Are You a Sheep?

The old metaphor of wolves and sheep is well-known. Sheep aren’t really managed by wolves. They’re managed by shepherds. The wolf represents an existential threat to sheep, but the shepherd represents the guide.

So what’s the difference between the shepherd and the sheep? Sheep only take their guidance from the shepherd (and the shepherd’s dogs). It is assumed that the shepherd makes his (or her) own choices. At the very least, the shepherd gets input from a variety of sources.

Does the sheep believe it is being controlled? There’s no way to know for sure, but if they are getting food and water and enjoying the comradery of their fellow sheep, they probably believe life is good. If life is good, then just maybe it is a result of making good choices. It’s easy to believe that you’re in control -- even if you’re a sheep.

So how can you test to see if you’re a sheep or not? It might actually be easier to test to see if you’re a shepherd. Here’s some question you can answer:

1. If you are affiliated with a political party, do you spend any time investigating the perspectives of the other party from their own materials?
2. Do you get your news from more than one or two well-aligned sources?
3. Do you have any close friends who do NOT share your core ideological beliefs?
4. When you need to make a decision, do you seek out people with opposing views to help you decide?
5. When you get into a debate with someone who disagrees with you on deeply embedded beliefs and they make a good case, do you change your beliefs?

If you answered “yes” to all of these questions, you are a shepherd. If not, you might be a sheep. Maybe it’s okay to be a sheep. We all know that for every shepherd, there are lots of sheep. Maybe that’s the natural order of things.

My struggle with this is that shepherds raise their sheep for purposes of self-aggrandizement at the sheeps’ expense. The term “getting fleeced” is one example of how this metaphor translates to the human experience. “The meat market” is an even more ominous outcome. In the end, the shepherd seems to come out better than the sheep. So, I will opt to be a shepherd. It’s more work and can sometimes be uncomfortable letting go of long held beliefs, but it seems like a fair price to pay for real freedom.

Raging Against the Machine

As I gather more years on the planet, I continue to learn. I learn about humans individually. How they think. What motivates them. How they respond in social situations. And, in all of this, I have learned more about myself.

I sometimes ponder whether there is some limit of unfairness or cruelty beyond which I would become violent in order to defend common decency. I’d like to think that I am a nonviolent person, but I’ve probably never been tested like others have.

Recent acts of fatal violence both individual and collective (I won’t glorify events by naming them) may well be a sign of rage. Rage could be the most dangerous of human emotions. In the hands of a man (or woman) with power of any sort, rage is always destructive. Even if only self-destructive.

What seems interesting is that from destruction comes renewal. It may simply be that humankind has developed an evolutionary mechanism that is specifically designed to refresh a stale system that no longer serves the masses in a reasonably equitable manner.

Many of us think that this sort of rage violence is on the rise.This is very unlikely. What we experience today is what Daniel Kahneman (in Thinking Fast and Slow) refers to as reporting bias. I’m pretty sure Kahneman didn’t coin the phrase, but he did do a nice job of explaining it. Essentially, one of the big differences between pre-electronic history and today is anonymity. Today, it is increasingly difficult to do anything significantly destructive in public and have it completely escape public awareness. Back then, it was just a hell of a lot easier to cover bad stuff up. So, when you consider population growth and reporting bias together then we’re probably doing better as a species than we have in the past.

Let’s face it, in the old days, humans probably burnt down the village for a lot less than we get pissed off about now. But, that doesn’t mean we’re over it either. Maybe societies always eventually arrive at an existential tipping point; where the abyss is better than the status quo. Maybe isolated acts of individual and collective violence are a run-up to the “big rage.”

If we are evolving socially, maybe one day we won’t need to burn down the village to salvage our future. Maybe we can tame that inner beast and find the middle way. Halfway between destruction and complete acceptance comes hope. Hope that those who are exploiting the masses (you know who you are) will finally stop deluding themselves into believing what they do is for the greater good. Everyone will know what the “greater good” looks like when they see it. In recent polls, between 28% and 31% of Americans think we’re moving in the right direction. That number is dangerously low.

How low does that number need to get? It doesn’t really measure the intensity with which those people feel the direction is wrong. Intensity is an important part of what fuels an emotion like rage. If we could measure that too, maybe we’d have a better idea of where the tipping point lies. We have seen people take to the streets in other countries. Most of the time, they still resort to burning down the village.

I am reminded of Gandhi admonishing his followers for calling him a pacifist. His actions were anything but passive. However, he always spoke against violence. This seems to be a trait that many “great” people share. Maybe one day we’ll all share it. Just maybe, we could all learn to love each other. \o/

Wasting Money on Money

Some estimates put the daily trading volume of currencies at $5.3 trillion. This means that every day, the people who are buying and selling money (preferably for a profit) are transacting 25 times the amount that is traded globally for goods and services.  Let's look at that in graphic form.

What is wrong with this picture? Well, I'll tell you: every dollar that isn't invested in goods and services takes away from social progress, jobs, and technological advancements that could save our planet.

What could we do if all that money was working for "we the people" instead of bankers enriching bankers?  For starters, how about solving our energy problem? If we used a couple day's worth of that volume on fusion reactors, we could chip away at the energy problem that is consuming our planet faster than anything else. We could build desalinization plants that utilize that fusion power to pump fresh water into California, which is a desert that happens to also be the bread basket for much of the United States.

The thing is, the technology for all of these things exists. The problem is funding. While trillions of dollars are tied up in markets that do nothing but enrich the traders that are participating in them, companies and research entities that are attempting to improve the human condition are starving for capital.

Let me be clear about something. This is not a condemnation of all bankers. Most smaller banks make an honest living by making loans to real businesses. Every day, they take calculated risks on real people who are providing real goods and services in the marketplace. Without them, capital would not flow and new businesses could not flourish.

If we simply eliminated derivatives and currency trading and forced investors to take the same risks on real companies providing real goods and services, the amount of money that would flow into the marketplace is hard to fathom (well, look at the graph above to get some idea).

Maybe it's time to stop the madness. We cannot expect the power brokers in government to do this.  They are part of the system that created this mess. It would be like asking the fox guarding the hen house to please stop eating chickens. Good luck with that! No, "we, the people" are going to need to rise up and demand this.

I can hear the currency traders now. They will tell us that without them, currencies would become unstable and economies would collapse. They are right. As long as we have a global currency system based on nothing, this juggling act must continue. However, if we were to go back to the gold standard or some sort of cryptocurrency like bitcoin that cannot be manipulated by monetary policy, currency would become a stable variable in the economy.  This would force actors to manipulate other aspects of the system. This would be a good thing. To learn why, you'll need to do your own research or wait for another post. Special thanks to George Gilder for sparking some of the ideas herein.

Evolution Vs. Technology

Last night, I was listening to a TED talk and the speaker pointed out that the total amount of human knowledge is now doubling every 18 months.  This is a staggering fact that has implications beyond imagination.  Since I love a challenge, I will imagine anyway.

It seems to me that the biggest challenge humans face is that biological evolution is slow.  Our basic nature is still stuck in a time when avoiding being consumed by a lion was one of our primary concerns.  Not starving to death was also high on the list.  These basic needs to survive and propagate our genes motivated our behavior.

Today, basic survival is almost assured.  With the technology available to us, every human on the planet could live in relative comfort, prosperity and peace.  While some of us might be able to overcome our evolutionary heritage to enjoy these circumstances, there are many who need to exercise their prehistoric drive to “survive.”

The prehistoric drive to survive is an aggressive affair that usually involves winners and losers.  This was tolerable when the loser got the tip of a spear or the blunt end of a club.  However, when the weapon of choice is a nuclear device or an autonomous killing machine, technology tips the balance of our underlying nature into something intolerable.

The question that has been on my mind lately is: can we overcome our prehistoric nature?  As technology progresses, the power individuals will have at their disposal for destruction will be so great that we can no longer count on the fact that there are only a few people who need to be closely watched with that sort of power.

How can we manage if the average person can gain the ability to destroy an entire city?  Or, country?  Michio Kaku, the great physicist and philosopher has pointed out that one reliable way to measure the advancement of a civilization is to calculate the amount of energy the average individual controls.  The implication here is that as time goes on, individuals will have increasing power at their disposal.  Their instincts could drive them to use that power to remove obstacles to their “survival.”  How we define survival as individuals and societies needs to change.

This is not a small thing.  It is fundamental.  It is difficult.  It is critical to our survival as a species.  In reading philosophical works, one theme seems to return on a regular basis; altruism is an advanced sociological trait.  At our current evolutionary state, altruism tends to be genetically based.  We would sacrifice ourselves for our offspring.  We might endure extended hardship for our immediate family members.  We might even put ourselves out for our community (however that gets defined).  Humanity?  Not so much.  All life on Earth -- forget about it.

We’re currently in the midst of a mass extinction.  This is not conjecture.  This is a fact.  What is also a fact is that humankind is the cause of this mass extinction.  I slept well last night.  Did you?  I have heard stories of dolphins rescuing fishermen who have fallen overboard even as they were being hunted.  If this is true, that is an exhibition of interspecies altruism.  To be sure, there are humans who have put their lives on the line to protect other species.  Unfortunately, this behavior is spotty at best.

When humans achieve the proper level of altruism, the effects will be obvious.  We will readily compromise our own standard of living to ensure that others are not suffering.  We will be so sickened by the suffering of others that we will be immediately (almost involuntarily) moved to action.  We will not accept conditions that allow others to be controlled for the enrichment of their controllers.

We are at a critical juncture in history.  If we don’t go to work soon to make a concerted effort to change our underlying nature, our technological advancements will outstrip our ability to to manage them.  We can’t expect individuals on a mass scale to instigate the social changes necessary to avert this looming disaster.  It will require extraordinary leadership -- something we have seen little of lately (see my article about Meritocracy).

In the movie Starman, the alien character played by Jeff Bridges, having observed humans for a few days commented, “You humans are beautiful.  You are at your very best when things are at their worst.”  Things could get very bad very quickly.  I hope Jeff was right because we’re going to need to do some major adapting.

The Mind, Body & Spirit of an Organization

The other day I was having a conversation with a coworker about what had gone wrong with his grand vision for a technology platform we are implementing.  He was frustrated because he had employed excellent architecture and even did the legwork to implement it to the point at which the concept was put into action.  Nonetheless, he was meeting resistance.

This gentleman (we will call him Abe) is a very pragmatic fellow and a brilliant technologist.  His ideas always seem to me to be well thought out and backed by a solid scientific and logical foundation.  This one was no exception.  Where did Abe go wrong?

If ideas represent the mind of an organization and implementation the body, then what is the spirit?  I would contend that every organization has a culture that transcends the mind and the body.  It is this aspect of an organization that forms its spirit.

Like many spiritual pursuits, organizational culture shares a certain amount of ambiguity that requires both knowledge and faith.  It requires one to have a deep understanding of the past in order to be able to properly interpret current events.

That’s why within an organization, there are those people who have been around a long time who are the keepers of the faith.  Sure, there may be some “non-believers” who have resisted the corporate culture for a long time, but most people eventually see the righteousness of the path of culture.

When the spirit conflicts with the mind and body, it usually wins.  Logical arguments don’t hold up well in the face of spiritual pursuits.  It is best to accept them and find a way to work within the confines of the spiritual tenets of your organization’s particular denomination.

This was the advice I gave to Abe.  Abe worships at the altar of the mind -- a true humanist.  However, the people he needs to convince of the righteousness of his path are believers.  They see the world differently and Abe will need to live in their world if he wants to influence it.

When the Punch Bowl Gets Stolen

Someone once defined the role of the Federal Reserve Board as the ones who job it is to steal the punchbowl just when the party really gets started.  The reason for this is because "The Fed," as they are oft referred, has one primary job -- to protect wealth.  You see, if inflation gets out of control, then people who owe money, which is most of us, get a break because the money we use to pay back our debts is worth less than the money we borrowed.  Unfortunately, lenders (like banks) get screwed.

Since bankers and other rich people mostly control the government, it should come as no surprise that policies designed to keep inflation down are paramount.  What's happened recently seems to be some sort of selective inflation.  The basics, housing, energy and healthcare are all getting very expensive.  The only thing that has been protected is food.  Our government knows from history that if food gets too expensive, revolution isn't far away.  So, they keep food cheap along with smartphones and cable TV. These rising costs are small for rich people, but represent a large portion of the bills us less wealthy people pay.

In the past, when the economy struggled, The Fed would lower interest rates.  This made it cheaper to borrow money and that helped get the economy going again.  Now, interest rates so close to zero that they don't matter to the types of people who borrow to help stimulate the economy.  So, when the banking industry got caught with their pants down in 2006-2007, lowering interest rates was not an option.

The Fed also has the ability to print money.  In the past, when they printed money, they had to be careful not to cause inflation (remember, that's bad for them).  Keep in mind that The Fed is not the government.  They are bankers.  Bankers print money as a last resort because of the risk of it causing inflation, so when they do it it's because they're trying to avert a rather large economic disaster.

When the housing bubble burst, they tried something that seemed new.  It's called Quantitative Easing.  Given that the vast majority of money is now electronic, printing money is no longer the answer.  Everything is done by computers.  Quantitative Easing (or QE for short) is a way to make money just by changing the electronic balances on certain accounts.  So, when The Fed "buys debt" from banks who have bad loans, they are using their power to magically make money appear out of nowhere to reduce the debt balance at the bank and thereby "give" them more money to work with.  That's QE!  The money comes from "The Fed."  Where do they get it?  They make it up -- that's where.

So, why wouldn't this cause inflation the same as printing money?  Excellent question!  The answer is that our economy is based on nothing but faith.  Our economy is the same as a religion.  You don't need hard evidence to know god exists; you just need faith.  And, that's all you need to believe that our economy is solvent.

As long as rich people don't panic, the system is essentially safe.  Here's the thing -- our system is really messed up.  Our actual reserves are way way lower than they should be and investors have made margin bets with money they don't have.  These bets on derivatives and stocks and bonds, are backed by nothing.  If something happened to cause the market to crash and all of these bets were called, there just isn't enough money to pay them off.

Unfortunately, since it is bankers making these bets, they have also taken the liberty of writing laws to ensure that they get paid first if money is owed to them.  Given the size of these debts, there won't be any money left for us regular folks.  The only option is to print more money to pay everyone off and hope that nobody complains.

That's what the bankers have been doing lately.  When things get bad, they print money (or QE it into existence) and hope that nobody notices.  So far, they haven't.  How long will this charade continue unnoticed?  It's impossible to predict.  If you asked an expert 100 years ago about the three trillion dollars that were made up in the last crisis, they would have said there's no way it would go unnoticed, but it did.  How big will the next bailout be?  Can it go on forever?  I don't know, but I do know that there is $3,000,000,000,000.00 more out there than there was 10 years ago and nobody earned it.  No company made it in profit. There was no economic activity in the "free" market that created it.  That, my friends, is not capitalism.  I don't know what it is.

QE is the only trick The Fed seems to have left.  Let's hope it keeps working, because if it doesn't, our whole economy is going down.  That's what I call stealing the punchbowl!

One final note, if you want to hedge against a potential collapse, consider buying some bitcoins.  The supply of these is controlled by an computer algorithm that no government controls and cannot be manipulated.  When rich people start running for the door, this is probably where they will run to.  If you think bitcoins are expensive now, imagine what the price would be if billions of dollars (and Euros and Yuan...) were flooded into them in the early hours of an economic meltdown.  Sooner or later, even rich people may stop trusting The Fed to protect their net worth.  Then, we'll have real trouble on our hands.

The Dollar - Ripe for the Picking

In recent times, there have been several popular books about events that cause significant change.  If you've read The Tipping Point by Malcolm Gladwell or The Black Swan by Nassim Nicolas Taleb, then you already have some understanding of how some events can be predicted even when the timing is elusive.

Since the United States abandoned the gold standard in 1971, the U.S. dollar has been based exclusively on  the faith and credit of our country.  Initially, the dollar maintained some pace with our gold reserves and people had confidence that the value of the dollar was backed by tangible assets.

Since that time, the global economy has changed dramatically.  The once powerful U S of A finds itself buying many of life's necessities and niceties from foreign economies.  Our trade deficit continues to climb even as we loan money to other countries.  Every country on the planet has substantial amounts of debt both public and private.

Were all this debt to be fully reconciled, we would all quickly learn that the global economy isn't solvent.  It is based entirely on debt and there isn't enough money in the world to pay it all off.  Again, this is not a distribution problem.  We have created a fiction with no controls to ensure its stability.

So, what does ensure its stability?  Answer: belief!  As long as we all believe that the global economic system is sound -- it is!  This brings us to the tipping point and black swan events.  What would it take to destroy our belief in the system?  In all likelihood, not much.  It is impossible to predict who, how, or when such an event might occur.

When it does, the evidence to support the claim will be overwhelming.  It already is.  Banks are over-leveraged, personal debt is high, and even gold is now being leveraged with metal funds sporting minimal reserves of actual supporting gold and silver.

There are powerful forces attempting to ensure that our economy remains stable.  When the interest rates were dropped to zero, the Federal Reserve lost its main lever for controlling the economy.  As a result, they switched to buying debt (quantitative easing).  The problem with this is the Federal Reserve actually doesn't have any "reserves."  When they buy things, they pay with money they print (they are after all the only ones who can print money).  Quantitative Easing I and II were both designed to stimulate the economy by pumping huge amounts of new money into the economy.

What is the effect of putting so much money into the economy?  The history on this action has not yet been written.  If it does not end in disaster, will the Fed do it again?  How much money can be pumped into an economy before disbelief sets in?  In all likelihood, we will find out eventually.  When that day comes, I hope you've made yourself Antifragile.  You'll need to read Taleb's sequel to The Black Swan to find out what I mean by that.

Technology: The Job Killer!

Once upon a time, there was an argument that technological breakthroughs actually created jobs.  The argument was so compelling and replete with empirical evidence that most people accepted this as a fact.  The automotive industry created millions of jobs as did the modern textile industry.  The industrial age was good to the average worker.

Then came the information age.  Technological breakthroughs came fast and furious.  The industry was born out of nothing and it created plenty of new jobs.  When a few people started to suggest that maybe some of this new technology was stealing jobs from humans, Those responsible for the health of the economy trotted out the old argument that technology creates more jobs than it eliminates.

That may have been true at one time, but technology has reached a tipping point.  With so much of our manufacturing capability being highly automated, new breakthroughs aimed at "increased productivity" are really targeted at maximizing the use of capital -- and I don't mean human capital.

Let's not kid ourselves.  Technology doesn't need a vacation.  It doesn't need time off for a sick kid or a death in the family; and its maintenance contract is undoubtedly far cheaper than the healthcare for the workers it replaced.  Technology that replaces people almost always increases the efficiency of capital.  This is the embodiment of maximizing profits -- the goal of any economic endeavor.

So, as robotics and mechanical systems have gotten more sophisticated, more and more blue collar labor jobs have been replaced with technology.  What about sales jobs?  Well, now we have integrated voice response systems, interactive websites and stay tuned for chat-bots that are almost impossible to tell from a human.  We may still need good salespeople, but not near as many of them as we once did.

 "Get an advanced education," is the cry of our beloved leaders.  Just be careful which path you choose because those jobs aren't safe anymore either.  There are now artificial intelligence algorithms that can write world class classical music, diagnose disease better than most clinicians, and invent new interesting chemical substances faster than any chemist.

Our government hides the truth from us in their unemployment numbers.  Many families have given up on two incomes.  Many children continue to live with their parents well into their twenties and even thirties.  Our economy is being hollowed out by technology.  If you don't think your job is in jeopardy, just keep watching.  New technology is coming to get ya!

Pretty soon, business owners will hire employees just to keep them company.  People won't need to do any work.  They can just watch it being done by technology.

Trajectory: Transparent Distributed Networks

History has a strange way of showing up after it becomes obvious.  Sometimes, events are spontaneous, like 911 and other times they are gradual like the industrial revolution.  One thing should be clear by now, history is speeding up.  The time between major social evolutionary stages is shortening.  This compression helps us see around the corner a little bit better.

The Internet hasn't been around that long, but its effects have been profound.  Many people sense that the Internet is responsible for a fundamental shift in our reality, but it's hard to grasp exactly what that shift is all about.  There are so many aspects to life on the Internet that the big picture gets muddled.

Nonetheless, many of those who are attempting to tease out the big picture are starting to converge on a common theme.  The Internet is driving two fundamental changes that are inextricably tied together and seemingly inevitable: transparency and decentralization.  Let's start by looking at each of these separately.

Transparency

In the age of the smartphone and Google Glass, everyone has a camera with them at all times.  They are able to provide full audio visual capture of just about any event -- public or private.  This makes secrets increasingly difficult.  Furthermore, sites like Facebook, Reddit and Digg make it easy for anything of significance to "go viral" within hours or even minutes of the event.  Whether from groups like Wikileaks and Anonymous, or individuals such as Edward Snowden, no secret can be too well kept.

Our love affair with secrets and privacy runs long and deep.  Yet, we are increasingly opening our lives to each other and this trend sees no signs of abating.  Technology will continue to evolve to make surveillance of every aspect of our lives easier and more accessible.  Drawn to its ultimate conclusion, it is not impossible to imagine a time when our very thoughts will be linked through some future incarnation of the Internet.

Decentralization

One of the other gifts of the Internet is built into its initial design.  The Internet was originally conceived as a communications network for military applications that could not be destroyed by attacking a central point.  This design has allowed anyone with a persistent connection to publish their own content.  One of the initial uses of this capability was music file sharing.  The music recording industry quickly came face-to-face with the full force of decentralization.  Without some central authority to pursue, they were forced to find ways to add value in order to get people to pay for music they could easily get for free.

Recently, the crypto-currency Bitcoin has emerged as another decentralized powerhouse.  Again, anyone with a computer can become part of the Bitcoin ecosystem.  In addition to being decentralized, Bitcoin is also transparent.  Its underlying algorithms are available for all to inspect.  Governments don't like Bitcoin.  Were it to become a standard global currency, it would eliminate their ability to manipulate it.

The latest edition to decentralized structures is Ethereum, which promises to go beyond crypto-currency to provide an open decentralized platform for creating any type of contract between multiple individuals.  Systems like this will allow any individual with a good idea to start a distributed ecosystem that is free from centralized control or interference -- even by its creator!

What Does it All Mean?

Governments have always been controlled by a few rich and powerful people.  In the past, socialism has been attempted to counter this trend, but it has always been corrupted by the powerful few due to lack of transparency.  The Internet and associated technologies offer a means to truly democratize decision-making.  Rather than basing choices on the whim of people, algorithms can be created that are decentralized and transparent that allow them to be optimized for the greater good.

This may seem idealistic.  One could easily argue that any system is corruptible.  Maybe so.  However, with transparent distributed systems, corruption is more difficult due to the risk of exposure caused by transparency and the logistics of co-opting widely distributed systems.  When attempts to do so inevitably fail, algorithms can be modified to eliminate future threats along the same lines.  We already do this with our computer operating systems and anti-virus software.

What if we could all purchase a power plant for the price of a car that would provide us with all the energy we would ever need?  What if we had autonomous flying vehicles that required no navigational infrastructure other than the ability to communicate with the vehicles around them?  What if we had a 3D printer (i.e. replicator v1.0) that could make many of the items we need?  And, what if we all got our food from our own garden and local farmers?  Do you see the pattern here?  Technology enables us to be increasingly independent.  

The less we rely on corporations and governments, the less power they have over us.  As their power diminishes, so does their relevance.  Ultimately, they will need to redefine themselves or fade into the dust heap of history.  If there is one great irony it is that a government funded program and a few huge corporations may be the primary enablers of their own demise.

A Driver's Lament

For most of my career, I've had a long commute.  I've put a lot of miles on a lot of cars and I've seen drivers of all types from timid drivers who go too slow to road ragers that would wish everyone into the corn field if they could.  What strikes me as most interesting is the juxtaposition of two very different spaces and how they affect people.

Unless you're using Zip Car or some such service, you probably own your own vehicle (or the bank does).  When you get into your car, you are in your own private space.  Your things are around you, your music or radio station is playing.  It's like a little piece of home on wheels.

Meanwhile, your vehicle is on a public road.  Public means that it is a shared space for all to use.  The idea of a public space carries very specific social meaning to us.  There are certain behaviors that are simply unacceptable when one is in a public space.

What makes driving unique is the private bubble containing us while we operate within a public space.  I have observed that many people exhibit private behavior patterns when they drive.  Behaviors which I have a hard time imagining they would exhibit if they weren't in a car.  For example, when was the last time you walked up to the front of a long line (queue for you Brits) and just stepped in front of the first person?  Unless you are a bona fide  sociopath, the answer is likely "never."  Yet, how often do you see someone zooming past cars piled up in the only remaining lane in front of a lane merge during heavy traffic?

Somehow, the private space of the vehicle causes many people to forget their manners.  The great irony is that the line-cutters anger others into doing the same.  The result is a pile-up at the choke point that would not even be there if everyone got into the only open lane before traffic began to constrict.

We see antisocial behavior in cars all the time.  People double park and then go to a meeting or to their offices or to the mall and behave like perfectly normal human beings who understand the rules of public behavior.  Maybe we need a new public relations campaign.  The slogan could be:

DRIVING IS A PUBLIC ACTIVITY.  ACT LIKE IT IS!

Capitalism With Limits Part 2

In my last post, I finished by leaving lots of money in the hands of government.  The challenge with governments is they encourage the consolidation of power.  Unfortunately, those who seek power are usually the first to be corrupted by it.  Our government is no exception.  We are not drawn to great leaders.  We are drawn to charismatic orators who have a knack for appeasing the largest number of likely voters.

If government is to succeed in supporting people, it must become more distributed.  Distributed structures are much more difficult to corrupt.  Transparency is only a good start towards making shared systems work.  They must also be based on algorithms.  Bitcoin is a good case in point.

There are lots of powerful people out there who would like to see Bitcoin fail.  Why?  Because is is a currency with no central control.  It operates on an algorithm that is available for anyone to understand.  It's functioning is transparent.  There are no backroom boys pulling levers to affect its supply or demand.  It is not subject to fiscal policy or monetary policy or the whims of governmental meddlers.

Governments already use algorithmic controls for things like traffic. Projects like Google's driverless car show that algorithms can be used for highly sophisticated problems.  The system is both adaptive and heuristic.  So, to conclude, creating transparent algorithmic solutions to any governmental management problem is within our technological reach.

This begs the question: what is the optimal distribution of wealth?  The following chart from the Center on Budget and Policy Priorities tells the tale:

After the great depression, lots of personal wealth was wiped out.  The result was unprecedented equality in income distribution.  The U.S. economy has never been stronger before or since. However, the insidious nature of capitalism to concentrate wealth once again took hold.

In 2006, we were due for another reset, but the government forestalled the inevitable by printing money -- lots of money.  This works for us because oil, still the #1 source of energy, is traded in dollars.  So, there's little incentive for anyone to see the dollar tank.  This won't be the case as we move away from an oil based economy -- another good reason to step up domestic oil production.

Back to my wealth distribution algorithm.  Clearly, we have data to support at least a starting point for good calculations.  By creating a system of distribution based on math rather than power struggles, we can ensure a vibrant economy.  But, what about jobs?  Clearly, the most efficient use of capital is to invest in the reduction of humans -- the most expensive asset a business has. We cannot expect the capitalistic markets to support work for all citizens.

Fortunately, our aging infrastructure needs lots of help to bring it into the 21st century.  There are lots of jobs available.  They just aren't commercially viable.  With all the new-found wealth in the hands of government, these infrastructure projects could be funded.  People who can't find jobs in the commercial sector will work for the infrastructure sector.  Of course, this means deciding once and for all which parts of our society constitute "infrastructure."  Some things should be easy: roads, power grids, water and waste.  Others may be more difficult to decide: space exploration, transportation and mail delivery.

What seems clear is that our aging infrastructure is bankrupting our country, the commercial markets are not creating enough jobs for full employment, 99% of the population are fighting rising costs and diminishing income, and those in power are doing nothing about it.

A redistribution of power means a redistribution of wealth.  The United States is a very wealthy place, if we can build a controlled and sustainable form of algorithmic sociocapitalism here, maybe the rest of the world would follow suit.  This will be essential if we are to keep capital from seeking environments where extreme greed is tolerated.

Capitalism with Limits

I was watching a movie the other day and one of the characters said the top 84 wealthiest people in the world control more economic power than the poorest three billion.  I don't know if that's true, but if the chart on the left is accurate, it's probably not far off.

We talk a lot about growing income disparity in the United States, but the insidious nature of the global economy is that income disparity is now a global problem that cannot be solved by national initiatives.

If one government attempts to choke off the wealth creation abilities of certain individuals, they will simply seek residence elsewhere.  There will always be some country willing to allow individuals to accumulate as much wealth as possible.  Our history as a species has retold this story many times.

1. A society is born
2. Everyone feels good about it and everyone pitches in to make it work
3. Society prospers and life is good
4. A powerful wealthy class emerges
5. The power class consolidates power and wealth at the expense of all others
6. All the others finally get fed up with their condition and the disparity with the power class
7. Revolution!

This story is so common in our history that it is far more difficult to find examples of smooth transitions of power.  If you're looking for a smooth transition that doesn't involve an external colonial power, the search will be even more difficult.  Why?  People with power never seem to want to lower their standing for the greater good.  They always believe in their own legitimacy, no matter how stacked the system may be in their favor.  

Is it possible to have an effective redistribution of wealth without a revolution or other form of massive social upheaval?  Maybe.  I have a simple idea that just might work.  It would require a global treaty, but it could be implemented by individual countries.  The basic premise that one must accept before seeing the value of this idea is simple:  taxation is ultimately a form of wealth redistribution.  When kings taxed the peasantry, they were redistributing wealth to themselves.  In the U.S. we use tax money to pay government workers, contractors and welfare recipients. 

So, if the tax code can be used for that purpose, why not be clear about it?  To make this work, we eliminate corporate taxes.  We eliminate the current income tax code and replace it with a progressive tax rate.  The rate is progressive, but based on income ranges.  The dollar amounts would need to be worked out, but it might look something like this:

• $0 - $20k/yr. = 0%
• $20k - $50k = 12%
• $50k - $100k = 25%
• $100k - $250k = 40%
• $250k - $1m = 60%
• $1m - $10m = 80%
• +$10m = 100%

Again, these numbers are just an example, but the concept is simple.  Your effective tax rate goes up on incomes a higher levels.  So, nobody (even rich people) pay taxes on their first $20k of income.  If you make $50k, you will pay no taxes on the first $20k, but you will pay 12% on the next $30k.  Eventually (whether it is $10m per year or $50m), there needs to be a point at which income is maxed out.  The system has given all it can to one individual.  Live with it!

Not fair, you say?  Here's what isn't fair: people with lots of money have a steady stream of opportunities to use their wealth to increase it.  People without wealth must be creative, hardworking and persistent; and then there's no guarantee of success.  No, the world is not fair.  Why should it be more fair for rich people?  Their power has corrupted them into believing that they have legitimacy to decide the fate of society writ large.  If history is a good judge, they will eventually discover that power is ultimately granted by the masses and it can be taken away by the same.

Of course, giving the government all that money is concentrating power elsewhere.  This is another problem.  One which I will discuss in my next post about infrastructure and welfare.

Capitalism: Heading for a Cliff

Throughout human history great civilizations have come and gone.  Why is it that we have been unable to establish societies that can be sustained indefinitely?  I believe the answer is simple.  We have always been dominated by a few powerful people who dictate the structure of "the system."  No matter how bad things get for the masses, those in power will remain the last to suffer.

Eventually, when the masses have suffered enough, they will revolt.  Unfortunately, when the masses revolt, there is little left but death and destruction until gradually a new system emerges from those who are strong enough to seize power...and the cycle begins again.  Just look at what is happening in countries like Syria and Ukraine.

So, why is capitalism doomed?  The principle of capitalism is simple:  people make or do things and other people buy them.  For the economy to be solid, more people must buy more stuff.  For that to happen, we must NEED more stuff.  The problem with more stuff is that it requires more energy and more material -- two things our little rock in the universe cannot sustain indefinitely.  We are wrecking our planet with our current strategy.

I have an old pair of wing tip shoes that still look great after more than 30 years.  My newer shoes are lucky to last a 10th of that.  We need obsolescence to continually prime our system.  This problem is compounded by the fact that automation is reducing the number of jobs required to make and do things.

So, we can either wait for the revolt, or we can hope that our leaders will cede their power in the name of the greater good.  Good luck with that!  Our current government does almost nothing.  Instead of getting more aggressive about attacking our social problems, our leaders offer us polarization and gridlock, even though we all need essentially the same things.

I have some ideas about what to do about it.  More on that later.

Technology Explosion

A few years ago, I stumbled on a book by Ray Kurzweil entitled The Singularity is Near.  I knew of Ray from his work in electronic musical instruments so I read the synopsis of the book.  The concept fascinated me, so I started reading and reading and reading...  It's a long book and it is packed with technical information about a wide range of scientific topics.

Subsequently, Kurzweil published a daily email digest of the latest research in many of these areas to which I subscribed.  The result has been an eye-opening experience.  Most people are unaware of the vast amount of research that is being done and the ramifications of said research.

I look at this research collectively and I see a future that is vastly different than what most see.  There are so many breakthroughs on the verge of realization that their combined effects cannot be imagined.  Humans have difficulty dealing with network effects.  Our minds evolved to deal with isolated situations.  Today, there world is so much more complex and this complexity is interactive.

Anyone who has studied chaos theory knows how quickly even complex computer models fizzle out when there are vast numbers of interacting variables.  In a true system of chaos, some variables have a cancelling effect, while others have a reinforcing effect.  However, with scientific research, the bulk of the work tends to reinforce other elements of interacting knowledge gains.

This compounding network effect has the potential to release virtual explosions of understanding in a wide range of areas.  Some of the giant breakthroughs like cold fusion, nanoelectronics, and quantum computing could happen almost simultaneously.  The far reaching impact that these new technologies will have on our reality are too hard to predict.

Like any explosion, destruction and creation happen simultaneously and at least somewhat chaotically.  Hold onto your butts because the next 20 years are going to be explosive.

Meritocracy

All but the most cynical among us believe that if we work hard and do well, we’ll get ahead.  The reality is once removed from that ideal.  See, the problem is: we rely on other people to get ahead.  Their goal is to…get ahead.  Until we live in a society where people care more about others than they do themselves (see altruism), we need to look at our prosperity in the context of those around us.

Sometimes, the smartest and hardest working people appear only as threats to their less capable superiors.  Threats are to be eliminated or at best subdued, not enhanced.  This is the fundamental flaw in thinking that the best people should rise to the top of any organization.  Naturally, some organizations are headed by true leaders.  Anyone who has spent some time reading about Warren Buffett knows that he exhibits the integrity and trust in his management team that causes good people to want to be around him.

Sadly, the reasons why most people strive to gain a leadership position are not psychologically healthy.  Some are driven to control an environment that they cannot control.  Some just want wealth and still others want pure power.  Any of these reasons ensure that the employees they manage will be unfulfilled.  As we all know, excrement rolls downhill.  Bad leadership begets bad leadership and the people performing line functions suffer.

How we pick our leaders is as much our fault as followers as it is theirs for leading poorly.  We have a choice to collectively reject bad leaders, but we are drawn to them like a moth to flame.  They are often tall and attractive people with soothing voices.  Their physical presence appeals to us on a visceral level that we don’t understand.  The alpha male is now the “alpha person.”  Unfortunately, the qualities that make a good leader are not perceived as attributes of the strong individual by traditional (caveman) standards: humble, empathic, thoughtful, caring…who would promote such a character?  …Certainly not a traditional leader.

So what’s the answer?  Reject bad leadership.  Workers of the world unite!  Let’s teach leadership skills in our schools.  Let’s demand real leaders even though our gut may be drawn to the bad ones.  If entire departments simultaneously threatened to quit unless bad leaders are replaced, good leaders could be forced on companies.  I have reserved the domain www.mybossisadick.com.  I think it’s time to call these people out.  It’s not their fault.  We put them there; so now we need to fix the problem.

Revolution!

I have not written a post in a while.  My social media website is progressing, but I don’t have enough to report just yet.  Meanwhile, the world rages on.  History is being made under our noses and most of us look at it as “news.”  Those of us fortunate enough to live in a capitalistic democracy tend to think that people who don’t enjoy such a lifestyle are not part of our system.

That would be a mistake.  Even if people are governed by an autocratic system, their leaders are forced to play economically in a capitalistic system, because that system is now global.  As money flows to a ruling regime, those people who are on the “inside” benefit.  The only real difference between their system and ours is that we all believe we have a fair chance of getting on the “inside” of our economic system.

In the Middle East, the people who are not on the inside and don’t have any chance of being there are fed up.  The wealth of their countries has tipped so heavily in favor of the insiders that they are no longer willing to suffer in silence.  This wave of revolution taking place in the Middle East may not stay there.  Libya is in North Africa and there are plenty of countries in the remainder of Africa that could easily react in the same manner.

The United States may be a long way from revolution, but the divide between rich and poor continues to widen and with each economic downturn, more people join the ranks of the poor.  Our global economic system does not have enough money.  Capital is being horded by the few while public institutions continue to borrow to prop up the rest of the people.

We find ourselves in an unsustainable downward spiral driven by greed.  The system will fail.  “When and how” are the two great questions.  But, the bigger mystery is what will replace it.  Maybe some of the transformations taking place in the Middle East will provide some insight.  Or, maybe the transformation from an autocracy to a democracy is a step along the path.  What does a failed democracy transform into?  Stay tuned!

Economic Fiction

What is money?  Seems like a straightforward question, doesn’t it?  It’s not.  The only money the U.S. government actually creates is coins.  The Federal Reserve prints bills.  They are not the government, but rather a corporation consisting of heads of large multi-national banks.  If ever there were a case of the fox guarding the hen house – this is it.  So, the source of creation notwithstanding, what does all this add up to?  Answer: 3% of all of the “money” that is credited as wealth by all the holders of wealth in the United States (individuals and corporations).

Where is the other 97%, you ask?  It’s data.  That’s right; it doesn’t really exist except in computers.  If all the computers were to shut down, 97% of our “money” would spontaneously disappear.  Where did all this “money” come from?  How do you create so much wealth out of thin air?  The answer is simple: loans.  When banks make a loan, they don’t put a freeze on the funds in your savings account.  They just create new money out of thin air.  Of course, most of it is just in the computer. 

You spend your new money using your checking account or credit card and this causes computer records to reflect the transfer of the “money” from one bank to another.  But, unless you withdraw money in the form of cash, it’s all part of the 97% fiction.

The great thing about the 97% fiction is: as long as everyone believes it is based on a true story – it is a true story!  Our problem is that it is getting increasingly difficult to believe the story.  Once enough suspicion arises, the story starts to fall apart.  This can only result in tragedy.  So, our leaders need to keep selling us the validity of the story.

This is one more example of how are lives are marching inexorably towards complete virtualization.  Our economic lives increasingly live in the net.  Our social lives are increasingly lived in the net.  For a growing number of us, our work lives live in the computer if not the net.  Video conferencing is a way to project yourself digitally to another place.  Most new laptops have a built-in camera for this purpose.  Do you see the pattern?  Our digital lives are slowly taking over as what matters in the world becomes increasingly online.

We will continue to find better ways to plug ourselves in.  The digital world will continue to become a richer, better place to be, while we continue to degrade the physical world around us.  Eventually, the 97% fiction becomes the stronger reality – the better reality.  Now, THAT is stranger than fiction!

On The Road

They say that most people only have one really great, unique and original idea in their whole lives.  Usually, that Idea comes early in life.  Colonel Sanders was in his sixties when he decided to sell his famous chicken recipe.  My story is not as compelling as the colonel’s, but it has taken me a while to get here.

My life has been wrapped around the computer industry.  In recent years, I have tried to shed my direct reliance on it for my livelihood, but it is still and always will be an intrinsic part of my commercial value.  To appreciate this, a brief history is in order.

I began my adult life as a musician and a desire to be a radio personality.  To that end, I went to Specs Howard School of Broadcasting Arts.  With my 3^rd Class License in hand, I set about finding a job in radio, eventually finding said job at WPON in Pontiac.  Meanwhile, I decided to go back to school and get a degree in Communication Arts.

After switching to being the program director of the Oakland University radio station, I found myself a little short of money.  My dad told me about a computer store called Computerland that was opening near campus.  I applied.  To my surprise, I was hired as a retail salesperson.  I didn’t know a thing about computers, but then who did back then?  I learned on the job.  This was in 1978.

The personal computer was just starting to get some notice by the general public.  I was on the cutting edge.  This theme would repeat itself throughout my career.  I don’t know if I’ve been lucky or if I actually have some sense about the next big thing, but I’ve always found my way onto the cutting edge.  After PCs were established, I moved to a company that was experimenting with selling local area networks, they were brand new.  Then, it was groupware like Lotus Notes and email.  Next came wide area communications – the ability to interconnect networks across large geographic distances.  And finally, the Internet.  By the time the Internet rolled around, I had my own company, but there I was, pioneering again.  Being on the cutting edge is messy, but exciting.

My last cutting edge experience was working in a company developing cloud based computing solutions.  We didn’t even know we were in the cloud then.  The term hadn’t been popularized yet.  It has been several years since I’ve been on the cutting edge and I’m starting to get antsy.  Something has to be done about it.

Enter JT. JT is a friend who I have known for eight years.  He is a very focused young man who seems to have a good bead on his direction in life.  He is a software guy; in particular, a Microsoft software development guy.  He loves it.  But, he doesn’t tolerate mediocrity very well.  I can relate.  I suffer from a similar affliction.  He decided that he wants to develop the next big thing on the Internet and retire young and rich.  Seems like a good plan.

As with any plan, the devil is in the details.  First, he had to come up with a good idea.  Every few months, JT would come to me with an idea for the next big thing.  Unfortunately, I quickly shot holes in each of them and JT skulked away dejectedly. 

Recently, we redecorated our bathroom upstairs.  One of the results of this effort was the realization of a lifelong dream to have a tub with jets in my very own home.  I especially enjoy using it in the winter.  A few months back, I was soaking and reading (as I am inclined to do).  I was reminiscing about my life back in high school.  I was a hippie.  I did what hippies did – searched for the next party.  I was pretty good at finding it, too.  Then, in a flash, an idea came to me.  That thought had caused me to hatch an idea of a great new use for the Internet.

Quickly, I began to search for a site that would do what I had conceived.  Nothing.  I told JT about it.  He searched.  Nothing.  I could not believe that if someone had implemented this idea, it would remain obscure enough not to be found.  It just wasn’t there.  JT and I realized that we are about to change the world.  That’s my goal anyway.  JT just wants to get rich.  The work begins…

The Journey

Anyone checking my blog lately has wondered what happened.  Well, I've been on hiatus for want of a compelling story to tell.  Call it the Michigan winter blues.  The important thing is:  I'M BACK!

Life goes through many stages.  Sometimes, it's hard to see the beginnings and ends of these stages while we are in the thick of it.  However, every once in a while there comes along a rare opportunity to chronicle such a stage from the beginning.

I happen to believe that I am embarking on a rather exciting journey.  I will either turn out to be correct or the following posts will prove once again to be the ramblings of delusional mind.