Oil And War. Algorithmic Robber Barons. What Do Billionaires Talk About At Dinner? Plus Tolkien Economics – And More! #208
Grüezi! I’m Adrian Monck – welcome!
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1️⃣ A True Story of Oil And War
When to double check the hype.
Readers might have noticed the continued howl round from last week’s story on China apparently “readying itself for conflict.”
One sign of impending doom? Strategic stockpiling – especially oil – designed to give it a buffer if geopolitical times turn turbulent.
Reuters’ excellent Peter Apps addressed the question directly:
Are barrels of black gold being hoarded for the Götterdämmerung?
TL;DR. No.
As Reuters reported, in March Russian oil once headed for India, ended up in China.
India had passed on it and tankers-full of the stuff had been floating around the world’s oceans looking for a berth.
As one energy commentator concluded, China’s stockpiling:
“was caused mostly by ... opportunistic purchase.
“This increase in inventories does not constitute any change in the market nor in Chinese policy. It is just a one-time opportunistic purchase.
“The fact that all the increase was reported in one week gives credence to our point. This gives China more pricing power as it might continue its policy of using its inventories to influence prices.”
The takeaways?
In geopolitics, signs aren’t always signals. This is why communications channels and dialogue matter – not to ignore disagreements but to ensure that both sides don’t mistake noise for something nastier.
⏭ Two media places that keep lines open? Sinica and Pekingnology.
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2️⃣ The Algorithmic Robber Barons
They own your attention – and they’re exploiting it.
A new study says the algorithms of platforms like Amazon, Google , and Meta have gone from serving users to serving them up for advertisers and sponsors.
Platforms are downgrading the information they provide to users to extract “rents” (AKA hyper-profits).
Example: Amazon used to show you best buys, now it pushes sponsored products that are higher price and lower quality than organic results. And it tweaks its pricing.
Winner-takes-all market power has allowed tech platforms to squeeze not just customers but advertisers, suppliers, and content creators too.
The advent of AI is likely to turbocharge this market power.
Some solutions?
Regulate: authorities should look at how dominant platforms use algorithms to allocate information to users. Degrading info quality to boost profits should qualify as abuse of market power or unfair competition.
Label the Ingredients: Platforms should clearly label sponsored content, provide users with options to control how information is ranked and displayed, and disclose more about their algorithms and the outcomes they produce.
Limit excess advertising: Billboards shouldn’t block every view. Restrictions could be placed on the proportion of advertising content displayed, particularly in prominent screen positions.
If you want a real life case study backing up what the academics above are talking about, read on...
⏭ The economics of information on Amazon.
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3️⃣ Tech Rot And Anti-Trust
A case study from the people vs. profit front line.
The inside scoop on how this exact scenario played out at Google?
2019’s “Code Yellow” incident, when the search giant’s sales folks put the squeeze on the engineering teams to put revenue growth over search quality.
The Code Yellow allowed the usual “Chinese walls” between sales and search to be erased.
The result?
Like final whistle at the Colosseum – Lions 56, Christians 0 – the engineers lost.
Google tweaked answers to make ads virtually indistinguishable from organic results and pushed algorithm updates that tanked search quality. Rent-seeking behaviour at its worst, actively eroding a product that billions rely on.
Big Tech’s current ad-driven business models and monopolies are creating perverse incentives that strangle innovation and degrade products.
The solution is to break these monopolies up.
It happened to Standard Oil.
In the 1980s, it happened to AT&T.
What did breaking up AT&T do to innovation in telecomms? It increased!
All that’s missing? Political will.
⏭ Breaking up monopolies works better than rapping their knuckles.
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4️⃣ Gilded Rage – A Dish Best Served Cold
Billionaires – don’t book writers as dinner party entertainment.
Back in the early 2000s I was a Marc Andreessen fan. No longer.
When tech billionaire Andreessen flew historian Rick Perlstein in as “conversational room meat” for his Silicon Valley buddies, Perlstein wrote about it.
The jaw-dropper comes when the table talk turns to the decimation of America’s small-town communities.
“Andreessen had grown up in an impoverished agricultural small town in Wisconsin, and despised it… He made it clear that people who chose not to leave such places deserved whatever impoverishment, cultural and political neglect, and alienation they suffered.”
“I pointed out that there must be something in the kind of places he grew up in worth preserving...
“And that’s when the man in the castle with the seven fireplaces said it:
“I’m glad there’s OxyContin and video games to keep those people quiet.”
Escaping small towns is a rite of passage for some people on the path to social mobility. It was for me. But not everyone can.
Maybe you feel that escaping gives you the right to make off-colour remarks about the people you grew up with. But it doesn’t.
⏭ Andreessen wrote his own manifesto last year.
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5️⃣ What Happened To Journalism?
A tech take on why the bottom dropped out of mass media.
Writing about #AI, Jon Evans throws in this sad note about journalism, in part to explain why AI gets such a bad rap:
“Journalism used to be a secure, prestigious, even lucrative industry. Now look at it. What happened?
“The tech industry, is what happened. Craigslist ate classifieds. Google ate advertising. Social media ate control over distribution.
“Journalists have seen their entire industry, a force for good in which they believed, which gave them meaning, absolutely gutted by the tech industry.
“No wonder they tend to be a tiny bit biased against it! …And no wonder they’ve subtly, collectively, usually unconsciously, turned the cultural temperature up towards ‘boiling rage.’”
He’s right about what happened to the industry. But is he right about the collective psyche?
Let me know what you think in the comments.
⏭ This year’s journalism and tech trends.
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6️⃣ Après Moi, Le Déluge – Flooding Is On The Rise
Water is on the up.
⏭ Weather changes faster than infrastructure – cities will need to cope.
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7️⃣ Tolkien Nonsense – Central Banks vs LOTR
Ever wondered why inflation is always supposed to be 2%?
Kudos to Bloomberg’s Marcus Ashworth for explaining and for taking a metaphor to the zero lower bound.
⏭ There are people out there who obsess over the actual economics of LOTR.
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If you enjoy this newsletter – please recommend it!
Best,
Adrian
