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Going International to Become More American

06 Apr

In mid-May, I will graduate with a Masters of Science in Foreign Service degree from Georgetown University.  This program is within the School of Foreign Service, formed after World War I to train Americans to engage with the rest of the world both in business and in diplomacy.  Today, about a third of our class consists of international students, and the topics we study involve international conflict, international business, statecraft, international development, peace-building, intelligence, and so on.  Our students have all traveled to many countries and many of us speak multiple languages.

Without malice, people joke that our class’s party photos look like Benetton ads because so many different colors, cultures, and countries are represented.  After a couple years of schooling in MSFS, we’ve been given policy toolsets and have been exposed to methods of viewing the world’s myriad quirky regions through different lenses.  Multiculturalism is normal within our program, on campus, and in DC.

Now, I’m not about to start talking about how the environment here is perfect.  Certainly it is an elite international class that is able to enjoy such an expensive education.  And certainly most students end up associating mostly with those of their own nationality by default.  But there’s nothing wrong with all that.  We are, after all, inherently tribal, and we gather with those of the same cultural heritage and customs as ourselves.

Unavoidably American

With that in mind, through all my experiences thus far, both in personal travel and in academic research, I’ve been confronted more and more brutally and unavoidably with the conclusion that I am, despite any illusions or deceptions, an American, and an American citizen and ambassador at that.

This may seem obvious to you, but do you not feel some doubts about your own nationality at times?  Assuming you’re “American”, do you not think of yourself as a midwesterner, or a Californian, or an east coaster, at times?  Did you get caught up in the post-9/11 debate about who was a “real” American?  Is it a flag-waving pro-military midwesterner or is it a liberal who thinks waving a flag is meaningless and trite?  Is it an Iowan farmer?  Is it a blue-collar union family from Detroit?  Is it a productive east coast elitist New Yorker who was attacked on 9/11?  Do you consider this or that party not in keeping with America’s original values?  Did you ever feel embarrassed when traveling that people would know you were American?

If you’re anything like me, you have moments where you think, yeah, I’m American, but other Americans don’t speak for me; I don’t agree with a lot of things we’re doing.  I didn’t vote for him.  I don’t have the responsibility for this, or for the war, or for failing “morals”.

We don’t always claim ownership when things are bad.  We’re discouraged from sacrifice.  It must have been someone else’s fault.

Military Service

Certainly I felt American when wearing the Army uniform and American flag every day for five years.  And certainly I felt American when I deployed to Iraq and served my country.  I felt pride when wearing my ACUs, representing the United States.  But I also knew that while riding on convoys in Baghdad, that many of the people who gazed upon me wanted to kill me for my uniform as well.

I felt American despite the Constitution being tampered with, reinterpreted, and spun in order to justify treachery, classification, intimidation, rendition, torture, murder, and corruption.  I felt American, rather alienated, when fellow soldiers completely disagreed with me on our presence in Iraq.

Yes, it was tough to swallow the things my country has done.  It was tough to see and do things I was a part of as a soldier in Iraq.

I felt American, but I’m not sure I felt like a very good representative.  I certainly didn’t share my patriotism with Bush’s words of nationalistic fervor.

Georgetown

Then I came to Georgetown and was exposed to a lot of different cultures and languages and ways of thinking.  While I felt comfortable engaging with others, at the same time I began to notice my own differences with them more, perhaps standing in stark contrast against the backdrop of multiculturalism.

What really came out of me during this period was my desire to effect change, to free the oppressed (“de oppresso liber”, the motto of my former command, Special Forces), to help the poor, and to use new ideas and new technology to accomplish all of that.  In short, I became very socially entrepreneurial and empowered to be so.

Such American traits.  Respect and love for professional militarism (which the American public has become enamored with, if not detached from), highly entrepreneurial, desire to be creative and proactive and generous.  I felt more American than ever.

With Barack Obama being elected, and the faux-Texan being kicked out, my American-ness was something I genuinely was able to share with others, spontaneously during the inauguration concert.  It was something I had previously felt only when wearing the uniform in the Army, among other soldiers in my teams, platoons, or units.  The pride returned, in the same way morale improved in the military once General Petraeus took charge in Iraq.  The cycle of bad leadership had come to an end. [my friend MonkeyPope vehemently disagrees with this assertion -- he thinks Petraeus still makes poor, politicized leadership decisions, and says his unit didn't like Petraeus]

I think I originally came to grad school after feeling left in the dark about what my country was doing as I got older.  Even as part of the military, I felt like there was a lot I wasn’t privy to.  How did my country really conduct foreign policy?  How did it set policy as representative of its people?  Would I let my leaders deceive and mislead me again?  Or would I do something to inoculate myself against ignorance?

Against the Free Market Radicals

This is a peculiarity and a peccadillo I learned during my time here at Georgetown, partially through my own experience, partially through watching the election cycle, and partially through studying democratization theory and poverty reduction:  Friedmanism, Reaganism, whatever it’s called these days, detaches people from their responsibility to anything beyond themselves.

Those who seek bare minimum government, lower taxes, a volunteer military, and Ayn Rand-style objectivism fall into a peculiar situation where they have no sacrifices they must give to their country.  Thus, while they promote war abroad, disengagement from the poor and disadvantaged, and massive privatization, they are also reducing funding to these areas and taking part in civic engagement less and less.

Sadistically, Reagan cut off the head of the EPA (Bush would do the same to USAID and State) so that it couldn’t operate, and then said, hey, look, government can’t operate.  Republicans cut federal and state budgets and then said, hey, look, government can’t operate.  Welfare and re-distribution programs (which help to forestall, well, a freaking rebellion) were cut, and they said, hey, look, these poor people are lazy and don’t want to lift themselves up by their bootstraps.  Sort of a self-fulfilling strategy to kill off undesirable policies.

Being taxed means you lose your hard-earned money, yes, but it also means you should have a say in how that money is spent.  The possibility of being drafted means that you will care a lot more if your government decides to mobilize for war.  Feeling a responsibility towards helping those less fortunate than you (i.e. through equal rights) means you might decide to support welfare (or the new favorite, “workfare”) programs.

Chicken-Hawks

Joe Scarborough on MSNBC and The Colbert Report just devoted large segments of their programs towards making fun of Glenn Beck, who has been crying embarrassingly like a pussy on his show about how much he loves his country.  Somewhat similar to the House Representative John Boehner, who is constantly crying on the House floor about how he hopes we don’t sell out the troops.

Quite outrageously insulting to me, given that Beck seems to have served not a lick of public service, and Boehner washed out of the Navy after 8 weeks with a bad back.  It’s a humiliation as a war veteran to look at grown men who’ve sacrificed little for their country crying on TV in front of a large domestic audience and a potential international audience of Iranians, Afghanis, Pakistanis, Russians, Chinese, etc. who see weakness in men crying.  These men do not speak for me.  I use the term “men” lightly, since such crying nancies with no spine (literally, in one case), are hardly the pinnacle of virility and machismo that they make themselves out to be the spokesmen for.  It’s like watching Jim and Tammy Faye Baker drenching their cheeks with mascara on Dallas Christian TV.

Standing on the Shoulders of Giants

Until I went to Georgetown, a private university, I was a product of many public institutions.  I went to public schools in Texas and then to the University of Texas at Austin, a state school, for undergrad.  After that, I joined the Army, a massive socialist institution within the US bureaucracy (an inconvenient truth for the pro-military right-wing hawks).  These public/state institutions gave me the opportunities to get to where I am today.  Were it not for the many teachers, administrators, and support systems within them, I wouldn’t be here today.  I almost decided to go to UT Austin for grad school as well, but luckily, in an extremely competitive higher education system, I could also choose among private schools.

And I was lucky enough to be admitted to Georgetown, with the help of the amazing administrators within MSFS who gave me a chance, and my classmates, who helped me along the way.  Georgetown, I might add, is private, yes, but it supports within its walls Jesuit priests who support the Georgetown community spiritually.

The point is, there are many people responsible for everyone else’s success, and pursuing complete self-interest breaks down such social fabrics through neglect and fiscal strangulation.  I would argue that it might even make us less American, less patriotic for our country.

Service and Responsibility

So I now feel beholden to my country, responsible for its well-being.  The program started by a Jesuit Catholic, Edmund Walsh, to prepare Americans to be ambassadors of their bold country, has rubbed off on me.  I seek to show the world what’s best about my country.  What I perhaps didn’t expect, studying how to interact with other countries, was that the best way to show others as an ambassador would be to lead by example.

Certainly this is the sergeant ethos in the military.  Lead from the front.  Don’t ask your soldiers to do something you wouldn’t.  Be proactive, take the initiative, drive on, etc. etc.  Most people WANT to do something, but they need leaders to show them the way, to give them bravery, to give them focus, to allow them to do their work.

I did my concentration in international development to apply technology to reducing poverty.  I’m not sure, though, that I ever thought I’d be applying my development background, being an ambassador to the world, to solving problems in my own country.

But I think that’s where I’m probably going.  The US is beset with all sorts of internal problems:  massive unemployment that might be sustained over a long period of time, badly uncompetitive infrastructure (weak public transport compared to, say, Japan and Germany), expensive telecommunications compared to its peers, dwindling educational competitiveness at the high school level, a collapse in innovation policy, anti-commons regulatory thickets in pharma and spectrum and patents and copyright, bizarre limited government theory within the context of a massive deficit, etc.

Within the context of a tenuous pause in Iraq, a near-failed Pakistan, massive indecision in Afghanistan policy, 2005/2006 Baghdad-like low-level violence in Mexico, a belligerent Israel acting with impunity in the face of policy failure under the auspices of the US, an increasingly dismissive but also increasingly influential Iran, and an embarrassing energy policy, the US is in danger of losing itself in all the distraction.

So yes, I do feel like an American citizen, and I do feel responsible for my country, and I do think what problems there are in the world must be fixed by starting at home.

Universal Human Rights

Through my development reading, I think what I’ve settled on is that the US can easily start fixing its problems by fully investing itself in its Bill of Rights, and adhering to the UN’s Universal Declaration of Human Rights as much as constitutionally possible.  Created in 1948, endorsed weakly by many countries, and consisting of 30 articles guaranteeing fundamental freedoms for every person on the planet, this Declaration is no where close to being completely implemented within the United States, where as Americans we are raised believing that we are all guaranteed equal rights.

Having been in the Army and living in some of the most segregated areas in the country (Georgia, DC, Texas), I’ve seen plenty of racism, sexism, and sexual bias.  Hell, the military has a policy of “Don’t Ask, Don’t Tell”, and gays can’t marry.  Never mind that some of the best leaders among my friends and cohorts in the Army are gay, and have served more time in a warzone than many of those who don’t want gays in the military.

American Exceptionalism is Made Up of Myths

There are many traits that are not uniquely American but that we associate with ourselves.  That first trait is that Americans believe all are created equal.  I strongly disagree that Americans really, innately, believe this.  I would also say that it’s not just Americans who are hard-working, although we love the image of the toiling blue-collar worker or farmer or, more recently, business executive.  We are not very good at sustainable management, despite our fanaticism for leadership roles and legendary success as Gordon Gecko/Carnegie robber barons.  We’ve sunk entire cultures and countries with our international development “strategies”.  Many of our stalwart institutions and companies have been placed on life support by fraudulent, unethical, insipid senior management who, in the case of insurance and auto companies, still feel they deserve large bonuses and lives of decadent privilege while their businesses lose billions of dollars a quarter.

When I look for the closest model to the Americans, strangely it seems like sub-Saharan Africa is the most similar.  Not, say, the Europeans.  Africa is bursting with social entrepreneurial energy and an innate desire to do business no matter what the environment is.  Its continent has the fastest growing Catholic population in the world.  It has been tainted by colonialism and by bailouts and aid.  The spirit and vigor I see in today’s Africans, I identify with as an American.  How odd is that?

This presents a deep problem if I had earlier stated that entrepreneurialism is one of America’s unique traits.  In running a draft of this post past my good Army buddy MonkeyPope, he noted,

“You seem to hint at entrepreneurship and innovation, but instead go off on a tangent about how our character resembles Africa, but you’re so much more interested in your analogy that it obfuscates and does not illuminate. Also, how do we play to our business strengths?  Relatedly, again something you hint at, but don’t outright express, couldn’t it be argued that in addition to the E and the I, another American strength is public works and volunteerism? Thus furthering the irony of self-isolated bootstrap Republicans opposed to goverment initiatives to improve the public good, such as Obama’s lip service to a broad American-wide volunteer service initiative.”

He makes very good points.  Africans and, now that I think of it, Indians are quite entrepreneurial.  Is the difference that Americans enjoy a high scientific and educational capital base for advanced technical entrepreneurship, while Africans and Indians tend to mobilize their low capital base for cheaper, yet perhaps more populist alternatives?  How long can such an American edge last if it’s losing its technical edge (from less funding and fewer engineers) while paying less attention to social entrepreneurship?

Philanthropy most certainly is a unique American trait for the moment.  Perhaps the Scandinavians and Europeans are more effectively using their money to help others, but do other countries have the history of reformed monopolists and robber barons and political families and business moguls turning into philanthropists as we do?  Is that something we can maintain if we lose what little collective spirit we have?

What of collective spirit, anyway?  Do I feel sympathy for that point of view because I am part Chinese?  Most certainly the Chinese, after Deng Xiaoping institutionalized it, think in terms of collectivism over the “cult of the individual” (a thinly veiled euphemism for Chairman Mao’s chapter).

Perhaps, then, one unique American trait is its ability to assimilate cultures.  Maybe in my being American, what I derive uniqueness is that combination of traits melted and reformed together from my heritage.  American acceptance of high risk, high reward individualistic entrepreneurship, a British appreciation for education, Chinese discipline and collectivism and high-context communication and desire to work hard.  Fused with having lived in the deep south, raised in Texas, born in the midwest, educated for a bit on both coasts, served as property of the US military.

Perhaps defining what it is to be American is so difficult precisely BECAUSE of the inability to approximate its characteristics.  Multi-racial people are becoming the norm in the US, a fascinating blend of cultures and attitudes and perspectives.  Where else can claim a mixing of cultures as ours combined with the freedom to go forth and create something new from that background, to become high-profile celebrity-entrepreneur-scientist-philanthropist-businessman-politician legendary stereotypes?

From what MonkeyPope suggested, can I take this further?  Can I say that this all suggests that supporting diversity, increasing self-actualization through affirming human rights, and seeking to build human capital through social programs is something that leads to massive gains in American well-being?

It’s a possible lead that I want to think more deeply about, for sure.  What makes you feel most American, if you are one?  What do you see as America’s defining traits?

Exclusion vs. Inclusion

Given that the Republicans seem comfortable with worsening and increasingly privatized education such that ignorance can be exploited through tabloid politics and not enlightened debate (as they should want according to their love of the Founding Fathers), they seem to willingly be obstacles in expanding the American Dream.  Wall Street seems comfortable withholding access to information in the markets it created and which have sucked money out of the peoples’ wallets and into a select groups’ coffers.  So Wall Street also seems to want to antagonize the American Dream.  Anywhere where people believe you do not have the need or intelligence to access their information, you can guarantee that they are trying to fleece you of your rights.

Which is why the American Dream must be defined as providing universal human rights.  Such a legal basis, true freedom for all people, provides a foundation for a sustainable future.  Such a basis leads to the need for true accountability, reciprocity, and transparency — which is why I’m trying to build an ecosystem for reputations and identities.

Here’s what Barack Obama said about the American Dream at the 2008 Democratic National Convention:

“What is that promise? It’s a promise that says each of us has the freedom to make of our own lives what we will, but that we also have the obligation to treat each other with dignity and respect. It’s a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, look out for American workers, and play by the rules of the road. Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves – protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and new science and technology. Our government should work for us, not against us. It should help us, not hurt us. It should ensure opportunity not just for those with the most money and influence, but for every American who’s willing to work. That’s the promise of America – the idea that we are responsible for ourselves, but that we also rise or fall as one nation; the fundamental belief that I am my brother’s keeper; I am my sister’s keeper. That’s the promise we need to keep. That’s the change we need right now.”

Scandinavia is now the leader in providing the most access to its people to universal human rights, despite the American self-love as a nation of “freedom”.  The US could immediately take the lead through a sweeping redefinition of American identity using the UDHR as a basis.  Reengagement of its citizens with the government by incentivizing non-disenfranchisement.  It’d make for a great start.  The observation effects worldwide would be massive.  Just as Britain, India, and the US (eventually) inspired positive world events, such as widescale decolonization of Africa and abolition of slavery (read David Brion Davis’s “Inhuman Bondage”), this would be impossible to ignore.  Public diplomacy?  It’s done mostly through example, not through force or subversion.

De oppresso liber.

How to Move Forward

This is a long rant.  But I’ve been sorting out all these thoughts as I come in to my own, as a fully aware American citizen.  Americans have a particular opportunity right now to invest in science, technology, IT, solar power, infrastructure, innovation, and all those things it’s always been good at, to build a new future economy and to free ourselves from the constraints of the past like energy and inefficient ways of conducting health care or producing food.

By understanding ourselves, and fully embracing our characteristics, we can increase our fundamental independence, which can show strength and leadership by example.  As JFK said (and corrupted by Reagan, McCain, and Palin), 60 days into his administration just as about where Obama is in his new administration:  “We must always consider that we shall be as a city upon a hill—the eyes of all people are upon us.”

He went on to say,

“History will not judge our endeavors—and a government cannot be selected—merely on the basis of color or creed or even party affiliation. Neither will competence and loyalty and stature, while essential to the utmost, suffice in times such as these.

“For of those to whom much is given, much is required. And when at some future date the high court of history sits in judgment on each one of us—recording whether in our brief span of service we fulfilled our responsibilities to the state—our success or failure, in whatever office we may hold, will be measured by the answers to four questions:

“First, were we truly men of courage—with the courage to stand up to one’s enemies—and the courage to stand up, when necessary, to one’s associates—the courage to resist public pressure, as well as private greed?

“Secondly, were we truly men of judgment—with perceptive judgment of the future as well as the past—of our own mistakes as well as the mistakes of others—with enough wisdom to know that we did not know, and enough candor to admit it?

“Third, were we truly men of integrity—men who never ran out on either the principles in which they believed or the people who believed in them—men who believed in us—men whom neither financial gain nor political ambition could ever divert from the fulfillment of our sacred trust?

“Finally, were we truly men of dedication—with an honor mortgaged to no single individual or group, and compromised by no private obligation or aim, but devoted solely to serving the public good and the national interest.”

Getting Our House in Order

Increased independence brings flexibility in decision-making, which we can use to promote our image, and to change the nature of our relationships abroad from less dependent/aggressive to more equitable/positive.  At that point, we can begin to work on fixing our massive foreign policy restraints.

It starts at home.  As cliche as this sounds, it only took me taking a pretty round-about path of exploring the world outside of the US to realize that.  And I’m still pretty young, so I have a lot to learn.  Certainly being among my many peers in the Army and in grad school has been immensely humbling — both other Americans and those from other nations are exceedingly strong, full of stamina, intelligent, creative, proactive, and beautiful to observe and interact with.  All our differences, though, are good differences, and they can be used constructively by all.  It is not a zero-sum game.

We have the internet, rapidly linking us all closer together.  The US has Barack Obama, currently mesmerizing world leaders in London at the G-20, even doing a thumbs-up in some official photos.  We have an opportunity now.  The pieces are in place.

What we need now (as is always needed) is courage to live up to the potential to do great things that everyone knows and hopes that we have as Americans.

 

Ticket Re-Sellers and Scalpers

20 Mar

Trent Reznor wrote a post on his Nine Inch Nails (NIN) forum about re-sellers and scalpers of concert tickets.  In it, he discusses the motivations for TicketMaster to encourage the secondary market for tickets, which leads to scalpers poaching tickets and re-selling to customers at huge mark-ups and at huge inconvenience to them.

As I’m sure you’re familiar with, event ticket purchasing is a scam, the bigger the event is.  Smaller events use an online purchasing framework and charge a usage fee, which you’re somewhat willing to pay because event organizers don’t have the infrastructure to go around middlemen.  But as events get larger, the more likely they’re swept up into TicketMaster’s orbit.  TicketMaster is tightly coupled with the physical venues where events are held, and thus they can control all distribution, access, and promotion.

If someone were so inclined, this subject would probably make for an excellent muck-raking book.  I certainly don’t understand the business and economics behind it but I think most of us can intuit what’s going on behind the scenes.

So Reznor, who put his last album up on his web site for free under a Creative Commons license, and who put his album with Saul Williams up for $5, is pissed off with the music industry labels and monopolists.

And it’s fair to say that most of us are too.  I have not been to many concerts in my life.  The sort of ninja moves you need to obtain tickets are not in my repertoire.  People fight over a small pool of tickets released online at a known time, crushing servers in the process.  Tickets are sold out in minutes.  This certainly incentivizes certain people to game the system, knowing they can re-sell the tickets at a mark-up that companies like TicketMaster benefit from (especially since they apparently own re-sellers, according to Reznor’s post).

TicketMaster is pushing a future of auctions, but this is still a closed system, so essentially all it’s doing is creating more profit for them while letting us see just how much we’re getting screwed in a public arena.

So I just skip out on concerts.  Some bands just plain suck live, anyway.  So the variables required for me to find a concert I can get tickets to while also enjoying and making sure my friends can all go too are too much for me.  I just give up.

Right now with the advent of internet collaboration (through web 2.0/web 3.0 tools) and the success of the change.org movement, a bunch of people are looking to organize to solve systemic problems that have existed since before most of them were born.  A lot of problems were created in the 50′s and 60′s and were institutionalized in people like in my generation:  we grew up buying CDs from Columbia House and seeing a newspaper on our front lawn and watching junk food ads in between our Saturday morning cartoons.  The next generation won’t even know what I’m talking about.

It’s quite amazing to see the problem-solvers approach every entrenched, fucked-up problem out there.

The Omnivore’s Dilemma, which I’m finally reading now, discusses our culture of corn and petroleum.  So people are trying to figure out how to wean our culture off the industrial food complex.

Electricity, oil, and cars go hand-in-hand.  They have promised us cheap solutions but those solutions are going to be far less palatable very quickly.  So people are now excited about solar energy, sustainable living, electric cars, the smart grid, and radically new forms of housing and energy usage to break away from the cartels.

American politics has become somewhat frozen — the Democrats and Republicans for a while became clients to Bush’s administration, both differing very little and unwilling to break too far from what the elite thought was.  So people voted in a candidate using web sites and community organization and grassroots initiatives.  That energy is now being put into transparency and collaboration tools for monitoring the government, and insurgents within Obama’s administration are now wanting to push government data out to the public, after Cheney’s attempt to classify everything.

Universities pay exhorbitant license fees for software and administration tools.  But MIT just decided to open up its scholarly articles for free while people like Kevin Donovan and CNDLS at Georgetown are pushing free tools and OpenCourseWare as alternatives.

Cellphones are notoriously tying together handsets, access providers, spectrum control, and software in the United States.  It’s a very restrictive model.  Google, while out to make a profit, is now testing the limits of the incumbent system with Android, its fairly open system that will work across devices.

Then there’s the busting of cable TV and the advent of online content streaming…  And new journalism models…  And more and more and more.  Information is being distributed faster than organizations can lock it down.  So what’s going on is a war.  And we’re winning.  All these shitty businesses that exist by locking people into a closet and abusing them are now being blown apart by the internet and by peoples’ sharing of ideas.  Facilitated by a brutal economic and financial crisis that no one can avoid.

Concerts are another battleground.  Why can’t music artists successfully organize against companies like TicketMaster?  If more of them worked like Reznor does, eschewing contracts and the desire to maximize profit without any of the negative effects of current ticket-selling schemes, then they could quickly tip the balance.  Wikipedia’s “Ticket resale” page lists alternatives.

Lottery…  Have a period of time where anyone can offer to purchase tickets.  But then winners are randomly selected.  This allows anyone a chance to get in.  Tie it to credit cards.

Authentication…  Print out names and photos on tickets, then verify at the gates.

Float prices…  Obviously some people will pay more.  Let them pay for the front seats, fine.  Float the front-row prices but make everything else lottery.

Distribution…  Must be combined with floating prices.  Bands should see concert tours as a way to promote their brand, not just make a shitload of money from each appearance.  That is, internet stream the concert to all those who couldn’t make it to the venue.  Bands may not want this kind of accountability though, to be judged by the same online viewers through each performance every other night.  But that drives up incentives to produce quality while maximizing potential future customers of your band’s music and product.

Venues…  Venues need the big acts to make revenue.  What if all these abandoned stores and buildings were turned into cheap venues themselves? (they’re already being filled with churches, libraries, and other public centers)  Then you don’t need the mid-size venues anymore.

It’s a war.  A war on the middlemen who begin to enjoy their cut a little too much and try to grow it.  A war on the people who act as gatekeepers between content and consumer.  It’s a war they are going to lose.

The Great Disruption is going to destroy the old infrastructure and build a sustainable infrastructure in its place, one that links value directly with those willing to pay for it.  In time, the middlemen will be back in new forms, but for now, the internet is giving us infinite tools to take control of our lives back.

 

Future of Web Apps, Miami, 2009

26 Feb

Back last semester, I decided to pony up the resources to travel to Miami to attend the Future of Web Apps conference run by Ryan Carson’s Carsonified.  The ticket cost $200 for just the conference day (the workshop day was on the prior day but cost quite a bit).  It ended up that I had to skip two classes in order to arrive on Monday, get settled in, and make it in time the next morning on Tuesday for the lectures to begin.

So I decided to book a night at South Beach hostel, having learned from my Australia trip never to stay in a hotel if I’m by myself or with a buddy.  It cost only $15/night in Miami Beach, which was across the causeway from where the conference venue was.

Took a shuttle from MIA airport (which is nowhere near as cool as Ft. Lauderdale).  I’m sure there’s a cheaper way to get into town but it sure is a pain in the ass.  Nothing like going to Reagan National from Georgetown…which is a shuttle and a metro ride away, very conveniently.

The hostel was awesome.  Reviews on online hostel sites complained about the recent construction but I didn’t think it was as bad by the time I got there.  I had an 8-person co-ed dorm room.  There were only like 5 of us in there though.

The great thing about hostels is that everyone’s there to hang out and they’re from all over.  One person I met is a forensic linguist in grad school.  His friend is a masseuse from up north.  Another roommate didn’t speak English and I can only assume she was shy and Scandinavian.

I ended up only checking the beach nearby out for a little bit since it was overcast and a little chilly.  Met up with a friend of mine and ate at a cool Cuban joint down the street called Puerto Sagua, a low-key, family-style place with great food that a Miamian at Georgetown recommended to me.  I got the bistec de Palomilla, also on her recommendation, to go with plantains.

After that, I went back to the hostel and ended up hanging out the rest of the night in the lounge/bar area that had a pool table and a great vibe.  My roommates and I played pool and shot the shit until late.

So much more value in a $15 hostel than in a $100+ hotel room, for sure.  If you don’t mind communal bathrooms and bunk beds.

The next morning I checked out and took the public bus across the causeway.  Checked in.

Jason Fried began the day.  He heads up 37signals, a cool company that sells project management web app services like Basecamp and Backpack.

This company is interesting because they keep a small staff and have varied ways of distributing and charging for their products.  Their book, “Getting Real”, is excellent and is available to read free online, but pay if you want a PDF or physical book.  Basecamp lets you run a small project off it but for more features and access, you subscribe.

Fried set the tone early in his talk by contradicting popular startup notions.  For one, he said startups should not see failure as something to be proud of, as many entrepreneurs do.  You should learn from all the small successes you make, not the big failure or big successes.  That is, how did you win these clients?  How did you identify this target base to go after, leading to increased sales?  The small things you learn through experience and not through books or blogs.

Fried said that the oil and lumber industries learned to turn their waste into more successful products.  Sawing wood produced sawdust and wood chips, that became marketable.  Oil by-products allowed for plastics.  So startups should find ways to use the by-products and waste of their main projects to see if they can turn in to products of their own.  I think Basecamp was a result of 37signals needed a project management suite to run their interior operations, for example.

Fried also said he doesn’t believe in giving your service away.  The relationship between a company and a paying customer is key — Fried noted examples of companies that got bought out and then ceased to operate, partially because they had no more responsibility for their users.  This contradicts the belief in advertising and radical freemiumism that is popular now among startups.  Fried believes people will pay for a product they love.

And finally Fried said that if you’re going to hire for a position, you need to know how to do that position in some capacity first.  Else, how would you know what to hire for and who to get?  Are you going to just let HR take over?  What does your business need?  How can you give orders to someone if you don’t know what he does?

So I really liked Fried’s lecture.  He tells you what you don’t want to hear:  charge for your product instead of try to build users first.  He questions assumptions.  He has a good product.

Ben Galbraith of Mozilla and Dion Almaer formerly of Google spoke about four changes coming down the pipe for browsers.  They likened the switch to when AJAX came out in terms of how our web site experience changed.

They talked about Web Workers, which is similar to Google Gears in that it takes scripts out of the browser, which can only really handle one script at a time, and can poll them when needed.  This allows for thread-like browser operation.

They also extolled the virtues of Canvas, which lets you (I assume) create in-browser Javascriptish 3D interfaces using the HTML standard.  So, think gaming. (what is Quake Live using?)

Then they talked about increased rendering capability in the browsers due to optimization, which will mean web apps will respond far faster and allow for things like Photoshop through the web.  And finally they brought up how something like Ubiquity can make browsing a more natural experience for you than “click to go to destination” and have content that doesn’t ever match you.   It’s somewhat like a command line for the web.  An implication of all this is that web apps will be readily converted into native apps as needed.  As Al3x of Twitter said, “They could rename the “Future of Web Apps” conference to “Past of Desktop Apps”. I still wouldn’t go, but they could.”

So our user experience with the web is going to fundamentally change yet again.

Joe Stump of Digg was interesting because he talked about keeping his developer teams small enough in essentially military-squad sizes of 5-6, even if there are far more developers than that.  It keeps them in the loop with each other.  Stump also advocated any project using a code repository and keeping a consistent documentation style, along with e-mail addresses to claim blocks of code.  Stump says developers are meant to be lazy…they know they can automate something with code so they don’t have to worry about it anymore.

Aza Raskin talked about Mozilla Weave — your “state” follows you from desktop to cellphone, as an example.  He calls for Tabs 2.0, a breakthrough in our still clunky tab management as many of us keep 10+ tabs open in our browsers now.

Dave Morin and Josh Elman promoted their company, Facebook, with Facebook Connect, which looks like Facebook is now allowing you to link any site to your vast (hopefully) Facebook friend network/social graph, thus immediately populating a new account with any of your friends also on the service.  This is a great change from the past where friend networks on each site take ages to develop.

The implications for what Facebook is doing are staggering.  They are creating a massive data feed of your social graph so you can employ your friends in participating in your life, your causes, etc.  At the same time, Facebook will eventually start letting you promote products to your friends (Beacon) across various networks, bringing in serious cash.  All this while we spend hours doing social grooming on Facebook with our friends, sharing more and more content with less and less concern about privacy.

It’s no wonder Facebook is taking over in countries all over the world, even against steadfast competition.

FOWA did this lameass panel on diversity on the speaker tour at one point.  It was good to see Chris Messina up there, a huge advocate for OpenID and also pushing for co-worker, providing shared spaces for people to be creative…  Kristina Halverson was also on the panel, after giving what was really a pretty boring speech on creating good copy.  Halverson was complaining about the lack of women at the conference and speaking on stage.  Wow, really?  You mean at a coder/developer conference, there aren’t many women?

I agree that there are awesome female coders and women working in Web 2.0.  Fine, great.  And to be honest some of them are more famous than most of the men…  So why aren’t they speaking?

Maybe specifically finding women to speak is something to keep in mind for the conference, but how about just finding entertaining, informative people?  It’s only a day of talks.

If you want to talk about gender equality and inclusivity, the conversation should be around earlier programs to get kids into engineering and math and science.  The rest of the fucking argument is moot.  Coders don’t disrespect women…they want to work with whomever can get the job done.

After a brief lunch there was a Phizzpop contest.  The first team of three guys created a Kiva-like funding site for space research.  It had a great Flash interface, funny video, good presentation.  These guys couldn’t have been very old.  The second team was made up of these old guys and their presentation was flat.  Wiry, blocky graphics, no coherent business strategy or model, trying to get astronauts and Twitterers to talk and share photos in space?  The presenter was horrible and said nothing of value.  The first team won, no contest!

One thing I think is interesting is how pro the web community is with slideshows.  If you’ve ever seen a military PPT or business PPT, you know how BORING they are.  300 slides of 100 words per slide.  Miserable…no fun.

But you get startup and web people, who are so used to pitching ideas and having fun, and you get these slick, fast-moving presentations that are engaging and interesting.  Something cool I noticed.

Joel Spoelsky gave a great talk on how he thinks attracting talent is the main aspect you should focus on.  Don’t skimp on the code or you’ll get a skimpy product.  To get great talent, pay up for it.  And buy good equipment for them, like adjustable desks and Herman Miller chairs.  Give the developers private offices around the business floor so they minimize distractions.  Developers die with every interruption; they need privacy to store lots of variables and thoughts in their short-term memory while coding.  Leave them be.  Only have meetings right after lunch to minimize distraction periods.  Coders only need to feed once a workday.  Closed door means no talkie.  Have a team lunch every day in the office’s kitchen at long tables to promote a good work atmosphere.

Alex Hunter from Virgin gave my favorite talk of the day about Brand 2.0.  You could tell he’s been talking with Gary Vaynerchuk a lot because both of them are always going on about going out there and ripping it and killing it when it comes to promoting your business and engaging your customers and fans.  They’re so animated when talking about ways to engage and interact.  How do you get a consumer to love you?  Then Hunter previewed the new Virgin web site that will affect all of Richard Branson’s properties.  The site has a sort of reputation system and virtual currency and rewards you for contributing to it.  Pretty cool!  I love to see that level of interaction with the customer…  He announced that Richard Branson and Ryan Carson and Gary Vaynerchuk would be blogging on the new Virgin site.  That’s a LOT of passion right there in those names.

Makes me desire even more to have my own web startup and spend much of my day engaging customers!  That was the goal of this conference, for myself:  to get myself totally psyched to work.  As if I weren’t enough already…

After Hunter finished his great talk, I had to leave.  I caught a cab to the airport and suffered a gate change and muzak.  MIA airport really is bad.  And I missed the launch of 280atlas (interface to quickly make web apps) and Gary Vaynerchuk, who’s always hyper and always awesome.  He finished off the day and judging by the FOWA tweets, everyone was loving what he had to say.  [edit:  here's his video] But I had a great (but brief) time, even missing all that.

Bottom line, I learned a hell of a lot, and seeing these people in person made it more personal to me.  Seth Godin would call it seeking to be part of the tribe.  I can’t afford to go to any more of these things, and I am not friends with any of the people involved yet, but perhaps that will change.  For now, though, I felt it was an awesome, informative trip for a multi-disciplinarian who’s studying international affairs and international development.  It was invaluable to see where the future of things is going.

 

Political Mismatch

22 Feb

I went to a cool meet-up/happy hour between students from my Georgetown MSFS program and Tufts’ Fletcher School last week.  I had a great conversation with one of their students about how potentially there’s now an intellectual mismatch between the Republicans and Democrats.

During the last election, it was interesting that so many hardcore Obama supporters and Democrats were also sharing and passing along information about Ron Paul.  Ron Paul, a strict libertarian from Texas, had almost no mainstream coverage, but gained quite a bit of traction online.  It was predictable that he’d appeal to progressives and the tech geeks who often fall into the Libertarian category, but he was also going viral with liberals.

During my conversation with the Tufts dude, it occurred to us that maybe the Republicans were no longer the intellectual foil to the Democrats.

I might argue that Democrats are happy to find an opposing view to debate against, and that is why Ron Paul appealed so much to them.  Clearly Paul differs from the Democrats on many issues (not the least of which being adherence to a return to a gold standard), but the two parties actually do share a lot of the same sentiments (which, also, are shared by most of the rest of the world), and there was quite a bit of common ground for both sides.

Meanwhile, the Republican party, which has painted itself into a corner, being a white party (although not necessarily a rich white party), advocating radical Friedmanite/Rand/Reagan/whatever free-market ideology even after a clear failure of those principles.  They advocate fiscal responsibility after having jacked up the country on worthless money and a military-industrial complex.  Their patron saint, Greenspan, admitted flaws to his model and even advocated for a fiscal stimulus plan.  Milton Friedman died recently.  It could even be argued that people are catching wise to Jeffrey Sachs.

From an article talking with Nouriel Roubini:

“I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there’s a role for prudential — not excessive — regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there’s no market failure.”

How could Mr. Greenspan have been so naïve, I ask, hoping to get a rise. “Well,” says Mr. Roubini, “at some level it’s good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand’s view of the world to an extreme.

“Again, I don’t want to personalize things, but the last decade was one of self-regulation. But in the financial markets, without proper institutional rules, there’s the law of the jungle — because there’s greed! There’s nothing wrong with greed, per se. It’s not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there’s less fear. And second, by prudential regulation and supervision to avoid certain excesses.”

It is not that the Republicans do not have important points to make — but they’ve been infiltrated by evangelists and neo-cons.  The Libertarians resemble the Republican party of old.  And the debate between those Republicans and the Democrats has long been a productive one.

I might argue that the Republican party is in danger of dying if it does not internally reform itself.  It might be smart for the Democrats to start engaging the Libertarians as their new counter-part for a strategy for the American vision of the future.

The latest stimulus discussion is distressing.  Republican governors are talking of rejecting stimulus. That is, they’re advocating turning down free money!  At the expense of their own states, which are struggling to pay state and local payrolls and guarantees.

That ideology of a radical free-market without government intervention will not die easily.  As bad as the economic crisis and business shutdown has been so far, I think it will inevitably get far worse, and will be felt more deeply by the people, who so far have seen job losses but not a complete collapse of the support system and a failure of their government to provide them services.  That endgame is still a strong possibility since it doesn’t appear that there’s an appropriate sense of urgency to do things like restructure debt, restructure institutions, and rid accounting books of toxic assets.

So, obviously the Democrats have their heads up their asses too, as they’ve been just as bureaucratic as the Republicans since Obama was sworn in, but if they were to dismiss the Republicans and engage the Libertarians, they might be able to pull off the traditional and moderate Republicans into the Libertarian fold and get rid of the festering cesspool of idiocy, racism, inbreeding, and economic ignorance that currently exists within the Republican party elite.

 

Casualties of Stock Market Warfare

11 Jan

A friend of mine linked to a blog post from Ivan Krsti? about a massive short squeeze on Volkswagen stock back in October of 2008. Ivan does a great job of explaining what happened (so read that first), but I wanted to build upon the story.

Porsche vs. Traders

Basically, a bunch of hedge funds were betting on Volkswagen’s stock price being too high for Porsche to buy it out. So they added short positions on Volkswagen in anticipation of the price falling. At the same time, Porsche was buying up Volkswagen shares, purportedly up to 75% of them, almost the entire available float. This caused a short squeeze, and the price of the stock skyrocketed from its normal trading range of €200-450 or so to over €1k on October 28th.

volkswagen

Certain investors got creamed by this manipulation — part of me wonders how stuff like this is legal for businesses to engage in aggressive trading — but Porsche must’ve made a bundle from it. The price has since then floated back to its normal range.

But since any short trade is selling borrowed stock, it is classified as a margin trade (i.e. you borrow money from your broker in order to buy/short stock, usually at 2x your cash level but in some cases up to 10x, which caused the massive speculative bubble burst among some of the big banks last year).

Therefore, if the price increases and you don’t have the margin to cover the shares, your broker can force you to cover or add more capital. That is why some players couldn’t just ride out the short squeeze until it was over.

Said Ivan Krsti?:

“On paper, Porsche made between €30-40 billion in the affair. Once all is said and done, the actual profit is closer to some €6-12 billion. To put those numbers in perspective, Porsche’s revenue for the whole year of 2006 was a bit over €7 billion.”

I remember reading a headline about this and wondered how it could have happened…but the EU has some weird relationships between different same-country companies. I didn’t look further into it.

Ugly Americans

I remember reading a similar story in Ben Mezrich’s “Ugly Americans: The True Story of the Ivy League Cowboys Who Raided the Asian Markets for Millions”, a fine re-telling of American finance guys traveling to Japan to play the markets there in the 1990′s.  I don’t remember all the details but basically everyone in town thought a deal between two organizations was going to happen on a specific date, so everyone traded the same way on it.  The subject of the story, however, reasoned that since he couldn’t actually find anyone involved in the deal, then it must not exist.  He changed his firm’s position on it and made a ton of money when no deal happened on that date.

Warfare, stock market-style.

Suicide

The Volkswagen story came back last week when one of the speculative traders, Adolf Merckle, tossed himself under a train in an apparent suicide. Merckle himself lost about €500mil on the Volkswagen trade, reportedly, while his family’s holding company owed €5bil to banks. Obviously Merckle’s financial story was spiraling out of control and he couldn’t take it anymore.

This is what makes investing, speculative trading, gambling, playing poker, anything involving rapid changes in cash levels so dangerous and oftentimes deleterious to one’s psychological health.

Most people might now think of the recent Madoff scandal reflexively.  But that wasn’t trading or addiction to gambling; such a Ponzi scheme is a one-off affair and people got burned, but it was a consensual affair with some degree of complicity, and it’s doubtful that you’ll see much more than some sheepishness as a result of the investigation.  As my girlfriend pointed out to me, Madoff doesn’t even feel remorse after the fact.  More of an “oops” than an admittance of personal failure.

Jesse Livermore

It’s not entirely clear what caused Merckle to commit suicide (it might not have been the Volkswagen trade at all, as his “empire was falling apart”), but certainly there’s a parallel between the lives and deaths of Merckle and a famous trader, Jesse Livermore.

Jesse Livermore was a stock trader back at the turn of the 20th century. He famously shorted the market in 1907 and in 1929 and made millions of dollars (good in today’s terms but phenomenal back then). He has turned into a trading legend and Edwin Lefevre’s pseudo-biography of him, “Reminiscences of a Stock Operator”, is considered a must-read in the trading canon.

He went bankrupt a few times.  He also ended up losing big on a cotton trade gone wrong.  Eventually he blew his brains out.

Psychology

Merckle and Livermore were individual men, trading fantastic amounts of capital. It is one thing to lose a hundred dollars in Vegas, but quite another to lose what would be a massive setback ($500mil) for an entire company, let alone one person.  What I think compounds the psychological damage is to place a trade, which is usually an expression of your opinion on a matter, and then have it go against you.  Not only was Merckle wrong, he was also $500mil wrong.  The market told him in no uncertain terms that he made a bad decision.

Traders often deal with this by justifying their trades.  “Oh it’s going down, and my shares are losing money, but I know eventually it will go up.”  And they ride it all the way down.  Eventually the price plunges quickly, causing traders to panic and sell…at which point a bottom comes in, at least temporarily.  But the traders got swept out because of emotion and fear.

It is almost impossible to rewire one’s brain to not react this way — which is why good traders are so hard to find.

So at some level, for many traders, successful trades are not just making money for them, they are also verification of traders’ sense of worth and identity.  If you make a bad trade and lose a lot of money off it, not only are you poorer but you also question your own worth.  I know this because I felt the same way on some trades I made.

Which is one reason I don’t trade anymore…  I’m a lousy trader.  But I’m a somewhat decent investor, and I try to stick just to that.

Conclusions

Scale is a consistent theme within these narratives.  That is, small traders tried to play a game against a large firm on the basis of the firm’s decision-making, and so the firm held all the cards (and all the shares).  The small traders got burned.

But another phenomenon has caught my interest:  there’s so much capital out there that individuals can retire overnight.  We are all just one NYTimes best-seller or Billboard album or accidental event away from being a multi-millionaire who can coast for the rest of his life on the winnings.  Trillions of dollars float around the world, and we need only capture a million or two of that to be “rich”.

This is great for those who are keen enough to go out and grab it, but it also doesn’t scale well because individuals cannot handle much of the pressure that comes with the large swings of capital.  We are used to paying $5-15 for a meal, and we may forego that extra $1 for bacon on our burger.  But we might at the same time be in a business like poker or trading where we regularly win and lose $50k in a few minutes, and rarely think about what that $50k actually represents in terms of actual worth.  I don’t know if most human brains and nerves can deal with the swings, as Matt Damon’s character in Rounders points out (forward to 4:36 or use this link to go right there).

YouTube Preview Image

Now individuals (with 100% liability) are competing with large firms who have limited liability.  This provides huge opportunity and huge risk.  Will individuals encounter psychological problems with scaling in, competing against an integrated economy, and dealing with the fallout?

Some manage it well; celebrities like Britney and Lindsey handle it poorly.  And people like Livermore and Merckle end up in grizzly failure piles of suicidal detritus.

In the future, we will all be empowered as individuals, but with that comes a lot of accountability and responsibility.  If we can’t deal with it individually (or build in social safety nets and cultural/social communities), then it will consume us.

 

The Commons as the Missing Piece?

29 Dec

There’s some really fascinating reading out there about what’s going to happen next.

The financial crisis and American imperial overreach has prompted some interesting discussion of the Zakarian post-American world, and whether the US will continue to be the clear hegemon in a multipolar world or just a bruised hegemon that needs to collect itself for a bit after some costly imperial wars within a larger, endless, fruitless global war.  Like mortgages and loans, risk has been so divided up and re-distributed that no one was responsible for it all…until now.  Americans, so consumption-crazy and divorced from their own government that they seek people outside the beltway and a life free of obligation from serving in the armed forces, have also parceled away their civic duties so much that no one is responsible for the still-to-come falling out in government budgeting and social services, and in consumer credit.

Bolder claims by a couple Russian authors discuss whether the US will break into several parts, or whether it’s less prepared for a crisis than the Soviet Union was when it collapsed.

At any rate, Francis Fukuyama’s call for an end of history, where democratic capitalism would become the only model, has seemed to fall dully on its face as democracies have struggled and authoritarian governments have consolidated their power while allowing for economic growth, creating a hybrid model that post-Cold War idealists did not anticipate.  As Robert Kagan wrote, history has returned and dreams have ended.

Others place a lot of the blame for upheaval on the finally delivered effects of the internet age.  One term, which I like very much, is “The Great Disruption”.  Scott Anthony at the Harvard blog writes,

“The Great Disruption didn’t start in 2008. Over the past decade, technological improvements have made starting and scaling businesses easier than ever. The rise of China, India, Brazil, and Russia mean market leaders have to deal with more sharp-elbowed competitors than ever before. And industries are frantically converging and colliding.

“Certainly the pace of change has accelerated over the past few months, but leaders in media, retail, defense, health care, automotive, and high-tech can attest that they have been grappling with the Great Disruption for some time.”

Funnily enough, I googled “great disruption” and found an article by none other than Francis Fukuyama, entitled “The Great Disruption” as well, written in 1999.  Much of the article is pretty boring, and Fukuyama was clearly wrong about the end of history, but he correctly identified massive social upheaval far before the current blame game that’s been put squarely upon internet disruptiveness:

“People associate the information age with the advent of the Internet, in the 1990s but the shift from the industrial era started more than a generation earlier, with the deindustrialization of the Rust Belt in the United States and comparable movements away from manufacturing in other industrialized countries.

“But there is a bright side, too: social order, once disrupted, tends to get remade, and there are many indications that this is happening today. We can expect a new social order for a simple reason: human beings are by nature social creatures, whose most basic drives and instincts lead them to create moral rules that bind them together into communities. They are also by nature rational, and their rationality allows them to spontaneously create ways of cooperating with one another. Religion, though often helpful to this process, is not the sine qua non of social order, as many conservatives believe. Neither is a strong and expansive state, as many on the left argue. Man’s natural condition is not the war of “every man against every man” envisioned by Thomas Hobbes but rather a civil society made orderly by the presence of a host of moral rules. These assertions, moreover, are empirically supported by a tremendous amount of research coming out of the life sciences in recent years, in fields as diverse as neurophysiology, behavioral genetics, evolutionary biology, ethology, and biologically informed approaches to psychology and anthropology. The study of how order arises – not as the result of a top-down mandate by hierarchical authority, whether political or religious, but as the result of self-organization on the part of decentralized individuals – is one of the most interesting and important intellectual developments of our time.”

Perhaps Obama’s campaign and the grassroots/netroots movements are early signs of a re-ordering.

All these factors seem quite fair to me to discuss and they all probably play key roles.  But, as I’ve been writing about for a while, there is also talk about the end of radical free market ideology that became codified after Reagan and Greenspan were anointed gods among us.  Greenspan has since admitted that there were errors in his analysis.  A whole generation of Americans who grew up fearing Communism reacted against it by turning to corporatism in its extreme forms, in the process removing the key aspects behind successful democratic capitalism (accountability, sustainability, competition).

What we have now in the US is hardly a democratic, capitalist system, what with protected trade, voter suppression, weakened individual rights, rampant oligopolies, and little oversight to nurture markets.

I just started reading Michael Heller‘s “The Gridlock Economy”, in which Heller coins the term, “the tragedy of the anti-commons”.  This was a Christmas gift from my parents.  My fellow Georgetown colleague Kevin has read it and recommended it to me.  What’s struck me so far is this diagram:

gridlockdiagram

[This diagram is not representative of Heller's whole argument.  He later adds the "anti-commons", an off-shoot of "private" property.]

Heller argues that the yearning for private property rights has led to dividing things up so much that they become underutilized.  We know this to be true from egregious examples like the war for spectrum and intellectual property rights controversies and the duplication of music and movies for piracy.

What I see above is where the future is going.  The late 19th century and early 20th century gave rise to stateism, socialism, and communism.  State command of the economy, top-down solutions.  What came next was a move towards private control of resources, within the popularized desire for capitalism in the west.  That may have reached its zenith now that such carved-up property rights have been found to be unsustainable for future growth, forming an “anti-commons”.

Now authors like Heller and Lawrence Lessig are talking about the commons, allowing for what is essentially a way to democratize, incentivize, and innovate for individuals.

Of course, you could shred this argument to threads but I think that what’s left for us to actively explore legally and socially is the move towards promoting more commons.  That much seems fair to say.  We’ve tried to prevent overuse of the commons, and we went too far.  Now we will try to prevent underuse of the anti-commons.

Some questions:  where were we before all this?  Monarchies, despots, highly top-down efforts?  And before that?  Small tribes exhibiting shared, collective, cooperative behavior, competing for resources against other tribes?  How far have we actually come?

Will we go too far in promoting a commons before finding a happy medium between state, private, and commons?  Will the commons finally allow for many of the best hopes for democracy such as individual empowerment and self-actualization?  What of Marx’s claims that capitalism gives way to socialism because capitalism is inherently unsustainable?  Have we finally discovered all the core components towards a sustainable way of life, and now we just need to fine tune the balance?

 

Idea for a Georgetown MSFS Start-Up Fund

15 Dec

Hi.  I am currently a second-year student in the Masters of Science in Foreign Service program at Georgetown University.  The program is housed within the School of Foreign Service, one of the best international affairs programs and international development programs in the world.  A list of alumni is at Wikipedia.

I am considering an idea to develop a start-up fund or foundation or some other type of organization within the School of Foreign Service of Georgetown that picks people, not ideas.

Start-Up Competitions

I have a problem with the way start-up competitions are run right now.  Currently, the model is that the best ideas are supposed to win.

But what often ends up happening is that the most previously successful or most monetizable “ideas” win.

That is, some competitions choose a beauty contest format, in which those who make the best business plan win.  This model is flawed, because business plans for early-stage ideas are usually full of made-up vapor numbers, and plans for later-stage companies are usually already financially successful or well on their way.  So of course the latter ideas make it while the earlier ones do not.  Sometimes having the best business plan just means the founder took a class in how to write a sexy, cosmetically-appealing one.  Hence, “beauty pageant”.

What can also happen is that the “ideas” selected in a contest just aren’t that compelling.  This comes from the obvious fact that if an idea was so brilliant, no one else would have thought of it before and probably wouldn’t understand the impact of the idea itself until it was proven.  Renting movies by mail?  A free online encyclopedia that anyone can edit?  A street-level Indian organization that lets streetkids dial in with their problems?  These things aren’t sustainable, monetizable, or realistic, right?

Wrong.  Netflix, Wikipedia, Childline.

Many final-round selectees are incremental improvements on marginally interesting/useful products that were already successful.  So funding these grinder ideas is not really selecting a “great idea” at all.  The biggest ideas can sometimes be “ah hah, that’s so easy!” ideas, but I think more often than not, the ideas that really change things do not make sense to people until much later.

And in fact I would go a step further and say that these paradigm-shift ideas do not occur in a vacuum.  They are the products of great minds.  Much is made of the professor at Stanford who passed not only on Yahoo! but on Google as well.  They weren’t obvious winners initially, but Brin and Page and Yang and Filo went on to do great things like Google.org.  Omidyar at eBay took an idea that people thought would fail against Amazon and has gone on to do philanthropy work.

People still don’t understand Mark Zuckerberg of Facebook but he has the potential to completely control the online social world.

So it is these people who envision what the future is going to look like…  It is not that they happened on an idea by luck and never innovated again.

So why do start-up competitions vote on ideas and not people?

Start-Up Competitions Judged by Start-Ups

I felt as though TechCrunch 50 was a pretty successful start-up contest.  It achieved success through collaboration and openness.  If I recall correctly, the top 50 ideas were voted in by the TechCrunch reader base.  This introduces some serious problems such as bandwagoning and successful block voting campaigns, but it might help to reduce the chaff.  It also doesn’t get rid of the “understanding bias”; a truly large idea may be misconstrued or misunderstood, or a bad idea may hide a truly gifted entrepreneur.

The top 50 ideas pitched their products live at a conference to a panel of serial entrepreneurs, entrepreneurs, and people really knowledgeable in the start-up/web space.  All of this was beamed over the web, and the ideas had web pages put up with reviews of their products.  The feedback was given to them by the panels and through online comments.

Start-Up Literature

What’s funny is a lot of the start-up literature out there spends a lot of time talking about how good the founders of an idea are.  Are those people the type that it takes to be a start-up leader?  Do they have good breadth of knowledge?  Inventiveness?  Adaptability?  Charisma?  The desire to work one’s ass off for a few years before ramping their business up?

In some cases, the literature says that angels and VCs and whatnot will often fund something on the basis solely of its founder and on the idea secondarily if at all.  They know that a good founder will make just about anything work.

So why does it come back to ideas and not the people behind them?

Georgetown MSFS’s Role in the Ecosystem

I think Georgetown MSFS has a unique position; it is placed in DC (a massive swirl of politicians, interns, NGO do-gooders, lobbyists, start-ups, consultants, activists, city dwellers, culture-lovers), is built into a fantastic school with an undergraduate base, has a powerful Jesuit tradition of erudition and moral value system that values diversity, and pumps out graduates who end up doing some of the craziest, most innovative, bizarre, important things you’ve never imagined.

In terms of its competition, MSFS doesn’t have many peers in terms of having fascinating people doing politics.  Johns Hopkins SAIS is closer to downtown but seems to be more applied economics.  Where do SAIS grads show up?  I don’t know…I don’t read about them often except that Tim Geithner just got nominated for Treasury.  George Washington, American, and George Mason are also fine schools but don’t dominate politics quite the same way Georgetown does.  As a caveat I should add that I’m amazed that the calibre of people who move out of these schools — DC truly is a place where anyone you meet on the street ends up being just the most fascinating person.

Schools outside DC (Columbia, Harvard, Yale, etc.) are also extremely good — don’t think I’m taking anything away from them — but they’re not as positioned for what I propose.

A Start-Up Fund for People

So Georgetown, which has a long tradition of truly singular models of virtue, ingenuity, and innovation, could build into its School of Foreign Service an organization that identifies the future possible leaders and issues them a challenge:  start up a company or organization that has the potential to help lots of people.  Instead of funding an idea, you fund a person.  The scope could be limited to social entrepreneurship, and/or to a “social business” model which does not pay out to shareholders but instead reinvests profits into helping more people.  This may be optional; while ideas shouldn’t be limited, you don’t want some SNAFU like this one guy I listened to on a panel once who, in response to “What do you want to do with your life?” answered “I want to create a new financial derivative.”  That was back in 2007 before the financial crisis began.

The fund would support the person enough to live for a certain duration of time, with further money allotted for a company space and, depending, money to hire outside help (like a programmer or two) if it can’t be crowdcoded.

The person could of course recruit other people from the campus or partner with other people chosen by the fund.  People wouldn’t have to apply to be selected — they could be nominated by others.  Any barriers to entry such as long admission applications would be minimal, so that those who are discouraged by doing yet more stupid paperwork for something they may not even have a chance for won’t be discouraged.

Heck, encourage an online standardization:  use LinkedIn for online résumé collection.

A Commons

A further addition to this is providing these people with a commons, as I described in an “Internet Commons Business Idea” post on my reputation research blog.

This would be a common area with laptops, large meeting tables, whiteboards, projectors, office supplies, everyone you need to bring a team together and brainstorm and code and do business, fit with phones, business address, full facilities and services.  Any empty office space can be rented for this purpose.  It doesn’t have to be much — just a place where a founding team can work together in an open area…and even collaborate with other teams.

The Final Piece:  Leveraging Politics

In the same way that Stanford seems to be the nexus for new web start-ups and Harvard/MIT seem to be the braintrusts for a lot of new start-ups and academic projects and research, Georgetown could become the hotspot for political start-ups.  There’s been much talk of Government 2.0, or bringing the US government into the Web 2.0 world of online collaboration.  There’s no greater concentration of activists, lobbyists, NGOs, NFPs, etc. than DC (Geneva?).  Not only is there a massive network of inspired minds here in DC, but they are also somewhat idealistic, risk averse, and willing to do something bold in order to effect change.

Sounds like the perfect place for start-up culture to me.  Combine this with a vibrant Georgetown political life — not the cocktail-drinking elite as John McCain thumbed his nose down upon — but hard-working, innovative, entrepreneurial Georgetown figures and personalities.  You have tons of personalities to choose from to help found this new start-up fund.

What Do We Get?

The end result is a closer approximation to how great ideas actually are made successful.  Choose great people:  you know from your circles of people which ones are always thinking of solutions to problems.  They may be the kinds who just have the energy and risk adversity to go out and start a new company.  They may just be really efficient at small projects.  At any rate, I don’t think these people are that secret.  Some people are start-up people, others aren’t.  Give them time to develop a project and maybe they will come up with a better idea than pure beauty-contest-business-plan start-up competitions can.

Certainly other organizations do something similar to this:  Ashoka, Skoll Foundation, Omidyar.  But an MSFS fund could focus on its core strengths:

  • Utilizing the Georgetown campus, network, and Washington, DC political social sphere
  • Building a core around awesomely diverse, eccentric, and productive students, alumni, and faculty
  • Funding key people, not necessarily ideas
  • Focusing on solving social problems in keeping with Georgetown/Jesuit tradition
  • Incorporating Georgetown’s unparalleled insight into international affairs, policy issues, international development, and interdisciplinary research.

Who else can compete with us there?

I don’t know.  I just think this way makes a lot more sense to how humans innovate.  And I think Georgetown’s atmosphere is one of the few places where that energy could really be supported flourish as part of the community.

[Extra reading:  entrepreneur hotels]

 

My Tech Policy Memo to President-Elect Obama

12 Dec

For my excellent “What’s Shaping the Internet?” class with Professor Michael Nelson, we had to write a 6-page memorandum to either President-Elect Obama, Google CEO Eric Schmidt, or some other organization head, using three main policy points.

I chose to advocate for an innovation commons, a push for open-source government interfaces, and a national identity system.

I posted the memo online at Scribd, which hosts my other academic papers as well.  Scribd is awesome — it embeds papers within Flash so you can see the original format, and also export to PDF or crowdshare it. I would embed it here but WordPress.com doesn’t let you embed most content. =(

Again, READ THE MEMO HERE.

I know that my memo does not have a conclusion. =)  I opted to leave the explanation to the executive summary, so it’s not a proper structure…  Memorandums are sometimes the hardest papers to write, because they need to be very brief, concise, and appealing.  That’s why our program stresses it so much.  But I strayed from it here.  Hopefully the content carries the weak structure.

What the Memo Said

My logic in the memo was that the government should create an innovation- and business- enabling environment by ensuring universal broadband access, net neutrality, a hybrid public commons/privately auctioned spectrum, and increased R&D with clustering through universities and companies.

After we get more people online and collaborating, we can call upon them to help build and inspect open-source applications to allow everyone to interface with the government more efficiently as befitting a digital 21st century.

And finally I called for a national ID system to help unify all the databases, ensure personal privacy and access controls, and allow us to fix our own information and use it better within the government.

The national ID system would use a social reputation system, part of which I’m hoping to create through my start-up, Galapag.us — see the research blog if you haven’t already.

 

Interesting Economic Datapoints

12 Dec

So I’m done with this semester and I was just watching C-SPAN2, which was covering the Senate vote on the automaker bailout.  The vote failed 52-35 or so.  Dow futures were down -325 around the time of the vote.

I am still cash but am getting a bit more antsy to buy than I was before.  I have an “I know it when I see it” approach to bottoms and tops, so I’m waiting for that feeling again.

But it’s clear that the economic outlook is not good, with record unemployment numbers, commodity and energy shocks, and real bloodshed within the old American industries like media, auto, and finance.  Tech and internet has not been immune, but their companies are still announcing improvements and new products…

AMZN

I bought AMZN at 36.5 one day but got shaken out at the end of the day by climax selling.  Since then, AMZN rallied and touched 54-55 as the market bounced off fresh lows a few weeks ago.  What a pain that was to watch.  The rally came off Obama’s announcement of the next economic team, but it’s unclear whether there’s correlation there.

AMZN should announce the next Kindle soon, and it has been opening up its web services platform up even more.  The next generation of Kindle will suck people like me in to buying digital books (and probably be the last time I buy actual books en masse) and any increase in consumer demand will grease all of AMZN’s cloudy wheels.

TED Spread

The TED spread tracks the spread between inter-bank loans and US treasury bills and is a measure of liquidity in the credit markets — if there’s a high spread, then banks aren’t lending because it costs too much to do so.  Here’s the chart:

08_12_11_ted

After the initial credit shock when Bear Stearns folded in Augustish, 2007, you can see that the spread spiked up to about 200 basis points.  From then, the market stabilized until Septemberish of this year, when all the Fannie, Freddie, Lehman, AIG, etc. crap happened.

The market was on the brink of collapse until the Fed and Treasury decided to do whatever it took along with a massive finance bailout.  Until the public money was sure to flow in, the TED spread spiked up to 450 basis points — essentially no money was flowing anywhere within the private banking sector.

The spread then fell and has stabilized as the market’s continued to sink.  Now 200 basis points seems to be an agreed-upon number, but note that it is only back to where we were after the first credit shocks.  The normal TED spread was well below 100 basis points up until 2007.

In other words, there’s still substantial risk and unwillingness to lend.

[Note:  On Tuesday, Dec. 17th, the Fed cut rates essentially to 0%, which should reduce the usefulness of looking at the TED spread since the Fed is essentially acting like another lender...]

Treasury Bills

On Tuesday, for the first time ever, three-month treasury bill interest rates went negative!  This means that, for a brief period, people were willing to PAY the government to hold their money instead of seeking a return elsewhere.  That is, people didn’t even want a return ON their money; they just wanted a return OF their money!

Later, the government managed to sell $30bil worth of T-bills at 0% interest.  Which is still ridiculous.  Here’s the chart:

08_12_11_tbills

From The Sun's Financial Diary

These are rare times…we keep seeing records being broken, aberrances being observed for the first time, red-flag indicators going off everywhere.

Iceland

Iceland’s finance-dominated stock market completely collapsed.  Here’s the chart:

08_12_11_iceland

Icelanders are devastated.  There’s pretty much nothing left.  But to add insult to injury, the index, which had been hovering in the 600′s, just plunged down to the 300′s this week after another major bank failed.

Oil

Here’s the thing about oil.  Everyone who’s been predicting peak oil soon and all these ridiculously paranoid and apocalyptic scenarios were made to look like experts over the summer when oil prices spiked to the $140′s and gas hit $4/gallon.  A lot of financial risk management and analysis reports were written up until now, assuming continued high oil prices.

Of course, oil has since crashed.

08_12_11_oil

In other words, these knuckleheads don’t know what they’re talking about, or where oil prices are going next.  The term “black swan”, I should add, really pisses me off.  Geez.  Enough with Taleb!

Certainly the shock of oil prices has everyone rattled.  The instability of prices along with Obama being elected will hopefully be enough to spur long-term energy innovations to get us out of this fucking mess.  The time for US energy independence is now.  Especially if we really believe in protecting national security, not to mention national (and global) stability.

My position on oil is that its days are numbered as the major energy source, but it will still be needed for many products and as one of many sources of energy, even after we’ve converted heavily away from petroleum.

I also do not believe peak oil is soon.  I believe oil bedevils much of our foreign policy and is tied to our adventures with Israel and the Middle East and South America.  I believe we have in our own hands the ability to rid ourselves of these albatrosses.

I believe the chart above correlates extremely well with the “war” in Iraq, starting in 2003.  I am not sure what happened this summer in 2008.  I know that the Status of Forces agreement started hitting Iraqi politics around the same time but the massive oil spike could have been a climax of worldwide fear.  I don’t know.  The Iraq “war” seems to be all but over now that the SOFA passed and Obama is in, and I think oil is pricing that news in.  Oil has always correlated well with foreign wars.

What Next?

It’s amazing what we as Americans are willing to inflict upon ourselves.  All of this is solvable, and we know approximately what the causes are.  Until Obama got elected, we refused to acknowledge it.  Here’s hoping that Obama can translate a good plan into action. But it will be hard to generate political action when so many interests are set against it, even if it means saving our economy.

In the meantime, the economy and financial markets are still a mess, even after a bunch of layoffs have helped companies streamline.  Will those frictionally unemployed turn into structurally unemployed?  With little emphasis on job re-training, and a prolonged recession, one might think so.

Something does not feel right at all out there in my gut, making me suspicious to put my money forth, and we have yet to deal with the next big financial bomb:  consumer credit.  What happens when people, many of whom have lost jobs and have lost a safety net because of Republican idiocy, run out of money to pay back creditors?

[60 Minutes just did a report on the upcoming 2nd mortgage shock:  option arms resets.  They will balloon homeowners' monthly expenses and look to be as bad as the first shock.  Watch the entire video for more.

07-10-24d_mortgage-resets-comprehensive

The light-green reflects the damage we've dealt with already, and the light-yellow and yellow are what's still to come.  Sobering.]

 

Inefficiencies: Everywhere

09 Dec

I have this running series of posts grouped into “Inefficiencies”, where I want to look at really poorly-run business sectors and figure out how to attack them if I were an entrepreneur in their space.  Thanks to the US’s infatuation with “free markets”, which really means protected corporatism these days, there’s a litany of examples of shitty practices that are deserving to be over-run:  cable TV (which my buddy MonkeyPope just got rid of now that there are just so many substitutes like Hulu and Netflix and free downloads from the content owners themselves), US government foreign language preparedness, and near and dear to our hearts these days:  cars.

I keep coming back to Clay Shirky’s amazing video on the “cognitive surplus”:

YouTube Preview Image YouTube Preview Image

Shirky describes the “cognitive surplus” as all the hours of thought unlocked as people move from passively watching TV or listening to radio and now doing things like adding edits to Wikipedia or gaming online with other people.

He goes on to say that the internet is so much more enticing because it’s interactive, whereas before it was the content providers who determined what we were allowed to do.

And now that we have a taste for this level of interaction, we’re going to go out and “carve out” a bit of the cognitive surplus to look for interaction in all those areas we previously passively accepted what we were given.

So, where am I going with this?

Airports

Airports are the fucking worst.  They are like life’s black holes.  Thanks to the wonderfully competent TSA, we now spend a majority of our time at the airport circumnavigating various security roadblocks.  This is already after we paid quite a lot of money to get a flight we probably weren’t completely satisfied with, on an airline we know we hate but are willing to save bucks on to fly with.

We get through security eventually and then we’re stuck in a strip mall of shitty restaurants and tchotchke stores.  We couldn’t bring in liquids to drink, so we have to go buy those.  What’s the worst is that we can’t even use wifi for free to escape from the misery that is waiting for a flight!!  Crying babies, countless intercom messages, other passengers frazzled about their strained flights.

And we have to pay a fortune just to log on.  The airports in their wisdom have whored out to access providers who grant us very generously access to 24-hour accounts (because we plan on being there for 24 hours, right?) for a low price of $15.

Hope you brought a book or iPod or feel like using EVDO or 3G on your iPhone.

Government Offices

Need to renew your paperwork at the DMV or the election office or get a visa?  Get ready to wait in long lines with nothing to do.  The government always provides buildings with a nice sterile, fluorescent-lighted linoleum feel to it, as you’re helped by workers who are just so tired of dealing with your type.  The worst part is that you know exactly what you need to do and what needs to happen, but you have to wait for a gatekeeper to process you.  And probably enter typos in your information at that.

Restaurants

The whole routine and ritual of not being able to make reservations at a place, then waiting around for a table to open, if you didn’t go somewhere else instead, and then figuring out how to provide enough cash from ten different people to pay up is such a rigamarole.

It’s tough to fault waitstaff sometimes for not attending to your every need, but it would be nice to be able to pass along your requests electronically so that they can prioritize their tasks and respond to customers without actually being there.

Looking for the Mouse

Shirky calls the internetification of everything else a process of “looking for the mouse”, a metaphor he explains he got from his kid who saw a TV and tried to find the computer mouse to use it.  His kid wasn’t happy just watching the TV.

Well, I think it’s about time we found the fucking mouse in places like airports, government offices, and restaurants.

We should be able to use the internet in an airport and on the plane for free.  Allow advertising on individual monitors on the planes or something to help subsidize it.  I don’t know.  We should have a bill of rights for being passengers on planes.  We should be able to expect open, transparent ticket pricing.  Why do airports sit idle all night instead of running flights 24 hours a day?  I’d be willing to fly early in the morning if it meant less bullshit.

Why can we still not vote online?  Why can’t we request edits to our government-held information online instead of heading to the office to stand in line?  Why do we need visas to go to allied countries?  Why are most government actions still requiring laborious procedures in person conducted by overworked staff?  We’re sitting on the greatest social media tools to ever be available to a government to allow its many citizens to take action and make an online system that works, and we still insist that things be done the old way.

We should be able to order electronically from our tables, see how much our orders are, pay individually by selecting what we ate, and request special or extra things from the staff, including sending compliments to the chef.  If eating out is such a social ritual, why are we locked in to seeing a host and a waiter?  Why don’t more restaurants embrace online marketing, having better menu web sites and more engagement with the community?

Entrepreneurship

I think entrepreneurs should focus on these questions and figure out how to solve them and take advantage of them.  There’s just so many inefficiencies out there that it’s a massive opportunity but also just incredibly disappointing.  People have come to expect the worst when they have to interact with these gatekeepers, but really the gatekeepers could fully embrace the new stuff become darlings of their customers.

We’re in the midst of a financial crisis that is still not resolved, and it’s causing a lot of pain to large, bloated, anti-competitive sectors of the US economy that refuse to change.  Automotive, media, telecommunications, publishing, pharmaceutical, industrial…all the things that worked in the past, no longer work quite as well.

This is a condemnation of current American “competitiveness”.  We better get our fucking heads in the game and figure out that we need to massively revamp our innovative capacity and challenge all our old assumptions, because right now we’re a rotting mess of dying companies that are begging for bailouts from a government infiltrated by failed businessmen under Bush’s corporatist regime.

Have any more places of inefficient misery that need fixing?  Comment below!