Friday, August 31, 2012

The Silicon Valley Bubble

The silicon valley bubble.

I'm a tech guy,  been in IT for most of my adult life.  I've worked for companies both great and vile and  when I finally got sick of being used, went into consulting.  Most of my consulting career has been  working for small companies with generally good people. 

In an environment like this it's a blessing to be able to just do what you do best and not be subject to the petty power struggles of the cubicle bound.  That's how I can say they're mostly good people because I didn't have to live with them...

I'm not so fortunate to have grown up in the progressive forward thinking panacea that is the Silicon Valley.  Or at least that's my impression of it. 

Forgive me if this next part is a bit autobiographical, it's necessary to avoid the moniker of a "troll" that may give you cause to ignore my message.

Troglodyte I can tolerate, however.  After all Troglodyte means "Cave Dweller" and as far as I know people who lived in caves stayed dry in a thunderstorm and didn't get eaten by Saber toothed tigers...

I grew up in the gun toting, bigoted, false-faced, chauvinistic mentality of Phoenix Arizona.  In an ultra conservative landscape where any alternative to the nuclear family is frowned upon, my upbringing was challenging to say the least. 

My childhood experiences formed my opinions just like everyone else but things were a bit different in my case. 

I was raised by well meaning incredible people in the persona of my family characterized by unsung heroes. 

My mother, who conquered the sexist biases of the glass ceiling even within her own family and achieved more than it's likely I ever will.

My  grandmother who's depression era wisdom guides my choices to this day. 

My aunt whose free spirit taught me that it was ok to say the hell with what people think you SHOULD be instead of what you WANT to be. 

Lest I forget my Uncle who was the only strong male influence that ever meant a damn to me. 

By the way, I admit there is a bit of a conflict between my aunt and my grandmother's influence....

Of course, where I lived there was a missing character in my upbringing that often left me isolated and ridiculed.  Apparently a fatherless (we won't go there) child in Arizona must automatically be relegated to something less than deserving.  I grew up being chided by other boy's fathers as being homosexual  (at the age of 8) or disallowed from associating with their "normal" offspring for fear that I might "infect" them.  The cruelty of their children is a given and I should add that none of them were ever in danger of either "aberration." 

In case you're still wondering, yes I like girls...

So much for the glorious childhood of my memories.  I couldn't wait to get out of it...

Even  with all that baggage,  I'm not looking to go anywhere else mostly because I've been here so long that I know my enemy too well to chance a new one anywhere else.  Besides, the few good friends I have here are far too important to me to abandon to this wasteland.  If I could take them with me I'd leave in a heartbeat.

Such is my fate but I still cling to the hope that I can somehow effect some change in this unholy backwater if for no other reason than to make it a little easier on my own existence.   

As I write this I'm sitting in a house that's approaching 100 degrees because I can't afford to turn the Air conditioning on.  To do so would bankrupt me.  Not that there aren't a dozen other things threatening to do the same.  That is mostly the result of a crippling economy and a bias against those who exhibit a tendency toward independent thought where I live.

Obviously, things used to be better but there's no sense on dwelling on it.

As an IT guy I've been responsible for everything from an office set up above someone's garage to a multi-million dollar law firm whose very whim could affect public policy.  Well, at least on a local scale...
Even in the backwater that is Arizona we still get news here.  It's just that most people here ignore anything that isn't self indulgent or threatening to their pro-life convictions.  I, however, do not.

Still there is some benefit to living in a place where all is never so rosy.  I've gained a sense of cynicism that allows me to cut through the hype of gross consumerism.  It's not that I've embraced the role of staunch pessimist.  I just have insight into what level of Maslow's hierarchy of needs other people are operating on.

So finally we get to the bubble. 

Being in IT I know I'm not in the most ideal locale to embrace all that technology has to offer.  So I recognize that the tech pundits who orbit the tech havens of Silicon Valley and Austin are fortunate to be able to operate at the higher levels of Maslow's construct.

Where I live being an IT professional offers little in the way of creative thought.  It's little more than a 21st century auto mechanic fixing what's broke for a set price.  The kind of intellectual freedom espoused by tech pundits is viewed as threatening to the local status quo.  Talent isn't cultivated or nurtured it's bought, used and discarded.  That's not pessimism, it's fact.

Talk to most people who live in the "Bubble," however, and you find an idealism that borders on the naive and to be honest it irritates me.

What most in this group consider profound suffering I'd consider a bad hair day. 

I would dearly love to live in a place where I could fully indulge in the higher levels of Maslow's hierarchy but alas I do not and likely will not as the opportunity has never presented itself.  Not that I've ever been in a position to take advantage of it if it did.

You can shelve your admonitions of pulling one's self up by their bootstraps by the way.  My boots are in hock.

It's not unlike the mid-level manager who's never been without a steady income and could never contemplate otherwise.  Our priorities naturally tend to shift upward in the hierarchy of needs since those who can reside there can take the lower levels for granted.  Unfortunately, it also tends to blind us to the realities clearly visible before the rest of us.  We rationalize those not so fortunate as somehow less deserving or lacking ambition.  As much as you deny it, it's only human nature in spite of our high ideals.

Those within the bubble operate at such a high level that an event such as, say the wrong salad dressing in their garden salad qualifies as a crisis on par with the Holocaust.  First world problems indeed....

So I find myself frequently irritated when assumptions made by these "Bubble People" are promoted as reality for the rest of us.   

The fact that it's not really necessary to replace a perfectly functioning phone because a new model came out is on par with blasphemy to them.  Consumerism goes hand in hand with technology it seems and is the guiding mantra of the "Bubble People". 

In short, they don't get it because they don't see it anymore...

Therefore I place no more value in their assertions than a review of a Broadway play (they don't do plays...).

If there is a social elite it doesn't belong to the old money of New England or the 21st century Wall Street barons.  No, it is the naiveté of the "Bubble People" who unwittingly advance consumerism to the exclusion of all detractors.

Perhaps if I had grown up in such a sheltered and "normal" environment I too would argue the merits of unbridled optimism and the promise of technology.  Unfortunately, I've seen little personal benefit from it.

Technological advance is a panacea only to those who can focus on it.

The easy answer is to just ignore the "Bubble People" but that's not possible.  They drive popular culture even if it's to our own detriment. 

I'm a fan of Star Trek and the world it proposes as are the "Bubble People."  The difference between me and them is that I know we haven't even started down that road.  They believe we're already there.

There's a place for the firmly optimistic but it has to be tempered with the realities that must be conquered to make their assertions true. 

By the way, the bubble isn't limited to technology.  It's easily applied to other dogmas like religion, politics and cultures.

The French revolution dealt harshly with those who ignored the realities of their own environment.  Bubble people should keep that in mind lest they find themselves on the guillotine of public opinion.  But then, the public only concerns themselves with the latest shiny object don't they...

Nothing's more debilitating than having one's bubble burst...

Saturday, August 18, 2012

Ordinary Injustices

Thoughts on a leisurely weekend commute

Recently, as I've been going about my normal daily routine I've been paying more attention to the mechanisms of ordinary commerce.

Take that gallon of gas you're inevitably going to buy if you live in a State like I do with poor public transit.  Conventional wisdom says that the law of supply and demand shall always reign supreme but that isn't necessarily the case.

Pay attention to the financial news and you'll see a correlation between the nervous commodities traders and the yo-yo of gas prices.  Since everyone's afraid of the stock market, commodities are the newest darling of the financial markets. 

That means traders will react to any piece of information that threatens their profit margins.  If the leader of a middle eastern regime has a fit of flatulence it's cause enough to raise the price of a barrel of oil $5. 
You can bet before the business day is over the gas station owner will be out changing his signs to reflect the sudden threat to supply. 

Except there is no threat...

Remember that the fuel in your local gas station is already in the ground and all but paid for.  The price has very little to do with supply or demand.  Rather it has to do with oil companies investing in slick marketing instead of their own infrastructure.   And why not? It's easy money to do less and charge more, especially if you can get away with it.

Lest we forget all those oil speculators who never actually buy anything, they place a bet hoping for the big win.  Thing is, they can only win if you lose and it's in big oil's interest that they do.  After all, it's not ExxonMobil, Chevron or Shell's fault prices are high, it's just "the market"
Considering that speculation can be up to 40% of the cost of a barrel of oil and as much as $1 of the price of a gallon of gas there's good reason to be angry. 

The next time a politician gets on stage and defends record oil company profits with a gallon of gas at $4/gallon or more I'd really like someone to siphon all the gas out of his limousine.  If CNN covered that I might actually call them a news network again...

Oh but friends I'm not stopping there, no sir (or ma'am)
Like many of you I've had to rely on credit more than I want to.  With prices inching ever higher, wages stagnant and the value of a dollar worth 1/2 of what it was just 10 years ago it's often the only way to fill the void. 

And just like your friendly neighborhood gas station they know a profit opportunity when they see it.  There was a time in this county when excessive interest rates were called usury.  Usury is defined as:
an unconscionable or exorbitant rate or amount of interest; specifically: interest in excess of a legal rate charged to a borrower for the use of money

These days the credit card companies and the banks that back them get away with pretty much any interest rate they want.  They did get their hands slapped a few years back when congress passed the Credit Card Accountability, Responsibility and Disclosure Act.

The effect was putting the brakes on surprise interest rate charges, raising your rates if you're late on a completely unrelated account (Universal Default),  yo-yoing fees and predatory practices against new customers.

That hasn't stopped the 29 % or more interest charged, however.  Congress stopped short of defining what constituted usury which means you pay whatever they want.  Yes, you could go find a better rate with another company but the days of 0% credit cards are over.  Expect no better than 11%.  which is almost amusing when you look at most state legislation (the only place usury is defined) can range from 8% to 45%.  So technically your capital 1 card at 34% is breaking the law in most states.  Good luck taking them to court though...

Something's very wrong when monthly interest fees added to your balance are more than your minimum payment. 

Speaking of Interest the other dirty little secret of credit has to do with getting an education.  Most of us aren't fortunate enough to have a rich uncle or all the money we need to take advantage of higher education.  Scholarships and grants are nice but you can't count on them especially if you go to a private college. 
Such is the case for many in the working world who aren't able to upend their lives to attend a regular public college or university.  Many private colleges try to address the problem by scheduling classes outside of a normal work schedule.  They can offer the same financial aid as a public university and often have private lending available when traditional sources aren't enough. 

Look out for those private sources though.  If usury is alive and well anywhere in the financial world it's in education finance. 

There's a wonderful opportunity in education funding for banks and other lenders to make ridiculous profits with virtually no risk. 

The opportunity comes from government secured education loans like the Stafford.  Lenders who participate in the program lend money at lower rates than private loans not unlike government backed housing loans. 
Understand this, to the lenders of these education loans there is NO RISK.  If the student defaults on the loan the lender is repaid leaving the government to collect on the debt. 

With a sour economy these loans are often the only option to pay for an education.  Worse, with increasing tuition costs student indebtedness can become overwhelming even with low interest rates.  That's where the options of deferment and forbearance come in.   With these options a borrower can buy time (literally) when they are unable to pay their monthly payment but don't want to default on their loans. 

The catch?

It's called capitalized interest.  Capitalized interest is the practice of taking the interest that would normally be paid during deferment and adding it to the principle balance of the loan.  In some cases it can swell the principal balance to 15 to 20% of the original amount borrowed. 

In effect, you pay the interest twice on the same money with this option.  Once for the original payment and again for the interest on the payments you defer when  it's added to the principal payment.  Combine this with loan consolidation which is often used to bring payments to a reasonable level. (Mine were almost $1000/mo. without it) and you have an inescapable money machine that only a winning lottery ticket could fix.

Again, any politician that stands up on a podium and blames the borrower for this legalized graft should be strung up by his toenails. 

We're told education is the road to success but soon find that road a financial minefield.  There should never be a profit motive in education outside of personal growth but we all know that's just an idealistic pipe dream.

So it seems we can't even drive to work or get an education without being subject to someone else's profit motive.  So imagine the depths of depravity when someone tries to convince you a luxury rises to the same level of a necessity.

Ah the price of convenience.  That gallon of milk or pack of cigarettes may always be available but you'll pay more because of it.  So it is with our modern toys. 

After all, who could live without being in constant contact with friends and loved ones or without the Internet at your fingertips wherever you go.  It's all so very... convenient, isn't it.

When does a convenience become a necessity?  When your work requires it? Maybe when you can't always be in the same room with those you care about?

Sometimes I think I'm a bit of a troglodyte and I've been called as much.  I'd like to think that I'm eminently practical.  I could care less how many processors your phone has or how great it takes pictures all I care about is if it rings.

Seems your choices to avoid the hysteria are ever dwindling.  Phones that don't have all those gee-whiz features are called amusingly enough, feature phones.   If you reject the Smartphone revolution these are your only option.  Mobile carriers would try to convince you that all these extras are critical to your survival at any cost. 

Of course that's a viewpoint subject to interpretation.  Along the way with clever marketing and peer pressure the public has been led to believe that paying hundreds of dollars a month for mobile phone service is no longer a luxury but a necessity. 

Carriers will always claim infrastructure costs, taxation and overhead to justify their rates but in the end it's really just about reaping the benefits of a good con.

Look at even the most basic of Smartphone plans and you see mandatory service charges even if you don't use the service.  Even if you don't surf the Internet or send a single text message you'll find yourself paying for the privilege anyway.

So it seems that even the most frugal among us can't escape the fleecing.  Even if we shun the Smartphone,  remain uneducated or never carry a credit card we can't escape being taken advantage of.   It's woven into the culture and reinforced with peer pressure and social marketing telling us all is as it should be and right.

It's not right, however, it never has been but as our lives get ever more comfortable we willingly suffer because we've accepted the programming to our own detriment.  Still so long as we have the trappings of our gilded cage built with institutionalized extortion no one will complain.