Terrible!

Thank you, people of Novgorod, for your welcome tonight!

It’s so good to see so many real Russians here tonight, the serfs, people who love their country, love Russia.

And, of course, there in the back of the room, the Phony Monastic Scribes, such corrupt, sick people. They lie. Lie all the time.

You know what they call me. They call me Ivan the…(pauses)

The crowd shouts “Terrible!” and laughs.

That’s right, Ivan the Terrible! Tell me, am I that terrible?

The crowd laughs and cheers enthusiastically.

They should call me Ivan the Genius, because I’m a genius. And I’m pious, very pious! There's never been a Tsar as pious as me! They should call me Ivan, the Very Pious Genius, not Ivan the Terrible!

Was I that terrible when I sacked Kazan and Astrakhan? Was I that terrible when I brought back wagonloads of treasure and slaves, hundreds of Tatar slaves, thousands of Tatar slaves! People came to me and said “Ivan, enough with the slaves, already! We have too many slaves! Stop bringing us Tatar slaves!” But I said, “We need more slaves! We don’t have enough slaves! We need slaves to Make Russia Great Again!”

The crowd laughs and applauds.

But still, they call me Terrible, and you know who they are. The hateful boyars, the so-called Noblemen – they’re not noble, folks, I call them the Not So Noble Men. And their friends, the Phony Monastic Scribes. Some people say we should impale them on a spike.

The crowd cheers and chants, “Impale Them on a Spike! Impale Them on a Spike!”

No, no, if I did that, they’d say, “Oh, that’s Ivan again, he’s so terrible.” Do they talk about all the good things I’ve done? For example, a little thing called the conquest of the Mongols? Or my decree that I have the right to punish anybody, any time, in any way I want? No, these Not So Noble Men, they just resist. When I told them my rule was the product of divine will, did they come together around me, help unite Russia? No! And, let me just say, I didn’t do that for myself, I did that for Russia, to protect the Tsardom for future Tsars! But no, the hateful boyars, the Not So Noble Men, they resisted, because they hate Russia, folks.

The crowd chants “Russia! Russia!”

They repeat these fake stories, hoaxes, like, “Oh, Ivan cuts people to pieces, he strips women naked and dismembers them with axes!" That’s so untrue -- fake tidings, everybody – and, besides, some of the people who dismember people with axes, they’re very good people. There are very good people on both sides of that axe.

A heckler in the crowd shouts out, “Freedom for all of Russia!” A supporter shouts “Disembowel him!” as the crowd sets upon him.

No, no, that’s alright. You know what they used to do with a guy like that -- take him out and impale him on a spike! (Ivan pantomimes a dead body on a spike, head askew, tongue out.) But, these Phony Monastic Scribes, they keep writing these Fake Tidings, like “Ivan ties these corrupt Not So Noble Men to a sled and drags them into the icy Moscow River to drown!” They call it “watersledding,” like it’s bad thing! But watersledding saves lives, our precious Russian lives! Watersledding keeps us safe!

But you know what they say, they say he’s Ivan the … (pauses)

The crowd responds, “Terrible!” and laughs raucously.

You hear it from them all the time. “Ivan’s terrible!” I’m not terrible! I’m wonderful! They should call me, Ivan the Wonderful! Ivan, the Wonderful, Very Pious Genius! Instead, they lie about me. They say, “Oh Ivan’s a fraud, he just inherited his position. His father, Vasili III, was a Tsar, and when his father died when he was just three years old, they crowned him Grand Prince of Moscow.” But, let me tell you, that was a very little crown, like a baby’s hat.

But, by the time I was sixteen, I became Tsar, Tsar of all of Russia, which is a much, much bigger crown. I built one of the greatest empires in history! If I’m so terrible, why am I the most popular Tsar in history?

Jubilant cries of “You are!”

And the successful, too! Am I the most successful?

Delighted squeals of “Yes! Yes!”

That’s what they should call me! Ivan the Successful! Ivan the Most Popular, Most Successful, Wonderful, Very Pious Genius!

But you know they won’t. You know what they'll say -- it’ll still be Ivan the…(he cups his ear with his hand)

The crowd shouts “Terrible!” and erupts in frenzied, ecstatic pandemonium.

What's Going On?

Welcome to my project – a website in which I’ll try to write stuff intelligent people would find amusing, hopefully with some regularity, and hopefully amusing enough to get you to come back and read the next piece. Think of it this way; something funny to read for free.

Why? Because I want to, but more broadly, being amusing in an intelligent way strikes me as a very high calling, and is a “now more than ever” kind of thing. The times in which we live are a direct insult to the very essence of amusing. Our society’s deficits – the marginalization of people of color, the profound material inequality among us, our collective inability to invest in a sustainable and rational future – let’s stop there in the interest of brevity -- are no longer things “nice people” don’t discuss, like a loopy aunt’s drinking problem. Our planet’s future is as tenuous as was Krypton’s when Superman’s father rocketed him here to escape its doom -- there’s a bittersweet paradox for you. All of this desolation makes you wonder if there’s a place for humor, for anything resembling light-heartedness.

And then there’s him. I’m amazed Trump didn’t appear until the third paragraph. He’s everywhere. Living in Trump’s world is like living in a world in which an image of a psychotic clown has replaced the sun and travels across the sky all day – ubiquitous, banal, inescapable evil. The ubiquity of his presence as upsetting as the actual wickedness he does – there’s just no escaping his leer, his bloviation, his obliviousness to human wants and needs, his swollen, orange face teasing us with the possibility of a heart attack that’s never delivered. So, this project, dedicated as it is to material that’s amusing in an intelligent way, begins with the premise that making fun of him isn’t very amusing. It’s just another reminder of the odiousness of the whole catastrophe.

I’m not saying I won’t descend into that putrid mire, but if and when I do, I’m going to enforce (my idea of) a high standard. Ditto for the virus. My feeling as a writer and a human is “let sleeping piles of shit lie,” but sometimes being drawn to wallowing is inescapable, like rubbernecking civilization’s car wreck on the highway. But my focus is not to traffic in outrage – it’s been done, and my outraged moral sensitivities aren’t that finer than anyone else’s. Don’t get me wrong, I’ll deal with political life – the post that will get us started (on Thursday) will probably be one -- but the point is not to make a point. It’s to entertain, to be amusing.

And to write. Writing is the point – I don’t want to get all “that way,” but you get to a point when writing tells the writer what it wants. I’ve had two novels in print – Big Government (1998) and Grant Speaks (2000), both by Warner Books – and it was fun to savor the accomplishment, some bucks, and the weird knowledge that The Grateful Dead, Humphrey Bogart, Ry Cooder, and I all had our creative output brought to market by the same greedy conglomerate. But with my career in economics an evermore distant memory (a biography, found elsewhere on this site, provides a full confession to this effect), the writer in me is now unleashed. Since hanging up my slide rule a few years ago, I’ve finished a third novel, The Adventures of Brightthinking McCoy, a satire about land speculation on the colonial frontier (I have an amazing feel for what sells!) and have started a fourth, Birds of America, about Audubon’s late-life search for a rare bird, which leads him on a De Tocqueville-like wandering through America, a rear-guard testament to our society’s character. Maybe those projects will show up here in some form, but that’s not the point right now. In all of these cases, the thrill of writing and creating is as exhilarating as is the little world in which you live with your characters isolated and frustrating. More than any other thing I’ve done in life, writing proves the dictum “there’s a fine line between stupid and clever.” But at some point it almost becomes a biological need – you’ve got to do it, or at least that’s how it feels.

And that’s the bottom line – I’ve got to do this. Admittedly, I’ve done something like this before. I was a commentator on NPR’s Morning Edition for eight years (some of my triumphs can be found elsewhere on this site), and the foremost challenge of that effort was having one or two good ideas a month. The same challenge exists here. And, let me add, I was thrown off the air for using profane Spanish slang to an audience of 10 million people in a commentary on Social Security. So, hopefully, this comes to a better end. But the challenge to have something worth saying remains. It's a challenge worth accepting.

So that’s the deal, or as they say nowadays, “the value creating proposition.” In a few days, I’ll get started, to the extent this isn’t that start. Expect a “first” post (other than this one) on September 9 and then one every ten days or so. Let me know how I’m doing, and give me a few chances. If you like it, stay with me, and let folks who might also like it know about it.

And in the meantime, be well, be safe, and be positive. If you allow yourself to look at it dispassionately, the world is an unholy mess – cue the litany -- Trump, the virus, the culture of intolerance, the death of truth as a virtue, senseless executions on the street, the planet’s descent into a permanent heat wave, the remanding of low-wage workers into modern morlocks who will be forced to risk their lives to make us hamburgers and empty our bedpans, whatever. But to paraphrase Victor Frankl, without a purpose and hope to power us towards it, life is extinguished. That’s the challenge we face – the greater the challenge, the greater our hope must be. And that’s my underlying goal – to help grow the organisms of good feeling and hope in the Petri dish of the human spirit.

Let’s see how I do.

Facebook at 50

We learned this week that Facebook has turned 50 – certainly not 50 years old – I wonder if Zuckerberg’s parents are 50 years old – but worth $50 billion, or at least that’s the value implied by the sale of a portion of its (privately held) stock to Goldman Sachs, which will own $450 million worth of the company, and a Russian company, Digital Sky, which added $50 million to the $700 million it owns in Facebook already.

If there was ever a time to sell a piece of Facebook, it’s now. Zuckerberg was just made Time’s Person of the Year – which prompted by new favorite satirist, Andy Borowitz, to applaud Time’s controversial decision that Zuckerberg was, indeed, a person – and the movie is going great guns, even if I’ve never seen it (although I’m told the novice actor given the part really nails Larry Summers – I thought the part really belonged to Gary Shandling). And we only recently learned that Facebook has now surpassed Google as the most visited site on the American Internet – about 9 percent of all site visits in the U.S. go there, although Google would account for 10 percent of you added in Google’s e-mail and YouTube affiliations. So Facebook is the Flavor of the Month, and if you think having money makes you immune to that kind of faddishness, I have mortgages to sell you.

Is Facebook really worth $50 billion? I don’t mean that in the cosmic shake-your-head-and-bemoan-man’s-fate sense, but in the down-to-earth context of whether this valuation is for real. The answer is more yes than you’d think.

The first perspective on this question is – who are the investors in question?. And when you think about Goldman and the Russians, it’s not an open-and-shut case. Digital Sky added incrementally to its already existing holding, so they have some incentive to create a demonstration effect that makes their existing stake in the company look more attractive. And since Facebook is not traded public in markets and therefore subject to the information disclosure requirements and open trading procedures the stocks you own are, it’s easier to try to manipulate its value. That’s not to say it would work, but you could try – Facebook’s limited number of existing shares are traded in a private market in which former employees and angel investors can buy and sell, and that means there’s limited liquidity and nebulous price revelation, as we economists like to say, which means you can’t really be sure what the hell it’s worth.

As for Goldman, I’ll pick that up in a moment. To get there, though, start here:

One issue raised by the Facebook valuation is whether the company will go public. Some analysts see this sale as a teaser to goose the market and get the public ready for an offering in the near future. Others take Zuckerberg at his word – or his mumble – that he’s not interested in ceding that much control, and see this sale as proof that he can raise enough money to finance whatever plans he has without a public offering. The reasons not to be become a public company boil down to the transparency it requires – you have to reveal your financial information and tolerate a distracting debate among investors, analysts, journalists, and idiots such as myself as to the extent to which you can differentiate your rear end from a hole in the ground. And while the regulation of securities has been proved by history to be an essential part of a well-functioning capital market, it’s no picnic for the regulated.

The reason to go public is to raise money, a problem Facebook obviously doesn’t have. Moreover, it’s possible that Facebook and Goldman are showing us the first inklings an alternative to the public markets for raising large sums of capital. To wit: the Securities and Exchange Commission will allow stock in a company such as Facebook to be traded privately – that is, without the disclosure, governance, and other requirements made of public companies through laws such as Sarbanes-Oxley – so long as they have 499 or fewer shareholders. That’s a pretty tight limit. But Goldman is said to be considering a new investment structure in which it would buy Facebook’s private stock and then allow investors to buy shares of something like a “Goldman-Sachs Facebook Trust” or some such with a minimum participation of $2 million per investor.

That gets me back to Goldman and the valuation. I think Goldman sees itself as a competitor, down the line, to the New York stock Exchange – not for schleps such as, say you and me, but as a market-maker for big block institutional traders. It’s already in that business in a big way. And if it were to do so, the line between public and private companies would blur, since both would be traded behind Goldman’s closed doors, instead of in the more regulated environment of the NYSE. Regardless, Goldman’s interested in both private and public issues, and the idea of a Facebook structure in which it “owns” the stock and that it passes along all the goodness and badness of ownership to customers who don’t actually take title to the stock, has to be an intriguing one to a company with that kind of aspiration – it’s like a little Facebook stock exchange. Moreover, for Facebook, it’s a way to create liquidity without having to comply with regulations that require it to be forthright about its circumstances, which is its right unless it wants to come to public markets. As for whether I’d feel as protected in that arrangement as I do in a regulated, public exchange – well, I wouldn’t. But that doesn’t mean it wouldn’t fly. And Goldman’s buying into the company could be a step towards that kind of arrangement, or at least Facebook’s participation in it. So Goldman’s buying Facebook at a $50 billion valuation could be like the Nationals giving Jayson Werth seven years – OK, there’s a risk we overpaid, but it gets us closer to a strategic goal, so what-the-hey.

But there’s then the question of Facebook’s intrinsic worth. An interesting piece by an analyst named Andy Zaky, last August, made the case for a $50 billion Facebook, months before it actually traded at that implied valuation. http://seekingalpha.com/article/222076-the-case-for-a-50-billion-facebook His argument, if I may distill it, is this. Right now, Facebook doesn’t bring in much money, certainly in proportion to its user base; Zaky used the number 500 million users, but that was last August. It’s closer to 600 million now. And Facebook now has roughly the same number of visits as does Google, and Google’s worth $200 billion (in a public market). So if Facebook gets better at monetizing itself – primarily through advertising – there’s no reason why it can’t get close to valuations like Google’s.

I see one strong and one weak argument buried in this chain of reasoning and, one argument that Zaky’s analysis misses, or at least seems to from what I read into it. The strong argument is that Google became a dominant site through innovation, while Facebook became one through…well, what’s the technical term for bullshit? Ah yes…network effects. A product has network effects if its value increases the more people have it. Like the phone system, Facebook is more valuable to me, the individual user, if more people join me in using it. Sure, it’s more inviting looking than competitors such as MySpace (which was the most visited site in America as recently as 2007 -- Hey? How’s MySpace doing now?), http://www.telegraph.co.uk/technology/myspace/8130097/MySpace-surrenders-to-Facebook-in-battle-of-social-networks.html but the real driver is reaching the network-based critical mass that generates the value to the individual user. Google, in contrast, got where they are by doing something very well, there’s no network effect behind it. Its value as a search engine has nothing to do with how many other people are using it. There are a myriad of questions about Google’s algorithm, about whether Google’s conflicted in its role as an “impartial” search algorithm and, at the same time, a purveyor of other services for which people search, and there are privacy issues(which they share, in some respects, with Facebook). But it’s possible to imagine that Google might one day face competition from someone who out-Googles them, that is, does the search job better. If Facebook is somehow out-competed, it will be because hundreds of millions of people were so pissed off at them for whatever reason that they switched to another, comparable service. Absent an ergotistic spore breaking out in Facebook’s headquarters, that’s harder to imagine. Google sits on top of a network; Facebook is a network. So that’s the strong argument for why Facebook out-survives Google.

The weaker argument, as it pertains to Zaky’s analysis, is that advertising is about selling people things, and Google’s clientele are people looking for things, as opposed to Facebook’s users, who are looking for each other. Advertising is relevant in the extreme to the value Google creates for its users, but only incidental to what Facebook’s users want. I can’t imagine that Facebook qua Facebook is going to be worth as much – in terms of ability to generate revenue per user or per visit from its core service – as is Google.

But Google’s valuation, to my thinking, isn’t completely, or really, about their value as a search engine. It’s about their value as a gateway into the tangled maze of value created on the Internet. Google is a search engine, but it’s already failed as an equipment manufacturer, succeeded as an e-mail provider and originator of operating systems for equipment, and could end up being everything from a travel agency to a television station to a carriage provider, a wistful vision to which it occasionally purports to subscribe. Facebook hasn’t added this kind of dimensionality, but it’s going to – yes, I said, will – because something to which so many people feel allegiance and are involved with daily cannot help but evolve in that direction. It will own a generation of users in a way Google cannot, even though Google, their monopolistic hearts, does something.

That’s the issue I have with the Zaky analysis, the argument he misses, as does any other valuation that focuses on advertising revenue per view. Just what market are Google and Facebook in? They’re monopolists in their own bailiwicks, but the spaces they occupy are only islands in a larger archipelago of value on the Internet. They might be “service” or “software” companies, but that misses the point. If it turns out that Facebook can truly cement the attentions of a generation of (self-absorbed, to be sure) users, then they can dominate the decisions about what equipment gets used, what broadband providers area selected, what other services enter the Internet space. Is Facebook something you “get” on your mobile or broadband provider? Or is your mobile or broadband provider someone that lets you “get” Facebook? The difference comes down to who will capture the lion’s share of the value you realize by having the entire package – access, device, services, applications, the whole “stack.”

That’s why it’s possible to talk about Facebook’s being worth $50 billion – because it might end up, with all its gruesome banality (who gets to light the pyres that reward the villains who gave us Farmville or Mafia Wars?), the gateway to the broadband world. There’s some chance that one day, all broadband access, service, and device providers will have to dance to their tune.

Today, 500 million users. Tomorrow, the world.

January, 2011