Facebook’s challenges demonstrate it is time to level the regulatory playing field

This week’s joint senate hearing on Facebook’s privacy and transparency policies raised the question, does the public expect Facebook to act like a information utility? Reactions on Facebook to Mark Zuckerberg’s testimony before the U.S. Senate’s commerce and judiciary committees ranged from calling the 33-year old CEO a “shitbag” to praising him for confidently addressing questions from a 44 senators, a significant number of whom gave the impression that they had no clue as to what Facebook’s model is.

Consumers have been bitching and moaning about Facebook for years, expressing displeasure whenever the company changed the configuration of its pages, added or subtracted icons, or changed its algorithms in order to present what it thinks is more pertinent information to its users. Most users access Facebook’s content at no out-of-pocket cost to them and I personally know of no one who clicks on the ad links that pop up along the right hand side of our timelines. Yet, a significant number of users have expectations about how Facebook treats them, especially when they get put in “Facebook jail” for stating positions that may not be in keeping with the Facebook’s “righteousness police squad.”

If any senator yesterday came close to summarizing my personal sentiments on Facebook it was Orrin Hatch, Republican of Utah. The 42-year senate veteran, in the five minutes allotted to each senator, was able to get across that Facebook was not a utility; that if people were not satisfied with the product that they could go elsewhere on the internet. I don’t view Facebook as a necessity although I admit I probably spend too much time posting there albeit not as much eleven years ago when I was invited to join the Facebook community.  It can see where it can be addicting, but in the end it is not a utility.

With a utility there is an understanding that in exchange for a service generated with the use of natural resources purchased by the utility, you the consumer will compensate the utility for the generation and distribution of said service. And if that utility is regulated, the regulator is following a mandate to balance the consumer’s interest in fair and reasonable rates and consumer protection with the utility’s interest in maximizing its shareholders’ wealth. The senators that seemed adamant about Facebook not being considerate of its user community seemed to come very close to wanting to treat Facebook like a utility, but were very far from considering Facebook’s investor needs.

If Congress wants to regulate Facebook like a utility, it will have to come to terms with the fact that Facebook has only one set of consumers; the firms that purchase its advertising services. The users that Congress is so concerned about are the fuel for Facebook’s advertising platform, specifically the information attached to each user. The user is extracted, organized, and packaged as a fuel cell for advertisers, creating the eyeballs to which company advertising is targeted.

Unlike coal, oil, or natural gas, the fuel for Facebook delivers itself voluntarily over broadband access infrastructure. Whether by wired or wireless access, these transmission pipes are a necessary part of Facebook’s “information utility” business. No fuel, no eyeballs for advertisers. As former Federal Communications Commission chairman Tom Wheeler argued, the consumer experience on the internet should be seamless. Consumers should be able to access websites like Facebook without broadband access providers throttling speeds or otherwise determining which websites would get access to the consumer at certain speeds and vice versa. Also, to create the seamless experience, broadband access providers had to exercise a great degree of transparency regarding their management practices while protecting the privacy of data used to fuel the information utilities, such as Facebook, that deliver services on the edge.

The problem with the Wheeler approach is that the framework balkanized regulation of the internet. Wheeler and other progressives favored archaic transparency and privacy of information rules based on the Communications Act of 1934 applied to broadband access providers. Edge providers, like Facebook, Google, and Twitter, were to remain outside of this regulatory framework where they would be allowed to innovate and not have their information utility business model threatened by AT&T, Comcast, or Verizon. But Facebook’s current dilemma, Russian use of its platform and the trade in its user private data by unauthorized third-parties, demonstrates that if policy makers and elected officials want a seamless internet that projects transparency, all stakeholders will have to be placed on a level regulatory playing field.

Transparency can’t end at a broadband access provider’s point of presence and then enter an edge provider’s black hole.  If consumers want their data to stay private and advocate for policies that keep that data private along and throughout the internet, policymakers will have to ensure that privacy policies extend from the modem in the consumer’s home to the servers that store the data that social media collects on its users. If Congress cannot deliver seamless regulation, then yesterday and today’s hearings will equate to the mindless twerking we see on Instagram.

When local government meets high tech sovereigns

Sometimes I think city government is sleeping at the wheel when it comes to technology and capital flows. During its lucid moments, government will fall back on its 1960s playbook of economic development by announcing plans to bring back manufacturing jobs that pay better wages than the service sector jobs that replaced factory work and eviscerated wages. This narrative may have worked in a locality that was created to take advantage of proximity to a local natural resource where factories could then convert the resources into goods for local and other markets, but for a city like a 21st century Atlanta, that narrative is disingenuous.

Atlanta’s “natural resource” today is information. Workers who know how to find, extract, organize, and distribute information are going to be the one’s who obtain employment and the higher wages that come along with work in the information sector. This demand for an information-centric political economy, I believe, is being driven by the changing tastes of capital. Capital wants its goods and services delivered conveniently and its production customized.

Information technology allows capital to target funds directly to high-value driven information entrepreneurs that can deliver a product that was designed, manufactured, packaged in, and delivered from multiple jurisdictions. Capital has no love for mass appeal. Why deal with crowded banks, malls, car dealerships, or grocery stores when extra minutes of leisure can be carved out by the manufacturing and service delivery efficiencies provided by Tesla, Uber, Grubhub, and Insta-cart.

Along with these efficiencies in product manufacturing and delivery come smaller work forces or work forces outside of the jurisdiction of local governments. Local governments have been the front line defense of investor capital from disgruntled labor. They regulate labor union speech during strikes. Where there is violence they arrest the rowdy. However, in an information age where there are a greater number of tech shops employing smaller numbers of non-unionized information workers versus a handful of large factories employing thousands of unionized lower-skilled workers, there is less demand for the police powers of local government. Disgruntled employees at today’s tech shops simply take their information knowledge somewhere else or create their own firm.

Eventually government starts tossing and turning in its sleep. It sees its “labor clamp down” requests severely diminished. Higher incomes start translating into reduced need for government services from garbage removal to security. Higher income earning citizens may consider pooling resources to support campaigns of candidates who agree to reducing tax burdens are, too the extreme, support carving out or “leasing sovereignty” to higher income communities.

Question is, how will those with no capital react to the erection of this wall of individual sovereignty?

Trump calls out the big guns at the Mexico-United States border…

A few moments ago, President Donald Trump issued a statement describing his authorization of national guard troops to provide back up for federal customs and border agents along the Mexico-United States border. Mr Trump caused a little confusion on 3 April 2018 during a conference with some Baltic region presidents when he told the press that the Administration was “preparing for the military to to secure our border between Mexico and the United States.” Military was a poor word choice thus the confusion not only in published press reports but on the part of the Mexican government as they considered Mr Trump’s proposal last Tuesday..

Under 18 USC § 1385, no part of the Army or Air Force can be used as a “posse” to execute any U.S. laws. The Department of the Navy has rules that follow Posse Comitatus Act, but I can see a president trying to get around that hole in the law by arguing that the statute does not specifically prohibit the Navy and the Air Force from playing police.

Under 10 USC § 12406, however, the president can “call into federal service members and units of the National Guard of any State in such numbers as he considers necessary to repel the invasion, suppress the rebellion, or execute the laws.”

Mexico may not take too kindly to an implication that their citizens are invading the United States, but a significant number of Americans, particularly those living along the southwest border, may believe that. I don’t see the actions of Mexicans attempting to enter the United States without so much as a visa or passport as being aggressive, especially those who get in front of a border agent and are willing to plea their case for some type of amnesty.

What could be looked at as aggression would be a tragic scenario where a guardsman shoots a foreign national. Gunned down by a federal or state law enforcement agent is one matter. Gunned down by a soldier becomes an international nightmare.

 

Is broadband access less about connectivity and more about individuality?

My sister recently experimented with Whole Foods‘ delivery service. As an Amazon Prime member, she could take advantage of no cost delivery to her home in the West End. This is a smart move on the part of Whole Foods to deliver to the West End, an area where the median household income is lower than the rest of Atlanta’s sectors. My observation has nothing to do with the wishful thinking that Whole Foods is practicing altruism, but the probability that Whole Foods is betting on the continued gentrification of the area; that it makes sense to plant a flag in the area so that when higher-income, cheap rent seeking young white couples move into the area, Whole Foods will be there to greet them. And while increasing the area’s investment value may not have been on the top of Whole Foods’ agenda, current property holders can at least tell their friends living in other areas of the city that they have not been left out of high-end food delivery options.

Going online and ordering your groceries is an example of what the long-term purpose of broadband connectivity is all about, especially for those with capital. If we accept the Facebook model of broadband and the internet, then we support the argument that broadband and the internet are about connecting people for the sake of creating a larger global community that leads to more democracy, peace, and understanding. This is one of the premises underlying net neutrality; the creation and maintenance of an open internet.  Two billion people connecting on Facebook may be deemed evidence that the globe is demanding this type of connectivity and community development on the world wide web, but such a view fails to account for the “politico-economic physics” of broadband and the internet. I believe the true value of broadband access lies in the empowerment that broadband access creates in the individual. The universe revolves around her and not the other way around.

The internet, at least for those with capital, is about bending the four-dimensional characteristics of space time and enhancing her sovereignty; creating a self-sufficient lifestyle for her. High value individuals don’t see the platforms upon which they move through space and time as flat or linear. The platform is geodesic; a curved line that provides the shortest distance between two points. In this case, between capital and the products and services that capital can acquire. The closer broadband technology brings her to sources of goods and services, the tighter her enclosure around her. She is not creating inclusiveness, or a bigger tent. In actuality, her tent becomes tighter, filled with other high value resources including friends and business associates. Creating a sovereignty blocks out the noise that the internet is becoming increasingly known for.

I would argue further that as her capital and value grows the more space-time bends around her. She creates a gravitational pull attracting even more resources, income, and opportunities. Those who argue for equality and democracy on the internet overlook this important value element. High value, capital holding consumers on the internet bend space-time toward them and high value content and service deliverers will point their commercial starships in the direction of high value.

How should policy react? It can either acknowledge the individual’s use of broadband to create a sovereign individual while transmitting her consumer energy into her tight commercial space or it can regulate her relationship with the points of commercial light within her internet space and risk forcing her to engage with value deficient “black holes” that threaten to reduce her incentive to engage in e-commerce or change her engagement in such a way that the value she receives and transmits is reduced. Policy should opt for protecting her choice for engaging with the value providers of her choice.

30,000 marching in Atlanta is a waste of time

Thirty thousand people allegedly marched for their lives today in Atlanta in protest of the current state of gun control laws. Using children as an indirect attack on Donald Trump is bloody apparent to anyone who has spent five seconds in the strategic communications game. This kumbaya moment is inconsequential and ineffective progressive, left-wing liberal bullshit.

When compounded by the upcoming 50th anniversary of the assassinations of Martin Luther King and Robert Francis Kennedy, the timing of the messaging is insidious. Why grown ass people fall for the emotional optics is amazing and scary.

If these individuals want to put a dent into the gun industry, they should take the direct approach. First, parents need to look into their stock portfolios and divest themselves of any holdings in gun manufacturers or the suppliers of gun manufacturers. Second, parents need to identify any other suppliers of service to gun manufacturers and stop buying their products.

All this marching does is create a video portfolio that the next Democratic nominee for president can use on the campaign trail.

Black America’s wrong approach to STEM

Black America needs more engineers but not for the reasons we typically hear on the panel discussion stump. On the panel discussion stump, you typically find well dressed and articulate black men and women speaking on the importance of going to college and picking up degrees in science, technology, engineering, or math in order to get a job with a corporation and make six-figures. Going into six-figure debt to get a six-figure job. Where did this school of thought come from?

Black America’s approach to learning about technology favors consumption of the applications that run over broadband networks. That is what I see particularly among poor blacks here in the West End and the Old Fourth Ward. We are using broadband voice applications to share the latest gossip or evangelizing on life. We are keeping occupied reading news items, watching sports highlights, or playing video games as we pass time on MARTA heading to work. Just about everyone has a cellphone and if you don’t, worry not. If you meet income eligibility requirements, you can buy one from a vendor at the corner of York Avenue and Lee Highway.

This propensity to consume technology is not relegated to the Black American poor. According to a 2016 report released by Nielsen,  Black Millennials are expected to help drive the leveraging of $1.2 billion in Black American buying power. With a cellphone ownership penetration rate of 91%, Nielsen sees Black Americans continuing to use the technology to extend black cultural identity and, with Millennials leading the way, continue efforts at civic or institutional change in America. Black America is also expected to buy more beauty and hair care products versus their white counterparts.

Millennials are expected to take their higher incomes into supermarkets as well. Black Americans demonstrate a propensity for cooking from scratch, planning meals ahead, and using fresh ingredients.

In short, the Nielsen report paints a picture of a Black America that furthers consumer centrism. Since release from their status as chattel slaves, blacks in America have slowly become a population over-indexed on consumption. And to further fuel its $1.2 billion in buying power, Black America has embarked on a campaign to get more of its young people into STEM jobs.

STEM employment pays well, according to a report written by the U.S. Department of Education. The average STEM employee pulls in approximately $65,000 a year. Those specializing in engineering or engineering technology average $73,700 a year. Great incomes for hair and makeup and cultural expression. But what is more important, in my view, is STEM driven creation of resources placed in black communities for blacks.

We don’t hear enough about the entrepreneurial side of STEM although we have examples out there. Firms such as Logistics Systems Incorporated and ATS-Chester Engineers have been providing engineering services for decades. They are demonstrating that blacks can do more than consume technology but design technology solutions as well. Production and ownership of technology assets lie at the heart of wealth creation for blacks and if properly deployed can be the basis for the creation of real black communities in the United States.

Unfortunately for current black communities, their leadership is tainted. Legacy black civil rights organizations that have a leadership class still living in 1968 are still focusing on how best to break into corporate America, or in the case of establishing minority-owned firms, maintaining affirmative action programs that provide set asides from government contracts. To paraphrase Yuval Noah Harari, they do not even have realistic ideas of what the job market looks like in two decades because they cannot see. Black leadership is still nostalgic about the civil rights battles of the 1960s when the focus should be on the resource and capital battles of the 21st century.

One example of a leadership not understanding STEM’s practical use is the lack of solar in the West End. I have yet to see a community solar farm. I see more historic district designations on houses than I see solar panels or wind turbines. Finding low cost energy solutions by pooling more STEM talent into black owned firms is a start. Current legacy black-owned engineering firms should consider investing in new black-owned start-ups that are committed to serving distressed communities. No community should be without its own locally owned energy source and this is one approach toward developing one.

Black America’s one-prong approach to STEM needs an upgrade and new leadership.

A brief history of nation-states and currency

The following brief outline on global trade, world, and U.S. history will help your children, grandchildren, nephews and nieces get through two semesters of a boring college lecture ….

“To celebrate a fiat currency is to celebrate poverty and theft. It is an acknowledgement that nation-states, central banks, merchant banks, and government treasuries were created to launder money.

Original wealth is the result of theft. When property was created, the desire to steal increased. Land means ownership of productive power. To increase your wealth, you stole land and shared some with your cohorts who would then form a moat around you and protect you from commoners and other barbarians.

Trade is a method by which you claim a stake in another tribe’s resources. As trade with peoples outside your tribe and later kingdom increased, there had to be a way to exchange value without giving another tribe direct claim to your land. The solution: issue currency. The more currency you have, the greater claims to wealth you can make.

The first mistake made was assuming that merely producing more coin by digging for more gold would lead to more wealth. The only thing that caused was inflation. Inflation erodes value and spending power and also invites war because other tribes don’t like the idea of their buying power being eroded because you went off, worked South American native inhabitants to death, and shipped home more gold. In order to slow down the erosion, tribes, now countries, created central banks and merchant banks to launder money.

In order to launder money, the king had to seek out new channels for spending and investing gold. He laundered it by issuing debt from his treasury through his central bankers at which time the original holders of wealth i.e. land holding thieves with coin backed by land, could convert gold into bonds. The king also laundered coin by granting charters and investment capital to stock companies, companies that would sail to foreign ports and establish trading posts. They would purchase raw materials and slaves in one port, transfer the raw materials and slaves to another port, and finally transfer finished product to your country. Sales and taxes on those sales would increase your treasury and pay back your bond holders.

In order to further increase your booty, you would use different types of promotions and incentives i.e. freedom to practice religion, freedom from prolonged imprisonment, freedom from a nagging wife, etc., to get more people from various tribes to move to your new colonies voluntarily where they would produce more goods and services and pay taxes, hence increasing your largesse. These colonies, filled with various free and enslaved people who other wise would not give a shit about each other, would become a nation-state, which simply boils down to a forced confederation of people who have little in common and giveth not a shit about each other.

Later on, someone, probably a disgruntled cousin, would get the ridiculous idea to form a democratic government, but even with that tweak in how the oligarchy controls the economy and currency, the model remained intact.

The takeaway. Whether slave or freed person, your being here was a manufactured event based on false premise along with the creation of an artificial country. The nation-state is the result of money laundering.