My January newspaper column: what's wrong with Facebook (and America?)

Here's my January newspaper column from the St. Cloud (MN) Times:

What do we do now? Facebook

Jan. 5, 2011


Monday’s financial headlines were dominated by Goldman Sachs’ $500 million investment in Facebook, raising the value of the privately owned Internet social media company to an estimated $50 billion.

All those connections between high school classmates, former colleagues and people who share an interest in online farm simulations are apparently worth more than anyone could have imagined when Facebook began as an undergraduate’s side project at Harvard in 2003.

With more than 500 million users worldwide, Facebook’s value now exceeds that of US Bank, Ford, Target, Monsanto or Visa. When Facebook goes public, as many assume it will in the next year, its market capitalization could exceed that of Boeing, Home Depot, Kraft or 3M, placing it within striking distance of Disney and McDonald’s among America’s largest corporations.

And Facebook doesn’t make a thing.

Fifty years ago, the largest corporations all made stuff. In 1961, the top 20 slots in the Fortune 500 were held by oil/chemical companies, automobile manufacturers, defense contractors, steel producers and food processors. Only one media company — CBS — was even in the top 100.

In 1961, 38 percent of American workers were producing something tangible: cars, steel, appliances, houses, oil, airplanes, bombs, etc. Today that number has fallen to 21 percent; about one in five of us actually makes something for a living now. The rest of us? Apparently we’re on Facebook.

This raises some basic questions about the future of our economy and the middle class.

The post-war American economic boom was based on the production of goods consumed domestically, relatively high wages in the manufacturing sector and public investment in education and infrastructure. The GI Bill, expansion of public universities and increased spending on K-12 education helped lift veterans and their children into the middle class, while those who did not pursue higher education could still get there by holding a union job. Still more families climbed into the middle class by sending mom into the work force, a shift that conveyed great advantages for the first generation to do so — but much less on subsequent generations when dual incomes became the status quo.

Today a $50 billion company makes no products at all, but rather supplies a virtual space in which people chatter, share pictures and play games. Facebook employs a few thousand people, has no factories, no warehouses, no distribution centers, no retail arm and no maintenance shops. Its founder did not graduate from college but was a billionaire before the age of 25.

Of course, this is all legal and proper; Facebook would not have 500 million users if people didn’t want its services.

What is wrong with the bigger picture is lack of counterbalancing stories for Facebook. When was the last time you read about a hugely profitable new product — an actual manufactured good — invented by, developed in, produced by and sold to Americans that wasn’t a drug? What was the last new industry that employed thousands of Americans at wages that would ensure a place in the middle class? When was the last massive public investment in our collective future, or that of our children?

America has long been in a state of slow decline. We have become a nation of consumers, rather than producers. Incomes have stagnated, and income inequality is growing. The middle class is eroding under a mountain of debt and fears that unemployment or illness could end their American dream.

We have stopped investing in schools, instead choosing to “train” children and young adults in skills that aren’t needed for careers that may not exist when they enter the job market. Few, if any, of our elected leaders appear to think beyond the next election cycle, and horizons beyond the next quarter don’t matter to Wall Street. Today’s children may well be the first generation in American history to collectively end up worse off than their parents when they reach middle age.

That, more than the $50 billion valuation of Facebook, should be dominating the headlines as we enter 2011.