SYNDICATED COLUMN: The Mayors of Brokesville

To Be Young, Technodouchey and Shilly at SXSW

It’s not like I didn’t know what I was getting into.

This was my second year at South by Southwest, the Austin music festival that has morphed into a trilateral Comic Con of the tattered remnants of the music industry, the on-the-ropes independent film sector, and a New Third Thing, the tantalizingly monetizable-for-a-few culturo-fiscal tsunami that left the first two that way, which SXSW hath dubbed Interactive.

Which is, of course, the Internet. Or more exactly, the hapless wretches who want to make money from it because, this being 2013, what else are they going to do – build real stuff and sell it? They seek to profit directly, by coming up with an awesome app like Foursquare which, as every article about this topic is required by law to mention, launched at SXSW in 2009 (and which said articles are never allowed to say, is pretty boring and useless and lame and, anyway, isn’t it kind of sad to have to point back four years to find a Big SXSW Launch?). Either that, or indirectly – by sucking dry a gullible VC (venture capitalist).

In case you’re wondering what goes on SXSW and why you should care, here’s what (why comes later; feel free to skip ahead, I would if I didn’t have to write this):

It’s a bunch of incredibly douchey – you think you know douche? you think you’ve met douches? oh, no, not like these douches you don’t – 25-to-37-year-old wannabentrepreneurs trying to market Webby things, 99% of which are apps for smartphones. And 99% of those 99% of those apps are redundant.

Redundant as in: “You can find restaurants in your area and review them. You can talk to other patrons about them in our online community.”

“Like Yelp?”

“Yeah, well, yes, but…”

“Like Yelp?”

Sad confused face.

I told you they were douches.

Speaking of which:

So during SXSW 2012 I wandered down to the lobby of my hotel to get coffee. Some douches were ambling zombie-aimlessly around, heads cocked in the familiar 20°-forward-head-tilt-toward-iPhone position. Other douches were clustered on the floor, deeply engaged in a random hackathon that accomplished little more than stressing the Hilton’s already technorati-overburned wi-fi network. But that still left other douches to notice that I wasn’t wearing shoes.

“Dude,” a tall male douche, about 32 years old, smiled at me. And pointed at my feet.

“What?” I asked, grouchily. Which was appropriate, considering that he was standing between me and the coffee line. Which was long. Shilling redundant apps requires caffeine as well as gall.

“No shoes,” he replied. “What are you promoting?” He actually seemed interested in my answer to his question.

Another douche, apparently the first douche’s comrade, joined us. “Hey, that’s great!” the second douche chimed in. “Are you repping a foot app? A shoe app? What is it? I gotta know! Hey guys” – he motioned toward a small douche-flock – “check it out!”

They were visibly, crushed-like-kids-who-got-lame-presents-on-Christmas-morn disappointed by my explanation, which was boring and simple: I didn’t feel like putting on shoes since I was just going back upstairs to my room. They thought I was lying.

“No one just doesn’t wear shoes,” the first douche accused. “You are promoting something.” Because, you know, the way you promote a product is by refusing to admit it.

To paraphrase Bruce Springsteen and Dave Edmunds, from big dumb things small dumb things one day come. So what came out of tens of thousands of douches dropping millions of dollars into Austin’s tourism industry?

“The breakout star of [the 2012] SXSW was Highlight, a location-aware app that alerts you when people you know are nearby, and attempts to introduce you to people you might want to know,” the Austin Business Journal reported. “Highlight dominated the buzz at the conference and was crowned the winner early on. However, it struggled to expand afterward because it was a battery hog, and it didn’t work as well outside of SXSW’s target-rich environment, where everyone was using it.” Which is why you’ve never heard of it.

So anyway, this year was more of the same. It was depressing and maddening. Except, without anything as thrilling as Highlight. It was also enlightening. Because SXSW is a metaphor for what’s going on in the American economy.

Like most U.S. businesses, SXSW attendees wanted to sell stuff. The problem was, no one wanted to buy, or hire, or invest.

So no one was selling or getting hired or invested in.

If the balance in Austin at SXSW and in the U.S. (and for that matter internationally) were less extreme – if, in Marxist terms, the oversupply of production merely exceeded rather than dwarfed consumer demand – you’d merely have downward pressure on wages and prices. Which, in fact, we’ve seen since the end of the Vietnam War. And isn’t good.

As things stand, the demand side – companies that want to hire people, which increases the number of goods and services consumers want to buy – is virtually nonexistent. And that’s catastrophic. The U.S. economy added 177,000 jobs in January, 237,000 in February, and 158,000 in March. Moody’s Analytics chief economist Mark Zandi estimates that overall growth is running at about 175,000 a month. Since the U.S. needs to add 180,000 jobs per month just to keep up with population growth, the U.S. in “recovery” is losing 5,000 jobs a month. “If that’s the case, underlying job growth is not changed appreciably,” Zandi says dryly.

Sassy ex-Reagan budget chief David Stockman – say what you will about his blame-the-Fed politics, he’s the most thrilling economist-writer ever – says America is doomed because of failed government intervention. “The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest [Wall Street] bubble pops, there will be nothing to stop the collapse.”

Stockman is probably wrong about the why – more old-fashioned socialist state control would have avoided or at least mitigated this mess by redistributing wealth, thus stimulating consumer demand – but right about the what. When you’ve got a marketplace full of would-be sellers but no one who wants to buy, you’ve got no market at all.

All that’s left is a bunch of douchebags looking at your feet.

(Ted Rall’s website is tedrall.com. His book “After We Kill You, We Will Welcome You Back As Honored Guests: Unembedded in Afghanistan” will be released in November by Farrar, Straus & Giroux.)

COPYRIGHT 2013 TED RALL

9 thoughts on “SYNDICATED COLUMN: The Mayors of Brokesville

  1. That’s right Ted – This is what the “recovery” looks like – it’s already here. There will be no return to job levels or good-paying jobs like before 2008. They no longer exist within the USA. I have seen the same thing here over in Europe – people trying desperately to create something from nothing. Over here in the Baltic States, it’s further manifested in business and training seminars that have few if any attendees because there is little or no business or jobs to be trained for. Over here, I was contacted to possibly provide English language services for some seminars, but they failed to materialize because there was no interest. What some people over here do when they can’t get a job is to try to create business seminars and training for others that can’t get a job ior a business because there are little or no opportunities.

  2. It gets worse.

    Recall the Cypress deal. Before the present bargain, the Powers That Be wanted to simply take the bank accounts of bank customers. Seriously. Just take poor peoples’ money right out of the banks. They were literally threatened with riots, so they backed off and the plan only hits accounts of at least 250,000 euros, a.k.a. the Russian bankers/fraudsters who it should have hit in the first place.

    But why even float the first plan in the first place? Because that’s what’s next for the U.S.

    Legislators aren’t even pretending that we won’t have another meltdown. The problem now is that making taxpayers bail banks out directly is politically dangerous. The next step is to simply make it a matter of law that account holders are on the hook when the bank breaks the law.

    That’s where the government is now. We know, for a fact, that stimulating consumer spending will fix the problems. We know we can create jobs. We know we can end the depression. We know how. We have the means. The costs are comparatively low. The results will be popular.

    But our aristocracy is so contemptuous of us and so in love with itself that it’s simply building an escape hatch into the next completely foreseeable catastrophe.

  3. Sekhmet: Every bank has to convince people to deposit their money, then has to loan all that money out. The deposits are the banks’ liabilities; the loans are the assets. As long as the loans are worth as much as the deposits, the bank is solvent. When they aren’t, the bank is insolvent and cannot possibly repay all depositors 100%.

    In 1907, there was a panic in the US. The loans were OK, but people thought they weren’t. Depositors tried to withdraw their deposits, banks had to try to sell the loans, but no one would buy the loans, and the US money supply collapsed with many businesses going bankrupt and many depositors losing everything. So the Fed was set up. If there was a panic, the Fed would buy the loans at their full, realistic value.

    Then in ’29, banks had loaned money to buy stocks, and stock prices had collapsed. The full, realistic value of those loans was much less than face value. Most banks charged a fixed amount against all deposits, so small deposits lost 100%, and large deposits lost a fraction of their full value.

    So FDR created bank insurance. Most depositors (e.g., my father) would only use banks with federal insurance, which meant that, even if the bank failed completely due to incompetence or theft, depositors were safe. But banks were limited in how much interest they could pay, much less than inflation, and depositors saw their savings plus interest worth much less than they’d deposited. So they started putting their money in uninsured places that paid enough interest that their savings would be worth as much as they’d deposited.

    In 2008, many of those uninsured investments became worthless. As in ’29, the Federal government, though under no legal obligation, insured the investments of the very rich who had connections to the Bush, Jr and then Obama administrations, and let all those without such connections lose everything, as was only fair.

    There is no way the government will renege on insured bank deposits.

    Uninsured deposits in institutions that go bankrupt will be guaranteed for all those investors who have connections to the then current administration, but not for those who don’t. As is only fair. Those who pay baksheesh deserve to get their money’s worth.

  4. Today’s NY Times tells me that the rate of hiring has slowed, and that unemployment has dropped another 1/10th of a percentage point. Carrying this through to its logical conclusion, when hiring drops to zero, unemployment will also drop to zero.

    I guess.

    But isn’t it the same mentality as Ted describes at the SXSW event? People simply not looking at the situation and assessing it realistically leading to a disaster? The Times keeps trying to feed us a line about a 7.x% unemployment rate while more and more people go onto food stamps and welfare? What are all these “programmers” doing? Apps to save us from the “problem” of finding a good restaurant in a strange neighborhood. I cannot begin to imagine how these “innovators” will cope with a real economic collapse.

    “What can you do?”

    “I can meta-analyze your data structures to impactfully re-energize your core compe–”

    “Can you mop a floor? The job’s mopping floors. It pays $5.50 an hour.”

    “My iPhone tells me that minimum wage is …”

    “The job pays $5.50. I don’t need some union agitator. I’ve got a line of illegals who’ll do it for even less, but I’m trying to be decent about this, kid. The job pays $5 an hour.”

    “You mean $5.50?”

    “I meant $5.50. You don’t like it, why don’t you start up a company to mop floors yourself.”

  5. michaelme:

    Everything you said, while textbook background, was irrelevant, except this:

    “There is no way the government will renege on insured bank deposits.”

    Which is both irrelevant and misleading.

    I never said the government would renege, or that insurance wouldn’t exist. Insurance is irrelevant. This is the banks — DIRECTLY — exercizing even greater control over what are, techinically, their assets. The point is that the government can simply wash their hands of the crisis instead of engaing in bailout political theater. The point was, after all, to get the banks poor peoples’ money.

  6. @Ted: fight fire with fire, and douchiness with douchiness. You wasted an oppertunity. If a random douche was trying to remake and resell Yelp, then when pressed for what you were hocking you should have tried to sell them webcomics, starting with your own political cartoons.

  7. In all due fairness to the person with the restaurant app, if he offers store hours information, then he’s one step ahead. Yelp doesn’t.

    I wanna know if an eatery is open without having to call.

  8. The rich bosses are greeding us to death. Coorporate profits and cash on hand are at all time highs. If they just paid more, people would spend more. How about 25% raises for everybody?