[ed. Well, that went well didn't it. Nothing like calling an emergency meeting then declaring there's nothing to worry about. Certainly no need to... panic! The existence of the so-called Plunge Protection Team (PPT) - a coordinated effort among banks and regulators to manipulate markets - has always been suspected but never formally acknowledged. This compliments the Greenspan/Bernanke "Puts", and market circuit breakers (or trading curbs) that actually do exist to halt market trading during a crash. All are manipulations to keep the market propped up rather than finding its normal level of value (at the pace it would like to find it). The casino is definitely rigged.]
Monday, December 24, 2018
Sunday, December 23, 2018
Machine Politics
The Goliath of totalitarianism will be brought down by the David of the microchip,” Ronald Reagan said in 1989. He was speaking to a thousand British notables in London’s historic Guildhall, several months before the fall of the Berlin Wall. Reagan proclaimed that the world was on the precipice of “a new era in human history,” one that would bring “peace and freedom for all.” Communism was crumbling, just as fascism had before it. Liberal democracies would soon encircle the globe, thanks to the innovations of Silicon Valley. “I believe,” he said, “that more than armies, more than diplomacy, more than the best intentions of democratic nations, the communications revolution will be the greatest force for the advancement of human freedom the world has ever seen.”
At the time, most everyone thought Reagan was right. The twentieth century had been dominated by media that delivered the same material to millions of people at the same time—radio and newspapers, movies and television. These were the kinds of one-to-many, top-down mass media that Orwell’s Big Brother had used to stay in power. Now, however, Americans were catching sight of the internet. They believed that it would do what earlier media could not: it would allow people to speak for themselves, directly to one another, around the world. “True personalization is now upon us,” wrote MIT professor Nicholas Negroponte in his 1995 bestseller Being Digital. Corporations, industries, and even whole nations would soon be transformed as centralized authorities were demolished. Hierarchies would dissolve and peer-to-peer collaborations would take their place. “Like a force of nature,” wrote Negroponte, “the digital age cannot be denied or stopped.”
One of the deepest ironies of our current situation is that the modes of communication that enable today’s authoritarians were first dreamed up to defeat them. The same technologies that were meant to level the political playing field have brought troll farms and Russian bots to corrupt our elections. The same platforms of self-expression that we thought would let us empathize with one another and build a more harmonious society have been co-opted by figures such as Milo Yiannopoulos and, for that matter, Donald Trump, to turn white supremacy into a topic of dinner-table conversation. And the same networked methods of organizing that so many thought would bring down malevolent states have not only failed to do so—think of the Arab Spring—but have instead empowered autocrats to more closely monitor protest and dissent. (...)
At the time, most everyone thought Reagan was right. The twentieth century had been dominated by media that delivered the same material to millions of people at the same time—radio and newspapers, movies and television. These were the kinds of one-to-many, top-down mass media that Orwell’s Big Brother had used to stay in power. Now, however, Americans were catching sight of the internet. They believed that it would do what earlier media could not: it would allow people to speak for themselves, directly to one another, around the world. “True personalization is now upon us,” wrote MIT professor Nicholas Negroponte in his 1995 bestseller Being Digital. Corporations, industries, and even whole nations would soon be transformed as centralized authorities were demolished. Hierarchies would dissolve and peer-to-peer collaborations would take their place. “Like a force of nature,” wrote Negroponte, “the digital age cannot be denied or stopped.”One of the deepest ironies of our current situation is that the modes of communication that enable today’s authoritarians were first dreamed up to defeat them. The same technologies that were meant to level the political playing field have brought troll farms and Russian bots to corrupt our elections. The same platforms of self-expression that we thought would let us empathize with one another and build a more harmonious society have been co-opted by figures such as Milo Yiannopoulos and, for that matter, Donald Trump, to turn white supremacy into a topic of dinner-table conversation. And the same networked methods of organizing that so many thought would bring down malevolent states have not only failed to do so—think of the Arab Spring—but have instead empowered autocrats to more closely monitor protest and dissent. (...)
Today, that sense of utopian mission persists throughout Silicon Valley. A month after Trump took office, Mark Zuckerberg laid out his social vision in a Facebook post entitled “Building Global Community.” Though only a few thousand words long, the document is every bit as ambitious as Wiener’s The Human Use of Human Beings. Like Wiener, Zuckerberg envisions a world in which individuals, communities, and nations create an ideal social order through the constant exchange of information—that is, through staying “connected.” “Our greatest opportunities are now global—like spreading prosperity and freedom, promoting peace and understanding, lifting people out of poverty, and accelerating science,” he wrote, sounding much like a representative of the Cold War–era State Department. “In times like these,” he continued, “the most important thing we at Facebook can do is develop the social infrastructure to give people the power to build a global community that works for all of us.”
For Zuckerberg, as for much of the left today, the key to a more egalitarian society lies in the freeing of individual voices, the expression of different lived experiences, and the forming of social groups around shared identities. But Facebook has tried to enable this kind of society by creating privately owned, for-profit digital technologies. As Zuckerberg put it, echoing the goals of the Whole Earth Catalog fifty years before, “Our commitment is to continue improving our tools to give you the power to share your experience.” Engineers like Zuckerberg or, for that matter, Wiener, have little interest in party politics: if you want to change the world, you don’t lobby or vote; you build new technologies.
This view has proved enormously profitable across Silicon Valley. By justifying the belief that for-profit systems are the best way to improve public life, it has helped turn the expression of individual experience into raw material that can be mined, processed, and sold. The big social-media companies, which often began with a dream of making WELL-like virtual communities at scale, have now become radically commercialized and devoted to surveillance at every level. On the WELL, users listened to each other, trying to get a feel for what kinds of people they were and how they might work together. Now user data is optimized and retailed automatically, to advertisers and other media firms, in real time. Computers track conversations and extract patterns at light speed, rendering them profitable. In 2017, Facebook reported annual revenue of more than $40 billion.
Social media’s ability to simultaneously solicit and surveil communication has not only turned the dream of individualized, expressive democracy into a fountain of wealth. It has turned it into the foundation of a new kind of authoritarianism. Fascists used to be distinguished by their penchant for obedience, submission, and self-erasure, with the power of public emotional expression reserved for the dictator. That is why both Wiener and the Committee stressed the qualities of independence and self-awareness in the democratic personality. And it was against the background of fascism that, during and after the 1960s, Vietnam protestors, civil-rights activists, feminists, queer-rights activists, and other members of the myriad communities who drove the rise of identity politics asserted their individual, lived experience as the basis of their right to political power. If the essence of totalitarianism was collective self-effacement, the foundation of democracy would have to be the assertion of collective individuality.
Today, radio and television talk shows, podcasts, blogs, and, of course, social media are part of a new media ecosystem that has rendered the voicing of one’s experiences so easy and powerful as to turn it into an appealing tool for the right as well as the left. (...)
Pundits on the left are fond of reminding us of how Trump storms and fulminates, the White House itself unable to contain his petulance and rage. Those same pundits then marvel that around 40 percent of the American people still think he is doing a good job. What they fail to understand is that Trump has mastered the politics of authenticity for a new media age. What mainstream analysts see as psychological weakness, Trump’s fans see as the man just being himself. What’s more, his anger, his rants, and his furious narcissism act out the feelings of people who believe they have been dispossessed by immigrants, women, and people of color. Trump is not only true to his own emotions. He is the personification of his supporters’ grievances. He is to his political base what Hitler was to many Germans, or Mussolini to Italians—the living embodiment of the nation.
Here, the identity-centered liberalism that has dominated so much of public life since the Second World War has come full circle. Its victories have been many, from civil rights to legalized abortion and gay marriage, and they have dramatically changed American life for the better. But in the form of people like Trump and Spencer, the performance of individualism—the revelation of the whole person in the context of public debate that was meant for so long to be a bulwark against totalitarianism—has also allowed today’s authoritarians to claim a new legitimacy. Fifty years ago, the New Left marched on the Pentagon, hoping to undermine the military-industrial complex behind the Vietnam War. Today, Trump attacks the FBI and the Justice Department, hoping to undermine a fantastical Minotaur called “the deep state.” Fifty years ago, the counterculture hoped to bring about a world in which individuals could be more authentically themselves, and in which the hierarchies of organizations and states would disappear. Today, those hierarchical institutions are all that stand between us and a cult of personality. (...)
The new authoritarianism represented by Spencer and Trump is not only a product of who owns today’s media. It’s also a product of the political vision that helped drive the creation of social media in the first place—a vision that distrusts public ownership and the political process while celebrating engineering as an alternative form of governance. Since the Second World War, critics have challenged the legitimacy of our civic institutions simply on the grounds that they were bureaucratic and slow to change. Yet organizations such as hospitals demonstrate the value of these features. They remind us that a democracy must do more than allow its citizens to speak. It must help them live. Above all, it must work to distribute our wealth more equably and to ensure that every member of society has both independence and security. This is work that requires intense negotiation among groups with conflicting material interests, and, often, deep-seated cultural differences. It requires the existence of institutions that can preserve and enforce the results of those negotiations over time. And it requires that those institutions be obliged to serve the public before tending to their own profits.
Today’s social media will never be able to do the difficult, embodied work of democracy. Computer-supported interconnection is simply no substitute for face-to-face negotiation, long-term collaboration, and the hard work of living together. The Black Lives Matter and #MeToo movements have taught us that social media can be a powerful force for liberating us from the fiction that all is well just as it is. But the attention these activists have brought to their causes will mean little if the changes they call for are not enshrined in explicit, enforceable laws. Even though the American state can be inefficient, unfair, corrupt, and discriminatory, the logic of representation that underlies it remains the most effective engine we have for ensuring the equable distribution of our collective wealth.
For Zuckerberg, as for much of the left today, the key to a more egalitarian society lies in the freeing of individual voices, the expression of different lived experiences, and the forming of social groups around shared identities. But Facebook has tried to enable this kind of society by creating privately owned, for-profit digital technologies. As Zuckerberg put it, echoing the goals of the Whole Earth Catalog fifty years before, “Our commitment is to continue improving our tools to give you the power to share your experience.” Engineers like Zuckerberg or, for that matter, Wiener, have little interest in party politics: if you want to change the world, you don’t lobby or vote; you build new technologies.
This view has proved enormously profitable across Silicon Valley. By justifying the belief that for-profit systems are the best way to improve public life, it has helped turn the expression of individual experience into raw material that can be mined, processed, and sold. The big social-media companies, which often began with a dream of making WELL-like virtual communities at scale, have now become radically commercialized and devoted to surveillance at every level. On the WELL, users listened to each other, trying to get a feel for what kinds of people they were and how they might work together. Now user data is optimized and retailed automatically, to advertisers and other media firms, in real time. Computers track conversations and extract patterns at light speed, rendering them profitable. In 2017, Facebook reported annual revenue of more than $40 billion.
Social media’s ability to simultaneously solicit and surveil communication has not only turned the dream of individualized, expressive democracy into a fountain of wealth. It has turned it into the foundation of a new kind of authoritarianism. Fascists used to be distinguished by their penchant for obedience, submission, and self-erasure, with the power of public emotional expression reserved for the dictator. That is why both Wiener and the Committee stressed the qualities of independence and self-awareness in the democratic personality. And it was against the background of fascism that, during and after the 1960s, Vietnam protestors, civil-rights activists, feminists, queer-rights activists, and other members of the myriad communities who drove the rise of identity politics asserted their individual, lived experience as the basis of their right to political power. If the essence of totalitarianism was collective self-effacement, the foundation of democracy would have to be the assertion of collective individuality.
Today, radio and television talk shows, podcasts, blogs, and, of course, social media are part of a new media ecosystem that has rendered the voicing of one’s experiences so easy and powerful as to turn it into an appealing tool for the right as well as the left. (...)
Pundits on the left are fond of reminding us of how Trump storms and fulminates, the White House itself unable to contain his petulance and rage. Those same pundits then marvel that around 40 percent of the American people still think he is doing a good job. What they fail to understand is that Trump has mastered the politics of authenticity for a new media age. What mainstream analysts see as psychological weakness, Trump’s fans see as the man just being himself. What’s more, his anger, his rants, and his furious narcissism act out the feelings of people who believe they have been dispossessed by immigrants, women, and people of color. Trump is not only true to his own emotions. He is the personification of his supporters’ grievances. He is to his political base what Hitler was to many Germans, or Mussolini to Italians—the living embodiment of the nation.
Here, the identity-centered liberalism that has dominated so much of public life since the Second World War has come full circle. Its victories have been many, from civil rights to legalized abortion and gay marriage, and they have dramatically changed American life for the better. But in the form of people like Trump and Spencer, the performance of individualism—the revelation of the whole person in the context of public debate that was meant for so long to be a bulwark against totalitarianism—has also allowed today’s authoritarians to claim a new legitimacy. Fifty years ago, the New Left marched on the Pentagon, hoping to undermine the military-industrial complex behind the Vietnam War. Today, Trump attacks the FBI and the Justice Department, hoping to undermine a fantastical Minotaur called “the deep state.” Fifty years ago, the counterculture hoped to bring about a world in which individuals could be more authentically themselves, and in which the hierarchies of organizations and states would disappear. Today, those hierarchical institutions are all that stand between us and a cult of personality. (...)
The new authoritarianism represented by Spencer and Trump is not only a product of who owns today’s media. It’s also a product of the political vision that helped drive the creation of social media in the first place—a vision that distrusts public ownership and the political process while celebrating engineering as an alternative form of governance. Since the Second World War, critics have challenged the legitimacy of our civic institutions simply on the grounds that they were bureaucratic and slow to change. Yet organizations such as hospitals demonstrate the value of these features. They remind us that a democracy must do more than allow its citizens to speak. It must help them live. Above all, it must work to distribute our wealth more equably and to ensure that every member of society has both independence and security. This is work that requires intense negotiation among groups with conflicting material interests, and, often, deep-seated cultural differences. It requires the existence of institutions that can preserve and enforce the results of those negotiations over time. And it requires that those institutions be obliged to serve the public before tending to their own profits.
Today’s social media will never be able to do the difficult, embodied work of democracy. Computer-supported interconnection is simply no substitute for face-to-face negotiation, long-term collaboration, and the hard work of living together. The Black Lives Matter and #MeToo movements have taught us that social media can be a powerful force for liberating us from the fiction that all is well just as it is. But the attention these activists have brought to their causes will mean little if the changes they call for are not enshrined in explicit, enforceable laws. Even though the American state can be inefficient, unfair, corrupt, and discriminatory, the logic of representation that underlies it remains the most effective engine we have for ensuring the equable distribution of our collective wealth.
by Fred Turner, Harper's | Read more:
Image: uncredited
Saturday, December 22, 2018
A Man Lost His Job to a Rape Joke. Are You Cheering?
Hooray for our side: another privileged old white guy chopped down, career in tatters. Hear us roar! Speak truth to power! In this case the malfeasant was film critic David Edelstein, who made a stupid, quickly deleted, misfired “joke” on his private Facebook page, regarding the death of Last Tango in Paris director Bernardo Bertolucci. Posted Edelstein: “Even grief is better with butter,” accompanied by a still of Maria Schneider and Marlon Brando from the film – yes, the infamous and now controversial anal rape scene.
Edelstein had been doing movie reviews for the last 16 years on the National Public Radio syndicated show Fresh Air, hosted by the much revered Terry Gross. He’s also the chief film critic for New York magazine and appears on the CBS Sunday Morning show. He’s what you might call “an influencer”, and his 2,091 Facebook friends include many well-known feminists. One of them apparently took a screenshot of the post and circulated it or, as another of his Facebook friends put it, “narced to the universe”. (Disclosure: I’m among those friends, though have taken no screenshots.)
What was Edelstein thinking? You can hear him straining and failing to find the joke, a condition that afflicts many who spend too much time on social media and get addicted to those endorphin-boosting likes. You need another fix and “edgy humor” is a good way of maximizing your response rate – as technology critics have lately informed us, Facebook’s algorithms favor posts that produce the most “emotional engagement”, positive or negative.
In this case, actress Martha Plimpton, herself an occasional NPR host (on the New York affiliate WNYC) and in receipt of the screenshot, quickly tweeted it to her 196,000 followers along with the demand: “Fire him. Immediately.” Which happened the next day: Fresh Air and NPR announced that they were cutting ties with Edelstein because the post had been “offensive and unacceptable, especially given Maria Schneider’s experience during the filming of Last Tango in Paris”.
The backstory: in a 2006 interview Schneider said that the filming of the scene had left her feeling humiliated and “a little raped”. The rape itself was in the script, but the butter wasn’t; Bertolucci and Brando had manipulated her by springing it on her to get a more spontaneous performance, or that was their line. (There seems to have been confusion in the social media response to Edelstein’s firing about whether Schneider was actually raped; she wasn’t.) The butter reappears in a later scene where Schneider’s character Jeanne uses it to anally penetrate Brando’s character. Jeanne also tricks him into getting an electric shock and later shoots him. At the time the film was regarded as a masterpiece; Bertolucci and Brando were both nominated for Academy Awards.
These are, of course, different times. Very different! In fact, it’s not an overstatement to say we’re in the midst of a cultural revolution, prompted, of course by #MeToo, along with the fact that more women are in positions of cultural and institutional power, or certainly cultural influence – vestigial patriarchal elements are being weeded out and replaced with new values. Sexual scumminess is one of those elements, though arguments remain about what is and isn’t scummy.
One part of me cheers – bring the clueless fuckers down, let heads roll. Men: stop being gross! Another part of me wonders about the expansion of employers’ power over workers’ leisure time, among other qualms. So let’s briefly pause and examine some of the tacit assumptions and values that Edelstein’s firing brings to light, especially regarding conditions of employment and inadvertent offense-causing.
As I read it, the first unstated rule would be that there’s nothing inadvertent about inadvertent offense: jokes and flubs will be treated as diagnostic instruments, like those personality tests sometimes administered to prospective employees, and revelatory of the true character of the flubber. Corollary: a clear soul will be required to remain employed.
The second unstated rule is that causing offense is a permanent mark against you, however apologetic you might be. One flub and you’re out. An unthinking social media post will outweigh a 16-year track record. Corollary: there’s no “off the clock” – it’s company time all the time.
A third unstated rule is that men need to prove and re-prove that they understand rape is bad, and take it seriously, not unlike signing a loyalty oath to demonstrate you’re not a communist. Failure to keep re-proving it implicates you in crimes against women. Edelstein was clearly insensitive about rape – well, not rape per se, but Schneider’s account of feeling a little raped. He said he was unaware of Schneider’s interview, but that was either not believed or didn’t matter. Corollary: men are not to be believed, they will say anything.
It was once argued, among a certain style of feminist, that when women came to power the world would be a more humane place because women’s style of rule would be different than men’s – more peaceable, more fair and collaborative, perhaps even a more moral style of power. To some extent this may prove to be true: certainly there will be less transactional sex in post-patriarchal times; likely less groping and leering. But will there be a more humane treatment of the workforce?
No doubt many will see the evolution of gendered management styles from “Give me a blow job or I’ll fire you” to “Don’t tell a joke I don’t like or I’ll fire you” as preferable. Personally, I think they’re both encroachments. Meet the new boss, same as the old boss.
[ed. Richard Pryor must be rolling in his grave. See also: It's the year that celebrities were held to account. Are we outraged too easily? (The Guardian)]
Edelstein had been doing movie reviews for the last 16 years on the National Public Radio syndicated show Fresh Air, hosted by the much revered Terry Gross. He’s also the chief film critic for New York magazine and appears on the CBS Sunday Morning show. He’s what you might call “an influencer”, and his 2,091 Facebook friends include many well-known feminists. One of them apparently took a screenshot of the post and circulated it or, as another of his Facebook friends put it, “narced to the universe”. (Disclosure: I’m among those friends, though have taken no screenshots.)
What was Edelstein thinking? You can hear him straining and failing to find the joke, a condition that afflicts many who spend too much time on social media and get addicted to those endorphin-boosting likes. You need another fix and “edgy humor” is a good way of maximizing your response rate – as technology critics have lately informed us, Facebook’s algorithms favor posts that produce the most “emotional engagement”, positive or negative.In this case, actress Martha Plimpton, herself an occasional NPR host (on the New York affiliate WNYC) and in receipt of the screenshot, quickly tweeted it to her 196,000 followers along with the demand: “Fire him. Immediately.” Which happened the next day: Fresh Air and NPR announced that they were cutting ties with Edelstein because the post had been “offensive and unacceptable, especially given Maria Schneider’s experience during the filming of Last Tango in Paris”.
The backstory: in a 2006 interview Schneider said that the filming of the scene had left her feeling humiliated and “a little raped”. The rape itself was in the script, but the butter wasn’t; Bertolucci and Brando had manipulated her by springing it on her to get a more spontaneous performance, or that was their line. (There seems to have been confusion in the social media response to Edelstein’s firing about whether Schneider was actually raped; she wasn’t.) The butter reappears in a later scene where Schneider’s character Jeanne uses it to anally penetrate Brando’s character. Jeanne also tricks him into getting an electric shock and later shoots him. At the time the film was regarded as a masterpiece; Bertolucci and Brando were both nominated for Academy Awards.
These are, of course, different times. Very different! In fact, it’s not an overstatement to say we’re in the midst of a cultural revolution, prompted, of course by #MeToo, along with the fact that more women are in positions of cultural and institutional power, or certainly cultural influence – vestigial patriarchal elements are being weeded out and replaced with new values. Sexual scumminess is one of those elements, though arguments remain about what is and isn’t scummy.
One part of me cheers – bring the clueless fuckers down, let heads roll. Men: stop being gross! Another part of me wonders about the expansion of employers’ power over workers’ leisure time, among other qualms. So let’s briefly pause and examine some of the tacit assumptions and values that Edelstein’s firing brings to light, especially regarding conditions of employment and inadvertent offense-causing.
As I read it, the first unstated rule would be that there’s nothing inadvertent about inadvertent offense: jokes and flubs will be treated as diagnostic instruments, like those personality tests sometimes administered to prospective employees, and revelatory of the true character of the flubber. Corollary: a clear soul will be required to remain employed.
The second unstated rule is that causing offense is a permanent mark against you, however apologetic you might be. One flub and you’re out. An unthinking social media post will outweigh a 16-year track record. Corollary: there’s no “off the clock” – it’s company time all the time.
A third unstated rule is that men need to prove and re-prove that they understand rape is bad, and take it seriously, not unlike signing a loyalty oath to demonstrate you’re not a communist. Failure to keep re-proving it implicates you in crimes against women. Edelstein was clearly insensitive about rape – well, not rape per se, but Schneider’s account of feeling a little raped. He said he was unaware of Schneider’s interview, but that was either not believed or didn’t matter. Corollary: men are not to be believed, they will say anything.
It was once argued, among a certain style of feminist, that when women came to power the world would be a more humane place because women’s style of rule would be different than men’s – more peaceable, more fair and collaborative, perhaps even a more moral style of power. To some extent this may prove to be true: certainly there will be less transactional sex in post-patriarchal times; likely less groping and leering. But will there be a more humane treatment of the workforce?
No doubt many will see the evolution of gendered management styles from “Give me a blow job or I’ll fire you” to “Don’t tell a joke I don’t like or I’ll fire you” as preferable. Personally, I think they’re both encroachments. Meet the new boss, same as the old boss.
by Laura Kipnis, The Guardian | Read more:
Image: Mark Ralston/AFP/Getty Images[ed. Richard Pryor must be rolling in his grave. See also: It's the year that celebrities were held to account. Are we outraged too easily? (The Guardian)]
The Itsy-Bitsy, Teenie-Weenie, Very Litigious Bikini
The Itsy-Bitsy, Teenie-Weenie, Very Litigious Bikini (NY Times)
Image: Maria Solange Ferrarini.CreditCreditDado Galdieri for The New York Times
Toward the Wiki Society
Wikipedia is now so good that we don’t tend to think about how good it is. It’s just there, and it feels as if it’s always been there. “Oh yes, the vast free repository of human knowledge, what about it?” But Wikipedia is remarkable. Astonishing, really. It’s built on a model that exists almost nowhere else online. It’s like nothing else in existence. And it gives us a bit of insight into how we might reform other platforms, even society itself.
First, let’s remember just how “top-down” almost all of the largest web services are. Google, Facebook, Amazon, Twitter. Each a multi-billion dollar company, each run for profit and owned by private investors, each controlled by a powerful CEO. Facebook, Twitter, and Google make money almost entirely through advertising: Companies pay them to put products in front of users’ eyeballs, and the platforms alter the user experience accordingly. Each of these companies operates exactly the way you’d expect of a corporation seeking monopoly power. They crush tiny competitors, they buy politicians (Google and Facebook give more money to Republicans than Democrats), and they are extremely secretive about their internal decision-making process. They do not tell you the algorithms that determine what they will show you, or the experiments they are using to figure out how to manipulate users’ psychology. (Facebook had a brief scandal in 2014 when it was revealed to have tested different ways to mess with people’s emotions, seeing if it could bump users toward happiness or sadness with the display of positive or negative news. Over 700,000 news feeds had been tampered with. It also, even more creepily, kept track of status updates that people had typed and deleted without posting.)
There is nothing even beginning to resemble “democracy” at these companies. Like most corporations, they are dictatorships internally. Amazon workers are infamously mistreated, and Jeff Bezos’ wealth increases by $215 million per day, meaning that he makes the median annual Amazon salary once every nine seconds. Amazon workers have had to fight hard just to reach $15 an hour base pay, which in many places is still far short of a living wage.
Users do not have any voice in company policy. Their only input comes in the form of a binary market choice: Use the service or don’t. If you don’t like the way Facebook’s ads work, go find some other social media network. But because there is no other social media network like Facebook, there is no online shopping portal like Amazon, and there is no bottomless pit of short-form blather like Twitter, it’s not clear where else there is to go. You can get the internet out of your life completely, which might be good for many people’s mental health. But some of us actually rely on these companies for our livelihoods. Current Affairs articles, for instance, are distributed primarily through Facebook and Twitter shares. If these companies were to, say, block our accounts, or even bump our material downward so that fewer users saw it, we’d take a significant hit to our revenue. And if we did incur the ire of one of the tech monoliths, if Amazon stopped selling our books or Google stopped displaying our pages in search results, there would be absolutely nothing we could do about it. They don’t have to give us an appeals process. Nobody votes on it. If Mark Zuckerberg wakes up one day and decides he’d like to put Current Affairs out of business, he could probably do it. We are reliant entirely on maintaining the good will of a benevolent overlord.
Wikipedia is something else. It has no advertisements, it seeks no profits, it has no shareholders. It’s incredible to think of the amount of money Wikipedia has given up by steadfastly refusing to publish even the most unobtrusive promotions. In the early days, when there was still a live debate about whether the site should have ads, even just ads for nonprofits, there were those who thought it insane to insist on keeping the site absolutely pure. And yet the purists won.
Being a nonprofit among the profit-seeking monopolies distinguishes Wikipedia. But what makes it like absolutely nothing else in the world is its governance structure. It’s a genuine democratic platform, its rules controlled by its users. There is nothing else quite like that anywhere.
Let’s consider the radicalism of the Wikipedia model. It’s a “free encyclopedia that anyone can edit,” as we know. It has well over 5 million articles in English (40 million total in 301 languages), all of which are put together through the collective effort of volunteers. Readers write a paragraph here, fix a date there, add a citation or two, and over time a vast compendium of human knowledge emerges. It has been stunningly successful, and is one of the most visited sites on the web, with over 18 billion page views.
But Wikipedia is not just edited by users. Its policies themselves are stored in wiki pages, and can be modified and updated by user-editors. The governance of the site itself, the processes that determine what you see, are open to revision by the Wikipedia community, a community that anyone can join. Not only that, but every change to Wikipedia is transparent: Its changes, and the debates over them, are fully available in a public record.
One of Wikipedia’s core rules is: “Wikipedia has no firm rules.” That does not mean “anything goes.” It means “the rules are principles, not laws” and they “exist only as rough approximations of their underlying principles.” But the ethic of Wikipedia is that everything is subject to revision, open to discussion, and that anyone can discuss it.
This has meant that Wikipedians have had to, over time, figure out how to govern themselves. Political philosophers have long been infatuated with the concept of the “state of nature,” the condition humankind would find itself in before it had designed governing institutions, and much political theory is concerned with examining how the people in this hypothetical world should construct a state. Or, if humankind suddenly finds itself stranded on a desert island, what procedures ought we to set up to keep everybody from eating each other? The course of Wikipedia’s development has been one of the few real-world examples of such a scenario.
First, let’s remember just how “top-down” almost all of the largest web services are. Google, Facebook, Amazon, Twitter. Each a multi-billion dollar company, each run for profit and owned by private investors, each controlled by a powerful CEO. Facebook, Twitter, and Google make money almost entirely through advertising: Companies pay them to put products in front of users’ eyeballs, and the platforms alter the user experience accordingly. Each of these companies operates exactly the way you’d expect of a corporation seeking monopoly power. They crush tiny competitors, they buy politicians (Google and Facebook give more money to Republicans than Democrats), and they are extremely secretive about their internal decision-making process. They do not tell you the algorithms that determine what they will show you, or the experiments they are using to figure out how to manipulate users’ psychology. (Facebook had a brief scandal in 2014 when it was revealed to have tested different ways to mess with people’s emotions, seeing if it could bump users toward happiness or sadness with the display of positive or negative news. Over 700,000 news feeds had been tampered with. It also, even more creepily, kept track of status updates that people had typed and deleted without posting.)
There is nothing even beginning to resemble “democracy” at these companies. Like most corporations, they are dictatorships internally. Amazon workers are infamously mistreated, and Jeff Bezos’ wealth increases by $215 million per day, meaning that he makes the median annual Amazon salary once every nine seconds. Amazon workers have had to fight hard just to reach $15 an hour base pay, which in many places is still far short of a living wage.Users do not have any voice in company policy. Their only input comes in the form of a binary market choice: Use the service or don’t. If you don’t like the way Facebook’s ads work, go find some other social media network. But because there is no other social media network like Facebook, there is no online shopping portal like Amazon, and there is no bottomless pit of short-form blather like Twitter, it’s not clear where else there is to go. You can get the internet out of your life completely, which might be good for many people’s mental health. But some of us actually rely on these companies for our livelihoods. Current Affairs articles, for instance, are distributed primarily through Facebook and Twitter shares. If these companies were to, say, block our accounts, or even bump our material downward so that fewer users saw it, we’d take a significant hit to our revenue. And if we did incur the ire of one of the tech monoliths, if Amazon stopped selling our books or Google stopped displaying our pages in search results, there would be absolutely nothing we could do about it. They don’t have to give us an appeals process. Nobody votes on it. If Mark Zuckerberg wakes up one day and decides he’d like to put Current Affairs out of business, he could probably do it. We are reliant entirely on maintaining the good will of a benevolent overlord.
Wikipedia is something else. It has no advertisements, it seeks no profits, it has no shareholders. It’s incredible to think of the amount of money Wikipedia has given up by steadfastly refusing to publish even the most unobtrusive promotions. In the early days, when there was still a live debate about whether the site should have ads, even just ads for nonprofits, there were those who thought it insane to insist on keeping the site absolutely pure. And yet the purists won.
Being a nonprofit among the profit-seeking monopolies distinguishes Wikipedia. But what makes it like absolutely nothing else in the world is its governance structure. It’s a genuine democratic platform, its rules controlled by its users. There is nothing else quite like that anywhere.
Let’s consider the radicalism of the Wikipedia model. It’s a “free encyclopedia that anyone can edit,” as we know. It has well over 5 million articles in English (40 million total in 301 languages), all of which are put together through the collective effort of volunteers. Readers write a paragraph here, fix a date there, add a citation or two, and over time a vast compendium of human knowledge emerges. It has been stunningly successful, and is one of the most visited sites on the web, with over 18 billion page views.
But Wikipedia is not just edited by users. Its policies themselves are stored in wiki pages, and can be modified and updated by user-editors. The governance of the site itself, the processes that determine what you see, are open to revision by the Wikipedia community, a community that anyone can join. Not only that, but every change to Wikipedia is transparent: Its changes, and the debates over them, are fully available in a public record.
One of Wikipedia’s core rules is: “Wikipedia has no firm rules.” That does not mean “anything goes.” It means “the rules are principles, not laws” and they “exist only as rough approximations of their underlying principles.” But the ethic of Wikipedia is that everything is subject to revision, open to discussion, and that anyone can discuss it.
This has meant that Wikipedians have had to, over time, figure out how to govern themselves. Political philosophers have long been infatuated with the concept of the “state of nature,” the condition humankind would find itself in before it had designed governing institutions, and much political theory is concerned with examining how the people in this hypothetical world should construct a state. Or, if humankind suddenly finds itself stranded on a desert island, what procedures ought we to set up to keep everybody from eating each other? The course of Wikipedia’s development has been one of the few real-world examples of such a scenario.
by Nathan J. Robinson, Current Affairs | Read more:
Image: Naomi Ushiyama
Friday, December 21, 2018
Amazon Prime's Promise of Two-Day Delivery Is Dying
Having a baby in 2018, as my wife and I just did, means becoming an Amazon household. We’re not proud of this. We know that Amazon treats its workers terribly. We know that the company has extorted billions of taxpayer dollars out of our home city of New York in exchange for turning our neighbors into terribly treated employees. But babies need a lot of stuff, and they need it quickly. Diapers on demand are a very tempting prospect. So we bought our diapers on Amazon. And then they didn’t come when Amazon said they would come.
One of the foundations of Amazon’s brand is its guaranteed two-day delivery, “free” to Prime subscribers. The company has taught America to rely on this instant gratification. Sometimes this reliance seems soft, or self-indulgent, like when we get mad that a pair of Bluetooth earbuds took three whole days to arrive. You can go an extra day without earbuds. A newborn cannot, generally, go an extra day without diapers.
We asked our friends where they get diapers. “Amazon,” they said. Great. On Day 3, customer service couldn’t even keep its story straight on when our diapers would arrive, or whether they’d even shipped. Of course, this wasn’t a real emergency. We live three blocks from a Walgreens—also a bad company!—so I popped over, bought a pack, problem solved. I’m lucky. But it finally made me realize that two-day shipping is a sham.
It’s a sham because overworked employees and delivery contractors like UPS can’t possibly fulfill all the orders on time. Rather than lose their most powerful client, they lie about whether packages got delivered.
But it’s also a sham because Prime no longer means two-day delivery. As Fast Company describes, Prime delivery times are often listed as three or even five days. The site offers no easy way to filter for two-day Prime shipping. (You can filter by free Prime shipping, but that includes items that take longer to ship. You can filter by two-day shipping, but that includes third-party items with an extra shipping charge.) And because Amazon lets third-party sellers clutter up results pages, you need to comb through results.
None of this is the worst ordeal in the world! It’s just very different than the rapid, no-hassle experience Amazon promised. It’s the promise that helped Amazon muscle out bookstores, threaten Wal-Mart, fleece cities, avoid taxes, bully suppliers, and make its owner the richest man alive. We let Amazon suck the world dry because in return, we could get anything delivered, for free, in a couple of days.
And now that’s gone too. Amazon pulled the old predatory pricing trick on us, got us hooked on an unsustainable shipping speed, then eased up on the delivery once it had pushed its competitors to the margins. So it’s time to suck it up and buy something from a real store—before they buy that too.
[ed. No kidding. I ordered a book for a friend in Santa Cruz, CA and it'll take two weeks to get there with Prime (what would it be without it?). See also: Amazon Prime is getting worse, and it’s making me question the nature of reality.]
One of the foundations of Amazon’s brand is its guaranteed two-day delivery, “free” to Prime subscribers. The company has taught America to rely on this instant gratification. Sometimes this reliance seems soft, or self-indulgent, like when we get mad that a pair of Bluetooth earbuds took three whole days to arrive. You can go an extra day without earbuds. A newborn cannot, generally, go an extra day without diapers.We asked our friends where they get diapers. “Amazon,” they said. Great. On Day 3, customer service couldn’t even keep its story straight on when our diapers would arrive, or whether they’d even shipped. Of course, this wasn’t a real emergency. We live three blocks from a Walgreens—also a bad company!—so I popped over, bought a pack, problem solved. I’m lucky. But it finally made me realize that two-day shipping is a sham.
It’s a sham because overworked employees and delivery contractors like UPS can’t possibly fulfill all the orders on time. Rather than lose their most powerful client, they lie about whether packages got delivered.
But it’s also a sham because Prime no longer means two-day delivery. As Fast Company describes, Prime delivery times are often listed as three or even five days. The site offers no easy way to filter for two-day Prime shipping. (You can filter by free Prime shipping, but that includes items that take longer to ship. You can filter by two-day shipping, but that includes third-party items with an extra shipping charge.) And because Amazon lets third-party sellers clutter up results pages, you need to comb through results.
None of this is the worst ordeal in the world! It’s just very different than the rapid, no-hassle experience Amazon promised. It’s the promise that helped Amazon muscle out bookstores, threaten Wal-Mart, fleece cities, avoid taxes, bully suppliers, and make its owner the richest man alive. We let Amazon suck the world dry because in return, we could get anything delivered, for free, in a couple of days.
And now that’s gone too. Amazon pulled the old predatory pricing trick on us, got us hooked on an unsustainable shipping speed, then eased up on the delivery once it had pushed its competitors to the margins. So it’s time to suck it up and buy something from a real store—before they buy that too.
by Nick Douglas, Lifehacker | Read more:
Image: Leon Neal/Getty Images[ed. No kidding. I ordered a book for a friend in Santa Cruz, CA and it'll take two weeks to get there with Prime (what would it be without it?). See also: Amazon Prime is getting worse, and it’s making me question the nature of reality.]
How This All Happened
This is a short story about what happened to the U.S. economy since the end of World War II.
That’s a lot to unpack in 5,000 words, but the short story of what happened over the last 73 years is simple: Things were very uncertain, then they were very good, then pretty bad, then really good, then really bad, and now here we are. And there is, I think, a narrative that links all those events together. Not a detailed account. But a story of how the details fit together.
Since this is an attempt to link the big events together, it leaves out all kinds of detail of what happened during this period. I’m likely to agree with anyone who points out what I’ve missed. My goal isn’t to describe every play; it’s to look at how one game influenced the next.
If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago.
Here’s how this all happened.
1. August, 1945. World War II ends.
Japan surrendering was “The Happiest Day in American History,” the New York Times wrote.
But there’s the saying, “History is just one damn thing after another.”
The joy of the war ending was quickly met with the question, “What happens now?”
Sixteen million Americans – 11% of the population – served in the war. About eight million were overseas at the end. Their average age was 23. Within 18 months all but 1.5 million of them would be home and out of uniform.
And then what?
What were they going to do next?
Where were they going to work?
Where were they going to live?
Those were the most important questions of the day, for two reasons. One, no one knew the answers. Two, if it couldn’t be answered quickly, the most likely scenario – in the eyes of many economists – was that the economy would slip back into the depths of the Great Depression.
Three forces had built up during the war:
In 1946 the Council of Economic Advisors delivered a report to President Truman warning of “a full-scale depression some time in the next one to four years.”
They wrote in a separate 1947 memo, summarizing a meeting with Truman:
2. So we did something about it: Low interest rates and the intentional birth of the American consumer.
That’s a lot to unpack in 5,000 words, but the short story of what happened over the last 73 years is simple: Things were very uncertain, then they were very good, then pretty bad, then really good, then really bad, and now here we are. And there is, I think, a narrative that links all those events together. Not a detailed account. But a story of how the details fit together.
Since this is an attempt to link the big events together, it leaves out all kinds of detail of what happened during this period. I’m likely to agree with anyone who points out what I’ve missed. My goal isn’t to describe every play; it’s to look at how one game influenced the next.
If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago.Here’s how this all happened.
1. August, 1945. World War II ends.
Japan surrendering was “The Happiest Day in American History,” the New York Times wrote.
But there’s the saying, “History is just one damn thing after another.”
The joy of the war ending was quickly met with the question, “What happens now?”
Sixteen million Americans – 11% of the population – served in the war. About eight million were overseas at the end. Their average age was 23. Within 18 months all but 1.5 million of them would be home and out of uniform.
And then what?
What were they going to do next?
Where were they going to work?
Where were they going to live?
Those were the most important questions of the day, for two reasons. One, no one knew the answers. Two, if it couldn’t be answered quickly, the most likely scenario – in the eyes of many economists – was that the economy would slip back into the depths of the Great Depression.
Three forces had built up during the war:
- Housing construction ground to a halt, as virtually all production capacity was shifted to building war supplies. Fewer than 12,000 homes per month were built in 1943, equivalent to less than one new home per American city. Returning soldiers faced a severe housing shortage.
- The specific jobs created during the war – building ships, tanks, bullets, planes – were very suddenly not necessary after it, stopping with a speed and magnitude rarely seen in private business. It was unclear where soldiers could work.
- The marriage rate spiked during and immediately after the war. Soldiers didn’t want to return to their mother’s basement. They wanted to start a family, in their own home, with a good job, right away.
In 1946 the Council of Economic Advisors delivered a report to President Truman warning of “a full-scale depression some time in the next one to four years.”
They wrote in a separate 1947 memo, summarizing a meeting with Truman:
We might be in some sort of recession period where we should have to be very sure of our ground as to whether recessionary forces might be in danger of getting out of hand … There is a substantial prospect which should not be overlooked that a further decline may increase the danger of a downward spiral into depression conditions.This fear was exacerbated by the fact that exports couldn’t be immediately relied upon for growth, as two of the largest economies – Europe and Japan – sat in ruins dealing with humanitarian crises. And America itself was buried in more debt than ever before, limiting direct government stimulus.
2. So we did something about it: Low interest rates and the intentional birth of the American consumer.
by Morgan Housel, Collaborative Fund | Read more:
Image: uncredited
Prime and Punishment
Last August, Zac Plansky woke to find that the rifle scopes he was selling on Amazon had received 16 five-star reviews overnight. Usually, that would be a good thing, but the reviews were strange. The scope would normally get a single review a day, and many of these referred to a different scope, as if they’d been cut and pasted from elsewhere. “I didn’t know what was going on, whether it was a glitch or whether somebody was trying to mess with us,” Plansky says.
As a precaution, he reported the reviews to Amazon. Most of them vanished days later — problem solved — and Plansky reimmersed himself in the work of running a six-employee, multimillion-dollar weapons accessory business on Amazon. Then, two weeks later, the trap sprang. “You have manipulated product reviews on our site,” an email from Amazon read. “This is against our policies. As a result, you may no longer sell on Amazon.com, and your listings have been removed from our site.”
A rival had framed Plansky for buying five-star reviews, a high crime in the world of Amazon. The funds in his account were immediately frozen, and his listings were shut down. Getting his store back would take him on a surreal weeks-long journey through Amazon’s bureaucracy, one that began with the click of a button at the bottom of his suspension message that read “appeal decision.”
When you buy something on Amazon, the odds are, you aren’t buying it from Amazon at all. Plansky is one of 6 million sellers on Amazon Marketplace, the company’s third-party platform. They are largely hidden from customers, but behind any item for sale, there could be dozens of sellers, all competing for your click. This year, Marketplace sales were almost double those of Amazon retail itself, according to Marketplace Pulse, making the seller platform alone the largest e-commerce business in the US.
For sellers, Amazon is a quasi-state. They rely on its infrastructure — its warehouses, shipping network, financial systems, and portal to millions of customers — and pay taxes in the form of fees. They also live in terror of its rules, which often change and are harshly enforced. A cryptic email like the one Plansky received can send a seller’s business into bankruptcy, with few avenues for appeal.
Sellers are more worried about a case being opened on Amazon than in actual court, says Dave Bryant, an Amazon seller and blogger. Amazon’s judgment is swifter and less predictable, and now that the company controls nearly half of the online retail market in the US, its rulings can instantly determine the success or failure of your business, he says. “Amazon is the judge, the jury, and the executioner.”
Amazon is far from the only tech company that, having annexed a vast sphere of human activity, finds itself in the position of having to govern it. But Amazon is the only platform that has a $175 billion prize pool tempting people to game it, and the company must constantly implement new rules and penalties, which in turn, become tools for new abuses, which require yet more rules to police. The evolution of its moderation system has been hyper-charged. While Mark Zuckerberg mused recently that Facebook might need an analog to the Supreme Court to adjudicate disputes and hear appeals, Amazon already has something like a judicial system — one that is secretive, volatile, and often terrifying.
Amazon’s judgments are so severe that its own rules have become the ultimate weapon in the constant warfare of Marketplace. Sellers devise all manner of intricate schemes to frame their rivals, as Plansky experienced. They impersonate, copy, deceive, threaten, sabotage, and even bribe Amazon employees for information on their competitors.
And what’s a seller to do when they end up in Amazon court? They can turn to someone like Cynthia Stine, who is part of a growing industry of consultants who help sellers navigate the ruthless world of Marketplace and the byzantine rules by which Amazon governs it. They are like lawyers, only their legal code is the Amazon Terms of Service, their court is a secretive and semiautomated corporate bureaucracy, and their jurisdiction is an algorithmically policed global bazaar rife with devious plots to hijack listings for novelty socks and plastic watches. People like Stine are fixers, guides to the cutthroat land of Amazon, who are willing to give their assistance to the desperate — for a price, of course. (...)
She calls the scheme that got Plansky a “dirty seller trick,” and she’s seen it before. As Amazon has escalated its war on fake reviews, sellers have realized that the most effective tactic is not buying them for yourself, but buying them for your competitors — the more obviously fraudulent the better. A handful of glowing testimonials, preferably in broken English about unrelated products and written by a known review purveyor on Fiverr, can not only take out a competitor and allow you to move up a slot in Amazon’s search results, it can land your rival in the bewildering morass of Amazon’s suspension system.
And Stine’s team had bad news: the only way back from suspension is to “confess and repent,” she says, even if you don’t think you’ve done anything wrong. “Amazon doesn’t like to see finger-pointing.”
Amazon calls them “appeals,” which suggests that there’s a possibility of having the verdict overturned. In reality, they’re more like a plea bargain crossed with a business memo, the core of which is a “plan of action” — an explanation of how you’ll make things right. And to make things right, you need to admit to having done something wrong. So Plansky sat down with Stine’s team and looked for something, anything, to confess to. In his appeal, he admitted to providing discounts for reviews before Amazon banned the practice, and to sending customers emails about printing out shooting targets that the algorithm might have mistaken for bribes.
“It was crazy,” he says. “I felt like I was in prison for a crime I didn’t commit, and the only way out was to plead guilty.”
In a way, Plansky had it easy. He at least knew what he had to confess to, even if he hadn’t done it. Many sellers can’t even figure out what Amazon is accusing them of. A suspension message will typically list an item along with a broad and tangentially related category of an infraction, like “used sold as new.” Understandably, sellers respond by sending invoices that show that the items are, in fact, new. Actually, Stine says, the suspension usually has nothing to do with the item being used, but with something like a peeling label on the box. “The thing Amazon wants you to fix is the buyer perception,” Stine says. “Just proving to Amazon that your goods are new is not good enough because Amazon wants you to address why the buyers thought they were used.” One seller described the typical process as Amazon saying, “I’m putting you in jail but not telling you what you did, now give me a justification for why I should let you out and you won’t do it again.”
The appeals process is so confounding that it’s given rise to an entire industry of consultants like Stine. Chris McCabe, a former Amazon employee, set up shop in 2014. CJ Rosenbaum, an attorney in Long Beach, New York, now bills himself as the “Amazon sellers lawyer,” with an “Amazon Law Library” featuring Amazon Law, vol. 1 ($95 on Amazon). Stine’s company deals with about 100 suspensions a month and charges $2,500 per appeal ($5,000 if you want an expedited one), which is in line with industry norms. It’s a price many are willing to pay. “It can be life or death for people,” McCabe says. “If they don’t get their Amazon account back, they might be insolvent, laying off 10, 12, 14 people, maybe more. I’ve had people begging me for help. I’ve had people at their wits’ end. I’ve had people crying.”
Much of Stine’s work involves translating Amazon’s cryptic suspension messages and then digging through every review, metric, and message in a seller’s account just to find the infraction she needs to design a remedy for. Sitting at her workstation, she clicks around the seller interface like a mechanic fiddling under the hood, talking mostly to herself. She looks at a warning message. “Amazon mad.” She sees a listing for dog toys that people complained were too chewy for their dogs. “This right here is going to trigger Amazon’s freak-o-meter real soon.”
The actual infraction can be as slight as the indictment is broad. Stine has a client whose listing for a rustic barn wood picture frame was deemed unsafe and taken down; it turned out the offense was a single customer review that mentioned getting a splinter. (The customer had actually given it five stars.) The seller was allowed back when he promised to add “wear gloves when installing” to his listing. Another seller was suspended for selling Nike shoes that were “not as described.” After he’d filed appeal after appeal proving the shoes were genuine Nikes, Stine’s team figured out the problem: some buyers complained the shoes were too small. That seller was let back on after promising to add a line to the listing recommending customers wear thin socks.
“That’s what we call ‘speaking Amazon,’” Stine says. “In my mind, I imagine a checklist, and it doesn’t even have to make sense. It’s just that the previous appeals hadn’t included this all-important proactive step they were going to take to prevent the complaint that the shoe was too tight.”
by Josh Dzieza, The Verge | Read more:
As a precaution, he reported the reviews to Amazon. Most of them vanished days later — problem solved — and Plansky reimmersed himself in the work of running a six-employee, multimillion-dollar weapons accessory business on Amazon. Then, two weeks later, the trap sprang. “You have manipulated product reviews on our site,” an email from Amazon read. “This is against our policies. As a result, you may no longer sell on Amazon.com, and your listings have been removed from our site.”
A rival had framed Plansky for buying five-star reviews, a high crime in the world of Amazon. The funds in his account were immediately frozen, and his listings were shut down. Getting his store back would take him on a surreal weeks-long journey through Amazon’s bureaucracy, one that began with the click of a button at the bottom of his suspension message that read “appeal decision.”When you buy something on Amazon, the odds are, you aren’t buying it from Amazon at all. Plansky is one of 6 million sellers on Amazon Marketplace, the company’s third-party platform. They are largely hidden from customers, but behind any item for sale, there could be dozens of sellers, all competing for your click. This year, Marketplace sales were almost double those of Amazon retail itself, according to Marketplace Pulse, making the seller platform alone the largest e-commerce business in the US.
For sellers, Amazon is a quasi-state. They rely on its infrastructure — its warehouses, shipping network, financial systems, and portal to millions of customers — and pay taxes in the form of fees. They also live in terror of its rules, which often change and are harshly enforced. A cryptic email like the one Plansky received can send a seller’s business into bankruptcy, with few avenues for appeal.
Sellers are more worried about a case being opened on Amazon than in actual court, says Dave Bryant, an Amazon seller and blogger. Amazon’s judgment is swifter and less predictable, and now that the company controls nearly half of the online retail market in the US, its rulings can instantly determine the success or failure of your business, he says. “Amazon is the judge, the jury, and the executioner.”
Amazon is far from the only tech company that, having annexed a vast sphere of human activity, finds itself in the position of having to govern it. But Amazon is the only platform that has a $175 billion prize pool tempting people to game it, and the company must constantly implement new rules and penalties, which in turn, become tools for new abuses, which require yet more rules to police. The evolution of its moderation system has been hyper-charged. While Mark Zuckerberg mused recently that Facebook might need an analog to the Supreme Court to adjudicate disputes and hear appeals, Amazon already has something like a judicial system — one that is secretive, volatile, and often terrifying.
Amazon’s judgments are so severe that its own rules have become the ultimate weapon in the constant warfare of Marketplace. Sellers devise all manner of intricate schemes to frame their rivals, as Plansky experienced. They impersonate, copy, deceive, threaten, sabotage, and even bribe Amazon employees for information on their competitors.
And what’s a seller to do when they end up in Amazon court? They can turn to someone like Cynthia Stine, who is part of a growing industry of consultants who help sellers navigate the ruthless world of Marketplace and the byzantine rules by which Amazon governs it. They are like lawyers, only their legal code is the Amazon Terms of Service, their court is a secretive and semiautomated corporate bureaucracy, and their jurisdiction is an algorithmically policed global bazaar rife with devious plots to hijack listings for novelty socks and plastic watches. People like Stine are fixers, guides to the cutthroat land of Amazon, who are willing to give their assistance to the desperate — for a price, of course. (...)
She calls the scheme that got Plansky a “dirty seller trick,” and she’s seen it before. As Amazon has escalated its war on fake reviews, sellers have realized that the most effective tactic is not buying them for yourself, but buying them for your competitors — the more obviously fraudulent the better. A handful of glowing testimonials, preferably in broken English about unrelated products and written by a known review purveyor on Fiverr, can not only take out a competitor and allow you to move up a slot in Amazon’s search results, it can land your rival in the bewildering morass of Amazon’s suspension system.
And Stine’s team had bad news: the only way back from suspension is to “confess and repent,” she says, even if you don’t think you’ve done anything wrong. “Amazon doesn’t like to see finger-pointing.”
Amazon calls them “appeals,” which suggests that there’s a possibility of having the verdict overturned. In reality, they’re more like a plea bargain crossed with a business memo, the core of which is a “plan of action” — an explanation of how you’ll make things right. And to make things right, you need to admit to having done something wrong. So Plansky sat down with Stine’s team and looked for something, anything, to confess to. In his appeal, he admitted to providing discounts for reviews before Amazon banned the practice, and to sending customers emails about printing out shooting targets that the algorithm might have mistaken for bribes.
“It was crazy,” he says. “I felt like I was in prison for a crime I didn’t commit, and the only way out was to plead guilty.”
In a way, Plansky had it easy. He at least knew what he had to confess to, even if he hadn’t done it. Many sellers can’t even figure out what Amazon is accusing them of. A suspension message will typically list an item along with a broad and tangentially related category of an infraction, like “used sold as new.” Understandably, sellers respond by sending invoices that show that the items are, in fact, new. Actually, Stine says, the suspension usually has nothing to do with the item being used, but with something like a peeling label on the box. “The thing Amazon wants you to fix is the buyer perception,” Stine says. “Just proving to Amazon that your goods are new is not good enough because Amazon wants you to address why the buyers thought they were used.” One seller described the typical process as Amazon saying, “I’m putting you in jail but not telling you what you did, now give me a justification for why I should let you out and you won’t do it again.”
The appeals process is so confounding that it’s given rise to an entire industry of consultants like Stine. Chris McCabe, a former Amazon employee, set up shop in 2014. CJ Rosenbaum, an attorney in Long Beach, New York, now bills himself as the “Amazon sellers lawyer,” with an “Amazon Law Library” featuring Amazon Law, vol. 1 ($95 on Amazon). Stine’s company deals with about 100 suspensions a month and charges $2,500 per appeal ($5,000 if you want an expedited one), which is in line with industry norms. It’s a price many are willing to pay. “It can be life or death for people,” McCabe says. “If they don’t get their Amazon account back, they might be insolvent, laying off 10, 12, 14 people, maybe more. I’ve had people begging me for help. I’ve had people at their wits’ end. I’ve had people crying.”
Much of Stine’s work involves translating Amazon’s cryptic suspension messages and then digging through every review, metric, and message in a seller’s account just to find the infraction she needs to design a remedy for. Sitting at her workstation, she clicks around the seller interface like a mechanic fiddling under the hood, talking mostly to herself. She looks at a warning message. “Amazon mad.” She sees a listing for dog toys that people complained were too chewy for their dogs. “This right here is going to trigger Amazon’s freak-o-meter real soon.”
The actual infraction can be as slight as the indictment is broad. Stine has a client whose listing for a rustic barn wood picture frame was deemed unsafe and taken down; it turned out the offense was a single customer review that mentioned getting a splinter. (The customer had actually given it five stars.) The seller was allowed back when he promised to add “wear gloves when installing” to his listing. Another seller was suspended for selling Nike shoes that were “not as described.” After he’d filed appeal after appeal proving the shoes were genuine Nikes, Stine’s team figured out the problem: some buyers complained the shoes were too small. That seller was let back on after promising to add a line to the listing recommending customers wear thin socks.
“That’s what we call ‘speaking Amazon,’” Stine says. “In my mind, I imagine a checklist, and it doesn’t even have to make sense. It’s just that the previous appeals hadn’t included this all-important proactive step they were going to take to prevent the complaint that the shoe was too tight.”
by Josh Dzieza, The Verge | Read more:
Image: BloodBros
The Imagined Threat of a Woman Who Governs Like a Man
On Tuesday, Politico posted a provocative, anonymously sourced piece claiming that New York congresswoman-elect Alexandria Ocasio-Cortez might be planning, in concert with Justice Democrats, to recruit a Democratic primary challenger to her fellow New York congressman Hakeem Jeffries in 2020, in part in response to his undercutting of California congresswoman and progressive stalwart Barbara Lee in a November House leadership election. Ocasio-Cortez later dismissed the piece, calling it “birdcage lining.”
However inaccurate the facts in Politico’s reporting may have been, the piece was useful and telling — the expression of a building fever dream about Ocasio-Cortez, and the fears of what she might be capable of, should she continue to flash her unprecedented willingness to make bold demands and push her party where she thinks it should go. Ocasio-Cortez’s eagerness to flex her muscles, without demurring or waiting for her turn — without even waiting to be sworn in — is undergirding nightmarish fears about her as an agent of chaos and destruction. The Politico story itself was illustrated with an image of the Bronx native appearing to literally rub her hands together while grinning like Dr. Evil.
Reading the piece, I couldn’t help but think of Naomi Alderman’s brain-bending novel, The Power, published last year. It depicts a world in which women develop the power to inflict physical pain, and to kill, via electricity that emanates from their fingers. In Alderman’s fictional universe, this power is exhibited first by young women who in turn awaken it in their elders; as they are learning the possibilities and limits of their new power, the women giddily experiment with it, sending sparks and currents, determining how much of it they have, whether they can control it, and how they might best deploy it.
The book is extraordinary because it forces readers to think about all the ways — within our social, sexual, professional, and political relationships — in which men’s power over women is so much taken for granted that we don’t question it, don’t even notice it. But when women acquire an equivalent force, chaos and fear reign. The Power read to many, and was regularly reviewed as, a piece of chilling dystopian fiction. But as Alderman herself has said, “It’s only a dystopia for the men … nothing happens to a man in this book that is not happening right now to a woman somewhere in the world.”
What the reaction to Ocasio-Cortez makes undeniable is that if and when women gain enough power to start behaving, in a political sphere, as men have for so long, they will be viewed with fright and discomfort.
Jeffries, a popular incumbent who is generally (though not universally) well-regarded by progressives, supposedly wound up in Ocasio-Cortez’s crosshairs in part because of his own recent tactical moves, which reportedly helped gain him a House leadership position.
In October, he jumped into the race against Lee for Democratic Caucus chair just a few weeks before the midterm elections. Lee was hoping to become the first African-American woman in history to serve in party leadership. According to the Intercept, she had believed that she had the votes, but Jeffries was helped at the last minute by one of his mentors, Joe Crowley, the long-serving New York congressman who’d been beaten in his June primary race by Ocasio-Cortez. Crowley reportedly falsely intimated to caucus members that Lee had donated to Ocasio-Cortez in advance of the primary, depicting her as supportive of the insurgent spirit Ocasio-Cortez has come to symbolize. Some of the votes Lee thought she had locked down changed, and Jeffries won the caucus chair slot by ten votes.
Tuesday’s piece suggesting that Ocasio-Cortez — angry at having been used to defeat a woman she admires by a man she beat — might want to oust Jeffries, prompted an affronted response. “Can we call this out for being dumb?” Bakari Sellers tweeted, calling Jeffries “one of our most talented members.” The actor Jeffrey Wright gravely noted that “quick fame is a funny thing,” apparently in reference to Ocasio-Cortez, and the columnist Michael Cohen predicted that Ocasio-Cortez was going to “wear out her welcome very quickly.”
In some ways, the strong defense of Jeffries wasn’t surprising. He’s extremely popular in his district, belongs to the Progressive Caucus, and is widely understood to have ambitions to succeed Nancy Pelosi as his party’s leader and become the country’s first black Speaker of the House. Jeffries may be a lovely man and a decent progressive, but it is also true that in his efforts to gain leadership of his party, he relied on a network of old-school male power (a network invested in its own form of revenge) to defeat a beloved and ideologically unimpeachable woman. No, this isn’t a capital offense; it’s not a shock; it is, in fact, just politics — what happens every day, not just in Congress but in workplaces around the country.
It happens in part because networks of power are built by and around men, especially white men. To the extent that they permit the entrance of those who are not white men, it is often black men (like Jeffries) and white women who are admitted and supported. But Lee is a black woman who was running for a leadership position in a party that relies on black women’s votes and electoral and activist labor yet rarely acknowledges, let alone endorses, their authority by electing them to positions of leadership.
There has historically been little cost to undercutting women of color on your way to power, because neither white women nor black men have had the power or the inclination to stand up for them in the way, for example, that Crowley and his supporters are alleged to have done for Jeffries in his leadership bid. And also because, hey — once you have the power, you have the power; who’s going to come for you once you ascend?
The tantalizing (or terrifying) possibility laid out in this small — overstated, perhaps even fantasized — story about Ocasio-Cortez coming for Jeffries was that we could, perhaps, imagine these dynamics changing, and that is shocking. Naturally, Ocasio-Cortez would be livid if a falsehood related to her campaign, allegedly propagated by the man she beat, were used to defeat an admired potential mentor. What’s arresting is the notion that she might be in a position — might have enough swagger and sway — to imagine doing something in response. That long-powerful men like Crowley might deploy a vengeful fuck-you isn’t a shocking notion … but what if newly powerful women could conceive of doing the same?
It’s this very possibility that’s exhilarating for some, chilling for others: that women, and in this case, progressive women of color, newly elected in historic numbers, might team up in defense of one another, come to each other’s aid, exact political revenge on those who would vanquish their allies in ways they have never been capable of before. Because it’s not that women in the past haven’t had the will or desire to respond to the affront of having been stepped over by powerful men; it’s that they have not had the numbers, the voice, or the chutzpah that comes with those things, until very, very recently. What’s scary to so many about Ocasio-Cortez is that she’s acting like a politician with power.
by Rebecca Traister, The Cut | Read more:
Image:Mario Tama/Getty Images
However inaccurate the facts in Politico’s reporting may have been, the piece was useful and telling — the expression of a building fever dream about Ocasio-Cortez, and the fears of what she might be capable of, should she continue to flash her unprecedented willingness to make bold demands and push her party where she thinks it should go. Ocasio-Cortez’s eagerness to flex her muscles, without demurring or waiting for her turn — without even waiting to be sworn in — is undergirding nightmarish fears about her as an agent of chaos and destruction. The Politico story itself was illustrated with an image of the Bronx native appearing to literally rub her hands together while grinning like Dr. Evil.
Reading the piece, I couldn’t help but think of Naomi Alderman’s brain-bending novel, The Power, published last year. It depicts a world in which women develop the power to inflict physical pain, and to kill, via electricity that emanates from their fingers. In Alderman’s fictional universe, this power is exhibited first by young women who in turn awaken it in their elders; as they are learning the possibilities and limits of their new power, the women giddily experiment with it, sending sparks and currents, determining how much of it they have, whether they can control it, and how they might best deploy it.The book is extraordinary because it forces readers to think about all the ways — within our social, sexual, professional, and political relationships — in which men’s power over women is so much taken for granted that we don’t question it, don’t even notice it. But when women acquire an equivalent force, chaos and fear reign. The Power read to many, and was regularly reviewed as, a piece of chilling dystopian fiction. But as Alderman herself has said, “It’s only a dystopia for the men … nothing happens to a man in this book that is not happening right now to a woman somewhere in the world.”
What the reaction to Ocasio-Cortez makes undeniable is that if and when women gain enough power to start behaving, in a political sphere, as men have for so long, they will be viewed with fright and discomfort.
Jeffries, a popular incumbent who is generally (though not universally) well-regarded by progressives, supposedly wound up in Ocasio-Cortez’s crosshairs in part because of his own recent tactical moves, which reportedly helped gain him a House leadership position.
In October, he jumped into the race against Lee for Democratic Caucus chair just a few weeks before the midterm elections. Lee was hoping to become the first African-American woman in history to serve in party leadership. According to the Intercept, she had believed that she had the votes, but Jeffries was helped at the last minute by one of his mentors, Joe Crowley, the long-serving New York congressman who’d been beaten in his June primary race by Ocasio-Cortez. Crowley reportedly falsely intimated to caucus members that Lee had donated to Ocasio-Cortez in advance of the primary, depicting her as supportive of the insurgent spirit Ocasio-Cortez has come to symbolize. Some of the votes Lee thought she had locked down changed, and Jeffries won the caucus chair slot by ten votes.
Tuesday’s piece suggesting that Ocasio-Cortez — angry at having been used to defeat a woman she admires by a man she beat — might want to oust Jeffries, prompted an affronted response. “Can we call this out for being dumb?” Bakari Sellers tweeted, calling Jeffries “one of our most talented members.” The actor Jeffrey Wright gravely noted that “quick fame is a funny thing,” apparently in reference to Ocasio-Cortez, and the columnist Michael Cohen predicted that Ocasio-Cortez was going to “wear out her welcome very quickly.”
In some ways, the strong defense of Jeffries wasn’t surprising. He’s extremely popular in his district, belongs to the Progressive Caucus, and is widely understood to have ambitions to succeed Nancy Pelosi as his party’s leader and become the country’s first black Speaker of the House. Jeffries may be a lovely man and a decent progressive, but it is also true that in his efforts to gain leadership of his party, he relied on a network of old-school male power (a network invested in its own form of revenge) to defeat a beloved and ideologically unimpeachable woman. No, this isn’t a capital offense; it’s not a shock; it is, in fact, just politics — what happens every day, not just in Congress but in workplaces around the country.
It happens in part because networks of power are built by and around men, especially white men. To the extent that they permit the entrance of those who are not white men, it is often black men (like Jeffries) and white women who are admitted and supported. But Lee is a black woman who was running for a leadership position in a party that relies on black women’s votes and electoral and activist labor yet rarely acknowledges, let alone endorses, their authority by electing them to positions of leadership.
There has historically been little cost to undercutting women of color on your way to power, because neither white women nor black men have had the power or the inclination to stand up for them in the way, for example, that Crowley and his supporters are alleged to have done for Jeffries in his leadership bid. And also because, hey — once you have the power, you have the power; who’s going to come for you once you ascend?
The tantalizing (or terrifying) possibility laid out in this small — overstated, perhaps even fantasized — story about Ocasio-Cortez coming for Jeffries was that we could, perhaps, imagine these dynamics changing, and that is shocking. Naturally, Ocasio-Cortez would be livid if a falsehood related to her campaign, allegedly propagated by the man she beat, were used to defeat an admired potential mentor. What’s arresting is the notion that she might be in a position — might have enough swagger and sway — to imagine doing something in response. That long-powerful men like Crowley might deploy a vengeful fuck-you isn’t a shocking notion … but what if newly powerful women could conceive of doing the same?
It’s this very possibility that’s exhilarating for some, chilling for others: that women, and in this case, progressive women of color, newly elected in historic numbers, might team up in defense of one another, come to each other’s aid, exact political revenge on those who would vanquish their allies in ways they have never been capable of before. Because it’s not that women in the past haven’t had the will or desire to respond to the affront of having been stepped over by powerful men; it’s that they have not had the numbers, the voice, or the chutzpah that comes with those things, until very, very recently. What’s scary to so many about Ocasio-Cortez is that she’s acting like a politician with power.
by Rebecca Traister, The Cut | Read more:
Image:Mario Tama/Getty Images
Wednesday, December 19, 2018
Costco’s 100 Million Chickens Will Change the Face of Nebraska
Can a single company reshape a landscape? That’s the question at play in Nebraska, where Costco, one of America’s most powerful companies, has the potential to impact residents, farmers, and the environment in complex and unprecedented ways.
At the center of the move is the company’s $4.99 rotisserie chicken. In 2014, Costco reported selling 78 million of these processed, four-pound birds a year. In order to guarantee a steady supply and maintain the price, Costco fixed its eye on Nebraska as the best place to start raising and processing its own supply of chickens, and “break free of the monopoly” held by companies such as Tyson and Pilgrim’s Pride, much like it did for sausage and hotdogs with its Kirkland plant in Tracy, California.
In June, the company broke ground on a giant new poultry processing facility in Fremont, about an hour west of Omaha. The plant will process more than 2 million chickens a week, or more than 100 million birds a year, and provide as much as 43 percent of Costco’s rotisserie chickens, as well as around one third of the raw birds it sells.
The effort will also include a feed mill and over 500 giant barns in which to raise the broilers, the hens, and the pullets, or parents used to breed the broilers. Costco needs to recruit around 125 farmers to build and fund chicken barns within a 100-mile radius, and it’s contracting with Lincoln Premium Poultry (LPP), a “company created for Costco in collaboration with Costco” that sprang up in 2016 to take over the business of working with farmers and building the infrastructure.
As the biggest competitor with Whole Foods, selling $4 billion in organic foods, Costco has been wooing shoppers who care about the source of their food for years. (In fact, the company just announced that it would tighten its standards around antibiotic use in all the meat it supplies thanks in part to an ongoing effort by shareholder activists). So, to say there’s a lot at stake with this new venture is an understatement.
While there has been resistance to both the plant and the barns on a county level, Nebraska’s state government has been working with industry forces for several years to welcome just such a project to the state. The operation is being billed as one of the only ways for farmers in the area to hold on to their land for the next generation, but farmers’ advocates and other experts well-versed in the woes farmers face in the chicken industry say the reward may not be worth the price.
And, to a group of farmers, land owners, and activists who have been united by the effort to oppose the plant, and are now actively envisioning a regenerative alternative, one thing is clear: This a watershed moment for the state, and for the shifting relationship between retailers and the larger food chain.
“Here you have a retailer who will now—from cradle to grave—have complete control of the entire production system,” says John Hansen, farmer and president of the Nebraska Farmers Union. “They’ll own the birds, they’ll control all of the particulars of the birds’ genetics, the production. They’ll own the feed mill and they’ll have control of the processing plant. If this model works, what will it mean for the rest of the poultry industry? Will other retailers, like Walmart, be close behind?”
At the center of the move is the company’s $4.99 rotisserie chicken. In 2014, Costco reported selling 78 million of these processed, four-pound birds a year. In order to guarantee a steady supply and maintain the price, Costco fixed its eye on Nebraska as the best place to start raising and processing its own supply of chickens, and “break free of the monopoly” held by companies such as Tyson and Pilgrim’s Pride, much like it did for sausage and hotdogs with its Kirkland plant in Tracy, California.
In June, the company broke ground on a giant new poultry processing facility in Fremont, about an hour west of Omaha. The plant will process more than 2 million chickens a week, or more than 100 million birds a year, and provide as much as 43 percent of Costco’s rotisserie chickens, as well as around one third of the raw birds it sells.The effort will also include a feed mill and over 500 giant barns in which to raise the broilers, the hens, and the pullets, or parents used to breed the broilers. Costco needs to recruit around 125 farmers to build and fund chicken barns within a 100-mile radius, and it’s contracting with Lincoln Premium Poultry (LPP), a “company created for Costco in collaboration with Costco” that sprang up in 2016 to take over the business of working with farmers and building the infrastructure.
As the biggest competitor with Whole Foods, selling $4 billion in organic foods, Costco has been wooing shoppers who care about the source of their food for years. (In fact, the company just announced that it would tighten its standards around antibiotic use in all the meat it supplies thanks in part to an ongoing effort by shareholder activists). So, to say there’s a lot at stake with this new venture is an understatement.
While there has been resistance to both the plant and the barns on a county level, Nebraska’s state government has been working with industry forces for several years to welcome just such a project to the state. The operation is being billed as one of the only ways for farmers in the area to hold on to their land for the next generation, but farmers’ advocates and other experts well-versed in the woes farmers face in the chicken industry say the reward may not be worth the price.
And, to a group of farmers, land owners, and activists who have been united by the effort to oppose the plant, and are now actively envisioning a regenerative alternative, one thing is clear: This a watershed moment for the state, and for the shifting relationship between retailers and the larger food chain.
“Here you have a retailer who will now—from cradle to grave—have complete control of the entire production system,” says John Hansen, farmer and president of the Nebraska Farmers Union. “They’ll own the birds, they’ll control all of the particulars of the birds’ genetics, the production. They’ll own the feed mill and they’ll have control of the processing plant. If this model works, what will it mean for the rest of the poultry industry? Will other retailers, like Walmart, be close behind?”
by Twilight Greenaway, Civil Eats | Read more:
Image: uncredited
Tuesday, December 18, 2018
A Vice President With Few Virtues
No matter what your politics, Christian Bale is easily one of our greatest living actors, along with Daniel Day-Lewis, Benedict Cumberbatch, and Robert De Niro. And while his stunning performance as Dick Cheney in Vice isn’t his best performance, it’s certainly his greatest impersonation since his Sissy-Spacek-as-Carrie/Anthony-Perkins-as-Norman-Bates-level defining of Patrick Bateman in American Psycho. (Like Meryl Streep playing The Iron Lady, Bale will be the mainstream star to watch in this year’s Best Actor race. Vice is already running away with Golden Globe nominations.)
On that note, I had planned to write a straightforward film review, maybe making a crack that it would be up to you to decide whether a film about Dick Cheney qualified as a sort of sequel to American Psycho, and leave it at that. And I would have been happy to have stayed in my lane, except for all the Beltway political pundits who, in Vice’s wake, have taken up the art of film criticism. (Full disclosure: I interviewed Ben Shapiro years ago for a book review, and though our outlooks differed, I respected him and liked him personally. That said, I’m afraid I disagree with him in the extreme here, although Kyle Smith in National Review makes a far more worthwhile case against the movie on its own merits, or lack thereof.)
So instead, I am summoned to a more urgent, if distasteful, task: to try and explain why anyone in the conservative movement (or anywhere else) would want to normalize Dick Cheney—let alone flat-out cheer for him. After all, this was a man who left office with an approval rating as low as 13 percent.
That’s lower than Richard Nixon when he resigned, lower than Jimmy Carter when he was replaced by Ronald Reagan. It’s as low as Herbert Hoover during the Great Depression and as low as Barack Obama among Republicans and conservatives.
Even today, Hillary Clinton and Donald Trump both have triple the approval ratings that Cheney left office with.
Thirteen percent.
To plagiarize what Andrew Sullivan famously said about Hillary, anyone with Cheney’s destructive track record towards his own movement should have been drummed out “under a welter of derision.”
We don’t have to be “ordered” to remember and revere historical figures like Reagan, MLK, and JFK, or be shamed into doing so. But who the heck did Dick Cheney ever benefit outside of the corporate-crony one percent? What small, non-monopoly business did he ever give a chance to grow? What did he do to improve our schools and police? What did he do for balanced-budget conservatism, as he overruled Alan Greenspan and his own treasury secretary, gloating that “deficits don’t matter”?
How did Cheney make us more secure, with Iraq and Afghanistan all but ruined, Iran and Syria feeling stronger every day, and ISIS having wrought its destruction—and with Osama bin Laden still livin’ large for two-and-a-half years after Cheney retired? How do you defend someone who literally went to the Supreme Court to keep the minutes of his infamous 2001 energy task force meetings secret (they were co-chaired by Kenny-Boy Lay during the height of Enron’s rape of California’s power grid), while at the same time suggesting the outing of a truly top secret CIA agent (Valerie Plame) just to get revenge on her journalist husband? How did Cheney uphold Ronald Reagan’s mantra of curbing big government excesses when he justified warrantless surveillance and straight-up torture?
And what lasting benefit did Dick Cheney bestow on the conservative or Republican brand, with Barack Obama winning the biggest landslides since Reagan and Bush Senior?
It was my respected colleague Kelley Vlahos who solved the mystery of why some members of the Beltway press just can’t quit Cheney: “because they still won’t admit that the war was wrong.” Bingo. Expecting the U.S. to export insta-democracy to decidedly non-Western cultures? Putting overwhelmingly Christian and Jewish “viceroys” in charge of historically Muslim nations? Gee, what could possibly go wrong… (...)
Watching Bale as a terse, leering, manipulative young reactionary as he grindstones and plays people against each other from the late ‘60s to his Bush-Cheney heyday, one is struck by his shameless entitlement. Cheney uses movement conservatism and old boy connections as his own Uber. If Christian Bale is a slim and athletic man trapped in a fat and ugly body, Cheney sees himself as the Richelieu or Machiavelli of his own real-life movie, trapped just one step behind the real decision-makers—until he finally gets that chance to ride his horse from Aqueduct to Santa Anita.
The other key role among these garbage men is Amy Adams’ take-no-prisoners performance as Lynne Cheney. Mrs. Cheney had the straight-A brains and Ph.D.-level drive to be a powerful judge or executive in her own right, and was, according to Adams, a better “natural politician” than her husband. But as a card-carrying member of the Phyllis Schlafly/Anita Bryant/Beverly LaHaye-era Right from rural Wyoming, Lynne had less than zero plans to transform herself into another bra-burning icon. Instead, “she lived her [considerable] ambitions through her husband,” as Adams said. Adams even added that compared to the iron-fisted Lynne, her husband Dick might have been the “velvet glove”! (...)
As we contemplate the dumpster fire that is today’s politics, Vice is a useful reminder that the arrogant and destructive reign of Dick “Full Speed Ahead” Cheney was so awful for American society in general and American conservatism in particular that it helped provoke the biggest counter-reaction on the Left since Watergate. And if you’re a Never Trumper, just recall that a key reason Trump and Ted Cruz were the last Republicans standing in 2016 was because Cheneyism had so discredited the old “conservative” establishment.
Sorry, I’m just not there for conservative writers infantilizing Cheney and going all triggered snowflake at what big meanies the Hollywood libr’als are being to him. Christian Bale said it himself: “[Cheney’s] a big boy…he says himself he has no remorse, no regrets, he’d do everything again in a minute.” Exactly.
On that note, I had planned to write a straightforward film review, maybe making a crack that it would be up to you to decide whether a film about Dick Cheney qualified as a sort of sequel to American Psycho, and leave it at that. And I would have been happy to have stayed in my lane, except for all the Beltway political pundits who, in Vice’s wake, have taken up the art of film criticism. (Full disclosure: I interviewed Ben Shapiro years ago for a book review, and though our outlooks differed, I respected him and liked him personally. That said, I’m afraid I disagree with him in the extreme here, although Kyle Smith in National Review makes a far more worthwhile case against the movie on its own merits, or lack thereof.)So instead, I am summoned to a more urgent, if distasteful, task: to try and explain why anyone in the conservative movement (or anywhere else) would want to normalize Dick Cheney—let alone flat-out cheer for him. After all, this was a man who left office with an approval rating as low as 13 percent.
That’s lower than Richard Nixon when he resigned, lower than Jimmy Carter when he was replaced by Ronald Reagan. It’s as low as Herbert Hoover during the Great Depression and as low as Barack Obama among Republicans and conservatives.
Even today, Hillary Clinton and Donald Trump both have triple the approval ratings that Cheney left office with.
Thirteen percent.
To plagiarize what Andrew Sullivan famously said about Hillary, anyone with Cheney’s destructive track record towards his own movement should have been drummed out “under a welter of derision.”
We don’t have to be “ordered” to remember and revere historical figures like Reagan, MLK, and JFK, or be shamed into doing so. But who the heck did Dick Cheney ever benefit outside of the corporate-crony one percent? What small, non-monopoly business did he ever give a chance to grow? What did he do to improve our schools and police? What did he do for balanced-budget conservatism, as he overruled Alan Greenspan and his own treasury secretary, gloating that “deficits don’t matter”?
How did Cheney make us more secure, with Iraq and Afghanistan all but ruined, Iran and Syria feeling stronger every day, and ISIS having wrought its destruction—and with Osama bin Laden still livin’ large for two-and-a-half years after Cheney retired? How do you defend someone who literally went to the Supreme Court to keep the minutes of his infamous 2001 energy task force meetings secret (they were co-chaired by Kenny-Boy Lay during the height of Enron’s rape of California’s power grid), while at the same time suggesting the outing of a truly top secret CIA agent (Valerie Plame) just to get revenge on her journalist husband? How did Cheney uphold Ronald Reagan’s mantra of curbing big government excesses when he justified warrantless surveillance and straight-up torture?
And what lasting benefit did Dick Cheney bestow on the conservative or Republican brand, with Barack Obama winning the biggest landslides since Reagan and Bush Senior?
It was my respected colleague Kelley Vlahos who solved the mystery of why some members of the Beltway press just can’t quit Cheney: “because they still won’t admit that the war was wrong.” Bingo. Expecting the U.S. to export insta-democracy to decidedly non-Western cultures? Putting overwhelmingly Christian and Jewish “viceroys” in charge of historically Muslim nations? Gee, what could possibly go wrong… (...)
Watching Bale as a terse, leering, manipulative young reactionary as he grindstones and plays people against each other from the late ‘60s to his Bush-Cheney heyday, one is struck by his shameless entitlement. Cheney uses movement conservatism and old boy connections as his own Uber. If Christian Bale is a slim and athletic man trapped in a fat and ugly body, Cheney sees himself as the Richelieu or Machiavelli of his own real-life movie, trapped just one step behind the real decision-makers—until he finally gets that chance to ride his horse from Aqueduct to Santa Anita.
The other key role among these garbage men is Amy Adams’ take-no-prisoners performance as Lynne Cheney. Mrs. Cheney had the straight-A brains and Ph.D.-level drive to be a powerful judge or executive in her own right, and was, according to Adams, a better “natural politician” than her husband. But as a card-carrying member of the Phyllis Schlafly/Anita Bryant/Beverly LaHaye-era Right from rural Wyoming, Lynne had less than zero plans to transform herself into another bra-burning icon. Instead, “she lived her [considerable] ambitions through her husband,” as Adams said. Adams even added that compared to the iron-fisted Lynne, her husband Dick might have been the “velvet glove”! (...)
As we contemplate the dumpster fire that is today’s politics, Vice is a useful reminder that the arrogant and destructive reign of Dick “Full Speed Ahead” Cheney was so awful for American society in general and American conservatism in particular that it helped provoke the biggest counter-reaction on the Left since Watergate. And if you’re a Never Trumper, just recall that a key reason Trump and Ted Cruz were the last Republicans standing in 2016 was because Cheneyism had so discredited the old “conservative” establishment.
Sorry, I’m just not there for conservative writers infantilizing Cheney and going all triggered snowflake at what big meanies the Hollywood libr’als are being to him. Christian Bale said it himself: “[Cheney’s] a big boy…he says himself he has no remorse, no regrets, he’d do everything again in a minute.” Exactly.
by Telly Davidson, The American Conservative | Read more:
Image: Vice/Annapurna Pictures/YouTube Screenshot
[ed. See also: Are We Ready to Lose Afghanistan? (American Conservative)]
A Texas Elementary School Speech Pathologist Refused to Sign a Pro-Israel Oath, So She Lost Her Job
A children's school pathologist who has worked for the last nine years with developmentally disabled, autistic, and speech-impaired elementary school students in Austin, Texas, has been told that she can no longer work with the public school district, after she refused to sign an oath vowing that she “does not” and “will not” engage in a boycott of Israel or “otherwise tak[e] any action that is intended to inflict economic harm” on that foreign nation. A lawsuit on her behalf was filed early Monday morning in a federal court in the Western District of Texas, alleging a violation of her First Amendment right of free speech.
The child language specialist, Bahia Amawi, is a U.S. citizen who received a master’s degree in speech pathology in 1999 and, since then, has specialized in evaluations for young children with language difficulties (see video below). Amawi was born in Austria and has lived in the U.S. for the last 30 years, fluently speaks three languages (English, German, and Arabic), and has four U.S.-born American children of her own.
Amawi began working in 2009 on a contract basis with the Pflugerville Independent School District, which includes Austin, to provide assessments and support for school children from the county’s growing Arabic-speaking immigrant community. The children with whom she has worked span the ages of 3 to 11. Ever since her work for the school district began in 2009, her contract was renewed each year with no controversy or problem.
But this year, all of that changed. On August 13, the school district once again offered to extend her contract for another year by sending her essentially the same contract and set of certifications she has received and signed at the end of each year since 2009.
She was prepared to sign her contract renewal until she noticed one new, and extremely significant, addition: a certification she was required to sign pledging that she “does not currently boycott Israel,” that she “will not boycott Israel during the term of the contract,” and that she shall refrain from any action “that is intended to penalize, inflict economic harm on, or limit commercial relations with Israel, or with a person or entity doing business in Israeli or in an Israel-controlled territory.”
That language would bar Amawi not only from refraining from buying goods from companies located within Israel, but also from any Israeli companies operating in the occupied West Bank (“an Israeli-controlled territory”). The oath given to Amawi would also likely prohibit her even from advocating such a boycott given that such speech could be seen as “intended to penalize, inflict economic harm on, or limit commercial relations with Israel.” (...)
This required certification about Israel was the only one in the contract sent to Amawi that pertained to political opinions and activism. There were no similar clauses relating to children (such as a vow not to advocate for pedophiles or child abusers), nor were there any required political oaths that pertained to the country of which she is a citizen and where she lives and works: the United States.
In order to obtain contracts in Texas, then, a citizen is free to denounce and work against the United States, to advocate for causes that directly harm American children, and even to support a boycott of particular U.S. states, such as was done in 2017 to North Carolina in protest of its anti-LGBT law. In order to continue to work, Amawi would be perfectly free to engage in any political activism against her own country, participate in an economic boycott of any state or city within the U.S., or work against the policies of any other government in the world — except Israel.
That’s one extraordinary aspect of this story: The sole political affirmation Texans like Amawi are required to sign in order to work with the school district’s children is one designed to protect not the United States or the children of Texas, but the economic interests of Israel. As Amawi put it to The Intercept: “It’s baffling that they can throw this down our throats and decide to protect another country’s economy versus protecting our constitutional rights.” (...)
When asked if she considered signing the pledge to preserve her ability to work, Amawi told The Intercept: “Absolutely not. I couldn’t in good conscience do that. If I did, I would not only be betraying Palestinians suffering under an occupation that I believe is unjust and thus, become complicit in their repression, but I’d also be betraying my fellow Americans by enabling violations of our constitutional rights to free speech and to protest peacefully.” (...)
The anti-BDS Israel oath was included in Amawi’s contract papers due to an Israel-specific state law enacted on May 2, 2017, by the Texas State Legislature and signed into law two days later by GOP Gov. Greg Abbott. The bill unanimously passed the lower House by a vote of 131-0, and then the Senate by a vote of 25-4.
When Abbott signed the bill in a ceremony held at the Austin Jewish Community Center, he proclaimed: “Any anti-Israel policy is an anti-Texas policy.”
The bill’s language is so sweeping that some victims of Hurricane Harvey, which devastated Southwest Texas in late 2017, were told that they could only receive state disaster relief if they first signed a pledge never to boycott Israel. That demand was deeply confusing to those hurricane victims in desperate need of help but who could not understand what their views of Israel and Palestine had to do with their ability to receive assistance from their state government.
The evangelical author of the Israel bill, Republican Texas state Rep. Phil King, said at the time that its application to hurricane relief was a “misunderstanding,” but nonetheless emphasized that the bill’s purpose was indeed to ensure that no public funds ever go to anyone who supports a boycott of Israel.
At the time that Texas enacted the law barring contractors from supporting a boycott of Israel, it was the 17th state in the country to do so. As of now, 26 states have enacted such laws — including blue states run by Democrats such as New York, California, and New Jersey — while similar bills are pending in another 13 states. (...)
The vast majority of American citizens are therefore now officially barred from supporting a boycott of Israel without incurring some form of sanction or limitation imposed by their state. And the relatively few Americans who are still free to form views on this hotly contested political debate without being officially punished are in danger of losing that freedom, as more and more states are poised to enact similar censorship schemes.
The child language specialist, Bahia Amawi, is a U.S. citizen who received a master’s degree in speech pathology in 1999 and, since then, has specialized in evaluations for young children with language difficulties (see video below). Amawi was born in Austria and has lived in the U.S. for the last 30 years, fluently speaks three languages (English, German, and Arabic), and has four U.S.-born American children of her own.
Amawi began working in 2009 on a contract basis with the Pflugerville Independent School District, which includes Austin, to provide assessments and support for school children from the county’s growing Arabic-speaking immigrant community. The children with whom she has worked span the ages of 3 to 11. Ever since her work for the school district began in 2009, her contract was renewed each year with no controversy or problem.But this year, all of that changed. On August 13, the school district once again offered to extend her contract for another year by sending her essentially the same contract and set of certifications she has received and signed at the end of each year since 2009.
She was prepared to sign her contract renewal until she noticed one new, and extremely significant, addition: a certification she was required to sign pledging that she “does not currently boycott Israel,” that she “will not boycott Israel during the term of the contract,” and that she shall refrain from any action “that is intended to penalize, inflict economic harm on, or limit commercial relations with Israel, or with a person or entity doing business in Israeli or in an Israel-controlled territory.”
That language would bar Amawi not only from refraining from buying goods from companies located within Israel, but also from any Israeli companies operating in the occupied West Bank (“an Israeli-controlled territory”). The oath given to Amawi would also likely prohibit her even from advocating such a boycott given that such speech could be seen as “intended to penalize, inflict economic harm on, or limit commercial relations with Israel.” (...)
This required certification about Israel was the only one in the contract sent to Amawi that pertained to political opinions and activism. There were no similar clauses relating to children (such as a vow not to advocate for pedophiles or child abusers), nor were there any required political oaths that pertained to the country of which she is a citizen and where she lives and works: the United States.
In order to obtain contracts in Texas, then, a citizen is free to denounce and work against the United States, to advocate for causes that directly harm American children, and even to support a boycott of particular U.S. states, such as was done in 2017 to North Carolina in protest of its anti-LGBT law. In order to continue to work, Amawi would be perfectly free to engage in any political activism against her own country, participate in an economic boycott of any state or city within the U.S., or work against the policies of any other government in the world — except Israel.
That’s one extraordinary aspect of this story: The sole political affirmation Texans like Amawi are required to sign in order to work with the school district’s children is one designed to protect not the United States or the children of Texas, but the economic interests of Israel. As Amawi put it to The Intercept: “It’s baffling that they can throw this down our throats and decide to protect another country’s economy versus protecting our constitutional rights.” (...)
When asked if she considered signing the pledge to preserve her ability to work, Amawi told The Intercept: “Absolutely not. I couldn’t in good conscience do that. If I did, I would not only be betraying Palestinians suffering under an occupation that I believe is unjust and thus, become complicit in their repression, but I’d also be betraying my fellow Americans by enabling violations of our constitutional rights to free speech and to protest peacefully.” (...)
The anti-BDS Israel oath was included in Amawi’s contract papers due to an Israel-specific state law enacted on May 2, 2017, by the Texas State Legislature and signed into law two days later by GOP Gov. Greg Abbott. The bill unanimously passed the lower House by a vote of 131-0, and then the Senate by a vote of 25-4.
When Abbott signed the bill in a ceremony held at the Austin Jewish Community Center, he proclaimed: “Any anti-Israel policy is an anti-Texas policy.”
The bill’s language is so sweeping that some victims of Hurricane Harvey, which devastated Southwest Texas in late 2017, were told that they could only receive state disaster relief if they first signed a pledge never to boycott Israel. That demand was deeply confusing to those hurricane victims in desperate need of help but who could not understand what their views of Israel and Palestine had to do with their ability to receive assistance from their state government.
The evangelical author of the Israel bill, Republican Texas state Rep. Phil King, said at the time that its application to hurricane relief was a “misunderstanding,” but nonetheless emphasized that the bill’s purpose was indeed to ensure that no public funds ever go to anyone who supports a boycott of Israel.
At the time that Texas enacted the law barring contractors from supporting a boycott of Israel, it was the 17th state in the country to do so. As of now, 26 states have enacted such laws — including blue states run by Democrats such as New York, California, and New Jersey — while similar bills are pending in another 13 states. (...)
The vast majority of American citizens are therefore now officially barred from supporting a boycott of Israel without incurring some form of sanction or limitation imposed by their state. And the relatively few Americans who are still free to form views on this hotly contested political debate without being officially punished are in danger of losing that freedom, as more and more states are poised to enact similar censorship schemes.
by Glenn Greenwald, The Intercept | Read more:
Image: YouTube
Monday, December 17, 2018
Bubbles and Hot Potatoes
Of all the delusions that have infected the minds of economists, central bankers, and the investing public in recent years, perhaps none is as short-sighted and pernicious as the idea that aggressively low interest rates are “good” for the economy and the financial markets.
There is, of course, a certain truth to that idea, roughly equivalent to proposing that snorting amphetamine-laced cocaine is “good” for one’s energy, or that walking into a bar and randomly choosing partners while wearing a blindfold is “good” for one’s love life. In each case, however, the validity of the claim comes from subverting the word “good” to mean nothing more than a short-lived burst of very bad choices.
Back in 2003, Alan Greenspan mixed the soap of what would become the housing bubble by holding interest rates to just 1%. Investors responded to the uncomfortably low yields on Treasury bills by looking for alternatives that offered a seemingly safe “pickup” in yield. They found that alternative in mortgage securities. Wall Street was more than happy to satisfy the demand for more “product,” as they called it, by creating more mortgage bonds. But see, creating a mortgage bond requires you to actually make a mortgage loan to someone, which is how we got zero-down, no-doc, interest-only loans. “No credit? No problem!” Well, no problem in the short-term. Over the next few years, that bubble of Fed-induced yield-seeking speculation would reach its peak, and then collapse, producing the worst financial crisis since the Great Depression.
In my 2003 piece outlining that developing bubble, I began, “T.S. Eliot once wrote ‘Only those who risk going too far can possibly find out how far one can go.’ It seems that the U.S. financial system is bound and determined to find out… the real question is this: why is anybody willing to hold this low interest rate paper if the borrowers issuing it are so vulnerable to default risk? That’s the secret. The borrowers don’t actually issue it directly. Instead, much of the worst credit risk in the U.S. financial system is actually swapped into instruments that end up being partially backed by the U.S. government. These are held by investors precisely because they piggyback on the good faith and credit of Uncle Sam.”
In the Federal Reserve’s attempt to bring the U.S. out of the crisis of its own making, the Fed has produced conditions that make another collapse inevitable. Unfortunately, the scale of the present bubble is far grander, and the consequences are likely to be more severe. By the completion of this cycle, I continue to expect the S&P 500 to lose roughly two-thirds of the market capitalization it reached at its September 20 peak. Mountains of covenant-lite debt and leveraged loans, this cycle’s version of “sub-prime” mortgages, will go into default. Worse, “covenant-lite” means that lenders have much less protection in the event of defaults, so recovery rates will plunge to levels that investors have never experienced.
After 8 years of Fed-induced yield-seeking speculation, financial valuations have been driven to the most offensive extremes in history, with the most reliable equity valuation measures recently matching or exceeding their 1929 and 2000 peaks. Accordingly, prospective long-term investment returns for stocks and bonds have been driven to strikingly low levels.
At the September peak, we estimated that a conventional portfolio mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills was likely to produce total returns averaging just 0.48% annually over the coming 12-year horizon. The only time passive investors faced lower expected 12-year returns was during the 3 weeks immediately surrounding the 1929 market peak. After a recent increase in bond yields and a mild -10% decline in the S&P 500, that estimate increased to just 1.29%. With most pension funds assuming expected future returns on the order of 7% annually, the coming years are likely to include a rather severe pension funding crisis. (...)
With the most reliable measures of market valuation still over 2.5 times their historical norms, there are essentially two ways to normalize valuations. One is for the market to lose about -60% of its value. The other is for fundamentals to grow while leaving stock prices unchanged. So the question is: how many years of growth would be required in order to normalize valuations? The answer is ln(2.5)/ln(1.04) = over 23 years. Though prices would be unchanged, you’d also get a dividend yield of about 2% while you wait.
In my view, there will likely be very large changes in economic conditions and market psychology long before then, so my sense is that a major price collapse like 2000-2002 and 2007-2009 is the most likely way this bubble will be resolved. Meanwhile, it’s worth noting that it would not even take a decline to historically run-of-the-mill valuations to wipe out every bit of S&P 500 total return that the index has enjoyed since 2000.
While successfully engineering inflation seems like a tempting way to avoid major market losses, it’s important to remember again that the best equity valuation measures remain over 2.5 times their historical norms. Though higher inflation isn’t required for valuations to normalize, it would almost certainly accelerate that normalization. That’s another way of saying that the CPI would have to far more than double before the positive effects of inflation on nominal growth would begin to overcome the negative effects of inflation on market valuations.
In the Federal Reserve’s attempt to bring the U.S. out of the crisis of its own making, the Fed has produced conditions that make another collapse inevitable. Unfortunately, the scale of the present bubble is far grander, and the consequences are likely to be more severe.
Put simply, the extraordinary and experimental policies of quantitative easing and zero interest rates have not been “good” except in the myopic sense of encouraging a short-term burst of very bad choices and misallocations of capital. While it’s unfortunately necessary to tolerate cartoonish rants on CNBC about a potential Fed “policy error” as it normalizes interest rates, the fact is that the policy error is way, way behind us, and the Fed already made it.
The financial markets have already experienced years of aggressive yield-seeking speculation, record valuation extremes, and eager issuance of new “product” – in the form of covenant lite debt and leveraged loans – to satisfy the need of investors to “earn something greater than zero.” Now all we have is an unfortunate situation. With the total capitalization of U.S. corporate equities recently pushing $40 trillion, I continue to expect that $20 trillion or more of what investors count as “wealth” will vanish over the completion of this cycle.
Bubbles and hot potatoes
Over the completion of this cycle, you’re going to hear a lot of misinformation about monetary policy, along with a great deal of misplaced blame. The initial blame will be directed at whatever immediately accompanies the downturn. If a market collapse happens to fall on the same day that an organ grinder’s monkey throws a coconut at the bronze bull on Wall Street, they’re going to blame the crash on the monkey.
Additional rounds of blame will be directed at whatever advances the agenda of the person talking. Republicans will blame Democrats. Democrats will blame Republicans. Dogs will blame cats. Cats will blame mice. Everyone on financial TV will blame Jay Powell at the Fed for the “policy mistake” of even trying to normalize interest rates. But the true object deserving of blame will be the thing that made a financial collapse inevitable in the first place: the yield-seeking carnival of speculation engineered by the Bernanke-Yellen Fed.
Let’s walk through some of the mechanics of how monetary policy actually works, and how recent policies encouraged a bubble and collapse that is now baked-in-the-cake. The discussion will help to clear up some misconceptions (like the insufferable phrase “cash on the sidelines”), as well as some widely-believed cause-and-effect relationships that have no basis in fact.
There is, of course, a certain truth to that idea, roughly equivalent to proposing that snorting amphetamine-laced cocaine is “good” for one’s energy, or that walking into a bar and randomly choosing partners while wearing a blindfold is “good” for one’s love life. In each case, however, the validity of the claim comes from subverting the word “good” to mean nothing more than a short-lived burst of very bad choices.
Back in 2003, Alan Greenspan mixed the soap of what would become the housing bubble by holding interest rates to just 1%. Investors responded to the uncomfortably low yields on Treasury bills by looking for alternatives that offered a seemingly safe “pickup” in yield. They found that alternative in mortgage securities. Wall Street was more than happy to satisfy the demand for more “product,” as they called it, by creating more mortgage bonds. But see, creating a mortgage bond requires you to actually make a mortgage loan to someone, which is how we got zero-down, no-doc, interest-only loans. “No credit? No problem!” Well, no problem in the short-term. Over the next few years, that bubble of Fed-induced yield-seeking speculation would reach its peak, and then collapse, producing the worst financial crisis since the Great Depression.
In my 2003 piece outlining that developing bubble, I began, “T.S. Eliot once wrote ‘Only those who risk going too far can possibly find out how far one can go.’ It seems that the U.S. financial system is bound and determined to find out… the real question is this: why is anybody willing to hold this low interest rate paper if the borrowers issuing it are so vulnerable to default risk? That’s the secret. The borrowers don’t actually issue it directly. Instead, much of the worst credit risk in the U.S. financial system is actually swapped into instruments that end up being partially backed by the U.S. government. These are held by investors precisely because they piggyback on the good faith and credit of Uncle Sam.”
In the Federal Reserve’s attempt to bring the U.S. out of the crisis of its own making, the Fed has produced conditions that make another collapse inevitable. Unfortunately, the scale of the present bubble is far grander, and the consequences are likely to be more severe. By the completion of this cycle, I continue to expect the S&P 500 to lose roughly two-thirds of the market capitalization it reached at its September 20 peak. Mountains of covenant-lite debt and leveraged loans, this cycle’s version of “sub-prime” mortgages, will go into default. Worse, “covenant-lite” means that lenders have much less protection in the event of defaults, so recovery rates will plunge to levels that investors have never experienced.
After 8 years of Fed-induced yield-seeking speculation, financial valuations have been driven to the most offensive extremes in history, with the most reliable equity valuation measures recently matching or exceeding their 1929 and 2000 peaks. Accordingly, prospective long-term investment returns for stocks and bonds have been driven to strikingly low levels.
At the September peak, we estimated that a conventional portfolio mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills was likely to produce total returns averaging just 0.48% annually over the coming 12-year horizon. The only time passive investors faced lower expected 12-year returns was during the 3 weeks immediately surrounding the 1929 market peak. After a recent increase in bond yields and a mild -10% decline in the S&P 500, that estimate increased to just 1.29%. With most pension funds assuming expected future returns on the order of 7% annually, the coming years are likely to include a rather severe pension funding crisis. (...)
With the most reliable measures of market valuation still over 2.5 times their historical norms, there are essentially two ways to normalize valuations. One is for the market to lose about -60% of its value. The other is for fundamentals to grow while leaving stock prices unchanged. So the question is: how many years of growth would be required in order to normalize valuations? The answer is ln(2.5)/ln(1.04) = over 23 years. Though prices would be unchanged, you’d also get a dividend yield of about 2% while you wait.
In my view, there will likely be very large changes in economic conditions and market psychology long before then, so my sense is that a major price collapse like 2000-2002 and 2007-2009 is the most likely way this bubble will be resolved. Meanwhile, it’s worth noting that it would not even take a decline to historically run-of-the-mill valuations to wipe out every bit of S&P 500 total return that the index has enjoyed since 2000.
While successfully engineering inflation seems like a tempting way to avoid major market losses, it’s important to remember again that the best equity valuation measures remain over 2.5 times their historical norms. Though higher inflation isn’t required for valuations to normalize, it would almost certainly accelerate that normalization. That’s another way of saying that the CPI would have to far more than double before the positive effects of inflation on nominal growth would begin to overcome the negative effects of inflation on market valuations.
In the Federal Reserve’s attempt to bring the U.S. out of the crisis of its own making, the Fed has produced conditions that make another collapse inevitable. Unfortunately, the scale of the present bubble is far grander, and the consequences are likely to be more severe.
Put simply, the extraordinary and experimental policies of quantitative easing and zero interest rates have not been “good” except in the myopic sense of encouraging a short-term burst of very bad choices and misallocations of capital. While it’s unfortunately necessary to tolerate cartoonish rants on CNBC about a potential Fed “policy error” as it normalizes interest rates, the fact is that the policy error is way, way behind us, and the Fed already made it.
The financial markets have already experienced years of aggressive yield-seeking speculation, record valuation extremes, and eager issuance of new “product” – in the form of covenant lite debt and leveraged loans – to satisfy the need of investors to “earn something greater than zero.” Now all we have is an unfortunate situation. With the total capitalization of U.S. corporate equities recently pushing $40 trillion, I continue to expect that $20 trillion or more of what investors count as “wealth” will vanish over the completion of this cycle.
Bubbles and hot potatoes
Over the completion of this cycle, you’re going to hear a lot of misinformation about monetary policy, along with a great deal of misplaced blame. The initial blame will be directed at whatever immediately accompanies the downturn. If a market collapse happens to fall on the same day that an organ grinder’s monkey throws a coconut at the bronze bull on Wall Street, they’re going to blame the crash on the monkey.
Additional rounds of blame will be directed at whatever advances the agenda of the person talking. Republicans will blame Democrats. Democrats will blame Republicans. Dogs will blame cats. Cats will blame mice. Everyone on financial TV will blame Jay Powell at the Fed for the “policy mistake” of even trying to normalize interest rates. But the true object deserving of blame will be the thing that made a financial collapse inevitable in the first place: the yield-seeking carnival of speculation engineered by the Bernanke-Yellen Fed.
Let’s walk through some of the mechanics of how monetary policy actually works, and how recent policies encouraged a bubble and collapse that is now baked-in-the-cake. The discussion will help to clear up some misconceptions (like the insufferable phrase “cash on the sidelines”), as well as some widely-believed cause-and-effect relationships that have no basis in fact.
by John P. Hussman, Ph.D., Hussman Investment Trust | Read more:
[ed. Do read the whole thing. In 2008, when the economic meltdown started to gain steam the S&P 500 was roughly around 1,400 and change. The Dow, 11,000. Now it's S&P: 2550 and Dow: 23,600 (not to mention the $1.5 trillion added to the national debt since then, courtesy of the GOP tax bill of 2017).]
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