Could a Revolution Happen in the U.S.?

Labor Movement And An Organized College Walkout Add Support To Occupy Wall Street Protest

Nick Hanauer, the only rich VC who was ever censored by Ted talks, just posted an essay on Politico, entitled The Pitchforks are Coming…for us Plutocrats. He raises the spector of a revolution in America unless the issue of income inequality is addressed.

What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.

The image of a combination of Occupy veterans and Tea Party populists marching on the headquarters of JP Morgan Chase with pitchforks is evocative, but for me it remains in the realm of speculative fiction. If you look at the history of inequality in both the U.S. and Europe you come to some pretty clear conclusions. The first is that which political party is in power doesn’t seem to make much difference.

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Looking at the U.S., from 1810-1910, the rise of the plutocrats was very steady, no matter which party was in power. Then in 1913 the Sixteenth Amendment to the Constitution was passed, allowing an income tax and the share of the top 10% began a slow decline. This movement towards equality was reversed in the the mid 1970′s with the Tax cut revolution that started at the state level  (eg.Prop 13 in California) and continued with Reagan’s cuts to federal income tax rates. From a historical perspective the fact that 90% of the people have never owned more that 38% of the wealth in this country is a bit shocking, but now we have reached a point where the richest 1% of the country owns as much as the poorest 90% of the country.

All of this would seem to be fertile grounds for a populist uprising, and yet it has never happened in America. The reason?

Too much cheap entertainment. Marx never figured on TMZ or the Kardashians. Of course Aldous Huxley in “Brave New World” did understand the power of drugs and entertainment to render a polity so passive that the plutocrats would never have to worry about the pitchfork brigade. 52 million Americans use prescription drugs “non-medically”. Then you have social networking which eats up 3 hours a day for the average user. Then we spend 5 hours a day in front of the TV. 8 hours of sleep and two hours eating, who has time for work, much less marching in the streets?

Much as I would like to think that Nick Hanauer could scare his fellow plutocrats into supporting a major raise in the minimum wage, I am highly skepitcal. I don’t think the Millennial generation, which has the most to lose in continuing the status quo, has any gumption to take to the streets. They are deep in college debt, desperate for work and not interested in rocking the boat.

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In Praise of the Beautiful Game

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I’m not sure I know why the whole planet is transfixed by the World Cup, but I think its a good thing. Deep in the Amazon jungle, villages running their sole TV off of car batteries gather to celebrate athletic excellence. What distinguishes sporting acheivement from that in other fields, is that it can’t be faked. Brittany Spears can lip sync her Vegas concerts, and  Ted Cruz can pretend to be a statesman, but Cliff Dempsey has to show up and play his heart out with a broken nose for 90 minutes in the steaming heat of Manaus. No excuses. No pretending. The other thing that distinguishes World Cup football from American Football or Basketball is that the athletes are the kind of people you could encounter in an airport and not blink twice. The are not seven feet tall. They do not weigh 300 pounds.

The U.S. audience for this sport is growing and I think the fact that the American team will probably make it through to the next round will help grow the interest in the sport. Of course the US TV networks hate soccer, because there are no regular breaks for commercials, and so they have shunned the sport. But if ESPN’s ratings continue to grow, that may change. And of course, because we are a country of immigrants, it doesn’t really matter how far the US gets in the tournament, because we all have a second team to root for based on some great experience in Brazil, the Netherlands, Mexico or maybe France. The next three weeks will be fun.

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What is So Good About Disruption?

 

Ever since the publication of Clayton Christensen’s 1997 book, “The Innovator’s Dilemma”,  the conventional wisdom in both business school classrooms and corporate boardrooms was that “disruptive innovation” from a new entrant selling a cheaper, lower quality product, would inevitably eat the lunch of the incumbent’s more expensive, higher quality product. Christensen had drawn on the earlier work of Joseph Schumpeter, who coined the phrase “creative destruction” in the 1940′s. In this week’s New Yorker, Harvard historian Jill Lepore writes an epic take down of Christensen’s theory, but for my money she doesn’t go far enough.

Christensen used the disk drive industry to show how new entrants, making cheaper, smaller drives supposedly destroyed the business of the incumbents. But as Lepore points out, it turns out that the incumbents adapted well and a company like Seagate managed to hold on to its market share lead and all the supposed disruptors are gone. What is so wonderful about Lepore’s essay is that it puts the relatively recent concept of disruption in an historical context.

The eighteenth century embraced the idea of progress; the nineteenth century had evolution; the twentieth century had growth and then innovation. Our era has disruption, which, despite its futurism, is atavistic. It’s a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence.

When applied to technology companies the notion of disruption has a kind of soulless darwinian feel to it. Who cares if Digital Equipment Company no longer exists? But for those of us involved in the culture business, the gleeful chuckles of the disruptors are disturbing; as they destroy first the music business, then journalism and now turn their sights on the movie and TV business (the one place of continuing cultural innovation). Lepore touches on this.

They are told that they should be reckless and ruthless. Their investors, if they’re like Josh Linkner, tell them that the world is a terrifying place, moving at a devastating pace. “Today I run a venture capital firm and back the next generation of innovators who are, as I was throughout my earlier career, dead-focused on eating your lunch,” Linkner writes. His job appears to be to convince a generation of people who want to do good and do well to learn, instead, remorselessness. Forget rules, obligations, your conscience, loyalty, a sense of the commonweal. If you start a business and it succeeds, Linkner advises, sell it and take the cash. Don’t look back. Never pause. Disrupt or be disrupted.

I am reminded of all of this as I watch You Tube destroy the music business. You Tube has decided to put up a paid music streaming service, but they won’t pay the indie artists like Jack White and Adele what they think is fair and so they will take down the artist’s official free videos, rendering them (just like Amazon’s treatment of J.K. Rowling) invisible. As David Newhoff notes,

 But because the company is all about you and all about free expression, of course, any unofficial videos that make use of these artists’ works as soundtracks will not be targeted for removal by Google.  You’ve got to love a company that can put the screws to an artist and exploit her at the same time while the “fans” applaud the whole stinking mess.  I mean that is some whack stupid evil genius shit right there.

As I have been writing recently, the tendency in the digital world is towards monopoly capitalism. If you were to ask me to invest in a start up competitor to Google or Amazon, I would tell you to not waste your time. All this talk about the wondrous benefits of creative destruction when applied to our culture is a sham. When Lana Del Rey spoke about her creative inspirations recently, it summed up what the disruptors have wrought.

Ms. Del Rey freely cites inspirations including Frank Sinatra, Bob Dylan, Cat Power, Nirvana and Eminem, but none of them emerged in this century. “Think of what’s going on now,” she said. “Where am I going to get my inspiration? I couldn’t think of a thing today that I would really genuinely want to be a part of.”

The greed heads of Silicon Valley may think that the past has nothing to teach them, but they are wrong. In their craving to disrupt everything, they are leaving us a soulless cultural desert.

 

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Do We Need War to Grow our Economy?

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The economist Tyler Cowen wrote a piece in the New York Times today entitled “The Lack of Major Wars May be Hurting Economic Growth”. He raises a serious point that requires two questions to be answered. First, does modern capitalism rely on military and other “wasteful” expenditures to grow? Second, is growth of 4% per year necessary for the American economy to succeed?

Cowen makes a fairly convincing argument that preparing for war has led to increased growth since the end of the Great Depression.

It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.

Neoclassical economics would have us believe that the invisible hand of the market in creating a balance of supply and demand will naturally create the kind of growth that makes capitalism the only possible economic system. Thus as we are reminded constantly by Republican economic orthodoxy, government intervention in the economy can only destroy this perfect balance and gum up the works. But Cowen (The Great Stagnation), a conservative economist, is arguing that since 1940 it has been government spending on military technology that made the difference in the post war average of 4% growth and our current relatively stagnant 2% growth. Although Cowen can point to the wonders of the Internet delivered by the Cold War, he admits that the wasteful cost of war (in blood and treasure) is not worth the growth. And then there is another source of waste that we need to look at. In 1950, total U.S. ad spending was $5.7 Billion. Last year it was $171 Billion. Why do I say waste? Because that box of Tide you just purchased had far more embedded costs in advertising and packaging than it did in ingredients (which were basically similar to the ingredients of all the competitive detergents).

Then there is a third source of waste for which we are paying dearly: Wall Street speculation.

Finance-Sector-as-percentage-of-GDP

Note how the role of Wall Street has grown since 1950. The vast proportion of this revenue is trading profits. This is not money going to finance productive growth of the economy, but rather the speculative profits of the trading desks of big banks. It is this speculative activity that caused the crash of 1929 and the Great Recession of 2008. Though the role of Wall Street fell dramatically in 1930, you will note that the Great Recession of 2008 was merely a hiccup in Wall Street Profits, mostly because men like John Paulson made billions betting the housing market would crash. And now, as Michael Lewis has reminded us, High Frequency Trading makes it possible for the Hedge Fund guys to let the computers do all the speculation, often trading in and out of a single stock four times a day.

So perhaps the invisible hand of the free market doesn’t really work without the government spending billions a year on missiles and bombers and the corporations spending billions a year to get you to buy stuff you don’t need. Perhaps Paul Ryan and Ted Cruz are just plain wrong in their belief in the growth fairy of Ayn Rand. But maybe we should look at it another way. Perhaps we don’t need to grow 4% a year. Given certain limits on our natural resources, perhaps a Steady State Economy might be a better idea. Cowen acknowledges this possibility.

We can prefer higher rates of economic growth and progress, even while recognizing that recent G.D.P. figures do not adequately measure all of the gains we have been enjoying. In addition to more peace, we also have a cleaner environment (along most but not all dimensions), more leisure time and a higher degree of social tolerance for minorities and formerly persecuted groups. Our more peaceful and — yes — more slacker-oriented world is in fact better than our economic measures acknowledge.

This of course brings me back to the point I made a couple of weeks ago from Moscow.

The mistake of the old wise men was that they thought man would gladly trade consumption for leisure—that living a modest life, rich in the aesthetics of writing songs or painting our masterpiece—would be a worthy trade.

It could be that we could create a sustainable society at lower growth levels. That there is not a single politician willing to acknowledge this possibility is depressing.

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Media and Polarization

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The Pew Center released a new poll with some fascinating conclusions. Our country really is far more polarized than ever before. This no surprise but what was fascinating to me is this other chart, which demonstrates how much of the country is not interested in either the extreme partisan position or in participating in a political process they see as fixed.

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Even though the percentage of voters on the extreme right and left is growing, it still represents only 20% of the potential electorate. But those who are the most extreme are exactly the folks who turn out at the polls.

Holding deeply negative views of the opposite party and its leaders is correlated with political participation, and this is particularly true among Republicans in the current context. Republicans who hold a very unfavorable opinion of the Democratic Party are 18 points more likely than those whose opinion is mostly unfavorable to say they always vote.

So what is the difference between the relatively benign atmosphere in the early 1990′s and our current poisoned chalice? I would argue that the rise of hard right talk radio and Fox News has made the difference. Andrew Sullivan writes of spending an evening watching Fox News.

Look: I know I may be a total sucker for even hoping to see some semblance of fairness and balance on Fox. But it’s still shocking to see programming designed not to uncover reality, but to create a reality in which no counter-arguments are ever considered, and in which hysteria is the constant norm. MSNBC is almost as bad, of course, but with CNN as the new Discovery Channel, the entire possibility of a balanced newscast has disappeared from cable – and from the lives of most Americans. Again, this is not new. But as it continues, it intensifies. And as it intensifies, the possibility of governing all of the country recedes into the distance.

This is a civil war without violence. And we are two countries now.

However, there may be an interesting development that could radically effect the 2016 election and that is a populist reform revolt against the elites of both parties. Writing in the National Journal, Ron Fournier notes that Eric Cantor’s defeat was not so much a product of a revolt against immigration reform as a revolt against crony capitalism, for which Cantor was the poster child. Fournier quotes Doug Sosnick (Bill Clinton’s political director), who feels the populist anger from both right and left could coalesce around a number of issues.

Which side of the barricade are you on? Populists from the right and the left—from the tea party and libertarian-leaning Rand Paul to economic populist Elizabeth Warren—are positioning themselves among the insurgents. Sosnik pointed to six areas of consensus that eventually may unite the divergent populist forces:

  • A pullback from the rest of the world, with more of an inward focus.
  • A desire to go after big banks and other large financial institutions.
  • Elimination of corporate welfare.
  • Reducing special deals for the rich.
  • Pushing back on the violation of the public’s privacy by the government and big business.
  • Reducing the size of government.

If those six issues are the platform for victory with the vast “silent plurality” that represents the middle of American politics then I’m not sure Hillary Clinton is prepared to embrace this program. Clearly Rand Paul could run there, but my own distrust of Paul as a “Manchurian Candidate” from the Lew Rockwell fringe of Libertarian politics, who is trying his best to look reasonable, makes me demur. Which of course leads back to Elizabeth Warren, who could run a populist campaign that just might be a winner.

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Does Talent Matter?

Over the weekend 12,500 screaming fans showed up at Citi Field in Queens for DigiFest NYC. They were not screaming in appreciation of some new boy band or rap star. They were screaming for Cameron Dallas, whose only apparent talent is that he looks cute. Cameron is well aware of his limitations.

 “Back in the day, you used to have to be a singer or an actor, but nowadays with social media, you can become well known just by being yourself.”

The devolution of teen fan hysteria can be charted from Frank Sinatra

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To Elvis Presley

screaming-fansTo The Beatles

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We have now arrived at Cameron Dallas.

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Except that unlike Frank Sinatra, Elvis or The Beatles, Cameron Dallas has no talent. How did we get here? Where the object of these girl’s affection does nothing but look pretty in front of his web cam. Are we so culturally bankrupt that this is the best we can do?

 

 

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St. Petersburg, Art Capital of the World

Hermitage Museum

Hermitage Museum

I’ve just spent four days exploring the art museums of St. Petersburg, Russia. I’ve spent a lot of time in the art museums of Paris, New York, Los Angeles, Berlin, Tokyo, Madrid, Rome, Florence and Venice and I think St. Petersburg has the deepest collections. I spent three days in The Hermitage and one day in the Russian Museum and I feel as if I had tasted an overview of the history of world culture from 800 BC to 1950.

In almost every era the collections are incredible. The Italians, French, Spanish, German classical work is so extensive it took me two full days to get to 1650. But what is so amazing is the the art from 1880-1930. The role of the major collectors, Sergei Shchukin and Ivan Morozov, both of whom had their collections nationalized by the Bolsheviks, is instrumental to the depth of the Hermitage modern collection. Rooms full of the most amazing Picasso’s lead you into the world of Magritte, Monet, Van Gogh andGauguin. These two Russian Businessmen seem to have bought up most of the output coming out of the major Paris painters from 1900 to 1915. Of course, when the Revolution arrived, their collections were seized and they both fled to Paris.

What is just as amazing is some of the Russian Avant Garde art from the same period, particularly Malevich and his contemporaries. What seems obvious to me is that the art made in Russia in the years preceding the Revolution, when there was an amazing amount artistic tumult in the air, is quite superior to the art made after the revolution, especially after Trotsky was purged and the artist became a servant of the party.

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Utility vs Aesthetics

 

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I had dinner in Moscow last night with a really smart Brit, who had come to Moscow to work in advertising eight years ago. In talking about the dining experience in Russia,he mentioned that many older Russians still regarded feeding yourself as a utility–maximum calories consumed in minimum time. I was reminded of a remark made by a biographer about eating with the great Russian revolutionary Leon Trotsky. It was an unpleasant experience he said, because Trotsky was so intent on scarfing down his dinner that he never paused to talk.

But if the Russians may rush through dinner, they will think nothing of spending three hours at the Bolshoi ballet, or three weeks reading “War and Peace”. In Trotsky’s utopian future, technology would take over all of the grunt work of society, leave the average man time to find his aesthetic muse.

Man will become immeasurably stronger, wiser and subtler; his body ‘will become more harmonized, his movements more rhythmic, his voice more musical. The forms of life will become dynamically dramatic. The average human type will rise to the heights of an Aristotle, a Goethe, or a Marx. And above this ridge new peaks will rise.

Of course this notion of the 15 hour week wasn’t just a Socialist fantasy, as Elizabeth Kolbert points out in the New Yorker this week.

To Keynes, the coming age of abundance, while welcome, would pose a new and in some ways even bigger challenge. With so little need for labor, people would have to figure out what to do with themselves: “For the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won.” The example offered by the idle rich was, he observed, “very depressing”; most of them had “failed disastrously” to find satisfying pastimes.

Now of course neither Trotsky nor Keynes’ view of the future came true. And in cities like Moscow and Los Angeles, working the 80 hour week to “get more things” is the assumed wisdom. The mistake of the old wise men was that they thought man would gladly trade consumption for leisure—that living a modest life, rich in the aesthetics of writing songs or painting our masterpiece—would be a worthy trade.
How wrong they were.

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Thought Police on Campus

The Adventures of Huckleberry Finn

The Adventures of Huckleberry Finn

I’m afraid these poor sensitive sophomores can’t read “Huckleberry Finn” without a warning label.

Should students about to read “The Great Gatsby” be forewarned about “a variety of scenes that reference gory, abusive and misogynistic violence,” as one Rutgers student proposed? Would any book that addresses racism — like “The Adventures of Huckleberry Finn” or “Things Fall Apart” — have to be preceded by a note of caution? Do sexual images from Greek mythology need to come with a viewer-beware label?

Colleges across the country this spring have been wrestling with student requests for what are known as “trigger warnings,” explicit alerts that the material they are about to read or see in a classroom might upset them or, as some students assert, cause symptoms of post-traumatic stress disorder in victims of rape or in war veterans.

The warnings, which have their ideological roots in feminist thought, have gained the most traction at the University of California, Santa Barbara, where the student government formally called for them.

In a spring when commencement speakers have been banned from campuses, it feels like the PC crowd is completely dominating the rhetoric on campus. The very notion that we can’t hear speeches or read literature that might make us a bit uncomfortable is totally frightening to me. I must say that I am not encountering this at USC, yet. My basic beef is with post modernist writing, which for the life of me is like a secret code, meant to obscure meaning.

Part of the problem with this identity politics view of education is that it confuses content and context. I have been saying for years that many young people have almost no sense of historical context. How could you possibly read Mark Twain without any sense of what growing up in Missouri in 1840 was like? How could they have gotten all the way through high school and not really understand the American Civil War or the fall of the Roman Empire? And remember what Marquez said about history“I cannot imagine how anyone could even think of writing a novel without having at least a vague of idea of the 10,000 years of literature that have gone before.”

Perhaps every entering Freshman should be required to read and take a test on JM Roberts’ The Penguin History of the World before they arrive on campus. Then their poor sensitive souls might not be so shocked by Greek tragedies.

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United States of Secrets

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The Frontline documentary, United States of Secrets, Pt. 1 is one of the most important television programs of the last decade. It is a tale of how Dick Cheney and his lawyer David Addington, remade the surveillance policies of America in the wake of 9/11, without regard to the Fourth Amendment or other inconvenient truths of the Constitution. What is most astonishing is how clueless George Bush was to what was going on in his government. “The Program”, which the NSA ran, was authored in Cheney’s office and when 13 senior officials of the Justice Department (including the Assistant Attorney General and the Director of the FBI) threatened to quit if the program was reauthorized, Bush was totally blindsided, completely unaware that anyone in his administration objected to warrantless surveillance.

We all know the story of Edward Snowden, but what the Frontline film does is show the stories of countless insiders at the NSA who knew the program was unconstitutional and fought from the inside to get it changed long before Snowden gave the documents to the press. Many of them like House Intelligence committee staffer Diane Roark risked their careers to try to stop it. And many of them hoped when Barack Obama became President that the program would be terminated. But it was not to be. Obama talked transparency on the campaign trail in 2008, but once he became President, he not only maintained The Program, but also pursued the insiders what had tried to alert the press with relentless ferocity.

One of the Dept. of Justice officials, Jack Goldsmith describes Addington’s authorization which Bush signed as filled with “inadequate legal reasoning and flawed legal opinions.” When he and James Comey blocked the re-authorization by the Attorney General, Cheney simply ignored it and got Bush’s counsel Alberto Gonzales to sign the re-authorization.  Gonzalez and NSA Director Michael Hayden are both remarkably candid on camera in saying that they wanted to do whatever the President wanted and that Bush’s powers as a war time President topped the constitutional problems presented by the Fourth Amendment.

What is equally remarkable is that Frontline takes on the new York Times, whose Executive Editor Bill Keller turns out to be completely cowed by his meetings with Bush and Hayden. For those of us who grew up on “All The President’s Men” and the image of the courageous editor who is not afraid of the White House, the Times willingness to kill a story by James Risen before the 2004 election, that would have revealed “The Program”, is a true profile in cowardice. Next Tuesday, Frontline turns the lens on Silicon Valley and the role Google and Facebook played in the government’s panoptican of surveillance. That should be must see TV.

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