Dana Blankenhorn

When Inflation Strikes

People are always fighting the last war. This is never truer than when talking about inflation.

Prices are rising. Oil producers are making a killing. Employees have their bosses over a barrel. There are supply chain disruptions.

There are also idiots responding that “inflation is theft” and demanding that the dollar be protected. This response made sense in 1979. Oil and other resources were the primary sources of wealth, and the only way to slow their takeover was to raise interest rates and cut the money supply.

This makes no sense today.

That’s because technology is much more effective than manufacturing was in fighting inflation. Just to give one example. Upstart uses artificial intelligence to decide whether someone should get a loan. Instead of just using credit scores, they use 1,000 variables that let banks more than double their lending without increasing their credit risk. The software does a better job than a loan officer. Why have loan officers?

The Metaverse Problem

Back in 2009, I covered Taiwan’s CompuText show, alongside my son, then 18.

We spent four days wandering the halls, on the hunt for “desktop Linux.” We eventually found Linux Foundation head Jim Zemlin addressing a small group in a corner of Taiwan 101, the city’s tallest building, miles from the show’s main hall. It’s become something of a joke between us since then.

The point is there was no desktop Linux. You can argue that Google Android is Linux, or that the Mac OS is based on a Linux, but these aren’t truly open systems. Linux is, and was, primarily a server technology.

This is important to note when thinking about Web 3.0, or the Metaverse, as the buzzword advocates call it. They say it’s the biggest thing since the Web was spun, nearly 3 decades ago. It’s certainly the biggest thing since the Cloud, which Amazon began selling 15 years ago.

Unbundling Cable

Over the weekend, Google briefly carried through on its threat to remove 15 Disney channels from its YouTube TV cable replacement and cut the price by $15/month.

Coverage focused on the brevity of the cut-off. In the process they missed the story.

This is the first time anyone has successfully unbundled cable TV. Previous threats by programmers to cut off cable operators succeeded because customers complained. The operators never cut their prices in response, as Google did in this case, and as it threatened to do earlier with Comcast.

Disney’s bluff included the line that disaffected viewers could \buy the “Disney Bundle,” combining its ESPN+, Hulu+, and Disney+ streams, for less than the YouTube price cut. What Google wanted was for Disney to charge it no more than it would cable operations of similar size. They likely got that.

The Metaverse Party

I once spent a half-year working on a manual for an online shopping service.

Unfortunately, the year was 1984.

The point is that while it’s easy to ridicule the metaverse, the enabling technology already exists. The vision is easy to express.

When Mark Zuckerberg thinks of the metaverse, he first sees the oculus headset and haptic gloves he’s been developing for nearly a decade. The former can deliver an artificial, or partly artificial, set of visual and auditory inputs. The latter can deliver other senses, like touch, taste, and smell, simply by assigning values to them and transmitting the values, while having the necessary client equipment on-hand to translate the values back into experience.

Controlling Data for Good

When we talk about control over data, we start with metadata. These are vast stores of data on what people are searching for online, data about data.

Google and Meta Platforms (Facebook) use metadata to control advertising. Metadata lets advertisers reach specific consumers for the same price as the general network. The aggregation and organization of markets, once done through journalism, no longer pays.

The same techniques, applied to content, led us to Trump. Victims stay within a walled garden of propaganda. Facts can never get in. People don’t just vote based on this. They refuse vaccines, buy guns, and die. He who controls the data makes the rules.

The Iron Triangle

For 200 years, since the Monroe Doctrine, Latin America has been ruled by an Iron Triangle of economic oligarchs, religious extremists, and militarists, backed by the veto of the U.S. government.

Democracy and liberty never stood a chance. Even when “leftists” took power, as in Cuba, Nicaragua, or Venezuela, they simply adapted the system. The party became the religion, and the party leaders the oligarchs. The military rules. Power flows from the barrel of a gun.

We teach our kids that America never adopted that system, but we did. In the American South, from 1876 until roughly the mid-1950s. The KKK was the military, the Southern Baptists were the religious, and local landowners were the oligarchs. Textile manufacturers moved south and adapted to it. It was the refusal of northern businesses to go along after World War II that led to its breakup.

Technology Can Whip Inflation Now

Bankers, reporters, and politicians are all focused on inflation right now.

Markets know better.

It’s true prices are rising. Wages are rising, too. Working conditions are even improving. I fail to see a problem here.

But just as some prices rise, other prices fall. Lumber prices have already rolled over. As electric cars begin to roll off lots next year, gas prices should ease.

A generation ago, it was hard to counteract rising commodity prices. Macro analysts are still locked into that mindset.

But now there’s software. Software scales. Software fights inflation with productivity. Clouds also fight inflation, helping scientists and engineers create substitutes for resources.

What If Steve Jobs Were Evil?

If Steve Jobs were evil, he would be Mark Zuckerberg.

Zuckerberg was born in 1984, the year the Apple Macintosh was introduced. He founded Facebook in 2004. He launched Facebook’s program to build cloud data centers in 2011. His fortune was estimated October 5 at $117 billion, but that underestimates him. That’s because he controls the voting stock of Facebook, now worth $913 billion, so his power is greater than his money.

Facebook isn’t its eponymous service. It’s not Instagram. It’s not WhatsApp. Facebook is its 16 data centers, the thousands of miles of fiber cables connecting them with local centers, and with the world. About 1.6 billion people use Facebook services every day, according to its most recent quarterly report. Americans can take or leave Facebook, but people in the “Global South” depend upon it.

Bottom Rail on Top

It’s a fight as old as the century. (There's a signed copy available at Amazon.Com.) 

Cable operator doesn’t want to pay too much for programming, lest they be forced to raise prices and lose customers. They play hardball with the cable programmer, who tells cable viewers they’re about to “lose access to your treasured programming” should a deal not be made.

Sometimes a deal is not made. Sinclair Broadcasting, now running the regional sports networks it bought from Fox and renamed Bally’s, has lost a lot of these deals. If I want to watch Atlanta United home games, I either take MARTA to the stadium or go to a bar.

It happens a lot with sports. That’s because sports programmers overpay for their rights, then jack up the price they’re charging operators (thus you). If MSG, which has rights to New York teams, can’t get a new deal from Comcast by September 30, for instance, you may miss the New York Red Bulls’ playoff push.  (It’s going nowhere, by the way.)

So, you have the big, bad cable operator against the poor, beleaguered programmer. Comcast is a meanie, you say.

But what if it were Comcast that was doing the begging? That’s happening right now.

Comcast has owned NBC Universal for a decade. It bought the asset from GE. (This was covered extensively on the documentary series 30 Rock.) It’s a sweet deal. Programmer NBC negotiates with operator Comcast for the best possible deal, then Comcast moves money from one pocket to the other.

Electrify My World

When we moved to our current house in 1983, the heavy rail MARTA station next door seemed futuristic. Between 1983 and 2020 my wife took the train to work nearly every day, while I worked from home.

Today MARTA and the urban design it was meant to serve are obsolete.

Electric motors can be made in any size. Batteries are more efficient and cheaper. The cloud means warehouses can break bulk for less than physical stores. The pandemic let my wife recapture 3 hours each day, for chores and for living. She’s not giving that time back.

Work can happen anywhere. The world I wrote about 30 years ago in my book A Guide to Field Computing has arrived. An iPad can do the work of a PC, a phone, and a TV, plus it’s rugged enough for use in a manufacturing plant or warehouse.