Reuters reported today that a group of tech leaders have banned together to attempt campaign finance reform. The group call themselves "Mayday", as in "the ship is sinking". The ship sinking is the American democratic process, subborned by large campaign financiers. Given this news it seemed appropriate to share a post I wrote several months ago but never published til today.
I have been concerned by the popularity of social media such as Facebook, Pinterest and Reddit for several years. I see it as serving no real purpose. I do not think it is a product or a service in the traditional economic sense. I understand that social media is responsive to our fundamental needs for community and collaboration and research even shows that it increases self-esteem in men (and probably dogs). I think of social media like financial derivatives, of limited value and a huge diversion of capital away from productive investment in products and services. But both activities are widespread and I cannot understand social media except in a historical context.
Social media dates back to the Roman times of Cicero (106 BC), according to Tom Standage’s new book, Writing on the Wall: Social Media-The First 2000 Years. Standage makes two important points in the course of tracing the history of social media through to today.
- There is always an increase in the frequency and intensity of social media at times of momentous social change. The English Civil War and the French Revolution are cited examples.
- Social media uses the newest technology to expand the distribution of the message at times of momentous social change. For example, Christianity was the first religion to make use of paper as the means to distribute its teachings. The German Reformation was facilitated by the newly invented printing press that allowed Martin Luther and others to more quickly and cheaply respond to Vatican criticism.
What Standage helps us to realize is that all the social media we see today is perhaps the smoke and not the fire. The popularity and increase in social media, facilitated by new technology, are most likely the indicators of another momentous social change comparable to the German Reformation or the French Revolution. We know from many sources including Standage’s examples that a momentous social change is either religious or political. There could be a religious movement emerging but I think not. For many people religion is irrelevant today and another significant group are religious extremists unlikely to lead mainstream social movements.
I think that the social change must be political, perhaps 10-20 years in the making or perhaps 50 years will be required. The change that is coming is:
- A reduction in the scope of federal and state government
- An increase in the importance of local government in part due to the increasing percentage of urban population
I do not come to this conclusion because I am a Republican or a Democrat, which is irrelevant.
Thomas Hobbes and John Locke defined modern democratic government in the 1600s. The purpose of government was to prevent untoward interference in the lives of the citizenry. As people increasingly benefit from existing and future IT tools they will become more and more sole practitioners and independent contractors rather than paid employees. As this trend accelerates people will become comfortable with less and less federal government and a return to a state of "self-reliance" similar to the way the U.S. was pre-1930. People will increasingly wish to reduce their payment of taxes for a government that provides what will be considered unnecessary, overpriced or outdated services. The fact is that today most working people need very limited services from the federal or state government, perhaps only the armed forces, law enforcement, courts, FDA, CDC, research funding, financial instrument regulation and a collection system (taxes) to pay for such services. Other services, including social services for the disadvantaged, could be privatized if desired. National parks might be an example.
Government is slower than slow [to recognize] and particularly at times when the status quo is dramatically changing. Therein lies the risk in government and the reason, in part, that environmental, urban and educational issues have received inadequate attention. Fortunately there are many examples where individuals and private sector companies have taken over the “traditional” role of government, which provides the early evidence for the change in the scope of government I foresee:
- More parents are home schooling and charter schools are growing rapidly, replacing government run public education
- Public infrastructure such as buses (Miami) and airports (Chicago) are being considered for privatization, matching the way most of the world provides such services
- Crowd funding is demonstrating that it can raise serious amounts of money, which allows for the raising of critical early-stage equity capital in a self-regulated environment
- Bit Coin, which Investopedia describes as the “alternative currency”, is growing and rumors circulate that large private sector companies such as Facebook will launch their own currencies, perhaps the first currencies not issued by a government in many centuries
The last point of evidence for my prediction both troubles me and gives me hope. The Snowden disclosures of secret NSA information made public the scope of U.S. government surveillance worldwide. I do not condone in any way the Snowden disclosures, but I understand the widespread anger at the scale of the surveillance. Nassim Taleb, author of The Black Swan, was one of the first writers to point out that we are outraged by the federal government’s behavior but no one complains about Google’s collection of so much private data related to our Internet behavior. Effectively, we have more trust and confidence in a Google or a Facebook than in the U.S. government. Whether Google or Facebook warrant the trust may still need to be determined, but they portend a new future of more limited government and greater reliance on individuals and the private sector.
Note: I think the U.S. is probably headed for a prolonged period of slow or modest growth in the economy. Such an event will slow the growth in tax revenues available to the federal government and exacerbate the over borrowed state of federal finances. Such a situation will reduce the government’s ability to pass on benefits to the citizenry and most likely lead to a reluctant reduction in benefits. Such a reduction in government benefits will contribute to the reduced scope of federal government I foresee.
Now this analysis might be entirely wrong. Perhaps there is another momentous social change afoot. Since the time of Franklin Roosevelt, the federal government has been expanding its power as it increasingly provided non-traditional services. What Roosevelt did was re-interpret the constitution such that what was not prohibited was permitted rather than the earlier interpretation that found that only what was stated was permitted. Many Presidents after Roosevelt followed his interpretation of the constitution and federal powers expanded.
At the same time the power of businesses and especially financial institutions was expanding. For example, the repeal of Glass-Steagall in 1999 greatly expanded the scope of businesses that were permitted for various financial institutions. We can argue about whether this legislative change directly led to the Financial Crisis of 2008, but the near collapse of the world financial system would suggest that financial institutions probably had too much discretion about products and/or risk.
Of course, the increased power of the financial institutions was permitted by the federal government, which brings me to a point. The federal government and business have both increased their power over the last eighty years to the point where we now probably have an unhealthy oligarchy of government and business. Both Karl Marx and Friedrich Hayek, perhaps the two writers who define the limits of the political spectrum, both predicted that businesses would eventually suborn democratic government. I do not know if I am ready yet to state that business has suborned government, but an oligarchy composed of financial institutions and federal government may be correct.
How does one go about challenging an oligarchy? Who is available to work toward re-balancing power, to restoring a more even-handed society consistent with the original tenets of Locke or Hobbes? There are three choices:
- Religious organizations
As stated earlier, religious organizations have lost much of their effectiveness as agents of social change as people increasingly see religion as less important to their lives. Academia may also have little power to bring about social change given the decline in public intellectualism, the de-emphasis of social science curriculum and the job preparation orientation of many universities. Which brings us to the media.
For most of human history, individuals created the information and arranged for its distribution to their community. With the advent of newspapers and then radio and television, the model changed. Information was centrally prepared and then disseminated to the individual. What the IT-based social media of today has done is allow us to return to the historical approach where individuals prepare and disseminate much of the information they wish to consider.
However, the social media remains the smoke and not the fire. The increased social media today still only signals a momentous social change. The momentous social change might be a re-balancing of power in society and the start of a breakup of a government-finance oligarchy. Facebook, Pinterest and Reddit might be just practice for the real battle to breakup an oligarchy.
On various fronts efforts are being made to reduce the scope of federal government. We must be wary that we do not leave businesses or financial institutions as the sole power brokers in society. From totally different perspectives, the considerable intellects of both Marx and Hayek predicted that business would eventually control a democratic society. Restoring the power of the individual in society should be the ultimate objective and the social media of today may be the only remaining way to reach that end. Reading more Hobbes and Locke might also be beneficial.
I commend the people looking to scale back campaign contributions. Please feel free to share this post as a sign of support for Mayday.