The world of high tech, Internet based businesses have had things all their own way as governments and regulators meekly stood aside while tech companies played fast and loose with users data, (not talking about the data gathered from our explorations of their sites or personal details we volunteer, but the practice of ‘data mining,’ scraping up personal details from our hard drives,) destroyed whole industries, turned the high streets of our towns and shopping centres of our cities into deserts, made “not-fit-for-purpose” an acceptable quality for goods on sale, and dehumanised the whole process of buying and of socialising.
It was inevitable there would be a backlash, not from business rivals, politicians sweetened by campaign contributions and fearful of being dubbed anti – progress or anti – science have let the tech industries get away with murder – literally in some cases. The resistance was always going to come from ‘we the punters’.
For almost two decades we have complied with exhortations to ’embrace change’ even when it was clear the change was not for the better, we have been pushed into shifting most of our financial business online, trusting financial details and our money to a notoriously insecure medium, we have been squeezed into buying from online retailers, knowing through mainstream media that ‘customer service’ was a completely alien concept to the bosses of these organisations, and we have accepted an increasingly impersonal world where increasingly our interfaces are with robots.
AND ALL THE TIME WE WERE ABLE TO SEE THIS BRAVE NEW WORLD WAS JUST NOT WORKING.
So it is encouraging that we are seeing headlines like:
What’s happening? Bernie Sanders Agrees With Trump: Amazon Has Too Much Power
Independent Vermont senator and 2016 presidential hopeful Bernie Sanders echoed President Donald Trump in expressing concern about retail giant Amazon. Sanders said that he felt Amazon had gotten too big on CNN’s “State of the Union” Sunday, and added that Amazon’s place in society should be examined.
“And I think this is, look, this is an issue that has got to be looked at. What we are seeing all over this country is the decline in retail. We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has,” said
After the backlash against Facebook over the past few weks for privacy abuses, and the backlash led by President Trump against Amazon, is there something bigger going on. Are these things connected? Yes, they probably are, but not in a way that either Trump or Sanders has clued in to. Someone who has, a for now lone voice, is Dave Stockman, a financial pundit who describes himself as a Washington insider turned iconoclast. Here’s what he wrote last week.
It is said that even a blind squirrel occasionally finds an acorn, and so it goes with The Donald. Banging on his Twitter keyboard in the morning darkness, he drilled Jeff Bezos a new one – or at least that’s what most people would call having their net worth lightened by about $2 billion:
“I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!” You can’t get more accurate than that. Amazon is a monstrous predator enabled by the state, but Amazon’s outrageous postal subsidy – a $1.46 gift card from the USPS stabled on each box – isn’t the half of it.
The real crime here is that Amazon has been exempted from financial regulations, and the culprit is the central banks’ malignant regime of Bubble Finance. The latter has destroyed financial discipline entirely and turned the stock market into the greatest den of speculation in human history. That’s why Bezos can kill established businesses with impunity.
The casino allows him to run a pernicious business model based on “price to destroy”, rather than price for profit and a return on capital.Needless to say, under a regime of sound money and honest capital markets Amazon would be a far more benign economic creature. That’s because no real investors would value AMAZON’s money-loosing e-Commerce business at $540 billion – nor even a small fraction of that after 25-years of profitless growth.
The bubble economy that was forced into being by Barack Obama’s stupid and economically illiterate Quantitative Easing policy and ultra-low rates, which saw central banks buying up trillions in what used to be sound assets, corporate bonds, and allowing massive buybacks that allow companies to While stocks nominally trade at astronomical rates, but actual traded volumes are low. Buybacks allow companies to reward managers and senior staff with stock, and then buy back the shares they have paid in lieu of salary or bonus, thus avoiding tax and holding their own stock while running on borrowed money, escaping financial scrutiny. The system allows them to inflate stock market capitalisation and raise their ‘value’ to astronomical levels by inflating the value of shares and capital assets. The system enabled a company like Amazon to kill off its competition, which consists of many thousands of retailers, all the time running a balance sheet loss on paper.
These financial policies have allowed not just Amazon, which though Trumps favourite target currently, but many of the most ‘valuable’ tech companies to expand at an exponential rate without having to account to investors for absence of dividends and thus elbow their way into our lives in ways designed to seem beneficial to us at first, but in reality resulting in less variety, less competition, and thousands fewer jobs. For too long they were the darlings of the media and the stock markets; the creations of the brightest and best among us, according to ‘the narrative.’
For some of the creations of our tech Olympians it’s easier to see the inevitability of disaster than for others. Tesla, Uber, Airbnb are all struggling right now, but more will follow. What you may notice is that two of the three sell noting but ‘cool.’ Tesla also may pretend to be a real car company, but in reality they sell stocks to investors, basing their pitch on promises they cannot fulfill.
Even Apple may not be immune from the carnage even though they make and sell real things they make real things! Apple CEO Tim Cook may have sought to distance his company from the likes of Facebook on morals and ethics, he can’t deny that Apple sells a zillion phones to a large extent because everybody uses them not so much to look at Facebook and Alphabet, Uber and Air BNB apps because there are many cheaper pieces of kit out there that will do the job just as well. People buy Apple in order to be seen using Apple gadgets, so what Apple really sell is social kudos. If data ethics are the only problem Cook sees ahead, he’s in trouble.
Silicon Valley infighting shows that the industry does have an idea what is going wrong, in ways that should have already led to many more pronounced worries and investigations.
Mr. Cook, who has long sought to differentiate Apple on privacy matters, contrasted its focus on selling devices with Facebook and Google’s ad-based businesses that are built on user data. Asked what he would do if he were Facebook CEO Mark Zuckerberg, Mr. Cook replied: “I wouldn’t be in this situation.”
Facebook hasn’t responded specifically to criticisms, but the hostility of those who live in the same glass palaces has provoked adverse comments from its own former vice president of growth, Chamath Palihapitiya. “The short-term, dopamine-driven feedback loops that we have created are destroying how society works,” Mr. Palihapitiya said at a talk at Stanford University in November.
We can expect to hear much more in the same vein over the remainder of this year. Big Tech is changing the world in more ways than one. And spying on people Facebook-style is merely one of a long list of them. Facebook doesn’t build the devices people use to see what their friends had for breakfast, Apple does that, but it’s the way Apple sells those gadgets that makes it vulnerable. Moreover, Apple profits hugely from stock buybacks, the practice of rewarding senior staff with company stock which they can then sell back to the company, thus incurring a lowrer tax liability than income from salary, so it fits in Stockman’s bubble finance definition of Amazon, too.
The failure of politics to investigate, and act against Facebook style ‘dopamine – driven’ feedback loops which exploit a vulnerability in human psychology in order to maximally waste your time and sell you product after product that you never (knew you) wanted is bordering on criminal negligence. They all made the mistake of thinking they could get away with it forever. What was that somone once said about not being able to fool all the people all the time.