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Monday, September 26, 2011

Facebook and The Slaughterhouse Principle

Blogger's note:  I apologize in advance for torturing a metaphor.

Just so you know, Facebook isn't about to charge us.  The warnings of our well-meaning colleagues, friends, family, and long-lost classmates regarding the impending $9.95 per month calamity, which are cute in an "Oh my, I thought you knew..." sort of way, can be ignored.  But that doesn't mean they didn't appear.

When my news-feed filled up with the ALL-CAPS warnings I thought about responding, but I couldn't think of a way to do it that wasn't embarrassingly patronizing.  Then a friend posted this:




It's cute because it has pigs in it, it's meme'y enough to viralate its way through the FaceBook, and it's simple enough that it might even permeate the veil of subscription-inspired dread that perpetually cloaks the more distant regions of our friends lists and save us from future adrenaline-soaked updates from the ALL CAPS Cassandras who there reside.

But the underlying message is more important than just FaceBook.  The principle at work here is one of the foundational principles of market economics and it is also one of the least understood.

Resources have value because they hold the two traits necessary:  Scarcity and Demand.  Gold is valuable because people want it and there is a limited supply.  Air is free because even though people need it, there is plenty to go around (at least until the CAA is gutted), and Dog Shit is free because even though the supply is limited, the demand is nonexistent.

So all resources have value and therefore if a resource is being utilized, it is costing somebody something.  In the case of FaceBook, the true value is in the advertising and marketing knowledge and so the consumers of the marketing information are footing the bill.  The user interface of FaceBook is simply present so that we will voluntarily tell them who our friends are, where we live, where we work, and what we think of Justin Beiber.

So, remember:  Whenever we are receiving a valuable service or product at no charge to us, we are not the consumer, we are the product.  Cows eat free at the slaughterhouse.

Cows eat free at the slaughterhouse.

Whenever we mistake an enticement for a service, we are unwittingly participating in our own exploitation.  Sometimes, this is fine.  If we don't mind having ads tailored to our status updates (if you ever want to amuse yourself, make a status update that includes the words 'freedom,' 'government,' or 'economy' and watch the Ron Paul ads blanket your page), then the slaughterhouse principle is benign.  

But this principle is at work in places other than the international online cocktail party and its effects can be pernicious.  This is especially so in situations where the cow pays a nominal fee to participate in something, but is unaware that the true cost of the slaughterhouse is footed by somebody who wants their meat.  That nominal fee convinces us that we are the customers when, in reality, we are only a product that helps defray its own cost.

Public Schools are a fine example.

The average student is very aware that public schools are supported by tax dollars and they'll tell you so if they feel mistreated.   Parents are generally even more aware of this than the kids are.   They have paid their nominal fee and therefore believe that they are the client.  But they're wrong.

Here in California, each student is attached to $6,300 which, if the student attends school each day for 180 days, the state gives to the school.  When this money is combined with the other few small remaining shreds of site-directed school funding, the amount being spent per student hovers somewhere around $7,500 depending on where in the state you are and in what school.

In order for a family of a schoolchild to truly be a "client" of the school system, they would need a family income of approximately $85,000 each year in net income.  These families have the resources to ensure that, since they are the client, their little products receive services that will ensure their purchase. Very very few families are clients of the public school system in California.  Those who do not meet this bar... their children are products, too, but their parents aren't the clients, so...

Who is?

As a nation, we are quick to pull out the "Our Children Are Our Future" flag and ball it up in our fretting fists as we bewail the state of public education while gesturing frantically with our free hand at the latest survey that shows that even our high school graduates can't point out Iowa on a map or identify the purpose of the legislative branch, but we aren't the clients either.

We may purchase one or two of these products to work in our small business or to perform some form of contract work, but we're small potatoes.   We're retail.  Who's the wholesaler?

Wal-Mart? Amazon?  KB Homes? Microsoft? Google? The US Army? The California Penal System?

Each of these will purchase a chunk of the product, but even together they won't ever come close to clearing the shelves and that's the problem.

Nobody ordered these products and nobody gave specs for their manufacture and so nobody is purchasing them and nobody wants to foot the bill.

We have a huge number of cows in the slaughterhouse, but nobody wants to buy the meat so we complain about the cost and the smell.  We blame the cows and the slaughterhouse itself for the problem.

"If these cows were of higher quality, people might want to buy them."

"If they'd just cut the meat better, then people would want to buy it."

Another basic lesson in economics:  When demand falls, supply falls, but before it falls, product tends to rot on the shelves for a while.

There is a solution, but its political feasibility is tenuous at best because it is straight up socialism:  When the private sector falls short and a market collapses, it is up to the government to step in.  We did it for banks and for the auto industry.  We do it for defense contractors every budget debate.  Now is the time to do it for public schools.  

Here's what it would take:
  1. A massive public works and infrastructure investment along with a massive expansion of public sector jobs of all collar-colors.
  2. A massive reinvestment in public schools under the idea that the the nation as a whole is the consumer and that, therefore, public schools need to provide products for all elements of our society, not just low-wage service workers, soldiers, prisoners, and professionals.  This means a return of vocational and technical programs, a new investment in programs like home economics (yes, Home Ec., I'm serious)
  3. A massive shift away from uniformity in curriculum, delivery, methodology, and assessment.  Since we don't have a single dominant work setting, there should no longer be a single dominant aesthetic for schools.  
This would cost billions of dollars and it would swell the size of government back to where it was under Ronald Reagan and it would mean that our taxes would have to be raised, and raised on some elements of our society considerably.   It still wouldn't ensure that our precious products would find homes, but it would surely get more of them off the shelves than the current system.  It's no guarantee and it would cost us lots of money, but then again:

If we are receiving a useful service and we are not paying for it, then we are not the client.




2 comments:

  1. Very thought provoking essay. Maybe we need to deal with the supply side as well. Decreased quantity as well as increased quality will increase demand. Hog farmers seem to know this - if demand drops or prices for food increase, they raise fewer pigs. Some countries pay people to have more kids - maybe the reverse would help although it would take a while. It is of interest that countries with the lowest unemployment also have among the lowest birthrates as well as the highest quality product (i.e. well educated and skilled workforces).

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  2. I know you're using facebook and similar services/products as an example for your metaphor but I think the user is more than just the product. The users are both product and client. Because Facebook could not sell the users to the advertisers without being able to attract the users we serve two roles really. So, unfortunately, as all things, it's a bit more complicated. Facebook needs to court its users as clients in order to attract enough product to entice advertisers to pay enough to make the whole business (the product to the user, although it is free) viable. So it is in Facebook's interests to keep their product/clients happy. I'm not sure how this relates to the rest of your essay, but thought I'd mention it.

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