Monday, December 10, 2018
US Regulators Have Essentially Become Do-Nothing Institutions
Something has gone terribly, terribly wrong with American capitalism. This argument, put forth by Jonathan Tepper and Denise Hearn, lies at the heart of their explosive new book The Myth of Capitalism: Monopolies and the Death of Competition. Instead of delivering on its stated promise to provide more opportunity, prosperity and choice, they argue, Americans today are subjected to a system that encourages and rewards predatory behavior, in which corporate monopolists and oligopolists are allowed to bleed consumers dry (and sometimes literally make them bleed) with impunity because the government has been “captured to rig the rules of the game for the strong at the expense of the weak.”
The two, it should be noted, are no Marxists—quite the opposite. A staunch and passionate advocate for free markets, Tepper is the founder of Variant Perception, an investment research firm that caters to hedge funds, banks, asset mangers and family offices. A senior fellow at The American Conservative, he has previously worked at SAC Capital and Bank of America (where was he was Vice President in proprietary trading).
How does a self-professed fan of markets end up writing a book titled “The Myth of Capitalism”? For one, argues Tepper, what is often called capitalism today is not, in fact, capitalism: competition is the essence of capitalism, and there is almost no competition in the American economy today. “Capitalism,” write Tepper and Hearn, “has been the greatest system in history to lift people out of poverty and create wealth, but the ‘capitalism’ we see today in the United States is a far cry from competitive markets.” Instead, the US economy has been overtaken by a “fake version of capitalism,” with government officials allowing (even cultivating) the concentration of economic and political power in the hands of few powerful monopolists who “cozy up to regulators to get the kind of rules they want and donate to get the laws they desire.”
A clear and incisive indictment of the United States’ increasingly monopolized economy, where rising market power has led to less competition, lower productivity, lower wages and staggering inequality, The Myth of Capitalism is also an urgent call to action for both the left and the right to support the restoration of America’s antimonopoly ideals. [We published an excerpt from the book last week. Read it here.]
In a recent interview with ProMarket, Tepper talked about the rise of America’s oligopoly problem, explained why he believes antimonopoly is not a left-right issue, and called on those who believe in free markets to support meaningful reforms. “If the people who love capitalism and competition don’t reform markets,” he warns, “people who don’t like capitalism are going to do it, and I think that we’ll all be worse off.”
by Asher Schechter, ProMarket | Read more:
Image: via
The two, it should be noted, are no Marxists—quite the opposite. A staunch and passionate advocate for free markets, Tepper is the founder of Variant Perception, an investment research firm that caters to hedge funds, banks, asset mangers and family offices. A senior fellow at The American Conservative, he has previously worked at SAC Capital and Bank of America (where was he was Vice President in proprietary trading).
How does a self-professed fan of markets end up writing a book titled “The Myth of Capitalism”? For one, argues Tepper, what is often called capitalism today is not, in fact, capitalism: competition is the essence of capitalism, and there is almost no competition in the American economy today. “Capitalism,” write Tepper and Hearn, “has been the greatest system in history to lift people out of poverty and create wealth, but the ‘capitalism’ we see today in the United States is a far cry from competitive markets.” Instead, the US economy has been overtaken by a “fake version of capitalism,” with government officials allowing (even cultivating) the concentration of economic and political power in the hands of few powerful monopolists who “cozy up to regulators to get the kind of rules they want and donate to get the laws they desire.”A clear and incisive indictment of the United States’ increasingly monopolized economy, where rising market power has led to less competition, lower productivity, lower wages and staggering inequality, The Myth of Capitalism is also an urgent call to action for both the left and the right to support the restoration of America’s antimonopoly ideals. [We published an excerpt from the book last week. Read it here.]
In a recent interview with ProMarket, Tepper talked about the rise of America’s oligopoly problem, explained why he believes antimonopoly is not a left-right issue, and called on those who believe in free markets to support meaningful reforms. “If the people who love capitalism and competition don’t reform markets,” he warns, “people who don’t like capitalism are going to do it, and I think that we’ll all be worse off.”
Q: You start the book with David Dao, the passenger that was a beaten and forcibly removed from a United flight last year for refusing to give up his seat. What is it that makes what happened to Dao “a metaphor for American capitalism in the twenty-first century,” as you call it?
First, I think the episode clearly resonated with the public because people feel that something’s changed in the airline industry, that airlines are nickel and diming them, and that part of it is also tied to increasing concentration and market power.
But the main reason [David Dao] came to my mind is that in the days after, I was reading the news and there were quite a few articles pointing out how airlines are now an oligopoly and that you have no choice, and most of the Wall Street research houses were putting out similar notes, so the stock went up. The idea was that it just doesn’t matter what you do in terms of public relations or how you treat customers—if you have a lock on the customers, they have no choice.
So you have the passenger who was bloodied, and that’s horrific. But what was almost more horrific was that once everyone started focusing on the fact that it was an oligopoly, the stock went up. (...)
Q: And yet you argue that what we have in the United States today is a “grotesque, deformed version of capitalism.” What is the difference between capitalism, as you see it, and today’s US economy?
Jeremy Grantham once said that “profit margins are the most mean-reverting series in finance. If margins don’t revert, something has gone wrong with capitalism.” Given that we have record-high corporate profit margins and very little mean reversion, it is a sign that we aren’t seeing a lot of competition. It’s not just obvious that we don’t have a lot of competition from new entrants, but there’s relatively little competition in many industries—a lot of markets are divided up geographically, or there’s collusion.
Capitalism is not just having private property and not being communists, but rather it’s actually having competition. Competition is what creates clear price signals that help drive supply and demand. So the absence of competition, the absence of contestability, is troubling. (...)
Q: There has been a lot of talk in the media about America’s monopoly problem in recent years, but you argue that the US doesn’t have a monopoly problem so much as an oligopoly problem. Why is oligopoly the more pressing problem?
Having four players is not vastly better than having one. Some people say that only monopolies are bad and therefore if you don’t have a monopoly, things are totally fine. The truth is there are sectors in the economy where you have duopolies or an oligopoly with three, four, even five players. What ends up happening is that you end up with tacit collusion, where companies play repeated games with each other and have no incentive to compete on price.
You’d think that if one of them hikes prices, the others might then want to capture some market share, but basically competitors tend to move in lockstep. You don’t even have to do that by speaking to each other—it’s pretty well understood that you can use company conference calls and establish essentially what you’re going to do in terms of trying to chase market share or not, or your levels of pricing and all that.
In the book, I quote one of the world’s top pricing experts who wrote a book where he pretty much advises companies to send signals to the market, whether it’s via press releases or quarterly conference calls, but recommends that the readers consult with their lawyers and attorneys first, clearly understanding that speaking directly is illegal but speaking indirectly is not. There’s been research done on airline conference calls and how airlines have used conference calls to indicate whether they’ll expand or not. The FTC was in fact looking into that—but the FTC is a do-nothing institution and I doubt anything will come of it.
But you find this in many other areas. In the book, I compare this to how the mob commission used to divide up the US: One family might have one part of the city and another family might have the other part of the city, and people would stay off each other’s turf. If you look at the way that the insurance markets carved up the United States, where you’ll have one or two dominant insurers per state, or how retail stores divided up the US geographically and tend not to compete head on, it’s very similar. (...)
Q: The US economy you describe in the book is markedly different than what American capitalism looked like 40-50 years ago. How did we end up here?
The counterrevolution which led us to where we are today really started essentially in the 1960s and 1970s, when Robert Bork and others did not like the fact that the antitrust was being vigorously enforced. They thought it was preventing efficiency and some economies of scale, and they did have a point—antitrust was very restrictive, and some minor deals that wouldn’t have caused any competitive issues were blocked.
But the problem is that when you fast forward 40 years later, what started out as possibly a worthwhile effort to allow slightly more mergers has ended up becoming basically a policy that’s become a do-nothing policy, in which K Street law firms, economists-for-hire that go in and out of government at the DOJ and the FTC, and Wall Street firms are all spectacularly well paid to push mergers through.
It’s very much like the NCAA’s Sweet 16, where you start out with 16 teams and then get down to eight, and then four and then two. We’ve had a merger wave in the 1980s that graduated in the 1990s, a merger wave leading up to the 2007 crisis and then a merger wave that peaked around 2015, and in many industries we’ve just basically been eliminating player after player.
That’s really sort of how we got here: a ratchet effect where each merger wave takes out more and more players. The process of getting mergers through is deeply corrupted, with economists-for-hire presenting models showing that prices will go down and studies showing that these models are almost always wrong and that you generally get higher prices. The whole system is essentially a charade.
Q: But also, the government was not a silent player in all this. Many political choices were made along the way.
I completely agree. I think that one of the key issues is that the government completely and radically changed antitrust through the bureaucracy, through the merger guidelines, and then basically by doing nothing and allowing mergers to proceed. Whereas the Sherman Act and Clayton Act were political acts passed by Congress, this is not something that we’ve collectively agreed is what we want. I think that most people are appalled at how things have changed.
In many cases, the people who are pro-merger have also taken over the courts and basically made the burden of proof so high that it’s very difficult to stop mergers. A lot of this is highly, highly ideological, in the sense that most of the pro-merger studies or models that are done before mergers turn out to be wrong, retrospectively. I have loads of footnotes in the book, and I hope people do go and read further studies.
What really happened is basically what I call an orgy of influence-peddling, with people moving in and out of the top of the FTC and the DOJ essentially green-lighting mergers and helping make them happen once they’re out of government. (...)
Q: What is your proposed solution for reforming markets and restoring an open, competitive economy?
In the book, I have a series of principles and specific reforms based on those principles. They’re fairly broad and I don’t pretend to have all the answers. There are many other people that put forward good ideas. Some of the key principles I mention are trying to reduce barriers to entry, to enhance competition, enforcement of antitrust, which means preventing mergers that reduced competition as well as undoing previous mergers that have created less competitive markets. Another key principle is to limit the revolving door. In the case of the US, you want to make sure that companies are limited in terms of how they can influence elections.
Those are just very basic reforms, but they could go a long way if implemented. Markets will not reform themselves. Monopolists are not going to want to give up their power and the current status quo in antitrust, because it pays them very, very well.
I would add that I’m not in favor of more regulation on its own. High levels of regulation create higher barriers to entry, and the most regulated sectors tend to be the ones with the highest concentration. What I’m in favor of is principles-based regulation rather than rules-based regulation. Glass Steagall was 35 pages long and worked for about 70 years, while Dodd-Frank is 2,200 pages and we’ve basically seen almost no new banks. I am also wary of creating new regulators or making regulators more powerful without making them accountable, because then you get regulatory capture. But I do believe we need more vigorous antitrust and a sensible reform of regulations.
First, I think the episode clearly resonated with the public because people feel that something’s changed in the airline industry, that airlines are nickel and diming them, and that part of it is also tied to increasing concentration and market power.
But the main reason [David Dao] came to my mind is that in the days after, I was reading the news and there were quite a few articles pointing out how airlines are now an oligopoly and that you have no choice, and most of the Wall Street research houses were putting out similar notes, so the stock went up. The idea was that it just doesn’t matter what you do in terms of public relations or how you treat customers—if you have a lock on the customers, they have no choice.
So you have the passenger who was bloodied, and that’s horrific. But what was almost more horrific was that once everyone started focusing on the fact that it was an oligopoly, the stock went up. (...)
Q: And yet you argue that what we have in the United States today is a “grotesque, deformed version of capitalism.” What is the difference between capitalism, as you see it, and today’s US economy?
Jeremy Grantham once said that “profit margins are the most mean-reverting series in finance. If margins don’t revert, something has gone wrong with capitalism.” Given that we have record-high corporate profit margins and very little mean reversion, it is a sign that we aren’t seeing a lot of competition. It’s not just obvious that we don’t have a lot of competition from new entrants, but there’s relatively little competition in many industries—a lot of markets are divided up geographically, or there’s collusion.
Capitalism is not just having private property and not being communists, but rather it’s actually having competition. Competition is what creates clear price signals that help drive supply and demand. So the absence of competition, the absence of contestability, is troubling. (...)
Q: There has been a lot of talk in the media about America’s monopoly problem in recent years, but you argue that the US doesn’t have a monopoly problem so much as an oligopoly problem. Why is oligopoly the more pressing problem?
Having four players is not vastly better than having one. Some people say that only monopolies are bad and therefore if you don’t have a monopoly, things are totally fine. The truth is there are sectors in the economy where you have duopolies or an oligopoly with three, four, even five players. What ends up happening is that you end up with tacit collusion, where companies play repeated games with each other and have no incentive to compete on price.
You’d think that if one of them hikes prices, the others might then want to capture some market share, but basically competitors tend to move in lockstep. You don’t even have to do that by speaking to each other—it’s pretty well understood that you can use company conference calls and establish essentially what you’re going to do in terms of trying to chase market share or not, or your levels of pricing and all that.
In the book, I quote one of the world’s top pricing experts who wrote a book where he pretty much advises companies to send signals to the market, whether it’s via press releases or quarterly conference calls, but recommends that the readers consult with their lawyers and attorneys first, clearly understanding that speaking directly is illegal but speaking indirectly is not. There’s been research done on airline conference calls and how airlines have used conference calls to indicate whether they’ll expand or not. The FTC was in fact looking into that—but the FTC is a do-nothing institution and I doubt anything will come of it.
But you find this in many other areas. In the book, I compare this to how the mob commission used to divide up the US: One family might have one part of the city and another family might have the other part of the city, and people would stay off each other’s turf. If you look at the way that the insurance markets carved up the United States, where you’ll have one or two dominant insurers per state, or how retail stores divided up the US geographically and tend not to compete head on, it’s very similar. (...)
Q: The US economy you describe in the book is markedly different than what American capitalism looked like 40-50 years ago. How did we end up here?
The counterrevolution which led us to where we are today really started essentially in the 1960s and 1970s, when Robert Bork and others did not like the fact that the antitrust was being vigorously enforced. They thought it was preventing efficiency and some economies of scale, and they did have a point—antitrust was very restrictive, and some minor deals that wouldn’t have caused any competitive issues were blocked.
But the problem is that when you fast forward 40 years later, what started out as possibly a worthwhile effort to allow slightly more mergers has ended up becoming basically a policy that’s become a do-nothing policy, in which K Street law firms, economists-for-hire that go in and out of government at the DOJ and the FTC, and Wall Street firms are all spectacularly well paid to push mergers through.
It’s very much like the NCAA’s Sweet 16, where you start out with 16 teams and then get down to eight, and then four and then two. We’ve had a merger wave in the 1980s that graduated in the 1990s, a merger wave leading up to the 2007 crisis and then a merger wave that peaked around 2015, and in many industries we’ve just basically been eliminating player after player.
That’s really sort of how we got here: a ratchet effect where each merger wave takes out more and more players. The process of getting mergers through is deeply corrupted, with economists-for-hire presenting models showing that prices will go down and studies showing that these models are almost always wrong and that you generally get higher prices. The whole system is essentially a charade.
Q: But also, the government was not a silent player in all this. Many political choices were made along the way.
I completely agree. I think that one of the key issues is that the government completely and radically changed antitrust through the bureaucracy, through the merger guidelines, and then basically by doing nothing and allowing mergers to proceed. Whereas the Sherman Act and Clayton Act were political acts passed by Congress, this is not something that we’ve collectively agreed is what we want. I think that most people are appalled at how things have changed.
In many cases, the people who are pro-merger have also taken over the courts and basically made the burden of proof so high that it’s very difficult to stop mergers. A lot of this is highly, highly ideological, in the sense that most of the pro-merger studies or models that are done before mergers turn out to be wrong, retrospectively. I have loads of footnotes in the book, and I hope people do go and read further studies.
What really happened is basically what I call an orgy of influence-peddling, with people moving in and out of the top of the FTC and the DOJ essentially green-lighting mergers and helping make them happen once they’re out of government. (...)
Q: What is your proposed solution for reforming markets and restoring an open, competitive economy?
In the book, I have a series of principles and specific reforms based on those principles. They’re fairly broad and I don’t pretend to have all the answers. There are many other people that put forward good ideas. Some of the key principles I mention are trying to reduce barriers to entry, to enhance competition, enforcement of antitrust, which means preventing mergers that reduced competition as well as undoing previous mergers that have created less competitive markets. Another key principle is to limit the revolving door. In the case of the US, you want to make sure that companies are limited in terms of how they can influence elections.
Those are just very basic reforms, but they could go a long way if implemented. Markets will not reform themselves. Monopolists are not going to want to give up their power and the current status quo in antitrust, because it pays them very, very well.
I would add that I’m not in favor of more regulation on its own. High levels of regulation create higher barriers to entry, and the most regulated sectors tend to be the ones with the highest concentration. What I’m in favor of is principles-based regulation rather than rules-based regulation. Glass Steagall was 35 pages long and worked for about 70 years, while Dodd-Frank is 2,200 pages and we’ve basically seen almost no new banks. I am also wary of creating new regulators or making regulators more powerful without making them accountable, because then you get regulatory capture. But I do believe we need more vigorous antitrust and a sensible reform of regulations.
by Asher Schechter, ProMarket | Read more:
Image: via
Sunday, December 9, 2018
Is It Ethical to Use Amazon?
Just about every week, I order a thing from Amazon. Sometimes it is a connector cable or some teabags. Occasionally it is a bag of gummy volcanoes. Checking my order history, I find that most recently it was a pair of lamp harps and a copy of John Cassidy’s How Markets Fail. I have an Amazon Prime account, which not only gets me free two-day shipping but grants me unlimited access to such cinema classics as Atlas Shrugged: Part II. I do not have an Alexa, because they are creepy. But I’ve bought everything from fountain pens to ladybugs and given Jeff Bezos God-knows-how-many of my hard-earned dollars.
All of which raises the question of whether I am a hypocrite who daily violates the principles he most holds dear. Actually, I know I am a hypocrite who violates my dearest principles—I suppose the question is rather: Just how bad of a hypocrite am I? Can one denounce Amazon’s business practices while using its services? Should people feel bad about using Amazon? Should they actively try to avoid it?
Let’s be clear: Amazon is terrible. Just a truly awful company in so many ways. Most recently, of course, they pitted struggling cities around the country against each other in a brutal “race to the bottom” to see how many taxpayer handouts they could get. New York City’s bribes succeeded and now Amazon has granted New York the privilege of having one of its working-class neighborhoods rapidly gentrified, and becoming even more unequal. But Amazon also overworks both its white-collar and blue-collar employees, and threatens to use its economic power to hurt local economies if the people so much as think of trying to make the company pay its fair share in taxes. An Amazon-dominated future is a bleak one: total unaccountable control of the economy in the hands of one fabulously wealthy individual, millions upon millions of people toiling away in his factories and warehouses.
Given all of that, the only ethical path would seem to be to have nothing to do with Amazon. Don’t go near it! Nobody’s making you. Why give money to Jeff Bezos? Amazon is like Walmart, and as with Walmart you should give your money to small businesses instead. Help your local shops, the places that treat their employees well and actually pay their taxes. If you succumb to Amazon’s temptations, you’re complicit in their evil.
And yet: As much as this makes sense to me intuitively, it also seems troublingly close to the conservative line that I reject: If you hate capitalism so much, why do you use an iPhone? (For the record, personally I don’t have an iPhone. I have one of these.) Versions of that kind of thinking strike me as silly: “You critique feudalism yet you live under feudalism,” “You say your boss exploits you, but you’re the one who chooses to work there,” “You criticize the actions of the American government yet you continue to live here.” In each case, the person making the critique seems to be focusing on the wrong thing. Why should we leave the country instead of making the government’s policies better? Why should we give up our paycheck instead of demanding an end to exploitation? Because it’s perfectly possible to “have your cake and eat it too,” why should we be asking people to choose between either bad cake or no cake?
That’s kind of how I think about Amazon and the iPhone. The problem isn’t that people use iPhones, it’s that iPhones are produced under intolerable conditions. If people should be ashamed, it’s not for the act of purchasing the product, but for failing to join a political movement aimed at ending exploitation. There’s nothing inherently wrong with having something like Amazon, a central system for choosing and delivering goods. (Apart from the climate consequences of mass consumption which is an entirely separate debate that will be had on a day that is not today.) The problem is that this system is operating as an extreme hierarchy, in which one man reaps nearly all the benefits and workers have very little control over their conditions. The solution, then, should not be to get people to stop using Amazon, any more than the solution to bad government policy is to leave the country. Instead, the goal should be to democratize Amazon and redistribute its earnings more equitably. In a way, Amazon is like the government: It’s been called monopolistic, and is steadily becoming more so. Plus, as with the working class families who shop at Walmart, why would we put the onus of ethical action on the consumer trying to save money? And besides, is Amazon that much worse than other giant corporations? On the left, there’s a slogan: “There is no ethical consumption under capitalism,” meaning that if the economic system is based on exploitation, it’s fruitless to try not to participate in an exploitative system. You’re going to be, no matter what, unless you go off and live in the forest and eat berries. So you might as well keep your Prime account, keep getting Always Lower prices at Walmart, and join the international proletarian movement!
I tell myself all of these things, and I believe them, but then I quickly swing back in the other direction: Okay, fine, there may not be any PERFECTLY ethical form of consumption, but surely there is more and less ethical consumption. If you have a choice between non-union sweatshop-made goods and goods made with well-paid unionized laborers, shouldn’t you choose the latter? Do consumers really bear no responsibility for the consequences of their choices? If consumers stopped using Amazon, Amazon wouldn’t be able to keep exploiting people. Boycotts can work, consumers have power. This seems persuasive to me, too. If I wear coats made by slaves, and I could choose to wear coats that are not made by slaves, surely that’s bad. And if that’s bad, then aren’t other choices just less extreme versions of a quite real ethical dilemma?
All of this gets complicated by another ethical problem: that of needless consumption itself. Is the problem that I am buying gummies and lamp harps from Amazon in particular, or is it that I am buying gummies and lamp harps when there are poor children whose families can’t afford to keep them alive? Perhaps the thing that makes me a hypocrite is not that I am going to the wrong retailer, but that I’m buying retail goods that I don’t absolutely need. I’ve wrestled with this before in the context of Mardi Gras: I love Mardi Gras, but it’s wasteful, extravagant, and in some sense pointless, and I have difficulty trying to justify it. And yet I feel strongly that a world without Mardi Gras would be a much worse world and that there’s no need to choose between Mardi Gras and healthy children. The kind of life I live, with its occasional carnivals and candies, seems like one everyone could have if we distributed the earth’s resources well.
I have no good answers to the Amazon problem, because I hold two beliefs that contradict each other and I haven’t found a way to reconcile them: (1) what’s wrong is not the act of purchasing from Amazon, but what Amazon does to its employees, and since there would be nothing wrong with purchasing from Amazon if it was, say, a worker cooperative, the demand should be “democratize it” rather than “stop using it.” (2) You shouldn’t buy from companies with highly unethical business practices, such as staying in a hotel that fired striking workers, or buying slave-made goods. I wrestle with this constantly, because Amazon is very difficult to avoid: We sell Current Affairs books and magazine subscriptions using Amazon and we use certain Amazon “web services” (Amazon absolutely dominates cloud computing and is bigger than its four next biggest competitors—Google, Microsoft, IBM, and Alibaba—combined, so lots of entities that you might not think are supporting Amazon are supporting Amazon). The company is going to continue to grow and grow, and we will all be touched by it in one way or another. Is it right or even helpful to boycott it? Should we decline to watch Amazon TV shows, on principle, and if so what is the principle?
by Nathan J. Robinson, Current Affairs | Read more:
All of which raises the question of whether I am a hypocrite who daily violates the principles he most holds dear. Actually, I know I am a hypocrite who violates my dearest principles—I suppose the question is rather: Just how bad of a hypocrite am I? Can one denounce Amazon’s business practices while using its services? Should people feel bad about using Amazon? Should they actively try to avoid it?
Let’s be clear: Amazon is terrible. Just a truly awful company in so many ways. Most recently, of course, they pitted struggling cities around the country against each other in a brutal “race to the bottom” to see how many taxpayer handouts they could get. New York City’s bribes succeeded and now Amazon has granted New York the privilege of having one of its working-class neighborhoods rapidly gentrified, and becoming even more unequal. But Amazon also overworks both its white-collar and blue-collar employees, and threatens to use its economic power to hurt local economies if the people so much as think of trying to make the company pay its fair share in taxes. An Amazon-dominated future is a bleak one: total unaccountable control of the economy in the hands of one fabulously wealthy individual, millions upon millions of people toiling away in his factories and warehouses. Given all of that, the only ethical path would seem to be to have nothing to do with Amazon. Don’t go near it! Nobody’s making you. Why give money to Jeff Bezos? Amazon is like Walmart, and as with Walmart you should give your money to small businesses instead. Help your local shops, the places that treat their employees well and actually pay their taxes. If you succumb to Amazon’s temptations, you’re complicit in their evil.
And yet: As much as this makes sense to me intuitively, it also seems troublingly close to the conservative line that I reject: If you hate capitalism so much, why do you use an iPhone? (For the record, personally I don’t have an iPhone. I have one of these.) Versions of that kind of thinking strike me as silly: “You critique feudalism yet you live under feudalism,” “You say your boss exploits you, but you’re the one who chooses to work there,” “You criticize the actions of the American government yet you continue to live here.” In each case, the person making the critique seems to be focusing on the wrong thing. Why should we leave the country instead of making the government’s policies better? Why should we give up our paycheck instead of demanding an end to exploitation? Because it’s perfectly possible to “have your cake and eat it too,” why should we be asking people to choose between either bad cake or no cake?
That’s kind of how I think about Amazon and the iPhone. The problem isn’t that people use iPhones, it’s that iPhones are produced under intolerable conditions. If people should be ashamed, it’s not for the act of purchasing the product, but for failing to join a political movement aimed at ending exploitation. There’s nothing inherently wrong with having something like Amazon, a central system for choosing and delivering goods. (Apart from the climate consequences of mass consumption which is an entirely separate debate that will be had on a day that is not today.) The problem is that this system is operating as an extreme hierarchy, in which one man reaps nearly all the benefits and workers have very little control over their conditions. The solution, then, should not be to get people to stop using Amazon, any more than the solution to bad government policy is to leave the country. Instead, the goal should be to democratize Amazon and redistribute its earnings more equitably. In a way, Amazon is like the government: It’s been called monopolistic, and is steadily becoming more so. Plus, as with the working class families who shop at Walmart, why would we put the onus of ethical action on the consumer trying to save money? And besides, is Amazon that much worse than other giant corporations? On the left, there’s a slogan: “There is no ethical consumption under capitalism,” meaning that if the economic system is based on exploitation, it’s fruitless to try not to participate in an exploitative system. You’re going to be, no matter what, unless you go off and live in the forest and eat berries. So you might as well keep your Prime account, keep getting Always Lower prices at Walmart, and join the international proletarian movement!
I tell myself all of these things, and I believe them, but then I quickly swing back in the other direction: Okay, fine, there may not be any PERFECTLY ethical form of consumption, but surely there is more and less ethical consumption. If you have a choice between non-union sweatshop-made goods and goods made with well-paid unionized laborers, shouldn’t you choose the latter? Do consumers really bear no responsibility for the consequences of their choices? If consumers stopped using Amazon, Amazon wouldn’t be able to keep exploiting people. Boycotts can work, consumers have power. This seems persuasive to me, too. If I wear coats made by slaves, and I could choose to wear coats that are not made by slaves, surely that’s bad. And if that’s bad, then aren’t other choices just less extreme versions of a quite real ethical dilemma?
All of this gets complicated by another ethical problem: that of needless consumption itself. Is the problem that I am buying gummies and lamp harps from Amazon in particular, or is it that I am buying gummies and lamp harps when there are poor children whose families can’t afford to keep them alive? Perhaps the thing that makes me a hypocrite is not that I am going to the wrong retailer, but that I’m buying retail goods that I don’t absolutely need. I’ve wrestled with this before in the context of Mardi Gras: I love Mardi Gras, but it’s wasteful, extravagant, and in some sense pointless, and I have difficulty trying to justify it. And yet I feel strongly that a world without Mardi Gras would be a much worse world and that there’s no need to choose between Mardi Gras and healthy children. The kind of life I live, with its occasional carnivals and candies, seems like one everyone could have if we distributed the earth’s resources well.
I have no good answers to the Amazon problem, because I hold two beliefs that contradict each other and I haven’t found a way to reconcile them: (1) what’s wrong is not the act of purchasing from Amazon, but what Amazon does to its employees, and since there would be nothing wrong with purchasing from Amazon if it was, say, a worker cooperative, the demand should be “democratize it” rather than “stop using it.” (2) You shouldn’t buy from companies with highly unethical business practices, such as staying in a hotel that fired striking workers, or buying slave-made goods. I wrestle with this constantly, because Amazon is very difficult to avoid: We sell Current Affairs books and magazine subscriptions using Amazon and we use certain Amazon “web services” (Amazon absolutely dominates cloud computing and is bigger than its four next biggest competitors—Google, Microsoft, IBM, and Alibaba—combined, so lots of entities that you might not think are supporting Amazon are supporting Amazon). The company is going to continue to grow and grow, and we will all be touched by it in one way or another. Is it right or even helpful to boycott it? Should we decline to watch Amazon TV shows, on principle, and if so what is the principle?
by Nathan J. Robinson, Current Affairs | Read more:
Image: uncredited
Lessons From Chomsky
It has been 50 years since Noam Chomsky first became a major public figure in the United States, after publishing his essay “The Responsibility of Intellectuals,” which argued that American academics had failed in their core duty to responsibly inquire into truth. Over the past five decades, he has paradoxically been both one of the most well-known and influential thinkers in the world and almost completely absent from mainstream U.S. media.
Nobody has been more influential on my own intellectual development than Chomsky. But I recently realized that what I’ve learned from Chomsky’s work has had almost nothing to do with the subjects he is most known for writing about: linguistics, U.S. foreign policy, and Israel. Instead, where I feel Chomsky’s influence most strongly is in a particular kind of approach to thinking and writing about political, social, and moral questions. In other words, it’s not so much his conclusions as his method (though I also share most of his conclusions). From Chomsky’s writing and talks, I have drawn an underlying set of values and principles that I have found very useful. And I think it’s easy to miss those underlying values, because his books often either consist of technical discussions of the human language faculty or long and fact-heavy indictments of United States government policy. So I’d like to go through and explain what I’ve learned and why I think it’s important. The lessons I’ve learned from Chomsky have encouraged me to be more rational, compassionate, consistent, skeptical, and curious. Nearly everything I write is at least in part a restatement or application of something I picked up from Noam Chomsky, and it feels only fair to acknowledge the source.
Libertarian Socialism
In the United States, “libertarianism” is associated with the right and “socialism” with the left. The libertarians value “freedom” (or what they call freedom) while the socialists value “equality.” And many people accept this distinction as fair: After all, the right wants smaller government while the left wants a big redistributionist government. Even many leftists implicitly accept this “freedom versus equality” distinction as fair, suggesting that while freedom may be nice, fairness is more important.
Libertarian socialism, the political tradition in which Noam Chomsky operates, which is closely tied to anarchism, rejects this distinction as illusory. If the word “libertarianism” is taken to mean “a belief in freedom” and the word “socialism” is taken to mean “a belief in fairness,” then the two are not just “not opposites,” but they are necessary complements. That’s because if you have “freedom” from government intervention, but you don’t have a fair economy, your freedom becomes meaningless, because you will still be faced with a choice between working and starving. Freedom is only meaningful to the extent that it actually creates a capacity for you to act. If you’re poor, you don’t have much of an actual capacity to do much, so you’re not terribly free. Likewise, “socialism” without a conception of freedom is not actually fair and equal. Libertarian socialists have always been critical of Marxist states, because the libertarian socialist recognizes that “equality” enforced by a brutal and repressive state is not just “un-free,” but is also unequal, because there is a huge imbalance of power between the people and the state. The Soviet Union was obviously not free, but it was also not socialist, because “the people” didn’t actually control anything; the state did.
The libertarian socialist perspective is well-captured by a quote from the pioneering anarchist Mikhail Bakunin: “Liberty without socialism is privilege and injustice; socialism without liberty is slavery and brutality.” During the 1860s and ’70s, 50 years before the Soviet Union, Bakunin warned that Marxist socialism’s authoritarian currents would lead to hideous repression. In a Marxist regime, he said:
There will be a new class, a new hierarchy of real and pretended scientists and scholars, and the world will be divided into a minority ruling in the name of knowledge and an immense ignorant majority. And then, woe betide the mass of ignorant ones!… You can see quite well that behind all the democratic and socialistic phrases and promises of Marx’s program, there is to be found in his State all that constitutes the true despotic and brutal nature of all States.
This, as we know, is precisely what happened. Unfortunately, however, the bloody history of 20th century Marxism-Leninism has convinced many people that socialism itself is discredited. They miss the voices of people in the libertarian socialist tradition, like Bakunin, Peter Kropotkin, and Noam Chomsky, who have always stood for a kind of socialism that places a core value on freedom and deplores authoritarianism. It emphasizes true democracy; that is, people should get to participate in the decisions that affect their lives, whether those decisions are labeled “political” or “economic.” It detests capitalism because capitalist institutions are totalitarian (you don’t get to vote for who your boss is, and you get very little say in what your company does), but it also believes strongly in freedom of expression and civil liberties.
Libertarian socialism seems to me a beautiful philosophy. It rejects both “misery through economic exploitation” and “misery through Stalinist totalitarianism,” arguing that the problem is misery itself, whatever the source. It’s a very simple concept, but it’s easy to miss because of the binary that pits “communism” against “capitalism.” Thus, if you’re a critic of capitalism, you must be an apologist for the most brutal socialist governments. But every time there has been such government, libertarian socialist critics have been the first to call it out for its hypocrisy. (Usually, such people are the first ones liquidated.) But the libertarian tradition in socialism is precious. And Chomsky, skeptical of corporate and governmental power alike, is our foremost public exponent of it. See: Chomsky on Libertarian Socialism.
Pragmatic Utopianism
The problem with utopians is that they’re not practical, and the problem with pragmatists is that they often lack vision. If you dream of elaborate perfect societies, but you don’t remain anchored in real-world realities and have a sense of how to get things done, all of your dreams are useless and you may even end up destroying the progress you have already made for the sake of an ideal you’ll never reach. But if you don’t have a strong sense of what the ultimate long-term goal is, you’re not going to know whether you’re moving closer to it or not.
Chomsky’s approach to “political reality” seems to me a good balance of both radicalism and pragmatism. He is an anarchist in his strong skepticism of authority, and a utopian in his belief that the ideal world is a world without social class or unjust hierachies of any kind, a world without war or economic deprivation. But he is also deeply conscious of the realities of the world we live in and the need for those who care about moving towards this utopia to be willing to take small steps rather than just wait for a “revolution.”
Consider Chomsky’s approach to voting. Chomsky believes simultaneously that (1) voting is not a very important part of politics, because it doesn’t change much thanks to the combination of the typically awful candidates and the low impact of a single vote and (2) you should still vote, and if you live in swing state, you should vote for the Democratic candidate for president. He is radical in that he believes we need far broader political action than simply voting once every few years for the least-worst of two major party candidates, but practical in that he also believes that it’s better if Democrats get into office than Republicans. Chomsky understands that you can simultaneously work to save ObamaCare and believe that it’s a pitiful substitute for a genuine health-care guarantee, and we need much more radical change. See: Chomsky on Voting and Democrats. (...)
The Consistent Application of Moral Standards
One of Chomsky’s simplest principles is among the most difficult to apply in practice: You should judge yourself by the same moral standards that you judge others by. This has formed the core of his critique of U.S. foreign policy, and yet it is often insufficiently appreciated even by those that embrace his conclusions. Many people think that Chomsky is uniquely “anti-American.” In fact, his criticisms of the United States are so strong largely because when this elementary moral principle is applied to the facts, the conclusion is inevitably deeply damning. It simply turns out that if you judge the United States by the standard that it uses to judge other people, the United States does not look very good. If you take the facts of, say, the U.S. bombing of Laos(where the United States secretly dropped 2.5 million tons of bombs in the ’60s and ’70s, massacring and maiming thousands of peaceable villagers, 20,000 of whom were killed or injured in the decades after the bombing when unexploded bombs went off), and you imagine how it would appear to us if the roles had been reversed and Laos had been bombing the United States, you begin to see just how inconsistent we are in our evaluations of our own actions versus the actions of others. 500,000 people died in the Iraq War. If Iraq had invaded the United States and 500,000 people died (actually, the proportional population equivalent would be closer to 5,000,000), would there be any way that anybody in the country could conceive of Iraq as a “force for good” in the world in the way that the U.S. believes people should think we are? It’s laughable. If Vietnam had invaded the United States the way the United States had invaded Vietnam, could such an act ever be considered justified?
This idea of moral consistency, of trying to treat like behaviors alike, is the simplest possible notion in the world. It’s so elementary that it sounds childish to even pose the questions. And yet the power of latent patriotic sentiment is so great that it makes a clear-eyed and fair assessment incredibly difficult. It’s hard to see the world through other people’s eyes, to see what our self-justifications look like to those who are on the receiving end of our actions. And when we do it, it’s deeply discomforting. But this is the foundation of Chomsky’s critique: It’s not enough to have “values” (e.g., “terrorism is bad”), you must apply those values consistently (i.e., if something would constitute terrorism if done against us, it must constitute terrorism if it is done by us). Chomsky is seen as being “anti-American” for pointing out that if the Nuremberg principles were applied consistently, essentially every postwar U.S. president would have to be hanged. But this is just a result of the application of consistency: The crime of “aggressive war” that was so forcefully condemned at Nuremberg has been committed repeatedly by the U.S.
In both linguistics and politics, Chomsky often uses his famous “Martian coming to Earth” example: Try to imagine what our planetary affairs would look like to someone who was not part of one of the particular human societies, but was separate from them and able to see their commonalities. They would perceive the similarities between human languages, rather than the differences, and they would see the bizarre ways in which each country perceives its own acts as right and everybody else’s as wrong, even when the same acts are being committed.
The principle of treating all human beings consistently has an incredible power to illuminate, because it helps us clarify what our values actually are and make sure we are following them. But it also helps us become true “universalists,” in the sense that we can begin to view things from a human perspective rather than a nationalistic perspective.
Nobody has been more influential on my own intellectual development than Chomsky. But I recently realized that what I’ve learned from Chomsky’s work has had almost nothing to do with the subjects he is most known for writing about: linguistics, U.S. foreign policy, and Israel. Instead, where I feel Chomsky’s influence most strongly is in a particular kind of approach to thinking and writing about political, social, and moral questions. In other words, it’s not so much his conclusions as his method (though I also share most of his conclusions). From Chomsky’s writing and talks, I have drawn an underlying set of values and principles that I have found very useful. And I think it’s easy to miss those underlying values, because his books often either consist of technical discussions of the human language faculty or long and fact-heavy indictments of United States government policy. So I’d like to go through and explain what I’ve learned and why I think it’s important. The lessons I’ve learned from Chomsky have encouraged me to be more rational, compassionate, consistent, skeptical, and curious. Nearly everything I write is at least in part a restatement or application of something I picked up from Noam Chomsky, and it feels only fair to acknowledge the source.Libertarian Socialism
In the United States, “libertarianism” is associated with the right and “socialism” with the left. The libertarians value “freedom” (or what they call freedom) while the socialists value “equality.” And many people accept this distinction as fair: After all, the right wants smaller government while the left wants a big redistributionist government. Even many leftists implicitly accept this “freedom versus equality” distinction as fair, suggesting that while freedom may be nice, fairness is more important.
Libertarian socialism, the political tradition in which Noam Chomsky operates, which is closely tied to anarchism, rejects this distinction as illusory. If the word “libertarianism” is taken to mean “a belief in freedom” and the word “socialism” is taken to mean “a belief in fairness,” then the two are not just “not opposites,” but they are necessary complements. That’s because if you have “freedom” from government intervention, but you don’t have a fair economy, your freedom becomes meaningless, because you will still be faced with a choice between working and starving. Freedom is only meaningful to the extent that it actually creates a capacity for you to act. If you’re poor, you don’t have much of an actual capacity to do much, so you’re not terribly free. Likewise, “socialism” without a conception of freedom is not actually fair and equal. Libertarian socialists have always been critical of Marxist states, because the libertarian socialist recognizes that “equality” enforced by a brutal and repressive state is not just “un-free,” but is also unequal, because there is a huge imbalance of power between the people and the state. The Soviet Union was obviously not free, but it was also not socialist, because “the people” didn’t actually control anything; the state did.
The libertarian socialist perspective is well-captured by a quote from the pioneering anarchist Mikhail Bakunin: “Liberty without socialism is privilege and injustice; socialism without liberty is slavery and brutality.” During the 1860s and ’70s, 50 years before the Soviet Union, Bakunin warned that Marxist socialism’s authoritarian currents would lead to hideous repression. In a Marxist regime, he said:
There will be a new class, a new hierarchy of real and pretended scientists and scholars, and the world will be divided into a minority ruling in the name of knowledge and an immense ignorant majority. And then, woe betide the mass of ignorant ones!… You can see quite well that behind all the democratic and socialistic phrases and promises of Marx’s program, there is to be found in his State all that constitutes the true despotic and brutal nature of all States.
This, as we know, is precisely what happened. Unfortunately, however, the bloody history of 20th century Marxism-Leninism has convinced many people that socialism itself is discredited. They miss the voices of people in the libertarian socialist tradition, like Bakunin, Peter Kropotkin, and Noam Chomsky, who have always stood for a kind of socialism that places a core value on freedom and deplores authoritarianism. It emphasizes true democracy; that is, people should get to participate in the decisions that affect their lives, whether those decisions are labeled “political” or “economic.” It detests capitalism because capitalist institutions are totalitarian (you don’t get to vote for who your boss is, and you get very little say in what your company does), but it also believes strongly in freedom of expression and civil liberties.
Libertarian socialism seems to me a beautiful philosophy. It rejects both “misery through economic exploitation” and “misery through Stalinist totalitarianism,” arguing that the problem is misery itself, whatever the source. It’s a very simple concept, but it’s easy to miss because of the binary that pits “communism” against “capitalism.” Thus, if you’re a critic of capitalism, you must be an apologist for the most brutal socialist governments. But every time there has been such government, libertarian socialist critics have been the first to call it out for its hypocrisy. (Usually, such people are the first ones liquidated.) But the libertarian tradition in socialism is precious. And Chomsky, skeptical of corporate and governmental power alike, is our foremost public exponent of it. See: Chomsky on Libertarian Socialism.
Pragmatic Utopianism
The problem with utopians is that they’re not practical, and the problem with pragmatists is that they often lack vision. If you dream of elaborate perfect societies, but you don’t remain anchored in real-world realities and have a sense of how to get things done, all of your dreams are useless and you may even end up destroying the progress you have already made for the sake of an ideal you’ll never reach. But if you don’t have a strong sense of what the ultimate long-term goal is, you’re not going to know whether you’re moving closer to it or not.
Chomsky’s approach to “political reality” seems to me a good balance of both radicalism and pragmatism. He is an anarchist in his strong skepticism of authority, and a utopian in his belief that the ideal world is a world without social class or unjust hierachies of any kind, a world without war or economic deprivation. But he is also deeply conscious of the realities of the world we live in and the need for those who care about moving towards this utopia to be willing to take small steps rather than just wait for a “revolution.”
Consider Chomsky’s approach to voting. Chomsky believes simultaneously that (1) voting is not a very important part of politics, because it doesn’t change much thanks to the combination of the typically awful candidates and the low impact of a single vote and (2) you should still vote, and if you live in swing state, you should vote for the Democratic candidate for president. He is radical in that he believes we need far broader political action than simply voting once every few years for the least-worst of two major party candidates, but practical in that he also believes that it’s better if Democrats get into office than Republicans. Chomsky understands that you can simultaneously work to save ObamaCare and believe that it’s a pitiful substitute for a genuine health-care guarantee, and we need much more radical change. See: Chomsky on Voting and Democrats. (...)
The Consistent Application of Moral Standards
One of Chomsky’s simplest principles is among the most difficult to apply in practice: You should judge yourself by the same moral standards that you judge others by. This has formed the core of his critique of U.S. foreign policy, and yet it is often insufficiently appreciated even by those that embrace his conclusions. Many people think that Chomsky is uniquely “anti-American.” In fact, his criticisms of the United States are so strong largely because when this elementary moral principle is applied to the facts, the conclusion is inevitably deeply damning. It simply turns out that if you judge the United States by the standard that it uses to judge other people, the United States does not look very good. If you take the facts of, say, the U.S. bombing of Laos(where the United States secretly dropped 2.5 million tons of bombs in the ’60s and ’70s, massacring and maiming thousands of peaceable villagers, 20,000 of whom were killed or injured in the decades after the bombing when unexploded bombs went off), and you imagine how it would appear to us if the roles had been reversed and Laos had been bombing the United States, you begin to see just how inconsistent we are in our evaluations of our own actions versus the actions of others. 500,000 people died in the Iraq War. If Iraq had invaded the United States and 500,000 people died (actually, the proportional population equivalent would be closer to 5,000,000), would there be any way that anybody in the country could conceive of Iraq as a “force for good” in the world in the way that the U.S. believes people should think we are? It’s laughable. If Vietnam had invaded the United States the way the United States had invaded Vietnam, could such an act ever be considered justified?
This idea of moral consistency, of trying to treat like behaviors alike, is the simplest possible notion in the world. It’s so elementary that it sounds childish to even pose the questions. And yet the power of latent patriotic sentiment is so great that it makes a clear-eyed and fair assessment incredibly difficult. It’s hard to see the world through other people’s eyes, to see what our self-justifications look like to those who are on the receiving end of our actions. And when we do it, it’s deeply discomforting. But this is the foundation of Chomsky’s critique: It’s not enough to have “values” (e.g., “terrorism is bad”), you must apply those values consistently (i.e., if something would constitute terrorism if done against us, it must constitute terrorism if it is done by us). Chomsky is seen as being “anti-American” for pointing out that if the Nuremberg principles were applied consistently, essentially every postwar U.S. president would have to be hanged. But this is just a result of the application of consistency: The crime of “aggressive war” that was so forcefully condemned at Nuremberg has been committed repeatedly by the U.S.
In both linguistics and politics, Chomsky often uses his famous “Martian coming to Earth” example: Try to imagine what our planetary affairs would look like to someone who was not part of one of the particular human societies, but was separate from them and able to see their commonalities. They would perceive the similarities between human languages, rather than the differences, and they would see the bizarre ways in which each country perceives its own acts as right and everybody else’s as wrong, even when the same acts are being committed.
The principle of treating all human beings consistently has an incredible power to illuminate, because it helps us clarify what our values actually are and make sure we are following them. But it also helps us become true “universalists,” in the sense that we can begin to view things from a human perspective rather than a nationalistic perspective.
by Nathan J. Robinson, Current Affairs | Read more:
Image: uncredited
[ed. See also: Noam Chomsky at 90: On Orwell, Taxi Drivers, and Rejecting Indoctrination.]
Flickr’s Big Change Proves You Can’t Trust Online Services
I need a digital moving van.
I have 60 days to relocate more than 2,100 images from their home on Flickr to another safe digital haven. The once popular photo-sharing destination announced this month that it’s limiting free membership accounts to just 1,000 images. If you want unlimited storage, you’ll have to pay $50 a year. Don’t pay up? The service will delete old photographs until you’re at the 1,000-image limit.
I already pay almost $40 a year for iCloud storage and another $99 a year for the 1 Terabyte (TB) of space that comes with my Office 365 account. I’ll skip the extra bill.
Some might call me cheap, but Flickr’s policy change highlights a larger concern for anyone storing their files on someone else’s servers, i.e. the cloud.What you understand and trust about their terms of service could change at any time. Free now — looking at you Google Photos — might not mean forever. The uncertainty around the future is reason to reevaluate the services you use in the present.
Two years ago, Flickr’s former parent Yahoo, the once powerful online giant, agreed to a $5 billion acquisition deal with Verizon. It now lives alongside another online cautionary tale, AOL, which was acquired by Verizon in 2015.
The telecom giant has spent months consolidating and cleaning house, which included quietly selling Flickr to the photo-sharing tchotchke company SmugMug. It’s a testament to how things have changed for Flickr, once the yardstick for all digital image activities. Flickr was how we first understood the meteoric rise of smartphone photography. It was the original Instagram, the place we shared and commented on photos.
Ironically, even as one of the most popular cameras used on Flickr became “iPhone,” Flickr, like much of Yahoo, failed to ride the mobile wave. Today, it’s a destination for those who care deeply about the craft of photography, excellent NASA images, and royalty-free images via Creative Commons. According to one report, the service still has 90 million monthly active users across 63 countries.
I joined Flickr 12 years ago and have driven almost a quarter of a million views to the service. Like everyone else, I stopped posting photos on Flickr and shifted my digital photography and art activities to the higher engagement of Instagram, Facebook, and Twitter, but that doesn’t mean I don’t care about my existing Flickr images.
Over the years, Flickr had slowly but consistently raised the price of my pro account to the point where it no longer made financial sense for me to continue. But to limit existing free accounts to 1,000 photos isn’t fair. Most of us have built our Photostreams up over the course of years. We’ve invested time and emotion into each image and helped build the still vibrant Flickr community. Our thanks is, “Get your stuff off our digital lawn!” A community-driven service like Flickr should, even as it changes, work to honor its existing community.
At the very least, Flickr should grandfather existing accounts and only apply this rule to new members. Let the non-pro members keep any number of existing photos on the service. If existing Flickr members want to add more images or access any other “Pro” features, then charge them. Asking people to remove thousands of images, especially when not everyone will have a secure place to store them, is wrong. I might even call it “smug.”
Perhaps you’re not on Flickr and figure this isn’t your problem. But viewed from the perspective of data storage on any platform, Flickr’s decision is deeply concerning.
by Lance Ulanoff, Medium | Read more:
I have 60 days to relocate more than 2,100 images from their home on Flickr to another safe digital haven. The once popular photo-sharing destination announced this month that it’s limiting free membership accounts to just 1,000 images. If you want unlimited storage, you’ll have to pay $50 a year. Don’t pay up? The service will delete old photographs until you’re at the 1,000-image limit.
I already pay almost $40 a year for iCloud storage and another $99 a year for the 1 Terabyte (TB) of space that comes with my Office 365 account. I’ll skip the extra bill.
Some might call me cheap, but Flickr’s policy change highlights a larger concern for anyone storing their files on someone else’s servers, i.e. the cloud.What you understand and trust about their terms of service could change at any time. Free now — looking at you Google Photos — might not mean forever. The uncertainty around the future is reason to reevaluate the services you use in the present.Two years ago, Flickr’s former parent Yahoo, the once powerful online giant, agreed to a $5 billion acquisition deal with Verizon. It now lives alongside another online cautionary tale, AOL, which was acquired by Verizon in 2015.
The telecom giant has spent months consolidating and cleaning house, which included quietly selling Flickr to the photo-sharing tchotchke company SmugMug. It’s a testament to how things have changed for Flickr, once the yardstick for all digital image activities. Flickr was how we first understood the meteoric rise of smartphone photography. It was the original Instagram, the place we shared and commented on photos.
Ironically, even as one of the most popular cameras used on Flickr became “iPhone,” Flickr, like much of Yahoo, failed to ride the mobile wave. Today, it’s a destination for those who care deeply about the craft of photography, excellent NASA images, and royalty-free images via Creative Commons. According to one report, the service still has 90 million monthly active users across 63 countries.
I joined Flickr 12 years ago and have driven almost a quarter of a million views to the service. Like everyone else, I stopped posting photos on Flickr and shifted my digital photography and art activities to the higher engagement of Instagram, Facebook, and Twitter, but that doesn’t mean I don’t care about my existing Flickr images.
Over the years, Flickr had slowly but consistently raised the price of my pro account to the point where it no longer made financial sense for me to continue. But to limit existing free accounts to 1,000 photos isn’t fair. Most of us have built our Photostreams up over the course of years. We’ve invested time and emotion into each image and helped build the still vibrant Flickr community. Our thanks is, “Get your stuff off our digital lawn!” A community-driven service like Flickr should, even as it changes, work to honor its existing community.
At the very least, Flickr should grandfather existing accounts and only apply this rule to new members. Let the non-pro members keep any number of existing photos on the service. If existing Flickr members want to add more images or access any other “Pro” features, then charge them. Asking people to remove thousands of images, especially when not everyone will have a secure place to store them, is wrong. I might even call it “smug.”
Perhaps you’re not on Flickr and figure this isn’t your problem. But viewed from the perspective of data storage on any platform, Flickr’s decision is deeply concerning.
by Lance Ulanoff, Medium | Read more:
Image: bagotaj/Getty
[ed. Case in point: Tumblr's recent decision to commit hara-kiri. The only workaround seems to be maintaining multiple accounts as a backup.]
[ed. Case in point: Tumblr's recent decision to commit hara-kiri. The only workaround seems to be maintaining multiple accounts as a backup.]
Saturday, December 8, 2018
Uber Is Headed for a Crash
By steamrolling local taxi operations in cities all over the world and cultivating cheerleaders in the business press and among Silicon Valley libertarians, Uber has managed to create an image of inevitability and invincibility. But the company just posted another quarter of jaw-dropping losses — this time over $1 billion, after $4.5 billion of losses in 2017. How much is hype and how much is real?
The notion that Uber, the most highly valued private company in the world, is a textbook “bezzle” — John Kenneth Galbraith’s coinage for an investment swindle where the losses have yet to be recognized — is likely to come as a surprise to its many satisfied customers. But as we’ll explain, relying on the extensive work of transportation expert Hubert Horan, Uber’s investors have been buying your satisfaction in the form of massive subsidies of services. What has made Uber a good deal for users makes it a lousy investment proposition. Uber has kept that recognition at bay via minimal and inconsistent financial disclosures combined with a relentless and so far effective public-relations campaign depicting Uber as following the pattern of digitally based start-ups whose large initial losses transformed into strong profits in a few years.
Comparisons of Uber to other storied tech wunderkinder show Uber is not on the same trajectory. No ultimately successful major technology company has been as deeply unprofitable for anywhere remotely as long as Uber has been. After nine years, Uber isn’t within hailing distance of making money and continues to bleed more red ink than any start-up in history. By contrast, Facebook and Amazon were solidly cash-flow positive by their fifth year.
The fact that this glorified local transportation company continues to be a financial failure should come as no surprise. What should be surprising is that the business press still parrots the fond hope of Uber’s management that the company will go public in 2019 at a target valuation of $120 billion. That’s well above its highest private share sale, at a valuation of $68 billion. And Uber’s management and underwriters will no doubt hope that the great unwashed public looks past the fact that more recently, SoftBank bought out insiders at a valuation of $48 billion, and its offer was oversubscribed. Why should new money come in at a price more than double where executives and employees were eager to get out?
Uber has never presented a case as to why it will ever be profitable, let alone earn an adequate return on capital. Investors are pinning their hopes on a successful IPO, which means finding greater fools in sufficient numbers. Uber is a taxi company with an app attached. It bears almost no resemblance to internet superstars it claims to emulate. The app is not technically daunting and and does not create a competitive barrier, as witnessed by the fact that many other players have copied it. Apps have been introduced for airlines, pizza delivery, and hundreds of other consumer services but have never generated market-share gains, much less tens of billions in corporate value. They do not create network effects. Unlike Facebook or eBay, having more Uber users does not improve the service.
Nor, after a certain point, does adding more drivers. Uber does regularly claim that its app creates economies of scale for drivers — but for that to be the case, adding more drivers would have to benefit drivers. It doesn’t. More drivers means more competition for available jobs, which means less utilization per driver. There is a trade-off between capacity and utilization in a transportation system, which you do not see in digital networks. The classic use of “network effects” referred to the design of an integrated transport network — an airline hub and spoke network which create utility for passengers (or packages) by having more opportunities to connect to more destinations versus linear point-to-point routes. Uber is obviously not a fixed network with integrated routes — taxi passengers do not connect between different vehicles.
Nor does being bigger make Uber a better business. As Hubert Horan explained in his series on Naked Capitalism, Uber has no competitive advantage compared to traditional taxi operators. Unlike digital businesses, the cab industry does not have significant scale economies; that’s why there have never been city-level cab monopolies, consolidation plays, or even significant regional operators. Size does not improve the economics of delivery of the taxi service, 85 percent of which are driver, vehicle, and fuel costs; the remaining 15 percent is typically overheads and profit. And Uber’s own results are proof. Uber has kept bulking up, yet it has failed to show the rapid margin improvements you’d see if costs fell as operations grew.
But, but, but — you may say — Uber has established a large business in cities over the world. Yes, it’s easy to get a lot of traffic by selling at a discount. Uber is subsidizing ride costs. Across all its businesses, Uber was providing services at only roughly 74 percent of their cost in its last quarter. Uber was selling its services at only roughly 64 percent of their cost in 2017, with a GAAP profit margin of negative 57 percent. As a reference point, in its worst four quarters, Amazon lost $1.4 billion on $2.8 billion in sales, for a negative margin of 50 percent. Amazon reacted by firing over 15 percent of its workers.
The notion that Uber, the most highly valued private company in the world, is a textbook “bezzle” — John Kenneth Galbraith’s coinage for an investment swindle where the losses have yet to be recognized — is likely to come as a surprise to its many satisfied customers. But as we’ll explain, relying on the extensive work of transportation expert Hubert Horan, Uber’s investors have been buying your satisfaction in the form of massive subsidies of services. What has made Uber a good deal for users makes it a lousy investment proposition. Uber has kept that recognition at bay via minimal and inconsistent financial disclosures combined with a relentless and so far effective public-relations campaign depicting Uber as following the pattern of digitally based start-ups whose large initial losses transformed into strong profits in a few years.
Comparisons of Uber to other storied tech wunderkinder show Uber is not on the same trajectory. No ultimately successful major technology company has been as deeply unprofitable for anywhere remotely as long as Uber has been. After nine years, Uber isn’t within hailing distance of making money and continues to bleed more red ink than any start-up in history. By contrast, Facebook and Amazon were solidly cash-flow positive by their fifth year.The fact that this glorified local transportation company continues to be a financial failure should come as no surprise. What should be surprising is that the business press still parrots the fond hope of Uber’s management that the company will go public in 2019 at a target valuation of $120 billion. That’s well above its highest private share sale, at a valuation of $68 billion. And Uber’s management and underwriters will no doubt hope that the great unwashed public looks past the fact that more recently, SoftBank bought out insiders at a valuation of $48 billion, and its offer was oversubscribed. Why should new money come in at a price more than double where executives and employees were eager to get out?
Uber has never presented a case as to why it will ever be profitable, let alone earn an adequate return on capital. Investors are pinning their hopes on a successful IPO, which means finding greater fools in sufficient numbers. Uber is a taxi company with an app attached. It bears almost no resemblance to internet superstars it claims to emulate. The app is not technically daunting and and does not create a competitive barrier, as witnessed by the fact that many other players have copied it. Apps have been introduced for airlines, pizza delivery, and hundreds of other consumer services but have never generated market-share gains, much less tens of billions in corporate value. They do not create network effects. Unlike Facebook or eBay, having more Uber users does not improve the service.
Nor, after a certain point, does adding more drivers. Uber does regularly claim that its app creates economies of scale for drivers — but for that to be the case, adding more drivers would have to benefit drivers. It doesn’t. More drivers means more competition for available jobs, which means less utilization per driver. There is a trade-off between capacity and utilization in a transportation system, which you do not see in digital networks. The classic use of “network effects” referred to the design of an integrated transport network — an airline hub and spoke network which create utility for passengers (or packages) by having more opportunities to connect to more destinations versus linear point-to-point routes. Uber is obviously not a fixed network with integrated routes — taxi passengers do not connect between different vehicles.
Nor does being bigger make Uber a better business. As Hubert Horan explained in his series on Naked Capitalism, Uber has no competitive advantage compared to traditional taxi operators. Unlike digital businesses, the cab industry does not have significant scale economies; that’s why there have never been city-level cab monopolies, consolidation plays, or even significant regional operators. Size does not improve the economics of delivery of the taxi service, 85 percent of which are driver, vehicle, and fuel costs; the remaining 15 percent is typically overheads and profit. And Uber’s own results are proof. Uber has kept bulking up, yet it has failed to show the rapid margin improvements you’d see if costs fell as operations grew.
But, but, but — you may say — Uber has established a large business in cities over the world. Yes, it’s easy to get a lot of traffic by selling at a discount. Uber is subsidizing ride costs. Across all its businesses, Uber was providing services at only roughly 74 percent of their cost in its last quarter. Uber was selling its services at only roughly 64 percent of their cost in 2017, with a GAAP profit margin of negative 57 percent. As a reference point, in its worst four quarters, Amazon lost $1.4 billion on $2.8 billion in sales, for a negative margin of 50 percent. Amazon reacted by firing over 15 percent of its workers.
by Yves Smith, Intelligencer | Read more:
Image: Ramon Costa/SOPA Images/LightRocket via Getty Images
Welcome to Our Modern Hospital
Where If You Want to Know a Price You Can Go Fuck Yourself
Welcome to America General Hospital! Seems you have an oozing head injury there. Let’s check your insurance. Okay, quick “heads up” — ha! — that your plan may not cover everything today. What’s that? You want a reasonable price quote, upfront, for our services? Sorry, let me explain a hospital to you: we give you medical care, then we charge whatever the hell we want for it.
If you don’t like that, go fuck yourself and die.
Honestly, there’s no telling what you’ll pay today. Maybe $700. Maybe $70,000. It’s a fun surprise! Maybe you’ll go to the ER for five minutes, get no treatment, then we’ll charge you $5,000 for an ice pack and a bandage. Then your insurance company will be like, “This is nuts. We’re not paying this.” Who knows how hard you’ll get screwed? You will, in three months.
Fun story: This one time we charged two parents $18,000 for some baby formula. LOL! We pull that shit all the time. Don’t like it? Don’t bring a baby, asshole.
Oh, I get it: you’re used to knowing a clear price for products and services. The difference is that medicine is complicated and scary — unlike, say, flying hundreds of people in a steel tube across an ocean, or selling them a six-ounce hand-held computer that plays movies and talks to satellites. Anyway, no need to think this through rationally while you’re vulnerable, right? Your head is really gushing, ma’am.
Sure we could start posting prices and discussing our costs, but then it turns into a public debate about transparency, and people get all huffy and self-righteous about $15 pills of Tylenol, $93 to turn on a single goddamned light, or $5,000 worth of sanitary gloves. We’d rather just mail you a bill later for $97,000, full of obscure medical codes you can’t understand. Oh, you like understanding things? Here, maybe this will help:
Hit your head, and talk to a doctor for one minute? $2,500, you idiot.
Want your pesky appendix out? That’ll probably be $33,611. Or it could be $180,000. Shrug. Don’t know. Don’t care.
Need an hour in the ER? How does $15,000-$50,000, sound? Hint: we don’t give a piss how it sounds you stupid fucking helpless human wallet.
Our medical system strikes you as “insane?” Well, you can’t do much about that now. Except of course to go fuck yourself. Yes, ma’am, as a matter of fact, we do have a special room where you can go fuck yourself. Yes, it does cost money to use the room, and no I cannot tell you how much. Want a hint? It’s between $1 and $35,000 per minute. Will you be reserving the go fuck yourself room?
Welcome to America General Hospital! Seems you have an oozing head injury there. Let’s check your insurance. Okay, quick “heads up” — ha! — that your plan may not cover everything today. What’s that? You want a reasonable price quote, upfront, for our services? Sorry, let me explain a hospital to you: we give you medical care, then we charge whatever the hell we want for it.
If you don’t like that, go fuck yourself and die.
Honestly, there’s no telling what you’ll pay today. Maybe $700. Maybe $70,000. It’s a fun surprise! Maybe you’ll go to the ER for five minutes, get no treatment, then we’ll charge you $5,000 for an ice pack and a bandage. Then your insurance company will be like, “This is nuts. We’re not paying this.” Who knows how hard you’ll get screwed? You will, in three months.Fun story: This one time we charged two parents $18,000 for some baby formula. LOL! We pull that shit all the time. Don’t like it? Don’t bring a baby, asshole.
Oh, I get it: you’re used to knowing a clear price for products and services. The difference is that medicine is complicated and scary — unlike, say, flying hundreds of people in a steel tube across an ocean, or selling them a six-ounce hand-held computer that plays movies and talks to satellites. Anyway, no need to think this through rationally while you’re vulnerable, right? Your head is really gushing, ma’am.
Sure we could start posting prices and discussing our costs, but then it turns into a public debate about transparency, and people get all huffy and self-righteous about $15 pills of Tylenol, $93 to turn on a single goddamned light, or $5,000 worth of sanitary gloves. We’d rather just mail you a bill later for $97,000, full of obscure medical codes you can’t understand. Oh, you like understanding things? Here, maybe this will help:
Hit your head, and talk to a doctor for one minute? $2,500, you idiot.
Want your pesky appendix out? That’ll probably be $33,611. Or it could be $180,000. Shrug. Don’t know. Don’t care.
Need an hour in the ER? How does $15,000-$50,000, sound? Hint: we don’t give a piss how it sounds you stupid fucking helpless human wallet.
Our medical system strikes you as “insane?” Well, you can’t do much about that now. Except of course to go fuck yourself. Yes, ma’am, as a matter of fact, we do have a special room where you can go fuck yourself. Yes, it does cost money to use the room, and no I cannot tell you how much. Want a hint? It’s between $1 and $35,000 per minute. Will you be reserving the go fuck yourself room?
by Alex Baia, McSweeny's | Read more:
Image: via
[ed. See also: This horrifying account of trying to get mental health counseling and treatment: Case Study of 1.]
[ed. See also: This horrifying account of trying to get mental health counseling and treatment: Case Study of 1.]
Friday, December 7, 2018
Wall Street's Corruption Runs Deeper Than You Can Fathom
Of the myriad policy decisions that have brought us to our current precipice, from the signing of the North Atlantic Free Trade Agreement (NAFTA) to the invasion of Iraq and the gerrymandering of House districts across the country, few have proven as consequential as the demise of Glass-Steagall. Signed into law as the U.S.A. Banking Act of 1933, the legislation had been crucial to safeguarding the financial industry in the wake of the Great Depression. But with its repeal in 1999, the barriers separating commercial and investment banking collapsed, creating the preconditions for an economic crisis from whose shadow we have yet to emerge.
Carmen Segarra might have predicted as much. As an employee at the Federal Reserve in 2011, three years after the dissolution of Lehman Brothers, she witnessed the results of this deregulation firsthand. In her new book, “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street,” she chronicles the recklessness of institutions like Goldman Sachs and the stunning lengths the United States government went to to accommodate them, even as they authored one of the worst crashes in our nation’s history.
“They didn’t want to hear what I had to say,” she tells Robert Scheer in the latest installment of “Scheer Intelligence.” “And so I think what we have in terms of this story is really not just a failure of the banks and the regulators, but also a failure of our prosecutors. I mean, a lot of the statutes that could be used—criminal statutes, even, that could be used to hold these executives accountable are not being used, and they have not expired; we could have prosecutors holding these people accountable.”
Segarra also explains why she decided to blow the whistle on the Fed, and what she ultimately hopes to accomplish by telling her story. “I don’t like to let the bad guys win,” she says. “I’d rather go down swinging. So for me, I saw it as an opportunity to do my civic duty and rebuild my life. … I was very lucky to be blessed by so many people who I shared the story to, especially lawyers who were so concerned about what I was reporting, who thought that the Federal Reserve was above this, who thought that the government would not fail us after the financial crisis, and who were livid.”
“Noncompliant” explores one of the darkest chapters in modern American history, but with a crook and unabashed narcissist occupying the Oval Office, its lessons are proving remarkably timely. “We live in a culture where we reward bad behavior, we worship bad behavior, and it’s something that needs to stop,” she cautions. “Changing the regulatory culture on [a] U.S. governmental level is something that’s going to take a decade, maybe two. And we need to start now, before things get worse.”
Listen to Segarra’s interview with Scheer or read a transcript of their conversation below:
Robert Scheer: Hi, I’m Robert Scheer, and this is another edition of “Scheer Intelligence,” where the intelligence comes from my guests. Today, Carmen Segarra. She’s written a book, just came out, called “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street.” And boy, did she ever. Perhaps you remember this case; it was in 2011, two, three years into the Great Recession. There was a lot of pressure from Congress that these banks be regulated in a more serious way. As a result, Carmen Segarra, someone of considerable education, was brought in. And she was assigned to do a survey of Goldman Sachs, to go over to Goldman Sachs. And I just want to preface this, people have to understand that not only is the Federal Reserve an incredibly—the most important economic institution in the United States, but the New York Federal Reserve plays a special role being in New York. And they are basically entrusted with regulating the banks, and they are the institution that most definitely failed in that task, and helped bring about the Great Recession. Would you agree with that assessment?
Carmen Segarra: Yes, I would agree with that assessment. When I joined the Federal Reserve, as you pointed out, I was hired from outside the regulatory world, but within the legal and compliance banking world, to help fix its problems. And I was well aware of the problems that existed. And scoping the problems itself was relatively easy; I mean, within days of arriving, I had participated in meetings where you had Goldman Sachs executives, you know, lying, doublespeaking, and misrepresenting to regulatory agencies without fear of repercussions. And where I saw Federal Reserve regulators actively working to suppress and expunge from the record evidence of wrongdoing that could be used by regulatory agencies, prosecutors, and even the Federal Reserve itself to hold Goldman Sachs accountable. The question was, when I arrived, you know, are these problems fixable? And, spoiler alert: I don’t think so. (...)
RS: Well, before you get to the whistleblowing stage, I think you’re being too kind to what I personally think are people who should be considered as, or at least charged and examined often with what is criminal behavior. Because ignorance is really not a good defense; when they were called before congressional committees, these knowledgeable people admitted they really didn’t understand collateralized debt obligations and credit default swaps. And for people who are not that familiar, you mentioned Glass-Steagall. And what Glass-Steagall was, was one of the, really maybe the most important response of Franklin Delano Roosevelt’s democratic administration to the Great Depression. And how did this terrible depression happen, how were the banks so irresponsible. And they decided the key thing was to separate investment banks from commercial bank; investment banks could be high-rollers, private money, you know what you’re doing, you have knowledge; and commercial banks where you’re basically protecting the assets of ordinary people, they’re not knowledgeable, they’re trusting your expertise. And eliminating Glass-Steagall eliminated this wall between the two kinds of banking. And the company that you went to observe, Goldman Sachs, was an investment bank. And by the working of that law, they should have been allowed to go belly-up when it turned out they had a lot of these dubious credit default swaps and collateralized debt obligations. To people who don’t know, a credit default swap was a phony insurance policy pretending to cover these things, but really there’s nothing backing it up. And somehow, in order to save them, they were allowed to announce they could do commercial banking. One could argue, in some ways, the barrier was lifted to help–Citigroup was of course the other one–Citibank. And these are two banks that the government stepped in to help and create this monster. Is it not the case?
CS: Yeah, that’s absolutely the case. But there’s a couple of things that we need to keep in mind. I mean, I think that we’re all sort of educated enough to know that, you know, where there’s a will, there’s a way. And so if a system can be corrupted, people that are allowed to grab hold of power will corrupt it–insofar and only for so long as we allow those people to have the ability and the power to corrupt it. So ultimately, talking about more or less rules, or different rules, is productive only to a point. Because ultimately what we’re talking about here is the haphazard, slap on the wrist, failure to truly enforce the rules and regulations equitably across the system. And that creates the imbalances that you see, for example, in Goldman Sachs, and that you see in the system in general. One of the things that happened as a result of Glass-Steagall coming down was that a lot of the investment bankers were allowed to take over the commercial banks. And those investment bankers knew nothing about banking, and Goldman is a great example of that. I mean, when I arrived three years in after the financial crisis, what was one of the things that was very shocking to me was going into meeting after meeting with Goldman senior management and hearing them lie, doublespeak, and most shockingly of all, insist that they didn’t have to comply with the law. And that is a problem. Because a bank that doesn’t believe, or management at a bank that doesn’t believe they have to comply with the law–you bet they are not supervising their employees correctly, and they’re not incentivizing employees correctly in terms of how to do their job. So their behavior is injecting enormous risk into the system.
RS: Why should they think they should comply with the law when they got the law written and they could get it rewritten? I mean, after all, the treasury secretary, who pushed in the Clinton administration, right, to get rid of this restraint of Glass-Steagall and allow companies like Goldman Sachs to cross that line, was Robert Rubin. And he had been a top executive at Goldman Sachs. In fact, people used to refer to it as Government Sachs, that they had people all over the government, and it was a revolving door. And I want to point out that what you did, which was really unique–you had the guts to record these conversations. When you finally got to have your say before Congress, you could be backed up because you had the record. And tell us about that record. The conversations you recorded are absolutely chilling in describing an atmosphere of cynicism; you know, corruption; contempt, actually, for the political process and for restraint and regulation.
CS: Yeah. And I would sort of add that part of what the book sort of points out is that I didn’t really get my say. I mean, Congress did hold a hearing, but they did not invite me to testify. They didn’t want to hear what I had to say. And so I think what we have in terms of this story is really not just a failure of the banks and the regulators, but also a failure of our prosecutors. I mean, a lot of the statutes that could be used–criminal statutes, even, that could be used to hold these executives accountable are not being used, and they have not expired; we could have prosecutors holding these people accountable. We could have trial lawyers filing cases and holding these people accountable. Yet we can’t count on them to do it; we can’t count on the judiciary to do anything about it. I mean, when you read about what happened in my case in the book, it’s tragic, you know? It’s unbelievable. (...)
RS: Well, we’ll see change. It might not be good change. I mean, you have Donald Trump–and I want to put some oomph behind this, that it’s bipartisan. Because one of the–you know, everybody, a lot of people I know are very upset about Donald Trump. He’s speaking to what Hillary Clinton calls the “deplorables”; but there’s a lot of people hurting out there. And if you read a study done by the Federal Reserve of St. Louis about the consequence of this economic meltdown that was engineered from places like Goldman Sachs, the human cost was incredible. I mean, people lost everything. They weren’t bailed out. There was no mortgage relief. They were not helped. The banks were bailed out. And yet no one has been held accountable, and the politicians, democrats and republicans, who supported it, have gotten off scot-free.
CS: ... This is not a democratic problem, this is not a republican problem. This is an American problem with worldwide impact. The U.S. dollar is a reserve currency. The world depends in large part on the American banking system to work. And for it to work, there are these rules, and these rules are there to create trust in the system and to create smooth processes in the system, so that money can be moved and the economy can continue to grow. If the world can no longer trust the American banking system because Americans cannot be trusted to regulate it, they are going to move away from the American banking system. They are going to move away from the U.S. dollar as a reserve currency. And then we are going to find ourselves in the situation that a lot of countries that are not governed by reserve currencies find themselves occasionally, from time to time, whenever they have a crisis. You know, we’re talking about countries in Latin America; we’re talking about countries in Africa; we’re talking about countries in Asia. I hope the book will inspire people to really take a look around and realize, you know, the American consumer, the American worker, is incredibly powerful. You know, these banks cannot survive without our money. We don’t have to wait for the government to keep failing us; we don’t have to wait for the judiciary to keep failing us; we don’t have to wait for lawyers to keep failing us. We choose who we work for. We choose where we keep our money. We can choose to protest. We can choose to call our pension funds and tell them, I want you to stop doing business with Goldman Sachs. It’s what we do on a daily basis. When we stand up and we say, I am not going to be banking with these people–they will listen. It’s like, they control all of these other checks and balances that were put in place in terms of the government to stop them. So now it’s up to us as a people to actually do something about this.
Carmen Segarra might have predicted as much. As an employee at the Federal Reserve in 2011, three years after the dissolution of Lehman Brothers, she witnessed the results of this deregulation firsthand. In her new book, “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street,” she chronicles the recklessness of institutions like Goldman Sachs and the stunning lengths the United States government went to to accommodate them, even as they authored one of the worst crashes in our nation’s history.
“They didn’t want to hear what I had to say,” she tells Robert Scheer in the latest installment of “Scheer Intelligence.” “And so I think what we have in terms of this story is really not just a failure of the banks and the regulators, but also a failure of our prosecutors. I mean, a lot of the statutes that could be used—criminal statutes, even, that could be used to hold these executives accountable are not being used, and they have not expired; we could have prosecutors holding these people accountable.”
Segarra also explains why she decided to blow the whistle on the Fed, and what she ultimately hopes to accomplish by telling her story. “I don’t like to let the bad guys win,” she says. “I’d rather go down swinging. So for me, I saw it as an opportunity to do my civic duty and rebuild my life. … I was very lucky to be blessed by so many people who I shared the story to, especially lawyers who were so concerned about what I was reporting, who thought that the Federal Reserve was above this, who thought that the government would not fail us after the financial crisis, and who were livid.”
“Noncompliant” explores one of the darkest chapters in modern American history, but with a crook and unabashed narcissist occupying the Oval Office, its lessons are proving remarkably timely. “We live in a culture where we reward bad behavior, we worship bad behavior, and it’s something that needs to stop,” she cautions. “Changing the regulatory culture on [a] U.S. governmental level is something that’s going to take a decade, maybe two. And we need to start now, before things get worse.”
Listen to Segarra’s interview with Scheer or read a transcript of their conversation below:
Robert Scheer: Hi, I’m Robert Scheer, and this is another edition of “Scheer Intelligence,” where the intelligence comes from my guests. Today, Carmen Segarra. She’s written a book, just came out, called “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street.” And boy, did she ever. Perhaps you remember this case; it was in 2011, two, three years into the Great Recession. There was a lot of pressure from Congress that these banks be regulated in a more serious way. As a result, Carmen Segarra, someone of considerable education, was brought in. And she was assigned to do a survey of Goldman Sachs, to go over to Goldman Sachs. And I just want to preface this, people have to understand that not only is the Federal Reserve an incredibly—the most important economic institution in the United States, but the New York Federal Reserve plays a special role being in New York. And they are basically entrusted with regulating the banks, and they are the institution that most definitely failed in that task, and helped bring about the Great Recession. Would you agree with that assessment?
Carmen Segarra: Yes, I would agree with that assessment. When I joined the Federal Reserve, as you pointed out, I was hired from outside the regulatory world, but within the legal and compliance banking world, to help fix its problems. And I was well aware of the problems that existed. And scoping the problems itself was relatively easy; I mean, within days of arriving, I had participated in meetings where you had Goldman Sachs executives, you know, lying, doublespeaking, and misrepresenting to regulatory agencies without fear of repercussions. And where I saw Federal Reserve regulators actively working to suppress and expunge from the record evidence of wrongdoing that could be used by regulatory agencies, prosecutors, and even the Federal Reserve itself to hold Goldman Sachs accountable. The question was, when I arrived, you know, are these problems fixable? And, spoiler alert: I don’t think so. (...)
RS: Well, before you get to the whistleblowing stage, I think you’re being too kind to what I personally think are people who should be considered as, or at least charged and examined often with what is criminal behavior. Because ignorance is really not a good defense; when they were called before congressional committees, these knowledgeable people admitted they really didn’t understand collateralized debt obligations and credit default swaps. And for people who are not that familiar, you mentioned Glass-Steagall. And what Glass-Steagall was, was one of the, really maybe the most important response of Franklin Delano Roosevelt’s democratic administration to the Great Depression. And how did this terrible depression happen, how were the banks so irresponsible. And they decided the key thing was to separate investment banks from commercial bank; investment banks could be high-rollers, private money, you know what you’re doing, you have knowledge; and commercial banks where you’re basically protecting the assets of ordinary people, they’re not knowledgeable, they’re trusting your expertise. And eliminating Glass-Steagall eliminated this wall between the two kinds of banking. And the company that you went to observe, Goldman Sachs, was an investment bank. And by the working of that law, they should have been allowed to go belly-up when it turned out they had a lot of these dubious credit default swaps and collateralized debt obligations. To people who don’t know, a credit default swap was a phony insurance policy pretending to cover these things, but really there’s nothing backing it up. And somehow, in order to save them, they were allowed to announce they could do commercial banking. One could argue, in some ways, the barrier was lifted to help–Citigroup was of course the other one–Citibank. And these are two banks that the government stepped in to help and create this monster. Is it not the case?
CS: Yeah, that’s absolutely the case. But there’s a couple of things that we need to keep in mind. I mean, I think that we’re all sort of educated enough to know that, you know, where there’s a will, there’s a way. And so if a system can be corrupted, people that are allowed to grab hold of power will corrupt it–insofar and only for so long as we allow those people to have the ability and the power to corrupt it. So ultimately, talking about more or less rules, or different rules, is productive only to a point. Because ultimately what we’re talking about here is the haphazard, slap on the wrist, failure to truly enforce the rules and regulations equitably across the system. And that creates the imbalances that you see, for example, in Goldman Sachs, and that you see in the system in general. One of the things that happened as a result of Glass-Steagall coming down was that a lot of the investment bankers were allowed to take over the commercial banks. And those investment bankers knew nothing about banking, and Goldman is a great example of that. I mean, when I arrived three years in after the financial crisis, what was one of the things that was very shocking to me was going into meeting after meeting with Goldman senior management and hearing them lie, doublespeak, and most shockingly of all, insist that they didn’t have to comply with the law. And that is a problem. Because a bank that doesn’t believe, or management at a bank that doesn’t believe they have to comply with the law–you bet they are not supervising their employees correctly, and they’re not incentivizing employees correctly in terms of how to do their job. So their behavior is injecting enormous risk into the system.
RS: Why should they think they should comply with the law when they got the law written and they could get it rewritten? I mean, after all, the treasury secretary, who pushed in the Clinton administration, right, to get rid of this restraint of Glass-Steagall and allow companies like Goldman Sachs to cross that line, was Robert Rubin. And he had been a top executive at Goldman Sachs. In fact, people used to refer to it as Government Sachs, that they had people all over the government, and it was a revolving door. And I want to point out that what you did, which was really unique–you had the guts to record these conversations. When you finally got to have your say before Congress, you could be backed up because you had the record. And tell us about that record. The conversations you recorded are absolutely chilling in describing an atmosphere of cynicism; you know, corruption; contempt, actually, for the political process and for restraint and regulation.
CS: Yeah. And I would sort of add that part of what the book sort of points out is that I didn’t really get my say. I mean, Congress did hold a hearing, but they did not invite me to testify. They didn’t want to hear what I had to say. And so I think what we have in terms of this story is really not just a failure of the banks and the regulators, but also a failure of our prosecutors. I mean, a lot of the statutes that could be used–criminal statutes, even, that could be used to hold these executives accountable are not being used, and they have not expired; we could have prosecutors holding these people accountable. We could have trial lawyers filing cases and holding these people accountable. Yet we can’t count on them to do it; we can’t count on the judiciary to do anything about it. I mean, when you read about what happened in my case in the book, it’s tragic, you know? It’s unbelievable. (...)
RS: Well, we’ll see change. It might not be good change. I mean, you have Donald Trump–and I want to put some oomph behind this, that it’s bipartisan. Because one of the–you know, everybody, a lot of people I know are very upset about Donald Trump. He’s speaking to what Hillary Clinton calls the “deplorables”; but there’s a lot of people hurting out there. And if you read a study done by the Federal Reserve of St. Louis about the consequence of this economic meltdown that was engineered from places like Goldman Sachs, the human cost was incredible. I mean, people lost everything. They weren’t bailed out. There was no mortgage relief. They were not helped. The banks were bailed out. And yet no one has been held accountable, and the politicians, democrats and republicans, who supported it, have gotten off scot-free.
CS: ... This is not a democratic problem, this is not a republican problem. This is an American problem with worldwide impact. The U.S. dollar is a reserve currency. The world depends in large part on the American banking system to work. And for it to work, there are these rules, and these rules are there to create trust in the system and to create smooth processes in the system, so that money can be moved and the economy can continue to grow. If the world can no longer trust the American banking system because Americans cannot be trusted to regulate it, they are going to move away from the American banking system. They are going to move away from the U.S. dollar as a reserve currency. And then we are going to find ourselves in the situation that a lot of countries that are not governed by reserve currencies find themselves occasionally, from time to time, whenever they have a crisis. You know, we’re talking about countries in Latin America; we’re talking about countries in Africa; we’re talking about countries in Asia. I hope the book will inspire people to really take a look around and realize, you know, the American consumer, the American worker, is incredibly powerful. You know, these banks cannot survive without our money. We don’t have to wait for the government to keep failing us; we don’t have to wait for the judiciary to keep failing us; we don’t have to wait for lawyers to keep failing us. We choose who we work for. We choose where we keep our money. We can choose to protest. We can choose to call our pension funds and tell them, I want you to stop doing business with Goldman Sachs. It’s what we do on a daily basis. When we stand up and we say, I am not going to be banking with these people–they will listen. It’s like, they control all of these other checks and balances that were put in place in terms of the government to stop them. So now it’s up to us as a people to actually do something about this.
by Robert Sheer, Truthdig | Read more:
[ed. See also: “US Regulators Have Essentially Become Do-Nothing Institutions”.]
[ed. See also: “US Regulators Have Essentially Become Do-Nothing Institutions”.]
Millennials Killed Canned Tuna!
What millennial panic stories — like “killing” canned tuna — tell us about Boomer guilt.
Have you heard? Millennials have killed the canned tuna industry. Why? Because apparently we don't own can-openers.
Over the weekend, the Wall Street Journal reported that canned tuna consumption is way down, it's declined by 42 percent in three decades and has dropped four percent just in the last five years. And tuna companies, particularly the big three — StarKist Co., Bumble Bee Foods LLC and Chicken of the Sea International — are not happy.
While the companies spoke about rebranding efforts, such as trying out new flavored tuna packs and innovative packaging to appeal to a younger consumer base, their more realized strategy is one we've seen over and over in recent years: cluelessly scapegoating millennials for the sake of one's shrinking business.
"In a country focused on convenience, canned tuna isn’t cutting it with consumers," WSJ reported. "Many can’t be bothered to open and drain the cans, or fetch utensils and dishes to eat the tuna. 'A lot of millennials don’t even own can openers,' said Andy Mecs, vice president of marketing and innovation for Pittsburgh-based StarKist, a subsidiary of South Korea’s Dongwon Group." (...)
As many people suggested on Twitter, there are myriad reasons to not eat canned tuna and none of them include millennials not owning can openers. Many people simply think it's disgusting, and also there was a whole movement of concern over dolphins being killed as a byproduct of being captured in the nets of tuna fishers, plus concern over its mercury levels.
As Business Insider reported, the smell of canned tuna makes eating it for lunch during the workday a cardinal sin in today's common open office settings where lunch hours away from one's desk are considered almost a luxury. And let's not forget that two of tuna's biggest brands, StarKist and Bumble Bee, were central to a price-fixing scandal that resulted in guilty pleas from the companies and from three executives.
But alas, it can be hard to keep track of all the things that the millennial generation has taken down. There's cereal, mayonnaise, napkins, golf, department stores, savings accounts, home ownership, diamonds, even sex. But the messaging is oddly similar across all of these stories — the shaming of young adults for failing to function in the world exactly as older generations did. Millennials' innovation to survive in the face of massive debt, the instability of the gig economy and lackluster career prospects, is seen in moral terms as a failure to prioritize and is often cast as entitlement. (...)
Sweeping, monolithic representations of a generation are rarely as insightful as they purport to be, but perhaps yelling at millennials for not eating enough cheap tuna while complaining that they consume too much avocado toast to ever be able to buy homes is easier than reckoning with the alarm of surging economic inequality, the stronghold of student debt, and a failure to pass universal health care. These shaming trend stories seem to cater primarily to Baby Boomers who still believe they simply worked harder and prioritized their spending better than their millennial offspring have, and so were able to afford houses, cars, and diamond engagement rings earlier in life.
Is the collective schadenfreude induced by millennial panic stories a coping mechanism for generational guilt over leaving a worse-off economy and world for us to inherit? If so, please stop; we've got enough anxiety as is.
by Rachel Leah, Salon | Read more:
Image: Tim Boyle/Getty
Have you heard? Millennials have killed the canned tuna industry. Why? Because apparently we don't own can-openers.
Over the weekend, the Wall Street Journal reported that canned tuna consumption is way down, it's declined by 42 percent in three decades and has dropped four percent just in the last five years. And tuna companies, particularly the big three — StarKist Co., Bumble Bee Foods LLC and Chicken of the Sea International — are not happy.
While the companies spoke about rebranding efforts, such as trying out new flavored tuna packs and innovative packaging to appeal to a younger consumer base, their more realized strategy is one we've seen over and over in recent years: cluelessly scapegoating millennials for the sake of one's shrinking business."In a country focused on convenience, canned tuna isn’t cutting it with consumers," WSJ reported. "Many can’t be bothered to open and drain the cans, or fetch utensils and dishes to eat the tuna. 'A lot of millennials don’t even own can openers,' said Andy Mecs, vice president of marketing and innovation for Pittsburgh-based StarKist, a subsidiary of South Korea’s Dongwon Group." (...)
As many people suggested on Twitter, there are myriad reasons to not eat canned tuna and none of them include millennials not owning can openers. Many people simply think it's disgusting, and also there was a whole movement of concern over dolphins being killed as a byproduct of being captured in the nets of tuna fishers, plus concern over its mercury levels.
As Business Insider reported, the smell of canned tuna makes eating it for lunch during the workday a cardinal sin in today's common open office settings where lunch hours away from one's desk are considered almost a luxury. And let's not forget that two of tuna's biggest brands, StarKist and Bumble Bee, were central to a price-fixing scandal that resulted in guilty pleas from the companies and from three executives.
But alas, it can be hard to keep track of all the things that the millennial generation has taken down. There's cereal, mayonnaise, napkins, golf, department stores, savings accounts, home ownership, diamonds, even sex. But the messaging is oddly similar across all of these stories — the shaming of young adults for failing to function in the world exactly as older generations did. Millennials' innovation to survive in the face of massive debt, the instability of the gig economy and lackluster career prospects, is seen in moral terms as a failure to prioritize and is often cast as entitlement. (...)
Sweeping, monolithic representations of a generation are rarely as insightful as they purport to be, but perhaps yelling at millennials for not eating enough cheap tuna while complaining that they consume too much avocado toast to ever be able to buy homes is easier than reckoning with the alarm of surging economic inequality, the stronghold of student debt, and a failure to pass universal health care. These shaming trend stories seem to cater primarily to Baby Boomers who still believe they simply worked harder and prioritized their spending better than their millennial offspring have, and so were able to afford houses, cars, and diamond engagement rings earlier in life.
Is the collective schadenfreude induced by millennial panic stories a coping mechanism for generational guilt over leaving a worse-off economy and world for us to inherit? If so, please stop; we've got enough anxiety as is.
by Rachel Leah, Salon | Read more:
Image: Tim Boyle/Getty
They're So Dumb They Might Just Get Away With It
Recent revelations from special counsel Robert Mueller have been more intriguing than enlightening (at least so far) but they do indicate that there's a whole lot of investigating going on. The Michael Cohen plea and sentencing memorandum, as well as the heavily redacted filing on Michael Flynn's sentence, were full of tantalizing hints about various possible crimes in multiple jurisdictions. Perhaps the most interesting tidbits in those documents are those that indicate both Cohen and Flynn spent a massive number of hours being interviewed. As CNN's Ron Brownstein said, "You can imagine meeting 19 times if someone was resisting you and not providing information. But if someone is cooperating, it doesn’t take 19 meetings for them to explain nothing unusual happened.” It's clear that Cohen and Flynn have stories to tell. We only know pieces of what they are.
I can't help but wonder whether Donald Trump and his family will be able to get away with whatever it is they're suspected of simply because people will believe that they are just too dumb to have known better. I'm aware that's not a legal excuse, but the future of all this is political as much as it is legal. And the great paradox of the Trump phenomenon is that while his followers believe he is a genius of epic proportions, everyone else can see that he's monumentally stupid.
That could add up to a reluctant acceptance that Trump can't be held responsible for any of the things he's suspected of doing. His voters will say that he was actually being "smart" (as he famously claimed was the reason he didn't pay taxes), further degrading whatever standards we had for honesty and intelligence in public life. Everyone else will be stuck trying to refute the defense that he was an "outsider businessman" who didn't know that his actions were unethical or illegal. Sure, we can all scream that that doesn't or shouldn't matter and that he must be held accountable regardless. But we'll also probably have to acknowledge on some level that he was too simpleminded to understand the ramifications of his actions. He probably was.
Trump's breathtaking arrogance in these matters might just allow him to barrel through. Take, for instance, his insistence that he has not obstructed justice but is simply "fighting back." Surely criminals all think that they are just fighting back when they try to cover up their crimes, threaten witnesses or offer bribes. In their minds it's self-defense. But Trump doesn't know that he sounds like a criminal when he makes this excuse, therefore making himself look even guiltier. He thinks it's a smart defense. Most of his followers take his word at face value and see him as heroically fighting the "deep state" on their behalf. The ones who know better see him as clever for twisting reality to frustrate his opponents, who become exasperated by his obtuse inability to understand reality.
Even Ivanka Trump, who everyone seemed to think was the smart one in the family, recently proved that she's a chip off the old block too. When it was reported that Ivanka used a private email account for government business, the excuse was that she didn't realize it wasn't OK to do that. People assumed she was lying because no sentient being could have missed the scandal surrounding Hillary Clinton's use of a private email for government business, least of all someone in Donald Trump's family. But it's really not unreasonable to believe that she didn't think it would be a problem for her. After all, she and the family were meeting with various foreign businessmen and political leaders on behalf of the Trump Organization and the president-elect during the transition and saw nothing wrong with talking business during those meetings. I don't think it occurred to them that there might be something unethical in doing that because they simply don't understand what ethics are.
I can't help but wonder whether Donald Trump and his family will be able to get away with whatever it is they're suspected of simply because people will believe that they are just too dumb to have known better. I'm aware that's not a legal excuse, but the future of all this is political as much as it is legal. And the great paradox of the Trump phenomenon is that while his followers believe he is a genius of epic proportions, everyone else can see that he's monumentally stupid.That could add up to a reluctant acceptance that Trump can't be held responsible for any of the things he's suspected of doing. His voters will say that he was actually being "smart" (as he famously claimed was the reason he didn't pay taxes), further degrading whatever standards we had for honesty and intelligence in public life. Everyone else will be stuck trying to refute the defense that he was an "outsider businessman" who didn't know that his actions were unethical or illegal. Sure, we can all scream that that doesn't or shouldn't matter and that he must be held accountable regardless. But we'll also probably have to acknowledge on some level that he was too simpleminded to understand the ramifications of his actions. He probably was.
Trump's breathtaking arrogance in these matters might just allow him to barrel through. Take, for instance, his insistence that he has not obstructed justice but is simply "fighting back." Surely criminals all think that they are just fighting back when they try to cover up their crimes, threaten witnesses or offer bribes. In their minds it's self-defense. But Trump doesn't know that he sounds like a criminal when he makes this excuse, therefore making himself look even guiltier. He thinks it's a smart defense. Most of his followers take his word at face value and see him as heroically fighting the "deep state" on their behalf. The ones who know better see him as clever for twisting reality to frustrate his opponents, who become exasperated by his obtuse inability to understand reality.
Even Ivanka Trump, who everyone seemed to think was the smart one in the family, recently proved that she's a chip off the old block too. When it was reported that Ivanka used a private email account for government business, the excuse was that she didn't realize it wasn't OK to do that. People assumed she was lying because no sentient being could have missed the scandal surrounding Hillary Clinton's use of a private email for government business, least of all someone in Donald Trump's family. But it's really not unreasonable to believe that she didn't think it would be a problem for her. After all, she and the family were meeting with various foreign businessmen and political leaders on behalf of the Trump Organization and the president-elect during the transition and saw nothing wrong with talking business during those meetings. I don't think it occurred to them that there might be something unethical in doing that because they simply don't understand what ethics are.
by Heather Digby Parton, Hullabaloo | Read more:
Image: uncredited
[ed. Sad but true. It may finally come down to 'intent' vs. simple cluelessness and greed. Of course, the coverup is usually worse.]
[ed. Sad but true. It may finally come down to 'intent' vs. simple cluelessness and greed. Of course, the coverup is usually worse.]
Thursday, December 6, 2018
The XFL is a Nightmare and It's Coming to Seattle
The XFL, an alternative version of football, was born in 2001. It also died in 2001.
America wasn’t ready for “extreme” football. The pre-season XFL advertising blimp that deflated and crashed in Oakland, CA was some on-the-nose foreshadowing. After its single season, the XFL quietly faded from memory, but its founder, Vince McMahon, of World Wrestling Entertainment (WWE) acclaim, was lying in wait.
Now, a short 17 years later, America is getting exactly what we never asked for, and maybe exactly what we deserve: the Second Coming of the XFL.
McMahon announced today that he and Andrew Luck’s (you know, that guy from football) dad, Oliver Luck, will be rebooting the league. There will be eight teams: Dallas, Los Angeles, Tampa Bay, Houston, New York, St. Louis, Washington D.C., and Seattle.
So, just what are we in for? When I first heard about the XFL, I assumed it was some cool, modern revamping of football like what Twenty20 did for cricket. Nope.
Bob Costas, an NBC sportscaster, described the XFL as a combination of “mediocre high school football and a tawdry strip club.”
The XFL was co-sponsored by NBC and the WWF (the precursor to the WWE). NBC was all bitter that they lost NFL broadcasting rights to CBS. So, naturally, they teamed up with the wrestling world to bring a new, spicier football to American television sets. Wrestling and football? What could go wrong?
The game, played by mostly amateur players (aside from this one guy), was designed to be faster and more violent.
For instance, there wasn’t a coin toss. There was, instead, an “opening scramble.” Players would race toward the middle and fight to get to a football first. Whoever got it would get to choose who had possession first. One guy ripped up his shoulder so badly in his first game during the scramble that he was out for the whole season.
The cheerleaders wore scantily clad and sexually suggestive outfits. The XFL filmed inside looks into the cheerleaders’ locker room. Players were encouraged to date them, according to the Wall Street Journal. There were hot tubs in the end zones filled with actual strippers.
by Nathalie Graham, The Stranger | Read more:
Image: Fatcamera/Getty
America wasn’t ready for “extreme” football. The pre-season XFL advertising blimp that deflated and crashed in Oakland, CA was some on-the-nose foreshadowing. After its single season, the XFL quietly faded from memory, but its founder, Vince McMahon, of World Wrestling Entertainment (WWE) acclaim, was lying in wait.
Now, a short 17 years later, America is getting exactly what we never asked for, and maybe exactly what we deserve: the Second Coming of the XFL.
McMahon announced today that he and Andrew Luck’s (you know, that guy from football) dad, Oliver Luck, will be rebooting the league. There will be eight teams: Dallas, Los Angeles, Tampa Bay, Houston, New York, St. Louis, Washington D.C., and Seattle.So, just what are we in for? When I first heard about the XFL, I assumed it was some cool, modern revamping of football like what Twenty20 did for cricket. Nope.
Bob Costas, an NBC sportscaster, described the XFL as a combination of “mediocre high school football and a tawdry strip club.”
The XFL was co-sponsored by NBC and the WWF (the precursor to the WWE). NBC was all bitter that they lost NFL broadcasting rights to CBS. So, naturally, they teamed up with the wrestling world to bring a new, spicier football to American television sets. Wrestling and football? What could go wrong?
The game, played by mostly amateur players (aside from this one guy), was designed to be faster and more violent.
For instance, there wasn’t a coin toss. There was, instead, an “opening scramble.” Players would race toward the middle and fight to get to a football first. Whoever got it would get to choose who had possession first. One guy ripped up his shoulder so badly in his first game during the scramble that he was out for the whole season.
The cheerleaders wore scantily clad and sexually suggestive outfits. The XFL filmed inside looks into the cheerleaders’ locker room. Players were encouraged to date them, according to the Wall Street Journal. There were hot tubs in the end zones filled with actual strippers.
by Nathalie Graham, The Stranger | Read more:
Image: Fatcamera/Getty
Lunch With M.
One afternoon last month, a woman in her early thirties, with shoulder-length blond hair and large brown eyes, arrived at Jean Georges, on the ground floor of the Trump International Hotel, in midtown Manhattan. The restaurant, which is owned by the chef Jean-Georges Vongerichten, and is one of the highest rated in the world, has an understated décor, with bare white walls and floor-to-ceiling windows. The woman took a seat at one of the tables in the center of the room. She wore a light-blue dress with a high neckline, little makeup, and no jewelry. There was nothing remarkable about her appearance, and her demeanor was quiet and unassuming, as if designed to deflect attention—a trait indispensable for her profession as an inspector for the Michelin hotel-and-restaurant guide. (...)
Michelin has gone to extraordinary lengths to maintain the anonymity of its inspectors. Many of the company’s top executives have never met an inspector; inspectors themselves are advised not to disclose their line of work, even to their parents (who might be tempted to boast about it); and, in all the years that it has been putting out the guide, Michelin has refused to allow its inspectors to speak to journalists. The inspectors write reports that are distilled, in annual “stars meetings” at the guide’s various national offices, into the ranking of three stars, two stars, or one star—or no stars. (Establishments that Michelin deems unworthy of a visit are not included in the guide.) A three-star Michelin ranking—like that enjoyed by Jean Georges—is exceedingly rare. Only twenty-six three-star restaurants exist in France, and only eighty-one in the world. (...)
Maxime is a New Yorker. She said that speaking to me about her work felt “surreal.” “We spend all our time not letting people know who we are,” she said, but admitted that she had told her husband what she does for a living. “He’s an attorney; he knows all about confidentiality.” For most others, she keeps her occupation vague. “We try not to lie,” she said. “You say you’re ‘in publishing,’ something like that.”
The waiter, a young man in a dark suit, handed us menus. I asked Maxime how she chooses what to order.
“You’re looking for something that really tests a number of quality ingredients and then something that’s a little complex, because you want to see what the kitchen can do,” she said. “We would never order something like a salad. We rarely order soup.” She decided to try the foie-gras brûlée, “although I usually avoid it, because of the calories.”
Maxime eats out more than two hundred days of the year, lunch and dinner. She eats the maximum number of courses offered—at Jean Georges, we were having three courses, plus dessert; that way, she said, “you really get to see the most food”—and she is required to eat everything on her plate. It is a regimen that calls to mind the force-feeding of the ducks that supply Vongerichten with his velvety foie gras, but Maxime, blessed with a quick metabolism, had managed to avoid obesity, an occupational hazard.
She was tending toward the Arctic char for her main course but couldn’t decide about her second course. The waiter reappeared and asked if he could answer any questions.
“Can you tell me about the crab toast?” she asked.
“It’s Peekytoe crab, a chiffonade of tarragon as well as chives topped with white sesame seeds, toasted in the oven, finished with a miso mustard, and a pear salad on the side,” he said.
“It’s new?” she said.
“About a week on the menu.”
She asked the waiter to give her a minute and then leaned in to me. Inspectors love it when they ask a question and can tell that a waiter has made up an answer, she explained, adding, “That never happens here.”
The original Guide Michelin was developed by André Michelin, an engineer, and his younger brother, Édouard. Born into a wealthy manufacturing family in Clermont-Ferrand, the brothers, in 1895, presented a new design for a pneumatic tire for cars. Automobiles were still a rarity on roads in France. The brothers had the idea that a guidebook to hotels in the French countryside would encourage people to climb into a car (equipped with Michelin tires) and hit the open road. The first edition, published in 1900, was a five-hundred-and-seventy-five-page alphabetical listing of towns throughout France and the distances between them, with recommendations for hotels and places to refuel, and instructions on how to change a flat. In a preface to the first edition, André wrote, “This work comes out with the century; it will last as long.” In 1933, the Michelin brothers introduced the first countrywide restaurant listings and unveiled the star system for ranking food, with one star denoting “a very good restaurant in its class”; two stars “excellent cooking, worth a detour”; and three stars “exceptional cuisine, worth a special journey.”
Over the years, other publications attempted to challenge Michelin but without success. To offset the expense of sending inspectors to restaurants across the country, rival guides were obliged to accept free meals, or to offer favors, like free advertising in the guides’ pages. Michelin’s inspectors faced no such quid pro quo. A century after André and Édouard created their first tire patent, Michelin has grown into one of the most successful multinational corporations in the world, a company more than three times the size of Goodyear. Michelin’s profits help to defray the costs of food inspectors’ salaries, travel budgets, and restaurant bills (which can run into real money at the upper end of the gastronomic scale: six years ago, at Bernard Loiseau’s La Côte d’Or, a three-star restaurant in Burgundy, the chicken stuffed with carrots, leeks, and truffles was two hundred and sixty-seven dollars). This independence, coupled with the jealously guarded anonymity of its inspectors, is what gives Michelin its aura of incorruptibility. The French chef Paul Bocuse, who helped create nouvelle cuisine in the nineteen-sixties, and whose restaurant near Lyons has held a three-star Michelin ranking for a record forty-five years, has said, “Michelin is the only guide that counts.” Indeed, in France publication of the guide each year sparks the kind of media excitement attendant on the Academy Awards. The days and weeks leading up to publication day are given over to endless debate, speculation, and rumor on TV and in newspapers over who might lose, and who might gain, a star. The results, revealed in early March, provide either a very public triumph or a very public humiliation for the chefs concerned, and a corresponding rise or drop in revenues for their restaurants.
Not everyone, however, is convinced that anonymous experts with bottomless expense accounts are the key to a dependable restaurant guide. “We’re coming at it from a completely different perspective,” says Nina Zagat, who dreamed up the idea of a customer-driven food survey with her husband, Tim, in their Upper West Side apartment thirty-one years ago. Today, Zagat covers more than ninety cities worldwide, is available as an iPhone app, and remains the top-selling restaurant guide in New York. “We’ve never believed that there were experts that should tell you what to do.”
“I’d love to know what their training is,” Tim Zagat added, speaking about Michelin’s inspectors. “Usually, the experts—for example, the major critics for the major papers—you know what their background is. But this business of making a virtue out of not knowing? I question it. How are you supposed to judge their expertise if you don’t have any idea who they are?”
by John Colapinto, New Yorker | Read more:
Image: Floc’h
Michelin has gone to extraordinary lengths to maintain the anonymity of its inspectors. Many of the company’s top executives have never met an inspector; inspectors themselves are advised not to disclose their line of work, even to their parents (who might be tempted to boast about it); and, in all the years that it has been putting out the guide, Michelin has refused to allow its inspectors to speak to journalists. The inspectors write reports that are distilled, in annual “stars meetings” at the guide’s various national offices, into the ranking of three stars, two stars, or one star—or no stars. (Establishments that Michelin deems unworthy of a visit are not included in the guide.) A three-star Michelin ranking—like that enjoyed by Jean Georges—is exceedingly rare. Only twenty-six three-star restaurants exist in France, and only eighty-one in the world. (...)
Maxime is a New Yorker. She said that speaking to me about her work felt “surreal.” “We spend all our time not letting people know who we are,” she said, but admitted that she had told her husband what she does for a living. “He’s an attorney; he knows all about confidentiality.” For most others, she keeps her occupation vague. “We try not to lie,” she said. “You say you’re ‘in publishing,’ something like that.”The waiter, a young man in a dark suit, handed us menus. I asked Maxime how she chooses what to order.
“You’re looking for something that really tests a number of quality ingredients and then something that’s a little complex, because you want to see what the kitchen can do,” she said. “We would never order something like a salad. We rarely order soup.” She decided to try the foie-gras brûlée, “although I usually avoid it, because of the calories.”
Maxime eats out more than two hundred days of the year, lunch and dinner. She eats the maximum number of courses offered—at Jean Georges, we were having three courses, plus dessert; that way, she said, “you really get to see the most food”—and she is required to eat everything on her plate. It is a regimen that calls to mind the force-feeding of the ducks that supply Vongerichten with his velvety foie gras, but Maxime, blessed with a quick metabolism, had managed to avoid obesity, an occupational hazard.
She was tending toward the Arctic char for her main course but couldn’t decide about her second course. The waiter reappeared and asked if he could answer any questions.
“Can you tell me about the crab toast?” she asked.
“It’s Peekytoe crab, a chiffonade of tarragon as well as chives topped with white sesame seeds, toasted in the oven, finished with a miso mustard, and a pear salad on the side,” he said.
“It’s new?” she said.
“About a week on the menu.”
She asked the waiter to give her a minute and then leaned in to me. Inspectors love it when they ask a question and can tell that a waiter has made up an answer, she explained, adding, “That never happens here.”
The original Guide Michelin was developed by André Michelin, an engineer, and his younger brother, Édouard. Born into a wealthy manufacturing family in Clermont-Ferrand, the brothers, in 1895, presented a new design for a pneumatic tire for cars. Automobiles were still a rarity on roads in France. The brothers had the idea that a guidebook to hotels in the French countryside would encourage people to climb into a car (equipped with Michelin tires) and hit the open road. The first edition, published in 1900, was a five-hundred-and-seventy-five-page alphabetical listing of towns throughout France and the distances between them, with recommendations for hotels and places to refuel, and instructions on how to change a flat. In a preface to the first edition, André wrote, “This work comes out with the century; it will last as long.” In 1933, the Michelin brothers introduced the first countrywide restaurant listings and unveiled the star system for ranking food, with one star denoting “a very good restaurant in its class”; two stars “excellent cooking, worth a detour”; and three stars “exceptional cuisine, worth a special journey.”
Over the years, other publications attempted to challenge Michelin but without success. To offset the expense of sending inspectors to restaurants across the country, rival guides were obliged to accept free meals, or to offer favors, like free advertising in the guides’ pages. Michelin’s inspectors faced no such quid pro quo. A century after André and Édouard created their first tire patent, Michelin has grown into one of the most successful multinational corporations in the world, a company more than three times the size of Goodyear. Michelin’s profits help to defray the costs of food inspectors’ salaries, travel budgets, and restaurant bills (which can run into real money at the upper end of the gastronomic scale: six years ago, at Bernard Loiseau’s La Côte d’Or, a three-star restaurant in Burgundy, the chicken stuffed with carrots, leeks, and truffles was two hundred and sixty-seven dollars). This independence, coupled with the jealously guarded anonymity of its inspectors, is what gives Michelin its aura of incorruptibility. The French chef Paul Bocuse, who helped create nouvelle cuisine in the nineteen-sixties, and whose restaurant near Lyons has held a three-star Michelin ranking for a record forty-five years, has said, “Michelin is the only guide that counts.” Indeed, in France publication of the guide each year sparks the kind of media excitement attendant on the Academy Awards. The days and weeks leading up to publication day are given over to endless debate, speculation, and rumor on TV and in newspapers over who might lose, and who might gain, a star. The results, revealed in early March, provide either a very public triumph or a very public humiliation for the chefs concerned, and a corresponding rise or drop in revenues for their restaurants.
Not everyone, however, is convinced that anonymous experts with bottomless expense accounts are the key to a dependable restaurant guide. “We’re coming at it from a completely different perspective,” says Nina Zagat, who dreamed up the idea of a customer-driven food survey with her husband, Tim, in their Upper West Side apartment thirty-one years ago. Today, Zagat covers more than ninety cities worldwide, is available as an iPhone app, and remains the top-selling restaurant guide in New York. “We’ve never believed that there were experts that should tell you what to do.”
“I’d love to know what their training is,” Tim Zagat added, speaking about Michelin’s inspectors. “Usually, the experts—for example, the major critics for the major papers—you know what their background is. But this business of making a virtue out of not knowing? I question it. How are you supposed to judge their expertise if you don’t have any idea who they are?”
by John Colapinto, New Yorker | Read more:
Image: Floc’h
Wednesday, December 5, 2018
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