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Musings Report 2018-9 3-3-18 Should Facebook, Google and Twitter Be Public Utilities?
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Should Facebook, Google and Twitter Be Public Utilities?
My longtime friend GFB recently suggested I revisit my position on RussiaGate, the investigation into Russian interference in the 2016 US election.
I have been dismissive of the investigation because the idea that a pinprick of Facebook advertising ($100,000) could influence the nation's sprawling ocean of public opinion struck me as preposterous.
But GFB suggested I look a bit deeper and consider the consequences of the Russian campaign, however modest it might have been; and I have taken his sage advice and reconsidered.
I've reached the conclusion that Facebook, Google and Twitter should be operated as public utilities, not as for-profit corporations.
Here is my thinking:
1. As GFB so insightfully observed, Facebook says it sells advertising, as this is uncontroversial. But what Facebook is actually selling is data on its users. This enables enterprises to target highly specific audiences (surfers between the ages of 18 and 34 with an interest in traveling overseas, etc.), but it also enabled the Russian interlopers to target audiences most likely to be receptive to divisive inflammatory content.
2. If we follow this dynamic to its conclusion, we realize that these quasi-monopoly for-profit corporations are threats to democracy, or are incompatible with democracy, if you prefer that wording, as they directly enable the relatively affordable and easy sowing of intentionally divisive content.
In Musings Report #7, I posted this article Inside the Two Years that Shook Facebook--and the World, which describes Facebook founder Mark Zuckerberg's belated realization that the technology he assumed would be both incredibly profitable and helpful could just as easily be used as a force for exploitation and propaganda.
3. In response, the social media/online advertising quasi-monopolies--Facebook, Google and Twitter--have all pursued censorship as their "solution" to "fake news."
But as we all know, censorship isn't quite as easy as the technocrats reckoned; algorithms designed to sort out "fake news" inevitably end up axing legitimate content, particularly legitimate dissent, which often shares certain traits with what's conveniently labeled "fake news," that is, anything that veers from supporting the conventional status quo narratives.
As the failure of the quick-and-dirty algorithms has became painfully visible, the for-profit quasi-monopolies have hired humans to sort the wheat of legitimate "news" (and what exactly defines legitimate news?) from the chaff of "fake news," and discovered to their dismay that the people they hired are biased against various dissenting views.
4. In effect, these corporations are a private-sector Stasi, pursuing an Orwellian world of profits reaped from the censorship and suppression of dissent, all in the name of "getting rid of bad players."
5. Democracy depends on the free and open distribution of a wide spectrum of opinion, and an electorate which is skeptical enough to decide for themselves what's inflammatory nonsense and what contains kernels of truth. The dominance of corporations seeking to maximize profits via selling user data invites the sort of private censorship we are now witnessing--a trend that is poisonous to a free press and democracy.
6. This week, GFB forwarded another article, What Would a 'healthy' Twitter Even Look Like?
The social media/online advertising quasi-monopolies have transformed the Web into a for-profit venture that harvests data from users, and this data-selling is open to abuse and exploitation as well as conventional marketing of goods and services.
In a frantic rush to protect their profits and market dominance and avoid government regulation, these social media/online advertising giants are rushing to impose an opaque private-sector censorship and suppression of dissent--in effect, undermining the foundation of democracy in their pursuit of monopolistic profits.
7. The solution isn't an opaque, private-sector Stasi--it's the transformation of these social media and search monopolies into public utilities that do not collect any data on their users.
The transformation can start with regulations that tighten a noose around the profiteering of these corporations: restrict data collection and raise fines to the point that violations yield billion-dollar fines.
The nation's moribund anti-trust laws might finally be applied to these social media/online advertising quasi-monopolies, forcing transparency that reveals their dangerous dominance.
As these nooses tighten, the market value of these quasi-monopolies will plummet. Once their value has been reduced, the federal government can buy them on the open market, strip out all data collection and maintain them as public utilities that are worthy of the expense because they're now an integral part of a free and transparent press.
This may sound controversial, but if we really follow the internal logic of quasi-monopolies selling user data for a profit, and acting as unregulated for-profit censors, this is the only possible positive conclusion: transfer the ownership of these for-profit quasi-monopolies to the public, and the sooner the better.
Summary of the Blog This Past Week
Never Mind Volatility: Systemic Risk Is Rising 3/2/18
Our Fragmented Labor Markets Defy Outdated Conventions 2/28/18
Career Advice to 20-Somethings: Create Value as a Mobile Creative 2/26/18
Best Thing That Happened To Me This Week
Met Nate Hagens during is visit to Berkeley, where he gave several talks at UC-Berkeley.
Best thing #2: Sold my UUP (a proxy for the US Dollar Index) on Wednesday for a modest profit. Taking profits is always a solid strategy, and an even better one in volatile markets. (see below)
Market Musings: We're All Traders Now
I'm afraid the conventional wisdom of financial advisors--to save money and invest it in stocks and bonds 'for the long haul"--a strategy that has worked fairly well for the past 60 years--will be disastrously wrong for the next decade.
This common advice is based on a very large and unspoken assumption: that every asset bubble that pops will be replaced by an even bigger (and therefore more profitable) bubble if we just wait a few years.
The last time this conventional wisdom came into serious question was in the stagflationary 1970s, when stocks and bonds, when adjusted for inflation, lost over 40% of their value. The decade was punctuated by numerous rallies, but each one petered out.
The only way to profit in this sort of market is to trade, i.e. buy the lows and sells the highs. Buy and hold is a disastrously wrongheaded strategy when the underpinnings of the status quo are eroding.
The 36-year bull market in bonds is drawing to a close, as yields are rising even as official inflation is moribund. Buying and holding bonds will guarantee steadily increasing losses as existing bonds lose value as rates rise.
Stocks have risen solely on the back of central bank stimulus, which is now being reduced/ended. In my view, the political blowback of soaring income inequality due to central banks rewarding capital at the expense of labor will place limits on future central bank largesse.
These long-term reversals of trend make everyone a trader, whether they like it or not: buying and holding might work for real-world assets if inflation really gathers steam, but if markets gyrate in the winds of uncertainty, every asset might rise and fall or simply stagnate.
Being a trader simply means selling an asset when it has topped out relative to other asset classes, and shifting the proceeds into assets that have been crushed and are begining an up-cycle. It sound so absurdly simple: buy low, sell high. But it's not that easy to accomplish in the real world.
It takes discipline to buy when others are selling (the low point of any asset cycle) and to sell when when everyone else is confident (and greedy for even more gains).
As a general rule, letting others gamble on the last 10% of gains is a prudent strategy: take profits when they arise, and don't assume uptrends of the sort we've enjoyed for the past 9 years will last.
As a trader as well as an investor, I've learned the hard way that the barriers to successful trading are mostly emotional: we are all too easily swayed by the emotions of greed, fear and group-think.
Buying and holding is a relatively painless strategy in a rising tide that raises all boats. But when markets gyrate up and down, only those able and willing to trade--to take a modest profit and then buy another asset and then sell that when profits arise--will actually prosper.
The final and perhaps most difficult piece of successful trading is to gain the ability to recognize a decision to buy an asset isn't working as planned, and to sell the asset for a loss. Nothing is more difficult for humans than admitting to ourselves that a decision isn't playing out and we have to exit with a loss.
Modern psychology informs us that the sting of losses is far more potent than the euphoria of gains, and mastery of trading requires the trader to "make all things equal", to use the Taoist phrase: losses and gains are treated equally.
Like the football quarterback, we can't dwell on the interception we just threw; we must clear our minds for the next successful throw/completion.
This discipline takes much practice, and most participants in the markets are ill-prepared to acquire the necessary discipline.
To employ another metaphor: sailing in calm seas and light, steady breezes makes sailing seem easy to the beginner. But when the seas roughen and the wind gusts unpredictably, it doesn't seem so easy any more.
Everyone who buys or owns any asset from now on --currency, cash, real estate, cryptocurrency, stocks, bonds, options, farmland, oil wells, everything--is a trader. Those who don't understand this may suffer potentially catastrophic losses.
From now on, everything is a trade that might have to be sold to avoid deeper losses. Buy and hold is no longer a winning strategy.
From Left Field
Money Laundering Via Author Impersonation on Amazon? (via Cheryl A.) -- fascinating account of how insanely expensive books can be money-laundering tools...
Life doesn’t make trash -- an interesting examination of the "junk DNA" in human DNA...
Americans are increasingly becoming more self-destructive in 'nightmarish' trend -- crisis of purpose, work and meaning... but nobody wants to hear about it...
Studies Show Anxiety Disorders May Be Caused By Exposure To Narcissistic Abuse -- something to ponder...
Neanderthals were cave artists, researchers find -- their disappearance is still a mystery... we interbred, as evidenced by the Neanderthal genes in many of us...
Safe travels (if you're wealthy and Western) (via Eric T.)
Balaji Srinivasan: Technology Will Lead to a Borderless World (via Michael K.) -- positive trends worth watching..
10 Things You Didn't Know George Harrison Did -- he released the first solo Beatles album, Wonderwall, which my brother and I immediately bought at Records Hawaii on Piikoi...
WHAT WOULD A 'HEALTHY' TWITTER EVEN LOOK LIKE? (via GFB) -- I know the answer--a public utility...
Total systemic failure? (via Steve K.) -- insightful system-analysis...
The Crypto Capital on the Shores of Lake Zug -- the Swiss and the Japanese get it: suppressing cryptocurrencies is suppressing the future of finance....
Energy, Money and Technology – From the Lens of the Superorganism (Nate Hagens) 1:20 hours) --highly recommended, an excellent investment of an hour and 20 minutes...
“Although you may spend your life killing, you will not exhaust all your foes. But if you quell your own anger, your real enemy will be slain.” Nagarjuna
Thanks for reading--
charles |
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