Posts Tagged ‘business’


A Civilization Measured by What It Tolerates

“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” — Louis Brandeis

  • Somewhere tonight, a child will go to bed hungry.
  • Somewhere tonight, a family will sleep in a car.
  • Somewhere tonight, someone will drink unsafe water because there is no alternative.
  • Somewhere tonight, a worker will delay medical care because the bill would be too high.

And somewhere in the same world, one man has accumulated a fortune measured in a trillion. That man is Elon Musk.

In the United States alone, nearly 750,000 people experienced homelessness during the most recent federal count. Across the globe, hundreds of millions of people continue to face chronic hunger. Yet at the same time, we have entered an era where an individual can possess wealth greater than the annual economic output of many nations.

I want to be clear from the beginning: I do not believe any human being should possess a trillion dollars. Not Elon Musk. Not the next visionary entrepreneur. Not the most brilliant innovator in history. Not anyone.

This is not because I oppose success. It is not because I oppose innovation. It is not because I believe wealth itself is immoral. It is because a trillion dollars is no longer a measure of success. It is a measure of concentration. A measure of ownership. A measure of power.

And when wealth reaches that scale, the question is no longer what one individual earned. The question becomes what kind of society allows so much wealth to accumulate in one place while so many basic human needs remain unmet.


When Numbers Stop Meaning Anything

Human beings are terrible at understanding very large numbers.

A million dollars sounds enormous. A billion dollars sounds unimaginable. A trillion dollars belongs to an entirely different category.

A million seconds is about eleven days. A billion seconds is about thirty-one years. A trillion seconds is nearly thirty-two thousand years. The scale becomes almost meaningless.

At that point, wealth stops resembling personal prosperity and starts resembling infrastructure. Many governments operate with fewer resources than the fortune now controlled by a single individual. That fact alone should give us pause.

There is a difference between being wealthy and possessing wealth on a civilizational scale.

I have no objection to people becoming rich. I have no objection to people building successful companies. But somewhere between prosperity and a trillion dollars, something changes.

The discussion is no longer about achievement. It becomes a discussion about power.

Every era has a number that reveals what it worships.

  • Ancient empires measured land.
  • Medieval kingdoms measured bloodlines.
  • Industrial societies measured production.
  • Ours measures valuation.

We are told that a trillion dollars is evidence of genius. Perhaps it is. But it is also evidence of something else: a civilization increasingly comfortable with concentrations of wealth and power that previous generations would have considered alarming.


The Lords Return

Defenders of extreme wealth often argue that today’s billionaires earned their fortunes while yesterday’s kings inherited theirs. Fair enough.

But if the outcome is one individual possessing more economic influence than entire nations, the distinction begins to matter less.

  • Medieval kings controlled land.
  • Modern billionaires control platforms.
  • Medieval lords controlled roads, trade routes, and resources.
  • Modern corporations increasingly control the digital roads through which communication, commerce, information, and culture flow.

History spent centuries dismantling hereditary aristocracies because concentrated power was considered dangerous.

Today we celebrate concentrations of power that medieval rulers could scarcely imagine. The lesson of history was never that wealth creation is evil. The lesson was that power concentrated beyond accountability eventually becomes dangerous.

That lesson has not become less relevant simply because the castles have been replaced with data centers.


We’ve Seen This Movie Before

America has already experienced a version of this story. The late nineteenth century produced industrial fortunes so vast that figures like Rockefeller and Carnegie seemed larger than life.

The era became known as the Gilded Age.

  • Economic growth exploded.
  • Innovation accelerated.
  • Industrial output soared.

Yet so did inequality, labor unrest, corruption, and the influence of private wealth over public institutions.

The problem was never that these men built successful enterprises. The problem was the concentration of power that followed. Eventually the public demanded antitrust laws, labor protections, and reforms designed to prevent private fortunes from eclipsing democratic institutions.

The lesson was not that markets are bad. The lesson was that markets left entirely unchecked tend to concentrate wealth and power into fewer and fewer hands.

Today we appear to be relearning that lesson.



The Machine That Makes Billionaires

Elon Musk did not personally build a trillion-dollars worth of products. No human being could.

A trillion-dollar fortune is not created through labor alone. It emerges from ownership.

  • From financial markets.
  • From automation.
  • From intellectual property.
  • From global supply chains.
  • From algorithms.
  • From systems that allow value to compound at extraordinary rates.

This is where economist Thomas Piketty becomes important. Piketty’s research argues that wealth naturally concentrates when returns on capital consistently outpace the growth of the broader economy.

In simple terms, wealth generates more wealth.

  • Ownership attracts more ownership.
  • Capital compounds.
  • The result is not necessarily a conspiracy.
  • It is a tendency.
  • A machine.
  • A system.

Modern capitalism has become remarkably effective at scaling value. What it has not solved is how to prevent that value from concentrating at levels that begin to rival democratic institutions themselves.

The question is not whether Elon Musk worked hard. The question is why modern economic systems repeatedly produce concentrations of wealth that would have been unimaginable to previous generations.


A Civilization’s Report Card

Imagine a society where every child has enough food.

  • Every family has safe housing.
  • Every community has clean drinking water.
  • Every citizen has access to healthcare.
  • Every worker can meet their basic needs.

Now imagine someone becomes a trillionaire.

We could still debate whether that concentration of wealth is healthy. But that is not the world we live in.

The world we live in still contains homelessness.

  • It still contains hunger.
  • It still contains medical debt.
  • It still contains preventable suffering.

These are not mysteries. They are not unsolvable. They are choices.

The scandal is not that poverty exists. Poverty has always existed.

The scandal is that poverty exists alongside unprecedented abundance.

We have solved the problems of production. We have not solved the problems of distribution.


The Question We Avoid

I believe a trillion dollars is a moral failure. Not merely the failure of one individual. The failure of a society. Because every trillion-dollar fortune exists alongside needs that remain unmet.

We are encouraged to marvel at the size of the fortune. Perhaps we should be asking what the existence of that fortune says about everyone who was left behind.

Economist Joseph Stiglitz has spent years warning that extreme inequality is not only unfair but economically inefficient and politically destabilizing. That should concern everyone regardless of ideology.

Extreme poverty creates instability. Extreme concentrations of wealth create instability.

History repeatedly shows that societies become fragile when ordinary people begin to believe the rules only work for the powerful.

The danger is not that one man becomes rich. The danger is that millions conclude the game itself is rigged.

Journalist Glenn Greenwald has often argued that the central political issue of our time is not left versus right but the concentration of power in institutions that become increasingly insulated from public accountability.

The same concern applies here. The question is not whether Elon Musk is a good person. The question is whether any individual should wield economic power on a scale once reserved for states.


What Happens Next?

Many people will celebrate the arrival of the world’s first trillionaire as proof that the system works.

I see something else. I see a warning light.

Not because success should be punished. Not because innovation should be discouraged.

But because no human being should possess that much wealth while so many struggle to obtain necessities.

A trillion dollars is not merely a fortune. It is a concentration of power unprecedented in modern history.

The real story is not Elon Musk. The real story is the world that made a trillionaire possible. A world capable of producing unimaginable abundance while leaving millions behind.

The question is no longer whether we can create trillionaires. The question is why we keep accepting them.

What is the stock market? A central marketplace to buy and sell stock. The NYSE dates back to 1792. It was likely never explicitly stated that it’s a private club. Because of the term publicly traded company, many people probably assume the public interest is being served or that the stock exchange is a public place. It is not.

10% of the populated owns nearly 93% of the stock market. As the late, great George Carlin used to say “it’s a big club, and you ain’t in it”.

10% of the population…wow, and the government gave them how much bailout money in 2008?

I wonder how the public could have benefited from that money? Healthcare, pot hole repair, college debt forgiveness, homeless sheltering, food banks, community gardens, jobs programs, etc. But that’s going into fantasy land. A fantasy where the rich don’t get richer.

Is there a middle ground where the poor don’t have to get poorer?

It is something to see so much data and evidence pile up that America is living in a capitalist controlled oligarchy. The illusion of direct democracy fades for all but the heavily propagandized. Unfortunately the heavily propagandized is still the majority of the civilian population of America.

The evidence of that fact shows up every election season. Red vs blue, republicans vs democrats, neighbor vs neighbor. Tribalism weaponized to keep the unwashed masses fighting amongst themselves rather than looking upwards and their oppressors.

That third parties are still relegated to joke status because the duopoly has people convinced lock, stock, and barrel that they need to vote between the lesser of two evils OR ELSE, is also really something to behold every election season.

How many billions need to be spent on war and corporate welfare each year before something changes? Is there a number? Is there a flash point? Is there a turning point? Do we as a people have it in us?

It is easier to just get by. Take less and be lead. Settle on the sidelines and complain through small talk or comment sections.

However, it is also getting harder to deny reality. Even in a time of compounding misinformation and infinite propaganda, a study that shows that 10% own 93% of the stock market comes out. The same stock market that is used by every mainstream news source as the indicator of whether the economy is doing good or bad for the whole country.

So if 10% are doing good we’re all doing good? No. But every news anchor and every politician in America talks about how good or bad the economy is doing based on how the stock market is doing. So what does it mean if the stock market is doing good, 10% of the population are doing good, the media and politicians all in unison say we are doing good as a whole, but the vast majority are experiencing the toughest times of the past century?

Naiveté of economic realities is something that seems unfortunately baked into human nature. In America where poor people or people who are just one step above being poor vote against their own better interests for generations.

The “Took Our Jobs” folks who are always ready, willing, and able to point their finger and raise their ire at anyone other than the billionaire capitalist class that is responsible.

…“cash rules everything around me”… is a universally agreed upon law of American life and other first world countries. So what does that mean when for the affluent when applied to income inequality, outsourcing, inflation, and tax cuts?

The people with the least, have the most influence on the lives of others?

Bernays won…in a landslide.

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by @anarchyroll
10/15/2014

It turns out Apple is worth more than a lot of things. A lot of things and a lot of other companies.

The company is valued at over half a trillion dollars and at any one time, has around $160 billion of liquid assets on hand.

The US government for instance, has less than 1/3 of that on hand. Although, as the Forbes article linked above makes sure to note, the US Treasury can at any time print more money and invest it into treasury notes.

What does it mean when a company has more than three times the amount of money as the government  of the country it operates in? Does that tremendous gift on incredible wealth come with added responsibility? A responsibility not just to employees and shareholders, but to cities, cultures, and societies?

Apple hoards so much cash, that Carl Ichan, the man who the lead character in the movie Wall Street is based on, thinks Apple is being too greedy with their profits. That takes a whole lotta greed. Ichan is as ruthless of a capitalist as it gets. If someone who makes his living using money to make money thinks Apple owes something to other people, that puts Apple in a different light than the idolatry bestowed upon their founder and products.

Apple already deserves some scorn for their notorious tax dodging/avoidance practices. They dodge taxes and hoard cash from even their own stockholders. What about the societies that have enabled the company to become richer than governments? What about the roads, schools, bridges, farms, poverty, intelligence, and morale of the places and people Apple has made their billions in? Do they owe something? Should they bear more responsibility to the public than slightly newer, slightly modified consumer electronic gadgets a few times per year?

With great power comes great responsibility. Money equals power in the world we live in. No one person, government, or corporation in the world has more money than Apple. Where does responsibility come in?

 

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by @anarchyroll
10/6/2014

The biggest Initial Public Offering (IPO) in the history of the New York Stock Exchange occurred recently.

Have you heard of Alibaba? Had you heard about Alibaba before last month? Have you already forgotten about Alibaba after it didn’t carry over to a fresh news cycle? When someone mentioned it to me last month, all I thought of was the Beastie Boys song.

What is Alibaba?

  • Google, Amazon, PayPal and eBay all rolled into one
  • A wholesale marketplace; Alibaba is the middleman the connects retailers/sellers directly to customers/buyers
  • Alibaba is the top dog in the largest e-commerce market in the world

How did Alibaba become the biggest IPO ever?

  • Capitalizing on the Chinese consumers’ desires to shop online, for cheap, with trustworthy retailers/merchants
  • 80% of China’s e-commerce is done through Alibaba
  • Domination of the world’s largest growing market paired with international expansion has Wall Street drooling

So China’s biggest internet cash cow has gone public on stock market. Yahoo is the biggest American company to directly benefit from Alibaba’s IPO success as the two are very  much in bed together, on the level, and in public NOT under the table. In fact, Yahoo has benefited so much from Alibaba’s success there is talk of them investing in and/or acquiring Snapchat.

What are potential problems with Alibaba?

  • It’s Chinese, the communist government/central bank could throw a monkey wrench into the mix at any time, and already has
  • The stock being bought isn’t actual stock in the company, but in their Cayman Islands shell corporation
  • Is Alibaba-Mania a product of a new Dot Com Bubble? The question is worth asking.

Should you go out and buy as much Alibaba stock as you can afford? Well, if you’re a good investor, you should always asked yourself; what would Warren Buffett do?

As with most IPOs, if you weren’t ahead of the curve or a fan of the band before they were cool, the ship has mostly sailed on this one. What I find personally noteworthy about Alibaba, is everyone I know who invests and is well off because of it, wants nothing to do with Alibaba. Why? They all say the same thing; the Chinese government. How much is the government involved with Alibaba? How much influence do they have? How much transparency is there and how much of that can actually be trusted?

When the Head of the FBI goes on 60 Minutes and openly talks about the Chinese military attempting to cyber attack the US economy, one should be very cautious about investing in the Cayman Islands shell company of a Chinese internet marketplace with direct ties to the Chinese government.