I find most of her slides interesting, but she circled the area from around 2002 to 2011 on slide 96 as "the biggest peacetime gap between revenue and expenses in USA history."
I'm not sure Ms. Meeker is aware, but we are _at war_ right now. For most of that period, we were fighting multiple wars at once.
Further, she used the 2010 budget outlook report from the CBO which takes the most pessimistic view that the Bush Tax Cuts are kept indefinitely in the heart of a deep recession. The CBO has released a 2011 budget outlook report (2012 is due next week). Even under the pessimistic alternative fiscal scenario, that 2025 date now doesn't happen until well after 2035 (the last date they try to estimate for)
That's not to say thing aren't out of control, but most of those problems are related to healthcare not "entitlements." Social security has only an extremely modest increase in cost. Healthcare is where the big hit comes from caused by and large by baby boomers aging and the restriction placed on the federal government to really negotiate rates.
If Obama had had support to implement single payer and got rid of the restrictions about negotiating rates, we'd live in a far more fiscally sound place today.
Ms. Meeker and I must be reading a different budget (or reading the same budget very differently). Most of the spending budget and budgetary issues fall squarely in the lap of military spending -- which has consistently been the biggest-ticket item for many decades.
A full 20% of federal healthcare related spending goes towards veteran benefits. That's one dollar in five. This is military spending that used to be counted under the DoD budget, but now creates the false appearance that non-military aspects of government are to blame for much of the increased costs. We see ridiculous slides like this, which rank health care for injured soldiers, military pensions and so on as "entitlements" rather than "defense." Other items excluded from the defense/military "20%" figure include (next paragraph quoted from http://en.wikipedia.org/wiki/Military_budget_of_the_United_S... ):
"Nuclear weapons research, maintenance, cleanup, and production, which is in the Department of Energy budget, Veterans Affairs, the Treasury Department's payments in pensions to military retirees and widows and their families, interest on debt incurred in past wars, or State Department financing of foreign arms sales and militarily-related development assistance. Neither does it include defense spending that is not military in nature, such as the Department of Homeland Security, counter-terrorism spending by the FBI, and intelligence-gathering spending by NASA."
I would suggest that military spending is out of control, has been out of control for a very, very long time. An honest appraisal of federal military expenditures will place it at somewhere near 50% of the entire federal budget.
Yes, but people like to rally against "entitlements" when they really mean a very specific part of entitlements: healthcare. It is politically dangerous for anyone who swings conservative to use accurate terminology because they've demonized healthcare reform so much.
That's true but irrelevant. Military spending as a percentage of GDP has decreased significantly over the last 50 years. Government healthcare spending as a percentage of GDP has grown unabated over the same time and shows no signs of stopping. It's this trend that makes healthcare spending a priority to solve today instead defense.
Military spending as a percentage of GDP only decreases if you don't count military spending outside the DoD's official budget -- which is why it appears to have shrunken when it actually has not.
For example, 50 years ago veteran's benefits were part of the DoD budget. Today, they're part of the healthcare budgets. VA spending accounts for 20% of all government health spending -- and has grown astronomically over the last decade. It's huge.
I urge you to take a second look at the numbers you're quoting. Specifically, consider how much of the "healthcare spending" increase is actually a hidden increase in military spending which has been quietly shifted into a non-military budget.
US public spending on healthcare is larger per capita than many other western countries with universally inclusive healthcare systems that also have better health outcomes.
As a bonus, public spending on healthcare in the US is matched by massive private spending, being responsible for most bankruptcies and foreclosures and tying many people to wage labor who would rather be entrepreneurs.
We know that healthcare with better outcomes than current ones doesn't have to be expensive. That money has been wasted. There's no established cost for endless multifront war other than our own historical experience, so it's hard to know if money is being wasted there.
We do know that we would have been running surpluses through the recession and into the foreseeable future if our healthcare system had the same costs as other systems, and wasn't a pile of rent-seeking, kickbacks, monopoly and artificial scarcity, and rats.
It's true that US public spending is larger per capita. Several times bigger than many successful european countries. It's a problem and deserves recognition.
However, it is not "120%" of the problem as you suggest. Military spending is similarly out of proportion (arguably much moreso) and military spending consumes much, much more of our federal budget than healthcare.
I'm not objecting to the idea that we need to fix our health care system -- you are right on. I'm saying that it's not "120%" of the problem; defense is, and has always been.
There's one whole chapter in that book that's an indictment of Meeker, Blodget, Quattrone, Glassman ( the Dow 36000 guy ) and the rest of the folks who supplied the oxygen for the previous bubble. And now Meeker's back...so that should signal something.
The key incident was the conference were Biggs was asked "Is the internet revolutionary ?".Biggs said "No". A collective boo from the audience. "Ok so what is revolutionary ?". Biggs thought for a while and said "The Air Conditioner. Without an AC, the entire south of the USA like the Carolinas, Florida & parts of Texas would remain unpopulated"
Biggs was laughed at. A month later the Dow plunged 2000 points over a 2 month period. Fun times ;)
The biggest take-away for me is that we are changing the way we do... pretty much everything.
Two things I noticed:
1. There is a big shift towards convenience and broader participation.
2. An increasing proportion of our activities are conducted through smart phones and tablets instead of going somewhere or using a device specifically designed for a given purpose. Many activities are becoming "just another app" and losing their traditional context.
Finally, there's a cautionary message about US debt. The disturbing chart of US entitlement and interest spending vs. revenue. At the current rate, in 2025, the government will be spending more on entitlements and interest alone (NOT taking into account government spending on defense, education, etc.) than they have revenue.
The flipside of this is: how much Internet in our lives is a good amount? To get a look at internet usage "from the outside", Paul Miller (on of The Verge's top editors) has quit the internet and will write about his observations for one year. The articles he's written so far are fascinating, and he's just getting started. http://www.theverge.com/label/offline I recommend reading them in chronological order, from the bottom.
At the current rate, in 2025, the government will be spending more on entitlements and interest alone (NOT taking into account government spending on defense, education, etc.) than they have revenue.
According to the pessimistic "Alternative Fiscal Scenario" in the 2011 CBO budget forecast estimate, this won't be true until after 2035 (the last year they estimate for). Ms. Meeker decided to use an older 2010 CBO estimates to make her point.
Also the CBO makes it clear that it is healthcare spending, not social security, that is causing the vast majority of the trouble. Alas, 64% of the increase is apparently due to baby boomers. If the US government would stop passing the "doc fix", the Extended-Baseline Scenario of the CBO estimates would kick in and we'd be looking at nearly no spending growth past 2014.
The "cautionary" message appears to be more political than anything else. The extrapolated line for "entitlements and interest" is almost identical to that of Paul Ryan's budget and groups things like Social Security-- which those receiving it PAID for-- as "entitlements".
It is, basically. The "entitlement" framing is a republican trope at this point; it's designed to make it sound like we're handing out cash to people who don't deserve it. If you relabel it "Medicare" and "Social Security" (concepts that are more familiar to the reader and thus make the graph easier to interpret) people tend to view it as worthwhile spending.
Likewise the revenue numbers look a little spun. They appear not to be including the near term bump due to the expiration of the 2001 tax cuts.
A ponzi scheme requires intentional fraud. You have to believe you are investing in something real, not simply paying back someone else.
Social security is very clear what is going on. It also has mandatory new participants which keeps it from collapsing as well as well understood economic increases. The same thing happens with corporate pension plans, interest on treasury bills and any number of other systems that require future growth in order to pay back debt.
It's a partial ponzi scheme, but it has nothing to do with the system itself, it has to do with what the Fed is doing to our currency. The people paying in are not going to get all of their money back out of it.
The fact that you're going to get a massively debased dollar back for each dollar you put in alone means it's a fraudulent process as it stands today (again due to our government's fiscal irresponsibility). The calculations used for inflation adjustments are about as bunk as you can get for govt numbers. The Fed has managed a catastrophic devaluing of the dollar over the last 50 years, and that's only likely to accelerate given their need to massively monetize our deficits and debts.
I'm sorry, but claiming inflation is fraud is complete nonsense. Inflation is a sign of a growing economy. It is neither good nor bad. It is however inevitable.
It is not related to fiscal irresponsibility. Sometimes it is due too too much demand and not enough supply driving the cost of goods up (prices are sticky) and other times it is due to underlying company costs going up and raising the prices to keep their profit margin even.
In neither case is it the government's "fault." Most governments around the world try to maintain an inflation rate of 2-3%. This is well understood. Don't keep your wealth in currency. No one sane has for over a hundred years even when we were on the broken gold standard (if you think inflation is bad, you should see what rapid deflation caused by a spike in gold demand followed by a rapid drop in demand does to an economy on the gold standard).
A partial ponzi scheme is the same as being half pregnant. I do agree though we have to start being more critical of currency manipulations across the board. We're dangerously close to a pile of monopoly money here. When that facade breaks we're in really huge trouble. (a new dark ages type of huge trouble)
Attempts to store wealth through currency or other assets are attempts to claim a future share of societies output. Since by definition you are asserting a claim into a scenario in which you might not even be present, there is an inherent tendency for such a claim to be weaker than one based in the present. That's just how it is.
While I agree that it's hard to have a real discussion about SS or Medicare without people sensationalizing one side or the other, the math is very real and the consequences are already here.
SS is bleeding out right now with a negative annual run, and will get worse every year for at least the next 20 years. There is no SS trust that we can tap into. It's all going to come from Fed monetization.
By the time this decade is out, SS will be running a negative $100+ billion per year cash flow. We were supposed to have eight more years of surplus than what we did, that didn't happen.
It's also worth pointing out that we're taking on over $5 trillion per year in new liabilities that we don't have the cash flow to pay for, when you count debt + entitlements that have to eventually be paid for.
The problem is that other government programs have borrowed from the trust fund as if it was a piggy bank. Social Security would have been perfectly solvent had both sides not treated the trust fund as a slush fund. This is not social security's fault.
In fact, if you eliminate social security, you will almost certainly have to raise taxes to create a new piggy bank for all the programs that are currently run off the social security one.
Those are "assets" in an accounting sense but they do not represent capital held by the government. Those assets can only be redeemed by taxing citizens.
Social Security is only "solvent" in a conventional sense if those assets can be redeemed without taxation. Since Social Security is a pay-as-you-go system, the cash-flow definition of "solvency" is appropriate.
That trust fund doesn't exist, there is no actual money in it, as noted by the other comments.
The Federal Reserve ultimately will lend the US Government that money (the Fed is now buying 95% of all long term US govt debt), now with interest on the debt, instead of there being an actual trust there earning interest.
So any math that relies on that trust existing, is Enron accounting.
Wow. Hurry-- you'd better tell that to "the Chinese" and anyone else who's been buying our debt. And also, that must mean that we can all stop worrying about that $15T govt debt, since it's all "Enron accounting". Whew! Problem solved!
Amazed that one of the biggest changes is something she missed. How mobile tech changed the face and effectiveness of protest, from Egypt and the Mid-East to Occupy and ongoing (current protests in Quebec).
Also missing is how effective live video -- especially Ustream -- has been in bypassing the MSM TV news to show the actions of police directly. And how such footage has been used to void arrests of protesters by perjuring police.
Not being in the Middle East (or ever having been, ever), I have to question that narrative, though it's a common one.
We know the Egyptian government eventually shut down internet access (leading to ingenious hacks, such as the Twitter-voice-recognition-bot Google wrote), but the protests continued unabated.
I'm sure social media had some role to play in the Arab Spring - but the extent of it I feel has been blown out of proportion by technocrats all too ready to self-congratulate.
After all, it feels nicer if you're not building that tool by which millions can breathlessly follow the every move of B-list celebrities. Indeed, wouldn't it be nice if all the hours we spend in air-conditioned offices was actually freedom fighting?
Lessons from Developed Mobile Markets like Japan ... Mobile Monetization Levels in USA Could Surpass Desktop Within 1-3 Years
The "Monetization Levels" are the advertising revenue. The report states that desktop internet advertising revenue grew from $55 million (estimated) in 1995 to $73 billion in 2011 (estimated). (And advertising revenue per user went from $9 to $49 in the same period.)
However, I have doubts that internet advertising will be as successful on mobile devices. Personally, I tend to avoid ad-supported apps or simply do not "click" on any ads within apps, but that's just me and I may be really off-base with the overall behavior of app users.
So for reference, when I left Sun in '95 I joined a startup named 'Golfweb' as their 'technology' guy. Golfweb was an online magazine about Golf, entirely digital, no print. They had partnered with Golf Digest (print only) because GD didn't know if this 'Internet thing' was a fad or not. Personally I think our agreement was with some nerdy kid in the mailroom but I digress.
Anyway, we tried to sell companies like Ping Golf on banner ads. These guys were paying $10K - $40K per color page in Golf Digest so maybe $250K an issue and we were asking them to pay us $40K to have all the ads on our web site during the Masters Tournament. It was a hard sell even though at the time we were one of exactly two professional sites covering golf on the Internet.
The challenge wasn't that Ping didn't understand advertising, what they didn't know yet was how effective it would be. They measured everything and without data they didn't know if it was more or less valuable than print. Because of that they were unwilling to spend any money.
As it turned out that campaign was pretty wildly successful for them. Because of it they were way ahead of their competitors in exploiting the Internet for ads. Once they were in, their competitors followed, and that created a market model for costing golf advertising.
So this is the same issue with mobility monetization today. Since there isn't a huge amount of experience out there it is not easy to justify spending a lot on it vs web moneitization which is by now a 'proven' channel. But over time the data will come in and people will then be able to make reasoned choices about what they are willing to pay to be on some potential customer's phone at some given time.
In her presentation, Meeks proposed that mobile monetization should at least equal web monetization and probably exceed it. I've seen other people get there by reasoning about how people use their phone to find nearby places that can service some immediate need like food, car service, gas, Etc. As a contrived, but plausible, example consider a world with multiple Uber type livery services, and a user finds a nearby place on their phone's map application. You can sell the rights to a button that says "Pick me up here and take me there." to a company like Uber very effectively. As an 'advertisement' that is worth probably $1 - $3 a click depending on what the fare is going to be if its taken.
Now is that exactly an ad? I don't know. It is a convenient pairing of service provider offering at a probabilistically determined 'good' time to offer. That any individual doesn't click on the offer is fine, as long as some percentage (even a small percent) do.
Great comment: ... But over time the data will come in and people will then be able to make reasoned choices about what they are willing to pay to be on some potential customer's phone at some given time.
And I like your example using Uber, but I immediately see the difficultly of a car service company supporting that type of interactive technology. (Again, I may be way off base, but I would think a car service company, using your example, would have to invest heavily, relatively, in technology to support your example.)
if mobile ads means using geo, then the ads revenues might be better. Think "check out this new bar near you" or "here is a deal a block away". There is a lot of money chasing foot traffic in urban areas.
I consume a hell of a lot more content on my desktop than my phone - and I am on both constantly. The reason is the screen on my laptop is large, my phones is small. I constantly have 20+ tabs open - on my phone I average ~4 pages open.
Also, the mobile speed of 3G sucks compared to desktop speeds (even a mobile browser on wifi at home renders slower than my laptop)
There are just so many reasons why I prefer to consume my internet servings via my laptop over my phone(s)