Is growing income inequality inevitable?

I recently had a short twitter conversation with @RepBrianKing regarding wealth and income inequality. He had posted a link to this YouTube video that discusses the subject. I had responded that "our policies that have become more slanted towards so called socialism, have made things worse not better" and later that "Income inequality is a big threat, but neither socialist nor conservative approaches will work. They both make it worse." This led him to ask the question in the title of this post, "Is growing income inequality inevitable?" Well, the short answer echos the Lorax: "Unless.". The not quite as short answer is "It will be difficult to do, and certainly not guaranteed, and will require some very new approaches to government policy." The long answer needs a lot of explanation. I will first address the problems, then the solution, and then the challenges of implementing such a program.

THE PROBLEMS. (You can skip this section if you know all this already.)

1. Wealth and income inequalities. Wealth and income inequality are not the same and often get confused, but they are both problems. They affect everyone, but not in the same ways. Extreme wealth inequality will ultimately result is chaos, civil unrest, or even war, and perhaps even widespread slavery (think Roman or Mayan empire slavery, not just revolutionary war American slavery.) This is because ultimately, all the resources of an economy become concentrated in the hands of the very few, and the entire rest of the society ceases to have any stake in it, but become serfs in a new feudalism. We are not there yet, but it can happen. One of the most significant modern implosions of a strong society was the implosion of the Argentine economy in the early 1900s. It was a very robust and powerful economy, but the wealth had become concentrated. This led to war lords and ultimately the horrors that followed under years of political purges and dictatorship. Income inequality leads to wealth inequality, but it also has some immediate problems of its own. It has the tendency to lead to vast growing over-indebtedness.  Eventually all of that debt will turn into a massive default, which will wipe out the wealth of even most of the upper class (the 10% through 2%). True, they might maintain a slight income advantage over others, but their wealth will mostly be eliminated.

2. Broken safety nets. Today, we have social safety nets that are supposed to help keep the poor from abject poverty and misery. These include social security, medicare and medicaid, welfare, unemployment, disability, food stamps, and myriads of other lesser programs. Each of these are designed to address some specific ill or condition, but often contain elements that penalize real success at getting back on their feet again. For instance, unemployment provides up to 40% of what a person made (up to a cap), but if they happen to make a few dollars doing freelance or temporary work, it takes dollar for dollar from what they would be getting. They are immediately penalized for any small success, and the only incentive the unemployment provides is to not get a job or have any outside income. Any partial success they get immediately tears into what little safety net that they have. Also, some of these programs have cliff like cutoffs. One minute you have vital help, and as soon as you get a little success, the rug gets pulled out from underneath you. Another example is the minimum wage. Raising it does seem to help in the short term, but the prices on basic items, that have the smallest margins for businesses, get raised first and hit the poor the hardest, resulting in eventually lowering their standard of living.

3. Bad socialist policies. Socialist policies of tax the rich and redistribute it to the poor don't work either. They sound great in theory, but in practice, history has repeatedly shown it doesn't work. Look at Russia. After 70 years of the most stark socialist policies in history, their income and wealth inequality are worse than ours. Their rich are richer, and their poor are poorer. The reasons for this are complex and varied, but the fact is it doesn't work. 
(Why it doesn't work: instead of better equalizing the created wealth, it reduces the amount of wealth created while the distribution of that wealth doesn't actually improve. Instead it disappears into hidden, protected, or institutional holdings, and does so at an even higher rate. The rich and powerful find ways to position themselves within an even more influential power structure, and then become untouchable overlords. They only way to apply such a system is through extreme application of force, which dehumanizes both those being forced, and those doing the forcing, and doesn't end up being successful in the long run.)
4. Bad conservative policies. Conservative policies of flat taxation and minimal government regulation have a tendency to get blown out of proportion.  They turn into a wild west type scenario with the attitude of "You have have what you can take"  and the strongest, or best armed have a tendency to turn into thugs or robber barrons and they victimize others. Again, this dehumanizes both the victims and the victimizers. The reasons these conservative policies don't work are a little more clear than the socialist policies. They don't have the negative of reducing wealth creation, and it doesn't tend to hit the middle classes quite as hard, but the results are the same in the long run and those at the top end still get richer while everyone else gets poorer.
5. Corporate usurpation. Wealth and income inequality is made worse with institutionalization of the corporate mindset: a.  Our companies are too big to fail and  b.Employees aren't even slaves, they are numbers and calculations. Corporations are generally not affected by socialist policies as they generally are able to buy themselves an exception. They wield such unbelievable power in influence by the kind of wealth they can throw around, that only other corporations stand in their way. And yet, corporations keep getting bigger and more powerful. Too big to fail. They can nearly collapse our economy, and we will bail them out and transfer their liability to us, because we are too afraid of what happens if they go away. The individuals involved are part of that 1%, and they are untouchable. They can spend money that isn't even theirs to manipulate the world around them. If they do something repulsive or vile, they can hide behind their corporations and stand blameless. Our tax policies hardly touch them.

THE SOLUTIONS (Read carefully)
These solutions are NOT a cafeteria plan. Only a few will be effective without the others, and then, not very much. They all need to be there in support of each other.
1. We need a fair wage act. This act would replace our current wage laws. It is focuses on real earnings of employees in an organization. Organizations with employees generate wealth, and those involved in generating that wealth need to share in that. Organizations (companies, non-profits, government agencies, etc) should be subject to a policy that can be expressed as: the highest compensated individual's total pay can not exceed the organization multiple of the lowest compensated individual's total pay. The organization multiple is determined by organization size. The penalty could be a fine, a corporate tax, or whatever would incentivize organizations to follow the policy. In order to be effective, private contractors would have to be included in these calculations, and total pay would have to include bonuses, commissions, benefits, stock options and any other compensation that has monetary value. The only thing not included in this is dividends paid to stock holders. That is covered later.
2. A better Fair Tax. You may have heard of the fair tax. It is mostly backed by a bunch of tea-partier, anti-IRS types. Sometimes I wonder if they really understand what it is they claim to support. Anyway, they have several things right, and understanding why those are right, and how to use them is important. On the other hand, they have several things wrong, which would make things worse if not addressed and corrected. Things they have right: First, a prebate that is equal across all registered citizens and residents and their dependents which can make even the worst regressive tax system progressive. In fact, if done right, it can be the first tier of a safety net that doesn't penalize success. Second. Taxing income only serves to perpetuate the income divide. Those at the top of the wealth scale don't make income. They make dividends and capital gains, but not income. And often they can offset those by so-called loses. Taxing consumption can be applied more universally, with less tax evasion, and is effective at taxing even those who get around the income tax. It makes shifts foreign trade vastly in our favor, without subsidies or tariffs. Things they have wrong: They want to exclude education and investments. Having worked in the education industry for years, it is an industry. It needs to be taxed just like everything else. It spreads the burden more evenly, and takes away the advantage of those who can afford much better education without paying part of the tax burden. Even more so, investment has to be taxed. It is the primary method of perpetuation of wealth without paying their fair share. The tax level should not be so high as to destroy investment, but if they can pay 5 percent broker fees, surely they can afford to pay tax. They don't have to pay taxes on the gains, just on the investment. It becomes part of the cost of investing. By taxing everything, including education and investment, we can provide a larger prebate, maybe to double what they are currently proposing. That large of a prebate would act as a first safety net buffer to those who are poor. It could greatly improve their financial situation. For those who make more, they still get the prebate, but it is much less significant to them.
3. 20% Accounts. These accounts take care of a large portion of the rest of the social safety net. They are the first tier of unemployment. They help employees feel a little less trapped, and give them a fallback when the worst comes. They are funded by the employer as a 20% match for all compensation for all employees. Who manages them is less important than the fact that they are there. They could be managed by the individual, by investment professionals, or even government agencies. Also, regardless of who manages it, it needs to limit risk for the bulk of the principle while still trying to have some growth. These accounts are generally not tap-able unless the person is unemployed, retired, or in special circumstances as determined by regulation.
4. Inheritance and Gift limits per recipient.  Those with vast wealth perpetuate others with vast wealth. They may have earned it, but they don't help society by creating an upper echelon of society who become untouchable 1%'s. But, what if they were limited in how much they could give to any one person. It could be enough that the recipient could do anything, but not enough to do nothing, or enough to usurp control and power over society. Those with vast wealth would have to spread their wealth out enough to cause it to re-enter the economy. Those who inherit such large amounts might be able to repeat their progenitors success, or they might just live the high life. Either way, the wealth gets spread out, and directly affects wealth inequality for the better.
5. Corporate size and influence limits. We need to make sure no corporation is too big to fail, or even big enough to establish a non-competitive environment. There are many ways to do this. One way would be to limit the number of locations a company can have. This would not limit franchises, as those are generally owned by others, but it would keep them from getting too big. There are other ways to limit the size and scope of corporations, but their size needs to be vastly limited. Some few corporations are of a nature that their size would still surpass reasonable levels, and those should be subject to very rigid restrictions that keep them from engaging in anti-competitive or undesirable behaviors.
6. Self sufficiency programs. It is in individuals', society's, and the government's best interest for communities, families, and individuals to be as self sufficient as possible. This reduces dependency on both society and the government, increases self worth, creates a more stable economy, and improves the overall desirability of the American life. At the same time, self sufficiency is highly dependent on individual attitudes. Attitudes can not be legislated or even regulated. But they can be affected with public service campaigns, and it is well within the scope of government in all but the most minimalist libertarian schemes to perform public education and service programs. Additionally, government can inspire and help develop programs to facilitate the success of those who have this attitude.
7. Limited scope additional safety net programs. There are still those who will be subject to extreme circumstances that prevent them from living at an acceptable level. They will need additional programs for things like disabilities, catastrophic medial conditions, or natural disasters. These programs should be designed, where possible, to help people get back on their own feet as quickly as they can, and should be very carefully monitored and regulated so as to not become abused or ineffective.

THE CHALLENGES ()

Obviously, it is easy to miss potential challenges. This list is certainly not exhaustive, but these are definitely some of the challenges.  It will take a lot of effort to overcome just these.
1. Entrenched Ideologies. The first challenge exists because we as a nation and culture have taken our eyes off of what we hope to ultimately achieve. We instead focus on pet issues, programs, and platitudes that have little real chance of reaching those goals. Each political party and faction has these sacred cows, and anything but their way is considered unacceptable. There is a lot of momentum in these false hopes, and to get people to stop and think, and to realize that the status-quo is quickly tearing our country apart, will take a lot of effort and self control to break from the fixed mindset we are currently in.
2. Educating the populace. Our populations are pretty ignorant of how government really works and affects their lives. Most of our people can quote campaign slogans, but have no idea how those would translate into whatever they think they are voting for. Except for the politically active, very few have taken the time and effort to understand much about these processes. Worse yet, they don't even want to know. Getting them to understand that these things will help them will take a lot of effort and patience.
3. Getting the idea out. Before we can address entrenched ideologies or ignorant populaces, first we have to get the idea out there. It will take a lot of people who really believe these policies will work and that these are problems that must be addressed.
4. Finding effective evangelists. Not everybody is equally effective at spreading the word. There are those who, by means of charisma, or public presence, or fame, or some other factor, are much more effective than most at getting others to both listen to what they say and to believe it. It will be critical to find those public opinion leaders who can help establish an effective movement for these proposals.
5. Critical mass. As with many things, there will probably be some sort of critical mass. Once enough espouse these ideas and policies, there will be a landslide to follow. Unfortunately, where that critical mass is and how to get there is generally unknown.
6. Vested interests. Obviously, if you are in the top 1%, these policies do not benefit you. You are powerful and influential and are going to do your best to see that these things never see the light of day. If you are not in the top 5%, chances are these polices will benefit you. These ideas are not designed to punish success, however, and getting those who are in the other 4 percent to see that will be difficult. Still, under these policies everyone can still enjoy the benefits of their success, but will not be able to just pass it on to create a dynasty. The top 1%'s kids will probably start off with a moderate competitive advantage, but not an insurmountable one. They will have to work for their own success just as their parents did.

In summary, these problems are serious and will destroy us as a nation and a culture if not effectively addressed. I have been thinking about these issues for years and have come up with the what I feel is the best policy proposals to address these things overall. Not being a very effective evangelist, I have been called everything from communist to robber baron to fascist when describing these ideas to people. I hope I have done a better job of describing these this time. These ideas are formulated for effectiveness, not for selling. They pass the economic, psychological, sociological, historical and mathematical evaluations I have tried them against. Having said that, these are new ideas, and implementation rarely mirrors theory. Even if implemented, there are likely to be many pitfalls in the way, but in years of searching for solutions to these problems, I haven't seen anything else which seems likely to work.

Utilities and service

You may have heard about the latest bruhaha with Comcast and L3 communications. There are a lot of other issues related to Comcast's behavior lately, and they are not doing anyone any favors. Comcast is easily identifiable as a Utility. The problems it seems intent on creating have always been issues with utilities.

The solution is simple. Utilities have 2 parts. There is a simple delivery mechanism that is location based, and there is what those delivery mechanisms deliver. In the case of Comcast, they deliver telecommunications services. The easy way to think of it is connectivity and content. I had the privilege of living in Texas recently, and they have a classic example of this solution implemented with their electricity providers. There is one connectivity provider in Texas. It is actually owned and operated by the state. It is prohibited from providing actual content, in this case electricity. It works well. The service is way faster than in other states, and the rates are generally lower. I actually had a slightly higher rate, because I went with an all renewable electricity provider. That was my choice because I was supporting something I believe in.

The same thing needs to be applied to phone service and internet service and cable service, and maybe even natural gas and water and other utilities. The provider of the connectivity needs to be separate from the provider of the content. That way, there is no conflict of interest, and market competition keeps the price of content down and the quality of content up. Only the connectivity provider needs be regulated. For companies like Comcast, the choices would be simple. Provide the connectivity, and be regulated, or provide the content and compete. You can't do both. If necessary, split the company into two, one for the connectivity and the other for the content.

That is the best solution. It could be done at the state level. Then, our rights as consumers would never be infringed by a monopoly connectivity provider that forces us to use their low quality and high cost content.

A better home

In the last year, I have lived a couple very different climates in very different housing. Also, the last 5 years I have had the experience of helping completely rebuild more than one house from top to bottom. These experiences have given me some insights and ideas related to modern housing, and some idea for what would be better.

First, housing today is too expensive, too slow to build, poorly designed and built, and not very effective.The biggest failures of housing today are poor insulation, poor usability, and poor quality. Unless where you live never gets over 80 degrees or under 60 degrees Fahrenheit, you probably could use much better total insulation in your house. This isn't saying that those with R40 insulation in their attics are doing badly, it is just that there are far too many other parts of modern houses that even when highly insulated in the normally insulated spaces, still are sources for massive energy loss.

Second, if you have ever had a house for more than a couple of years, you probably noticed that they fall apart and wear out very quickly. The materials used for them is about as cheap as can be had, and the overall quality of workmanship often leaves something to be desired. This is not saying that you can't get quality products or workmanship. I have seen those homes and other buildings which are built to last with very little maintenance, and they are awesome, but with a very high premium attached to their price tag. Most people and developers are not willing to go this route for a couple of reasons. They couldn't resell the home for anything close to what it cost them, and the don't plan on keeping the home for a very long time. This only exacerbates the first problem.

What if we could have a housing system that would create high quality houses with extremely high efficiency and very low upkeep requirements that could be built very quickly by very small teams of people for costs equal to or less than our current housing offerings? If you had developed such a system, how would you go about marketing it? What would such a system include?

I can picture a day, not very far down the road, where you can order such a house, or office, or whatever, and it can be put together and finished in only a few days, but would last centuries. It would be well laid out, and custom configurations would be available and would not add huge overruns on the initial cost. There are those working on such systems, and they are, for the most part, not compatible with current building methods. Who will be first, and how will they succeed?

Local sustainability

Some time ago, shortly after I started this blog, I created a whole list of topics that I wanted to do posts on. Today, I realized that I still had a few that were not done, so I am finishing all the posts I had sitting in my backlog. Then I can move on with some other ideas that I have.

One of the ideas I wanted to write about is what I call local sustainability. The idea of local sustainability is that a locality, whether a city or a town or a county or what ever distinction it might have, should be able to provide for its own needs, and not depend on outside resources for the necessities of life. It has been a long time since this sort of thing actually was common, but I don't know that it is necessarily a bad idea. Lets evaluate why.

First, lets look at what our current situation is. We mostly live in large cities. Our cities mostly provide services, with a few very large concentrations of finished goods manufacturing. Our cities certainly, with very few exceptions, do not provide raw materials. In some degree, they do process raw materials into finished goods (or some form of intermediate goods). People in cities mostly consume, and produce little. Our raw materials and even most of our finished goods come from elsewhere. Lately, most of it seems to be coming from China, but there have been other sources at other times. Our food doesn't come from where people live either. We have an estimated 3 days of food on shelves in most American and Industrialized cities. Our energy is generally not locally produced either. Some power plants are thousands of miles from the cities where the energy produced is used. Much of our oil and finished products now comes from overseas. Even most of the oil and finished products that are produced domestically still has to be shipped thousands of miles.

There are benefits to our current situation which unless maintained, would not make a switch to local sustainability an acceptable choice to most people. In our current system, we have very low cost, high end or high tech goods that are available from a large variety of sources. We can get almost anything we want nearly instantaneously if we have the means to pay for them, and even for those with smaller means, the amount of goods in their economic reach far exceed anything available in past eras.

In order to make a switch to local sustainability one of two things has to happen. The most likely and least desirable of these is some form of economic collapse affecting infrastructure, and lowering the availability of goods to crisis levels. The variety of goods would shrink 100 fold, and the costs would out pace all but the wealthiest of people for anything but the most basic goods. Famine and death would be rampant and most of us would die or wish we were dead.

The other option would be a new set of technology, business, and regulatory developments which when functioning jointly, would enable localities, or at least city sized regions to become able to produce 95% of what is consumed in those cities, using either directly produced or recycled raw materials or at the very least, with raw materials being primarily the goods being shipped into the cities from multi-regional or semi local supply sources. These developments would have to be able to produce almost anything on demand. The one thing that would be truly global would be the designs and manufacturing blueprints use by flexible micro manufacturing facilities which would need to be able to produce anything within a very large range of materials. For instance, there would need to be a electronics manufacturing facility that could use designs and blueprints from any developer to produce whatever the local consumer wanted, and produce it on demand.

In order for this to work, there would also have to be certain green space requirements primarily concerned with organic food production. The food production would have to have a much greater level of automation in its production, but instead of the mammoth machines currently being used by agricorps, these would require smart, possibly robotic, cultivators which would be able to produce higher quality and healthier crops in relatively small spaces. They would also need to be able to cultivate a wide variety of crops simultaneously, and with a minimum of pesticides and other chemicals. Larger green zones would also be needed for the raising of animal crops, with other more novel approaches facilitating the raising of the animals. Energy would have to be a local product, but with photovoltaic, wind power, and other systems becoming more efficient and less expensive all the time, this is become a real possibility today.

Of course, this kind of development would take a huge effort, but it would also have huge payoffs for just about everyone, from rich to poor, government, business, and just the lay consumer. The question is, who is willing to devote time, effort, and resources to the development of such a system.

Fair Tax, or not Fair Tax

I have made no secret that I support the Fair Tax. It has some really wonderful components that I think would be an overall boon to the whole country. Unfortunately, it really doesn't have support from across the whole political spectrum like I would have expected it to. And, here is the thing. I was originally attracted to the fair tax for five main reasons.

The first reason is the prebate it gives everyone. It isn't a huge amount of money, but enough to make a difference for the poor. Now, for the richest of Americans, what they would get for the prebate wouldn't even be pocket change, but there are some of the poorest Americans who live on not much more than they would be getting in their prebate, therefor it would almost double their available finances. Anyway, that was the first thing I liked about it. It helped those in need, but it helped everyone the same amount without taking away their freedom.

The second reason is that it eliminates the regressive, ineffective, and punitive payroll taxes. Lets face it, payroll taxes suck. And the only people who get out of them are those who make too much. Replacing it with the consumption tax would make it much more fair for everyone and less punitive, especially for those who are self employed.

The third reason was the nature of a consumption tax means that I get to decide how much I get taxed. If you don't like getting taxed, reduce your spending. But, with it being an inclusive tax, you don't have this big add-on at the checkout stand, it is just there, but since it is a standard rate, you know exactly how much you are paying in taxes, but you don't have to file a tax return, and you don't have to worry about some IRS auditors making your life hell just because you added something wrong.

Fourth, simplicity. No tax cheating. You pay by buying stuff. It is the only tax you pay. It gets rid of all those layers of tax garbage that we currently deal with. The tax code is possibly as short as a single page.

Fifth, economic stimulus. Our products are too expensive overseas, so we don't sell as much, and other countries products are too inexpensive here for us to want to buy our own products. If the we sell our stuff overseas, the cost is high in part because of all the layers of taxes that are rolled into the costs. Theirs are cheaper, cause their taxes aren't as much. But with the fair tax, suddenly, they lose the benefit and we gain it. Sure, we still have a higher standard of living, but it eliminates a disadvantage that can be as high as 50% of the cost of goods. We sell ours for about 23% cheaper, and theirs cost about 30% more, and all of a sudden, our goods are much more competitive, if not cheaper for better quality goods.

So, in all of this, I have looked into the fair tax, and understand the economic advantages, and the only thing I couldn't understand is why there was such lopsided support. I decided to write a blog post about how liberals and progressives should be coming out in droves to support this thing. I first decided to do some research.

Fairtax.org has a calculator that you can use to determine what you would be facing under the fair tax. I have used this to figure how it would have affected me before I shut down my business and sold my house, and again after everything kind of imploded and I lost everything, and based on how much I expect to be making now that I am closer to getting back on my feet. Each time, things are quite a bit better for me under the fair tax.

For my research however, I decided I was not typical in terms of economic conditions, so I created Joe Doe. Single college age kid but not in college, working for $9/hour in a dead end job and not sure what he wants to do with his life, but he is having fun right now. Well, guess what? The fair tax was not as fair to Joe Doe. "Wait a minute," I thought, "That can't be right!" Well, I double checked the calculations, and guess what, if you are really close to the average, it isn't such a great idea for you. Not terribly worse, and in the long run, you would still probably benefit due to the other features, but I thought this thing was supposed to be progressive. Well, what if we give Joe a couple more years, a wife and 2 kids. Well, it got even worse for poor old Joe. That doesn't sound very fair to me. I mean, sure, I benefit greatly, even when things are really bad for me, but us independently minded entrepreneurs don't represent mainstream America very well. Joe is the definition of main stream America, well, the poorer side of it, anyway.

So, am I saying that I don't support the Fair Tax anymore? No. I just don't support it as enthusiastically as I did before. There are 2 or 3 main things wrong with the current configuration of the Fair Tax.

First, the prebates need to be bigger, a lot bigger. Like, try double. If you need to raise the overall rate to cover it, then do it, but first try the other two suggestions.

Second, education (and I work in the education industry) needs to be taxed the same as everything else. Education does not really help people become more productive. That idea is just industry marketing doing its job.

Third, all investments need to be taxed, but at a much lower rate, something like 3% to 5%. Not so much that it becomes a bad thing to invest, but enough so that it takes most of the vampires out of the system and causes the stock market and other investment systems to become much less volatile. Then you wouldn't have non-productives leaching on the rest of the economy. Those making long term investments would hardly even notice it. Day traders, on the other hand, would have to go find real jobs.

These changes would make for a much more "fair" tax, and be supportable by more of those who are not on the extreme right of the political spectrum.

Industry Acceptable Innovation

A while back, I was talking with a friend of mine that is almost always got his fingers in some form of disruptive innovation or other. Since then, I have thought a lot about some of the things he told me, and I think I have come up with a new (or at least, new to me) concept, relating to innovation and what could be successful or not. In any industry, there are major forces at work fighting innovation. I am not talking about incremental evolutionary changes, I am talking about the big, in your face, revolutionary innovations. There are many of these forces, some of them from somewhat surprising sources.

Lets say you were to invent a megawatt wind power generator that cost less than say, $5,000. That would be a very disruptive development. Why? Because it would require changes on the part of almost every other aspect of the energy industry. The current cost of approximately $1Million per 1 megawatt wind power generator unit tells you that things would change immensely. In this case, no longer would the investment for such generation unit be limited to major power players, investors, and idealistic billionaires. At that cost, they would be springing up all over the place, putting thousands and tens of thousands of people in the current energy industry out of work. Not that the industry would stand idly by. They would refuse to connect them to the power grid, and even then, they would require new wind generator users to pay for costly upgrades to the power grid. If that didn't work (and they probably wouldn't wait to see if it did), they would seek all sorts of legislation to make it both much more costly to own and run such a unit, and much more difficult to produce. It would be in their interest to make your supplies and manufacturing process much more costly and inefficient. They also would want a piece of the action as a way to hedge their bets, but with this much disruption, they would be more encouraged to buy up the technology rights and hide them (maybe use them, but only to the degree that it doesn't negatively affect their bottom line). What most innovators seem to forget, is that energy companies are not in the business of making energy, but in the business of making money.

One more example. Lets say I created a new ERP system that increased productivity by 10 times for those implemented it. Lets say I created it in such a way that it was 10 times easier to install. Now, lets say I price it very closely to the existing systems. Sounds like a no-brainer, right? Well, maybe. Most companies love increases in productivity. They especially like it in little bites. 10 to 40 percent productivity gains make a company just thrilled. But what would it mean to have 1000% productivity gains. Well, they are either producing 10 times the product or need 1/10th the workforce to produce it. The might decide to produce only twice as much with only 1/5th of the workforce, but the changes are extreme. People, and companies, do not like that much change. It hurts. It is uncomfortable. Not to mention, existing ERP providers wouldn't like my creation of such a new disruptive presence in their market. They would scramble to develop enhancements of their products to make them more competitive, but again, as we are talking about dollars being the main purpose and not product effectiveness, it would probably come to an attempted buy-out situation or extensive use of legislation, courts, and negative marketing.

Beyond the items listed in each example, I have heard that some companies or executives (but not most) get even dirtier, and do things like economic or social or even literal assassination to get the people involved to stop ruining their party. I have never been shown any incontrovertible evidence that this has happened, but I have heard at least one businessman say that he had taken out a contract on the life of someone they found particularly troublesome. Now, whether or not this is a common consequence of radically disruptive innovation isn't really the point. The point is that there is a limit to how radical an innovation can be in any given industry and any given point before it is too radical for acceptance by the industry and consumers. It therefore follows that there might be an optimal level of innovation for any industry at any specific point in time, and that the more that optimal level is exceeded, the more difficulty there will be in turning the innovation into successful products. Most industry sponsored innovation will usually be well within that acceptable innovation limit, and generally moves much slower than that.

Better news service.

I just got a CNN Breaking News email. The subject of the breaking news really doesn't matter, but it brought to mind some ideas. Some years ago, during some political something or other, I signed up with CNN to get their Breaking News email updates. They come in this nice little string of text with just enough information to let you know what is going on. I have learned that a Breaking News email update usually means that they now have a great article on their site for me to read if I want to know more. Most of the time, if it interests me, I want to know more.

If you are not familiar with their Breaking News emails, you might guess that it would include a nice little link to the related article or maybe a stub or topic page that links to all the related articles if it is an ongoing story.

Nope. Nada.

They have an unsubscribe link. They have links from the ads that they stick in them. But nothing to get me to their site so they can do their job of getting me to read more of their content. Come on people, my kid could program that. The whole concept of hyperlinks in emails is almost as old as the web. This should have happened 15 years ago. Think of the change to readership and the bottom line in terms of ad revenue.

I should probably thank them, though. If I clicked off to CNN every time I got an interesting Breaking News update, I would probably spend a lot more time on their site, and consequently, less time actually trying to be productive. That brings me to another point. More than half of the Breaking News updates I get, I don't care about. For some, yeah, I am sure they are interested, but different people have different interests.

Let me pick my interests. Please. I don't care about sports, or entertainment, and there are only a few sub topics that interest me in travel, health, and living. Come to think of it, I really don't care about most of criminal proceedings under the justice section either. Constitutional law, business law, and patent law, yes, but the rest of the stuff, just let me opt out of it.

Make a general list of subject tags, arranged categorically, and let me pick whole sections, sub-sections, or even individual subject tags, and only send me the links on those. If you did, I can promise I will click the link much more often. Yeah, that link that doesn't exist yet. I figure, if you can tailor my content to me, you certainly can make it easier for me to get to.

The follies of globalization

The last couple of centuries have witnessed an ongoing march of a phenomenon that most people in business applaud, but which often has been fought against, protested, and accused of the worst of atrocities. I speak of the phenomenon of globalization. The economic practice and concept is the removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labor, so that all parts of the world make specialized goods and compete in a global marketplace for these things. There is much debate over the benefits and ill effects of globalization, but perhaps the strongest effect is that no-one is immune.

For the poor of the earth, good times under globalization means that they have sweatshop type job opportunities and many chances to be exploited. For the richest of individuals, good times under globalization mean a great increase in wealth and expansion of power. For the bulk of us in the United States, good times under globalization means we have ever increasing options of cheap consumer goods to purchase to pad our consumption centered lives. Under bad times, globalization means much worse news for the poor, not much difference for the richest, and probable economic discomfort for those with a standard of living equivalent to the average Americans.

There is some mobility between groups, and globalization has generally had the effect of increased mobility for the highest and lowest performers from each group. However, for many, globalization means the loss of dreams and traditions. Especially for those engaged in the more traditional forms of business. Most of the small independent retail and service business are gone world wide. The more industrialized an place, the worse it is. Besides the obvious loss of quality and custom hand made goods and custom lunches at the local diners, there is significant loss of opportunity to build ones own future with your own hard work. Beyond that, and perhaps most tragic of all, is that now it is very difficult to be truly self sufficient as individuals and impossible as communities and towns. I applaud the global dissemination of technology and even culture, but at the cost of destroying any long term security, and often the freedoms that come with it, I have to conclude that unrestrained globalization isn't all that it is cracked up to be.

A while back, I applauded a move by Walmart to help restore some local viability into local markets, but the effort so far has been weak and insufficient to have much of an effect. I suggested at the time that they should try to get more of what they sell manufactured and produced locally. I recognize that some things will always have to be brought in from elsewhere. Wisconsin will never grow bananas or pineapples, but they can do a lot of other things. If the means for local economies to produce their goods locally were more prevalent, then perhaps all this social and economic upheaval that we call globalization might not be so bad.

HP WebOS

So, you may have noticed, I haven't posted in about two weeks. I have been out and about the country. I realize I missed a wonderful opportunity to add my voice to the chorus of others throwing in their commentary on the HP-Palm connection. And really, I hope HP does something wonderful. I am not getting my hopes up, not because I don't like HP. This post is being written on an HP laptop. I love my laptop. The problem is that HP rarely does anything really innovative or revolutionary. They do a great job adding polish to existing innovations. They make good quality products. Their support could use some help, but most companies need this as well. Many of the things HP does, it does really well.

What it doesn't do well, or at least not very often, is create innovative and revolutionary products and break ground where others haven't. Palm's WebOS is a great piece of programming, but it doesn't go far enough, and I doubt that HP will have the self restraint to let go of control and let it become what it needs to be. In case they missed it, they should check out my post on a Smart Phone Dream Machine.

Smart Phone Dream Machine

Imagine that down the road, an older Steve Jobs walks on stage in his classic black turtleneck and says something like "Everybody loves the iPhone, and they love the iPad too. Many wish that the iPad would fit in your pocket, or the iPhone had a bigger screen. Wouldn't it be great if you could just do this?" He holds out an iPhone, pulls at two opposite corners, and ssssttttrrrrreeeeettttccchhh, its an iPad. The audience explodes with excitement and wonder.

I first thought of that scenario a couple of years ago, way before the iPad was even a rumor. I could see what the iPhone represented and could lead to, but I could also see it's limitations. I was interested, but reluctant to actually spend money on one. The iPod Touch seemed like a much better offering, but it's additional limitations were too much. I hate the abuse heaped on me by AT&T since they bought Cingular, so I wasn't about to subject myself to more. I had already suffered abuse by Verizon and swore in my wrath that I would never use Verizon. Period. So, that leaves me being abused by AT&T or underserved by T-Mobile, Sprint, or Virgin. Perhaps I could use one of Walmart's phones and make Slim a little richer. Anyway, so, I opted for the status quo and have just watched the Market since then.

I was very excited when I first heard about the Palm Pre and their Web OS. I have been cautiously optimistic about Google's Android. I was surprised, but skeptical when Windows Phone OS was announced. I was unmoved about most of the other news on the smart phone front, apart from being more and more impressed with the iPhone and more and more disgusted with the draconian policies and behavior from Apple and Mr. Jobs. They have so many things nearly perfected, but then go and make things awful by their ridiculous developer agreements, their totalitarian control of applications and content, and the unbelievably bad mobile service from their only provider.

There are a few things that could be done much better than the iPhone. Of course, you have to have a multi-touch screen, and lots of wonderful apps, and incredible base functionality, but that is only to equal out what Apple has already done. Then, you have to beat them. First on the list, you have to do better on enterprise functionality. I will have to see the enterprise friendly features in iPhone OS 4 before I really believe they have got them right. Apple has never got enterprise even close since they have focused so much on the consumer, and never the twain shall meet (maybe).

Next, address one of the next biggest complaints. Make it so you can open it up, change your own battery, and even swap sim cards and radio units. Imagine, you get tired of being abused by AT&T (yeah, I know, pretty far fetched) and so you decide to order or buy a T-Mobile radio modulator. It wouldn't matter that they use different protocols on different bandwidth spectrum, you just open the case, remove the old one, put in the new one, and activate your account. Yeah, maybe someday the American Telecoms will get a clue and start using open standards, but until then, swappable radio units are the way to go. Then you don't loose all your stuff. Better yet, make all the major components like wi-fi, gps, battery, and memory swappable and upgradable.

Next, and here is where Apple has really missed the boat. They needed some kind of central access location where all applications and a lot of content would be available and they also needed the ability to reach in and clean things up (used very judiciously of course), but they don't have to have draconian developer policies, and they don't have to act like they own their customers because the customers bought a device. The centralized site ('store' for lack of a better word) should only provide services to the app vendors. All apps should be submittable to the store to be verified as quality, but if 500 developers want to build a music playing, managing, or purchasing app, the store shouldn't care as long as they pass quality control requirements. Let the natural market decide what things are available. They should also require all service providers to provide on-bill selling of apps and content. They would of course set up a robust API to make sure it all works perfectly, and then the sellers would have simplified selling, if they wanted. If they thought they didn't need it, they should be allowed to go it alone. If they can get enough people wanting their apps, they shouldn't even need to have them verified through quality control. I know, this puts people at risk if they are stupid enough to download or buy bad apps, but it is time for a little personal responsibility, don't you think?

Now, to wrap things up, lets really make it better. I want some more features that no-one seems to offer. One, I want a bigger screen than the iPhone, but it still needs to fit in my pocket. Two, I want extensive external connectivity, even if it is through some kind of special dock. In fact, I want to be able to have the dock support an external monitor and display multiple apps in blowup mode, and even support full screen modes for those apps that can handle multiple screen sizes. Three, I want a dual slide out keyboard. I want it to be a full qwerty keyboard in landscape mode, and a numeric keypad in vertical mode. Then, and I alluded to this before, I want to maximize the hardware. When a new processor comes out, I want to open up the thing, and pop out my old processor, and pop my new one in. I want to do that with everything except the screen, the case, and the motherboard (which should be an integrated unit that could support your old peripherals until you upgrade them. Oh, and I want to run this thing without an cell contract when I want to.

I know that such a device doesn't exist, and probably won't, but if someone did it, the marketing opportunities would be incredible.

Public Spectrum WiMax Mesh

Ok, I have held onto this one for a while, but I have talked it around, and even got a wireless services guy at AT&T to listen to it. His objective was that it wouldn't fit the business model, even though it would work and be awesome. He also said that their investment into their current technology was far too high to want to try a different approach. His last objection, although, he wanted this off the record, was that AT&T would view this as a big potential loss of control and don't want people to have options cause they wouldn't make as much.

Well, this one is good enough that we don't need a big brother type company to implement it, but whoever did would make bank on it cause the mentality of all the other players would keep them out of the market for too long.

The idea is that we use WiMax or some similar wireless broadband technology, but configure it to use public spectrum and build low cost wireless repeater mesh units to provide internet connectivity to anyone wanting to participate. Now, it would be best if there was some kind of backbone access control system that made sure that every so often, one of these repeater units was plugged into a fiber line. Otherwise, likely there would be too many freeloaders wanting free access, but really, once figured out, one of these units should be able to be made for less than a couple hundred dollars, and the cost would really come down over time.

Naturally, the repeater density in metropolitan areas would greatly exceed that in suburbs and rural areas, and, there might be a slightly higher cost per user in rural areas, but I can picture that monthly internet access could easily be as low as 10 to 15 dollars for near unlimited access. (Oh, sure, I can also picture a bandwidth cap or a tiered system, but for most of us, like, 99% of us, we would be on the bottom tier, cause we just don't use that much.)

How about it people, should we do this? It would take some time and resources, but it would be a great solution. (I can picture all the neighborhoods and HOA's out there providing this as part of their services). Once it started becoming common, all the devices would start being made with the capability built in. Then, we really could get great access from everywhere, and the money grubbing, control freak big brother companies like AT&T could be gone, and we wouldn't miss them one bit. How great would that be?

Localized Energy

Energy, specifically electricity, has been a wonderful blessing to many people, yet at the same time, it has been used to enslave populations. I hate to admit it, but I have a green streak also, where I hate to see our energy systems pollute so much as well. Additionally, I think energy systems would be a lot more effective if they were localized and then only tied together to the grid, but able to operate independently when needed.

I have heard many proposals and detractors of those proposals regarding locally generated power. When I say locally generated, I mean something that doesn't require outside resources to continue to run. For some places, that would make natural gas turbines a real viability, but for most places, that leaves as options solar, wind, and water. (I don't accept nuclear as a local option because of the setup cost, and continual problem of nuclear waste.) Yeah, I know, all of these options will generally need outside resources to get going, but once they are set up, they can go for many years without additional outside resources (There is a solution to that problem too, but that will have to be another post).

So, after my walk today, I was thinking about my power bills. I have always like the idea of being able to produce my own power. There are a lot of problems with producing your own power. The initial cost of any solution out there is pretty prohibitive to start with, but even if that wasn't an issue, there are other considerations that need to be addressed. One of the biggest is that we often don't use power when it is best generated, so I would have to have some kind of storage. Now, that starts getting expensive, cause mostly we are talking about batteries now. Batteries are one of the weakest links of any power storage system. They wear out, they are usually toxic, they require big infrastructures to create and support them. They are just a lousy answer, but, that is usually what comes to mind.

What if we had some other way to store energy? Two other solutions came to mind. The first is hydrogen storage. We just take the energy we are creating and not using and generate hydrogen with it, store it, and when we need electricity, or hydrogen to burn for things like cooking, we pull from our storage tanks. Well, hydrogen storage isn't such a simple thing. It is expensive, requires large expensive infrastructures, and is prone to failure. Ok, well what about that other idea.

I would call this one kinetic storage. You hook some kind of generating electric motor (one that is about equally efficient both ways) to a big pulley system that lifts something really heavy upward. It doesn't have to be that high, as the cables that lift it would feed into the pulley system so, when you have extra energy, you send the extra to the generator motor, and lift that big weight, and when you need that energy back, you allow the weight to run it the other way, and generate electricity with it. The weight doesn't have to be that expensive. The structure housing it wouldn't need to be that complex, just strong enough. It could be easily secured in a variety of ways.

So, what would we use for the weight. How about a big iron box with rocks in it, or if it was adequately sealed, put water in it. Hmm, if you put water in it, it could be lighter when you lifted it up, and then lift the water a little at a time. That might be a pretty good approach, when it got to the bottom, it would release the water, and lift the tank back up, and then start filling it again.

Hmm, if you used a gravity piston pump, you could have the thing be your primary generation system, that would store it automatically without converting it to electricity and then back, and you could do it without destroying the streams by damming them up all the time. You would require a decent water flow to make it work, but most of that water (90%) would continue downstream uninterrupted. only 10% would be used to power the system before it continued downstream as well. Hmm, I guess that could also provide a solution for water storage as well, but, that is another issue, even though the solution is right here.

Yes, I know, this won't work for everyone. It requires a decent water flow and elevation drop to make the piston pump work, but, if you had to run from a well, windmills have been used to pump water for longer than they have been used to generate electricity. And, last but not least, you could generate electricity with solar to pump the water from a well. Not as inexpensive and elegant as the gravity pump, but, still it would work.

Local Economies

I read an article about Walmart today that kind of surprised me. I have been in the anit-Walmart camp for quite a few years, but I have not been so rabid that I don't shop there. I have a brother who won't shop there if it kills him. Anyway, Walmart is a big corporation focused on it's profits and whatever effects it has on the individual, it generally doesn't care about. It really isn't all that different any other major corporation. The difference is, when it puts its stores in small towns, it decimates their economies, and puts lots of people out of work. It gives people a dead end existence, and leaves no capacity for the local economy to support itself. The small towns then are completely dependent upon large employers, most often multinational corporations such as Walmart and it's most major suppliers.

Some might say, "So, what is that problem with that? It is just capitalism at work." Well, the problem is that it ties these small economies to the downs of the global economy. Due to the nature of multinational corporations, the end production workers and the towns they live in do not benefit from the ups of the global economy, but they are the first to feel the effects of the downs. In the past, if one local economy was badly affected by some economic or environmental event or condition, the effect was limited in its scope. A local economy that was well run and whose participants were wise and careful could almost always ride the ups and downs of larger economic cycles, with the exception of extreme events of nature.

Now, all of our economies are tied to each other to such an extent, that it is almost impossible to run a local economy well enough to be not hammered when the global economy turns bad. It doesn't matter how well the local businesses are run, and how good the decisions made by the local participants are, the bad decisions made by individuals and groups in other locations ultimately lead to the natural consequences of bad decisions and drag the whole economy down, including those of well run localities. Talk about killing incentive for making good business decisions. Take your quick profit now and run. It encourages us all to be unethical and immoral.

Enter Walmart. Well, I guess I should say, Re-enter Walmart. They have this program that is encouraging local production of certain types of produce. Not that produce and food is the core of a local economy, but it has always been a vital component. Now Walmart has learned they can get better goods going to the local economy for things. Not everything mind you, but as much as makes business sense. I realize this is a fragile step in the right direction, and could easily be undone, but encouraging nonetheless.

Ok, here is the thing and a piece of advice to Walmart. Take this approach further. Take a little time to develop the means for a small community to produce a much larger percentage of what they consume. I am not just talking food. This could mean textiles, toys, electronics, tools, personal products. Once you figure out the basic components for local production of each class of goods, don't just push your way into all the towns, co-venture. Take a page from the Leavitt Group of insurance companies. They have tons of insurance agencies, each one operated locally, with policies and support from the parent company, but with a significant, albeit minority, ownership stake by the local operators. Just think Walmart, you could be the primary owners of the majority of production companies in the whole world. The local economies would be much more resilient against outside economic conditions. And, to say the least, your profit would come out smelling like roses, year in and year out. Pretty hard to beat that.

Integrators

I predict that there will someday arise a whole class of integrator websites. What I mean by an integrator website is a site that addresses a specific market or class of websites, and pulls all the major ones out there into a single place, while making sure that the content providing sites are still benefited by actions done on the site.

An example of this would be a Job search integrator. It would integrate with all the big job search sites out there. It would also integrate with as many major employment providers and major corporations as it could. It would need to have some kind of supporting niche that it either provides or that it advertises for, like resume building, technical training, or certification providers (in order to provide revenue). It would have to be well designed so that the sites that contribute to it (or that it grabs data from) are not disadvantaged by it, and even are promoted by it. It would need tools so that one resume experience there would populate and extend to all the contributing companies, so monster.com and careerbuilder.com would both get updated at the same time.

Other types of sites for which this could happen are shopping sites (Amazon kind of has already started this), social networking sites, blogs, software code sites, product review sites, deal sites, etc. I think when these sites are fully functional, they will make life a little (or a lot) easier for those of us who just want to live life. I can see some sites refuse to use the integrators, but only those who want you to be their captive customer.

Needed: Idea Marketplace

In case you haven't noticed it, Marketplaces are the latest Next Big Thing. I am not sure, but I think the latest trend started with the iPhone App Store, but has quickly picked up pace, inspiring the Android market place, and half a dozen or so other ripoff clones. Then a few people decided to take it a little further, and make other marketplace sites. One of the latest is the Google App Marketplace.

The concept is simple enough. Provide a single place where both sellers and buyers can get together to buy and sell software. Ok, sounds a lot like eBay, but for non-tangibles. One of the keys to making these marketplaces is specialization, which is why eBay isn't included as the the start of this latest thing. eBay was for old junk, but these marketplaces are where you go for specific things you can't get elsewhere, or, at least, stuff that isn't readily available elsewhere.

While it is true that you can get iPhone apps elsewhere, there are barriers to entry (you have to void your warranty by jailbreaking your phone). The upside is that the store and it's almost exclusive nature brings a large number of buyers together, and that just about anyone who can program can put together an app and get it on there. The down side is that you don't control all the terms. If you are willing to play by the rules of the marketplace operators, you can benefit considerably.

What I would like to see is a marketplace for ideas. Well, not exactly, cause there are lots of people with ideas that could flood the place with junk. Finding quality ideas amidst all that junk would make it in-effective. Another problem is, how do you sell your ideas without telling the buyer what your idea is before he pays for it.

If an Idea Marketplace were to work, it would have to entice and protect both buyer and seller. For it to entice buyers, the ideas would have to be more than vague notions. They would be more like complete business plans with complete product specification documents. We are talking about quite a bit of work required before the idea would be allowed on the site. There would be a submission process, with the marketplace ensuring completeness and viability (similar to what Ventureworthy tries to do). There would obviously need to be categories and search tools to make finding the right idea very easy. This would also protect the buyers, because they would be getting a well developed concept that would then be more easily developed.

The enticement to the seller is that the buyers are there. In order to protect the seller, the buyer would be able to limit access to specific information, and maybe there would be some kind of agreement not to steal ideas from the system (this last idea would be a tough sell for those in the market to buy ideas). Once the buyer was interested in an idea, they could schedule a pitch/introduction/demo much like VC's do now. The pitch would of course be the same kind of thing that those seeking venture capital already do, with perhaps, slightly more robust media content using the marketplace tools.

I have no idea how to go about initiating such an idea. It would almost need a bunch of VC's and Angel Investors to get together to promote it. The trick in operating it is in maintaining quality in terms of complete idea packages. They would need to have a lot of tutorial material to demonstrate how to make sure your idea is complete. The system would also need to have some kind of negotiation system built right in, that would allow complex investment/purchase agreements (with multiple investors getting different levels of ownership and control). If any of you want to start something like this, or if there is one that I don't know about, let me know. I would love to use it.

212 Catapult

Warning: Shameless Product Review

Ok, I really hadn't planned on doing product reviews, but this one really deserves it, because it is awesome. The product is called Catapult by 212 LLC. Disclamer: Two of the four partners were former business associates and clients of mine. Another was a former employee. I really can't be completely un-biased here, but this thing is still awesome.

Now let me underwhelm you. It is a media player. But, it is way more than a media player. It allows you to play all sorts of media, track who it gets sent to, who uses it, and in general get statistics on usage way beyond anything else out there that I have encountered. It also allows you to specify specific calls to action, and add supporting documents and links to related material. The bit-rate on whatever media you have added to it can also be adjusted.

All in all, it provides a very good media viewing experience, and can be tailored even to those with slower connections. The downside is that it doesn't help you make your videos or other media. You still have to have some talent with that. I will be testing it out in the next few weeks or months as I am seeking a new job. I look forward to being able to see the statistics of who is viewing my resume and so forth. Not only can I see that it is being viewed, but I can see exactly who is viewing it.

Very powerful. In the right hands, this could really do wonders. Of course, that is where that other required talent comes in. Once I get my Catapult resume promotion sequence set up, I will probably put a link on here so you can see it. Now, I just have to figure out what kind of media experience I want my users to have.