Facebook’s next project: American inequality
politico.com
politico.com
- real wages decreasing since 1980
- the commoditizing of labor (e.g. janitorial companies, the "sharing economy")
- ever-decreasing investment in infrastructure
- tying wealth to real estate prices
- an educational system that leaves many young people mired in debt
- tying healthcare to employment and the price of healthcare in general. The first kills labor mobility. The second either bankrupts or kills you.
- mass incarceration destroying families and individuals
- regulatory capture allowing big businesses to beat down all the small ones
- a monoculture that tremendously decreases resiliency
I don't think that by studying Facebook profiles, you'll be able to understand why politicians take corporate money and try to help only the rich to get richer, or other stuff like that.
There are of course other major, possibly greater, factors like, NIMBY housing policies ( incl. rent-seeking boomers ).
https://www.investopedia.com/articles/mortgages-real-estate/...
It seems obvious that low interest rates would drive up property prices. It's less clear whether that would drive up or down rents.
It would tend to drive up rents by: requiring landlords to tie up more capital in new purchases of buildings (decreasing their marginal propensity/ability to put new buildings online for tenants), decreasing the number of people buying [increasing the number renting] due to fear of bubbly real estate market or inability to save down payment.
It would tend to drive down rents by: lower returns in other passive investments might drive investment towards rental real estate chasing income (increasing supply), steadily increasing property values might encourage marginal buyers to buy, reducing demand on rental units in an area, foreign buyers might be more inclined to "park money" in USD real estate, some of which could be rented to offset the cash flow.
Rental properties are convertible to condos. If you make money available to buy property then exactly that happens, which reduces the supply of rental properties available to the people who can't afford to buy even with the mortgage subsidies, thereby increasing rents.
> It would tend to drive down rents by: lower returns in other passive investments might drive investment towards rental real estate chasing income (increasing supply), steadily increasing property values might encourage marginal buyers to buy, reducing demand on rental units in an area, foreign buyers might be more inclined to "park money" in USD real estate, some of which could be rented to offset the cash flow.
Rents are directly related to property values. If property values are higher it takes more capital to purchase a property in order to rent it out, which requires higher rents to justify someone doing that instead of allowing the property to be sold to a resident.
In theory mortgage interest subsidies might not increase property values if the market responded to the demand by increasing the housing supply. But then zoning laws prevent that from happening, so they do.
And there is no reason for someone who buys housing for speculation to rent it out at below market rates. Moreover, it has been a major problem that many of those people don't rent it out at all because at scale not renting it increases housing prices (which is what they want as speculators), leading to a large amount of unoccupied housing in the midst of a supply shortage.
Yeah, I don't really understand their justification either. But they are actually doing it for some reason.
Ah, look it's someone that has never rented property before.
a) You rent your house in a city in California. You figure out your renter is trash, and is trashing your house. You can't move them out for months and they do tens of thousands of property damage in the meantime.
b) You live in a city with rent price fixing.
c) You don't have time to manage the property, but have been burned by poor rental management companies.
Edit: I should note that I think performing social science on Facebook data is creepy and weird and potentially unethical.
The essence of the scientific method is taking what you think is true and proving it with a higher degree of accuracy.
This is why studies are repeated by other people, to see if the results match up.
I'd even go so far as arguing that in-depth studies with their typical bias (to use a nice term) is what has made so many young, highly educated "evidence based" thinkers genuinely believe straightforward & consistent-with-observable-reality explanations like this are literally incorrect.
Your bullet points these may well be immediate causes, but if you say something like 'real wages decreasing' well then you need to ask, what's the cause of that? And what's the cause of whatever caused that?
Now is the time for action in response to the findings.
At some point, it stops becoming on us to link to studies for well-documented stuff, and on you to show the intellectual curiosity to find it on your own (and intellectual honesty to accept it).
I am not arguing that wages are up or down, but there is enough reasonable doubt that such statements aren’t in the realm of “the sun is hot.”
Science should be continually challenging assumptions — especially social science where there is huge opportunity for bias and inconsistently.
To people in the real world all this is simply lived experience rather than abstractions. It's tangibly, obviously real.
https://www.cnbc.com/2016/04/01/charts-whats-the-real-unempl... http://www.epi.org/publication/charting-wage-stagnation/
The root cause isn't a known thing to my knowledge.
Robert Putnam (Harvard prof who has advised several presidents) has been looking at this for a while now. I had the privilege of hearing him talk about it a couple of years back.
His objective is to identify the mechanisms through which economic inequality interacts with things like social cohesion, examining hundreds of indicators over the past century and further, such as the frequency of bipartisan bills, the incidence of social club membership, unions, incidence of interracial relationships, etc.
I recall a few notable points; Firstly social cohesion had a low around the turn of the century (1900) and peaked around the mid 1960s and is currently dropping. Secondly, economic inequality indicators follow the same pattern, but trail social cohesion indicators by 5-10 years if I remember correctly. Thirdly, the effect is noticable in the US (and to a lesser extent the UK) but varies a lot internationally.
(I don't have links, this was all verbal. He said he was considering putting it in a book, which to my knowledge is not yet published)
What's changed is that when a businessman needs some work done, the first thing he is going to look at is if the job can be automated. The second is that he'll look for lower cost offshore labor, made possible by cheap shipping and telecommunications, but also free trade agreements. The third is that he'll look to hire a legal or illegal immigrant who will take a lower wage. The fourth is that he'll look to move from a northern state to a southern right to work state, made possible by Taft-Hartley and its successors, and pliable Southern legislatures, where he can hire non-union labor who will take a lower wage. With so much new competition for labor, much of it government created, it's not surprising that economic growth is not flowing to labor.
I understand lack of infrastructure investment is a problem but how exactly does that cause poverty?
Not saying that the employment benefits aren't real, but the other problem needs to be solved to get the best benefit.
Similar problems exist when folks lack sanitary conditions or mass transit proves to be completely inadequate or doesn't exist. At best, the sanitation easily means folks become sick more easily - which can push folks into poverty because the health care infrastructure and care isn't where it should be.
Now, I don't have facts to back these up, but they aren't exactly insane ideas either.
- Central planners in government who think they're able to positively control and shape society ( because they know better than 'we' do )
> real wages decreasing since 1980
This is the problematic outcome itself, not one of the specific causes.
> the commoditizing of labor (e.g. janitorial companies, the "sharing economy")
Caused by labor laws that make hiring full time employees more expensive (e.g. employer-provided healthcare mandates, see below), pushing businesses to hire temporary contractors from contracting companies that take a cut of the wages rather than forming stable long-term employment relationships directly with specific individuals.
> ever-decreasing investment in infrastructure
This is obviously a call for more government spending on infrastructure, which I would agree with personally, but there is actually a "this is still the government's fault" Libertarian position on this -- the government provides crumbling-but-free infrastructure which destroys the private market for providing the same things. If they didn't provide it at all then the market would invest more in it, so the theory goes.
> tying wealth to real estate prices
Unambiguous case of government regulations (zoning laws, loan interest subsidies) screwing things up.
> an educational system that leaves many young people mired in debt
Federal loan interest subsidies again.
> tying healthcare to employment and the price of healthcare in general.
More bad regulations: Tax subsidies and regulatory requirements for employer-provided healthcare, laws that encourage "health insurance" that covers everyday medicine rather than actual insurance against atypically large costs, which inhibits consumers from being price sensitive and thereby inflates healthcare costs.
> mass incarceration destroying families and individuals
Obvious case of "repeal the laws" as the solution.
> regulatory capture allowing big businesses to beat down all the small ones
Large companies control the regulatory bodies for their industry and purposely have rules enacted that favor large scale entities. Remove the rules, restore competition.
> a monoculture that tremendously decreases resiliency
Outcome of bad regulations again -- regulatory capture producing monopolies/oligopolies, regulations mandating specific solutions instead of facilitating multiple alternative solutions, high regulatory compliance costs destroying small businesses, monoculture of federal programs themselves that displace diverse programs operated by localities or private industry, etc.
There is a completely valid position that eliminating regulations could solve all of these.
What you cite as problematic regulation is interesting. I'm not sure regulation is to blame for megacorp monopolies. When you have so much money that you can bury any competition, and buy up all the regulators, regulation is effectively useless.
It seems having too much money/power is the real problem. Regulation can only stop bad behavior if regulators have more power than the regulated. That can lead to a stagnation of innovation though.
I kind of feel like we need more monetary checks and balances. Currently, the court system is extremely skewed in favor of the wealthy. Most people can't afford to go to court to protect their interests, so those with more money can just walk all over whoever they want.
It's not just useless, it's actively harmful. The regulations are created at the behest of the megacorp to harm prospective competitors.
The problem is we can sit here and agree that we need better regulations, and call Congress and tell them to pass better regulations, and then a 5000 page bill comes up for a vote. Normal people don't have time to understand what's in it, but megacorp's lawyers do. So if it's something they like it sails right through and if it's something they hate they pay for a truckload of sand to be poured into the gears so it never goes anywhere.
So the alternatives are A) "have megacorp's preferred regulations" or B) "stop federally regulating that thing" and there is no third option on the table. Which do you choose?
"Get a third option" would be great, if anybody knew how to actually do that. But every time anybody has claimed they're going to do it in the last century or so we just end up with option A instead.
It'd be great if we still had Teddy Roosevelt in there, but we don't, and he's not even on the ballot.
> It seems having too much money/power is the real problem. Regulation can only stop bad behavior if regulators have more power than the regulated. That can lead to a stagnation of innovation though.
Fixing this tends to have counterintuitive solutions.
People are always talking about "the 1%" as if the problem is people, but the main problem is really corporations. There is no natural person with more money than Apple Inc.
And the biggest reason for that is that we have a tax system that rewards huge multinational corporations hoarding cash. The only reason the shareholders don't demand their take of the profits is that they know that actually taking them causes a large amount of taxes to be due to both the company and the shareholder. So they take their gains as share price appreciation, which has preferential tax treatment but leaves the huge pile of money inside the corporation.
There are two main things needed to fix that. The first is to replace corporate income tax with VAT, so there is no more incentive for corporations to hold money offshore. And the second is to defer taxes when dividends or capital gains are immediately reinvested, so that an investor who takes profits from a megacorp and invests them in a small or medium business doesn't immediately owe a bunch of taxes, when leaving the cash in the megacorp wouldn't.
The problem is both of these policies will inevitably get characterized as helping the rich, even though their effect is to eliminate the relative costs of moving profits from megacorps to smaller businesses.
From my experience, it feels like there are so many pitfalls and financial traps designed to catch people moving from the middle class on up. Once you make it to 10 Million +, you can coast from there with no financial burdens, but until then there is always something to get you.
The IRS will demand you pay tax on 100 million dollars right that minute. Obviously, this would be impossible since you cannot sell your stock, and it's value is only based on speculative appraisals.
Say you somehow got a loan to pay that tax up front. Say the tax was 20 million dollars. Then google goes belly up and your stock becomes worthless.
Too bad so sad! You are on the hook for paying back that 20 million dollars.
Why not smash one of the points with data if you think that is the way that everything should proceed?
This list isn't really anything different than your standard Democratic talking points and doesn't even directly relate to the article. Not sure what it's doing as a top comment here.
It's purely tax law with very broad implications.
So what happens is that all that risk, red-tape, etc gets consolidated in the form of an employment intermediary (for lack of a better term). So they consolidate, optimize and package all that risk and cost into a single figure which is both cheaper (due to economies of scale and concentrated knowledge) and easier to deal with and monetarily quantify. Companies then save money by rather hiring the employment intermediary instead of the actual employee.
I clearly see it immensely in South Africa. Even in the software-development industry, where software-development firms are called "body-shops" because all they do is re-sell developer-hours rather than working on projects. The client explicitly interviews, selects and has the developer sit in their offices under their management team with their hardware, etc. It's made worse in South Africa because there is no at-will employment, and the government has made it ridiculously difficult to dismiss/fire employees even for perfectly reasonable and straightforward reasons.
Which is good for everyone. It's good for the first company, because they're saving money and can either deliver more profit to shareholders or they have more money to reinvest into the company. It's good for the janitorial company because that entire company wouldn't have existed before. Everyone there not scrubbing floors has a job because that company exists. It's good for the janitors because more janitors can be employed (again through economies of scale).
For instance I am above the poverty line, yet can be far outranked in monetary scale by a reasonable 40% of society in my country. I could be seen as having income inequality for the value I contribute to society and yet not fall onto the scale of poverty or even lower income.
Technically the arguement could be made that the difference between the top 5% and 0.5% of society have a far greater inequality between themselves than the rest of us. Poverty is absent in this context.
You don't have citations in your post, that's because it's a summary. There are huge amounts of evidence backing up your claim.
A bigger issue than the uselessness of this initiative by facebook is the empty, bald-faced PR "Hey, look over here!" distraction that they're using to cover their callous complicity in disinformation campaigns.
That bothers me more.
Basically, Facebook needs to find a solution to poverty that ends with them consuming and disseminating the data of billions of people who happen to not be desperately poor. In many ways their best case is all the better if their data is of solvent people.
They've been on the defensive for years now. Recall how vehemently they downplayed Russian attempts to influence via Facebook ad buys and troll accounts
But to the general point, we've known how to fix the problems for decades but actually attacking issues of income and wealth disparity is asking for the people who are currently benefitting most from the system to give something back. And if history tells us anything, it may take violent revolution to see a real fix.
Also I believe in empathy as an intellectual response, i.e. in some sense the "enemy" can't help the way they are and should be given complete amnesty after they lose.
I never once claimed there was no evidence for the list of claims about inequality made above. In fact I agree with most of them. But they have nothing to do with the main claim that "We don't need more big data studies to figure out what is causing poverty or how to fix it." That's a controversial statement if you ask me, but the OP managed to distract everyone from it by posting a bunch of generally agreed-upon claims about inequality. (Which arguably will be re-enforced by more data driven studies.) It's a pretty good rhetorical technique for getting people to implicitly agree with you about something you actually disagree on: say something that is controversial and then quickly say a bunch of stuff the other person agrees with.
Along the way guess what, now everyone is implicitly defending the claim that there should be no further research on inequality. If the OP's post consisted entirely of "We don't need more big data studies to figure out what is causing poverty or how to fix it" then they'd have people disagreeing with them, but you should note they've literally said just that, since they have provided no evidence to support it.
I observed that my troubles exactly tracked the Labor Share of wages as tracked by the Fed: I was impoverished to the exact proportion that the country (and the world: I did and do a lot of export) didn't itself have money. If labor boomed, so did I: if labor took a downturn, so did I.
I retained such a high reputation that I was able to withstand a switch over to Patreon when my payment processor went out of business owing me months of payments: from my observation if you transition to a patron model it literally decimates your earnings, but they become steady and may grow.
I am also typically American in that I figure if I double down and work ten times harder and don't die, it'll all work out, and I'm getting up to what would be minimum wage for a factory worker (this is 97th percentile of Patreon accounts, by the way: I'm in the top 3% of all Patreon and trying to get into ITS 'one percent') and doing things like releasing all my existing products for LinuxVST and methodically open-sourcing it all under the MIT license.
I figure even as an open-sourcer I will not succeed unless I can be ruthlessly exploited for my work, and even as a patron-supported person I'm still subject to the power-law factor of 2018 life where unless I'm exploding in success, I'm failing. So my motivation can only be: exploit and crush the world, or out-give the most generous people AS IF I was already that millionaire, a Bill Gates just looking for ways to give it away again.
So I'm doing the latter, and we'll see whether I literally live to do more of it. Any little financial thing crushes me and breaks my spirit for a while, costing me valuable work time. My only recourse is to charge off entreprenurially into new prospects and hope for the best. The funny thing is, that's the same recipe for if I was trying to prosper with new commercial products, and I do free everything now (increasingly including ideas).
In an America with a saner Gini coefficient, I would probably still be close to broke, but I'd have a much huger cash flow and would probably be employing people. I know I can't do everything I envision, and I would absolutely be hiring if that was remotely possible.
I think you can do better on licensing. I'm doing AGPL, holding my power to individually licensee as necessary (with some pieces under more/fully permissive licenses where it makes sense--not cents :). I've got cool demos online, can track me down pretty easily. Indeed, studying all the Machiavellian stuff I can, given it's clearly being used at higher levels. I just want to be excellent to each other and make cool stuff, and eat.
I'm not buying that. Check out how FB had no problem letting Philippines President Duterte get elected by using FB, including sending FB consultants to the Philippines -- https://www.bloomberg.com/news/features/2017-12-07/how-rodri...
The obsession with facebook lately has been unbearable.
A lot of people will probably object due to their romanticizing of the age before Facebook, but, I strongly believe people have never been as connected to others as they are today, never been as social with as many people as today. Sure, it's mostly in the form of text and pictures and shit which is not as er, "intense" as face to face, but it does allow people to extend their networks by a lot.
[Edit: fixed mobile type-o]
You can disagree with Facebook's practices without being so absurd about it.
-Russell Brand
In the big picture Russell Brand can't change the world but it would be good if he did pay people working for him well. Same for Facebook. They could pay their service workers better and do a lot of good that way.
In the end I think doing more studies is just a smokescreen for not doing anything.
Seems reasonable to me.
> If they want to understand inequality they just have to look at their own company and see how the higher ups reap most of the benefits.
I'm a Software Engineer at another big 4 tech company. While the higher ups are undoubtedly making a ton of money, my income puts me well within the top 5-10% of people in the US. I think bitching about salary inequality at Facebook is a weird place to start. Try Walmart.
I know they are not technically in the janitorial business but it's a necessary part of making the company work. When you want to address inequality we have to stop marking some people as essential and having them participate in the success of the company while others are being left out and get no benefit while also working full time for the company.
In my company the lower ranks don't get any yearly bonus while engineers and up get one. These people also contribute to the company's success but somehow they are not deemed worthy enough to get a share of the success.
Start with Walmart or start with facebook, it doesn't matter. What matters is that it's the same driving business value by squeezing people.
>Try Walmart.
I bet walmart spends more of their revenue on salary than FB.
What a dumb metric. Of course they do, because they have 100,000s of low paid workers. How the hell is that relevant to a discussion about prevailing wages? Facebook pays extremely well, but now we are going to start a wage discussion with what Facebook's suppliers pay?
I think that's the heart of what's fucked up in the USA right now -- this unsustainable notion that profits go up forever.
Also, will we get a number showing how much addictive FB use correlates to economic status? I have a feeling the corporate benefactor wouldn't allow that.
Perhaps they're accounting for this but I'm not really a fan of doing social science based on a data set that's more fantasy than scientific measurement.
My intuition tells me that predicting socioeconomic status with Facebook's data would probably be reasonably successful, and you could look at feature importance from that. If they're trying to test every theory that Munoz came up with in 4 years of brainstorming or w/e though, then I think they'll likely find it's an insufficiently complete dataset.
The popular course is taught as an introduction to economics for Stanford freshman.
https://www.youtube.com/watch?v=eqAeKQJcaUU&list=PLDcD0S_1fQ...