Martin Wolf, writing in the Financial Times, touches on a few points that resonate with my readings over the years.
He believes capitalism, as a system, is not a bad one, but it is bad when it is âriggedâ; and that Aristotle was indeed right (as history has since proved) that a sizeable middle class is necessary for the functioning of a democracy.
We know that the US, for instance, doesnât really do much about monopolies, having redefined them since the 1980s as essentially OK if no one gets charged more. Hence, Wolf, citing Prof Thomas Philipponâs The Great Reversal, notes that the spikes in M&A activity in the US has weakened competition. I should note that this isnât the province of âthe rightââPhilippon also shows that M&A activity reduced under Nixon.
I alluded to the lack of competition driving down innovation, but Wolf adds that it has driven up prices (so much for the USâs stance, since people are being charged more), and resulted in lower investment and lower productivity growth.
In line with some of my recent posts, Wolf says, âIn the past decade, Amazon, Apple, Facebook, Google, and Microsoft combined have made over 400 acquisitions globally. Dominant companies should not be given a free hand to buy potential rivals. Such market and political power is unacceptable. A refurbishment of competition policy should start from the assumption that mergers and acquisitions need to be properly justified.â
History shows us that Big Techâs acquisitions have not been healthy to consumers, especially on the privacy front; they colluded to suppress wages before getting busted. In a serious case, according to one company, Google itself commits outright intellectual property theft: âGoogle would solicit a party to share with it highly confidential trade secrets under a non-disclosure agreement, conduct negotiations with the party, then terminate negotiations with the party professing a lack of interest in the partyâs technology, followed by the unlawful use of the partyâs trade secrets in its business.â (The case, Attia v. Google, is ongoing, I believe.) Their own Federal Trade Commission said Google âused anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals,â quoting the Murdoch Press. We see many undesirable patterns with other firms there exercising monopoly powers, some of which Iâve detailed on this blog, and so far, only Europe has had the cohones to slap Google with massive fines (in the milliards, since 2017), though other jurisdictions have begun to investigate.
As New Zealand seeks to reexamine its Commerce Act, we need to ensure that we donât merely parrot the US and UK approach.
Wolf also notes that inequality âundermines social mobility; weakens aggregate demand and slows economic growth.â The central point Iâve made before on Twitter: why would I want people to do poorly when those same people are potentially my customers? It seems to be good capitalism to ensure thereâs a healthy base of consumers.
I can be staunch on IP protection in a lot of casesâbut in the case of Martin Shkreli of Turing Pharmaceuticals AG hiking the price of an Aids drug from $13·50 to $750 per pill, not so much (for obvious reasons). If youâre in pharmaceuticals, then there has to be some element of wanting to benefit enough of humankind so that they can be, well, alive to better societyâor, if you want to be monetarist about it, so they can consume more products and services. Whichever side of politics youâre on, productive people are a good thing for everyone except the armsâ industry. Yet the pharmaceutical industry is the one thatâs trying to patent natural ingredients and phenomenaâand thatâs a step too far. It was something we were taught at law school that could not happenâhow can a corporation own nature?âso for the industry to challenge both that jurisprudence smacks of greed. If you didnât originate it, you shouldnât be able to own it. Even if it could be protected, nature has been around long enough for that protection to have lapsed. Patenting genes? Please.
Sure, everyone has the right to make a buck from intellectual endeavours, but their track record needs to be a lot cleaner. Why was there so much opposition to TPPA et al? Because there had been far too many cases of corporations taking the piss when it came to basic rights and established laws, and governments havenât upped their game sufficiently. I love the idea of global trade, the notion âweâre all in this togetherâ, but not at the expense of the welfare of fellow human beings. Simply, I give a shit. Hiking the price of something that costs $13·50 to $750 is laziness at the very leastâletâs profit without lifting a fingerâand being a douchebag at the worst. And I donât believe we should reward either of these things.
I have a friend who is against vaccinationsânot a position I agree withâbut his rationale boils down to his mistrust of Big Pharma. And why should he trust them, with these among their worst cases? (As far as I know, he doesnât oppose other forms of IP protection.) Somewhere, thereâs something that kicks off various positions, and corporate misbehaviour must fuel plenty.
Meanwhile, hereâs Martin Shkreliâs point of view, where he doesnât see his actions as wrongful, as told on Tinder, and as told by Yahoo. His view is that Turing isnât making a profit and he needs to find ways where it does. He has a duty to his shareholders. It seems incredibly short-termâone would hope that innovation is what turns around a pharmaceuticalsâ businessâand we come back to the notion that it all feels a bit lazy.
My forced Facebook sabbatical came to an end in the late morning. So what did I think of it all? One of my Tweets last night was: âI hope [it is temporary], though I have found people out for 7â12 days now. Now itâs Monday I hope they have got over their hangovers!â At the time I thought: this Facebook is probably not a 24-hour operation. These guys are probably off for the weekend, and they work part-time. We might see them on Monday morning, US time, or whenever they come back from Thanksgiving, Memorial Day, Bill Cosby Day, or whatever it is they celebrate over there. Oh, itâs California, so they are probably stoned.
Sixty-nine hours werenât quite enough to break my habits, though they were beginning to change. No more was I looking up Facebook in bed before I go to the office, or having a quick gander at night. But on the desktop, I left one tab open, which would always draw me there to have a glance at what friends were up to.
The timing was a bit exceptional: we had the top 23 pages for the Miss Universe New Zealand 2014 finalists to launch. Had it not been for that, I wonder if I would have bothered with Facebook at all. I had queries to field, direct messages to respond to.
The direct messaging is obviously separate from the rest of Facebook, as it was the one thing that hadnât failed. But everything else was worsening: initially losing liking, commenting and posting, then losing the fan pages I administered. Friends could not see my wall, while a few who could see it tried to like things and were given errors. Aside from a few exceptions, no one seemed to think this was out of the ordinary and worth chatting to me about. Not that I mind this: they could all get in touch with me via other media. But this signals that it is OK to get an error when liking something, and shrug it off as temporary, because we believed Facebook when it told us to try again in a few minutes. Never mind that in Facebookland, âa fewâ means 4,000. We have low expectations of these dot coms.
So when people joke about how these things always tend to happen to me, I wonder. Iâve always maintained they happen to us all. Maybe the difference is I donât believe these buggers when they tell me that things will be back in a few minutes, because invariably they donât. So I put an entry in to Get Satisfaction, or on this blog, so others donât feel they are alone.
And if I had found the limits of the siteâbecause I believe on Vox I did in 2009, when exactly the same thing happened, and the techs had no way outâthen Facebook should know about this.
Facebook was, through all of this, useless. It had closed down its Known Issues on Facebook page, which seemed foolhardy, because this certainly was a known issue with the increasing number of Tweets about it. There were no acknowledgements, and most of the time, feeding anything into its report forms resulted in errors. Sometimes I got a blank screen. Its own help pages told you to do things that were impossible. If it were any other firm, people would be crying bloody murder or wanting their money back. (And I am technically a customer, through my mayoral campaign last year.)
A few other accounts came back, for the people I interacted with on Twitter and Get Satisfaction in the same predicament.
So what now? I might Facebook less. The 69 hours were a good reminder. One of the things I had watched during the sabbatical was the following video via Johnnie Moore, where Douglas Rushkoff speaks about how these big innovators arenât really adding value, only capital. He gives the example of Twitter:
The company that was going to be the maker of things now has to be the site where he aggregates the other makers of things ⊠so that you can show multi-billion-dollar returns instead of the hundred millions that you were doing ⊠You know, for Twitter, I just saw yesterday, they’re failing! Only $43 million last quarter! Isn’t that awful? Oh my God! Only $43 million, which is, I mean, how many employees do they have? I think that would be enough but their market cap is so outlandishly huge, so much money has gotten stuck in there, that they’re gonna be stuck looking for a new way to somehow milk more money out of an otherwise great tool and they’re gonna kill it. They have toâthey have to, âcause they need that home run.
Can we expect there to be greater innovation in such an environment, for any of these platforms? If we arenât feeling the same buzz we once did with these sites, thereâs a good reason, and the above is part of the problem. They arenât creating value any more, only market cap and stock, or, as Rushkoff says, âstatic capital.â
This is what [Thomas] Piketty was really writing about ⊠Capital has the ability to actually create profit, so all these companies, all this development, are really just different versions gaming the system rather than rewiring the system, rebooting it, which is the opportunity here.
I spent part of the last few days looking at the PDF proofs for Lucire Arabia, where at least I know I am part of making something that is creating value and, through its content, helping people. While my original motive for being on Facebook et al was promotional, for my businesses, I have to question if that was the best use of my time, and for creating value. Facebook organized my friends, as Google organized the webânow that those are done, there is the next step.
I left Voxâor rather, Vox left me when the site died and I was no longer able to postâand put more time elsewhere, namely into my first mayoral election campaign. I knew I was creating an opportunity to help people, and the upshot of that is the free wifi system we have in Wellington today (ironically probably very heavily used to update Facebook). It meant more than a means to Facebook and Instagram: the bigger picture was to signal to the tech sector that Wellington is open for business, and that we arenât being left behind in an industry that can create frictionless exports and intellectual capital.
We arenât quite there again in 2014, as Facebook is back, but it may be worth contemplating just where Iâm creating value for business and society when itâs not election year. This year, I don’t have a book plannedâbut it may have to be something where a good bunch of people are going to get some benefit.
I still have Adam Curtisâs The Mayfair Set, a TV series charting the decline of British power and the rise of the technocracy, recorded on video cassette somewhere. I consider him someone who can see through the emperor having no clothes, and in The Mayfair Set, he certainly saw through the Empire having no clothes.
As I type this, John Barryâs âVendettaâ is going through my head as an earworm: the series used this piece as its theme tune.
On my friend Keith Adamsâs Facebook page was a link to Curtisâs blog at the BBC website, titled with a reference to another song, this time from Maurice Jarreâs Doctor Zhivago score. Curtis begins by saying that he uncovered a 1977 film about two British Leyland workers heading to Togliattigrad, where the ĐОгŃлО (Zhiguli, or Lada to those of us outside the Soviet Bloc) was built. At Togliattigrad, the managers used the chaos that was allowed to prevail to set up their alternative economic structures to line their own pocketsâand corruption was rife.
He writes, âWhat then happened is murky, but it is alleged that the managers in effect looted their own factory.â
So far, so good. It read as a story about the bad old days of communismâtill Curtis draws the clear parallels between Togliattigrad and what happened in the last days of the remnants of British Leyland. The Phoenix Four used money meant for the plant for themselves.
Curtis again: âThe Phoenix directors systematically restructured the business. They did it in a way that ensured that many economic benefits flowed not to MG Rover and the thousands of workers, but to the directors themselves and the man they appointed chief executive of MG Rover.
âThe [government] report [into the collapse of MG Rover] is over 800 pagesâand it is a fascinating snapshot of our time. It lists all sorts of schemes with names like “Project Slag”, “Project Platinum” and “Project Aircraft”âall of them designed to try and bring profits not into MG Rover but into the holding company set up by the Phoenix consortium.â
No more western superiority here: chaosâwhether in the political, social, cultural or commercial realmsâbreeds opportunity for many. The trick is always to ensure that the opportunists are those who can put things right, rather than selfishly benefit themselves. Some might see Curtisâs blog entry as a criticism of the monetarist, technocratic systemâas was The Mayfair Set.
But it is equally a story about how the absence of transparency breeds systems that benefit the fewâregardless of whether the background is communism or capitalism.
These are themes that we at the Medinge Group explored as early as 2003 in Beyond Branding, written in the wake of the Enron collapse. Weâve partly stayed on the same theme over the last eight years, because history shows us that transparency is often the enemy of inequity and unfairness. And even the technocracy.
