From Big Government to Big Tech

From 2013-2017 or so when the writings of Moldbug began to gain some mainstream traction, the private sector seemed comparably anemic relative to the Bush + Obama administrations, both of whom epitomized ‘big government’, so the concept of an ‘exit’ strategy, the modern equivalent of ‘going Galt’, seemed appealing. But now fast-forward to 2021-2022 and things have to some degree flipped, with the private sector gaining power relative to the public sector.

The past century saw the continued build up of the power of the federal government, which reached an apex during 2008 financial crisis, in which the Treasury, Congress, and the Federal Reserve effectively took control of the financial sector, an overreach of power that even rivaled that of FDR. FDR introduced Social Security, the FHA, and also signed executive order 9066, which was literally unconstitutional, not unconstitutional in some abstract sense. LBJ oversaw the ‘great society’ programs and signed the Civil Rights Act of 1964, which were major expansions of federal power. Nixon created the EPA. George H.W. Bush passed the Americans with Disabilities Act of 1990, again, a great expansion of federal power that required thousands of business comply (at a significant cost). Bill Clinton in 1999 launched airstrikes against Yugoslavia (without authorization of the UN Security Council, which technically made it illegal) to possibly distract the media from his infamous sex scandal. Jr. Bush was able to start two wars and create an entire homeland security apparatus with minimal to no resistance from Congress, the courts, or the general public. The final years of Obama era saw the federal government as a force of social and economic change finally crest and then diminish to some extent, with the ACA being his crowning achievement and the most significant legislative reform in healthcare since the founding of Medicare and Medicaid in 1965, the constitutionality of which continues to be challenged and debated to this day.

I don’t think Moldbug and others foresaw the private sector pushing wokeness or being so big so fast. 10-15 years ago academia and the government had much more relative power, but how that power is shared by a burgeoning private sector and highly influential private individuals, not academics or bureaucrats. YouTube is bigger than any legacy media company. Elon Musk is possibly the most influential person alive in the ‘western world’, at least. I don’t think pundits appreciate just how big and influential these companies are, or how important and permanent this shift is. People still think that CNN is as important now as it was in 1996; it’s not. Facebook by itself can create news cycles. YouTube livestreams have greater reach than cable TV. Podcasts like Joe Rogan have a bigger audience than any late night host. Hollywood was a much bigger deal in the 90s and up to the mid 2000s, but that too has been overshadowed by platforms like YouTube. Superhero flicks will always be big draws, but it would seem movies stopped being forces of cultural change or having an indelible impact like they did in the past.

In the early 2000’s I cannot even recall there even being such a thing as a ‘celebrity businessperson’ like we see now with Musk, Bezos, Branson, or the late Steve Jobs. The closest may have been Donald Trump. Even Warren Buffett, 91, has throngs of devotees online like on Reddit, whereas in the early 2000s and the 90s hardly anyone outside of finance knew or cared about him. Livestream events of the aforementioned individuals, whether it’s rocket launches or product unveilings, get way more media coverage and views than ‘mainstream’ stuff like TV shows. Contrast today’s ‘billionaire culture’ to when Hollywood celebrities like Matt Damon, Angelina Jolie, and Ben Affleck were always in the news. Celebrities tend to have messy personal lives and are perceived as being hypocritical (such as preaching about the dangers of climate change while flying private, or using tax shelters while at the same time decrying poverty (as Bono got a lot of criticism for)), which has hurt their brands, in addition to the ‘me too’ scandal, which arose in 2017 at the same time tech billionaire wealth really began to take off. E-celebs, tech/business billionaires and millionaires are perceived as being more ‘relatable’ and meritocratic, instead of having been ‘chosen’ by Hollywood elites and out of touch (you will never see Matt Damon do a YouTube livestream).

There is just so much wealth created over the past decade, since the bottom of the 2008 financial crisis, than any other period in history, even after adjusting for inflation. There are at least 5 companies worth $1 trillion, all tech companies. A decade ago it seemed inconceivable that even a single company would be worth a trillion , yet now Apple and Amazon are closing in on $2 trillion, and Microsoft is worth $2 trillion. It’s just nuts. From 2001-207 or so, it seemed like there was not much wealth being created. Compared to today, everything was so downgraded and ‘poor’. MMOGs were a huge deal (like WoW and Eve) at the time, but hardly anyone was getting rich. By contrast, today, mid to high-6-figure tech/FAANG salaries have become the expectation, and valuations of $10+ billion for tech companies are a dime a dozen. Entire economies now revolve around gaming, digital objects, online streaming and content creation, etc. that a decade ago didn’t exist or was much smaller.

In 2007 the richest man in the world was a Mexican, Carlos Slim, whose net worth briefly topped $50 billion, as well as a smattering of Saudi oil heirs and Russian tycoons, and of course Bill Gates. Now there are probably at least five people whose net worth exceeds $100 billion, all in tech, and many others also in tech in the top 50, along with Warren Buffett. As for Carlos Slim, he’s fallen to #16. The richest Saudi, Prince Alwaleed, ranks at ‘only’ 83. More billionaires were probably created over the past 5 years than probably the last 50 combined.

So what was the tipping point that saw this wealth creation in overdrive, especially in tech? If I had to guess, the trigger was Microsoft on October, 24, 2007, making a $250 million investment in Facebook, valuing the social network at $16 billion just a little over three years after its founding, which no one saw coming (the assumption was that Facebook would probably meet a similar fate as Myspace, or that it was just a niche). From that point on, everything just snowballed. It hasn’t stopped. The realization was that eyeballs are worth a lot of money, and that networks and scale matter a lot. Then 2013 onwards saw the era of Elon Musk, who unlike Zuckerberg is actually likable. And then Jeff Bezos, too, who proved also that third-party online commerce and cloud hosting could be multi-trillion dollar industries after so many tried and failed in the 90s and early 2000s.

The period from around 2002-2012 or so saw considerable media, business, and public interest in behavioral economics and human psychology. Academics and journalists such as such as Dan Ariely (Predictably Irrational (2008), The Upside of Irrationality (2010)), Richard Thaler and Cass R. Sunstein (Nudge (2008)), Malcolm Gladwell (Outliers (2008), Blink (2005)), Steven Levitt, Stephen J. Dubner (Freakonomics (2005)), Nassim Taleb (The Black Swan (2007)), and Daniel Kahneman (Thinking Fast and Slow (2011)) saw a surge in popularity in the 2000s, along with the rise of TED talks. Entire publishing, consulting, speaking careers were built around proving how humans were irrational. The combination of the 2008 financial crisis and Great Recession, the Enron and WorldCom accounting scandals, 911, and the dotcom bubble, all compressed into just a decade, called into doubt many of the assumptions of rationality and human behavior that had been taken for granted and seemingly failed, so alternative explanations were sought.

But right now academia is fighting for relevance, due a combination of a backlash to CRT/wokeness, concerns about a student loan bubble/crisis, budget cuts, a shift away from the humanities and into STEM, and a replication crisis that threatens of undo decades of research, particularly pertaining to behavioral psychology (which a decade ago had given rise to so many careers and TED talks, but now the research appears to have been built on a foundation of sand). TED talks still exist, but they don’t seem to carry as much cultural currency compared to 8 years ago. People have grown cynical of pop psychology too (it would seem as if there is more criticism of Gladwell’s books, such as the so-called ‘10,000 hours rule’ he popularized in Outliers being wrong, than praise). With the 2008 crisis a distant memory and the post-2009 bull market, economic expansion, and housing boom the biggest and longest ever, it would seem as if the status quo has returned and alternative theories are not needed. The period from 2000-2010 can be treated as an outlier in the otherwise unstoppable march of capitalism and asset prices, not some fundamentally new paradigm shift that so many predicted would emerge.

But Biden, like Trump, cannot get much done. Unlike past crisis, there was no national response to Covid (only state-wide action and stimulus, which is reactionary instead of proactive [1]), suggestive of the diminished power of the federal government to force societal change. Such roles, particularly for the left, have now been supplanted by the rapidly growing, immensely profitable, more efficient private sector and private individuals. Social media companies, hosting providers, payment processors, etc. have taken it upon themselves to police content even though there is no law requiring them to do so.

For example, on YouTube below is a screenshot of Covid video recommendations on my account even though YouTube in no way derives revenue from this, nor did I ever watch a Covid video (or anything health related), yet YouTube keeps recommending me them.

Somehow YouTube has decided that even at the cost of sacrificing potential revenue, that that this scarce and valuable frontpage real estate on my YouTube homepage needs to be devoted to Covid videos.

Millions of people rely on Google, Facebook, PayPal, Twitter and other platforms for business and personal life. With a single keystroke or by tripping some sort of algorithmic wire, year’s worth of connections and content can be instantly erased with zero hope of recourse/appeal. It happens sooo often (google “banned from _____”, where _____ is any large social media company or platform.) Arbitration is expensive and time-consuming and does not in any way rectify such disputes in a way that benefits the wrongly banned. What we need are constitutionally-protected rights of social media account holders, given that social media is now a major part of speech. [2]

So, the techno-commercialist society Moldbug and others envisioned is being realized, but not in the way he and others wanted or hoped. My prediction is that the current trend of woke capitalism will likely continue uninterrupted for a long time to come, maybe forever (or until there is a sufficiently bad crisis as to disrupt the status quo, but it may be such a long time for that to happen that for all intents and purposes it may as well be forever). I don’t see anything that can stand in its way. I think it sounded good in theory replacing government inefficiency with private sector efficiency, until these companies decided that making tons of money and enriching their founders and investors beyond their wildest dreams was not good enough; they had to control how information is shared, who is allowed to associate with whom, and at that point, I think we have to step back and reconsider if this is the future we want.

Related to the concept of neo-monarchism, what about ‘noblesse oblige’? A purely algorithmic society, in which people’s fates are out of their control and in the hands of dispassionate, huge companies and algorithms, leaves no from for forgiveness, no room for error, and no room for even market-based solutions; all you have done is replace one faceless government bureaucracy with a privatized one.

[1] Moldbug has repeatably argued, that similar to China, more drastic action at the federal level should have been taken to contain Covid, and that the failure to do anything made the situation worse. I dunno how effective this would have been (given the poor track record of quarantines/shutdowns worldwide at containing Covid, probably not that effective).

[2] One solution I have pondered is the U.S. government creating its own versions of Facebook, YouTube, Twitter, etc. Because these sites would be government property and constitute a ‘public space’, 1st Amendments rights for all account holders (tied to one’s ID) would be upheld. Because at this point, limiting the domain of public space to just the physical is insufficient given how important the internet is. So every American would be allowed a single account on each of these sites, effectively acting as an extension of one’s own personhood/identity, sorta like Facebook’s meta concept.

A free-market solution is that account holders can pay a fee to lessen the likelihood of being banned. I for example would gladly pay a good amount of money to ensure that my accounts will not be subject to the whims of capricious algos.

Alt-tech platforms have gained some traction of the years, but they pale in comparison, in terms of users, to the platforms they seek to imitate. All of the combined YouTube alternatives–Rumble, Odyssey, etc.–combined are just a tiny fraction of the popularity of YouTube. It’s also more work having to sync content between many tiny platforms, compared to just doing it once on YouTube or Twitter.

1 comment

  1. You are kind of agreeing with what I’ve been saying for awhile. Namely, that we are entering a period where racial and sexual quotas are moving up the food chain and that this will begin to affect the quality and performance of major US companies. It will not just be social media. It will begin to affect all sectors.

    Employees cannot criticize non-white and women senior management so the feedback loop breaks down. They do get feedback but it’s the wrong kind. It’s not about producing a quality product that people are willing to pay money for but what the fanatical anti-westerners demand, and their opponents are smeared as racist and sexist.

    It’s not rational. This is hysteria. Probably because modern liberalism cannot deal with reality and this produces severe neurosis, e.g., the inability to resolve real life contradictions.

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