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Tuesday, January 31, 2012
The Economist on Unrest in China
Tuesday, January 10, 2012
Financial Times on Capitalism in crisis: The code that forms a bar to harmony
The enrichment of bankers, corporate chiefs, flash traders and their cronies is testing tolerance of inequality, argues John Plender in the first part of an FT series
January 8, 2012 9:15 pm
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Greedy bankers, overpaid executives, anaemic growth, stubbornly high unemployment – these are just a few of the things that have lately driven protesters on to the streets and caused the wider public in the developed world to become disgruntled about capitalism. The system, in all its different varieties, is widely perceived to be failing to deliver.
Business in the leading English-speaking countries attracts misgivings. Fewer than half of the American and British people sampled in the 2011 Edelman Trust Barometer have faith in business to do what is right. The survey rates the US and the UK only marginally ahead of Russia on this score. So there is talk of a crisis of legitimacy and an erosion of business’s “licence to operate”
This article, the first in a series on rethinking capitalism after the financial crisis that began in 2007, argues that popular acceptance – which is a basic condition for business success – has waned in the Anglosphere for good reason. At the heart of the problem is widening inequality. In a recent study, the Paris-based Organisation for Economic Co-operation and Development, the club of developed nations, declared that the wealthiest Americans “have collected the bulk of the past three decades’ income gains”. Much the same is true of the UK. In both cases, most of the spoils have gone to finance professionals and top executives.
As Stewart Lansley, author of a recent book on inequality*, puts it, the modern economy appears to consist of two tracks: a fast one for the super-rich and a stalled one for everyone else. Those in the slow lane enjoyed rising living standards before 2007, despite stagnant real incomes, thanks to increased borrowing on the security of their homes. Since the crisis, however, American and British homeowners have faced a long and deep squeeze on real living standards, while struggling to service an unprecedented level of indebtedness. At the same time, says Mr Lansley, finance has come to play a new role as “a cash cow for a global super-rich elite”.
In continental Europe, the increase in inequality is less pronounced and the legitimacy problem has more to do with the way imbalances in the eurozone are being addressed. Northern Europeans resent a monetary union that has permitted southern Europe to engage in what they see as fiscally profligate behaviour, while southern Europeans and the Irish are required to submit to extreme austerity programmes that exacerbate their sovereign debt problems.
As the German-led policy elite inches towards “more Europe” as a solution to the fissures in the eurozone, it is far from clear that more Europe is what the citizens of Europe want. Democratic legitimacy has been largely lacking from the outset of this gigantic monetary experiment. On both sides of the Atlantic there is now a risk that reasonable aspirations to equality of opportunity are being undermined, accompanied by a growing threat of political instability. Support for open trade and free markets is also being adversely affected.
Misery and money motive
The problem of consent in relation to capitalism is nothing new. In fact, it returns with nagging frequency. In the early years of the industrial revolution, average per capita incomes were slow to rise and the contrast between the plight of the working population and the lifestyle of rich manufacturers prompted savage diatribes such as that of Charles Dickens in Hard Times. Even when living standards did rise, David Ricardo and Karl Marx worried whether the free markets trumpeted by Adam Smith could produce an income distribution that was politically tolerable.
By the late 19th century the debate turned more heavily on the moral question posed by the unedifying behaviour of the American robber barons at a time of spectacular economic growth. The centrality of the money motive in wealth creation appeared to detract from capitalism’s legitimacy unless there was an implicit social contract between the rich and the rest of society, whereby the wealthy tempered ostentation and engaged in philanthropy.
Then, in the unstable 1920s and the Depression of the 1930s, the efficacy as well as the moral basis of capitalism was once again called into question. While F. Scott Fitzgerald chronicled the moral vacuity of jazz age capitalism in The Great Gatsby, John Maynard Keynes, who provided a theoretical basis for the mixed economy and a more humane form of capitalism, was notably acerbic on what he called “individualist capitalism” and the money motive. Such questioning was sharpened by the existence for the first time of a seemingly successful alternative to capitalism in the Soviet Union; also of competing models, such as the corporatist approaches developed in Germany and Italy.
What, then, is different about today’s outbreak of disaffection? Perhaps the most important difference is that it is not the product of despair. The people in Manhattan’s Zuccotti Park and on the steps of St Paul’s Cathedral in London had no need of soup kitchens and took to their tents out of choice, unlike many in the 1930s US who slept in cardboard box colonies – Hoovervilles – out of necessity.
If there is no proliferation of soup queues, it is because in all the economies of the developed world capitalism has been humanised to a greater or lesser degree by forms of social democracy and by bank bail-outs. Unemployment in the US has gone nowhere near the 25 per cent rate that prevailed in 1933. While there are exceptionally high rates of youth unemployment, especially in southern Europe, there is more of a safety net for the victims than in the Depression. And if today’s protesters articulate no coherent programme, it seems clear that underlying frustrations are to do with perceptions of unfairness, not immiseration.
Much of that frustration relates to the banks. In contrast to the 1930s, when banking was about deposit-taking and lending, modern bankers engage in complex trading that they themselves do not always understand and whose social utility is not apparent to ordinary mortals – or even to the likes of Lord Turner, head of the UK Financial Services Authority, who famously declared that many parts of the banking business had “grown beyond a socially reasonable size”. Many have shown a disregard for their customers, while fiduciary obligation has become a casualty of deregulation and the shareholder value revolution. There is a widespread conviction that these bankers constitute a protected class who enjoy bonuses regardless of performance, while relying on the taxpayer to socialise their losses when they have taken excessive risks. At the same time, the public is aware that top executive rewards more generally are poorly related to performance and tend to go up even when profits fall.
Human capital or ‘hand’
Such resentment is not completely new. It bears some resemblance to the hostility towards profiteers after the first world war, which prompted Keynes to remark: “To convert the business man into the profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards. The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”** On that basis, no one can be surprised that the legitimacy of capitalism is currently in question. And it would be wrong to call it a “winner takes all” form of capitalism, because privileged losers appear to be making off with the prizes too.
What is unquestionably novel is the ferocity with which US business sheds labour now that executive pay and incentive schemes are more closely linked to short-term performance targets. In effect, the American worker has gone from being regarded as human capital to a mere cost, or what was known in the 19th century as a “hand”. Yet this pursuit of a narrowly financial conception of shareholder value may destroy value for the ultimate pension beneficiaries – because of the disruption that slashing and burning causes, and the cost and time involved in hiring and retraining when conditions improve.
That underlines the “agency problem” at the heart of the banking and boardroom pay sagas. The accountability of management – the agent acting on behalf of the highly dispersed beneficiaries of equity ownership – is fundamentally flawed. While the public may not be aware of the details of the weak chain of accountability, or the growing number of investors such as high-frequency traders or hedge funds that have no interest in playing a stewardship role, it sees the outcome, which contributes to the wider inequality story.
So what to do? It is not as if there are attractive alternative models. While the west is chastened by the rise of Asia, few would wish to adopt the communist Chinese mixture of state ownership, red-in-tooth-and-claw private markets, wholesale corruption and even greater inequality than the US. As for the cleaner authoritarian approach of Singapore, despite delivering high economic growth, it has started to lose its appeal with the island’s electorate. Nor would many in the west find free-market Hong Kong a comfortable environment.
The real question, as Keynes argued in the 1930s, is therefore how to improve the existing model of capitalism. The snag is that there is minimal flexibility in macro policy after the crisis, especially in the US where broadly centrist politics have been replaced by a polarised, stalemated debate. And in both the US and UK there is a greater mistrust of big government, according to the Edelman Trust Barometer, than of business. Efforts to re-regulate the banking system, meantime, have failed to convince many experts that an even larger financial crisis can be avoided.
From distribution to decline
If Hyman Minsky, the expert on financial market fragility, provided the best route map for understanding events before the crisis, and Keynes offered the best guide to crisis management, Mancur Olson, a theorist on institutional economics, could now be a posthumous beacon on how to manage the aftermath. Olson argued that nations decline because of the lobbying power of distributional coalitions, or special-interest groups, whose growing influence fosters economic inefficiency and inequality.***
When he was writing, the main interest groups were trade unions and business cartels. Today, the pre-eminent interest group consists of finance professionals on Wall Street and in London. Through campaign finance and political donations, they have bought themselves protection from proper societal accountability. And they pose a continuing obstacle to the de-risking of banking of the kind recommended by the Vickers commission in the UK.
Tackling such interest groups both in the US and Europe is one of the biggest post-crisis tasks for policymakers and a key to addressing concerns about systemic legitimacy. The inchoate nature of the public’s complaints is another. Not the least of the difficulties, to reformulate Winston Churchill’s famous remark on democracy, is that capitalism is the worst form of economic management except for all those other forms that have been tried from time to time. The public relations problem implicit in that pale endorsement is an underlying reason why legitimacy crises recur.
* The Cost of Inequality, Gibson Square, 2011
** Quoted in Keynes and Capitalism, Roger E. Backhouse and Bradley W. Bateman, History of Political Economy, 2009
*** The Rise and Decline of Nations, Yale University Press, 1982
Tuesday, December 20, 2011
#Riot: Self-Organized, Hyper-Networked Revolts—Coming to a City Near You
December 16, 2011
Wired January 2011 "20.01"
Forget anarchy. Today's prtests, revolts and riots are self organizing, hyper-networked -- and headed for a city near you.
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Let’s start with the fundamental paradox: Our personal technology in the 21st century—our laptops and smartphones, our browsers and apps—does everything it can to keep us out of crowds.
Why pack into Target when Amazon can speed the essentials of life to your door? Why approach strangers at parties or bars when dating sites like OkCupid (to say nothing of hookup apps like Grindr) can more efficiently shuttle potential mates into your bed? Why sit in a cinema when you can stream? Why cram into arena seats when you can pay per view? We declare the obsolescence of “bricks and mortar,” but let’s be honest: What we usually want to avoid is the flesh and blood, the unpleasant waits and stares and sweat entailed in vying against other bodies in the same place, at the same time, in pursuit of the same resources.
And yet: On those rare occasions when we want to form a crowd, our tech can work a strange, dark magic. Consider this anonymous note, passed around among young residents of greater London on a Sunday in early August:
Everyone in edmonton enfield woodgreen everywhere in north link up at enfield town station 4 o clock sharp!!!!
Bring some bags, the note went on; bring cars and vans, and also hammers. Make sure no snitch boys get dis, it implored. Link up and cause havic, just rob everything. Police can’t stop it. This note, and variants on it, circulated on August 7, the day after a riot had broken out in the London district of Tottenham, protesting the police killing of a 29-year-old man in a botched arrest. So the recipients of this missive, many of them at least, were already primed for violence.
It helped, too, that the medium was BlackBerry Messenger, a private system in which “broadcasting” messages—sending them to one’s entire address book—can be done for free, with a single command. Unlike in the US, where BlackBerrys are seen as strictly a white-collar accessory, teens and twentysomethings in the UK have embraced the platform wholeheartedly, with 37 percent of 16- to 24-year-olds using the devices nationwide; the percentage is probably much higher in urban areas like London. From early on in the rioting, BBM messages were pinging around among the participants and their friends, who were using the service for everything from sharing photos to coordinating locations. Contemplating the corporate-grade security and mass communication of the platform, Mike Butcher, a prominent British blogger who serves as a digital adviser to the London mayor, wryly remarked that BBM had become the “thug’s Gutenberg press.”
Nick de Bois, one of Enfield’s representatives in Parliament, was whiling away that Sunday afternoon at the horse races in Windsor, where a friend’s wife was celebrating her 40th birthday. It was a fine day of racing, to boot: In the third, Toffee Tart bested Marygold by just half a length, paying off at 7:2. “Unusually for me, I hadn’t looked at my handheld in two hours,” de Bois says. But when he did look, he saw something disturbing. Gossip was swirling about more riots that night, with Enfield named as a likely target. De Bois decided he had better cut his race day short. “I never even had a chance to recover my losses,” he deadpans.
By five in the afternoon, he was on the streets of Enfield Town, along with a handful of police. Was there a riot? No—not really, not yet. But there was a gathering crowd, a mixed-race group of mostly young men, just milling around in small bunches. Some were conducting what de Bois describes as “reckys”—reconnaissance missions—around the town center. “They were just having a good look!” he says.
Then, at around 6 pm, as if at some unvoiced command, the street exploded. The crowd hit a Pearsons department store, a Starbucks, an HMV. Police were able to move in and contain the violence—or so they thought—to a small part of the town’s shopping district. “Of course, there were side roads,” de Bois says. “But broadly speaking, the looting had been contained. Calm had been restored.” It was a loose version of what the British call kettling, an anti-riot tactic where police keep a disorderly crowd penned in, often for hours, to avoid their causing any more trouble.
Only then, though, did the situation in Enfield get truly surreal. De Bois was standing outside the sealed-off zone, behind one line of police, in an open area that led to the train station. As he watched in amazement, more and more people—some disembarking trains at the station, some stepping out of cars—continued to pour into the plaza. Riot police were convoying in, too, but their numbers couldn’t possibly keep up. And even if they did, it was impossible to definitively separate the would-be rioters from the bystanders.
Right behind a line of armor-clad police who had successfully contained a riot, this new crowd of hundreds was gearing up to touch off a second riot. As 7 pm approached, face coverings went up, and a small group walked past de Bois with a crowbar. Gangs began to break windows throughout the plaza—one local jewelry store lost nearly $65,000 in stock. Police would descend on a group, but then the crowd would disperse, only to reconstitute itself someplace else a few minutes later. Part of the issue was a peculiarity of British policing: Largely because most cops lack guns, they can’t easily carry out mass arrests, even in emergencies. Instead, each arrestee is physically accompanied by individual officers for booking. With their numbers already stretched thin, the police could not take looters off the streets without further depleting their own ranks.
But there was also something strange about the character of this riot, and these rioters—something that seemed to make the violence unstoppable. At base, it was their confidence: their surety that, as they streamed out of their cars and trains, or as they milled around in small groups, or even after they were dispersed by police, they would always find one another in sufficient numbers. As de Bois wandered through the crowd, he buttonholed one of the young men, asked him who they all were and why they were there. “Don’t worry,” said the looter to the MP, in a tone of gruff reassurance. “We’ll be out of here soon.”
But on both sides of the Atlantic, there was a rash of more mysterious, more malicious-seeming crowds in which technology appeared to play a central role. Riots over four days in Britain spread across the country and caused millions of dollars in property damage. US cities struggled with their own disorder: In Kansas City, Missouri, gunfire injured three after hundreds of high school students descended on an open-air shopping mall, while Philadelphia imposed a curfew to fight a long string of surprise gatherings by teens. At least five cities saw an innovative form of robbery, where a large group of kids would simultaneously run into a store, take items off the shelves, and run out again. To be sure, technology wasn’t at the root of all the crowd mayhem: For example, an investigation of a group robbery in Germantown, Maryland, determined that the thieves had hatched their plan on a bus, not online. But with most of these events, there was some sort of electronic trail (Facebook, Twitter, texts, BBM) that showed how they coalesced.
Groping for what to call these events, the media christened them “flash mobs”—lumped them in, that is, with the fad in which large crowds carry out a public performance and then post the results on YouTube. So at around the same time that Fox was running a lighthearted flash-mob reality show called Mobbed, and Friends With Benefits, the high-grossing rom-com starring Justin Timberlake and Mila Kunis, featured a flash-mob dance in Times Square, pundits and public officials suddenly began railing against flash mobs as a threat to public order. The convenience store knock-overs became “flash mob robberies,” or even “flash robs.” “The evolution of flash mobs from pranks to crime and revolution,” declared one of my local papers, the San Francisco Examiner, after the hacktivist group Anonymous had helped to create subway shutdowns.
Here is where the story got a bit uncomfortable for me personally. The Examiner’s flash-mob timeline, which ended in a terrifying stew of rioting and revolution, literally began with my name. Back in 2003, as a sort of social experiment, I sent an email to friends and asked them to forward it along, looking to gather “inexplicable mobs” of people around New York. Then, over the span of just a couple of months, I watched in amazement as my prank turned into a worldwide fad. I should add that the first flash mobs weren’t like either the Friends With Benefits kind or the burn-and-loot kind—or, maybe I should say, they were a little like both. Like the happy mobs, they were good-natured spectacles, and they often involved the crowd performing some benign group action: bowing before a robotic dinosaur, making birdcalls in Central Park. Like the violent mobs, though, they were highly spontaneous; the crowd was told where they were going and what they would do there only minutes beforehand. And the goal of the get-togethers was not to entertain but, if I may borrow a phrase, to “link up and cause havic.”
I even called my events “mobs,” as a wink to the scary connotations of a large group gathered for no good reason. But I didn’t come up with the name flash mob—that honor belongs to Sean Savage, a UC Berkeley grad student who was blogging about my events and the copycats as they happened. He added the word “flash” as an analogy to a flash flood, evoking the way that these crowds (which in the original version arrived all at once and were gone in 10 minutes or less) rushed in and out like water from a sudden storm. Savage and I never met while the original mobs were still going on, but today we work just a block away from each other in San Francisco—me at Wired, him at Frog Design, where he’s an interaction designer—so we now can get together and commiserate about what’s become of our mutual creation. It had been bad enough to see the term get appropriated by Oprah to describe a ridiculous public dance party featuring the Black Eyed Peas. Now the media was stretching the term to include just about any sort of group crime. “It means everything and nothing now,” Savage says morosely.
One reason the term “flash mob” stuck back in 2003 was its resonance, among some sci-fi fans who read Savage’s blog, with a 1973 short story by Larry Niven called “Flash Crowd.” Niven’s tale revolved around the effects of cheap teleportation technology, depicting a future California where “displacement booths” line the street like telephone booths. The story is set in motion when its protagonist, a TV journalist, inadvertently touches off a riot with one of his news reports. Thanks to teleportation, the rioting burns out of control for days, as thrill-seekers use the booths to beam in from all around to watch and loot. Reading “Flash Crowd” back in 2003, I hadn’t seen much connection to my own mobs, which I intended as a joke about the slavishness of fads. I laughed off anyone who worried about these mobs getting violent. In 2011, though, it does feel like Niven got something chillingly correct. He seems especially prescient in the way he describes the interplay of curiosity, large numbers, and low-level criminality that causes his fictional riots to grow. “How many people would be dumb enough to come watch a riot?” the narrator asks. “But that little percentage, they all came at once, from all over the United States and some other places, too. And the more there were, the bigger the crowd got, the louder it got—the better it looked to the looters … And the looters came from everywhere, too.”
That last line passed for science fiction in 1973. The not-infrequent riots that wracked American cities in the 1960s tended to be strikingly localized, with rioters taking out their aggression on the immediate neighborhood in which they lived. By contrast, Nick de Bois says that of the 165 or so people arrested so far for the looting in Enfield Town, only around 60 percent hailed from the local borough, which includes not just greater Enfield but a few surrounding towns. The other 40 percent commuted in from elsewhere, including locales as far afield as Essex and Twickenham, each a good hour’s drive away. Instead of teleportation booths replacing telephone booths—how quaint!—it turned out that those phones merely had to shrink down enough to fit into our pockets.
In trying to understand how and why crowds go wrong, you can have no better guide than Clifford Stott, senior lecturer in social psychology at the University of Liverpool. Stott has risked his life researching his subject. Specifically, he has spent most of his career—more than 20 years so far—conducting a firsthand study of violence among soccer fans. On one particularly dicey trip to Marseilles in 1998, Stott and a small crowd of Englishmen ran away from a cloud of tear gas only to find themselves facing a gang of 50 French toughs, some of them wielding bottles and driftwood. “If you are on your own,” a philosophical fellow Brit remarked to Stott at that moment, “you’re going to get fucked.” This, in a sense, is the fundamental wisdom at the heart of Stott’s work—though he does couch it in somewhat more respectable language.To Stott, members of a crowd are never really “on their own.” Based on a set of ideas that he and other social psychologists call ESIM (Elaborated Social Identity Model), Stott believes crowds form what are essentially shared identities, which evolve as the situation changes. We might see a crowd doing something that appears to us to be just mindless violence, but to those in the throng, the actions make perfect sense. With this notion, Stott and his colleagues are trying to rebut an influential line of thinking on crowd violence that stretches from Gustave Le Bon, whose 1895 treatise, The Crowd, launched the field of crowd psychology, up to Philip Zimbardo, the psychologist behind the infamous Stanford Prison Experiment of 1971. To explain group disorder, Zimbardo and other mid-20th-century psychologists blamed a process they called deindividuation, by which a crowd frees its members to carry out their baser impulses. Through anonymity, in Zimbardo’s view, the strictures of society were lifted from crowds, pushing them toward a state of anarchy and thereby toward senseless violence.
By contrast, Stott sees crowds as the opposite of ruleless, and crowd violence as the opposite of senseless: What seems like anarchic behavior is in fact governed by a shared self-conception and thus a shared set of grievances. Stott’s response to the riots has been unpopular with many of his countrymen. Unlike Zimbardo, who would respond—and indeed has responded over the years—to incidents of group misbehavior by speaking darkly of moral breakdown, Stott brings the focus back to the long history of societal slights, usually by police, that primed so many young people to riot in the first place.
Meeting Stott in person, one can see how he’s been able to blend in with soccer fans over the years. He’s a stocky guy, with a likably craggy face and a nose that looks suspiciously like it’s been broken a few times. When asked why the recent riots happened, his answers always come back to poor policing—particularly in Tottenham, where questions over the death of a young man went unaddressed by police for days and where the subsequent protest was met with arbitrary violence. Stott singles out one moment when police seemed to handle a young woman roughly and an image of that mistreatment was tweeted (and BBMed) throughout London’s black community and beyond. It was around then that the identity of the crowd shifted, decisively, to outright combat against the police.
Stott boils down the violent potential of a crowd to two basic factors. The first is what he and other social psychologists call legitimacy—the extent to which the crowd feels that the police and the whole social order still deserve to be obeyed. In combustible situations, the shared identity of a crowd is really about legitimacy, since individuals usually start out with different attitudes toward the police but then are steered toward greater unanimity by what they see and hear. Paul Torrens, a University of Maryland professor who builds 3-D computer models of riots and other crowd events, imbues each agent in his simulations with an initial Legitimacy score on a scale from 0 (total disrespect for police authority) to 1 (absolute deference). Then he allows the agents to influence one another. It’s a crude model, but it’s useful in seeing the importance of a crowd’s initial perception of legitimacy. A crowd where every member has a low L will be predisposed to rebel from the outset; a more varied crowd, by contrast, will take significantly longer to turn ugly, if it ever does.
It’s easy to see how technology can significantly change this starting position. When that tweet or text or BBM blast goes out declaring, as the Enfield message did, that “police can’t stop it,” the eventual crowd will be preselected for a very low L indeed. As Stott puts it, flash-mob-style gatherings are special because they “create the identity of a crowd prior to the event itself,” thereby front-loading what he calls the “complex process of norm construction,” which usually takes a substantial amount of time. He hastens to add that crowd identity can be pre-formed through other means, too, and that such gatherings also have to draw from a huge group of willing (and determined) participants. But the technology allows a group of like-minded people to gather with unprecedented speed and scale. “You’ve only got to write one message,” Stott says, “and it can reach 50, or 500, or even 5,000 people with the touch of a button.” If only a tiny fraction of this quickly multiplying audience gets the message and already has prepared itself for disorder, then disorder is what they are likely to create.
The second factor in crowd violence, in Stott’s view, is simply what he calls power: the perception within a crowd that it has the ability to do what it wants, to take to the streets without fear of punishment. This, in turn, is largely a function of sheer size—and just as with legitimacy, small gradations can make an enormous difference. We often think about flash mobs and other Internet-gathered crowds as just another type of viral phenomenon, the equivalent of a video that gets a million views instead of a thousand. But in the physical world, the distance separating the typical from the transformational is radically smaller than in the realm of bits. Merely doubling the expected size of a crowd can create a truly combustible situation.
It was this problem of sheer volume, in retrospect, that tripped up Ryan Raddon—aka Kaskade, a Santa Monica, California, electronic dance artist—in his ill-fated PR stunt last July. The plan was simple enough: To celebrate the release of Electric Daisy Carnival Experience, a documentary about the electronic dance music scene that prominently featured him, Raddon would put on a short show outside the premiere, at the iconic Grauman’s Chinese Theatre on Hollywood Boulevard. He got a permit from the fire department to shut down one lane of traffic. The idea was that the crowd would assemble on the sidewalk; he would cruise in, playing music on the back of a truck, and stop right in front, blocking that one agreed-upon lane. Really, it was a very elegant plan, and at 1:36 pm, he sent out the fateful tweet:
Today@6pm in Hollywood @Mann’s Chinese Theatre. ME+BIG SPEAKERS+ MUSIC=BLOCK PARTY!!! RT!
As Raddon was to discover, though, the math of physical space is unforgiving. The stretch of sidewalk directly in front of the theater is around 130 feet wide by 12 feet deep, while the outer courtyard offers a second viewing area of perhaps twice that size. Since even a dense crowd accommodates only around one person per 4.5 square feet, this would imply a maximum audience of about a thousand. By the time Raddon’s truck arrived, though, the crowd had swelled to roughly 5,000, stretching both ways down the block and thickly obstructing all six lanes of traffic. Police and news helicopters rotored overhead; fistfights began to break out. There was nowhere for Raddon’s truck to pull in, so the police directed him around the corner.
Then they tried to disperse the crowd, sending a line of riot cops down Hollywood Boulevard. They barked an order to leave the street, even though the sidewalks could not fit another person, let alone another thousand. Some fans responded by throwing bottles at the police, who in turn shot beanbag cannons into the crowd. Pandemonium ensued, with Raddon’s fans surging onto the tops of police cars and resisting arrest. Around the corner on Orange Drive, a cruiser was set ablaze. The dismal drift of the event is well captured in Raddon’s Twitter stream, which started out so cocksure just before his arrival but which escalated, over the course of 90 minutes, into an agitated blizzard of all-caps:
6:58 pm
Everybody CHILL OUT!!! The cops are freaking out. BE SAFE AND LET’S HAVE SOME FUN!
7:18 pm
EVERYONE CHILL NOW!!! The block party has officially been shut down! BUT THIS IS TOO CRAZY AND WE NEED TO BE SAFE!
7:31 pm
EVERYONE NEEDS TO GO HOME NOW! I DON’T WANT THIS TO REFLECT BADLY ON EDM OR WHAT WE ARE ABOUT. BE RESPECTFUL AND CHILL OUT!!!
When I meet Raddon a few months later—at the studio suite in Santa Monica that he shares, a bit incongruously, with the R&B legend Booker T. Jones—he’s still puzzling over why so many people came. At first blush, this sounds like false modesty: A week before we meet, a fan poll cosponsored byDJ Times magazine named him “America’s Best DJ,” a serious honor in the electronic dance scene. But as Raddon points out, he doesn’t even have a major-label record deal, and with 138,000 followers, he certainly doesn’t rank very high among musicians on Twitter: Lady Gaga now has more than 16 million, a minor big-label star like Jason Mraz boasts more than 2 million, and indie heavies like the Decemberists top 200,000, easy. It’s hard to believe that even Mraz, or “Weird Al” Yankovic (2.2 million), could draw out 5,000 people on just four hours’ notice.
Really, Raddon was right: On their face, at least, the numbers don’t add up. It’s not as if his appeal is somehow regional to Southern California; the electronic dance music fan base is truly worldwide. So even a generous estimate of around 10 percent local would put barely more than 13,500 of his Twitter followers within driving distance of the show. How did he get nearly half that many people to drop what they were doing and almost immediately schlep out to Hollywood Boulevard? And how did that crowd, of all crowds—a fan base known for its gratuitous hug-giving and cuddle-puddling—escalate into a full-blown riot?
To the first question, at least, Raddon has come up with a preliminary answer, and it’s a smart one, because it gets at the changing nature of the subculture he inhabits. It has become a cliché these days to talk about “engagement” in social media, about the magical way that some users and institutions online are able to punch above their weight, as it were, in the devotion of their relatively small groups of followers. But among dance music fans, super-engagement is a real and rational phenomenon, because social media serves not just as a diversion or a supplemental source of information but as the entire lifeline of their scene. Even the largest house acts have tended not to be on major labels. Raddon himself is signed to a small New York-based outfit called Ultra Records, which sells all its music online; it’s vanishingly rare for an Ultra artist to hit the Billboard Hot 100, but the label’s YouTube channel is the fifth-most-viewed music channel of all time and the 11th-most-viewed channel of any type. Unless you’re extremely diligent about following Raddon or his label or other big acts on social media, you might never hear about even the major shows in your area.
“Electronic dance music is still something that you have to find,” Raddon says. “It’s not on the radio, it’s not on TV. These people really had to search me out.” And the sense of shared community this engenders cannot be overstated. Ten years ago, the dance music scene was finely sliced into such an interminable array of genre divisions that it became a joke: aquatic techno-funk, down-tempo future jazz, goa-trance, hard chill ambient, techxotica, and so on. In the past decade or so, though, despite all the ways that the Internet encourages music to nichify, the rise of social media has actually pushed electronic dance music in the opposite direction. Witnessing its sheer numbers, sensing its collective power, the dance scene has reunified, becoming more of a mass phenomenon—an undifferentiated subculture of millions. It turns out that the thrill of collective identity, a moblike feeling of shared enormity, is far more exciting to fans than were their endless dives down rabbit holes of sonic purism.
Can you see how this starts to hint at an answer to the second question? The one about why a raver crowd became a riot? Think of it this way: To show up at Kaskade’s block party—and to hang around even after, or especially after, the police have come to send you home—is a decision that’s about far more than taste in music. It’s about being part of a group that has long felt invisible (no radio, no TV) despite the existence of enormous numbers. One might call this the emergence of mega-undergrounds, groups of people for whom the rise of Facebook and Twitter has laid bare the disconnect between their real scale and the puny extent to which the dominant culture recognizes them. For these groups, suddenly coalescing into a crowd feels like stepping out from the shadows, like forcing society to respect the numbers that they now know themselves to command.
Every disorderly flash mob that I’ve mentioned in this story has been, at root, a mega-underground phenomenon. In many cases, this brings us back around to the uncomfortable subject of race. In the US, the biggest and most important of the urban flash mobs that politicians have railed against (and that right-wingers now fret about as representing the specter of black insurrection) weren’t gathered by calls to violence, as in London. Instead, they were essentially about African-American teenagers showing their numbers, about kids taking over—for a brief window of time—some highly visible public spaces where they normally feel less than welcome. In Kansas City, a police investigation found that the mobs in April 2010 were gathered via Facebook, bringing between 700 and 900 kids to the aptly named Country Club Plaza, lined with plush stores. The Philadelphia mobs that same spring were touched off by a popular dance crew called Team Nike, who tweeted about the public performances they were giving; as in LA, though, these tweets got widely forwarded with an eye toward creating impromptu street parties on South Street and at the Gallery mall. Elijah Anderson, a Yale sociologist and Philly native who studies poor urban communities, has coined the term “cosmopolitan canopy” to describe these kinds of spaces. They’re the places where people of different races and class backgrounds come together, which makes them the closest thing we have today to a commons; for teens, especially poorer teens, the cosmopolitan canopy represents society and authority in the way that a statehouse or bank headquarters ought to but doesn’t.
And it’s not too far a stretch to extend this same idea into the realm of protests. This is, at root, the way that Occupy Wall Street defied expectations to become a genuine political force. The media harped on how these protests grew through Twitter, but it was really the movement’s Tumblr—wearethe99percent.tumblr.com—that made it work. Those photos of struggling Americans essentiallyvirtualized the occupation; the street protesters were merely the visible symbol of the giant, subterranean mob of Americans struggling to get by. What’s really revolutionary about all these gatherings—what remains both dangerous and magnificent about them—is the way they represent a disconnected group getting connected, a mega-underground casting off its invisibility to embody itself, formidably, in physical space.
None of this can entirely explain Enfield, though. What remains shocking about that riot is the way it evolved in the moment, forming and reforming, eluding attempts to contain it. I keep coming back to one particular video from that night, a 50-second clip that captures the moment when G. Mantella, a mom-and-pop jewelry store, got hit for $65,000 in merchandise. Seriously, go watch the video right now, if you’re near a browser: It’s at wrdm.ag/riotvideo. The camera moves at walking pace toward the store, through a large but loose milling crowd. Who is a spectator? Who is a looter? Everyone looks simultaneously like neither and both. There’s a remarkable moment at 0:30 where a guy in a hoodie walks by, clutching a smartphone to his chest, looking cannily over his shoulder. He’s clearly taken on the group identity, but his peculiar expression betrays something strange about the nature and extent of his affiliation. The device in his hands connects him but it also frees him, allowing him to stay in and out of the mob at the same time.
The camera approaches the jewelry store just as three police vans come screaming up, and the looters stream out of the store at top speed. It’s the only point in the video that you see a real, thick, densely packed crowd, and that’s at the moment right before it gets dispersed. What isn’t clear from the video—what I didn’t realize until I took the train up to Enfield Town and made my own walk from the station to the square—was just how open this whole space is, how far back the buildings sit from the relatively wide streets. In LA, it had taken the confidence of a thickly gathered mob of ravers to confront the police. Here in Enfield, you had a few hundred people ranging around, gathering to loot, dispersing, and then reconvening soon thereafter to strike again. This was the pattern in Brixton, too, in South London, where rioters looted and burned a shopping district, scattered, and then reemerged a half-mile away to hit an electronics superstore. As Nick de Bois says, “It was organized, but it was dynamic.”
Really, what the video reveals is an extra dimension to the phenomenon of “power,” which turns out to be about more than sheer numbers. In the pre-cell-phone era—as Cliff Stott observed in Marseilles—overall numbers didn’t matter one bit if you could not keep physically connected. In Among the Thugs, Bill Buford’s first-person account of soccer hooliganism, he describes the remarkable discipline that even these drunken, anarchic yobs had to maintain to carry out violence against opposing fans: “Everyone is jogging in formation, tightly compressed, silent.” Step out of the phalanx to grab a pint or take a piss and you might never find your fellows again; in the meantime, the opposing mob might find you alone. Today, by contrast, a crowd’s power is amplified by the fact that its members can never really get separated. A crowd that’s always connected can never really be dispersed. It’s always still out there.
Among the more idealistic people who organize protests, not riots, there are dreams of creating special tools that can guide crowds in the moment, making them even more effective at thwarting or eluding police. At the London Hackspace, a maker workshop in the city’s Hackney borough, I met up with Sam Carlisle, codeveloper of an app called Sukey. Initially concocted to aid a series of student actions last winter—protesting an enormous hike in university fees that was being pushed through by the new Conservative-led government—Sukey has the very specific goal of frustrating that police tactic of kettling, which can imprison activists on the street for hours. To combat this maneuver, Sukey polls protesters in real time to identify exit points to public spaces that are blocked by police. Carlisle and his fellow developers are talking with protest groups about how to expand the app’s reach, creating dedicated apps for multiple smartphone platforms, in multiple languages, for use all around the world.
It’s a great idea in principle. But it seems hard to believe that any dedicated app for crowd communication could possibly be more effective than BBM was in London. In a protest crowd of any significant size, there will be a huge contingent that steps out at the spur of the moment, with no thought of downloading a special app or even bookmarking a URL. When disorder strikes or danger looms, they will fall back on the social ties they have already established, the tools they already possess, the patterns they already follow.
Among tech journalists, BlackBerry is considered to be “old-fashioned, lame, commoditized technology,” as Mike Butcher, the blogger and digital adviser in London puts it. But BBM is private, decentralized, blindingly fast, and—most important—ubiquitous. My colleague Robert Capps has called this phenomenon the Good Enough Revolution (issue 17.09), though I doubt he imagined that last word would ever assume, as it did in the streets of London, such an uncomfortably literal connotation. For tech to become effective as a tool for civic disorder, it first had to insinuate itself into people’s daily lives. Now that it has, there can be no getting rid of it. The agent provocateur lives inside our pockets and purses and cannot be uninstalled.
By the end of “Flash Crowd,” Niven’s fictional journalist, the guy accused of setting off the giant riot in the first place, has dreamed up a system to stop the violence from recurring. It involves the police both curtailing the teleportation technology and commandeering it. Cops, in his scheme, would get to ban all arrivals near the site of unrest, switching the booths so that they only send—directly to the inside of a police station or mass jail.
In the aftermath of the UK riots, the proposals floating around Parliament sounded every bit as intrusive, if not more so. Representatives of Facebook and Twitter were called in to discuss emergency plans to throttle their services. Research in Motion, the maker of BlackBerry, has promised (or so it has been reported) that it would halt BBM if riots happened again. But for the same basic reason that the technologies have proved instrumental in crowd disorders—the ubiquity of their use, among not just young people but all classes and professions—one has to doubt whether governments and tech companies will really have the stomach to carry out these draconian countermeasures. Vital emergency personnel routinely rely on BBM and other smartphone services, so an outright shutdown might easily sacrifice more lives than it saves.
So what’s a police force to do? In late September, the Dallas Police Department played host to a conference called SMILE (Social Media, the Internet, and Law Enforcement), and this question was very much in the air. Mike Parker, a captain at the Los Angeles County Sheriff’s Department, said that his force monitors social media and looks to disrupt problems before they start. He used an example of an entertainer—he wouldn’t specify the name—who tweeted to his half-million followers that he would be making a guerrilla appearance at a local electronics store. Once the police were tipped off to this, they helped to make a clever intervention: By the time the celebrity showed up, store employees had set up a folding table near the front for him, and two cops hung around to watch. “You can imagine how happy he wasn’t, when he showed up,” Parker says with barely restrained glee. “His whole plan was to create a spontaneous, ‘cool’ event, and instead it ended up looking organized.”
But to stay abreast of such would-be mobs, police would need to monitor social media with a level of intelligence—attuned to popularity, cognizant of slang, filtering for location—that right now is beyond the reach of even sophisticated tech startups, let alone cash-strapped police departments. The pitfalls of this task were apparent when David Gerulski, from a firm called DigitalStakeout, took the podium to give a demo. With his service, he promised the assembled officers, they could stop tinkering with social media and “go back to kicking down doors and sticking guns in people’s faces!” On the big screen, he projected a map from his software’s filtering system showing recent and potentially dangerous tweets from Dallas. He drilled down on one tweet in particular, from a user named Evy: suck a dick and die! Jk. (:
“Who’s she talking to? What’s she talking about?” he asked in a portentous tone. “It wasn’t that long ago that Representative Giffords got shot in Arizona. So, with an angry post like this, you want to find out, is this serious?”
“It says JK,” someone called out from the audience. “As in: ‘just kidding.’ “
“Ah,” Gerulski replied. “I didn’t know the JK.”
The most sensible way of looking at this problem is to ask how policing strategies that succeed in the offline world might be extended onto social media. The key to “community policing” has always been that police can gain trust over time but then—when tensions run high—can also quickly demonstrate a presence, making it clear that the law is watching. At the SMILE conference, Scott Mills, an officer from Toronto who works with teens (his Twitter handle, @GraffitiBMXCop, gives a sense of his particular cred), puts this very principle into practice, integrating location-based social media with “walking the beat.” When Mills is called to a crime scene, he checks into Foursquare—and he knows so many kids, he says, that they come find him.
Beyond smarter policing, though, there is only so much that government can do. We probably need to accept, as a simple fact of life in the digital age, that the freedom of assembly will necessarily imply the freedom of an enormous group of people—sometimes people who don’t always behave themselves—to assemble with little or no warning. It’s worth mentioning that in “Flash Crowd,” the journalist never gets around to pitching the authorities on his plan to stop the riots. In the story’s very last lines, an anchorman at his network tells him about a new flash crowd that’s just cropped up. This one is nearly as large, but it’s merely there to witness the red tide at Hermosa Beach, which a celebrity had praised on TV. “It’s a happy riot,” his colleague says, a bit perplexed. “There’s just a bitch of a lot of people.” The journalist takes the assignment, grabs a camera, steps into the booth, and disappears.
Senior editor Bill Wasik (@billwasik) is the author of And Then There’s This: How Stories Live and Die in Viral Culture.
Sunday, August 14, 2011
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Omaha
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.