Despite a bit of a slide today, the stock market is soaring! GDP is positive! Unemployment is down! Consumer confidence is up! Donald Trump is a proven “mentally stable genius,” right? Global statistics show that virtually every conflict-free nation in the world is experiencing GDP growth, according to the OCED, with China topping the list at 6.6%. But despite pledges to the contrary, the United States cannot get anywhere near the 3% growth rate targeted by the Trump administration. Trump may want to take credit for that 2.3% growth rate, but except for the GOP tax cut for corporations, virtually all of the policies necessary for GDP growth were in place before he took office.
Except for the US stock market, which I will discuss below, GDP – which has absorbed the share price explosion – is stabilizing and slowing. Not to mention that the GDP measures the entire economy without differentiating which segments are doing well – it is an average figure which soars even when the rich get wildly richer at the expense of everyone else, a definition of the US economy today. The extreme polarization we see in the United States, where wealth at the top one percent is accelerating at a much more rapid pace than the rest of the nation, is exaggerated and particularly pronounced, but it is a global phenomenon that reflects how wealth is generated. The OCED tells us that 82% of all the recent growth went to the world’s wealthiest one percent.
Money today follows manufacturing and resource extraction efficiencies, mostly reflected in technology upgrades (read: intelligent automation) that ordinary workers cannot afford but which is displacing them in droves. Except for top financial and engineering jobs, still much in demand, the level of work left after automation is implemented is both unstable and compensated generally at a lower level. The future for so many basic jobs, which will feel the technology pinch, is often bleak. Meanwhile, in the United States, healthcare, housing and food cost increases have more than made up for any semblance of a slight cut in individual taxes. And then there is the interest charge, which must be paid by all Americans, generated by the massive tax cut deficit.
But the trillion+ dollar give away to corporate America (that big bribe to the rich) by the most simplistic analysis has kicked the value of corporate America through the stratosphere without any concomitant guarantee of more or better jobs. I’ve already blogged on how the implementation of these efficiencies, and the economics of merging/acquiring/stock buy-backs result from all this excess corporate cash, has historically resulted in layoffs and job cutbacks. We won’t see that very much this year, but in 2019 and years following, the impact will slam us all.
Simply put, since so many corporate valuations that determine share price are based on profitability – regardless of what causes that profitability – throwing a windfall of trillion+ tax cut dollars into corporate coffers, even the expectation of that tax cut before it actually passed, by definition will always send the stock market soaring. But is a government gift a reflection of how well those companies work, their true value without regard to that tax cut? For the most part, NO. But there is one more, big variable that has to be keeping Democrats awake at night.
The biggest questions surrounding political power are oddly exemplified by the Silicon Valley, once the darling of the Democratic Party. But not only is the Silicon Valley a massive beneficiary of that GOP tax cut – one they are just beginning to enjoy – but it seems pretty clear that the Dems are beginning to question the Valley’s complicity in the plethora of fake news, the enabling of sophisticated robotic e-communications that target individual consumers based on very trackable vulnerabilities and preferences and the ability of a third party, be it Russian-enabled hackers and disinformation experts or political parties with greater technological capability and lower thresholds of moral responsibility, to influence voters rather directly. Silicon Valley mavens are on the defensive, perhaps grateful that the party in power doesn’t want these revelations any more than the CEOs of the biggest social media companies.
Is there a bizarre alignment of interests between the Trump administration and the Valley? And exactly how will this influence the Valley in the upcoming elections… the same executives who flushed that last election with massive campaign contributions to Hillary Clinton and the Democratic Party? “On Tuesday [1/23], a Washington think tank, New America, and Harvard’s Shorenstein Center on Media, Politics and Public Policy published a report [former Obama tech advisor, Clinton campaign advisor and recent Facebook exec, Dipayan Ghosh] co-wrote, asserting that technology behind digital advertising — the financial lifeblood of Facebook, Google and Twitter — has made disinformation campaigns more effective.
“‘The problems were much broader than we imagined, and it was not just about one tool or platform,’ said Mr. Ghosh, who with his co-author, Ben Scott [also a Clinton campaign advisor], worked on devising Mrs. Clinton’s tech policy platform. ‘It’s the profit model underlying the whole digital advertising system.’
“Mr. Ghosh and Mr. Scott are the latest members of the political party that more eagerly embraced Silicon Valley to sharply criticize the tech industry. Tech policy officials from the Obama administration and from Mrs. Clinton’s campaign, as well as prominent Democrats in Congress, are demanding changes from companies they had long viewed as too important and nimble for regulations…
“Karen Kornbluh, who served as Mr. Obama’s ambassador to the Organization for Economic Cooperation and Development, said that before the election, there was a view of “internet utopianism” in government. Officials looked to the internet to solve problems in education, income inequality and global democracy. They called on tech executives to help with those initiatives and hired from Google and other tech outfits to bring their expertise into the White House.
“‘So if you were championing the best things about the internet, it was easy to be disappointed that it was hijacked to subvert the very things it could foster,’ Ms. Kornbluh said. But she said few people in government were looking with a full view of how social media and other internet services posed national security, economic and other risks.
“Mr. Ghosh and Mr. Scott played a leading role in helping to create the tech-friendly policies that helped companies like Facebook and Google flourish during the Obama administration. But as more information trickled out about the role played by technology firms in Russia’s attempts to influence the presidential election, they, like many Democrats, became disillusioned.” New York Times, January 23rd.
This does seem to pit tech giants, from Facebook, Twitter and Google and even to Apple, against the Democratic Party and its obvious interests. Add this to the upcoming implementation of new and massive privacy legislation from the European Union, and it seems pretty clear that these tech companies are facing a global inquiry, one laced with anger and suspicion… attitudes perhaps justified in the name of preserving democracy. So the Democrats have to ask themselves if the political money tap from these Silicon Valley contributors will close… or worse, if it does not close, what exactly does the Valley expect in exchange. And that has to bring a smile to Mr. Trump and the entire GOP. And exactly which user has the greatest number of Twitter followers on earth? Yeah, him.
I’m Peter Dekom, and at this stage of our political reality, does making massive amounts of money now trump every other value that Americans once held dear?
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