Dana Blankenhorn

The Creativity Economy

The ignorance of Washington continues to amaze.

Reporters are all claiming Republicans “must” win in 2022, because the economy will be destroyed by inflation.

The economy will not be destroyed by inflation. The economy isn’t what it was.

Yesterday’s economy was based on resources. The economy before that was built on the rising efficiency of manufacturing. Today’s economy is based on technology and Moore’s Law. It’s built on clouds and devices. It’s centered on software. The gating factor in a tech economy is what I have called “human capital” – trained, empowered brains.

This is the creativity economy. (Shown is Richard Florida, who has  been talking about this since 2002.)

Retire Dan Garber

Soccer has a huge opportunity to become America’s favorite sport, as it is everywhere else.

But it won’t get there with the minor league business model of Major League Soccer (MLS) Commissioner Dan Garber.

Garber’s business model was crafted in the 1990s, when MLS feared failure. All teams are controlled by the league. The season runs from the spring to the fall, and ends in a series of play-offs, just like baseball.

The league has prospered, thanks to expansion fees. New owners pay hundreds of millions to join MLS, and this gets split among existing teams. This means teams can’t be relegated if they refuse to be competitive. It makes for lazy owners and bad soccer. It means the most important games are played when they don’t draw interest.

The answers are simple, but Garber won’t consider them. He needs to go.

Once he’s out of the way, MLS should buy the minor league United Soccer League. It can do this by selling its own interest in member teams. This will create a windfall that can fund a new structure.

Home of the Brave

My local baseball team is in the World Series. The Atlanta Braves are playing my former local baseball team, the Houston Astros.

It feels strange. When I moved here this would be a midweek series between two low-rated NL West rivals. I could have gotten into the old Fulton County Stadium for a fiver and brought a book. Or I could have listened to Skip Carey call the game from this same desk in Kirkwood.  

The Braves have been in Atlanta since 1966. Before that they were in Milwaukee. My late mother was a Braves fan. They were in Boston. (Locals will tell you they made another move, leaving the city for Cobb County in 2017, after the local Republican machine gave them “incentives” (taxpayer giveaways) worth $1 billion. (Democrats won the next county election.)

The name goes back to 1912 when a New York businessmen named James Gaffney, affiliated with the Tammany Hall machine, bought what had once been the Boston Beaneaters. (Tammany members were called Braves.) The team was one a National League original. In fact the team predates the league.. The new name was meant to appeal to working class Democrats. My mom was an O’Donnell.

Anyway, the name is even more politically incorrect now than it was then. What to do, what to do?

BroTatorship

“Poor man wanna be rich, rich man wanna be King, and a King ain’t satisfied ‘til he rules everything.”

Springsteen’s Badlands sums up the political moment. In terms of its own self-interest, the technology industry should be leaning left. What matters to tech is creativity, fostering it, nurturing it, letting it run and exploiting it. Instead, many of tech’s leaders are leaning right, hard right, as in I’m going to be the world’s dictator right.

I’m not just talking about Peter Thiel becoming his generation’s Charles Koch, bankrolling efforts to overthrow democracy and install the Trump family (with Thiel behind the throne). I’m talking about the support Jack Dorsey and other “bro-billionaires” are giving Bitcoin, and the threat that carries for all civil government.

Financially Bitcoin is an asset, a wholly-fake asset, generated from whole cloth, based on the answers to an encryption puzzle. Since there can only be 21 million answers, that’s how many Bitcoins there can ever be. In practice there are fewer. Not all the answers have been found, and many Bitcoins have been lost due to password error or fraud.

Facebook is Not Immoral

Facebook is amoral.

There’s a difference. The New Yorker knows this.  But, like Mark Zuckerberg, Conde Nast doesn’t care.

An immoral actor deliberately does things they know are wrong.

An amoral actor does things without regard to whether they’re wrong or not.

Facebook can’t afford to be moral. No tech company can. Creative destruction happens so fast I barely have time to call a company “clueless” before it faces the consequences. (Hello, Zillow.)

Corporate graveyards are littered with the molding corpses of companies that tried to defy this axiom. I have been watching tech for four decades now. It’s beyond obvious.

The Gilded Age of Software

Rising prices have given a new boost to software stocks.

It’s because software is the best way to fight inflation. Automate what people did, replace humans with code, and you cut costs. It’s just Moore’s Law in action.

A year ago, the pandemic gave a big boost to software stocks. Software was the best way to keep the economy going.

There’s irony in this because software is still made by hand. And unlike this story, software maintains its utility, even increases in value, the more it’s used.

This has long been obvious in my house.

My wife became a computer programmer in 1982, supplementing my income as a business reporter. My career remained on a high until the dot-bomb in 2000. Since then, hers has gone from strength-to-strength.

Newswriting in the 21st Century

I was taught two ways to write a story in the 1970s. (That's me in 1981.)

First was the inverted pyramid. Describe the story in a sentence. Then summarize the most important point. Keep going, in order or importance, so an editor can snip the story, from the bottom, and always have the gist of it.

Second was a circle. Grab the reader in your first paragraph. Then walk around the story until it’s told. Deliver a sting ending, a thank you for reading. This was my specialty. It worked great in magazines.

In 2021, the Internet has two different ways of delivering the news.

The first is what I call the “oh no.” This has replaced the inverted pyramid. If it’s good news, say “yeah, but” in the first paragraph, then describe how things are likely to go bad. If it’s bad news, scream “oh noes” and describe how things can only get worse.

The second is what I call “hide the pickle.” This has replaced the circle. Promise you’re going to say something important in the headline. Then don’t say it. Lead the reader on for paragraph after paragraph, page after page, filling their eyes with ads, until you finally get to some point (always less than was promised).

Cloudflare and the Cloudless Cloud

The Cloud Czars gained dominance by putting cash flow into cloud infrastructure.

Apple, Microsoft, Amazon, Google, and Facebook now spend billions of dollars each quarter on data centers. They upgrade the ones they have, and they build new ones. This is the cloud world we know.

Cloudflare wants to change that. The company is selling a concept called “Web3,” in which every server can be a node on the cloud network.

The offering is based on distributed technology already used for cryptocurrency like Bitcoin and Ethereum. Cloudflare supports these efforts with gateways. The idea is that distributed software can now support cloud storage for less than what Amazon (for instance) charges to move data out of its S3 repository. It’s in moving data out that Amazon Web Services sees its biggest profits. Cloudflare says it can disrupt that. Amazon calls its storage offering S3. Cloudflare calls its new one R2.

Great theory. Harnessing the edge to take on the center makes sense. Letting anyone with unused space play in cloud markets sounds great. Exporting data with S3 is expensive.

Dealing With China

I have a dog in the China policy fight.

Our 30 year-old son has a job waiting in Taiwan. He just needs a visa. Taiwan is slow-walking it because of COVID. China’s belligerence toward Taiwan means we have worries.

Most of what is being written about America’s China policy is bullshit. It’s Cold Warriors anxious for a fight, Republican apparatchiks looking to take Biden down, human rights activists who see China “getting away with it.”

Here’s what I think. Xi Jinping is in trouble. He pretends to be Mao but he’s not. There is opposition to his policies kept inside an opaque party. Jack Ma is still a party member.

China has huge debts. Property debts, government debts, corporate debts. There’s still room to maneuver because the Yuan trades at 6.45 to the dollar. That’s not a manipulation. If China were manipulating the currency it would trade at 7 to the dollar or more.

China has an energy crisis and an environmental crisis going on at the same time it’s the world’s biggest producer and buyer of solar energy. The floods that overtook the country this summer are a lot like California’s fires and Louisiana’s hurricanes, but they’re happening to 20 times more people.

Obama vs. Trump is Google vs. Facebook

There’s a false assumption in the land. Democrats are doomed in 2022.

For evidence, there’s the fact that parties in power lose in off-years. That’s been true 4 times in a row. But in 2002 Bush filled people with patriotic fervor. In 1998 Clinton filled them with anger over his impeachment. The real lesson is that political upsets happen when people are motivated. In or out doesn’t matter.

Republicans are in power in most states. Impunity is getting people angry. And when government is doing what you want, you’re as likely to relax Election Day as to crawl over crushed glass to vote.

The 2022 election will be a battle between Google and Facebook.

Barack Obama won because of Google. After holding a highly-publicized meetup with employees in 2007, the Obama campaign was created in Google’s image. It built giant voter databases, donor databases, volunteer databases. Based on those databases, it activated people through email to call on neighbors. It scaled the intimacy of the 2004 Dean campaign, which ran a popular blog but refused to build the database. It worked.

Donald Trump won because of Facebook. His team hacked the system. They used Facebook’s algorithm to gin up anger, to turn the social medium to their side. Anyone who clicked on a pro-Trump story was run down a rabbit hole of conspiracy theories. They became immune to anything outside the conspiracy. It worked.

Trump ran an identical campaign in 2020. It didn’t work. In 2020 he was the incumbent. In 2020, America was going to hell in a hand cart. Reality triumphed over conspiracy.

Stacey Abrams, who lost Georgia narrowly in 2018 to a Trump-like opponent, drove much of what happened last year. Hers was an inside-outside effort. Inside, her FairFightAction learned how the rules worked and fought to keep them as they were. Outside her databases identified Democrats and activated them.