economy

The Dollar’s Tight-Rope

The dollar is the most often used thing of value in which non-USA countries store their foreign currency reserve. First off, what’s a foreign currency reserve? These are often large sums of currency held by the central banks of various countries to stabilize their currencies. If there’s a sudden shock on the Swiss Franc, the government of Switzerland can buy or sell dollars to mitigate the shock. In some cases, the governments also use reserves to facilitate trade or government purchases. This was traditionally done with gold and silver. However, since 1974, it has largely been done with dollars. Dollars provided by a country that (until recently) was committed to international rules and institutions that facilitated trade and rule of law for disputes.

The dollar is not only a reserve, held by many countries including China and Russia, but also a preferred currency for many international exchanges. When you buy a barrel of oil, that contract is denominated in dollars. (Even though the Saudis did poke Joe Biden in the eye by executing some contracts with China in Yuan – it was a political move, not based economics). If a large bank, or a government, lends money to another country, it will generally do so in dollars. A German bank does not want useless Bolivars, Dinars, Pesos, Drachmas, or Rials. They want dollars, Euros, and Swiss Francs (probably in that order). The country or government receiving the loan also wants dollars. (Although Euros can be fine, as they translate quickly and easily into dollars).

This puts the United States in a unique position, as the world’s supplier of dollars. When we run a deficit, we borrow that money in dollars. If a German bank buys a US treasury bond (a loan to the United States government), it will be repaid in dollars. The repayment risk to the German bank is minimal, as the US can just print all the dollars it wants. The risk to the German bank is the US will be poorly managed, and the value of the dollar will be inflated away. Let’s say the German bank buys the treasury bond for $1,000, expecting to receive $50 in interest every year for the next five years and then the $1,000 principle. At a 2% inflation rate, that $1,000 will be worth about $900 in today’s money. But if the US engages in some very stupid decisions, and the inflation rate climes to 5%, that will be worth $775 in today’s money. Until recently, the US has had largely very sober, responsible economic managers, so the risk was minimal.

How bad can inflation get? We’ve had 5% inflation for short periods at numerous times. It didn’t really bother people that much, because it quickly fell back down. We had around 9% under Biden for a brief period and people lost their minds. But many places have seen inflation rates in the 20% or more range for prolonged periods of time. They still survived as countries. Even hyper-inflated countries have held together. At a 20% inflation rate, the German bank would see $325 returned in today’s money. If that bank had any real fear the US was going to 20% inflation, they’d avoid the bond until it had over a 20% interest rate. But most US debt is actually held by US individuals.

On net, this is a good position. If we want to buy something we make the magic tokens most people want to exchange. If we need more dollars, we can make more. We don’t even have to print them. We just put some numbers in a database. People are also willing to buy our debt, which we will pay back in those same magic tokens we make. Unless we do something stupid, that results in protracted, high inflation, we will continue to hold this unique position. The contenders for this rare status are the Euro and the Yen. No one wants Yuan or other BRICs currencies, not even the BRICS countries. Many countries hold a basket of currencies that include Yen, Euros, Swiss Francs, gold, and silver, but the US dollar is the workhorse currency.

There have been a couple of recent incidents, however, that may interfere with the dollar status. The first is seizing reserves. Specifically, a federal court seizing Argentine dollar reserves held in the US to pay creditors. For any country relying on the auspices of the Federal Reserve to hold their reserves (which many countries do), the chance they are seized by a US court has to be taken into consideration. (The US also holds the gold reserves of other countries as well). Unless you want to have palettes of $100 bills in a warehouse, you may want to hold bearer bonds, gold, and silver in your own country. Along with this was partially pushing Russia out of the financial system for the invasion of Ukraine. Although this was something I felt was necessary at the time, with the recent administration, European countries especially might be concerned. Could UK assets be seized if the UK does something that insults the orange idiot? Before now it was assumed that it would require a lot of legal mumbo-jumbo – but with the administration operating outside the law, it becomes a matter of fiat by the generalismo.

What would the world do? I really don’t know. The idea of crypto currencies stepping into this role is ridiculous. The volatility of any crypto makes holding it as a reserve nearly suicidal. Likewise, gold seems unable to handle the requirements of a much larger trading system than pre-1974 trade. It would also be a boon to the Russians, something many Europeans would rather avoid. However, as we’ve seen, gold has been been climbing steadily over the last year. And it’s hard to detach the timing from the chaotic nature of US policy. The Euro and the Yen are not there yet in peoples’ minds. The Yen may be closer to that role than the Euro, which seems too susceptible to political meddling from Europe. (Which should be a warning to the dollar).

What would happen to the US if the dollar no longer occupied its current position? I think it matters how we get there. If we get there because of an orderly move to more balanced baskets of reserves, not much. But, if we get there because of dollar weaponization or severe inflation, that’s a different story. For one thing, we would be paying higher interest rates on US debt. If it’s an inflation story, both US and foreign bond holders would want higher interest payments. Somewhat less if it’s a weaponization story, but they still would want compensation for added risk. The dollar would fall in value as people demand less dollars. As a country that imports quite a bit of stuff, this would push inflation.

But I suspect the biggest change would be the world no longer has to “grin and bear it,” when the US does something they don’t like. On one side is a fall into policies that degrade the value of holding dollars On the other side is a fall into the world of inflation. Maybe it isn’t a tight rope. Maybe it’s more like a balance beam, with more room for error than I believe. But at the end of the day, the loss of the dollar’s special position would not make America great again.

The Quantum Job Market

We have 3 numbers in fairly short order: JOLTS, first time claims, and the monthly jobs number. What do we have so far? The first time claims continue to come in well below ‘recession’ levels. From that number, the labor market looks tight. The JOLTS data, covered earlier, indicates a functioning labor market and not a great disconnect between people leaving jobs and people getting hired. And today we have the non-farm payrolls number. Let’s also add in the ADP number (which I do not think is as reliable as the payroll data). Both the payroll and the ADP number show a struggling labor market, according to historical metrics. Not a bad labor market, but a struggling labor market. Like most economic statistics, we care more about trends than the absolute number, but a non-farm payroll number indicative of a very healthy labor market would be above 150,000. Although it’s possible to get the occasional blip below 100,000.

Note the left hand side is the crazy period when the job market went nuts after COVID.

So far we’ve had about 160,000 jobs created over the last six months. That’s well below the number we need to absorb new entrants into the economy. The less reliable ADP number confirms the payroll data. The JOLTS data indicates a reasonable labor market and the first time climes show little job loss. This is where I think the first time claims may be under-reporting. If you lose your job, you might make slightly more money driving an Uber than collecting unemployment. I suspect other factors are depressing the actual number of people who would seek unemployment assistance. That’s not necessarily a bad thing, if you can make more money driving an Uber than collecting unemployment. You would be better off, even if you are grossly under-employed.

The red line represents initial unemployment claims, while the blue line is a survey of people looking for full time work.

This is why there is no magic single number, and no magic single sample of that number, that gives you a picture of the US economy. From the numbers, the labor market looks slack but not recessionary. It seems to back up the anecdotes of job hugging (where employers and employees may want to part ways but decide it’s better not to part ways right now), and new entrants having a difficult time finding a job. If it’s true that 70 million Americans engage in some kind of “gig” work, that’s nearly half the labor force (about 160 million participants). And maybe a weak jobs number isn’t as bad as it sounds if people can enter the gig economy instead of a “regular” job, and those people are under-counted. (Setting aside issues of job security, benefits, and the impact of under-employment). Is the labor market indicating recession?

There is something we need to acknowledge. Deficit spending is stimulative. At the end of the 2008 recession, there was a push-back on yet another democrat taxing and spending. And the stimulative policies were tempered by the resistance from republicans. (Although at levels that now seem quaint). That drew out the recovery period because fiscal policy was not injected into the problem. Spending more money than the amount removed through taxation stimulates activity and we may have ratcheted that up with the latest budget. We won’t know the final numbers until 2027. It will depend on actual receipts and actual outlays. There is some evidence the outlays will be higher than anticipated, with the DOGE effort showing an actual increase in government spending. If income tax receipts are weaker than offsets from tariffs, it could easily come in above estimates.

The current CBO estimates put the 2026 estimated deficit at 5.5% of GDP. The percentage of GDP is useful because it allows us to gauge what the real impact of the deficit, given the size of the economy. After all, a billion dollar deficit is a much bigger issue if the economy is only 10 billion dollars in size. The 2026 number may be above (likely) or below (unlikely) estimates given factors we won’t know until later. We won’t know until we actually see the impact of the new tax law, along with actual real spending.

The deficit coming down slows the economy in kind of a natural way, as activity boosts tax revenues and broader employment lowers spending on programs like SNAP and unemployment insurance. This natural brake pulls money out of the economy in higher tax revenues and lower spending, reducing the risk of the expansion becoming inflationary. However, we are doing two things that are expansionary for 2026, which are reducing tax rates and pushing the Fed to lower rates. In the face of already expansionary fiscal policy, this may push inflation for 2026. Unfortunately, it’s almost impossible to know the actual impact on inflation because we don’t know how the economy will react. The consumer in the lower 50% of income is in shambles. Most of the consumption is done by the top 20%, with half concentrated in the top 10%. There may not be the purchasing power for broad inflation, even if high end goods may see a level of inflation.

In addition, lower imports from tariffs boosts GDP, even if it means people are consuming less stuff. Could we be in a world where stagnation is masked as the GDP “increases” due to fewer imports? It’s mathematically possible. You could have patchy inflation depending on what goods you are measuring along with an improving GDP due to fewer imports. (You aren’t better off, you just don’t buy that sweater or bottle of wine, because it’s a little pricey). Combine this with jobs numbers being a less reliable measure of economic health (because workers don’t leverage unemployment insurance and transition to gig work), and you could have a stagnant economy, even if the numbers don’t look bad. You have low unemployment because of gig work and GDP growth from lower imports, even though you are under employed and just can’t afford things you used to buy.

Note that numbers are negative, so sloping up and right means the lower imports.

At the end of the day, the purpose of economics is to understand how these voluntary and sometimes emergent systems of interaction between people create well-being. The purpose of 2% inflation or a target of 4.5% unemployment isn’t because the number is important, but because the well-being of many people seems to change at around those inflection points. If inflation drops below 2%, that is usually because economic activity is slowing and over time we will be worse off. If it goes above 2%, that’s a level people feel it erodes their buying power and they are less well off. If unemployment is too low, there is inflation as wages are bid up, while if it is too high, people are out of work and can’t find jobs. The goal of the specific metric should be to indicate when a change in policy is necessary because people feel their well-being is falling.

But it feels like we’re too focused on the numbers, rather than what they mean. I can’t count how many times it feels like the number itself is the target or the policy is being gamed to meet the target number. This includes “patching up” numbers like the CPI so they under report inflation. (There is mixed evidence on this. But we would expect the CPI goods basket to change as the basket of goods and services from 1976 is less applicable in 2026). When the economy changes, the old metrics used to gauge the health of the economy no longer make sense. Following unemployment claims or number of jobs created, if people are shifting to gig work that isn’t reported through these numbers, may no longer provide a meaningful metric. And yet, we don’t have a widely accepted substitute. Like a quantum system isn’t in one state or another until it’s observed, our economy is both good and bad at the same time, because we lack the metrics to observe it.

It Feels a Little Like a Lie

As Q3 GDP arrives, it’s above expectations. I hate anecdotal accounts as a basis for inferring trends, but we have had report after report of worsening conditions for individuals. Whether it’s visits to food banks or layoffs, or retailers pointing to weaker consumers, it feels like Q3 GDP should not have come in at 4.3%. I’m certainly not saying anything ridiculous, like the number is a fabrication or it should have been something negative. I live in the real world (or at lest do my best to discern the real world around me). Somewhere in the 3.5 to 2.5% range felt reasonable.

I’m still digging through the explanations, but one thing that sticks in the back of my mind is feeling like a 4 year economics degree was a joke. All the discussions about stability, or rule of law, or predictability as good soil for economic growth, are out the window. Apparently, you can run the economy like a drunken loon and it doesn’t matter. Or the government stepping in to buy stakes in companies is now a good thing (remember when the evil government stepped in to buy a stake in the big three)? Nosebleed deficits are now okay. Absolutely bonkers ideas from those responsible for our economy, like replacing income taxes with tariffs, is now calmly, if not happily, digested by the markets.

But the biggest shock is the degree to which tariffs don’t matter. It’s part of a larger narrative, where the lower income folks that make the stuff get the shaft and higher income investors and managers are doing better and better. (The managers and shareholders do well as profits, bonuses, and stock awards roll in for moving production overseas, while local workers lose their jobs. While the remuneration is tax efficient, at lower rates for capital gains, the unemployed eventually see their benefits cut because they’re ‘lazy’). We make life better and easier for the top earners while fucking the bottom quartile half three-quarters. Any discussion of taking the surplus from trade and using it to offset the negative impact as jobs shift overseas or are eliminated entirely is sidelined as socialism.

But I digress. We have had chaotic, possibly illegal, and arbitrary tariffs and restraints of trade (like who the fuck thought the government should get a ‘cut’ of GPU sales). And it doesn’t matter. Push for inflationary rate cuts. It doesn’t matter. Heck, I could be wrong, we might not get inflation. Make enforcement a function of bribes to a would-be monarch. No problem, apparently rule of law was not important as long as a bribe gets you what you want. Need to merge? Don’t look for clear guidance to support M&A, just give the grifter in chief and his cronies their vig. Policy clarity can be defined as knowing where and who to bribe.

Am I angry that GDP came in at 4.3%? It surprised me, but I’m not angry. I am frustrated that all the talk about the care and feeding of the economy, the hard choices we need to make to keep it running well, or the degree to which we need the best people running seems like a joke. All the ivy league, PhD, novella-sized CV people apparently were just tooting their own class horns. You took an economics at a community college and think we should return to the gold standard? Who the fuck knows at this point, maybe it will work. You’re a welder who thinks we should stop importing things from Turkey to boost GDP? Sure, why not. Think there’s a trillion dollars of spending that can seriously be cut? Sure, no problem, fuck the math.

Admittedly, this was a rant. Maybe we’re floating on a bubble that may pop badly. And then we might see the effects of stupid policies through the lens of a spiraling economy. And we’ll rediscover we need intelligent, skill people in charge. Or maybe not. Maybe Baumol and Blinder is as much a work of careful fiction as a theology textbook.

But that’s not something I want for me, my family, or my neighbors. Maybe we’ll see the government wade further into business by back-stopping any collapse with “free money” of cheap interest rates, loan guarantees, and buying even more equity in private companies. I remember when that kind of socialism was something Republicans vehemently opposed. Against all the good principles of being careful stewards of the pillars that hold up prosperity. Manipulating rates, funny money deficits, state owned companies, and corrupt officials were something we pointed to as markers of guaranteed economic suffering under tin-pot dictators. I never could have imagined it would be our future.

First Time Claims Make Less and Less Sense

The number of first time jobless claims (a weekly statistic measuring the number of folks filing their first claim for unemployment insurance when they become unemployed) has been bouncing around 250,000 for the last year and change.

A related number, the continuing claims, which measures the number of unemployment claimants who are continuing to file for benefits has also been remarkably steady.

While it looks like there was a big jump in May, it was a change from 1,800,00 to about 1,940,000, of about 7-8%. And then it stayed steady. Meanwhile, unemployment has been slowly creeping back up over the last two years.

Meanwhile, we see a definite softening of new jobs created. The change in non-farm employment shows a degree of cooling in the economy.

What would we expect to see, if job creation is slowing, along with an up-tick in the unemployment rate? We’d expect to see more claimants for unemployment insurance. Fewer jobs, more layoffs, and lots of stories about graduates that can’t find jobs (who cannot apply for unemployment insurance), indicate a soft labor market. We see the average weeks of unemployment (how hard it is to find a job once you lose your job), tick up slightly but not decisively, by about 2 weeks, but still within statistical noise.

With today’s CPI coming in a lot softer than expected, this will give the Fed a green light to cut. But as much as we see evidence of a slowing job market, we don’t see more and more people applying for unemployment, what gives? Is this just what a more normal employment market looks like after the go-go job markets of 2021 to 2023? When there were many times more jobs open than there were candidates?

First, we have to remember a few things that may be complicating the first time claims picture. First is that the new graduate cannot claim unemployment. If a new high-school or college graduate cannot find a job, they cannot claim benefits because they haven’t worked for an employer that paid into the insurance pool. If you quit because your commute would be 2 hours (after you moved because even your boss was saying WFH would be the new normal), you are not eligible. If your employer claims it was for cause, you are not eligible. That’s why many employers will try to cite ’cause’ as the termination reason, even though they’re firing dozens or hundreds of people at the same time. Nor are independent contractors. if you were an independent IT contractor at US AID and your contract was terminated, you are not eligible. You basically have to work on a “W-2” basis for an employer that terminates you for non-performance (or criminal) reasons.

Then there are other reasons, such as deciding not to claim benefits, because you can make more money driving for Uber. (Or at least you think you can make more money driving for Uber). If you make more money than your benefit check at a part time job, you can’t claim benefits. Some people won’t claim it out of principle. And some people live in states that felt too many workers were getting cushy at home instead of returning to the workforce and made it harder to claim benefits.

Does an increase in first time claims (or continuing claims) predict a recession? No. It is a trailing indicator. Generally corporate profits fall, along with Wall Street’s expectations of future profits, as the economy slows. At that point corporations realize revenue won’t grow, so they have to cut costs to keep their margins. One quick way is to lay off staff. Often, this is a time for the company to prune their deadwood projects. These are projects they’re putting money into because it seemed like a good idea at the time, but no one seems to be able to kill it now that it’s shown to be a dud. Managers are human, too, and subject to biases like the ‘sunk cost’ fallacy. This is the push that management needed. But sometimes they just reduce head-count to the point of pain, because they can coast on their accumulating inventory until business improves. Only after output falls (a recession begins) does employment really contract.

But it is still striking there’s been so little movement in first time claims. It feels like you could place bets on it being between 220,000 and 240,000 next week and the week after. Do I think it’s being manipulated? No. While it was popular among the right to say Biden’s numbers were all fake and made up, I never thought that claim was based in reality and I don’t think there’s any skulduggery now. Did Trump send a worrying signal by firing statisticians? Yes, but I believe the core of the process is still very much intact. Are the numbers massaged? Yes, sometimes seasonality needs to be taken into account, otherwise the increase or decrease would be overstated and the period to period changes are harder to compare. And if you think that’s an issue, most numbers are also released without seasonal adjustment. So, go look for yourself. Are numbers revised? Yes – because sometimes data doesn’t come in on time. This is especially true of the employment survey, with some employers submitting data weeks after the data was due.

What we may be seeing is a change, or a beginning of a change, in the relevance of this number. Due to a variety of factors, it’s becoming less sensitive to changes in the health of the labor market. If you lose your job, your ability to access smaller benefits may be reduced. And employers may be getting better at incentivizing you to quit and unable to access your benefits. For example, we need you to report to work 3 states away and we won’t help you move. The first time claims may be very slow to move, if at all. Like we are seeing unemployment hit 4.6% but little to no change in the first time claims.

There’s a Bad Smell

If you don’t think something is very wrong, you’re not looking very hard. Recently, the cost of the average new car in the US topped $50,000. The median household income in the US (meaning the half way point, if you arrange all peoples’ incomes from lowest to highest) was about $83,000. The mean was about $66,000, suggesting a lot of skew from a bunch of very high incomes at the top end of the data set. So the “average,” under some definition of average, American household would pay about 70% to 80% of their income for the average new car.

If we go back 30 years, to the mid 1980s, median income was about 24,000 in 1985. (Not adjusted for inflation). If you adjust it for inflation, we have to face the ugly fact that 40 years has only taken us from $64,000 of 1985 median household income in today’s dollars to $83,000. Meaning that with all the advancements we’ve seen, and all the gains in productivity, our earning power grew just 35% or so. That’s less than a 1% improvement per year. But in the 1980s, a nice Buick or Dodge set you back less than $10,000. You could get economy cars for $5,000 – $7,500 price range. The average new car set a family back less than 50% of its income. Less than a third, if the bought an economy car. Even if you adjust for inflation, the average new car should be in the $25,000 to $30,000 range. To get to that that “less than 50%” range in today’s actual prices., you need an income of at least $100,000, if not slightly more.

This is the difference between purchasing power, wealth, and income. Partly it’s inflation, and partly it’s not inflation (to the degree inflation measurements aren’t arbitrary). The price of an “average” new car has risen faster than inflation. So has housing. So has medical care. So has education. If you could easily afford an average car in 1985, but struggle to buy an average car in 2025, you are poorer as far as cars are concerned. If you could afford to go to the doctor’s office in 1985 but not 2025, you are poorer along that axis. However, an IBM PC computer or original Macintosh cost maybe 10% of your 1985 median household income. Today, that (relatively) high-end computer is in the 3-4% category. We’re much richer on that axis. The necessary stuff is more expensive, but escapism is cheap.

I would argue that the things that matter, like food, housing, and transportation are why we feel poorer today. Setting aside the paltry growth in inflation adjusted median household income (while upper incomes have grown much faster than inflation), having to put yourself in deep debt to do “normal” things hurts.

The fact we are drowning in televisions, computers, and other gadgets doesn’t compensate for not being able to afford college. If I were to ask most people struggling to buy a house, would you rather have: more expensive TVs and computers or cheaper houses? They would opt for the house. If I asked the person trying to get one more year out of the ride that gets them to their job, if they wanted cheaper cell phones or cheaper cars, they’d opt for cheaper cars. Or a public transportation system that didn’t feel punitive in its cost and inefficiency.

You need transportation, you need a house, you need to go to the doctor and the dentist. Those seem more and more like luxury items. That’s what feels so wrong about today. I caught a passing notice about Paul Krugman saying China has passed the US in purchasing power parity. They may have. I haven’t read it. I’m a little tired of Krugman, who lost credibility with me as an economist, for focusing on too many nakedly partisan issues. But we all feel it. If you make more money next year, it doesn’t really feel like you got ahead. In fact, it feels like you’re falling further and further behind.

So you tell me, after 40 years of progress, with companies worth trillions of dollars, and with two people in a race to be the first trillionaire, does it feel like we’ve advanced? Do you feel wealthier? Does that seem like a system that’s working for the benefit of most people? Do numbers like GDP and a soaring stock market paint a rosy picture, so we we learn to ignore what our lying eyes are trying to tell us?

Why Everything Feels Broken

Once upon a time, if you wanted to watch television (a football game, a show, or whatever) you pushed a button and twisted a nob. That was the entirety of the user interface. The channels were clearly marked and number 2 through 13 and ‘U’. If you twisted the top knob to ‘U’, you had the choice of a whole slew of channels on a lower knob, marked UHF. These tended to be local, low-budget, smaller stations and public broadcasters. They were the kind of station that had a ‘Creature Feature’ movie night where the station owner’s nephew pretended to be Dracula. The whole interface was an on-off button, and a pair of knobs (or a keypad on a remote to select 00-99). When our family went to cable in the 1990s, it was at most 3 buttons pushes to select a channel. (And if you hit ‘4’ and just waited instead of typing in ‘004’ – chances are it would turn on channel ‘4’).

At my parents’ house, they now turn on the TV and are presented with the Roku welcome screen. Then they need to select their TV provider, Hulu, by navigating to that icon and selecting it. They are then taken to a list of users, for ‘personalized’ content. The just have the one. Then they need to hit the left arrow to switch to the left side of the navigation and the down arrow to select ‘live’. From there they can use the right arrow to make the current screen the focus. Using the ‘down’ array (for some reason) allows them to select a channel. But it doesn’t show them all the channels. Just the channels they traversed recently (although I think Hulu’s logic on ‘recent’ is a little screwy). For all the channels, they need to return to the left side navigation again, select what subset of channels they might want, and then scroll around until they find that channel.

Dozens of button clicks, four or five menus (depending on what you count), and having to navigate from Roku to Hulu, all to do something that once required nothing more than twisting a knob. And that’s if you do everything correctly.

For elderly people like my parents, this is a nightmare. For them the TV is clearly broken. They sometimes hit the wrong key. They sometimes get confused as to why they are prompted for new information. They forget if their show is on Hulu or Netflix. Depending on when you bought the Roku, the four buttons to take you directly to a service may or may not include any of the services you use. The interface is intentionally confusing to guide you to Roku’s or Hulu’s content or sponsored content or partners. And god forbid they have to log in to Hulu again for some reason, or there’s a new privacy policy to agree to, or there’s some promotional message. I’m often around as I help take care of them, so they hand me the remote in frustration and I put on the local news. But that’s old people, right? They don’t really count. (Have I got some news about what the future has in store for you, as well…)

Why does a lack of well designed products for the end user indicate a systemic problem in our society? From our perspective these things are broken. Products are now designed for the benefit of the provider and the third parties harvesting data. From their perspective, this is great. We have scroll through content we don’t want to watch or have to dig twice as hard to find something we need. We might get tricked and watch their ads. This is a feature for them. The TV manufacturer, Roku, and Hulu have no incentive to take my parents directly to a local channel to watch news at 6 pm. They have every incentive to drag them through all sorts of other content because it makes a little more money.

At no point, during my childhood and early adult-hood, did I have to agree to a EULA or privacy policy to watch television. Not because the executives at the TV manufacturer were better human beings, but because they had no way of collecting that data. But if they had a means of collecting that data, people would have blown a gasket. Keeping track of the books I read, the shows I watched, or where I went, was dystopian and Orwellian. Something we try no to think about, as the services and products we use capture that information and much more. And it’s easy to forget about the data market-places were this data can be aggregated from multiple sources and sold (without warrant) to the government. After a couple of decades of technological progress and slow incursions on our privacy, we are now the frogs looking at the boiling water and wondering ‘how did this happen?’

When you buy a smart TV, the makers argue sponsored content and information harvesting deals lower the cost to the consumer. You are told it’s good for you. Why would someone help subsidize your TV for some data and to push their content? So you buy things you don’t need. Can’t afford it? No problem – do it in four easy payments. (Including groceries – ugh!) The advertisers and content pushers want you to think you’re smarter than they are and somehow immune to their efforts. (Which is obviously true because you drink the beer of smart people everywhere, right?) How much does your data and attention ‘lower the price’ of the television? We have no idea. It could be $5 or it could be half the cost. But if it is half the cost, think how much the advertisers are getting out of that deal!

Data predation is coupled with a lack of options. It’s good for the consumer to have one search engine. It’s good for the consumer to have one operating system. It’s good for the consumer to have one choice, right? If it lowers prices, it’s got to be good for the consumer, right? That is the monopolist’s new trick. Just (promise to) keep the sticker price down. Unfortunately we can’t run the world with two different set of policies. When an anti-trust case is litigated, we can’t both break the monopolist and not break the monopolist to see which option results in a better world, ten years hence. We just have a mob of economists come through with their “objective” estimates of how much prices will go up or down. I can assure you that every monopolist has convincingly argued the world is a better place if they are allowed to integrate and lower costs to consumers.

But price isn’t the only lever a monopolist has. For example, they can be paid to push content you don’t want. Are you a business using Windows 11 Enterprise Edition? Why are some games pre-installed on your enterprise desktops and laptops? Would you be surprised to know that’s sponsored content? Look at the clickbait feed when you open Microsoft Edge or the start menu. Should that be on a work computer? What about a laptop you buy at the store, only to find you can’t uninstall some of the software? You could buy a premium product, like an Apple Mac. Or maybe you can’t buy a Mac, because your kid’s school, your work, or maybe just games you like are only on Windows. Microsoft can do this because they know you don’t have a choice. As a business you have few options, none of them exceptionally palatable.

Leena Khan tried to do something about it. She was hated by both the right and left (well, the donor part of the right and left). Ms. Khan always seemed in danger of being asked to step down. She was probably not the world’s greatest manager. She was willing to go after big tech, the woke companies the Republicans wanted to hurt, so even JD Vance once sang her praises. Flawed, and sometimes awkward, she did push back.

This is part of the fall. You are hung on a hook like a fattened pig and butchered to become a vendible commodity. Even if you don’t have an intellectual grasp of your exploitation, you feel it. It’s not that people in power have no incentive to fix it. They have the exact opposite incentive. The wealthy profit from this machine. And neither side is immune. You might find more sympathy among Democrats – but not necessarily more effort. Even if I sometimes thought her choices were peculiar, Ms. Khan was a rare moment when something was actually tried. So was the CFPB, which I’ll link through Wikipedia because I don’t know how much longer they will be around. The interests are aligned toward further extraction of your value, further monetization of your attention, and further driving you into debt.

Where is it taking us? At some point the exploitation is not compatible with a good life. One of two things can happen. We could have a genuine rebellion. We rise up and smash the machine. This sounds romantic, but as someone who has read a little history, I can tell you that revolutions can go very bad. The ballot box is less bloody and more predictable than the barricades. Whether it’s the terror following the French revolution, the rise of the authoritarian bolsheviks after the Russian revolution, or countless smaller coups and insurrections that lead to psychotically brutal regimes, a revolution can quickly turn autocratic. Some of which might be playing out in the current administration.

The second option is to meander forward. The temperature is managed well enough so the frog never knows it’s being boiled. Each year life gets shorter and more miserable. In this period, everyone is out for themselves. Everyone is cynical. The country descends into kleptocracy. We’ve already seen many of our leaders go from modest means to fantastic wealth on their government salaries. If you have sufficiently low morals and good connections, you live well during this future. Otherwise the good things slowly become memories. Remember when you just went to a doctor because your job provided health insurance? Or you could afford to buy a house? Or children weren’t a luxury good? Or teeth weren’t just rich people bones? Or you could just pay for a Big Mac meal once and not in four easy installments?

I would argue we are taking the second option. And that’s why it all feels broken. Because it is breaking, from our perspective. But it’s not a sudden, catastrophic event. It is getting slowly worse as we are mined for attention and data so we can be sold increasingly needless and expensive products. Our leaders are wielding power for the benefit of the wealthy, and the wealthy are rebuilding the world in their favor. The few protections our leaders once put in place to foster competition or prevent companies from predatory practices are being lifted, as the wealthy rewrite the rules. To do that they must break our world. We continue to elect leaders that are there because of the generous support of the monied interests that want to exploit us, rather than rejecting those leaders outright. At some point we should be asking why the predators at the door are so eager for us to support their candidates.

And that local UHF TV station? That’s been consolidated in the The Sinclair Group. The station owner’s nephew doesn’t do ‘Creature Feature’ any more. He peddles right wing talking points.