The Windows Phone Problem In Three Words: Way Too Late.
Earlier today, Charlie Kindel, a former Windows Phone GM, posted some thoughts on why Windows Phone hasn’t taken off. Essentially, he blames Microsoft’s model pressuring both OEMs and carriers — so much so that neither really wants to push the platform.
Perhaps not surprisingly, I largely agree with his criticisms of Android. He believes Google’s platform has completely laid down for both the OEMs and the carriers to the detriment of the users (hence, the fragmentation we continue to see). This has allowed Android to flourish with regard to market share, but he thinks it won’t last forever because eventually the consumers will revolt, just as they did against Windows Mobile.
I agree.
Where I don’t agree with him is that Windows Phone is the correct model. I like the model a lot more than Android’s, and I like the OS a lot. But I don’t like the OEM strategy. And I hate the timing.
The new Nokia Windows Phone device looks nice (though I haven’t personally used it yet), but the others I’ve seen are largely the same crap that Android phones run on. The iPhone blows these phones out of the water.
Kindel believes Apple’s strategy (of making the devices themselves and bending the carriers to their will this way) will eventually backfire. But he declines to elaborate as to why he believes this (he says it will be a different post).
All of this is very interesting to think about. But I think Kindel is silly to overlook a couple key things.
First, Apple’s initial model, while frustrating, was actually quite smart. They partnered with one carrier to ensure they got the terms they wanted. And rode this until other customers demanding the iPhone hit a fever pitch. At this point, the other carriers (in the U.S. at least) had to accept to play ball with Apple on their own terms.
Apple could afford to do this because they knew their device — their complete device: OS and hardware — was that good.
But Apple could also afford to do this because they were first to market. When the iPhone launched in 2007, the other smartphones on the market were shit. There was no actual competition for the iPhone. The first Android phones that launched over a year later were a joke.
Contrast that with Windows Phone which launched far too late into the market. Kindel never mentions it, but you simply can’t downplay that fact. Had Windows Phone launched in 2007 or even 2008, the story would have been different. Instead, it launched in late 2010.
Way too late.
Two to three years in the hole, the only way Windows Phone can win the market now is to make a product that is leaps and bounds better than what’s out there. They need something that’s an iPhone-in-2007 type product. The product they have, while good, isn’t that.
It’s not enough to be better. (And we can argue as to whether iOS or Android or Windows Phone is better.) You need to present a product so good that people have to buy it. Windows Phone isn’t close to being that. I’m sorry, but it’s just not.
And one other big reason for that is something else Kindel oddly downplays: apps. Even if you think Windows Phone is better than iOS or Android right now, you’re unlikely to buy it because all of your favorite apps are available on those competing platforms and very few are available for Windows Phone.
Microsoft has been pushing hard to change this, offering third-party developers bags of cash to port their apps to Windows Phone. But for most developers, the money isn’t enough. The users just aren’t there. It’s very much a chicken-and-egg problem.
I just think the main Windows Phone problem is a lot more simple than Kindel wants to believe. He blames carrier marketing — yadda, yadda. Microsoft has all the money in the world; if it was just a marketing problem, they could fix that.
He also thinks it’s almost a conspiracy theory to ensure the Android model — which is favorable to carriers and OEMs — wins out. To some extent, I have no doubt this is true. If I was a carrier or OEM, Android would be my best friend. But Windows Phone availability in 2008 may have altered this.
You can’t overlook being two to three years late to the market. And as a result, having essentially no third-party developer support. This does matter.
So what can Windows Phone do? I don’t know. But I’d consider betting it all on the Xbox Live integration. Or I’d go back to the drawing board and come up with something completely different to blow the market away. I’d invent the iPhone in a world of RAZRs all over again. Small task, I know.
Tuesday, December 27, 2011
parislemon • The Windows Phone Problem In Three Words: Way Too Late.
Monday, December 19, 2011
Sunday, December 11, 2011
Saturday, December 10, 2011
Monday, December 05, 2011
Damn You Auto Correct Reveals 9 Funniest Texts of the Year
The auto-correct feature on mobile phones can be a blessing for catching text message typos but also a nightmare when a word is automatically replaced with an embarrassing one.
Popular blog Damn You Auto Correct — which features a collection of outrageous auto-corrected text messages submitted by readers — has unveiled its top laugh-out-loud entries of the year, based on Facebook shares, tweets, comments and page views.
Here’s a look at some of the most wild and blush-worthy texts that topped the list. Warning: Some of the content is not safe for work.
Friday, December 02, 2011
HTML5 Smart Board Attempts To Out-Surface The Surface | TechCrunch
Intuilabs is showing off their proof-of-concept HTML5-based multi-touch smartboard in an effort to prove a) that HTML5 is pretty rocking and b) that someday we may all have smart tabletops in our home. To see the big screen in action you can fast forward to about 3 minutes in.
It’s obviously a little wonky in terms of applicability in the real world, but these guys aim to add multi-touch interfaces to the entire web, at least in some form. It will definitely be fascinating when web apps can do what native apps can do, especially when it comes to pinching, zooming, et al.
Introducing the Web as a multi-touch application hosting option opens the door to instant availability and universal access, giving retailers, advertisers and the like a powerful new medium for communicating with their prospects and customers. Web designers and their clients will be able to create immersive Web experiences without requiring plug-in downloads or excessive cross-browser scripting to ensure compatibility. Interactive mobile phone experiences could be ported to the Web, establishing a consistent look-and-feel, and then expanded to take advantage of additional screen real estate. Ambitious retailers, hospitality vendors and the like could take things a step further and carry over the phone and Web experience to their stores, lobbies and gathering places through interactive tablets, kiosks, tables and touchscreen walls.
Thursday, December 01, 2011
The state of digital music (as I see it) | Jason Paul
Several months ago I wrote an essay about how I thought Netflix could save music. Since then I’ve become a big believer in subscription music services. I chose Rdio because I liked the design, the social aspect and lack of ads. I honestly don’t understand why anyone wouldn’t use a subscription music service (MOG, Spotify, Rhapsody, Rdio) instead of paying more and listening to less with iTunes. I’ve come down pretty hard on iTunes in essays and on Twitter. I fail see why we need it and how it’s good. In this so called ‘cloud’ age owning an mp3 has become redundant. While I’m skeptical of the cloud for personal data I think distributed media (music, movies) has found a perfect and profitable future in the cloud. Apple has introduced their version of cloud music called iCloud which will be released soon. My gut response is an immediate aversion. It seems better than the totally wasteful Google and Amazon cloud music offerings. The problem I foresee in iCloud is that it continues to coddle the antiquated consumer impulse to objectify music. While iTunes can claim they are helping artists earn money off of digital music it actually amounts to an enormous scam against both consumer and artist.
I am 100% for supporting the artist. To use iTunes as an argument for artist charity is delusional. An artist can sell directly on their website and collect 100% profit instead of paying the middleman. We are talking about the world wide web damnit. I’m more likely to buy when I know my money goes direct to the artist. With regards to subscription music I do see immense value for distribution. It’s interesting Apple won’t be jumping into music subscriptions as they are the most poised to popularise this very rational approach. But they won’t cannibalise their very expensive old-school approach to selling mp3s (in my opinion worthless collections of data).
Why I think Rdio’s social model is so important is because of the access it provides. It’s not just access to any impressively large library of music but it’s also access to a network of audiophiles interacting around common music tastes. Where Rdio is all about discovery iTunes leans more on traditional promotion. Discovery is much better for artists so their work can speak for itself. Most interestingly on Rdio I’ve noticed that really good indie music tends to hold its own against pop juggernauts and in many cases does better. This could be a reflexion on the Rdio user base.
Music in a social network has other important implications. Many Twitter users seem to be aiming for and a few have actually attained a kind of social capital (influence). In a music social network gaining this kind of influence is actually more straightforward and less self-serving. The goal simply being to find great music from like-minded listeners. At least that’s why I’m hooked on Rdio. I’m always looking for my next art pop fix and the people I follow represent leads for my addiction. I love discovering new, good music. There’s way too much music but nowhere near enough good music.
My positive experience with Rdio has convinced me that the success of the music economy (and the end of what they call piracy) lies exclusively with access, cloud and social. I’m so sure of this I won’t even bother elaborating and let the immediate future convince any skeptics. What I hope you will consider is that any digital music service that isn’t based on these three attributes is DOA. That’s right, Amazon and Google, have already failed in there forays into digital music. What absolute redundancy! Having people backup/duplicate music files that could simply be accessed in the cloud?
The Future
I’ll close and go back to the future and recount a social music experiment I participated in on Rdio. Although it is a social network it is surprisingly (and deliberately) difficult to communicate with people directly to ensure the network maintains its focus on music. The desire to communicate with other users is so strong that people create playlists and use them as forums where they communicate through comments. Someone started a forum where they devised an experiment to get as many people in the network as possible to listen to the terrible 1976 comedy album by Redd Foxx “You Better Wash Your Ass.” It was an effort to get popular artists such as Fleet Foxes and Adele bumped from the Rdio heavy rotation charts. I did my part and left the album on loop all night (on mute as it is pretty terrible). The experiment worked. The next day Redd Foxx’s album was the top album in Rdio’s heavy rotation.
From the comments on the forum it seemed that a few Rdio power users who’d participated were a little disillusioned with the experiment. Perhaps they felt a little used and aesthetically compromised (I felt a little like that). What I found incredibly interesting about the experiment was how it simultaneously revealed how powerful users are and how easily the social music system can be gamed. If/when subscription music goes mainstream we undoubtably will have to deal with major labels paying off listeners to exclusively play their releases to gain rankings. The algorithm will evolve as well hopefully in favor of the real user. Perhaps there will never be a totally fair music utopia but for the moment it’s nice to be part of a network where the good stuff, even when obscure, actually gets noticed.
Related content:
Categories: Blog, Essays | Tags: access, Apple, cloud, iTunes, music, Rdio, subscriptions | Permalink
Wow....Jason's analysis is exactly how I feel about current music offerings. First I stored my CD collection 5 years ago (never unboxed) as everything I listened too was from iTunes and now I never use iTunes and just use rdio.....
Sunday, November 20, 2011
Friday, November 18, 2011
Netflix scores new Arrested Development episodes for 2013 | Electronista
Netflix scores new Arrested Development episodes for 2013
updated 08:20 pm EST, Fri November 18, 2011
Netflix gets lock on Arrested Development return
Fox and Imagine Television confirmed a major deal on Friday to get new episodes of Arrested Development. The agreement outlined by Variety would revive the cult hit TV show starting from early 2013. It reportedly won out in a fierce bidding competition with traditional TV that included Showtime, among others.
The terms of the deal weren't given out, but are likely to be expensive. Netflix' first exclusive show, the Kevin Spacey headliner House of Cards, is unofficially believed to have cost over $100 million.
It comes in sync with plans for an Arrested Development movie and could be crucial to Netflix keeping its status as the primary source of online video in the US. Netflix is on the verge of losing Starz content that, while a small piece of its overall content, may cost it variety that it has been working for years to build. A deal, while not coming for over a year, would help smooth out the public relations fiascoes created first by hiking the price of getting both DVDs and streaming as well as the flip-flop on splitting off DVDs under Qwikster.
If exclusive, it could significantly shut out competitors like Apple and Amazon. Both as a whole get much more recent content through their willingness to sell TV episodes, but they rarely have true exclusives.
By Electronista Staff
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Sunday, November 06, 2011
Metamemory and the User Experience | UX Magazine
An article published in Science Magazine in June provides evidence that the Internet has become an “external part” of our memory systems. Rather than remembering information, we seem to have “outsourced” this effortful task to an entity other than ourselves.
On the face of it, this is not an astounding finding in that psychologists have demonstrated for over 30 years that we use outside sources, such as family or team members, to supplement our less-than-perfect memories. What makes this research remarkable, and of interest to the UX community, is that the researchers found that when we expect to be able to access information in the future, we tend to have reduced memory for the actual information, but enhanced memory for where to find the information. Thus, while we do measurably worse at remembering that the capital of Vermont is Montpellier, we apparently remember with greater accuracy, where on the bookshelf the atlas is located. These findings suggest that making sites memorable as the repository of information may be the key to gaining return visitors.
What the Science Demonstrated
The Science Magazine article’s authors conducted a series of experiments that explored whether the Internet actually functions as an external memory source. In the first experiment they found that attempting to answer difficult trivia questions disposes people to think of computer-related terms and brand names such as Google and Yahoo!. In the second experiment they found that memory for information is better if people do not believe they will have access to the information in the future. In the third and fourth experiments they showed that when people believe they will have access to information in the future, they are more likely to remember where to find the information than actually remembering the information itself.
The authors propose that this is an adaptive use of memory—we use the Internet as an external source of memory because it is available as an easy repository for knowledge we do not store in our brains. They conclude that we are using the Internet in a manner akin to transactive memory, a social form of external memory in which individuals within a team or social group rely on one another to be sources of information.
These findings suggest that people are willing to spend more energy remembering the location of information rather than the information per se. What does this mean for the UX community? Perhaps not surprisingly, the answer lies in the three components of transactive memory: specialization, coordination, and credibility.
Transactive Memory and Reliance on a Conglomerate
Transactive memory theory is based on the idea that individuals can serve as external memory stores for others. Typically, the theory relates to groups of people such as families or work groups. Each individual has specialized knowledge, and other group members rely on the “expert” to be the keeper of that knowledge and share it when necessary. Although people often form their own memories of information, they also rely on others to hold that knowledge. For example, one spouse might be the keeper of knowledge about how the furnace works, allowing the other spouse to ask for the information if it’s needed without having to retain the memory him or herself. The memory is transactive in that the content of the memory is passed between the knower and the person with the need to know.
Transactive memory is thought to be composed of three components: specialization, coordination, and credibility. Specialization results from one member of a team assuming expertise in knowledge not held by other team members. Coordination occurs when the team members develop a “metamemory” of each member’s specialization, and credibility describes the extent to which team members believe in the accuracy and trustworthiness of one another’s knowledge. In other words, once a team has developed a transactive memory and each team member believes in each other’s skills, then success of the group is predicted by the conglomerate rather than relying on each individual to remember everything. The gain here is twofold: first, the group can rely on an expert, and second the group gains greater efficiency.
Successful Websites Reflect Elements of Transactive Memory
Singular purpose
It’s spooky, upon consideration, how many successful websites faithfully mirror the components of transactive memory described above. Some of the most successful sites specialize in a particular offering—Expedia does travel, Epicurious focuses on food, and Amazon sells stuff. Even though they are large sites, there is a core offering that is easy to remember. Amazon may sell many products, but they do not offer information about how to use these products or news about the product manufacturers. Similarly, Expedia is known for travel—booking flights, hotels, car rentals, cruises, etc.—but is not known for advice on planning a trip. These sites have a singular purpose and state it unequivocally. We return to them when we want what they offer; there is no need to search for “travel” or “books.” Thus, site specialization may contribute to memorability.
Lack of specialization can potentially hurt a site’s memorability. Case in point: About.com. This site attempts to be all things to all people. Lack of broad loyalty may be due to users’ inability to pinpoint what precisely the site can offer them. Breadth makes it cumbersome.
There is one way, however, where breadth is apparently, powerful: what if people believe a site is the gatekeeper to all knowledge? As a matter of fact they do. Google appears to have become our metamemory and in this way has cornered the information market. Don’t believe me? Just Google it!
Niche market segments, products or services, or geographic concentration of resources may be recommended. This strategy may increase the probability that users will remember the location of information rather than the information itself.
Coordination is metamemory
Coordination is the user’s awareness of all the sites needed to get through the day. Supplies, sustenance, and resuscitation easily translate into shopping, food, and vacation. This, in turn, is one step away from Amazon, Recipes.com, and Travelocity. Metamemory, therefore, is the awareness and categorization of all information sources.
Just being memorable is not enough
Finally, credibility of a site is crucial for return visits. Memorability of information location is not enough; users need to feel that a site is trustworthy in order to make it worth remembering. Trust can be generated in multiple ways. Firstly, trust comes through making a site understandable. Understanding provides a feeling of control that results in positive regard for a site and site owner. Trust is also increased when a site functions without errors and appears professional. Credibility is also dependent upon the perceived accuracy of content. Sites like Yelp and TripAdvisor utilize user-generated content, and trust is an emergent property based upon convergence of opinions. Additionally, the authenticity of posted information is subject to questioning by the users themselves and thereby subject to the requisite checks and balances. Alternately, sites like CNET gain their credibility through the use of expert reviewers. Regardless of how it is earned, trust is a critical component of memorability.
The science has offered us a blueprint for gathering and keeping a loyal and satisfied customer base. This is likely to work best when websites use the heuristics of human cognition to allow the customer’s experience to echo their own natural behavior. In this specific case, being a credible information source for a specialized offering seems to form the foundation and framework for loyal customers because of the human penchant to form metamemory systems.
Narcissists Feel Like Better Leaders | Psychology Today
Because narcissists are so confident in their abilities and opinions, they may keep group members from sharing information. In situations where shared information is crucial to good performance, a narcissistic leader may cause a group to be very confident that their leader is a good one and yet they may perform poorly.
To test this possibility, groups of three people were asked to evaluate candidate for job. Before getting together as a group, a leader was selected at random. The group leader was the one who had to make the final decision in the task. The participants in this study also filled out an inventory that measured their level of narcissism.
Each group member was given a list of 9 characteristics for each of three job candidates. Some of those characteristics were given to each group member, but some were given only to individuals. The descriptions were cleverly set up so that one job candidate would look best if only the information that all group members shared was considered, but that if the group pooled all of its information, then a second job candidate would actually be the best one.
Two results emerged from this study.
First, group leaders who had a high score on the narcissism scale, were generally seen as more effective leaders than group leaders who had a low score on the narcissism scale. That is the typical result from studies of narcissism and leadership.
Second, groups with more narcissistic leaders tended to share less information than those with less narcissistic leaders, and as a result, they made worse decisions. So, even though the groups with narcissistic leaders felt better about their group leader, they actually performed more poorly than those with less narcissistic leaders.
What does this mean?
There are often two distinct issues in group performance. First, groups do need to have some confidence that they are going to succeed. That confidence can increase motivation to continue with a difficult task. In that way, a narcissistic leader can be good.
However, if the group needs to share information in order to succeed, then narcissistic leaders need to curb their tendency to dominate the discussion and decision making and let others share information. Otherwise, the group runs the risk of rushing to judgment without key information that might lead to better performance.
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Thursday, October 06, 2011
Friday, September 30, 2011
Sunday, September 25, 2011
Tuesday, September 20, 2011
Saturday, September 17, 2011
In Paris for Ecommerce Expo
Tuesday, September 13, 2011
Ebay And Walmart's Biggest Threat Is..... Groupon?!? | iStockAnalyst.com
Ebay And Walmart's Biggest Threat Is..... Groupon?!?
By: Scot Wingo | Sep 12, 2011 |
There's been so much going on in the world of e-commerce that, unfortunately, I haven't had much time to blog. Over the next couple of days I wanted to share and discuss two big items that I think will have tectonic implications for e-commerce and the incumbent players.
Groupon - changing the game of e-commerce?
The first e-commerce shaking topic I wanted to cover is Groupon's entrance into the marketplace space and it's impact. I'm pretty shocked this has flown under the radar for so long, but I think it's time to really shine a bright light on it as it can and will be pretty big. How big? To quote Justin Timberlake playing the semi-fictional role of Sean Parker from Social Network:
"A million dollars isn't cool. You know what's cool - a BILLION dollars."
Yes, I think Groupon could quickly siphon $1B+++ out of the e-commerce market. Before we jump into my thesis, here's a brief backgrounder on Groupon.
Groupon - brief backgrounder
- In August in an update to their S1 Groupon disclosed that it's subscriber base had mushroomed up to 115m subscribers.
- Groupon's subscriber base is growing on average 17% m/m (so by the time you read this that 115m is probably more like 134m!
- I can't re-itereate this point enough - Groupon emails 134m globally EVERY DAY. No other company on the planet has that type of daily customer direct touch. Sure FB has 750m users, but they don't have permission to put a deal in front of them every day.
- When I say Groupon, I mean 'the daily deal space which is dominated by Groupon' - the second largest is LivingSocial and they have 30m subscribers. Groupon states that 75% of LS's subscribers are also on Groupon, so there's an incremental 10m or so users on LS and maybe another 20m if you count the 'clones'. Suffice it to say that once Groupon comes out with their offering, every clone will, well, clone that too. LS is already well down the path as you'll see.
- There's a big discussion in the blogosphere around if Groupon is a viable business. Everyone remember 1999 when everyone thought that, 'Sure Amazon sells books to millions of people, but they'll never turn it into a viable business'. I don't want to get into the Groupon viability discussion, but personally, I think Groupon is viable on their business today and has an opportunity to really expand dramatically beyond the 'daily local deal' space if they can continue to drive value for subscribers.
Friday, September 09, 2011
Wednesday, September 07, 2011
Jobs Will Follow a Strengthening of the Middle Class
THE 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.
When so much income goes to the top, the middle class doesn’t have enough purchasing power to keep the economy going without sinking ever more deeply into debt — which, as we’ve seen, ends badly. An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar?
The economy won’t really bounce back until America’s surge toward inequality is reversed. Even if by some miracle President Obama gets support for a second big stimulus while Ben S. Bernanke’s Fed keeps interest rates near zero, neither will do the trick without a middle class capable of spending. Pump-priming works only when a well contains enough water.
Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.
During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.
Starting in the late 1970s, the middle class began to weaken. Although productivity continued to grow and the economy continued to expand, wages began flattening in the 1970s because new technologies — container ships, satellite communications, eventually computers and the Internet — started to undermine any American job that could be automated or done more cheaply abroad. The same technologies bestowed ever larger rewards on people who could use them to innovate and solve problems. Some were product entrepreneurs; a growing number were financial entrepreneurs. The pay of graduates of prestigious colleges and M.B.A. programs — the “talent” who reached the pinnacles of power in executive suites and on Wall Street — soared.
The middle class nonetheless continued to spend, at first enabled by the flow of women into the work force. (In the 1960s only 12 percent of married women with young children were working for pay; by the late 1990s, 55 percent were.) When that way of life stopped generating enough income, Americans went deeper into debt. From the late 1990s to 2007, the typical household debt grew by a third. As long as housing values continued to rise it seemed a painless way to get additional money.
Eventually, of course, the bubble burst. That ended the middle class’s remarkable ability to keep spending in the face of near stagnant wages. The puzzle is why so little has been done in the last 40 years to help deal with the subversion of the economic power of the middle class. With the continued gains from economic growth, the nation could have enabled more people to become problem solvers and innovators — through early childhood education, better public schools, expanded access to higher education and more efficient public transportation.
We might have enlarged safety nets — by having unemployment insurance cover part-time work, by giving transition assistance to move to new jobs in new locations, by creating insurance for communities that lost a major employer. And we could have made Medicare available to anyone.
Big companies could have been required to pay severance to American workers they let go and train them for new jobs. The minimum wage could have been pegged at half the median wage, and we could have insisted that the foreign nations we trade with do the same, so that all citizens could share in gains from trade.
We could have raised taxes on the rich and cut them for poorer Americans.
But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It cut spending on infrastructure as a percentage of the national economy and shifted more of the costs of public higher education to families. It shredded safety nets. (Only 27 percent of the unemployed are covered by unemployment insurance.) And it allowed companies to bust unions and threaten employees who tried to organize. Fewer than 8 percent of private-sector workers are unionized.
More generally, it stood by as big American companies became global companies with no more loyalty to the United States than a GPS satellite. Meanwhile, the top income tax rate was halved to 35 percent and many of the nation’s richest were allowed to treat their income as capital gains subject to no more than 15 percent tax. Inheritance taxes that affected only the topmost 1.5 percent of earners were sliced. Yet at the same time sales and payroll taxes — both taking a bigger chunk out of modest paychecks — were increased.
Most telling of all, Washington deregulated Wall Street while insuring it against major losses. In so doing, it allowed finance — which until then had been the servant of American industry — to become its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation’s profits. By 2007, financial companies accounted for over 40 percent of American corporate profits and almost as great a percentage of pay, up from 10 percent during the Great Prosperity.
Some say the regressive lurch occurred because Americans lost confidence in government. But this argument has cause and effect backward. The tax revolts that thundered across America starting in the late 1970s were not so much ideological revolts against government — Americans still wanted all the government services they had before, and then some — as against paying more taxes on incomes that had stagnated. Inevitably, government services deteriorated and government deficits exploded, confirming the public’s growing cynicism about government’s doing anything right.
Some say we couldn’t have reversed the consequences of globalization and technological change. Yet the experiences of other nations, like Germany, suggest otherwise. Germany has grown faster than the United States for the last 15 years, and the gains have been more widely spread. While Americans’ average hourly pay has risen only 6 percent since 1985, adjusted for inflation, German workers’ pay has risen almost 30 percent. At the same time, the top 1 percent of German households now take home about 11 percent of all income — about the same as in 1970. And although in the last months Germany has been hit by the debt crisis of its neighbors, its unemployment is still below where it was when the financial crisis started in 2007.
How has Germany done it? Mainly by focusing like a laser on education (German math scores continue to extend their lead over American), and by maintaining strong labor unions.
THE real reason for America’s Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people “with great economic power had an undue influence in making the rules of the economic game.” With hefty campaign contributions and platoons of lobbyists and public relations spinners, America’s executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.
Yet the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water.
The economy cannot possibly get out of its current doldrums without a strategy to revive the purchasing power of America’s vast middle class. The spending of the richest 5 percent alone will not lead to a virtuous cycle of more jobs and higher living standards. Nor can we rely on exports to fill the gap. It is impossible for every large economy, including the United States, to become a net exporter.
Reviving the middle class requires that we reverse the nation’s decades-long trend toward widening inequality. This is possible notwithstanding the political power of the executive class. So many people are now being hit by job losses, sagging incomes and declining home values that Americans could be mobilized.
Moreover, an economy is not a zero-sum game. Even the executive class has an enlightened self-interest in reversing the trend; just as a rising tide lifts all boats, the ebbing tide is now threatening to beach many of the yachts. The question is whether, and when, we will summon the political will. We have summoned it before in even bleaker times.
As the historian James Truslow Adams defined the American Dream when he coined the term at the depths of the Great Depression, what we seek is “a land in which life should be better and richer and fuller for everyone.”
That dream is still within our grasp.
Very clear summary of where we are today........
