Tuesday, June 17th, 2014

Marc Andreessen and the Inevitability of Catastrophic Ideas


Greed is right, greed works… Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much. — Michael Douglas in the character of Gordon Gekko, in Wall Street

Gordon Gekko was meant to be a villain, but he became a plutocratic folk hero. There has been greed enough in the last thirty-seven years, surely, to have transformed the USA into a positive utopia according to the Gekko formula, with prosperity for all.

Has the USA been saved? LOL nope.

Whether promulgated as supply-side or trickle-down economics—or the Objectivo-duncianism promoted over Twitter by Netscape founder and rabidly successful venture capitalist Marc Andreessen, it’s all window dressing for what John Kenneth Galbraith used to call "the horse-and-sparrow theory" as he described in the New York Review of Books in 1982:

Mr. David Stockman [director of OMB under Ronald Reagan] has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows.

There’s little evidence that this theory has ever worked or can ever work.

We have had almost forty years of "free markets"—markets that are not merely open, but pointedly and performatively unaccountable—and here is what we have to show for it: Median household income has hardly grown despite huge increases in productivity, with wages as a share of GDP—the number we ought to be focusing on—falling to record lows, while an extremely small portion of the population has become inordinately, obscenely richer. But the triumphalists of Silicon Valley, their insulated worldview informed by an unholy stew of TED Talks, Lean In and Atlas Shrugged, appear to think otherwise.

Though he is a Silicon Valley mogul through and through, Marc Andreessen is no Tom Perkins. As tech zillionaires go, he seems to be one of the more decent ones—a nice guy, it is said, with a genuine interest in philanthropy. His wife, Laura (herself the daughter of a billionaire), teaches classes in philanthropy at Stanford. All six of the partners at Andreessen-Horowitz have pledged to give away at least half the proceeds of their venture capital careers in their lifetimes; the 2012 announcement of their pledge was paired with a gift of $1 million to six different charities. Still, charity, even in sizable amounts of it, does not inherently absolve the world’s zillionaires of criticism, particularly when it is evident that their taking played such a dramatic role in getting us into this mess in the first place. What if they took less, instead? Where are the tycoons who "give back" in the form of wages and benefits for their employees? This observation is to make the following point: What you will never find a modern plutocrat doing is promulgating any "innovation" that will curtail their own privileges.

In recent days, Andreessen has taken to Twitter to hold forth on socioeconomic matters in several series of tweets, about a hundred in total; they are hair-raising, particularly the seventeen-part series about how "tech innovation helps the poor." The problems that the poor face are deep and structural, but the rich like Andreesseen show little interest in fixing them, preferring to trumpet the virtues of beautiful Band-Aids instead. The poor need a real path to educational achievement to even hope to escape their poverty; Andreessen and his cohort proffer MOOCs. The poor need a way to move around cities to get to far-flung jobs; Elon Musk is talking about hyperlooping between SF and LA for his buddies.

It's difficult to figure out what is meant here, exactly. Is this just plain warmed-over Objectivism, straight from the decayed paps of Ayn Rand? Or what? Marc Andreessen is the direct beneficiary of "technology innovation" to the tune of several hundred million dollars. And yet, he claims, the poor have somehow been helped still more than he.

Here's the rest of the June 4th series:

2/This sounds like it must be a controversial and politically charged position, and yet it is not — it flows from basic economics.

3/The best way to understand this is by historical example: What the rich used to have and what the poor now have, due to tech innovation.

4/Rich have always been able to pay servants to wash dishes; due to tech change, now most US homes have automatic dishwashers.

5/Rich have always been able to pay servants to wash and dry clothes; now most US homes have automated washers and dryers.

6/Rich were able to afford to have fresh ice delivered daily to make iceboxes work; now all American homes have refrigerators.

7/Rich were always able to afford to hire musicians to play in their homes; now audio equipment and digital music are cheap for everyone.

8/At one point only the rich could pay for horses, buggies, stables, coachmen — now cars are easily affordable by almost everyone in West.

9/Go far enough back, only rich could afford hand-copied books or to employ scribes; printing press made books accessible to the poor.

10/Technology innovation is the main process by which luxury items become produced, packaged, and made affordable for everyone.

11/Opposing tech innovation is punishing the poor by slowing the process by which they get things previously only affordable to the rich.

12/And, tech innovation is the process by which everyone in the world will be able to afford things that are plentiful in the West today.

13/A great lens on this is the US HUD housing survey; shows rapid material progress of poor Americans quite clearly. http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2010/HUDNo.10-138

14/Note that consumer costs rising most quickly (education, health care) have least tech innovation and least market competition.

15/This is Baumol's Cost Disease: http://www.amazon.com/The-Cost-Disease-Computers-Cheaper/dp/0300179286/ref=pd_sim_sbs_b_2?ie=UTF8&refRID=05X070VAH6JAR7SFFY4H http://en.wikipedia.org/wiki/Baumol's_cost_disease http://www.economist.com/node/21563714

16/The way to make health care and education more affordable for more people is more tech innovation, not less. Push onto tech price curve.

17/if you object "not ALL poor can afford product X": The answer is more tech innovation to drive price down further, in every case.

In these few brief remarks, Andreessen manages to mention the "rich" nine times, and the "poor," seven; "people," just once, and "human," not at all. What the supply-side formula really does is provide the rich with a crucial delusion: It creates two kinds of people, a superior and an inferior kind, so that the rich can then situate themselves in the higher, better, more important class, separate from the lower. This absolves them of any real responsibility even to think about those lesser ones as equals, as fellow human beings—because just by their regular doings, their entrepreneurial drive, they are magically, effortlessly helping The Poor.

Sixteen or seventeen percent of Americans are living in poverty, the 2014 federal guideline being $23,850 for a family of four. The millions living in circumstances this reduced do not buy much in the way of "products". They can't. (Payday loans! I guess they can buy.)

The concrete benefits Andreessen claims the poor are receiving because of "technology innovation," according to his various tweets of June 4th, are as follows:

• dishwashers

• washers and dryers

• refrigerators

• audio equipment and digital music

• cars

• printed books

That doesn’t quite seem to add up to "the good life," does it? Low-income Americans may have the use of kitchen equipment in their rented apartments, (more rarely a washer or dryer) but the cost of gas and insurance makes it impossible for many to drive even a used car. (The HUD survey Andreessen cites doesn't count mobile homes or trailers.) Used audio equipment is plentiful at thrift shops (though maybe not iPods or even MP3 players), okay. It’s hard to avoid the impression that Andreessen's "poor" are in fact some lost, idealized version of the consumer middle class.

The final entry, "printed books" is the most illuminating. Though Gutenberg and co. had driven the price of books down substantially in the fifteenth century, they were still luxury objects for a long time after that.

An equally significant "technology innovation" with respect to the spread of literacy and books is the rise of the public lending library in the eighteenth and nineteenth centuries, in which communities pooled their resources in order to make new books—luxuries then, as they are still—available to all. (In the United States, Andrew Carnegie granted funds to build more than 1,600 libraries, all contingent, though, on the community's willingness to raise taxes to share the cost.) We still use this method of disseminating books and information to the poorest Americans. Nobody ever got rich as a result, either.

It's not false to say that some crumbs perforce will fall from the tables of the rich onto those of the poor. It in no way follows, however, that that is the way bread should be shared.

An education is not a refrigerator, nor is it a dishwasher; it is not a "product" to "Push onto tech price curve". It should be free to anyone capable of benefiting from it—via the investment of our pooled resources—not merely "more affordable." The Silicon Valley notion that you can deliver education through a vending machine is of a piece with Andreessen's two-dimensional view of socioeconomics. So easy! Program a MOOC, film a professor, test the student and see what his score is afterward.

He was educated in public schools, and he should be ashamed of himself. Though in some ways I can’t really blame Andreessen or his cohort for thinking as he does: He’s a meritocrat, simply carrying out the programming of American cultural institutions.

Michael Young warned against the rise of people like Marc Andreessen in his 1958 satire, Rise of the Meritocracy, and all his predictions came exactly true, as he lamented in writing in the Guardian in 2001:

If meritocrats believe, as more and more of them are encouraged to, that their advancement comes from their own merits, they can feel they deserve whatever they can get.

They can be insufferably smug, much more so than the people who knew they had achieved advancement not on their own merit but because they were, as somebody's son or daughter, the beneficiaries of nepotism. The newcomers can actually believe they have morality on their side.

So assured have the elite become that there is almost no block on the rewards they arrogate to themselves.

One of the worst misapprehensions in Andreessen's worldview is that creativity and inventiveness and "progress" are tied exclusively to the drive to create wealth. They aren’t.

A lot of the twentieth century’s most valuable inventions and discoveries—GPS systems, the Internet—came straight from university and government researchers on salary. Not from people trying to get rich. Some, like Andreessen, have used the university or government resources made available to them and taken their findings to private industry. Many do not take that route. The scientists and astronauts of the Apollo missions at the time of the lunar landing were worshipped in America, though none were in it for the money; Albert Einstein did not get rich from his discoveries; Jonas Salk gave his to the world for free. It’s only very recently that making money was so tightly sutured to the idea of “innovation," as if nobody would bother to try or make anything if there weren't a potential fortune in it—which would come as news to Tim Berners-Lee.

New Yorker staff writer and Harvard professor Jill Lepore set out to challenge the inevitability of “disruption,” what Andreessen might call the principal tool of "tech innovation.” Citing the remarks of venture capitalist Josh Linkner, who said, "[T]he next generation of innovators… are dead-focused on eating your lunch," Lepore remarked:

his job appears to be to convince a generation of people who want to do good to learn, instead, remorselessness. Forget rules, obligations, your conscience, loyalty, a sense of the commonweal. If you start a business and it succeeds, Linkner advises, sell it and take the cash. Don’t look back. Never pause. Disrupt or be disrupted.

Far from being a benefit to society or torch-bearers for "progress," there is ample evidence that the "entrepreneurial spirit," for which read the drive to create wealth, in the hypertrophied, monopolistic, megalomaniacal incarnation in which we currently find it in Silicon Valley, has been and continues to be terrible for the future of American business, society and culture.

There have been two very good rebuttals to Marc Andreessen in recent days: one from Andrew Leonard at Salon, and the other from Sam Biddle at Valleywag.

Leonard takes Andreessen's economic argument apart clearly and neatly. But it's Biddle's piece that begins to explain what's really gone wrong in Silicon Valley (and on Wall Street, and perhaps in the halls of power in general.)

In conclusion, [Andreessen suggests that] the fact that we aren't all living in mud huts or clinging to the side of crevasses, babies bundled in animal pelts, is a feat of Silicon Valley. The affordability of a smartphone or a television has everything to do with uncritical, unwavering faith in "tech innovation" and some childish, abstract notion of industrial progress. It has absolutely nothing to do with, say, the legion of Chinese laborers working under deplorable conditions. Ignore the fact that that owning a dishwasher doesn't mean your position relative to the rest of society is anything resembling good or fair—just be glad your standard of living has increased since the 17th century.

Not two weeks later, in response to Lepore’s piece, Andreessen posted a since-deleted tweet:

What does Jill Lepore, Ph.D. in American Studies from Yale, think about quantum entanglement?

The classification of human inquiry into the Sciences and the Humanities is a rough but useful one. In essence, the part that concerns itself with what can be measured, we call "science," and that concerned with what cannot be measured, we call "the humanities”. The former field of study provides us with the means to operate more effectively in the material world. The latter (and the latter alone) grants us the ability to judge what goes on out there. This is a question of balance. The study of the humanities is for judgement, and it’s judgement that our age is sorely lacking. We seem to have forgotten that we even need it.

These two ways of looking at the world and considering our actions therein are like the right and the left hand of human consciousness. It's far easier to navigate the world with the full use of both. But the irrelevance of the humanities is trumpeted through the media on a daily basis. We live in a scientific age, we are assured. Everything must be tallied, measured, "explained" (LOL until I die a thousand times) with a chart or a bunch of incomprehensible psychedelic blobs on an MRI scan. We no longer need the fuzzy, meaningless mumbo-jumbo of philosophy or history, or the airy-fairy study of literature, impractical ivory tower disciplines for people who “don’t live in the real world”!

This conviction is widespread, with the results that you see all around you.

Having apparently determined that the Scientific hand is superior to the other one, having determined that "practical" considerations demand that we must judge the whole of human progress by means of GDP, our era finds us trying to do everything one-handed. In the manner, in short, of Chairman Marc. (Thank god he's not in charge of agriculture!)

Those affiliated with the humanities—who interest themselves in all the things that can't be measured, but must be judged instead, like moral, aesthetic and philosophical questions—are experiencing a daily low-grade fever of dissatisfaction (or generalized rage, in the case of Sam Biddle) as we are daily sold on the inevitability of catastrophic ideas. In 2003, Donald Rumsfeld told a reporter that the OMB had estimated that the Iraq War would cost something less than $50 billion—the total sum, to be shared by the US and its allies. There would be "smart bombs," plans laid by expert warmongerers, all kinds of precision.

None of this persuaded the people who'd read their history and learned about the politics, who were warning against the likelihood of disaster and of civil war and the emboldening of extremists, and who marched in their millions (many, many millions) in the streets of the world's capital cities in early 2003. So it rankles in a particular way to see that the true cost of the Iraq War topped $2 trillion not long ago.

What is the study of humanities for? It's to prevent this. To apply the lessons of history, and consider the possible costs to the future. To consider not only what will profit us but what will be right for us to do, and why. Andreessen, a dyed-in-the-wool measurer and chart-monger if there ever was one, is a man who would never even dream of a just world, where all would sit at the same table. He is the living example of what is lost when we value things only through the money they represent.

Maria Bustillos is a writer and critic in Los Angeles.

Photo by Fortune Live Media

5 Comments / Post A Comment

Moff (#28)

Yeah, McLuhan makes the point about how the dishwasher and vacuum were supposed to be labor-saving devices, but actually would ultimately increase the labor of women who had previously used hired help. And by sort of atomizing everyone into full responsibility for their own labor, technologies like those have also dissolved a lot of the fabric of basic, mundane human contact — last week I talked to a woman who'd just retired after 22 years in banking, who has all these close relationships with her customers, and that's just not a thing that happens so much anymore, thanks to ATMs and the web. (Samuel R. Delany makes some very worthwhile points related to all this in the second half of Times Square Red, Times Square Blue, easily the most compelling case you'll ever read for why the NYC porno theaters were a greater social good than the touristy landscape that displaced them.)

At the end of the day, building a world where people get along better (in every way) inevitably comes down to getting along with people, not reducing their role in the equation, whether you do so with a machine or software or a system.

KarenUhOh (#19)

I return to this favored homily:

We are living in the future
I'll tell you how I know
I read it in the paper
Fifteen years ago
We're all driving rocket ships
And talking with our minds
And wearing turquoise jewelry
And standing in soup lines.

hershmire (#233,671)

I don't think YOU understand, Maria. There are no spots on my dishes. Do you hear me? NO. SPOTS.

Ralph Haygood (#13,154)

As usual with such "self-made" men, Marc Andreesen owes his wealth to being in the right place at the right time. In his case, that consisted of hanging around with Jim Clark, the already-rich founder of Silicon Graphics, circa 1994. Irrational exuberance among investors – the dot-com bubble – also played a large role. See Michael Lewis's book "The new new thing" for an entertaining account.

Andreesen is arguably less contemptible than most of his fellow plutocrats, having at one time been at least a competent programmer. Still, his lack of self-awareness is breathtaking and typical.

Here's a darkly amusing passage from Lewis: "The speed with which Clark had made himself and a lot of other engineers rich created new forces of greed and fear in Silicon Valley. Microsoft was twelve years old before people started talking about Microsoft millionaires; Netscape was one and a half. Up until then the typical engineer's decision about where to work turned on old-fashioned considerations, like salary and benefits and the inherent technical interest of the work. Suddenly, all of these were overshadowed by stock options. The engineers who went to work for Netscape were no different from you. And yet…they – not you! – were getting rich. Worse, they were the B team. The A teams of engineering had been, in general, too well treated by their companies to take a flier on what appeared, from a distance, a doubtful new venture. Netscape ushered in an age of doubtful new ventures. Whether he liked it or not, every day he went to work the engineer was making a huge financial gamble. Silicon Valley laid itself out before him like one giant high-stakes roulette table, and the engineer had to decide on which number he should place his services. Guess wrong and he'd miss the boom; guess right and he'd be rich."

NeonTrotsky (#2,249)

If Andreesson believes that since many poor people in the U.S. own appliances and entertainment devices, then they're not *really* poor, it follows under his conception that Communist Czechoslovakia in the 1970s or 1980s–where virtually every household owned a refrigerator/TV/radio while virtually none had a generation before–must have been a veritable paradise. And to think it accomplished this with one of the world's lowest levels of income inequality!

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