Dana Blankenhorn

Obligations of Capitalism

Capitalism isn’t a free ride. As described by Adam Smith in The Wealth of Nations, wealth carries obligations to the common good.

This isn’t a new concept. The whole story of Buddhism is of a man in mid-life who renounces the pursuit of wealth in favor of spirituality. Even Mohammed was a trader before he was a prophet. The idea is that you spend the first half of your life building wealth, recognize how shallow that is, and spend the back end doing for others.

Against that we have Nietzsche, for whom self-interest was the whole of the law. Against that we have Nietzsche’s acolyte, Ayn Rand, who brought him to America with badly-written novels that were thinly-disguised political screeds telling the poor to fuck off.

Tech’s Stock Problem

In today’s technology age, wealth is defined by stock.

This is causing a big problem for those who believe in capitalism.

To exercise their vision and keep companies out of the hands of Wall Street, entrepreneurs need a controlling stake. If their vision succeeds, this can create fortunes of unimaginable size. Of the 8 “centi-billionaires” listed by Forbes on May 19, 5 were American tech executives. 

They’re not the responsible, prudent men they were in the good old days. Jeff Bezos is living out the wildest fantasies of in-your-face wealth, buying giant mansions and super-yachts with his girlfriend – he divorced his wife last year. Bill Gates has been “outed” as a hound, a sexual predator, as he goes through a messy divorce. Elon Musk is just being an asshole, manipulating crypto-currency markets with his tweets. Larry Ellison buys islands and moves thousands of people around the country if you dare try to tax him. Mark Zuckerberg, not yet 40, seems the most responsible of the bunch.

It’s not just the ultra-rich giving wealth a bad name. The merely insanely rich are also being shown to be grade-a assholes. As I explained in my recent SPAC piece, these people create companies out of cash, buy operating tech companies, win even if they lose, and turn other people into billionaires before they’ve really accomplished anything.

Austin Russell, for instance, is 26. His company, Luminar, is just one of several trying to build Lidar systems that will help make cars autonomous, self-driving.  So why is he worth $2.2 billion?  It’s because a SPAC took Luminar public, and investors have yet to catch on that sales of $5.3 million in three months, don’t justify a $7 billion market cap.

The Lesson of Basecamp

Human capital is the gating factor to growth.

I’ve said this many times. I usually apply it to economics and politics. The seeming move leftward is built on our being a technology economy. We no longer depend on resources like oil.

We run on brains.

This also applies to individual companies like Basecamp.  It’s not enough to pay people well and empower people. Tech companies must let employees feel empowered if they’re to succeed.

This is what Basecamp, which ironically is selling a mobile work platform, chose to ignore when it instituted a ban on politics. It tried to be gentle about it, offering generous severance to those who disagreed. One third left .

My guess is the one-third leaving are the more talented third. Despite repeated attempts by Robert Zafft at Forbes to say this is addition by subtraction, it’s subtraction by subtraction.

Basecamp is based in Chicago, but its employees are everywhere. It’s not just competing with other Chicago-area employers for talent. It’s competing with everyone.

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.

Be Your Own Brand, Become your own business

This is the first piece of advice I give young journalists. It’s one I was taught in the 1970s was anathema.

Be your own brand.

When I was at Northwestern’s Medill School, in the late 1970s, I was told a journalist “is someone who works for someone who buys ink by the barrel.” This has since been changed to “bits by the gigabyte” but it remains true. Journalists are defined by who they work for. You are your job.

(This is a publicity picture taken at my first post-Medill job, with the Houston Business Journal.)

But it’s a one-way street. You can give your publisher all your loyalty and, should the needs of business demand it, you’ll still be on the street. (I've been there.) The only way to protect yourself is to define your beat, to specialize, and become “the leading expert” on it. Then (and this is the hard part) monetize it.

This is the part of the new job journalists hate. I feel for you. I hate it, too. But if you want to make a living at this, you must do it.

This starts with social media but doesn’t end there. If you’ve gained expertise advertise it and become a source. Start a side gig, a blog or e-mail newsletter. Incorporate, and treat yourself as a business. This means that you can consider stepping over lines your j-school taught you never to cross, but which your publisher-employers crossed as easily as you walk across the street.

It used to be that the only alternative to a newspaper or magazine job was to go into PR or ghost write. That’s not true anymore. You can solicit advertisers or take money from politicians if you like. You can go on TV and spout off if you’re asked. You can do podcasts, send out your own press releases. You can mine your market, in any way you can, if you’re willing to take the risks that every other businessperson takes.

Adam Smith Was Wrong

Adam Smith’s book The Wealth of Nations is treated, by conservatives, with the reverence Marxists offer Das Kapital.

Both are books of political philosophy. Both are also wrong.

Smith’s mistake is the most important one today. He believed that prosperity would naturally incline the wealthy toward the common good. This is true, for some. For Bill Gates, wealth is a responsibility, as it was for John D. Rockefeller and Andrew Carnegie. It’s a tool to be deployed toward the good of all.

But that’s not true for all wealthy people, especially in technology. As a political force, wealth has generally been deployed on behalf of more wealth for the wealthy. In our time this has created a self-perpetuating economic elite, where heirs have greater fortunes than the men who made them, and greater political power to pile ever higher on their own children and grandchildren, while billions remain Les Miserables,

For capitalism to resemble a moral force, this needs to change. It needs to become as easy for people to fall as to rise. Right now, rising to wealth is a long, long shot, and wealthy wastrel bros go on-and-on. Having power invested in people with no interest in the common good isn’t democracy, it’s feudalism.

The Trump years made this clear. Money can’t be our god, an end unto itself. That’s what Adam Smith believed. Adam Smith was no Marxist.

You Won’t Read This

You won’t read this because I’m in Twitmo.

My account was suspended a week ago. Repeated e-mails to Twitter support have gotten no real response.

Twitter has a legal right to do this. They are under no legal obligation to explain it.

But there is a moral responsibility.

Twitter has become a vital publicity stream for millions of people around the world. I didn’t realize until last week just how vital it was. The free web continues to shrink in size, and Twitter is an increasing part of it. In some ways it has taken the place of Google. We go to Twitter to learn what’s happening in the world. The only force that can compete with it is Reddit.

I blame Trump for that. Trump and his Trumpkins stole all our attention for years, and Twitter is where that attention was both focused and blasted into the world. Twitter’s banning of Trump was a turning point. The stock is up since it happened.

The Overnight Game

Redditors who started by fighting short sellers over Gamestop have a new game to play.

The overnight game.

I got to see it for myself yesterday. I was tasked to write about Sundial Growers. They’re on the NASDAQ, ticker symbol SNDL. They’re a pot company, a small one.

At the start of January this was a penny stock, worth just 60 cents. Then the games started. Management took advantage, watering down the stock repeatedly to get rid of debt and raise cash. This only made the punters more desperate to get a piece. As of this week there are 1.5 billion shares outstanding.

But with a market cap of $2 billion, it’s not hard to move. If you play the overnight game.

After markets close, they’re still open. After-hours trading continues for hours and officially resumes in the morning. Even during those 10 hours, you can still place an order. So, orders got placed. When I was writing at around 7 AM yesterday, shares that had risen to $3 during the day were trading at $4.50.

I told readers to sell, but the game was already over by the time my article came out. By lunch the stock was trading below $2.50.

Dave Portnoy, founder of Barstool Sports, was in on it. He bragged about his $50,000 profit online, buying, then selling in the overnight hours.

Assholes like Portnoy are going to run this game on their followers again-and-again until the suckers get wise. Those who get in with them will win, the ones who follow will be fleeced.

Reform is needed.

Facebook vs. Apple

It’s not as black and white as you think.

To hear the tech press tell the story, Facebook is promoting evil by admitting to its ad tracking and asking users to opt-in. Apple, meanwhile, is on the side of the angels by loudly promoting privacy.

But here’s the deal. Facebook services are free. Apple services are not.

The tech media is cheering for the global elite against the global poor.

The free web has been the greatest wealth production effort in history. Over the last 20 years over 1 billion people, a substantial portion of the world’s population, has been lifted out of extreme poverty by the free web. The freedom of the web, free as in beer, has been driven by the cloud, which pushed costs low enough that they could be supported by advertising.

The Big Tech Conspiracy That Wasn’t

Once you show you like something, I offer you more of it.

Is this a conspiracy?

Not unless I’m a scaled Web site. Because this is at the heart of the charge against “Big Tech,” the companies I call Cloud Czars.

• Show a preference for certain videos on YouTube and YouTube offers you more videos like them.
• “Like” things on Facebook or Instagram, and you will get more things like them.
• Follow certain celebrities on Twitter, you’re offered more like them.
• The same with Amazon Kindle books. When you buy something from Amazon, you’ll be followed for days by ads offering the same thing.

The algorithms follow human nature. Chances are that if you like a book about 12^th century monks who solve murders, you might like another one. If you like Henry Winkler, you’ll probably like Ron Howard.

The problem is that if you like crazy conspiracy theories on Instagram, or videos describing the terrors of the Illuminati on YouTube, you’ll get more of them. Like those, you’ll get more. And more and more.