This article appears in the November 2007 issue of The American Spectator. To subscribe to our monthly print edition, click here.
Even in the quietest of times it’s hard to figure where the country is headed, but in a revolution it’s impossible. And we are living through a revolution — a slow-motion one, or perhaps not so slow. I refer to the transformation ushered in by the high-tech world. Its consequences are likely to be as far-reaching as those of the printing press, but it’s all happening much more quickly than Gutenberg’s revolution. That one took maybe 250 years to mature.
The late Petr Beckmann, who taught electrical engineering at the University of Colorado, used to say that only profound technological change can transform the social order. That is what we are seeing now with the digital revolution and the development of the Internet. We are inclined to think of revolutions as arriving like tornadoes, like the Russian Revolution in 1917. This one inches forward day by day. But it is inexorable and we are only beginning to see its consequences.
The Internet has even kept ahead of regulation and taxation. I was just reading a book called AOL.com, by Kara Swisher, telling “how Steven Case beat Bill Gates, nailed the netheads, and made millions in the war for the web.” Although published as recently as 1998, it already reads like something from a time capsule. AOL’s merger with Time Warner still lay in the future.
That catastrophe, in which Time Inc.’s feckless CEO Jerry Levin was duped by Case and others into thinking that AOL was worth about five times its true value, is well told in a later book, Fools Rush In, by Nina Munk (2004). But guess what name doesn’t occur in Munk’s index: Google. Its initial public offering occurred later in 2004.
As for the Time Warner-AOL disaster (from the point of view of Time Inc. and its employees), the irony is that Case’s vision of the online future was basically correct. He just didn’t need Time‘s “content providers” to achieve it. AOL itself hasn’t survived the competition. Today it is struggling to turn itself from an Internet provider into an “advertising specialist,” and its top employees are moving from Dulles, Virginia, to New York.
So it would be rash to predict the way the world will look even a few years hence. Certain trends are nonetheless unmistakable. One is that market forces keep getting stronger. As for the politicians, they pretend to ignore this (some genuinely don’t understand it) but either way their maneuvering room is more restricted and their sound and fury signifies little.
The talk show hosts fume about the “mainstream media,” and it’s true that they tilt in a liberal direction; more government is their universal remedy. Meanwhile, however, the old media companies are being eaten up before our eyes. Network television audiences are melting away and look at what’s happening to the stock price of the New York Times (stock symbol: NYT).
True, many websites rely on information dug up by mainstream journalists. So the demand for reporting is undiminished. But dollar losses experienced by print and television greatly exceed the online dollar gains. Free content is likely to mean unpaid journalists. Salon‘s Washington bureau chief Walter Shapiro wondered the other day how journalists will be paid if present trends continue.
I mentioned this to a friend of mine who has had great success investing in Silicon Valley start-ups. Take the case of the Washington Post‘s investigation of the problems at Walter Reed hospital, I said. The Post had reporters working on it for weeks before anything appeared in print and it wouldn’t surprise me if their up-front cost, salaries included, came to $100,000. No blogger and few websites could afford that. So, can investigative journalism survive the Internet?
My friend replied that very similar things are happening to popular music, because songs can be downloaded for little or nothing. Are we experiencing a shortfall of pop music as a result? He had me there, because I never listen to contemporary pop and if there is less of it I would regard it as a blessing. But I take his point (which is that they are still grinding it out).
The transformation wrought by the web is affecting all business, not just the news business. A friend of mine in England owns an automobile dealership near Guildford, a wealthy area 30 miles from London. He is 66 years old and hoping to retire soon. I guessed he would be able to command a good price for his car business. But apparently not. He told me when I saw him in July that he probably won’t be able to sell it at all. Thanks to the Internet, he said, his dealership had been transformed into something rather different: a platform from which customers can test-drive new cars. At full price, his profit from the sale of a new car might be 10 percent. But nowadays the customers, back from their joy ride, say: “I like the car. Let me get back to you.” Then they go online and find another place that will sell the same car for 5 percent less. And so on and on. The Internet thereby greatly increases competition, driving prices down and forcing everyone to be more and more efficient. (For my friend, the good news is that the underlying land is worth quite a bit — far more than the business itself.)
BUT THERE’S A DEEPER and less noticeable trend. You have to go back 30 or 40 years to see it. The longshoreman-philosopher Eric Hoffer argued that the direction in which ambition and talent flowed reveals much about a society. “In this country until not very long ago the social landscape was steeply tilted toward the marketplace,” he wrote. “Most energies and talents flowed toward business.”
By the late 1960s, however, Hoffer saw that a big change was underway. “The prestige of the businessman is no longer what it used to be,” and was moving toward the universities. People with the ability to be wheelers and dealers were “pawing their way up academic ladders and throwing their weight around in literary and artistic cliques.”
That has now been reversed, surely. College professors are two-a-penny and hardly anyone pays attention to them. English departments with their absurd critical theorists have become a joke. Meanwhile the prestige of entrepreneurial capitalists has soared. Rick Perlstein, who wrote “What’s the Matter With College?” in the New York Times Magazine, noted that “the distance between the campus and the market has shrunk” (a bad thing, in his view). In the campus turmoil of 40 years ago, few would have anticipated the current “saturation of higher education with market thinking.” His basic complaint was this: Campuses are no longer centers of rebellion. To which a junior at Yale responded:
“How do we rebel against a generation that is expecting, anticipating, nostalgic for revolution? How do we rebel against parents who sometimes seem to want revolution more than we do? We don’t. We rebel by not rebelling. We wear the defunct masks of protest and moral outrage, but the real energy in campus activism is on the Internet.”
Meanwhile, politics plods on as though nothing has happened. Vast attention is paid to the presidential election, because journalists love it. On the hustings, at least, the socialist dream lives on, particularly in the realm of medical care. And who would have thought that the leading GOP candidates would be the former mayor of New York and the former governor of Massachusetts? But the truth is that whoever gets to be president will be severely constrained by market forces. (Foreign policy is a key exception. Presidents seem to have been granted the power to lead the country into war at will.)
Washington Post columnist E.J. Dionne, a useful idiot for the left, is yelling with excitement because Obama & Co. are promising to raise our taxes. But if a Democrat wins next year, I wonder if that will really happen. If free-market ideas can penetrate the campus, maybe they can even reach into the Democratic Party.