It’s not this blog’s practice simply to reproduce other bloggers’ pieces; but a deserved exception is hereby made for this exceptional post from Fake Steve Jobs, on the subject of ATT’s recent lament that iPhone users are using their phones too much.

As FSJ observes, the issue is aggravating enough in its particulars; but its implications– the trends and tendencies it represents in the culture of America business today– are truly dispiriting…

A not-so-brief chat with Randall Stephenson of AT&T

So we set up a call with Randall this morning to discuss some of the profoundly stupid things his guy Ralph de la Vega said recently about creating incentives that would encourage people to stop using AT&T’s data network so much. Point of the talk was, when you’re lucky enough to create a smash hit product — when the stars align, and the hardware is great and the ecosystem is great and the apps are great and the whole experience is great, and everything you do just makes everything else better, and you’re totally on a roll and can do no wrong — when that happens, you do not go out and try to fuck it all up by discouraging people who love your product. What you do, instead, is you fix your fucking shitty ass network you fucking shit-eating-grin-wearing hillbilly ass clown!

First off, before we even start the call, we’ve got problems, because shithead won’t get on the phone unless I’m on the line first. Like, Ja’Red comes in and says we’re ready to go, and I go, You mean Randall is on the line, and Ja’Red says, No, his assistant is on the line and once you get on then they’re going to get Randall — so I reach down, hit the button then hit it again so the call gets terminated. I tell Ja’Red to explain to these motherfuckers that Steve Jobs does not get on the line first, ever. Ja’Red does this, but Randall’s assistant insists Randall always gets on last, and especially so in this case since AT&T is about three times the size of Apple, so this time I pick up the phone and tell the assistant that he should inform Randall that when he’s ready to get his pointy head out of his ass and call me, I’ll be here waiting for his call.

So fine. We wait a bit, and he calls. He doesn’t say anything about the standoff, but I can tell he’s pissed, which is fine by me. He launches into a mumbling spiel about how Ralph de la Vega didn’t really say what all the papers are saying he said, and he was misquoted, and it was taken out of context, but I’m like, Bitch, please, guys at our level don’t get taken out of context, we write the shit out in advance and we know exactly what we’re saying when we say it and every goddamn word has been vetted and gone over by a team of flacks. So please don’t sit there like a zoo monkey throwing your own feces at me through the bars of your cage, bokay?

Then I go, Look, Randall, you’re how old — about 50? He says he’s 49. I go, Okay, so you were born in 1960, so maybe you don’t remember Meet the Beatles. Or do you? Do you remember that album? Did they have record players out there in Arkansas?

He goes, I’m from Oklahoma, and I’m like, Yeah, same thing, so anyway did you know that album? Were you aware of it? Came out in the beginning of 1964. The one with the four guys in black and white, half their faces white, half in shadow? Just four faces against a black backdrop? He says he’s familiar with the album but he thought we were getting on the phone to talk about incentivizing heavy users in order to optimize the network resources blah blah and I’m like, Dude, if you ever use the word incentivize around me again I swear I will get in my Gulfstream and fly to wherever you are and I will smash you in the face with a rock.

He sighs and says, Okay. I’m like, I’m sorry, what did you say? He says, Okay. I go, I’m sorry, but I can’t hear you. What did you say? He goes, YES! and I go, That’s better. But back to the Beatles. Now, the thing about that album was, on the day it hit the U.S. the whole world changed. Like, before that day, the world was one way, music was one way, culture was one way — and then after that day the world was never the same ever again, and as soon as you heard that album you knew that, and even if you were only nine years old, which I was, you just knew. You knew. Sales were crazy. I mean nuts. The thing was a huge smash hit. By April, twelve weeks after that album came out, the Beatles had the top five spots on the Billboard chart.

Now there was a lot of demand for that record — so much that the plant that printed the records could not keep up. Now here’s the lesson. Do you think the guys who were running Capitol Records said, Gee whiz, the kids are buying up this record at such a crazy pace that our printing plant can’t keep up — we’d better find a way to slow things down. Maybe we can create an incentive that would discourage people from buying the record. Do you think they said that? No, they did not. What they did was, they went out and found another printing plant. And another one and another one, until they could make as many records as people wanted.

Randall is like, Okay, I get your point. I’m like, You know what, I don’t think you do, because if you did, we wouldn’t be sitting here having this conversation, would we? I mean if you did understand how to do things, your guys wouldn’t be standing up at Wall Street conferences and complaining about how much traffic you’re getting. Instead, you would be running around like a fucking maniac trying to build out your fucking network and make it the best network in the world — and the only reason you would ever need to talk to me would be to thank me for creating a phone that’s so amazing that it draws people to your shit network in the first place.

Randall, baby. we’ve got a hit on our hands. We’ve got the smartphone equivalent of Meet the Beatles. It’s not like that album was the first rock album ever. It’s not like nobody ever made a band with some guitars and drums before. But it was radical. It was new. They took old forms and made them new. Same with us. We didn’t invent the smartphone or the PDA or the music player or the Web browser. We just made them better. We made them new. We changed the fucking world, Randall.

And when I say that “we” have a hit on our hands, I’m really giving you way too much credit, because let’s be honest, the success of iPhone has nothing to do with you. In fact, iPhone is a smash hit in spite of your network, not because of it. That’s how good we are here at Apple — we’re so good that even you and your team of Bell System frigtards can’t stop us. You know what it’s like being your business partner? It’s like trying to swim the English Channel with a boat anchor tied to my legs. And yes, in case you’re not following me, in that analogy, you, my friend, are the fucking boat anchor.

So let’s talk traffic. We’ve got people who love this goddamn phone so much that they’re living on it. Yes, that’s crushing your network. Yes, 3% of your users are taking up 40% of your bandwidth. You see this as a bad thing. It’s not. It’s a good thing. It’s a blessing. It’s an indication that people love what we’re doing, which means you now have a reason to go out and double or triple or quadruple your damn network capacity. Jesus! I can’t believe I’m explaining this to you. You’re in the business of selling bandwidth. That pipe is what you sell. Right now what the market is telling you is that you can sell even more! Lots more! Good Lord. The world is changing, and you’re right in the sweet spot.

While I’m ranting, let me ask you something, Randall. At the risk of sounding like Glenn Beck Jr. — what the fuck has gone wrong with our country? Used to be, we were innovators. We were leaders. We were builders. We were engineers. We were the best and brightest. We were the kind of guys who, if they were running the biggest mobile network in the U.S., would say it’s not enough to be the biggest, we also want to be the best, and once they got to be the best, they’d say, How can we get even better? What can we do to be the best in the whole fucking world? What can we do that would blow people’s fucking minds? They wouldn’t have sat around wondering about ways to fuck over people who loved their product. But then something happened. Guys like you took over the phone company and all you cared about was milking profit and paying off assholes in Congress to fuck over anyone who came along with a better idea, because even though it might be great for consumers it would  mean you and your lazy pals would have to get off your asses and start working again in order to keep up.

And not just you. Look at Big Three automakers. Same deal. Lazy, fat, slow, stupid, from the top to the bottom — everyone focused on just getting what they can in the short run and who cares what kind of piece of shit product we’re putting out. Then somehow along the way the evil motherfuckers on Wall Street got involved and became everyone’s enabler, devoting all their energy and brainpower to breaking things up and parceling them out and selling them off in pieces and then putting them back together again, and it was all about taking all this great shit that our predecessors had built and “unlocking value” which really meant finding ways to leech out whatever bit of money they could get in the short run and let the future be damned. It was all just one big swindle, and the only kind of engineering that matters anymore is financial engineering.

And now here we are. Right here in your own backyard, an American company creates a brilliant phone, and that company hands it to you, and gives you an exclusive deal to carry it — and all you guys can do is complain about how much people want to use it. You, Randall Stephenson, and your lazy stupid company — you are the problem. You are what’s wrong with this country.

I stopped, then. There was nothing on the line. Silence. I said, Randall? He goes, Yeah, I’m here. I said, Does any of that make sense? He says, Yeah, but we’re still not going to do it. See, when you run the numbers what you find is that we’re actually better off running a shitty network than making the investment to build a good one. It’s just numbers, Steve. You can’t charge enough to get a return on the investment.

Now there was silence again. This time I was the one not talking. There was this weird lump in my throat, this tightness in my chest. I had this vision of the future — a ruined empire, run by number crunchers, squalid and stupid and puffed up with phony patriotism, settling for a long slow decline.

“Okay,” I said. “Nice talking to you.” Then I hung up.

As we metabolize our way through the annual tryptophan haze, two contributions on a theme that’s been raised here before (c.f., for example,  here, here, and most fundamentally, here), two video commentaries on the current state of economic play…

First, via the ever-insightful Calculated Risk, a piece from the Versus Holiday Songbook:

And (on a very different note, but to the same end), via MonkeyBusinessBlog, a “soliloquy” from Wallstreetpro2 (alert:  after you get past the first few seconds– which are devoted to a pitch for precious metals– this video is, by reason of sustained use of profanity, not even nearly “suitable for work”… but then, it’s a holiday; we’re not at work):

While it’s easy to quibble with a detail here or there, and to fault the not-so-veiled xenophobia in the latter, it’s hard to dismiss the through-line.   But that it’s a problem of a scale befitting both the cynical nostalgia and the epic anger?  Quod erat demonstrandum.

So, what to do?

Increasingly, wise and experienced observers are arguing that financial institutions central to the economic infrastructure– banks, some insurance companies, a few huge employers (like GM and Chrysler)… any institution that government(s) can’t permit to crash– must not be allowed to become (or, in our current situation, to remain) “too big to fail.” Former IMF Chief Economist and MIT Professor Simon Johnson, Nobel Laureate Joesph Stiglitz (see also Bloomberg video here), former Federal Reserve Chairman Paul Volcker– all warn against letting institutions grow so large that they cannot be allowed to die.

Why?  Far from reducing the appetite for the kind of risky behavior that drove us into our current trough, the effective guarantee of a government bailout removes all moral hazard; if the truly-huge get to keep their winnings, but have their losses covered, why not take more and more risk?  And since the bankers and the markets all know that the guarantee is in place, the gargantuan incumbents enjoy a cost advantage– they can (as the first video reminds us) raise money more cheaply than their competitors (after all, there’s no risk)– money that they have used not to restore the flow of credit, but to acquire even more scale through acquisitions, to fund extraordinarily profitable proprietary trading…  and of course, to pay those infamous bonuses (and here).  All, while these behemoths raise their fees to their customers (see here, here, and here, for instance).

For my part, I agree– I hope that efforts like those of Vermont Senator Bernie Sanders bear some fruit.

But I fear that they neither go far enough to address inherent risk and the attendant issues of fairness, nor get at what is, at the core of our troubles, an extraordinary opportunity for growth…  and after all, a crisis is a terrible thing to waste.  More on that shortly…

A guest post from (Roughly) Daily…

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“The injunction of Jesus to love others as ourselves is an endorsement of self-interest,” Goldman’s Griffiths said Oct. 20, his voice echoing around the gold-mosaic walls of St. Paul’s Cathedral, whose 365-feet-high dome towers over the City, London’s financial district. “We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.”

-via Profit `Not Satanic,’ Barclays Says, After Goldman Invokes Jesus – Bloomberg.com.

The ever-incisive Matt Taibbi ponders this pontification:  “I didn’t believe this story was true at first — thought it had to be a spoof. But it turns out to be true. The great banks of the world have gone on a p.r. counteroffensive in Europe, and are sending spokescrooks in shiny suits into churches to persuade the masses that Christ would have approved of the latest round of obscene bonuses.”

Taibbi’s piece, which explores how it is that someone could reach this kind of conclusion (spoiler alert:  it’s to do with a self-interested understanding of “free market” ideology) is well worth reading in full.  Here, let me just reprise his all-too-apt conclusion:

There are lots of different varieties of evil in the world. On the extreme end of the spectrum you’ve probably got your Ted Bundy-at-Lake-Sammamish brand of evil, torturers and such, people who actually take pleasure in the suffering of others. You look at people like that and they defy rational explanation; you have to just chalk that up to the universe basically being a horrifying place where there’s either no God at at all or a God who’s just incompetent and/or explaining himself really, really badly.

On the other end of the spectrum, not nearly as evil comparably but still pretty bad, are people like this clown from Goldman. They lie to themselves and think up elaborate reasons to do the bad acts they were already hoping to do anyway. Some day, when historians finish peeling back all the different onion-layers of this financial disaster we’re living out right now, they’re going to find at the heart of it all this social Darwinist mantra wherein a very small group of overeducated twerps agreed to believe that stealing every last dime they could get their hands on was something other than what it looks and sounds like to the rest of us. That protective delusion was the first of the many luxuries they bought with all the money they stole, and see if it isn’t the last they agree to give up. What a bunch of assholes!

By way of context, research company TNS reports that “around half of American, British and German respondents reported that they would not be able to come up with $2,000 in 30 days from savings, borrowing, friends or family” if faced with an emergency…  and then [as discussed in the prior post here] there’s the real poverty in the world that we can and must more aggressively address.

As we recover our composure, we might recall that it was on this date in 1789 that Benjamin Franklin remarked, in a letter to Jean-Baptiste Leroy, that “in this world nothing can be said to be certain, except death and taxes.”  (In fact the first recorded utterance of that sentiment in English was by Daniel Defoe in The Political History of the Devil, 1726: “Things as certain as death and taxes, can be more firmly believed”…  before that [pace Goldman] there was Jesus:  “render unto Caesar…”  One wonders what the front-runners and mortgage pushers at the top of the financial heap will make of that…)

Uncle Ben

source: Grameen Foundation

The Grameen Bank and the micro-lending boom that it spawned didn’t set out to discriminate by gender in its lending.  Still, the preponderance of their loans are to women.  As the Grameen Foundation web site explains:

Why women? Studies have shown that women use the profits from their businesses to send their children to school, improve their families’ living conditions and nutrition, and expand their businesses. The fruits of their businesses not only make an impact on themselves and their families, but entire communities.

But as powerful a development tool as micro-finance can be, it has its limits– starting with the requirement that loans go (again quoting the Grameen site) “to start or expand very small, self-sufficient businesses.”  These entrepreneurs are necessary to eradicating poverty, but they aren’t sufficient.

The development community is realizing that land rights reform has as big– or bigger– a role to play.

As Katherine Gustafson points out on Change.org,

Women grow more than half of the world’s food and the lion’s share (as much as 80 percent) of the food in developing countries, reports the Food and Agriculture Organization of the United Nations.

Despite their majority contribution, however, women only own 2 percent of the world’s land, according to UN WomenWatch. Around the world, women are deprived of legal rights to the land they toil over day after day.

The U.S. government is stepping up to the issue.  At the recent meeting of the Clinton Global Initiative, Secretary of State Hillary Clinton promised that women would be at the heart of the international agricultural priorities of the Obama administration– efforts that include a minimum of $3.5 billion over the next three year as a contribution to the $20 billion pledged by all the G-8 nations toward strengthening global agricultural systems.   She explained,

We have seen again and again . . . that women are entrepreneurial, accountable, and practical. So women are a wise investment. And since the majority of the world’s farmers are women, it’s critical that our investments in agriculture leverage their ambition and perseverance.

And NGO’s are active as well.  Perhaps most notably, the Rural Development Institute– an organization whose pioneering land reform work has helped over 400 million people out of poverty in 40 countries over the last 40 years– is founding the Global Center for Women’s Land Rights to accelerate research and advocacy for policies that will help women gain legal access to their land.

RDI’s meticulous research into the results of their projects over the last four decades confirms that land reform does in fact lift its beneficiaries out of poverty and benefit the economies of the countries in which its undertaken.  But in fact, it benefits almost everything else in the country as well– from the environment through state of health and education to the viabllity of its democracy.

It’s when we confront the lives of those living in poverty– the 3.4 billion in this world living on $2 a day– that we realize just how much we take for granted in our own lives.  As RDI is demonstrating, it may be that the most fundamental of those “entitlements” is our ability to trust that what we own is in fact ours, and to build on that.

The eradication of poverty will take many kinds of efforts, delivered in many kinds of ways, over years.  But it is increasingly clear that the eradication of poverty most effectively starts with land rights reform– with the extension of the fundamental right to own and to build on what one owns to the 3.4 billion people around the world without it.  And that land reform starts with the women who will make it sing.

Learn more here.

source: RDI

How is it that America legislative politics have gotten so out of touch, so out of hand– so out of whack?  It’s no secret that lobbying has contorted the system.  Here, from UC Berkeley Post-Doc Fellow David Zetland, a wonderfully elegant explanation of how…

He demonstrates the “all-pay auction,” in which every bidder must pay his/her final bid, regardless of whether or not it wins.

Given the “all-pay auction” character of the donation-for-consideration system in Congress, politicians, the beneficiaries of the accumulated bidding for their favors, make out like…  er, bandits.  But citizens– and for that matter, the lobbying interests?  Not so much.

As Zetland observes (alluding to the 1980s classic War Games), the only winning strategy is not to play the game.

At the risk of sounding like the proverbial broken record, check out Change Congress.

A guest post from (Roughly Daily):

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But then, Zippy can console himself that, as recent honoree H.L. Mencken observed, “no one ever went broke underestimating the intelligence of the American public.”

As we revisit our plans to open that book store, we might recall that this is the anniversary of the premiere (in 1954) of Walt Disney’s first prime-time television program (Disneyland, on ABC; later re-titled The Wonderful World of Disney), the second longest running television franchise in the country (as measured in seasons aired), and arguably the nation’s first major full-length infomercial (…though Bonomo, The Magic Clown, which ran on NBC from 1949 to 1954– and which was essentially an advertisement for Bonomo Turkish Taffy– has a defensible rival claim to that honor).

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Your correspondent is headed for points antipodal, where, as it happens, the drains do not spiral in a different direction, but where connectivity promises to be uncertain…  consequently, for the next week or so, these missives are likely to be more roughly than daily.

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So, further to the last several posts… why aren’t more Americans protesting the pass-through of bail-out money as bonuses to the financial executives whose deeds are effectively indistinguishable for those of Madoff or Drier?  Why are we not storming the halls of health insurers who stir opposition to reform in the name of free markets, but collude with the immunity of anti-trust exemption?

Why instead are so many marching against reform, waving placards and asserting “facts”– death panels and the like– that simply are not facts?

Why are so many of us acting against our own best interests and those of our society?

Perhaps (as was so often the case) W.H. Auden nailed it:

We would rather be ruined than changed. We would rather die in our dread than climb the cross of the moment and let our illusions die.

Surely, it is time to climb.

(Thanks to my friend Houston Spencer for his reminder of the quote.)

source: Berkeley Rep

Further to “Main Streets or Mean Streets,” this from the ever-insightful Simon Johnson:

The US Chamber of Commerce is opposing the administration’s proposed Consumer Financial Protection Agency, on the grounds that it would hurt small business.  Their argument is that this agency will extend the dead hand of government into every small business.

For the Chamber of Commerce, government is the enemy of small business and should always and everywhere be fought to a standstill.  Chamber Senior Vice President (and former Fred Thompson campaign manager) Tom Collamore sees this as “advocacy on behalf of small businesses, job creators, and entrepreneurs” (quoted in the WSJ link above), and the Chamber has launched the “American Free Enterprise” campaign.

Somewhere, the Chamber’s senior leadership missed the plot.  What brought on the greatest financial crisis since the 1930s?  What has hurt, directly and indirectly, small business of all kinds to an unprecedented degree over the past 12 months?  What is killing small and medium-sized banks at a rate not seen in nearly 80 years?

It’s the behavior of the financial sector, particularly big banks and their close allies – by consistently mistreating consumers.  And the letter and spirit of the regulatory regime let them get away with it.

Some members of Congress honestly believe that consumers should have a free choice, unfettered by any kind of restriction, regarding the financial products they buy.

But spend time talking to any marketing professional or call them to testify before your committee – or just ask Mr. Collamore, who was previously at Altria.  The state of knowledge regarding how to persuade people to buy stuff is impressive, the degree of potential manipulation for consumer preferences is simply stunning, and the “innovations” in this area are not slowing down.

The scope for taking advantage of consumers in subtle ways, or outright duping them, is probably higher for finance than for any other sector.  For fairly obvious reasons, people are more likely to misunderstand credit than, say, furniture.  Ambitious executives have therefore hammered hard on borrowers.  And the implications – as you have seen and are still seeing – of systemic financial misbehavior are awful in terms of human impact and essentially without limit in terms of ultimate macroeconomic downside.

Unscrupulous Finance has brought us down and will do it again.  Those most damaged now and in the future include small and medium-sized business owners who are trying to treat customers fairly.

The Chamber of Commerce is fighting the last war (or the one before that).  Their small business membership should wake up to the current reality and press the Chamber hard to change its position before it is too late.

President Obama needs to go over the heads of the Chamber’s leadership, reaching out to and running ads directly targeted at its small business membership.  The White House has to tackle this head on, framing the issue clearly for people with the help of very clear TV and radio ads.  The Chamber of Commerce is arguing that unfettered finance is good for small business.  They are wrong.

As Tom Frank has asked, “What’s the Matter with Kansas?“

Dark clouds have gathered over small business in the U.S.– and over the prospect that it can lead us out of our economic morass in the way that it has in the past.  Two charts from Calculated Risk tell the unfortunate story:

1) Job losses (from peak pre-recession employment levels) have been worse in this recession than in any since the Great Depression:

click to enlarge

2) Those job losses have come, in this recession, much more heavily from small business (45%) than in the last recession:

click to enlarge

… Which together suggest that there’s less chance than our recent experience might suggest that small business will lead a recovery.  As Dr. Melinda Pitts of the Atlanta Fed (the author of the second chart) suggests:

Looking ahead, it’s not clear whether small businesses will continue to play their traditional role in hiring staff and helping to fuel an employment recovery. However, if the above-mentioned financial constraints [contraction in available credit; see here] are a major contributor to the disproportionately large employment contractions for very small firms, then the post-recession employment boost these firms typically provide may be less robust than in previous recoveries.

The implications of this hit to small business for the pace of a recovery are obvious and discouraging.

But in many ways more concerning are the the implications for the shape of a recovery.  As our economy begins to move up and out of the trough in which it’s mired, big companies will be playing a relatively larger role in the economy– and will be getting bigger (both relatively and absolutely).

Case in point: this morning’s New York Times reports that “Support Builds for Tax Credit to Help Hiring.”  But while one of the aims of the bipartisan sponsors of such a move is “to encourage small-business development,” it’s questionable whether it can.  Those tax credits will be useful only to companies that can find the cash to invest in new jobs that can generate profits to shelter… and in the credit-constricted environment in which we currently sit, that means companies that have either lots of cash or the “too big to fail” credibility that gives them access to debt.  In the current environment it does not mean small business.

Per “Beware the Land of the Giants…,” this is a dangerous situation; all growth is not created equal.  We live in a dynamic global market, where a nation must innovate or fall behind.  And we live in a nation in which wealth and incomes have polarized, and middle- and lower-class real wages have steadily fallen for over a decade.  Leaving aside the powerful arguments for fairness, considering only the economic, we live in a nation in which the lives of most must improve if there’s to be enough consumption to support all.

Which is all to say that, in the situation we’re in, it is not sufficient for the U.S. simply to stabilize its economy; we must reinvigorate it.  And if we’re going to re-energize, that means that we have to find ways to encourage small business, from main street shops to start-ups that aspire to grow into mega-corporations.

And that means that we need to rethink the ways that our government is “helping.”  As noted before, the one thing that the TARP funds did not do is the one thing they were meant to– re-start the flow of credit.   Thus, the continued decline in employment.

So, when the second round of “The Stimulus” comes (and it surely will, whether it’s acknowledged as that or not), it’s critical that it come with enforcement that assures that it is put to its intended purposes.

Similarly, as Congress looks to take steps that will be perceived as responsive to the pain that Americans are ever more widely feeling, it’s critical that those steps– from tax incentives to regulations– actually are responsive.

It’s not so complicated; but it’s hard.  It’s hard because the extraordinary tide of funding flowing into Washington to shape Congressional action– lobbying monies, campaign contributions– is flowing primarily from large, entrenched interests: the big, who want to get bigger.  The change that we need will come despite those efforts, not because of them.

We can, and we should, do our best to keep our Congresspeople honest and on mission.  And, given our not-very-encouraging experience of that effort, we should lean into effort’s like Larry Lessig’s Change Congress.

We are for sure going to continue to pay for the excesses of the past few decades.  The only question is whether we can convert that heavy penalty into the price of renewal.