If only we’d seen this before the election….

The White House is floating the idea of substantial reductions in Social Security payments. How they reconcile this with their “crisis” and privatization program is impossible to imagine, but basically even if the changes President Bush seeks are implemented, we’re on our own (as if today’s payments are a living retirement).

From the Wall Street Journal:

From: Wehner, Peter H.

Subject: Some Thoughts on Social Security

I wanted to provide to you our latest thinking (not for attribution) on Social Security reform.

I don’t need to tell you that this will be one of the most important conservative undertakings of modern times. If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever. The scope and scale of this endeavor are hard to overestimate.

Let me tell you first what our plans are in terms of sequencing and political strategy. We will focus on Social Security immediately in this new year. Our strategy will probably include speeches early this month to establish an important premise: the current system is heading for an iceberg. The notion that younger workers will receive anything like the benefits they have been promised is fiction, unless significant reforms are undertaken. We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course. That reality needs to be seared into the public consciousness; it is the pre-condition to authentic reform.

Given that, our aim is to introduce market reforms in Social Security and make the system permanently solvent and sustainable.

There’s more to the memo and you should read it. In short, the average person is now on their own, screwed as far as the programs that used to provide some help in retirement. The Bush administration is going into high gear to fuck the people’s programs before they leave office, if they ever leave office.

From 1994: Factory To Consumer By Network?

This is from the July 1994 issue of Digital Media, the newsletter I ran back in the mid-90s. I mentioned this piece in my Red Herring posting yesterday.

Factory To Consumer By Network?

Nolan Bushnell prophesies a doubtful future devoid of retail outlets



Nolan Bushnell’s always had strong beliefs. He charted the future of a $7.5 billion interactive game business when he founded Atari in 1972. Since then, he’s probed unsuccessfully for the font of a new interactive entertainment industry. This year he was back at Digital World with some radical ideas about the future of retailing.

Contrary to the cautious tone of Digital World’s many speakers, he projects rapid deployment of interactive networks, and equally fast adoption of technology by consumers hungry for direct access to discounted products. Bushnell believes that the traditional retailer will soon by wiped out by discount shopping via digital networks.

“I think it is going to happen so easily, particularly in the very, very large areas where it’s cheap,” Bushnell said of two-way, broadband networking. “But fundamentally, I think the TV and the computer become also tremendously irrelevant.”

After the network and home information appliances are identified and perfected comes the next step, one presaged by Bushnell’s entrepreneurial investments in interactivity: Pizza Time Theatre Inc., the pizza-and-video concept that failed in 1984 and his campaign to bring toymaker Hasbro onto the digital gaming scene in the mid-eighties. Networked distribution of products will result in an all-out assault on retail outlets.

“Just like what has happened to the toy business in the past 20 years, i.e., there used to be a huge jobber and distribution environment,” he told the Digital World audience, “today, if you’re a toy manufacturer, you sell directly … to retailers. Directly. No middleman allowed. In fact, WalMart doesn’t even want the manufacturers to go through manufacturers’ representatives. Today’s manufacturers are telling retailers, ‘Come to us directly instead of giving the rep three percent; we want it’,” Bushnell said.

The trends eroding the distribution ladder will continue until, at last, only the consumer and manufacturer are left, he said. That rather barren economic landscape creates new pressures on companies to develop product demonstration centers, where consumers will go to get hands-on experience before buying. Retailers, who will be unable to compete on price, because of the advertising and other overhead costs, will retire to the sidelines.

“As we approach a more perfect information society, the economic model collapses into ‘from-manufacturer-to-consumer’,” said Bushnell. “I don’t believe there are going to be places in the middle for a tremendous amount of shopping fun and games. I believe that’s all going to have to be provided as part of the transport structure … supplied by the manufacturer, because only the manufacturer will be able to control pricing.”

Bushnell said the trend was nearly inescapable. Even if a retailer can create an effective “entertainment concept,” which he said is critical to commercial success these days, it won’t be able to compete with manufacturers who put their product catalogs online. Not even the home shopping channels will be safe from the onslaught of technology, since their networks depend on huge profit margins for survival.

“The minute you decide on a product you say, ‘I am now going to unleash my product Archie to find the cheapest price,” Bushnell said, describing a simple search mechanism that would connect the buyer to the the cheapest seller.

NO PROFIT FOR ADVERTISERS

“I believe that a tremendous amount of shopping that goes on through the newspapers is price shopping,” Bushnell said. “Price becomes particularly important when you’re talking about grocery stores and some of those other areas.”

“The problem is, how does the advertiser get paid when there’s someone out there who [can sell] the product … for [a] five percent [profit]? Five percent just covers overhead, it doesn’t cover advertising costs,” Bushnell said. “[Retailers] will advertise, advertising will create demand [and that] demand will go to the low-cost producer who doesn’t advertise. There’s a disconnect.”

Bushnell’s argument is an intriguing one, but it is built on an overly generalized view of consumer behavior. For example, examinations of technology adoption in corporations point to increased, rather than decreased, interaction between the parties in an electronic relationship. It seems that electronic markets will actually require greater retail participation in the sales cycle, because consumers will depend upon the human salesperson to interpret the increased information available to them.

Moreover, value added through personal support for the customer through a local business is substantial, and will probably be more important in the information age. Consider the immense success of Nike Corp., which maintains a large product support force known as the “Ekins.” This fit lot of tanned, outdoorsy young people travel the country training shoe retailers to sell the special features of the company’s shoes. The Ekins’ personal appearance and style reinforce the Nike marketing messsage, which emphasizes the purity of spirit in athletic attainment.

A retail experience that includes a wide selection of products and informed salespeople who help make sense of choices looks more powerful than the allure of discounts offered to the consumer via digital networks. As products become more complex and choices more varied, companies benefit from skilled retail representation. Look at computer companies: They depend on extensive training for computer resellers and system integrators, who in turn pass that knowledge value along to consumers.

Likewise, Bushnell’s analysis of the importance of discounting runs contrary to the findings of several recent studies.

Even if manufacturer trade discounting has grown from $12 billion to more than $36 billion in the past ten years, according to American Demographics, price doesn’t play a large part in consumers’ minds. A recent study by Prof. J. Patrick Kelly of Wayne State University in Detroit shows that only 14 percent of shoppers enter a store with the intention to buy products only if they are discounted. By contrast, 60 percent of shoppers interviewed planned to make all their purchases at full price.

In fact, everyday low pricing can actually drive sales down. According to a Nielsen Marketing Research report cited in American Demographics (January 1994), Procter & Gamble’s Dawn liquid detergent sales volume fell four percent (with sales revenues down 12 percent) after the company adopted an everyday low pricing strategy in 1992.

Likewise, discounting has increased, not diminished the power of the retailer. Sophisticated product-tracking systems combined with the individual store managers’ ability to feature items that are showing signs of increased sales over a very short time drive impulse purchasing.

And, perhaps the most fatal error is his lack of appreciation for the increasingly social nature of shopping—it’s one of the few public behaviors shared by all Americans—and the critical nature of impulse purchasing.

“Understand that when you go to a mall, you’re really buying entertainment, your not buying a product,” Bushnell said. “When you buy over the superhighway, you’re buying on price, not entertainment.”

DREAMS OF ENTREPRENEURIAL ASCENDANCY

“I actually think we’re going to be finding the All-Ideas Channel,” Bushnell said, “where entrepreneurs climb in and give their ideas, and people come along and give their bids on engineering it, and other people come along and bid on marketing it, and people bid on manufacturing it, and none of those things happen if the people watching it [don’t act]—I mean, this is the ultimate in early adopters—they will order the idea based on a speculative price.”

The early adopters aren’t price shoppers, because they don’t concentrate on just one aspect of a product or market. Instead, early adopters are eclectic consumers who base their buying decisions on many different variables. The equations they apply are dynamic, changing on a purchase-by-purchase basis. They gamble on high paybacks on the premium prices they pay for prices.

An SRI International study of early adopters and new media described in American Demographics by Bruce MacEvoy, a senior research psychologist at the Menlo Park, Calif.-based company confirms that these consumers almost always look above the bottom line when considering the value of a purchase. A key theme for advertisers using new media, MacEvoy wrote, is that their messages should emphasize that the purchase is the beginning of a long-term relationship. Clearly, price-driven marketing will provide insufficient margins to support the ongoing interaction between seller and consumer.

Bushnell’s suggestion that manufacturers will set up product demonstration centers is a valuable insight, but it doesn’t jive with consumers’ capricious buying habits. Fewer than 50 percent of shoppers actually buy everything they intend to when they enter a store, according to the Wayne State University study. The study also found the reason most consumers don’t actually buy the items they plan to when entering a store is a lack of selection.

Product demonstration centers that offer access to a single company’s products are not likely to draw the attention of comparison shoppers seeking stimulation and value at a fair price. When one imagines what a robust comparative shopping environment looks like—whether it is supported by an on-site sales capability or digital networks and order fulfillment systems—the image that springs to mind bears a striking resemblance to the modern retail environment, where technology helps the sales force interpret the differences between products while delivering them at competitive prices. — Mitch Ratcliffe

Bushies placing the blame before the robbery

Katrina vanden Heuvel of The Nation uses my line: Ken Lay Would Love SS Privatization. I agree with Scott Rosenberg that Josh Marshall’s explanation of the Great Social Security Rip-Off of 2005 is excellent for its clarity and brevity.

Now that Ken Lay’s name is being picked up by the Liberal press (what took so long?), let’s add another fabulous name from the past to explain the unprecedented level of greed driving the Bush push to privatize Social Security: Charles Keating. The difference between the S&L Crisis, which was triggered by Republican banking reform, is that, this time, the money will be paid into the pockets of the rich upfront rather than after they have pillaged the public weal. With that kind of leverage, Bush’s base can turn the United States into a legitimate third-world country, free from regulation and any semblance of a fair economy, from which they can flee to any tax haven they choose.

Also, this time the Republicans are already blaming government qua government for the problems they are creating. The S&L folks only managed that trick years later (note that the link if to the Michael Milken-sponsored Milken Institute and suggests “Congress [used the S&L bailout legislation] to deflect blame to directors, officers, lawyers, accountants and others who had been caught at the tiller when the system sank into insolvency.”)

The difference between Democrats and Republicans is simple: Democrats try to use the government to do something good for people, even though they screw up a lot, while Republicans use government to rob the people while blaming government for their dirty work.

Update: Paul Krugman’s column today is a must-read:

Today let’s focus on one piece of those scare tactics: the claim that Social Security faces an imminent crisis.

That claim is simply false. Yet much of the press has reported the falsehood as a fact. For example, The Washington Post recently described 2018, when benefit payments are projected to exceed payroll tax revenues, as a “day of reckoning.”

Here’s the truth: by law, Social Security has a budget independent of the rest of the U.S. government. That budget is currently running a surplus, thanks to an increase in the payroll tax two decades ago. As a result, Social Security has a large and growing trust fund.

When benefit payments start to exceed payroll tax revenues, Social Security will be able to draw on that trust fund. And the trust fund will last for a long time: until 2042, says the Social Security Administration; until 2052, says the Congressional Budget Office; quite possibly forever, say many economists, who point out that these projections assume that the economy will grow much more slowly in the future than it has in the past.

Involved and not; reporting’s many faces

Dave Winer wrote today of “professional journalists”:

We’re fools if we believe they can be trusted to watch over themselves. We have the empirical evidence that proves otherwise.

Net-net: the professional journalist is totally part of the story he or she is writing. That they believe otherwise is the major bug in their process.

The problem with Dave’s argument is that it assumes reporters are always involved. In fact, sometimes reporters simply aren’t involved and are just reporting events. That’s why there are reporters and columnists, beat writers and feature writers. The former are generally uninvolved, in the sense that reporters and beat writers are supposed to report events dispassionately and often do. The latter, columnists and feature writers, are definitely involved. Eventually, if you earn it, you get to have an opinion in a column or to write a feature that takes a position, even if it is just a narrative position on the events covered.

Those distinctions are important to understanding the many afflictions of a professionalized journalism, because many journalists attempt to be columnists when they are reporting and vice versa (Robert Novack’s alleged “reporting” about Valerie Plame’s professional activities is actually a form of politicking, for example). People’s ambitions carry them beyond the parameters of their current job, turning reporters into commentators and commentators, who are ostensibly supposed to be objective (and can be, though I find humorists who are willing to skewer everyone are the most objective-seeming of all), become “players” in their own right rather than the informed observers they are purported to be.

Anyone who thought reporters were pure as the driven snow is a fool, because there is nothing superhuman about them and the record stretches back far before Dan Rather and Bob Novack came along. Reporters are human, which involves some corruption of heart and mind as well as moments of true courage, honesty and charity. I don’t know why everyone is surprised by the news that reporters often take sides; it’s a natural function of spending time with people you are reporting on. It’s also hypocritical to argue reporters are corrupt if they don’t take your side, whether they explicitly acknowledge their position or not. I’ll take a reporter who knows their limits any day over an ideal. And there are times when it is best to leave the reporter’s opinion aside, as they should, as well. Stories that achieve this usually read as though the writer had no idea what was going on and asked the questions necessary to find out.

Then, there were the New Journalism writers, like Tom Wolfe and gonzo’s Hunter S. Thompson. I personally go for Thompson’s style over anything Wolfe wrote after 1970. Wolfe’s narratives are mannered while Thompson—at his best—is simply ripping up the scenery and recounting how people reacted. Thompson at his worst is a kind of caricature of dissent in the face of power. Doc Searls talks about this in response to Dave’s posting:

This was also a bug long before blogs came along and began fixing it with a vengeance. The first fixit effort I can remember arrived in what Tom Wolfe, Gay Talese and others called The New Journalism. Hunter S. Thompson took this to a personal extreme he called Gonzo Journalism, without which we never would have had Gonzo Marketing, among other things.

A newspaper of nothing but gonzo reporting would be hard to read, though you’d probably find a voice or two you couldn’t do without. Why would it be that hard to read? Because there are a lot of bad writers who practice gonzo to cover their weaknesses, while some people’s view of the world and the way they enter it is addictive for its humor, honesty and cutting insight.

The fix-it project of the 1960s wasn’t a replacement or an upgrade, it was additive, providing another form for delivering information. It broadened the palette, though at the time it felt like the palette had been replaced. The point of innovation in media is to expand, not simply to displace, the voices that existed before (politics is what replaces voices).

I’m feeling more Buddhist all the time about this whole journalism v. blogging debate. The middle way in the metalogue that is emerging—the miraculous opening up of “the media” that’s going on—is plenty wide for all sorts of writing, the objective, the disclosed and the personal. There’s not one bug in journalism, there are many, almost as many or more than the number of journalists. There are also many bugs in the blogging process, especially since it is easy to claim that one is fully disclosed when bloggers seldom spend time examining their views for the influence of their own interests.

Bloggers simply haven’t had enough time to fuck up as royally as those who have been granted First Amendment protection for a couple centuries. Give them some time, though, and we’ll all see they’re human, if Matt Drudge’s many misleading and misinformed “scoops” aren’t proof enough for you. Fortunately, when everyone owns a press the empirical evidence that bloggers are humans prone to making egregious mistakes will pile up a lot faster than in the tightly controlled world of corporate media.

We—the people who read and listen or spend part of our time doing that before shooting our own mouths off—need to be skeptical of everything, especially one another. The articles of faith, even our faith in the voices of our friends, need to be examined constantly. Replacing Dan Rather with 100 bloggers’ reports about the world is just as flawed as trusting Dan Rather all the time; in fact, it’s probably more dangerous to our perception of the truth.

New retail reality

My Red Herring piece today is about the evolution of retail.

One thing that is not in there is a comment about the tools the people at the edge of the network will use… blog tools, among others, will be applied to a kind of customer relationship that hasn’t existed before. Rather than tout “blogging” as the enabler, however, I’d argue it’s the personal communication represented by blogging that will be transformative—and that can be conveyed through a variety of tools, not just blogs. Databases, web page design tools, audio and video production tools; basically, everything is going through the evolution that publishing did when desktop publishing tools appeared. The walls are coming down everywhere, not just with a particular format or genre of communication.

No write ansur

  1. The year when blogging tools part ways with blogging religion for good, for good and bad. There will be publications built on blog tools (call the “blublications” or “blubs”) that start to earn real money and audio/video will become the canvas for self-produced news and commentary if someone can organize the many choices into something comprehensible and manageable, which is simply a problem to be solved with some sweat and cash combined in the right measure.

The old order has come apart and new orders are struggling to take control (“meet the new boss, same as the old boss”), though plenty of people will simply go their own way, some thriving and others burning out like the screen stars of the 1950s. There are no correct definitions of behavior, only the raw material for debates about ethics, business models and editorial/creative process.

Umberto Eco wrote in 1983:

Once upon a time there were the mass media, and they were wicked, of course, and there was a guilty party. Then there were the virtuous voices that accused the criminals. And Art (ah, what luck!) offered alternatives, for those who were not prisoners of the mass media.

Well, it’s all over. We have to start again from the beginning, asking one another what’s going on.

Some of my notes in the margin after reading that last night: Beware rebels bearing manifestoes and the sleek taboos of trendsetters. Eat the dead, if their bodies aren’t too putrid, to learn from the lessons coursing through their veins. Start no religions except those you are willing to mock mercilessly. Trust experience without regard to the grammars available from local professional societies. Live and let live, else you will find yourself roasting on the spit of your own dogma. Create to be free, consume to die to yourself.