The Ingenesist Project

The Next Economic Paradigm

Tag: corruption

The Rango Prophesy

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On July 2, 2012

In General Information

When I asked my friend and highly respected Seattle consultant Joe Brewer for advice, he simply says:

“Tell an Epic Story”

Rango is a hapless Chameleon in a classic “fish out of water” tale and unlikely hero who finds himself in a “Dust Bowl” meets “Spaghetti Western” hardship scenario. His only preparation is an active imagination and a lot of luck.

All of the characters are similarly encrusted desert animals doomed to a life of subservience to a central banker in an economy where water is the currency of trade.

The Mayor of the town first appears as an almost spiritual leader who provides his flock with hope that their suffering will soon be relieved on the day when water flows again from the shrine of the Holy Spigot.   The analogy to modern religion is hard to miss.

When Rango arrives and accidentally stumbles upon an act of valor, he is anointed sheriff of the town.  Meanwhile, the mayor is, in fact, the person causing the hardship by secretly constraining the supply of the water so that he can buy up all of the failed farms for commercial real estate development.

Upon providing guidance to the new sheriff, the mayor inadvertently slips that proverbial libertarian battle cry  “whoever controls the water (currency) controls the people.”   This sparks suspicion in Rango, who then ventures off on an adventure with some of the town folk to find out what is happening to the water.

After plenty of twists, turns, predators, mistakes, and a whole lot of ironic/comical symbolism, Rango and his gang finally learn that the mayor simply shut off the valve tapping the Las Vegan water main.  Once Rango’s gang opens the tap, water becomes abundant again and the protagonists meet their appropriate demise (suitable for young viewers).

The metaphor for the real world is a no brainer, for most reading this blog anyway.  Bankers artificially control the currency tumbling communities into bankruptcy, unemployment, and despair.  Meanwhile politicians, corporate interests, and legislators conspire to offer fasle hope to the wallowing masses as each person, one by one, hands over their fortunes and freedoms to the powerful elite.

Of course the plan is foiled when a group of brave citizens form alliances with their previous adversaries acting in unison toward a common goal.  It then becomes readily apparent that an “abundance” of productive currency, such as water, is precisely the solution to ridding desert society of crime and corruption thereby enabling peace for all – not the other way around.

This is the story that I want to tell.

There is a very simple task at hand – find the main line and open the valve.  Human knowledge, like water is constrained behind artificial barriers called “intangible” asset accounting.  To build an accounting system that makes knowledge assets “tangible” will open the floodgates of the most valuable currency civilization has ever known.  Not surprisingly, the protagonists will meet their appropriate demise –  suitable for young viewers, of course.

 

 

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Criminals Steal Social Agreements

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On April 1, 2010

In General Information

At the end of the day, everyone is arguing over money. How are we going to heal the poor? How are we going to police the world? How are we going to bail everyone out? How are we going to preserve the environment? The answer is always the same…it takes money to solve all of these problems.

What people do not realize is that currency is a social agreement, not a disagreement. Money is whatever people agree to use as a storage container for the value of their time, labor, intellect, or other resources. A criminal can steal your time, labor, intellect and possessions, or they can just steal your social agreements and replace them with a social disagreements.

It is easier to steal from the poor than the rich

Stealing money is not as difficult as some may think. Whenever people are held below a certain economic level, they fail to organize in communities that would otherwise protect them from outside influences. These people are often too busy holding a job, paying off debt, or traveling in search of work, or worse, a place to live – they become easy targets.

Blind leading the blind

Currency, by fiat or black market, is just a way that everyone agrees to store and exchange value. So, when people are at each other’s throats over a system of beliefs, they are effectively blinded to their true opponent – their inability to make a social agreement regarding the storage and exchange of value.

The current political strains pulling at this country are dangerous. The real problem is not your colleague or neighbor who is in favor of universal healthcare. The problem is not your old classmate on facebook calling Obama a liar. It’s OK to oppose the government – it’s our right. It’s OK to oppose bankers, they are accountable to a social charter.

The problem is that people are opposing each other.

There is no way to pay off a 50 Trillion dollar debt. All politicians know this. You would need to harvest every fish in the ocean, pump every remaining barrel of oil, and cut down every tree to extract this amount of “value” from what is left of the Earth. To whom exactly would this value be delivered and how? It simply cannot and it simply will not be repaid without some magnificent productivity gains on the order of nuclear fusion or superconductivity.

I will not speculate exactly how the currency fails. There are plenty of examples in history. Instead, I will speculate on what will replace the failed currency in the age of social media.

Social media is taking on some very fortunate characteristics, especially in the area of organizing people and communities around a common goal. Too often that common goal is to oppose another force of social media. This will change, it must change. When the dollar fails, people are going walk out their front door, look at their neighbors, and introduce themselves.

So, There you have it – that’s where all the money went. It is stored and exchanged in our social agreements.

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They Should Pass A Social Currency Option

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On March 23, 2010

In General Information

My new favorite rebuttal to any argument from economic ailment to political controversy is: “I’d like to see a social currency thrown into the mix”.

It is really convenient to have the same position on all issues; Health Care, Terrorism, abortion, financial meltdown, education reform, and political scandal – my response is the same. “I’d like to see a social currency thrown into the mix”.

What the heck am I talking about?

Several recent blogs articles (and here, and here, and here) have converged around the idea that social currency is something that people earn from being active in a community, network, or social organization. Social Currency in lauded upon the recipient in many forms such as Google juice, respect, engagement, trust, re-tweets, reputation, merit badges, check-ins, tokens, Whuffie, wiggly worms, etc…

Regardless of what you call it, all social currencies have a very unique characteristic that differentiates them from a financial currency. Social currencies reward high integrity and punish low integrity.

Social Currency can be earned or converted:

Organizing a community around a common goal is serving a need that government and corporations do not have to fulfill in their “Social Charter”. So it has value.

  • Helping a neighbor find a job supplants the work of the government funded unemployment office.
  • Helping an elderly neighbor with their shopping supplements the Department of Health and Human Services.
  • Adopting a child alleviates expenditures in the foster care system, abortion, and possibly the courts and prisons.
  • Helping local vendors stay afloat by organizing a community of group buying or groupons reduces the demands on bankruptcy courts and social services.

Social Currency can also be eliminated:

  • Public servants and politicians who squander the trust of their constituents through acts of corruption and impropriety
  • Corporations who decimate local priorities in favor of Wall Street priorities.
  • Breaking the law, endangering others, neglect, fraud, breech of social contract .
  • Consumption far in excess of social contribution.

Take any issue and apply social currency

The health care debate is an excellent example. First, let’s apply a social currency to all of the people voting on the bill. Next, let’s apply a social currency to everyone arguing against the bill. Next, let’s apply a social currency to everyone arguing in favor of the bill. Let that count establish the burden of proof of the argument.

Next, let’s pay for Health Care Reform in social currency, not financial currency. That means people with a surplus of social currency receive health care at a certain rate. People with a deficit of social currency receive health care at a different rate.

Finally, compensation to health care providers would also be biased by a social currency. Providers with a surplus of social currency are paid at a different rate than providers with a deficit of social currency.

What about cheaters?, who pays these subsidies? how do you count it?, It’s a job killer, corporations will go bankrupt, losers still lose, Holy cow, this messes everything up!!!!

Actually, it’s not much different than how we allocate money on a credit scoring basis. It’s not any more difficult to count than the blood-money coursing through the veins of an unvetted financial / insurance system. Most importantly, constraining a Financial Currency with a Social Currency sets up a whole new landscape of benchmarks and incentives that accelerate innovation, in effect, printing new currency.

That’s what I mean when I say; “I’d Like to see some Social Currency in the Mix”


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Palinism; It’s About The Ice, Not The Puck

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On November 24, 2009

In General Information

What does Sarah Palin tell us about ourselves as a culture, a nation, or as individuals?

No matter whether you like her or not, you can’t help but feel something for her. The Cinderella launch into worldwide stage, full public disclosure of her laundry room, dumped at the altar by the grizzled groom, sent back to Alaska with a scarlet letter (take your pick) tattooed on her forehead. Alas, the epiphany: God speaks to the persecuted one; “Rise Up and serve thy mission!”

The thing that America has in common with Sarah is the time table. All of this happened in 16 months. The same 16 months of time as a new genre of bad news was also thrust upon us: astonishing job losses, crippling deterioration of wealth, unspeakable corruption, and complete disregard for what happens to a family when they a kicked out of their home by the law they elected.

“Too big to fail” means the rest of us are too small to succeed. Then here comes Sarah reminding us of ourselves; so much to blame on others and absolutely nothing that can be done about it. The only thing she has left is the moose horn. Let me tell you, if I had a moose horn like hers, I’d yell into it every day, all day long until someone smarter, stronger, and with less dignity (or nothing more to lose) steals it from me. This says a lot about the people who can’t shut Sarah up.

As president, she would be woefully inadequate, but as a Hockey Mom, she’s quite talented – when everyone else plays with fire, she plays the game of ice. The home team hates her, the opposing team hates her, the coaches conspire against her – nothing she says makes much sense anywhere else except those few seconds of a game long ago played – at least her mission, whatever it may be, is being accomplished.

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Toyota Raises the Bar, Again

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On October 12, 2009

In General Information

Adapted from NY Times article here

Last week Akio Toyoda, president of Toyota Motor, apologized for his company’s poor financial performance and possible culpability in the death of an American family for faulty product.To this, I ask – what is the value of this conversation in the age of Social Media and where is the associated innovation?

I worked extensively in Japan and apologies from CEOs are not uncommon.  When All Nippon Airlines and Japan Airlines had a few runway incursions – both CEOs (competitive enemies) appeared together on national TV nearing tears and ending with a loooooooong bow of remorse.  US media does not often get a chance to see this side of Japanese culture because of it’s intimacy, sensitivity, and frankly, it’s a little bit strange since scandal and corruption in Japan can be truly world class.

A few interesting quotes from Mr. Toyoda:

  • Toyota was shamefully unprepared for the global economic crisis and now is a step away from “capitulation to irrelevance or death,” said Mr. Toyoda, the grandson of the car maker’s founder. The company, he added, is “grasping for salvation.”
  • Toyoda declared the automaker had gotten too arrogant on “the hubris born of success” and the “undisciplined pursuit of more.”
  • “I want Toyota to return to profit, so we can start paying taxes and go back to contributing to society,” he said.
  • And in a peculiar show of deference, even the reporters gathered were issued an apology.
  • “I’m sorry I am standing on a podium, standing above you,” Mr. Toyoda told the seated audience. “But my seniors always taught me that I must stand when addressing those who are above me.”
  • ….and they go on and on….

And on the other side of the pond…

I am still waiting for a single US Banker, Insurance company CEO, or Corporate executive to apologize for mismanagement and failing to sell worthy products.  Not one – Sure, they will kowtow to the Congress or the courts, but not the people – all they need to do is look straight at the camera. Seat belts were not even installed in US automobiles for the first 60 years because they did not want to give the “impression” that automobiles were unsafe.

The devaluation of conversation?

“Sometimes, this apology business is a way to avoid taking real action or responsibility,” said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University’s Japan campus.

“When you hear these long apologies,” Mr. Dujarric said, “It makes you want to say: ‘Don’t be sorry, just do something about it.”’

Now, enter Social Media:

Toyoda again has set a new standard.  This story is covered throughout social media space – most other big Japanese apologies had not.  The difference between the US automaker and the Japanese is stark.    Toyota intends to be the standard by which all other competitors are compared.  When most are trying to lower the bar, Toyota raises it.

That’s the value of conversational currency.

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Is The Banking System Corrupted?

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On March 9, 2009

In General Information

The following video series is one of the most important videos that you can watch right now. These were published in 2006 but it’s the best place to start understanding the current crisis. It will also give you an understanding of what Barak Obama is doing and why.

Finally, after viewing these videos, you will have a greater understanding of what money is, what the future holds, and why the Ingenesist Project is therefore so Important.

Part 1/5; Cartels Robbing the Public

Part 2/5; How Money is Created

Part 3/5; Money Is Debt

Part 4/5; Monetary Reform

Part 5/5; Warning About the New World Order.

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To Awaken a Giant

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On January 23, 2009

In General Information

“Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished”.

– Barak Obama

.

The gloves are off:

Mr. Obama’s statement is profound; in a single stroke, he liberated social capital, creative capital, and intellectual capital from the oppressive arm of the financial markets.  This sends a strong message to entrenched and corrupted financial operatives that they no longer hold a monopoly on American productivity.

The factors of production carried over from the last century; land, labor, and capital, can be now be challenged by social capital, creative capital, and intellectual capital as factors of production for an Innovation Economy.

The third option:

Q. So how exactly does a country meet a 50+ Trillion dollar obligation?
A. It depends on the social agreement.

First, we could default and let the system crash. Second, we could endeavor to pay it back by committing the next several generations to servitude of the debt.  Or, there is the third option that nobody talks about.

Create a new currency.

Almost every country has done it.  Mexico replaced the old “Peso” with a “New Peso” (worth 1000 old Pesos).  Europe created a new common currency.  Chinese Yuan is a “bridge currency” that gets them from point A to point B. Each of these examples is different, but they have one very important element in common; they are utterly dependent on a social agreement.

People must agree to exchange the new currency on the streets.  Social agreement, creative agreement, and intellectual agreement drives entrepreneurship and all must be achieved completely or “black markets” will form undermining the entire system.

The Tipping Point

We know a few things about currency outcomes.  If inflation occurs, people with “cash” will lose it, while people with “debt” will see it deflate.  The US can erase the deficit by inducing inflation and deflating the debt if production capacity remains undiminished. People, organizations, and governments that have exactly as much cash as they have debt will see no net loss or gain.  In fact, the entire world’s financial system is worth exactly as much as it owes to itself – minus the value of social capital, creative capital, intellectual capital and natural resources – now, set free. 

Social Agreement

As inflation progresses, there will be a point where a critical mass of the “social agreement” will hold the same amount of cash as they hold debt – their net loss will be zero.  That’s when the system can reboot.  obviously there will be serious consequences to any of the options, but this time, unlike any other time in history, social media will be the vehicle upon which the social agreement is catalyzed and not necessarily mandated by policy makers.

The Obama Factor

“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America”

Mr. Obama is right – the outcome depends on us. We cannot expect government or corperations to attend to all of our needs because we are the ones who individually and collectively own and control the factors of production that will support the next currency. The road to opportunity has been cleared and the invitation has been cast.  We must now reach deep into our imagination and define the new business system where social capital, creative capital, and intellectual capital are directly tangible in a new global economic imperative; the Innovation Economy.

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Social Clipping and the Amazing Disappearing Economy

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On January 14, 2009

In General Information

In the early 1990’s, the NAFTA Mutual Recognition Document (MRD) for engineering professionals was the first modern attempt to treat knowledge like a financial instrument. Unfortunately it failed because of a tiny little flaw that I call ‘social clipping’.

Most trade agreements that followed were modeled after NAFTA and, as such, inherited the clipping flaw.  The flaw is that ‘products’, but not the knowledge assets that created them, are mobile in a global economy.

The MRD handed the knowledge economy to Mexico on a silver platter; but they turned it down.  The government did not want to give their engineers “wings” because they were afraid that they would fly away.  Instead, Mexico chose to sell their extraordinary young engineering talent off cheap to meet quotas promised to Asian, European, and American companies to relocate huge manufacturing plants to the country. Today, Mexico competes with China in a race to the bottom of a manufacturing economy and almost no indigenous design industries.

Two-way street:

Back then, the protesters raged about an influx of cheap foreign engineers to the US.  But many US engineers saw that Mexico needed everything that engineers make – roads, bridges, infrastructure, etc. The needs were endless and the objective was clear; to increase human productivity in Mexico was to create real and sustainable wealth.  Maybe then, the citizens would not need to fly away.

These infrastructure projects could have been funded because the Professional Engineering License behaves like a financial instrument mitigating project risks (so that nothing “disappears”). Only then banks would lend and insurers would insure.  The transfer of knowledge and accountability to Mexico would have been extraordinary; the relationships, profound; their development progress, astonishing.

The Disappearing Economy

But the MRD died by clipping.  Mexican Engineers would have been required to take the same engineering examinations as US engineer.  The government refused citing concern that they could not pass. So, in 1994-1997, this author directed a large comparative education project sending over 250 engineers to the US professional engineering examination (EIT).  The Mexican Pass rate was extraordinary – they were easily comparable to the US pass rate in most subjects and flat-out superior in mathematics.  There was nothing wrong with Mexican engineers, or the culture; there was something wrong with the financial system that keeps them invisible.

Knowledge is Power

As the story goes, Mexico has a family oriented culture where hierarchy is often based on seniority; a common examination may favor recent graduates.  It would be inappropriate for a young engineer to have authority over a more senior engineer.  Dig a little deeper and the real problem was power. In Mexico, power is concentrated among very few people.  It would have been unacceptable for transparency to exist.

We are facing a similar situation in America today.  Power has been steadily consolidating over the years.  A huge and fast stimulus package will enter a financial system with a shortage of vetting institutions. There is a strong pull toward ‘business as usual’ – creating J-O-B-S; not necessarily more entrepreneurs, engineers, or mentors, and certainly not empowering whistle blowers.  In the knowledge economy, Americans salaries are pegged to off-shore outsourcing. This is a game that we can no longer win playing by the rules.

Social clipping

As we have seen with less developed nations; when people are held below a certain economic level, they fail to organize for innovation, social change, entrepreneurship, and value creation because they are too busy trying to pay off debt and feed their families.  Social capital, creative capital, and intellectual capital are muted; that’s when the magic of innovation disappears. That’s social clipping.

America must move on to the next level of economic growth.  The Innovation economy is a game we can win playing by new rules. Government must trust the people, empower social media, and not clip our wings with an outdated economic model.

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A System of Innovation

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On December 2, 2008

In General Information

We have established that Innovation and wealth creation are profoundly related and that one cannot be sustained without the other.  A huge problem is becoming apparent because Money lives in a complex, global and highly integrated system where billions of dollars can circle the globe daily at the speed of light. Meanwhile, innovation does not live in an equally diverse, integrated and global system.

Instead, innovation lives in the patent system which is extremely slow, prohibitively expensive and full of secret language and legal strategy – certainly not accessible to most people who actually do the innovating.  In the immediate financial crisis where we are printing money at an astonishing rate, we must increase the speed, quantity, and quality of innovation at a comparable rate in order to preserve the balance.  We need an Innovation System to balance the Financial system.

Everyone knows that innovation happens in places like Silicon Valley, Corporations, a bunch of research labs, someplace in Japan, and of course the proverbial “Steve’s Garage”; but these places do not behave like a system, they are not integrated and they often compete rather than cooperate. Everyone knows what money is – but innovation is treated like some sort of mystery potion related to supreme knowledge among the gifted few.

Nothing could be further from the truth. Remember in the last chapter, the billions upon billions of tiny ideas are basically crowd sourced.  These ideas are combined into larger advances and that process continues until, say, an IPod rolls off the assembly line.   We readily call the IPod the innovation, but not the billions of tiny ideas.

A System of Innovation

Our accounting system is used to keep track of money, it is not designed to keep track of billions of tiny ideas.  So it calls human knowledge “intangible” while the IPod is “tangible”.  Somewhere along the line our culture reinforces this idea.  The truth is that knowledge is not intangible – knowledge is simply invisible.  This is a much easier problem to solve.

Intellectual Capital, social capital, and creative capital are locked up inside corporations sitting behind processes, job descriptions, and insulated from tangibility by multiple levels of management.  The command and control system arose from the industrial revolution, and with the help of Wall Street, is responsible for great innovation advances leading humanity to a global gross domestic product of 65 trillion dollars. However, the volume of innovation under this system is no longer sufficient to sustain the debt that it has also created.

Today, the phenomenon of Social Networks is showing us that human knowledge is desperately trying to become visible, and predictably, innovation in this area is increases at a remarkable rate!  The challenge now is to marry the phenomenon of social media to the financial system just like corporations are married to the financial system through Wall Street.

In market economics there are five components that are essential for a market to work properly; first, there is a currency of trade; like Dollars, or Euros, or Yen. Second, there is always an inventory so we can find pieces, count them, and build stuff. Third, there are financial and government institutions that are supposed to protect property rights to keep the game fair so that the people that own things don’t get ripped off. Fourth, we have entrepreneurs to do the fuzzy math, they interact with the system, they fill in the grey areas, and they manage risk. Finally, there is a business plan so that the entrepreneur can do what they do best – buy low, add value, sell high and pocket the difference. That’s how a market works. It’s quite simple.

Now listen carefully, these five elements are tightly connected and must be present in some way at every transaction. If any one of these elements is missing, disconnected, or corrupted, the system will fail. This is the underlying cause of the financial crisis, the system became disconnected.

We need to make “knowledge” look like money, walk like money, and talk like money and some real interesting things should happen.

The next several modules will go step by step through the five elements of market economics and we’ll uncover as best as we can those same five elements as they exist today in our knowledge economy.  Then we’ll connect the dots, fill in the blanks – and out pops the innovation economy!!!

After that, we’ll discover the new business methods of the innovation economy. And finally, we will talk about the thousands of new “corporations” that will arise. Literally, every business that we know of can be made more efficient in an environment where knowledge is tangible and a great deal of new wealth creation will occur.

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