Abolish the debt that is drowning Puerto Rico

We need to organize for immediate disaster relief for Puerto Rico–but we can also expose and oppose the debt disaster that came before the hurricanes.

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

SOCIALIST WORKER supports President Trump in his call to cancel Puerto Rico’s punishing debt.

We can pretty much guarantee you’ll never see the first five words of that sentence here ever again–and the supervisors of the “adult day care center” at 1600 Pennsylvania Avenue are obviously trying like hell to make sure we never have reason to.

But it says a lot about the Wall Street-made catastrophe that has plagued Puerto Rico for years before Hurricane Maria that even a reactionary fanatic like Trump didn’t think twice before stating the obvious.

“They owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said in an interview last week with Geraldo Rivera of Fox News. “I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”

“Wall Street promptly freaked out,” Politico reported the next day. That was an understatement. Heavy trading on the normally stable bond market pushed the value of Puerto Rico’s general obligation bonds–already devalued to 56 cents on the dollar after the island effectively declared bankruptcy earlier this year–down to 37 cents on the dollar.

The White House then “move[d] swiftly to clean up Trump’s seemingly offhand remarks,” Politico continued. Again an understatement. Office of Management and Budget Director Mick Mulvaney was rushed in front of a television camera to tell CNN: “I wouldn’t take it word for word with that.”

Just to make sure Wall Street got the message that no one in the Trump administration had any intention of doing what the head of the Trump administration had just said, Mulvaney was more explicit–and more contemptuous of the Puerto Rican people–in a second interview with Bloomberg: “We are not going to bail them out. We are not going to pay off those debts.”

Anyone want to bet that Trump doesn’t talk about “saying goodbye” to Puerto Rico’s debt again?

But the simple fact is that justice demands exactly that: The cancelation of all of Puerto Rico’s debt repayments, by the action of the U.S. government, taking responsibility for the Wall Street loan sharks who inflicted the damage in the first place.

Puerto Rico is caught in the same kind of debt trap that has ensnared poor countries in hock to the International Monetary Fund and World Bank–or more advanced economies like Greece, at the hands of European bankers and bureaucrats. The aim is to force vulnerable societies to knuckle under to the will of the ruling class.

And now, the devastation of neoliberal policies has made Puerto Rico’s crisis following Hurricanes Irma and Maria much, much worse.

People who want to show solidarity with Puerto Rico today will rightly focus on ways to provide immediate relief to communities desperate for food, water and critical supplies. SW hopes its readers will raise what money they can to donate to grassroots efforts–see the What You Can Do box with this article.

But we have another job to do now, while Puerto Rico lingers in the media spotlight: expose the debt trap that made the island more vulnerable when Maria struck and demand that it end.

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IN MAY of this year, Puerto Rico’s government went to federal court to file for the equivalent of bankruptcy on a debt that includes over $74 billion in repayments on government bonds and $49 billion in pension obligations. But in return for immediate relief, Puerto Rico will have to abide by even harsher austerity dictates.

The debt burden–which is larger than the annual economic output of the island when pension obligations are added in–is one consequence of a recession that has lasted for more than a decade.

The economic slump began when Corporate America–after many years of making super-profits off operations in Puerto Rico, particularly pharmaceutical production–abandoned the island after favorable tax incentives for investment were phased out starting in the early 2000s. Annual corporate investment in Puerto Rico peaked at 20.7 percent of gross domestic product in 1999–it has fallen to under 7.9 percent as of 2016.

Successive governments–whether led by New Progressive Party, which is aligned with the U.S. Republicans, or the Popular Democratic Party, tied to the Democrats–imposed policies that were guaranteed to make the crisis worse: neoliberal austerity.

Social spending was cut drastically–reductions in the island’s education budget led to hundreds of schools being closed, for example. Public-sector workers have been under intense pressure, with tens of thousands of layoffs and attacks on their unions. Regressive taxes have been hiked, making the sales tax of 11.5 percent higher than any U.S. state.

A succession of state assets were privatized on terms guaranteed to benefit the private purchasers: Back in the 1990s, conservative Gov. Pedro Rosselló González sold off hospitals that were part of a public health care system that was once fairly accessible and affordable at around half their market value.

Austerity measures propelled the vicious circle: Continuing economic decline made shortfalls in government revenues worse, leading to more spending cuts and regressive taxes that caused further economic contraction, and on and on.

The consequences even before Hurricane Maria were dire: Official unemployment is 11.7 percent, well over double the rate in the U.S. as a whole. Just under half of people on the island live in poverty, including three in five children.

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THROUGH IT all, debt was the straitjacket to make sure Puerto Rico didn’t stray from austerity.

Faced with declining revenues as a result of the contracting economy, various branches and agencies of the Puerto Rican government issued bonds to raise money–but these came not only with the usual obligation to repay the cash with interest, but increasing pressure to intensify neoliberal measures.

The vultures of Wall Street were eager to set up the increasingly complex bond issues. They paid better than most municipal issues, and interest on income from Puerto Rico bonds is exempt from city, state and federal taxes.

But the biggest gamblers on Wall Street see more than a tax loophole in the suffering of the people of Puerto Rico. A 2015 report from the Hedgeclippers.org website paints an ugly picture:

Several groups of hedge funds have bought up large chunks of Puerto Rican debt at discounts and have also pushed the island to borrow at extremely favorable terms for creditors. Hedge fund managers are also recommending the implementation of austerity measures.

Known as “vulture funds,” these investors have followed a similar game plan in other debt crises, in countries such as Greece and Argentina. The spoils they ultimately seek are not just bond payments, but structural reforms and privatization schemes that give them extraordinary wealth and power–at the expense of everyone else.

It’s been obvious for several years that Puerto Rico’s debt burden is unpayable, but the hedge-fund vultures are counting on enforcers in the form of the U.S. government.

A law pushed through Congress last year by Barack Obama and the Democrats established a seven-person Fiscal Control Board with broad powers to direct government agencies on the island and dictate laws and policies. It has ordered, for example, exemptions to federal standards on the minimum wage, Medicaid and Temporary Assistance to Needy Families.

To top it off, the seven members of the board include some of the same financiers who imposed neoliberal policies and arranged the deals that caused the debt burden.

Bondholders may still be forced to take a “haircut”–that is, accept less than what they are owed on Puerto Rico’s bonds. But the mission of the Fiscal Control Board is to make sure working people on the island, not investors, pay as much of the price as possible.

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ALL THIS “reads like the 21st century equivalent of the metropolitan looting of wealth from the colonies,” as Lance Selfa wrote for SocialistWorker.org after Hurricane Maria struck Puerto Rico head on.

And we know who the looters and their accomplices are.

The hedge-fund parasites who are trying to inflict more suffering on Puerto Rico rather than lose a penny from their investment gambles should face pickets outside their offices. Members of Congress–Republican and Democrat alike–should be greeted at public events by solidarity activists demanding that they remove the noose that is strangling the island.

There is much work to be done to organize for immediate relief in Puerto Rico after the hurricane catastrophe. But the left has an opportunity to also expose and oppose the unnatural disaster that came before Irma and Maria.

We may not hear any more about canceling the debt from Donald Trump, but we can raise our own voices to demand that this crushing burden be lifted off the people of Puerto Rico.

https://socialistworker.org/2017/10/11/abolish-the-debt-that-is-drowning-puerto-rico

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Trump to devastated Puerto Rico: Wall Street must be paid!

27 September 2017

The US colonial territory of Puerto Rico has been devastated by a disaster that has left its population of 3.5 million in the midst of a full-blown humanitarian catastrophe.

Much of the island looks like it was hit by an atomic bomb. The already fragile electrical grid has been largely destroyed, leaving millions literally in the dark and without power for air-conditioning or even fans, as Puerto Rico faces 90-degree temperatures and high humidity.

While the official death toll stands at 16, there are no doubt many more fatalities that have gone uncounted, and the threat is that far more people, particularly among the elderly and the sick, some of them trapped in high-rise apartment buildings or small villages cut off from relief, will lose their lives.

San Juan Mayor Carmen Yulin Cruz told the media, “What’s out there is total devastation. Total annihilation. People literally gasping for air” in the merciless heat. She spoke of people being taken from their homes in “near-death conditions,” including dialysis patients unable to get treatment and people whose oxygen tanks had run out.

At least 60 percent of the population lacks access to clean water, and food is in short supply. Hospitals report that they are within days of running out of medicine, essential supplies and fuel to run generators. Garbage is going uncollected, while many streets are still flooded. Conditions are growing for the spread of deadly diseases, including cholera.

At least 15,000 people have taken refuge in shelters, while many tens, if not hundreds, of thousands more are camping out in homes left in shambles and without roofs by Maria’s 155-mile-an-hour winds. Meanwhile, some 70,000 Puerto Ricans are still in danger from a possible failure of the Guajataca dam, which would wipe out entire towns and villages.

Cell phone service has been wiped out for three quarters of the population. The country’s agriculture has been devastated, with 80 percent of its crops destroyed.

Descriptions of conditions in Puerto Rico as “apocalyptic” are anything but hyperbole.

As in every such “natural disaster,” Hurricane Maria has exposed the deep-going social oppression, poverty and inequality that existed before the storm ever made landfall in a territory where the poverty rate approaches 50 percent, and unemployment 12 percent.

“We’ve not seen any help. Nobody’s been out asking what we need or that kind of thing,” Maria Gonzalez, 74, in the Santurce district of San Juan, told Reuters. Pointing to Condado, the Puerto Rican capital’s tourist area of hotels and restaurants, she added, “There’s plenty of electricity over there, but there’s nothing in the poor areas.”

Nearly one week after Hurricane Maria struck the island with the full force of a near-Category 5 storm, US President Donald Trump took his first public notice of the disaster with a Monday night tweet. “Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble,” Trump tweeted. “Much of the Island was destroyed, with billions of dollars…owed to Wall Street and the banks which, sadly, must be dealt with.”

The combination of ignorance and arrogance contained in this statement is the product not just of Donald Trump’s fascistic and pathological social outlook, but rather an expression of the criminal negligence, parasitism and predatory character of an entire social system. Trump’s apparent intention was to contrast Texas and Florida—both “doing great”—with Puerto Rico, which he suggests is responsible for the catastrophe that has befallen it because of its status as a bankrupt debtor to the Wall Street banks.

The reality is that large portions of the populations of Houston and Florida, the working class and the poor, are doing anything but “great,” having lost their homes, their cars and, in some cases, their jobs, and left struggling to obtain the means to live.

As to Puerto Rico’s $73 billion debt—roughly equal to the $72 billion that is now estimated in damages caused by Hurricane Maria—it is the legacy of over a century of colonialism dating back to the Spanish American War of 1898.

The so-called “Associated Free State” of Puerto Rico (established in 1952 following the brutal suppression of a nationalist revolt) supposedly gave Puerto Ricans local self-government as well as American citizenship. It was a second-class citizenship at best, however, without congressional representation or the right to vote in presidential elections.

While at the time Washington fostered the development in its “perfumed colony” of manufacturing, principally pharmaceuticals, textiles, petrochemicals and electronics, through corporate tax breaks and low-wage labor, these measures were later rescinded as cheaper labor platforms became available to American capital in Asia and elsewhere.

Local self-government has been effectively abrogated with the creation of a US-appointed Fiscal Supervisory Board (JSF), which has overriding power over the territory’s budget and is charged with imposing austerity measures aimed at meeting payments to Wall Street bondholders and the predatory hedge funds that sought out distressed Puerto Rican debt.

This is Trump’s main concern—that blood be soaked from the stone of an island thrust back a century in terms of its economic and social conditions.

The shameful failure of the US government to provide adequate relief to the Puerto Rican people is driven by considerations of profit and the interests of billionaire bankers and hedge fund chiefs. They are already calculating how the devastation of Hurricane Maria can be exploited through privatization fire sales of public infrastructure and the reaping of further super-profits off America’s Caribbean colony.

Trump has idiotically attempted to excuse this failure to provide adequate aid by asserting—falsely—that Puerto Rico is “in the middle of a…really, really big ocean.”

No one can claim with a straight face that if Puerto Rico were the target of an invasion—such as Iraq in 2003—the Pentagon would not have already opened its ports and made its airport fully operational. As it is, relief supplies collected by Puerto Rican and American working people in the US sit in warehouses and on docks in Miami and elsewhere because the incentive to aid the island’s people is nowhere near that which drives US wars of aggression across the globe.

The one thing that Washington has been able to do efficiently is dispatch troops and police to the island with the objective of suppressing social revolt.

The disaster in Puerto Rico, like those in Houston and Florida that preceded it, has made it abundantly clear that neither recovery, much less protection, from devastating disasters like those wrought by Hurricanes Harvey, Irma and Maria can be achieved outside of a frontal assault on the stranglehold exercised by the ruling financial oligarchy over social wealth and the productive forces of society.

It is the working class of Puerto Rico, united with workers in the United States and internationally, which must accomplish this task through a revolutionary struggle to reorganize society on the foundations of socialist ownership of the means of production and the world’s resources.

Bill Van Auken

WSWS

 

Here’s how the Trump administration has been handing over government to businesses

The first six months of the Trump administration have seen a decrease in the effectiveness of regulations

Here's how the Trump administration has been handing over government to businesses
(Credit: AP Photo/Mark Lennihan, File)

President Donald Trump’s assault on regulations designed to keep Wall Street in check is going quite well, as a check on the first quarter of his presidency has found that fines levied by government regulators has decreased substantially.

The U.S. has cut the amount of fines against institutions issued by two-thirds, compared to last year. As the Wall Street Journal reported Monday, that would put it on track for a low not seen in seven years:

Penalties levied against firms and individuals by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority in the first half of 2017 were down nearly two-thirds compared with the first half of 2016—putting regulators on track for the lowest annual level of fines since at least 2010, the Journal found. Fines of $489 million in the first half of 2017 compared with $1.4 billion in the 2016 period.

The SEC levied some $318 million in penalties during the first half of 2017, a search of federal court documents and all publicly available records on the agency’s website and data provided by Andrew N. Vollmer, a professor at the University of Virginia School of Law, showed. Last year, agency actions yielded $750 million in penalties during the same period, an agency spokesman said. The SEC declined to disclose its own tally of 2017 penalties; the agency didn’t dispute that the total value of penalties fell in the first half of 2017 compared with the same term in 2016.

Agency officials were quick to point out that a six-month sample shouldn’t be considered indicative of the government’s regulatory mechanisms — the WSJ pointed to large payouts in two major cases that accounted for a large portion of the $1.4 billion mark in 2016.

Wall Street lobbyists have also been pushing the administration to “lower the size of financial penalties,” the Journal said. And as regulators expect Trump to continue with a “business-friendly” approach, increased oversight doesn’t look likely in the future.

If being lax about enforcing the laws isn’t enough, the administration has been pushing for businesses to be writing them, too. According to McClatchy, business executives have been working in secret “advisory groups” that haven’t been disclosing what they’ve been working on.

Can’t enforce the laws if there are no laws to enforce.

Will the Trump team disasters finally put an end to the businessman myth?

Greed is not good:

The idea that businessmen are better equipped to run the country is why our nation is poised for catastrophe

 

If you were wondering exactly how Anthony “The Mooch” Scaramucci was able to weasel his way into the White House, you have to recall that he wasn’t only a Donald Trump sycophant; he was also touted as a businessman who could “fix” problems career politicians couldn’t. This is the guy who asked Barack Obama what he planned to do about the way that Wall Streeters were being treated like piñatas during a town hall in 2010. And it is the same guy who dropped $100,000 to appear in the sequel to Oliver Stone’s “Wall Street,” the film that brought us Gordon Gekko and his famous line, “Greed is good.”

Forget that Gekko ultimately lands in jail or that the sequel is also designed to make us aware of the unethical behavior of Wall Street types, the Mooch wanted in on “Wall Street: Money Never Sleeps” so badly he was willing to pay a yuuge sum of money for a chance to appear in two brief cameos that amounted to around 15 seconds of screen time. The Mooch wasn’t the only businessman that wanted in on the film. Trump was also set to appear in it, but his scene was eventually cut.

The story of The Mooch and “Wall Street: Money Never Sleeps” is an apt tale to help illustrate how weirdly confused our nation has become over the myth of the businessman. Even though both of Stone’s films focus on how the folks working in Wall Street are crooked, dodgy and dangerous, they each managed to build an aura around the cult of the businessman. Gekko is a criminal, but everyone loves his “greed is good” swagger.

For some bizarre reason the public is aware that businessmen, whether they work on Wall Street or are New York real estate moguls, are often shady, greedy and selfish, but they still believe somehow that they possess critical and valuable skills that could transfer to running government. There is the public sense that businessmen are effective leaders despite overwhelming evidence that businessmen can and have been vile, corrupt and incompetent.

Generalizations are always a fraught enterprise: clearly not all businessmen are terrible people, but that isn’t the point. The point is that the mistaken idea that businessmen are better equipped to run the country is exactly why our nation is poised for catastrophe. And that’s not an exaggeration. We literally have a government being run by a kakistocracy that has no idea whatsoever what they are doing.

I’m not trying to put politicians on a pedestal here either. But there is a basic difference between people trained to accumulate profit and people trained to foster public support.

Our nation has long held the notion that businessmen are more skilled and trustworthy than politicians. Public trust in government is at a historic low of 20 percent. Even more shocking, a 2015 Gallup poll showed that the public trusted stockbrokers more than senators.

We can track the legend of the businessman back to the Gilded Age or to Ayn Rand or to Ross Perot, but regardless of its historic origin, the key question is whether the complete and utter disaster that is the Donald Trump administration will finally put an end to the delusion that a business background naturally prepares one to hold public office.

Days before the inauguration, Trump stated, “I could actually run my business and run government at the same time.” On the campaign trail we heard repeatedly that he had skills and training that would help him do a better job as president than our nation had ever seen before. In fact his entire campaign was centered on the idea that his business background would not only be adequate, but would actually be better suited to a successful presidency than political experience.

Within months of taking on his new job, Trump later remarked, “This is more work than in my previous life. I thought it would be easier.” It was a clear sign that he didn’t have the slightest clue what the job of president actually entails.

There has been much reflection on how a bigoted blowhard managed to win the election, but there has not been enough attention to the fact that the bigoted blowhard had absolutely no training for the job. Trump is the first person ever elected to the office of president in our nation that has not either served in the military or held public office.

It’s hard to know where to start when describing the stunning failures surrounding the Donald Trump presidency. From hiring competent staff, to identifying the components of the nuclear triad, to hosting heads of state, to launching a legislative agenda, Trump has been a disaster on all fronts.

Put simply, there is not one facet of the job of president that Trump seems to have gotten even remotely right. Only a few months into the job it was stunningly clear that Trump wasn’t just addicted to attention and overwhelmed by poor impulse control, but that he really didn’t understand the job he had been elected to do. In a piece for U.S. News and World Report, Robert Schlesinger marveled at “the litany of things that were apparently astonishing to the new president which would come as a surprise to no one who has paid more than a passing amount of attention to national and international affairs.”

Here’s the thing. Politicians make campaign promises all the time that they know full well they will have a hard time delivering. But Trump literally thought he could do things like terminate NAFTA, pull out of NATO and force China to control North Korea. And then there’s the jaw dropping moment when Trump blathered, “Nobody knew health care could be so complicated.”

The list is literally endless at this point. But part of the reason why it is so long is because Trump had no idea how the shared governance of a democracy functions or what it means to work with allies because in his businessman model he really can make absolute decisions without building consensus or making compromises. He has zero appreciation for the notion of the public good, of the value in supporting allies and of the need to respect the opinions of other leaders.

Much has been made about his authoritarian impulses and his dictatorial qualities. But face it; he would be a lousy dictator, too. Even despots know that they have to build alliances and garner popular support. Less than 200 days into his presidency, Trump is at a new all-time low in support with only about one-third of voters approving of him. Most dictators would be worried at those numbers, but Trump blusters on.

Meanwhile his constant threats to fire anyone he disagrees with have created a White House staff with more turnover than we have ever seen. Acting Attorney General Sally Yates, National Security Advisor Michael Flynn, FBI Director James Comey, Press Secretary Sean Spicer, Chief of Staff Reince Priebus, Communications Director Mike Dubke, Communications Director Anthony Scaramucci are only at the top of the list of those who have been fired or have resigned.

During the Obama era, Larry Sabato pointed out in Politico that between 1946 and 2014 there were only about 35 significant involuntary departures of top White House officials. Sure, presidents see considerable turnover when their administrations come under crisis, but the level of turnover in Trump’s team is directly tied to his “you’re fired” mentality. It’s also directly linked to his businessman swagger. And it’s a clear sign that he doesn’t have the leadership skills of a trained politician.

And that brings me back to The Mooch, yet another sign of a businessman who has no business in government. Back when he asked his question of Obama in 2010, Jon Stewart decided to do a bit on him for “The Daily Show.” Stewart quickly pointed out that the Mooch’s question about being a piñata was bizarre.

How could he characterize Wall Streeters as victims?  Hadn’t they been bailed out by the government? And hadn’t they actually done some pretty vile things to attract public outcry? As Stewart addressed the Mooch on camera he admonished him for characterizing himself as a piñata that had been whacked unfairly. “Until your papier-mâché bellies are no longer stuffed with government money, walk it off.”

The crazy part of that story, in keeping with the story of The Mooch paying to be in the sequel to “Wall Street,” is that seven years later this is the kind of guy who gets hired in the White House. The Mooch might be gone, but like the whack-a-mole that is the Trump team, you can be sure there is another one just like him waiting to pop up.

None of this mess gets better until this nation takes responsibility for its unfounded adoration of businessmen. The notion that a businessman is better at politics than a politician isn’t just wrong; it’s led to the Trump administration. And if that doesn’t kill the myth, I don’t know what can.

 

Sophia A. McClennen is Professor of International Affairs and Comparative Literature at the Pennsylvania State University. She writes on the intersections between culture, politics, and society. Her latest book, co-authored with Remy M. Maisel, is, Is Satire Saving Our Nation? Mockery and American Politics.

Silicon Valley’s advertisements aren’t just selling products — they’re selling an ideology

The utopian futures we see in tech ads have a trickle-down effect on how we perceive the role of tech in our lives

Silicon Valley’s advertisements aren’t just selling products — they’re selling an ideology
(Credit: Getty/NelleG)

A man and woman are awakened by the cooing alarm emanating from a massive wall-mounted touchscreen. A wall of floor-to-ceiling photochromic windows gradually brightens to reveal the morning sun kissing a lush estate garden. The scene shifts to the woman brushing her teeth while checking work email from a bathroom mirror screen. Moments later, two girls in school uniforms stand in a gleaming white kitchen; one of them is playing with a touchscreen-covered refrigerator door while the father makes an omelet on a sleek high-tech induction stovetop interacting with yet another touchscreen embedded in the countertop.

Amid the tinkling of an electric keyboard, this five-minute promotional video from Gorilla Glass manufacturer Corning walks us through the day of this fictional wealthy family in an idealized version of a Manhattan-like “smart” city impossibly devoid of traffic. Corning isn’t just selling its durable glass, but its vision of future society.

In Corningland, everyone is happy, wealthy and living out fruitful, productive lives, surrounded by products of benevolent technological disruption. This world has no unhappy Uber drivers, Airbnb-fueled gentrification doesn’t exist and iPads in the classrooms actually help to educate children. When tech marketing underscores social or global problems, it’s used only as a setup to underscore how technology can solve them.

“It’s like you have one class [in tech-focused promotional material] and the class that you have is upper middle,” Chris Birks, associate professor of digital media at Benedictine University, told Salon. “You see a utopian vision, not one necessarily of everyone being super rich, but doing better than they were because of the new technology we have, which is not the case.”

As 18th-century English writer Samuel Johnson famously said: “Promise, large promise, is the soul of an advertisement.” It’s natural for product promotions to either depict the world in utopian terms or to engage in what’s known as “constructive discontent,” in which a problem is highlighted in order to show that a product or service is its solution.

But unlike, say, environmentally unfriendly laundry detergent or sugary carbonated beverages, the underlying assumptions proposed by ads for Google Glass, Amazon Prime, Microsoft Cloud and other innovative products often  go unquestioned.

“Technology advertising is especially interesting because what it’s doing is saying all technological advances are good and all technology is beneficial to the people who will be lucky enough to adopt it,” John Carroll, assistant professor of Mass Communications as Boston University, who specializes in advertising and media criticism, told Salon. “There’s nothing that says an advertisement needs to point out the downside of a product, but one of the issues here is that the counterbalancing argument that not all innovation is beneficial doesn’t get the kind of exposure that might be helpful to the public.”

Indeed, visit any technology-focused media outlet, or the tech sections of many news organizations, and you’ll see that “gadget porn” videos, hagiographic profiles of startup founders or the regurgitation of lofty growth expectations from Wall Street analysts vastly outnumber critical analyses of technological disruption. The criticisms that do exist tend to focus on ancillary issues, such as Silicon Valley’s dismal lack of workplace diversity, or how innovation is upsetting norms in the labor market, or the class-based digital divide; all are no doubt important topics, but they’re ones that don’t question the overall assumptions that innovation and disruption are at worst harmless if not benevolent.

Carroll says that it’s up to the media, schools and even religious institutions to counterbalance the presumptions made in advertising, whose goal, he points out, is often to portray happiness “through acquisition as opposed to achievement.”

This idea of selling innovation as a pathway to universal prosperity isn’t new. In the 1980s, South Korean technology companies LG and Samsung were churning out idealistic portrayals of technology’s role in creating what Su-Ji Lee, a faculty member at Seoul National University who studies design and culture, described in a paper published in November as “technological utopianism.” The idea that technology will save us all emerged in South Korea during the country’s rapid economic development following decades of poverty.

In these ads, Samsung and LG portrayed consumers as happy or bewildered children, innocent and helpless, as technology lorded benevolently over the innocent and helpless, bringing to them (and to Korea itself) a new era of post-war prosperity.

In these advertisements, Lee writes, “the corporations . . . [play] the leading role of progress towards the future and enlightenment of people.” In these advertising campaigns, she continued, “the hero is the corporation rather than the human.”

Birks, who has studied utopian depictions in web advertising, says that while innovation can be off-putting and certainly not always benevolent, it’s always been the case that innovators views themselves as disruptors.

“For better or worse, they are changing the world,” he said.

Like any sector, the tech industry isn’t going to underscore the negative implications of its innovations in its own promotional materials. Helped by more objective and less fawning tech coverage, people can decide how much technology they want in their lives. Perhaps it would help them if they realized that many of the tech industry’s most celebrated heroes, including the late Steve Jobs, are so wary of emerging technologies that they keep their own children away from their own gadgets..

 

http://www.salon.com/2017/06/24/silicon-valleys-advertisements-arent-just-selling-products-they-are-selling-an-ideology/?source=newsletter

Why are there so many billionaires leading money-losing companies?

Uber lost $708 million in 6 months, but its CEO/founder is worth billions. Is Silicon Valley a pyramid scheme?

Why are there so many billionaires leading money-losing companies?
(Credit: Getty/Ronstik)

In a financial report released last week, ride-hailing app company Uber reported a staggering $708 million loss for the first three months of the year. Since the company was founded eight years ago, it’s burned through almost half of the $15 billion in private venture capital that it has raised.

But despite the mounting losses, the departure of more than a dozen company executives over the past year and a string of controversies that would send the typical company plunging into an irreversible death spiral, Uber CEO and co-founder Travis Kalanick’s net worth is immense.

According to Forbes, Kalanick is worth $6.3 billion, making him the world’s 226th wealthiest billionaire and the 35th richest magnate of the global tech industry. That makes him richer than Wal-Mart heiress Christy Walton and Liu Qiandong, founder and head of Chinese e-commerce and retail giant JD.com, which recently reported $11 billion in quarterly sales and its first profit as a publicly traded company.

Kalanick’s bounty seems largely immune (so far) to Uber’s string of mishaps, including allegations of about its workplace being hostile to women, a bitter legal fight with Google over allegedly stolen self-driving car technology, scrutiny over the company’s attempt to deceive government officials, and other controversies concerning its treatment of drivers.

So how does a 40-year-old computer programmer heading a beleaguered and unprofitable company have a net worth greater than the gross domestic product of Barbados?

The short answer is: hopes, dreams and aspirations. Specifically, those of the Uber’s financial backers, who believe in the gospel that Uber is on its way to killing the global taxi industry.

Under normal startup circumstances, a business faces intense pressure to attain profitability within a short period of time. According to the U.S. Small Business Administration, 1 in 5 new businesses goes under in the first year while nearly half fail within the fifth year. According to a 2015 study from Babson and Baruch Colleges, the typical entrepreneur provides nearly 60 percent of the funding needed for his or her business.

But in the world of Silicon Valley, profitability takes a back seat as deep-pocketed investors throw money at long-term aspirations. For years private investors have assigned sky-high valuations to tech industry startups in a bid to find the next Amazon or Google nestled in some Northern California office building or garage. Billionaire investors, private equity firms and sovereign wealth fund managers are willing to take considerable risks that mushroom the wealth of founders and CEOs to astronomical levels.

Kalanick is a billionaire because private investors have assigned a value to Uber based on its future potential; that’s where the hopey-dreamy stuff comes in. The company is currently valued at a sky-high $68 billion according to CBInsights, more than half the value of global aerospace behemoth Boeing. Because Kalanick is a primary shareholder of Uber, his net worth is boosted by this potentially irrational valuation, making him a “paper” billionaire.

Though what he does with his equity is not publicly known, Kalanick can potentially leverage this net worth to grow his personal fortune by using his stake in Uber to engage in other business endeavors, like buying real estate or investing in securities, all based on what private investors think his startup is worth.

In the typical scenario, an executive at private equity firm considering an investment in a private startup might compare the numbers offered in a business plan with those of a comparable publicly traded company and examine operating costs, profit margins and overall capital structure. If the startup has a prospectus with targets that seem viable compared with those of an existing competitor, investors will have some degree of confidence that they’ll wind up with a windfall of profit once the company is acquired or it files an initial public offering.

But because of the strange nature of the tech industry, there often isn’t a comparable company upon which investors can base their assessments. When Amazon was raising money in the early 1990s, there was no existing competitor with a similar business model, so early investors had to make estimates and assumptions to base their hopes on. It is interesting that very few individuals invested in Amazon prior to its initial public offering.

In retrospect, offering seed money to Amazon was a no brainer. Internet commerce was growing by a staggering 2,300 percent a year in 1994, and Jeff Bezos saw that light early and famously drew up a business plan during a road trip to Seattle. Venture capital firm Kleiner Perkins Caufield & Byers was one of a few private investors that gave Bezos money early on, and it reaped a fortune after Amazon filed its initial public offering in 1997 just as the dot-com bubble peaked.

But the success of tech companies like Amazon.com and Google are few and far between. Often the decision by private investors whether to invest in a technology startup is based on assumptions, best estimates and industrywide averages of publicly traded companies in the same sector.

While private equity firms have special access to review a startup’s books, CEO- founders have much more latitude in selling their plans and manipulating their numbers than the heads of established publicly traded companies, who face more regulatory scrutiny.

Once startups make their way to the public markets through initial public offerings, founder-CEOs can continue to reap billions from their company’s valuations without the companies making a dime in profit. Tesla CEO Elon Musk, who’s worth an estimated $16 billion, the head of Snap, Evan Spiegel ($4.7 billion) and Twitter’s Jack Dorsey ($1.8 billion) are notable examples of rich CEOs who head unprofitable companies.

These founder-CEOs can spend good portions of their lives as billionaire heads of money-losing companies as long as investors keep believing that these companies may someday strike it rich. But there’s always a make-or-break point, and paper billionaire are always at risk of sinking their fortunes with investors losing their shirts. One thing is almost certain: Even if Uber crashes and burns, Kalanick would likely walk away from the wreckage a very wealthy computer programmer.

 

How Trump and Obama are Exactly Alike

Not until faithfulness turns to betrayal
And betrayal into trust
Can any human being become part of the truth.

— Rumi

Trump won the 2016 nomination and election largely because he was able to pose as a populist and anti-interventionist “America Firster”.

Similarly, Obama won the 2008 election in good part because he promised “hope and change” and because he had given a speech years earlier against the then-impending invasion of Iraq.

Short of disclosure of diaries or other documents from these politicians, we can’t know for certain if they planned on reversing much of what they promised or if the political establishment compelled them to change, but they both eventually perpetrated a massive fraud.

What is perhaps most striking is actually how quickly each of them backtracked on their alleged purpose. Particular since they were both proclaimed as representing “movements”.

Even before he took office, Obama stacked his administration with pro-war people: He incredibly kept Bush’s head of the Pentagon, Robert Gates; nominated Hillary Clinton for Secretary of State, who he beat largely because she voted for giving Bush authorization to invade Iraq. Other prominent Iraq War backers atop the administration included VP Joe Biden, Susan Rice and Richard Holbrooke. Before he was sworn in, Obama backed the 2008 Israeli slaughter of Palestinians in Gaza. See from 2008: “Anti-War Candidate, Pro-War Cabinet?

Predictably, the Obama years saw a dramatic escalation of the U.S. global assassination program using drones. Obama intentionally bombed more countries than any other president since World War II: Iraq, Syria, Afghanistan, Libya, Somalia, Yemen and Pakistan. Obama talked about a nuclear weapons free world, but geared up to spent $1 trillion in upgrading the U.S. nuclear weapons arsenal. At the end of his administration, attempts at the UN to work toward banning nuclear weapons were sabotaged, efforts that the Trump administration continues. At his first news conference as president, Helen Thomas asked Obama if he know of any country in the Mideast that had nuclear weapons. Obama passed on the opportunity to start unraveling the mountain of deceits that constitutes U.S. foreign policy by simply saying “Israel” and instead said that he didn’t want to “speculate” about the matter.

As many have noted recently, Trump seemingly reversed himself on Syria and launched a barrage of cruise missiles targeting the Assad regime. It’s part of a whole host of what’s called “flip-flops” — Ex-Im Bank, NATO, China, Russia, Federal Reserve — but which are in fact the unraveling of campaign deceits.

Fundamentally, Obama and Trump ran against the establishment and then helped rebrand it — further entrenching it.

And of course it’s not just foreign policy. Obama brought in pro-Wall Street apparatchiks Tim Geithner and others around Robert Rubin, like Larry Summers. Some were connected to Goldman Sachs, including Rahm Emanuel, Gary Gensler and Elena Kagan and Obama would back the Wall Street bailout. Trump campaigned as a populist and brought in a litany of Goldman Sachs tools, most prominently Steven Mnuchin at Treasury Secretary and Gary Cohn as chief economic advisor.

The nature of their deception is different. Obama is lawyerly and, like jello, hard to pin to the wall. Many of his broken promises are actually violations of the spirit of what he said, not the letter. He can promise to withdraw “all combat troops” from Iraq — but doesn’t inform voters that “combat troops” in his parlance is not the same as “troops”. And most certainly many of his backers were utterly infatuated with him and seemed incapable of parsing out his deceitful misimpressions. Obama did however outright violate some promises, most obviously to close the the gulag at Guantanamo Bay in his first 100 days.

Trump triangulates by being an electron. He can say X and not-X in the span of a minute. Like an electron, he can be in two places at the same time. Trump is just an extreme example of what should be evident: It’s largely meaningless if a politician declares a position, especially during a campaign. The question is: What have they done? How have they demonstrated their commitment to, say, ending perpetual wars or taking on Wall Street?

These people are largely salesmen.

Nor are these patterns totally new. George W. Bush campaigned against “nation building” (sic: nation destroying); Bill Clinton campaigned as the “man from Hope” for the little guy; George H. W. Bush claimed he was a compassionate conservative. All backed corporate power and finance. All waged aggressive war.

In both the cases of Obama and Trump, the “opposition” party put forward a ridiculous critique that pushed them to be more militaristic. Obama as a “secret Muslim” — which gave him more licence to bomb more Muslim countries while still having a ridiculous image of being some sort of pacifist. Much of the “liberal” and “progressive” critique of Trump has been focusing on Russia, in effect pushing Trump to be more militaristic against the other major nuclear state on the planet.

One thing that’s needed is citizens aided by media that adroitly and accessibly pierce through the substantial deceptions in real time.

Another thing that’s needed is that people from what we call the “left” and “right” need to join together and pursue polices that undermine the grip of Wall Street and the war makers. They should not be draw into loving or hating personalities or take satisfaction from principleless partisan barbs.

Only when there’s adherence to real values and when solidarity is acted upon will the cycles of betrayal be broken.

Sam Husseini is founder of the website VotePact.org

COUNTERPUNCH