Dana Blankenhorn

Rich Folks for Biden

Right now, asset prices are vulnerable to a crash. (Image from Slate.)

There’s too much loose money around. Stocks, homes, and Bitcoin are all overvalued. There isn’t enough investment drawing a return.

That’s the problem Joe Biden’s “tax-and-spend” plan is meant to cure. Most analysts are painting the argument as being between left and right. It’s really about assets vs. investment.

The money Biden wants to remove from those making over $400,000/year is money that is sitting on assets. The $200 billion Jeff Bezos fortune is assets. So are the fortunes of most rich people. It’s not money that’s doing anything, because there isn’t a big enough market for private goods and services.

Biden wants to invest that money in social goods. People are infrastructure too, my friend. In a technology economy, human capital is the gating factor to growth. The more highly trained, empowered, and motivated people you have, the more you can use cloud hardware and software to drive value.

The Problem with Academe

The University of Minnesota’s latest scandal illustrates a bigger problem with major universities.

As my friend Steven J. Vaughan-Nichols has been reporting, UMN’s Institutional Review Board let a computer science professor deliberately dump dodgy code into the Linux kernel, just to see what would happen. 

Well, now we know what will happen. The paper has been pulled, the professor has been shamed, and the university has been banned from contributing to Linux. Everyone is being punished by that, down to the last undergraduate.

Yet the university thought an apology would suffice. 

It doesn’t.

The Rise of the Rest

Throughout the Trump years, former AOL CEO Steve Case wandered the country, promoting the “Rise of the Rest.” 

The idea was that you didn’t have to be in California to be in tech. You could do it from anywhere.

Not news to me. I’ve been covering the technology industry since 1982, from Atlanta. My wife has been working in it since 1983.

But for decades Techlandia represented just a few places. Like San Francisco, Seattle, Boston and Washington, D.C. Yet it exists everywhere. Always has.

The pandemic has altered the rules and thus accelerated the change. While the money for tech still comes from Silicon Valley and New York, workers and start-ups can be found everywhere. 

Bubbles Don’t Really Pop

History will record that the Trump Bubble burst on January 6, with a coup attempt organized by Donald Trump. (The picture is from Doc Searls' blog.)

I have seen many bubbles pop in my experience as a business reporter. The best-known was the dot-com bubble. It popped on January 10, 2000 when Time Warner announced it would “acquire” AOL.

The precise date of the popping is only remembered in retrospect. At the time, business went on. That spring I attended a trade show called ad:tech, on my employer’s dime. Even a year later I was able to take my wife on a trip to Hawaii because of an Internet commerce conference on the Big Island.

My most vivid memory of that ad:tech conference was on a bus, heading back to our hotel after a day spent on the water, sponsored by an Internet ad agency that eventually sank with the rest. A young entrepreneur was complaining that each new round of funding was requiring more equity from him and generating less cash. “It’s unfair,” he whined.

I’m a cruel man. I laughed until I cried. Later, at the event’s award show, a block “CNN” ad won awards for creativity. I laughed until I cried again. The people around me thought I’d gone crazy. It was just that I saw the handwriting on the wall.

The point is that even after a bubble pops, many people will remain unaware of it. They will continue to take the bubble as a real thing. They’ll go in even-deeper. They’ll consider falling prices an opportunity, telling folks to “buy the dip.”

Pay Per Day

There are days when I’m disgusted by my fellow journalists, and the whole journalism business.

This is one of those days.

While elite journalists bemoan the right-wing propaganda machine, seeing it as an existential threat to democracy and liberty, they’re defending an industry rapidly going behind paywalls. Nearly all daily newspapers are already there. Now the news services are doing. The latest is Reuters, which erected theirs this weekend.

The criticism is apt. The refusal to do anything about it is criminal.

There are things that can be done. I have been flogging the idea of “day passes” for some time.

Instead of demanding the commitment of a subscription, newspapers can offer day passes that let people behind the paywall for 24 hours or even less. When I tweeted this idea, however, a reporter for the Columbia Journalism Review specializing in digital journalism instantly dismissed it, calling it unworkable. (I felt like throttling the bastard.)

Amazon can make this work. Google can make this work. So could Microsoft or Apple. Heck, Facebook could make this work.

The True Cost of Bitcoin

If America’s enemies wanted to bury this country under energy costs, it could do worse than to have invented Bitcoin.

Greed has made Bitcoin the world’s energy sink. Bitcoin uses as much energy as the country of Argentina. Most of this new Bitcoin is being produced in China, leaving most of the country dependent on coal. It’s not just China being hurt. A Bitcoin miner in Montana, a former patent troll, is keeping a local coal-fired power plant operating. 

The waste doesn’t stop there. It costs about $25 million of electricity per day to run the Bitcoin network.  The current estimate for Bitcoin energy consumption this year is over 100 Terawatts.  And it’s not just Bitcoin. Every cryptocurrency is an energy hog. 

Some cryptocoin advocates, like Ethereum inventor Vitalik Buterin, admit the truth. He wants to change Ethereum’s algorithm so it uses less electricity.

But Buterin is in the minority. Most Bitcoin advocates claim what I just wrote is a myth. It’s supposed to use a lot of energy, at first, they claim. The existing transaction networks also use energy. Bitcoin’s use will drop once it replaces every other currency. Oh, and if you’re using hydropower or “excess” power from otherwise unused sources, what’s the harm? 

This is bullshit. Bitcoin isn’t a currency. Currency values remain relatively stable during a trade, otherwise they’re useless. Bitcoin is an asset, a global index of fear and greed.

Free TV is an Invisible Scandal

When TV was made digital to free up spectrum  stations were given “extra” channels in the new bandwidth, to do with as they wanted.

Something similar happened in the 1940s, and it made many fortunes. Big radio stations in major markets were literally handed new TV stations. If they also owned newspapers the bonanza was doubled. This was the foundation of Cox Enterprises, originally a newspaper chain founded by failed 1920 Presidential candidate James M. Cox.

The current transition is making no billionaires. In fact, it’s a scandal. A scandal no one is talking about.

Before the transition there was lots of talk about TV stations creating multiple channels with their new spectrum rights – news channels, cultural channels, ethnic channels. Instead, these rights have been sold or rented to a host of ad-based garbage programmers. Most stations just took the money and ran.

In Atlanta, for instance, there are channels running 1950s re-runs, a bunch of home shopping channels, foreign language channels, religious channels, even foreign channels. These are the kinds of channels that are too worthless to make it onto cable. There are also a lot of empty channels, or channels running the equivalent of radio. If you only have access to “free” TV (through a special antenna and, perhaps, a set-top box) you’ve been ripped-off. It’s not worth what you paid for the antenna.

The frequency spectrum is not supposed to be property. It’s not supposed to be a private slum. It’s supposed to be a public good. That was the idea of the Radio Act of 1926, and the Federal Communications Act that followed it. But this concept has been lost in our time.

If you want to make some meaningful change, demand we go back to that.

#NeverAgain

If #NeverAgain doesn’t apply to everyone it’s just special pleading.

This statement that nearly got me fired last week, from both my jobs. It’s a stance that, if made to a conservative Israeli in 2021, gets you branded an anti-semite.

Of course, even that term is loaded. Anti-semitism refers to prejudice against any semitic people. Palestinians are semites. So are all Arabs. How Israelis can commit daily outrages against Palestinians and call their critics anti-semite is beyond me. But there it is.

In saying this, I’m not denying the Holocaust or diminishing it. Most of the people I grew up around were children of survivors, or the soldiers who liberated them. But genocide is not the unique property of Jews. Armenians were victims of a genocide years before Hitler, no matter how much Turks reject that even today.

White Americans committed genocide against the native Americans, a fact obvious whenever you look into the eyes of Mexican immigrants. Most are descended from Indians. We killed ours. The Spanish just enslaved theirs.

America’s genocide, meant to create “living room” for European settlers, became Hitler’s model for his eastern war, German “lebensraum.” Another American idea that turned out to be nonsense was “eugenics,” the idea that certain races were genetically superior. (In fact, genetic diversity makes a species stronger.) Hitler adopted that, too.

The Holocaust was born in America.

We still hear echoes of it in Republican rhetoric. They won’t be “replaced?” By whom? Immigrants are as human as Tucker Carlson.

Genocide is more than prejudice. It’s more than oppression, or murder. It’s mass murder, meant to exterminate an entire race of people. Americans are committing genocide as I write this. We make guns into totems and kill 100 Americans each day with them. We ignore science and have lost 550,000 in one year. Why won’t Republicans speak out? Because most of the victims are black or brown or immigrants. Never again? Really?

Class Struggle in the 2020s

In the 2020s there are generally two classes of people. (The Class Sketch was first broadcast in 1966. See the whole sketch here.) 

There are the highly educated with their hands on the code. Then there are the uneducated whose actions are controlled by the code.

The result is that instead of having three economic classes in America we mostly have two. Both sides feel bad about it.

The controlling class, understanding that human potential has value, support all kinds of aid to the controlled. We’re liberals. We’re “woke.” We oppose discrimination because it’s inefficient. We support education because we want more of us. Health care, infrastructure, all the social costs that let us focus on the work we do rather than the rest of life, we’re all for it.

The controlled class sees accepting aid as demeaning and they have they pride. It may be all they have, but it’s a potent political force. Knowing that they lack skills, they’re also deathly afraid of being replaced. They lash out in anger at anyone they think might do this – at minorities, at gays, at smart women. They’re focused on protecting what they have.

Tech Needs People

On the surface the economic policies of Joe Biden, Ronald Reagan, and Franklin D. Roosevelt look very different.

They’re not. Each path has been designed toward the same aim, benefitting a dominant industry.

Today that industry is computer technology – chips, software, and the cloud. Look at the latest Forbes 400. That’s where the money is. Found a tech company and, if you’re lucky, you can become a billionaire. Jeff Bezos likes Bidenomics.

What do tech companies need? What is the gating factor to their growth? It’s people. To be specific, smart people. It doesn’t matter what color the skin, what the brains’ sex is or who they love. Can’t get out of your wheelchair? You could become Stephen Hawking.

Educated, motivated, empowered minds are what make technology happen. What do such minds need? Security, challenges, the ability to chase their dreams, unencumbered by other worries. It’s true they need the three-legged stool of capitalism, democracy, and personal liberty. But they also need time to focus on the task at hand, all the time they can get. If you’re worried about your kids or your parents, if you’re worried about your health, that’s mental energy that’s not going into the work. Tech needs all of that it can find to discover the next big thing.