Politics 101

Don’t Fear Trump–Fear the Next Republican President (Benjamin Studebaker)

Budget talks progress, as Senate Dems drop Dreamer demand (Politico) [ed. Dems = Charlie Brown = Football]

American democracy is failing. The courts are finally starting to notice. (Think Progress)

[ed. Take-away line: And then there is in the single most frightening projection facing both large-D Democrats and small-d democrats in the United States. By 2040, according to Dean David Birdsell of the school of public and international affairs at Baruch College, “about 70% of Americans are expected to live in the 15 largest states.” That means that 70 percent of Americans “will have only 30 senators representing them, while the remaining 30% of Americans will have 70 senators representing them.”]

NSA Deletes "Honesty" and "Openness" from Core Values (The Intercept)

How the GOP Rigs Elections (Rolling Stone)

White House asks for Van Gogh loan – but Guggenheim offers gold toilet instead (The Guardian)

Democrats Paid a Huge Price for Letting Unions Die (New York)

Presidential Confusion (The Baffler)

[ed. Stay tuned for more.]

Lund Hagem
via:

Robert De Niro's Disaster Capitalism

A chorus of voices from the Caribbean island of Barbuda is accusing Robert De Niro of being part of a backroom effort to exploit a devastating hurricane to fundamentally change the island’s communal land ownership law in the interest of developers — changes opposed by many Barbudans, but which could aid the actor’s controversial plans to build a large luxury resort called Paradise Found Nobu.

Earlier this month, with almost no international news coverage and with the majority of Barbudans still displaced from the storm, an amendment to the law in question was quietly pushed through the Senate of Antigua and Barbuda — a body dominated by politicians from the wealthier and more populous island of Antigua. If the amendment stands, a tradition of communal land rights that dates back to the abolition of slavery in 1834 — and which has protected Barbuda as a rare beacon of sustainable development in the Caribbean — will be extinguished.

But as news of the change trickles out, Barbudans are fighting back, challenging the legality of the amendment to the Barbuda Land Act. And they say the island’s highest-profile investor, Robert De Niro, stands to benefit most.

“It’s just a scam to take away the land from the Barbudans so they can give it to people like Robert de Niro,” said Mackenzie Frank, a former senator from the island. “Anyone who has beach land is laughing all the way to the bank.”

De Niro, who has so far stayed silent as the controversy has grown, did not respond to The Intercept’s requests for comment.

Up until the recent changes, land in Barbuda was held in common: It could not be bought or sold, and though developers could lease land for 50 years, their projects needed to win the consent of a majority of Barbudans. It was a rare example of participatory economic planning and successful land redistribution to freed slaves and their descendants.

But the Land Act was resented by foreign investors and wealthy Antiguans, and the latest push to alter the law first reared its head just days after Hurricane Irma roared through Barbuda. The island had been hit by storms before, but never like this: Upwards of 90 percent of the buildings in Barbuda were damaged, and all residents were evacuated to Antigua.

When they heard about the proposed changes to the Land Act, many Barbudans (including those living in the diaspora) objected — but it was nearly impossible for them to organize effective opposition. As Tim George, a U.K. citizen whose mother is Barbudan, observed weeks after the storm, “An entire population is now housed in temporary shelter, reliant on the authorities for everything, and restricted in their access to their homes. By allowing an opportunistic Antiguan government the momentum to force this change past a traumatised community in its most vulnerable moment, the core freedom secured by those emancipated from slavery, successfully defended and passed down through generations, is under serious threat.”

Ayana Elizabeth Johnson, a marine biologist and ocean conservationist who worked in Barbuda for years, describes the attempted changes a “land grab” and “a wild episode of disaster capitalism.”

To many outsiders, the role De Niro played in this period seemed benign, if not downright heroic. In the weeks after Irma hit, he appeared at the United Nations and on cable news, pledging to personally help with Barbuda’s reconstruction and urging governments and international agencies to pony up aid and stand with the “vulnerable.” In interviews, De Niro did mention that he had a hotel project in development on the island, but only to explain his particular compassion for the people there.

The facts paint a more complex picture. Though best known for acting and producing (as well as founding the Tribeca Film Festival), De Niro has also emerged as a highly successful real estate mogul, accumulating a rapidly expanding empire of elite properties. As co-owner of Nobu Hospitality, De Niro helped turn a celebrated Japanese eatery in Beverly Hills into a chain of dozens of restaurants around the world, as well as a growing roster of luxury condos and hotels.

For the most part, Nobu’s expansion has focused on cities, but in recent years, De Niro has had his sights set on an ambitious project on Barbuda, which has a population of approximately 1,800. In 2014, the actor partnered with the Australian billionaire bad boy James Packer (best known for his messy break-up with singer Mariah Carey) to develop an exclusive hotel there. They bought out the lease on a derelict resort that, in its heyday, had been Princess Diana’s favorite family beach destination. Attracted to the island’s unspoiled white beaches, shallow turquoise waters, and slow pace, De Niro and Packer unveiled plans to significantly expand the property and rebrand it as “Paradise Found Nobu.” Packer has also not responded to a request for comment.

But there were limits to how big and how lavish the resort could be. That’s because Barbuda’s unique and democratic collective land ownership structure keeps the pace of development in check. As explained in this New York Times documentary, the island runs “like a co-op,” with decisions about land use driven by an elected council, and approvals for major developments going to a general vote. Many of its inhabitants raise livestock or fish for lobster to support themselves. “Life in Barbuda, it is slow, it is quiet, it is restful, it’s peaceful,” 25-year-old Kendra Beazer, the youngest member of the Barbuda Council, told The Intercept.

In contrast, the other half of the twin-island nation, Antigua, has flung itself open to mega resorts and heavy cruise ship traffic (as well as financial services). Seeing further opportunity in Barbuda’s pristine beaches and abundant fisheries, the Antiguan-dominated government – which has strong ties to real estate and banking — has long fought to end the tradition of communal land rights on Barbuda. Casting this pressure as an attack on hard-won victories after the abolition of slavery, Barbudans convinced legislators in 2007 to cement in law the practices they had followed for hundreds of years. The Barbuda Land Act underlined that “all land in Barbuda shall be owned in common by the people of Barbuda,” and “no land in Barbuda shall be sold.”

All of this has kept the vast majority of the island in the hands of families directly descended from slaves — a remarkable achievement. It has also kept tourism and most other development at a sustainable level, which is the reason Barbuda remained a “paradise” to be “found” by men like De Niro and Packer in the first place.

But for investors with big dreams, the Barbuda Land Act was also highly inconvenient. It placed limits on the length of their leases, the footprint of their properties, and the infrastructure that could service them. It also required a great deal of democratic engagement with the island’s residents, as opposed to the usual top-down deals.

De Niro and Packer have not navigated this landscape well, choosing instead to try winning exceptions to the Land Act from the Antigua-based government of Prime Minister Gaston Browne, a former banker who consistently casts Barbuda as a “welfare island.” De Niro has found a fierce ally in Browne. Months before the Barbudan approval process could even begin, the prime minister signed a memorandum of agreement with the actor, promising a 198-year lease of 555 acres for just $6.2 million, plus an array of tax benefits. He went further, dubbing De Niro an official “economic envoy” of Antigua and Barbuda.

This approach has not gone over well with many Barbudans, who see it as railroading their democratic rules. It’s a conflict that has landed De Niro and Packer in a protracted legal mess, with hundreds of Barbudans signing a petition against their plans for Paradise Found. Members of the political party Barbuda People’s Movement sued the project, arguing that the referendum approving it illegally allowed non-Barbudans to vote and failed to anonymize the ballots.

Browne responded to these challenges by going to war for De Niro. “Those who may intend to become economic terrorists in this country,” he said in March 2015, referring to project opponents, “they would have to face the full extent of the law for any infractions whatsoever.” Months later, his government went so far as to pass the Paradise Found Act, specially designed to approve De Niro’s project and bypass the Barbuda Land Act with its collective approval requirements. Just for Paradise Found, the act explicitly nullifies the community approval sections of the Barbuda Land Act. It also grants the project permission to build its own television service, renewable energy, and desalinization plants, “for the sole purpose of the Project,” as well as infrastructure for “large and super yachts” and a helipad.

by Naomi Klein and Alleen Brown, The Intercept |  Read more:
Image: Chris Young/The Canadian Press/AP

Plein air in a can
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[ed. Might make a great gift.]

What's the Deal With Tide Pods?

Across the world, millennials are pausing to ask, in the manner of J. Alfred Prufrock: “Do I dare to eat a Tide Pod?”

As any adult with a half-functioning brain will tell you, the answer is no. I guess I should put this at the top: Do not, under any circumstances, eat Tide Pods, the dissolving packets of detergent that make laundry slightly easier.

Why, then, are Tide Pods suddenly dominating the memescape? Why are teenagers on YouTube eating, or pretending to eat, or, uh, vaping Tide Pods? Why is it that on any social network worth that title — from Tumblr to YouTube to Facebook to even, yes, Twitter — people are joking (are they joking?) about eating Tide Pods?

This gets a little messy. By and large, the jokes about eating Tide Pods are just that: jokes. There are very few people “eating” Tide Pods; the people who are “eating” them are really just biting into them and spitting out the detergent. But, of course, when local-news anchors hear the phrase “eating Tide Pods,” it becomes fodder for nice parental-anxiety-inducing segments, and to young people that panic is incredibly funny (and search-term-friendly!), so then more people start “eating” laundry pods (or even just posting videos with those terms in the title). So idiocy begets idiocy in the worst possible “chicken and the egg” parable one could imagine. (...)

The jokes about eating Tide Pods have also spawned a “Tide Pod Challenge” in which (a fairly small number of) people actually bite into these things on video, a rare instance of thousands of jokes spawning an online “challenge” (previously: cinnamon, ice bucket, mannequin) rather than the other way around. One answer to the question “Why is eating Tide Pods a joke?” is “because it drives engagement on YouTube.” Ah, youth! Never underestimate the power of social-platform metrics to drive adolescent meme consumption!

Truly, never underestimate the appeal of obscurity and adult incomprehensibility — Tide Pods are a global inside joke for fans of light trolling. And there is something generationally specific about Tide Pods, beyond the YouTube incentives and the generically youthful oddness. The uncharitable reading would be that the Tide Pod is an invention for age demographics so coddled that they can’t be bothered to measure out laundry detergent themselves. That makes the product a potent marker for a certain cultural stereotype — younger, pampered, more destabilized than they’ve ever been in their life.

More generously, though, we might imagine that the idea of eating Tide Pods has a certain resonance to a medicated, surveilled generation, coming of age among ceaseless internet-based moral panics (Jenkem, i-dosing, the knockout game) and amid a constant volume of hectoring advice from parents and teachers and therapists and advertisers — all while the world collapses around it. It makes sense that the rise of the culturewide idea of eating poisonous Tide Pods coincides with the end of an exhausting 2017, and the start of a 2018 that saw its first statewide ballistic-missile panic less than two weeks in. Why take your doctor-prescribed meds when you can take Procter & Gamble’s, administering to yourself the ultimate cure, death on your own terms? (...)

Tide Pods are, maybe, a step beyond the Harambe concept — not simply a meme that corporations can’t control, but a meme that itself controls a corporation. Instead of participating in the meme — thereby ruining it — Procter & Gamble is obligated to spend a great deal of money actively trying to shut the meme down. There is something thrilling, funny, and a bit perverse in forcing a company’s “I talk just like you, fellow teens” social-media account to request that you engage with their products less.

The life cycle of a meme is always a struggle over ownership. It’s silly to try to own an idea, or a joke, and to try to control how people tweak it and iterate on it. Tide Pods are the first step in a new age where — instead of resisting corporate meddling in the meme world — the established norms of social media are manipulated to force a company to participate in the culture in ways that run counter to its own interests.

by Brian Feldman, Select/All |  Read more:
Image: Samokhin Roman/Getty Images/iStockphoto
[ed. When a meme gets this type attention/analysis you know it's probably dead (in meme time). See also: I Made Edible Tide Pods — and Honestly, You Should Just Eat a Real One]

Dorothy Parker, The Art of Fiction No. 13

Dorothy Parker lives at present in a mid-town New York hotel. She shares her small apartment with a youthful poodle which has the run of the place and has caused it to look, as Miss Parker says apologetically, somewhat “Hogarthian”: newspapers spread about the floor, picked lamb chops here and there, and a rubber doll—its throat torn from ear to ear—which Miss Parker lobs lefthanded from her chair into corners of the room for the poodle to retrieve—which it does, never tiring of the opportunity. The room is sparsely decorated, its one overpowering fixture being a large dog portrait, not of the poodle, but of a sheepdog owned by the author Philip Wylie and painted by his wife. The portrait indicates a dog of such size that in real life it must dwarf Miss Parker. She is a small woman, her voice gentle, her tone often apologetic. But occasionally, given the opportunity to comment on matters she feels strongly about, her voice rises almost harshly, her sentences punctuated with observations phrased with lethal force. Hers is still the wit which made her a legend as a member of the Algonquin’s Round Table—a humor whose particular quality seems a coupling of a brilliant social commentary with a mind of devastating inventiveness. She seemed able to produce the well-turned phrase for any occasion. A friend remembers sitting next to her at the theatre when the news was announced of the death of the stolid Calvin Coolidge. “How do they know?” whispered Miss Parker.

Readers of this interview, however, will find that Miss Parker has only contempt for the eager reception accorded her wit. “Why it got so bad,” she has said bitterly, “that they began to laugh before I opened my mouth.” And she has a similar attitude disparaging her value as a serious writer.

But Miss Parker is her own worst critic. Her three books of poetry may have established her reputation as a master of light verse, but her short stories are essentially serious in tone—serious in that they reflect Miss Parker’s own life which has been in many ways an unhappy one. “She has distilled,” one commentator said of her, “her sorrow for the light quaffing of a flippant generation.”

If the tone of her short stories is serious, so is her intent. Franklin P. Adams has described it in an introduction to her work: “Nobody can write such ironic things unless he has a deep sense of injustice—injustice to those members of the race who are the victims of the stupid, the pretentious and the hypocritical ...”

INTERVIEWER

Your first job was on Vogue, wasn’t it? How did you go about getting hired, and why Vogue?

DOROTHY PARKER

After my father died there wasn’t any money. I had to work, you see, and Mr. Crowninshield, God rest his soul, paid $12 for a small verse of mine and gave me a job at $10 a week. Well, I thought I was Edith Sitwell. I lived in a boarding house at 103rd and Broadway, paying $8 a week for my room and two meals, breakfast and dinner. Thorne Smith was there, and another man. We used to sit around in the evening and talk. There was no money, but Jesus we had fun.

INTERVIEWER

What kind of work did you do at Vogue?

PARKER

I wrote captions. “This little pink dress will win you a beau,” that sort of thing. Funny, they were plain women working at Vogue, not chic. They were decent, nice women—the nicest women I ever met—but they had no business on such a magazine. They wore funny little bonnets and in the pages of their magazine they virginized the models from tough babes into exquisite little loves. Now the editors are what they should be: all divorcees, and chic, a collection of Ilka Chases; the models are out of the mind of a Bram Stoker, and as for the caption writers—my old job—they’re recommending mink covers at $75 apiece for the wooden ends of golf clubs “—for the friend who has everything.” Civilization is coming to an end, you understand.

INTERVIEWER

Why did you change to Vanity Fair?

PARKER

Mr. Crowninshield wanted me to. Mr. Sherwood and Mr. Benchley—we always called each other by our last names—were there. Our office was across from the Hippodrome. The midgets would come out and frighten Mr. Sherwood. He was about seven feet tall and they were always sneaking up behind him and asking him how the weather was up there. “Walk down the street with me,” he’d ask, and Mr. Benchley and I would leave our jobs and guide him down the street. I can’t tell you, we had more fun. Both Mr. Benchley and I subscribed to two undertaking magazines: The Casket and Sunnyside. Steel yourself: Sunnyside had a joke column called “From Grave to Gay.” I cut a picture out of one of them, in color, of how and where to inject embalming fluid, and had it hung over my desk until Mr. Crowninshield asked me if I could possibly take it down. Mr. Crowninshield was a lovely man, but puzzled. I must say we behaved extremely badly. Albert Lee, one of the editors, had a map over his desk with little flags on it to show where our troops were fighting during the first world war. Every day he would get the news and move the flags around. I was married, my husband was overseas, and since I didn’t have anything better to do I’d get up half an hour early and go down and change his flags. Later on, Lee would come in, look at his map, and he’d get very serious about spies—shout, and spend his morning moving his little pins back into position. (...)

INTERVIEWER

It’s a popular supposition that there was much more communication between writers in the “twenties.” The Round Table discussions in the Algonquin, for example.

PARKER

I wasn’t there very often—it cost too much. Others went. Kaufman was there. I guess he was sort of funny. Mr. Benchley and Mr. Sherwood went when they had a nickel. Franklin P. Adams, whose column was widely read by people who wanted to write, would sit in occasionally. And Harold Ross, the New Yorker editor. He was a professional lunatic, but I don’t know if he was a great man. He had a profound ignorance. On one of Mr. Benchley’s manuscripts he wrote in the margin opposite “Andromache,” “Who’s he?” Mr. Benchley wrote back, “You keep out of this.” The only one with stature who came to the Round Table was Heywood Broun.

INTERVIEWER

What was it about the “twenties” that inspired people like yourself and Broun?

PARKER

Gertrude Stein did us the most harm when she said, “You’re all a lost generation.” That got around to certain people and we all said, “Whee! We’re lost.” Perhaps it suddenly brought to us the sense of change. Or irresponsibility. But don’t forget that, though the people in the “twenties” seemed like flops, they weren’t. Fitzgerald, the rest of them, reckless as they were, drinkers as they were, they worked damn hard and all the time.

by Marion Capron, Paris Review | Read more:
Image: uncredited
[ed. Every week, the editors of The Paris Review lift the paywall on a selection of interviews, stories, poems, and more from the magazine’s archive.]

… you going to eat those pinecones?
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Amazon Go and the Future

Yesterday the Amazon Go concept store in Seattle opened to the public, filled with sandwiches, salads, snacks, various groceries, and even beer and wine (Recode has a great set of pictures here). The trick is that you don’t pay, at least in person: a collection of cameras and sensors pair your selection to your Amazon account — registered at the door via smartphone app — which rather redefines the concept of “grab-and-go.”

The economics of Amazon Go define the tech industry; the strategy, though, is uniquely Amazon’s. Most of all, the implications of Amazon Go explain both the challenges and opportunities faced by society broadly by the rise of tech.

The Economics of Tech

This point is foundational to nearly all of the analysis of Stratechery, which is why it’s worth repeating. To understand the economics of tech companies one must understand the difference between fixed and marginal costs, and for this Amazon Go provides a perfect example.

A cashier — and forgive the bloodless language for what is flesh and blood — is a marginal cost. That is, for a convenience store to sell one more item requires some amount of time on the part of a cashier, and that time costs the convenience store operator money. To sell 100 more items requires even more time — costs increase in line with revenue.

Fixed costs, on the other hand, have no relation to revenue. In the case of convenience stores, rent is a fixed cost; 7-11 has to pay its lease whether it serves 100 customers or serves 1,000 in any given month. Certainly the more it serves the better: that means the store is achieving more “leverage” on its fixed costs.

In the case of Amazon Go specifically, all of those cameras and sensors and smartphone-reading gates are fixed costs as well — two types, in fact. The first is the actual cost of buying and installing the equipment; those costs, like rent, are incurred regardless of how much revenue the store ultimately produces.

Far more extensive, though, are the costs of developing the underlying systems that make Amazon Go even possible. These are R&D costs, and they are different enough from fixed costs like rent and equipment that they typically live in another place on the balance sheet entirely.

• These different types of costs affect management decision-making at different levels (that is, there is a spectrum from purely marginal costs to purely fixed costs; it all depends on your time frame):
• If the marginal cost of selling an individual item is more than the marginal revenue gained from selling the item (i.e. it costs more to pay a cashier to sell an item than the gross profit earned from an item) then the item won’t be sold.
• If the monthly rent for a convenience store exceeds the monthly gross profit from the store, then the store will be closed.
• If the cost of renovations and equipment (in the case of small businesses, this cost is usually the monthly repayments on a loan) exceeds the net profit ex-financing, then the owner will go bankrupt.

Keep in mind, most businesses start out in the red: it usually takes financing, often in the form of a loan, to buy everything necessary to even open the business in the first place; a company is not truly profitable until that financing is retired. Of course once everything is paid off a business is not entirely in the clear: physical objects like shelves or refrigeration units or lights break and wear out, and need to be replaced; until that happens, though, money can be made by utilizing what has already been paid for.

This, though, is why the activity that is accounted for in R&D is so important to tech company profitability: while digital infrastructure obviously needs to be maintained, by-and-large the investment reaps dividends far longer than the purchase of any physical good. Amazon Go is a perfect example: the massive expense that went into developing the underlying system powering cashier-less purchasing does not need to be spent again; moreover, unlike shelving or refrigerators, the output of that expense can be duplicated infinitely without incurring any additional cost.

This principle undergirds the fantastic profitability of successful tech companies:

• It was expensive to develop mainframes, but IBM could reuse the expertise to build them and most importantly the software needed to run them; every new mainframe was more profitable than the last.
• It was expensive to develop Windows, but Microsoft could reuse the software on all computers; every new computer sold was pure profit.
• It was expensive to build Google, but search can be extended to anyone with an Internet connection; every new user was an opportunity to show more ads.
• It was expensive to develop iOS, but the software can be used on billions of iPhones, every one of which generates tremendous profit.
• It was expensive to build Facebook, but the network can scale to two billion people and counting, all of which can be shown ads.

In every case a huge amount of fixed costs up front is overwhelmed by the ongoing ability to make money at scale; to put it another way, tech company combine fixed costs with marginal revenue opportunities, such that they make more money on additional customers without any corresponding rise in costs.

This is clearly the goal with Amazon Go: to build out such a complex system for a single store would be foolhardy; Amazon expects the technology to be used broadly, unlocking additional revenue opportunities without any corresponding rise in fixed costs — of developing the software, that is; each new store will still require traditional fixed costs like shelving and refrigeration. That, though, is why this idea is so uniquely Amazonian.

The Strategy of Technology

The most important difference between Amazon and most other tech companies is that the latter generally invest exclusively in research and development — that is, to say, in software. And why not? As I just explained software development has the magical properties of value retention and infinite reproduction. Better to let others handle the less profitable and more risky (at least in the short term) marginal complements. To take the three most prominent examples:

• Microsoft builds the operating system (and eventually, application software) and leaves the building of computers to OEMs
• Google builds the search engine and leaves the creation of web pages to be searched to the rest of the world
• Facebook builds the infrastructure of the network, and leaves the creation of content to be shared to its users

All three companies are, at least in terms of their core businesses, pure software companies, which means the economics of their businesses align with the economics of software: massive fixed costs, and effectively zero marginal costs. And while Microsoft’s market, large though it may have been, was limited by the price of a computer, Google and Facebook, by virtue of their advertising model, are super-aggregators capable of scaling to anyone with an Internet connection. All three also benefit (or benefited) from strong network effects, both on the supply and demand side; these network effects, supercharged by the ability to scale for free, are these companies’ moats.

Apple and IBM, on the other hand, are/were vertical integrators, particularly IBM. In the mainframe era the company built everything from components to operating systems to application software and sold it as a package with a long-term service agreement. By doing so all would-be competitors were foreclosed from IBM’s market; eventually, in a(n unsuccessful) bid to escape antitrust pressure, application software was opened up, but that ended up entrenching IBM further by adding on a network effect. Apple isn’t nearly as integrated as IBM was back in the 60s, but it builds both the software and the finished products on which it runs, foreclosing competitors (while gaining economies of scale from sourcing components and two-sided network effects through the App Store); Apple is also happy to partner with telecoms, which have their own network effects.

Amazon is doing both.

In market after market the company is leveraging software to build horizontal businesses that benefit from network effects: in e-commerce, more buyers lead to more suppliers lead to more buyers. In cloud services, more tenants lead to great economies of scale, not just in terms of servers and data centers but in the leverage gained by adding ever more esoteric features that both meet market needs and create lock-in. As I wrote last year the point of buying Whole Foods was to jump start a similar dynamic in groceries.

At the same time Amazon continues to vertically integrate. The company is making more and more products under its own private labels on one hand, and building out its fulfillment network on the other. The company is rapidly moving up the stack in cloud services, offering not just virtual servers but microservices that obviate the need for server management entirely. And in logistics the company has its own airplanes, trucks, and courier services, and has promised drones, with the clear goal of allowing the company to deliver products entirely on its own.

To be both horizontal and vertical is incredibly difficult: horizontal companies often betray their economic model by trying to differentiate their vertical offerings; vertical companies lose their differentiation by trying to reach everyone. That, though, gives a hint as to how Amazon is building out its juggernaut: economic models — that is, the constraint on horizontal companies going vertical — can be overcome if the priority is not short-term profit maximization.

Amazon's Triple Play

In 2012 Amazon acquired Kiva Systems for $775 million, then the largest acquisition in company history. Kiva Systems built robots for fulfillment centers, and many analysts were puzzled by the purchase: Kiva Systems already had a plethora of customers, and Amazon was free to buy their robots for a whole lot less than $775 million. Both points argued against a purchase: continuing to sell to other companies removed the only plausible strategic rationale for buying the company instead of simply buying robots, but to stop selling to Kiva Systems’ existing customers would be value-destructive. It’s one thing to pay 8x revenue, as Amazon did; it’s another to cut off that revenue in the process.

In fact, though, that is exactly what Amazon did. The company had no interest in sharing Kiva Systems’ robots with its competitors, leaving a gap in the market. At the same time the company ramped up its fulfillment center build-out, gobbling up all of Kiva Systems’ capacity. In other words, Amazon made the “wrong” move in the short-term for a long-term benefit: more and better fulfillment centers than any of its competitors — and spent billions of dollars doing so.

This willingness to spend is what truly differentiates Amazon, and the payoffs are tremendous. I mentioned telecom companies in passing above: their economic power flows directly from massive amounts of capital spending; said power is limited by a lack of differentiation. Amazon, though, having started with a software-based horizontal model and network-based differentiation, has not only started to build out its vertical stack but has spent massive amounts of money to do so. That spending is painful in the short-term — which is why most software companies avoid it — but it provides a massive moat.

That is why, contra most of the analysis I have seen, I don’t think Amazon will license out the Amazon Go technology. Make no mistake, that is exactly what a company like Google would do (and as I expect them to do with Waymo), and for good reason: the best way to get the greatest possible return on software R&D is to spread it as far and wide as possible, which means licensing. The best way to build a moat, though, is to actually put in the effort to dig it, i.e. spend the money.

To that end, I suspect that in five to ten years the countries Amazon serves will be blanketed with Amazon Go stores, selling mostly Amazon products, augmented by Amazon fulfillment centers. That is the other point many are missing; yes, the Amazon Go store took pains to show that it still had plenty of workers: shelf stockers, ID checkers, and food preparers, etc.

Unlike cashiers, though, none of these jobs have to actually be present in the store most of the time. It seems obvious that Amazon Go stores of the future will rarely have employees in store at all: there will be a centralized location for food preparation and a dedicated fleet of shelf stockers. That’s the thing about Amazon: the company isn’t afraid of old-world scale. No, sandwich preparation doesn’t scale infinitely, but it does scale, particularly if you are willing to spend.

by Ben Thompson, Stratechery |  Read more:

Image: Jason Del Rey for Recode

blood moon
via:

Well Endowed

How Rich Universities Waste Their Endowments

In November 2015, the man who led the operations to capture Saddam Hussein and kill Osama bin Laden stepped to the podium in a wood-paneled boardroom in Austin, Texas, to embark on a new and very different mission: launching a public university system into the highest level of prominence and respect.

Former four-star admiral and Navy SEAL Bill McRaven had been hired almost a year earlier, with great fanfare, to serve as chancellor of the University of Texas system, which oversees the University of Texas at Austin and thirteen other college campuses and medical schools. Now, addressing the UT board of regents, he was proposing nine “quantum leaps”—major initiatives that, he declared, “will make us the envy of every system in the nation.”

Some of the “leaps” are things other public universities could only dream of doing, in an era of budget cutting. Ten million dollars for a “UT Network for National Security.” Thirty-six million dollars (so far) to “develop a collaborative health care enterprise.”

McRaven was able to secure that funding because of a mountain of money that few outside the UT system know much about, called the Permanent University Fund. The fund, derived from oil drilling in state-owned land in West Texas, is worth about $20 billion. Two-thirds belongs to the UT system, making up the majority of its $24 billion endowment and putting it in an exclusive club with wealthy private schools. The UT system has more endowment money per student than Georgetown.

And yet, just three months after his “quantum leaps” speech, McRaven once again found himself before the board of regents—this time asking for a tuition increase. “The fact is, we fall well below our peers in terms of national rankings,” he said. To climb in the rankings, he argued, would require spending more money—money that would have to come from students.

How could McRaven propose a tuition hike when the system has a multibillion-dollar oil fund in its pocket? This question has only started brewing at the UT system, but members of the public, and lawmakers, have long been asking wealthy private schools pointed questions along the same lines. Massive endowments at places like Yale and Stanford add up to an enormous public subsidy. Donations are tax-deductible, and universities don’t pay taxes on the investment income endowments generate. Meanwhile, they typically spend only a small percentage of the endowment per year. That has spurred suggestions that universities be forced to spend their endowments on affordability as a condition of those tax benefits.

Even Donald Trump, during the 2016 campaign, told a Pennsylvania crowd that he would “work with Congress on reforms to make sure that if universities want access to all of these special federal tax breaks, and tax dollars, paid for by you, that they are going to make good-faith efforts to reduce the cost of college and student debt, and to spend their endowments on their students rather than other things that don’t matter.”

The tax bills that the House and Senate passed in December finally took action, imposing a 1.4 percent tax on the largest endowments. (As this article went to press, the final bill was still being negotiated.) That move appears to be driven more by a growing Republican antipathy toward academia—the House version of the bill would have taxed the tuition waivers granted to graduate students—than by concerns about affordability. But universities haven’t done themselves any favors by being extremely cagey about how they spend their endowments. When Congress asked dozens of schools to report on their spending in 2016, for instance, Harvard declined to say exactly how much of its $37 billion endowment is paid to the people who manage it. While most colleges did tell Congress what percentage of their annual endowment payout goes to financial aid, they generally didn’t elaborate further—such as on the proportion of aid that’s based on academic merit, which tends to benefit upper-middle-class students, versus financial need.

But there is one institution that serves as an exception to the black box of endowment spending. Unlike most other American public universities, which have miniscule endowments, the University of Texas system is tremendously wealthy, with an endowment more than double that of the next-richest public institution. And unlike private universities, it has to reveal how it spends that wealth.

Thanks to the fracking boom, record-high oil prices, and some smart investing, the oil fund’s value has skyrocketed in recent years. That provides an unprecedented opportunity to examine not just how a wealthy endowment-like fund is spent in general, but also what university administrators decide to do with a sudden windfall of cash.

And if the UT system’s choices are at all representative of well-endowed institutions across the country, we can pretty safely conclude that universities spend their endowments primarily to elevate their status—not to help students afford college. 

by Neena Satija, Washington Monthly |  Read more:

Image: Nicolas Raymond/Todd Wiseman for the Texas Tribune

When a Partner Cheats

Marriages fall apart for many different reasons, but one of the most common and most challenging to overcome is the discovery that one partner has “cheated” on the other.

I put the word cheated in quotes because the definition of infidelity can vary widely among and within couples. Though most often it involves explicit sexual acts with someone other than one’s spouse or committed partner, there are also couples torn asunder by a partner’s surreptitious use of pornography, a purely emotional relationship with no sexual contact, virtual affairs, even just ogling or flirting with a nonpartner.

Infidelity is hardly a new phenomenon. It has existed for as long as people have united as couples, married or otherwise. Marriage counselors report that affairs sometimes occur in happy relationships as well as troubled ones.

According to the American Association for Marriage and Family Therapy, national surveys indicate that 15 percent of married women and 25 percent of married men have had extramarital affairs. The incidence is about 20 percent higher when emotional and sexual relationships without intercourse are included. As more women began working outside the home, their chances of having an affair have increased accordingly.

Volumes have been written about infidelity, most recently two excellent and illuminating books: “The State of Affairs: Rethinking Infidelity” by Esther Perel, a New York psychotherapist, and “Healing from Infidelity” by Michele Weiner-Davis, a psychotherapist in Boulder, Colo. Both books are based on the authors’ extensive experience counseling couples whose relationships have been shattered by affairs.

The good news is, depending upon what caused one partner to wander and how determined a couple is to remain together, infidelity need not result in divorce. In fact, Ms. Perel and other marriage counselors have found, couples that choose to recover from and rebuild after infidelity often end up with a stronger, more loving and mutually understanding relationship than they had previously.

“People who’ve been betrayed need to know that there’s no shame in staying in the marriage — they’re not doormats, they’re warriors,” Ms. Weiner-Davis said in an interview. “The gift they provide to their families by working through the pain is enormous.”

Ms. Perel concedes that “some affairs will deliver a fatal blow to a relationship.” But she wrote, “Others may inspire change that was sorely needed. Betrayal cuts to the bone, but the wound can be healed. Plenty of people care deeply for the well-being of their partners even while lying to them, just as plenty of those who have been betrayed continue to love the ones who lied to them and want to find a way to stay together.”

The latter was exactly the position a friend of mine found herself in after discovering her husband’s affair. “At first I wanted to kick him out,” she told me. “But I realized that I didn’t want to get divorced. My mother did that and she ended up raising three children alone. I didn’t want a repeat of my childhood. I wanted my son, who was then 2 years old, to have a father in his life. But I also knew that if we were going to stay together, we had to go to couples counseling.”

About a dozen sessions later, my friend came away with critical insights: “I know I’m not perfect. I was very focused on taking care of my son, and my husband wasn’t getting from me whatever he needed. Everybody should be allowed to make mistakes and learn from them. We learned how to talk to each other and really listen. I love him and respect him, I’m so happy we didn’t split apart. He’s a wonderful father, a stimulating partner, and while our marriage isn’t perfect — whose is? — we are supportive and nurturing of each other. Working through the affair made us stronger.”

As happened with my friend, most affairs result from dissatisfaction with the marital relationship, fueled by temptation and opportunity. One partner may spend endless hours and days on work, household chores, outside activities or even social media, to the neglect of their spouse’s emotional and sexual needs. Often betrayed partners were unaware of what was lacking in the relationship and did not suspect that trouble was brewing.

Or the problem may result from a partner’s personal issues, like an inability to deal with conflict, a fear of intimacy, deep-seated insecurity or changes in life circumstances that rob the marital relationship of the attention and affection that once sustained it.

But short of irreversible incompatibility or physical or emotional abuse, with professional counseling and a mutual willingness to preserve the marriage, therapists maintain that couples stand a good chance of overcoming the trauma of infidelity and avoiding what is often the more painful trauma of divorce.

by Jane E. Brody, NY Times |  Read more:

Image: Paul Rogers
[ed. I'm pretty sure staying in a marriage because it's the lesser of two traumas (infidelity vs divorce) is not very good reasoning. Assuming there's a mutual willingness to continue (which often there isn't after the initial guilt of disclosure subsides), trust has to be re-established. And respect. And how does one go about doing that other than by accepting in faith that a lying partner will in fact never lie again? It's a process that can only be validated over time and with subsequent experience. Perhaps that's why some marriages that recover are stronger - couples become more attuned to deception and accountability and being present - and less inclined to emotional fantasies of what "a good marriage" should be, but actually is... hard work.]

Hugh Masekela

Hugh Masekela April, 1939 – January, 2018

via:

“Get Out of Jail Free” Cards

In the movies I’ve seen people who try to get out of a traffic ticket by telling the police officer they made a donation to the policeman’s ball, but those were comedies. I had no idea that not only does this exist there are official cards. In fact, the police in New York are livid that the number of cards is being limited:

The city’s police-officers union is cracking down on the number of “get out of jail free” courtesy cards distributed to cops to give to family and friends. 

Patrolmen’s Benevolent Association boss Pat Lynch slashed the maximum number of cards that could be issued to current cops from 30 to 20, and to retirees from 20 to 10, sources told The Post. 

The cards are often used to wiggle out of minor trouble such as speeding tickets, the theory being that presenting one suggests you know someone in the NYPD.

The rank and file is livid. 

“They are treating active members like s–t, and retired members even worse than s–t,” griped an NYPD cop who retired on disability. “All the cops I spoke to were . . . very disappointed they couldn’t hand them out as Christmas gifts.”

A Christmas gift of institutionalized corruption.

Here’s another article on these cards which just gets all the more stunning.

First, there are tiers of cards. Silver cards are the highest honor given to citizens. It’s almost universally honored by officers, and can also help save money on insurance. Gold PBA cards are only given to police officers and their families. You’d be hard-pressed finding a cop who won’t honor a gold card.

Gold and silver cards! It gets better. You can buy these cards on eBay. Here’s a gold New Jersey card on sale for $114. A silver “family member”shield goes for $299. Some of these are probably fake. The gold and silver are rare but remember, cops get 20 to 30 regular cards so you can see why they might be upset at losing them.

The regular cards have become more common as NYC hires more police. The union may in fact be trying to bump up its monopoly profit by restricting supply.

The cards don’t just go to family members. The rot is deep:

Union officials say the cards are also public relations tools and tokens of appreciation handed out to politicians, judges, lawyers, businessmen, civil service workers and members of the news media.

A retired police officer on Quora explains how the privilege is enforced:

The officer who is presented with one of these cards will normally tell the violator to be more careful, give the card back, and send them on their way.… 

The other option is potentially more perilous. The enforcement officer can issue the ticket or make the arrest in spite of the courtesy card. This is called “writing over the card.” There is a chance that the officer who issued the card will understand why the enforcement officer did what he did, and nothing will come of it. However, it is equally possible that the enforcement officer’s zeal will not be appreciated, and the enforcement officer will come to work one day to find his locker has been moved to the parking lot and filled with dog excrement.

by Alex Taborrok, Marginal Revolution |  Read more:
Image: uncredited 
[ed. I'm not sure which I'd want more, one of these or a handicapped parking permit.]

Three Theories of Infinite Earths

One of the major theories of cosmology — the study of space — is that the universe we live in might not have an endpoint, but instead goes on forever. Scientists theorize it’s possible that if you flew a spaceship trying to reach the end of the universe, it would continue to fly past suns and moons and planets and black holes forever. Not everyone agrees with this idea.

The multiverse theory, advanced by other scientists and physicists, says the spaceship would eventually reach the end of our universe, and then transition into another universe — and then another and another and another, for an infinite amount of time.

If either of these theories is true, the infinite nature of space, combined with the limited way that particles can organize themselves to form matter (which planets and life forms are all made out of), leads to a shocking but inevitable truth: Earth as we know it probably repeats itself, over and over.

“In any one region of space there’s a finite number of atoms and particles, and there’s a finite size,” says Carroll. “If you think about an infinite number of regions spread throughout the universe, everything that can possibly happen in any region will happen an infinite number of times.” (...)

That means it’s entirely plausible that somewhere out in the infinite universe there’s another Earth where you are sitting in front of another Internet reading this article. In fact, it is plausible that there are billions of you’s on billions of Earths that are exactly the same or slightly different or vastly different. The math of infinity makes this repetition not only plausible, but certain.The theory of Many Worlds is the most similar to the circumstances described in Counterpart, and it’s also the most likely to be true, based on experimental evidence. It goes like this: When particles are teeny tiny (smaller than atoms) they act really, really weird. An electron, for example, is always spinning. When you observe it, you can see that it’s spinning either clockwise or counterclockwise. But before you looked at that electron, when it wasn’t being observed, it was very likely spinning in both directions. You may know this better as Schrödinger’s cat, the theoretical parable that says if you have a cat in a box, the cat is both alive and dead until you open the box, at which point the cat must be one or the other but not both.

“Some people think that the act of looking at the electron made it spin clockwise. I think they’re just wrong,” says Carroll. Rather, the Many Worlds theory says that the act of observing the electron created a whole different outcome entirely: “By coming into contact with that electron you have split. Before there was only one of you, afterward there are two of you,” he says. One of you is watching the electron move clockwise and the other version of you is watching it move counterclockwise. In either case, the electron is still moving in both directions.

Three Theories of Infinite Earths (Wired)

Image: uncredited

[ed.  Sci-fi unless proven.]

The Second Coming of Ultrasound

Before Pierre Curie met the chemist Marie Sklodowska; before they married and she took his name; before he abandoned his physics work and moved into her laboratory on Rue Lhomond where they would discover the radioactive elements polonium and radium, Curie discovered something called piezoelectricity. Some materials, he found—like quartz and certain kinds of salts and ceramics—build up an electric charge when you squeeze them. Sure, it’s no nuclear power. But thanks to piezoelectricity, US troops could locate enemy submarines during World War I. Thousands of expectant parents could see their baby’s face for the first time. And one day soon, it may be how doctors cure disease.

Ultrasound, as you may have figured out by now, runs on piezoelectricity. Applying voltage to a piezoelectric crystal makes it vibrate, sending out a sound wave. When the echo that bounces back is converted into electrical signals, you get an image of, say, a fetus, or a submarine. But in the last few years, the lo-fi tech has reinvented itself in some weird new ways.

Researchers are fitting people’s heads with ultrasound-emitting helmets to treat tremors and Alzheimer’s. They’re using it to remotely activate cancer-fighting immune cells. Startups are designing swallowable capsules and ultrasonically vibrating enemas to shoot drugs into the bloodstream. One company is even using the shockwaves to heal wounds—stuff Curie never could have even imagined.

So how did this 100-year-old technology learn some new tricks? With the help of modern-day medical imaging, and lots and lots of bubbles.

Bubbles are what brought Tao Sun from Nanjing, China to California as an exchange student in 2011, and eventually to the Focused Ultrasound Lab at Brigham and Women’s Hospital and Harvard Medical School. The 27-year-old electrical engineering grad student studies a particular kind of bubble—the gas-filled microbubbles that technicians use to bump up contrast in grainy ultrasound images. Passing ultrasonic waves compress the bubbles’ gas cores, resulting in a stronger echo that pops out against tissue. “We’re starting to realize they can be much more versatile,” says Sun. “We can chemically design their shells to alter their physical properties, load them with tissue-seeking markers, even attach drugs to them.”

Nearly two decades ago, scientists discovered that those microbubbles could do something else: They could shake loose the blood-brain barrier. This impassable membrane is why neurological conditions like epilepsy, Alzheimer’s, and Parkinson’s are so hard to treat: 98 percent of drugs simply can’t get to the brain. But if you station a battalion of microbubbles at the barrier and hit them with a focused beam of ultrasound, the tiny orbs begin to oscillate. They grow and grow until they reach the critical size of 8 microns, and then, like some Grey Wizard magic, the blood-brain barrier opens—and for a few hours, any drugs that happen to be in the bloodstream can also slip in. Things like chemo drugs, or anti-seizure medications.

This is both super cool and not a little bit scary. Too much pressure and those bubbles can implode violently, irreversibly damaging the barrier.

That’s where Sun comes in. Last year he developed a device that could listen in on the bubbles and tell how stable they were. If he eavesdropped while playing with the ultrasound input, he could find a sweet spot where the barrier opens and the bubbles don’t burst. In November, Sun’s team successfully tested the approach in rats and mice, publishing their results in Proceedings in the National Academy of Sciences.

“In the longer term we want to make this into something that doesn’t require a super complicated device, something idiot-proof that can be used in any doctor’s office,” says Nathan McDannold, co-author on Sun’s paper and director of the Focused Ultrasound Lab. He discovered ultrasonic blood-brain barrier disruption, along with biomedical physicist Kullervo Hynynen, who is leading the world’s first clinical trial evaluating its usefulness for Alzheimer’s patients at the Sunnybrook Research Institute in Toronto. Current technology requires patients to don special ultrasound helmets and hop in an MRI machine, to ensure the sonic beams go to the right place. For the treatment to gain any widespread traction, it’ll have to become as portable as the ultrasound carts wheeled around hospitals today.

More recently, scientists have realized that the blood-brain barrier isn’t the only tissue that could benefit from ultrasound and microbubbles. The colon, for instance, is pretty terrible at absorbing the most common drugs for treating Crohn’s disease, ulcerative colitis, and other inflammatory bowel diseases. So they’re often delivered via enemas—which, inconveniently, need to be left in for hours.

But if you send ultrasound waves waves through the colon, you could shorten that process to minutes. In 2015, pioneering MIT engineer Robert Langer and then-PhD student Carl Schoellhammer showed that mice treated with mesalamine and one second of ultrasound every day for two weeks were cured of their colitis symptoms. The method also worked to deliver insulin, a far larger molecule, into pigs.

Since then, the duo has continued to develop the technology within a start-up called Suono Bio, which is supported by MIT’s tech accelerator, The Engine. The company intends to submit its tech for FDA approval in humans sometime later this year.

Instead of injecting manufactured microbubbles, Suono Bio uses ultrasound to make them in the wilds of the gut. They act like jets, propelling whatever is in the liquid into nearby tissues. In addition to its backdoor approach, Suono is also working on an ultrasound-emitting capsule that could work in the stomach for things like insulin, which is too fragile to be orally administered (hence all the needle sticks). But Schoellhammer says they have yet to find a limit on the kinds of molecules they can force into the bloodstream using ultrasound.

“We’ve done small molecules, we’ve done biologics, we’ve tried DNA, naked RNA, we’ve even tried Crispr,” he says. “As superficial as it may sound, it all just works.”

by Megan Molteni, Wired |  Read more:

Image: Suono Bio

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A New Map For America

These days, in the thick of the American presidential primaries, it’s easy to see how the 50 states continue to drive the political system. But increasingly, that’s all they drive — socially and economically, America is reorganizing itself around regional infrastructure lines and metropolitan clusters that ignore state and even national borders. The problem is, the political system hasn’t caught up.

America faces a two-part problem. It’s no secret that the country has fallen behind on infrastructure spending. But it’s not just a matter of how much is spent on catching up, but how and where it is spent. Advanced economies in Western Europe and Asia are reorienting themselves around robust urban clusters of advanced industry. Unfortunately, American policy making remains wedded to an antiquated political structure of 50 distinct states.

To an extent, America is already headed toward a metropolis-first arrangement. The states aren’t about to go away, but economically and socially, the country is drifting toward looser metropolitan and regional formations, anchored by the great cities and urban archipelagos that already lead global economic circuits.

The Northeastern megalopolis, stretching from Boston to Washington, contains more than 50 million people and represents 20 percent of America’s gross domestic product. Greater Los Angeles accounts for more than 10 percent of G.D.P. These city-states matter far more than most American states — and connectivity to these urban clusters determines Americans’ long-term economic viability far more than which state they reside in.

This reshuffling has profound economic consequences. America is increasingly divided not between red states and blue states, but between connected hubs and disconnected backwaters. Bruce Katz of the Brookings Institution has pointed out that of America’s 350 major metro areas, the cities with more than three million people have rebounded far better from the financial crisis. Meanwhile, smaller cities like Dayton, Ohio, already floundering, have been falling further behind, as have countless disconnected small towns across the country.

The problem is that while the economic reality goes one way, the 50-state model means that federal and state resources are concentrated in a state capital — often a small, isolated city itself — and allocated with little sense of the larger whole. Not only does this keep back our largest cities, but smaller American cities are increasingly cut off from the national agenda, destined to become low-cost immigrant and retirement colonies, or simply to be abandoned. (...)

Connectivity isn’t just about infrastructure; it’s about strategy. It’s not just about more roads, rail lines and telecommunications — as well as manufacturing plants and data centers — but where those are placed. Getting that right is critical to getting the most out of public investment. But too often, decisions about infrastructure investment are made at the state (or even county) level, and end at the state border.

A New Map for America (NY Times)

Image: Joel Kotkin​ (boundaries and names of 7 mega-regions)​; Forbes Magazine​; Regional Plan Association; Census Bureau; ​United States​ High Speed Rail Association; Clare Trainor/University of Wisconsin-Madison Cartography Laboratory.

These Guys Are Good

[ed. Pretty much my golf game (all luck), except I wouldn't hit the green (maybe a sprinkler head, porta-potty, or innocent bystander), and sure wouldn't win a new BMW Roadster.]

Joe Jackson