Musings & Meanderings

Marc Andreessen’s post titled Modern Financial Markets, Explained! offers a great video that explains it all.

Seamless satire from Michael Lewis.

A serious post on irresponsible lending by Dr Eamonn Butler on the Adam Smith Institute Blog.

“The two chief enemies of the free society or free enterprise are intellectuals on the one hand and businessmen on the other, for opposite reasons. Every intellectual believes in freedom for himself, but he’s opposed to freedom for others. He thinks there ought to be a central planning board that will establish social priorities. The businessmen are just the opposite. Every businessman is in favor of freedom for everybody else, but when it comes to himself that’s a different question. He’s always the special case. He ought to get special privileges from the government, a tariff, this, that, and the other thing.”
~Milton Friedman

My American friend alternately tells me that everything in the US is about politics and that everything is about money. My response is that everything is about freedom. What do you think?

Being fascinated by all things cultural, from fine arts to psychology to free speech, I continually view political and economic landscapes from multiple viewpoints. The United States of America is truly the most dynamic and multifaceted nation on our planet for this kind of observation. It also offers, by virtue of the freedom its citizens enjoy, as wide a range of belief systems as any one society has ever simultaneously produced and allowed to flourish.

Every ideology has some positive values at its core. We can trivialize them, we can view them with cynicism, especially when they are misinterpreted or perverted or taken out of context, yet no matter how much we do this we can’t make them go away. We can’t dismiss a core value out of existence by sneering at it, and if we try to invalidate it by ignoring it our whole becomes unbalanced, or, to put it another way, the code won’t validate and the program will keep slowing and stalling. Unfortunately, our natural tendency is to concentrate on the values and processes we personally like, and when we get stuck we try to blame it on the things we don’t like.

What does all this have to do with money?

Monetary valuation is a lot like a piece of the underlying structure of a computer program. It performs functions based on values. It is also a universal method we have developed for understanding and allocating meaning to much of our day to day existence, to our actions and interactions with one another.

How we live our lives, what we do and how we behave in relation to others is what really makes the ‘world go round’. Our most natural functions, though, in conscious learning and living, involve valuation and judgment. Money is, at its essence, symbolic. Removing money as a symbol does not change what is being symbolized.

Communal ideologies, in practice, tend to crash on the basis of valuation, and this is because people are all unique and different. we have different abilities and needs, even when we have a common purpose. Altruism, charity, the concept of mitzvah, social responsibility, etc. are not things that can truly exist without personal belief and motivation. Individual achievements and actions that benefit several or many can be entirely satisfying without formal valuation, but an idealistic state where every one of us devotes all our efforts only to benefiting others is contrary to our basic nature. Each of us has many primary levels of need, beginning with those associated with physical survival, and increasing in complexity through levels of self realization, emotional balance, etc. Disassociating these personal needs from the money symbol is a good thing, but denying them as unique and personal isn’t. Trying to do so not only denies our identities it also threatens our very existence by devaluing them.

Money is an integral component of the methods we’ve developed for valuation of our actions and accomplishments, and it is only that. Primitive societies used other things symbolically for the same purpose. The issues related to ‘love and peace’ vs ‘aggression and war’ are important to most of us, but valuing then on an economic or monetary basis makes no sense. Both peaceful and warlike societies have died out, passively or violently. Power has been acquired and used by benevolent leaders and by tyrants alike, but neither benevolence nor tyranny are based on wealth. Money is one of our important things. It isn’t us.

Our personal motivations and actions can be moral or immoral, but blaming immorality on money is pure misdirection. Even more dangerous is associating immorality with the accumulation of money. Money doesn’t breed immorality …immorality breeds immorality. The more we hang on to this dangerous fallacy the more it ‘proves’ itself for us. In interpersonal transactions, whether we trade our work product peer to peer, create products or services for many, or are forced to rely on the kindness of strangers, we choose constantly either to focus on creating and offering value or on trying to get away with something and this is the root of morality. This is the level at which we define, or misdefine it, and making this a conscious action is one of the best definitions of freedom I know.

Democracy is, perhaps, the best ideal we’ve created so far, and the statement that ‘all men are created equal’ one of the best expressions of it. This is, in my opinion, perverted by viewpoints which effectively deny our unique individual makeup, abilities, and autonomy, and thereby our freedom. The very concept of freedom is one of the most highly personal things there is, not a political system. It is also, and for the same reason, at the heart of every great human achievement. None of these have been motivated by money per se, yet, if money is viewed as a measure of prosperity and an instrument of freedom in society, then most of them were.

We in North America live in what was once called the New World, a place where opportunity to create a good life for ourselves, our families, and our communities was boundless. It was also a rough and dangerous place, involving risks and responsibilities that are hard for most of us to imagine today. Both peace loving settlers and daring adventurers survived and prospered, in part, by being prepared to kill or die at any time. Is modern society here safer?

An essential part of the romantic allure that permeates the history of this continent rests in the dream of almost limitless personal freedom. The history proved some very profound truths. More recent history illustrates the same truths, but they are becoming obscured by our increasing lack of understanding of personal freedom in the context of societal interaction and interdependence.

Every one of us has, deliberately or accidentally, said something politically incorrect. Recently, I pointed out to an aggressive bill collector following old records that he was looking for someone male with an Arabic name and that I was female with a Slavic name. His response was instant anger and his retort, (approximately) that “we’re all trying to become alike!”, struck me as sublime. This particular mantra isn’t about any real ideal of equality. We are, every one of us, completely unique in a myriad of truly wonderful ways, yet share an equally remarkable spectrum of needs, desires, and goals in common. Where individualism and equality meet, where they recognize and respect one another, is where freedom resides.

From my oracle, OMO:

The 3 major tv networks have been conning program producers for decades (over 5 decades, in fact). Early on the networks convinced the producers that they should make series programs for the networks and accept a “license fee” for each show that was well below what it actually cost to make each show, i.e., a license fee of $100,000. for a show that actually cost $500,000. to produce.

The producers were told that “all they had to do” was remain on the air long enough to accumulate 100 episodes, and then they could put those 100 shows into “syndication” to the independent stations all around the country, and charge the indies exorbitant rates per show. In this way, they (the producers) would make back all the losses incurred when making the shows originally, plus huge profits.

They never mentioned that, of the hundreds of shows that were produced, only a handful ever reached the 100 episode level. Further, the losses involved were not only actual dollars spent in production budgets, but also the cost of money borrowed from banks to make programs at a loss for 5 years minimum. All the shows that lost money weekly, but never reached the “syndication” level, outnumbered the successful ones 20-1.

The networks, of course, paid their pittance of “license fees,” and then sold advertising in the millions of dollars per episode, per week. The producers never saw any of that money, they were busy waiting for the “pot-of-gold” at the end of the rainbow.

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Do we see any parallels to the production of web content?

If I had a nickel for every time the word monetize is used… well, the word would still be grating on me more each day. I like making money, and lots of it, as much as anyone, but this place wouldn’t exist as we know it if it was only about money, any more than my home and personal world is only about money. (end rant)

To the point, a penny for every page load would shoot you right through the Forbes list radar. If you subscribe to the belief that we’re barely over the threshold of a huge population explosion on the internet, projecting those numbers can make your head spin.

I propose that the major paradigm shift of technology has long been underway, but that our conceptualization of the future we’re entering is barely a glimmer.

In terms of monetization, the age old human model was based on 2 plus 2 equals 4. Very simple. Make or buy it for 2 and sell it for 4. Keep your overhead at 1 (per piece) and you’re making a solid profit.

Next came the economies of scale that became more widely understood via industrialization. Buy 100 times the inventory and you can make a deal to pay 1 per piece. Your profit climbs from 25% to 50%. Increase your volume sufficiently that your overhead per piece starts falling to a fractional percentage. At the next stage of growth, you could very well get that profit margin up to 100%.

So far, technology has added two minor revisions to this basic model.

The first is a drastic reduction of overhead. Early eBay Powersellers often pinched themselves in amazement at being able to realize fantastical profits with virtually no overhead. Any individual can make a darn good living while they sleep by packaging some info or advice and mastering the basic tools. It has been a gift from heaven to old fashioned entrepreneurs on a grass roots level.

The fact that it hasn’t translated that way for big companies so far is partly because the web is nothing but a peripheral venue tacked on to their old fashioned business models. If there was a way to translate those physical commerce models directly into a virtual version, then it would already be a reality. They’ve got the bucks to corral enough brilliant programmers to their service.

The second minor revision to the model is more interesting.

It started with the power of media. In the 70s and 80s, business people learned the concept that 2 plus 2 can equal 5 …maybe even 7. We called it many things, including synergy. Bean counters started paying more attention to the value of ‘good will’ and a new segment of consultancy that specialized in branding sprang to life. Billions of dollars are spent in the world of media and advertising in the quest to capture this elusive magical profit. Little guys can get a piece of magic profit too, because we once again (start with reading Machiavelli) understand that knowledge is power and people will pay for information.

The wizards of magical profit, including media barons and money players led by venture capitalists, are astoundingly overrepresented in the business community on the web. The best of them are very successful financially and therefore entitled to this oracular position they’ve staked out. They take full advantage of the human tradition where oracles talk in riddles. Why wouldn’t they? The big problem here, for the entrepreneurial panners for gold who pore over this oracular wisdom, is that you don’t often hear an oracle admitting in public that none of them really know for sure where the next motherlodes will be found. The straight shooters among them will readily admit that in person, but hey, if you’re standing in the spotlight and the crowds are applauding your brilliance, what’s a guy to do besides take a bow and bask, with or without modesty.

End of human knowledge overview.

Investors and entrepreneurs and a growing audience are now all either waiting breathlessly, or doggedly digging, or furiously networking the in crowd, to discover the next secrets of monetizing technology.

Some are standing a little further back, observing the huge surge in traffic concentrated in enabling services such as Google or doggedly developing meme type concepts such as Wikipedia. Some but not all of this group are focused on future monetization.

Then there’s the growing and huge core population of internet developers, coders, etc., including the people who built this darned thing in the first place, who don’t believe that the internet is essentially about monetization. They aren’t all idealists, and they’re the opposite of stupid. Every one of them has to pay the rent and feed their families and they tend to be very logical, practical people, and can often be highly motivated by money although not by greed.

The schism between those focused exclusively on money, aggressively competing for a position that will give afford them a piece of the growing pie, and the political, ideological, and sheer mass of humanity grown accustomed to free everything is as broad and stark as an epic sci fi image.

This new cosmos we’re creating …this network that’s making the world ‘flat’ and supporting the web that reinvents the three or more dimensions… is not a commercial creation in itself any more than the discoveries of science and technology that preceded it. We’d be wise to focus less on the specifics of powerful copyright holders vs users whose stakes are negligible individually and more on the process and direction of change.

Instead of analyzing how we use the web today and how to fine tune that experience, we should turn our attention to concepts such as ‘collective intelligence’. More in the mainstream popular jargon is the ‘wisdom of crowds’ which notion applies beautifully to real teamwork but also disregards the converse ‘power of the mob’ and its pitfalls. In either perspective, we are creating power for the masses, a situation in history that on the surface lends itself to anarchy but in practice more often results in fascism.

Again, we’re barely over the threshold of population explosion now. Even this term has to be viewed in a completely new way. It isn’t simply a matter of counting how many eyeballs own how much hardware now compared to how many will in 10 years. The biggest difference will be the actual use and power of this medium by the controlling few vs the millions/billions.

There’s a silent battle being waged within the next wave of this development. The more of us responsibly and deliberately gather between the polar extremes of sheer greed for money and the awesome power to manipulate based on political or ideological agendas, the greater our chances of building a world we will be proud to inhabit rather than wish to flee from.

I’ve never been one to sit on a fence. My definition of this middle ground we should be staking could as easily be expressed in military as in moral terms. There is success and money and power accruing to future leaders. Defending the very definitions of common sense, liberty (including capitalistic free enterprise), and higher civilizations is the price, and the investment, for me. This is where I believe the forefront of our brave excursion into the future should be directed.

first a distinction…
Passion is not the same thing as fantasy.

Passion

There’s a common belief in our culture that if you find something to do that you are good at, you will be successful, and if you are also wildly passionate about it, you can be wildly successful. This simplistic idea pleases us. There are enough examples of successful people confirming it to give it legs, and it offers a cleansing illusion that supposedly removes the evil taint associated with money.

Passion, though, is not an activity but an emotion, appropriate to devotion such as in love, sex, religion, art. In pure form it has no goal and is its own reward.

In order for the belief or tenet about success to make sense applied to a life plan, we have to marry our passions to activity, adding means, and goals, as well as motivations.

The term marriage here connotes the process through which we build the vehicle of daily human activity within which to carry and nurture our passion.

Understanding passion is easy in the context of a great love or devotion, talent or gift. Any of these translates clearly in our minds into a picture of daily activity. Bringing that picture into a context of worldly success, however, is much more elusive.

Some of us are passionate and some of us are gifted. Everyone has passions and everyone has gifts. Both of those statements are true. Using what we have most effectively can also be viewed as being true to ourselves, which may or may not translate into worldly success.

Money

We all know that money is but a token of exchange. Trading your effort for those tokens in order to acquire/provide the necessities of life is the first order of survival.

A focus on worldly success and wealth, however, is capable of pushing almost every emotional button human beings have. We can believe passionately in a classless society, for example, but human nature will still dictate that we’ll be judged against our accumulation of tokens. Power and success are tokens, too, which may or may not translate into money. The ability to cause other people to do things is power. Setting a world record or baking the perfect souffle are both types of successes.

Anyone who says they don’t discriminate or judge is lying. The whole concept is totally contrary to human nature. You can feel virtuous for being humane and compassionate when you help someone less fortunate, but you can’t explain how you determined the basis of that without making judgments. Or, as my husband is fond of pointing out, if you tell kids that you’ll no longer keep score in a game they’re playing so that there won’t be any losers, they’ll ignore you and keep score for themselves.

Keeping score is natural. I want to own my accomplishments and successes. It is completely unrelated to whether and why I might decide to use my tokens for someone else’s benefit.

Our difficulties come about not from making judgments or keeping score. They arise from passing and executing sentences based on those judgments, from taking actions which affect another’s rights and freedoms. We’re all entitled to our opinions, and are going to have them even if we aren’t lucky enough to live in a society that grants us personal freedom to state them out loud.

We analyze constantly on the basis of comparison, deciding how a thing/place/idea/person is the same or different from another, in order to discriminate and make judgments.

Wanting to succeed in monetary terms really has no more morality attached to it than wanting to hit the most baseballs in a game does. Doing it has requirements and consequences, though.

If your world is partly defined by your relationships with friends and peers, most of those relationships will change if and when you have a noticeably greater amount of tokens than you did when you met. Those relationships might have to change substantially before you can reach a set goal of token ownership. Setting off in a different direction will make you different. You will be judged.

Some people who succeed financially receive adulation and others are vilified. The basis of either of those rewards is a perception of a combination of things, many of them superficial, such as charisma or lack thereof and good or bad public relations. Rarely is it a purely moral judgment.

Being more successful than others means, by definition, being different. It means a greater share of the spotlight. It attracts, proportionately, the attention, speculation, and judgment of others. It changes who your peers are.

I’ve never met a highly successful person who wasn’t passionate about something. They don’t necessarily care about more things than others …many are breathtakingly single minded… but their depth of caring and commitment to something is exceptional.