Dana Blankenhorn

Human Capital and the 1980 Game

In 2020, we will be 12 years removed from the first political triumph of technology, the generational election of Barack Obama. All his progress is now being undone, much as a generation ago oil’s gains were threatened by Jimmy Carter and his cardigan sweater.

As we prepare to play the 1980 Game the question becomes, who is Ronald Reagan now? (It’s usually phrased, “Who Can Beat Trump?”) The answer lies in what drives our economy today, and in what drove it then.

I remain confident in the ultimate triumph of Democracy because, today, human capital is the gating factor to economic growth.

Where Elizabeth Warren is Wrong

Like a lot of people, I admire Sen. Elizabeth Warren of Massachusetts, or as the great Charlie Pierce calls her Senator Professor Warren (SPW).

But, again like most people, I can’t vote for her for President.

The reason, in my case, is Warren’s attitude to the Cloud Czars. Warren is staking a big part of her candidacy on running against them.

Let’s set aside, for a moment, the fact that the Czars – Microsoft, Apple, Amazon, Google and Facebook – now command a combined market cap of nearly $4.5 TRILLION. Never mind that they dominate the business world, or that democracy always follows the Golden Rule – he who has the gold makes the rules. Democrats aren’t going to win the White House over the objection of the Czars and the bulk of the technology industry.

My beef here has to do with her proposal to break up the Czars, starting with Amazon.

Her argument against Amazon is that the company can see which brands people are buying, then put an Amazon version into the market and wipe out the other seller. It’s like she never heard of store brands.

Store brands have been a feature of American retailing practically since brands. Kroger does it with food. Target does it with clothes. Walmart does it with both. Walmart calls their store brands “Great Value.”

Copyright Wars 2020

My #1 life goal is to be plagiarized. THERE IS NO GREATER ACHIEVEMENT OR HONOR.

                                                                                ---Tom Peters 

                I first wrote about the Copyright Wars in 1997, when the Digital Millennium Copyright Act was being debated.

                I predicted, in my first version of Moore’s Lore, which came out in the year 2001, that “East Coast” laws like this would fall to the “West Coast Law” of code.

                This is not the way things are working out in 2019. The Internet’s ability to serve mankind is threatened as a result.

                As Tom Peters notes, there is no real value in an idea. An idea is only worthwhile if spreads, or if it’s acted upon. For this to happen it must be communicated, disseminated, and digested by many other people.

                The Internet, specifically the World Wide Web, is the means by which this now happens. The Internet lets any idea, from anyone, reach an audience and change people. Or not.

                But two things are happening. First, bad ideas are getting the same power to change people as good ideas, because no one can credibly tell everyone the difference. Second, the copyright industries have moved to stop the distribution of ideas, under the mistaken belief that there is value in them, and that anyone repeating them should pay.

                Trump illustrates the first point well, although anti-vaxxers and other idiocies would exist even without him. It’s in the nature of the Internet to eliminate gatekeepers, and those companies that have risen to that position, like Facebook, Google and Twitter, eschew the role, fearing it will let government prevent protest (which it can).

The Death of Cable (and what comes after)

On March 25 Apple announced the death of the cable television model.

What replaces it is, in a word, the Internet. Streaming services, yes, but with far more interactivity than cable or broadcasting ever offered. True integration between audiences and programming, whether you need news, sports, or entertainment. Available wherever you happen to be. All you need is a mobile phone.

This is the entertainment model of the future.

Sounds great. People are now paying $200-250 per month for bundled Internet and TV service, with the TV taking up two-thirds of that bill. They’re paying another $60 or so for mobile Internet service, with calling bundled in.

There’s a lot of money at stake.

I covered the birth of the present world. I covered it twice.

Technology’s Dilemma

There is a bug at the heart of innovation, of technology, and of capitalism itself.

It lies in the incentives we give innovators.

It lies in stock ownership.

What liberals have condemned is the fact that nearly all the profit from innovation is going to a very small number of people. The winners’ founders, and their venture capital partners, get fortunes measured in the billions of dollars. Their key people also wind up as multi-millionaires. Everyone else, whether they’re line staff or just ordinary schmoes, can pound sand.

Sure, we all get some of the benefits. It’s cool to have cat litter delivered. It’s amazing that I can learn anything I want to know within moments. I can call my kid in Europe free. The software and hardware my son accesses, to automate cutting-edge medical tests is amazing. As a result, we’re starting to understand not only the genetic code, but what lies beneath it.

Still it’s true. The rewards are all going to a very small number of people. Jeff Bezos will never be able to spend the $150 billion he has access to. Bill Gates will never be able to give away the fortune he has won. Philanthropists are taking on the role of governments, self-appointed boards deciding the priorities on the nation’s wealth.

World War III, The Internet War

World War III is an Internet war. It has been ongoing for over a decade.

When the conflict was between countries like Pakistan and Ireland, or Ukraine and Russia, we could afford to ignore it.

Then it came to our own shores. November 8, 2016 was this war’s Pearl Harbor.

Yet we still haven’t reacted, because once the enemy is in the tent the media thinks going after them is friendly fire.

There’s nothing friendly about it.

Sure, there are efforts underway at Google and Facebook to boost “real news” and dissuade “fake news.” Yes, there are efforts underway in Congress to control online political spending. Yes, there is the Mueller probe.

But these are nothing. We still see the Internet War as something we can stop with higher firewalls, or bigger budgets.

We can’t.

The Streaming Crash of 2019

For the last several years, a lot of companies have been trying to fit through a very narrow door.

That door is streaming.

The success of Netflix, and of podcast stars like Marc Maron, has caused a heart attack in the entertainment world. Suddenly everyone, and every company, is aiming for a taste of this action.

They can’t all get it.

There aren’t enough hours in the day to listen to a fraction of the podcasts available now. I have a half-dozen in my phone, and I can’t get to all of them. Long-haul truck drivers can get to a lot, and people who work as security guards may listen for 8 hours per day. But a single Joe Rogan podcast can run 4 hours. Maron does 3 hours every week.

CBS, NPR, the BBC and others are hitching their wagon to podcasts. Spotify plans to spend $500 million on podcasts, an industry that generates $700 million in annual revenue.

These numbers make no sense.

The Elite Web

A lot of people like to complain about the lack of online freedom in China.

It’s true. The government there decides what people can and can’t see, what they can and can’t say. The social conditioning is impressive and made more impressive by the constantly-growing economy.

But if Jack Ma, or anyone in his Alibaba executive team, wants to learn something from the online world, or say something online, it’s not a problem. The same at a thousand other large enterprises. Freedom is doled out with an eye dropper, but for those who need it the firehose is available.

Is the situation better in our country?

Democracy's Business Model Problem

When I started as a reporter, 40 years ago, there was a strict separation between “data” and “service.” There was usually just one layer of data.

The service was a phone call. The data was the time, duration and number called. The data was used to generate a bill for service. AT&T still mails customers this data.

There was also another layer of data, hidden beneath the services data, namely the content of the call. This was only available to law enforcement, with a warrant. A number might be tapped or (when technology permitted) a subject might have all the numbers they used tapped. This data was secured. It could only be used in criminal investigations. Civil cases could be tossed if this data were misused.

In print, there were similar splits between service and data. Editorial was the service. Subscriber lists were the data.

Facebook and the Fall of Free

Facebook has no friends.

Mark Zuckerberg thought he had billions of friends. He was wrong.

That’s one of the clear lessons of the Facebook scandal.

The way competitors, celebrities and the media are piling on Facebook is something to behold. I said they were vulnerable to something like this at the start of the month.  I was right.

Facebook is uniquely vulnerable because it has no customers. It doesn’t sell anything to people. Amazon sells stuff to people, and so when Trump goes after Amazon, Jeff Bezos sees his customers defending him. The same thing is true of Apple, which is why Tim Cook didn’t hold back on attacking the heart of the Facebook business model when given the chance on MSNBC.

Microsoft and Google have (so far) kept quiet about Facebook’s troubles, and for the same reason. Both run services supported by advertising. Microsoft has been backing away from this throughout the century (the MS on MSNBC is like the Cheshire Cat’s smile as it disappears). Google has been trying to diversify into products and autonomous cars. But their dependence still exists.

There’s one more important point to make about all this.