An Economics of Polarization

This post is a response to yesterday’s discussion in Davidson Now’s pop-up MOOC,  “Engagement in a Time of Polarization”.   The key provocation for the discussion was Chris Gilliard’s great essay Power, Polarization, and TechThe video of the hangout discussion is embedded at the end of this post for you.


In his discussion of social media rules and platforms, Chris poses an interesting hypothetical:

If we had social media and rules for operating on platforms made by black women instead of bros, what might these platforms look like? What would the rules be for free speech and who gets protected? How would we experience online “community” differently than we do now? Would polarization be a bug instead of a feature? The historical disenfranchisement of black and brown women and men is compounded by these same folks still being walled off and locked out of tech institutions through hiring policy, toxic masculinity at the companies, and lack of access to venture capital. “Black women are the most educated and entrepreneurial group in the U.S., yet they receive less than 1% of VC (Venture Capital) funding.”

I’m going to argue that if Facebook or Twitter or one of the other monster social media platforms had been staffed and created by black women (or just about any other historically disenfranchised group) the results would likely have been the same.  I’m not arguing an “all people are corrupt” position. Rather, I want to highlight the institutional conditions and economics by which these firms come about.  The institutional framework in the US, combined with some straight forward economics pretty much sets the path. Any group of entrepreneurs would likely end up in the same place, behaving the same way, and producing the same polarizing products/services.

I say this not as a voice of gloom, but rather to highlight that if we want to avoid or dismantle the damaging polarization and surveillance capabilities of these social media mega-platforms, we need to make institutional and legal changes.  And those legal and institutional changes may be in areas you don’t suspect such as antitrust law. First, I want to bring to light two different aspects of the institutional economics of these firms. The first is price discrimination and the second is corporate capital funding structures, especially for start-ups.

The bros that started, coded, and grew these social media platforms such as FB, Twitter, Google, and even Amazon, didn’t set out to polarize the population. Each had an interesting concept to provide people such as search (Google), interpersonal social connection (FB), or quick broadcast chat (Twitter).  But those services required large user bases and people were unlikely to pay for the privilege. So a monetization model was needed. Advertising and/or data sold to advertisers. Most folks know that these platforms with their data enable advertisers to “target” specific higher-probability buyers for their products.  But just increasing the likelihood that a specific ad will result in a sale isn’t the gold.

The gold is in price discrimination. Always has been.  I don’t have time now to fully explain price discrimination, but there’s a Wikipedia entry on it and an Economics Help site entry for it. An individual’s real demand curve for a product is very difficult to ascertain. It’s a hypothetical. It’s how many would you buy at all the possible prices? Looked at from a seller’s viewpoint, it’s what’s the maximum price I can charge and still sell as many as I want?  If the seller knows, he/she can charge prices that capture all the consumer surplus value for themselves instead of sharing the joint benefits of the transaction. 

If an advertiser/seller can gain enough information about a potential buyer’s real demand curve, it’s the route to profit nirvana. But historically it’s been difficult to do price discrimination. For products, there’s that pesky Robinson-Patman antitrust law. Often it’s been done via proxy indicators of group preferences – think Ladies’ Night at the bar or higher prices for business travellers on airlines. Getting the knowledge has been tough.  Big data from social media solves that problem.  That’s why social media data is so valuable and profitable and why FB/Google/Amazon/Twitter chose that route to monetization instead of subscriptions or memberships.

This price discrimination behavior is nothing new and neither are the abuses. It’s what made John D. Rockefeller’s Standard Oil so profitable and so socially destructive 120 years ago.  The urge to find ways to price discriminate is inherent in corporate market behavior.  The only limits legal.  We used to pass and enforce antitrust laws against such behavior, but that’s been considered bad form ever since the Reagan administration listened to the Chicago boys back in the early ’80’s.

To enable price discrimination practices, the social media monsters had to find more and more data about each and every user.  There’s a direct line between individualized data and monetization.  Now the marketers don’t call it discrimination. They call it differentiation.  They want to know exactly how every person is different from everybody else and find little homogenous groups to put them in.

The purpose was economic & marketing discrimination/differentiation. But once the differences are revealed. Polarization, a side effect, is all about finding differences, not commonalities. Finding commonalities doesn’t make money for marketers.

I don’t think any of the bros that did this at these platforms intended or planned to polarize the nation. It was just an unintended, unconsidered consequence.  Don’t get me wrong. I’m not absolving them of responsibility.  Sometimes unintended consequences could and should have been foreseen. It’s kind of like drunk driving. Very few, if any, people set out to drink and the drive with intent of killing somebody.  It happens because they didn’t think and didn’t foresee the consequences of their actions.

Given the incentives and demands of capital structure, I think any group would likely have gone for the price discrimination-data collection jackpot, especially since there are no legal guard rails against it and they likely would have to as a startup.

Now that gets us to another question. Why did FB/Twitter/Google, et al, find the need to maximize the monetization?  Well, here we can fault them. The reason was greed but again it was unintended, unforeseen consequences.  Their choice of capital structure forced it. They went for too much cash at the IPO’s.

Chris is right. Black women as a group are highly entrepreneurial. But there are maybe 4 motivations for entrepreneurship. Some do small businesses because there’s no other option – that’s a lot of present black women entrepreneurship. Some start businesses just to be left alone (like me 20 yrs ago). Some just want to get stinking rich and leave (Peter Theil, Paul Allen). And some want to get stinking rich, build a huge legacy corporation, and rule the world (Zuckerberg, Bezos).  FB/Google/Twitter et al chose to go the IPO route to become stinking rich.  Google, IIRC, did it twice.  The cash they gathered from those IPO’s did more than fund operations and some growth. It was in excess of their real cash needs. The consequence was they needed continuous high growth rate in both users and profits.  That’s what Wall Street style financial capitalism both rewards and requires. With the high, continuous growth, there’s no stock premium No stock premium = low stock price = founder isn’t really that rich.

My argument is that some other group, black women or POC or whoever, might have done things differently, but only if they had set different goals of not getting rich. Unfortunately, the US corporate funding and legal systems don’t really allow for enterprises that in-between. It’s either struggle for funds as a non-profit or go for continuous profit maximizing high growth.

There’s not really an institutional option for funding “just adequate to provide a utility-like service”.  To get the funding to start, any group effectively commits to the profit max, high growth route.  And that commitment drives the monetization strategy of data collection to seize the gold of price discrimination.

Is it all gloom and doom? No. I don’t think so.  But arguments that simply ask for firms and developers to be more “ethical” or even just more diverse aren’t likely to work in my opinion.  We need to change a lot of the rules of the game.

I do have suggestions for those changes, but this more than enough for tonight.

 

Open Ed, Trump, Brexit

The #Trexit Conversation

I’ll be leading  a panel discussion at OER17 called Open Education in a time of Trump and Brexit.  Joining me in the panel live at the conference will be Maha Bali (@bali_maha), Lorna Campbell (@LornaMCampbell), and Martin Weller (@mweller).  While we four could easily carry on a lively discussion for 80 minutes (some would say I could jabber that long myself), I wanted to bring in additional perspectives.  To that end, I have enlisted the help of a few people to provide different perspectives to get the conversation going.  These people, Robin DeRosa, Nadine Aboulmagd, Chris Gilliard, and David Kernohan, unfortunately couldn’t attend the conference in person, but they’ve kindly provided us video statements intended to help provoke the discussion and stimulate our collective thinking and learning.  I’ve embedded those video statements below in this post.

I know many, perhaps most or even all, open educators have thought about the implications of the Trump election, the Brexit referendum, and other political movements for open education and OER.  I hope this panel can help stimulate a wider and deeper discussion and sharing of ideas.  Feel free to participate on Twitter with the hashtags #trexit #oer17.   Or, add your comments here or blog them yourself.

The Topic

The original motivation for this panel discussion came from private discussions among some of us just after the US presidential election in November 2016.  We thought those discussions should be expanded and made more open. After all, one of the core values of the open education movement is that more participation and open involvement improves the outcomes, right? Hence, this panel discussion with the open education community at OER17. The original proposal for this panel discussion stated:

Like the Internet itself, the Open Education movement, including OER and OEP, has grown in a world of globalised capitalism that has been dominant in North America and Europe, and indeed, developed and growing economies. The Brexit vote, Donald Trump’s election, and shifts toward nationalist-right parties elsewhere are changing the political landscape. At a minimum, the rhetoric of these movements, both in support and opposition, has altered public discourse and often attitudes toward higher education. These political shifts have complex and multifaceted implications for the open education movement.

At the OER17 conference in London, our panel aims to stimulate deeper thought beyond our initial reactions to these political movements. We hope to provide different perspectives on the relationship between Open Education and the political changes represented by Brexit and the Trump election. Many questions arise, including:

  • What challenges do these political movements pose for Open Education? What opportunities?
  • Open Education movement has largely embraced values of inclusiveness, sharing, connectedness, equity, voice, agency, and openness. How might these values be furthered under these new regimes? How might these values be hindered?
  • Will our work in the open education movement change?
  • In what ways can we shape the future of the Open Education Movement?

When considering the relationship between Trump/Brexit and the OER/ open education movements, it is tempting to think in narrow terms. We’re tempted to see think first of funding implications, academic freedom concerns, or wavering support for education as a public good.   These are valid concerns. But as our three “provocateers” suggest, there’s more to the intersection of Trump/Brexit and OER/Open Education than we might think at first.  It’s complex.

The Provocations

Robin DeRosa

Robin DeRosa, (@actualham), suggests we observe and consider the parallels between the larger political environment and the environments we create in the classroom. (4:47 min)

Nadinne Aboulmagd

Nadinne Aboulmagd, (@NadinneAbo), provides a close-up insight into some challenges the Trump administration policies create for open scholarship. Note: Nadinne was prevented from creating the video at the last minute due to illness but has very generously shared her script for the video here.

Chris Gilliard

Chris Gilliard, (@hypervisible),  notes the role of surveillance and monitoring and urges us to think of open as in freedom. (2:28 min)

David Kernohan

David Kernohan, @dkernohan, takes a look at the “roaming auto-didacts” involved in the Trump/Brexit movements and considers what open education/OER did and did not contribute.

At this point, we’ll insert insightful and witty commentary from our panelists.

UPDATE:  After I put this blog post together but just before the panel started, we received the video from Nadinne (who went beyond the call of duty!).  I wanted to include it:

Who’s Zoomin’ Who?

How do you know that? Why do you think that?  How does that make any sense?  

I was a highly opinionated child with a lot of crazy ideas. But my Dad was patient. He never told me “that’s crazy” or “that’s wrong”.  Instead he usually greeted my pronouncements with some variation of those three questions and often he strung them together into a dialogue.  I’d answer and he’d ask the next question or repeat the first.  At some age, I don’t really recall when,  I began to internalize those questions and the resulting dialogue.  When I got to college I had the chance to study rhetoric and semantics. I added my own questions to his three.

Why these words? What do they want me to think/feel/do? Why are they saying this?

I guess these questions are what the education folks call “critical thinking”. What I know is that we’d be better off asking these questions when we read. I’ve been reading lots of stories, tweets, and posts about “fake news” websites and the need for improved “fact-checking” and digital literacy.  But I’m not too sure we’re getting at the problem. The problem is a lack of critical thinking as my Dad would have approached.  Instead, people seem to be emphasizing the following questions:

What are the “facts”? Is this true? Is this a “legitimate” news site? Should I trust this source? How do we filter out the “fake news”?

These are the wrong questions. They won’t lead to critical insight. They’ll only lead to more deception and propaganda.  I see two problems with these questions people are posing.

First, everything cannot be reduced to some “fact” status as either true or not true. I don’t want to get into some deep philosophical exploration of the nature of truth, I just want to point out any statement of the future  or intentions is inherently speculative and cannot be “fact checked”. All statements of policy intents are statements about the future.   A person can lie about their intents (and even lie to themselves) but it cannot be “fact checked”. The lie can only be challenged by building an argument of reasoning why the person should not be believed. Further the class of things that can be called “facts” includes only objectively verifiable things. Yet subjective things matter too. Feelings, preferences, and perceptions cannot be “fact-checked”. Culture is made of more feelings and perceptions than it is facts.

I could elaborate on the inadequacy of “fact-checking” and likely will in some future post, but right now I want to focus on the second issue: the problems involved in focusing on “legitimate” vs. “fake” news sites.  This isn’t really critical thinking at all. It’s a reliance on authority as the sole arbiter of truth. It’s actually the approach that says we don’t have to engage the actual message itself and critically think about it. This approach advises to divide the world into approved “legitimate” news sources, presumably nice establishment entities such as the New York Times, or Washington Post, or ABC/CBS/NBC/CNN.  I suppose whether Fox News qualifies depends on whether you’re Republican or Democrat.  But other sources are deemed suspicious and likely to be “fake”.  Folks, the problem isn’t whether the news publisher is “legit” it’s whether the news story itself is “legit”.  Big difference.

Let me use a story that has made the rounds in the last day or so.  The Washington Post published a story with the headline:
Russian propaganda effort helped spread ‘fake news’ during election, experts say

Almost instantly, the Twittersphere and blogosphere lit up with mostly unhappy Clinton supporters claiming this is the biggest news story and everybody is missing it.  And yet, the Washington Post site fails on all my Dad’s questions. There’s nothing really there. And when I ask myself about their semantics and ask myself “cui bono?” from this piece, I find it seriously lacking.  I don’t have to take it apart for you because Fortune magazine and journalist Caitlin Johnstone, quoting Glenn Greenwald, did it for me.  You can read for yourself:

Fortune:  Russian Fake News

Caitlyn Johnstone on Newslogue: Glenn Greenwald Just Beat The Snot Out Of Fake News Rag ‘The Washington Post’

(update 28Nov2016: An even better critical thinking take-down of the Washington Post article from William Black at New Economic Perspectives: The Washington Post’s Propaganda About Russian Propaganda )

I’ll reiterate what I’ve said on Twitter and FB.  We shouldn’t be calling out “fake news” sites. We shouldn’t even be calling out “fake news”.  We should call it what it is: propaganda.  Calling it “fake news” will mislead us and get all of us into trouble.  It leads to binary thinking: is this “true” or “fake”?  The problem is propaganda. The most effective propaganda is neither true nor fake. It contains at least some elements of truth or facts but uses rhetorical sleight of hand to get you to believe something you really don’t know. We used to call it spin, but I guess that’s gone out of style.

Let’s remember “legitimate” news sources can and often do deliver propaganda, “fake news” if you will, just as easily and even more effectively than any “fake news sites” spun up by some troll teenager in his basement.

I’m old enough to remember that the legitimate news sources delivered the news to us about Gulf of Tonkin incident and Saddam Hussein’s weapons of mass destruction and anthrax.   Those were propaganda, “fake news”, spun up to work the nation up to war. They worked unfortunately and hundreds of thousands died. Indeed, the march to war is always accompanied by the whole hearted support of the merchants of death and the “legitimate” news sources.

Crying “Russians! Russians!” is dangerous. Accepting such stories uncritically is even more dangerous.  It allows people, especially establishment Democrats, to ignore their own culpability in creating this disaster of an impending Trump presidency. But even more dangerous is it feeds the war machine. We have a populace that wants to look elsewhere to blame their problems: Republicans want to blame Arabs, Muslims, and immigrants.  Now Democrats are crying to blame Russians.  That way lies madness. Let’s remember, when it comes to world wars, it’s three strikes and we’re all out.

So I humbly ask that we all ask ourselves as we read these days: Who’s zoomin’ here?

hat tip to the Queen of Soul, Aretha Franklin for the inspiration for the post.  Enjoy:

 

 

Brexit, Trumpworld, and the Future of Open Ed: A Topic for OER17?

The deadline is looming in a few days for next April’s OER17 conference in London. I’m not even sure yet if I can make to the conference yet but the events of the past week seem to me compelling to us.
I’m thinking of proposing a panel discussion to discuss Open Education in a time of Brexit, Trumpworld, & whatever other shifts to the hard right happen before April. Specifically we would look at not only whatever threats the political shift from globalized neo-liberalism to far-right nationalism might mean, but more importantly in my opinion other issues:
  • examining the idea that open, connected, learning is more important than ever, and that open, connected, learning is the vehicle by which we combat long-term these trends
  • the implications for the more decolonization and opportunity in the rest of the world, after all, Brexit-Trump-Putin etc is pretty much a Euro-North American phenomenon.
  • what hidden opportunities might this shift away from neo-liberalism offer?
  • how might we change our approach to promoting open, connected education?
Martin Weller has already offered some thoughts from last September in Open Education and the Unenlightment.  I intend to blog heavily in the coming months on the subject and also include my Comparative Economic Systems class in the work.
Here’s the catch. I really don’t want to create another all-white-male panel.  We need more voices. If you’re thinking of attending OER17, interested in being part of it, and you don’t look like me (lucky you!) please contact me ASAP.  Either follow me on Twitter (@econproph) and DM me, or email me at   econproph(at)gmail.com.

Doing the Write Thing

The past 4 weeks have been unsettling.   As above, so below.  At my school where I’ve spent 8 years heavily engaged in governance, planning, and accreditation work I’ve come under a severe personal and “political” attack that has put the open learning project I’ve decorative image of trees reflected in pond led at risk.  I didn’t see that coming.  Yet, three weeks ago I participated in my first Lilly Conference. I felt comfortable and surprisingly (to me) confident. I’ve never thought of myself as having much pedagogical expertise. I always thought I was just an economist, an unconscious competent when it came to teaching.  I started to realize that even though I don’t have any degree in “education”, I’ve got something to contribute and I feel comfortable with these “teaching experts”.

Then two weeks ago it was OpenEd16. I’ve already written about that. I found my people. Never have I have felt more at home with some academic group.  I went to OpenEd hoping to tell the story  of what we’ve done with open learning and a domains of one’s own project at my community college.  I seriously hoped to get a kind of “that’s a good job, there, little bro” from all these thought leaders and big research schools that pioneering this movement.  What I got was a welcome and interest as a peer – people thought I had something interesting to say.  My voice was welcomed. And it was welcomed on a stage much larger than I pictured. It’s an international stage.

And then election came day.  Trumpland.  I didn’t see that coming either, but in retrospect this week, I should have.   I’m still an economist. I teach not only macro principles, but econ history and comparative econ systems.  But I listened to pollsters instead of relying on my own analysis as economic historian.  So I’ve been deeply buried in trying to figure out what Trump + Republican congress means. How will things change.  How do I explain it.  And I’m trying to figure all that out while sorting out my own feelings of grief for my country and society and my realization that I have to help protect all those that are so threatened  by this coming new administration.  I am fortunate enough to be older, hetero, white married male. I am not as vulnerable as so many others are.  That’s a privilege.

But with great privilege comes great responsibility. 

So what to do?  I realize that I’ve let my blogging and writing languish in recent years as I got more and more involved in governance and politics inside the little campus where I work.  I got tied up in a silly anxiety over whether I should use this blog, which originally started as just explanations of economic news for my students and somehow gained some followers, or use a different platform for topics that weren’t directly economic analysis: open learning concepts, pedagogy, management and leadership of higher education, and just broader social commentary.  I realize I’ve let my voice get too quiet.  I also realize that while I don’t have all the answers,  I can offer some unique perspectives.  What’s felt like an unfocused jack-of-all-trades-not-expert-in-anything career with corporate planning, strategic & technology planning consulting, teaching economics, economic analysis, college governance, economic history,  rhetoric studies, and pedagogy might actually be an advantage.  I can connect dots that others can’t even see.  I’m also now in my sixties. I’ve seen many things those that are younger haven’t and were never taught.

So I hereby commit to write more.  I’m going to contribute my voice more and quit hesitating.  The role I’ve come to play on campus needs to step up to a larger stage where more across long distance can hear and where I can amplify their voices.

I’ve developed a bad case of blogstipation*.   Specifically, you the reader can expect more and more frequent posts about the following themes. I promise there will be more of not only the original reason for this blog,

  • More macro policy analysis – As we shift from Obama’s inadequate policies based on broken mainstream macroeconomic theories to Trump’s likely to be volatile and failed policies based on a free-market fantasy, there will be much to explain.

but also more about what I’m doing and experimenting with pedagogically.

  • Open Learning – the nuts and bolts of what I’m doing, what I (we) are learning about learning, and the odd insight

I now see that I these aren’t entirely different worlds of thought.  They’re connected.  So I’ve got some pieces in the works that make the big picture connections.

  • It’s the End of the World, except It’s Not.  Brexit. Trumpworld.  Putin. Europe seems to be turning to the right.  I read and hear way too much commentary that sees this as the end of the world but sees it in older 20th century right-left, free market capitalist vs. socialist, cold-war or WWII terms.  It is possibly the end of a dominant system in the West, but that system is globalized neo-liberalism (don’t reach the verdict yet, the Empire has yet to strike back).  That view also ignores the heavily colonized vast rest of the world. What comes next?  There’s a lot to talk about.
  • Sub-Prime US.  Gardner Campbell  planted this seed.  The financial crisis of 2007-09 that started in the U.S. with the sub-prime mortgage mess wasn’t an accident. It was a feature of the system and not bug.  When seen as part of a globalized, neo-liberal, hierarchical system, we see that sub-prime is a class thing.  The “student success” and “completion” agendas and efforts in higher education have much in common with Wall Street’s embrace of sub-prime mortgages.  The corporate restructurings and shift of the US economy from manufacturing to finance & entertainment is part of a class system: the blue-chip 1% and the elite-educated struggling to become the 1%, and the rest of us reduced to sub-prime status.  Sub-prime us.

But I also have ideas about how we can lead, react, and fix this mess.  I need to document and share these ideas so they can be pollinated.

  • Flipped College – How we manage, organize, and lead higher education must change.  Much has been made in recent years of the need to “flip” the college classroom (I hate the simplistic moniker BTW).  But the classroom pedagogy is but a reflection of the institution itself. If we don’t want the classroom to be top-down content-delivery, we have to flip the college itself away from top-down hierarchical structures and practices.
  • some more that I don’t have cute little names for yet.

Stay tuned.  I have work to do.

 

So Who Pays For the Government and How?

I’ve always found putting things in historical perspective and looking at the long-term trend of things usually illuminates a lot of policy discussions. It’s easier to see “what’s really happening” if you look at the long-term trend.  Taxes, tax rates, and the government budget are often hot topics of policy debate.  So is the future of the intergenerational social insurance programs such as Social Security and Medicare (also here).

As Paul Krugman has often mentioned, the best way to think of the U.S. federal government budget is to think of the government as “an insurance company with an army”.  But who pays for this insurance company (Social Security, Medicare, Medicaid) and it’s accompanying army?  The distinct trend of the last few decades is that individuals are being asked to shoulder more and more of the burden and that corporations are carrying a less-and-less share. In fact, as this graph shows, the corporations are nearing becoming insignificant in their contribution to the general welfare and maintenance of our government.

The data for this graph is from Office of Management and Budget in this file.

 

Busting the Medicare Myths – Presentation

I gave a presentation today to the Michigan Intergenerational Network at Madonna University on the economic prospects of Medicare (U.S.). Thanks to the Madonna Univ. Gerontology Department for support and assistance.

For a downloadable and viewable copy of the presentation, see:  https://jimluke.com/course-resources/presentations/busting-myths-about-medicare/.

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