Monday, June 20, 2016

Throwing Rocks at Throwing Rocks at the Google Bus

I haven't done much posting lately, so here is a review of an idiotic book I had fun making fun of on Amazon.

As I have two decades of experience in tech, and an extensive background in economics, I was interested to check out this book after reading about its controversial claims. I doubted that I would agree with all of its points, but might at least find something interesting in its arguments. Unfortunately it did not succeed even in that meager goal.

Rushkoff, as best as I can tell is a media arts professor (is that even a real academic discipline) who has an interest in technology. Unfortunately he doesn’t even have the most basic layman’s understanding of economics or history, nor the intellectual curiosity to find out.  Instead this book is just a lightly researched polemic, making ridiculous, often unsourced wide-sweeping claims. Even when I checked out the few footnotes he included, his sources did not say what he said they did. For example, the average Google employee does not quit within a year, there are not 1.7 million medical bankruptcies per year (in 2015 there were only 900,000 personal bankruptcies for all reasons) and companies are not gobbling up tech firms with no revenues, left and right. For that last claim I assume he actually meant profit, but it is hard to tell as he uses economic and financial terms loosely out of context, and often meaninglessly.

I can appreciate a book even if I don’t agree with it, but this book doesn’t even agree with itself. On one page the author condemns the low starvation wages paid by major corporations in third world countries, then a few pages later says that this is just a fiction of artificial exchange rates. More than once in apocalyptic terms he talks of companies like WalMart which are massive profitable behemoths strip mining the nation of all resources and ripping off the consumer, it efficiencies paling in comparison to its “extracting”, then he dedicates an entire section to how corporations are becoming less and less profitable. Which is it? He condemns modern “monopolies” such as Facebook, but then laments the demise of taxi cartels which supposedly supplied so many good jobs, and then waxes romantically about medieval guilds, without noting that both of them are textbook examples of cartels which restrict competition.

Historically speaking this whole thing about guilds that becomes a foundation of his thesis is just bizarre and completely ahistorical. He provides no sourcing or even argument to support his contention that they represented some sort of apex of human “peer to peer” commerce; he just asserts it as somehow better than modern corporations. As best as I can tell he learned everything he knows about guilds from playing Dungeons and Dragons in high school. Without defining the terms he refers to them as “value creation” while modern corporations are “value extraction”. Romantic notions aside, however, they create value in the exact same way. Whether I purchase an item from an individual, a guild, or a corporation, I am doing it for the exact same reason, because that good or service is worth more to me than the money or item I am giving up in exchange for it. My trading partner is selling it to me for the exact same reason. Simply labeling one exchange as creating and another as extracting is ridiculous romanticism with no basis in economics, math or logic.  

As an example of this, at one point the author criticizes Facebook and other social media applications for mining user data, as in the modern world that much data on personal preferences is valuable, and that it is ripping off its users by not sharing this wealth with them. How, in fact, are they being ripped off when they are more than happy to use these applications (most provided entirely free) voluntarily. I have been on Facebook several years and I do not know of a single person ever forced to use the application at gunpoint. They obviously see some value in the application to themselves, otherwise they would not use it. Whether Facebook also obtains some value, and presumably they do otherwise they would not invest considerable resources in running it, is immaterial to the user. Ironically Rushkoff also repeatedly mocks these very same Internet startups in other parts of the book for not having revenue, so apparently he expects them to share the money with customers that he claims they are not making. And this is one of his more coherent and consistent arguments.

The book gets somewhat better when it moves from the “history” to the “solutions”  phase, although many of his solutions have absolutely nothing to do with what he claims were the problems. Yes, local currencies and bitcoins are interesting, although as of yet just libertarian thought experiments, but they do nothing to address the issues of income distribution or economic stagnation that he claims are the problem. Ironically in one section he condemns the Federal Reserve of the tool of the rich to enslave the working class, and then promotes local currencies as a solution to shortages of currency and credit, without noticing the fact that the primary goal of the Federal Reserve is to act as a lender of last resort and keep the credit and currency markets functioning properly. Rushkoff then goes on to make the startling discovery that there are a variety of corporate structures such as non-profits and employee owned companies, an entirely unsurprising observation, given their existence for the last several centuries. It all gets pretty bizarre though, at one point Rushkoff goes the full Mao and proposes we all start farming “in shifts”. Hey, when the Soviets and Chinese tried that it only killed a few tens of millions of people. What could possibly go wrong?  I could go on for several thousand more words, but I tire of this.

So in summary, this book easily rates as one of the most mind-numbingly stupid books I have ever read. I hate to make such broad generalizations, but in the hundreds, perhaps thousands, of books I have read in my lifetime no other better examples come to mind. The author fails to make a single coherent argument in this entire work, and we are all worse off for having read it. In fact, one may say that it was value extracting. Hey, maybe he was on to something after all? I award you no points (well, OK, one star because that is the lowest Amazon will allow) and may God have mercy on your soul.

Sunday, January 31, 2016

The Incoherency of Trumponomics

I was flipping through the channels Thursday night during the debate and caught a bit of Donald Trump's counter-rally and noticed this little gem.

 China, this year in trade, will make over $500 billion in terms of our trade deficit. $500 billion. That's no partnership, and I'm a free trader, I love free trade, but we have to use our head and we use political hacks to negotiate with the Chinese and they have the smartest people, I deal with them all the time. I love the Chinese, they buy my apartments for millions. I have the largest bank in the world from China in one of my buildings. I love them. I'm not blaming the Chinese, I'm not angry at them I'm angry at our politicians, because we have people who are incompetent running our country. Why should we be losing in trade deficits $500 billion per year?

The ironic thing though, is how little Trump appears to understand what the trade deficit (more accurately called the current account deficit) is composed of. He is always stating in his usual bombastic overly simplistic terms as "winning" or "profit". It's not though, If China exports more goods to the US than we export to them, the difference isn't profit, it is dollars which they have to hold in some form other than an exported good, so it becomes some sort of security (usually Treasuries) or they keep the money in the United States and invest it in some sort of asset like real estate or a business, like, just picking a completely random example, the largest bank in China starting a branch in a building owned by Donald Trump.

Trump doesn't even realize that the money he is making off the Chinese, is the same exact money that he claims the Chinese are "making" off of us.

Saturday, January 02, 2016