Religious suffering is, at one and the same time, the expression of real suffering and a protest against real suffering. Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people. – Karl Marx, A Contribution to the Critique of Hegel’s Philosophy of Right
Social media is becoming the new whipping boy and poster child for all that ills our culture and contributing to its decline.
We added our two cents in a recent post, Why Google Is A Short,
…social media probably generates negative productivity. We read some time ago the average American spends 40 minutes per day playing Farmville. How does planting virtual corn add to the GDP?
Though we are more ambivalent about Google, Facebook is doing some severe psychological damage to an entire generation, including my 15-year daughter. They spend much of their time competing with trophy photos loaded up on Instagram. Never gonna win that game, which leads to increased anxiety and depression for an entire generation.
The Google Short
That brings us to the Google (we are old school and can’t bring ourselves to call it Alphabet) short.
Imagine when a politician has his/her epiphany that all those porn searches they have done over the years on Google are stored somewhere and could be hacked and released to the public? That will ignite a prairie fire of potential legislation, which will spread faster than you can say SNAP. – GMM, Apr 24th
Our Friend Weighs In
We received this email from a very close friend yesterday,
Yesterday I downloaded the data Facebook has stored on me. 407 pages including every message I sent, every like, every picture, on and on. Below I pasted just one of these pages, the list of advertisers who requested all my data. I know nothing about most of these companies and to my knowledge do not use them. Just saying.
Psychological Damage On Children
In 2013, one of my daughters was seeing a therapist to help her work through the psychological complications of her just diagnosed epilepsy. She is in good company – Julius Caesar and Chief Justice Roberts.
The therapist had all the right credentials from all the right institutions, Harvard grad, Ph.D. from Stanford. Until I asked her about the damage smartphones are doing to children.
She began to justify, almost saying they were good for kids.
The takeaway quote I recall, she had just attended a seminar and smartphones are good for children, “it is changing their brains.”
No shit. I fired her on the spot.
Moreover, I can’t tell you how many conversations I have had with friends who have trouble with their children’s use of social media.
Nefarious Activity On Social Media
By the way, I came out of that meeting with my daughter’s therapist to find my trading account had lost several thousand dollars as some dickhead ‘bots hacked into AP’s twitter account posting the White House had been bombed and President Obama was injured. Stocks plunged and I was sold out of my long postions by deep out-of-the-money stops.
The FBI and SEC are to launch investigations after more than £90bn was temporarily wiped off the US stock market when hackers broke into the Twitter account of the Associated Press and announced that two bombs had exploded at the White House, injuring Barack Obama. – The Telegraph
I couldn’t figure out what happened to my account as the S&P was higher than before I entered the meeting. Until I looked at the chart.
We are not as negative on Twitter as much as Facebook but this is just another example of why the government has to take a closer look at social media. Furthermore, and more important, many believe that even the fate of democracy hinges on the future of clickbait.
Noah At Bloomberg Opines
The great Noah Smith of Bloomberg penned a must-read yesterday, Social Media Looks Like the New Opiate of the Masses, with the subtitle, Researchers have found some troubling parallels with addictive drugs.
Here are the non-wonkish money quotes:
I suspect it will be many years before the true scale and scope of the changes are appreciated, and even then much will never be fully understood. The era when humans interacted mainly by gathering in physical space, or maintained personal networks through one-to-one connections, has drawn to a close, and the next generation won’t even really understand what that era was like. Social media has changed the meaning of human life itself.
But many of us who lived through the shift from Internet 1.0 to the new age of social media can’t help but feel a nagging worry. In addition to concerns about privacy, electoral influence and online abuse, social media seems like it has many of the qualities of an addictive drug.
Research isn’t conclusive on whether social-media addiction is real. But it certainly has some negative side effects that loosely resemble the downsides of recreational drugs.
Experiments found that smartphone deprivation induced anxiety among young people, a phenomenon that certainly has parallels to drug withdrawal.
Once the internet offered an escape from the real world, now the real world is a much-needed escape from the internet.
If social media really does act on many users in a manner loosely analogous to cigarettes or heroin, that means the benefits are less than people’s willingness to pay. Junkies would pay quite a lot for their fix, but that doesn’t mean the money would be well-spent.
Before we conclude that social media is like tobacco. And even if it is, the harm would need to be very substantial in order to get government policy involved in limiting social-media use.
Whereas Karl Marx declared that religion is the opiate of the masses, our modern capitalists may have invented a better one.
Who in their right minds would have thought five years ago we would be comparing Facebook use to tobacco addiction?
We are less sanguine than Noah on the future of our social media economy.
More so, not because of the addiction thing, but because of privacy issues. The behemoths will surely try and adapt their business models to survive. Will you pay $120 per year for Facebook? There is no free lunch, right?
That brings us to investing.
Are the toothless F$%Gs out of the woods? Hardly. It is only two outs in the top of first, in our opinion. The blowback is just getting started.
For the above reasons, a long-term sword of Damocles is hanging over the market and these companies, in particular. Their stocks, which have heavy weights in the indices, will experience fits of volcanic eruptions and existential crises to periods of calm and euphoria. In other words, prepare for a Key Stone Cops chase scene.
Is Our Social Media Economy Good For The Economy
This is one issue where the president is right-freaking-on. Building a ballroom trumps building a chatroom, as it creates more income and real wealth.
Think back when GM and Ford dominated the economy. How many secondary jobs were created when a car rolled off the assembly line? Gas stations, tire shops, mechanics, smog inspectors, auto body painters?
They still do with imported BMWs (especially German cars, they are so expensive to repair) but the input multiplier is not as great.
We won’t fix our economic problems by reducing trade, especially with tariffs, but by making auto workers more productive with both human and physical capital investments. Maybe 3-D printed cars will eventually rule the day?
This type of anufacturing is more likely (cannot say with certainty, we have not done the research) to have a greater jobs multiplier than the social media economy, and is more egalitarian in income and wealth distribution.
We will concede that the social media jobs multiplier is not zero. For example, vendors of, say, banana flavored condoms can sell their junk over these platforms. But, come on, man!
The Bigs And AI
The one big caveat to our view is that the Facebooks and Googles are big spenders and on the cutting edge of artificial intelligence (AI), which is subsidized by their advertising revenues. Soomeday they may be big players in the AI/robotic manufacturing displacement that is already here and only surely to accelerate.
But will they have enough time? Uhh…probably.