Dana Blankenhorn

Phone FUD Targets Google

It may be the first challenge to the new President's tech policy.

For the last several months advocates for the nation's phone monopolists have been ginning up a public relations campaign against Google. They claim it's a monopolist. They claim it's a threat to freedom, a violator of privacy, evil.

It's being done in clever ways, through academics and think tanks you don't usually think of as Bell shills. Privacy advocates are being taken in, even the Electronic Frontier Foundation.

But it doesn't take a genius to see where all this is coming for, or where it's leading. All it takes is a little knowledge of the industry's history, a quick look at who stands to benefit, and a short Google of who's cheering from the sidelines.

Just read Scott Cleland's blog. Cleland, a notorious phone monopoly booster of long standing, has been hammering Google this year at every opportunity.

Google itself seems unable to understand the situation, or properly respond to it. CEO Eric Schmidt has tried to be personally charming. The company's other officials have sought to be transparent, and answer questions honestly.

Meanwhile, the stock market crash has hit Google hard. The company is now worth only about what Verizon is worth -- AT&T is now worth nearly twice that. And Google's stock valuation has begun tracking the phone giants. Suddenly it's no longer a growth stock.

How should Google respond? Aggressively. And it needs to understand who its opposition really is, the ruthlessness of that opposition, and the nature of the struggle.

It is a political struggle.

Old Economy, New Economy

- Norah Jones "Sinkin' Soon" Lyrics

Paulson lied.

He claimed to have a coherent plan for $700 billion in workout money. I supported him on that basis. He would buy up toxic assets at the market value, find the real value in them, and re-sell them for what they were.

Instead he propped up the capital in banks and insurance companies, no strings attached, and now he claims to be trying to prop up consumer spending and housing.

Heckuva job, Henry.

Michael Brown at least had the excuse of a rotten career in the private sector. Hank Paulson was once the head of Goldman Sachs, the smartest investment banker in the world.

Markets have tanked for a good reason. It is now plain that there is no one with a brain cell alive in Washington City. If Paulson has lost his marbles, the old economy is lost.

The implications of that are painful to contemplate.

Housing has to find its level, regardless of the consequences. Consumer spending has to find its level, regardless of consequences. People have to get their own balance sheets in line, on their own, or go under. Same with all kinds of businesses, all around the world.

The old economy is dead. It can no longer be saved. And this has enormous implications for the policy of the new Administration.

Where the Next Boom Will Start

Think of this as Volume 11, Number 43 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Every economic recovery is different. What worked before may recover but it's never the same.

That said, note that every new boom starts slowly. Growth is never uniform, not between industries or within an economic cycle. Recovery will be slow. It will take years. But its pace will accelerate and at some point we'll forget again what hard times felt like. That's when we'll be ready for another bust.

Let me start by looking at previous booms I have lived through:

• The 1970s happened in the oil patch. I was in Houston then and it was a lot like Dubai has been the last few years. One bank put up what looked from the air like a huge green dollar sign. That's how things were. After the crash, which was hard, there was finally a recovery, but it was never the same as it had been.
• The 1980s happened on Wall Street. I was a business reporter then and I watched as supposedly brilliant people took apart companies, then put them back together to reveal value. Everything else went up in sympathy. After the crash the Wall Street game changed. You still read about the "heroes" of that era, like Carl Icahn, but it's not the same. Nor will it be.
• The 1990s  happened on the Internet. I was an Internet reporter. I started warning of the crash in 1997, but the boom happened despite me. The bust took down a ton of companies, and I was out of work completely for over two years. But it did come back. Amazon and eBay came back. Other sites came back. Google barely existed at that time. But, again, this decade, online, has been mainly about consolidation and steady change, not revolution.
• The 2000s were all about housing. Whether the boom was real or artificial, the product of lax regulation or an attempt to cover up for the Iraq War's costs, is irrelevant right now. We created enough Confederate Money to paper the world, backed by houses that were only worth a fraction of what we paid for them, and it will take years to unwind that. When housing does "come back" it won't be the same. It can't be. But, in time, it will come back.

Big Threat to the War Against Oil

There is an enormous threat developing to the War Against Oil we all need to conduct in order to save the planet.

Low oil prices.

The price of crude on world markets has been cut in half over the last few months, as the recession we started with our Confederate Money spreads around the world. While the U.S. has responded appropriately, injecting new liquidity to partly make up for what has been lost, the world has yet to respond. The dollar is up against the Euro as a result.

Why is a lower oil price bad? If you spent the last year working on a plan to develop solar or geothermal or hydrogen energy, based on a price equivalent of $100/barrel oil, your project is now dead in the water. Your investors have pulled out and that energy won't be produced.

So long as energy prices are subject to the instant fluctuations of hedge funds and day traders, it is impossible to plan for new supplies.

The solution is simple, and it's time we went for it. As I have stated here many times, that solution is to set a floor price for oil.

Inside the Obama Ground Game

Now is the time for all good men (and women) to come to the aid of the party.

The 2008 election will be decided over the next month, but perhaps not where you think.

Republicans can always win an air war. They have been doing this for a generation. It is what they do. We are inclined to buy their crap so they spit it out, the knees jerk, and that's that.

But there is another way. I have been exploring it, both from my standpoint as a tech reporter and as a Barack Obama supporter, over the last few days.

I call it the ground war. It's a fascinating story. It's partly a computer story. It's also, partly, a human story. It's a story you can be part of, if you choose. But your choice, whatever it is, will decide this election.

The Key To The War Against Oil

The key to winning the War Against Oil will lie in the appointment of a new Energy Secretary.

The Department of Energy has been moribund practically since the day it was born, in part because the President who created it, Jimmy Carter, became so discredited he wasn't even asked to speak at his party's convention this week, despite two Nobel Peace Prizes.

It was designed to implement an industrial policy, but instead it became a political dumping ground, staffed by businessmen under Republicans and party hacks under Democrats.

We can't afford that now.

The Department of Energy must deliver research and policy to guide public and private investment toward a hydrogen economy. Since people really began recognizing the priority we have seen scam-after-scam-after-scam get funding, get publicity, and get power.

1. Ethanol is a scam. It raises food prices, and costs more in energy to produce than it delivers.
2. Clean coal is a lie. The technology does not exist, yet. It might one day, but until it does new coal investments are counter-productive.
3. T. Boone Pickens is a fraud. He wants government power, and subsidies, to turn West Texas into his own fiefdom, stealing and selling its water, running roughshod over property rights with special eminent domain laws.
4. Wind efforts are being wasted. Power lines lose half the power getting it to market. There is, as yet, no infrastructure to turn that power into hydrogen and get it to market.

That's not all. Nuclear power is making a comeback, even though we still don't know what to do with the waste, or even how to protect it against dirty bomb makers. Drill here, drill now advocates threaten to seize the capital we need to make the future and re-enslave us to the past.

I have a very simple plan for the next Energy Secretary:

What Does MIT Have?

I drew nastygrams for noting that ITM Power of England only has a membrane, not a solution to the problems of solar power.

I'm all for solar, and I'm all for hydrogen, but we need to hold ourselves in check, I wrote then. Extraordinary claims demand extraordinary proof.

Now MIT has its own claims, namely a catalyst for splitting hydrogen from oxygen in water, described as an "indium tin oxide electrode in phosphate-buffered water" containing carbon dioxide.

Major discovery? Yes. Certainly worth the $20 million the team has won to move on to the next phase of its work.

But a solution? A revolution?

No.

The Money To Do Online Journalism

Think of this as Volume 11, Number 30 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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We're on the verge of a breakthrough in journalism. A breakthrough in business models.

Publishers like ZDNet, where I now work, have found some success with incentive programs based on pageviews. They have good online publishing systems and ad staffs which can fill the corners of an online page with money-producing ads. By putting the two together, everyone can make a living.

Critics will note it can be tweaked a bit. I get a lot more traffic from trollbait than from innovative, interview-driven stuff, so when I'm hungry I go with the trollbait. Over time readers will notice, and it's up to the publisher to tweak their financial incentives to keep me on the straight-and-narrow.

If we could simply take this model into local news markets, we'd have enough money to pay for covering all those events and scandals which right now aren't being covered. The zoning games played with developers. The small corruptions of the local school boards. The side deals done to lure businesses to town. An open meeting is closed if there's no one there taking notes.

In his print column for July 28 Jonathan Alter of Newsweek (left) weeps bitter tears over this. "Bloggers rarely pick up the phone or go interview the middle-level bureaucrats who know the good stuff," he writes.

I know why. It doesn't pay.

This has always been true. You know how much of a print newspaper's budget goes to editorial? (This is also true for journals like Newsweek, by the way.)

8%!

That's all the writers, all the editors, the whole art department, the secretaries, the research people, everything. Over 90% of a newspaper's income goes elsewhere -- to the ad staff, to the printer, to the delivery guys, to the executive suite, to the bottom line. That's all you're really worth, Alter  -- a little piece of that 8%.

So there is plenty of room to create incentives for news-gathering. Advertising isn't disappearing. It's simply changing media -- from print to online. And newspapers simply aren't competing for that dollar. Because of attitudes like Alter's, which are divorced from the market.

The problem is this assumption of "authority" which positively oozes out of Alter's pores, and those of every other so-called journalist in this country. That's something your employer earns for you, and you try very hard not to toss away. It's a loan, not a grant, which comes from the market, not from God.

So here's the secret to making money online, doing real journalism, in 2008.

The Crisis, or The Dawn of the 21st Century

Many historians date centuries based on relevant events, not the turn of a calendar page. (From the collection of the State Library of Victoria, Australia. Click here to see it as more than a thumbnail.)

The 20th century, in other words, did not start on January 1, 1901. It started with the Guns of August. World War I ushered in the Great Power era, the wars of ideology, the mass murders, and the auto civilization for which the 20th century will always be known.

We are still living in that century. We still depend on cars, and oil. We still obsess over ideology. We still die over resources, and in vast numbers. We are still divided.

But this old order is dieing. If the War in Iraq should prove useful in any way, it is to kill these presumptions about ideology and resources. Capturing Iraq's oil did not make its price manageable. The "good vs. evil" Cold War game the Bush Era created has been shown to be a sham.

The 20th century is not going out with a bang, but with a whimper. What began in shock and awe is going out in economic and environmental dysfunction.

Most of us have known for many years what the 21st century will be about:

• The Global Crisis of climate change.
• A single planet requiring a single set of standards.
• The Infosphere, science vs. reality.

Journalism's Biggest Mistake

As a graduate of the Medill School of Journalism, I'm here to tell you that the biggest mistake you'll hear at that school will likely come on the first day you're there. (That's Joe Medill at right, a real 19th century man.)

Someone will call it a profession.

Journalism is not a profession. Journalism is a trade. Just like cooking is a trade, and plumbing, and tree surgery. That is, journalism is a market process and no journalist -- no matter what they think or what some asshat "professor" tells them -- stands above or apart from the market.

I was fortunate that, in my time at Medill, we had a few teachers who understood this and emphasized it. Ben Baldwin chided anyone who dared call him "professor" or (worse) "doctor" -- noting he only had a master's. Dick Schwarzlose got it. Elizabeth Yamashita introduced her business journalism class by giving us the "good news" that "you're all going to get jobs."

The canard that journalism is a profession came from, among others, Mr. Medill. Along with Mr. Pulizer, whose name is on the Columbia school, and Mr. Annenberg, whose name adorns USC's school. None of these men were journalists. They were businessmen. And their claim that journalism is, or ever was, a profession was designed merely to keep the workers in their places, which was (and is) under the thumb of the boss.

Notice. Those who work for established publishers are deemed members of the profession. Those who don't aren't, unless they're freelancing for the same established publishers.