banning of "heretical" books, because if you really believe you have truth on your side, you are not afraid of absurdities. Banning things just suggests that you lack confidence in what you claim to believe.

However, one frightening destructive potential of the internet is asserted in "Internet in Gaza: Sexual Liberation as Political Control" by E. Michael Jones.

http://www.culturewars.com/CultureWars/index/Index16.htm

http://www.freerepublic.com/forum/a3ac6460b2b23.htm

Besides the sheer volume of X-rated internet traffic, there is the sheer inanity of most of the rest of it. There has never been so much information and self-education available at everyone's fingertips, but it seems there has also never been such widespread ignorance. Abraham Lincoln got himself an exponentially better education reading books in a log cabin, than 99.9% of today's young people get themselves or even what is provided free by the State.

Coincidentally, this is just out on Townhall.Com, and hits the nail on the head:

"Prosperity: The Three Questions That Really Matter"
By Jerry Bowyer

http://finance.townhall.com/columnists/jerrybowyer/2013/05/17/prosperity...

1. How many people are there?

".......But people matter more than anything else, because people create wealth. Yes, there are ‘natural resources,’ but that phrase really is a misnomer. If they’re natural, they’re probably not resources; if they’re resources, they’re probably not natural. Other than air and sunshine, everything else in our environment needs to be transformed by us in order to become a resource......

".....But the moment we transform it, it is no longer nature, it is artifact. Even simple resources like water have to be toted. Many ‘natural resources’ were at one time anti-resources. Oil was a pollutant oozing in the streets of Cleveland, its stinking mass shoveled and carted away by workmen until a chemist told John D. Rockefeller that it could be turned into a valuable commodity. People do that sort of thing. And people manage to create huge sums of wealth even if they live on a rock sitting in the ocean in tiny prosperous city states like Hong Kong, Singapore and Taiwan with very little by way of natural resources, because they have something better: they have people, the unnatural resource......

2. What’s inside of them?

People are complex clusterings of motivations centering in on a person. At the core is what is commonly called the heart, and I don’t mean cardiac muscles in the center of the chest. I mean the heart of the self. What do you believe about God, man and the world? Do you believe you should live entirely for today’s pleasures or defer gratification in the interest of future prosperity? Is virtue the true measure of mankind, or simply an arbitrary set of rules invented to keep us down? Is the sweat of current work worth the sweet of future reward? Edward Banfield in The Unheavenly City argued that the principal difference between the classes was time preference. Okay, kids, one candy bar today or two candy bars tomorrow? Underclass kids choose the former, middle and upper class kids choose the latter. Von Mises and Hayek put time preference in the center of the economic equation, a thermostat setting either toward the future or the present, expressing itself in an interest rate. Sydney Homer of Solomon Brothers andHistory of Interest Rates and The Bond Yield Book, follows Hayek and Von Mises all the way back to the founder of the Austrian school, Menger, and sees interest rates as an indicator of civilizational health.

But let’s call this stuff what it really is: culture, philosophy, world-view, religion. The great sociologist Peter Berger told me recently that after his long life of studying human societies he has concluded that culture is simply religion externalized into the community (more on that interview in a future column), and that not all religions/cultures have been equally conducive to economic growth. Far from it.

If this offends you, then I suggest you just deal with it. Religion is a hugely important factor in national growth and prosperity and if you have any interest in understanding which nations will and won’t prosper, you’d be better off not allowing personal views or political correctness speech code sensibilities to screen it out as a factor.

3. What’s outside of them?

In truth, there is a lot of overlap between question two and question three. After all, societies are the result of human interaction, so of course our individual heart and family issues come pouring out through culture and end up forming societies. In this sense, what has come to be called institutions theory in economics or in short, institutionalism, is not independent of sociology of religion. But it is a factor in its own right.

Do you get to keep what you make? Will government confiscate your property, or tax away the proceeds of the sale of your labor? Do you have control of what you own, or are there regulatory takings which render the pond on your property technically yours, but ineligible for you to tap for irrigation purposes? Do you have to pay an additional tax in order to get fair government services in the form of a bribe or coerced campaign contribution? If you are fortunate enough to live in a nation which allows you to labor and to exchange that work for currency and not have most of it taxed or grafted away, will that currency hold its value? If not, how severe will devaluations prove to be? When you devise business plans can you count on at least some price stability or are future budgets, already murky enough, made more fallible due to fluctuations in the value of currency? Will those currency and interest rate manipulations create boom and bust cycles and how do you know whether the booms are real or bubbles? How do you plan for a world in which legal institutions create more flux rather than more stability? Will there be a change in administration? Will there be a change in regime? Can I build for the long term when the institutions are built on a foundation of sand?

I’m convinced that in order to screen out the noise you need a filter which helps you distinguish between what is important and what’s a shiny, backlit distraction. What’s important is people; the way they think and act; and the way their society treats them. How could things possibly be otherwise?......"

Along the lines of what I was saying...

Jonathan Zittrain had some insights he shared 5 years ago on what he called "generative technology."

He wrote about it here:

http://bostonreview.net/BR33.2/zittrain.php

and talked about it here:

http://isoc-ny.org/195

He provides a useful contrast between what computer technology used to be like vs. what it is today, and how we've lost something important along the way that would be worth reacquiring somehow. If we were to do that, it would restore flexible authoring, but also provide some security such that malicious actors could not wreak havoc in our networked world.

The only natural resource is the human mind

Just so you know, freerepublic says your link refers to a file it can't find.

I first heard John Allison say this a couple months ago, that the only natural resource is the human mind. Everything that we use is in some way modified by human effort. The way things become resources for us to use is through knowledge. Very true.

The idea of heretical works does apply to what I said above, but the main point I was trying to communicate is that right now literacy in what computing makes possible is limited, and right now this is a mutual decision being made by both those who create our technology, and those who purchase it.

When personal computers first became popular in the late 1970s, full access was given to this emerging medium. This was almost out of necessity. Many of the early purchasers of these computers were already familiar with computing and programming ("reading and writing" in this new medium). Plus, there wasn't much software available, so the industry created its own authors. By the mid-1980s the industry hit a kind of "ceiling." The market for these kinds of computers was becoming saturated, and that point wasn't that large. Most of the population still did not own one, and didn't particularly want one, because they couldn't see how it fit into their lives. Gradually what happened was the industry realized in order to make computers more popular they needed to constrain people's choices and flexibility, in terms of what people could do with them, because too much was scary to people. The end result is where we are today, where increasingly the machines present fewer and fewer options for possible actions in different scenarios, and with this, they've become more and more popular. With this has come a hierarchy, where you have hardware producers, and system software developers at the top, which are increasingly controlling distribution channels, then solution and application developers below them, and then consumers, who are "read to" by the upper two levels.

Most people seem to prefer this arrangement, but it's not what we had with books and print. With them, we didn't necessarily have a "clerisy" in charge of what people believe. We could not only read, but also write our own opinions. If someone knew something that someone else didn't, they could communicate their own knowledge. We have reified the print world (and the audiovisual world) into the digital world, but what we don't yet realize is that the digital world is *not* the print (or audiovisual) world. It is a new medium, where new kinds of thoughts can be communicated.

Our networked media largely constrains us to the modes of interaction we're used to from old media. Yes, we can publish our own thoughts with text, and audio-visually, but what computing hints at in word processing and spreadsheets (what's considered part of an "office" software suite today) is the ability to take information in pieces, and create our own relationships between them, to say something new, or analyze it in our own way, or to change the rules of the system which supports the information to create a new system. We can perhaps see something in the original content that was not seen before, or act in a way that was not anticipated when the design was first created. That latter point is the scariest of them all. People see too often how that ability is used maliciously, but this is only because of widespread illiteracy, where a few rogue "clerics" want to play tricks on hapless victims. What's not received often enough is how that same ability can be used constructively. It will take literacy to realize that.

This is an example of what has not yet been realized. We can be sure there are yet new discoveries to be made about what computing makes possible.

IT Oligarchs have also smashed Wall St already

And it gets worse.....the "IT oligarch" phenomenon has already smashed Wall Street and few people have woken up to it. The following is a "must read", this has implications even for the urban and spatial model of NYC:

“Eunuchs of the Universe”, by Tom Wolfe.

http://www.thedailybeast.com/newsweek/2013/01/04/eunuchs-of-the-universe...

"......James Simons hid his operation so well, it was more than a decade before Wall Street woke up to what Simons had there. For a start, he set up shop with a team of other quants, virtually all strangers to Wall Street, in a town on the north shore of Long Island out in Suffolk County, named East Setauket. East Setauket was the sort of town so small in scale, so given over to little buildings in a colonial—New England style—the first settlers had sailed across Long Island Sound from New England three centuries ago—people went away saying, “Oh, how picturesque.” East Setauket had two advantages: it was very near Simons’s office at Stony Brook—and nobody, nobody, in the Wall Street financial world ever heard of it. Good. Simons didn’t want anybody from Wall Street to come near the place.

With one exception, he hired no one tainted by Wall Street experience or even Wall Street ambitions… such as business-school graduates, M.B.A.s. Their young minds had already been twisted too far. They had been expertly educated to become dim-witted macho blowhard frat-boy losers. Simons wanted only mathematicians and scientists.....

".....In its first 24 years, Renaissance Technologies brought its investors—and its help—yearly returns averaging 38.5 percent… net of fees, and his fees were the stiffest in the business: 5 percent of each account each year and 36 percent of the fund’s profits. Simons’s own yearly income ran in the hundreds of millions. In its third year, 1990, the Medallion Fund turned a 55.9 percent profit, again net of fees. In 2000, during the dotcom crash, the Standard & Poor’s 500 Index fell 10.1 percent—and the Medallion Fund rose 98.5 percent, net……

“…….By 2007 he was by far the biggest player the markets had. Next to James Simons, Warren Buffett and George Soros were elves of the Old Time variety. Yet news stories about Simons were rare.....

"......“………The “quants” robo-monster accounted for 10 percent of all trades in 2000. Thereafter, the number rose in a steep, steady climb to a peak of 73 percent in 2009, close to three of every four trades—and nobody in the outside world, not even the press, had ever heard of it! The first mention of it in the press was not until July 23, 2009, in the New York Times.
The majority of men working full-time right here on Wall Street didn’t know much more. They were as innocent as the suckers, the guppies, the muppets. They learned in such tiny steps, they didn’t get the whole picture until very late in the game. Their first inkling came when the investment banks’ trading floors began to calm down… fewer and fewer traders yelling at each other or into the telephone or at Fate. Before long they were sitting at desks behind banks of computer screens and communicating with each other by text message.
The robots cost some old traders and salesmen their jobs but, again, gradually, and intermittently, somebody still had to attend to the muppets and marks who continued to come to Wall Street to invest—to the quants the word seemed so archaic—to “invest” their money. What the Masters didn’t realize was that their muppets, marks, guppies, and chumps provided only the liquidity—i.e., ready money… useful mainly to provide the quants’ robo-diddlers with numbers to play with, discrepancies the robot battle machinery could game and exploit.....

"......Two things showed quite concretely how lowly the traders and salesmen had fallen. For a hot quant prospect, employers would pay up to five times as much as for a Master of the Universe. Or as a New York Post headline put it recently: “Slick ‘Wall Street’ guys ousted by $1M geeks.” And a quant’s rogue algorithm for a single stock could bring down the entire market, as in the “flash crash” of 2010 and the 1,000-point nosedive of 2012......"

A disturbing and accurate article.

And don't forget that Congress (and I think the Republic Party at the national level is guiltier than the Democrats) panders to people's privacy concerns when government is involved (such as trying to limit survey work done by Census), but encourages and enables much more intrusive data collection and snooping by private-sector firms like those mentioned above.

New Netherlands

"But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry"

I wonder if this isn't because they control the cultural apparatus far more completely than they did back in the late 19th century? But just who are the "they" that control the cultural apparatus and thereby control country?

Well, I am very much enamored at the moment with Colin Woodard's notion that America is not one nation but ten or eleven, the most powerful one of which ("New Netherlands") turns out not to be a nation at all but rather NYC. I would go further and say that it is not NYC as a whole or even Manhattan as a whole but rather a very small group of families concentrated on the upper East and West Sides and in a few posh bedroom communities in the surrounding metropolitan area, plus outposts in DC and the Ivy League and on the gold coast of California. Ethnically it is composed of America's Ashekenazi and Anglo/Catholic elites, who are now effectively married to each other, plus a few token minorities thrown in for window dressing. It cares little for welfare of the American people as a whole (aka those other ten nations), only its own wealth and power around the globe. In fact it's view of America is very much like that old New Yorker map looking across the Hudson which shows little beyond East Orange except DC, Boston, and the West Coast.

I've made a few "utopian" comments about how this new aristocracy might be, if not defeated, at least effectively opposed here: http://hbdchick.wordpress.com/2013/05/12/to-disbelieve-in-witchcraft-is-...