Facebook 2021: A,I can’t help you A,I won’t help you?

 

Company over country; profit over propriety. These were the key points made in the recent book An Ugly Truth, and the documentary The Social Dilemma. Facebook (aka Meta) has been exposed to a staggering amount of bad press which included a whistleblower, Frances Haugen, federal lawsuits, and accusations of pandering to children at a time when suicide among the very young is startlingly increasing.

Yet, especially despite all of the above, Facebook’s numbers are dazzling. Yahoo! Reported on November 24th of this year:

“Meta's third-quarter 2021 earnings of $3.22 per share beat the Zacks Consensus Estimate by 0.6% and increased 18.8% year over year.

Revenues of $29.01 billion missed the Zacks Consensus Estimate by 1.8% but increased 35.1% year over year. At constant currency (cc), the top line improved 34%.

Geographically, Asia-Pacific, the United States & Canada, Europe, and Rest of World (RoW) revenues grew 29.1%, 34.3%, 36.3%, and 49.1%, on a year-over-year basis, respectively.

Average Revenue per User (ARPU) in RoW, Europe, the United States & Canada, and Asia-Pacific grew 41.4%, 33%, 32.1% and 17.2%, on a year-over-year basis, respectively.

Advertising revenues surged 33.2% year over year to $28.28 billion and accounted for 97.5% of third-quarter revenues. Other revenues surged 194.8% year over year to $734 million.

The tech giant’s RoW, Europe, the United States & Canada, and Asia-Pacific advertising revenues grew 49.6%, 35%, 31.1% and 28.5%, on a year-over-year basis, respectively.

Ad impressions served rose 9% and average price per ad increased 22% from the year-ago quarter.

User Base Continues to Expand

Monthly active users (MAUs) were 2.910 billion, up 6.2% year over year.

MAUs in Asia-Pacific, RoW, Europe, and the United States & Canada grew 9.6%, 4.7%, 2.4% and 2.4% to 1.28 billion, 949 million, 423 million and 261 million, respectively.

Daily Active Users (DAUs) were 1.930 billion, which increased 6% year over year and represented 66% of MAUs.

Asia-Pacific DAUs were up 10.7% year over year to 805 million. DAUs in RoW and Europe grew 4.9% and 1% to 622 million and 308 million, respectively. The United States & Canada DAUs were unchanged at 196 million.

Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Meta, Instagram, Messenger and/or WhatsApp) on a given day, were 2.81 billion, up 10.6% year over year.” 

Scott Galloway’s New Algorithm of Value is surely at work here. (What it basically says is the bigger you get, the more data you can gather; the more data you can gather, the bigger you get). Can Facebook and Mark Zuckerberg be held responsible for anything that happens, whether intentionally due to their AI or as a result of it?

The Economist recently reported in a piece called “Accounting for algorithms,” that a UN report published in 2018 attributed a “determining role” for Facebook’s platform in the Rohingya genocide. According to the article, on December 6th of 2021 a letter was delivered to Facebook’s offices in London and California. The suit will seek “at least $150bn in compensations for “wrongful death, personal injury, pain and suffering, emotional distress, and loss of property.” The suit is predicated on being able to apply Burmese law for harms done in Myanmar. 

Most importantly, the article points out that, “The current lawsuits argue that Facebook is both manufacturer and, to some extent, messenger: its algorithms decide what people see. Whether and how the firm is liable for what its algorithms do will now be tested.” 

That is just the point: If Facebook can create algorithms and media that facilitate this kind of hate and tragedy, do they not have the power to create algorithms that don’t, even if it costs them revenue? For example, with today’s algorithms, if you like to see hate posts or fake news, revolutionary or destructive posts, Facebook’s algorithms will show you more of those. Whatever changes Facebook says it has made to better control that sort of thing, how far has it gone? Has Facebook demonstrated what its algorithms will be in the future so it can capture the positive aspects of a global media app and eliminate the negative and tragic? 

Will the US Government succeed in taking Facebook to task in court, as they have tried to do and failed? I think not. Why? Because Senators, Congressmen, all politicians cannot get elected without Facebook. So why kill their golden goose?

Does getting elected take precedence over protecting the electorate?

After showing my students the above documentary and their reading the book, they said they were “trying to cut down” on social media time (like trying to quit smoking—never works). And, when asked the question as to whether someone who chooses to advertise on Facebook is also responsible for its ills, their answer was—silence.

Mark Zuckerberg has proven to be the Teflon Don to a degree that John Gotti could not even dream of. So if we accept the fact that Facebook is too big and too much a part of everyone’s lives to control, we can only hope that he sees the light at some point and makes the changes that will address all these recurring issues. If he does, the case might be that Facebook does not lose users; it may gain back those who (like me) have abandoned it and its avatars.

Meet the HENRYs- Your New Target Customer

 

(This is the second in a series about today’s luxury market and customer. If you read my first article, “Are the Roaring 20’s Back?” you would already know that focusing on the luxury market is a key strategy for 2022 and beyond)

What’s a HENRY? Or rather, who are the HENRYs?

HENRY stands for High Earners Not Rich Yet. What does this mean? According to the Wise Marketer, they are mostly Millennials (born between 1981 and 1996, which means they would have been between 25 to 40 in 2021) but overall a household under 55 whose income ranges between $100 and $250K and who have not yet amassed investable assets of $1M.

Many of these HENRY customers have cleared college loans and dependency on their parents or family, and are in a rising income mode; while the Millenial HENRY has not totally done so, their spending is nonetheless rising. With that rising income comes a rise in discretionary spending, more than the Gen X or Baby Boomer HENRYs. 

Let’s look at the entire Millennial generation first. According to Goldman Sachs, they are the largest population cohort: 92 million vs 61 Million Gen X (1965-1980) and 77 million Baby Boomers (1946-1964) and the first generation of Digital Natives.  That said, their debt burden is higher than those of its predecessors, but the Pandemic has started to reverse that.

So why focus on the Millennial HENRY? 

First, they spend more than the other generations within the HENRY group. According to Wise Marketer, Discretionary Spending peaks at age 40, and begins to decline at age 50.  The report cites $86K for Millennial HENRYs as opposed to $67K and $60K for Gen X and Boomer HENRYs. 

And that is only going to get bigger as the younger Millennial HENRYs reach their peak spending years.

What is the customer profile of the Millenial HENRY?

So Millennial HENRYs are a particular bunch with particular requirements which are different from their older HENRY cohorts. How so?

1. Mobile-First Marketing- There have been different numbers at different times, but Millenials make the majority of their purchases on their smartphone and, if you add laptops and tablets, that about does it all.

That said, the luxury market is and always will be a sector that is oriented toward physical stores, due to the price, the service and the overall experience. BUT, digital marketing is becoming a key tool for a ROPO (Research Online, Purchase Offline) or a Showrooming (the opposite of ROPO) strategy, which many luxury customers prefer. Either way, digital presence is key to success in the luxury market as well as all the others.

Millennial HENRYs are ideal luxury customers, but with their own style and conditions. To HENRYs, brands have to fulfill their Aspirational Self; their view of who they are and who they want to be. As well, their Prosocial Signaling and their need for Uniqueness. This certainly applies to luxury fashion, but also determines where they eat, which car they drive, and where they vacation.

More, the Millennial HENRY is comfortable with new technology and adopts that as a signal of who they are. 

Ethics and Sustainability figure for the Millennial HENRY, where they were not a factor for their predecessors.

Make me look good, feel good, feel special about myself and my association with you, brand. And follow my needs, or someone else will.

This is one of the biggest differences between the Millennial Luxury Customer and their predecessor generations: brands have to follow them, not the other way around. Even the big iconic brands like LVMH and Kering are learning that.

For the Millennial, the sacred Four P’s of marketing have become the Four E’s:

• Product >> has changed to >> Experience

• Place >> has changed to >> Everyplace

• Price >> has changed to >> Exchange

• Promotion >> has changed to >> Evangelism  

On Strategy explains:

Experience: Where marketers used to focus on their product, now we must think of the entire customer experience- what does a customer encounter related to purchasing and using your product/service?

EveryPlace: Today, place has become everyplace- there’s just SO MANY methods for conveying your message: IM, SMS, countless social media websites, video games, product placement in places like TV, Movies, internet video clips- the list goes on.

Exchange: With so much on the web being offered for free, pricing has become much different. Words like Freemium, describing how premium services pay for free services offered by the same company would have boggled marketers minds a few years ago.

Engagement/Evangelism: Promotion isn’t enough any longer. With so many more message channels, we can’t just bombard people with messages and hope they’ll pick them up. Companies have to figure out how to get consumers to allow them into their attention spans.

Brands better pay very close attention to the entire experience, from Awareness to Advocacy, or someone else will be glad to do it for them. This is especially important, as well as difficult, in the digital space. 

What happens as Millennial HENRYs get old and start to peak spending? 

Everything they believed and their approach to spending is geometrically multiplied by their followers, Gen Z.

But that’s another subject. Watch this space.

©Michael Serwetz 2021

Are the “Roaring 20’s” back? Yes, but not how you probably think.

There she is- the common image of the Roaring 20’s symbolized by the beautiful Mia Farrow.

An age of joy, abandon, unprecedented riches and living in the moment—until the moment fell apart in 1929.

There has been a lot of talk about this type of wild consumerism coming back post-Pandemic. And maybe it will. But not everyone will attend the wild party.

In 2021-22, the Roaring 20’s WILL dominate the retail scene. But not the era, the income group; the top 20% of earners has grown dramatically, while the bottom 20% struggles with necessities and paying bills.

Let’s take a look:

It is clear to see from the above that the top 20% has lots of wiggle room between their necessities expense and discretionary spending; however, if the bottom 20% wants to spend on something they don’t need, they have to dip into the pot that funds their necessities.

And this:

The combined wealth growth of the top 10% was $17.3 trillion; if we include the top 50%, it was $23.4 trillion. This compared to $1.2 trillion for the entire bottom 50%. So, in terms of wealth and discretionary spending, it will come from the top 20% plus the wannabes and aspirants from the top 50%. The HENRYs (High Earner, not rich yet- typically between $100 and $250K annual income).

So what does this portend for retail?

First, tremendous growth in the premium and luxury sectors. Not just the iconic brands, but the hundreds of new brands that have positioned themselves with the hope of joining the luxury fraternity.

Second, what has come to be known as the Bifurcation of Retail will become more exaggerated. The bottom 50% has to be concerned about price in everything they do; retailers that emphasize and are devoted to the price strategy like Walmart, TJX, Amazon will be their go to shopping destinations.

The top 50% will look for individualistic, higher quality product from the above iconic and emergent premium and luxury retailers.

What is missing here? The middle. Traditionally populated by “balanced” department stores. It looks like they are and will continue to find themselves irrelevant in both high- and low-end consumers retail plans.

Can the department stores reinvent themselves to be the true moderate middle again? To do so, will they give up the 25% because of this plus another 25% because of that and 25% more because we like you to fill their floors with quality, well-merchandised goods that represent fashion and quality at a moderate price point? Even if they want to, do they have the merchants who can do it? Back in the day, we NY department store buyers were good to great merchants who trekked to Paris and Tokyo, and knew what they wanted to buy or develop; the sales floors were not overcrowded or overassorted—they represented our statement of what we believed in. Sound familiar? This is the way Inditex (Zara biggest division) runs its business.

My word is not as good as the facts. Let’s take a look (the following two graphics are from the Deloitte Insights Report (2018). They are even worse (or better, depending on who you are) today:

      

      And this:

The Deloitte report was exposing something that had started to happen years before the Pandemic. We all know that the Pandemic served as the Grim Reaper for many retailers, most in that moderate middle.

Conclusively, the report said, “The great retail bifurcation is the apparent low-end and high-end retailers in accordance with the consumer’s economic situation and, more importantly, in accordance with a close understanding and response to what needs the consumer is expressing.” 

According to the same report (pre-Pandemic), the bifurcation represents an opportunity, a Renaissance, for retailers, big or small, apparel or any industry, who want to pay close attention to the evolving requirements of their target audience.

Such as ethics and sustainability- but that’s another subject. (Author’s note: this is the first in a series of articles about the luxury retail sector in 2021 and the future. Watch this space for more.)

© Michael Serwetz 2021

Another Ugly Truth: Facebook's Moat

 Another Ugly Truth: Facebook’s Moat

 

“An Ugly Truth” is the name of a recent book about Facebook, authored by Sheera Frenkel and Cecilia Kang, reporters for the New York Times. The book is an eye-opening, stomach-churning account of Facebook’s history from its birth in 2006 through its role in Trump’s election in 2016, up until the recent history of the attack on the Capitol on January 6, 2021. After reading the book, I considered: Why does Facebook have a Teflon coating, and just keeps growing despite all its missteps, misses and company-first decisions with significant global impact?

 

First, to understand the book’s point of view, present tense, stated in the last paragraph, let’s read it here:

 

“One thing is certain. Even if the company undergoes a radical transformation in the coming years, that change is unlikely to come from within. The algorithm that serves as Facebook’s beating heart is too powerful and too lucrative. And the platform is built upon a fundamental, possibly irreconcilable dichotomy: its purposed mission to advance society by connecting people while also profiting off them. It is Facebook’s dilemma and its ugly truth.”[i]

 

What the book chronicles is exactly the above: As Facebook got bigger (by acquisitions and users) and became more relevant in people’s lives, thus more irresistible for advertisers’ money, the more it became a platform not only for people wanting to say hi to Grandma, but people wanting to overthrow governments, influence elections, and spread misinformation easily to the world’s biggest audience. Of course, the known examples are Trump’s use of the platform before and after his election and defeat (he was at one point Facebook’s biggest advertiser), the Cambridge Analytica scandal, and the insurrection of January 6. How to balance hate being spread on its pages with “free speech” (Oliver Wendell Holmes may be doing spins in his grave) and pissing off users when you take a stand for or against something that may influence their lives (Trump’s BS) or even get people killed (Myanmar), which might lead to loss of users and revenue?

 

Facebook’s “Battle for Domination” becomes a battle to walk the tightrope between revenue and principle- in the public and government’s eyes, with revenue the clear and simple goal. Frenkel and Kang leave no doubt that, to Zuckerberg, the algorithm was and is “Company over Country.”[ii]

 

Fast forward to today, July 27, 2021. Two recent news articles about Facebook reveal the road that Facebook has chosen to walk, at least up to now. The first is, as reported by Reuters, that Facebook will restrict targeting of users under 18 according to their behavior on other sites (they still can be targeted, but only based on their activity on Facebook/Instagram/Messenger).[iii]

 

The other is an article in the New York Times by the same Cecilia Kang entitled, “The F.T.C. asks for an extension to refile its Facebook antitrust suit,” which was thrown out by the District Court in D.C.  and given 30 days to refile (good luck with finding something in the next 30 days that they didn’t find before).[iv]

 

For those who are thinking (again) that altruism and social responsibility has become the mantra at Facebook over moneymaking, ask yourself if Facebook is doing this because they want to protect our children, or because they want to protect themselves? The same question must be asked about Apple’s IOS 14.5 (which gives the users the right to opt out of companies selling their info to other companies) and Google’s new Privacy Policy. 

 

And, I believe the answer to this question for three of Scott Galloway’s Four Horsemen[v] is the same: when they have more to lose than gain, only then will they consider compromising any activity that contributes to revenue.

 

Why can they get away with this and why does their business keep growing significantly (Facebook’s share price has increased 61.44% in the last year[vi])? The simple answer is the same as for every other company- Their Moat.

 

For those of you who are not familiar with the term, an economic Moat is, put simply, a barrier to entry for any threats to the enterprise- be it another company, economic issues, governments or Pandemics. The wider the Moat, the safer the company is to continue its mission and prosper. 

 

Morningstar Investments, the famous investment research company, defines four types of Moats:

 

1.    Switching Costs- The financial and/or emotional cost of switching from one brand/product/service to another

2.    Intangible Assets- Brand image, patents, trade secrets, customer perception

3.     Cost Advantage- Based on:

1.    Economies of scale- eg., Amazon Prime-wide

2.    Process advantage- Be cheaper eg., Payless Shoe Stores, Kmart-narrower

4.    Network Effect- Value grows as people use the brand or service more and more-self perpetuating[vii]

 

Let’s look at each as regards Facebook:

 

1.    Switching Costs- Sure, you can switch social media apps, but a. you want to be where everyone is, is the soul of social media, and b. If you did switch from Facebook, your likely choice would be Instagram, which is—Facebook. Yes, you can go TikTok or Reddit or Snapchat but in the 6+ hours the average teenager spends on the internet, which social media app is where the action is? And what would it take, if it were at all possible, for the invaders of the moat to be a real alternative to Facebook? Switching costs are both financial and functional. And advertisers know that.

2.    Intangible Assets- Facebook is a brand that has withstood governmental attacks, hackers, invaders and their own greed and inability to respond in a timely and correct manner-but it is still—Facebook. And advertisers know that.

3.    Economies of Scale- In this case, Scale above all is reach. Half the world outside of China is on Facebook. And advertisers know that.

4.    Network Effect- Why Facebook keeps getting bigger and bigger. The huge trove of data feeds the monster and it perpetuates itself. And advertisers know that.

 

Is there anything that can readjust the balance between social responsibility, actually protecting users from hate and misinformation, and the constant flood of increased revenue without overbearing government control, which would taint the experience? 

 

Well, as Frenkel and Kang have aptly stated above, if there is an answer, nobody has found it yet. Even if government is successful in breaking up the company, it will be broken into pieces so big that they may be able to regenerate to an even bigger tomorrow. But yet, given the absolute fact that our children are digital-native and are influenced more and more by what they see and hear on social media, where they may spend most of their day, it is a problem that must be solved for the good of society. Will today’s teenagers and young people demand more social responsibility of companies they deal with? I have polled every class I teach about this, and they all say yes. 

 

But, the question really is, are they the influencers or the influenced?

 

And Facebook, with the rest of the Four Horsemen, goes on.

 

Author’s Note: An Ugly Truth is a well-written, totally engaging, at times stomach-turning, book that everyone should read, if they live anywhere in this world.

 

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[i] Sheera Frenkel and Cecilia Kang, “An Ugly Truth: Inside Facebook’s Battle for Domination,” (New York: HarperCollins, 2021), p. 300.

[ii] Ibid., p. 117.

[iii] Reuters.com, “Facebook will restrict ad targeting of under-18s,” https://www.reuters.com/article/us-facebook-advertising/facebook-will-restrict-ad-targeting-of-under-18s-idUSKBN2EX1OS

[iv] NewYorkTimes.com, “The F.T.C. asks for an extension to refile its Facebook antitrust suit,” https://www.nytimes.com/2021/07/23/technology/ftc-facebook-antitrust-lawsuit.html

[v] Scott Galloway, “The Four: The hidden DNA of Amazon, Apple, Facebook and Google,” (New York: Portfolio/Penguin, 2017) p. 2. 

[vi] Seekingalpha.com, https://seekingalpha.com/symbol/FB

[vii] Morningstar.com, “Types of economic moats,” http://news.morningstar.com/classroom2/course.asp?docId=144046&page=5

The American Responsibility Act

 The American Responsibility Act

 

Since he took office, President Biden has been promoting Rooseveltian legislation aimed at bringing America up to speed in many ways. Such acts as the WPA-like American Jobs Plan, For the People Act, and American Families Plan are not forward-looking legislation so much as they are playing catch up ball with what we messed up or neglected in the past. Is it too little, too late? Now, it can only be too little, but it could be too late if Congress play games with the needs of the American people. Could happen.

 

Good for President Biden for taking this direction; it is urgently needed to offset years of inaction. Or, in some cases, hundreds of years. Let’s see some examples:

 

·      Infrastructure- We basically built our last interstate highway in 1956[i]. The total of 46,720 miles was surpassed by China in 2011 with 52,800 miles and China main highways stood at 100,040 miles (161,000km) in 2020.[ii]

·      Computer Chips- Only 12% of the world’s computer chips are made in the US,[iii] with China positioned to become the world leader by[iv] 2030.Taiwan Semiconductor and Korea’s Samsung are two of the market leaders. Even Intel, the leader by volume, makes some of its chips in China.[v]

·      Taxes- It has become embarrassingly clear that billionaires like Jeff Bezos probably pay less taxes than you or I do. The income inequality level in 2019 reached its highest level in 50 years. Economist Larry Summers has estimated that if the US had the same income distribution it had in 1979, the bottom 80% would have $1 trillion (or $11,000 per family) more and the top 1% would have $1 trillion, or $750,000, less.

·      Political Gridlock- Our United States Congress is anything but united. Now we have partisan gridlock on just about everything; when something does get done, it becomes like food that tries to please everyone, but ends up pleasing nobody.

 

Let’s move on to social issues. For a country that has a Statue of Liberty still standing in its gateway, and E Pluribus Unum (From many, one) on every bill, we are sadly NOT living up to that image. Some prime examples:

·      Racism- Black Americans- Slavery was abolished in 1865, 10 of the first 12 American Presidents were slaveholders, then Martin Luther King was assassinated in 1968 campaigning for civil rights, yet on May 25, 2020 we had George Floyd’s murder. And many more incidents up until today. 156 years after we passed the Thirteenth Amendment into law, we passed Juneteenth as a national holiday to celebrate it.  Why? Because racism is in our cultural DNA. And in many places little change of attitude has taken place over the centuries. Case in point is that the state of Mississippi did not certify the Thirteenth Amendment, thus actually banning slavery, until 2013.[vi] Don’t believe me? Look it up.

·      Racism-Anti-Asian Hate- This has always existed in the United States and been promoted and protected by law. IN 1882 The Chinese Exclusion Act was passed, which was not officially reversed until 1965.[vii] Of course, in 2020 Anti-Asian Hate was promoted publicly by the President and his staff. So what is the result? In 2021, anti-Asian hate crimes increased by 223% in New York and 140% in San Francisco, two cities with large Chinese populations.[viii]We cannot write this social disease off to “a few people;” it has had official sanction for most of our history. 

 

Think about it, and it gets worse. We have in this country anti-black racism, and anti- Asian hate, not to mention prejudice toward other groups. Along with many other immigrant groups like those from Europe, Chinese, Black, Latino and other countries, immigrant groups have built this country and still stand as some of its most sturdy pillars. If you accept this, and you must if you are not in denial, then please explain why there are no Anti-Italian or Anti-Irish hate spikes? Is it because all of those facing prejudice and racism look different? I am afraid so.

Worse, are we teaching our children to hate or fear anyone who doesn’t look like them? Yes, we are. This is our Xenophobic reality.

 

The most popular excuse, and it is just that, today is to blame China for our ills. Does this make sense? OK, did the Chinese take our jobs in building their economy? Did they build all those roads and metros against our will or were they just doing what they should do?

 

China did not take our jobs, fellow Americans; we handed them to China, gladly. As income inequality grew and our standard of living plummeted, we happily gave up competing in basic industries, and eagerly shopped at Walmart so we could get more for less. I remember back in the 80s when I reached out to American textile and garment owners asking them to compete with overseas industries by using automation and efficiency, they either ignored me or called me traitor for suggesting that we were losing the action to yellow and brown people. At that time, I was just one lonely voice. Maybe I still am, but I haven’t given up telling the Plain Truth.

 

But, why do so many Americans think like Trump? Or like Trump? Because politicians, good ones without a soul, are the most highly skilled at making people think the way they want them to think. Which, in every single case, never serves the influenced but always serves the influencers. Hitler was a master at that. We haven’t had a Hitler yet, maybe we survived a doppelganger, but we need to admit that those in Germany and in this country who are influenced by unscrupulous politicians are usually willing victims.

 

So now we come to the title of this Article- The American Responsibility Act. I am not suggesting that President Biden introduce legislation of this sort; this is because, as I have suggested in all my writing, that legislation cannot solve embedded racism; it can suppress it, but not solve it. To purposely demean the deception that Xenophobics resort to, it is like when a kid gets caught doing something bad; he or she never admits to it, but seeks every creative way possible to deflect the blame, usually on someone less fortunate—the little brother or sister, the dog, etc.

 

The hallmark of emotional maturity is when a person learns to admit their own mistakes and learns from them; they also learn that admitting the truth to yourself is a prerequisite to solving the problem—unless, of course, the continuing existence of the problem is of benefit to you. That isn’t the case for most of us.

 

So, as an individual, what I am proposing you do is the other meaning of the word act. In addition to being a piece of legislation, an act can be something that you do, which goes to the next level and speaks louder than words. 

 

You do something about racism, prejudice and the unfairness of our system; you speak up for spending whatever is needed to bring our economy up to speed. You don’t let the soulless politicians speak for you. How? By taking responsibility as an American for where we are and not blaming China or Chinese, or Asians, or Blacks, or Latinos. Why? Because youhave a soul. An American Soul, that resonates with the intent of our Constitution which we need to turn into the Acts that define our daily lives, and what we will pass on to our children.

 

 

 

 

 

 

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[i] Waycaretech.com, “The US Interstate Highway System,” https://waycaretech.com/us-interstate-highway-system-why-it-took-62-years-to-complete-and-how-the-idea-arose-in-germany/

[ii] Wikipedia.org, “Expressways of China,” https://en.wikipedia.org/wiki/Expressways_of_China

[iii] Businessinsider.com, “Why the US doesn’t make chips,” https://www.businessinsider.com/why-us-doesnt-make-chips-semiconductor-shortage-2021-4

[iv] Ibid.

[v] Wikipedia.org, “Semiconductor Industry,” https://en.wikipedia.org/wiki/Semiconductor_industry

[vi] www.civil-discourse-history-blog.com, “Mississippi Finally ‘Bans” Slavery,” http://www.civildiscourse-historyblog.com/blog/2017/6/7/mississippi-finally-bans-slavery

[vii] Wikipedia.org, “Chinese Exclusion Act,” https://en.wikipedia.org/wiki/Chinese_Exclusion_Act

[viii] CNN.com, “Anti-Asian Hate crimes surged in early 2021, survey says,” https://www.cnn.com/2021/05/05/us/anti-asian-hate-crimes-study/index.html

What Pearl S. Buck Knew About Arab-Israeli Relations

Why a lesson from her 1948 novel “Peony” should be applied to this ongoing, deadly conflict

The conflict between Israel and Palestine is a powder keg for the world with a short fuse. Now the fuse is (temporarily) blown out, and we are led to believe that a new government in Israel (maybe) will solve the problem. History tells us that it won’t. 

In researching for my book about US-Chinese relations, I came across a passage in Pearl S. Buck’s 1948 novel that I believe applies to the current situation in the Middle East and reveals the plain truth about the nature of the situation in Israel/Palestine; recognizing the plain truth is the only route to a solution--in all cases and always. 

Pearl S. Buck (1892-1973) was the daughter of Christian missionaries in China, where she was born and lived until 1934. She is best known for her Pulitzer Prize-winning book “The Good Earth” in 1932. Her work earned her the first Nobel prize ever given to a woman in 1938. After coming to the US, she wrote, taught and advocated for Chinese and minority causes.

The book for which she is most acclaimed is the story of the travails of a Chinese peasant family. 

So what should she know about this current, seemingly unending conflict that inflames the rest of the world with its flash fires, simmering forever under the surface and never being put out. What is the solution to the problem? Many Presidents and diplomats have tried, for decades, and still, it defies resolution. Worse, in today’s connected world, the information is available to everyone on video and, like a California forest fire, throws its embers everywhere, becoming an instant global conflagration.

So why should Pearl S. Buck know anything about Jews and Arabs? I believe that her later novel, Peony, about a Jewish family in Kaifeng, China, points directly at the cause of the conflict, which is necessary for a resolution-if there can be one.

She was born and grew up in China, so what did she know about Jews? Were there Jews in China at the time? The answer is yes. The Kaifeng (Henan) enclave is notably famous, but there have been Jews resident in China since the 8th Century AD, who were known to trade in China up to 6 centuries prior. China is part of the Jewish Diaspora; it started to figure during the Han Dynasty after the Silk Road was created to facilitate trade between China and the Middle East. Waves of Jews later followed this route between 618-807 AD, having been blessed to interact by the Tang Dynasty Emperor. Later, during the Song Dynasty, the Kaifeng community began to be formed. 

Let’s note: In contrast to many other parts of the world, Jews were accepted in China, despite their physical, racial and religious differences.

Buck’s novel, Peony, written in 1948, is the story of a Jewish family, the House of Ezra, in the Kaifeng community. Peony is a bondmaid whose only job is to take care of the only child and son of the family, David. David’s father, while observant of Judaism, is half Chinese, which makes David one-quarter. Ezra is a respected merchant in the community, with a Chinese partner named Kung Chen. Throughout the book the internal struggle between the traditions of Judaism and the open-minded and accepting Chinese community is a main element. David sees and falls in love with Kaolien, daughter of Kung Chen, and wishes to marry her. This is not acceptable to Naomi, David’s mother, who wishes David to marry Leah, the daughter of the local rabbi, so that he can personify the perpetuation of the faith. She moves the rabbi’s family into her house to promote the relationship between David and Leah. 

Significantly and notably, the rabbi is blind. 

The exchange that relates to the current Arab-Israeli situation takes place in the synagogue between the rabbi and Kung Chen (note that, when this incident takes place, Kung Chen has already accepted that his daughter marry David).

Kung Chen meets David on the street, and David informs him that he has come from the synagogue but will go back there. Kung Chen asks to accompany him, which David happily accepts. In his previous visit, David has observed inscriptions written by congregants which emphasize the inclusion between Judaism and Chinese culture. One inscription said, 

“Worship is to honor Heaven, and righteousness is to follow the ancestors. But the human mind has always existed before worship and righteousness.” 

Another, which both Kung Chen and David read, says,

“From the time of Abram, when our faith was established, and ever after, we the Jews of China have spread the knowledge of God and in return we have received the knowledge of Confucius and Buddha and Tao,” 

This is a message of inclusivity, not exclusion. Both David and Kung Chen are happy with this message. But, when the Rabbi becomes aware of their presence in the synagogue, including the Chinese non-Jewish man, he sings a different tune. The exchange that follows is the significant allegory for the current Arab- Israeli conflict.

The rabbi becomes angry when he discovers that Kung Chen is in the temple. He berates David and tells him he should not have brought a Son of Adam into the holy place. Kung Chen responds with the statement, “I am no Son of Adam. There is no such name among my ancestors.” The rabbi retorts that all heathens are sons of Adam, and only Jews (David) are sons of God. Kung Chen says that he does not want to be called the son of a man of whom he has never heard. 

The exchange heats up between them as Kung Chen becomes insulted and angry. The interaction goes as follows (soon you will get my point, be patient and read on):

Kung Chen: “Moreover, I do not like to hear any man call only himself and his people the sons of God. Let it be that you are the sons of your god if you please, but there are many gods.”

Rabbi, trembling: “There is only one true God, and Jehovah is His name.”

Kung Chen: “So the followers of Mohammed in our city declare, but they call his name Allah. Is he the same as your Jehovah?”

Rabbi, yelling: “There is no god beside our God. He is the One True God.”

Rabbi, loudly, responding to Kung Chen’s statement that beyond this earth we cannot know: “Beyond this earth we can know! It is for this that God has chosen my people, that we may eternally remind mankind of Him, Who alone rules. We are gadfly to man’s soul. We may not rest until all mankind believes in the one true God.”

Kung Chen, in a kind voice: “God--if there is a God—would not choose one man above another or one people above another. Under Heaven we are all one family.” 

This is an allegory for the past and current situation between Palestine and Israel. Both, in their purest state, are religions of exclusion, claiming that theirs is the one true faith and that all others can be heaped into a group. Some Jews call them Goyim or Gentiles, while some Muslims call them Kafir or Infidels. Notably these are not all or maybe even most Jews or Muslims; but they are the primary actors in this conflict (who may be using the religious differences to their own political end).

So here we are: two strong, passionate, exclusionary cultures, living next door to each other through a legislated nationhood, facing off in a battle that has been going on for ages. Either/Or, not Both. Only now it gets more dangerous with each flareup, creating enmity, hate and misunderstanding worldwide.

Imagine if, in Peony, the rabbi were having this argument with a Muslim, maybe an Imam, rather than Kung Chen. Would it have come to blows? Probably. 

David, who is physically and spiritually part of both cultures, doesn’t know how to feel at first, but then remembers the inscriptions about the human mind, and the free exchange of cultures, and decides to marry Kaolien rather than Leah. Kung Chen actually remarks earlier in the work that the hybridization of the two cultures, whether by marriage or interaction, makes both stronger.

In Peony, cultural understanding and compromise is juxtaposed with a clear and fanatical exclusionary mindset, and is what wins out in the end when David marries Kaolien and gives birth to (mixed) children, happily prospering in Kaifeng as part of the community of Jews and Chinese living and working together. Had he married Leah and become a proselytizer of the religion as superior, special and exclusive, the outcome in his life and in Kaifeng would have been very different. Not better, just different.

The current story of Israel and Palestine can be imagined to be an ongoing argument with no compromise or end between the Rabbi and his Muslim counterpart, both insisting on their religious culture as superior, to the exclusion of the other, and all others.

Israel and Palestine can never conclude this battle if each insists on cultural, religious supremacy and doesn’t recognize the the other culture as different but equal. Given that their lingering hate spreads like a virus around the world, there is an imperative for a real, lasting solution that is much bigger than both of them. Cultural compromise, fueled with genuine caring about children’s lives and welfare, is a small price to pay for what would be considered a monumental victory for peace and understanding.

Changing the government won’t do it.

[1] Wikipedia.com, “History of the Jews in China,” https://en.wikipedia.org/wiki/History_of_the_Jews_in_China

[1] Buck, Pearl S., “Peony: A Novel of China,” (New York: Moyer Bell, 1948) p. 147.

[1] Ibid., p. 149.

[1] Ibid., p. 150.

[1] Ibid., p. 152.

Economist: “Sweatpants Are A Designer’s Worst Nightmare”—Is dressing up another casualty of the Pandemic?

 Economist: “Sweatpants Are A Designer’s Worst Nightmare”—Is dressing up another casualty of the Pandemic?

Are we doomed to be sloppy?

 

An article in The Economist 1843 Magazine written in March 2021 thinks so—maybe.

 

What do you think?

 

There is no doubt that the year of the Pandemic took a grave toll on apparel, maybe more than any other industry.  Let’s look at some numbers:

 

First, of all retail sectors, apparel and accessories have suffered the most, almost diving 100% last year and still seriously in deficit.

 

Next, let’s take a look at the total sales picture. From a peak of about $34 billion in November 2019 pre-Christmas, sales sunk to about $7 billion in May 2020 and only could recover to about $30billion at Christmas 2020, after operating in serious deficit for almost a year:

 

 

The kids didn’t get new clothes, either. Family clothing stores followed the same trend, but even worse; the nadir in May 2020 was about $700 million from a peak of almost $15 billion.

 

Some major companies did well during this period, and some did not. Take a look at the following graph and tell me what the common denominator is for those who saw increases:

 

Crocs. Eh? You don’t wear those to the office or on a date. Wolverine- Moccasins, Hush Puppies? See the point now?

 

So, dressing up is dead and we all fall down in sweats? Hoodies for dinner? To a meeting, though? The author of the Economist article entitled, “Fashion Victim: Sweatpants are a Designer’s Worst Nightmare: The Shape of Things to Come,” [i]says, “The rise of sweatpants represents the demise of fashion as we knew it.”[ii]

 

So, is this true? Are we going to see hoodies in restaurants? In offices? My answer to that is no and no. And it has been for more than a year, which I have expressed in my isourcerer.com article in February of this year, my informal poll of nearly 100 students from the US and other countries begs to differ:

 

My students will happily shed their hoodies and sweatshirts to dress up when person-to-person and person-to-group interactions are permitted and safe. They were nearly unanimous about that. One student went so far as to say she felt like she would throw out her entire wardrobe. Bright colors, happy clothes that actually fit and don’t make you feel like taking a nap will come roaring back. 

 

Those of us who have experience in the world of retail (pre-Pandemic and pre-Ecommerce) and have a good merchant’s sense of trends incoming all agree that the lack of buying clothes for a year (except online which seems to have been Crocs and Mocs) will have a snapback some are calling “the roaring 20’s (100 year anniversary which we hope will not end the way the last 20’s did), insofar as it will constitute not only wardrobe additions, but wardrobe replacement).

 

In fact, here is my contribution to the chorus, my solo as it were: I believe we are going to see a new attitude toward dressing that has been in remission since the jeans craze of the 1980’s and subsequent approval for casual dress in offices (because the boss wanted to wear jeans too). No, we won’t have dress codes to wear a tie and suit to work as we did in the 1970’s; if there is any code to come, it may be that offices set limits on how sloppy you can look. 

 

The real trend will be a reaction to the Year of the Pandemic where people began to recognize that a sloppy you is not your ideal presentation to the world; in fact, it is pretty damn embarrassing. And that you are what you wear; look good, feel good (Ricardo Montalban vintage: “I feel mahvelous, dahling”). Wait-will “dress for success” come back into people’s psyches? It could be…

 

This revolution will also be a quality revolution. Renewed pride in your appearance will require your clothes don’t look cheap; this will spell trouble for those purveyors of disposable clothes like Inditex and H&M (I have complete faith that they will respond but it may take some time and rocky roads).

 

One more blow to the fast-fashion brands will be that people not only won’t want to look cheap, they will NOT want to look just like the person next to them (and also on the other side); so we will see a drive for Individualism in apparel, a definite departure from the cookie-cutter fashion that ruled the world pre-Pandemic.

 

We merchants had solemn responsibility to not only spot the fashion trends—fit, silhouette, fabric, the Black Swan (actually, significant fashion changes can come from the Unknown Unknown), but when we bought merchandise to populate our t-stands and round racks, we had better figure out the right color. There could be few worst disasters than having thousands of the right style in the wrong color. So here I go with another risky prediction, one which I have said before: Bright Colors can do the best job of externalizing our psyche and will have the most robust response both physical and online.

 

None of this is written in stone or on tablets (stone ones). And world events could easily get in the way of my predictions (such as European countries like France bungling the vaccine response and prolonging the pain of Pandemic). But I think, all things considered and not considering Black Swans (which you never get to consider until they show up at your door), my predictions are accurate.

 

The one thing that I can virtually guarantee is that the Economist column writer is wrong about the enduring influence of sweatpants on fashion. If anything, their influence will be a reverse effect. 

 

The author backtracks and covers his butt at the end of the article. After a headline that pronounces sweatpants the Wicked Witch of fashion, he backtracks and says, “One day we will go out again and we won’t be wearing sweatpants.”[iii] So which is it, then? I guess it depends on when “one day” is. I can speculate on that: One day is 2021 Fall season to 2022 Spring season, the start will be fast and the momentum will leave many retailers in the dust.

 

And, therein lies the biggest danger to the revival of the fashion business: That retailers get lazy, or lack vision and merchant abilities, thus failing to prepare the inventory when the customer wants it, or blindly following the Pandemic Trend as if it were going to last forever. Google sweatpants and you will see that everyone from designer to mass market is rushing to compete in the Red Ocean of sweats. From the online merchandising, it would see that the Economist writer is correct.

 

Again, I don’t agree and think that stores are lobotomously missing a key post-Pandemic trend. That enduring incompetence can scotch this recovery; however, for those of us who have the right merchandise at the right time, it IS the Roaring Twenties. At the other end of the spectrum, the Grim Reaper will be invited to the party, as he was so many times in 2020.

 

Send me your opinions! You are part of the customer base. Then, when we get enough opinions, it will be more than opinion—it will be proof.

 

Copyright 2021 Michael Serwetz

 

(Origin of all graphs are documented on the graph itself and text quoted is duly footnoted below)

 

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[i] www.economist.com/1843, “Fashion Victim: Sweatpants are a Designer’s Worst Nightmare: The Shape of Things to Come,” https://www.economist.com/1843/2021/03/17/sweatpants-are-fashion-designers-worst-nightmare?utm_campaign=the-economist-today&utm_medium=newsletter&utm_source=salesforce-marketing-cloud&utm_term=2021-03-19&utm_content=article-link-7&etear=nl_today_7

[ii] Ibid.

[iii] Ibid.