Inside Facebook reports that need-to-knows in the media were sent e-vites to a Facebook meeting at the start of the Web 2.0 conference in San Francisco next week. The invitations included the Facebook Messages icon, a not-so-subtle indication of what the focus of this particular press conference would be.

Criticisms of Facebook’s existing messaging system have been around since before there were 500 million friends. Facebook could simply address these concerns and announce some satisfactory changes, or it could be introducing the game-changing address of “@facebook.com.”

The implications are clear. With a Facebook e-mail address, users would be tying themselves into the Facebook.com brand with increased longevity and personal investment.

Project Titan also strikes a blow in the battle between the search engine and social media site over contacts. Google has blocked attempts by Facebook to allow users to import their contact lists from Gmail to Facebook. Now, a Facebooker’s contacts will be available for immediate import into the new e-mail service, completely circumnavigating Gmail and rendering it superfluous.

Google has a fighting chance, if it doesn’t lose any more of its employees to Team Zuckerberg. Would you switch over to a Facebook e-mail account?

Here is the “trailer” for “The Social Network” as interpreted by funnyordie.com:

Facebook’s botched IPO adds a new wrinkle. In contrast to Bain-style private equity wheeling-and-dealing, the Silicon Valley venture capital model for new firm creation has always enjoyed a much more positive public relations profile. Maybe it’s a West Coast vs. East Coast thing, but conjuring up the likes of Intel or Apple or Google from thin air is a lot more sexy than swooping down on a troubled firm, brutally slashing costs and stripping assets, and then reselling for a huge profit a few years down the line.

But the Facebook mess, with all the questions it raises about insider trading, and the clear abuse of small investors in favor of the big boys, reminds us that everybody’s got their warts and nobody should get a free pass. Facebook’s early venture capitalist investors and the big investment bank clients that got preferential access to new, and negative, information about Facebook’s future profits, were able to cash out while the little guy was left holding the bag. Sifting through the aftermath, it’s hard to avoid the conclusion that a lot of people got ripped off. And coming right in the middle of all the back and forth about the merits of private equity, Facebook’s IPO raises a provocative question: Just how is it that capitalism, East Coast or West Coast style, currently serves the interests of the American people?

Because here’s the thing: Over the past 40 years, the venture capital and private equity buyout industries have grown dramatically, from basically nothing to becoming crucial drivers of corporate formation and growth. Last year, venture capital firms invested $32 billion in new start-ups in the U.S. while private equity funds raised over $100 billion for buyout activity. All along the way, government policy lavished both sectors with extraordinarily lenient tax policy — including massive cuts in the capital gains tax and the so-called carried interest rule that allows Mitt Romney to fork over only 14 percent of his income to the IRS — which has allowed financiers of every stripe to vastly increase their individual wealth. But over that same period, income inequality has grown and the average worker’s wages have stagnated, while the cost of healthcare and education has skyrocketed.

Facebook’s IPO and Bain Capital’s track record end up telling us exactly the same thing. State-of-the-art American capitalism works very efficiently for the 1 percent, and leaves just crumbs for the rest of us. Efficiency is good for them, but not for us. That’s quite the achievement.

“Forty years ago,” David Brooks proclaimed in a New York Times column earlier this week, “corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.”

The specific purpose of Brooks’ column was to defend Bain Capital, Mitt Romney and private equity in general from demonization by Obama. But we can also throw venture capital into his “reform and transformation” pot. After all, strictly speaking, venture capital is a subset of the larger category of “private equity.” (Nothing’s “public” until the IPO.)

In pragmatic terms, there’s a key difference. What we typically call private equity generally involves a group of investors (i.e., Bain Capital) who borrow money to purchase an already-existing company — what’s known as the “leveraged buyout” — while venture capital typically focuses on investing non-borrowed cash for the purpose of creating or nurturing a new enterprise. The distinction is important, but we’ll come back to that later. For now, let’s assume that David Brooks is correct: 40 years ago, American businesses had forgotten how to compete, but today they’re much more fearsome operators. And let’s share the credit between private equity, headquartered in New York, slicing-and-dicing its way through old fogies, and venture capital, headquartered in Silicon Valley, relentlessly spawning new giants to stride the earth.

Again, the Silicon Valley venture capital model has always gotten better press (with the possible exception of the height of dot-com bubble insanity). The reason is obvious. It’s much easier to make the case that there are clear economic benefits to the country as a whole when new firms are being born and jobs are being created. It’s a lot more difficult to make the same argument about private equity, since it is very often the case that one of the ways in which the new owners “streamline” operations and make things more “efficient” is to cut costs by firing workers. To successfully defend the idea that private equity serves the interests of the general good, you have to fall back on hard-to-quantify things like the theory that weeding out the poor performers “frees up” productive forces to find better uses in the larger economy. That’s a hotly debated topic, and if you’re looking for a direct rejoinder to the assertions made in support of private equity by David Brooks, go read Josh Kosman’s new Rolling Stone Op-Ed “Why Private Equity Firms Like Bain Really Are the Worst of Capitalism.” Suffice to say, the story is not as slam dunk as Brooks would have us believe.

But never mind that. For our purposes here, it’s more interesting to focus on how the venture capital model and private equity models are similar — in the sense that the manner in which both types of investors encourage corporations to operate more efficiently and profitably can be argued to work against the interests of American workers. This is a critical point, because what have we gained from American corporations becoming less bloated over the last 40 years, if, at the same time, the fabric of our society has deteriorated and our upward mobility has become more limited?

I first really began to understand the extent to which Silicon Valley was no longer the vaunted job creation engine it had long been held up to be seven years ago when I visited the Santa Clara offices of PortalPlayer, a microchip designer riding high on Apple’s decision to use its premier product as the brains of the iPod. PortalPlayer was a state-of-the-art Silicon Valley venture-backed play. A significant portion of chip design and software development was outsourced to a fully owned subsidiary in Hyderabad, India. The chips themselves were manufactured in Taiwan. Less than half the company’s employees were located in the United States.

The visit was eye-opening. From a venture capital investment standpoint, PortalPlayer’s business model was an ultra-efficient application of resources. Indian coders were cheaper, and the time difference between Santa Clara and Hyderabad meant that PortalPlayer could develop software around the clock. Likewise, it made no sense for a small independent chip designer to fabricate its own hardware. But from an American software developer’s perspective or that of a prospective employee at a chip manufacturing plant, PortalPlayer’s model was discouraging: It clearly implied tough wage competition and fewer hiring opportunities. Repeat this model a few hundred, or a few thousand, times, and you start seriously hollowing out the United States semiconductor design and manufacturing capacity. Good for the V.C. investors, not so great for the country.

Facebook doesn’t fit as neatly into the the offshoring/outsourcing screw-the-American-worker model as do so many of today’s new technology start-ups or a Bain Capital outsourcing company. But the details of how the IPO was bungled illustrate another important way in which the wealthy benefit far more from how modern financial markets work than the general public. The emerging story of how top investment bank clients were told directly that Facebook had adjusted its revenue projections downward due to trouble selling ads on cellphones is evidence of a broken system. It calls to mind the string of dot-com frauds brought to market in the late ’90s that had no revenue at all or even the barest rudiment of a sane business plan, but still ended up delivering millions to the early V.C. investors before the newly public companies went bankrupt. For a few years, sure, there was a lot of job creation — but then everyone was laid off. Similarly, with Facebook, the earliest V.C. investors, the Greylocks and Accel Ventures, were able to cash out long before the clouds started to darken. Where Facebook is headed now is not their problem.

The private equity model of capitalism results in eerily similar outcomes for workers. One of the ways in which the new private equity owners of a firm streamline costs is through “business process outsourcing” — a bloodless phrase that means, in practice, hiring cheaper workers (either domestically or abroad) on a contract basis to perform tasks previously kept in house. Call center support operations move to the Philippines or Bangalore. Manufacturing goes to China. Et cetera.

All of these measures clearly succeed in cutting costs in the short run, which is important, because the new owners have added a lot of debt to the company’s bottom-line that needs to be paid off. But they’re not the same as making investments in the future. It’s not analogous to pouring money into research and development or taking risks developing new markets. Short-term “efficiency” is easy to maximize at the expense of long-term growth but it’s a very open question as to whether the benefits of that efficiency are broadly shared.

Bain Capital, it should be noted, didn’t just apply cost-cutting strategies that involved outsourcing to the companies it bought; Bain invested in at least two companies, Stream.com and Modus Media, that specialized in providing outsourcing services to Fortune 1000 companies. This is how American capitalism eats itself. You buy the companies that you use to carve up the other companies that you buy into little pieces.

Facebook’s IPO reminds us that even the most high-profile venture capital plays are often rigged in favor of the big investor — something that we should never have forgotten after dot-com boom became bust. But enraging as the behavior of investment bankers and Facebook executives might be, those run-of-the-mill shenanigans obscure a deeper problem. Whether the engine is powered by private equity or venture capital, we’ve created a machine that generates wealth for the few, while actually exerting downward pressure on the many. And that’s not something we’re likely to hear much about from either presidential campaign.

Here’s what we know: Sometime in the run-up to the IPO, Facebook realized that it needed to downgrade its revenue projections for the second quarter because of difficulties selling ads on mobile phones — which are increasingly the access point of choice for Facebook browsing. This news was buried deep in an SEC regulatory filing, but it also may have been communicated directly to Facebook’s underwriters who, in turn, may have told their big clients — the institutional investors who usually make out like bandits on IPO day by buying stock at the offering price and then selling on the pop. The big investors accordingly decided that the price was a little too high and dumped their stock as quickly as they could. Thus: no pop. The closing price was essentially the same as the opening price, and that wasn’t supposed to happen.

There’s a lot that’s hazy here. But it smells to high heaven, and lawsuits have already been filed. As Heidi Moore writes in The Guardian:

U.S. securities laws are very strict about what a company can say while it prepares to go public – which is to say, almost nothing. Executives maintain a “quiet period” for months. If the company has to disclose anything, it has to do so to all investors, at once. The fact that sophisticated investors knew the company was warning them about its prospects could have been enough to account for the determined selling of the stock from almost its first minute. Wall Street investors are far less patient with changing the goalposts than are the 900 million users of Facebook who accede to every whim of the company’s changing user agreements.

Whatever happened, one thing is indisputable. The little guy (by which I mean the retail investor, who probably isn’t really a “little guy” as compared to someone who’s on unemployment or facing foreclosure) got screwed. And along with Facebook, the key parties involved in the screwing included Facebook’s three biggest underwriting banks, Morgan Stanley, Goldman Sachs and JP Morgan.

Why do those names sound familiar? Oh that’s right — they were key players in wrecking the economy of the United States by screwing around with mortgage-backed securities. And if you want to go even further back, they were all hip-deep in the IPO scandals that made the dot-com boom such a minefield of fraud and get-rich-quick scams. (Indeed, one of the weirder ironic twists to the Facebook story is the sight of Business Insider founder Henry Blodget, who was himself banned for life from the securities industry for fraudulently hyping dot-com stocks, waxing aggrieved at the improprieties involved in the IPO.)

Never mind the stock price. Never mind the fact that Facebook itself made out like a bandit. The real scandal here is that Wall Street investment banks never change their stripes. Their insatiable greed inflated both the dot-com bubble and the housing bubble, and the closer you look at either episode, the more evidence you find, not just of reckless irresponsibility, but of clear criminal misbehavior. And yet their punishments — if they even get punished, which is rarer and rarer — never fit the crime and never dissuade further misbehavior. The Facebook IPO might seem like a weird flashback to the days of dot-com excess, but what it really demonstrates is business-as-usual in the financial sector.

Broviak told MSNBC Friday, “What a violation of my daughter’s privacy this whole episode was,” adding that the experience took “a huge toll on my daughter, who ended up crying through most of the rest of the day and therefore missed most of her classes. She was embarrassed and very upset.” She says when she confronted the school about the issue, they told her it was routine policy to investigate students’ social networking pages and cellphones.

Geneva schools superintendent Kent Mutchler told MSNBC Friday that Broviak’s version of events is inaccurate, stating, “We would never demand someone’s password. When you have someone’s password, you open yourself up to other issues.” But alarmingly, he added, “If we have a disruptive situation, a school [official] will ask to see the page, and if the student refuses, we call the parents … There are different levels of concern. If there is a drug trafficking suspicion, we’ll get the police involved. If it’s something like cyberbullying, we’ll say, ‘This has been reported to us,’ and ask to see the page. We ask, ‘Is there something you want to show us?’ that sort of thing. And they volunteer.”

Oh, they just up and volunteer? Let’s think about this a minute. You’re a 13-year-old. It’s implied you’re in trouble for something, and your teacher or principal suggests that if you have nothing to hide, why wouldn’t you share what you’ve been doing online? That’s a fantastically intimidating and pathetic abuse of power, wielded against the kids you’re daily teaching to comply to your requests.

And, as Broviak points out, that kind of behavior isn’t just a violation of the student’s privacy –  but that of anyone in her social media circle. “Some families communicate through Facebook,” Broviak told MSNBC. “What if her aunt was going through a divorce or had an illness? And now there’s these anonymous people reading through this information.”

Sadly, this kind of repulsive invasion isn’t an isolated incident. Last month, Garrett, Ind., high school student Austin Carroll was expelled for using profanity on Twitter. And, mind-bogglingly enough, earlier this month 4,000 New Jersey third-graders were asked “to write about a secret and why it was hard to keep” on a standardized test.

Schools are — not without justification — scared witless about the ease with which kids commit all kinds of wrongs via social media. They’re concerned about how they interact, and the consequences of their communications. Great. But that doesn’t mean ignoring the basic fact that kids are entitled to privacy, too. They’re entitled to complain about their homework load; they’re entitled to post silly pictures of themselves; they’re entitled, in short, to express themselves on their own turf in their own terms. Sometimes that notion that kids are out there behaving in ways we’re not privy to can be terrifying for adults. Tough. How about working with them to include empathy and conflict resolution in the curriculum, instead of cracking down on their extracurricular lives? How about talking to them? Because snooping around in people’s private lives, coercing them into compromising behavior – it’s called bullying. And isn’t there already enough of that in our schools?

They are the resisters.

“I’m absolutely in touch with everyone in my life that I want to be in touch with,” Arwood says. “I don’t need to share triviality with someone that I might have known for six months 12 years ago.”

Even without people like Arwood, Facebook is one of the biggest business success stories in history. The site had 1 million users by the end of 2004, the year Mark Zuckerberg started it in his Harvard dorm room. Two years later, it had 12 million. Facebook had 500 million by summer 2010 and 901 million as of March 31, according to the company.

That staggering rise in popularity is one reason why Facebook Inc.’s initial public offering is one of the most hotly anticipated in years. The company’s shares are expected to begin trading on the Nasdaq Stock Market on Friday under the ticker symbol “FB”. Facebook is likely to have an estimated market valuation of some $100 billion, making it worth more than Kraft Foods, Ford or Disney.

Facebook still has plenty of room to grow, particularly in developing countries where people are only starting to get Internet access. As it is, about 80 percent of its users are outside U.S. and Canada.

But if Facebook is to live up to its pre-IPO hype and reward the investors who are clamoring for its stock this week, it needs to convince some of the resisters to join. Two out of every five American adults have not joined Facebook, according to a recent Associated Press-CNBC poll. Among those who are not on Facebook, a third cited a lack of interest or need.

If all those people continue to shun Facebook, the social network could become akin to a postal system that only delivers mail to houses on one side of the street. The system isn’t as useful, and people aren’t apt to spend as much time with it. That means fewer opportunities for Facebook to sell ads.

Lee Rainie, director of the Pew Internet & American Life Project, says that new communications channels — from the telephone to radio, TV and personal computers — often breed a cadre of holdouts in their early days.

“It’s disorienting because people have different relationships with others depending on the media they use,” Rainie says. “But we’ve been through this before. As each new communications media comes to prominence, there is a period of adoption.”

Len Kleinrock, 77, says Facebook is fine for his grandchildren, but it’s not for him.

“I do not want more distractions,” he says. “As it is, I am deluged with email. My friends and colleagues have ready access to me and I don’t really want another service that I would feel obliged to check into on a frequent basis.”

Kleinrock says his resistance is generational, but discomfort with technology isn’t a factor.

After all, Kleinrock is arguably the world’s first Internet user. The University of California, Los Angeles professor was part of the team that invented the Internet. His lab was where researchers gathered in 1969 to send test data between two bulky computers —the beginnings of the Arpanet network, which morphed into the Internet we know today.

“I’m having a ‘been-there, done-that’ feeling,” Kleinrock says. “There’s not a need on my part for reaching out and finding new social groups to interact with. I have trouble keeping up with those I’m involved with now.”

Thomas Chin, 35, who works at an advertising and media planning company in New York, says he may be missing out on what friends-of-friends-of-friends are doing, but he doesn’t need Facebook to connect with family and closer acquaintances.

“If we’re going to go out to do stuff, we organize it (outside) of Facebook,” he says.

Some people don’t join the social network because they don’t have a computer or Internet access, are concerned about privacy, or generally dislike Facebook. Those without a college education are less likely to be on Facebook, as are those with lower incomes. Women who choose to skip Facebook are more likely than men to cite privacy issues, while seniors are more likely than those 50-64 years old to cite computer issues, according the AP-CNBC poll.

About three-quarters of seniors are not on Facebook. By contrast, more than half of those under 35 use it every day.

The poll of 1,004 adults nationwide was conducted by GfK Roper Public Affairs and Corporate Communications May 3-7 and has a margin of sampling error of plus or minus 3.9 percentage points.

Steve Jones, a professor who studies online culture and communications at the University of Illinois at Chicago, says many resisters consider Facebook to be too much of a chore.

“We’ve added social networking to our lives. We haven’t added any hours to our days,” Jones says. “The decision to be online on Facebook is simultaneously a decision not to be doing something else.”

Jones says many people on Facebook try to overcome that by multitasking, but they end up splitting their attention and engaging with others online only superficially.

Arwood, 47, a restaurant manager in Chicago, says she was surprised when colleagues on an English-teaching program in rural Spain in 2010 opted to spend their breaks checking Facebook.

“I spent my time on break trying to learn more about the Spanish culture, really taking advantage of it,” she says. “I went on walks with some of the students and asked them questions.”

Kariann Goldschmitt, 32, a music professor at New College of Florida in Sarasota, Fla., was on Facebook not long after its founding in 2004, but she quit in 2010. In part, it was because of growing concerns about her privacy and Facebook’s ongoing encouragement of people to share more about themselves with the company, with marketers and with the world.

She says she’s been much more productive since leaving.

“I was a typical user, on it once or twice a day,” she says. “After a certain point, I sort of resented how it felt like an obligation rather than fun.”

Besides Facebook resisters and quitters, there are those who take a break. In some cases, people quit temporarily as they apply for new jobs, so that potential employers won’t stumble on photos of their wild nights out drinking. Although Facebook doesn’t make it easy to find, it offers options for both deleting and suspending accounts.

Goldschmitt says it takes effort to stay in touch with friends and relatives without Facebook. For instance, she has to make mental notes of when her friends are expecting babies, knowing that they have become so used to Facebook “that they don’t engage with us anymore.”

“I’m like, ‘Hmmm, when is nine months?’ I have to remember to contact them since they won’t remember to tell me when the baby’s born.”

Neil Robinson, 54, a government lawyer in Washington, says that when his nephew’s son was born, pictures went up on Facebook almost immediately. As a Facebook holdout, he had to wait for someone to email photos.

After years of resisting, Robinson plans to join next month, mostly because he doesn’t want to lose touch with younger relatives who choose Facebook as their primary means of communication.

But for every Robinson, there is an Edelstein, who has no desire for Facebook and prefers email and postcards.

“I prefer to keep my communications personal and targeted,” says Jake Edelstein, 41, a pharmaceutical consultant in New York. “You’re getting a message that’s written for you. Clearly someone took the time to sit down to do it.”

___

Associated Press Deputy Director of Polling Jennifer Agiesta and News Survey Specialist Dennis Junius in Washington contributed this report.

It’s no accident that the president’s change of heart happened to make for a perfect sound bite. Nearly as fast as Barack Obama, leader of the free world, could utter the words “Same-sex couples should be able to get married,” to ABC News correspondent Robin Roberts, @barackobama — the president’s not-nearly-as-popular-as@JustinBieber Twitter account — was announcing “Same-sex couples should be able to get married.” As of Thursday morning, it had been retweeted over 56,000 times and counting.

And just like that, what had been a fuzzy campaign issue for Obama just a week ago became a defiant stance – and an easily forwarded post. The president’s Twitter and Facebook accounts wasted no time issuing a photo of Obama with his statement, under the heading, “history.” The campaign’s main page itself immediately splashed up the quote, along with the ABC News clip and the invitation to “stand up with the president.” And the campaign’s colorful, friendly-looking poster stating that “Every single American/Gay Straight Lesbian Bisexual Transgender/Deserves to be treated equally in the eyes of the law and in the eyes of our society/It’s a pretty simple proposition” popped into a place of honor on the Obama Pinterest and Instagram pages.

Elections can turn on a few provocative words – from “Read my lips” to “It’s the economy, stupid” to, simply, “Hope.” But there’s never been a time when a single sentiment could be parroted across so many different platforms. The Obama campaign knows this, and has shrewdly seized upon the immediate, visceral reaction that one sentence can inspire with impressive immediacy. Watch and learn, Romney. Though we’ve yet to see how the president’s “evolved” stance will shake out into real votes in November, for now, it sure makes for a whole lot of likes and pins. Whatever happens next, Obama’s won Twitter.