Sh*t Floats: Mega-Yacht Sails as the World Economy Fails

July 30, 2009 — Anton Steinpilz

As the nation’s economic prospects with each passing day begin more and more to resemble a scraped bong, its good to pause a moment to reflect on on the nature of the universe and of humanity, and how they contribute to our current predicament. So here’s to a little of the ol’ class resentment, alive and well in the 21st century!

I’ve lived long enough to recognize that the universe contains many marvels. The Higgs boson, Coldplay, cosplay, just about anything having to do with hipsters — these along with many, many other phenomena continue to mystify me.

But I’ve also lived long enough to recognize that the universe contains a great many more drearily predictable regularities. I’ve learned that no matter how dire the economic situation, how acute the peril to most everyone on the planet, I can always count on the filthy rich to lord it over everyone.

Meet Oculus, the latest plaything for the rich and shameless. Daniel Yoh over at technogad describes Oculus as

a long distance cruising yacht. The exterior styling is representative of the jaw and eye socket bone structure of large oceanic fish and mammals. It features a dramatic reverse bow configuration and a “low rider profile”.

That’s right. Along with sleek, cetacean-like details comes a little bit of ghetto fab. Whoever buys Oculus can turn a tidy profit renting it out for rap video shoots — or even porno. And such profitability is a good thing, because command of a water whip as pimp as Oculus doesn’t come cheap. The yacht commands a cool US$ 95 million,  a price that puts it out of reach of just about everyone except maybe Bill Gates, Warren Buffet, George Soros, Oprah, and the board members of Goldman Sachs.

Though most of us consider a recession as a time to rein in expenditures, the rich continue to show us that primitive accumulation means never having to say you’re sorry. To them, austerity is simply slumming, a Rumspringa for the silver-spoon set, something to be gotten out of one’s system before entering The Wharton School.  The rich may be many things, but one thing they should never be is boring. Fortunately, Boston architect Kevin Schopfer has arrived to deliver the rich from that unseemly, unfashionable possibility. He considers it his mission to see to it that ”luxury yachts should move away from generic boat shapes to something more playful,” a recent CNN.com story reports. And with Oculus he has seen his mission through.

LOL fat cats: ultra-rich worry not aboard a hardened yacht.

LOL fat cats: ultra-rich worry not aboard a hardened yacht.

Playfulness in a yacht is all fine and good for the Hamptons or Monte Carlo. But in more perilous parts of the globe, ostentation takes a different form. The June 15, 2009 edition of The Daily Mail reports on Russian oligarch Roman Abramovich’s latest entry into the excessive vessel contest:

It is the biggest private yacht in existence and comes with a missile-detection system, two helipads, a luxury spa, swimming pool and a miniature submarine.

But when you’re Russian oligarch Roman Abramovich, only the most ostentatious displays of wealth will do.

His latest baby is the Eclipse, a 557-footer reported to have cost a staggering £300million.

To keep the oligarch safe, the Eclipse has a military-grade missile defence system, armour-plating around Abramovich’s master suite and bullet-proof windows.

There is also a private submarine, which doubles as an escape pod.

That Abramovich felt the need to harden his yacht certainly comes as disappointing news. It makes one wish for a juster world, one in which oligarchs can enjoy the fruits of their predations free from fear of reprisal. One day, perhaps, we’ll have such a world.

Meanwhile, landlubbers for whom the yachting life is but the stuff of 70s lite rock confront the long emergency of health care. Premiums rocket ever upward, soon to reach the point where they might as well be yachts for the amount most Americans will have to fork over.

Paul Creeden over at Buddha’s Pillow sums the situation up nicely, connecting to current political impasse on single-payer health insurance to the prerogatives of the upper crust. “US citizens are allowing themselves to be ruled by a plutocracy,” he writes:

The current whining of the Democrats in Congress that ‘the votes aren’t there’ for universal health care for American citizens, when there are a majority of Democrats in the Congress, is the open admission that we no longer have a two-party democracy in the US. We have a plutocracy: Government by the wealthy for the interests of the wealthy.

Creeden goes on to draw a useful distinction, one which highlights the degree to which semantics influence the health-care debate:

Universal health care would mean that any US citizen or legal resident would have the ability to access health care (medical assistance or treatment) anywhere in the US at any time it was required without worry about being bankrupted by that need. In other words, medical care as a human and civil right.

Universal health coverage keeps up the illusion that medical care is a commodity, not a human and civil right. This is the position of the insurance industry and the pharmaceutical industry, the wealthy interests who obviously own our Congress lock, stock and barrel. So, the Congress will keep funneling customers to the insurance companies. More than ever, since every US citizen will be forced to buy private insurance in order to get medical treatment.

That legislative stooges for the HMOs and Big Pharma would like to see political action limited to health coverage comes as no surprise. After all, to do otherwise would wipe out huge profit potential and thus shut a lot of folks out of the yacht market.

The choice with which the plutocrats saddle Americans reminds me of the scene (warning: NSFW) in Martin Scorscese’s 1995 film Casino where the casino boss, played by Robert De Niro, discovers two guys cheating at blackjack. Already strapped citizens get the money and the hammer, or they get to walk away — but they don’t get both.

Something to contemplate over a sultry summer weekend.

Posted in culture. Tags: , , , . Leave a Comment »

The Joe You Know: On Shakespeare and “Stealth Starbucks”

July 28, 2009 — Anton Steinpilz

In Shakespeare’s Measure for Measure (1604), Duke Vincentio of Vienna faces a problem of governance that seems cribbed from the worst apprehensions of the World Net Daily crowd. The duke’s subjects have for many years been flouting the city’s laws governing sexual behavior, gittin’  jiggy wid each other right under the duke’s nose; because, as he admits to Friar Peter, the duke in his distaste for affairs of state had “for this fourteen years … let slip” the responsibility of enforcing  these laws. Duke Vincentio has decided to remedy his long neglect. He wishes to see the laws enforced once again.

These laws, “strict” and “most biting,” present “[t]he needful bits and curbs to headstrong weeds,” but for this very reason they also put the duke in a thorny political predicament. Because he failed for so long to hold his subjects to these laws, he recognizes that “['t]would be [his] tyranny to strike and and gall them” with the harsh penalties these laws call for.

So the duke hits upon the time-honored political expedient of deputizing someone to enforce the laws and, more importantly, to draw the inevitable flak. The person Duke Vincentio designates is Angelo, a man outwardly puritanical but freaky between the sheets. To him falls the duty of cooling off the duke’s hot Wieners, which he pursues with zeal. Meanwhile, Duke Vincentio, pretending an embassy to Poland, enters a monastery in order to pose as a friar. Thus disguised, the duke sets about laying a trap for Angelo, whom he wishes to expose as a hypocritical fraud.

The problem Duke Vincentio confronts is a version of the central problem of quantum mechanics, in which the act of observing influences the phenomenon observed. He tells Angelo, “I love the people, / But do not like to stage me in their eyes.”  The duke wants to observe Angelo and others in their real characters, but he knows that were he to try to do undisguised, he’d see not their behavior as he’d like to see them — honest, spontaneous, unguarded — but as they’d behave in his presence. He therefore resorts to donning a friars habit in the hopes that “disguise shall, by th’ disguised, / Pay with falsehood false exacting.”

As if stealing a page from Duke Vincentio’s playbook, Starbucks has likewise elected to throw a disguise around its magnificence. The July 20, 2009 edition of The Guardian reports that

[t]he US coffee chain is rebranding at least three stores in its home town of Seattle under different, locally orientated, names in an initiative dubbed “stealth Starbucks” in the US media.

Necessitating such stealth is a certain waywardness that, much like in Measure for Measure, has sprung up among the coffee-drinking public during the long reign of Starbuck’s double-shot-venti hegemony. But whereas waywardness of Shakespeare’s Viennese consists of wantonness, that of contemporary coffee-drinkers’ involves abstention.

It seems a growing contingent has shown itself unwilling to pony up the premium Starbucks attaches to their elaborate coffee drinks. (You know it’s bad when, as BrandRepublic reports, company CEO Howard Schultz himself admits that “the coffee chain [has] become the ‘poster child’ for excess.”) Duly alarmed by this defection and the dwindling flow of tribute it represents, Starbucks has decided to don a “more bohemian guise featuring live music performances, poetry readings and sales of alcohol as well as hot drinks ” in order to recapture the public’s fealty and shopping dollars. Such a guise goes by the name “community personality” in Starbucks’ corporate idiom.

emCafé caché/em: stealth Starbucks go boho to hide brand.

Café caché: stealth Starbucks go boho to hide brand.

Mother Jones reporter Josh Harkinson fairly captures the sort of confusion Starbucks seeks to sow with its community-personality makeover. He characterizes it as “the Red Scare in reverse,” in which worrying whether “the hipster at the cafe is secretly a communist is … replaced with worrying whether the hipster cafe is secretly a Starbucks.”

The success of Starbucks’ “community personality” makeover remains in question. A cursory survey of the blogosphere, however, suggests that the outlook is not good. “Frankhg” of  Sand Dollar Adventures recognizes Starbucks ploy for what it is: namely, an “attempt to pull the corporate label over our eyes.”

At her eponymous blog, Gladys Santiago adopts a less condemnatory tone. “Essentially, Starbucks is trying to present itself as a neighborhood coffee shop instead of a corporate conglomerate that ruins small businesses,” she observes:

Critics have referred to the shops as “Stealth Starbucks” and while this sort of marketing is rather subversive, we really shouldn’t be surprised that it has emerged. In an environment in which consumers are bombarded with brand messages and have developed a hyper-awareness and distain for perpetually invasive marketing, companies need to soften their approach. Displacing the familiar slogans, and visual cues that are synonymous with a brand may be a risky move, but several marketers are going this innovative route.

She does, however, point out that Starbucks stealth marketing faces a significant obstacle in the highly developed “persuasion knowledge” of its targeted demographic:

Marketing in general has become rather ubiquitous and invasive, which has resulted in the formation of a hyper-aware audience that sees through and ignores most campaign strategies.

The people Starbucks wishes to lure into their newly re-branded, ersatz-boho digs aren’t likely, as the old Italian saying goes, to mistake the habit for the monk. There’s a strong chance they’ll recognize that under such humble fustian moves a familiar despotic form.

But those of a lower persuasion-knowledge quotient might get sucked in à la Angelo of Measure for Measure, especially if the re-branding strategy manages to circumvent the political reservations many folks have about bringing Starbucks their custom. To these people, as John Jay of The Daily (Maybe) so pithily puts it, these re-branded stealth outlets offer “[a]ll Starbucks, but with none of the liberal guilt.”

Foul trade made fair by fair seeming — truly a devilish measure … by any measure.

Posted in consumerism. Tags: , , , . 1 Comment »

Beggin’ for a Piece of That Bubble: Macrorationality and the Limits of the Possible

July 26, 2009 — Rob Horning

A few weeks ago, at the Baseline Scenario, James Kwak wrote a few posts about the difficulty of spotting bubbles, responding to suggestions from economist Leigh Caldwell calling for a behavioral-finance-inspired index of bubbliciousness, that Dionysian state which impels people to pitch themselves headlong into jumbo mortgages and other quixotic ventures, all in the interest of rags-to-riches self-actualization, keeping-up-with-the-Joneses “juice,” and other consumer-culture daydreams.

“Behavioural and experimental economics now provide objective ways to measure and monitor such variables as risk appetite, monetary value expectations, and cognitive capabilities of investors when evaluating financial products,” Caldwell explains. Therefore, “using known expected values, it is possible to calibrate investors against the hypothetical rational agent, and find out whether they are irrationally exuberant — or irrationally pessimistic.” That is, we can test actual investors behavior against the rational behavior neoclassical economics expects (here defined also as the normal and optimal behavior — a problematic assumption in itself) and determine their degrees of bubble-fomenting.

According to Caldwell, this procedure will give us a kind of handicap with which to adjust the prices of assets to their “true” value. “While the long-term return cannot be tested today, the irrationality of consumers can, through specific experiments,” he writes: “Thus the change in expected returns can be deduced by subtracting the irrationality effect from the actual price rise.” Further, once this “irrationality effect” has been isolated, efforts could be made to correct it through what Caldwell terms “macrorationality”:

There are many other tools which have been experimentally tested at the micro level but not yet applied to macroeconomics. Price anchoring, framing, endowment effects, confirmation bias and various social and peer effects all demonstrably allow us to influence behaviour in the lab; they should have applications to what we might call “macrorationality”.

Caldwell would like us to resolve irrational  human behavior into a form that proves “mathematically tractable” — which sounds a lot like old Frankfurt-School fears about the totally administered society coming to fruition at yet another level. Macrorationality seems like a matter of circumscribing one’s possible decisions at the broadest possible point, of eliminating individual autonomy in favor of better economic predictability at the social scale. All this while maintaining the pretense that reality is not being shaped or conjured, but is simply being measured more carefully. (Caldwell himself notes the paternalism of his suggestions only quickly to dispose of them as being questions to resolve at a later date, when the state of financial regulation is not in a crisis.)

Managed care: microrationality cages animal spirits.

Managed care: microrationality cages animal spirits.

If behavior can be modeled mathematically, is it irrational any longer? Isn’t the irrational precisely that which eludes formulation? Aren’t bubbles inherently the scenarios in which the models are defunct or purposely discarded as no longer relevant to the new hyperoptimistic reality, in which everything’s different? Kwak, in hashing out the problem of gauging housing prices, notes, as many others have before him, that in any situation, “it’s generally possible to come up with a reasonable argument that things have changed this time.”

If we’ve learned anything from the past few decades, it’s that bubbles redefine what’s normal so that failure to participate in whatever Ponzi-like scheme has inflated the bubble is what registers as abnormal. If you don’t invest in internet stocks, if you don’t day-trade, if you don’t try to flip condos, if you don’t tap your home equity credit lines to reinvest in more lucrative opportunities and so on, you distinguish yourself as a wet blanket — or even, astonishingly enough, as a poor patriot.

Within capitalism as it’s currently configured, irrational exuberance will always finds its alibis. Too many suckers are structurally required. It’s a fortunate thing, then, that there’s one born every minute.

Posted in economy. Tags: , , , . 2 Comments »

Will Work for Work: Nouriel Roubini and Hipster Runoff’s Carles on Labor’s Future

July 24, 2009 — Anton Steinpilz

In a recent commentary for Project Syndicate, New York University economics professor Nouriel Roubini tells workers what they can expect from the labor market as economies throughout the developed world shed jobs at about the same rate that my compulsive over-eater of a cat sheds his fur — which is to say, exceedingly fast.

Popularly known as “Dr. Doom,” Roubini isn’t one to sugarcoat the bitter and difficult-to-swallow pills he dispenses in liberal doses. He has more or less maintained his grim outlook throughout the recession, delivering oracles in prose that, like the martinis so loved by the monied classes, is invariably dry and stiff. “Recent data suggest that job market conditions are not improving in the United States and other advanced economies,” Roubini writes:

In the US, the unemployment rate, currently at 9.5%, is poised to rise above 10% by the fall. It should peak at 11% some time in 2010 and remain well above 10% for a long time. The unemployment rate will peak above 10% in most other advanced economies, too.

Lest his readers be lulled into thinking things could be worse, Roubini hastens to add that these numbers actually downplay the real situation:

These raw figures on job losses, bad as they are, actually understate the weakness in world labor markets. If you include partially employed workers and discouraged workers who left the US labor force, for example, the unemployment rate is already 16.5%. Monetary and fiscal stimulus in most countries has done little to slow down the rate of job losses. As a result, total labor income — the product of jobs times hours worked times average hourly wages — has fallen dramatically.

If these raw figures actually understate the real labor-market situation, American workers can expect that when the official unemployment peaks, as Roubini predicts, at 11 percent, this will mean nearly 20 percent unemployment in real terms. 20-percent unemployment will put the year 2010 right up there with 1933, when unemployment reached 24.3 percent, the highest rate of the entire Great Depression.

One should bear in mind, however, that the entire US population in 1933 was 125 million souls, of which 11.4  million comprised the eligible workforce. So, even at the point when the vicissitudes and dislocations of the Great Depression had reach gale force, they tossed only some 2.8 million people out of work, a number that today, with the US population at 305 million and with many more women in the workforce, hovers well within the bounds of what labor statisticians consider virtually full employment.

Bludgeoning readers with numbers isn’t terribly attention-economical, I know. But these numbers do paint a picture stark enough to where one isn’t liable to mistake green shits of inanition for the green shoots of regeneration. What, after all, does 20-percent unemployment look like, not in the ether of statistics, but at street-level? Well, according to the Franklin Delano Roosevelt Presidential Library and Museum’s website, this is what 24.3 percent unemployment looked like in 1933:

The displacement of the American work force and farming communities caused families to split up or to migrate from their homes in search of work. “Hoovervilles,” or shantytowns built of packing crates, abandoned cars, and other scraps, sprung up across the nation. Residents of the Great Plains area, where the effects of the Depression were intensified by drought and dust storms, simply abandoned their farms and headed for California in hopes of finding a true “land of milk and honey.” Gangs of unemployed youth, whose families could no longer support them, rode the rails as hobos in search of work. America’s unemployed citizens were on the move, but there was no place to go that offered relief from the Great Depression.

My vision of what 20-percent unemployment in 2009, which in terms of real numbers involves vastly more people than 24.3-percent unemployment did in 1933, resembles the Tucson, Arizona that I experienced throughout the 1990s and half of the first decade of the 21st century. For me, Tucson will forever stand as a cesspool where the outcast, outlawed, defeated and damaged can settle in order to pursue a curious liberty all too familiar to those who have ever lived in the American West: the exchange of one’s dignity, and perhaps one’s hygiene, for a dusty freehold on which to park a trailer, a grim aluminum asylum where one can sift at her leisure the shards of her broken dreams.

Often, enough trailers and trailer denizens accumulate in one area to form a “wildcat” development: an ad-hoc community, a confederacy of the impoverished, the drug-addled, the defiantly desperate, mixing promiscuously through lurid liaisons, sub-rosa intrigues and manufactured drama intended to bring intensity to their lives of sun-scorched, pinchpenny monotony. Diets of affordable, heavily marketed processed foods betray their bodies into obesity; their arms become flabby flippers, their legs unsightly topographies of dimples, bulges and blemishes. Immorality and schemes abound in this city where parasites’ parasites play silly confidence games for pathetic stakes in an eternal bellum omnium contra omnes.

Now, imagine these conditions applied to an entire nation. This, I think, fairly captures a situation in which one in five eligible workers can’t find work.

Or perhaps the irrepressible Carles’s vision comes closest to what the future of work holds for American workers. In his latest post at Hipster Runoff, Carles adopts the persona of freshly graduated coed confronting for the first time the harsh realities of securing work. Finding herself stymied by the contradictions of job-hunting in her “industry,” Carles’s fictional coed decides to play it as it lays, opting “to start ‘from the ground up’ within [the] corporate hierarchy” of Chili’s Inc., a wholly-owned subsidiary of Brinker International.

Carles’s coed settles on an entry-level position as hostess “at an upscale Chili’s brand which they are beta testing in several U.S. markets.” Advantageously situated in Scottsdale, one of the selected test-markets, Carles’s coed describes how this new restaurant will distinguish it’s brand, and how it will market the experience associated with this brand:

Being a hostess here is amazing … even the uniform is a little bit stylish. I have met tons of amazing people. This Chili’s is great because we don’t serve food to the poors. We are looking to be a place where business men can wine and dine their mistresses, and seem ‘rich’ while still eating variations of our original Chili’s menu.

The brand’s identity depends, in other words, on its ability to bottle the volatile spirits of affluence; the upscale Scottsdale Chili’s preserves something of the form of conspicuous consumption, if very little of the substance. Creating a space where people can continue to “seem ‘rich’” while dining on nouvelle nuke-n’-serve will perhaps come to represent the best possible kind of brand magic.

Strike a pose: Service proles recast in sexy roles.

Strike a pose: service proles recast in sexy roles.

And crucial to capturing this brand magic is a staff capable of weaving s its spell — a staff of spirited hotties like Carles’s coed, who “pre-party while [they] work, then go out and get mad crunk afterwards,” and whose greatest single achievement is “becoming an ambassador of the Chili’s brand.”

Carles’s vision indeed seems to augur what is to come. With an already tight job market getting even tighter in 2010, competition for just about any position is sure to be fierce. Roubini himself remarks on the various ways companies are cutting pay without necessarily cutting jobs:

[M]any employers, seeking to share the pain of recession and slow down layoffs, are now asking workers to accept cuts in both hours and hourly wages. British Airways, for example, has asked workers to work for an entire month without pay. Thus, the total effect of the recession on labor income of jobs, hours and wage reductions is much larger.

Imagine, then, with so many workers out there laboring for free just to hang onto benefits and to keep downtime off their résumés, how attractive a job offering a wage — any wage — would appear to the many lean and hungry-eyed strivers forced into indigence by the violent economic churn now upon them. And with hotness now the cardinal American virtue, job fairs will no doubt become beauty pageants. The future, as Carles suggests, is one where people with Alpha-Plus bodies perform Gamma and Epsilon jobs, while the hordes of those arranged elsewhere on the Greek alphabet sit and suck stones.

Posted in economy. Tags: , , , . 2 Comments »

Buy None Get One Free: Digital Research Resources and the Emerging “Freeconomy”

July 22, 2009 — Anton Steinpilz

The July 15, 2009 edition of  The Chronicle of Higher Education features an article detailing a recent study by research firm Ithaka S+R investigating ways to keep digital educational resources (of dubious sustainability at any time under the regime of the Bayh-Dole Act) afloat in an economy whose “green shoots” may just be bladderwrack stranded by an ebbing tide.

The study draws the unsurprising conclusion that the research projects in question adequate themselves to current economic conditions. The key to their survival involves becoming learner and meaner — “flexible” and “adaptable” in industry parlance.

One recommended means of so doing, The Chronicle story reports, involves “rely[ing] on hybrid models” of resource development. These hybrid models are ones which “[mix] subscription and open-access components, or which “[draw] on institutional support as well as revenue generated by commercial arrangements.”

Ithaka’s study essentially recommends following the principle of decreasing cost while maximizing revenue — pretty much Business 101. The specific recommendation of mixing subscription and open-access components perhaps signals the arrival of freeware from geekdom’s murky margins, especially if many projects come to depend on it.

The price point “free,” beyond the immediate appeal of nabbing something for nothing, carries profound implications for commerce. A school of economists known as marginalists holds that value is discovered, and thus prices are set, in so-called marginal transactions. For example, a person has been wandering the desert for days, suffering a raging thirst. He happens upon another person selling bottled water. The price this desert wanderer is willing to pay the water vendor for a bottle of water is quite high, given his raging thirst. The price he’s willing to pay for a second bottle of water, however, will likely be lower than the price he paid for the second bottle, because he’s now well on his way toward quenching his thirst. The price for a third bottle would be lower still, and so on.

“Free,” the price point at which one forks over no money in exchange for a good, represents the horizon for marginal transactions. There’s no price cheaper than free, so any good nabbed at that price supplies an optimal amount of what economists call “utility,” the benefit gained from the good in question, because the person receiving the good didn’t have to give up anything in return.

Such ideal utility optimizations seldom happened until the Internet came along, digitizing just about everything that can be digitized. Music, movies, maps, magazines — all these and more the ‘Net assumed into the empyrean of cyberspace, and in so doing eliminated many inputs (econo-speak for the material, machinery and labor necessary for producing goods) whose own costs influence the finished goods price.

Also, unlike a record album or even a compact disc, an mp3 won’t warp if left in a car. And, what’s more, mp3s, like all digital media, aren’t subject to “generational loss,” the degradation of clarity or fidelity afflicting copies of copies. Because all that is transferred is code, one can share an mp3 file as many times as she likes, and each recipient’s own file will sound exactly the same.

Give it away now: Internet a digital horn o plenty.

Give it away now: Internet a digital horn o' plenty.

Media industries have, of course, reacted to these technological developments with consternation, if not outright hostility. They find themselves in the position of having to sabotage their products in order to stem the sapping influence file sharing and other piratical practices have had on their bottom line. Sabotage of this sort has always happened. One thinks of “planned obsolesence,” that pernicious practice of deliberating making goods crummy. But such dastardly doing has heretofore been a mostly surreptitious affair. With mp3s and related media, industries now do their hamstringing in the clear light of day, installing so-called crippleware on players to inhibit their full functionality, or including code to inhibit a file’s transmissibility.

These practices haven’t been winning these media industries much sympathy, especially among champions of freeware and peer-to-peer file sharing. The lawsuit filed by the Recording Industry Association of America (RIAA) against the pioneer file-sharing network Napster stands as a pivotal moment in this young age of virtual reproduction. The RIAA won the battle, the case decided in its favor, but it appears that it is losing the war. One may get audio and video files off the ‘Net as easily as ever, and this has been playing havoc with media industries’ traditional business model.

If these industries can’t hold the line as they’d like against peer-to-peer poachers, they may just have discard their traditional business model for one more robust to the changes which convulse culture almost daily. They might just have to entertain a business model organized around the price point of “free.”

Such is Wired Magazine editor and author Chris Anderson’s assessment, anyway. His new book, Free: The Future of a Radical Price, argues that the the World Wide Web, as the medium and support of virtual goods like audio and video files, as well as applications and software, has basically reduced production costs to the point where it makes better financial sense to give those goods away than to sell them.

“Free” might just be the radical price Anderson claims it is, which is terrific — as far as it goes. It’s fine and good to be able to download the latest version of Firefox for free, but one can’t eat a browser. Vast areas of the economy remain for which “free” guarantees a short-lived enterprise, and most of these areas involve the perpetuation of one’s continued being.

Free virtual goods have an undeniable appeal, and they may just save many research projects’ bacon. But one ought to remember that consumption of these goods, even at the “free” price point, requires a standard of living affording one enough comfort and leisure to consume or even to access these goods. After all, it’s hard to get wi-fi in Tent City.

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Admirable Pluck: Hipsters Carry the Weight of the World on a Stubbled Brow

July 20, 2009 — Anton Steinpilz

Many a plutocratic policymaker rose to prominence during 1980s and ‘90s, decades when creeping deregulation exposed the soft underbellies of firms fattened in the shelter of saner times. Such firms, lurching on the pampas of commerce, became increasingly easy to eat as the ecology tipped in favor of lean carnivores whose scruples were as spare as their frames. Cutting their teeth on junk bonds and hostile takeovers during the ’80s, they reached lethal maturity in the 1990s, roving in packs known as private equity firms, which, bearing names like “Bain” and “Cerberus,” continue to inspire distinct foreboding.

Years of such predation have altered the landscape of capitalism to where the road to riches lies not in invention or innovation, but in asset stripping, which involves simply finding a company staggering from age or bloat, running it down, denuding it of its choice bits, and leaving the rest for the vultures — a ready and easy way to many fistfuls of dollars, to be sure, especially considering private equity can cruise the turbid waters of modern commerce under power of private capital, which grants it the quickness and nimbleness needed to capture its prey and to escape those that would capture it.

Private equity’s resounding triumph echoes in the ears of countless strivers eager to sample la dolce vita, inspiring in them the belief that they can asset-strip their way to prosperity. So keen, in fact,  are people on getting into the game commenced during the Reagan years that they’re finding strippable assets in some rather unlikely places — like their own faces. The July 15 edition of The New York Times reports on the latest trend among local hipsters: plucking or bleaching their eyebrows.

Article author William Van Meter introduces Lauren Boyle (who is apparently still basking in the acclaim that followed her showstopping performance on Britain’s Got Talent) and David Toro, two habitués of the hipster demimonde who discovered that stripping away their eyebrows, usually facial assets that prevent one from looking bizarrely alien, presented a sure path to distinction, the kind of social capital which for hipsters glistens brightest:

“If I had Brooke Shields’s eyebrows, I wouldn’t have erased them,” said Lauren Boyle, a 26-year-old fashion consultant. “But they weren’t adding to my look.”

Ms. Boyle’s cosmetic choice gives new impetus to the old nostrum, “Less is more”; she has developed a personal aesthetic centered on an almost cabalistic principle whereby one adds by subtracting.

Ms. Boyle’s partner in browlessness, David Toro, similarly admits that stripping away this particular facial feature has returned immediate dividends in the economies of attention that govern hipsterdom:

“I get a lot of stares,” said Mr. Toro, who wasn’t immediately recognized by his friends that evening, his face had changed so much. “But it’s cool because they are perplexed looks instead of something hateful.”

What sort “hateful” stares a previously eyebrowed Mr. Toro suffered remains open to conjecture, but its comforting to know that such stares mellowed to merely “perplexed” once Mr. Toro emerged thusly shorn.

No-brow know-how: hipsters depilation sensation.

No-brow know-how: hipsters launch a depilation sensation.

Expanding on Mr. Toro’s positive attitude, Ms. Boyle characterizes her brow-free personal aesthetic as an “optimistic” and “idealistic” statement rooted in a timeless, emancipatory spirit of androgyny:

“It’s unifying,” she said. “There is an asexual element to no eyebrows. We are much more accepting of the ‘other’ nowadays. Removing eyebrows removes a degree of expression, which makes one look less human and more cerebral, maybe even mechanical. It’s an exercise in modernity.”

Such sentiments, rarely heard outside the confines of cultural-studies graduate seminars, are given a religious gloss by Terence Koh, the host of the party attended by  Ms. Boyle and Mr. Toro. Not one to allow his guests to remain unique in their uniqueness, Mr. Koh admits to similarly depilating. He protests a religious pretext for his toilet:

“I was reading a lot about Buddhism,” Mr. Koh said of what impelled him to grab the razor. “Thai monks shave off their eyebrows. Maybe the monks are affecting everyone subconsciously?”

Though one cannot entirely rule out the notion of monks in Thailand remotely influencing fashionistas in Manhattan, sociological and economic rather than karmic forces perhaps better explain this fad. Van Meter himself muses on the nature of the factors at play. “Could no eyebrows be a reflection of economic downturn?,” he asks:

Can one be too poor to have them? Having no eyebrows is certainly a way to express oneself without buying a product.

What sort of indigence would rob one of her eyebrows is something I leave to the reader’s imagination. The more relevant concern for every hipster in this foundering economy is how one can garner attention on the cheap. Seeing the way we live now reflected in a naked brow, Amy Odell, in a July 16 response to Van Meter’s story, writes:

Of course it’s the economy. Except now that the trend has been highlighted with a substantial article in the “Thursday Styles” section, it’s no longer cool. Hipsters will have to find something else that doesn’t cost any money but will cause strangers to stare at them.

Ms. Odell’s comments highlight the element of creative destruction pervading hipsterdom’s attention economy. Stripping oneself of the aesthetic asset of eyebrows returns an immediate profit in terms of attention. Yet the attention won leads to the asset’s devaluation as a result, paradoxically enough, of too much attention.

Soon, legions of hipsters will languish, eyebrowless in Gaza — and ignored.

– Anton Steinpilz

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“Neither a Borrower Nor a Lender Be”: Americans Dash for Cash after Wall Street’s Crash

July 19, 2009 — Rob Horning

The mainstream media generally misleads casual news followers about the state of real estate markets, deploying the mathematical legerdemain necessary to make reported data seem like good news. Presumably they are just doing their part to stir up the animal spirits. Nonetheless, Barry Ritholtz provides a list of 7 reasons (actually I count eight) why the housing market hasn’t reached bottom. The last one most interested me:

Deleveraging: For the first time in decades, the American consumer is in the process of saving money and deleveraging their balance sheets. After a 40 year credit binge, its long overdue. The process is likely to go on for years, as a new generation is losing confidence in the stock market, Corporate America and their government. Think back to the post-Depression generation that were big savers, modest consumers, who eschewed credit and borrowing. The damage is going to take a while to repair.

The recent increase in the savings rate has been widely documented, but I wonder if it indicates a return of the post-Depression skepticism to heedless consumer spending.

No depression: deleveraging a new way for Americans to unwind.

No Depression: deleveraging a new way for Americans to unwind.

The  Depression saw unemployment rates much higher than we’ve seen yet in this recession, and it lasted for nearly a decade. Also, American culture wasn’t nearly as integrated by various forms of media as it is now, which meant that the experience of poverty was far more isolating and devastating. So while Americans have lost confidence in the economy for sure, it’s not yet clear whether Americans have suffered enough in this downturn to confidently predict a return of the “modest consumer” who is wary of indebtedness. The surge in consumerism in the past few decades dismantled an entire infrastructure of self-reliance, destroyed much of the wherewithal for being habitually thrifty. That, too, would take a while to repair.

– Rob Horning

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A Debt to Treasure: What Makes a Bubble Generation Most?

July 17, 2009 — Rob Horning

What might the term “generation bubble” mean? I’d argue for this conception: It refers to those who have come of age in a society in which increased access to debt replaced wage growth as the key to an improved standard of living. To this cohort, the game of life is mainly a matter of making oneself appear creditworthy

Members of Generation Bubble understand intuitively that consumption (shopping and spending and collecting) has replaced production (completing meaningful and self-fulfilling work) as the key aspect of one’s identity, and that producing a self to which a good credit score can be attached now constitutes our lives’ great work. That’s where we’ll reap our rewards, that’s how the final judgment will be passed on our existence. We’ll cut capers in celebration of a jumbo-mortgage re-fi like those looped booty shakers populating  various pop-up ads.

Consider this editorial by asset manager Ben Funnell that ran in the Financial Times last week: “Debt is capitalism’s dirty little secret.” The secret, as he elaborates it, is this: “Excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.” The debt bubble worked hand-in-hand with the consumption bubble, both of which reinforced the ways our self-conception changed after World War II, quickened by the need to accommodate the consumer revolution. It was then that economic recovery began to rely solely on increased consumer spending (as opposed to, say, an expansion in business investment), an idea that has since become an article of faith. This trope can be found in countless reports from financial analysts today: Unless consumers spend more and save less, the economy’s green shoots will fail to blossom.

Debt, Funnell suggests,  masked the ways in which real consumer spending power stagnated, a point Ezra Klein reiterates here with some illustrative charts. Klein points out that “the acceleration in inequality and the acceleration in debt mirror each other pretty closely,” which he takes to mean that consumers borrowed more to try to close the consumption gap that income inequality otherwise threatened to open.

Stairway to heaven: Generation Bubble rises to the occasion.

Stairway to heaven: Generation Bubble rises to the occasion.

So the ability to go into debt protected consumerism — and consumers, as capitalism worked steadily to impoverish more of them. “The benefits of economic growth have gone into the pockets of plutocrats rather than the bulk of the population,” Funnell notes, but the population was too awash in consumer goods bought with credit to realize it. What he doesn’t add is that debt is, in some ways, the means by which wealth was transferred up the chain. At Rortybomb, Mike Rorty has several good posts about what is in essence sanctioned debt serfdom. He writes that regardless of how you think of yourselves, your creditors (usually big banks and credit-card companies)

think of you less as an individual to have a dynamic risk factor dynamically assigned to you, and instead as part of a portfolio to have a specific rate of return extracted from. So they have statisticians and psychologists not to create a credit risk, but instead to figure out who is likely to pay what when, and use that to keep their returns very high. Quants to study how much they can squeeze from someone – not too much, but not too little. So it is less about the awesome part of markets, the price information and the convergence and feedback, and something more feudal.

That is to say, the banks own you, and you toil to generate equity for them. This isn’t just true of paycheck lending and revolving credit-card debt. In Rorty’s convincing account, the housing bubble, too, grew out of banks’ desire to bet on the housing market, and make us work for their balance sheets:

Instead of providing consumers with loans so they can buy homes, they are instead taking bets on house prices, using consumers as people who sit in and look after the homes they are betting on. The purpose is less to get consumers to build good equity but rather find ways to transfer equity from the home to the bank itself.

Funnell’s solution to this whole debt-culture problem? Education and austerity: “We need a new political consensus, one aimed at reducing overall debt levels while reducing inequality by encouraging education, entrepreneurship and investment in innovation.” But what would such a consensus look like. What are its aims in practical terms? What specific kinds of ideological work will need to be undertaken in order to shift a population away from consumerism and toward the creative, entrepreneurial ideals Funnell champions here? That is what the people of Generation Bubble must figure out, and that’s the guiding idea behind what I will be writing about here.

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Special Announcement: Double the Bubble with Marginal Utility’s Rob Horning

July 16, 2009 — Anton Steinpilz

Rob Horning has agreed to a guest-posting stint with Generation Bubble. Rob’s weblog, Marginal Utility, began running at Pop Matters in August 2005 and has since become a site mainstay. Here’s his bio, courtesy of Pop Matters:

Robert Horning has developed a substantial body of work in PopMatters’ music reviews, concerts, film, and TV sections. His writing has also appeared in Time Out New York and Skyscraper. In his PopMatters column, “Marginal Utility”, Rob bridges the abstract and concrete aspects of consumerism. His writing is as grounded and approachable as an everyday trip to the grocery store. Rob has a BA and MA in English Literature; his interests in social theory, economics, and sociology generates his solid background knowledge for “Marginal Utility” and informs his music reviews.

I’m confident that like me you’ll find Rob a most welcome addition to the GenBub club.

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Reading Degree Zero: Printed Matter’s “IF”-fy Prognosis

July 15, 2009 — Anton Steinpilz

Via David Weir at BNET comes notice of Steve Moyer’s article “What IF?” (“IF” stands for Institute for the Future of the Book, a technophile think tank). The article, appearing in the July/August 2009 issue of Humanities, concerns the future existence of the book, both as a material object and as a text (a distinction lit-crit types love to draw).

The former, it appears, is on its way out. Replacing it is the latter — the text in all of its virtual, electronic permutations.

The virtualization of the book, according to Moyer, has been a subtle, almost clandestine affair, thanks in no small part to the dispersed, decentralized nature of cyberspace. “No one, it seems safe to say at this point,” writes Moyer, “does fully comprehend what’s afoot as the printed page begins to give some ground, perhaps much ground, to the networked screen.” The fact that the computer networks have stolen a march on the printing presses is something to which just about everyone in print journalism can attest, as newspapers lose readers and revenue to Internet journalism and its supernumerary “chattering class” of bloggers.

Suffice it to say, however, that such chatter has largely drowned out stentorian intonations from great gray New York Times on down. And now books are poised to follow suit, much to the chagrin of some and to the delight of others. “Two camps have formed … at opposite ends of a readers’ continuum,” Moyer continues:

The first is represented by an “infotopian” dream of more than six billion minds united by the Internet’s promise of access to every book on earth. The second is loyal to the traditional image of an engrossed reader holding and poring over a physical book.

Access to every book on earth involves, of course, eliminating those aspects which prevent its ready communication to everyone. This includes the very materiality of the book — the cardboard, paper and ink that make it the object it is.

Page against the machine: the books future in jeopardy.

Page against the machine: the book's future in jeopardy.

Yet the object is precisely what the “engrossed reader” so deeply esteems (one is tempted to say, fetishizes). To this kind of reader, universal access to books means nothing if one cannot hold them or turn their pages. Moyer does not say it, but one need not read between the lines too strenuously to tease out a critical implication: the “engrossed-reader” position — the position that gives primacy to having over sharing books — is clearly reactionary, because it assigns more value to the material object’s preservation than to the de-materialized text’s dissemination.

The engrossed-reader contingent, in other words, invests deeply in maintaining the relative scarcity of books, not for the book’s sake necessarily, but for the status distinctions which come with scarcity. Writer Susan Scafidi, whom Moyer paraphrases in his article, puts the matter quite well. She claims “that books are the scented candles of the twenty-first century” in the sense that “they are becoming identity-bearing goods.” Lifestyle once again shows itself the enemy of real progress. Giving up printed books altogether is a small price to pay for the creation of what amounts to a library that put ancient Alexandria’s to shame, but it is a price the book fetishist, whose very sense of self depends printed books, is unwilling to pay.

These fetishists fail to realize that the very books they fetishize result from an initiative of increased access to texts advanced most famously by Johannes Gutenberg, who introduced the printing press to Europe around 1439. Were today July 15, 1309, one wonders how many of these same book fetishists would rate among the have-nots, lacking the resources to procure quills and vellum, to hire a scribe, and to borrow a manuscript for copying.

Gutenberg’s printing press effectively removed these barriers, thus facilitating greater access to texts. And what was result? The Reformation, the Counter-Reformation, the Enlightenment, the Rights of Man, the scientific method, the nation-state, the welfare state, the moon landing … and, eventually, the science responsible for the personal computer and the Internet.

Periods of great change can frighten, certainly. This shouldn’t, however, excuse reactionary responses to such change. The “Great Disintermediation” that futurists and technophiles prophesied decades ago remains a work in progress. How thoroughly it changes the print industry, as well as those whose very identities depend on the industry’s present form, is likewise yet to be seen.“What this [emerging online technology] … implies for skills in the literary arts is anything but clear,” Moyer writes, “but we should begin to get some indications over the next ten years or so about which cultural shifts will take hold.”

We at Generation Bubble suppose that at this juncture there’s as much reason to believe that these cultural shifts will be terrible as there is reason to suppose they’ll be wonderful. The nation’s current economic situation encourages one to bet they’ll turn out fine, if for no other reason than there are few other choices. Universal access to every book can only come as a blessing to cash-strapped schools and libraries, and to the citizens who depend on them. Book fetishists can keep their fiefdoms of the mind. We’ll take infotopia.

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