In creating my Locals.com account and my Substack site, I do have long term objectives. First, I wish to present, through my newsletter, white papers, books and discussion, an objectively supportable world view. Second, by virtue of our objectively supportable world view, we will come to a superior knowledge of and vision for futurity. Third, I hope that the audience, shared by an impressive roundtable of polymathic, public intellectuals, will transform into a constituency for a Polymathican subculture that has central principles of intellectual sophistication and lifelong learning.
I am building the business model as 'fee for service' rather than advertisement supported. There are several reasons for that. First, an ad based business model actually decreases the percent of total revenue that accrues to the content creator. Google is among the worst, using some misleading calculations to imply that the content provider receives 50% of generated revenue. Even if that was true, it does not compare favorably with the 70% or more that content creators receive on fee for service platforms.
Second, the content creator is providing a service of value. It is on the basis of that value that they should be compensated. It should not be based upon their ability to sell T-shirts, insurance, electronic devices, etc. Third, the attitudes of the advertisers can influence the content. Why should they get a vote? Many Youtubers complain that they are being demonetized, when, in reality, the problem is that advertisers do not agree with the message and, consequently, choose to advertise elsewhere.
The current business model at Patreon, Locals, Substack etc. is to have 'true fans' fund the operation. This encourages the content creator to place most of their content behind a relatively expensive paywall. I think that $60 per year or more is too much, but that is how the platforms are currently constructed. My goal is to eventually set up a site where content creators can get 5X the audience at 20% of current prices and come out even. That benefits both the content creators and the content consumers.
The Decline of Netflix, et al.
Recently,
Netflix informed its employees that "We let viewers decide what's
appropriate for them, versus having Netflix censor specific artists or
voices." It went on to say, 'If
you'd find it hard to support our content breadth, Netflix may not be
the best place for you." This set off a firestorm, with many people
rejoicing that, officially, Netflix refuses to put their programming
decisions through a 'woke' filter while others were scandalized and
threatened to quit or unsubscribe.
Most observers likened it to
the wholly pragmatic Michael Jordan quote that, 'Republicans buy
sneakers, too'. I confess that I suspect that Netflix would have
reacted less aggressively, if David Chappelle, the comedian whose
comments in a Netflix special sparked the controversy, was not such a
huge money maker for them. Still, like Elon Musk, I support the Netflix
decision to not let a minority sensibility dictate the programming
intended to appeal to the largest market possible.
However, this
is only a temporary fix. A demographic earthquake is about to
level the industry. It will be one of a series of transitions that, in the end, will contribute to the fragmentation of EUNA (Europe and North America). People do,
in fact, respond to ideological issues through their content consumption, even when entertainment is the primary goal. However, market forces are
generally more powerful because they are more personal.
Internet based streaming
services began with Netflix and, over time, Hulu and Amazon Prime,
emerged as competitors. Today, the market has expanded with many
smaller streaming services. There are exceptions, of course, such as Viki. However, most are still attempting to seize the mass
market. However, in the longer term, more targeted streaming services
will come to dominate. While Netflix may remain the market leader,
catering to the largest market segment, it really has little opportunity
to reverse a long term trend of market share loss.
The reason is
simply because there is significant diversity in personal preferences
in streaming services. Often it is just the traditional differences of
romcoms vs. action films, etc. but it also can be a reflection of
differences in intellectual abilities or cultural values. While 'Leftish' consumers may see a proliferation of LGBTQ+ characters as a positive, for many 'Rightish' consumers it may make the content unappealing, not because they are bigots, but because they don't related to the depicted social environment. The net
result is that many people, whether Leftish or Rightish, have little or no interest in most of the
offerings of Netflix, Hulu, Amazon Prime, etc. Consequently, while a person may
pay for over 100 different offerings, series, movies and documentaries,
they may only be interested in 1/4 or less of them.
My readers
and I tend to be intellectuals and lean toward Apollonian values over
Dionysian values. Also, intellectualism matters. One of the reasons I liked 'Gilmore Girls' was because Yale graduates talked like Yale graduates, even though that meant that they used many words that most people don't know. I prefer Science Fiction offerings that don't hit me over the head with bad science.
So consider, a streaming service that provides an
equal number of offerings as Netflix but is skewed toward Polymathicans. Rather than less
than 1/4 of the offerings being interesting, perhaps 3/4 are. In other
words, this more targeted streaming service will have a perceived value
that is 3X greater than Netflix but at approximately the same price.
For us, Netflix can't compete.
In the other direction, the more
customers a streaming service has the more offerings it can afford to
make without materially increasing its costs. This economy of scale
limits how many streaming services will be viable. However, streaming
services are cheap enough that people typically have more than one. So,
a Marxist/Feminist streaming service may offer few content options, but the
far greater cultural richness for the target market, combined with a larger 'progressive' streaming
service of broader appeal may find success.
Another complicating trend is the emergence of the
rental and purchase options for specific shows and movies. A reasonable
future consumer behavior might be to purchase first run offerings and
then to subscribe to a targeted streaming service for culturally comfortable reruns.
Direct to streaming 'video novels', at 35USD per 12 hours of content, will
likely supplant movies that typically sell for 15USD per 1.6 hours of
content.
So, while Netflix is trying to deal with the pressures
of a rapidly segmenting market by eschewing strong cultural signals in its
content, in the end, the multiplicity of market segments will win. An obvious reaction
to the Netflix rejection of woke-only content is that a woke only
streaming service will emerge. This will be a watershed event in the process.
R.E. January 6, Pay Attention to the Bottom Line
We are now in the middle of a January 6 presentation and this has placed the 2020 U.S. Presidential election front and center. The Republicans have charged that it nothing more than a 'Show Trial'. Even some Democrats have said essentially the same thing. That charge is not without merit. When the committee was first formed, Minority Leader, Kevin McCarthy, as is the norm, appointed Republican members. Speaker Pelosi rejected them and appointed two hand picked Republicans of her own. Consequently, the current activity is properly called a presentation rather than a hearing. It is a carefully crafted by Democrats present evidence that benefits Democrats and is devoid oft any opportunity for rebuttal or refutation by Republicans. It was produced by James Goldston, a former President of ABC News. In other words, it more closely resembles '60 Minutes' than a House hearing.
One might very reasonably question whether the presentation is fair. It clearly is not in the sense that the obvious target is former President Donald Trump and he, quite contrary to American principles, is being denied the opportunity to face his accusers. He has no opportunity for cross examination. There is no opportunity for discovery. In other words, the presentation contains a subset of all evidence and neither Trump nor sympathetic media is allowed to view the evidence in its entirety to determine if the evidence has been selected to present a biased interpretation of the facts.
The Left Silo, obviously, is pushing very hard on the narrative that there was a conspiracy to engage in insurrection. The Right Silo is skeptical. I strongly suggest that my readers who want to have an opinion on January 6 should read both the Left Silo and the Right Silo. I, actually, do not intend to delve into the arguments on either side, either in support or in refutation. Rather, I am going to pay attention to the bottom line. What was the result of the event and which side does it favor?
If January 6 was, in fact, a Right Wing plot, it was a truly boneheaded one. All we need do is put ourselves in the room when the plan was being hatched. How did they see it going down? A large number of unarmed rioters would burst into the Capitol building and be confronted by armed Capital police and, perhaps, National Guard. The members of Congress, who were either presenting or listening to evidence of election improprieties, would be spirited away. In some fairly short period of time, the mayhem would be subdued and the Capitol cleared. The House would be called back into session and the process would continue, with or without, a continuation of the presentation of objections.
As it turned out, the hours of presentation of evidence was cancelled, the House went directly to a vote and the Biden Electors were ratified. So, the bottom line is that the Trump supporters who were planning to present evidence of election irregularities didn't have the opportunity to do so. Yes, there was a short delay in ratification, but mostly shutting up the Trump supporters was the only significant result. Instead of reading hours of evidence purportedly supporting the charge of a stolen election into the Congressional record, they went directly to a vote. So, in that sense, rather than delaying the ratification, it sped it up.
Now, we are meant to conclude that Donald Trump and some of his advisors orchestrated the riot. My reaction to that is that while anything (almost) is possible, it would have been very stupid for them to do so. It did not benefit them in the slightest and has proven to be a PR nightmare. Furthermore, there doesn't seem to be any possibility of a positive outcome. Are we to imagine that the intent was for this unarmed group to enter the Capitol building and hold the Representatives hostage until they agreed to not seat the Biden Electors? The alleged scheme makes no sense on any level. If Trump or any of his key advisors had been involved in this plot, they would have stopped it. It was so clearly total folly. Many of them believed that the election had been 'stolen', however, this plot, no matter how well executed, was in no way remedial.
Again, I'm bottom lining this. I am not arguing for or against the quality of evidence for election irregularities. However, the only significant result of this event was that several hours of evidence supporting election irregularities was not presented. Once the situation was resolved, the House resolved to halt testimony and go directly to ratification of the election. That was a benefit to the Democrats, not the Republicans.
For all of the 21st Century, every time a Republican won the Presidency, some Democrat Representatives objected to the seating of Republican Electors and they presented evidence. Every time a Democrat won the Presidency, some Republican Representatives objected and presented evidence. This was not the unprecedented behavior. Rather, it was routine and the MSM did not make a big deal over it in the past elections. This time was different and the Left Silo behaved differently and implied that these objections were not the norm. That is because, around 40% of Americans believed that the results in key states had been 'stolen' and the Right Silo MSM had become large enough to matter.
Furthermore, more than any time in the past, save for, perhaps, the charges that the Democrats 'stole' Illinois in the Kennedy/Nixon election and that the Republicans 'stole' Florida in the Bush/Gore election, for the first time, there actually was a mountain of evidence that many fair minded people may have considered to be dispositive. In other words, if the presentation of evidence in the Congressional Record was allowed, the Democrats were at risk of losing control of the narrative of the 'Big Lie'.
The Democrats still have a problem. It certainly appears that the Republicans will take over the House in 2023 and with a very large contingent of Trump supporters. At that time, if they can't derail it, they will likely find that they will be the target of a House inquiry into the January 6 event with the intent to establish culpability on the part of certain Democrats. Additionally, it is quite possible that the MAGA Representatives will be powerful enough to present their evidence of a stolen election.
Again, I emphasize that I am not attempting to support either the 'Big Lie' or the 'Big Steal' scenario. I am agnostic with regard to who would have won, had the 2020 Presidential election been a perfect one. Rather, I am generally of the opinion that the evidence simply does not exist to make a determination of which candidate 'wone'. This article is about who is going to own the narrative and what the sides may or may not have done to own it.
I do believe that if the U.S. is to be taken seriously as a liberal, representative democracy, it really needs to clean up its election process. However, that is a different article that I will publish in the future.
Corporate Profits and Inflation
Recently on one of my social media threads, someone implied that inflation is increasing because 'greedy corporations' are increasing their prices in order to increase corporate profits. I can see why that may seem right, and the Left and Right Media don't contradict the inference. It is, however, mostly not correct. Like nearly all issues of any significance, inflation is causally multivariate and not just a little bit so. While 'X causes Y' is, in a sense, calming and fits easily into a twenty second sound byte, it is also rarely true and the desire to believe in simple answers can be used to manipulate an audience. Both Silos, whether represented by a pundit, politician or professor, often will take advantage of this desire to simplify. On the Left, it is manifested in the 'Putin price hike'. On the Right, the canard is that it is all Biden's fault. Both are, actually, components of the current acceleration in inflation. However, neither is the predominant reason.
At the outset, I want to make it completely clear that I am not an apologist for corporations. I worked in that environment for decades and frequently observed reasoning that caused me to think, 'Well, that just isn't right'. Also, large corporations are run by people with graduate degrees. In the business schools, students are indoctrinated with 'stakeholder theory'. This is the idea that enterprises must first be good corporate citizens, beholden to customers, employees, vendors, local governments, etc. in addition to their traditional, fiduciary responsibility to maximize risk adjusted shareholder return. However, they are people who, just like most people, want to provide well for their families. They are remunerated by salary, but also by stock options. So, it is a bit like Animal Farm. All animals (stakeholders) are equal, but the pigs (shareholders) are more equal.
It is absolutely the case that money supply times velocity plus or minus change in net savings, defines the supply of money and it establishes the supply portion of supply and demand in the inflation equation. In other words, if the supply of money increases by 5% but production of goods and services remains constant, there will be 5% inflation. However, all of these factors have feedbacks, so it actually isn't that simple. Having said that, it is still generally the primary cause of inflation.
Of course, there is scarcity inflation as well. Recently, oil supply fell in relation to demand and the price of oil increased. Because oil is a component of nearly all products and services, prices generally went up. The Right will often suggest that if the price of oil goes up and there is no increase in money supply, the prices of everything else will go down. That, actually, isn't what happens. Rather, the demand for everything else goes down and we end up with an inflation driven recession.
The Federal Reserve and other central banks do not want to instigate a recession, so they do increase money supply. However, there is another factor; the Federal government can have a deficit equal to the nominal increase in GDP with no consequence as long as the Central Bank buys the bonds necessary to fund the shortfall. On the other hand, if the deficit is too large, and the Central Bank buys all the bonds, the money supply so created will exceed the banks' targets and inflation will grow above the optimal rate. This is the primary reason for the current inflation.
The relationship between inflation and corporate profits is a complex one. Obviously, if scarcity pushes up the price of oil, the oil companies will earn more money. That, however, over the long term is usually compensated by the lower profits caused when prices fall. That assumes that markets are perfect and they are not. Profits in an industry can be higher than one would expect if there are barriers to market entry and that measurably restricts market entry and, thus, competition. This creates a cartel effect. In a industry with low barriers to market entry, if profits increase, competitors will emerge that will undercut prices and bring profits back under control.
As a general statement, corporate profits are going up over the long term. That is partially due to growing economies causing growing profits. However, it is also due to the long term trend toward more automation. Corporations are always looking for ways to replace high cost employees with lower cost machines. There are limits; the cost of the machines must be less than the savings from reducing labor. If not, the corporation will experience lower profits and they would not knowingly do that. In other words, if the net present value of the machines is one million dollars and it saves five hundred thousand dollars in labor, the automation will not be done. However, if the net present value of the machines is five hundred thousand dollars and the labor savings is one million dollars, the enterprise will buy the machine and profits will increase by five hundred thousand dollars. Because corporations generally do the latter but not the former, in general, corporate profits are increasing.
There is a persistent trend for the global economy to become more automated and will likely do so at an accelerating rate over the next 30 years, corporate profits will also increase. Because the costs of the machines, including the necessary increase in profits, must be less than the cost of the labor that they replace, the profits go up by more than is required and those excess profits typically are used to lower prices and increase market share. We know this because in the 1990s and 2000s, as the manufacturing costs of electronics fell, competition did result in quickly falling prices. Simultaneously, stock prices started soaring because the resulting corporate profits were increasing dramatically as well.
There is a component of both the Right Silo and the Left Silo that will portray a future world in which AI and advanced robotics do everything. They imagine a world of nearly 100% unemployment with just a handful of people who own everything. This is called the Luddite Fallacy. It has been around for 200 years and it has never been true. I will discuss this in great detail in an upcoming book, 'The Death of Capitalism: Information Age Economics'.
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