Friday, January 21, 2011

Priests and jesters (17 Oct 2007)

Hopefully the title of this entry doesn't have you expecting an exegesis of Marillion lyrics or something; instead I wanted to revisit the point I was trying to make in the previous entry about education and try to illuminate it with a concept from an essay by Leszek Kolakowski. In his essay "The Priest and the Jester," Kolakowski posits two eternally warring approaches to philosophy, which in his view has yet to shake its theological roots and is always taking up eschatological questions.
The antagonism between a philosophy that perpetuates the absolute and a philosophy that questions accepted absolutes seems incurable, as incurable as that which exists between conservatism and radicalism in all aspect s of human life. This is the antagonism between the priest and the jester, and in almost every epoch the philosophy of the priest and the philosophy of the jester are the two most general forms of intellectual culture. The priest is the guardian of the absolute; he sustains the cult of the final and the obvious as acknowledged by and contained in tradition. The jester is he who moves in good society without belonging to it, and treats it with impertinence; he who doubts all that appears self-evident. He could not do this if he belonged to good society; he would then be at best a salon scandalmonger. The jester must stand outside good society and observe it from the sidelines in order to unveil the nonobvious behind the obvious, the nonfinal behind the final; yet he must frequent society to know what it holds sacred.
In the previous post, I was trying to argue that everyday life tends to make jesters of us all, while cultural institutions tend to try to instill us the reverence of the priest and the complacency that comes with believing moral questions have been settled -- in Venezuela, in favor of the "new man." But the "new man" himself was supposed to be a jester; his demeanor was precisely something that can't be taught, an attitude that self-consciousness and second-handedness destroys.

When I was a college teacher, this dilemma was palpable to me, but I didn't have this vocabulary to describe it. I could tell that some other English dept. professors clearly took inherited standards seriously and saw these traditions as self-justifying, worth preserving simply because others had saw fit to do the same. These priestly professors would teach appreciation classes and pass off subjective judgments on poetry, etc., without a blush or a moment's hesitation -- to them, that's why you got credentialed, so that others would have to take your opinion as gospel, so you could essentially say whether various works of art rock, rot, or rule. Others, the teaching assistants especially, wanted to challenge the students to contest everything and reject all hierarchies and make it all up for themselves, as though they weren't in the classroom to learn from someone else. These instructors wanted to dismantle all authority, particularly their own, and affirm the students' voice. I would sort of ricochet back and forth between those poles, with an ad hoc pedagogy and a faithlessness in the whole process. Inevitably, one may have to become a priest to become entrenched in academia; one must professionalize and buy into one's own bullshit, or in other words, have the dignity to take one's own career seriously. And as a by-product of that, you might so piss off some students with your righteousness that they'll develop their own jester-like qualities and fulfill their subversive potential.

Ideological education (16 Oct 2007)

Last week, in an issue that went out of its way to demonize Che Guevara, the Economist ridiculed the recent efforts by the Venezuelan government to reshape its public education system in accordance to Marxist theory.
the aim of the new education plan is “the formation of the new man”.
That phrase was coined by Ernesto “Che” Guevara in the early years of the Cuban revolution. His “new man” would be motivated by moral rather than material incentives. Cuba's communist government has pursued this chimera in vain for decades. Now its Venezuelan ally is embarking on the quest. “The old values of individualism, capitalism and egoism must be demolished,” says the president. “New values must be created, and that can only be done through education.”

All public educational programs are ideological in nature; it's state-sponsored training in how to be the kind of docile citizen it expects. (Hence, phys ed classes.) So there's no sense in criticizing Chavez for making the attempt. But it is strange to see an educational program that seems plausible only as a marginal, oppositional, and subversive pedagogy enacted by fringe radical instructors rolled out as a top-down national initiative. The agenda outlined in the Economist article -- "children will be taught that capitalism is 'a form of world domination' associated with imperialism," " 'a critical attitude towards any attempt at internal or external aggression,' " "the need to replace capitalist with socialist “hegemony”, by taking over those institutions that transmit the values of society" -- are all things that back in the day many of my fellow Freshman Composition teachers used to fantasize about bringing to our classrooms under the innocuous guise of teaching critical thinking. And I wouldn't repudiate any of these goals now. But critical thought is primarily a matter of challenging official doctrines and resisting to whatever degree is possible indoctrination of any sort, including that administered by your leftist literature teachers. When the state dictates some new hegemony, it remains hegemonic; it's still the institutional culture, which itself carries with it the traits that we idealistically hope education will take the edge off of -- conformity, superficiality, suspicion, hierarchical discipline, rigidity, etc.

The instinctual response to institutional culture often seems to be skepticism, so it's hard to imagine indoctrination working. Hegemony is never complete enough to eliminate the space for the viewpoints you are trying to eradicate. Indoctrination is much more effective when it operates indirectly, outside of institutional culture, or in what is perceived by participants as interstitial to it -- the talk at the water cooler, what your hippie teacher gets away with saying, the shared jokes between individuals about bureaucratic rules as they carry them out, the things the police condone. True hegemony is achieved when these spaces too are reiterating the dominant culture, as they seem to in capitalist society, where individualism and consumerism are played out as pseudo rebellions rather than conformist posturing, mouthing a party line. Sociologists -- Michel de Certeau, Henri Lefervre -- have theorized this interstitial space as "everyday life," and much is made of how it subverts the official version of how things are that makes it into recorded history -- the speeches of leaders, survey results, economic data, that sort of thing. If the state seeks to leverage everyday life to its advantage, though, it needs to be subtle and circumspect about it, figure out ways to present oppression and restriction as advances in freedom. Platitudes and maxims about the "new man" are probably not enough to create this impression. The best kind of education is that which engenders beliefs that it can't explicitly pursue as goals, education that works despite itself to create students who are curious, self-motivated, and sufficiently critical.

Financial narratives (14 Oct 2007)

I spent a lot of years studying literature, and though it frequently seemed like I was pursuing vanity degrees that would have no use in the "real world," I tried to put a brave face on it, telling myself and anyone who would listen that the study of the functioning of narratives culturally is integral to understanding the course of that society; that manipulation of those narratives can dictate the course of history; that the values individuals subscribe to can often be traced to narratives that have cultural currency. So it's gratifying to see an piece like this one in today's NYT, by Robert Shiller, of Irrational Exuberance fame, that confirms my rationalizations.
Consumer confidence indexes have not yet fallen as they did at the onset of the last two recessions. But confidence is a delicate psychological state, not easily quantified. It is related to the stories that people are talking about at the moment, narratives that put emotional color into otherwise dry economic statistics....
It is clear that salient, emotion-arousing narratives — those that capture the popular imagination and damage public confidence — are central to the etiology of recessions. As these stories gain currency, they impel people to curtail their spending, both in business and their personal lives.
Narratives that render the economic data comprehensible at an emotional level are clearly significant, but Shiller might have been more specific than to attribute those narratives to what "people" are saying. The business press mainly exists to fashion those narratives, and many of them take that responsibility to heart and continually cheerlead for the economy, trying to implant confidence-building stories about the current situation in the general public. Unlike daily market roundups, whose main subterfuge is to confidently present explanations of why markets moved in this direction or that (see the epic account of day trading maestro Victor Niederhoffer in this week's New Yorker for a look at how much more sophisticated this kind of interpretation can become), I'm thinking instead of BusinessWeek's "Business Outlook" section, the weekly roundup of the market's performance and its interpretation of new data for various indicators. This column is perpetually optimistic, finding the bright side to any grim piece of economic news and promising recovery or further growth or bigger profits or higher stock prices around every corner. It's a testament to how slippery data is, and how many different factors and figures can plausibly be evoked in providing a picture of the economy -- the sunshine gang at BusinessWeek can simply keep digging around until they find some indicators or some time frames to contextualize numbers and spin them positively. In reality, the economy has far too many moving parts to accurately describe the interaction of all of them; this opens the window to ideological interpretations of carefully selected partial accounts of the total situation. At stake in these narratives usually is the eventual level of state intervention in the economy, though other messages are often embedded: hard work pays; only greedy speculators disrupt the operation of markets; growth is benevolent and leaves no one behind; containing labor costs (i.e. wages) ultimately benefits everyone; freedom is best understood as purchasing power and entrepreneurial opportunity, etc.

If the business press is there to cheerlead for market forces' benevolence, and sustain investors' confidence, how does the recession narrative get started and catch on? It may be a matter of data too discouraging to ignore, though just a look at how the National Association of Realtors' economists spun away the problems in the housing market for so long is enough to make that premise seem questionable. They may not get started until after the fact, when they can be comfortably cast in the past tense, which may be why recessions are often not identified until well after the fact, as Shiller notes. And the business press ultimately has to represent conditions realistically in order that those who consume the information can profit. There's still money to be made in a recession, after all.

Recessions, according to Shiller, hinge in part on consumer confidence, and a force more significant than the business press in sustaining consumer confidence is the advertising industry, which is always touting the benefits of consumption in increasingly intrusive ways. And these messages become self-reinforcing; once we accept their basic truth, we may at some level yearn to see them reiterated, which makes us more attentive to ads and the fantasies they enact. A study of the appeal of fiction -- studying literature -- can perhaps be useful in understanding how ads design their own fantasies and make them efficacious. The vicarious pleasures experienced in consuming experiences supplied by the media may translate into a faith in shopping to provide similar joys, reinforcing the identities people want to construct for themselves. And our sense of confidence then rests in how effectively we can make those identities from things we buy and consume rather than other sorts of prospects -- that our identity stems primarily from being consumers makes sustaining consumer confidence something of a cinch.

Scalping Hannah Montana (12 Oct 2007)

Is the culture industry responsible for democratizing better access to the celebrities it manufactures in the mass media? Or to put that more plainly, should every kid have just as much of a chance of seeing Hannah Montana live as they do of seeing her on the Disney channel or hearing her sing on the radio? In the Financial Times yesterday, John Gapper analyzed the problem of ticket brokers cornering the market in Hannah Montana tickets, which are apparently as highly demanded as Tickle Me Elmos and Cabbage Patch Dolls were in their day.
So popular is the show with tweens that the Hannah Montana/Miley Cyrus tour is a red-hot ticket. Tickets with a face value of up to $64 each are selling for an average of $232 on StubHub, an internet trading site. That is higher even than average secondary prices for the Bruce Springsteen and The Police tours, although the latter charged up to $250 per ticket.
Fair enough, you may think. Companies such as Google initially set the price for shares in IPOs and from then on the secondary market decides. When demand outstrips supply, prices rise. The same goes for bands: they sell tickets at face value through a distributor (in this case Ticketmaster). Prices then fluctuate on secondary sites such as StubHub.
But thousands of parents who failed to snag Hannah Montana tickets from Ticketmaster are not so phlegmatic. Nor are the attorneys-general of Arkansas, Connecticut, Missouri and Pennsylvania. They are apoplectic.

Is equal access to a pop star who appeals across the classes to children of all income brackets a standard of fairness that mass media generates, along with the illusion of equality that the quasi-egalitarian nature of wide distribution evokes? Because so many have access to celebrities in the media, consumers may develop the expectation that access to them is an entitlement, and ever more intrusive coverage of celebrities would seem to only enhance that expectation. In line with that expectation, promoters set the prices at a rate that they think demonstrates their intentions of making them affordable for middle-class fans (whom they don't want to alienate), but this only prompts ticket brokers to buy as many as they can and resell them. As Gapper explains, "The courts have not yet decided whether these tactics are illegal or merely unpleasant. It clearly puts Ticketmaster at a disadvantage to banks that allocate shares to investors in IPOs because it has lost control of who gets scarce tickets."

The notion of fairness embedded in free-market economics would require that we let markets determine the value of things by letting prices rise in order to find the equilibrium between supply and demand. This rids us of "artificial" constraints, and lets whoever wants something badly enough (desire being measured by a willingness to spend) get it. But when you don't have money to spend, you can't express desire through a willingness to spend it. Instead, you have to express it by either (a) working hard to get more money, or (2) complaining to authorities who might then intervene in markets on your behalf. Thus, parents want to force tour promoters to restrict access to tickets, so that more non-brokers have the ability to buy them at face value, which the secondary market proves are far too low.

Markets are often regarded as inherently democratic in the way they bring goods to more and more consumers and allow consumer-citizens to feel they have the same rights because they shop in the same store. But the prevalence of abundant, quasi-democratically distributed goods tends to make the demand even more fierce for positional goods, and what the frenzy over Hannah Montana tickets suggests is that they have become, essentially, as much a positional good as oceanfront property. What makes them valuable is the very fact that not every kid can have one, and kids may be learning very early not merely the hard lesson of scarcity's effect on prices, as Gapper suggests, but the peculiar excitement of winning the snob game of having something other people want -- as well as the corollary notion that it's more important to have something others envy than something you personally enjoy. In fact, kids may not be too young to absorb the cynical idea that they should condition their own preferences in accordance to those of their peers. It's never too early to learn that only the very naive can believe that their tastes are wholly their own.

Ads for cell phone use (11 Oct 2007)

Advertisers appear to be salivating at the prospects of sending ads to individuals' cell phones, and they are hoping to bait the hook for consumers by promising that ads will subsidize the cell phones and make them free to use. So having private and personal conversations brought to you by Nike and Starbucks and Miller Lite may not be too far off. As a non-cell-phone user, I can only speculate as to how annoying this will be, though I'd be much more likely to use a cell phone if I didn't have to decode the arcane service plans to get one. I don't need the "convenience" of being always accessible so badly that I'm willing to feel perpetually ripped off by roaming charges and binding contracts and other hidden fees to have it. I've always had difficulty wrapping my mind around the monthly minutes model and the other price discrimination techniques in play with cell phones, and I still can't fathom why text messages are so costly. Maybe when they are supported by ads the way many email services are, that will change.

The advantages to marketers of cell-phone ads are self-evident: The cell phone tracks where you are and allows for the ultimate in contextual ad placement. This is why Google is trying to get in on the action. It also compiles data on what are interested in and what sort of people you talk to, and if they are linked in as well, what they are interested in and so on. The cell phone network that marketers could tap into is much like the social networks mapped out on MySpace and Facebook, only much more useful -- much less fictional, and intimately connected with one's actual conduct in the material world. And because the medium is so personal, the ads can be personalized to the most extreme degree without the danger of alienating those not in the target audience. Presumably, some consumers will find such finely targeted ads useful rather than intrusive. They will want to, for example, know what marketers want them to think of the various retail outlets they might happen to be passing at any given moment.

Tyler Cowen, however, suspects that people probably don't want ads invading the inner sanctum of their phone.
Most people tolerate ads in their TV and radio shows, and indeed most of cable has evolved into an ad-supported medium. [But] many viewers turn on the TV or radio to dull their senses and simply to hear voices or see faces. Those who want more buy HBO and TiVo. In contrast, we call on the cell phone to feel in control of a situation (am I too influenced by my experience of a teenage stepdaughter?). The last thing the caller wants is to have that feeling of control interrupted by...lack of control.
I don't know that people would experience ads directly at them personally as a loss of control, though; they may find it flattering -- "Just imagine, these huge megacorporations have gone to the trouble of getting to know me and my habits personally." A small minority will be utterly creeped out by the thought of all this invasive surveillance, but others will feel the same thrill that reality-TV participants must feel when they know lots of people are watching. Advertising may keep lonely people company, and who is more lonely than the person addicted to checking a cell phone for updates?

Overrating critical rating (10 Oct 2007)

Blender's PR people forwarded me a link to its latest stab at generating "controversy" -- a list of overpraised albums. It doesn't take a whole lot of ingenuity to craft such a list -- just look at what appears on other publications' "best of" lists and aim a few cheap shots at them. I'm a sucker for such contrarianism; I'll admit I clicked through to the link despite my general rule not to click on any mail from a PR firm. (Why would I want to encourage them?) The list yields absolutely no surprises, and I can't imagine anyone so insecure about their appreciation for, say, Pet Sounds or Astral Weeks to have doubts sown by these half-assed attempts at iconoclasm. And as reassuring as I may find it to see someone else question the eternal genius of Radiohead, I know I can't really find any comfort there, because the criticism is shallow, and as is true in the PR realm generally, no publicity is bad publicity. To be singled out as overrated is just another way to be rated highly.

Lately I have been striving to stop worrying about what rating any music should have (one of the reasons I don't do much record reviewing anymore). The reasons I have for this are about what you'd expect; the arbitrary ranking nullifies the contextual factors that give any listening experience its character, and the ranking reduces something indescribably complex to something fungible, a number, etc. The impulse to rank and rate seems a defense mechanism against actually having the elusive sensual experience itself, which may always prove to be evanescent, unrepeatable and thus a little depressing after the fact. Rank it, however, and it seems as though you have pinned the experience down and taken possession of it.

Thursday, January 20, 2011

Market failures (4 Oct 2007)

It's easy to be lulled into complacency when thinking about the putative wisdom of markets, and I've found myself guilty of it lately: listening to a co-worker complain about the death of mom-and-pop type stores in Manhattan, I sat silently thinking that if New Yorkers truly cherished such stores, they wouldn't be disappearing. Of course the situation is not so clear-cut -- big chains make their bucks elsewhere and then contribute to the rent inflation that makes smaller businesses unprofitable. Chains can defray the expenses of flagship outlets in prestigious locations by trimming costs around the margins at workaday branches in humdrum suburban strip malls. But since I've inundated myself with econothink, I tend to put the burden of proof on those who want to tamper with the workings of markets, particularly for the provision of nonessential goods. So this Slate column by economist Joel Waldfogel, worked for me as a timely corrective. His main point is that individual taste doesn't dictate what is available in the marketplace:
Two simple conditions that prevail in many markets mean that individual taste alone doesn't determine individual satisfaction. These conditions are 1) big setup costs and 2) preferences that differ across groups; when they're present, an individual's satisfaction is a function of how many people share his or her tastes. In other words, in these cases, markets share some of the objectionable features of government. They give bigger groups more and better options.
Waldfogel's point here is that markets stifle diversity, but in a perverse way, this strikes me as an argument in markets' favor; why should we labor under the tyranny of individuals' taste, and the waste and inefficiency necessary to cater to each and every person out there? Maybe long-tail marketing and internet distribution can mitigate the collective burden of this somewhat, but still -- markets may be useful to the degree that they break people out of selfish expectations and gratifications, teach them that gathering goods is the part of life in which you should conform and accept what's available, and its the actual conduct of your life that brings to it its individualized color. What's wrong with markets is not that that can't gratify individualistic desires, but that they can and that marketers do whatever they can to foster such wishes.

But Waldfogel is right in pointing out that there is nothing particularly "just" about market outcomes, anymore than politically motivated outcomes determined by bureaucrats. The main argument in the market outcome's favor is the illusion of control it affords the consumer -- you seem to have no one to blame but yourself. But in a functioning democracy, a popularly elected government can contribute the same illusion of control, only you spend your vote rather than your dollar to shape your economic outlook. But the case I would want to make is that there is no point in expecting justice of that sort -- of the "right" to have one's peculiar wants serviced -- in the marketplace, and that one should be looking for justice, fulfillment, self-expression, and so on elsewhere.

UPDATE: Economist Glen Whitman has a similar take.

Radiohead becomes economists' favorite band (3 Oct 2007)

Economists are very excited by the Radiohead's voluntary pricing scheme, mainly because it will provide a data set with which to test assumptions about tipping and about the future of the music industry. Prognosis? It's fucked, according to Bob Lefsetz (quoted here): "This is big news. This says the major labels are fucked. Untrustworthy with a worthless business model. Radiohead doesn’t seem to care if the music is free. Not that they believe it will be. Because believers will give you ALL THEIR MONEY!"

There's a strong temptation to be faintly cynical about Radiohead's motives and look for the advantages the band reaps through this highly publicized gambit. Tyler Cowen explains how it's a good publicity stunt for bands that make their money by seeming cool to their fans and by touring. Megan McArdle points out the clever deployment of price discrimination:
While the download is free, the physical discs with all the notes and bonus material are 40 quid . . . or about $80. This is quite a lot to pay for an album, even if you really, really like the band. So in effect, Radiohead may have created a really effective price discrimination system: the free download might not only rope in lukewarm fans like me who would have put off the purchase, possibly to forever, but also create goodwill that encourages more of their fans to buy the super-expensive (in America) discs.
Another way it might work is that the very popularity of the free (or low cost) download might force dedicated fans to spend a lot in order to signal their committment to the band. Music has a substantial status component to its consumption. If everyone and their lame younger brother has downloaded the new album for a pittance, you might have to order the discs just to set yourself apart from the hoi polloi.
Price discrimination can seem sort of nefarious, but in charging people different sums in order they may have a slightly different experience of the same basic good, just enough rope is supplied to consumers to hang themselves how they choose. And superfans can try to feel connected to their idols by making larger and larger pecuniary sacrifices. That they are buying an illusion doesn't necessarily mean they should be kept from doing so.

As someone who grew up listening to music on a collection of homemade cassette tapes, I have never understood the idea of showing one's loyalty to a pop band by finding occasions to pay them for their work; in the crowded world of pop music, it seems enough just to pay with the much scarcer currency of attention. In fact, people may have few qualms about stealing music because they see no correlation between the amount they pay and the value they get out of the work -- because they don't price aesthetic pleasure, despite the culture industry's desperate wish that they do so (I paid $5 for an Astral Weeks LP; I got the unspeakably awful Poetic Champions Compose for $15. I certainly didn't get three times as much pleasure from it.) Some peope might find that investing money in cultural product commits them to putting in the time necessary to embellish its value, to weave it into the fabric of one's experience, bind it up with memories; but when price isn't an issue, the process seems to me a little bit more organic (if not altogether arbitrary).

You also can't put a price of being socially relevant, and that is something you can monetize in innumerable ways, something Radiohead is probably aware of. My impression is that the artists making music worth hearing would make it even without the financial incentive (expression at that level is its own reward), so there's no need to worry about "supporting" them so that their innovations can make it into the world. Intellectual property arguments applied to artistic expression seem to me to debase art out of all recognition and turn it into nothing more than a patentable idea, art as entrepreneurship.

"Real facts" (2 Oct 2007)

For the first time in a long time, I bought a bottle of Snapple yesterday with my lunch and noticed that they were running "real facts'' printed under the cap. It's not often that "facts" are used in marketing campaigns; they tend to deliberately steer clear of facts if at all possible and evoke feelings. Advertising seems designed to undermine the tyranny of the fact and let us loose in the playground of fantasy and solipsistic belief that needs no petty substantiation from the outside world. Anyway, with my lime-flavored green tea I got "Real Fact #36": "A duck's quack doesn't echo."

That the facts are numbered struck me as interesting. They are probably numbered in hopes that it will trigger some collecting habit in someone out there who will then start trying to acquire every single bottle cap in the series and procure that sense of accomplishment unique to advanced, decadent consumer societies. But the numbering also had the effect of making it seem as if the Snapple company had cataloged every fact and determined there were 46,785, or something.

I also wondered what made a fact "real." it was troubling to think that Snapple was implying that there were plenty of false facts floating around, and they were making the truth contingent on drinking a lot of sugary tea. If I were deeply curious about the slippery nature of so-called facts, I suppose I could consult historian Mary Poovey's book, A History of the Modern Fact (I'll spare you the title's post-colon elucidation), which declares the fact to be, in the words of the reviewer Amazon cites, a "pioneering epistemological designation" that was more or less invented during the Enlightenment. Before that, presumably facts were even stupider things than they were in Reagan's time.

But the particular real fact on my Snapple cap seems a bit questionable to me, less a fact along the lines of "Jack Ruby shot Lee Harvey Oswald" or "Mercury poisoning causes birth defects", and more like a folk saying or a cryptic aphorism you could pull out of a Zen Buddhist text. I find myself doubting whether or not it's a real fact after all, and not some compressed parable about how one shouldn't say silly things if one wants to be heard and remembered and have one's words live on in future generations or something.

The real fact comes with a website address attached, so I'm guessing it's a newfangled interactive marketing ploy hoping I will live the brand a little bit. I assume I could go to the site and supply some user-generated content Web 2.0 style and offer up my own real facts. I have only a few so far:

A Key lime pie tastes best when sliced into quarters.
If you drink black coffee, you are more likely to burn your mouth.
An accurate count of pigeons in a public square is impossible to pin down.
Mosquitoes won't bite a bald head.
A good night's sleep won't improve your dreams.
You can't boil the flavor out of unripened fruit.

Sleaze addiction (26 Sept 2007)

Every time I see another one of American Apparel's ultrasleazy ads, I presumably fall into the trap these ads have set for me and find myself wondering about sleaze's effectiveness as an promotional strategy. (Angry advertising blogger copyranter has an informative set of posts on the campaign here, if you need a reference point.)The people I know who wear American Apparel's clothes usually claim to wear them despite the ad campaign, claiming the clothes are exceptionally well-designed, or comfortable, or well-fitting or some other mitigating factor -- because they obviously want to disassociate themselves publicly from the implications of the ads, namely that sluts and pervy scumbags wear American Apparel.

It's fairly well-established that American Apparel founder Dov Charney is a tad skeevy; this NYT story about his selling the company to a private equity group details how employees now sign a sort of sexual harassment waiver: "American Apparel is in the business of designing and manufacturing sexually charged T-shirts and intimate apparel, and uses sexually charged visual and oral communications in its marketing and sales activity." But he's also a successful businessman, as the NYT article also makes amply clear, so obviously this ad campaign would have stopped long ago if his skanky predilections would have had any chance of hurting his big payday. Clearly the ads keep coming because they are working; one of the ways they work is that they prompt people like me to fret and complain about them in a public forum, doing word-of-mouth advertising for them gratis. And plus I get the prude's thrill of being titillated by what I complain about without having to acknowledge fully to myself that it's so. "These ads are so terrible; just look another one, aren't they terrible?" But people like me will never support the company by actually buying the clothes.

So these ads must have something for actual fashion-conscious shoppers: They must project an identity that some consumers apparently identify with and find attractive; some people must see these ads and feel a vicarious thrill at the lifestyle they suggest: the possibility of blase sexual exploitation lurking around every urban corner. If you buy into these ads, maybe wearing American Apparel's clothes makes you feel sexualized as well, makes you believe that wearing a T-shirt is suddenly bold, even risque.

Perhaps the ads, by depicting fetishes unapologetically, tap into something comparably compulsive in consumers, giving sanction to the innate tendencies toward sleaze that we typically suppress. But eventually when we become too conscious of the gratification, we'll reject the source of the dissonance. We'll feel as though the advertiser is trying to cheat by circumventing the approved filters, the customary disguises -- fashion advertisers may be able to get away with perviness under the guise of brash transgression for a while but eventually it becomes distasteful. Suddenly, depersonalized sex seems not a promise of some kind of transformative freedom (a pretty far-fetched notion the more you think about it) but an illustration of how depersonalizing fashion itself is.

American Apparel's popularity reminds a bit of the late 1970s power pop band the Knack, who seemed bizarrely compelled to take something immaculately crafted (pop songs as opposed to T-shirts) and sully it with sexist sleaze: "Good Girls Don't", "Frustrated", etc. Their signature song is like Dov Charney's interior monologue: "Never gonna stop give it up such a dirty mind / Always get it up for the touch of the younger kind." Yet the song is at the same time a clinic in pop craftsmanship; every nook and cranny is filled with an irresistible hook, and the guitar solo is one ear-tugging riff after another. When the Knack first caught on, they were ubiquitous, but soon audiences turned against them -- perhaps it was the overdone Beatles imitation of their album design, but it may also have been that the sleaze that was at first edgy and vaguely interesting -- making the familiar pop seem daring, hipper than its popularity would generally allow -- suddenly revealed itself as tedious and unimaginative. Their second album proved this to be so. Dov Charney, of course, is in the fortunate position of not having to come up with a second act for his career.

Overtime and meaningful work (25 Sept 2007)

The most recent BusinessWeek has an article about how many employees miss out on the overtime they may be owed under the Fair Labor Standards Act, which was enacted during the New Deal in order to promote higher employment. The idea was that by forcing firms to pay time-and-a-half overtime wages for any hours an employee works over 40, they would discourage long hours and hire more workers instead. But as the article points out, the math no longer works out -- the benefits and training that any new employee requires makes overtime a better deal for management, particularly if they can get away with not paying it. How can they do that? By making wage workers mistakenly think that they are salaried employees who are "exempt" from overtime.

What makes that piece of subterfuge possible is the longstanding association of overtime with blue-collar work, itself a product of FLSA. The law established a distinction between work eligible for overtime pay (which was anything that could be done interchangeably basically by any trained worker) and work that wasn't -- namely any kind of work that required judgment, management ability, or administrative talent any professional or creative work, any work where the worker's individual talent and personality factors in. So naturally, workers concluded if their work was meaningful or satisfying in any way, then it wasn't eligible for overtime. Only those working on mindless tasks would expect overtime. Moreover, to be offered overtime was an implicit suggestion that your work should be meaningless to you, that only money should be able to induce you to want to be doing it anymore than you already unfortunately have to. Thus, at one of the places I've worked as a copy editor, the other copy editors were fighting to be regarded by the human resources department as exempt, as this would prove officially that their work required judgment and not just the mechanical application of standards passed down from managers. Whether they were right about this is an open question, but it seems to me that surrendering overtime to feel pride in your job is an absurd sacrifice. And no employees, salaried or not, should be resisting the opportunity for overtime, or the additional leverage over their employers that rights to overtime supplies. And the fact that meaningful work is in some ways its own reward doesn't change that. Companies seem to get away with paying employees in meaningful work -- in autonomy and in decision-making latitude. If money really were the ultimate key to autonomy, the ultimate invitation to decision making, that neutral storehouse of value that we decide to turn into whatever we want, perhaps we'd be more outraged about this. But the truth is that money can't necessarily buy the satisfaction of having power and responsibility, the gratification of being taken seriously by people and entrusted to exercise one's own judgment in the planning for achieving a common goal. This is underscored by a comment in a sidebar to the article from a professor of leisure studies (a oxymoronic discipline if there ever was one):
This brings to mind an oft-forgotten fact about overtime laws, which is that they were rooted in a time when many envisioned a steady reduction in the hours Americans worked. (John Maynard Keynes predicted a two-hour workweek by 1980.) That vision is long gone. In the intervening years, says Benjamin Kline, a professor of leisure studies at the University of Iowa, a huge change has taken place. The ideal of working fewer hours vanished long ago, partly as a result of economic imperative but also because of a cultural shift toward embracing work, particularly by professionals. "The image I use is that our faith is in our jobs" now, he says. The sense of purpose and identity that we used to find in religion, "we find more and more in our work."
We look to work for meaning as much as for pay, so if we're getting one, we perhaps don't mind getting short shrift with the other. Thus it's likely that the more an employer can create the illusion of meaning for its workers, the greater the share of profits it'll be able to retain for itself. In order to fight this, we as a society would have to establish meaningful work as an automatic given rather than a glamorous substitute for other kinds of compensation. But unfortunately, there will always be that ever enlarging proportion of non-meaningful work that needs to be done by someone.

Greenspan's media blitz (23 Sept 2007)

Former Fed chairman Alan Greenspan has been doing a lot of press for his memoir, The Age of Turbulence, which was released on Monday, and he seems determined to say a lot of things that will get him attention. In practice, that apparently means distancing himself from the Republican establishment that built him and making many comments that clash with their accepted talking points. Just as he made him self serviceable when Bush first came into office, speaking out in favor of his unnecessary tax cuts (as Paul Krugman details here), perhaps Greenspan, sensing the coming change in the political wind, now wants to preserve his reputation for being relevant by throwing some sops to Democrats, who are likely to dominate the Washington establishment in coming years. If he has their approval, and he continues to be frequently cited in public discourse and continues to show the power to affect markets with his utterances, he can keep on procuring the lucrative speaking fees he's apparently earning on the lecture and conference circuit. Hence, Greenspan has basically suggested lately in his memoir and in interviews that the Iraq war is about oil, not democracy or terrorism; deficits do matter; Bush's fiscal policy is responsible; the Republican led 2004 Congress deserved to lose for its fiscal irresponsibility, which bordered on corruption in its abuse of power; and Clinton was a good custodian of the federal purse, nothing like the tax-and-spend stereotype that Democrats are tarred with. And consistent with a goal of remaining relevant, Greenspan doesn't admit to having done anything wrong in holding rates low and inflating asset bubbles -- the excess liquidity, he argues, was not a matter of central bank policy but instead a consequence of globalization and the spread of capitalism throughout the world, introducing newly productive workers who work for cheap and contributing to what Benanke, his successor, would call a savings glut. For good measure, in a FT interview he adds that bubbles are just an inevitable and unfortunate consequence of human nature: "I am coming to the conclusion that bubbles are inevitable," he says. "Human beings cannot avoid them . . . They cannot learn."

But of all his repositioning moves recently, this one, from the same FT piece, where he questions the current profit/wage split, was the most striking:
The world he is describing looks like a global market nirvana – with one very odd feature: profits are much higher than they should be in a world of ever-intensifying global competition.
He says: "We know in an accounting sense what is causing it" – the share of worker compensation in national income in the US and some other developed countries is unusually low by historical standards – "but we don't know in an economic sense what the processes are."
In the long run, he says "real compensation tends to parallel real productivity, and we have seen that for generations, but not now. It has veered off course for reasons I am not clear about."
It is striking that he does not, as many do, blame China. He agrees that companies should not be able to price above their marginal cost, as many apparently can today. "They should not be able to," he says. "And the issue here is that there are restrictions that they are not identifying that enable them." He adds: "The competition should be moving in."
Mr Greenspan says "I did and still do" expect some normalisation of profit and wage shares. But asked whether the high profit share remains a puzzle to him, he says: "Yes, it does." In his book, he worries that if wages for the average US worker do not start to rise more quickly political support for free markets may be undermined.

It's pretty startling to see the friend of investment bankers, the namesake of the notorious Greenspan put that protects big financial risk takers from facing consequences, wondering why wage earners aren't getting more of their share. That last comment verges on an endorsement of a populist uprising, a return to union power, and the kind of labor-friendly economics John Edwards seems to be campaigning on. You can interpret that last comment to suggest what left-leaning economists tend to say all the time: The whole capitalist system is threatened by income inequality, because the injustice of inequality reveals the imbalances between labor and capital that undermine the economy's supposed rational fundamentals. The power distortions lead to externalities, rent-seeking, perverse incentives and other phenomena that make a market economy veer from its ideal, textbook elegance, where ever party gets what they wants and what they deserve at a price that can be nothing other than fair. Eventually, there is no redress to the imbalances other than political intervention, and if Greenspan is right -- and if his anti-Republican pronouncements are further evidence of his sense of shifting political winds -- than we can expect that intervention to come soon. When the redistribution of profits fails to happen naturally -- as it inevitably does -- the political cycle (from right to left) must kick in to correct the business cycle (from capital to labor). This preserves the sanctity of both and forestalls the kind of revolution that would put an end to all such cycles (and most of what we recognize as economic freedom as well).

Disaster capitalism (17 Sept 2007)

Harper's has an excerpt from Naomi Klein's new book, which I mentioned in a post a few days ago. I was a little skeptical about it having read only summaries, but this excerpt helps bring the argument into better focus: Klein uses the Green Zone in Iraq as an example of what the U.S. could become if the mania for privatizing all government services would be allowed to continue unabated. In walled, heavily guarded communities, the privileged would continue their lives of comfort while outside the walls would be a reversion to a primitive struggle for basic resources, for the chance at survival itself. The idea of a functioning state that unifies the different classes and factions in a society with equal rights and a basic level of public services is rejected; in Iraq, it appears absolutely impossible. This appears to have been by design; in the immediate aftermath of the invasion, as has often been noted, the Bush administration sent a bunch of flunkies picked for their ideological commitment to administer an experiment in free market anti-government, privatizing services and dismantling existing state institutions, and helping bring forth the conditions that have produced the current quagmire. Klein's point in the article is that the same free marketeers would like to introduce the program in America, using privatization as a rallying cry in times of crisis to make the well-off think to themselves, Why should I share in the general suffering? Should this society be set up so that my money will protect me from all misery and discomfort? Otherwise what good is my money? And if those poor people feel "left behind," then, well, they should have thought of that when they decided to be born poor and then not work extra hard to overcome that disadvantage to get enough money to safeguard themselves.

This is a fundamental divide between American conservatives and liberals: conservatives want to conserve privilege and prevent the state from alleviating inequalities (otherwise we'll have "moral hazard" and "perverse incentives" and the poor won't bother to work very hard to change their condition); liberals believe that civil unrest is mitigated and the better side of human nature expressed by using the state to help provide equal opportunity and a basic level of security to all citizens. That means making a certain amount of sacrifice for an intangible benefit, and it means irrational decision making at the margins, but that's because the return on the investment is not readily measurable by the economic tools the champions of market forces tend to prefer. One can imagine the same ideological divide applying to the health care crisis America faces regarding supplying a basic level of care for all: Prices are going up and insurance companies won't cover those likely to be sick (or unemployed,a rough proxy for health) and this amounts to a de facto form of rationing. Conservatives play to the upper-middle-class's fears and selfishness: You know there will be rationing, they intimate, so why not rig the system so your wealth guarantees you preferential treatment. And if those without suffer, well, at least it's not your family. Why have a safety net if that means you, in your privilege, are a hair less safe? Of course the liberal answer to that regards the lack of huge disparities among society as beneficial in itself; it means less envy, less misery, less unrest, and ultimately more liberty for more people -- satisfied people will generally leave each other alone and let people live and let live.

The return of the last intellectual (15 Sept 2007)

America has a reputation for being fairly anti-intellectual, which is an impression created mostly by how the reactionary religious aspects of American culture have influenced politics and by extension culture -- politicians cater to small but noisy constituencies who are invested in repression, straitened gender roles, self-righteous moralism, and censorship, and then suddenly Janet Jackson's tit exposure becomes big news, a societal touchstone. But put aside that element, and America is a pretty good place to be an intellectual, for the reasons Scott McLemee touches on in this review of Russell Jacoby's somewhat notorious book, The Last Intellectuals. In America there are lots of ideologically derived jobs that call for public intellectualizing, only in America we shy away from calling those who perform them intellectuals. (Thanks to that aforementioned corps of reactionaries, intellectual, like feminist or liberal, have become pejorative appellations in America.) Often these people are functionaries in the media feeding the voracious maw of the new outlets online, or they are adjuncts at state-supported universities. They are writing proposals or grants for a wide variety of philanthropies or NGOs; they are producing research or policy papers for one of any number of lobbies or think tanks. They are part of the army of commentators, professional or semiprofessional, supporting the edifice of mediated public life, convincing us that celebrities are important, or that the new books and TV shows and films and songs coming out are critically important and crucially significant. Perhaps America seems anti-intellectual because so many people have reasonable cause to fancy themselves as intellectuals, and the word has lost all relative meaning. What were once rootless intellectuals have become today's "creatives," who are repopulating cities to lead their boundlessly creative lifestyles, absolutely sure of their own centrality to the zeitgeist, their own fecundity.

McLemee cites this observation of Irving Howe's:
The kind of society that has been emerging in the West, a society in which bureaucratic controls are imposed upon (but not fundamentally against) an interplay of private interests, has need for intellectuals in a way that earlier, “traditional” capitalism never did. It is a society in which ideology plays an unprecedented part: as social relations become more abstract and elusive, the human object is bound to the state with ideological slogans and abstractions—and for this chore intellectuals are indispensable; no one else can do the job as well. Because industrialism grants large quantities of leisure time without any creative sense of how to employ it, there springs up a vast new industry that must be staffed by intellectuals and quasi-intellectuals: the industry of mass culture. And because the state subsidizes mass education and our uneasy prosperity allows additional millions to gain a “higher” education, many new jobs suddenly become available in the academy: some fall to intellectuals.
Bohemia as a site of struggle and intellectual foment disappeared, to be replaced with a consumerist phantasmagoria. Intellectuals were drafted into the business of marketing, sometimes in positions were it was easy to disguise one's own promotional function from oneself, particularly when what was being marketed was "cool", and the intellectual labor to market hipness could be fobbed off as some sort of process of self-discovery.

Jacoby's book geta cited as one of many works pointing out the irrelevance of academics as opposed to the intellectuals who truly did affect culture and steer the avant-garde from their rootless place at society's margin and is thus seen as a lament for some lost golden age. But McLemee aptly points out that there was probably nothing particularly glorious in that life of insecurity, even if it did generate truly penetrating critiques of society from an "unattached" outsider's perspective. But their critical apparatus didn't prevent them from selling out at the earliest opportunity. Consumer capitalism was able to thrive so vigorously in post-war America in part because it found a place for these erstwhile rootless intellectuals, who primarily became apologists and heralds for the new order. Those who didn't work to commercialize the public sphere and make it safe for "cool" retreated into obscurantism and hyperspecialism, content to rehearse overly subtle arguments for no one's behalf. McLemee traces this point to Marcuse:
Marcuse admitted that his analysis yielded “two contradictory hypotheses: (1) that advanced industrial society is capable of containing qualitative change for the foreseeable future; (2) that forces and tendencies exist which may break this containment and explode the society.” But the recuperative capacities of a prosperous, bureaucratically administered consumer society were formidable, tipping the balance. Such a condition, as Marcuse wrote, “shapes the entire universe of discourse and action, intellectual and material culture,” and generates “an omnipresent system which swallows up or repulses all alternatives.”
So the position of unaffiliated intellectual has been swallowed up by history. Where does critique emanate from now? From blogs and other unpaid, unrequested forms of mental labor being performed at the far reaches of the long tail? Or are these too just niches being filled to smooth over and firm up the impenetrable facade the consumer culture and the cult of narcissistic self-fashioning now present us with?

The dark secrets of the Denver Airport (14 Sept 2007)

One of my favorite conspiracy theories revolves around the Denver Airport, which ties into CIA mind control, extraterrestrials, devil worship, sex slavery, the Masons, the Mayan calendar and the Queen of England. The article linked above explores this through the lens of Coast to Coast radio, an overnight radio show devoted to the paranormal that was once broadcast from the Kingdom of Nye with Art Bell at the helm, but now administered by his disciple George Noory. But to truly appreciate the mystery of DIA, you must contemplate its truly bizarre murals.

What fascinates me about this conspiracy is how hard it labors to explain things -- the delays in construction, the inconvenient location, the Byzantine baggage system, the amateurish mural painting that are probably just the result of an incompetent bureaucracy, poor planning, and feather-bedding contractors. If only there were schemes this far-reaching and nefarious. But then maybe by disbelieving, I'm living in a dream world. Maybe skepticism is just our last line of psychological defense.

Did Americans really want McMansions? (12 Sept 2007)

In the midst of the building craze it was easy to assume that McMansions were being built because vulgar, ostentatious Americans wanted them; in fact, it seemed an emblem of our national character along with obesity and SUVs. That's not a very generous characterization, and most of us would want to exempt most everyone we know from it, but it still seems sort of true in the abstract. Someone has to be driving all those Escalades and Yukons you see in suburban mall parking lots. Someone is living in those vast vistas of huddled houses in those endless developments across the fruited plain.

But as this article in today's WSJ suggests, it may have been that McMansions were a structural necessity brought on by the economics of the housing bubble. The article reports that builders are now building smaller homes as jumbo mortgages (too big for the government agencies to insure) are harder to come by for prospective buyers.

More recently, turmoil in the mortgage market has made it harder for buyers to qualify for bigger loans. As lending standards get stiffer, lenders have cut back on mortgages exceeding $417,000. That's the maximum size loan that lenders can sell to Fannie Mae and Freddie Mac, the government-sponsored financiers that buy mortgages from lenders and repackage them into mortgage bonds for sale to investors.

All this is causing builders to redraw their blueprints. After reducing prices on their current inventories of unsold homes, the next step is to "start building to a new market. That new market is a lower price point at a smaller size. To the extent they can do it, they will," said Kermit Baker, chief economist at the American Institute of Architects.

The article still wants to pin the ballooning size of homes before the credit crunch on consumers' desires to flaunt their prosperity, but it's worth considering the consequences of easy financing itself, which drove up valuations and prices and raised the floor at which real estate deals needed to be made in order to seem worth the trouble. This meant catering only to the high end of the market and encouraging everyone to consider themselves a part of it, whether they wanted to or not. The houses had to be big to accommodate all the money sloshing around in freely distributed mortgages, and to give margins big enough for builders to make money on the inflatedly expensive land they built on. Home buyers became caught up in a nexus of brokers, bankers, and builders that may have obfuscated alternatives to brand spanking new McMonstrosities in what used to be meadows. So maybe we really should feel sorry for the homeowner cited in the article who is angry that smaller houses are going up around his behemoth in a development: "Standing on his back porch, he can look out across the lake and see at least six newer, smaller homes. 'The garage looks bigger than the house,' he said."

So perhaps in this new real-estate climate, Americans can redefine themselves from being a people of outsize excess to something more conscientious, and perhaps investment vehicles like the "energy-efficient" mortgage will allow for it.
The energy-efficient products are structured like traditional adjustable or fixed-rate mortgages, yet they incorporate the cost of energy-efficient improvements, such as insulation, windows and cooling systems, into a mortgage so customers can pay these costs over the life of the loan. When customers wish to a buy a home, they have an energy audit done by a certified third party, which evaluates the home and creates a list of energy-efficient improvements that can save the homeowner money on utility bills. The lender -- which will identify a certified auditor -- puts the money needed for the improvements in an escrow account and the improvements are made after the home is purchased.
As nice as grassroots efforts at greening America are, it will probably be a matter of more corporate-sponsored efforts like this becoming normal -- becoming integrated in the way business is done in America -- for the commonsense assumptions about what Americans want to change. The business press tends to report about "greening" of the economy as a trend, a fad, a gimmick uses to dupe silly consumers who want to pretend to be making a difference. But that may be because it clings to antiquated dichotomies that structure its discourse, between conservation-focused environmentalism on the one hand and pro-growth economism on the other. But it seems to be slowly recognizing that businesses are themselves driving the trend toward sustainability because it can drive profits, and not merely by taking advantage of the foibles of consumers. "Green" may be marketed like it is a brand, but unlike brand equity -- which is a kind of illusion, a virtual value, part of the superstructure -- "green" actually affects the economic base. And it seems backward to see average American consumers as environmentally conscious, as shaping the development of markets (apologists for corporations love to make it seem so since it makes corporation seem like massive agents of the people's will rather than ill-regulated forces manufacturing it.) In fact, we may be so committed to the values embedded deep in consumer capitalism -- of brands and big corporations validating aspects of our personal lives and of rationality being a matter of finding profitability and financial advantage -- that environmentalism must generally be rationalized by economic efficiency, even if it's just a veneer.

The "greening of Wal-Mart" (11 Sept 2007)

Yesterday's FT had an article about Wal-Mart's recent environmental commitments and whether the company should be lauded or criticized as not going far enough. The gist is that they can function the way the state of California does with auto-related legislation -- if the state mandates changes, the automakers must accommodate to preserve access to the largest vehicle market in America. Likewise, if Wal-Mart insists that its suppliers avoid using certain chemicals in its products, they have to change their ways. (Wal-Mart has already ruffled the feathers of the Vinyl Institute with its intention to stop buying products made with PVC.) If Wal-Mart orders a huge amount of concentrated laundry detergent (saves water) or fluorescent lightbulbs, then the price and production of these items are affected accordingly. And Wal-Mart, as one of the nation's biggest commercial real-estate owners, can have a big impact if it makes all of its sites energy-efficient, as it plans to.

So what could be wrong with all of that -- with the world's largest company using its leverage to force changes for the better. It seems rather straightforward but there are a few wrinkles. First, these environmental changes, laudable as they may be, may be part of a smokescreen distracting Wal-Mart's critics from its dubious labor practices. By being on the green forefront, Wal-Mart can divide and sap the power of the various groups that had aligned against it and begun to lobby for regulation and state intervention into its practices. It also doesn't address the fundamental problem of its business model, which is to prevent the lowest possible prices, labor and environment be damned. Generally speaking, Wal-Mart off-shores miserable labor conditions so that it can present its goods at rock-bottom prices with relatively clean hands. And then it can point to its sales figures as a kind of pseudo-democratic endorsement of its methods -- see? the people love it! And the low prices are seen as extending more power to poor consumers, who get more bang for their buck. But low prices are a product of failing to internalize the true cost of cheap goods, of the wastefulness of shoddy, disposable products. The blight of consumerism may be considered a kind of moral pollution that can't be adjudicated economically. Were Wal-Mart truly committed to change, it might make an effort to have prices reflect the true costs (if they could somehow be determined outside of market forces) of its wares, or it might make efforts to attract consumers with some other lure than low prices, though when it tried an upscale move last year, it lost market share (and who is to say an upscale move is any more laudable than a commitment to cheapness; that replaces disposability with a climate of status envy). From this point of view, Wal-Mart's low prices offer consumers a Faustian bargain of purchasing power at the expense of political power.

But the main reason that critics need to continue to gripe about Wal-Mart is that its recent gestures toward sustainability and environmental concern are essentially marketing gimmicks, a product of the pressure already put on them by critics -- it's all basically a PR move necessitated by the volume of complaining. Basically, nothing Wal-Mart can do should stop the bad PR, since the bad PR is arguably all that has been demonstrated to motivate the company to change. Otherwise it might revert to being guided by ruthlessly seeking effiency and wrenching out all it can from its supply chain by any means necessary. Currently, Wal-Mart seems to be seeking a middle ground, pursuing green initiatives that are also economically efficient, that won't be in danger of alienating not-so-green shareholders. Until Wal-Mart makes bottom-line concessions in the name of environmentalism, compromising profits in some explicit way, there's no reason for critics to temper their criticism. The vehemence of that criticism is what's pricing the value of Wal-Mart's moves.

A few theses about the Beatles (10 Sept 2007)

These were inspired by reading this alternately brilliant and irritatingly self-involved essay in the Guardian by Jonathan Lethem.

1. George Harrison released the best solo album by a Beatle. This, of course, is Cloud Nine. Okay, it's All Things Must Pass, and you have to ignore the god-awful third disc of jams appended to it. What this suggests is that Harrison had become the best songwriter in the Beatles by the end of their career, which is borne out by his contributions to Abbey Road and maybe even the Get Back sessions prior to that. By the end, McCartney was content to try to rewrite "Hey Jude" style anthems over and over, and Lennon couldn't muster anything other than rote blues jams for the most part.

2. Ringo's not such a bad drummer. Sure, he's not Ginger Baker back there, but he stays out of the way of the songs and plays admirably economical fills that have become part of the vocabulary of pop music. They are in fact a huge part of what signifies "Beatlesque."

3. Lennon's attempts at political expression are unfortunate. His heart was probably in the right place, but his attempts to be relevant weren't particularly insightful. The band's mere popularity was enough of a political statement in itself; the lyrics really didn't need to make any sociocultural statements. It's a shame because Lennon's genius was for writing songs about personal pain: "Help", "I'm a Loser", "Everybody's Got Something to Hide Except for Me and My Monkey."

4. The Beatles became archetypes after the fact. They became famous as a group and thus ended up being interpreted in the media in terms of group-psychology notions about family dynamics and sociological types. The band members' identities were defined in relation to one another on the basis of very limited samples of behavior and then became self-reinforcing. These identities seem to apply only to the individual Beatles as Beatles, and in terms of how they are understood publicly. Their private characters remain especially unknowable, though I think we know more about John and Paul's "real selves" from Walls and Bridges and Give My Regards to Broad Street respectively then from any accomplishment they had while Beatles.

5. Beatles songs are in danger of becoming simply the soundtrack to the story of their own rise and fall. The proliferation of an industry based on the Beatles' celebrity threatens to make their songs significant only in the context of the band's history rather than standing alone and being absorbed into the private and personal life of listeners. Instead of being tied to the listener's specific memories, the songs tend to signify first and foremost the Beatles themselves. The same way Abba's songs are now the soundtrack to a broadway musical rather than possibly the soundtrack of your life, the Beatles songs mark moments of progress of the Fab Four on their way to beatification. You can vicariously pretend to their lives, but it's much harder to imagine they had your dilemmas in mind when they were churning out hits.

Nimbyism and environmental justice (8 Sept 2007)

Is there anyway to avoid the sort of NIMBYism that leads to the inevitable outcome of poor neighborhoods being saddled with toxic waste, pollutants, garbage dumps, waste treatment plants, and undesirable industrial activity? An article by Amanda Griscom Little in last week's NYT magazine took a look at the problem, focusing on the concept of environmental justice, which presumes all Americans have an equal right to a safe environment -- a wonderfully egalitarian notion that few would disagree with, until the consequences are considered.
are environmental-justice goals always compatible with economic growth? There is a debate, says Daniel Doctoroff, New York City’s deputy mayor for economic development and rebuilding: “On the one hand, environmental issues, versus having more jobs.” Real estate is scarce. No matter how clean and efficient industrial sites are, he says, “there will always be things that nobody wants, and we have to find places to put them.” And taxpayers will inevitably question why they should foot the bill for a sewage-treatment plant on the Upper East Side when it could be placed in a far less expensive neighborhood.

Some critics of the environmental-justice movement go further. It is not surprising, they say, that land near toxic sites is inexpensive and that the people who live there are poor. “It’s neither possible nor desirable in a free society to have all groups living equally close to everything — be it libraries or landfills,” argues Michael Steinberg, a Washington lawyer with clients in the chemical industry. “Even the old Soviet Politburo would have a hard time pulling that one off.” The mere fact of disparate impact, he says, is not evidence of intentional discrimination in the placement of polluting facilities — it’s just economics.

Despite the purely demagogic reference to the Soviet Union, I find myself surprisingly sympathetic to the corporate lawyer's point of view. Wherever you locate certain undesirable facilities, the land around them will become devalued, creating slums. I have friends who live near a recently constructed bus depot in East Harlem; they were none to pleased about its being built and participated in some fruitless protests against it. They thought it might be relocated in the Upper East Side, only what would happen then? The value of the land around it there would decrease -- hitting the city's tax take much more drastically and thus compromising the sort of services it could provide. Or the depot could have not been built at all, thus debilitating the transportation that people in neighborhoods like East Harlem tend to particularly rely on.

Is it unfair? Yes. I'm sure the lawyer would advise those living in undesirable areas to make more money and move elsewhere. That's the basic economic solution to everything -- let the money do the talking via "free" markets. Of course,the markets are free only to the extent that opportunities for amassing money are equally open to all, and that's obviously not true -- the poor begin disadvantaged in that regard, and then the consequences of being poor -- insufficient and inferior education, limited access, internalizing self-defeating habits, etc. -- widen the opportunity gap. The alternative to the free market solution to the Nimby problem is to either forbid residential use of the land near dangerous facilities, or to force industry to take further precautions to prevent its making the surrounding environment unsafe -- this is probably what the environmental justice crusaders are concentrating on. The point at which class discrimination rather than the dismal realities of economic distribution enters the scenario is when firms capitalize on the disorganization and helplessness of poor populations to break the laws that are meant to control the damage they do to the surrounding environs. Sustainable South Bronx, the group Griscom Little highlights, wants to usual legal challenges to prevent polluting industry from coming in, while simultaneously encouraging the development of green energy. But the same sort of economic problems emerge with this sort of solution as with the bus depot, only in reverse -- if green energy concerns thrive, they make the locus of such industries desirable places to be, eventually crowding out the poor who may happen to live near them. Ultimately, those with means will avoid undesirable locales and buy up more-desirable land unless state intervention prevents Nimbyism by fiat. And the money involved in democratic politics will assure that never happens. What good is the bourgeois state if it can't protect property rights, and by extension the best property money can buy?

Burning the early adopters (7 Sept 2007)

As a foe of hype and the phony value of novelty, I was a bit disappointed to see Steve Jobs backpedal so quickly on his de facto attempt to hang early adopters out to dry by cutting iPhone prices only a few months after the device hit the market. It was like he wanted to make a mockery of the early adopters, and show what suckers they were for rushing in. (To which I'm inclined to say amen. It's a small Pyrrhic victory in my unwinnable war against status displays rooted in consumerism.) They thought they were getting something elite, rare, and expensive; now Jobs is telling them they got the crappy, overpriced beta version of a product intended for the broadest possible customer base. As much as I can understand being pissed paying full price for something that gets reduced a few months later, the first=round iPhone buyers had to know what they were getting into -- that few hundred dollars was just part of the cost one must pay to be first on the block with a new toy. It's a small price to pay for the experiential good of feeling special and superior to the iPhoneless for one brief shining month. If it hadn't cost anything, there would have been no bragging rights. "If they bought it a month ago, well, that's what happens in technology," Jobs said. It's like he purposely wants to reduce the window for early adoption to as short a period as possible. As economist William Polley pointed out, "The effect is to segment the market into the patient and the impatient."

And who really cares about the iPhone anymore, now that everyone knows someone who has one? The moment when you can be impressive by brandishing one has probably already past. Again, that's what that $100 now be rebated paid for, the right to be part of that initial wave of media-stoked excitement. With this price slashing move, it's like Jobs wants to once and for all end the notion of Apple as a leading-edge gadget maker suitable mainly for geeks and hipsters. He seems to have decided that the mass market he wants Apple to dominate can't be hemmed in by the associations of exclusivity that have adhered to the company's brand thus far. The truly hegemonic brands -- the Coca-Colas and Microsofts of the world -- aren't restricted by a need to be cool or to come off as an underdog.

Clearly Apple intends to make the ubiquitous handheld WiFi device, as the concurrent release of the iPhone that doesn't even work as a phone (the iPod touch) shows. This seemingly quixotic and redundant device is actually sort of perfect for someone like me, who wants the benefits of anywhere-internet access without being beset by the annoying expectations that I'll have to (a) talk to people on demand or (b) ever listen to voice messages. This device helps me imagine my dream: my phoneless future (which somewhat resembles the epistolary past), where all conversations are necessarily face to face, and all other subordinate communication occurs via email.

Anyway, the price cut was a courageous move, and not just because it cost Apple's stock several points when investors concluded the price drop meant sales weren't as strong as had been hoped. Apple relies on early adopters to do the job of proselytizing for the company and giving its products an aura of cool -- making their release dates into pseudoevents that the tech press can breathlessly report on. Nevertheless Jobs didn't hesitate to alienate them with the price cut-- sending them the message that their mission of shilling for the company has been accomplished and the cachet that they hoped to retain for being on the gadget vanguard was now being stripped as Apple veers toward the mass market. Apple's days as a niche product are well over, and the company's devotees will eventually recognize that there is no identity perks to using Apple stuff. It just makes you like everyone else, one of those featureless shadows in the iPod's marketing campaign, one of those rotating clone computers in the ads for the iMac running incessantly during the televised U.S. Open tennis matches.

But by issuing his apology (and the rebate offer), Jobs is in a position to reap some praise from the consumers he is signaling that he no longer cares about -- he can seem iconoclastic for acknowledging a mistake in pursuing a tried-and-true business strategy of shooting for the mainstream even while continuing to pursue it, with even more vehemence.

Opera for the masses (6 Sept 2007)

I have had so little time to read lately that I'm blogging on consecutive days about material I heard on the radio in my morning wake-up stupor. Today, the BBC news hour on WNYC spent an eternity covering the death of Pavarotti, one of the famed three tenors. In the middle of the segment, I shut my eyes for what I thought was only a moment, because they were still yammering on about him when I drifted back into consciousness. Then I realized nearly 15 minutes had passed and I was going to be late for work.

The interminable segment was something I was trying very hard to block out, but one comment made by one of the newsreaders nonetheless stuck with me: She noted that though Pavarotti was often criticized for his limited repertoire and refusal to take risks and test the limits of his ability, he should be praised for having done as much as any other singer to bring opera to the masses. Not to be too elitist (or perhaps too philistine) but why is that particularly praiseworthy? What difference does it make whether or not the masses are exposed to opera, an aristocratic indulgence held over from previous periods of opulence and saturated with the mores of a rigid caste system? Is it some great favor to the masses that Pavarotti can make it appeal to them by apparently simplifying it? It seems somewhat condescending for one -- "He was so great, even the masses could appreciate it" -- and it implies that what the masses were already preoccupying themselves with was vulgar. Thank God they at least got to hear a little Pavarotti in their time. I've got nothing against Pavarotti's singing, which I'm sure is impeccable. Reaching a mass audience is an achievement of a sort, but it's not automatically an important or laudable one. It seems more a symptom of what media makes possible and the extent to which we as a society all feel obliged to pretend to care about high art.

The expanded coverage for Pavarotti's death and the condescension in the reportage seem to be part of some cultural instinct to kowtow to certain recondite art forms that have little broad cultural significance other than serving as class boundary markers. We're supposed to revere Pavarotti for having transcended those boundaries, but all he really did was remind us that they persist.

Trickle-down recession (5 Sept 2007)

This morning, NPR had an item about the impact of the subprime-mortgage crisis on which real-estate experts were complaining that the pendulum has swung too far too quickly: A few months ago loans were too easy to come by; now they are too hard -- bankers now have the temerity to verify borrowers incomes. This was accompanied with the usual trumpet sounding about home ownership as the basis of the American dream, and what about the families? If a middle-class family can't exercise its god-given right to home ownership, then why the hell do we even have an America for? We were then invited to feel sorry for the families that couldn't afford median-priced homes in bubble-inflated markets, with no indication given that the lax lending helped foster the high prices in the first places. Instead the implicit prescription was more of the germs that led to the disease in the first place.

To give the matter more urgency, the piece went on to elucidate this chain of reasoning. When the middle class feel as though they can't afford the half-a-million dollar houses for sale in southern California, they may become discouraged about economic prospects generally, and curb their discretionary spending on luxury consumer goods -- an interesting link, because expensive housing isn't always regarded as the luxury good that it is. This downturn in consumption would then spread throughout the economy, bringing on a recession that would harm everyone. We are already seeing some of this in the ways local governments are being affected by the loss of housing-related revenues, as this WSJ story points out. Lower housing prices mean lower tax assessments, and fewer homes sold mean fewer taxes paid, fewer housing starts mean fewer associated fees collected. You start to see how many people have an interest in prolonging the housing bubble, how deeply perverse the incentives can be as long as people believe the inflation in housing can be contained to housing, where it is offset by generous income tax breaks and the happy possibility of home equity loans.

But whenever I hear about housing woes threatening consumption, I think about my frequent complaints about consumerism and wonder whether I should consider this a good thing, if whether my recent fixation of credit markets is a product of hoping that credit will dry up altogether, forcing a shift in values away from consumption, for which there will no longer be any funds. By that logic then, what I am hoping for is a return of the Great Depression, when people were forced to find other ways to occupy themselves than shopping (and working).

But I don't in fact hope for that kind of material deprivation, rampant unemployment, and generalized insecurity. One thing worth remembering is that increased consumption is different from consumerism. Increased consumption is a macroeconomic fact inseparable from any kind of growth, even if it is restricted to the population. More prevalent consumerism, however, is a matter of social priorities. What's needed is a way to divorce prosperity from the ethics of frivolity; to find a way to mitigate the corrosive effects prosperity sometimes seems to have on individuals, making them vain, selfish and insipid; obsessed with developing their own identity and lifestyle rather than contributing anything to their communities, etc. -- the typical complaints about consumerism. One could argue that these traits are actually good -- the libertarian approach that sees self-obsession as a radical expression of freedom. By this argument, shopping makes our lives meaningful -- all those important choices about what to buy that we make and almost take for granted -- as opposed to the opposite. Consumerism widens the scope of our ultimate activity rather than narrows it into a channel carved out by corporate interests and conformism and a customary allegiance to what appears to be common sense.

Or one can refute the complaints. Maybe such self-involved and shallow people don't actually exist and are only posited by the advertisements that are designed to sustain consumer enthusiasm, yet this is belied by the apparent success of such ads (they keep making them and devoting millions of dollars to them) and the theoretical apparatus that has identity being formed by such cultural influences, as in Judith Williamson's case (critiqued here) that ads function as Althusserian ideological state apparatuses allowing us to define ourselves in a way that is complicit with the economic system they support.

The important question, I guess, is whether economic growth relies on consumerism -- whether consumption will only grow at the rate required or in the directions necessary for capitalism (consumption of goods made for profit in order to display status) when consumers are prodded ideologically. John Kenneth Galbraith argued as much in The Affluent Society but many other economists scoffed at that assessment. But one can't reject consumerist values merely out of being offended by their puerility -- one person's BeerFest is another person's Hamlet. It seems that the point where one differentiates between consumption and consumerism is where critics of consumerism become environmentalists, insisting that sustainability is the basis upon which to restrict growth and develop alternative values.

Friday, January 14, 2011

Bankerpalooza (31 August 2007)

The annual conference of central bankers is about to begin in Jackson Hole, Wyoming -- an always exciting academic elucidation of macroeconomic research. If central bankers were indie rockers, this would be Bankerpalooza. This year it's attracting more attention than usual because the turbulent credit markets have crept out of their hiding spot deep in the financial section and made it to the front page, making collateralized debt obligations and asset-backed commercial paper into household words. (Okay, well, not really; but for business-press addicts, it has.) Observers have been especially eager to hear Bernanke give this speech about the what more the Fed might do to ameliorate conditions in the debt market. Will it risk generating moral hazard and bail out the financiers with a fed-funds rate cut?

When I used to study literature, my fellow graduate students and I would make a big deal about the centrality of language to experience and how much hung in the balance in the close reading of texts and in the teasing out of every possible nuance of words forged in the crucible of the author's intentions and the audience's expectations. But even while I was making those arguments, I never quite believed them; I didn't really think these skills had any bearing on real life -- they were just an elaborate way to try to justify spending one's time, say, reading Trollope novels without feeling like an idler. But it turns out that the skills weren't worthless; I was just reading the wrong sort of material. Clearly, careful parsing of the Fed's utterances leads to significant economic consequences. Millions of dollars are made or lost on these interpretations and how they play out on the market, as in what happened two days ago when Bernanke wrote a letter to Senator Chuck Schumer of New York. The Fed's language fashions economic realities, the way we always insisted Emily Brontë's shaped perceptions of gender in Victorian England or whatever. Only in the Fed's case, there's direct empirical evidence to support the claim. Not that those analyses of literature are superfluous or wrong; it's just that I personally wish I would have realized that analytical skills could be more profitably employed outside of English departments, on matters more pressing and more widely consequential than just what Thomas Grey might have meant when he was writing poems in the 18th century about his cat.

In the speech, Bernanke attempts a middle course, with a great deal of hedged language about future actions. These are the key paragraphs:
It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy. In a statement issued simultaneously with the discount window announcement, the FOMC indicated that the deterioration in financial market conditions and the tightening of credit since its August 7 meeting had appreciably increased the downside risks to growth. In particular, the further tightening of credit conditions, if sustained, would increase the risk that the current weakness in housing could be deeper or more prolonged than previously expected, with possible adverse effects on consumer spending and the economy more generally.
The incoming data indicate that the economy continued to expand at a moderate pace into the summer, despite the sharp correction in the housing sector. However, in light of recent financial developments, economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation. Consequently, we will pay particularly close attention to the timeliest indicators, as well as information gleaned from our business and banking contacts around the country. Inevitably, the uncertainty surrounding the outlook will be greater than normal, presenting a challenge to policymakers to manage the risks to their growth and price stability objectives. The Committee continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets.
The first sentence declares the Fed's intention to forestall moral hazard; if risk has no consequences, then markets don't work properly. Risk was in danger of becoming meaningless, with investors treating credit markets as a perpetual-profit-making machine. Those looking for better yield had to assume larger risks (subprime loans hidden in AAA tranches of CDOs) at higher leverage. That's no longer true; spreads between risky and safe investments have widened again. As Bernanke says earlier in the speech, "Some increase in the premiums that investors require to take risk is probably a healthy development on the whole, as these premiums have been exceptionally low for some time."

But after that celebration of risk qua risk, he drifts into a fog of prognostication: past data will be "less useful than usual" and they will look instead to the unmentioned "timeliest indicators" and the unreported advice from unnamed "business and banking contacts." Then they will "act as needed." Apparently, that promise has been enough to comfort Wall Street: stocks on the Dow and the S&P 500 are up more than 1 percent so far today. But isn't that because the statement is vague enough that congenitally optimistic investors can read into it what they want to hear? Consider the typical headline (this one from Reuters): "Bernanke: Fed Ready to Act if Turmoil Hits Economy". This is not exactly news; this is the Fed's mandate. Presenting it as news, though, can do wonders for day traders.

Digital books (29 August 2007)

Why would anyone buy a digital book reader? I found myself asking this question while reading this somewhat nonsensically titled BusinessWeek piece, "Making Digital Books into Page Turners." (Huh? I guess they thought best-seller and head turner were too cliche, so they went for an only tangentially related set phrase. Does "Turning the Page on Digital Books" make more sense?)
The market for digital books is nascent, and Sony, despite the Reader's less-than-splashy debut, still sees its potential, believing people will eventually warm to reading on a flat screen everything from books to the magazine you're holding now.
The strange thing is, I've already got a machine that can do this, and in fact I read those very words on its screen. I wasn't holding a magazine at all! No, I'm not a magician or a time traveler from the future; I've got this thing called a "laptop" and it can do many other neat things beside display the pages of a book. It displays these things called "web pages" that have all sorts of information on them, and I can even use what's known as a "search engine" to find just about any information I want. When prices of cheap laptops are going ever downward, who the hell wants a stupid toy that only displays proprietary pages? What was in Sony's mind, besides greed, when it decided to limit its digital reader to its files alone? When will media companies get it that no one is going to pay for digital information the way they did for collectible things?

Book buyers like to collect things; reading the books is somewhat incidental. If they wanted merely to read, they could go to library. And no one likes reading on screens; they will do it however if the content is free. They are never, ever, going to pay the same amount for a digital book, as Sony seems to expect, as they would for a real one -- they will not pay for the eyestrain and the absence of an object to arrange on their bookshelves. Only when real books cost $150 will people consent to explore the possibilities of digital ones for $20. And at that point, people will have mastered the art of distributing books as pdfs anyway. I'm sure you could search torrent sites now for pdfs of just about any best-seller as well as just about any magazine. People will go to the trouble if its free. If they wanted to pay, they would buy the actual object. So this makes no sense:
To stoke sales, Sony has knocked $50 off its original price for the Reader and rolled out a new print ad campaign in publications such as The New York Times (NYT ), USA Today, and Vanity Fair. As part of this marketing push, Sony is offering new buyers, who are also registered Connect users, credit for 100 free classic titles, such as Great Expectations and Moby-Dick. "In terms of timing, with people going back to school, there is a lot of interest in classic literature," said Jim Malcolm, director of marketing for Sony Electronics. "It gives people an incentive to buy."
But you can download classic novels, for which there is no copyright, for free already. You can get many of them in cheap print editions as well.

Perhaps Sony has seen what digital music has done to company balance sheet and are trying to get ahead of the curve. The digital-music-marketplace logic seems to be this: when distribution costs zero, you only have to sell a few to be profitable. So then if you can guilt some small proportion of the public into paying for digital content with the intellectual-property boogeyman or the specter of your crack legal team, you might still have a viable business. But music and books are not particularly comparable goods. Music affords an immediate experience and often serves as a backdrop for setting a mood or manifesting an identity. Books require attention, a commodity becoming rarer all the time. When people have the attention to pay, they'll invest it in such a way to maximize the pleasure and utility it affords them -- that means getting comfortable with a printed book, or getting utilitarian with a wide array of digital materials to that may be cut and pasted and reincorporated in whatever it is the user is trying to accomplish.