Now, French philosophers can be daunting at the best of times, but this chap got through to me. His money quote: “All of [modern] life presents itself as an immense accumulation of spectacles. Everything that was directly lived has moved away into a representation.”
That sounds about right to me … and I’ve made it my mission to expose this “spectacle” for what it is: a drain on our wallets.
Fake News = Fake Reality
In plain English, my French philosopher meant this: The modern economy is so complex that people can no longer perceive the true forces that shape their lives. In this vacuum, the media portrays bad things as desirable and freedom as slavery. It’s profitable to do so — after all, who wants to hear bad news all the time? People have become so mesmerized by the buzz of misinformation around them that they no longer know truth from falsehood.
Anyone who has watched “headline news” will recognize this. There could be an asteroid headed right for us, and Robin Meade would still be running stories about rescued kittens.
There are asteroids headed for us right now, in fact … hidden by the incessant prattle about the president-elect’s latest tweets. A big one is the likely merger of AT&T Inc. (NYSE:T) and Time Warner Inc (NYSE:TWX), which will entrench monopoly conditions in the U.S. telecom sector and maintain our status as the most expensive, worst-served broadband market in the developed world.
They Got the Power … and the Money
During his campaign, Donald Trump said:
In an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN — a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.
Quite right, sir! When a broadband provider owns the programming it transmits, it can favor that content and penalize others. In fact, AT&T already does this. AT&T doesn’t count the content on its DirecTV network toward its customers’ monthly data caps. But anything viewed on a competing network, such as Comcast, Cox or Charter, counts toward the cap. That’s known as “zero-rating.”
Zero-rating creates a powerful incentive for AT&T customers to choose things to watch from AT&T’s proprietary offerings. That in turn allows AT&T to raise the price of that content and to charge advertisers more to appear on it.
As I describe in the January edition of The Bauman Letter newsletter, that’s called “economic rent”: the excess profits a company gets by making the market less competitive. That extra profit doesn’t reflect the cost of production or any added economic value by AT&T … instead, it’s a pure transfer of wealth from you, the subscriber, to AT&T.
Did I Say That?
In reality, Trump wanted to block the Time Warner deal because he was mad at how CNN, a subsidiary, conducted the first presidential debate. After all, that’s how he rolls: Don’t get mad, get even. That didn’t get reported, though, and millions of voters — at least those who pay attention to such things — took it as evidence of his commitment to “drain the swamp” of our distorted, monopolistic telecom markets.
In the meantime, Trump’s transition team will reportedly appoint Jeffrey Eisenach to run the Federal Communication Commission, which will oversee the AT&T/Time Warner merger. Eisenach is a staunch supporter of zero-rating and an outspoken advocate of telecom industry interests. Much of his own research on telecom has been funded by companies like Verizon. All of Trump’s telecom advisers are solidly pro-zero-rating.
It seems very unlikely that the Trump administration will oppose the AT&T/Time Warner merger after all. The market thinks so too: AT&T’s stock price has risen 12% since the election.
Seeing Through the Trump Spectacle
The number of policy flips in Trump’s transition are so numerous by now that hardly anyone pays attention. Some media outlets are covering them, but they mainly preach to the converted. By contrast, a search for “Trump AT&T merger” on Fox News produces zero results.
This is true of many critical things that affect the contents of your wallet these days. A combination of fear of lost ad revenue, laziness and the never-ending search for the least challenging content ensures that millions of people will go about their lives thinking the new administration is going to look after their interests … when the opposite is true.
That’s not a unique criticism of the new administration. I felt exactly the same way about the Obama administration and said so often. That’s why you can expect me to continue to cover rampant “economic rent” in The Bauman Letter … and to offer practical alternatives that will keep your hard-earned money in your wallet where it belongs.