Tag: Political Science & Economics

Seven Important Books

Category : Books
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Over the past nine months or so I stepped back from writing and threw myself into reading. I took a trip into the classics, reading Wealth of Nations, Crime and Punishment, Brothers Karamozov, 1984, Brave New World, The Autobiography of Benjamin Franklin, some light fiction and fun non fiction, but what I’ve really been interested in lately is the intersection between technology, our economy and how it’s changing our culture, both for the better and for worse.

I’ve started to formulate a thesis. And I don’t really like the conclusions that I’ve been reaching. Over the next few weeks, I’m going to be writing about what I think might be going on, why its happening and how it may affect our present and our future. These are the key books that I’ve read that have shaped my thinking.

World

Antifragile – Nassim Nicholas Taleb

Taleb’s follow up to best selling and paradigm breaking The Black Swan, Antifragile, is probably the most important book in the past decade, if not longer. I found myself smiling and nodding in agreement throughout the book. And I’ve found that if someone’s read this book and enjoyed it, I’ll likely be their friend and share a similar world view.

Taleb creates a new word: antifragile – things that grow stronger from stressors. Humans get stronger from mild stressors. A glass vase does not. The restaurant industry does. Wall Street does not. Taleb shows that lack of skin in the game, the agency problem, micromanaging and a lack of understanding of real risk is causing our world to be more fragile when we should be orientating toward antifragile approaches.

Shorter: My Rules for Life in The Guardian.

You Are Not a Gadget – Jaron Lanier

Lanier invented the term Virtual Reality and has been involved in Silicon Valley since the very beginning. And he thinks technologist have gotten it all wrong. We’ve built technology that serves technology, not technology that serves humans. Our iPhones control us, not the other way around. And it’s wrecking our culture and economic future.

If you can’t read the book, read his oped in the Wall Street Journal, World Wide Mush.

Who Owns The Future – Jaron Lanier

In Lanier’s follow up, he talks about how technology is accruing massive returns for those who have the biggest, most powerful servers, not those who have the best ideas or give humans the most benefit. This techification eliminates the middle class and pushes economic returns up to a small group and gives the rest candy. Facebook without any users is worth $0. So why do so few people as a percentage earn money using Facebook?

If you can’t read the book, read his NY Times piece Fixing the Digital Economy.

Coming Apart – Charles Murry

Murry shows how the US has developed extreme income inequality that’s led to a small, super rich upper class that’s both physically and culturally separate from the rest of the population, similar to Latin American and other oligarchical countries. His description of how the US looks today is spot on and some of the consequences of income inequality, but I don’t buy his social root causes. I believe a similar pattern is taking place globally.

If you can’t read the book, read his Wall Street Journal piece The New American Divide and then Ross Douthat’s What Charles Murry Gets Right from the NY Times.

US Specific

Rise of the Warrior Cop – Radley Balko

Balko traces the militarization of US police forces from the US’s birth to present day and shows how the drug war and now terrorism fears have turned a police from traditional beat cops who knew everyone in their neighborhoods into body armored, automatic weapon toting, tank driving para military forces that have eviscerated the 1st and 4th amendments, wreaked havoc on families, killed innocents and brought terror the american households, all without even doing anything to lower crime.

Shorter: Why Did You Shoot Me? I was just reading a book! from Salon.

Three Felonies a Day – Harvey Silvergate & Alan Dershowitz

The US federal law system is now so vague that we all commit at least three felonies per day and the only reason we don’t get prosecuted is that we haven’t run afoul of a politician, a bureaucrat, or a prosecutor or even just gotten unlucky. Rise of the Warrior Cop interplays very well with this book. While I don’t recommend reading this book for pleasure reading, as its clearly intended for technical attorneys, the thesis is spot on.

These two books together paint the picture of why I’m very worried about NSA spying. Between a militarized police force, a government that collects all of our data and a criminal justice system that can indict you with lifetime jail time for living a normal life, we’re well on our way toward a police state.

Shorter: You Commit Three Felonies A Day from The Wall Street Journal.

Fiction

Super Sad True Love Story – Gary Shteyngart

A dystopian, but extremely readable look at what the future might look like where everyone’s always connected to the internet, we’re constantly alone together, the government monitors everything, the US is a banana republic and everyone is rated on everything via metadata. Read it.

Photo Credit: hobvias sudoneighm

An Empire Eaten From Within

Category : Political Science & Economics
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In a recent edition of the Economist, Ariana Huffington claims we face a stark choice as Americans.  We can continue going down our current path and turn into a third world country, a shell of our former selves, or Americans can demand more from their leaders and start to take the lead in their own lives to restore the US back to previous heights.

The US is already starting to resemble a third world country in many ways:  The gap between the rich and the poor is growing toward South American levels.  City and state governments are making decisions to cut school teachers and school days, turning off street lights and deciding to let some roads return to nature.

Our infrastructure is beginning to crumble and we’re developing an underclass of unskilled, unemployable people in addition to the abundance of service jobs like nannies, maids, restaurant workers and farm work that are being filled on one side by over educated workers and on the other illegal immigrants.  Our deficits are some of the highest per capita in the world and our national debt is the biggest in the history of the world.  All the while, we demand more.

The rich want to pay lower taxes, but still get the benefits of the state.  Bankers want to be able to play in their casino and if they screw up, they cry to be bailed out from the public coffers.  Public unions want to retire in their 50s or early 60s with a full pension and health care, while contributing hardly anything toward these benefits while they are still working.  Republicans want to keep spending huge amounts on the military and continue to spend on bases in 75% of the world.  Democrats want to spend more on transfer payments, regulation and social programs and nobody is willing to compromise.

Economist say that people are “motivated by self interest,” but I think we’ve crossed the line from self-interest to plain old selfishness.  Most Americans want theirs and don’t seem to care about the rest of the country.  They think (and sometimes say), “as long as I get mine, fuck the rest.”

America’s rich are starting to realize that they don’t really need us anymore.  They can live the good life in the United States while producing and selling their products in developing markets around the world.

I’ve written extensively about how Americans have lived the good life off of debt, but it seems like the rest of the world is starting to see through our profligacy.  People want to continue to live in McMansions with the latest cars and electronic toys and spend outrageous amounts of money on the military, health care and social security, without feeling any of the pain of actually paying the bills.

I haven’t really proposed any solutions, mostly because I don’t really see any that have a chance of working.  It will take a huge change in America’s mindset.  I don’t generally subscribe to the “great leader” theory of change, but they do come around every once in awhile.  Ghandi, Martin Luther King , Nelson Mandela and others have inspired huge, national movements that changed the world, but most change comes from within, from smaller movements.

I think the only way we will see the change necessary to save America from it’s current trajectory is a leader or a movement that is willing to tell it like it is.  Americans need to be told:

  • Manufacturing jobs are not coming back
  • Americans need to be able to compete with people in the rest of the world, so you need to try in school.  A college degree with no skills does not cut it anymore.
  • Our standard of living is going to fall, we need to downsize our lives
  • We ALL need to make sacrifices and many of these sacrifices will be painful.
  • You can’t always get what you want.  If you’re demanding 100% of your agenda, you’re being selfish and damaging the country.  Even if you’re demanding 75% you’re still probably doing it.

We need to paint people who are being selfish (not self interested) as the selfish people they are.  Public unions can’t continue to live like they have.  Bankers cannot continue to speculate and gamble with our money.  The military will have to be scaled back and bases will have to be closed.  We’ll have to examine legalizing marijuana and releasing non-violent offenders.  We’ll have to look at privatizing portions of social security.  We’ll have to demand that Americans take personal responsibility and get in shape (economically and physically).  This will lower health care costs for us all.  We’ll need to back off the ledge of our 24 hour, soundbite, black vs. white “news” cycle and go back to actually solving problems.

We need to create a common sense movement to tell our leaders they are on the wrong track.  It’s not a Republican/Democrat issue.  It’s a systemic problem.  The current crop in both parties are part of the problem.

We need to turn inward and take a long look at ourselves and start to take responsibility.  We have the government (and the media) we deserve.  It’s a selfish government, catering to the needs of special interests, rather than the greater good.  We need to demand that our government tackles the big problems, not the politically expedient ones.  If we don’t, we’ll continue down the path we’re on.  Nobody will do it for us.  It’s on us.

If we don’t, we’ll end up an empire eaten from within.  And it will be our fault.

Do you agree?

The American Economy and The Future

Category : Political Science & Economics
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There are two Americas: those with skills and those without.  And by skills, I don’t mean those who have a college degree: I see tons of college grads looking for work who don’t really have any skills.  If you want to be successful in our economy, you must be creative, innovative, hard working and on the cutting edge.  You have to work harder and be more innovative than workers in other countries.  Or you must be willing to do jobs that nobody else wants, but require skills (plumber, electrician, etc).  Simply getting a college degree doesn’t guarantee you anything anymore and may in fact be harmful to many people since college costs so much these days.

Right now, people with skills are doing ok, and in many cases really well, but those without are not.  The demise of the US factory worker has been well documented, but I think we are now seeing the demise of the midlevel, but well paid, white collar worker.   Because of a convergence of technology, globalization and higher productivity, companies are realizing that they can get along fine without as many people in house.  I think the days are gone where you could come out of college, follow orders and keep your head down and make a good living.  Seth Godin says that there are two recessions, one that is cyclical and the other that he describes below:

This is the recession of the industrial age, the receding wave of bounty that workers and businesses got as a result of rising productivity but imperfect market communication. In short: if you’re local, we need to buy from you. If you work in town, we need to hire you. If you can do a craft, we can’t replace you with a machine. No longer.

The lowest price for any good worth pricing is now available to anyone, anywhere. Which makes the market for boring stuff a lot more perfect than it used to be. Since the ‘factory’ work we did is now being mechanized, outsourced or eliminated, it’s hard to pay extra for it. And since buyers have so many choices (and much more perfect information about pricing and availability) it’s hard to charge extra.

Thus, middle class jobs that existed because companies had no choice are now gone.

It started with factory work, but has moved into accounting, medical transcription, IT and a whole host of other industries.  I think it’s pretty clear that Godin is right.

So what does that mean for us?

We’re living through a time of tremendous upheaval.  People are scared because they don’t think they can control their lives anymore.  Many don’t believe that if they work hard, they will be successful. They might even find themselves on the unemployment line.  Global forces of competition are hitting Americans at a time when we’ve become fat and lazy (literally and figuratively) and accustomed to living the good life on credit.  We’ve gotten to a point where many Americans believe that a large percentage of jobs are “beneath” them.  Most people who are alive today have never lived through hard times and now 1 in 6 Americans receive some form of government aid.

Our government is filled with a political class on both sides of the aisle that are pretty much the same.  The current republicans may claim that they want less government, but their actions don’t demonstrate it.  Both parties just want to stay in power.  They raise hot button issues like don’t ask don’t tell, gay marriage, abortion and other red herrings to gain political points, but don’t tackle problems like our massive federal debt, unfunded liabilities like Medicare/Medicade and the Social Security Ponzi scheme.  They don’t make sensible policy changes because neither side can score political points. Instead, they spend and borrow from China.

The tea party is a reaction to people being scared of our changing times and I don’t blame them one bit.  It’s a classic reaction to changing times.  There’s been tremendous upheaval over the last 10-15 years, culminating the recession that started in late 2007.  We’ve lost our manufacturing base.  China, India, Brazil and others are growing in strength.   We’ve commoditized human labor for a huge percentage of our workforce.  Unemployment is over 10% and we (government, citizens, businesses) have spent trillions of dollars that we don’t have.   People want to believe that the good life is coming back, but deep down, I think they know that our standard of living can’t be as high as it was through the 90s and 2000s when we lived the high life on credit.

When people are scared and don’t believe that they have any say in their lives, they can lose hope and sometimes turn to violence.  Muslim terrorists are generally well educated, just like you and me, but lack any outlet for their protests other than violence.  Repressive regimes forment violent opposition because they take away all other forms of protest.  The US system is not repressive because the government is taking over our lives.  Instead, because our politicians all want to stay in office and follow their own self interest, our government has become dysfunctional.  Nothing gets done and people are losing hope.

So how do we fix this?

We need a leader who is willing to tell Americans the truth and use common sense to get us back on the right track.  We need someone to tell us that we need to sacrifice if we want to continue to be a world leader, rather than pander to interest groups.  We need a leader who is willing to enact policies that will piss off teachers unions, the military, trial lawyers, the intelligence community, wall street banks, public employee unions and other interest groups equally.  We need someone to simplify our government and reign in spending and align our incentives so that innovators can create jobs.   Even though I didn’t vote for him, I was hopeful that Obama might be the right guy, but he hasn’t been (I didn’t vote for McCain either).  His policy is to exert more government control and then spend our way out of problems.  I don’t see anyone in the republican or tea party besides maybe Paul Ryan who is willing to tell it like it is, but he’s been marginalized by the party of no.  We can’t just keep the status quo or we’ll be bankrupt.

What do you think?  Am I right, wrong, crazy?  What do you see in the US’s future?

Thomas Friedman’s Advice to President Obama is Spot On

Category : Entrepreneurship, Entrustet, Political Science & Economics
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From time to time, Thomas Friedman writes something that has the power to change lives.  So far, Friedman’s The World Is Flat has had the greatest impact on me, as it inspired my business partner, Jesse Davis, to start work on our startup, Entruset.  The ideas in his book are still reverberating through our company today, as we got our first mention in the press in today’s Washington Post and continue to work to solve the problem he identified in the book.  You can read the entire story over on our company blog in a post called How Thomas Friedman and The World Is Flat Helped Spawn Entrustet.

I think his latest piece titled More (Steve) Jobs, Jobs, Jobs, Jobs has the potential to impact the lives of even more people.  Friedman says:

The most striking feature of Barack Obama’s campaign for the presidency was the amazing, young, Internet-enabled, grass-roots movement he mobilized to get elected. The most striking feature of Obama’s presidency a year later is how thoroughly that movement has disappeared.

I remember getting inundated by posts from my friends on Facebook in the weeks leading up to the election urging me to support Obama, attend rallies or make sure to go out and vote.  The movement continued for the next few weeks, but has completely lost steam.  Even the most ardent Obama supporters among my friends aren’t engaged via social media anymore.  This in itself is pretty amazing, but not Friedman’s main point. He wants President Obama to re-engage America’s youth and doesn’t believe that going after Wall Street or other negative methods will work.  He continues:

Obama should launch his own moon shot. What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “Start-Up America.”

Obama should make the centerpiece of his presidency mobilizing a million new start-up companies that won’t just give us temporary highway jobs, but lasting good jobs that keep America on the cutting edge. The best way to counter the Tea Party movement, which is all about stopping things, is with an Innovation Movement, which is all about starting things. Without inventing more new products and services that make people more productive, healthier or entertained — that we can sell around the world — we’ll never be able to afford the health care our people need, let alone pay off our debts.

I am 100% behind this idea.  It makes perfect sense and would appeal to both sides of the aisle at at time when partisanship is at a seemingly all time high because of the fight over health care.  It would harken back to the Obama that many young people voted for, rather than the less than inspirational version of the President who we have gotten to know since his election.

I believe that entrepreneurship is our best hope for saving the US from its mammoth debt obligations.  We need to find ways to “grow the pie” rather than trying to raise taxes on a stagnant (or shrinking) pie.  I believe that all kinds of entrepreneurship are going to be necessary to solve our problems.  We are going to need traditional entrepreneurs like Steve Jobs and Bill Gates, but we will also need social entrepreneurs like Muhammad Yunus and the social entrepreneurs featured in Business Week.

I think that if President Obama were to make entrepreneurship a central portion of his presidency, he will find a huge groundswell of willing entrepreneurs who will be willing to help.  Friedman mentions National Lab Day and the Network for Teaching Entrepreneurship as examples of organization that are helping young people get interested in innovation.  Both programs would not be able to survive without older, successful mentors.  I think that entrepreneurs are willing to help out as mentors and young people are waiting to be entrepreneurs, but some are just waiting to be pushed.  Inc. Magazine contributor and author of Upstarts!, Donna Fenn says:

Over 75% of the entrepreneurs I interviewed for my book, Upstarts! said that they were very or highly likely to start another company; most had already founded two or more.”  She continues, “70% said their companies had a social mission. But make no mistake: they’re laser-focused on the bottom line as well and they understand why growing a profitable, sustainable company that creates jobs is a social good in and of itself. It’s pretty clear to me: this is a generation worth investing in.

Fenn‘s point is important because many startups are not only creating jobs and coming up with new solutions to problems, but they are also trying to make the world a better place.  If we can get more people to think with this mindset, the US and the world will be a better place.  So President Obama, please follow Friedman’s advice.  This is a no lose issue for you and the country.  You should be able to get support from both sides of the aisle.  You should be able to reconnect with an electorate that wants to support you, but has not because you have abandoned what got you into office.  Go back to the politics of hope, propose real solutions that everyone can get behind and see what happens.  I bet it will change lives.