Archive for the ‘economics’ Category
Gaffes. Alternative facts. They are the reason Donald Trump is the President, and why his opponents have all failed to stop him.
All the hand-wringing against the avalanche of fake news on the Internet ignore the most important and scary aspects of the phenomenon. First, the guy in the White House, and his backers, actively employ the tactic to advance their political agendas. (So other Internet fake news are of secondary concern.) Second, fake news have been around for thousands of years.
The problem goes to the heart of Donald Trump’s successful campaign. It is the culmination of decades, nay, centuries of religious renewals, and of capitalist expansion. There are two areas where facts don’t matter: religion and business. More people have come to accept that facts don’t matter as much as the heart, the opposite of Enlightenment. And more people now accept that the primary and even sole aim of any enterprises is profits.
Barack Obama was elected at the nadir of free-market economics in the United States, when a house of cards (and fake mortgages) almost brought down the world. But he didn’t go after any of the people guilty of fleecing the rest of us. Eight years went by and not a single Wall Street CEO went to jail for destroying trillions of dollars. Consequently, he and his party became the source of evil in the eyes of many Americans, and free market crony economics staged an improbable comeback, culminating in the election of a businessman to take over the U.S. government.
The other battle in American society has been religion’s role in people’s lives, in schools, in governments. There, too, facts matter not. We are told that faith is what gives our lives meanings, that spiritual beliefs are more important that facts on the ground. Taken to its logical extreme, we can ignore everything from global warming to charter schools to discrimination. Life is so much simpler when all that matters is what you believe.
Democrats have failed to stop a single nominee of the Trump presidency, despite historically unprecedented disapproval ratings for a new president. They are losing the war because they don’t realize who they’re fighting against: white supremacists for whom money is everything. Many are too idealistic and still believe money can’t buy everything. But when everything, even schools, are for sale, it can and will.
Faced with the opposition in civil war, this as an election for Hillary Clinton to lose. With the help of the Democratic Party, she did.
Already, The Guardian has an article blaming “liberals” for the loss; other pundits will explain away what happened. But when a Democrat loses Pennsylvania, it’s much more than candidates, but what they represent.
Brexit was the warning that people are left behind, that they are angry. And they buy into whatever the corporate overlords demanded. Only Trump understood that anger. Oh, and Bernie Sanders.
Throughout the primary and well after, Clinton operatives denigrated Sanders and his idealism. Devoid of their passion to do good, she would never build a commanding lead.
Even if Clinton had won, her brand of elite, Wall-Street-friendly politics meant it was only time that a truer believer in laissez-faire would take over.
Obama laid the groundwork for Clinton’s defeat. His first 100 days should have focused on a broad revamp of labor laws. Wall Street and trickle-down economics had been completely discredited by the stock market crash of 2008, and Americans across the political spectrum voted for change. Obama should’ve rebuilt the only conscientious dissenters of corporate power, the labor unions. When radical Justices handed down Citizens United and gave the wealthy a blank check to buy out politicians, Obama should’ve fought it in every state, to rescue our democracy.
Instead, he saved AIG executives’ paychecks (a contract is a contract), sat on his hands on health care for two years until everyone disliked it for opposite reasons, and allowed himself and the Democrats to get blamed for the Great Recession through an austerity that dared not speak its name.
Wall Street and trickle-down economics had been completely discredited by the stock market crash of 2008, and Americans across the political spectrum voted for change.
Make no mistake, this is the biggest disaster for the United States since the repeal of Reconstruction. As corporate Democrats swing even further to the right in search of that illusive “middle”, as the party of Roosevelt and Johnson completely forget to serve the working poor, Republicans now control all branches of the federal government, and most state legislature and governor mansions. Trump’s brand of racism, sexism, and corporate domination will meet no resistance in the land of free-to-grab-whatevers.
Donald Trump calling Ted Cruz an “anchor baby” was pretty hilarious, but the charge hasn’t stuck because unlike Obama, Cruz’s skin is much lighter.
Like most of other inflammatory comments from Trump, Americans seem to fall into three camps regarding the mogul’s quotable quotes and candidacy. They either love it, hate it, or laugh it off. What most don’t realize is that win or lose, Trump’s candidacy marks the end of American politics as a democratic experiment, and the beginning of it as a business.
The Supreme Court decision that gave corporations real citizenship–“Citizens United”–marked the beginning of the end of the democracy. Individuals literally lost power to entities known as the Corporation. For two-hundred-plus years, an experiment that started as companies colonized a new continent (for the Europeans) seemed to have gotten better and better. It began by giving companies “personhood”–literally treating them as a person, so it can have its own assets, debts, even criminal offenses. But what seemed for a long time like a clever legal tactic has been taken almost to its logical conclusion. Conservative justices decided that corporations have freedom of speech like the rest of us, so they can spend as much as they want, and without public disclosure, to advocate their positions, to campaign for or against candidates (through various legal contortions). The only thing corporations lack now is a vote in the booth, but who needs that when you can buy elections?
But while some liberal groups have been sounding the alarm on Citizens United, the battle has moved well beyond that line. It is hard to imagine now a time when news anchors don’t promote TV shows or movies, or when news networks happily lose hundreds of millions of dollars or more every year. But it was so for decades, more than a century, even. Only in the mid-2000s, did Fox News start promoting its shows and other entertainment lines in the heretofore sanctity of the newsroom. Quickly, other networks fell in line because moguls were no longer satisfied with the cachets of journalism, but demand profits from every line of business, including the newsroom.
Like good ol’ capitalists, they didn’t stop there. Businesspeople like Ben Carson and Carly Fiorina realized that they could make more money and gain more influence, even if for a limited time only, by running for office. Win or lose, they would have a glorious few months to mine their 15 seconds of fame.
No one, though, has as much experience in self-promotion than Donald Trump. So here he is, badmouthing anyone who dares to pose a risk to his new business. In the world of reality TV, it is the best and only way to survive. As the long-time “star” of such a show, Trump knows exactly how to play the game.
Many people worry what a Trump nomination would mean for the country and its standing in the world. Worry not. Even if he loses, more businesspeople will run, and eventually one and more will win. If there’s one sector bigger than public education that money power loves to get its hands on, it’s the American body politics. Regulation, taxation, riches of an unprecedented scale are waiting to be be plundered.
Scott Walker made clear during the fake Koch phone call his plan to destroy labor unions: drag out the stand-off, tire out the media attention, and be the last one standing. While unions and progressive groups have wakened to the gravity of the situation, they have been unable to gain traction outside their core constituents. According to MoveOn.org’s email Sunday night, 50 thousand people went out to the streets nationwide in capitals across 50 states over the weekend. Yet there remain more than 300 million people in the country. Walker is right: the longer the fight goes on, the weaker his opposition will become. Supporters of unions and workers must expand quickly the war on workers beyond members’ right to collective bargaining, into a genuine movement to reorganize the working class in this country.
[Please see the list of brands that in effect fund the other side in Wisconsin, Ohio, and beyond. Thanks Sandra.]
The right’s audacity comes from decades of union decline, from a high in the 1950s when a third of Americans belonged to unions. The latest figures show more than 93% of private-sector workforce are non-union, and so are 88% in government agencies. That most Americans still oppose the Midwest governor is a fortunate blessing.
Many people (not just Tea Party animals) are asking: “Why should union members have health care when I don’t? Why should they have pensions when my employer took away mine? Why should they health care when I can’t afford treatments after having a heart attack?”
The truth is, neither public employees nor union workers were responsible for the economic meltdown or Ponzi schemes from Madoff to Goldman Sachs. They did not take away millions of jobs, erase thousands of pensions, or make employers and states to eliminate the life-saving vehicle that is health insurance.
Many of the same people upset at the benefits still enjoyed by some union members used to have good jobs, health care, pensions, and all the other trappings of middle class that this country was once built on. The question is not why union members still have them, but “Why don’t you have yours?”
And the answer is that they don’t have a union anymore.
You want more than poverty wages? Join a union. You want health care? Join a union. You want weekends off and not a bankrupted retirement? Join a union.
The only way unions and their supporters can win against Gov. Walker (despite an almost silent Democratic Party) is if they can leverage the power of the millions of angry and deprived workers who do not belong to any unions; if they have the backing of 100% of the private sector workforce, and 100% of public employees.
That means fighting to get them to have everything that union members have. Because if they don’t, they will turn on the ones who do.
This is the labor movement’s last chance. You have a few weeks at most. Organize, or die.
Q: This company dominates search and faces extinction.
A: What is Google?
Google investors may want to brace themselves for a “permanently high plateau” as its flagship search engine and email service face the prospect of being marginalized or eliminated by a new competition. While the media focused on the televised game show Jeopardy! in which IBM’s Watson computer obliterated human opponents, they may have overlooked the real story: the birth of an ultimate search engine, not powered by Google.
Google is search, and so far, only search
Google has done well for its long-term investors. Since its IPO in late 2004, the stock has risen more than six-folds. But the business has stayed the same: 96% of its revenues in 2010 came from advertising, based on its market-dominant search engine. Pretenders have come–Yahoo, Ask, Wolfram Alpha, Bing, to name just a few–and most have gone. Soon, so may Google.
Google knows it must diversify and develop new income streams. It has developed or acquired services including Google Voice, Maps, Gmail, YouTube, Android, Chrome, and even a social networking site called Orkut that dominates in Brazil (and nowhere else). Yet, all of them combined contribute to less than 5% of the company’s total revenue. Profits are out of the picture altogether.
And now Google’s flagship services are under siege. Web-based email usage declined from 2009 to 2010. Users are increasingly turning to mobile services, including texting, and social networking sites like Twitter and Facebook to communicate. Mobile email access did surge 36%, but it was not clear how this is done (via Blackberry-like push or Gmail App-like pull). What is clear is that to the extent Google, Microsoft, or other providers want to consider advertising, screen real estate simply does not exist on cell phones.
ComScore reported that usage dropped 24% for teenage users between 12 and 17 years old. The only segment increases came from users over the age of 55. In technology, there is not much better leading indicator of success than the age differential. The evidence is clear: web-based email is shriveling.
Watson will kill the Google star
Even more troubling for Google is that the heart, brain, and body of the company–the lightly decorated search engine visitors see when they visit Google.com–will face an unprecedented and probably hopeless fight against IBM’s Watson, who recently obliterated human rivals in a competition that almost no one thought a machine could win perhaps just a few months ago.
IBM defeated the best chess player in the world a few years ago, but its new machine is even more ground-breaking. It was able to parse regular language, often shrouded in tricky puns and entendres, and find the likeliest answer to a question.
Ken Jennings, the record holder for the longest winning streak on the show, described how Watson did it.
The computer’s techniques for unraveling Jeopardy! clues sounded just like mine. That machine zeroes in on key words in a clue, then combs its memory (in Watson’s case, a 15-terabyte data bank of human knowledge) for clusters of associations with those words. It rigorously checks the top hits against all the contextual information it can muster: the category name; the kind of answer being sought; the time, place, and gender hinted at in the clue; and so on. And when it feels “sure” enough, it decides to buzz. This is all an instant, intuitive process for a human Jeopardy! player, but I felt convinced that under the hood my brain was doing more or less the same thing.
Translation: Watson was given a set of words, and had to decipher the question and find the answer. Exactly what a search engine ideally would do.
IBM has already landed a partnership with Nuance Communications, a speech-recognition leader, to develop an offering for medical diagnosis and treatment. And as the company’s legal counsel pointed out, “the amount of information available to lawyers is practically unmanageable.” Yet with Watson, a lawyer can analyze hundreds of millions of pages of content and mine them for facts and conclusions — in about the time it takes to answer a question on a quiz show. Consider the number of paralegals, associates, even lawyers this service can replace.
Searching for answers, not links
But the true path to glory is in search. Right now, a user has to figure out the mix of keywords for non-trivial searches. “Apple rotten” may turn up agricultural and other results, but is unlikely to find discussions of business practices.
Instead of finding pages that match keywords, Watson was expressly purposed to find answers to the question that those keywords represent. Others have tried before, most notably by Ask.com, but invariably failed due to half-hearted efforts to understand the questions. Watson has come closer to any machine has ever done in replicating knowledge, and it will change “queries” into answers.
Where there is search, there is money, specifically in search-driven advertising. Instead of serving up unrelated and sometimes nonsensical ads, Watson can “understand” the nature of the query and pinpoint the products or services a user is looking for. Just like an effective salesperson can listen to a customer and propose solutions that the latter is not aware of or can imagine, Watson can do the same, 24/7, across the globe. Better matches mean greater returns for advertisers, and higher rates for the seller (Google, IBM, etc.)
While Watson can be used in a variety of fields that requires human interaction, its implication for Google cannot be more direct. Admittedly, it is far from being an economical alternative, at an estimated $3 million of hardware. But most queries will be easier than the typical Jeopardy! question, and economies of scale as well as Murphy’s laws have solved uncountable numbers of problems once thought to be too technologically complicated.
Besides, this is where the industry is going. Greg Sterling, founding principal of Sterling Market Intelligence, a consumer research firm focusing on Internet’s influence, points out that “answers not links” is stated objective of the likes of Bing and Siri (acquired by Apple). And as Google’s Marissa Mayer has said many times, “the ‘perfect search engine’ is one that ‘understands’ what we want.”
Remember the declining use of webmail due to the proliferation of mobile devices? Mobile search will also change consumer behavior, because the small screen will highlight the need to get to the answer as quickly as possible. How often have you seen someone whip out the phone to settle an argument? She certainly is not looking for ten or ten thousand results. As Mr. Sterling explains, “When I ask for ‘the best sushi restaurant in New York’, I want a very few of the best options, not 390,000 links.”
Even if Google tries and succeeds in emulating Watson, the effort may take a better part of the six years that IBM spent on the project, by which time Watson will be that much more refined. While Google is trying its best to develop Android and other ventures that result in a legitimate, new line of business, it needs to refocus on search to stand a chance of remaining relevant in the next few years.
Admittedly, it has a few advantages. With $36 billion in cash and counting, besting IBM’s team of 20-25 people would not be an issue. Google’s roots were already in search, and unlike IBM it is largely unburdened by desires to sell million-dollar hardware. But the effort to reinvent itself must start now.
Groupon, the online group-purchasing phenomenon, recently rejected a whopping $6 billion bid from Google. That’s billions, with a “B”. Apparently, its management and investors expect even more dramatic growth than they have experience so far, buoyed by the service’s popularity. But that popularity could signal the beginning of the end, at least for the company’s current business strategy.
Groupon uses heavy discounting to drive new customers to businesses. It usually works like this. A consumer buys a $20 gift card (in the form of a coupon) for a restaurant for $10, to be used in the next six months. Unlike traditional vendors such as restaurants.com, the coupon acts like cash for food and sometimes drinks, without ridiculous conditions like high minimum purchases or the requirement to notify the establishment before using a meal.
Here is the catch, for the restaurant. It pays Groupon up to half of the receipt from the coupon sale. So after giving a half-off discount to the consumer, the business gives another half to Groupon. No wonder it is so profitable! The restaurant, however, has essentially cut its price by 75%, or more.
This is the main reason the practice is unsustainable. Groupon will have a hard time getting its clients, the businesses, to keep coming back with 75% discounts. A select few will accept the sale because of their confidence in bringing in new repeat customers, but by definition, most shops will not succeed in beating the average.
Businesses do not want to be repeat customers of Groupon either, unless they can restrict offers to new customers only, like a gym or spa. They do not want to slash prices on a permanent basis, nor do they want to train current or potential customers to expect such heavy discounts.
Finally, there is little barrier to entry. At least a dozen rival services have sprung up to cash in on the craze. Word-of-mouth is critical, but the magnitude of discounts ensure it is not as difficult as in other online businesses. The success of the likes of BuyWithMe, Eversave, and LivingSocial prove that even without one of the catchiest brand names, scale is not difficult to achieve. At the same time, they offer stiff competition to Groupon as the latter seeks new clientele (ie. retailers).
Recently, the company announced plans to exploit China and other emerging markets. New markets like the world’s most populous countries are perhaps Groupon’s best hope for a sustainable business, but the same problems with pricing, repeat customers, and barrier to entry will ensure the company must stay on the top of its game for any hope of recapturing the $6 billion enterprise value offered by Google. Time will tell whether the gamble was brilliant or overly optimistic.