Between the Squirrel and the Ant

From many years ago, a long time before the word term “welfare state” was conjured, society (if we can ask its non-believers to suppose its existence) must have been quite a tenuous concept. Our distant relations in the animal kingdom lead quite different lives and communities. Most don’t look out for each other and it’s this lack of collaboration that means they’re not us. We live on a spectrum, positioned somewhere between a dray of squirrels and an army of ants. Democracy has accelerated nation states into looking out for its weakest and most vulnerable. Over centuries, we have shown we have become more compassionate, even though short term electoral cycles may disguise this very strong longer term trend. However it is important to recognise that these changes have been accompanied by a massive improvement in prosperity and living standards.

The tax rate once upon a time was zero. Then powerful Kings and Queens sought tax for wealth and power and to build armies to stop foreign armies invading (or to invade somewhere else). Now the representation we accept in exchange for taxation is divided left to right.

We do know zero taxation would lead to a barren lawless land and we know that 100% taxation would lead to a seizing up of effective production and our functioning. The question for every democracy and dictatorship is how much to turn the taxation dial.

Perhaps the dominating sovereign debt headlines are no different to any other debt issue. Money, representing work done, has been borrowed by those that already have money (for work done) and lent it to those who borrow. Be it entrepreneur, gambler, business or state, the borrower must generate a return in order to repay the creditor. It therefore seems that some governments have not been able to generate the return from their society that was required. If we do find that nations collapse under their own debt then this should be recognized as a warning signal that our capital has been misallocated and our ideals have overburdened our pockets to tearing point. This very alarm is a signal that we need society to generate a better return on the tax paid by and to the nation.

Collaboration has changed from one of sharing meat and fruit to sharing stored capital in money. We could also suggest that money needed to be created once society reached a certain level of productivity – otherwise why work? One may expect that short term volatility would over the fullness of time exhibit a trend of convergence to some magic and universally accepted level of taxation. However it’s very difficult to know if our society is more collaborative today compared to 10,000 years ago. Certainly we have always built upon inter-generational advancements (very possibly the defining element of being human). However answering if our predisposition (or need) to collaborate has changed over the last 10,000 years makes me want to go for a long walk in the countryside.

Honey, what have you made today?

Why is it we say we have “made” money from a good investment or we have “lost” money from a bad one? Shouldn’t we be consistent and symmetrical and say we have “broken” or “destroyed” money if things turn bad or say we have “found” money when things go well? How dare I call this hubris. We’ve chosen these words over a long time. It’s what we have found we like saying and we say what we like.

Don’t be Sauron

A long time before George Orwell was even born or Tolkien imagined the Eye of Sauron, in 1791 the British philosopher Jeremy Bentham proudly laid out his blue print for the ‘panopticon’. The panopticon was a concept prison building in which the occupants were constantly observable. Bentham was careful to define the concept as one in which the inmates were observable rather than necessarily observed. The building was planned as a circular ring around a centrally positioned watchtower. By including partitions (that were like incomplete wheel spokes) from the outer ring, a set of cells along the outer perimeter could be constructed so that the central watch tower could see into each and every cell right through to the perimeter wall at the back. No cell could see its adjacent cell. Bentham envisioned that any watchmen within the central tower would be hidden from view of the prisoners, thus introducing the uncertainty within the prisoners of their being watched. Bentham conceived that living in this permanent state of observed living would pacify the prisoners as well as leveraging resources to maximize efficiency.

We are now well into the informational epoch that ignited with Intel’s first micro-chip. We began with the original IBM main-frame concept and after spending twenty years with decentralized personal computation memory and processing power, we are now returning to the original model of centralized computing. Perhaps our detour away from centralized computing will provide important lessons for the continuation of our march along our inevitable technological path. However now we are migrating data and computing power towards cloud computing. This model which has all the wires leading to a central memory and processing unit offers an awesome potential.

This week, the Executive Chairman of Google, Eric Schmidt, explained that Google+ was built primarily as an ‘identity service’. A debate has raged: One side claims that a transparent web of true identity is a good development that will bring honesty and decency. The other side claims that our privacy is a right and this outweighs the cost of its abuse. Of course Google are a private company and have the right to do as they wish.

The famous ‘Milgram Experiment’ (Yale 1961) and the (Zimbardo) ‘Stanford Prison Experiment’ (1971) do demonstrate the dangers of an imbalance of real, or at least, perceived power.  With increased information, leveraged for the good of our diet, it is important that we know if the central Eye of Schmidt’s comment ‘might blink’. After all we need to know what we are leveraging. We as a society have the right and currently the privilege of giving and restricting power, but for this to remain so we need to know the extent of any powers.

Bentham may well have argued that the mere possibility of being observed online would act to moderate our behavior. The application of observance by means of the penopticon prison did of course apply to criminals and not ordinary citizens. We should at least recognise that we may be led by stealth into an infrastructure looking very much like a cyber penopticon.

 

The creeping divorce of interest and capital

There always seems to be big events in August. The level of gold has hit its record levels and sits smugly in vaults around the world. The high prices that have been paid for gold are a signal that there are no better investment homes for the money. The volatility we’ve seen teases out and amplifies the fundamental (and often balancing) characteristics of our nature. This has been a big display of capitalism in action.

Capitalism suggests that capital and other factors of production, combined with the wisdom of crowds will find the most efficient utilization. It is the question of how the wisdom of crowds allocates the capital that we will now consider. Let’s think about what the typical private investment looks like: Overwhelmingly this is likely to be an investment, either advised or self-advised, into the stock market. Would it be fair to argue that these investors are bound only by their capital with these companies? If this is true then the ‘investment’ is simply a purchase of securities based on some belief that the value of the company will appreciate. This could actually already be defined as speculation rather than investment – perhaps this is actually the blurry distinction between the two? If the only contribution is capital, then surely this should be recognized as speculation rather than investment. An increasingly capitalist system would see a transition from passive investments to an arrangement where more is demanded from the investor in terms of value added factors. Rarely is the question asked  “what comes with your money”?

New start-ups begin with partnerships that very often demand a higher level of participation than simply capital contribution. Examples of this are ‘angel investments’ and a large part of venture capital. Beyond these stages of company formation, all further capital infused usually comes without representation or other benefits (ignoring voting rights since they arguably represent a governance control rather than a form of value added contribution). Many start-ups do seek value added money infusions and the popular BBC television programme called the ‘Dragons Den’ does show aspects of competition between the investors beyond monetary investment. However, the extreme world in which all investors are forced to participate in their investments could be case of overkill. Like most solutions, the answer lies somewhere in the balanced middle.

Since the major transport (canal and rail), industrial (steel and mass production) and technological (micro-chip followed by dotcom) revolutions , we have moved towards a model of a divorce between people and their capital. The owners of the capital have decreased their participation in the investment and now see their function as that of laying their wager only. Is it fair to say that this is an abdication of responsibility? I fear the ease at which money may be perceived to be made will reduce the overall effectiveness and net output of our current economic paradigm. Large swings in wealth occur on the stock market but does this change in the wealth of the investor represent a change in the value that either the winner or loser is personally bringing to people? Perhaps my goal here is to  encourage an understanding of what an ‘investment’ reasonably ought to entitle and to call for a reality based appreciation of the value of  contributions made by investing.

I do believe that ultimately the Technium leads us on its inevitable arc over the long term but here and now in the shorter term, there’s plenty of time for deviance. Capitalism is not the end but a step towards a closer alignment between dedication and capital.

Progress comes in long term cycles

Mania’s always indicate some revolutionary change to the technium. Revolutions are a bit like cosmic explosions in that they leave us with an abundance supply of core fundamental stuff from which we can use and make more complex stuff which is helpful in making yet more complex stuff. Yet these boom and bust cycles that very often are based on a core infrastructure leave long term capacity for new technologies to build with.

The ‘canal mania’ in Great Britain in the 1790’s became a frenzy of joining any two sources of water. There was little standardization in dimensions or routes of the waterways and this poor overall coordination and synchronization was also symptomatic of route planning of the ‘railway mania’ of the 1840’s. Following the Carnegie Steel revolution in the 1870’s,the 1900’s was the age of oil and the automobile all made possible following in the new age of mass production initiated with the Model T Ford in 1908. It is important to recognize that this age didn’t end with The Great Depression, begun in 1929. This did mark a shift in the economic, political and social paradigm to this new age. The extensive road and electric supply this left the USA was of enormous benefit during WWII and was the platform from which the now mature economy was able to build from and upon. This successful economy was driven by an enormous domestic mass consumption market leading to the ensuing years of complete global dominance. The depression years were barren, but during this time the new technologies were waiting for the time they could be deployed en-masse.

The Dot Com bust at the turn of the century left us using only a few percent of the total fiber optic cable that had been laid. However, in almost all these examples, it takes a crash before the new infrastructure to become deployed into society and our lives. It is almost as if technology development is faster than our acceptance of it, and this can be argued since the companies developing them are doing so for economic reasons, whereas society at large do not have such a powerful motive.

If you could in the 1960’S buy five cars for the price of one computer and in the 1990’s twenty computers for the price of one car we can see how the technology of the previous incumbent revolution becomes ubiquitous and the focus is on the next new leap.

The internet is an infrastructure that is supporting a growing family of new infrastructures that themselves support businesses and service. Over the coming decades it will be important to drop the label of ‘internet company’. After all any company that used the road network built in the US during the first half of the 20th century would not be labeled a product of the boom that caused  Great Depression.

To be bullish on the future implicitly implies and is implied by being bullish on tech. The new tech.

You can’t make decent content if you’re in a suit

Following a very interesting talk on ‘Social Media’ at the British Chambers of Commerce, the après was fascinating in its actual focus. It seems the whole world wants to get information out. Every business recognizes that they need to be involved in social media and needs to get their message out. There were repeated questions in search of examples of winning social media strategies which may be cloned. Everyone wants new ways of creating interesting Twitter fodder and YouTube fun. The stampede to create content is underway and in full charge.

When large groups of non-media companies are discussing creating a Twitter-post agenda then something doesn’t quite feel right. Energy and focus on getting information out may actually turn out to be like effort spent alchemizing.

Would companies be better off reversing the flow and try to seek information? By this I mean ideas, advice and guidance for better products, streamlining of services and enhancing user experience? At least one sub-goal of any company is to make better products or services to enhance future profitability. What better is there to beginning to achieve this than to seek opinions from the users or potential users.

Car companies should focus on building better cars not blogs. How many people buy a Blue car because the Blue Company has the best blog? Of course companies need to produce quality, well presented information, but if they are competing to win attention to satisfy some measure or sales metric then it becomes hollow and frustrating – especially when it serves no purpose and the content is clearly sub-par.

It does become a rather fruitless struggle for non-media companies to compete in the content business. Social media is not new. Word of mouth has been around since one came out of the other, but only recently has the grandiose ambition of industrial companies winning attention for more than their purpose of marketing become common practice.

I’m not arguing against content, I’m just arguing on who should produce it. Data is for companies to produce, but surely content should be from the fans. Wise companies will listen to their fans and detractors. Any efficient economy or company will have resources seek their most productive niche. The best content providers shouldn’t be wasted on making a blog for the Blue Company and neither should the Blue Company try to dominate our time to just sit on their blogs. They have to serve a purpose. You really can’t make content worthy of attention while you’re wearing a suit. Neither should you try.

 

Googled: End of net neutrality by stealth

Google will soon begin to pre-load a page which their algorithm deems the most likely you will choose from their search results. This is a great idea and will save time for everyone.

However this does come with theoretically embedded risks to a principal Google believe in. In particular net neutrality. If Google control the speed at which sites may be accessed this will have a significant impact on where users go and indeed whether they stay at the site (likely if pre-loaded) or go (likely if not pre-loading and the site is slow to appear).  What if Google began to prioritize pre-loading to those that have paid for it to be? Would this world be net neutral?

Information Revolution

In order to fund renovation in the early 16th century to the St Peter’s Basilica, special pardons of written forgiveness began being sold by priests throughout Germany. Official absolution was found and granted through the purchase of these ‘indulgences’.

A saying attributed to Johann Tetzel, a priest who begun selling these in Germany, says that “As soon as the coin in the coffer rings, the soul from purgatory springs.”

The German priest and Professor of Theology, Martin Luther, aghast when he saw these letters amongst his parishioners in 1517 wrote to his superior and included what became known as his ‘Ninety Five Theses’ in opposition to this practice and other practices of the Catholic Church.

History tells that this writing was also nailed to the door of Luther’s Church door. Several months later the original script, which was written in Latin, was translated into German and printed by a number of printers using the technology that Guttenberg had created to first print the Bible in 1455.

Here the Protestant Reformation and the family tree of a completely new world history was born.

The cost of that picture from Soho

There seems to be a Soho in every trendy corner of the world and of course in these places there’s a lot of hi-tech gadgetry on show as part of the regalia. We had a really nice window seat that let you look right up the street and into the restaurants along it. Up the street walked Elvis and as he approached the restaurant right across from where we sitting it was hard not to notice a guest usher him in and tip him well to sing to his friends. Elvis did his rocked his pelvis as the friends all clapped and cheered all except the usher who sat uncomfortably to record the stunt on his phone. The big question this poses is can we have fun without taking a picture to prove it? That picture will remind people of the fun Saturday in Soho but from one person’s lens it will be forever a missed opportunity. Though, maybe it was a sacrifice.