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WHAT IS GOOGLE? A PLAGUE ON THE GLOBAL ECONOMY?

Posted in ECONOMY by Administrator on the March 24th, 2009


Though search engines are new, their most obvious old media comparison is the encyclopaedia. Encyclopaedia publishers gathered and verified information which was sold as a book(s) or belatedly as a CD ROM and they received money for their work. Google’s business model is rather different, though Google has successfully masked its impact by constantly telling us that it is a benevolent company and will maintain its saintly status as it matures.

Regardless of Google’s intent and/or diversification, everything about Google returns to its search engine and how it has turned the traditional encyclopaedia model on its head. On Planet Google we toil writing the content, we toil building the websites and when Google recognises humble little us near the top of a results screen we are grateful! You have to hand it to these guys who would have thought a ‘cool’, ‘liberal’, ‘good’ company would be relying on slave labour!

From about the time Google emerged as the de facto search engine, thereby ending the ‘portal’ concept which initially guided the user through the Internet experience as it went mass market, the company has made quite a song and dance about being a force for good. Yet Google’s epitaph will be quite the opposite.

Most commentators, cultural, social and financial, would agree that apart from the search, most Google products have either failed or been disappointing. Google’s radio ad programme has just been canned. Google newspaper ads was a non-event. Gmail is a clumsy mess. Google Docs hasn’t set the world alight. Google Earth is a fantastic plaything. Only Google’s search facility remains unchallenged and that makes me suspect that the majority of Google’s toys are a PR exercise to deflect criticism.

While claiming to be a force for good, Google has engaged in practices which are cunning. Making money from the trademarks of others while pre-emptively claiming it is legal strikes me as rampant greed, and a blatant breach of that much cited modern clause, the fair use policy. Google behaves like the well-armed hoodlum at the gold mine. The scanning of Gmail to find an opportunity to flog something reeks of utter vulgarity. Google wants to invest in green energy while its founders ponce around in their Boeing 767, a twin-aisle civilian airliner. These jokers make private jets look subtle!

But what makes Google’s prominence so inappropriate is the simple fact that Google search isn’t a complete product in the industrial or consumer sense. We do all the work. Google outsources the content to us. Google produces a screen, which they exploit monetarily, based on our efforts. Google isn’t a product – there is no Google mass market product, our efforts and products are piggy-backed by Google to make money. Google has outsourced creativity to others for it to financially exploit. Google profits from the efforts of everyone else. Google is not a product that has inspired other products or improved productivity.

Google, sooner rather than later, will come to be regarded as one of the most destructive companies ever, and pilloried as such. While capitalism and the free market have always been subjected to enormous changes the Internet has brought changes which are only now being felt. Unfortunately these types of upheavals are of the historical kind- that is there is no one alive who has lived through such previous disruptions so the likelihood of politicians or governments knowing what to do is minuscule. Destructive creativity is an indispensable part of capitalism, but Google is not creating anything. Google is efficiently destructive without bringing any commercial advantages. (If anyone thinks the ad words programme is a financially dynamic replacement for the value Google has destroyed then they are certifiable.) Google is a parasite, a locust.

Therein lies an important lesson for Western economies which has been either ignored or overlooked, and may come as a shock to most of our politicians. The ‘knowledge economy’ doesn’t exist. There is no opportunity for Western economies to deliver high value goods. I’m certainly not a fan of Warren Buffet but he correctly recognised as the first round of the Internet gold rush was underway more than a decade ago that the Internet would destroy value, and in the vast majority of cases it does.

At any public appearance of a software or Internet ‘billionaire’ you will find politicians dancing around like frisky labradors. They seize the opportunity to proclaim that this individual is the face of our prosperous future. Without fail it is a scene repeated in any Western city. The knowledge economy is the path to riches. Except it isn’t. The knowledge economy is an express route to poverty.

The West could only have a knowledge economy if everyone in the developing world was daft, and we all know that is certainly not the case. They are resourceful and industrious, and in many ways put us to shame. When it comes to employment, software and computing invoke of the law of diminishing returns. Each generation of software has to eliminate tasks and become more usable otherwise it wouldn’t sell. The workforce doesn’t grow in knowledge and accomplishment to master the software- the end user’s participation is always simplified. Making subsequent generations of software simpler is vital to the vendor’s market penetration. Every generation of software aims to make more of the coding invisible and almost always aims for greater simplicity and less skill. Only the computing requirements get greater. Software aims to make each task simpler until it can be traded down to a lower salary and skill level. The ‘killer app’ aims for ubiquity and instant comprehensibility. Once computing and software are indispensable to a role then that job can be outsourced to a cheaper country because, of course, the computers and software are there too.

Google and the Internet have been lauded for giving power to consumers. But once consumers have more power than they need they focus only on the best price rather than a fair price. Consumers have become the impetus  for outsourcing and off-shoring their own jobs as companies strive to remain competitive.

The case of YouTube is probably an example not of Google’s ingenuity but its stupidity and arrogance. Google should not have purchased the site, and surely knows it. YouTube is nothing without the pillaged content. TV ratings and revenue collapse as Google has the ‘best bits’ for more advertising opportunities. Occasionally, yes, there is some press piece about some civilian celebrity whose clip has been viewed so many million times but that individual is immediately replaced by the next sensation. In the case of YouTube, though, the sensation doesn’t produce any wealth or benefit. Considering how often YouTube clips and the like do rounds of the workplace, Google and YouTube are anti-productivity. They have a resolutely negative toll on the economy.  If anything the Google and the Internet accelerate dumbing down. Over and above the pointlessness of the content it is simply astounding that old media have not retaliated by forming RecordLabelTube or at least made some effort to reclaim their turf. As is so often the case these days, the people at the helm have neither ideas nor gumption.

Startling too is Google’s decision to digitise books, all books. Is this really to broaden the minds of netizens everywhere or to data mine for unlimited advertising connections? Why not digitise all the movies ever made and make them available? Why not send a memo to the Hollywood studios telling them that they will have to opt out, otherwise it’s consent assumed? Wouldn’t the movies been better digitised? And TV too? After all we use a screen to view movies and TV so everything on our laptops would make sense. Well we all know the answer: Because the massed ranks of the studios and the A-List would give Google a financial thumping, with possibly a jail term too for good measure. Writers and publishers are being bullied. Google has identified the local sap it can take for a ride. (It’s a glaring hypocrisy too that a company as wealthy as Google had to be sued over the issue of scanning books- what message does Google’s behaviour send to the average citizen about the legality and morality of downloading music and movies?)

In a recent speech to Congress by British Prime Minister Gordon Brown, he said, as have many before and many still to do, that the West must concentrate on producing and selling high values goods to developing countries. The logic is plain: our citizens need high paying jobs to pay their mortgages, massive debts and have enough money to maintain the living standards they are accustomed to or our politicians will find themselves caught up in chaos. Europe and America will not produce high value goods for China and India etc. India and China, with nearly three billion people between them, will have to produce these goods on their own. In fact, they will have to surpass the West. At present the combined population of India and China is about 5 times US and Europe, and growing faster. These are citizens who will, by a simple matter of the size and extent of their need, control the market and dominate pricing power. Are these people going to be content to produce disposable clothing and cheap electronics for us while they buy our jetliners? Of course, not. Usually discussed in tandem with ‘high value goods’ is the vague mantra that technology is going to liberate us from oil dependency, on occasion it is said it will also solve our environmental problems. Technology, apart from militarily sensitive and nuclear, is a genuinely free market. To sovereign states its advantages are equal or comparatively similar. High value goods will be produced wherever it can be done at a profit. The interests of shareholders and the returns sought by pension funds will make China more tempting than Michigan for some time yet. China and India need their own purveyors of ingenuity and bold global brands to build and sustain their societies.

The dirty secret of Globalisation is that it is about standardisation, equalisation. I have long been a believer in fair global trade standards but I also understood it would involve considerable difficulties and probably take several generations. But Western countries have, as their citizens will shortly come to comprehend, been betrayed by a cabal aiming to enrich themselves by any means. Until recently the global economy was like a see-saw, controlled by us, the West. They, the developing world, dangled in the air while we dictated global trade, tariffs and economic power. That has been traded for a DVD player in every room. For the US, that bastion of the Internet boom, things look particularly bad. Entertainment and aviation have been for several decades America’s great exports. The Internet’s toll on old media does not need any elaboration and of course Boeing has been dabbling in outsourcing, called ‘sharing the risk’, for its new jet, the 787-an aircraft so innovative that in a ‘knowledge economy’ it would be the sort of high value product that could only be home-grown.

It is doubly ironic that the vigorously pro-free market Right has basked in the largely imaginary benefits of Globalisation will now, as we say in Britain, try to close the gate after the horse has bolted, while the Left which derided Globalisation as Americanisation, will see that the mass transfer of the means of production to China and a few others has damaged America and Western capitalism in a way the USSR could never manage. China is often the subject of demonisation in America. But let no American be fooled by this hokum. If China embraced democracy tomorrow the US would be ousted as top dog the day after! The consequences for the dollar would make the current situation look like Disneyland. Indeed, possibly the gravest threat to a solution to the fiscal chaos is the Chinese government succumbing to domestic protests.

Google and the Internet will make this recession more severe. Various networking and business sites touting themselves as gateways to a new career will depress salaries already under pressure. Although the B2B bonanza hasn’t really happened the way it was originally envisaged- there’s a surprise! – it has enabled even the smallest businesses to access the ‘China price’. Now of course in boom times competition is vital to a robust and healthy economy. In bad times competition will cull the weak and expose the fat but in the current circumstances the Internet will be a driver of deflation. This is not really being considered by officials because of their relative tech ignorance. The developed and developing economies are caught at a point in the equation where neither side looks able to produce the spurt that will avoid stagnation. Globalisation’s natural course is to have the see-saw become a spirit level. And the only way that can happen is for our standard of living to drop and their standard of living to rise. Living standards will drop because salaries in the West will be forced down, as will house prices. The bulk exporting of the consumer manufacturing base can only be reversed when it is economic to make things in the West, although the adjustment for people who expect cheap consumer goods will almost certainly cause confusion and political opportunism. The Internet’s role in the global economy will be to further erode high paying jobs in the West. Most industries and manual workers have been subjected to decades of streamlining. The office is next. Animation is a perfect example of what would be a typical knowledge economy product in the eyes of a politician, yet it has been outsourced to an astonishing level.

We are pre-occupied with how the banks have been allowed to run riot unregulated. Soon, very soon, we will be questioning why the influence of Google, which is effectively an information monopoly, and the Internet has been allowed to run riot unregulated too. Most politicians have little or no grasp of the Internet and its implications. Much of what they know has come from the PR teams of tech companies and the wretched executives-as-salesmen who have convinced them there is a crock of gold at the end of the tech rainbow just waiting for their constituents to divide the spoils. Yes, the Internet is a vast and wonderful resource in the right hands but like opium controlled in hospitals as morphine and heroin on the street… The Internet has destroyed and devoured vast amounts of monetary value just as the West’s deindustrialisation has reached it zenith. Child pornographers have flourished like never before. The commercialisation and even sexualisation of childhood is now becoming the norm. Simple consumer goods to complex medical formulae are pirated and faked on scale we haven’t quite grasped. Suicide bombers have organised their activities and funding and then introduce themselves posthumously, and jeeringly, to a global audience. Militants have webcast the staging of the most brutal executions as entertainment, inspiration and recruitment drive. Copyright has been abused and plundered. Financial scams are rampant too, though the banks seem to keep the information close to their chests. The vulnerable are targeted. Not since the heyday of Western imperialism has there been such a prolonged robbery and free-for-all. (You could argue we deserve it.) Yet nobody is held to account.

Despite the Internet often being described as the Wild West politicians, intimidated by computers and geeks, have abdicated responsibility. Isn’t time to look again at the conduct of the IT industry at the turn of the millennium? Who can forget the sales-driven panic of the Y2K bug? Nuclear missiles were going to detonate themselves as 2000 dawned across the time zones. Our computers would crash in unison. Air traffic control would be helpless; anything with a chip – that is almost everything- would stubbornly defy our attempts to operate it. Bank tellers would be unable to give us our money as their computers mutinied; shops would be unable to sell us the most basic things, but of course the solution was simple: give the IT machine more money. Held to ransom we upgraded everything and some of us thought it was really just sensible to buy everything all over again. What an expensive anti-climax the millennium bug was!

Despite that episode of enforced monetary extravagance, policymakers are still spellbound by anything Internet/tech and show a rash willingness to genuflect unquestioningly in the presence of geeks.

The Internet needs regulation and the control of information must be removed from Google. Long before the Internet went mainstream we weren’t completely isolated, ignorant and information-deprived. The Dark Ages were several centuries behind us, have we forgotten? We need a civic information gateway, possibly state owned but autonomous or overseen by UNESCO, say- a stepping stone to what we need to know. Yes, there are issues of free speech and government surveillance, but there always has been!

When everyone realises there is no knowledge economy and we have exported all the factories because we knew the price of everything and the value of nothing we will feel nostalgic for simpler times when we used to get our hands dirty.

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