Bubba, Bonds, and Blacks …

As much as blacks loved Bill Clinton, blacks never applied the most important political lesson Bubba himself learned: He who controls the bond markets, wins. Collective or group politics hasn’t gotten blacks much of anything over the past 50 years, but a collective, focused targeting of the bond markets just might.

Yes, there are a few “here and there” types posting on LinkedIn about how well their panel discussions are going and how many awards they are receiving from some social justice warrior group, but the masses are not winning because most of the cream is staying in the cups on the top.

What Mr Clinton realized back in 1994 was that re-election hinged on a happy bond market. Maintaining an economy with low interest rates meant increases in asset prices leading to higher valued collateral upon which more credit could be issued.

Now imagine if 13% of the American population were able to take a 13% position in the bond market. The potential shock waves that synchronized buying and selling would cause would have policy makers asking that group, “Hey! What do you want?”
Blacks wouldn’t need another “get out and vote drive” ever again. The Montgomery bus boycott would pale in significance.

Unfortunately, the inside the box, plantation mentality of partisan politics, especially as orchestrated by liberals, keeps blacks in “Massa ain’t gave me permission yet” mindset. I am seeing cracks in that narrative, but there is still more work to be done….

“You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?” — William Jefferson Clinton

“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.” — James Carville

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We own our thoughts. They are the last frontier…

A few days ago, a colleague and I had a brief conversation on colonization. How was it that the European was able to take over a large land mass and extract its natural and human resources so brutally and without effective resistance?  My colleague’s answer: “Once your mind is taken over, everything else falls.”

Thought, in my opinion, is the ultimate form of capital.  Every man-made construct around you emanates from it.  In a society so fixated on the physical act, it is easy to overlook the role of thought.  We don’t admit it, but we have relegated thought to the back burner, often times disparagingly.  “Instead of talking, why don’t you do something about it!” “Actions speak louder than words!”  Daphne, after all, caught more eyes than Velma.

The artificial physicality that western man has managed to lay all over significant portions of Earth have served, like Daphne, to distract us from more use of our cognitive or reflective skills.  Technology, innovation, the distraction economy, and ensuing and increased consumerism have eviscerated our capacity to think critically and severely reduced the time to sit down and reflect.

For example, I mentioned the distraction economy.  Social media companies have leveraged technology to extract more of the precious resource of time, contributing to changes in our ability to express ourselves in long form or our inability to pay attention for the extended period of time necessary for critical thinking.  We need more Velma time.

Distractions lay at the heart of colonizing the mind.  While social media has been taking a lot of heat lately for its use as a medium for spreading “fake news”, traditional media shares as much blame for creating narratives designed to sensationalize events and capture attention versus simply educating and creating a forum for outside-the-box thinking.

Protecting our “thought capital” from these growing incursions is especially necessary for blacks in America.  Blacks in America have little in terms of productive capital.  Blacks in America have more “creative capital.”  I won’t go through a laundry list here as to black contribution to the arts and entertainment.  I would like to see more recognition of black contribution to the development of applied sciences and how blacks are using applied sciences to directly impact their communities.

My more important point is that this creative capital cannot be further nurtured and leveraged for black consumption if our main engine, the mind and the thoughts that flow in and through it, are bombarded by distractions. In addition, we should support public policy that protects our intellectual property and artistic works as this “thought capital” becomes more important in a world that grows more dependent on knowledge.

We own our thoughts and should own the residuals that flow from them.  Our thoughts are the last and first frontier.

Balkanizing internet regulation is out of step with the uniformity needs of financial technology

The eye-catcher ….

In two weeks, state utility regulators will convene in San Antonio, Texas for the National Association of Regulatory Utility Commissioners annual meeting to discuss how they can leverage a recent decision by the United States Court of Appeals-DC Circuit that the Federal Communications Commission cannot preempt state regulation of concerns over consumer access to and privacy on the internet via broadband.

Some states such as California have moved ahead with their own net neutrality laws, hoping to enforce consumer protections by prohibiting internet access providers from lowering traffic speed from certain websites or preventing internet service providers from favoring their own content by blocking a consumer’s access to content that the consumer prefers.

The state-by-state approach problem

The problem with a state-by-state approach for a financial technology firm is the uncertainty that data and capital face when they traverse state borders. Will a content delivery firm tasked with storing and transmitting financial data on behalf of a financial technology firm have to enter into different interconnection agreements per state because of the differing consumer privacy laws encountered in each state?  Will differing requirements on paid prioritization result in financial data traffic slowing down depending on which state border it crosses?

There is an irony that on a global basis, the United States is a staunch proponent of freer cross-border data flows, but would run the risk of subjecting those same data flows to a hodge-podge of regulations that create digital toll roads for financial data traffic.

The changing consumer taste in banking

What federal and state policy makers should be focusing on is ensuring the amount of bandwidth necessary for digital transmission of financial data and capital is available.  Our use of digital banking services will not be shrinking anytime soon.  MediaCom Business cited data in a blog post that 92% of millennials make their choices as to where to bank based on the digital services a bank offers.  Legacy banks hoping to compete with digital upstarts are accepting this type of demand an, as found by consulting firm Accenture, are exploring how best to integrate and deploy technology necessary for meeting this demand.

Recommendation: Seamless versus Balkanization

The supply of digital banking and payment systems services combined with increasing demand for these services means more bandwidth is needed in order to optimize the consumer experience.  State and federal policy makers can facilitate this need for increased bandwidth by focusing policy on ensuring the delivery of this infrastructure.  Coming up with 50 different rules on net neutrality is more distraction than help.

What should be spawned in next month’s NARUC meeting is a recommendation for national legislation on consumer privacy.  Consumer privacy concerns should no longer be leveraged to create 50-plus fiefdoms for net neutrality.  Transmission of information, data, and knowledge should be a seamless experience for consumer and firms that use financial technology to transmit value and capital.

Rural areas have a demand for technical skills

The Internet Innovation Association, a broadband advocacy group, citing research by National Public Radio and Harvard University, found that when it comes to training that will get rural residents further ahead economically, rural residents place a higher priority on computer and technical skills.  Twenty-five percent of respondents cited computer and technical skills followed closely behind by 24% saying that a first or more advanced degree would best help a rural resident keep or find a better job in her community.

Coming in at 17% were writing and research skills, presentation and public speaking, and skills for starting a business.

This data seems in line with the observation that the United States is moving further into an information economy.  These skills are increasingly necessary for workers seeking to make a living in an economy where extraction, production, and storage of knowledge is a process taking place more and more online.  To be a competing port of call in the information trade, rural residents will have to garner these skills on varying levels.

What should state and local law and policy makers be doing?  They should first continue to encourage deployment of infrastructure necessary for carrying additional “load”, to use an electric grid term.  With more rural residents learning computer skills, the United States will need the digital capacity that can accommodate more digital workers.  A continuously minimum regulatory infrastructure is key.  State and local governments should bear in mind that broadband infrastructure requires significant amounts of investment.

USTelecom reports that $1.6 billion has been invested in broadband since 1996, the year that the Communications Act was amended to reflect a public policy that encourages advanced communications.  This investment has paid off not only in terms of  more advanced communications infrastructure, but with the addition of edge providers such as Netflix, Facebook, and Amazon.

Law and policy makers who are sincerely mindful of the need for an economy that can accommodate demand for digital workers should always remember that investment and a light touch regulatory scheme works.

The Senate Commerce Committee has another information market issue on its hand.

Yesterday, the U.S. Senate’s Committee on Commerce, Science, and Transportation held a hearing on the re-authorization of the Satellite Television Extension and Localism Act (STELAR). The Act, along with its predecessor forms, have been in existence since 1988 and is intended to guarantee that consumers with satellite access to television programming has access to programming provided by over-the-air broadcast stations.

Consumers, due to terrain or distance, may have problems receiving signals from over-the-air broadcast stations.  Some consumers may choose satellite television as their medium for obtaining programming provided by these stations.  Depending on the agreements entered into to carry or re-transmit signals from a broadcast station, there is a chance that the consumer may not receive programming from broadcast stations within her local area.

This possibility of not receiving local broadcast station signals lies at the heart of the localism problem, where consumers may be denied information on what’s happening in their local communities and instead, in return for receiving content from a broadcast network outside of their locality, they would only have access to “local” content from another community, content that would be useless to them.

Critics of the Act want to see STELAR expire on 31 December and not be re-authorized.  Critics claim that not only are local consumers of satellite services being denied local broadcast content as a result of the agreements their satellite services enter into with outside area “local” broadcasters, but they are also bearing the burden of lost advertisement revenues where their local content is being replaced by the content of outside area broadcasters.  In addition, local broadcasters incur another dent in revenues where satellite companies are opting to lower re-transmission fees to outside broadcasters versus local broadcasters.

But if a consumer can’t receive signals from their local broadcaster due to terrain or distance, why should they be denied access to content from outside area broadcasters via satellite?  The argument that these consumers are being denied access to information about community events sounds laudable on the surface, but there are alternatives available that can supplement the lack of local television news that covers community events.

For example, more and more local stations are streaming news content online.  They are also supplementing their video content with texts and graphics.  They are noticeably expressing their journalistic chops by providing digital print and video.

Local programmers could also take advantage of this supposed demand by offering this local content online via their websites on a paid basis, assessing a fee commensurate with that of the local newspaper.  People do that today when they purchase Netflix, HBO Go, etc., so why not with local television content?

As for emergency alerts and other emergency information, there are mobile apps available that can keep consumers informed about urgent events.

Congress, when contemplating extension of STELAR, should keep in mind that at the core the issue is about competitive provision of content in another information market. Local television broadcasters must find innovative ways of getting their content in front of their local consumers.  Just being a part of the community is not enough for local broadcasters.

Congress should also bear in mind that satellite companies should be expected to meet local needs for network programming by providing broadcast packaging at the lowest cost possible.  This may mean creating packages that do not include programming from the local broadcaster because local broadcaster re-transmission fees are cost prohibitive.

If anything, extending STELAR puts the onus on local broadcasters to become more innovative on how they meet local community information needs.

Representative democracy has failed black people in America

The growth of political capitalists …

Representation means nothing if the spoils of society are not being delivered for each vote provided by citizens.  Black voters in particular are interested in optimal physical safety, a need stemming from violence perpetrated on them during the Jim Crow era; optimal access to capital, without which economic security is near impossible or very difficult; and the right to exist as a unique and thriving culture.

What I see being exchanged for each vote delivered by black citizens is the acquisition of a title by one or two elected representatives.  Representative democracy has created political capitalism, where owners of the political factors of political output are not creating political outcomes that address protecting uniqueness of black society, optimal black economic security, or optimal protection from violence.  Government, rather, is a feeding trough for black political representatives, with the number of voters they can persuade to vote for their party serving as the tickets for admission to the political feeding spots.

Government as a club you swing, not a club you join …

Blacks should not look at government as a club to send their smoothest talking salesman to.  Rather, blacks should look at government as a club that can be swung in order to generate capital access, physical security, and economic empowerment.  The outcomes should be a result of pressure politics.  This means that black political leadership should not be found embedded in the political machinery.  Black political leadership should be manipulating the political machinery from the outside.

Blacks in America need only go back to 1954 when the U.S. Supreme Court, in Brown v. Board of Education, vacated the ruling in Plessy v. Ferguson, holding that segregated educational facilities were unconstitutional.  This major landmark civil rights action did not flow from the efforts of black members of Congress.  There were hardly any.  This ruling was the result of blacks taking alternative action in the courts, an approach that was focused and targeted on, in my opinion, the most important branch of government.  It is here where the social and public policy goals of law are interpreted and in some cases, where current social policy is brought to light and used to overturn precedent.

Creative chaos versus status quo ….

When black representatives allow themselves to be embedded in the current electoral structure, their priorities shift to satisfying congressional leadership and mining votes for their national parties.  These activities serve the interests of a majority white congressional leadership versus the black constituents black representatives are supposed to be advocating for.  Take for example U.S. Representative Al Green’s attempt to bring forward articles of impeachment against President Donald J. Trump.  The articles were blocked by the House with Mr. Green, Democrat of Texas, not being able to bring the majority of his own party on board with the proposal.

Mr. Green’s actions were in keeping with the status quo of congressional politics.  But did his actions result in any benefits for black constituents?  Did they lead to an increase in physical or economic security?  Did they lead to increased influence of blacks in the national Democratic Party?

What is likely is that Mr. Green lost political capital and as a political capitalist he must realize that a decreased ability to bring voters with him to the trough means lessened prestige in the Congress.  The other issue he has to face is how his constituents will deal with the knowledge that their congressman has wasted scarce political capital on a go nowhere initiative all because being embedded in the machinery creates the obligation of delivering outcomes that don’t serve them.

Conclusion: Representative democracy is failing blacks …

Representative democracy has failed black people in America.  The representatives from the black community in Washington have been converted into agents for their respective party’s leadership, securing the votes needed so that they can pull up a chair at the trough.  Just like social media has turned subscribers to social networks into resource and product for advertisers, the electoral system has turned black voters into lumps of coal with black congressmen acting as the conveyor belt carrying the coal to the primaries and the national elections.

The question is, what is the alternative approach?

 

Capital. The true digital divide

A couple early morning thoughts on the digital divide.  So far the digital divide narrative has occupied two schools of thought that are not necessarily opposed to each other.

Race and the Digital Divide

The first school of thought revolves around race.  Given that within the black American community there is a higher level of poor households, affordability is keeping blacks from accessing the internet via high-speed broadband infrastructure.  If blacks do not have the income to sustain a broadband business model, then internet access providers are less likely to deploy facilities in poor neighborhoods.  Lack of deployment in these neighborhoods may result in a barrier to valuable information that may lead to greater economic opportunities, according to advocates seeking to close this gap.

Rural Communities and the Digital Divide

The second school of thought revolves around rural communities.  The argument is that lower population density as compared to urban areas makes deploying broadband access facilities in rural areas more expensive.  In addition, terrain, such as that faced by internet access providers in mountain states, has traditionally added to the problem of higher costs to provide broadband access facilities.

An Overlooked Divide

There is another divide, one that is often overlooked and it has to go to what is known as “first-mover advantage.” The real value generated by the internet is the ability to extract, analyze, package, and distribute information, and have that information be available digitally forever.  The focus on a gap between facilities deployed in black neighborhoods versus facilities deployed in white neighborhoods or the gap between rural community deployment versus urban community deployment goes to seeking out new suppliers of information.  The civil right veneer that has been placed over the broadband racial divide hides this supply-side characteristic from the policy debate.  It has also created the opportunity for the political left to craft an electoral package that can be sold to voters.

It is the other side of the equation, the production side, that, in my opinion holds more value.  When we look at the history of the internet, particularly the period when the internet was commercialized, its players included white venture capitalists; Web 1.0 internet service providers, i.e. AOL, CompuServ, Mindspring, etc.; and dial-up access providers such as BellSouth.

Black Americans could always access information from analog sources, i.e. television; print media; or word of mouth, but the efficient extraction, cataloging,  indexing, aggregation, and distribution of information via the internet were the domain of companies invested in and managed by whites.  As whites continued to level their first-mover advantage, this gap between producer/owner of capital and consumer continued to grow.

Capital not only seeks a vacuum, it also seeks a return.  Returns from investing in black or even rural communities were not going to be as high as returns invested in affluent neighborhoods, neighborhoods whose residents probably owned shares in the very companies that commercialized the internet in the first place.  Closing the “digital divide” means first closing the capital divide.

What will Government Do Next?

Government will do nothing from a capital perspective to close the digital divide. The Federal Communications Commission has a number of universal service funding initiatives designed to encourage mobile and fixed broadband deployment in rural areas; to facilitate the delivery of health care via broadband; and to reduce the costs incurred by low-income consumers for accessing and maintaining high-speed broadband service.  By subsidizing the consumer demand for broadband services, the Commission hopes to encourage the delivery of broadband services.  But again, the focus is on consumer demand, not bridging the capital gap.

The philosophical underpinnings of the American economy, where capital is to flow freely to its best use may prohibit government from taking any concrete action for closing a capital gap.  If blacks or rural residents had sufficient capital to purchase, construct, or maintain broadband access facilities, using their intimate knowledge of their communities to distribute services, we might see a decrease in the gap.  We should expect that government will stay on a path of incentivizing capital investment in infrastructure development versus trying to repair capital discrepancies via a capital transfer.