Who talks like FDR but acts like Ayn Rand? Easy: Silicon Valley’s wealthiest and most powerful people

Tech’s toxic political culture: The stealth libertarianism of Silicon Valley bigwigs

Tech's toxic political culture: The stealth libertarianism of Silicon Valley bigwigs
Ayn Rand, Marc Andreessen, Franklin D. Roosevelt (Credit: AP/Reuters/Fred Prouser/Salon)

Marc Andreessen is a major architect of our current technologically mediated reality. As the leader of the team that created the Mosaic Web browser in the early ’90s and as co-founder of Netscape, Andreessen, possibly more than any single other person, helped make the Internet accessible to the masses.

In his second act as a Silicon Valley venture capitalist, Andreessen has hardly slackened the pace. The portfolio of companies with investments from his VC firm, Andreessen Horowitz, is a roll-call for tech “disruption.” (Included on the list: Airbnb, Lyft, Box, Oculus VR, Imgur, Pinterest, RapGenius, Skype and, of course, Twitter and Facebook.) Social media, the “sharing” economy, Bitcoin — Andreessen’s dollars are fueling all of it.

So when the man tweets, people listen.

And, good grief, right now the man is tweeting. Since Jan. 1, when Andreessen decided to aggressively reengage with Twitter after staying mostly silent for years, @pmarca has been pumping out so many tweets that one wonders how he finds time to attend to his normal business.

On June 1, Andreessen took his game to a new level. In what seems to be a major bid to establish himself as Silicon Valley’s premier public intellectual, Andreessen has deployed Twitter to deliver a unified theory of tech utopia.

In seven different multi-part tweet streams, adding up to a total of almost 100 tweets, Andreessen argues that we shouldn’t bother our heads about the prospect that robots will steal all our jobs.  Technological innovation will end poverty, solve bottlenecks in education and healthcare, and usher in an era of ubiquitous affluence in which all our basic needs are taken care of. We will occupy our time engaged in the creative pursuits of our heart’s desire.



So how do we get there? Easy! All we have to do is just get out of Silicon Valley’s way. (Andreessen is never specific about exactly what he means by this, but it’s easy to guess: Don’t burden tech’s disruptive firms with the safety, health and insurance regulations that the old economy must abide by.)

Oh, and one other little thing: Make sure that we have a social welfare safety net robust enough to take care of the people who fall though the cracks (or are eaten by robots).

The full collection of tweets marks an impressive achievement — a manifesto, you might even call it, although Andreessen has been quick to distinguish his techno-capitalist-created utopia from any kind of Marxist paradise. But there’s a hole in his argument big enough to steer a $500 million round of Series A financing right through. Getting out of the way of Silicon Valley and ensuring a strong safety net add up to a political paradox. Because Silicon Valley doesn’t want to pay for the safety net.

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http://www.salon.com/2014/06/06/techs_toxic_political_culture_the_stealth_libertarianism_of_silicon_valley_bigwigs/

Who Really Owns The Internet?

http://gagful.com/uploads/2011_12/1322992719_nothing_is_fun_in_the_internet_anymore_gag.jpg

Why are a tiny handful of people making so much money off of material produced for nothing or next-to-nothing by so many others? Why do we make it so easy for Internet moguls to avoid stepping on to what one called “the treadmill of paying for content”? Who owns the Internet?

In her excellent new book The People’s Platform, Astra Taylor thinks through issues of money and power in the age of the Internet with clarity, nuance, and wit. (The book is fun to read, even as it terrifies you about the future of culture and of the economy.) She brings to bear her estimable experience as a documentary filmmaker—she is the director of two engaging films about philosophy, Zizek! And Examined Life—as well as a publisher and musician. For the past several months, she has been on the road performing with the reunion tour of Neutral Milk Hotel (she is married to the band’s lead singer, Jeff Magnum). We spoke over coffee on the Lower East Side during a brief break from her tour.

Can we solve the issues that you talk about without radically reorganizing the economy?

No. (Laughs) Which I think is why I’ve been so active. I’ve been thinking about this in connection with all these writers who are coming up who found each other through Occupy, and why all of us were willing to participate in that uprising despite all the problems and the occasional ridiculousness of it.

But the economy can be revolutionized or the economy can be reformed, and I don’t discount the latter option. That level of social change happens in unpredictable ways. It’s actually harder to think of a revolutionary event that has had a positive outcome, whereas there have been lots of reforms and lots of things that people have done on the edges that have had powerful consequences. Would I like to see an economic revolution? Definitely. But I think there are a lot of ways to insert a kind of friction into the system that can be beneficial.

This book is about economics, and the amazing, probably very American ability to not talk about economics—particularly with technology, which is supposed to be this magical realm, so pure and disruptive and unpredictable that it transcends economic conditions and constraints. The basic idea is that that’s not the case.

To a lot of people this is self-evident, but I was surprised at how outside the mainstream conversation that insight was. When money is brought up, there’s this incredible romanticism, like the Yochai Benkler quote about being motivated by things other than money. But we’re talking about platforms that go to Goldman Sachs to handle their IPOs. Money is here. Wake up!

The people at the top are making money.

In that conversation about creativity and work, there’s so much ire directed at cultural elites. And rightly so. Newspapers suck. They’re not doing the job that they could do for us. Book publishers publish crap. Cultural elites deserve criticism. The punching bags of this Web 2.0 conversation all deserve it. But when we let the economic elites off the hook, that’s feeding into the tradition of right-wing populism. Ultimately, the guys getting rich behind the curtain aren’t being treated as the real enemies.

You mention that when you wrote to people who posted your films online, you either received no response or a very angry response.

One thing I took away from that experience is that it’s almost as though people really believe that the Internet is a library. “I should be able to watch on YouTube a full-length film about philosophy. It’s a library, it should be full of edifying, enlightening things!

My response was that I spent two years making this film, and I want a window—I didn’t ask them to take it down forever, I asked for a grace period of I think two months. Conceptually, we’re not grasping the fact that even though there are private platforms that increase our access to things, first those things have to exist. How have we not thought through how these products are funded?

I empathized with the person on the other end, who wanted these films. I made them because I hoped that people would want them. But I can’t invest another two years of my life in an esoteric and expensive production if all I can do is put it on YouTube and pray that it goes viral.

And even if it goes viral, you might not make any money from it.

Right. The whole model doesn’t work in that context. And I can see both sides. Especially on the copyright issue. As a documentary filmmaker, you’re so dependent on gleaning from the world, gleaning from other people’s creations. You’re not always the author of the words on the screen. I don’t want some closed, locked-down scenario where every utterance is closed and monitored by algorithms who have no ethical imperatives and have no nuance and who don’t understand fair use.

Another person I’ve talked to for this series is Benjamin Kunkel, who said his introduction to Marxist theory is already a bit antiquated because of Jesse Myerson’s Rolling Stone article, which recommends, among other things, a universal basic income. As I was reading your book, I was thinking about how a universal basic income might help.

I actually mention universal income in passing, in the chapter that looks at the enthusiasm for amateurism that was actually a bit more prominent a few years ago, when I started writing. “We finally have a platform that allows non-professionals to participate!There were things in that conversation that were so reminiscent of utopian predictions from centuries past about how machines would free us to live the life of a poet. “We’ll only work four hours a day.Why didn’t those visions come to pass? Because those machines were not harnessed by the people. They were harnessed by the ruling elite.

I was struck by how ours is a diminished utopianism. It wasn’t that we would use these machines to free us from labor; it was that now in our stolen minutes after work we can go online and be on social media. How did it come to this, that’s that all we can hope for? And the answer is in how the economy has been reshaped by neoliberalism or whatever you want to call it over the last few decades.

The idea of labor-saving devices has been around. Oscar Wilde, Keynes. But it was pretty common in the 1960s, when there was a robust social safety net. So I think you’re exactly right, that we need something in the public-policy and social sphere, not the technological sphere, to address these issues.

It’s great that people are talking about a universal income, at least in our little tiny circles. You step outside bubble of the young intellectual left of New York, and people will say: What the fuck are you talking about?

We think this idea is getting traction, but it’s because we all follow each other online and we’re all reading the same magazines. Not everyone is reading Kathi Weeks or Ben Kunkel in their free time. I don’t agree with Ben that his book is out of date because of that one article in Rolling Stone. We need to keep harping on these basic concepts.

I think it’s a ripe time for it, considering recent research into the employment prospects for millenials. College indebtedness is insane right now. That’s why I got involved with StrikeDebt. When the economy is forcing you to separate the romantic idea of what you consider your calling from what you have to do for money since there are no fucking jobs that have anything to do with your degree, you start to think that maybe a universal income might make a lot of sense.

If the economy won’t support you to do what you love for a living, you’re already halfway there.

Can you talk about Occupy and how you got involved?

I was working on this book before Occupy, and the tech realm was where a lot of our political hopes were being invested. If you think back, there wasn’t a vibrant protest movement in the US. Instead, there was this idea of democracy through social media, and technologically-enabled protests abroad. That might account a bit for why I gravitated towards this subject.

Then Occupy happened. If anything, it distracted me from The People’s Platform. I wound up putting out five issues of the Occupy Gazette with n+1. Then I got roped into, or rather I roped myself into, this offshoot of Occupy called StrikeDebt that has been doing the Rolling Jubilee campaign.

But my work with the Occupy campaign suffused my analysis more and more. Calling attention to the economic elite fits very well into Occupy’s idea of the ninety-nine percent and the one percent. The amount of value being hoarded by these companies is just mind-boggling.

So these projects did go in tandem. Both of them are thinking about power today. In this book, I was trying to think through how power operates in the technological sphere generally, but particularly in relationship to media. So no longer are you just watching what’s been chosen for you on television. Now you’re supposed to be the agent of your own destiny, clicking around. But there’s still power; there’s still money.

People will say, “How can you criticize these technological tools that helped people overthrow dictators?We constantly use this framework of the people against the authoritarian dictator. There was a lot of buzz about how social media empowered the protests in the Middle East which mostly turned out to be false. But what about the US? There’s no dictator. There’s a far more complicated power dynamic. The challenge of our generation is how you build economic association and aggregate economic power when you’re not going to be doing conventional workplace organizing, because there are no jobs, let alone stable, long-term jobs.

So, this is depressing. Could you talk about solutions?

The solutions aren’t that radical: The library model that we project on to the Internet but that doesn’t quite fit—we can invent something analogous to it. There are lots of cool things we could be doing. But we’re locked into this model that’s really stupid and inefficient: the advertising model. That’s the most ridiculous way to create these services and platforms. The advertising model is commonsensical because it’s common, but it’s not sensical.

What would socialized social media—and non-social media—look like?

Ben Kunkel has an essay where he talks a bit about this. But first, we have to get away from the idea that the government is the bad guy. One thing that we’ve learned in the wake of the NSA scandals is that the public and private sectors are really intertwined; government surveillance piggybacks off of corporate surveillance. It might be less technological and more about funding things for their own sake. If you look at countries with robust cultural policies, under the broadcast model a lot of them instate quotas. There would be a lot of protectionist regulations, and they would invest in their own work.

Quotas are complicated, obviously. But you can look to the model of public broadcasting. Public broadcasting wasn’t a government propaganda machine. Liberals and conservatives both worry that this would create something bland. But when public broadcasting came under fire, it was usually for being too edgy and provocative. There are mechanisms that you can introduce to prevent whatever visions of sad iron-curtain art you have in your head.

One thing that comes up a lot in some liberal critiques of Edward Snowden is that he might be a libertarian.

I don’t know Snowden, so I can’t comment on him. But I think that a lot of us are libertarians. Libertarianism is the default ideology of our day because there’s something deeply appealing about the idea of free agents—people on their own in charge of their own destinies. That has to do with the retreat of institutions from our lives, which results in an inability to imagine a positive role for them to play. We’re still dependent on institutions; we just don’t recognize it or give them much credit.

This ubiquitous libertarianism, particularly in tech circles, was a major target of my book. All of these things you want these tools to bring about—an egalitarian sphere, a sphere where the best could rise to the top, one that is not dominated by old Goliaths—within the libertarian framework, you’ll never get there. You have to have a more productive economic critique.

But I also think that if you’re on the left, you need to recognize what’s appealing about libertarianism. It’s the emphasis on freedom. We need to articulate a left politics that has freedom at its center. We can’t be afraid of freedom or individuality, and we need to challenge the idea that equality and freedom are somehow contradictions.

At the same time, even on the radical left, there’s a knee-jerk suspicion of institutions. When we criticize institutions that serve as buffers or bastions against market forces, the right wins out more. It’s a complicated thing.

When I defend institutions in this book, I knew I might provoke my more radical friends. The position that everything is corrupt—journalism is corrupt, educational institutions are corrupt, publishers are corrupt—sounds great. And on some level it’s true. They’ve disappointed us. But we need more and better—more robust, more accountable—institutions. So I tried to move out of the position of just criticizing those arrangements and enumerating all their flaws and all the ways they’ve failed us. What happens when we’ve burned all these institutions to the ground and it’s just us and Google?

One of my favorite aspects of your book is your emphasis on the physical aspects of the Internet. It reminded me of the scene in Examined Life where Zizek is standing on the garbage heap, talking about how material stuff disappears.

That image we have of the Internet as weightless—it’s so high-tech it doesn’t really exist!—is part of why we misunderstand it. There are some people doing good work around this, people like Andrew Blum, who wrote the book Tubes, asking what the Internet is. There’s infrastructure. It’s immense, and it’s of great consequence, especially as more and more of our lives move online. The materiality is really important to keep in mind.

We’re moving to a place where we have a better of grasp of this. People are finally realizing that the online and the offline are not separate realms. It’s not really like I have my online life where I’m pretending to be a 65-year-old man in a chat room, and then I’m Astra at the coffee shop. Those identities are as complicated and as coherent as any human identity has ever been. That can extend towards thinking about objects.

The other night I was re-reading Vance Packard’s The Waste Makers—the sort of book that makes you feel like you’re just reheated whatever, and that this person did it so much better the first time around. He outlines planned obsolescence, stuff made to break. It’s so relevant to our gadgets, our technology. He wrote it in 1960, at that moment where the economy had been saturated, so everybody had their fridge and their car. So how do you keep GDP going up? It’s actually patriotic to make things that break.

You talk about Steve Jobs in that context.

Steve Jobs is the ultimate incarnation of that plan. You have to have a new iPod every year. But he presented himself as this artist-craftsman who would never sacrifice quality. That’s such a lie.

You talk about how both sides of the Internet debate, if you will, see a radical break with the past, whereas you see more continuity.

I think that that’s crucial to understanding where we’re at. This standard assumption that there would be a massive transformation blocked us from seeing the obvious outcomes and set us back in terms of having a grasp on our current condition. If we had gone into it with a bit more realism, more respect for the power of the market, less faith in technology’s ability to transcend it, we’d be better off.

Could you say more about respect for the power of the market?

You don’t want to be too deterministic, I suppose, but the market drives the development of these tools. Especially once you’ve gone public and you’re beholden to your shareholders.

There’s confusion because we’ve been here before with the first tech boom. One thing that got me thinking about this—and that confused me—was that I came to New York right at the tail end of that. I didn’t work for a startup or anything like that, but I had friends who did, friends who were fired. I followed what was happening in the Bay Area, they lost hundreds of thousands of jobs. You think: okay, we learned from that. We learned that because of the way the market sought investments, they propped up some really stupid ideas, there was a bubble, and it burst. What’s amazing to me is that fifteen years later, the same commentators are suddenly back, talking about social media, Web 2.0, and making proclamations about how the culture will evolve. You were wrong then, partially because you ignored the financial aspect of what was going on, and here you are again, ignoring the money. Give the market its due.

Do you have advice for what people—people like me—who write or produce other work for the Internet can do about this situation?

I’m encouraged by all these little magazines that have started in the last few years. Building institutions, even if they’re small, is a very powerful thing, so that we’re less isolated. When you’re isolated, you’re forced into the logic of building our own brand. If you build something together, you’re more able to focus on endeavors that don’t immediately feed into that. That’s what an institution can buy you—the space to focus on other things.

What would help creators more than anything else in this country are things that would help other workers: Real public health care, real social provisions. Artists are people like everybody else; we need the same things as our barista.

I quote John Lennon: “You think you’re so clever and classless and free. One thing we need is an end to artist exceptionalism. When we can see our connection to other precarious people in the economy, that’s when interesting things could happen. When we justify our position with our own specialness…

You talk about how Steve Jobs would tell his employees that they were artists.

Right. How could you ask to be properly compensated, don’t you see that you’re supposed to be an artist? Grad students were given that advice, too.

That’s where this ties in to Miya Tokumitsu’s essay on the problems with the concept of “Do What You Love.”

Exactly. Now, precarity shouldn’t be a consequence of being an artist. Everyone should have more security. But it’s more and more the condition of our time. One thing I say in passing is that the ethos of the artist—someone who is willing to work around the clock with no security, and who will keep on working after punching out the clock—that attitude is more and more demanded of everyone in the economy. Maybe artists can be at the vanguard of saying no to that. But yes, there would have to be a psychological shift where people would have to accept being less special.

David Burr Gerrard’s debut novel, Short Century, has just been released by Rare Bird Books. He can be followed on Twitter. The interview has been condensed and edited.

http://www.theawl.com/2014/04/who-owns-the-internet

“Sharing economy” shams: Deception at the core of the Internet’s hottest businesses

 

How companies like Airbnb use the language of “sharing” and “gifts” to conceal ambitions far more libertarian

 

 

(Credit: akindo via iStock)

 

“Sharing is the new buying.”

The title of technology analyst Jeremy Owyang’s survey of the sharing economy was exquisitely designed to grab attention: It was released just before the start of SXSW Interactive, the annual orgy of techie self-congratulation held every March in Austin, Texas. It boasted a clever, cognitively disjunctive twist: Sharing? Buying? Aren’t they opposites? And in an era of unlimited hype, it tabulated real data, reportedly “engaging 90,112 people in the US, Canada and the UK” to discern how and why they were embracing services like Lyft and Airbnb and Yerdle.

The study’s findings make for interesting and useful reading for anyone tracking the rise of what is called “collaborative consumption” — the proliferation of services that allow us to rent out our spare rooms and cars and junk gathering dust in the garage. But as I perused the contents, I found myself repeatedly coming back to a question I’d been obsessing over for months.

What, I wondered, would a Kwakiutl chieftain make of the sharing economy? (Bear with me for a moment.)

It is one of the delightful oddities of Internet anthropology: Dig deep enough into the early days of online communication and you are sure to stumble upon references to the practices of the Kwakiutl, indigenous inhabitants of North America who once reigned over a significant swath of what is now British Columbia. The Kwakiutl were famous for their “gift economy” rituals, festive gatherings in which gifts were exchanged to mark relative social status and create ties of reciprocity.



It was once fashionable for both libertarian programmers and left-wing social critics to characterize the early growth of the Internet as following “gift economy” practices that broke the traditional rules of market capitalism. In the Internet’s gift economy, programmers built tools and wrote code that they contributed freely to the benefit of the common good. They didn’t labor for anything as crass as money. Because they wanted to “scratch their own itch,” or aspired to higher status among their own peers, or for reasons of simple pragmatism, voluntary coordination seemed like a more effective way to solve common problems. The Internet was one giant potluck (a word derived from the Kwakitul “potlatch”) — we brought what we had to give, and got to taste everyone else’s offerings. The theorist Richard Barbrook dubbed it “cybernetic communism.”

The new sharing economy overlaps with its predecessor, the gift economy, in many obvious ways: Before the emergence of globe-spanning digital networks, it was impossible for far-flung programmers to efficiently collaborate on huge projects like the Linux operating system. The infrastructure of the Internet enabled programmers to share, copy and modify code with ease. In other words, it was suddenly much easier to give away the product of your programming labor and coordinate that labor with others. Similarly, there’s no Lyft without networks and smartphones — and no way to find out where the nearest Lyft driver is to the would-be Lyft rider. The fact that the Internet and mobile devices have enabled much more efficient resource allocation is not hype. It’s a fundamental building block of our new world.

But there’s also an overlap of rhetoric. The early advocates of the Internet gift economy saw it as a better way to be. This amazing information-sharing network, built from code that anyone could modify or copy, would benefit all of society! The sharing economy is proselytized with similar language. Sharing apps, we are told, builds trust between consumers and service providers. Sharing our stuff also conserves resources (e.g., ride sharing is good for the planet). Stare long enough at the marketing materials for Yerdle — “a marketplace where everything is free” — and “cybernetic communism” seems alive and well.

But there’s one crucial area where the linkages between the gift economy and the sharing economy break down. Reciprocity. The anthropologists who studied the Kwakiutl and other cultures with similar gift economy practices argued that the act of gift giving was meant to be reciprocated. Gift giving created obligations to respond in kind. These mutual obligations were the ties that bound society together.

The sharing economy doesn’t work quite the same way. The most high-profile sharing economy apps are designed to generate significant profits for a relatively small number of people. It is an open question whether the concentration of wealth that will result will bind our society closer together or continue to exacerbate the growing income inequality that is ripping us apart. This is the defining contradiction of the new economy: apps that enable us to pinch pennies and survive in an era of intense competition — to make do with less — will make them rich. That’s not the Internet “gift economy” as originally conceived, a utopia in which we all benefit from our voluntary contributions. It’s something quite different — the relentless co-optation of the gift economy by market capitalism. The sharing economy, as practiced by Silicon Valley, is a betrayal of the gift economy. The potlatch has been paved over, and replaced with a digital shopping mall.

*  * *

In her introduction to Marcel Mauss’ “The Gift: The Form and Reason for Exchange in Archaic Societies,” the British anthropologist Mary Douglas wrote that “a gift that does nothing to enhance solidarity is a contradiction.” Mauss himself writes that potlatch implies “a succession of rights and duties to consume and reciprocate, corresponding to rights and duties to offer and accept.” When we give each other gifts we are not being altruists; we are strengthening our mutual connections. This is how a group of individuals becomes a society.

I won’t deny that you can hear faint echoes of this sense of solidarity in the sharing economy. When I fist-bump with a Lyft driver I feel more of a sense of connection with her than I do with my typical Yellow Cab driver. If your Airbnb experience has you ending up in a spare bedroom of a house that is occupied by its owner at the same time you are there, then you may very well strike up a bond more meaningful than those that you share with the concierge at the nearest Hilton.

But I can’t shake the suspicion that this nascent, fragile solidarity is nothing more than marketing for some of the most agile capitalists on the planet. Consider Lyft. Last week, Lyft announced it was halfway through a new round of financing that aims to add another $150 million of capital on top of the $83 million the company has already raised. The new infusion will value Lyft at around $700 million. If all goes as planned, Lyft will one day enjoy a spectacular public offering or be purchased by another company for billions of dollars — and the investors will happily haul in some significant multiple of their initial payout. It will be a great day for Lyft shareholders.

But what does that mean for solidarity? What will the Lyft shareholders do with their profits? Outside of a few philanthropists, it’s not at all clear they will “give” their bounty back to the larger community or otherwise “share” it. Quite the contrary! As best we can tell, the politics of the venture capital elite boil down to fending off higher taxes, keeping labor costs low and reducing the “burden” of government regulation.

The concentration of great wealth in the hands of a small group that then employs that wealth to protect its own privileges and fortify its own status is the polar opposite of reciprocity. Growing income inequality weakens social ties. Our “sharing” is their windfall. That’s not how the gift economy is supposed to work.

Nowhere is this contradiction more self-serving than in the sharing economy’s stance on regulation. As articulated recently in “Trusting the ‘Sharing Economy’ to Regulate Itself,” a New York Times Op-Ed written by Arun Sundararajan, a business school professor at New York University, we are somehow supposed to believe that the forces of capital mobilizing behind the sharing economy are qualitatively different from any other potentially misbehaving market.

The profit-seeking interests of these private marketplaces aren’t that different from those of a textbook regulator: encouraging productive trade, keeping market participants safe and preventing “market failure.”

This is an extraordinary claim. The profit-seeking interests of private marketplaces are usually considered to be, by definition, at odds with the interests of regulators. The intersection of public safety and profit-seeking is exactly the point at which true friction enters the system. It’s exactly the point at which the general public can’t trust the private sector. It’s hard to understand why Sundrarajan thinks that sharing-economy companies are different from any other consumer-facing company. Don’t they all want to keep participants safe and prevent market failure?

In “Sharing Is the New Buying,” Jeremy Owyang declares that “brands that want to succeed in the sharing economy must tell stories around value and trust.” That strikes me as an odd formulation. Brands that want to succeed need to deliver value. And as for trust? In the earliest gift economy sense, trust was built from reciprocity and mutual obligation. Silicon Valley is going to have to work a lot harder to make that happen. It could start by putting a stop to pretending that the sharing economy is about anything other than making a killing.

 

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

http://www.salon.com/2014/03/14/sharing_economy_shams_deception_at_the_core_of_the_internets_hottest_businesses/?source=newsletter

 

The Obsolete Crime Lord

S.F. Tech Culture Begat the Silk Road and Its Replaceable Founder

By Rachel Swan Wednesday, Nov 20 2013

The Obsolete Crime Lord: S.F. Tech Culture Begat the Silk Road and Its Replaceable Founder

There was strange trouble at Glen Park Library on the first of October, an otherwise unremarkable Tuesday, in what’s otherwise one of the quietest buildings in San Francisco. Around 3 p.m., a librarian heard a thump in the science fiction department. Thinking someone had fallen out of a chair, she went to investigate and saw two patrons holding a spindly young man against a window. One of them, a woman with unusually “beefy” arms, flashed a badge. “FBI,” the woman said.

The man at the window, 29-year-old Ross Ulbricht, had a narrow, square-jawed face, copper-colored eyes, and the kind of haircut you’d see on children in Norman Rockwell paintings. He looked pliant and unassuming. He would turn out to be an international drug trafficking suspect. His arrest was two years in the making.

Once a promising engineer, Ulbricht faces a minimum 10-year sentence for allegedly creating Silk Road, a massive drug and contraband marketplace that occupied a dark hinterland of the Internet called the “deep web.” He’s an accused crime boss whose virtual hideout couldn’t be accessed on traditional browsers, and who trafficked exclusively in the electronic currency Bitcoin (a form of money transferred over the Internet, with no central bank attached). Federal prosecutors say he built an empire out of things he couldn’t see or touch. His alleged henchmen were doughy computer guys who shipped massive quantities of drugs from their bedrooms. They corresponded over message boards. It’s doubtful that Ulbricht met any of them in real life.

Momi Toby's Revolution Cafe & Art Bar, where Ross Ulbricht occasionally set up shop.

Mike Koozmin
Momi Toby’s Revolution Cafe & Art Bar, where Ross Ulbricht occasionally set up shop.
Before his arrest, Ross Ulbricht left no real impression on anyone.

LinkedIn
Before his arrest, Ross Ulbricht left no real impression on anyone.

To many, Ulbricht seems like a perfect parable for the Internet age, a computer geek who moved drug shipments while pecking at his keyboard. His alleged alias, Dread Pirate Roberts, referred to a series of characters in the novel and film versions of The Princess Bride who were all anonymous and replicable. If he was, indeed, the person cited in court complaints, then he’d taken the idea of a criminal dynasty and rendered it a meme.

But Silk Road might also be the inevitable byproduct of tech culture in San Francisco, where innovation and the desire for personal freedoms are at once an economic engine, a lifestyle, and a belief system. And Ulbricht, the alleged mastermind, left a trail of ideological crumbs to explain his motivations. In college he joined campus libertarian groups and supported Ron Paul‘s 2008 presidential bid; afterward he moved to San Francisco, tried to partake of the start-up boom. In the interim he wrote long Facebook soliloquies about freedom and personal liberties.

His political philosophy matches a current of thought that is ascendant in Silicon Valley. Look no further than Berkeley entrepreneur Patri Friedman, who amassed more than $2 million in venture capital to build a floating libertarian island just outside the San Francisco Bay. Or San Francisco entrepreneur Balaji Srinivasan, who recently preached secessionism — the formation of a separate society, with unregulated digital currency, and sharing economy hotels, and unlicensed firearms — to a roomful of aspiring start-up founders.

So it was inevitable that, in the land of chaotic, multi-billion dollar IPOs, someone would also build a new version of an ancient economy, dealing exclusively in the forbidden. Dread Pirate Roberts was not the first person to trade in Bitcoin, or to build a site on the deep web, but he caused both of them to snowball in popularity. By disrupting the black market, he’d taken all of San Francisco’s ideals about tearing down institutions to their extreme. He inspired a confederation of supporters whose faith in Silk Road has an almost evangelical cast.

But they were enchanted by the vessel, not the person — or people — behind it. Dread Pirate Roberts, however many of them there may be, was just an avatar; Silk Road fulfilled the dark promise of San Francisco’s tech culture.

The small cult of adoration Ulbricht himself spawned, via a few “Free Ross Ulbricht” Facebook pages, didn’t bear any trace of old-school outlaw allure. If anything, fans seem fixated on the ideological underpinnings of Silk Road, rather than the man who prosecutors say embodies them.

And Dread Pirate Roberts never resisted being a cipher for a set of ideals. Many observers say the avatar is no accident; that the founder of Silk Road saw himself as a franchise rather than a Don. Some even believe the name extends to multiple administrators, most of whom may never be caught. Their suspicions were supported when a new iteration of the site, Silk Road 2.0, arose with the same template, the same product offerings, and a new Dread Pirate Roberts just weeks after Ulbricht was apprehended.

If Ulbricht was endlessly franchisable online, he was equally replaceable in real life, a boy-next-door type with a willowy frame and nondescript features, and a lifestyle that resembled that of any bright-eyed, aspiring San Francisco tech bro. Even while harvesting millions in Bitcoin, Ulbricht lived modestly, on a tight-knit row of single-family walk-ups whose owners say they had no idea that an alleged drug dealer operated in their midst. A barista at Momi Toby’s Revolution Cafe & Art Bar in Hayes Valley, cited in the FBI indictment as a place where Ulbricht worked, says he can’t recall seeing Ulbricht’s face, either.

CONTINUED:   http://www.sfweekly.com/2013-11-20/news/ross-ulbricht-silk-road-dread-pirate-roberts-bitcoin-glen-park?utm_source=Newsletters&utm_medium=email

Thom Hartmann: Libertarians are pushing us over a cliff

 

 

The author says we’ll get sensible financial regulation, but not until conservative “predators” destroy the economy

 

Thom Hartmann: Libertarians are pushing us over a cliff
Thom Hartmann (Credit: Ian Sbalcio)

 

Brace yourself. Thom Hartmann has bad news. His new book “The Crash of 2016” is self-explanatory but understated. The great recession? As he sees it, that  was a tremor before the big one. It’s coming and just one of the causes might be the unregulated derivatives market measured in hundreds of trillions of dollars, several times as much as the conventional global economy.

Thom Hartmann talked to Salon about how conservative “predators” got out of control, Enron’s ugly legacy and why he’s optimistic. Gluttons for punishment can find an excerpt from the book here.

This interview has been edited for space and clarity.

What is the plot to destroy America? There have been lots of them.

From the beginning of our republic there has been this debate. There have been these dueling visions of what America should be. In some ways it’s an analogue of what ended up being the Whig Federalist vs. the Democratic Republican debates, which is should we have a country that is governed by a wise few, because the masses can’t really be trusted or should we have a country that is governed from the bottom up. This debate has taken a lot of different forms and morphed into a variety of political positions, but that’s the essential battle.

That’s the plot, as it were; on the one hand a group of ideologues concerned that you can’t trust the masses and on the other hand you have the kind of Rooseveltian notion that society should be for all the people and all the people should be able to participate in the society whether it’s through a union or with the democratic process.

There’s two groups that are driving this thing that I describe as the plot. First is the [conservative] ideologues but then there’s also a group of predators who use that rhetoric and that ideology to set up a situation where they can enrich themselves at the expense of everyone else. So the rhetoric has been used to deconstruct the protections for our economy and our middle class that kept our nation stable from the ’40s through the ’80s.



Then the predators stepped in and said let’s take that a step further and blow up Glass-Steagall and put in the Futures Modernization Act so we can have unregulated derivatives, create an $800 trillion market when the whole world’s GDP is only $65 trillion. It’s really the predators that have always brought down our country, but they’ve hidden behind ideology that is actually a legitimate ideology.

You’re talking about conservative ideology?

One might call it conservative ideology but I’m not even sure Barry Goldwater would recognize it. Maybe “libertarian ideology” is a better word for it.

What enabled this ideology to reach what you’re arguing is a dangerous point? There have always been predators.

That’s the second major point of the book. You have to go back to a quote that has been attributed to various people, “When the last man that remembers the horrors of the last great war dies, the next great war becomes inevitable.” When we forget the history, to paraphrase Sir Edmund Burke, we are doomed to repeat it. And it takes about 80 years for that to happen. Roughly 90 years ago we saw the election of Warren Harding on a platform, his slogan was, “More business in government, less government in business.” He dropped the tax rate, deregulated banks, deregulated pretty much everything. It was this huge bubble in the ’20s that crashed in 1929.

If you go back 80 years before that you see the big battles over regulation and deregulation of the 1840s and 1850s that led to the crash of 1857 that arguably led to the Civil War. And if you go back 80 years before that, you see there were somewhat similar economic debates.

Roughly every 80 years we kind of forget about economic bubbles, make the same mistakes, and those mistakes lead to economic disaster, which typically leads to a war. And I’m saying we’re 80 years out from the last one and we’re making the same mistakes.

We’ve just had a severely bad recession as well as quite a few wars. Why aren’t those having the effect you say crises have – a corrective effect?

Because we’ve been insulated from them. Because they haven’t been real for the average American. World War II, the Civil War, the Revolutionary War – everybody participated. There was no getting out of it. This war – the Afghan and Iraqi wars, which I would argue are not so much a result of this economic crisis, they were more strategic and oil wars – those wars were basically volunteer wars. We have a pauper army, to an extent.

So the war hasn’t really affected America the way the Vietnam War did or World War II, the Civil War, the Revolution. And the recession – the stock market is back where it was, the recession — the really bad part, the hemorrhaging jobs — that lasted for just six or seven months. Obama got his stimulus bill passed and kind of put a stop to it. What I’m suggesting in the book, and what I think I’m making a pretty strong argument for, is that we’re still in that crash. The crash really started in 2006/2007 when the housing started to collapse, and arguably it started in ’99/2000 when all the banking supports were pulled apart. That was the analogue of 1920 and the analogue of 1840.

Because we haven’t repaired the fundamentals, we haven’t regulated investment banks, we haven’t regulated derivatives and commodities trading; we haven’t protected the middle class and now they’re being eviscerated. The predators are like bandits and the economic fundamentals are not different in any meaningful way than they were in 2006. The crash was going to happen, and they had a whole bunch of bubble gum and wire holding it together.

That’s why I’m saying the [crash will come in] 2016. The crash really started in 2006, and the Bush administration saw it coming and did everything they could to hold it off until after November 2008. And they just were not able to. And now I think the Obama administration thinks they can old it off until after November 2016. But they can’t. I’m skeptical.

From the George Washington administration until the Franklin Roosevelt administration, we never went more than 15 years without a major national bank panic, or stock crash. Never. It was just constantly happening. When things got so Roosevelt created the SEC, put in Glass-Steagall, put in really serious banking regulations, made unions legal, which is a mass stabilizer. He also raised the top income tax rates, another mass stabilizer since it keeps hot money out of the marketplace. He put all these protections into place and we went from 1935 until 2008 without a major bank panic and without a major stock market crash that lasted more than a day or two.

They had finally figured out how to build stabilizers into the economy. Well, we’ve been deconstructing that aggressively9. Without all of the traditional stabilizers in our economy we’re not just vulnerable to a collapse, but I think a collapse is inevitable.

Consensus is that the crash in 2008 was due to the housing bubble and the mortgage bubble. What are some of the indicators that you’re looking at now that make you nervous?

I would say that the crash of 2008 wasn’t the housing bubble and the mortgage bubble, but it was the housing bubble and the mortgage bubble, which crashed the derivatives bubble, which is really what caused the crash of 2008. You had banks that had multitrillion-dollar liabilities, which we’d never seen before. In the late ’90s we had a derivatives market that was less than $80 billion, to, in 2008, having an unregulated derivatives market was over $800 trillion, according to the bank of international settlements. The entire GDP of the planet is $65 trillion and the entire GDP of our entire country is $15 trillion per year.

This is all funny money, and it dropped down to $400 trillion after the crash, but it’s back up to $700 trillion or $800 trillion now. Nobody knows for sure because it’s unregulated. So I’d say that the crash really begins back in ’99/2000 when Phil Gramm pushed through the Commodity Futures Modernization Act that allowed all that to happen. Of course he did that because [former Enron CEO] Ken Lay wanted it done.

There was an attempt to change [the law] with Dodd-Frank, but more than half of Dodd-Frank has not even been implemented. And I don’t think Dodd-Frank, even if it was fully implemented, would be strong enough to rein this stuff in. We need to go back to simple stuff like Glass-Steagall. Am I making sense?

You’re making sense. To most people, a derivatives bubble is invisible. Is there anything more tangible to look for?

We are starting to reinflate the housing bubble. We’re starting to reinflate the stock market bubble. I mean, we’ve been doing it over the last couple of years. But the most tangible thing is that since roughly the beginning of the Reagan presidency, wages have been flat even as productivity has continued to increase. Productivity is what creates corporate profits.

Back in the ’60s Time magazine did a thing on the coming leisure society and they predicted that by 2000 people would be working, you know, 20 to 30 hours a week and making the equivalent in today’s dollars of $80,000 a year. And if productivity and wages had tracked each other over the last 32 years that would be the case right now.

But instead wages have flattened out for the average working person and productivity has increased. All that wage money has gone to basically the ownership class, the CEOs and stockholders.

The consequence of that is that for the middle class to maintain their standard of living more women [went to work]. And then when women entering the [workforce] wasn’t enough to maintain middle-class stability, people started converting their homes into ATMs.

Then when they ran out of equity on their house, they began to put stuff on their credit card, and when they ran out of that, they went back to school or sent their kids to school and now we have a trillion-dollar debt bubble in student loans. So there’s this massive debt bubble and when that thing bursts it’s going to take everything down with it. People know this instinctively: People don’t buy cars anymore; they rent them, they lease them. People don’t buy houses, they borrow them from the bank. I’m old enough to have seen this cycle. I remember actually buying cars and owning houses back in the ’70s, ’80s.

What can be done?

There are three things we need to do in a very straightforward fashion. No. 1: We need to restore fundamental regulators to the game of economics. You wouldn’t play a game of football without referees, and rules and goal posts. And if you said, “Whichever team has the most money can just determine where the goal posts are,” everybody would think you’re crazy. And yet that’s what we’ve done to our economy. We need to change the fundamentals and go back to a set of rules that are good for everybody.

No. 2: We need to unwind the debt bubble. I think, frankly, we need to deal with student loans. Abraham Lincoln gave us great schools. Thomas Jefferson started the first free school. That ended with the Reagan presidency. We should seriously consider debt [forgiveness] for student debt. We have an entire generation that is saddled with decades of paying off debt that none of their predecessors had.

No. 3 is to put policies into place that will cause wages to track productivity, like they did from the George Washington administration to the Ronald Reagan administration. And that principally has to do with taxation at the high end, so that it’s just not worth it anymore to make a thousand times more than your workers. Go back to that 30-to-1 ratio that we historically had in America.

Are you optimistic?

I’m very optimistic because every time we’ve had one of these four-generation, 80-year crashes, what has come out of it has been a very rapid and very substantial positive and forward motion for this country. The first time we went from being a colony of England to forming our own nation. The second time we ended slavery and moved into the Industrial Revolution. The third time, in the 1930s, we came out of the Great Depression and built the strongest middle class the world had ever seen. We became the world superpower.

Our country tends to move forward but the biggest motions always come after these crashes. We are sort of like in AA: We have to hit bottom before we seriously start talking about looking up and seeing what the possibilities are.

That’s an answer to why didn’t the crash of 2008 do it? Why didn’t the wars in Iraq and Afghanistan do it? The average American didn’t have the experience of hitting bottom. And when we do, then there will be a serious discussion, serious conversation that goes beyond dueling sound bites between political parties, and partisan positions, about what kind of country this is, and what kind of country we want it to be.

You’re saying it is going to have to get really bad, but then you’re optimistic.

Absolutely. That’s what rebooting is, like rebooting your computer.

 

Alex Halperin is news editor at Salon. You can follow him on Twitter @alexhalperin.

Libertarians are very confused about capitalism

 

Elites didn’t get rich off of some “free market.” Here’s why libertarians should back radical wealth redistribution

 

 

Libertarians are very confused about capitalismRand and Ron Paul (Credit: Reuters/Jim Young)

 

“There is no evidence that capitalism exists today,” says former congressman Ron Paul. A leading libertarian voice in American politics, Paul says the land of the free no longer has free markets but an economy centrally planned by powerful elites, one that “allows major benefits to accrue to the politically connected,” not the most deserving.

These days, “corporate subsidies” and “privileged government contracts to the military-industrial complex” are the path to riches, says Paul. “This is not capitalism!”

If one defines capitalism as a system designed by and for the interests of those who hold capital (what it is), capitalism is what the United States has today. It is a system based not on principles of freedom and liberty and justice for all, but the accumulation of wealth for people called “capitalists.” It entails structuring an economy in such a way that natural resources are exploited for private gain and land is parceled off into mortgage-backed securities. It means rich people using their money to buy power and shape economic relations to their advantage, which makes them more money.

But let’s say this isn’t “capitalism,” as libertarians define it: this is not a genuine “free market,” which would entail the institution of private property and the privatized control of vital natural resources, yes, but would also be free of much if not all state intervention, with financial success based not on coercion and heavily armed people with guns but healthy and fair competition. Wealth would be a just reward for producing better widgets, not a license to rewrite the rules in one’s favor.

I am told this does not exist today, “the free market,” and I agree, but I suspect it doesn’t exist now – a capitalism based on rigid notions of private property but not systemic violence that manifests itself in a massive transfer of wealth to an already wealthy elite – for the same reason human babies aren’t born to alligators: because it’s impossible and goes against everything we know about our world.

We know that money buys power, for instance. And we know that rich people are not typically concerned with sainthood when it comes to their pursuit of money. When enormous wealth is allowed to accumulate in the hands of a small fraction of the population, then, that minority can use that wealth to manipulate economic outcomes – and they don’t care if they violate every principle known to the Paul family. That is why some oppose this concentration of wealth no matter whether it comes from “good” or “bad” capitalism.



But there is common ground here that can be exploited. Libertarians need not agree that the accumulation of enormous sums of wealth is immoral and unhelpful when it comes to the preservation of freedom, even though it is. All libertarians need to do is keep on with the “this isn’t real capitalism” stuff, because if people are getting wealthy off something other than producing the best widget in a free and competitive marketplace, then why do all those rich people get to keep all their money?

Capitalism without the change

“I complain about some of the rich,” says Ron Paul. “If the rich are getting rich because they have a super-good [government] contract … or subsidies and they’re part of that system, then you want to get rid of that system that’s doing it.”

Like other libertarians, Paul tries to distinguish between rotten and not-so-rotten rich people, despite his condemning the system as a whole; he sees a difference between those who feed at the trough of taxpayer money and those who – what? Traded Bitcoins for drugs on the federally indicted free market of the Silk Road? The thing libertarians will sometimes say but don’t want to admit invalidates most wealth by their own standards: There is not a single aspect of the U.S. economy untainted by state intervention on behalf of powerful rich people (again, a redundancy).

Drug companies, for instance, reap billions of dollars in monopoly profits due to “intellectual property” laws that make the free sharing of scientific knowledge a criminal offense. Oil and gas companies drill on public lands for private profit, while socializing the risks (“Sorry about the Gulf.” – BP). Even children’s books are subject to statism, with author J.K. Rowling becoming a billionaire only after using the legal system to ensure no one could so much as mention the name “Harry P*tter” without paying her a handsome fee.

As of 2012, the average CEO at a top American firm now makes 273 times as much as the average employee, up from a ratio of 20-1 in 1965. Few libertarians would say the market today is freer than the market then. So why don’t we hear anything about any grand, liberty-minded plans for the radical redistribution of wealth? When you change a system but keep the results of systemic injustice in place, you are not really changing anything. Who cares about “freedom” when the only difference between that and oppressive Big Government is that an absentee landlord now relies on a private security firm to kick you out of your home instead of the cops?

When property is obtained through illegitimate means, which libertarians would take to mean “not the free market,” then “the only proper solution is an immediate vacating of the title and its transfer to the [people], with certainly no compensation to the aggressors who had wrongly seized control of the land.” That’s according to Murray Rothbard, a guy Ron Paul describes as the “founder of modern libertarianism” and one of America’s “greatest men.”

Before throwing down with the angry white right in the years before his death in 1995 – going so far as to defend David Duke, a white supremacist and former leader of the Ku Klux Klan –  Rothbard exerted a lot of effort trying to make libertarianism more palatable to what at the time was a rising left. Distancing himself from those who were mere defenders of the rich, Rothbard argued that money made through systemic coercion was no more legitimate than highway robbery.

It’s OK to take it back

In his 1982 book, “The Ethics of Liberty,” Rothbard went after those sort of “American laissez-fair economists” who “tend to confine their recommendations … to preachments about the virtues of the free market.” People don’t want to hear that, he wrote: They want to know how you plan on freeing people, not some abstraction called a “market,” which sounds to many like a simple defense of the right of rich people to be richer than you.

Rothbard exempted North America from his calls for land redistribution, claiming America’s was the only “truly libertarian” property system because early settlers claimed land free of much state interference (sorry all you dead indigenous people). But not even he could keep that up. A few hundred words after that assertion, Rothbard pointed to the treatment of former slaves in America – what better illustration of how “property” comes to be defined under capitalism – and argues that it was incredibly unjust that slaves were freed only to spend the rest of their lives impoverished, working for their former masters. By contrast, wrote Rothbard, “elementary libertarian justice required not only the immediate freeing of the slaves, but also the immediate turning over to the slaves, again without compensation to the masters, of the plantation lands on which they had worked and sweated.”

By not doing so, the United States made the same mistake as Russia when it “ended” serfdom in the 19thcentury:

[T]he bodies of the oppressed were freed, but the property which they had worked and eminently deserved to own, remained in the hands of their former oppressors. With the economic power thus remaining in their hands, the former lords soon found themselves virtual masters once more of what were now free tenants or farm laborers. The serfs and the slaves had tasted freedom, but had been cruelly deprived of its fruits.

In 2005, financial giant JPMorgan – later bailed out by the very taxpayers it is currently foreclosing upon – admitted that it profited from the slave trade, which is to say: The effect of letting slave owners keep their illegitimate wealth can still be felt today. What then of the multitude of other state interventions on behalf of the unjustly rich that have happened since: “This isn’t capitalism,” right?

Let’s start over. The wealthy elite are too tainted by the current system of state capitalism for us to rely on a “good” and “bad” distinction when it comes enormous wealth. No one worth more than $10 million is able to get that much money without systemic state violence. There is no reason they should get a head start in Liberty Land.

Oh, forget raising marginal tax rates – that’s catnip for liberal suckers and people too dumb to put their money in tax shelters. Instead, distribute property that has been unjustly acquired directly to the people. Give property titles held by bailed-out banks to the people those banks are currently foreclosing upon. Pool together the salaries of Fortune 500 CEOs and distribute the money equally across the land.

Libertarians don’t have to agree on where all this ends (it ends with workers seizing the means of production), but they should understand that no matter what one replaces it with, dismantling an unjust system requires addressing the injustices that system created. If you don’t, then your idea of “freedom” will be attacked as the freedom to be exploited by the same people running the world today. And with good reason.

Charles Davis is a writer and producer in Los Angeles whose work has been published by outlets including Al Jazeera, The New Inquiry and Vice. You can read more of his writing here.