Monday, February 27, 2006

2/27/06 The New, Old Thing: Silicon Valley, Hollywood, Madison Ave—Oscar, Emmy, Clio, or “Amateur Night at the Apollo” 2690 words

revised 2/28, 11:33 pm

“You might as well do some social stuff because that is where the big problems are.” “If a lot of people come out of poverty that is a tremendous business opportunity.” Larry Page, Google’s co-founder, 2006 World Economic Forum, “Financial Times,” Jan 31, 2006

What is the Oscar-nominated movie “Brokeback Mountain” about? Who won “American Idol” last year? What’s happening on “CSI” and “24”? Who are the two current holders of highest political office in China, with one-fifth the world's population (which just passed 6.5 billion people this weekend)? In India, with more than one billion people?

Many Americans know the first three, but I would guess less than 2% could answer the last two, fewer if you exclude international business people. (An embarrassingly far higher percentage of urban Chinese and Indians would know of Bush and Cheney.)

So what, one might ask, why does it matter? At minimum, simply from a human interest viewpoint, look at some of the compelling stories Americans are missing due to the negligence of the corporate mass media:

In the past few decades, more people, many hundreds of millions, mainly in East Asia, have uplifted themselves out of poverty than has ever happened in such a short time in world history. Surely this could be the stuff of inspiring personal and family stories of perseverance and overcoming tremendous adversity?

Over the same period, an entire continent of nearly seven hundred million people, Africa, has been devastated, by wars, disease, famine, etc. Sadly the nearly incomprehensible suffering of this huge human tragedy continues to beg to be told.

An entire religion of 1.5 billion people, Islam, is in the midst of a struggle to interpret its heritage whilst coming to grips with the modernity of a globalized world. Needless to say, understanding this is in the interests of all of us.

Closer to home, the world's wealthiest nation shares a very long border with a huge continental region to the south of both deep poverty and pockets of development and hope, a prime example of the world's growing income/wealth gaps that must be addressed in a fair and honest manner by the advocates of globalization who dominate the corporate mass media.

Yet these stories are hardly ever told by the corporate mainstream media, especially in films and television. Mainstream journalism seems to do a somewhat better job, often under difficult editorial constraints, but has come up sorely lacking at critical points, most especially leading up to the U.S. invasion of Iraq and also during the stock market bubble of the late 1990s.

Mine is not a new “elitist” criticism of the corporate mass media, it has been made by cranky social critics and hopeless idealists since the beginning of television and surely long before that. But perhaps it takes on a greater urgency now.

Generally, the global economy obviously is more interconnected than ever before, so it is more important that the disparate regions of the world understand each other much better. More specifically, the U.S. now heavily relies on foreign savings/capital to maintain its living standards.

Yet the average American, whose home value is ultimately heavily dependent on savings not from his local S&L, as was the case thirty years ago, but now on mortgage-backed securities held all over the globe, is blissfully unaware of the lives of his creditors.

There is an implicit global deal, what some economists have misleadingly labeled Bretton Woods II, which links the U.S. with other nations, especially those in East Asia. This deal assumes a viable, mutually beneficial creditor-debtor arrangement between vastly different societies, mediated through supposedly rational global capital markets.

But behind these capital flows are very real human beings organized into sovereign nations with potentially very different notions of the fairness and justice of these implicit deals, arranged and supported by so-called "independent" central banks, on which the people have not been consulted and with which they ultimately might not be very happy with, much to the surprise of American debtors.

I.e. since Americans now owe foreigners a lot of money, it might at least be polite to know how they live and what they’re like.

E.g., more white Americans learned to empathize with black Americans through the tv series "Roots" in the 1970s than from their history textbooks. The world needs more stories shown in the corporate mass media that enable people to transcend their different backgrounds, cultures, etc.

It wouldn't be hard to get them, just slap some subtitles on the most popular shows from various countries. Americans can learn about the world from the foreign equivalents of "Desperate Housewives" and "Sex and the City." :-)

E.g. for the past few years, S. Korean serial tv dramas have been very popular in Japan amd China, helping to smooth over historical tensions. There's no reason why Americans shouldn't be seeing similar things in their mass media, including more Mexican television.

During the very same period in which the U.S. has become by far the world's largest debtor, to much of the rest of the world, as indicated by numerous public opinion polls, the current U.S. government hubristically has come to believe that as the self-proclaimed "sole superpower,” it alone has the unique right, historical mission, and even godly duty to tell the rest of the world what to do, regardless of national sovereignty.

Thus, it would be more than a little helpful if the American population in whose name this government is acting had a better understanding of how the rest of the world lives, and how it perceives the self-interested actions of the U.S.

Alas, thanks to the corporate media, the vast majority of Americans has very little understanding of the rest of the world, as verified over and over again in public opinion polls. And, the rest of the world knows this, and doesn’t like it. It’s easy to see how this situation could degenerate from current serious misunderstandings into something worse, perhaps much worse.

This of course is not lost on the international business community, which is far more aware of global linkages and foreign cultures than the average American. But like a lot of other things that need changing, the business elite is not doing much about this, hoping it can continue to slide by.

Yes, things are much better than before (the very crude national chauvinism preceding major wars of the past is hopefully unthinkable nowadays). The Internet has made many more people far more aware of far more things.

But unfortunately, that seems limited to a small minority of the population. The rest, which is highly dependent on the corporate mass media, still seems relatively uninformed about global interdependencies.

Finally, the corporate mass media continues to be an unabashed cheerleader for all sorts of financial speculative excesses, only slightly toned done from the stock market TMT bubble days, making it very difficult for the American population to get a better grip on economic reality.

Is Silicon Valley’s current love affair with media helping to change this potentially very dangerous situation?

For many decades, Silicon Valley made itself the coolest, hippest, most relevant place on earth by supplying the electronic infrastructure tools to greatly increase organizational and personal productivity, effectiveness and innovation.

In the 1980’s, Silicon Valley made possible the PC revolution. In the 1990s, it led the profound changes associated with the Internet and wireless, with everything linked to everything else, including databases, 24/7.

With the help of Silicon Valley, the transition over the last few decades to a highly productive America is by and large now complete, if for no other reason than there are now no more hours in the day in which to spin one’s wheels keeping busy.

In the 2000’s, the “new new thing” has been Silicon Valley’s love affair with media, advertising and consumer electronics. Unfortunately, this doesn’t seem to be working nearly as well as the previous major transformations. On the contrary, it comes across as amateur night at the Apollo, with little meaningful impact so far, with perhaps a few exceptions.

Rather than helping Americans become truly informed about the world, Silicon Valley seems pre-occupied with the rather mundane but more profitable pursuits of serving up prodigious amounts of very ordinary movies and music, web searches for the latest on Lindsay Lohan and Angelina Jolie, the nonstop adolescent gossip on, etc

Yet, despite this chase after the quick buck, Silicon Valley seems to think it is once again at the forefront of earth-shattering change to overturn the established corporate order. But Silicon Valley is not immune to speculative global market forces.

In the 1990’s it allied with (some might say sold out to) Wall Street to create the TMT equity bubble (infamously called “the greatest legal creation of wealth in history” by top vc John Doerr). A lot of vc’s got very wealthy pushing extremely shoddy deals, and most of them, despite the label "venture capitalists," did not suffer any serious consequences for doing so when the stock market bubble popped and $8 trillion in market cap went up in smoke.

Wall Street, meanwhile, simply moved on, replacing over-priced, fraudulent but legal IPO’s with mortgage-backed securities, emerging market debt, private equity and m&a deals, and incomprehensibly huge amounts of ever more convoluted derivatives with increasingly less connection to underlying economic reality. In the 2000s, with the government and big banks orchestrating a global consumer/real estate boom, Silicon Valley found media, advertising and consumer electronics after the TMT equity bust.

E.g., as recounted in the book, “The Search,” when the author, Wired’s John Battelle, first talked to Google’s CEO Eric Schmidt about advertising, Schmidt “didn’t see the point of starting a media business. Google was a technology business, he told me…’We’re looking for the next billion-dollar market in technology’….A year later I met with Eric again. Among his first words: ‘Isn’t the media business great.’”

Similar words could have been said by Steve Jobs as he re-vitalized Apple with the iPod, and sold Pixar to Disney. And in the sale of to Murdoch’s News Corp.

Yet, at the end of the day, nothing really changes, the oligopolistic corporate media still controls what the majority of Americans see and hear, and Wall Street moves from bubble to bubble without a pause.

Silicon Valley’s regional economy, once the dynamic model for the world, is now, like the rest of the U.S., mainly dependent on rampant real estate and stock market speculation. Meanwhile, the main action has moved five hundred miles southeast, to the epicenter of American social excesses and the record-breaking real estate speculation of this decade, Las Vegas.

Of course Silicon Valley companies can not be held responsible for fixing the world’s problems. But we should not pretend that those problems do not exist by ignoring them, or by uncritically reporting and accepting often misleading, at very best, solutions, as the mainstream corporate media does.

No amount of amateur-hour blogging and adolescent social networking is changing that potentially dangerous reality, despite the delusions of those in Silicon Valley to the contrary.

If Silicon Valley really thinks it is having a profound impact on the media business, then I suggest two "reality checks" over the coming year, based on the principle of "fool be once, shame on you, fool me twice, shame on me."

First reality check, will the mass media finally tell the truth about how the income-stagnant American middle class is highly dependent on speculation, especially real estate, and what will be the dire consequences of placing all the nation's economic chips on speculation if real estate turns out to be another massive bubble?

Average inflation-adujsted weekly earnings of U.S. workers are down 17% from 1972 and flat since 2000 (see Table B-47, pg 338, 2006 "Economic Report of the President" available on-line). Most of the American middle class, now heavily dependent on speculation, particularly in real estate, can no longer distinguish paper "wealth creation" from the real thing. That inability will most likely cause severe problems at some point down the road. (See previous two articles posted on this blog.)

The corporate mass media was fully complicit in the creation of the largest financial bubble in history up until that time, the TMT equity bubble ("irrational exuberance" was simply a "plausible denial" cover story for the gullible).

It is not clear if the global real estate boom will turn out to have been an even larger bubble. If it is, then the corporate mass media will have been complicit with Wall Street in grossly distorting global capital flows for the benefit of the financial elite twice in the past decade.

Thanks to the corporate mass media, the average middle-class American homeowner has now fully adopted Wall Street's "power of myth" re the benefits of so-called "free markets," which don't actually exist. Rather "independent" central banks operate largely free from market discipline, as they were somewhat constrained from wildly inflating in the original Bretton Woods system, and outside of democratic control, mainly for the benefit of the global speculative financial system.

Second reality check, in international affairs, will the free pass that was granted the Bush Administration by the corporate mass media in Iraq be repeated, with Iran, Syria, China (over trade, currency, Taiwan, energy, etc) and others, before push comes to shove once again?

E.g., here are a couple of quotes made on March 16, 2003, three days before the U.S. invaded Iraq, by Vice President Cheney on “Meet the Press”: "And we believe he [Saddam] has, in fact, reconstituted nuclear weapons. I think Mr. El Baradei frankly is wrong." “We know he’s [Saddam] out trying once again to produce nuclear weapons and we know that he has a long-standing relationship with various terrorist groups, including the al-Qaeda organization.”

Cheney never has been held accountable by the corporate mass media for this and similar statements of alleged “fact,” under the same standards the media used when Pres. Clinton was impeached over lying about sex. Such blatant double standards are not bought by the rest of the world, to the detriment of the international standing of the U.S.

We want to make it very clear that we don’t “blame” Silicon Valley or hold it primarily responsible for its potential slide. Like the rest of America, Silicon Valley clearly has been seduced to go for the quick buck in its business models, product developments, etc. by greatly distorted market signals from the global speculative financial system that benefits Wall Street and its own venture capitalists.

Could things be different? Some of Silicon Valley’s entrepreneurs still seem to have the right instincts about who really creates real wealth, as Google’s founders did in their prickly relationship with Wall Street during its IPO and their earlier relationship with their vc’s. Google’s corporate mission is “to organize the world's information and make it universally accessible and useful,” and its corporate dna is “do no evil.”

If Silicon Valley really wants to change the media industry, how about funding a new television network that actually tells honest news and holds our leaders accountable for their statements and acts? Wouldn’t that be a real “new new thing”?

If that's too ambitious, as I previously suggested, then just slap some sub-titles on the most popular tv shows from China, S. Korea, Japan, etc. and show them in prime time. The rest of the world learns about the U.S. mainly by watching American tv shows and movies. Likewise, Americans would learn more about the people of the world by watching their most popular entertainment than by reading all the news stories shown in my links.

Surely, guys, watching such stuff is worth giving up just a little NFL, NBA and NASCAR on the big-screen tv you bought from East Asia? After all, it's hard to go to war with someone after enjoying their dramas and sitcoms and seeing for oneself that we're all humans on a small planet.

Isn't it time that Silicon Valley grew up and stopped being led around by the nose by its big brothers, Wall Street and Hollywood?

Next: Innovation, "Dark Matter," and Silicon Valley’s Horizontal, Asset-Light, Slice-and-Dice Business Model