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20150926 Internet is not the answer



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The main idea of this book derived from author’s disappointment with Internet as the new media of exchange for goods, services, and ideas. Instead of mass prosperity with dramatic increase of small business included into global market place Internet brought us a few big companies that dominate various areas of internet such as Google for search and advertisement or Amazon for online retail. The great increase in productivity and decrease in transaction costs brought in by Internet caused decrease in jobs for middle class and consequentially change in population breakdown from haves a lot, haves quite a bit, and have nothings into billionaires and nobodies. The remedy proposed is trivial: government regulation and tax increases.


Preface: The Question

At the beginning author catalogues all things good that Internet was supposed to promote: more and better jobs via self-employment with access to global markets, more tolerance through social network, open and direct global communication between people from different countries, cultures, and dramatically decreased costs of business transactions and communication. Then he plainly affirms that none of this happened as predicted, instead Internet brought lots of bad things like loss of jobs to global market, loss of privacy, global monopolies, and such. In short: the Internet is not the answer.


The introduction starts with description of the Battery club in San Francisco that represents a special case of culture where young billionaires pretend to be non-elite at the same time boldly waiving their elite credentials. From here author makes his point that after we build the Internet, the Internet start rebuilding us, meaning society and its mores.


This chapter is very short retelling of the history of Internet creation.

Chapter Two THE MONEY

The main point of this chapter is to demonstrate that far from opening era of distributed capitalism, the Internet created much more concentrated global capitalism with a few monopolies like Google and Amazon outcompeting everybody else in monetizing Internet and creating world of a superrich fraction of 1% versus impoverished everybody else with practically very few in the middle.


This is discussion of disappearing of middle class using example of what used to be super global corporation, but currently bankrupt Kodak. In the old glory days it employed hundreds of thousands of middle class people who did imaging services for billions of consumers. Now much better imagining services at much lower cost are provided by just a few dozens of employees of Internet companies with bulk of revenues going not to rich owners of Kodak and its middle class multitudes of employees, but to superrich owners of internet companies and practically nobody else.


This is a more detailed look at Instagram as one of substitutes of Kodak in the new era. This company provides instant computer enhanced imagining that allow people to get better than reality images of themselves and everything they would like to imagine. Author seems to believe that such enhancement causes serious damage to out personalities and to overall culture pushing out reality, substituting it with dreams, and pushing people into narcissism.


This chapter is based on author experience as music lover in big records stores of London and then as start up Internet Company owner in music records industry. The big hope of many such companies over time turned into disappointment and frustration. This experience was very tough because initial hope that Internet will expand music business did not materialized. Just the opposite, while consumption of music hugely increased it did not created similar revenues flow for multitude of companies, but rather dramatically decreased amount of money paid for music due to simplicity of legal and/or illegal distribution that become unstoppable because of Internet.


This is continuation of discussion of new business model in distribution of all things convertible to digital form. The main point here is that instead of old Pareto rule when 20% of companies produce 80% of everything, digitalization turned into 1% producing 99% with corresponding loss of jobs and business and thousands middle class business owners with millions of employees loosing business to a dozen of billionaires with a couple hundreds employees at most. At the end author points out that with 3D printing even production of all thing material could follow the path of music and books.

Chapter Seven CRYSTAL MAN

This chapter looks at lost of privacy due to Internet and powerful super databases, comparing it to the old East German Stasi that tried to control people with a primitive technology of 1970s. It also brings in Jeremy Bentham and his idea of Panopticon with everybody always being under surveillance, pointing out that that’s where we are getting with companies and government tracing everybody all the time.

Chapter Eight EPIC FAIL

Here author expresses his bitterness directed at all these successful billionaires who made fortune in Internet in their 20s and have gall to promote failure as precondition for success. He obviously believes and probably correctly that failure is far from reliable path to success, but rather station in itself and quite often the final station for many. The final discussion in this chapter is about kind of secession practiced by rich and powerful who practically separate themselves from general population in isolated super luxurious world, leaving everybody else struggle in devastated world of middle class practically destroyed by Internet and its super cheap services.

Conclusion THE ANSWER

As one could expect, author sees the answer in big and powerful government that will stop libertarian juggernaut of Internet and tax superrich 1% into decency, distributing resources to 99% who were hurt by Internet.


I found factual part of this book that is describing fate of musical industry, author interactions in Silicon Valley interesting and curious, but analytical part is missing a lot. Author spends lots of space lamenting losses of middle class from disappearance of old style monopolies like Kodak and its hundred of thousands of jobs, but pays very little on other side of equation: dramatic decrease of prices and increase in functionality for all kinds of imagining service not available before that improve lives of everybody who is using these services including middle and lower classes. One thing I completely agree with author thou, is that Internet is not the Answer. I believe it is just a tool, nothing more and nothing less and tools change society, but do not define how it would change. Finally ideal of big government, big regulation, and big taxes, in my opinion is even less of an answer than Internet. This ideal is nothing more than a way to decrease quality of live for everybody except of a small cadre of politicians and bureaucrats, which would not help middle class in any way, shape, or form. The evil billionaires at least produced real goods and services that made them billionaires, while bureaucrats and politicians are purely parasitic creatures who only impede production of goods and services.

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