Wolf Country Week in Review: Money, Money, Money and a Bigger Boat

When you haven’t any coal in the stove
And you freeze in the winter
And you curse to the wind at your fate.
When you haven’t any shoes on your feet,
Your coat’s thin as paper, 
And you look 30 pounds underweight
Rat-a-tat rat-a-tat at the window
*knock knock* (at the window)
Who’s there? (hunger) oh, hunger!
See how love flies out the door…
For, money makes the world go around —

The Money Song, John Kander/Fred Ebb, Cabaret 1972

Dave Leonhardt is a columnist for the NY Times, and he also wrote summaries of other news that went out daily. He stopped that recently, and all the columnists are enlisted in it now, but it was a great start, pilfered from the Wall Street Journal. By having different working columnists engaged, your get a wider  variety of recommendations and some of them might seem bizarre, but the fact remains, the Times is the “paper of record” and also has a lot of prestige. And, it has some of the best columnists, so…quality leads to quality.

Today’s Leonhardt column began with a critique of Elizabeth Warren’s proposal to “cancel” student debt.Two things emerge — Warren’s plan is well thought out, definitely doable, and takes into account the differences between incomes of students going in and of students going out. It does in fact do something to help with monstrous amounts of debt for law school or med school but takes into account the salary difference between a Harvard Med or Law graduate who borried $150K to get the degree versus the GM blue collar worker whose children ran up huge debt as did he and his wife.

He also doesn’t like it because he thinks that it is still regressive and doesn’t do as much to level the playing field overall — balancing the cost may not be enough to leverage this into redressing the bloody mess that will do more than Trump with a chain saw to undermine the values and commonwealth of the United States.

So, while the Right pushes this as more Princess Pocahontas elitist nonsense, he finds it better than the present situation and yet not radical enough. He points out that highly respected economists from the left and the right fall into place on it — the Left tends to like it, the Right tends to hate it. So, sounds like a good commonsense compromise to me, and in his heart, to Leonhardt as well.

He also recommends another piece, this one from Kara Swisher, a technology reporter who is editor at large of the technology website Recode and a contributing opinion writer for the Times. Her piece is an interesting reflection on the meaninglessness of charging Facebook “the largest fine ever issued” and it’s really worth considering universally as not just a way of influencing behavior but also of leveling the income inequality situation.

For it’s latest privacy debacle, Facebook is facing a fine of up to $5 Billion. Now, if I’m reading the paper and I see that number, I feel that if they get hit that way, they’ll regret doing whatever they’ve done — imagine it, and it’s probably true — and won’t do it again. They will include their business standards and ethics people in the future in decisions to make certain they won’t step on whatever they agree to with the feds with some new “innovation.” Let there be peace in the valley. Or not. Probably not…

She did a great job of making me think by pointing out something as she muses on how to describe the proposed settlement.

How about: It’s a parking ticket. Not a speeding ticket. Not a DUI — or a DUI(P), data under the influence of Putin. A parking ticket.To be clear, $5 billion is a lot of money. A lot of dough, clams, loot, lettuce, simoleons. But with apologies to that pissed-off shark in “Jaws,” they’re going to need a bigger fine if they actually want to stop Facebook from violating its users’ privacy.

She points out that the civil purpose of punishment is not so much revenge but deterrence. If as in Sharia law, you punish a thief by cutting off his hand, taking $5B from Facebook is not taking a hand so much as clipping a fingernail or two. Punishment has to hurt to be deterrence. There’s no pain for Facebook in a fine of that size; they have over $20B on the books right now. It’s just that simple. The effect on their balance sheet is probably a wash at worst, since they will be taking cash in hand to pay an outstanding debt; hell, they probably can add a billion or two in valuation to their good name. After all, $5B is a lot of money!

But not to them, and that’s the point of Ms Swisher’s article. If I end up paying a fine of $5 for behavior X which made me $5M, do you think I’m going to be deterred? Like sanctions on Putin’s Russia for various high crimes and geopolitical misdemeanors, it has no impact whatsoever. It’s almost as if the FTC is encouraging them to keep doing it, but to try harder not get caught in the future.

As she concludes,

With $23 billion in cash on hand, Facebook will see a $5 billion fine as simply the cost of doing business. Needless to say, this is not how fines are supposed to work. Scott Galloway, a marketing professor at N.Y.U. and my co-host on the podcast Pivot, calls it the “algebra of deterrence,” by which he means a price and a punishment that makes certain you will not do a bad thing again. Five billion dollars is not that price. “Put another zero on it and then we can start talking,” said Mr. Galloway this week…since the job of regulators is to protect us, they have to stop the enabling of powerful entities and start forcing them to get in line — with fines, more investigations, smart laws, programs to help small innovative companies to thrive, whatever it takes. Still, this little fine is a start. As a taxpayer, I guess I’d like to thank Facebook for paying its parking ticket. But fair warning: Don’t make us put two zeros on the end of it.

I think the Galloway idea of “putting another zero behind it” is probably not allowed by the statute. But, I also think that the current regime in DC would be vastly opposed to doing any such thing. Tough. Here’s something to crusade on that will drive the right wingers nuts, especially the true believers in “innovation.” What exactly has the Facebook “innovation” done for the commonwealth besides ruin the era of blogs and undermine the ability of free press internet innovations like Veterans Today to make enough money to maintain? And, that particular innovation simply means this column will never get pushed in Facebook, despite our best efforts…

This is what it’s done — it’s made a lot of people rich. Not everyone, not everyone working at Facebook, but a lot of people rich. In other words, Facebook has found a way to exploit the poor for the benefit of the wealthy. Granted, if I want to look at cat-conspires-against -dog pictures or join n the debate between “Clapton is God” versus “Clapton is a wanker” debate, I can find it easily. Of course, the debate will be irrelevant and uninformed and probably just a waste of my time. But I can do it so it must have some worth? No. Like the cat picture gone viral, it’s frivolous and fun but the world is no more poor if I can’t see or share it on Facebook.

So, why not make the fine actually hurt? How much money does it cost to make a fine really hurt Facebook? Well, how much does it take a traffic ticket to hurt a single Mom getting a parking citation when she seeks a payday advance to buy milk and medicine for her children?  How much does it take to pay an outstanding debt?

Use that criteria — existential risk — and we might be surprised at the improved impact of the justice system on the bad behavior of the plutocratic among us.