A bitter-clinger's perspective

LinkedIn is a business-oriented social networking service.

President Obama's famous "bitter clingers" speech was given in San Fransisco.  The audience was heavily weighted with the titans of Silicon Valley.  To refresh your memory:

You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not.

And it's not surprising then they get bitter, they cling to guns or religion or antipathy toward people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

To put a bit of context around his remarks, California is the 500 pound electoral gorilla in the room.  And while most of the democratic voters in the Great State of California are NOT wealthy, their opinions are molded and shaped via TV advertising paid for by the tycoons of Silicon Valley.

That is, the fulcrum to move the world rests on the largess of thirty year old mega-millionaires with Silicon Valley addresses.

Ironically, most businessmen are conservatives.  They know the books.  They are very protective of their cash flow.  They do not believe in something-for-nothing nor do they believe in free lunches.

The entrepreneurs of Silicon Valley are a different breed.  It is almost inconceivable but many of them are Socialists.  There is a reason for that.

The State (and Crony-Capitalists) as a pantheon of Beneficial Gods

A typical businessman is forced to put a price on his offerings and to then compete in the marketplace based on the quality of his offerings, his ability to deliver in a timely way and the price.  He is at the mercy of the customer who often decides that his offering is not worth the price the businessman had to charge to stay in business.

The Silicon Valley model is different.  They dispense free ice-cream.  The winners are the ones who dispense the most free ice-cream.  It is like the Welfare Department; the Employee of the Month is the person who signs up the most people.  It is a Socialist heaven.  Sainthood entails doing whatever you want...just do it really, really well and Wall Street (and government subsidies and contracts) will shower you with cubic yards of $100 bills.

Those of us who are "bitter clingers" do not live in that universe.  In our zip code, businesses that incur ever rising expenses without generating revenue quickly go bankrupt.

The thing about the Wall Street investors is that we expect businesses to eventually put a "meter" (like a cab) on the ice-cream dispenser.  Cell phone providers did it.  Amazon did it.  Google is doing it via ads.  The others?  Nada.

Are you surprised that I said "we" are Wall Street investors?  You have skin in the game if you have a pension or own an insurance policy.  At some point you will want your money out.  The need to generate liquidity to fund cash redemptions is the pin that have pricked many a Ponzi scheme.

Back to Obama

He was accurate.  We are bitter.  We are bitter that we followed the rules and were punished.  We ripped coal out of mountains, made steel, made automobiles and furniture and hammers and shingles and grew corn and hogs and went to church.....  and we lost our jobs and our savings and our house and our kids are taken from us by the state.  All while folks selling fantasies, and stories, and memes, and business plans and whackadoodle religions and free ice-cream prospered.

We clung to what we know will endure while watching the biggest liars reap the biggest rewards.

Maybe "bitter" is too strong a word.  Maybe, "cynical" is a better fit.

Our cynicism tells us that life is hard and it is harder when you are stupid. 

Stupid is thinking you are the first person to have invented a perpetual motion machine, or a business that can thrive without organic demand from customers even as you charge sustainable prices.  Stupid is thinking that you will never have to put a meter in your cab and start charging fares to cover the cost of gas, depreciation and to compensate the driver for his time.

Welcome to my world.  I am sure Linkedin will have a lot of company over the next cycle.