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Javier E

How to Raise a University's Profile: Pricing and Packaging - NYTimes.com - 0 views

  • I talked to a half-dozen of Hugh Moren’s fellow students. A highly indebted senior who was terrified of the weak job market described George Washington, where he had invested considerable time getting and doing internships, as “the world’s most expensive trade school.” Another mentioned the abundance of rich students whose parents were giving them a fancy-sounding diploma the way they might a new car. There are serious students here, he acknowledged, but: “You can go to G.W. and essentially buy a degree.”
  • A recent study from the Organization for Economic Cooperation and Development found that, on average, American college graduates score well below college graduates from most other industrialized countries in mathematics. In literacy (“understanding, evaluating, using and engaging with written text”), scores are just average. This comes on the heels of Richard Arum and Josipa Roksa’s “Academically Adrift,” a study that found “limited or no learning” among many college students.Instead of focusing on undergraduate learning, nu
  • colleges have been engaged in the kind of building spree I saw at George Washington. Recreation centers with world-class workout facilities and lazy rivers rise out of construction pits even as students and parents are handed staggeringly large tuition bills. Colleges compete to hire famous professors even as undergraduates wander through academic programs that often lack rigor or coherence. Campuses vie to become the next Harvard — or at least the next George Washington — while ignoring the growing cost and suspect quality of undergraduate education.
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  • John Silber embarked on a huge building campaign while bringing luminaries like Saul Bellow and Elie Wiesel on board to teach and lend their prestige to the B.U. name, creating a bigger, more famous and much more costly institution. He had helped write a game plan for the aspiring college president.
  • the American research university had evolved into a complicated and somewhat peculiar organization. It was built to be all things to all people: to teach undergraduates, produce knowledge, socialize young men and women, train workers for jobs, anchor local economies, even put on weekend sports events. And excellence was defined by similarity to old, elite institutions. Universities were judged by the quality of their scholars, the size of their endowments, the beauty of their buildings and the test scores of their incoming students.
  • Mr. Trachtenberg understood the centrality of the university as a physical place. New structures were a visceral sign of progress. They told visitors, donors and civic leaders that the institution was, like beams and scaffolding rising from the earth, ascending. He added new programs, recruited more students, and followed the dictate of constant expansion.
  • GWU is, for all intents and purposes, a for-profit organization. Best example: study abroad. Their top program, a partnering with Sciences Po, costs each student (30 of them, on a program with 'prestige' status?) a full semester's tuition. It costs GW, according to Sciences Po website, €1000. A neat $20,000 profit per student (who is in digging her/himself deeper and deeper in debt.) Moreover, the school takes a $500 admin fee for the study abroad application! With no guarantee that all credits transfer. Students often lose a partial semester, GW profits again. Nor does GW offer help with an antiquated, one-shot/no transfers, tricky registration process. It's tough luck in gay Paris.Just one of many examples. Dorms with extreme mold, off-campus housing impossible for freshmen and sophomores. Required meal plan: Chick-o-Filet etc. Classes with over 300 students (required).This is not Harvard, but costs same.Emotional problems? Counselors too few. Suicides continue and are not appropriately addressed. Caring environment? Extension so and so, please hold.It's an impressive campus, I'm an alum. If you apply, make sure the DC experience is worth the price: good are internships, a few colleges like Elliot School, post-grad.GWU uses undergrad $$ directly for building projects, like the medical center to which students have NO access. (Student health facility is underfunded, outsourced.)Outstanding professors still make a difference. But is that enough?
  • Mr. Trachtenberg, however, understood something crucial about the modern university. It had come to inhabit a market for luxury goods. People don’t buy Gucci bags merely for their beauty and functionality. They buy them because other people will know they can afford the price of purchase. The great virtue of a luxury good, from the manufacturer’s standpoint, isn’t just that people will pay extra money for the feeling associated with a name brand. It’s that the high price is, in and of itself, a crucial part of what people are buying.
  • Mr. Trachtenberg convinced people that George Washington was worth a lot more money by charging a lot more money. Unlike most college presidents, he was surprisingly candid about his strategy. College is like vodka, he liked to explain.
  • The Absolut Rolex plan worked. The number of applicants surged from some 6,000 to 20,000, the average SAT score of students rose by nearly 200 points, and the endowment jumped from $200 million to almost $1 billion.
  • The university became a magnet for the children of new money who didn’t quite have the SATs or family connections required for admission to Stanford or Yale. It also aggressively recruited international students, rich families from Asia and the Middle East who believed, as nearly everyone did, that American universities were the best in the world.
  • U.S. News & World Report now ranks the university at No. 54 nationwide, just outside the “first tier.”
  • The watch and vodka analogies are correct. Personally, I used car analogies when discussing college choices with my kids. We were in the fortunate position of being able to comfortably send our kids to any college in the country and have them leave debt free. Notwithstanding, I told them that they would be going to a state school unless they were able to get into one of about 40 schools that I felt, in whatever arbitrary manner I decided, that was worth the extra cost. They both ended up going to state schools.College is by and large a commodity and you get out of it what you put into it. Both of my kids worked hard in college and were involved in school life. They both left the schools better people and the schools better schools for them being there. They are both now successful adults.I believe too many people look for the prestige of a named school and that is not what college should be primarily about.
  • In 2013, only 14 percent of the university’s 10,000 undergraduates received a grant — a figure on a par with elite schools but far below the national average. The average undergraduate borrower leaves with about $30,800 in debt.
  • When I talk to the best high school students in my state I always stress the benefits of the honors college experience at an affordable public university. For students who won't qualify for a public honors college. the regular pubic university experience is far preferable to the huge debt of places like GW.
  • Carey would do well to look beyond high ticket private universities (which after all are still private enterprises) and what he describes as the Olympian heights of higher education (which for some reason seems also to embitter him) and look at the system overall . The withdrawal of public support was never a policy choice; it was a political choice, "packaged and branded" as some tax cutting palaver all wrapped up in the argument that a free-market should decide how much college should cost and how many seats we need. In such an environment, trustees at private universities are no more solely responsible for turning their degrees into commodities than the administrations of state universities are for raising the number of out-of-state students in order to offset the loss of support from their legislatures. No doubt, we will hear more about market based solutions and technology from Mr. Carey
  • I went to GW back in the 60s. It was affordable and it got me away from home in New York. While I was there, Newsweek famously published a article about the DC Universities - GW, Georgetown, American and Catholic - dubbing them the Pony league, the schools for the children of wealthy middle class New Yorkers who couldn't get into the Ivy League. Nobody really complained. But that wasn't me. I went because I wanted to be where the action was in the 60s, and as we used to say - "GW was literally a stone's throw from the White House. And we could prove it." Back then, the two biggest alumni names were Jackie Kennedy, who's taken some classes there, and J. Edgar Hoover. Now, according to the glossy magazine they send me each month, it's the actress Kerry Washington. There's some sort of progress there, but I'm a GW alum and not properly trained to understand it.
  • More and more, I notice what my debt-financed contributions to the revenue streams of my vendors earn them, not me. My banks earned enough to pay ridiculous bonuses to employees for reckless risk-taking. My satellite tv operator earned enough to overpay ESPN for sports programming that I never watch--and that, in turn, overpays these idiotic pro athletes and college sports administrators. My health insurer earned enough to defeat one-payor insurance; to enable the opaque, inefficient billing practices of hospitals and other providers; and to feed the behemoth pharmaceutical industry. My church earned enough to buy the silence of sex abuse victims and oppose progressive political candidates. And my govt earned enough to continue ag subsidies, inefficient defense spending, and obsolete transportation and energy policies.
  • I attended nearby Georgetown University and graduated in 1985. Relative to state schools and elite schools, it was expensive then. I took out loans. I had Pell grants. I had work-study and GSL. I paid my debt of $15,000 off in ten years. Would I have done it differently? Yes: I would have continued on to graduate school and not worried about paying off those big loans right after college. My career work out and I am grateful for the education I received and paid for. But I would not recommend to my nieces and nephews debts north of $100,000 for a BA in liberal arts. Go community. Then go state. Then punch your ticket to Harvard, Yale or Stanford — if you are good enough.
  • American universities appear to have more and more drifted away from educating individuals and citizens to becoming high priced trade schools and purveyors of occupational licenses. Lost in the process is the concept of expanding a student's ability to appreciate broadly and deeply, as well as the belief that a republican democracy needs an educated citizenry, not a trained citizenry, to function well.Both the Heisman Trophy winner and the producer of a successful tech I.P.O. likely have much in common, a college education whose rewards are limited to the financial. I don't know if I find this more sad on the individual level or more worrisome for the future of America.
  • This is now a consumer world for everything, including institutions once thought to float above the Shakespearean briars of the work-a-day world such as higher education, law and medicine. Students get this. Parents get this. Everything is negotiable: financial aid, a spot in the nicest dorm, tix to the big game. But through all this, there are faculty - lots of 'em - who work away from the fluff to link the ambitions of the students with the reality and rigor of the 21st century. The job of the student is to get beyond the visible hype of the surroundings and find those faculty members. They will make sure your investment is worth it
  • My experience in managing or working with GW alumni in their 20's or 30's has not been good. Virtually all have been mentally lazy and/or had a stunning sense of entitlement. Basically they've been all talk and no results. That's been quite a contrast to the graduates from VA/MD state universities.
  • This explains a lot of the modern, emerging mentality. It encompasses the culture of enforced grade inflation, cheating and anti-intellectualism in much of higher education. It is consistent with our culture of misleading statistics and information, cronyism and fake quality, the "best and the brightest" being only schemers and glad handers. The wisdom and creativity engendered by an honest, rigorous academic education are replaced by the disingenuous quick fix, the winner-take-all mentality that neglects the common good.
  • as the parent of GWU freshman I am grateful for every opportunity afforded her. She has a generous merit scholarship, is in the honors program with some small classes, and has access to internships that can be done while at school. GWU also gave her AP credits to advance her to sophomore status. Had she attended the state flagship school (where she was accepted into that exclusive honors program) she would have a great education but little else. It's not possible to do foreign affairs related internship far from D.C. or Manhattan. She went to a very competitive high school where for the one or two ivy league schools in which she was interested, she didn't have the same level of connections or wealth as many of her peers. Whether because of the Common Application or other factors, getting into a good school with financial help is difficult for a middle class student like my daughter who had a 4.0 GPA and 2300 on the SAT. She also worked after school.The bottom line - GWU offered more money than perceived "higher tier" universities, and brought tuition to almost that of our state school system. And by the way, I think she is also getting a very good education.
  • This article reinforces something I have learned during my daughter's college application process. Most students choose a school based on emotion (reputation) and not value. This luxury good analogy holds up.
  • The entire education problem can be solved by MOOCs lots and lots of them plus a few closely monitored tests and personal interviews with people. Of course many many people make MONEY off of our entirely inefficient way of "educating" -- are we even really doing that -- getting a degree does NOT mean one is actually educated
  • As a first-generation college graduate I entered GW ambitious but left saddled with debt, and crestfallen at the hard-hitting realization that my four undergraduate years were an aberration from what life is actually like post-college: not as simple as getting an [unpaid] internship with a fancy titled institution, as most Colonials do. I knew how to get in to college, but what do you do after the recess of life ends?I learned more about networking, resume plumping (designated responses to constituents...errr....replied to emails), and elevator pitches than actual theory, economic principles, strong writing skills, critical thinking, analysis, and philosophy. While relatively easy to get a job after graduating (for many with a GW degree this is sadly not the case) sustaining one and excelling in it is much harder. It's never enough just to be able to open a new door, you also need to be prepared to navigate your way through that next opportunity.
  • this is a very telling article. Aimless and directionless high school graduates are matched only by aimless and directionless institutes of higher learning. Each child and each parent should start with a goal - before handing over their hard earned tuition dollars, and/or leaving a trail of broken debt in the aftermath of a substandard, unfocused education.
  • it is no longer the most expensive university in America. It is the 46th.Others have been implementing the Absolut Rolex Plan. John Sexton turned New York University into a global higher-education player by selling the dream of downtown living to students raised on “Sex and the City.” Northeastern followed Boston University up the ladder. Under Steven B. Sample, the University of Southern California became a U.S. News top-25 university. Washington University in St. Louis did the same.
  • I currently attend GW, and I have to say, this article completely misrepresents the situation. I have yet to meet a single person who is paying the full $60k tuition - I myself am paying $30k, because the school gave me $30k in grants. As for the quality of education, Foreign Policy rated GW the #8 best school in the world for undergraduate education in international affairs, Princeton Review ranks it as one of the best schools for political science, and U.S. News ranks the law school #20. The author also ignores the role that an expanding research profile plays in growing a university's prestige and educational power.
  • it makes me very sad to see how expensive some public schools have become. Used to be you could work your way through a public school without loans, but not any more. Like you, I had the advantage of a largely-scholarship paid undergraduate education at a top private college. However, I was also offered a virtually free spot in my state university's (then new) honors college
  • this is the same playbook used by hospitals the past 30 years or so. It is how Hackensack Hospital became Hackensack Medical Center and McComb Hospital became Southwest Mississippi Regional Medical Center. No wonder the results have been the same in healthcare and higher education; both have priced themselves out of reach for average Americans.
  • a world where a college is rated not by the quality of its output, but instaed, by the quality of its inputs. A world where there is practically no work to be done by the administration because the college's reputation is made before the first class even begins! This is isanity! But this is the swill that the mammoth college marketing departments nationwide have shoved down America's throat. Colleges are ranked not by the quality of their graduates, but rather, by the test scores of their incoming students!
  • The Pew Foundation has been doing surveys on what students learn, how much homework they do, how much time they spend with professors etc. All good stuff to know before a student chooses a school. It is called the National Survey of Student Engagement (NSSE - called Nessy). It turns out that the higher ranked schools do NOT allow their information to be released to the public. It is SECRET.Why do you think that is?
  • The article blames "the standard university organizational model left teaching responsibilities to autonomous academic departments and individual faculty members, each of which taught and tested in its own way." This is the view of someone who has never taught at a university, nor thought much about how education there actually happens. Once undergraduates get beyond the general requirements, their educations _have_ to depend on "autonomous departments" because it's only those departments know what the requirements for given degree can be, and can grant the necessary accreditation of a given student. The idea that some administrator could know what's necessary for degrees in everything from engineering to fiction writing is nonsense, except that's what the people who only know the theory of education (but not its practice) actually seem to think. In the classroom itself, you have tremendously talented people, who nevertheless have their own particular strengths and approaches. Don't you think it's a good idea to let them do what they do best rather than trying to make everyone teach the same way? Don't you think supervision of young teachers by older colleagues, who actually know their field and its pedagogy, rather than some administrator, who knows nothing of the subject, is a good idea?
  • And in hundreds of regional universities and community colleges, presidents and deans and department chairmen have watched this spectacle of ascension and said to themselves, “That could be me.” Agricultural schools and technical institutes are lobbying state legislatures for tuition increases and Ph.D. programs, fitness centers and arenas for sport. Presidents and boards are drawing up plans to raise tuition, recruit “better” students and add academic programs. They all want to go in one direction — up! — and they are all moving with a single vision of what they want to be.
  • My daughter attended a good community college for a couple of classes during her senior year of high school and I could immediately see how such places are laboratories for failure. They seem like high schools in atmosphere and appearance. Students rush in by car and rush out again when the class is over.The four year residency college creates a completely different feel. On arrival, you get the sense that you are engaging in something important, something apart and one that will require your full attention. I don't say this is for everyone or that the model is not flawed in some ways (students actually only spend 2 1/2 yrs. on campus to get the four yr. degree). College is supposed to be a 60 hour per week job. Anything less than that and the student is seeking himself or herself
  • This. Is. STUNNING. I have always wondered, especially as my kids have approached college age, why American colleges have felt justified in raising tuition at a rate that has well exceeded inflation, year after year after year. (Nobody needs a dorm with luxury suites and a lazy river pool at college!) And as it turns out, they did it to become luxury brands. Just that simple. Incredible.I don't even blame this guy at GWU for doing what he did. He wasn't made responsible for all of American higher ed. But I do think we all need to realize what happened, and why. This is front page stuff.
  • I agree with you, but, unfortunately, given the choice between low tuition, primitive dorms, and no athletic center VS expensive & luxurious, the customers (and their parents) are choosing the latter. As long as this is the case, there is little incentive to provide bare-bones and cheap education.
  • Wesleyan University in CT is one school that is moving down the rankings. Syracuse University is another. Reed College is a third. Why? Because these schools try hard to stay out of the marketing game. (With its new president, Syracuse has jumped back into the game.) Bryn Mawr College, outside Philadelphia hasn't fared well over the past few decades in the rankings, which is true of practically every women's college. Wellesley is by far the highest ranked women's college, but even there the acceptance rate is significantly higher than one finds at comparable coed liberal arts colleges like Amherst & Williams. University of Chicago is another fascinating case for Mr. Carey to study (I'm sure he does in his forthcoming book, which I look forward to reading). Although it has always enjoyed an illustrious academic reputation, until recently Chicago's undergraduate reputation paled in comparison to peer institutions on the two coasts. A few years ago, Chicago changed its game plan to more closely resemble Harvard and Stanford in undergraduate amenities, and lo and behold, its rankings shot up. It was a very cynical move on the president's part to reassemble the football team, but it was a shrewd move because athletics draw more money than academics ever can (except at engineering schools like Cal Tech & MIT), and more money draws richer students from fancier secondary schools with higher test scores, which lead to higher rankings - and the beat goes on.
  • College INDUSTRY is out of control. Sorry, NYU, GW, BU are not worth the price. Are state schools any better? We have the University of Michigan, which is really not a state school, but a university that gives a discount to people who live in Michigan. Why? When you have an undergraduate body 40+% out-of-state that pays tuition of over $50K/year, you tell me?Perhaps the solution is two years of community college followed by two at places like U of M or Michigan State - get the same diploma at the end for much less and beat the system.
  • In one recent yr., the majority of undergrad professors at Harvard, according to Boston.com, where adjuncts. That means low pay, no benefits, no office, temp workers. Harvard.Easily available student loans fueled this arms race of amenities and frills that in which colleges now engage. They moved the cost of education onto the backs of people, kids, who don't understand what they are doing.Students in colleges these days are customers and the customers must be able to get through. If it requires dumbing things down, so be it. On top of tuition, G.W. U. is known by its students as the land of added fees on top of added fees. The joke around campus was that they would soon be installing pay toilets in the student union. No one was laughing.
  • You could written the same story about my alma mater, American University. The place reeked of ambition and upward mobility decades ago and still does. Whoever's running it now must look at its measly half-billion-dollar endowment and compare it to GWU's $1.5 billion and seethe with envy, while GWU's president sets his sights on an Ivy League-size endowment. And both get back to their real jobs: 24/7 fundraising,Which is what university presidents are all about these days. Money - including million-dollar salaries for themselves (GWU's president made more than Harvard's in 2011) - pride, cachet, power, a mansion, first-class all the way. They should just be honest about it and change their university's motto to Ostende mihi pecuniam! (please excuse my questionable Latin)Whether the students are actually learning anything is up to them, I guess - if they do, it's thanks to the professors, adjuncts and the administrative staff, who do the actual work of educating and keep the school running.
  • When I was in HS (70s), many of my richer friends went to GW and I was then of the impression that GW was a 'good' school. As I age, I have come to realize that this place is just another façade to the emptiness that has become America. All too often are we faced with a dilemma: damned if we do, damned if we don't. Yep, 'education' has become a trap for all too many of our citizen.
  • I transferred to GWU from a state school. I am forever grateful that I did. I wanted to get a good rigorous education and go to one of the best International Affairs schools in the world. Even though the state school I went to was dirt-cheap, the education and the faculty was awful. I transferred to GW and was amazed at the professors at that university. An ambassador or a prominent IA scholar taught every class. GW is an expensive school, but that is the free market. If you want a good education you need to be willing to pay for it or join the military. I did the latter and my school was completely free with no debt and I received an amazing education. If young people aren't willing to make some sort of sacrifice to get ahead or just expect everything to be given to then our country is in a sad state.We need to stop blaming universities like GWU that strive to attract better students, better professors, and better infrastructure. They are doing what is expected in America, to better oneself.
  • "Whether the students are actually learning anything is up to them, I guess." How could it possibly be otherwise??? I am glad that you are willing to give credit to teachers and administrators, but it is not they who "do the actual work of educating." From this fallacy comes its corollary, that we should blame teachers first for "under-performing schools". This long-running show of scapegoating may suit the wallets and vanity of American parents, but it is utterly senseless. When, if ever, American culture stops reeking of arrogance, greed and anti-intellectualism, things may improve, and we may resume the habit of bothering to learn. Until then, nothing doing.
  • Universities sell knowledge and grade students on how much they have learned. Fundamentally, there is conflict of interest in thsi setup. Moreover, students who are poorly educated, even if they know this, will not criticize their school, because doing so would make it harder for them to have a career. As such, many problems with higher education remain unexposed to the public.
  • I've lectured and taught in at least five different countries in three continents and the shortest perusal of what goes on abroad would totally undermine most of these speculations. For one thing American universities are unique in their dedication to a broad based liberal arts type education. In France, Italy or Germany, for example, you select a major like mathematics or physics and then in your four years you will not take even one course in another subject. The amount of work that you do that is critically evaluated by an instructor is a tiny fraction of what is done in an American University. While half educated critics based on profoundly incomplete research write criticism like this Universities in Germany Italy, the Netherlands, South Korea and Japan as well as France have appointed committees and made studies to explain why the American system of higher education so drastically outperforms their own system. Elsewhere students do get a rather nice dose of general education but it ends in secondary school and it has the narrowness and formulaic quality that we would just normally associate with that. The character who wrote this article probably never set foot on a "campus" of the University of Paris or Rome
  • This is the inevitable result of privatizing higher education. In the not-so-distant past, we paid for great state universities through our taxes, not tuition. Then, the states shifted funding to prisons and the Federal government radically cut research support and the GI bill. Instead, today we expect universities to support themselves through tuition, and to the extent that we offered students support, it is through non-dischargeable loans. To make matters worse, the interest rates on those loans are far above the government's cost of funds -- so in effect the loans are an excise tax on education (most of which is used to support a handful of for-profit institutions that account for the most student defaults). This "consumer sovereignty" privatized model of funding education works no better than privatizing California's electrical system did in the era of Enron, or our privatized funding of medical service, or our increasingly privatized prison system: it drives up costs at the same time that it replace quality with marketing.
  • The university is part of a complex economic system and it is responding to the demands of that system. For example, students and parents choose universities that have beautiful campuses and buildings. So universities build beautiful campuses. State support of universities has greatly declined, and this decline in funding is the greatest cause of increased tuition. Therefore universities must compete for dollars and must build to attract students and parents. Also, universities are not ranked based on how they educate students -- that's difficult to measure so it is not measured. Instead universities are ranked on research publications. So while universities certainly put much effort into teaching, research has to have a priority in order for the university to survive. Also universities do not force students and parents to attend high price institutions. Reasonably priced state institutions and community colleges are available to every student. Community colleges have an advantage because they are funded by property taxes. Finally learning requires good teaching, but it also requires students that come to the university funded, prepared, and engaged. This often does not happen. Conclusion- universities have to participate in profile raising actions in order to survive. The day that funding is provided for college, ranking is based on education, and students choose campuses with simple buildings, then things will change at the university.
  • There are data in some instances on student learning, but the deeper problem, as I suspect the author already knows, is that there is nothing like a consensus on how to measure that learning, or even on when is the proper end point to emphasize (a lot of what I teach -- I know this from what students have told me -- tends to come into sharp focus years after graduation).
  • Michael (Baltimore) has hit the nail on the head. Universities are increasingly corporatized institutions in the credentialing business. Knowledge, for those few who care about it (often not those paying for the credentials) is available freely because there's no profit in it. Like many corporate entities, it is increasingly run by increasingly highly paid administrators, not faculty.
  • GWU has not defined itself in any unique way, it has merely embraced the bland, but very expensive, accoutrements of American private education: luxury dorms, food courts, spa-like gyms, endless extracurricular activities, etc. But the real culprit for this bloat that students have to bear financially is the college ranking system by US News, Princeton Review, etc. An ultimately meaningless exercise in competition that has nevertheless pushed colleges and universities to be more like one another. A sad state of affairs, and an extremely expensive one for students
  • It is long past time to realize the failure of the Reagonomics-neoliberal private profits over public good program. In education, we need to return to public institutions publicly funded. Just as we need to recognize that Medicare, Social Security, the post office, public utilities, fire departments, interstate highway system, Veterans Administration hospitals and the GI bill are models to be improved and expanded, not destroyed.
  • George Washington is actually not a Rolex watch, it is a counterfeit Rolex. The real Rolexes of higher education -- places like Hopkins, Georgetown, Duke, the Ivies etc. -- have real endowments and real financial aid. No middle class kid is required to borrow $100,000 to get a degree from those schools, because they offer generous need-based financial aid in the form of grants, not loans. The tuition at the real Rolexes is really a sticker price that only the wealthy pay -- everybody else on a sliding scale. For middle class kids who are fortunate enough to get in, Penn actually ends up costing considerably less than a state university.The fake Rolexes -- BU, NYU, Drexel in Philadelphia -- don't have the sliding scale. They bury middle class students in debt.And really, though it is foolish to borrow $100,000 or $120,000 for an undergraduate degree, I don't find the transaction morally wrong. What is morally wrong is our federal government making that loan non-dischargeable in bankruptcy, so many if these kids will be having their wages garnished for the REST OF THEIR LIVES.There is a very simple solution to this, by the way. Cap the amount of non-dischargeable student loan debt at, say, $50,000
  • The slant of this article is critical of the growth of research universities. Couldn't disagree more. Modern research universities create are incredibly engines of economic opportunity not only for the students (who pay the bills) but also for the community via the creation of blue and white collar jobs. Large research university employ tens of thousands of locals from custodial and food service workers right up to high level administrators and specialist in finance, computer services, buildings and facilities management, etc. Johns Hopkins University and the University of Maryland system employ more people than any other industry in Maryland -- including the government. Research universities typically have hospitals providing cutting-edge medical care to the community. Local business (from cafes to property rental companies) benefit from a built-in, long-term client base as well as an educated workforce. And of course they are the foundry of new knowledge which is critical for the future growth of our country.Check out the work of famed economist Dr. Julia Lane on modeling the economic value of the research university. In a nutshell, there are few better investments America can make in herself than research universities. We are the envy of the world in that regard -- and with good reason. How many *industries* (let alone jobs) have Stanford University alone catalyzed?
  • What universities have the monopoly on is the credential. Anyone can learn, from books, from free lectures on the internet, from this newspaper, etc. But only universities can endow you with the cherished degree. For some reason, people are will to pay more for one of these pieces of paper with a certain name on it -- Ivy League, Stanford, even GW -- than another -- Generic State U -- though there is no evidence one is actually worth more in the marketplace of reality than the other. But, by the laws of economics, these places are actually underpriced: after all, something like 20 times more people are trying to buy a Harvard education than are allowed to purchase one. Usually that means you raise your price.
  • Overalll a good article, except for - "This comes on the heels of Richard Arum and Josipa Roksa’s “Academically Adrift,” a study that found “limited or no learning” among many college students." The measure of learning you report was a general thinking skills exam. That's not a good measure of college gains. Most psychologists and cognitive scientists worth their salt would tell you that improvement in critical thinking skills is going to be limited to specific areas. In other words, learning critical thinking skills in math will make little change in critical thinking about political science or biology. Thus we should not expect huge improvements in general critical thinking skills, but rather improvements in a student's major and other areas of focus, such as a minor. Although who has time for a minor when it is universally acknowledged that the purpose of a university is to please and profit an employer or, if one is lucky, an investor. Finally, improved critical thinking skills are not the end all and be all of a college education even given this profit centered perspective. Learning and mastering the cumulative knowledge of past generations is arguably the most important thing to be gained, and most universities still tend to excel at that even with the increasing mandate to run education like a business and cultivate and cull the college "consumer".
  • As for community colleges, there was an article in the Times several years ago that said it much better than I could have said it myself: community colleges are places where dreams are put on hold. Without making the full commitment to study, without leaving the home environment, many, if not most, community college students are caught betwixt and between, trying to balance work responsibilities, caring for a young child or baby and attending classes. For males, the classic "end of the road" in community college is to get a car, a job and a girlfriend, one who is not in college, and that is the end of the dream. Some can make it, but most cannot.
  • as a scientist I disagree with the claim that undergrad tuition subsidizes basic research. Nearly all lab equipment and research personnel (grad students, technicians, anyone with the title "research scientist" or similar) on campus is paid for through federal grants. Professors often spend all their time outside teaching and administration writing grant proposals, as the limited federal grant funds mean ~%85 of proposals must be rejected. What is more, out of each successful grant the university levies a "tax", called "overhead", of 30-40%, nominally to pay for basic operations (utilities, office space, administrators). So in fact one might say research helps fund the university rather than the other way around. Flag
  • It's certainly overrated as a research and graduate level university. Whether it is good for getting an undergraduate education is unclear, but a big part of the appeal is getting to live in D.C..while attending college instead of living in some small college town in the corn fields.
Javier E

The Tech Industry's Psychological War on Kids - Member Feature Stories - Medium - 0 views

  • she cried, “They took my f***ing phone!” Attempting to engage Kelly in conversation, I asked her what she liked about her phone and social media. “They make me happy,” she replied.
  • Even though they were loving and involved parents, Kelly’s mom couldn’t help feeling that they’d failed their daughter and must have done something terribly wrong that led to her problems.
  • My practice as a child and adolescent psychologist is filled with families like Kelly’s. These parents say their kids’ extreme overuse of phones, video games, and social media is the most difficult parenting issue they face — and, in many cases, is tearing the family apart.
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  • What none of these parents understand is that their children’s and teens’ destructive obsession with technology is the predictable consequence of a virtually unrecognized merger between the tech industry and psychology.
  • Dr. B.J. Fogg, is a psychologist and the father of persuasive technology, a discipline in which digital machines and apps — including smartphones, social media, and video games — are configured to alter human thoughts and behaviors. As the lab’s website boldly proclaims: “Machines designed to change humans.”
  • These parents have no idea that lurking behind their kids’ screens and phones are a multitude of psychologists, neuroscientists, and social science experts who use their knowledge of psychological vulnerabilities to devise products that capture kids’ attention for the sake of industry profit.
  • psychology — a discipline that we associate with healing — is now being used as a weapon against children.
  • This alliance pairs the consumer tech industry’s immense wealth with the most sophisticated psychological research, making it possible to develop social media, video games, and phones with drug-like power to seduce young users.
  • Likewise, social media companies use persuasive design to prey on the age-appropriate desire for preteen and teen kids, especially girls, to be socially successful. This drive is built into our DNA, since real-world relational skills have fostered human evolution.
  • Called “the millionaire maker,” Fogg has groomed former students who have used his methods to develop technologies that now consume kids’ lives. As he recently touted on his personal website, “My students often do groundbreaking projects, and they continue having impact in the real world after they leave Stanford… For example, Instagram has influenced the behavior of over 800 million people. The co-founder was a student of mine.”
  • Persuasive technology (also called persuasive design) works by deliberately creating digital environments that users feel fulfill their basic human drives — to be social or obtain goals — better than real-world alternatives.
  • Kids spend countless hours in social media and video game environments in pursuit of likes, “friends,” game points, and levels — because it’s stimulating, they believe that this makes them happy and successful, and they find it easier than doing the difficult but developmentally important activities of childhood.
  • While persuasion techniques work well on adults, they are particularly effective at influencing the still-maturing child and teen brain.
  • “Video games, better than anything else in our culture, deliver rewards to people, especially teenage boys,” says Fogg. “Teenage boys are wired to seek competency. To master our world and get better at stuff. Video games, in dishing out rewards, can convey to people that their competency is growing, you can get better at something second by second.”
  • it’s persuasive design that’s helped convince this generation of boys they are gaining “competency” by spending countless hours on game sites, when the sad reality is they are locked away in their rooms gaming, ignoring school, and not developing the real-world competencies that colleges and employers demand.
  • Persuasive technologies work because of their apparent triggering of the release of dopamine, a powerful neurotransmitter involved in reward, attention, and addiction.
  • As she says, “If you don’t get 100 ‘likes,’ you make other people share it so you get 100…. Or else you just get upset. Everyone wants to get the most ‘likes.’ It’s like a popularity contest.”
  • there are costs to Casey’s phone obsession, noting that the “girl’s phone, be it Facebook, Instagram or iMessage, is constantly pulling her away from her homework, sleep, or conversations with her family.
  • Casey says she wishes she could put her phone down. But she can’t. “I’ll wake up in the morning and go on Facebook just… because,” she says. “It’s not like I want to or I don’t. I just go on it. I’m, like, forced to. I don’t know why. I need to. Facebook takes up my whole life.”
  • B.J. Fogg may not be a household name, but Fortune Magazine calls him a “New Guru You Should Know,” and his research is driving a worldwide legion of user experience (UX) designers who utilize and expand upon his models of persuasive design.
  • “No one has perhaps been as influential on the current generation of user experience (UX) designers as Stanford researcher B.J. Fogg.”
  • the core of UX research is about using psychology to take advantage of our human vulnerabilities.
  • As Fogg is quoted in Kosner’s Forbes article, “Facebook, Twitter, Google, you name it, these companies have been using computers to influence our behavior.” However, the driving force behind behavior change isn’t computers. “The missing link isn’t the technology, it’s psychology,” says Fogg.
  • UX researchers not only follow Fogg’s design model, but also his apparent tendency to overlook the broader implications of persuasive design. They focus on the task at hand, building digital machines and apps that better demand users’ attention, compel users to return again and again, and grow businesses’ bottom line.
  • the “Fogg Behavior Model” is a well-tested method to change behavior and, in its simplified form, involves three primary factors: motivation, ability, and triggers.
  • “We can now create machines that can change what people think and what people do, and the machines can do that autonomously.”
  • Regarding ability, Fogg suggests that digital products should be made so that users don’t have to “think hard.” Hence, social networks are designed for ease of use
  • Finally, Fogg says that potential users need to be triggered to use a site. This is accomplished by a myriad of digital tricks, including the sending of incessant notifications
  • moral questions about the impact of turning persuasive techniques on children and teens are not being asked. For example, should the fear of social rejection be used to compel kids to compulsively use social media? Is it okay to lure kids away from school tasks that demand a strong mental effort so they can spend their lives on social networks or playing video games that don’t make them think much at all?
  • Describing how his formula is effective at getting people to use a social network, the psychologist says in an academic paper that a key motivator is users’ desire for “social acceptance,” although he says an even more powerful motivator is the desire “to avoid being socially rejected.”
  • the startup Dopamine Labs boasts about its use of persuasive techniques to increase profits: “Connect your app to our Persuasive AI [Artificial Intelligence] and lift your engagement and revenue up to 30% by giving your users our perfect bursts of dopamine,” and “A burst of Dopamine doesn’t just feel good: it’s proven to re-wire user behavior and habits.”
  • Ramsay Brown, the founder of Dopamine Labs, says in a KQED Science article, “We have now developed a rigorous technology of the human mind, and that is both exciting and terrifying. We have the ability to twiddle some knobs in a machine learning dashboard we build, and around the world hundreds of thousands of people are going to quietly change their behavior in ways that, unbeknownst to them, feel second-nature but are really by design.”
  • Programmers call this “brain hacking,” as it compels users to spend more time on sites even though they mistakenly believe it’s strictly due to their own conscious choices.
  • Banks of computers employ AI to “learn” which of a countless number of persuasive design elements will keep users hooked
  • A persuasion profile of a particular user’s unique vulnerabilities is developed in real time and exploited to keep users on the site and make them return again and again for longer periods of time. This drives up profits for consumer internet companies whose revenue is based on how much their products are used.
  • “The leaders of Internet companies face an interesting, if also morally questionable, imperative: either they hijack neuroscience to gain market share and make large profits, or they let competitors do that and run away with the market.”
  • Social media and video game companies believe they are compelled to use persuasive technology in the arms race for attention, profits, and survival.
  • Children’s well-being is not part of the decision calculus.
  • one breakthrough occurred in 2017 when Facebook documents were leaked to The Australian. The internal report crafted by Facebook executives showed the social network boasting to advertisers that by monitoring posts, interactions, and photos in real time, the network is able to track when teens feel “insecure,” “worthless,” “stressed,” “useless” and a “failure.”
  • The report also bragged about Facebook’s ability to micro-target ads down to “moments when young people need a confidence boost.”
  • These design techniques provide tech corporations a window into kids’ hearts and minds to measure their particular vulnerabilities, which can then be used to control their behavior as consumers. This isn’t some strange future… this is now.
  • The official tech industry line is that persuasive technologies are used to make products more engaging and enjoyable. But the revelations of industry insiders can reveal darker motives.
  • Revealing the hard science behind persuasive technology, Hopson says, “This is not to say that players are the same as rats, but that there are general rules of learning which apply equally to both.”
  • After penning the paper, Hopson was hired by Microsoft, where he helped lead the development of the Xbox Live, Microsoft’s online gaming system
  • “If game designers are going to pull a person away from every other voluntary social activity or hobby or pastime, they’re going to have to engage that person at a very deep level in every possible way they can.”
  • This is the dominant effect of persuasive design today: building video games and social media products so compelling that they pull users away from the real world to spend their lives in for-profit domains.
  • Persuasive technologies are reshaping childhood, luring kids away from family and schoolwork to spend more and more of their lives sitting before screens and phones.
  • “Since we’ve figured to some extent how these pieces of the brain that handle addiction are working, people have figured out how to juice them further and how to bake that information into apps.”
  • Today, persuasive design is likely distracting adults from driving safely, productive work, and engaging with their own children — all matters which need urgent attention
  • Still, because the child and adolescent brain is more easily controlled than the adult mind, the use of persuasive design is having a much more hurtful impact on kids.
  • But to engage in a pursuit at the expense of important real-world activities is a core element of addiction.
  • younger U.S. children now spend 5 ½ hours each day with entertainment technologies, including video games, social media, and online videos.
  • Even more, the average teen now spends an incredible 8 hours each day playing with screens and phones
  • U.S. kids only spend 16 minutes each day using the computer at home for school.
  • Quietly, using screens and phones for entertainment has become the dominant activity of childhood.
  • Younger kids spend more time engaging with entertainment screens than they do in school
  • teens spend even more time playing with screens and phones than they do sleeping
  • kids are so taken with their phones and other devices that they have turned their backs to the world around them.
  • many children are missing out on real-life engagement with family and school — the two cornerstones of childhood that lead them to grow up happy and successful
  • persuasive technologies are pulling kids into often toxic digital environments
  • A too frequent experience for many is being cyberbullied, which increases their risk of skipping school and considering suicide.
  • And there is growing recognition of the negative impact of FOMO, or the fear of missing out, as kids spend their social media lives watching a parade of peers who look to be having a great time without them, feeding their feelings of loneliness and being less than.
  • The combined effects of the displacement of vital childhood activities and exposure to unhealthy online environments is wrecking a generation.
  • as the typical age when kids get their first smartphone has fallen to 10, it’s no surprise to see serious psychiatric problems — once the domain of teens — now enveloping young kids
  • Self-inflicted injuries, such as cutting, that are serious enough to require treatment in an emergency room, have increased dramatically in 10- to 14-year-old girls, up 19% per year since 2009.
  • While girls are pulled onto smartphones and social media, boys are more likely to be seduced into the world of video gaming, often at the expense of a focus on school
  • it’s no surprise to see this generation of boys struggling to make it to college: a full 57% of college admissions are granted to young women compared with only 43% to young men.
  • Economists working with the National Bureau of Economic Research recently demonstrated how many young U.S. men are choosing to play video games rather than join the workforce.
  • The destructive forces of psychology deployed by the tech industry are making a greater impact on kids than the positive uses of psychology by mental health providers and child advocates. Put plainly, the science of psychology is hurting kids more than helping them.
  • Hope for this wired generation has seemed dim until recently, when a surprising group has come forward to criticize the tech industry’s use of psychological manipulation: tech executives
  • Tristan Harris, formerly a design ethicist at Google, has led the way by unmasking the industry’s use of persuasive design. Interviewed in The Economist’s 1843 magazine, he says, “The job of these companies is to hook people, and they do that by hijacking our psychological vulnerabilities.”
  • Marc Benioff, CEO of the cloud computing company Salesforce, is one of the voices calling for the regulation of social media companies because of their potential to addict children. He says that just as the cigarette industry has been regulated, so too should social media companies. “I think that, for sure, technology has addictive qualities that we have to address, and that product designers are working to make those products more addictive, and we need to rein that back as much as possible,”
  • “If there’s an unfair advantage or things that are out there that are not understood by parents, then the government’s got to come forward and illuminate that.”
  • Since millions of parents, for example the parents of my patient Kelly, have absolutely no idea that devices are used to hijack their children’s minds and lives, regulation of such practices is the right thing to do.
  • Another improbable group to speak out on behalf of children is tech investors.
  • How has the consumer tech industry responded to these calls for change? By going even lower.
  • Facebook recently launched Messenger Kids, a social media app that will reach kids as young as five years old. Suggestive that harmful persuasive design is now honing in on very young children is the declaration of Messenger Kids Art Director, Shiu Pei Luu, “We want to help foster communication [on Facebook] and make that the most exciting thing you want to be doing.”
  • the American Psychological Association (APA) — which is tasked with protecting children and families from harmful psychological practices — has been essentially silent on the matter
  • APA Ethical Standards require the profession to make efforts to correct the “misuse” of the work of psychologists, which would include the application of B.J. Fogg’s persuasive technologies to influence children against their best interests
  • Manipulating children for profit without their own or parents’ consent, and driving kids to spend more time on devices that contribute to emotional and academic problems is the embodiment of unethical psychological practice.
  • “Never before in history have basically 50 mostly men, mostly 20–35, mostly white engineer designer types within 50 miles of where we are right now [Silicon Valley], had control of what a billion people think and do.”
  • Some may argue that it’s the parents’ responsibility to protect their children from tech industry deception. However, parents have no idea of the powerful forces aligned against them, nor do they know how technologies are developed with drug-like effects to capture kids’ minds
  • Others will claim that nothing should be done because the intention behind persuasive design is to build better products, not manipulate kids
  • similar circumstances exist in the cigarette industry, as tobacco companies have as their intention profiting from the sale of their product, not hurting children. Nonetheless, because cigarettes and persuasive design predictably harm children, actions should be taken to protect kids from their effects.
  • in a 1998 academic paper, Fogg describes what should happen if things go wrong, saying, if persuasive technologies are “deemed harmful or questionable in some regard, a researcher should then either take social action or advocate that others do so.”
  • I suggest turning to President John F. Kennedy’s prescient guidance: He said that technology “has no conscience of its own. Whether it will become a force for good or ill depends on man.”
  • The APA should begin by demanding that the tech industry’s behavioral manipulation techniques be brought out of the shadows and exposed to the light of public awareness
  • Changes should be made in the APA’s Ethics Code to specifically prevent psychologists from manipulating children using digital machines, especially if such influence is known to pose risks to their well-being.
  • Moreover, the APA should follow its Ethical Standards by making strong efforts to correct the misuse of psychological persuasion by the tech industry and by user experience designers outside the field of psychology.
  • It should join with tech executives who are demanding that persuasive design in kids’ tech products be regulated
  • The APA also should make its powerful voice heard amongst the growing chorus calling out tech companies that intentionally exploit children’s vulnerabilities.
Duncan H

It's Consumer Spending, Stupid - NYTimes.com - 0 views

  • using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.
  • Economists will tell you that private business investment causes growth because it pays for the new plant or equipment that creates jobs, improves labor productivity and increases workers’ incomes. As a result, you’ll hear politicians insisting that more incentives for private investors — lower taxes on corporate profits — will lead to faster and better-balanced growth.
  • But history shows that this is wrong.
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  • Between 1900 and 2000, real gross domestic product per capita (the output of goods and services per person) grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What’s more, in 1900 almost all investment came from the private sector — from companies, not from government — whereas in 2000, most investment was either from government spending (out of tax revenues) or “residential investment,” which means consumer spending on housing, rather than business expenditure on plants, equipment and labor.
  • over the course of the last century, net business investment atrophied while G.D.P. per capita increased spectacularly. And the source of that growth? Increased consumer spending, coupled with and amplified by government outlays.
  • President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment.
  • According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we face.
  • So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.
  • we doubt the moral worth of consumer culture. Like the abstemious ant who scolds the feckless grasshopper as winter approaches, we think that saving is the right thing to do. Even as we shop with abandon, we feel that if only we could contain our unruly desires, we’d be committing ourselves to a better future. But we’re wrong.
  • Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending.
Javier E

A Voter Revolt Against 'Shareholder Value' - WSJ - 0 views

  • a Feb. 29 quotation from Leslie Moonves, chairman of CBS, CBS -1.76 % that sums up everything wrong with today’s media culture—and with corporate America.
  • Reflecting on the Trump phenomenon at a media and technology conference, Mr. Moonves said that “It may not be good for America, but it’s damn good for CBS.”
  • Mr. Moonves is saying that CBS’s only responsibility is to maximize profits, not only in its entertainment division, but also in its news operation
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  • He knows that what his network is doing is against the national interest. He has just enough conscience to be aware that it is “terrible,” but not nearly enough to stop doing it. It might impair shareholder value, after all.
  • Mr. Moonves is suggesting that there is no difference in principle between entertainment and news. Both should be judged by the same standard—ratings. If policy speeches don’t attract large enough audiences, cut to a Trump rally.
  • If the leading purveyors of broadcast journalism make no distinction between news and entertainment, then who can blame viewers for seeing no difference between entertainment and politics?
  • American politicians and parties have used entertainment to draw audiences for the better part of two centuries. But there used to be countervailing forces, including prestigious broadcast news organizations. Not anymore. Once these organizations served as gatekeepers; now they are open-door enablers.
  • They are all in the grip of the same misunderstanding, that their business begins and ends with maximizing shareholder value.
  • They may believe that this is a statutory requirement or a fiduciary duty. If so, they are mistaken
  • It is Milton Friedman’s theory. “There is one and only one social responsibility of business,” he wrote in “Capitalism and Freedom,” “to use its resources and engage in activities designed to increase its profits.”
  • corporate law imposes no enforceable legal duty to maximize either profits or share prices.
  • As a policy argument, Friedman’s thesis flunks key empirical tests
  • And it is not politically sustainable. This is the clear meaning of the 2016 presidential election.
  • during the 1970s, inflation, recession, a stagnant stock market and rising competition from abroad created an opening for Friedman’s theory, which soon dominated corporate boardrooms.
  • In the name of maximizing shareholder value, corporations moved plants and jobs around the world, paid the lowest wages they could get away with, and scheduled work assignments to maintain managerial “flexibility,” whatever the consequences for workers’ families. Meanwhile, their lobbyists engineered a myriad of special interest breaks in the corporate tax code.
  • Now we can see what four decades of pursuing shareholder value at the expense of everything else has yielded
  • Public confidence in corporations is at rock-bottom, and public anger is sky-high
  • The revolt against the corporate economic agenda—free trade, a generous immigration policy, lower corporate taxes and the rest—is sweeping the country.
  • As the Republican rank and file has turned against corporations and New Democrats have given ground to left-wing populists, big business has been left politically homeless.
  • It will take corporate America a long time to climb out of this self-created hole.
  • Its first step should be to back long-overdue proposals for improving workers’ lives and incomes. Paid family leave is an idea whose time has come; so is a catch-up increase in the federal minimum wage; so are stable and predictable schedules for part-time workers.
  • Allowing workers to share in profits and productivity increases would be another good step.
  • Above all, corporate leaders should grasp the distinction between immediate gain and self-interest rightly understood. Pushing for the last increment of profit over the next quarter and the one after that comes at the expense of the strategies that can leave firms best positioned for the future.
  • America needs a new generation of corporate statesmen.
Javier E

The Disturbing New Facts About American Capitalism - WSJ - 0 views

  • “Let your winners run” is one of the oldest adages in investing. One of the newest ideas is that the winners may be running away with everything.
  • Modern capitalism is built on the idea that as companies get big, they become fat and happy, opening themselves up to lean and hungry competitors that can underprice and overtake them. That cycle of creative destruction may be changing in ways that help explain the seemingly unstoppable rise of the stock market.
  • U.S. companies are moving toward a winner-take-all system in which giants get stronger, not weaker, as they expand.
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  • That’s the latest among several recent studies by economists working independently, all arriving at similar findings: A few “superstar firms” have grown to dominate their industries, crowding out competitors and controlling markets to a degree not seen in many decades.
  • Let’s look beyond such obvious winner-take-all examples as Apple or Alphabet, the parent of Google.
  • Consider real-estate services. In 1997, according to Profs. Grullon, Larkin and Michaely, that sector had 42 publicly traded companies; the four largest generated 49% of the group’s total revenue. By 2014, only 20 public firms were left, and the top four— CBRE Group, Jones Lang LaSalle, Realogy Holdings and Wyndham Worldwide—commanded 78% of the group’s combined revenue.
  • Or look at supermarkets. In 1997, there were 36 publicly traded companies in that industry, with the top four accounting for more than half of total sales. By 2014, only 11 were left. The top four—Kroger, Supervalu, Whole Foods Market and Roundy’s (since acquired by Kroger)—held 89% of the pie.
  • The U.S. had more than 7,000 public companies 20 years ago, the professors say; nowadays, it’s fewer than 4,000.
  • The winners are also grabbing most of the profits
  • At the end of 1996, the 25 companies in the S&P 500 with the highest net profit margins—income as a percentage of revenue—earned a median of just under 21 cents on every dollar of sales. Last year, the top 25 such companies earned a median of 39 cents on the dollar.
  • Two decades ago, the median net margin among all S&P 500 members was 6.7%. By the end of 2016, that had increased to 9.7%.
  • So while companies as a whole became more profitable over the past 20 years, the winners have become vastly more profitable, nearly doubling the gains they got on each dollar of sales.
  • Why might it be easier now for winners to take all? Prof. Michaely suggests two theories. Declining enforcement of antitrust rules has led to bigger mergers, less competition and higher profits.
  • The other is technology. “If you want to compete with Google or Amazon,” he says, “you’ll have to invest not just billions, but tens of billions of dollars.”
  • Still, history offers a warning. Many times in the past, winners have taken all but seldom for long.
Javier E

George Packer: Is Amazon Bad for Books? : The New Yorker - 0 views

  • Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business
  • Amazon is not just the “Everything Store,” to quote the title of Brad Stone’s rich chronicle of Bezos and his company; it’s more like the Everything. What remains constant is ambition, and the search for new things to be ambitious about.
  • It wasn’t a love of books that led him to start an online bookstore. “It was totally based on the property of books as a product,” Shel Kaphan, Bezos’s former deputy, says. Books are easy to ship and hard to break, and there was a major distribution warehouse in Oregon. Crucially, there are far too many books, in and out of print, to sell even a fraction of them at a physical store. The vast selection made possible by the Internet gave Amazon its initial advantage, and a wedge into selling everything else.
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  • it’s impossible to know for sure, but, according to one publisher’s estimate, book sales in the U.S. now make up no more than seven per cent of the company’s roughly seventy-five billion dollars in annual revenue.
  • A monopoly is dangerous because it concentrates so much economic power, but in the book business the prospect of a single owner of both the means of production and the modes of distribution is especially worrisome: it would give Amazon more control over the exchange of ideas than any company in U.S. history.
  • “The key to understanding Amazon is the hiring process,” one former employee said. “You’re not hired to do a particular job—you’re hired to be an Amazonian. Lots of managers had to take the Myers-Briggs personality tests. Eighty per cent of them came in two or three similar categories, and Bezos is the same: introverted, detail-oriented, engineer-type personality. Not musicians, designers, salesmen. The vast majority fall within the same personality type—people who graduate at the top of their class at M.I.T. and have no idea what to say to a woman in a bar.”
  • According to Marcus, Amazon executives considered publishing people “antediluvian losers with rotary phones and inventory systems designed in 1968 and warehouses full of crap.” Publishers kept no data on customers, making their bets on books a matter of instinct rather than metrics. They were full of inefficiences, starting with overpriced Manhattan offices.
  • For a smaller house, Amazon’s total discount can go as high as sixty per cent, which cuts deeply into already slim profit margins. Because Amazon manages its inventory so well, it often buys books from small publishers with the understanding that it can’t return them, for an even deeper discount
  • According to one insider, around 2008—when the company was selling far more than books, and was making twenty billion dollars a year in revenue, more than the combined sales of all other American bookstores—Amazon began thinking of content as central to its business. Authors started to be considered among the company’s most important customers. By then, Amazon had lost much of the market in selling music and videos to Apple and Netflix, and its relations with publishers were deteriorating
  • In its drive for profitability, Amazon did not raise retail prices; it simply squeezed its suppliers harder, much as Walmart had done with manufacturers. Amazon demanded ever-larger co-op fees and better shipping terms; publishers knew that they would stop being favored by the site’s recommendation algorithms if they didn’t comply. Eventually, they all did.
  • Brad Stone describes one campaign to pressure the most vulnerable publishers for better terms: internally, it was known as the Gazelle Project, after Bezos suggested “that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle.”
  • ithout dropping co-op fees entirely, Amazon simplified its system: publishers were asked to hand over a percentage of their previous year’s sales on the site, as “marketing development funds.”
  • The figure keeps rising, though less for the giant pachyderms than for the sickly gazelles. According to the marketing executive, the larger houses, which used to pay two or three per cent of their net sales through Amazon, now relinquish five to seven per cent of gross sales, pushing Amazon’s percentage discount on books into the mid-fifties. Random House currently gives Amazon an effective discount of around fifty-three per cent.
  • In December, 1999, at the height of the dot-com mania, Time named Bezos its Person of the Year. “Amazon isn’t about technology or even commerce,” the breathless cover article announced. “Amazon is, like every other site on the Web, a content play.” Yet this was the moment, Marcus said, when “content” people were “on the way out.”
  • In 2004, he set up a lab in Silicon Valley that would build Amazon’s first piece of consumer hardware: a device for reading digital books. According to Stone’s book, Bezos told the executive running the project, “Proceed as if your goal is to put everyone selling physical books out of a job.”
  • By 2010, Amazon controlled ninety per cent of the market in digital books—a dominance that almost no company, in any industry, could claim. Its prohibitively low prices warded off competition
  • Lately, digital titles have levelled off at about thirty per cent of book sales.
  • The literary agent Andrew Wylie (whose firm represents me) says, “What Bezos wants is to drag the retail price down as low as he can get it—a dollar-ninety-nine, even ninety-nine cents. That’s the Apple play—‘What we want is traffic through our device, and we’ll do anything to get there.’ ” If customers grew used to paying just a few dollars for an e-book, how long before publishers would have to slash the cover price of all their titles?
  • As Apple and the publishers see it, the ruling ignored the context of the case: when the key events occurred, Amazon effectively had a monopoly in digital books and was selling them so cheaply that it resembled predatory pricing—a barrier to entry for potential competitors. Since then, Amazon’s share of the e-book market has dropped, levelling off at about sixty-five per cent, with the rest going largely to Apple and to Barnes & Noble, which sells the Nook e-reader. In other words, before the feds stepped in, the agency model introduced competition to the market
  • But the court’s decision reflected a trend in legal thinking among liberals and conservatives alike, going back to the seventies, that looks at antitrust cases from the perspective of consumers, not producers: what matters is lowering prices, even if that goal comes at the expense of competition. Barry Lynn, a market-policy expert at the New America Foundation, said, “It’s one of the main factors that’s led to massive consolidation.”
  • The combination of ceaseless innovation and low-wage drudgery makes Amazon the epitome of a successful New Economy company. It’s hiring as fast as it can—nearly thirty thousand employees last year.
  • brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen.
  • Since the arrival of the Kindle, the tension between Amazon and the publishers has become an open battle. The conflict reflects not only business antagonism amid technological change but a division between the two coasts, with different cultural styles and a philosophical disagreement about what techies call “disruption.”
  • Bezos told Charlie Rose, “Amazon is not happening to bookselling. The future is happening to bookselling.”
  • n Grandinetti’s view, the Kindle “has helped the book business make a more orderly transition to a mixed print and digital world than perhaps any other medium.” Compared with people who work in music, movies, and newspapers, he said, authors are well positioned to thrive. The old print world of scarcity—with a limited number of publishers and editors selecting which manuscripts to publish, and a limited number of bookstores selecting which titles to carry—is yielding to a world of digital abundance. Grandinetti told me that, in these new circumstances, a publisher’s job “is to build a megaphone.”
  • it offers an extremely popular self-publishing platform. Authors become Amazon partners, earning up to seventy per cent in royalties, as opposed to the fifteen per cent that authors typically make on hardcovers. Bezos touts the biggest successes, such as Theresa Ragan, whose self-published thrillers and romances have been downloaded hundreds of thousands of times. But one survey found that half of all self-published authors make less than five hundred dollars a year.
  • The business term for all this clear-cutting is “disintermediation”: the elimination of the “gatekeepers,” as Bezos calls the professionals who get in the customer’s way. There’s a populist inflection to Amazon’s propaganda, an argument against élitist institutions and for “the democratization of the means of production”—a common line of thought in the West Coast tech world
  • “Book publishing is a very human business, and Amazon is driven by algorithms and scale,” Sargent told me. When a house gets behind a new book, “well over two hundred people are pushing your book all over the place, handing it to people, talking about it. A mass of humans, all in one place, generating tremendous energy—that’s the magic potion of publishing. . . . That’s pretty hard to replicate in Amazon’s publishing world, where they have hundreds of thousands of titles.”
  • By producing its own original work, Amazon can sell more devices and sign up more Prime members—a major source of revenue. While the company was building the
  • Like the publishing venture, Amazon Studios set out to make the old “gatekeepers”—in this case, Hollywood agents and executives—obsolete. “We let the data drive what to put in front of customers,” Carr told the Wall Street Journal. “We don’t have tastemakers deciding what our customers should read, listen to, and watch.”
  • book publishers have been consolidating for several decades, under the ownership of media conglomerates like News Corporation, which squeeze them for profits, or holding companies such as Rivergroup, which strip them to service debt. The effect of all this corporatization, as with the replacement of independent booksellers by superstores, has been to privilege the blockbuster.
  • Publishers sometimes pass on this cost to authors, by redefining royalties as a percentage of the publisher’s receipts, not of the book’s list price. Recently, publishers say, Amazon began demanding an additional payment, amounting to approximately one per cent of net sales
  • the long-term outlook is discouraging. This is partly because Americans don’t read as many books as they used to—they are too busy doing other things with their devices—but also because of the relentless downward pressure on prices that Amazon enforces.
  • he digital market is awash with millions of barely edited titles, most of it dreck, while r
  • Amazon believes that its approach encourages ever more people to tell their stories to ever more people, and turns writers into entrepreneurs; the price per unit might be cheap, but the higher number of units sold, and the accompanying royalties, will make authors wealthier
  • In Friedman’s view, selling digital books at low prices will democratize reading: “What do you want as an author—to sell books to as few people as possible for as much as possible, or for as little as possible to as many readers as possible?”
  • The real talent, the people who are writers because they happen to be really good at writing—they aren’t going to be able to afford to do it.”
  • Seven-figure bidding wars still break out over potential blockbusters, even though these battles often turn out to be follies. The quest for publishing profits in an economy of scarcity drives the money toward a few big books. So does the gradual disappearance of book reviewers and knowledgeable booksellers, whose enthusiasm might have rescued a book from drowning in obscurity. When consumers are overwhelmed with choices, some experts argue, they all tend to buy the same well-known thing.
  • These trends point toward what the literary agent called “the rich getting richer, the poor getting poorer.” A few brand names at the top, a mass of unwashed titles down below, the middle hollowed out: the book business in the age of Amazon mirrors the widening inequality of the broader economy.
  • “If they did, in my opinion they would save the industry. They’d lose thirty per cent of their sales, but they would have an additional thirty per cent for every copy they sold, because they’d be selling directly to consumers. The industry thinks of itself as Procter & Gamble*. What gave publishers the idea that this was some big goddam business? It’s not—it’s a tiny little business, selling to a bunch of odd people who read.”
  • Bezos is right: gatekeepers are inherently élitist, and some of them have been weakened, in no small part, because of their complacency and short-term thinking. But gatekeepers are also barriers against the complete commercialization of ideas, allowing new talent the time to develop and learn to tell difficult truths. When the last gatekeeper but one is gone, will Amazon care whether a book is any good? ♦
Javier E

Understanding What's Wrong With Facebook | Talking Points Memo - 0 views

  • to really understand the problem with Facebook we need to understand the structural roots of that problem, how much of it is baked into the core architecture of the site and its very business model
  • much of it is inherent in the core strategies of the post-2000, second wave Internet tech companies that now dominate our information space and economy.
  • Facebook is an ingenious engine for information and ideational manipulation.
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  • Good old fashioned advertising does that to a degree. But Facebook is much more powerful, adaptive and efficient.
  • Facebook is designed to do specific things. It’s an engine to understand people’s minds and then manipulate their thinking.
  • Those tools are refined for revenue making but can be used for many other purposes. That makes it ripe for misuse and bad acting.
  • The core of all second wave Internet commerce operations was finding network models where costs grow mathematically and revenues grow exponentially.
  • The network and its dominance is the product and once it takes hold the cost inputs remained constrained while the revenues grow almost without limit.
  • Facebook is best understood as a fantastically profitable nuclear energy company whose profitability is based on dumping the waste on the side of the road and accepting frequent accidents and explosions as inherent to the enterprise.
  • That’s why these companies employ so few people relative to scale and profitability.
  • That’s why there’s no phone support for Google or Facebook or Twitter. If half the people on the planet are ‘customers’ or users that’s not remotely possible.
  • The core economic model requires doing all of it on the cheap. Indeed, what Zuckerberg et al. have created with Facebook is so vast that the money required not to do it on the cheap almost defies imagination.
  • Facebook’s core model and concept requires not taking responsibility for what others do with the engine created to drive revenue.
  • It all amounts to a grand exercise in socializing the externalities and keeping all the revenues for the owners.
  • Here’s a way to think about it. Nuclear power is actually incredibly cheap. The fuel is fairly plentiful and easy to pull out of the ground. You set up a little engine and it generates energy almost without limit. What makes it ruinously expensive is managing the externalities – all the risks and dangers, the radiation, accidents, the constant production of radioactive waste.
  • managing or distinguishing between legitimate and bad-acting uses of the powerful Facebook engine is one that would require huge, huge investments of money and armies of workers to manage
  • But back to Facebook. The point is that they’ve created a hugely powerful and potentially very dangerous machine
  • The core business model is based on harvesting the profits from the commercial uses of the machine and using algorithms and very, very limited personnel (relative to scale) to try to get a handle on the most outrageous and shocking abuses which the engine makes possible.
  • Zuckerberg may be a jerk and there really is a culture of bad acting within the organization. But it’s not about him being a jerk. Replace him and his team with non-jerks and you’d still have a similar core problem.
  • To manage the potential negative externalities, to take some responsibility for all the dangerous uses the engine makes possible would require money the owners are totally unwilling and in some ways are unable to spend.
Javier E

Opinion | You Are the Object of Facebook's Secret Extraction Operation - The New York T... - 0 views

  • Facebook is not just any corporation. It reached trillion-dollar status in a single decade by applying the logic of what I call surveillance capitalism — an economic system built on the secret extraction and manipulation of human data
  • Facebook and other leading surveillance capitalist corporations now control information flows and communication infrastructures across the world.
  • These infrastructures are critical to the possibility of a democratic society, yet our democracies have allowed these companies to own, operate and mediate our information spaces unconstrained by public law.
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  • The result has been a hidden revolution in how information is produced, circulated and acted upon
  • The world’s liberal democracies now confront a tragedy of the “un-commons.” Information spaces that people assume to be public are strictly ruled by private commercial interests for maximum profit.
  • The internet as a self-regulating market has been revealed as a failed experiment. Surveillance capitalism leaves a trail of social wreckage in its wake: the wholesale destruction of privacy, the intensification of social inequality, the poisoning of social discourse with defactualized information, the demolition of social norms and the weakening of democratic institutions.
  • These social harms are not random. They are tightly coupled effects of evolving economic operations. Each harm paves the way for the next and is dependent on what went before.
  • There is no way to escape the machine systems that surveil u
  • All roads to economic and social participation now lead through surveillance capitalism’s profit-maximizing institutional terrain, a condition that has intensified during nearly two years of global plague.
  • Will Facebook’s digital violence finally trigger our commitment to take back the “un-commons”?
  • Will we confront the fundamental but long ignored questions of an information civilization: How should we organize and govern the information and communication spaces of the digital century in ways that sustain and advance democratic values and principles?
  • Mark Zuckerberg’s start-up did not invent surveillance capitalism. Google did that. In 2000, when only 25 percent of the world’s information was stored digitally, Google was a tiny start-up with a great search product but little revenue.
  • By 2001, in the teeth of the dot-com bust, Google’s leaders found their breakthrough in a series of inventions that would transform advertising. Their team learned how to combine massive data flows of personal information with advanced computational analyses to predict where an ad should be placed for maximum “click through.”
  • Google’s scientists learned how to extract predictive metadata from this “data exhaust” and use it to analyze likely patterns of future behavior.
  • Prediction was the first imperative that determined the second imperative: extraction.
  • Lucrative predictions required flows of human data at unimaginable scale. Users did not suspect that their data was secretly hunted and captured from every corner of the internet and, later, from apps, smartphones, devices, cameras and sensors
  • User ignorance was understood as crucial to success. Each new product was a means to more “engagement,” a euphemism used to conceal illicit extraction operations.
  • When asked “What is Google?” the co-founder Larry Page laid it out in 2001,
  • “Storage is cheap. Cameras are cheap. People will generate enormous amounts of data,” Mr. Page said. “Everything you’ve ever heard or seen or experienced will become searchable. Your whole life will be searchable.”
  • Instead of selling search to users, Google survived by turning its search engine into a sophisticated surveillance medium for seizing human data
  • Company executives worked to keep these economic operations secret, hidden from users, lawmakers, and competitors. Mr. Page opposed anything that might “stir the privacy pot and endanger our ability to gather data,” Mr. Edwards wrote.
  • As recently as 2017, Eric Schmidt, the executive chairman of Google’s parent company, Alphabet, acknowledged the role of Google’s algorithmic ranking operations in spreading corrupt information. “There is a line that we can’t really get across,” he said. “It is very difficult for us to understand truth.” A company with a mission to organize and make accessible all the world’s information using the most sophisticated machine systems cannot discern corrupt information.
  • This is the economic context in which disinformation wins
  • In March 2008, Mr. Zuckerberg hired Google’s head of global online advertising, Sheryl Sandberg, as his second in command. Ms. Sandberg had joined Google in 2001 and was a key player in the surveillance capitalism revolution. She led the build-out of Google’s advertising engine, AdWords, and its AdSense program, which together accounted for most of the company’s $16.6 billion in revenue in 2007.
  • A Google multimillionaire by the time she met Mr. Zuckerberg, Ms. Sandberg had a canny appreciation of Facebook’s immense opportunities for extraction of rich predictive data. “We have better information than anyone else. We know gender, age, location, and it’s real data as opposed to the stuff other people infer,” Ms. Sandberg explained
  • The company had “better data” and “real data” because it had a front-row seat to what Mr. Page had called “your whole life.”
  • Facebook paved the way for surveillance economics with new privacy policies in late 2009. The Electronic Frontier Foundation warned that new “Everyone” settings eliminated options to restrict the visibility of personal data, instead treating it as publicly available information.
  • Mr. Zuckerberg “just went for it” because there were no laws to stop him from joining Google in the wholesale destruction of privacy. If lawmakers wanted to sanction him as a ruthless profit-maximizer willing to use his social network against society, then 2009 to 2010 would have been a good opportunity.
  • Facebook was the first follower, but not the last. Google, Facebook, Amazon, Microsoft and Apple are private surveillance empires, each with distinct business models.
  • In 2021 these five U.S. tech giants represent five of the six largest publicly traded companies by market capitalization in the world.
  • As we move into the third decade of the 21st century, surveillance capitalism is the dominant economic institution of our time. In the absence of countervailing law, this system successfully mediates nearly every aspect of human engagement with digital information
  • Today all apps and software, no matter how benign they appear, are designed to maximize data collection.
  • Historically, great concentrations of corporate power were associated with economic harms. But when human data are the raw material and predictions of human behavior are the product, then the harms are social rather than economic
  • The difficulty is that these novel harms are typically understood as separate, even unrelated, problems, which makes them impossible to solve. Instead, each new stage of harm creates the conditions for the next stage.
  • Fifty years ago the conservative economist Milton Friedman exhorted American executives, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Even this radical doctrine did not reckon with the possibility of no rules.
  • With privacy out of the way, ill-gotten human data are concentrated within private corporations, where they are claimed as corporate assets to be deployed at will.
  • The sheer size of this knowledge gap is conveyed in a leaked 2018 Facebook document, which described its artificial intelligence hub, ingesting trillions of behavioral data points every day and producing six million behavioral predictions each second.
  • Next, these human data are weaponized as targeting algorithms, engineered to maximize extraction and aimed back at their unsuspecting human sources to increase engagement
  • Targeting mechanisms change real life, sometimes with grave consequences. For example, the Facebook Files depict Mr. Zuckerberg using his algorithms to reinforce or disrupt the behavior of billions of people. Anger is rewarded or ignored. News stories become more trustworthy or unhinged. Publishers prosper or wither. Political discourse turns uglier or more moderate. People live or die.
  • Occasionally the fog clears to reveal the ultimate harm: the growing power of tech giants willing to use their control over critical information infrastructure to compete with democratically elected lawmakers for societal dominance.
  • when it comes to the triumph of surveillance capitalism’s revolution, it is the lawmakers of every liberal democracy, especially in the United States, who bear the greatest burden of responsibility. They allowed private capital to rule our information spaces during two decades of spectacular growth, with no laws to stop it.
  • All of it begins with extraction. An economic order founded on the secret massive-scale extraction of human data assumes the destruction of privacy as a nonnegotiable condition of its business operations.
  • We can’t fix all our problems at once, but we won’t fix any of them, ever, unless we reclaim the sanctity of information integrity and trustworthy communications
  • The abdication of our information and communication spaces to surveillance capitalism has become the meta-crisis of every republic, because it obstructs solutions to all other crises.
  • Neither Google, nor Facebook, nor any other corporate actor in this new economic order set out to destroy society, any more than the fossil fuel industry set out to destroy the earth.
  • like global warming, the tech giants and their fellow travelers have been willing to treat their destructive effects on people and society as collateral damage — the unfortunate but unavoidable byproduct of perfectly legal economic operations that have produced some of the wealthiest and most powerful corporations in the history of capitalism.
  • Where does that leave us?
  • Democracy is the only countervailing institutional order with the legitimate authority and power to change our course. If the ideal of human self-governance is to survive the digital century, then all solutions point to one solution: a democratic counterrevolution.
  • instead of the usual laundry lists of remedies, lawmakers need to proceed with a clear grasp of the adversary: a single hierarchy of economic causes and their social harms.
  • We can’t rid ourselves of later-stage social harms unless we outlaw their foundational economic causes
  • This means we move beyond the current focus on downstream issues such as content moderation and policing illegal content. Such “remedies” only treat the symptoms without challenging the illegitimacy of the human data extraction that funds private control over society’s information spaces
  • Similarly, structural solutions like “breaking up” the tech giants may be valuable in some cases, but they will not affect the underlying economic operations of surveillance capitalism.
  • Instead, discussions about regulating big tech should focus on the bedrock of surveillance economics: the secret extraction of human data from realms of life once called “private.
  • No secret extraction means no illegitimate concentrations of knowledge about people. No concentrations of knowledge means no targeting algorithms. No targeting means that corporations can no longer control and curate information flows and social speech or shape human behavior to favor their interests
  • the sober truth is that we need lawmakers ready to engage in a once-a-century exploration of far more basic questions:
  • How should we structure and govern information, connection and communication in a democratic digital century?
  • What new charters of rights, legislative frameworks and institutions are required to ensure that data collection and use serve the genuine needs of individuals and society?
  • What measures will protect citizens from unaccountable power over information, whether it is wielded by private companies or governments?
  • The corporation that is Facebook may change its name or its leaders, but it will not voluntarily change its economics.
Javier E

Robert Reich: A single-payer health care system is inevitable - Salon.com - 1 views

  • In a nutshell, the more sick people and the fewer healthy people a private for-profit insurer attracts, the less competitive that insurer becomes relative to other insurers that don’t attract as high a percentage of the sick but a higher percentage of the healthy.
  • If insurers had no idea who’d be sick and who’d be healthy when they sign up for insurance (and keep them insured at the same price even after they become sick), this wouldn’t be a problem. But they do know — and they’re developing more and more sophisticated ways of finding out.
  • Health insurers spend lots of time, effort and money trying to attract people who have high odds of staying healthy (the young and the fit) while doing whatever they can to fend off those who have high odds of getting sick (the older, infirm and the unfit).
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  • As a result we end up with the most bizarre health-insurance system imaginable: One ever better designed to avoid sick people.
  • America’s giant health insurers are now busily consolidating into ever-larger behemoths.
  • In reality, they’re becoming huge to get more bargaining leverage over everyone they do business with — hospitals, doctors, employers, the government and consumers. That way they make even bigger profits.
  • researchers found, for example, that after Aetna merged with Prudential HealthCare in 1999, premiums rose 7 percent higher than had the merger not occurred.
  • The real choice in the future is either a hugely expensive for-profit oligopoly with the market power to charge high prices even to healthy people and stop insuring sick people.
  • Or else a government-run single payer system — such as is in place in almost every other advanced economy — dedicated to lower premiums and better care for everyone.
Javier E

Rethinking Our 'Rights' to Dangerous Behaviors - NYTimes.com - 0 views

  • Freudenberg’s case is that the food industry is but one example of the threat to public health posed by what he calls “the corporate consumption complex,” an alliance of corporations, banks, marketers and others that essentially promote and benefit from unhealthy lifestyles.
  • six industries — food and beverage, tobacco, alcohol, firearms, pharmaceutical and automotive — use pretty much the same playbook to defend the sales of health-threatening products. This playbook, largely developed by the tobacco industry, disregards human health and poses greater threats to our existence than any communicable disease you can name.
  • All of these industries work hard to defend our “right” — to smoke, feed our children junk, carry handguns and so on — as matters of choice, freedom and responsibility. Their unified line is that anything that restricts those “rights” is un-American.
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  • each industry, as it (mostly) legally can, designs products that are difficult to resist and sometimes addictive.
  • The issues of auto and gun safety, of drug, alcohol and tobacco addiction, and of hyperconsumption of unhealthy food are not as distinct as we’ve long believed; really, they’re quite similar. For example, the argument for protecting people against marketers of junk food relies in part on the fact that antismoking regulations and seatbelt laws were initially attacked as robbing us of choice; now we know they’re lifesavers.
  • Until now (and, sadly, perhaps well into the future), corporations have been both more nimble and more flush with cash than the public health arms of government
  • “What we need,” Freudenberg said to me, “is to return to the public sector the right to set health policy and to limit corporations’ freedom to profit at the expense of public health.”
  • The turning point in the tobacco wars was when the question changed from the industry’s — “Do people have the right to smoke?” — to that of public health: “Do people have the right to breathe clean air?” Note that both questions are legitimate, but if you address the first (to which the answer is of course “yes”) without asking the second (to which the answer is of course also “yes”) you miss an opportunity to convert the answer from one that leads to greater industry profits to one that has literally cut smoking rates in half.
  • Similarly, we need to be asking not “Do junk food companies have the right to market to children?” but “Do children have the right to a healthy diet?”
  • The question is not only, “Do we have a right to bear arms?” but also “Do we have the right to be safe in our streets and schools?”
  • n short, says Freudenberg: “The right to be healthy trumps the right of corporations to promote choices that lead to premature death and preventable illnesses. Protecting public health is a fundamental government responsibility
  • “Shouldn’t science and technology be used to improve human well-being, not to advance business goals that harm health?” Two other questions that can be answered “yes.”
Javier E

Mark Zuckerberg, Let Me Pay for Facebook - NYTimes.com - 0 views

  • 93 percent of the public believes that “being in control of who can get information about them is important,” and yet the amount of information we generate online has exploded and we seldom know where it all goes.
  • the pop-up and the ad-financed business model. The former is annoying but it’s the latter that is helping destroy the fabric of a rich, pluralistic Internet.
  • Facebook makes about 20 cents per user per month in profit. This is a pitiful sum, especially since the average user spends an impressive 20 hours on Facebook every month, according to the company. This paltry profit margin drives the business model: Internet ads are basically worthless unless they are hyper-targeted based on tracking and extensive profiling of users. This is a bad bargain, especially since two-thirds of American adults don’t want ads that target them based on that tracking and analysis of personal behavior.
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  • This way of doing business rewards huge Internet platforms, since ads that are worth so little can support only companies with hundreds of millions of users.
  • Ad-based businesses distort our online interactions. People flock to Internet platforms because they help us connect with one another or the world’s bounty of information — a crucial, valuable function. Yet ad-based financing means that the companies have an interest in manipulating our attention on behalf of advertisers, instead of letting us connect as we wish.
  • Many users think their feed shows everything that their friends post. It doesn’t. Facebook runs its billion-plus users’ newsfeed by a proprietary, ever-changing algorithm that decides what we see. If Facebook didn’t have to control the feed to keep us on the site longer and to inject ads into our stream, it could instead offer us control over this algorithm.
  • we’re not starting from scratch. Micropayment systems that would allow users to spend a few cents here and there, not be so easily tracked by all the Big Brothers, and even allow personalization were developed in the early days of the Internet. Big banks and large Internet platforms didn’t show much interest in this micropayment path, which would limit their surveillance abilities. We can revive it.
  • What to do? It’s simple: Internet sites should allow their users to be the customers. I would, as I bet many others would, happily pay more than 20 cents per month for a Facebook or a Google that did not track me, upgraded its encryption and treated me as a customer whose preferences and privacy matter.
  • Many people say that no significant number of users will ever pay directly for Internet services. But that is because we are misled by the mantra that these services are free. With growing awareness of the privacy cost of ads, this may well change. Millions of people pay for Netflix despite the fact that pirated copies of many movies are available free. We eventually pay for ads, anyway, as that cost is baked into products we purchase
  • A seamless, secure micropayment system that spreads a few pennies at a time as we browse a social network, up to a preset monthly limit, would alter the whole landscape for the better.
  • Many nonprofits and civic groups that were initially thrilled about their success in using Facebook to reach people are now despondent as their entries are less and less likely to reach people who “liked” their posts unless they pay Facebook to help boost their updates.
  • If even a quarter of Facebook’s 1.5 billion users were willing to pay $1 per month in return for not being tracked or targeted based on their data, that would yield more than $4 billion per year — surely a number worth considering.
  • Mr. Zuckerberg has reportedly spent more than $30 million to buy the homes around his in Palo Alto, Calif., and more than $100 million for a secluded parcel of land in Hawaii. He knows privacy is worth paying for. So he should let us pay a few dollars to protect ours.
Javier E

Why Silicon Valley can't fix itself | News | The Guardian - 1 views

  • After decades of rarely apologising for anything, Silicon Valley suddenly seems to be apologising for everything. They are sorry about the trolls. They are sorry about the bots. They are sorry about the fake news and the Russians, and the cartoons that are terrifying your kids on YouTube. But they are especially sorry about our brains.
  • Sean Parker, the former president of Facebook – who was played by Justin Timberlake in The Social Network – has publicly lamented the “unintended consequences” of the platform he helped create: “God only knows what it’s doing to our children’s brains.”
  • Parker, Rosenstein and the other insiders now talking about the harms of smartphones and social media belong to an informal yet influential current of tech critics emerging within Silicon Valley. You could call them the “tech humanists”. Amid rising public concern about the power of the industry, they argue that the primary problem with its products is that they threaten our health and our humanity.
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  • It is clear that these products are designed to be maximally addictive, in order to harvest as much of our attention as they can. Tech humanists say this business model is both unhealthy and inhumane – that it damages our psychological well-being and conditions us to behave in ways that diminish our humanity
  • The main solution that they propose is better design. By redesigning technology to be less addictive and less manipulative, they believe we can make it healthier – we can realign technology with our humanity and build products that don’t “hijack” our minds.
  • its most prominent spokesman is executive director Tristan Harris, a former “design ethicist” at Google who has been hailed by the Atlantic magazine as “the closest thing Silicon Valley has to a conscience”. Harris has spent years trying to persuade the industry of the dangers of tech addiction.
  • In February, Pierre Omidyar, the billionaire founder of eBay, launched a related initiative: the Tech and Society Solutions Lab, which aims to “maximise the tech industry’s contributions to a healthy society”.
  • the tech humanists are making a bid to become tech’s loyal opposition. They are using their insider credentials to promote a particular diagnosis of where tech went wrong and of how to get it back on track
  • The real reason tech humanism matters is because some of the most powerful people in the industry are starting to speak its idiom. Snap CEO Evan Spiegel has warned about social media’s role in encouraging “mindless scrambles for friends or unworthy distractions”,
  • In short, the effort to humanise computing produced the very situation that the tech humanists now consider dehumanising: a wilderness of screens where digital devices chase every last instant of our attention.
  • After years of ignoring their critics, industry leaders are finally acknowledging that problems exist. Tech humanists deserve credit for drawing attention to one of those problems – the manipulative design decisions made by Silicon Valley.
  • these decisions are only symptoms of a larger issue: the fact that the digital infrastructures that increasingly shape our personal, social and civic lives are owned and controlled by a few billionaires
  • Because it ignores the question of power, the tech-humanist diagnosis is incomplete – and could even help the industry evade meaningful reform
  • Taken up by leaders such as Zuckerberg, tech humanism is likely to result in only superficial changes
  • they will not address the origin of that anger. If anything, they will make Silicon Valley even more powerful.
  • To the litany of problems caused by “technology that extracts attention and erodes society”, the text asserts that “humane design is the solution”. Drawing on the rhetoric of the “design thinking” philosophy that has long suffused Silicon Valley, the website explains that humane design “starts by understanding our most vulnerable human instincts so we can design compassionately”
  • this language is not foreign to Silicon Valley. On the contrary, “humanising” technology has long been its central ambition and the source of its power. It was precisely by developing a “humanised” form of computing that entrepreneurs such as Steve Jobs brought computing into millions of users’ everyday lives
  • Facebook had a new priority: maximising “time well spent” on the platform, rather than total time spent. By “time well spent”, Zuckerberg means time spent interacting with “friends” rather than businesses, brands or media sources. He said the News Feed algorithm was already prioritising these “more meaningful” activities.
  • They believe we can use better design to make technology serve human nature rather than exploit and corrupt it. But this idea is drawn from the same tradition that created the world that tech humanists believe is distracting and damaging us.
  • Tech humanists say they want to align humanity and technology. But this project is based on a deep misunderstanding of the relationship between humanity and technology: namely, the fantasy that these two entities could ever exist in separation.
  • The story of our species began when we began to make tools
  • All of which is to say: humanity and technology are not only entangled, they constantly change together.
  • This is not just a metaphor. Recent research suggests that the human hand evolved to manipulate the stone tools that our ancestors used
  • The ways our bodies and brains change in conjunction with the tools we make have long inspired anxieties that “we” are losing some essential qualities
  • Yet as we lose certain capacities, we gain new ones.
  • The nature of human nature is that it changes. It can not, therefore, serve as a stable basis for evaluating the impact of technology
  • Yet the assumption that it doesn’t change serves a useful purpose. Treating human nature as something static, pure and essential elevates the speaker into a position of power. Claiming to tell us who we are, they tell us how we should be.
  • Holding humanity and technology separate clears the way for a small group of humans to determine the proper alignment between them
  • Harris and his fellow tech humanists also frequently invoke the language of public health. The Center for Humane Technology’s Roger McNamee has gone so far as to call public health “the root of the whole thing”, and Harris has compared using Snapchat to smoking cigarettes
  • The public-health framing casts the tech humanists in a paternalistic role. Resolving a public health crisis requires public health expertise. It also precludes the possibility of democratic debate. You don’t put the question of how to treat a disease up for a vote – you call a doctor.
  • They also remain confined to the personal level, aiming to redesign how the individual user interacts with technology rather than tackling the industry’s structural failures. Tech humanism fails to address the root cause of the tech backlash: the fact that a small handful of corporations own our digital lives and strip-mine them for profit.
  • This is a fundamentally political and collective issue. But by framing the problem in terms of health and humanity, and the solution in terms of design, the tech humanists personalise and depoliticise it.
  • Far from challenging Silicon Valley, tech humanism offers Silicon Valley a useful way to pacify public concerns without surrendering any of its enormous wealth and power.
  • these principles could make Facebook even more profitable and powerful, by opening up new business opportunities. That seems to be exactly what Facebook has planned.
  • reported that total time spent on the platform had dropped by around 5%, or about 50m hours per day. But, Zuckerberg said, this was by design: in particular, it was in response to tweaks to the News Feed that prioritised “meaningful” interactions with “friends” rather than consuming “public content” like video and news. This would ensure that “Facebook isn’t just fun, but also good for people’s well-being”
  • Zuckerberg said he expected those changes would continue to decrease total time spent – but “the time you do spend on Facebook will be more valuable”. This may describe what users find valuable – but it also refers to what Facebook finds valuable
  • not all data is created equal. One of the most valuable sources of data to Facebook is used to inform a metric called “coefficient”. This measures the strength of a connection between two users – Zuckerberg once called it “an index for each relationship”
  • Facebook records every interaction you have with another user – from liking a friend’s post or viewing their profile, to sending them a message. These activities provide Facebook with a sense of how close you are to another person, and different activities are weighted differently.
  • Messaging, for instance, is considered the strongest signal. It’s reasonable to assume that you’re closer to somebody you exchange messages with than somebody whose post you once liked.
  • Why is coefficient so valuable? Because Facebook uses it to create a Facebook they think you will like: it guides algorithmic decisions about what content you see and the order in which you see it. It also helps improve ad targeting, by showing you ads for things liked by friends with whom you often interact
  • emphasising time well spent means creating a Facebook that prioritises data-rich personal interactions that Facebook can use to make a more engaging platform.
  • “time well spent” means Facebook can monetise more efficiently. It can prioritise the intensity of data extraction over its extensiveness. This is a wise business move, disguised as a concession to critics
  • industrialists had to find ways to make the time of the worker more valuable – to extract more money from each moment rather than adding more moments. They did this by making industrial production more efficient: developing new technologies and techniques that squeezed more value out of the worker and stretched that value further than ever before.
  • there is another way of thinking about how to live with technology – one that is both truer to the history of our species and useful for building a more democratic future. This tradition does not address “humanity” in the abstract, but as distinct human beings, whose capacities are shaped by the tools they use.
  • It sees us as hybrids of animal and machine – as “cyborgs”, to quote the biologist and philosopher of science Donna Haraway.
  • The cyborg way of thinking, by contrast, tells us that our species is essentially technological. We change as we change our tools, and our tools change us. But even though our continuous co-evolution with our machines is inevitable, the way it unfolds is not. Rather, it is determined by who owns and runs those machines. It is a question of power
  • The various scandals that have stoked the tech backlash all share a single source. Surveillance, fake news and the miserable working conditions in Amazon’s warehouses are profitable. If they were not, they would not exist. They are symptoms of a profound democratic deficit inflicted by a system that prioritises the wealth of the few over the needs and desires of the many.
  • If being technological is a feature of being human, then the power to shape how we live with technology should be a fundamental human right
  • The decisions that most affect our technological lives are far too important to be left to Mark Zuckerberg, rich investors or a handful of “humane designers”. They should be made by everyone, together.
  • Rather than trying to humanise technology, then, we should be trying to democratise it. We should be demanding that society as a whole gets to decide how we live with technology
  • What does this mean in practice? First, it requires limiting and eroding Silicon Valley’s power.
  • Antitrust laws and tax policy offer useful ways to claw back the fortunes Big Tech has built on common resources
  • democratic governments should be making rules about how those firms are allowed to behave – rules that restrict how they can collect and use our personal data, for instance, like the General Data Protection Regulation
  • This means developing publicly and co-operatively owned alternatives that empower workers, users and citizens to determine how they are run.
  • we might demand that tech firms pay for the privilege of extracting our data, so that we can collectively benefit from a resource we collectively create.
caelengrubb

Microeconomics - Econlib - 0 views

  • The motivating force for the change came from the macro side, with modern macroeconomics being far more explicit than old-fashioned monetary theory about fluctuations in income and employment (as well as the price level).
  • Many different distortions can create similar anomalies. If cotton is subsidized, the price farmers get will exceed, by the amount of the subsidy, the value to consumers. Society thus stands to gain by eliminating the subsidy and moving to a price that is the same for both buyers and sellers.
  • Public finance (see public choice) looks at how the government enters the scene. Traditionally, its focus was on taxes, which automatically introduce “wedges” (differences between the price the buyer pays and the price the seller receives) and cause inefficiency.
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  • Applied welfare economics is the fruition of microeconomics.
  • It is hard to imagine a basic course in microeconomics failing to include numerous cases and examples drawn from all of the fields listed above. This is because microeconomics is so basic. It represents the trunk of the tree from which all the listed subfields have branche
  • The specialization of production and the institutions of trade, commerce, and markets long antedated the science of economics. Indeed, one can fairly say that from the very outset the science of economics entailed the study of the market forms that arose quite naturally (and without any help from economists) out of human behavior
  • In microeconomics this is translated into the notion of people maximizing their personal “utility,” or welfare.
  • At the beginning of the process, those who adopted the new hybrids made handsome profits.
  • The economics of supply and demand has a sort of moral or normative overtone, at least when it comes to dealing with a wide range of market distortions. In an undistorted market, buyers pay the market price up to the point where they judge further units not to be worth that price, while competitive sellers supply added units as long as they can make money on each increment.
  • The strength of microeconomics comes from the simplicity of its underlying structure and its close touch with the real world. In a nutshell, microeconomics has to do with supply and demand, and with the way they interact in various markets.
  • If price controls keep bread (or anything else) artificially cheap, the predictable result is that less will be supplied than is demanded.
  • Had the government given wheat farmers coupons, each of which permitted the farmer to market one bushel of wheat, wheat marketings could have been cut by the desired amount. Production inefficiencies could be avoided by allowing the farmers to buy and sell coupons among themselves.
  • monopoly represents the artificial restriction of production by an entity having sufficient “market power” to do so.
  • Modern monopolies are a bit less transparent, for two reasons. First, even though governments still grant monopolies, they usually grant them to the producers. Second, some monopolies just happen without government creating them, although these are usually short-lived.
  • A final example of what occurs with official prices that are too high is the phenomenon of “rent seeking,” which occurs when someone enters a business to earn a profit that the government has tried to make unusually high.
  • If the wage does not adjust downward to equate supply and demand, the rate of urban unemployment will rise until further migration is deterred. Still other examples are in banking and drugs.
  • Rent seeking also occurs when something of value (like import licenses or radio/TV franchises) is being given away or sold below its true value
  • The great unifying principles of microeconomics are, ever and always, supply and demand. The normative overtone of microeconomics comes from the fact that competitive supply price represents value as seen by suppliers, and competitive demand price represents value as seen by demanders.
Javier E

The 'E-Pimps' of OnlyFans - The New York Times - 0 views

  • Over the course of two dozen interviews spanning six countries, I’ve discovered a thriving warren of companies employing a similar business model, using ghostwriters on OnlyFans to provide digital intimacy at scale. These agencies operate, out of necessity, a little below the radar. They collectively represent hundreds of models, and some claim to bring in profits that can range into the seven figures annually.
  • OnlyFans started in 2016, and has since emerged as the top platform worldwide for creators to sell monthly subscriptions for self-produced erotic content. The platform has become synonymous with this sort of business, though some use it for other purposes.
  • The real product is relationships. Money from subscriptions can be trivial compared with the profits earned by selling custom videos, sexting sessions and other forms of fan interaction that require more concerted engagement than simply posting to a feed.
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  • Above all, the manual emphasized efficiency. Managers were told to answer DMs in less than five minutes, since users were coming to OnlyFans for immediate gratification and would go elsewhere if ignored. It encouraged the creation of keyboard shortcuts, so that managers could deploy an arsenal of rote sexual phrases with a few keystrokes, steering conversations toward the hard sell. It also outlined a series of strategies to boost engagement on the pages, including a gambit in which models would offer to rate a picture of a subscriber’s penis for a fee.
  • “Every page needs to have an established back story to make the person seem more believable,” it stated. OnlyFans works because people pay for a connection that feels deeper than porn. The document encouraged Ekko’s employees, called page managers, to identify “big spenders” who would part ways with more than $200 in short order, and cultivate a deep rapport by asking about their life and what they do for a living.
  • This can be extremely time-consuming: In an interview with this magazine last year, an OnlyFans creator said she spends six hours a day just sexting with subscribers. But these relationships are important to cultivate. In a blog post on its website, OnlyFans encourages creators to cater to their “superfans,” who pay for custom content and will “give more if they feel they’re getting something special.”
  • But all of them take advantage of the same raw materials: the endless reproducibility of digital images; the widespread global availability of cheap English-speaking labor; and the world’s unquenchable desire for companionship.
  • The key to this business model is the ready availability of cheap English-speaking labor around the globe. Job postings for OnlyFans chatters are widespread on freelance sites like Upwork, many offering as little as $3 an hour. Agency heads told me they’ve hired workers from Eastern Europe, Africa and all across Southeast Asia. “At the end of the day, it is a geo-arbitrage business,”
  • This phenomenon is part of a broader boom in homespun online businesses that connect cheap developing-world labor with American consumers, allowing the proprietor to step back and reap the profits
  • During his stint as a chatter, Andre has become intimately familiar with the quirks and desires of the subscribers. Over time, he’s learned something of a sex-work cliché: More than sexual gratification, he said, many of the guys just want someone to talk to
Emily Horwitz

Analysis: Entering the age of the $1 million medicine | Reuters - 0 views

  •  
    An interesting article about a new (and expensive!) gene therapy drug for an extremely small portion of the world's population. It reminded me of our discussions of utilitarianism during Jr. year TOK, in that insurance companies are not willing to cover the costs of certain medicines, because they will only benefit a small number of people. Instead, these companies prefer to cover the majority of people, to ensure their profit and their clients' benefit.
sissij

Lessons from Playing Golf with Trump - The New Yorker - 1 views

  • “I will buy one only if it has the potential to be the best. I’m not interested in having a nine.”
  • A friend asked me later whether Trump wasn’t “in on the joke” of his public persona, and I said that, as far as I could tell, the Trump we were used to seeing on television was the honest-to-god authentic Trump: a ten-year-old boy who, for unknown reasons, had been given a real airplane and a billion dollars. In other words, a fun guy to hang around with.
  • He was upset that I hadn’t written that he’d shot 71—a very good golf score, one stroke under par.
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  • He complained to me that golf publications never rank his courses high enough, because the people who do the rating hold a grudge against him, but he also said that he never allows raters to play his courses, because they would just get in the way of the members.
  • He wanted the number, and the fact that I hadn’t published the number proved that I was just like all the other biased reporters, who, because we’re all part of the anti-Trump media conspiracy, never give him as much credit as he deserves for being awesome.
  • In Trump’s own mind, I suspect, he really did shoot 71 that day, if not (by now) 69. Trump’s world is a parallel universe in which truth takes many forms, none of them necessarily based on reality.
  •  
    I think this article has a very interesting interpretation on Trump's personalities and behaviors. Something we think is absurd might be totally normal in other people's perspective. For example, in this article, the author states that Trump values social status and potential profit more than the real person or the real thing. It shows how people see this world differently and this affects how they make their moves and decisions. I think the overwhelming critics on Trump is partly because we don't understand Trump and don't even try to understand and accept him. He is an anomaly. Also, I think everybody observe the universe through their unique senses and perception, so we cannot tell whose reality is truer than others. Condemning others' reality won't bring us a good negotiation. --Sissi (1/14/2017)
sissij

Apple removed the New York Times app in China. Why now? - LA Times - 0 views

  • California’s Internet companies may have once dreamed of liberating China through technology, but these days they seem more willing than ever to play the Communist Party's game
  • "This is a restoration of the Cultural Revolution or another historical retrogression," said another.
  • The Washington Post is one of many Western newspapers that carries a regular paid supplement by China Daily, another Communist Party mouthpiece.
  •  
    The censorship in China has long been a controversial issue that's widely discussed. I think it's very natural that those internet companies play the government the rules to enter the Chinese market because most companies are profit-driven rather than being all idealistic. However, I found the tone of this article very uncomfortable. He used the word "liberating" as if China is in bad condition or great suffer that need American freedom to save. Also, looking back to American history, American heroism plays a big part in what the American government did. They "liberated" Canada, "liberated" Vietnam, "liberated" Pakistan, and now America tries to "liberate" China. However, they never fully understand the pros and cons of censorship and how China is a totally different country to America. One's medicine can toxic for another. --Sissi (1/6/2017)
kirkpatrickry

Charles Koch's Disturbing High School Economics Project Teaches 'Sacrificing Lives for ... - 0 views

  • Charles Koch is known for being CEO of industrial giant Koch Industries and a chief financier of the massive conservative political operation he runs with his brother David. In recent years, student activists and investigative journalists have exposed another of Koch’s hats: mega-donor to hundreds of colleges and universities, often funding free-market-focused academic centers housed at public and private schools alike. One Koch-funded program is advocating cutthroat economics to grade school students, even sacrificing lives for profits.
  • From 2005 to 2014, the Charles Koch Foundation doled out nearly $108 million to colleges and universities. The school that has accepted the second highest total from the Charles Koch Foundation from 2005 to 2014 is Florida State University, whose economics department entered into a 2008 agreement that gave the foundation a say in its curriculum and hiring decisions, as Dave Levinthal of the Center for Public Integrity reported. One part of the 2008 agreement, which proposed a $6.6 million budget to be funded by the Charles Koch Foundation and unnamed “Donor Partners,” established a “Program for Excellence in Economic Education” within the Gus A. Stavros Center for the Advancement of Free Enterprise and Economic Education, part of the economics department. Annual reports confirm these funding arrangements
Javier E

Minsky's moment | The Economist - 0 views

  • Minsky started with an explanation of investment. It is, in essence, an exchange of money today for money tomorrow. A firm pays now for the construction of a factory; profits from running the facility will, all going well, translate into money for it in coming years.
  • Put crudely, money today can come from one of two sources: the firm’s own cash or that of others (for example, if the firm borrows from a bank). The balance between the two is the key question for the financial system.
  • Minsky distinguished between three kinds of financing. The first, which he called “hedge financing”, is the safest: firms rely on their future cashflow to repay all their borrowings. For this to work, they need to have very limited borrowings and healthy profits. The second, speculative financing, is a bit riskier: firms rely on their cashflow to repay the interest on their borrowings but must roll over their debt to repay the principal. This should be manageable as long as the economy functions smoothly, but a downturn could cause distress. The third, Ponzi financing, is the most dangerous. Cashflow covers neither principal nor interest; firms are betting only that the underlying asset will appreciate by enough to cover their liabilities. If that fails to happen, they will be left exposed.
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  • Economies dominated by hedge financing—that is, those with strong cashflows and low debt levels—are the most stable. When speculative and, especially, Ponzi financing come to the fore, financial systems are more vulnerable. If asset values start to fall, either because of monetary tightening or some external shock, the most overstretched firms will be forced to sell their positions. This further undermines asset values, causing pain for even more firms. They could avoid this trouble by restricting themselves to hedge financing. But over time, particularly when the economy is in fine fettle, the temptation to take on debt is irresistible. When growth looks assured, why not borrow more? Banks add to the dynamic, lowering their credit standards the longer booms last. If defaults are minimal, why not lend more? Minsky’s conclusion was unsettling. Economic stability breeds instability. Periods of prosperity give way to financial fragility.
  • Minsky’s insight might sound obvious. Of course, debt and finance matter. But for decades the study of economics paid little heed to the former and relegated the latter to a sub-discipline, not an essential element in broader theories.
  • Minsky was a maverick. He challenged both the Keynesian backbone of macroeconomics and a prevailing belief in efficient markets.
  • t Messrs Hicks and Hansen largely left the financial sector out of the picture, even though Keynes was keenly aware of the importance of markets. To Minsky, this was an “unfair and naive representation of Keynes’s subtle and sophisticated views”. Minsky’s financial-instability hypothesis helped fill in the holes.
  • His challenge to the prophets of efficient markets was even more acute. Eugene Fama and Robert Lucas, among others, persuaded most of academia and policymaking circles that markets tended towards equilibrium as people digested all available information. The structure of the financial system was treated as almost irrelevant
  • In recent years, behavioural economists have attacked one plank of efficient-market theory: people, far from being rational actors who maximise their gains, are often clueless about what they want and make the wrong decisions.
  • But years earlier Minsky had attacked another: deep-seated forces in financial systems propel them towards trouble, he argued, with stability only ever a fleeting illusion.
  • Investors were faster than professors to latch onto his views. More than anyone else it was Paul McCulley of PIMCO, a fund-management group, who popularised his ideas. He coined the term “Minsky moment” to describe a situation when debt levels reach breaking-point and asset prices across the board start plunging. Mr McCulley initially used the term in explaining the Russian financial crisis of 1998. Since the global turmoil of 2008, it has become ubiquitous. For investment analysts and fund managers, a “Minsky moment” is now virtually synonymous with a financial crisis.
  • it would be a stretch to expect the financial-instability hypothesis to become a new foundation for economic theory. Minsky’s legacy has more to do with focusing on the right things than correctly structuring quantifiable models. It is enough to observe that debt and financial instability, his main preoccupations, have become some of the principal topics of inquiry for economists today
  • As Mr Krugman has quipped: “We are all Minskyites now.”
Javier E

Chick-fil-A is Bad For Your Political Health | Patrol - A review of religion and the mo... - 0 views

  • The premise is that politics and economics are separate realms, and we are “creating a culture” of division by dragging politics into such things as economic transactions. One could hardly better encapsulate the reality we live under, where economics have completely replaced politics. That’s pretty much the definition of classical liberalism: true politics, where human values are disputed, are expected to be sublimated by economic transactions.
  • The winner is the corporation, which can now reap the profits of a society where no human value is allowed to be more important than a business deal. (If you question that orthodoxy, you’re likely to be labeled a “radical” or a “partisan,” or better yet, just “too political.”) This ideology owes its entire existence to the need for capitalists to keep human values out of the way of the market. Above all, it must keep politics a dirty word, because people who know what politics are and how to use them can cause trouble for capitalists very quickly.
  • our commercial and our political lives are already completely intermeshed, because under the current regime we basically only have commercial lives. The only political power to be had in the United States is money, and even if you don’t have enough to make a corporation hurt, how you consume is one of the few expressions of political will open to the average citizen. They may not have enough money to shake the economy, and may not even when pooled with a large group of like-minded people. But a visceral awareness that money is politics is an excellent first step toward the average person realizing his or her political agency and taking responsibility for it.
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  • Even if the corporatization of our society is so complete that it is objectively impossible to avoid giving money to entities that are at that very moment working to undermine our political freedoms, every religious and ethically-minded institution should be urging those under its influence to be aware and resist wherever possible.
  • In sum, you should absolutely be supporting corporations that put human values ahead of profit, and doing your best to keep your dollars away from ones that exploit workers and try to obstruct democracy, whether directly by stripping workers of their rights or indirectly by supporting the exclusionary social fantasies of religious reactionaries.
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