Political opinion, thoughts, reflections

AxelS
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Could business be on the precipice of an automation explosion?

Somebody asked me an interesting question on Quora, and I thought I share my answer here:
QUESTION: Could business be on the precipice of an automation explosion?

Precipice? No. Automation is on a “normal” exponential growth.

INDUSTRIAL AUTOMATION

The degree of Industrial automation (meaning production) in Europe and several Asian countries is at over 80% and still accelerating. When we reach 90%, it will decelerate as 100% industrial automation is not even a goal as we still need to continue innovating. Yet, ironically, innovative solutions need a bit of handholding in the beginning. :)

BUSINESS AUTOMATION

When we look at business automation or office worker automation, that is different. We just see the start of the so-called Hockey Stick. Office automation meaning all the hundreds of millions of office workers who do repeated jobs, call and support centers of any kind, sales and marketing automation, initial health analysis at doctors’ offices, base work in architectural offices, industrial design, and what have you. Here we are currently at about 15%. By the end of this decade, it will significantly change.

EVOLVING TO TRUE HUMANS

The biggest problem here is that we are conditioned to do linear jobs – everything, no matter how difficult, is a step by step process. And these can be done by autonomous machines. Forget AI – please !!! Autonomous machines are human-made machines with human-made code and human-made algorithms that can do amazing things. It can paint and write books (see GDP-3) – BUT – that’s absolutely peanuts compared to what your brain can do. If you want to learn something, learn all about Neuroscience.

HUMANS MOST PRECIOUS ASSET

C R E A T I V I T Y – is no match for even the wildest dreams on the AI front. Our Corpus Callosum, which negotiates thoughts between the left and the right brain halves, connects both with approx. 200 Million axons (Nerve fibers). This is the equivalent of a 200 million parallel processor machine. Today’s AI needs roughly 2,000 to 200,000 images to identify a cat in any surrounding environment. And it may take roughly 10 kW energy to complete it. Any of my four kids needed maybe 10 times to hear what a cat, dog, bird, etc., is. All it took is probably an apple and a glass of water. Every millisecond we recognize our world; we compare it with the millions of previous experiences and create a thought about the difference. All ideas ever created were a composition of billions of past experiences so that it may be the next billion-dollar business. We are just beginning to learn something that opens doors and worlds far beyond the technical capability of any machine. We need to defend life in the universe from the threat of being wiped out by an asteroid. We NEED systems such as AI and mathematicians to build algorithms beyond our today’s imagination. We need to understand quantum mechanics and the entangled phenomenon of those. An AI system can only help when the following conditions are true
1) A purpose is created to make it happen (Human)
2) It can calculate all the possible options (machine)
3) it will be built to do that (human)
4) It will be trained to learn or observe specific things (human)
5) It has enough energy to execute the job (provided by humans)
6) It knows the critical moment when it has a “solution” (defined by humans)
Preserving life in the universe beyond the existence of our planet is our job.

WHAT NEED TO CHANGE

Fingerpointing to our 5,000-year-old or more directly 800-year-old education system makes no sense. It is too complicated to change. WE NEED TO CHANGE.
The knowledge explosion is at a staggering rate of 100% every 24 hours. But we still learn 20,000 hours in our life in schools and universities what our great great great grandparents learned. But 80% of the knowledge that we acquired we don’t. There is not a single hour of education that helps kids understand what success is, how to create happiness for themselves, how our political system works or why it no longer works, how to create wealth, why our banking system is what it is, how modern democracy is now dominated by 80% of under-educated people who do not know what to vote for other than what populists, communicate. We still educate with fear and uncertainty to make young people do what the system says.
WE NEED TO CHANGE and educate our children what the future is bringing, the most amazing opportunities that most adults cannot even comprehend.

HOPING FOR THE AUTOMATION EXPLOSION

100% Unemployment rate is the best thing that can happen to us humans. Then we all become entrepreneurs, do what we love, unfold our creativity – even forced to get creative and live a fulfilling, purposeful life. We cannot all be entrepreneurs?
Take a trip to Shenzhen and visit one of those “Maker Markets.” here everybody is an entrepreneur. Some make others assemble, yet others sell and so forth. You will have a hard time finding unhappy people. “But there must be people who really work,” absolutely not because that is done by robots, AI, and other mechanisms that have not even been developed yet – but are coming from the released creativity. “Not everybody is so creative” – ha ha ha visit any childcare, Kindergarten, or just groups of very small kids on the street. They burst of creativity because nobody told them YET – to sit still, don’t do this or that, go to school, get good grades if you don’t you get no job stay poos can’t have a family….

Have a great time in your life.

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AxelS
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Happy 2019 – It’s going to be interesting

It will become an interesting year in very many ways. I feel there are three challenges worth mentioning for 2019
* Intensifying economic challenges across the world
* Stress factor technological challenges rising
* Socio-Political challenges to deal with the global development

Let me shed some light on those challenges.

Intensifying economic challenges across the world

In 2018 the stock exchanges finished with the worst christmas day in history. The former economic leader, the USA, is in deep trouble. The country is effectively bankrupt but tears itself out of the dilemma, like every year. It does it not by smart finance politics but simply by moving assets around, printing more money and near perfect political communication (also known as propaganda). So markets reakt on the troubling US economy – who’s fault is it? Ahh – the Chinese production data. So the troubling economic situation isn’t about the US but China – really? It’s that simple. But since global financial transaction, mainly commodities are bound to the dollar – nobody wants to change their lead currency in their dealings. However – more and more actually do – but silently. In 2018 Europe became the largest export economy in the world. Export is the factor that defines a nation’s wealth and makes Europe – under the radar – the most powerful economy on the globe. Asia is the fastest growing Economy. But since most economists still look for the US development, the global economic picture is seriously distorted. Even the largest non US banks see a rosy future based on US data influence. Ok data, being the most important raw material for any decision process, come almost exclusively from the US. Europe and Asia has been successfully stimulated to see privacy and data “protection” the most important goal. Well done my friends. 2019 will be interesting as the world’s transparency is still rising, information flying at the speed of light – unfortunately without solid data from the two global power houses Europe and Asia. The result of these challenges -mainly lack of solid information – may be a massive economic crisis in the US and Japan, which can be easily “promoted” to a global economic crisis, leading to massive devaluation of the global stock markets – regardless of their actual local performance. Cash will become king and allow those who keep the cash buy top functional businesses very cheap in the next three years – history will repeat itself on a new even higher level. This may actually by far the best way for the US to rebound from their troubled economy when hundreds of US billionaires acquire top notch European and Asian businesses for change.

Stress factor technological challenges rising

Our technology development is mind boggling. In 2018 more new inventions and discoveries were made than in the previous 10 years which was more than in the past 100 years, which was more than since the existing of mankind. And the pace is still accelerating. But the advances are so many and in so many areas that we hardly notice them.

Will there be any major technological breakthrough?  NO – Not in AI, not in smart material, not with bio material, not with molecular technology, not within blockchain, not in FinTech and any of the other major topics we are talking about in recent months.

We are in a phase of the most massive technological shift of all times. However none of them will see a “breakthrough”. We may actually not see any breakthroughs at all any longer. Because, unlike 50 years ago, we are seeing thousands of revolutionary inventions and discoveries every single day – not every year.

In 2018 we saw the creation of a heart chamber that is entirely build from bio material, creation of concrete stone that is actually made of air – actually CO2 – modified carbon, the advances in enforced deep learning letting AI play, find or construct much faster than any human ever will, creating bacteria that can digest polymers, and hundreds of other “breakthroughs”. They all happened this year – 2018. Next year will be the same and again without any “big bang” but as a “rolling thunder”.

Lack of interest, not knowing where to start, not knowing what to look for and most importantly with not a single hour of education, our children and parents raising children will remain completely unprepared for what is coming in the next 10 years. That stress factor is certainly rising in 2019 and hopefully gaining enough attention for everything and everybody in education to respond.

Socio-Political challenges to deal with the global development

With the two defining drivers in our developed world: economy and technology, seeming to get out of hand, we will see three rather different developments across the planet. Based on our insights working in 27 countries we are seeing three different ways nations will respond to our major challenges:
Doing nothing, waiting what others do
We will see this – actually continuing to see this in countries from eastern and southern Europe, most of Latin America, Africa, and several Asian countries like India, Thailand, Philippines or Indonesia.
Trying to best understand the challenges and respond with actions
We already see this in Germany, France, Switzerland, Netherlands, South Korea, Vietnam, Singapore, Australia, Chile, Mexico, Russia and some others.
Due to lack of comprehension and in part inner instability trying to isolate the nation from the rest
Mostly countries with a strong culture, some living big time in nostalgia, or past successes, making their country great again. We see this very prominently happening in the US, Japan, Italy, Greece, Turkey, and other former developed or nearly developed countries.

Even though this third challenge is very much influenced by the first two, it is interesting to note that the world’s order is no longer east / west or developed / emerging countries but reranking itself into advancing countries which can be east and west, and also can be developed, emerging, decaying or least developed countries. One of the least developed countries to watch is Nepal. If the government takes the right actions in the next 5 years it may be a phoenix out of the ash. Already in 2017 we saw that development emerging but in the next two years it will become very apparent.

The biggest challenge in 2019 for everybody: Keeping track of what is going on on a global scale and to do so, developing the skill of “abstraction” – meaning building up the ability to focus on what is most influential and verify the sources of information. Every single human is living in the information age – whether we want it or not.

 

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AxelS
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Artificial Intelligence Timeline – next 50+ years

Technological – Business – Societal  – Impact Development Timeline
The era of AMs – Autonomous Machines

2020 – 2025
We will see a rising number of products mainly chat bots, entering our day to day world. At the same time the work on “General AI” will be intensified and we are getting better and better results – yet no real products – despite the rapid development. The business impact will be substantial because access to knowledge will span all industries and will be substantially easier as conventional text search. Search engines will be either UI-less (meaning no keyboard, mouse, looking through lists but you speak to mic anywhere).
The societal impact will begin to bring a dark cloud. The start of significant unemployment in all kinds of call centers, info centers, support center…
Science Fiction movies may become rarer. Our development is faster than a movie maker can write a script, produce the movie and bring it to market. Ex-Machina II may possibly still not come out ;)

2025 – 2030
Technology development towards general AI will be in full swing but not yet really mainstream. Millions of engineers from around the globe will work on AI solutions. That includes Universal AI, multi purpose AI, single purpose AI. AIPU s (artificial intelligent processing units) will become more widely available. New Memory systems may arise. With that I mean silicon embedded intelligence to address memory content. There was a technology developed called “Content Addressed Memory” that may come to new life – now there may be a need for it.
The number of AMs (Autonomous Machines) such as AI Based self driving cars, AI based autonomous robots, AI based autonomous devices, AI based autonomous computers will rise significantly. By then everybody will sell their products with AI-Based XYZ. AI is like Internet in 1998. Widely used but still not fully developed. But everything will include AI one way or the other.
The unemployment rate will rise to very uncomfortable 100+ Million across the globe. Countries will start to TAX AMs in order to finance unemployment aid.
Unemployed will most likely not be able to find a new job. It’s when the wider public understands that AI is different to any other new technology: AI is used to make machines autonomous – rather then needing new skills to use the new technology by humans. AI is not even a technology, software, microprocessors, robots, cars everything existed, but a completely new way to use technology.
As a result, a significant shift in our society will begin. The makers movement will explode, social workers, nature-observers and protectors, artists, musicians, coaches and so forth will rise. We will move from “employed humans” to “autonomous humans”. We will grow more self determined across all levels of education and with a higher value to our society, environment and future evolution of humankind. A major societal inflection point may surface. Those who still need to “work” will push the AI development forward, knowing that if their jobs will be replaced, they can – like all the others – do what they really like to do and receive a UBI (Unconditional base income).

2030–2040
The AMs are substantially advanced. AI development languages and AI operating systems will become a standard in the tech space. Under the development systems the graphical application design tools may dominate as they can be used by pretty much any generally educated business manager. Just pointing and selecting data set sources, algorithms that analyze those data sets, selecting processors (neural networks) to pump it through and so forth. It will be the beginning of broadly available general AI. The number of AI based applications will grow faster and bigger than all conventional software together. The old software world is fading away.
The number of applications and functionalities leveraging IOT, sensor techniques, and robots will enter into all kinds of industries replacing ever more people. It will now be apparent – also for the last human on earth – that industrial work will be completely eradicated. Industrial unemployment will be raising to over a billion people in the next 10 to 15 years. Whether its office workers or manufacturing workers, AMs will take over the jobs. Everybody who is working on repetitive products or services can be replaced by an AM. Artists, will still keep creating Art any creative work that creates a unique ‘thing’ will obviously not be replaced because it would simply make no sense and cost too much. Those AMs work 3 times as long (8 versus 24 hours), no social cost, no vacation. Unemployment aid will at the very latest now become an unconditional base income for everybody, funded by the earlier implemented Value added AM tax. Autonomous Humans will now become the majority.
We also reached another interesting inflection point. Product costs are no longer determined by the amount of labor cost – back to raw material cost based pricing. But the raw material may actually sooner or later come from other planets. Science Fiction? No – this is now becoming reality. Not only because we understand that renewable ENERGY is limited but also recyclable MATERIAL is not infinitely available on earth. A billion cars with Lithium Batteries would require more Lithium after the first few replacement than we have on earth.

2040 – 2050
The AMs will evolve further, write complex algorithms themselves, beyond our own capabilities, create structures and construct products beyond our intellectual capacity. Humans, however, will also evolve further and deeper than we can imagine today, in 2018. Our brain will have more capacity for creativity because we will no longer need to remember when King Ramses built his empire, who his father was and so fort. We have that knowledge in our extended, collective, connected technical brain. Internet connection is omnipresent and guaranteed on every square inch on land or water on earth. Mass products in any way or shape can be constructed, prepared and produced by AMs. Only the decision, what we actually want to create, will still be coming from the human mind. And latest by then we will bring forward real self aware AMs (if not much earlier). There are many people including me working on self conscious AI concepts already. Yet even self aware AMs are far away from the human brain capabilities. The AI research will help us better understand what we are actually capable of. We will learn more about ourselves in these 10 years than in all the 300,000 years before. The human mind’s creativity is so complex that AI is still very far away from coming even close to it. We will have a far deeper understanding of the human mind than just our intelligence. We will understand that intelligence is just one power of our mind, similar to our power to move, the power of our muscles and the power of our orientation – which we have all augmented already some hundreds of years ago. We will understand artificial intelligence is no more than our artificial muscles, which we call tools.

2050 – 2075
Leveraging our added skills, collective knowledge our amazing machines, scientists will be replaced by those machines as well. Testing something new and prove a repetitive behavior to make it a scientifically proven fact, is much better done by an AI system than by a Ph.D. ‘system’. Science will be done by AMs across all factions. At the same time, innovative and creative ideas will explode, AM’s will analyze and verify those ideas in no time. AM owners will compete for those crazy but verified ideas and build it. AMs will help revitalize space exploration in a new and rather meaningful way. We will need other places than earth to harvest raw material and we need other planets for recycling or wast disposal. AMs, powered by solar energy are the best “people” to send to other planets or our moon to extract, produce, recycle, deposit. We don’t even need to terraform Mars for that. But we may safe Mars for exploring Terraforming together with AMs. Autonomous Machines and Autonomous Humans will build the most powerful synergy ever built. We will be depending on AI, more than on any other technology built so far. Most technology can be replaced by something else. But an AI system that can iterate through millions of ideas for any given solution in a few hours is something not only beyond what we built but beyond ourselves.

More details on how and why thousands of different jobs in 300+ industries, from around the world will be replaced in the next 30 years and how we manage the inflection point from the disaster of being “unemployed” to the luxury of becoming an autonomous human will be available on: Eliminating Work . AI

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AxelS
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Crazy, intriguing, beautiful, challenging future

More and more people understand today, that our future is not accidentally happening but literally created by us and by the forces of our universe.

If a large asteroid is destroying our planet before we found an emergency exit, that future is created by the forces of the universe or whatever we call it and believe in, including by chance if you like. But if we find a way to either destroy such an asteroid before it hits us – or find a way to rescue people and escape to another planet, this is a future we literally create ourselves. Everything we have today, homes, running water, accessible electricity, cars, planes, hospitals, computer, artificial intelligence, robots, machines, cranes…. was created by us. The live we live in today was the future, created by our parents – for us.

With that understanding, we should help all people understand, that every single one is helping create our future. Whether it is building a rocket to the moon where thousands of people, engineers and metal worker created that future – or agreeing that the UK shall no longer be in the EU, was  created by the sum of all of the respective people. The responsibility of every single one is much grander than most realize. Their ever growing influence is way more powerful than most people can comprehend. It is our responsibility to help everybody, understand that we are a collective and we collectively create our future – in what way ever.

For those who fear that influence – I guess we can trust that there are more people with a common sense on earth than those with destructive or criminal energy.

 

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AxelS

Dear Mr. President Obama

I’m concerned. With a defense budget of $690 Billion, the US spends more money on defense and armor than China ($129B), India ($44B), Russia ($64B), UK ($57B), France ($58B), Germany ($43B), Korea… all together. That means that every US family is paying $6,200 per year to defend – what?

In contrast, the US education budget is only $69B, infrastructure and everything else is even less.

If you restructure the budget, keep $250B for defense, you are still bigger than China, India, Russia combined, or bigger than all Europe and have $440B for making the US the nation with the biggest education budget, the biggest science budget, the biggest economic stimulation, the biggest traffic infrastructure development and make it the leading nation – again. And still have a few billion to revitalize a Space program.

I believe the most significant defense program for 2014 is to defend US internal poverty, under education and economic meltdown.

I wish you and all Americans a happy and prosperous 2014

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AxelS

Separation between state and capital

I’d like to expand further on an earlier post about the three priorities of a well run democratic government: Education, Infrastructure and Law. I made a short statement about separation of state and capital.

In recent year I saw quite some interesting posts about ‘separation between state and economics’ or ‘separation between state and economy’. Well first of all i see “economy’ as the mirror of how we conduct business and how business can flourish in a given society. Economy or the economics of a nation is a result of a carefully interwoven and networked interaction between capital or the business owning part of a society and the government with it’s responsibility to take care of ALL of its citizens. Hence I believe it is better to say “Separation of state and capital”. With this approach we will also see a major conflict right away in a political form that is called capitalism.  Capitalism basically fuses capital and state in one unit that has eventually the same problem than communism. In a capitalistic world less and less people control more and more assets to a point where there is no difference to communism from an economic point of view.

When capitalism becomes an economic communism

Let’s look into the United States today, end of 2013. The largest part, approximately 80% of the population works in large global enterprises. They are all public companies. Public companies means the public participates in the economic success of those companies, very much like in communism. The company leadership including the ‘real investors’ however work very closely with the government and have a huge influence in the government’s decisions. When we look at the investor structure of the food industry which is still the most essential industry to mankind, the 350 ‘individual brands’ in the US are owned by approximately 10 large enterprises and only a few people like Warren Buffet have a large stake in those companies. At present time, less and less people control more and more assets and build and incomprehensible wealth – while an unhappiness 99% seeing the chances to become rich rapidly vanishing away.   Some predict that there will be the first Trillionaires in the next two generations.

Unlike the idea of free competition – as seen by Wesley Gant – and a well self balanced economy, capitalism allows an uncontrolled gravitational force that allows one company gets acquired by another until there is no competition left and we experience monopolies that are not only as bad as communism, it’s actually worst. AT&T, Comcast Cable, Microsoft, Ford and GM, General Electric, super market chains are only a few of those examples. The US had once 26 world class auto makers and have been considered the world leading auto industry. A sales pitch from GM telling other companies that ‘economy of scale’ will crush them and they better merge with GM worked well enough to buy most of the car makers, creating an unmanageable behemoth, that was eventually unable to compete on the world market. Ford and Chrysler did the same and the US ended up with three brands, so inflexible and lacking of innovation that international brands took over and crushed the US auto industry. In just 16 years the US lost all it’s leadership, no more the leading auto industry, no more the leading home appliance industry, no longer the leading aerospace industry, no longer the best education, no longer a self sufficient energy producer, no leadership in environmental technologies, renewable energy, health care….

The end of the american dream? The end of the land of opportunities? It is certainly just a few seconds before 12 and when you see billions of US$ flow into countries like Africa and revolutionize the African infrastructure, you know that a large portion of that gigantic wealth is leaving the country.

Is separation of economics and state an illusion?

One of the very related and controversial discussed movies is Atlas Shrugged from Ayn Rand. The story was written in 1953 and the third movie of that trilogy is currently in the making. Also Ayn is a big proponent for a free and uncontrolled capitalism and is mentioning the separation between economics and state – as she is migrating from Russia to the fast emerging US. But now – 60 years later, where are we? There is no separation between economics and state and capitalism is at risk to collapse. Replacing “economics” with “capital” isn’t just semantics but a significant difference.

I believe capitalism and communism are both idealistic and extreme forms of an ideal world, described by people who would like everybody adopts what is ideal for them. As such I trust neither one will ever work. All too often freedom for one is a limitation to another. We need to recognize and respect that a peaceful coexistence requires compromises. And compromises need to be democratically decided and then respected (one may not agree but will commit).

Separation of state and capital

The government of a society needs to look at the entire population and be not guided by the capital. That a company such as GM can buy and destroy public transportation in the interest to sell more cars, should never be possible in a democratic and capital independent government. That a government supports the weapons industry to a degree that the arsenal is able to destroy the plant 60 times and sell weapons to countries that are simply unpredictable just to fuel war for their own business interest should never be possible. Infrastructure that is part of the foundation of a society’s success should not be privatized unless it can be insured that there are at least three independent competitors. Patent laws should be in the interest of an inventor not in the interest of the capital. Trade laws should be in the interest of all independent trader and need to be predictable.

EDUCATION
In today’s technological very demanding world education is not only a base right but a responsibility of the government to provide the best possible education to its society. That responsibility includes motivation why such education is so essential. Unlike in the US education system where higher education is almost in-affordable for an average family, the state need to ensure that all talented citizens are motivated and have access to the best possible education, including political education to grow a nation that is mentally able to execute their democratic rights and can contribute to the evolution of such a democracy. Political education also needed to ensure a society can maintain their democratic rights so that at least a large part of the society is able to comprehend the evolution of the law and rules and regulation the society is governed by. Since there will always be talents that come out of circumstances unable to afford first class education, it is the states responsibility to support those in the interest of the entire society.

INFRASTRUCTURE
From history we can learn that infrastructure has always been a keystone for prosperity. First cities in Egypt were build at the river Nile, where the river was a key transport medium. Harbors became the strategic infrastructure for prospering nations for thousands of years. Later on trading hubs emerged inland if good roads where available, expanded by trains and lately airports to be connected to air traffic. Public transportation systems are key in large cities to provide fast transportation within those cities. Phone connections, Internet, mobile phone infrastructure are the latest examples for key strategic infrastructure elements. Obviously handing those over to private businesses seemed to make a lot of sense, but the economic interest and the interest of a society as a whole are colliding also here. European countries for instance responded to those essentially just different monopolies with state regulations to ensure service needed for a prospering country. Germany, one of the most healthy economies, for instance took it even a step further and followed the principle to have communication managed by the department of traffic and infrastructure. Traffic, communication and energy are so critical to a nations success that it may make a lot of sense to make those carefully watched and co-managed by the state.

LAW
Obviously one of the most essential responsibilities of the sate is to create, maintain and enforce the law for its society. In particular maintenance of a law is a big challenge for most modern societies, that have still rules and regulations that are more than hundred years old and are completely outdated. Yet as one rule builds on previous ones it is very difficult to remove such outdated laws. More importantly is the need to create new rules for new behaviors, often triggered by new technologies. While the law is the foundation of today’s democratic society, all too often is the society not participating to execute their democratic rights by virtue of not even understanding what the law is for and what permutation it may have (see education).  I rising issue in the developed world is to understand and navigate business development. In today’s capitalistic societies it is easily possible that financially dominant groups can easily overpower less powerful groups for their own benefit but not for the benefit of the economy. For instance Microsoft was able to deliver Internet Explorer for free and killed innovator Netscape. This example is in particular valuable as one school of thought will suggest that any intervention of a government is negative for the economy and if the government would regulate at that level, where will it end? The other school of thought may argue that destroying innovation not in a competition of innovation but in a competition of capital is not in the interest of a thriving society and we need to find ways of fair competition in the base of the matter – in this case innovation. Obviously I’m not writing this to make a suggestion but to raise the issue and show the challenges that lay ahead of us.

In all of the above core elements, a well run government has deep connection between state and economy, yet not necessarily a need to have state and capital be as closely connected as it is today in many societies.

Economy, being “the wealth and resources of a country or region, esp. in terms of the production and consumption of goods and services” in accordance to Google, it would be hard to believe to decouple economy from state but separating state and capital as only one of the players of a nation seems to make a lot of sense.

 

References:
Market Watch, 11 Trillionaires in 2 generations
Currently richest people
Wesley Gant – separation of economy and state
Any Rand – principles of a free society
Recent theories of the capitalist state
What is economy

 

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AxelS

A democracy’s top priority

With the ongoing struggle of the US economy, the inner unhappiness and the many questions arising every day in the public web, I was thinking back and forth over the past 2 years about the essence of democracy and the top priorities of a democratic leader. The list is obviously almost with no end. But running a country is all about focus and complexity management.

 

I think there are three things a well run democracy provides for their citizens:

1) Education

Lowest cost possible education is essential. Education drives innovation and innovation drives the economy. Nobody can predict who are the next innovators. But one thing is for sure: limiting top education to a top class in the society is reducing the amount of possible innovation by order of magnitude. Most of the big tech leader and tech innovations in the US were essentially stemmed by people from middle class or lower families. If a country can’t support broad education it cripples its ability to innovate and as such it essentially reduces its competitiveness on a global scale.

2) Infrastructure

An omnipresent basic infrastructure for clean water, energy, public transportation and communication (i.e. mobile networks and Internet) is essential for a society to work and deliver a high value to the society. Communication, knowledge transfer and interaction via the Internet and mobile communication is in today’s world as important as air traffic was in the 60’s and 70’s. If you can’t go there easily you decouple yourself from the rest of the business world. If you don’t make it easy and encourage people to leverage the global Internet you disconnect yourself from the global business flow.

3) Common sense law

A law is helping citizen to collaborate and live with each other, keep freedom and prosperity. However like education models and infrastructure if it is not well maintained, there is a high risk of permutation that makes the law not the law for the people but against the people. The Headline in Wire Magazine a year or so ago: “Need cash – sue Google” is a funny yet devastating testimony for a law that is out of control.

All the other key needs including Jobs, Healthcare, Freedom…. will fall into its place if the above is a top priority. To the contrary if any one of the above responsibilities are a low priority, there is a high risk a society is at jeopardy.

Separation of state and capital

Very much like the separation of state and church back in the 1700’s a modern society need to care about the separation between state and capital. Societies in capitalistic nations are particularly at risk to outbalance democracy in a way where poor get ever poorer and less and less people get ever richer to a degree that the capital eventually controls what happens in a country and not an elected government.

 

Plausibility check

Jobs & Innovation

If we have many well educated kids from all kinds of levels of our society we will see a lot of creativity and start-ups driving the creativity to new business and new jobs. Jobs can’t be “created” for people to have a job. Jobs can only be created by demand to do things we haven’t done before. Innovation means developing the ability on a global scale and build more than we can consume ourselves.

Health Care

If we have jobs we can pay for healthcare and if we have agile and creative people, they find new ways to make health care more affordable, less complicated, more variety and more option. We can’t “generate” healthcare unless we put it back to a government function.

Prosperity

If the laws of a country help keeping the balance between a young generations innovation and mature capital we alleviate the risk of monopolies and support the growth of a middle class – which is essential for a stable and well balanced economy. If like in some countries over 80% of the food supply is concentrated in 350 brands that are essentially owned by 10 companies who have all one major shareholder in common, we live in a very dangerous system that allowed the prosperity development to get out of synch. It doesn’t make sense to finger point to people and call the greedy – when the system is build to make it happen.

Well – is our democratic model no longer working? No – our world and it’s needs and haves have evolved dramatically and our democratic answers need to evolve as well. Public companies for instance were a great innovation about 100 years ago to let the public participate in the gains of larger companies. Today public companies ruin more individuals than other investment opportunities, or no longer even give access to many citizens and investments have grown to a level of complication that it just doesn’t make sense any longer. Neither the laws to protect investors or businesses nor the laws and rules to run businesses kept up with the evolution of our globally connected business world.

Summary

While this is all very complex, if we distill it down to Education, Infrastructure and Law we can start working on it and get out of trouble easily within a few years.  Just thinking

Axel
http://XeeMe.com/AxelS

 

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AxelS

A thought provoking interview about capitalism

I learned from my grandmother: “At one point in time capitalism is identically to communism. It is at the time when a tiny group of people control most of the assets of that society.” Are we there?

I think raising minimum wage is only one more action where the small group takes control. The free flow of economic forces has stopped. And now the worst thing is that the 99% point fingers to the 1% as the bad guys. In my opinion the real problem is a system that just have seen its days. To fix that it actually takes the 99% and not the 1%. But here is the real problem: zero political education for generations. The 99% does only know little to nothing about macroeconomic, economy dynamics…

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AxelS
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Let’s create leadership in education and innovation, not world domination and war

Yes, we lost the leadership but maybe in the future there is no more single world leader. Maybe there are different leaders in different areas. We don’t need a global leader we need global collaboration. With connections across all countries we develop friends across all countries. And with friends across all countries we are less likely to start yet another war just to make the weapons industry happy. There are over 300 Million Americans who no longer want war, instead want to see the tax money put into education and innovation, both being the no.1 driver for jobs and wealth.

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AxelS
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Recession 2.0

This is my personal observation on our current economic situation. (2007)

We call an economic melt down “Recession”, when we don’t know the origin of the situation.

We call a Recession a ”Depression” if we failed to find the reason and continue the way we did in the past

We don’t know what we don’t know
The oil crisis or energy crisis had a name because we knew what the issues are. The Internet bubble had a name because we knew the cause and could deal with it. The current “recessive behavior of economy” seems unknown to many and have a real vague reason for some. It is pretty easy to point to the financial institutes who in turn point to politicians, and argue about interest rate definitions, manipulation of a free economy etc. But what do we say about the automobile industry and their issues? What do we say why HighTech consumption is declining? Why even consumer goods are declining before the “Financial hammer” was hitting? The list is as long as our Industry SIC codes.

Businesses around the glob will suffer 10% – 20% decrease in revenue. This causes layoffs and a dramatic increase in unemployment rate. Now this will really accelerate recessive revenues and a decrease in consumption and the spiral goes further down.

We don’t know the real origin of the revenue recessiveness
Why the layoffs in the first place? Because all we know is that consumption is going down. But too many don’t know why or have false assumptions. And hence a stimulus package would only absorb additional liquidity without helping “reform” our macro economic landscape.

Analyzing the details of recessive revenue
Try to buy a car. What is happening? You feel ripped off by that car dealer which probably has the worst reputation in the sales guild. A friend of ours found the perfect car. But the sales guy was so pushy and so aggressive that she left the store. It took another month until she found the equivalent car and be prepared through online research so she exactly knew what to buy, where to buy and what to pay. As a result she bought much later than she planned to. And so many of us have seen this same behavior with friends and with ourselves.

I tried to add an additional cable TV connection at another place. Not only that the customer unfriendly voice recognition system and out sourced call centers are rather incompetent, the available plans are so complicated and vary every day that I hung up and it took me two more month until I finally ordered it because I really had to. Just forget about some cool extras – many of us just buy what you absolutely need. And this is not because we have no money – but because we just don’t want to deal with those companies. Again you buy less and much later.

Try by a cell phone. The sales information, the plans and the sales methods are like 25 years old. Buy an Apple iPhone and you need to stand in artificially created lines to activate the phone to make it look more attractive. How can just a few weeks later people download millions of gadgets when only a few 20 per store can get activated? Better wait until the artificial hype is over and be treated as a welcome customer. Purchase delayed by 2-3 month.

Want to book a vacation. Ohhh what a drama. You wait until you know it is really about time because all those offers are so complicated and since there is no such thing called travel agency who has some friendly local representatives, you order online – cheap – late.

Buy some new clothes. You only can get what the industry is producing right now, dependent of the season, dependent on surveyed fashion trends and based on regional aspects of their purchasing departments. So the selection is highly limited, optimized, maximized in accordance to some business process automation suggestion. You simply buy less.

Now buy food. Grocery store consolidation has reduced the product variety, quality has shrunk and with less consumption the personal is now less and cheaper. You buy what you find and many get fancy by going to WholeFoods and Trader Joe’s despite the higher price. But isn’t it interesting that the super expensive Whole Food is very successful?

I can go on and on and see one interesting pattern across the board – purchases are made later by approximately one or two month at least. A delay of 2 month or 1/6th of a year translates to 16% reduction in revenue. But that is only for the goods and services we HAVE TO HAVE – or believe so. Now add the other little things that we buy or not buy and never buy just because we are sick of the bad service that is provided. An over all revenue reduction of 20% for an economy that is used to think in 3 or more percent growth – that is RECESSIVE and if we don’t wake up it will get DEPRESSIVE!

Now think about the initial customer contacts:
Call a business and you will need to dial 2 – dial 6 – dial 7 – dial 1 then land at an  outsourced call center that hardly speaks English and only has a repertoire of some 20 – 30 questions. As a customer or prospect I just feel how much I’m worth to the company I try to contact. THAT CAN BE CHANGED – RIGHT?

Business Process Automation
BPI is one of the main topics of most companies. Business processes are so deeply optimized that as a customer or prospect I’m hardly playing any role. It’s all about the internal processes. The focus then includes quickly compliance issues, information flow, disclaimers and who can provide what information. At the end nobody can say anything. Corporations became so closed that again a business relationship is hardly possible. I’ve seen user groups collecting contact information from a vendors sales people to get in touch with them. It sounds unbelievable but even the customers can’t talk to sales people to buy updates (A still multi B$ telecommunication company). THAT CAN BE CHANGED – RIGHT?

Information Flow
While businesses make it much harder to get to relevant information, users are forced to dig through forums, blogs, communities to find information. The only information flow is mass emails, advertising, sponsored link with all the same – excuse me – bullshit nobody really want’s to read. I asked participants in an event “who trusts or even just cares about advertising?” all I got as an answer was a laughter. Still approximately 1 Trillion Dollar is spend in advertising and advertising related initiatives – unfortunately it’s no longer bringing any results. In general business simply lost the sense for their most precious good – customers. THAT CAN BE CHANGED – RIGHT?

Product Design, Production, Marketing, Sales, Support
We build products that are neither verified nor wanted by the market. And while customers scream about their needs in forums and user groups, producers are not even aware what they say. Businesses spend 3-5% on advertising that nobody cares anymore, they loose 3-5% of their profit right here. Sales is purely trained, and under such pressure to sell that it scares customers away. If purchase is delayed about a month translating to 8.33% reduction in revenue it often represents another loss of 4% profitability. Support is so underpowered and the leverage from knowledgeable users is simply ignored which cost another 2-5% profitability. And if we add all up our business in some cases looses even more than the average 5-10 but more like 20% soon. People get laid off to keep the company going – keep the status quo – which drives the company further down.

What on earth has all that to do with the “financial crisis”?
When businesses around the world loose their customers because the customers loose interest in those products and services, what has that to do with the prime rate? NOTHING. Why are a few companies thriving? Sheer luck? Absolutely NO. Can companies produce, market and sell products in a crisis? Yes, as long as we live, eat, move, search for new opportunities, create new opportunities, build more attractive products, provide better service, spend less on advertising nobody cares about and do what customers really are interested in.

For Even if you think – this is stupid, this is too easy, this is superficial, and I have absolutely no clue. Wouldn’t it make sense to improve your business anyway?

1) First off all re-architect your first impression:
– Stop the outsourced call centers and put less but well trained customer focused people on the phone
– Move your advertising budget towards customer relevant initiatives like blogs, communities, forums
– Seriously redefine your information policy – your shareholders rather have results than an over compliant closed company.

2) Rethink your product / service / pricing model:
– Work with product management on more transparent pricing models – the old customer rip off didn’t fly
– Listen to your customers and simply build what they ask for – if you don’t do it someone else will
– Take green and social serious. It’s not a hype it’s what the majority of customers care about.

3) Redefine your corporate values (if you have any)
– Make the ones who pay you (customers) not silly Kings but seriously valued Advisors and Advocates
– Measure, manage and control customer reflection on you not by anonymous endless surveys but by tangible activities in your ecosystem
– As CEO erase “Shareholder value” from your list of priorities. Shareholder value comes automatically and for free if your customers are happy and buy more products. Instead make market relevance the one and only goal for your business. Market relevance is when more people consider you important, trustful and buy your products, services and buy into your vision.

I’ve never been in a real recession before, so I can’t tell if this one is different or if our tools and information flow is so much better that we can analyze the issues. But it is very obvious to me that if people are less motivated to buy, mostly disappointed with the resources and services the seller provides them, that consumption goes down.

Plausibility Check:
1) Personal Experience
look at the last 6 months where you as a consumer bought things whether it was a new or used car, stereo, TV, video games, phone services, homes, food, clothes, booked a vacation… what ever, how happy where you with the service, hoe easy was it to buy it, how compelling was the offer.
2) Influence
Now check: what or who were the influencing factors for said purchases, how important was advertising for any of them, how important were past experience, suggestions from friends or what kind of other influences would you name as important
3) Behavior
Try to remember what would you have purchased either faster or more of in the last 12 month if the offer would have been more compelling, if the producer or reseller would have been more trustful and if the whole business experience would have been more attractive. Whatever dollar amount you come up with from the last 12 month multiply it by 300 Million (US population) and you get the “Recession value”. For instance if you would have purchased stuff worth of $1,000 in the last 12 month as an average citizen – The “Recession Value” for the US economy would be 3 Trillion Dollar. A lot of tax dollars our country is loosing too.

Well – this is just a short and superficial glimpse into our super complex economic network. But hopefully enough to get you thinking “What can I do to create a better business experience for my customers, prospects and partners”.

 

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