Venezuela: Next Stop Clusterfuck

Book report #49

Why America’s New Apartment Buildings All Look the Same” by Justin Fox (Bloomberg)

 

I’ve seen this stick frame condominium in every city I have been to in the past five years. I bet you have too. Here’s why.

 

Neoliberalism or Death: The U.S. Economic War Against Venezuela (Intercepted)

 

Venezuela is in a rough spot now: poverty, inflation, civil unrest, and a crumbling healthcare system. But is their society collapsing because of Nicolas Maduro’s poor governing or because of two years of economic sanctions by the United States? Both. However, experts decry the sanctions as a force that directly provoked the humanitarian disaster. So why does the US have any interest in Venezuela? Because we love to spread peace and democracy? In Latin America no less? Elliot fucking Abrams–noted war criminal who snuck munitions and drugs into Nicaragua to fund the Contras under the guise of aid–was just appointed by Trump as special envoy to Venezuela. Are we on a mid-century Latin America coup d’etat reunion tour? Hmm, what possibly could be going on? Does Venezuela’s gigantic well of oil have anything to do with it? This is an actual quote from John Bolton about the United States intentions behind regime change in Venezuela with a fun call-back to the “Axis of Evil”:

 

“I think we’re trying to get to the same end result here. You know Venezuela is one of the three countries I call the troika of tyranny. It’ll make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela.”

 

LOL!

 

The Old And Mysterious Practice Of Eating Dirt, Revealed” By Linda Chen (NPR)

 

Why wouldn’t dirt have nutrients? The story of kaolin, the white dirt of Georgia.

 

Divining Desire: Focus Groups and the Culture of Consultation by Liza Featherstone

 

This is Liza Featherstone’s recent, semi-provocative book. In it she explains that focus groups were originally a tool invented in the 1920s in Vienna to help birth social democracy in Europe. Focus groups unearthed what the masses wanted. But as soon as focus groups became prominent, elites lashed out against them. Yielding to popular opinion always challenges the status of those in power. Those who rail against them today–-TED-talk pundits, Silicon Valley billionaires, and corporate apologists like Malcolm Gladwell–-are really fomenting an anti-democratic elitism that would rather suppress mass political power than ever listen to it. As Featherstone says at the end of her book, “hatred of the focus group is the populism of fools, because it’s really a kind of elitism.”

 

Maybe you are suspicious of focus groups. Featherstone understands the implicit bias that many have about them. She wants to suggest that this idea was planted by elitist, anti-democratic crusaders.

 

The book shows that elites hate focus groups. (This chapter is useful.) They routinely subvert or don’t heed the results, like in the case of the Ford Edsel: the design of the car was supposed to be tested with consumers, but executives refused. Yet when the car flopped, as Featherstone notes, Ford blamed the failure on consumers. They don’t know what they want! Focus groups are the perfect corporate pariah.

 

Focus groups expose the will of the people, which is often contrary to the elites’. She cites Malcolm Gladwell’s TED talk called “Abolish the Focus Group” or something like that. Gladwell is a documented corporate apologist (see next item). People like Gladwell want to push the idea that they masses know nothing, and need a benevolent overlord to guide them. But they’re wrong, listening to people is effective. Now we just need to find a way for consultation to play a role in creating policy. Political operatives may use focus groups to find issues that drive people to the polls, but Featherstone points out that public policy almost never reflects the sentiments emanating from political focus groups. If government could be retooled to use consultation for more than just electioneering and signalling, it might be a good thing.

 

Malcolm Gladwell Unmasked: A Look Into the Life & Work of America’s Most Successful Propagandist  by Yasha Levine (S.H.A.M.E.)

 

In college, Malcolm was a young Republican Reagan enthusiast who received his journalism training from an institute that was funded by a Big Tobacco PR firm. Is it any surprise that in his popular book The Tipping Point he argued that tobacco was used heavily by teens not because tobacco companies explicitly targeted teens, but because smoking is cool, and teens just can’t help wanting to cool? I want to be cool! Get me a pack of those damn cigarettes.

 

I’ve always been suspicious of Gladwell’s faith in the meritocracy and the palliative nature of data. He almost always uses data to argue that institutional biases don’t exist. That Enron didn’t fail because of greed, but because they hired the wrong people and put them on the wrong teams. Or that there’s no difference between a rich and poor person with the same IQ. Just because the rich person succeeds, Gladwell would love to show, doesn’t say anything about class.

 

Even Gladwell’s most recent article in the New Yorker was a real head-scratcher. He argued that maybe pot legalization wasn’t a good thing. Here, he uses a reactionary mode that confuses a lot of people into thinking that he is liberal or Left-leaning or something. But his reactionary stance (“contrarian” as he would say) is the definition of conservative thinking. Gladwell wants to defend the current power structure, the winners of our world, with zany sets of obscure data.

 

Bright-sided: How the Relentless Promotion of Positive Thinking Has Undermined America by Barbara Ehrenriech

 

When Barbara Ehrenreich was diagnosed with breast cancer, she was unhappy to find that it was an under-researched type of cancer than may have been accelerated by certain pharmaceuticals typically prescribed to women. But when she mentioned her findings in support groups, she was met with hostility. She wasn’t looking on the bright-side. Positivity was required for faster remediation. Ehrenreich started to see enforced positivity everywhere in American culture. If your business failed, or you had trouble dating, or you couldn’t find that favorite sweater, the cause is almost always a wealth of negativity and dearth of positive thinking. Ehrenreich tells us this is holding us back. As someone who can be negative from time to time, I have to agree with her. It is useful to be critical. Of course, too much negativity is annoying; but so is too much positivity. There are things that are need, nay require, criticism. You cannot always make the best of bad situation.

 

Rendezvous with Oblivion by Thomas Frank

 

This essay collection is something like a follow up to Frank’s Listen, Liberal, which was a book that bemoaned the Democrats’ abandonment of the masses in favor of the professional class. He’s a deft, facile writer (e.g. On libertarianism today: “Attend a few tea party rallies around the country and you’ll inevitably be passed a platter of novelist Ayn Rand’s spiciest hors d’oeuvres.”) He analyzes McMansions, reports on a fast-food workers strike in the South, takes apart Team of Rivals (and Spielberg’s Lincoln), and profiles the late Andrew Breitbart.

 

Uninstalling Hayek” by Corey Robin (Boston Review)

 

It has been Friedrich Hayek, the Viennese economist and philosopher, who has come to dominate our political, economic, and, as Robin argues, moral thought. Hayek believed that the freedom in the market allow humans to express their ethics and morals better than any system where the state influences prices (and thus, morality). But the neoliberal/libertarian order has left us with drastic inequality. So maybe the market fundamentalism, and the moral order it implies, need to be ejected.

 

This essay is a response to an article also published in the Boston Review by three economists who argue that economics is not just neoliberalism. But it’s too wonkish, and the changes they suggest are maddeningly incremental (and 40 years too late). Staggering wealth will not be solved by some policy tinkering or unleashing the “power of incentives,” as they say. It will require a brand-new vision of the future, something optimistic, popular, and clear. I’m not sure if economists are up to the task. Robin’s response is diplomatic and brilliant, likely because he is a political scientist and not an economist.

 

Paper Boys: Inside The Dark, Labyrinthine, and Extremely Lucrative World of Consumer Debt Collection by Jake Halpern (NYT Magazine)

 

How much is a spreadsheet worth?

 

Other People’s Blood” by Tim Barker (n+1)

 

This article is about what is called the ‘Volcker shock,’ which was a dramatic limitation of the money supply in the 1980s. The shock caused banks to raise interest rates, which curbed inflation and almost permanently raised unemployment. Barker explains why unemployment stayed perpetually high after the Volcker shock:

 

“As late as 1986, unemployment was still 6.6 percent, the Reagan boom notwithstanding. This was the practical embodiment of Milton Friedman’s idea that there was a natural rate of unemployment, and attempts to go below it would always cause inflation. The logic here is plain: there need to be millions of unemployed workers for the economy to work as it should.”

 

Friedman said there had to be some amount of unemployment, so workers don’t drive wages up too high and thus cause prices to inflate. And everyone bought into this idea. It is a theoretical construct that is caustically anti-worker, but as Barker shows, no one questions this idea anymore. Economists and politicians on the right and left agree: to stop inflation, workers must be disenfranchised. This is obviously unpopular, but it happens because central bankers like Volcker are insulated from domestic democratic politics.

 

By causing interest rates to rise, Volcker’s policies also fueled the power of finance, and caused the financialization of the economy.

 

“Volcker also helped to bring about the orgy of financialization that has driven the American economy since the early 1980s. As sociologist Greta Krippner shows in her invaluable Capitalizing on Crisis, the high interest rates of the 1980s ‘created punishing conditions for productive investment and drew economic activity inexorably toward finance.’”

 

Barker continues,

 

“The irony is that Volcker played a significant role in bringing about the situation he laments. ‘There is no force on earth,’ he writes today, ‘that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process.’ If there was ever such a force, it was the labor movement which Volcker helped destroy.”

 

Did Volcker need to sacrifice the American worker to appease the god of inflation? Barker challenges orthodoxy by suggesting there were other means of dealing with the problem, like the use of wage controls (which I think might apply to C-suite pay as well).

Fyre docs: A report on an over-caffeinated seven year old

Book report

Fyre Fraud (Hulu) and

Fyre: The Greatest Party That Never Happened (Netflix)

 

These two documentaries are good tragicomic stories but miss the greater historical context: fraud is inherent to capitalism and most rampant in moments when the culture worships innovation and risk.

 

I have no doubt you saw or heard about these two movies. They both clumsily explain that millenial’s fear of missing out caused them to spend tens of thousands of dollars on a poorly planned music festival. Millennials cry on a bus. Millennials slash each other’s tents. Millennials record every moment of their lives with their damn video phones. Both documentaries explain what influencers are, and both try and fail to answer a question about how culpable advertisers are in perpetrating scams. They fail because that line of thinking just begs the question: whose fault is it when scams occur? Is it simply buyer beware? If not, how responsible are advertisers to verify their clients’ products? Better yet, how responsible are venture capitalists and financiers in ensuring they are funding a legitimate businesses? Should the government be policing businesses?

 

Fraud has always been present in America. As Duke Professor Edward Balleisen explains in his recent book about fraud, periods of technological innovation that rely on the use of financial capital are the most fraud filled (that is, our current era). From the frauds of westward expansion to lightning rod salesman of the 1920s to Bernie Madoff, unstable times make people vulnerable to those who promise them what they want most.

 

The two documentaries focus on the schadenfreude of watching Millennials get scammed, but it was a trans-generational group who got sucked in: the spineless advertisers, the clueless financiers, and Bahamians of all stripes who turned out to work for little pay. All these parties believed that the rich-seeming tech bro Billy McFarlane–who looked and acted like a caffeinated seven year-old–could pull off a music festival in the Bahamas with no prior experience. Some wanted to believe, and some were too desperate to have any choice.

 

For his entire adult life, Macfarlane found that capital was easy to drum up. He, like Elizabeth Holmes of Theranos, raised real, legal capital. As another contemporary fraud, the ”Soho Grifter” Anna Delvey, told a reporter from jail, her fraud wasn’t about just stealing cash, “If I really wanted the money, I would have better and faster ways to get some. Resilience is hard to come by, but not capital.” Macfarlane is comparable to Holmes and Delvey–confirmed frauds–but also to one of his funders, deceased fracking billionaire Aubrey McClendon. The question is why is capital so accessible to people like Billy Macfarlane when we can’t even fund a infrastructure improvements? Fraud is important to pay attention to; it exposes real fundamental flaws in our economic arrangement.

 

Elwood, Illinois (Pop. 2,200), Has Become a Vital Hub of America’s Consumer Economy. And It’s Hell. by Alexander Sammon (The New Republic)

 

Elwood, a town 40 minutes south of Chicago, attracted business by allowing itself to become an inland port. Warehouses and distribution centers for Walmart, Amazon, and other quickly populated the area. But these companies were attracted with the typical corporate giveaways. First there were tax breaks, temp labor, and now the local municipality is losing control of its corporate tenants.

 

Truck traffic alone is a major problem, because the roads aren’t big enough and truck drivers are a less experienced, more desperate lot. A trucker gets stuck on a local road: “It’s gonna be a problem trying to get him out of here,” Buss grumbled. “There’s no training now. Most of these guys don’t know how to back up.”

 

Bait and Switch by Barbara Ehrenreich

 

Ehrenreich goes undercover in the mid-2000s to see if she can get a job in white-collar executive America. I enjoyed this book, but it felt strange and disappointing. The book has no culminating action. She never even gets close to finding a white-collar job. She regales us with dark, funny stories of career coaches she employs, networking events and job training seminars that she attends. They all practice some form of victim blaming–she needs to have a positive attitude, she needs to be networking more, the corporate world does not owe her a job–but also make no real attempt to help her find work. The only job she is offered is a temp job selling insurance for AFLAC, which is not really a job. It’s a freelance position with no benefits, or guidance even. The reality is that the white-collar world is more akin to a feudal court than to a factory, and who you know, who you were raised to be, who you genuflect to, is most important. Skills have nothing to do with it.

 

The Real Legacy of the 1970s by Michael Tomasky

 

The rampant inflation of the 1970s made us not trustworthy? Interesting theory, though incomplete and not totally believable.

 

Until the Next Crash by Jonathan Levy (n+1)

 

Levy opens his review of Adam Tooze’s Crashed with a discussion of the deleterious preoccupation of the global economy: liquidity. He writes that “liquidity is a fetish, because for the community as a whole the concept makes no sense. What looks like liquidity to an individual owner of wealth means a decline in the aggregate rate of long-term investment for the macroeconomy—fewer jobs, less wealth, and more wasted human potential.”

 

The Federal Reserve stepped in, after the 2008 crash and over the past decade, to ensure liquidity with a number of complex policies that reaminmated the American and global economy. Is this new economy based solely on complex tools durable? The fed is like Dr. Frankenstein, animating his monster with brilliant technical wizardry. An undeniably amazing achievement. But the monster is fucked-up and ghastly. You couldn’t confuse it for human. What hath God wrought?

 

Stuck In A Gilded Age by Jonathan Levy (Dissent)

 

Industrial productivity ended in the 1970s, and never came back. This is industrial crisis. Levy says that, “by the 1970s, the productivity gains of the Second Industrial Revolution were exhausted. Productivity flagged, contributing to…inflation and the wider sense of industrial malaise. It has not revived—aside for the period 1996–2004—because technological innovation has occurred in the relatively narrow sector of information technology. The narrowness of the Third Industrial Revolution means eight years of solid productivity growth was all this revolution could muster.”

 

So what happened in America after the 1970s? One thing that is certain is that capitalists stopped doing the only thing that made them capitalists, plugging money back into their businesses. They stopped reinvesting and the rate of investment or investment in capital stock, as it’s also called, dropped. And this trend has only increased since 2000s. Hmm

 

Levy explains that “the [rate of investment] has been trending steadily downward ever since 1970, and plummeted after 2000. This has continued while, at the same time, entering 2016, U.S. corporations sat on some $1.9 trillion in cash, which they have not yet invested. Gordon does not include the broken state of U.S. investment as a “headwind”—even as so much money sloshes around domestic and global financial markets, inflating asset prices and thereby contributing directly to the growth of wealth and income inequality.”

 

One simple explanation of inequality is that business have stopped investing in business. Growth, as a goal, leads businesses to hoard cash instead of reinvesting. This leads to the worst of all possible worlds: “The chief economic problem today is not that we do not have enough wealth, but that we do not have the ability to direct it towards the most worthy of human aspirations.”

 

The Orchid Thief by Susan Orlean

 

People are crazy for orchids.

 

Bruno Latour, the Post-Truth Philosopher, Mounts a Defense of Science (The New York Times)

and

The Philosopher Redefining Inequality by Nathan Heller (The New Yorker)

 

Bruno Latour theorized that scientific ideas make the world, scientists don’t discover buried truths. Scientists felt this might be an attack, but Latour actually loves them. He is, as a philosopher, not comfortable saying that gravity exists without the frame of scientific inquiry. His position is similar to that of the pragmatists (William James, John Dewey, etc): ideas are tools. I’m not interested in pure science unfortunately, but I like pragmatism.

 

In Heller’s profile, he digs into University of Michigan’s Elizabeth Anderson, a professor who named her chair after John Dewey. I don’t know if she calls herself a pragmatist, but her ideas stem from that tradition. She is looking to see how ideas work in the world, not how they are supposed to work. This leads to a rethinking of how inequality comes to exist.

 

The Neoliberal Optimism Industry (Citations Needed)

and

Accentuate the Positive by Anthony Gottlieb (NY Review of Books)

and

Consolation Prizes by Alex Pareene (The Baffler)

 

There is sector of thinking that posits that things have never been better (so stop complaining!). It is occupied by thinkers like Malcolm Gladwell, Steven Pinker and Bill Gates. Pinker wrote a book many years ago about why violence has declined and has a new book about why capitalism has raised the standard of living for everyone on the planet. Not to be glib (or repetitive) but why, in that case, does poverty still exist? The rhetorical twist of the optimism industry is a rebuttal to protestors and reformers,  and it is an obsequious theory. It’s tailor-made for those in power. In “Consolation Prizes” Pareene explains how we’ve come to believe that the ability to buy consumer goods, alone, makes poverty okay, as opposed to other countries that provide healthcare and education by reducing disposable income.

 

Everyone hates open offices. Here’s why they still exist By Katharine Schwab (Fast Company)

 

Open offices are a way to indicate a company’s value to venture capitalists and talent. The goal is “not to improve productivity and collaboration, but to signal that the company [is] doing something interesting.”

 

Cubicles and offices are expensive, which apparently matters more that helping people get things done.

Five things to read: business disaster edition

 

 

All these books cover some kind of business or financial disaster. For some reason this is one of my favorite types of book to read. Lots to learn here, not only for business people, but anyone who hopes to recognize disasters before they happen, and maybe get out of the way.

 

The tale of RJR Nabisco, and how the voracious appetite of Wall Street (and the CEO of Nabisco) brought down a once great company. This is a tale so messy, that in the end, no one walks away the victor.

I love this story because it makes clear how flawed even the smartest people can be. Two nobel prize winning economist were on board a hedge fund that pitched itself to investors as being bulletproof, and the celebrity of not only the economists, but the star traders, blinded people the

Smartest Guys in the Room is one of my favorite books on business disasters. It covers the whole gamut of dysfunction that I see as rampant in the American work place. A shark-tank workplace. Religious-like advocacy of deregulation.

If you have seen the movie, you have gotten the full story. A masterfully crafted narrative that describes in detail how the housing bubble came to be, and how it was discovered. If you are ever wondering how a bubble is created, or what it looks like before it pops, this is a book to read.

Tett, a reporter for the Financial Times, chronicals how a financial innovation that was meant to spread risk around to those who could handle it (an innocent, if not valuable thing to do) turned into what Warren Buffett would call “weapons of mass destruction.”