Only pay top pay for top people

We often hear organisations say they need the best people, therefore have to pay the best too. This line of argument is seriously flawed but is cited in every boardroom remuneration battle. It too often results in highly excessive reward for mediocre performance. In many cases, someone as good or even better could be employed for far less.

I meet a great many CXOs in my line of work, and with a few exceptions who really are worth their pay, I have noticed very little correlation between rank and overall capability or quality of judgement. Why should people be paid much better if they aren’t a lot better than their potential replacements? There are a few stars who ought to be rewarded, but most senior posts can be filled just as well at lower cost. Only vested interests maintain the ubiquity and longevity of this flawed reasoning that top executives have to be paid very richly within a company. 

In the vast majority of situations, and at every stage of promotion, a number of candidates apply for the job. There is usually very little to choose between the top candidates, but someone has to get the job, and it goes to the one who performed marginally better in the interview. What is then forgotten is that although the job has been filled, there are still several equally good people who could do it. If the winning candidate were to move on for higher pay elsewhere, any one of the others could easily pick up the baton and probably do just as well. It is therefore nonsense that the pay for the job has to be a lot higher than the grade below. If it were just 5% bigger than the lower grade, it would still be filled by someone just as competent. People would still want the more senior job because it is more senior. Pay is actually one of the lesser incentives, power being a greater one.

If each grade were paid 5% more than the grade below, wages would be much flatter. Typical blue chips have about 7 layers of management, and even this is open to question in terms of wisdom. That means that the top job only really needs to pay 40% more than the lowest grade. If an executive then performs far better than expected, they could be rewarded by bonuses, just like any other staff. If such a remuneration policy were implemented, it would save companies a great deal of money.

Of course, experience should be rewarded too and a wage scale within each grade is still useful to reward people who stay with a company as they become more useful. It would be reasonable to implement a bigger differential between the top and bottom of a scale than between scales. A higher grade might mean more responsibility or longer hours, but doesn’t necessarily need significantly more talent, and usually the job could be done by any number of people at the layer below. Therefore, promotion should be rewarded less lucratively than progress up each pay scale according to experience and tenure, which does correlate very highly with being more useful. Too often, someone who is excellent at their job is promoted to one where they are less excellent, and the company suffers (as does the person). Rewarding skill and experience within the job is often a better idea than promoting someone.

Clearly, some people do deserve to be paid much more than their colleagues. In many fields – design, leadership, research, engineering, teaching, law, medicine and so on, there are always a few high fliers who are so good at their job that they produce many times the value of their more ordinary colleagues. A top engineer might invent many of the key products on which the company depends, whereas many others perform at levels where they are easily replaced or outsourced. A top designer might make the product so appealing that it sells far better than it would otherwise. Companies should try hard to keep such people since they generate a disproportionate amount of income. But even here, pay is only one of a range of incentives that appeal to people, so companies should spend more effort looking at the individual’s goals and desires and target them more accurately. Bonuses and pay can be used of course if that is appropriate. In this case, there is no good reason a top designer should not be paid more than the CEO.

So, the problem is not that some people should not be paid more, it is that it isn’t always necessary to pay more. Just beating a few other candidates at an interview does not in itself guarantee that a person is much more valuable than others who also applied. In most cases they aren’t.

So, how to identify those that should be paid more? Simple. Top people stick out. If they don’t stick out, they aren’t top people. Top people don’t get discovered at job interviews. Often they don’t even apply for promotions because they are already exactly where they want to be.

If a product is hailed as having a wonderful design, find the people who were responsible and reward them. If a team performs well ahead of expectation, first reward them, and then ask them why they did so well. If they think that excellent leadership was a key factor, then reward the leader again too. Just don’t always jump to conclusions and always reward the people who happen to be in charge at the time something goes right. It may well have happened anyway, or even in spite of their involvement.

One of the big problems that many companies are now discovering is that top people no longer want to work for them. Often those people have found that thanks to the net, they can work freelance on a contract by contract basis for the highest bidder. Some of them can’t now be bought at any price as permanent employees, other will respond to higher offers. The result will be a small elite who are highly rewarded, and a large majority who are simply commodities and whose skills can be acquired at low cost either locally or from other countries.

So, what of the companies paying high salaries for top people. Well, some of them deserve it. Having them on board can save a company or dramatically improve its performance. But the simple truth is that most of the so-called top people are not top at all, but only marginally better than the competition at a series of interviews. They deserve 40% more than the junior manager, and not a penny more. We need to spend a lot less on high blanket remuneration of all executives, and start spending a little effort on identifying the really top people and reward them instead. It doesn’t take that much more effort, because as I said, the top people really stick out, and if they don’t, they simply aren’t top people.

Fairy stories as a guide to the future?

OK, clutching at straws for a topic this morning, but here goes. Arthur C. Clarke said that sufficiently advanced technology is indistinguishable from magic and I agree. Engineers often derive inspiration from science fiction (and vice versa), but the magic in fairy stories might be a rich source of ideas too. If we look to fairy stories to see the sorts of things people do with magic, then we should see some markets for real advanced technology. Not all of them will be feasible, but some will. It may not be a very standard futures technique, but it should work. We won’t know if we don’t try. There is a pretty standard formula now for producing ideas and techniques in science fiction and computer games. Just mix together some nice potions such as synthetic biology, nanotechnology, genetic modification, artificial intelligence, neurotechnology, virtual, quantum and so on, and you can’t go far wrong, you will end up with all the magic you can imagine. Fairy stories are a bit pre-technology, but maybe we’ll see some ideas.

Let’s start with love potions, evil kisses, poisoned needles and the like. These are included in many stories as tricks that conceal means to control others, spy on them, make them do things or think things. Could that be done? Yes, probably. I wrote about hacking into people’s brains and remote controlling them in my ‘Zombies are coming’ piece, and about some related concepts in my pieces on immortality via direct links to the brain. It essentially uses bacteria to infiltrate the other person’s body via hand contact, a simple kiss, or eating something, and once introduced, the bacteria reproduce and synthesise the components that then connect to nerves in the brain and form a remote control channel. So you could create anything in their mind – sensations, memories, ideas, anything. You could make them believe anything, love anyone, or just hack into their mind to see what they are thinking, any of those sorts of things. Sure, it would be difficult, but it will be feasible one day.

Mind reading is already with us to some degree. Some computer games can be controlled by thought, wheelchairs for the disabled. Scientists can even work out what videos someone is thinking about by comparing the electrical signal they emit to those gathered when they were actually viewing  a selection of videos earlier.

How about preserving someone? Like sleeping beauty. Well, hibernation research has been going on for ages already, and one day that will come up with the goods too. It probably won’t involve spinning wheels, but an injection of some sort is quite likely.

Invisibility is a common occurrence in fairy stories too, and in real life, scientists can make small objects almost invisible too, using special fabrics that bend light or cameras coupled to light emitting fabrics. So far they only work from one direction, and some only work in small colour ranges, but we’re getting there.

Levitation can be done with magnets and superconductivity. Being in two places at once, well I guess that is called Skype.

I am struggling to think of stuff in fairy stories that can’t already be done in the lab or that we at least have a good idea how to do it. Ah yes, frogs that turn into princes. Well, outside of computer games or virtual worlds, it would be difficult, but as augmented reality becomes everyday stuff, we”’ see lots of people using weird avatars, and who knows, some princes with a sense of fun might well choose to be frogs.

The magic wand would also feature well in augmented reality but in the real world would have little real application except as a simple interface to start other processes.

Actually though, I am going to stop here. Fairy stories are a rich source of ideas for technologies we already have or already know about. A part record of the scope of imagination in days gone by. They maybe aren’t so good as a future tool after all. Maybe we need more science fiction writers to do fairy stories before that will be fixed.

Connecting up? let’s shake on that. Guest post by Chris Moseley

“Let’s connect up!” A former American associate of mine used that phrase all the time and nice lady that she is, those words always had an empty, rather dread ring to them. “Connecting up” invariably meant participation in a teleconference where, blind to each other’s facial expressions, attire – hairstyles! – the contributors to the so-called ‘conference’ were left anxiously trying to assemble layers of meaning and depth from each other’s lifeless pleonasms. The communications experience was never much better when we actually saw each other; teleconferencing offered its own unique brand of awfulness, which unvaryingly got in the way of good discussion. Of course there is nothing unusual about this type of experience – it’s common in fact, which makes it all the more dreadful. With all the technology that has come about to help us ‘connect’, much faster and with less effort than ever before, we have become ever more detached from real, flesh and blood relationships. Digital communications simply does not cut it when it comes to developing a relationship. Of course we all know the mantra, the arguments for communications technology. It’s an important tool that helps us to make plans more efficiently, and to stay in touch with friends and loved ones. It is a portal to our business world – to making money! It has even proved to be critically important to the cause of liberty and democracy, witness the events that led to the Arab Spring. And yet I feel that we’re all missing out terribly by confining ourselves to studying our smartphones instead of reading the faces of the people around us, or by choosing to text a few words to a colleague in the office via Skype when he/she is only a few feet away (oh, yes, this is really happening more and more now). I suppose we must keep faith and hope for common sense to lead us back to a sensible blend of technology and good old-fashioned human contact. Or perhaps those clever fellows at BT, Ma Bell, Deutsche Telecom or Telstra will find a viable substitute via interactive holographic technology, or some form of advanced avatar communications. Mmm, I believe that I would still rather shake someone’s hand and, err, smile.

Chris Moseley, 17 Mile Studios, Brisbane, Australia

www.17milestudios.com.au

The future of men

Environmental exposure to feminising chemicals

Many studies over the last decade (and even earlier) have shown endocrine disruptors (which mimic the behaviour of estrogens) in the environment causing feminisation  in insects, fish, amphibians, birds, reptiles and mammals. Such chemicals come from plastics, packaging, pesticides, cleaning products and even shampoo and the linings of tin cans. In extreme cases, polluted rivers have seen 100% of male fish (Roach) becoming hermaphrodite. Effects are greater in the young. Google it for examples. You’ll find lots.

Humans are animals too of course, and although we may not have enough exposure to human endocrine disruptors in our everyday environment to cause adult men to actually change into women, again there do appear to be significant effects, especially on such things as sperm counts, breast development and testicular cancer rates. Sperm counts have fallen dramatically over the last few decades.

In the womb, effects are potentially far greater. In 2007, the Arctic Measurement and Assessment Program found twice as many girls as boys being born due to levels of chemicals in the blood of pregnant women there that were high enough to cause gender change. In Japan too, fewer boys are being born.

Surprisingly perhaps, the effects on humans have not had much study, but this is perhaps because of the potential reactions of militants in the gay and transgender communities. It is a sensitive area, but we ought to be able to discuss it properly and openly. We are using more and more chemicals in our everyday lives – more hygiene and cleaning products, more processed foods, more packaging, more plastics generally. Exposure to human endocrine disruptors is already high and may become higher if we keep brushing the issues under the carpet.

What is at stake?

I have no intention in this article of getting into a men v women value debate, nor one of gay v straight. It isn’t about that at all. The issue is that if men are becoming feminised, we will gradually lose the many contributions of one end of the masculinity spectrum. Gender lines have blurred and are blurring further, and the impact  on our culture is as important as the impact on health and fertility. The problems will escalate if unborn babies and younger generations with greater vulnerability are exposed to relatively higher exposures. 

It does seem that men are showing their feminine sides far more than used to be the norm. Are metrosexuals in increasing abundance because of fashion and cultural exposure, or because of chemicals changing their preferences, or a combination. Why do men cry more now? Why are more men gay and bisexual than before? Why do far more teenage boys want gender changes than before? I am sure any one trend arises from a combination of factors, but I don’t think we need to know which is which before we get concerned. If the overall feminisation is due in part to chemical exposure, I think that is a problem that should be fixed. Human culture and social make-up shouldn’t be dictated by pollution. 

Why does it matter?

Without wanting to be patronising, I love women, and greatly enjoy their company. Apart from their obvious sex appeal, I greatly value their different views of life, different opinions, ways of thinking, emotional reactions. Women are fascinating and adorable and I won’t hear a word against them, straight, bi or lesbian. Transgender people, gay men and metrosexuals also make a large and diverse contribution. I don’t want to devalue any of that at all. But I also value the way other men behave and think and react and emote, or not. The feminised end of the male spectrum is growing, so they aren’t a concern here, but we should worry about losing ‘straight’, non-metrosexual masculinity. It has value too. I am not talking Rambo here, I am talking about ordinary men, ordinary masculinity. I think you understand, even if the words are hard to pin down. In the gender spectrum, one end of it is becoming fainter while the other intensifies.

I don’t want future generations to only have access to women and feminised men. I don’t think most women or feminists or gay militants want that either. Vive la difference!

So what to do?

If cultural and chemical effects on men created pressure in opposite directions, they might cancel to some degree, but they don’t. They both create feminising pressure. Men have been under strong social and media pressure to feminise for decades. It simply isn’t fashionable to be a man today. Male behaviour is ridiculed routinely throughout the media, especially in advertising, with men portrayed as cavemen and idiots in a world of highly evolved and intelligent women. Men are encouraged to explore and show their feminine sides. Even I have been told to do so a few times, and I am hardly Rambo. Our UK education system has been restructured to favour the ways girls learn. Boys are punished and put down in the playground if they dare to behave as boys. Selection of participants in reality TV shows such as ‘Big Brother’, ‘I’m a Celebrity’ and ‘Come dine with me’ greatly favours feminised men to fill the male half. TV presenting is the same. Women have significantly greater legal rights than men. In the workplace, women and gay men are heavily protected and given positive discrimination at the expense of straight men. While chemical exposure is already creating biological feminising pressure, society is kicking masculinity while it’s down.

We should obviously start to limit exposure to chemicals that cause feminisation. But society should also question its attitudes and consider the long term consequences of anti-masculinity pressure. Femininity is great, but do we really want a world with only feminised men? I really don’t think we do.

Why won’t our leaders pick the best future?

Like most democracies, we elect leaders every several years on the basis of an overall package of promises, which are too often later forgotten or given lip service.

I can easily understand leaders mostly doing what they want, and only doing enough of what we want to get elected. What I don’t understand is why they seem to make so many choices that are bad for everyone, and why we can’t find leaders who would make better ones. It seems as though the choice of leaders we currently have is among awful, terrible, and really bad. It isn’t obvious with 63 million people why we can’t find better leaders, but then again, the USA doesn’t do much better with over 300 million.

Governments are not short of advice. They have access to huge quantities of data and research, and ready access to many supposedly smart people and consultants. They even have their own futurology departments, so they really should have a reasonable idea of what is coming down the road. So why is that with all the possible futures to pick from, they so often pick the worst? I am UK-based so will use UK examples, but I feel confident that most readers will find equivalent examples in their own country, especially in the USA and down under, where many of you are.

Starting off with a few recent errors (please forgive me if I stray into the occasional rant):

Road deaths in the UK are the lowest in the world, while our health service has one of the worst records in a developed nation. Some estimates put the numbers of deaths caused by poor NHS hygiene, negligence and errors at over 50,000 a year, compared to 1800 deaths on the roads. So you might have expected that a government wanting to save lots of lives would focus on fixing the NHS rather than the roads. Furthermore, only 10% of deaths on the roads are caused in significant part by excessive speed, so the most that can be expected to be saved by reducing the rural speed limits to 40mph is a couple of hundred. Compared to the inconvenience caused and cost to the economy, the savings of lives for both time and money spent would be far higher by addressing NHS problems.

There are lots of environmental policy examples.

Our UK governments of late have fallen fully for the anthropogenic global warming doom-mongering, and as if that isn’t bad enough, they have then gone for the worst possible ways of fixing it, assuming it were a problem in the first place. By concentrating solely on CO2 emissions, and then choosing solutions that provide the most expensive, least environmentally friendly, and least effective ways of reducing them, they have managed to delay CO2 emission reductions while costing taxpayers and bill-payers a fortune during the worst recession since the 1930s, and causing many manufacturers to leave the UK just as we need to get expansion of the manufacturing sector. Related policy decisions such as introducing carbon trading have already increased crime and caused environmental and social devastation in many countries. Predictable, but not taken into account by government.

By contrast, while the UK and the EU as a whole have chosen to use carbon credits and hold back shale gas development, and thereby perversely incentivised the resurgence of dirty coal, kept and even reinforced the problems of high gas prices, hostile suppliers, poor energy security and disadvantaged industry, the USA avoided such errors of commitment, encouraged shale gas, and has seen its carbon emissions fall enormously by adopting shale gas while seeing economic boom (apart from California which has copied the EU’s error). It is now likely that the EU will burn US coal.

Even the alternative energy policy is wrong. If we do want to use alternative energy, it make sense to get as much as possible for the money. By insisting that we have to rush, we are paying top prices and huge subsidies, transferring money from the poor to the rich. With any sign of global warming on hold now for 15 years or more, there was clearly no big rush, the government sponsored climate models got their predictions spectacularly wrong time and again because of the perverse way that government pays for its research. In the real world, we have plenty of time to wait for prices to fall, at which point we would know the science behind climate much better, having filtered out the worst of the nonsense, and could plan our actions with fewer disastrous unexpected side effects, and when we do invest we would get far more bang per buck. So if  there was a Nobel prize equivalent for stupidity, this and the last government would be joint winners. Other polices connected to the environment seem almost as dumb.

Fisheries policy over the last decade has forced fishermen to throw a lot of their catch back into the sea, dead, apparently to preserve fish stocks. Dead fish don’t breed well, and their bodies have instead created great unbalance in the ecosystem. The number of lobsters has rocketed, the number of sea-birds too, and also seals. The demand of the increased seal population for fish has rocketed by 100,000 tons per year, and they and the extra sea birds and lobsters will still want to eat once the dumping policy is terminated.  This isn’t a case of hindsight, it should have been obvious to all concerned that this would happen. It was entirely predictable.

Also obvious to anyone with any common sense, and without any need for hindsight, you shouldn’t build homes on flood plains, they might flood. However, two successive governments have allowed builders to put many new homes on flood plains. Now, government response to the inevitable flooding is simply to force more sensible buyers (who choose not to live on flood plains) to share the cost of flood insurance for them. You couldn’t make it up!

At a time when disposal of plastics is a problem, and landfill sites are filling up fast,  government regulations prohibit waste plastic bales from being used to prevent coastal erosion. Instead, concrete blocks must be used, which also adds hugely to CO2 emissions.

Changing topic, to remuneration policies for senior civil servants, BBC celebs and doctors, these too seem to be illustrations of lack of foresight (as well as lack of application of sensible market principles, by which the rate offered should be tailored until there is only a modest number of applicants – many public sector jobs get thousands, a clear indication that they overpay).

When Labour sent morons to the negotiations with doctors, the doctors emerged with far greater pay for less work, and bonuses for many things they had previously done as part of their normal jobs. Not surprisingly, many of the wealthier doctors chose to work fewer hours and enjoy life, instead of working extra hours for a little more, achieving the opposite of what was intended. A bit like the England football team. Pay peanuts and get monkeys for sure, but pay too well, you get people more eager on spending than training or working.

Other top-level pay is too high mainly because it is simply unnecessary. The argument is always that you need to pay more to get the best staff, but in fact, each advertised post almost always only sees tiny differences in quality among the candidates, and any of those who didn’t get the job would probably gladly take it the minute it is vacated and do just as well. If each level of promotion only offers a few percent more than the level below, it will still be filled just as well. This is the everyday sort of foresight that most people just call common sense, but which seems nevertheless seems to escape policy makers.

Paying top pay when it isn’t needed is stupid and reckless with other people’s money. The argument that you have to compete always ends in a price war where no-one gains any long-term advantage, so extra is spent by all for no gain. As for BBC celebs, I just don’t see a problem if someone trained up as a star by the BBC wanders off to another channel, or indeed if you have to push a different button to watch a football game. The same viewers watch those channels too, and can still see them if they wish. There will be no shortage of volunteers to be made into new stars, and football associations will still have to sell the rights to broadcast their games at whatever price they can still get. And anyway, the mandate for the BBC is to produce good programmes, not to compete. Forcing prices up by competing unnecessarily is stupidity. Again, a failure of everyday foresight common sense.

Banking is a rich seam in which to find government incompetence of course. I don’t think I really want to go there, we all know the issues and are sick of reading more each day. Ditto the Euro.

The Olympics foresight is actually rather amusing, not only the estimates of costs that followed the usual error factor of 2 or 3 in any government cost estimate, but especially security, looking at it from safe outside London anyway. Giving the main security contract to G4S with their history has got to be award-winning idiocy with predictable, even inevitable result. Surely we all expected that not to work? You didn’t need much futures expertise to know G4S would screw it up. The rest of the incompetence is just day-to-day stupidity though rather than foresight failure, so I’ll ignore that.

Thanks to poor foresight, the recent 9Bn investment in rail will mostly be wasted on the wrong technology, as I just blogged for Business Weekly – I won’t repeat it here:

http://www.businessweekly.co.uk/blog/futuretech-with-ian-pearson-of-futurizon/14305-a-modern-railway-for-the-21st-century-really

Immigration policy over a few governments seems also to have lacked foresight. Surely, they should have understood a big difference in importing people from Middle Eastern (and some African) countries where terrorism has been a huge problem for decades, and where the people seem to hate us, compared to other countries. We have now imported large numbers of people into the UK that are intent on bringing us harm.

The arguments over national debt and austerity measures and even cuts in the army are party political, and although I do think foresight is lacking here across the spectrum, it is too mixed up with value sets to cleanly separate, so I’ll leave it for now.

I think I have listed enough examples where governments of all flavours have made decisions that show an alarming lack of foresight, or at least of taking any notice of it. There is no need for yet more examples. The important question remains. When it is obvious that there is a choice between two or more possible futures, and the differences in outcomes are entirely predictable, why should governments pick the one that looks worst? (Let’s ignore any potential bribery and corruption and lobbying and feathering of nests. Those are just too hard to prove in any particular case).

In some cases, notably Labour’s immigration policy, it is aimed at securing a direct political advantage, by tilting the playing field in their favour. There is a safety net assumption that the consequences will largely appear in another term, hopefully when the opposition is in power.

Another contributor is short-term marketability. In each of these cases, even though the government may know the policy will not be a good long-term idea, there is an obvious way in which the policy can be spun to the public for short-term political gain. Doing something easy and conspicuous about a small number of road deaths nicely deflects attention away from the far great numbers in the NHS, which are harder to deal with, and the negatives can easily be concealed behind emotionalism. Much of the Conservative’s green policy also falls into this category, holding back positive things like shale gas and pushing negative ones like wind farms even when the evidence is stacked heavily against them, because they perceive that voters want them to be green and those are perceived to be the green badges of honour at the time.

In areas like fishery policy, again, the need to be seen to be ‘doing something’ far outweighs the advantages of taking time to do the right thing, so legislation is reactive and badly thought out. There is always a long list of short-term things that fall into this category and so government rushes through lots of bad things rather than a few good things or indeed even tidying up the mess from the last batch of bad ones.

This short-termism is really no different from private sector abuse where top management run a company for short-term profit at the expense of long-term well-being to maximise their own remuneration. Although there are ways of ensuring the bonuses are linked to longer term results, and this is starting to happen, it isn’t as easy to force politicians to take responsibility for the longer term consequences of their actions. Indeed, they rarely have to. Any government coming in can blame things on the last one for a year or so, but after that, they get the blame and any attempt to blame it thereafter is counter-productive. So at worst, governments are protected from the long-term harm done by their policies and yet reap the short-term gains. It reminds me of the banks.

So, when we look at the availability of foresight and assume a modicum of common sense, we are left with the unavoidable deduction that short-termism is a much more powerful force than foresight. Our leaders know what is best, but choose to do something else because they are rewarded for doing so. It is as simple as that. If we want to fix that, we need to change the ways in which we implement democracy. Don’t hold your breath.

Population growth is a good thing, updated July 2012

This has been my most popular blog article so far so here is an updated version, since the original is 18 months old now. No big changes, mainly a tidy-up, with a long overdue promised section on biological resources added at the end.

Many people are worried now that we have passed the 7Bn mark for world human population, that we are overpopulating the planet and will reap environmental catastrophe. Some suggest draconian measures to limit or even reduce it. I am not panicking at all, and refuse even to be particularly concerned. I don’t think it is necessarily a bad thing to have a high population. And to use the doom-monger’s favourite term, sustainable, I think it will be entirely sustainable. OK, so, point by point, here is why.

Population is certainly growing rapidly, and will continue till it levels off around 9.5 billion by about 2050. Then it will start to fall. But let’s not treat 9.5Bn as if it is a major catastrophe. Doom-mongers are predicting mass starvation, riots and so on, as doom mongers enjoy doing. But is it so bad? Let’s put it in perspective a bit. I live in the South of England. When I go on walks with my wife I will typically meet only a few people on the way; mostly it will be empty countryside and most of the time we won’t be able to see a single building or road. I do not feel it is terribly overpopulated here yet, even with the second highest population density on Earth, at 470 people per square kilometre. India only has 345, even with its massive population. China has even less at only 140, while Indonesia has 117,  Brazil just 22, and Russia a mere 7.4 people per square kilometre. Yet these are the world’s biggest populations today. Room for expansion perhaps. If all the inhabitable land in the world were to be occupied at average English density, the world can actually hold 75Bn people. There would still be loads of open countryside, still only 1 or 2% covered in concrete and tarmac. So let’s stop first of all from imagining that we are running out of space any time soon. We just aren’t!  We panic in the UK because we see the uncomfortable end of extreme inequality in global distribution of people, but that will self limit. If it becomes too dense, people will stop immigrating.

Secondly, westerners’ (i.e. relatively wealthy people’s) houses have typically 5 or 6m deep of living space. They live on top of 6000km deep of materials. So do their neighbours. Not all of it is useful, but it is really hard to see why there is so much panic about physical resources when they lie so deep under our feet. When we discard them, they are still there, just repositioned. If you buy stuff, your house quickly fills up and you have to throw something out to make space before you buy more. It gets recycled or thrown on landfill, which could become a  future mine if materials ever did become scarce enough. A few spacecraft have left the earth forever over the years, taking a few tons of material away, but space dust occasionally lands too, so actually there are more physical resources on Earth than there were before people came into being. Organic resources such as forests and fisheries are a different matter. I’ll look at them later in this article. It won’t change the balance of the argument because we will learn to manage them better.

But of course, if everyone wants to live to westerns standards, the demands on the environment will grow as the poor become richer and able to afford more. If we try to carry on with existing technology, or worse, with yesterday’s, we will not find it easy. Those who consider technology and economic growth to be enemies of the environment, and who therefore would lock us into today’s or yesterday’s technology, would condemn not only billions of people to poverty and misery but also force those extra people to destroy the environment to try to survive. The result would be miserable future for humanity and a wrecked environment. Ironically, they have the audacity to call themselves environmentalists or greens, but they are the true enemies of the earth, and of humanity. If we ignore such lunacy as we should, and allow progress to continue, we will see steady global economic growth that will result in a higher average income per capita in 2050 with 9.5Bn people than we have today with only 7Bn. The technology meanwhile will develop so much that the same standard of living can be achieved with far less environmental impact. For example, bridges hundreds of years ago used far more material than today’s , because they were stuck with primitive science and technology. Technology is better now and needs less material, and is better for the environment. With nanotechnology and improved materials, we will need even less material to build future bridges. The environmental footprint of each person will certainly be far lower in 2050 if we accept new technology than it will be if we restrict growth and technology development. It will almost certainly be less even than today’s, even though our future lifestyles would be far better. Trying to go back to yesterday’s technologies without greatly reducing population and lifestyle would impose such high environmental impact that the environment would be devastated. We don’t need to, and we shouldn’t.

Take TVs as another example. TVs used to be hugely heavy and bulky glass monsters that took up half the living room, used lots of electricity, but offered relatively small displays with a choice from just a few channels. Today, thin LCD/LED displays use far less material, consume far less power, take up far less space and offer far bigger and better displays offering access to thousands of channels via satellites and web links. So as far as TV-based entertainment goes, we have a higher standard of living with lower environmental impact. The same is true for our phones, computers, networks, cars, fridges, washing machines, and most other tools. Better materials enable lower use. New science and technology has enabled new kinds of materials that can substitute for scarce physical resources. Copper was once in danger of running out imminently. Now you can build a national fibre telecommunication network with a few bucketfuls of sand and some plastic. We have plastic pipes and water tanks too, so we dont really need copper for plumbing either. Aluminium makes reasonable cables, and future materials will make even better cables, still with no copper use. There are few things that can’t be done with alternative materials, especially as quantum materials can be designed to echo the behaviour of many chemicals. It is highly unlikely that we will ever run out of any element. We will simply find alternative solutions as shortages demand.

Oil will be much the same story. To believe the doom-mongers, our use of oil will continue to grow exponentially until one day there is none left and then we will all be in big trouble, or dead, breathing in 20% CO2 by then of course. Again, nonsense. By 2030, oil will be considered a messy and expensive way of getting energy, and most will be left in the ground. The 6Gjoules of energy a barrel of oil contains could be made for $30 using solar panels in the deserts, and electricity is clean. Cheap electricity won’t come from our UK rooftops as current incentivised by our green-pressured government, but somewhere it is actually sunny, deserts for example, where land is cheap, because it isn’t much use for anything else. The energy will get to us via superconducting cables. Sure, the technology doesn’t yet exist, but it will. Oil will only cost $30 a barrel because no-one will want to pay more than that for what will be seen as an inferior means of energy production. Shale gas might still be used because it produces relatively little CO2 and will be very cheap, but even that will start declining as the costs of solar and nuclear variants fall.

By the time we get to our 2050 world with 9.5Bn people, fusion power will be up and running, alongside efficient solar (perhaps some wind) and other forms of energy production, proving an energy glut that will help with water supply and food production as well as our other energy needs. In fact, thanks to the development of graphene desalination technology, clean water will be abundantly available at low cost (not much more than typical tap-water costs today) everywhere. Our technologies will be so advanced by then that we will be able to control climate better too. We will have environmental models based on science, not eviro-religion. So we will know what we’re doing rather than acting on guesswork and old-wives’ tales. We will have excellent understanding of genetics and biotech and be able to make superior crops and animals, so will be able to make enough food to feed everyone, ensuring not only quantity but nutritional quality too. While today’s crops deliver about 2% of the solar energy landing on their fields to us as food, we will be able to make foods in factories more efficiently, and will have crops that are also more efficient. It is true that we may see occasional short-term food shortages, but in the long term, there is absolutely no need to worry about feeding everyone. And no need to worry about the impact on the environment either, because we will be able to make more food with far less space. No-one needs to be hungry, even if we have 9.5Bn of us, and with steady economic growth, everyone will be able to afford food too. This is no fanciful techno-utopia. It is entirely deliverable and even expectable. All around the world today, people’s ethical awareness is increasing and we are finally starting to address problems of food and emergency aid distribution, even in failing regimes. The next few decades will not eradicate poverty completely, but it will make starvation much less of a problem, along with clean water availability.

How can we be sure it will be developed? Well, there will be more people for one thing. That means more brains. Those people will be richer, they will be better educated, many will be scientists and engineers. And many will have been born in countries that value engineers and scientists greatly, and will have a lot of backing, so will get results. And some will be in IT, and will develop computer intelligence to add to the human effort, and provide better, cheaper and faster tools for scientists and engineers in every field to use. So, total intellectual resources will be far greater than they are today. Therefore we can be certain that technological progress will continue to accelerate. As it does, the environment will become cleaner and healthier, because we will be able to make it so. We will restore nature. Rivers today in the UK are cleaner than 100 years ago. The air is cleaner too. We look after nature better, because that’s what people do when they are affluent and well educated. In 50 years time we will see that more widespread. The rainforests will be flourishing, some species will be being resurrected from extinction via DNA banks. People will be well fed. Water supply will be adequate. But all this can only happen if we stop following the advice of doom-mongers and technophobes who want to take us backwards.

That really is the key: more people means more brain power, more solutions, better technology. For the last million years, that has meant steady improvement of our lot. In the un-technological world of the cavemen hunter-gatherers, the world was capable of supporting around 60 million people. If we try to restrict technology development now, it will be a death sentence. People and the environment would both suffer. No-one wins if we stop progress. That is the fallacy of environmental dogma that is shouted loudly by the doom mongers. Some extremists in the green movement would have us go back to yesterday, rejecting technology, living on nature and punishing everyone who disagrees with them. They can indulge such silliness when they are only a few and the rest of us support them, but everyone simply can’t live like that. Without technology, the world can only support 60 million. Not 7 billion or 9.5 billion or 75 billion. There simply aren’t enough nice fields and forest for us all to live that way.

It is a simple choice. We could have 60 million thoroughly miserable post-environmentalists living in a post eco-catastrophe world where nature has been devastated by the results of stupid policies invented by so-called environmentalists, and trying to make a feeble recovery. Or we can ignore their nonsense, get on with our ongoing development, and live in a richer, nicer world where 9.5Bn people (or even far more if we want) can be happy, well fed, well educated, with a good standard of living, and living side by side with a flourishing environment, where our main impacts on the environment are positive. Technology won’t solve every problem, and will even create some, but without a shadow of a doubt, technology is by far nature’s best friend. And ours. Not the ‘environmentalists’, many of whom are actually among the environment’s worst enemies – at best, well-meaning fools.

And there is one final point hat is always overlooked in this debate. Every new person that is born is another life, living, breathing, loving, hopefully having fun, enjoying life and being happy. Life is a good thing, to be celebrated, not extinguished or prevented from coming into existence just because someone else has no imagination. Thanks to the positive feedbacks in the development loops, 50% more people means probably 100% more total joy and happiness. Population growth is good, we just have to be more creative, but that’s what we do all the time. Now let’s get on with making it work.

Good times lie ahead. We do need to fix some things though.

I mentioned that physical resources won’t diminish significantly in quantity in terms of the elements they hold at least, though those we use for energy (oil, coal and gas) give up their energy when we use them and that is gone. However, the ecosystem is a different matter. Even with advanced genetic technology we can expect in the far future, it will be difficult to resurrect organisms that have become extinct, and far better to make sure they don’t. Even though an organism may be brought back, we’d also have to bring back the environment it needs with all the intricately woven inter-species dependencies. Losing a single organism might be relatively recoverable, but losing a rain forest will be very hard to fix. Forests are very complex systems. In fact designing and making a synthetic and simpler rainforest is probably easier than trying to regenerate a lost natural one. We really don’t want to have to do that. It would be far better to make sure we preserve the existing forests and other complex ecosystems. Poor countries may reasonably ask for some payment to preserve theirs rather than chopping them down to sell wood. We should also make sure to remove current incentives to chop them down to make room for palm oil plantations to satisfy the demands of poorly thought out environmental policies in rich countries.

The same goes for ocean ecosystems. We are badly mismanaging many fisheries today, and that needs to be fixed. There are certainly some signs of progress.  Silly EU regulations that cause huge quantities of fish to be caught and thrown back dead into the sea will soon be history. Again, these are a hangover from previous environmental policy designed to preserve fish stocks, but again this was poorly thought out and has had the opposite result. Other policies in the EU and in other parts of the world are also causing problems by unbalancing populations and harming or distorting food chains. The bans on seal hunting are good – we love seals, but the explosion is seal populations caused by throwing dead fish back has increased the demand of the seal population to over 100,000 tons of fish a year, when it is already severely stressed by over-fishing. The dead fish have also helped cause an explosion in lobster populations and in some sea birds. We may appreciate the good side, but we mustn’t forget to look for harmful effects that may also be caused. It is obvious that we could do far better job, and we must. A well-managed ocean with properly designed farms should be able to provide all the fish and other seafood we need, but we are well away from it yet and we do need to fix it.

With ongoing scientific study, understanding or relationships between species and especially in food chains is improving, and regulations are slowly becoming more sensible, so there is hope. Many people are switching their diets to fish with sustainable populations. But these will need managed well too. Farming is suitable for many species and crashes in some fish populations have added up to a loud wake-up call to fix regulations around the world. We may use genetic modification to increase growth and reproduction rates, or otherwise optimise sustainability and ocean capacity. I don’t think there is any room for complacency, but I am confident that we can and will develop good husbandry practices and that our oceans and fish stocks will recover and become sustainable.

Certainly, we have a greater emotional attachment to the organic world than to mere minerals, and we are part of nature too, but we can and will be sustainable in both camps, even with a greatly increased population.

 

The future of the UK monarchy

It would have been poor taste to write this last month, but we’re back to normal now. I am often asked about the future of the monarchy, and it is a valid topic for futurists I guess. I’ll write what I think ought to happen, and then what I think will happen.

I am not a royal basher. I am one of millions of people who respect the Queen and hope she lives a long life, but who nevertheless think the monarchy should go to the grave with her. I think it simply belongs in history. I recognise that many people like it and want it to continue, and I have no wish to offend them, I just don’t agree and would prefer it to end.  It generates media and tourism revenue for sure, but that isn’t sufficient justification for its continuation, and doesn’t make up for the downsides. I can’t think of any other.

The full range of arguments for abolition and for a proper democracy don’t need repeated here, you’ll have heard most. Here is the one I prefer:

Kings and queens in our history books, mythology, even fairy stories, existed in times when you had to win battles and capture a throne, and even if you inherited it, you still had to win more to hold on to it. To do so you must solicit the support of many powerful people in battle, and unless you also win their loyalty, you’ll need far more – a volunteer is worth ten pressed men. So in a way, it was a raw and brutal sort of democracy. Either you won and kept people’s support or you couldn’t be king. It wasn’t just handed to you on a plate, nor something to lay back and relax luxuriantly in. But the last generations of course have been simple inheritance of titles, and without the hard work to win loyalty, the monarchy has lost its true authority. The royals now live in expensive style at the expense of everyone else, but haven’t earned it and give far too little back. It is meaningless. Without won loyalty, monarchy is no better than a dictatorship, and with the ability to dictate stripped away as in the UK monarchy, it has no real meaning at all. It has become an empty symbol of times gone by, the fairy story bits without any substance, empty celebrity. Time for it to go.

The rest of the aristocratic titles should go with it of course, and that would work well with the coming reform the House of Lords. We should cut our shackles and start afresh. The associated wealth needs addressed too. Anything belonging to the crown  - the lands and properties, jewels, the gifts received by virtue of the position (and we could debate the full extent of what should be included in that and what rightfully belongs to individual royals) should be turned to other state uses, or put in museums.The redundant royals should receive pay-offs or pensions according to their prior positions.

What of the landed wealth, once given for favours and loyalty by past kings and queens, that has been passed down these generations, such as the country estates?  An extremist might want to confiscate anything that could be traced back to the crown. I think that is too harsh and unnecessary. A more humane approach could be simply to start treating all inherited wealth the same, to abolish the trusts used by the wealthy to hide stuff from taxation, get rid of any special exceptions for farms and so on. If everyone is treated the same, inheritance can only pass down a generation or two before it is absorbed back into society. Families that pass wealth on and manage it well enough to maintain its value even after such taxation would have earned it.

If we did this, the monarchy would have a dignified end. The Queen did an excellent job and it would end on a high note. If it is allowed to continue, it will be a relic that will become increasingly unwelcome.

So much for my own views. What is likely? Well, it has some momentum, and there is insufficient demand for an early dispatch, so it will probably cling on for a good while after the next coronation, maybe a decade (a honeymoon period plus a few years), two at the most. I can’t give a date for that because I don’t know when the Queen will die. But the reign of either Charles or William (I think Charles will be crowned if he survives the Queen and will be as bad as many of us expect, and if he abdicates quickly, it will still be too late) will quickly erode the support for it, not necessarily on their own, but with the help of the full suite of royal hangers-on. People will lose patience with the associated expense and embarrassment. With a minority of support, it will be abolished and given a dignified burial. As for the rest of my wish list above, that depends very much on who is in power at the time, but I suspect it will go more or less along the lines above.

Nuclear weapons + ?

I was privileged and honoured in 2005 to be elected one of the Fellows of the World Academy of Art and Science. It is a mark of recognition and distinction that I wear with pride. The WAAS was set up by Einstein, Oppenheimer, Bertrand Russel and a few other great people, as a forum to discuss the big issues that affect the whole of humanity, especially the potential misuse of scientific discoveries, and by extension, technological developments. Not surprisingly therefore, one of their main programs from the outset has been the pursuit of the abolition of nuclear weapons. It’s a subject I have never written about before so maybe now is a good time to start. Most importantly, I think it’s now time to add others to the list.

There are good arguments on both sides of this issue.

In favour of nukes, it can be argued from a pragmatic stance that the existence of nuclear capability has contributed to reduction in the ferocity of wars. If you know that the enemy could resort to nuclear weapon use if pushed too far, then it may create some pressure to restrict the devastation levied on the enemy.

But this only works if both sides value lives of their citizens sufficiently. If a leader thinks he may survive such a war, or doesn’t mind risking his life for the cause, then the deterrent ceases to work properly. An all out global nuclear war could kill billions of people and leave the survivors in a rather unpleasant world. As Einstein observed, he wasn’t sure what weapons World War 3 would be fought with, but world war 4 would be fought with sticks and stones. Mutually assured destruction may work to some degree as a deterrent, but it is based on second guessing a madman. It isn’t a moral argument, just a pragmatic one. Wear a big enough bomb, and people might give you a wide berth.

Against nukes, it can be argued from a moral basis that such weapons should never be used in any circumstances, their capability to cause devastation beyond the limits that should be tolerated by any civilisation. Furthermore, any resources spent on creating and maintaining them are therefore wasted and could have been put to better more constructive use.

This argument is appealing, but lacks pragmatism in a world where some people don’t abide by the rules.

Pragmatism and morality often align with the right and left of the political spectrum, but there is a solution that keeps both sides happy, albeit an imperfect one. If all nuclear weapons can be removed, and stay removed, so that no-one has any or can build any, then pragmatically, there could be even more wars, and they may be even more prolonged and nasty, but the damage will be kept short of mutual annihilation. Terrorists and mad rulers wouldn’t be able to destroy us all in a nuclear Armageddon. Morally, we may accept the increased casualties as the cost of keeping the moral high ground and protecting human civilisation. This total disarmament option is the goal of the WAAS. Pragmatic to some degree, and just about morally digestible.

Another argument that is occasionally aired is the ‘what if?’ WW2 scenario. What if nuclear weapons hadn’t been invented? More people would probably have died in a longer WW2. If they had been invented and used earlier by the other side, and the Germans had won, perhaps we would have had ended up with a unified Europe with the Germans in the driving seat. Would that be hugely different from the Europe we actually have 65 years later anyway. Are even major wars just fights over the the nature of our lives over a few decades? What if the Romans or the Normans or Vikings had been defeated? Would Britain be so different today? ‘What if?’ debates get you little except interesting debate.

The arguments for and against nuclear weapons haven’t really moved on much over the years, but now the scope is changing a bit. They are as big a threat as ever, maybe more-so with the increasing possibility of rogue regimes and terrorists getting their hands on them, but we are adding other technologies that are potentially just as destructive, in principle anyway, and they could be weaponised if required.

One path to destruction that entered a new phase in the last few years is our messing around with the tools of biology. Biotechnology and genetic modification, synthetic biology, and the linking of external technology into our nervous systems are individual different strands of this threat, but each of them is developing quickly. What links all these is the increasing understanding, harnessing and ongoing development of processes similar to those that nature uses to make life. We start with what nature provides, reverse engineer some of the tools, improve on them, adapt and develop them for particular tasks, and then use these to do stuff that improves on or interacts with natural systems.

Alongside nuclear weapons, we have already become used to the bio-weapons threat based on genetically modified viruses or bacteria, and also to weapons using nerve gases that inhibit neural functioning to kill us. But not far away is biotech designed to change the way our brains work, potentially to control or enslave us. It is starting benignly of course, helping people with disabilities or nerve or brain disorders. But some will pervert it.

Traditional war has been based on causing enough pain to the enemy until they surrender and do as you wish. Future warfare could be based on altering their thinking until it complies with what you want, making an enemy into a willing ally, servant or slave. We don’t want to lose the great potential for improving lives, but we shouldn’t be naive about the risks.

The broad convergence of neurotechnology and IT is a particularly dangerous area. Adding artificial intelligence into the mix opens the possibility of smart adapting organisms as well as the Terminator style threats. Organisms that can survive in multiple niches, or hybrid nature/cyberspace ones that use external AI to redesign their offspring to colonise others. Organisms that penetrate your brain and take control.

Another dangerous offspring from better understanding of biology is that we now have clubs where enthusiasts gather to make genetically modified organisms. At the moment, this is benign novelty stuff, such as transferring a bio-luminescence gene or a fluorescent marker to another organism, just another after-school science club for gifted school-kids and hobbyist adults. But it is I think a dangerous hobby to encourage. With better technology and skill developing all the time, some of those enthusiasts will move on to designing and creating synthetic genes, some won’t like being constrained by safety procedures, and some may have accidents and release modified organisms into the wild that were developed without observing the safety rules. Some will use them to learn genetic design, modification and fabrication techniques and then work in secret or teach terrorist groups. Not all the members can be guaranteed to be fine upstanding members of the community, and it should be assumed that some will be people of ill intent trying to learn how to do the most possible harm.

At least a dozen new types of WMD are possible based on this family of technologies, even before we add in nanotechnology. We should not leave it too late to take this threat seriously. Whereas nuclear weapons are hard to build and require large facilities that are hard to hide, much of this new stuff can be done in garden sheds or ordinary office buildings. They are embryonic and even theoretical today, but that won’t last. I am glad to say that in organisations such as the Lifeboat Foundation (lifeboat.com), in many universities and R&D labs, and doubtless in military ones, some thought has already gone into defence against them and how to police them, but not enough. It is time now to escalate these kinds of threats to the same attention we give to the nuclear one.

With a global nuclear war, much of the life on earth could be destroyed, and that will become possible with the release of well-designed organisms. But I doubt if I am alone in thinking that the possibility of being left alive with my mind controlled by others may well be a fate worse than death.

To each according to their effort

This blog is very long, around 4000 words, and looks at various forms of exploitation and how we might design a better system. It is as much a personal exploration of the field as anything.

Hardening of attitudes to welfare abuse

There is growing resentment right across the political spectrum against those taking welfare who won’t do enough to try to look after themselves but expect handouts, while others are having to work hard to make ends meet. And at the same time, resentment against the rich who use loopholes in the law to find technically legal but morally dubious tax avoidance schemes. What these have in common is that they exploit others. I want in this blog to look at a variety of ways in which people exploit others, some that we are so used to we don’t even notice any more. And of course this is important in helping to determine what may happen in the future.

If you have any knowledge of economics, please go away now, I don’t want to offend you by teaching basic economics, especially if I get it wrong. Otherwise, please explore with me.

The few have always exploited the many

We recently had a short break visiting the Cotswolds (a chocolate-box picture area of England). We saw a huge Roman villa, fantastic mosaics in the Roman museum in Cirencester, and a couple of stately homes. Then we went to Portugal where we saw the very ornate but tasteless Palace of Penna. It made me realise just how much better off we are today, when thanks to technology development, even a modest income buys vastly superior functionality and comfort than even royalty used to have to put up with.

I used to enjoy seeing such things, but the last few years I have found them increasingly disturbing. I still find them interesting to look at, but now they make me angry, as monuments to the ability of the few to exploit the efforts of the many for their own gain. So while admiring the landscape architecture of Lancelot (Capability) Brown, and the Roman mosaics, I felt sorry for the many people who had little or no choice but to do all the work for relatively little reward. Especially so with buildings like the Palace of Penna where an obviously enormous amount of hard work has been spent on something that ended up hideously ugly. Even if the artists and workmen were paid a good wage, their abilities could probably still have been put to much more constructive use.

But we don’t want equality of poverty

I strongly believe that we overvalue capital compared to knowledge, talent and effort, resulting in too high a proportion of wealth going to capital owners.  Capitalism sometimes saps too many of the rewards of effort away from those who earn them. However, few people would argue for a system where everyone is poorer just so that we can have equality, as happened in communism, and as would be the result if some current socialists got their ways. The system should be fair to everyone, but if we are to prosper as a society, it also needs to incentivise the production of wealth.

Exploitation of society by the lazy and greedy

That of course brings us to the abuse at the other end, with some people who are perfectly able to work drawing state benefits instead (or indeed as well as wages from work) and thereby putting unjust extra load on the welfare system. This of course acts as a major drain on hard working people too and reduces the rewards of effort. Those who work hard may thus see their money disappearing at both ends, possibly taken by exploitative employers and certainly taken by the state to give to others. Exploitation is still exploitation whether it is by the privileged or the lazy. We all want the welfare system, because another powerful force in human nature is to care for others, and we instinctively want to help those who can’t help themselves. But that doesn’t mean we want to be taken advantage of.

Rewarding effort is essential for a healthy economy

As a general principle, extra effort or skill or risk or investment should reap extra reward. If there is too little incentive to do put in more work or investment, human nature dictates that most people won’t do it. The same goes for leading others or building companies and employing others. If you don’t get extra reward from enabling or leading other people to create more, you probably won’t bother doing that either. Very many communes have started up with idealism and failed for this reason.

In both of these cases, a few nice people will do more, even without financial incentive, simply because it makes them feel good to work hard or help others, but most won’t, or will start doing so and quickly give up when appreciation runs dry or they become frustrated by the laziness of others.

While effort and investment and skill and leadership must all be rewarded to make a healthy economy, it is a natural and fair consequence of rewarding these that some people will become richer than others, and if they help many other people also to do more, they may become quite a lot richer than others.

‘To each according to their effort’ is a fundamentally better approach than ‘from each according to their ability and to each according to their need’ as preached by communists – it is simply more in tune with human nature. It makes more people do more, so we all prosper. Trying to level the playing field by redistributing wealth too much deters effort and ultimately makes everyone worse off. A reasonable gap between rich and poor is both necessary and fair.

But we shouldn’t let people demand too much of the rewards

However, an extreme gap indicates that there is exploitation, that some people are keeping rather too much of the reward from the efforts of others. As always, we need to find the right balance. Greed does seem to be one of the powerful forces in human nature, and if opportunity exists for someone to take more for themselves at the expense of others, some will. I don’t believe we should try to change human nature, but I do believe we should try to defend the weak against exploitation by the greedy. Some studies have shown a correlation between social inequality and social problems of crime, poor education and so on. That doesn’t prove causality of course, but it does seem reasonable to infer causality in any case here.

I wrote in April

http://timeguide.wordpress.com/2012/04/28/will-barclays-become-a-not-for-profit-company/

highlighting the situation in large companies such as Barclays where top managers seem to run the company as if it were their own, allocating huge rewards for themselves at the expense of both customers and shareholders’ interests. Such abuse of position is widespread across the economy, but is very much in the spotlight now, and it will inevitably be reined back over time in spite of fierce resistance from the beneficiaries. The power of public pressure via shame should not be underestimated, even though some seem conspicuously immune to it. Where the abusers still decide to abuse, power will come either by shareholders disposing of abusers, or regulators giving shareholders better power to over-rule where there is abuse, as is already starting to happen, or by direct pay caps for public sector chiefs. The situation at the moment gives too much power to managers and shareholders need to given back the rights to control their own companies more fully.

Reducing market friction

There are many opportunities to exploit others, and always some who will try to take the fullest advantage. We won’t ever make everyone nice, but at least we can make exploitation more difficult. Part of the problem is social structure and governance of course, but part is also market imperfection. While social structure only changes slowly, and government is doomed to suffer the underlying problems associated with democracy, we can almost certainly do something about the market using better technology. So let’s look at the market for areas to tweak.

Strength of position

Kings or slave owners may have been able to force subjects to work, but a modern employer theoretically has to offer competitive terms and conditions to get someone to work, and people are theoretically free to sell their efforts, or not. Then the theory becomes more complex and the playing field starts to tilt. People have to live, and they have to support their dependants.  Not everyone is born with the intellectual gifts or social privileges that enable them to be entrepreneurs or high-earning professionals who can pick and choose their work and set their own prices. And if someone can’t sell their efforts directly to a customer, they may have to accept whatever terms and conditions are available from a local employer or trader. 

Location location location makes traders powerful

In fact, most people have to look and see what jobs there are locally and have to apply for one of them because they need the money, and can’t travel far, so are in a very poor bargaining position. By contrast, capital providers and leaders and entrepreneurs and traders have always been in an excellent position to exploit this. In a town with high unemployment, or low wages, or indeed, throughout a poor country, potential employees will settle for the local wage rate for that kind of work, but that may differ hugely from the rate for similar work elsewhere.

The laws of supply and demand apply, but the locations of supply and demand need not be the same, and where they aren’t, traders are the ones who benefit, not those doing the work. Traders have existed and prospered for millennia and have often become very wealthy by exploiting the difference in labour costs and produce prices around the world. 

Manufacturers can play the same geography game

Now with increasing globalisation, those with good logistics available to them can use these differences in manufacturing too, using cheap labour in one place to produce goods that can be sold for high prices in other places. Is it only the margins and the balance of bargaining power that determines whether this exploitation is fair or not, or is it also the availability of access to markets? What is a fair margin? How much of the profit should we allow traders or manufacturers to keep? If not enough, and markets are not free and lubricated enough, potential producers may stay idle and be even poorer because they can’t sell their efforts. If too much, someone else is getting rich at their expense. 

Making access to free global markets easier and better will help

We need to create a system where people on both sides are empowered to ensure a fair deal. At the moment, it is tilted very heavily in favour of the trader, selling the produce of cheap labour in expensive markets. When someone has no choice but to take what’s going, they are weak and vulnerable. If they can sell into a bigger market, they are stronger.

If everyone everywhere can see your produce and can get it delivered, then prices will tend to become fairer. There is still need for distributors, and they will still need paid, but they are just suppliers of a service in a competitive market too, and with free choice of customer and supplier at every stage, all parties can negotiate to get a deal they are all content with, where no-one is at an a priori disadvantage. It may still work out cheaper to buy from a great distance, but at least each party has agreed acceptable terms on a relatively level playing field. The web has already gone some way to improving market visibility but it is still difficult for many people to access the web with reasonable speed and security, and many more don’t understand how to do things like making websites, especially ones that have commerce functions. 

If we can make better free access to markets, then unfair exploitation should become less of a problem, because it will be easier for people to sell their effort direct to an end customer, but it will have to become a lot easier to display your goods on the web for all to see without undue risk. Making the web easier to use, and automating as much as possible of the security and administration should help a lot. This is happening quite quickly, but it needs time.

Import levies can reduce the incentive to exploit low wage workers

Levies can be added to imported goods so that someone can’t use cheap labour in one area to compete with the equivalent product made in the other. This is well tried and operates frequently where manufacturers pressure their governments to protect them from overseas competition that they see as unfair. However, it is usually aimed at protecting the richer employees from cheap competition rather than trying to increase wages for those being exploited in low wage economies. So it is far from ideal. Better a tool that allows pressure to increase the proportion of proceeds that go to the workers.

Peer pressure via transparency of margins

Another is to provide transparency in price attribution. If customers can see how much of the purchase price is going to each of the agents involved in its production and distribution chain, then pressure increases to pay a decent wage to the workers who actually make it, and less to those who merely sell it. Just like greed and caring, shame is another powerful emotion in the suite of human nature, and people will generally be more honest and fair if they know others can see what they are doing.

However, I do not expect this would work very well in practice, since most customers don’t care enough to get ethically involved in every purchase, and the further away and more socially distant the workers are, the less customers care. And if the person needing shamed is thousands of miles away, the peer pressure is non-existent. Yet again, location is important.

Transparency to the workforce

In our economy, and across the developed world, typically about half of the profits of someone’s ‘job’ go to the person doing it and the other half goes to the owners of the company employing them.  Transparency helps customers decide on supplier, but also helps employees to decide whether to work for a particular employer. They should of course be made fully aware of how they will be rewarded but also how much of their efforts will reward others. In a good company, the chiefs may be able to generate greater rewards for both staff and shareholders (and themselves), but as long as the details are all available, a free and informed choice can be made.

The community can generate its own businesses

In a well automated web environment, some company types would no longer be needed. Companies are often top down designs, with departments and employee structures that are populated by staff. The reverse is increasingly feasible, with groups of freelancers and small businesses using the web to find each other, and working loosely together as virtual companies to address the same markets the traditional company once did. But instead of giving half of the profits to a company owner, they reap the full rewards and share it between them. The administrative functions once done by the company are largely off-the-shelf and cheap. The few essential professional functions that the company provided can also be found as independents in the same marketplace. Virtual companies are the 21st century co-operative. The employees own the company and keep all the profits. Not surprisingly, many people have already left big companies to set up on their own as freelancers and small businesses.

Unfortunately, this model can’t work everywhere. Sometimes, a large factory is needed, or large capital investment. This favours the rich and powerful, and of course large companies, but there is again a new model that will start to come into play.

Investors don’t have to be wealthy individuals or big companies. They can also be communities. In a period where banks have become extremely unpopular, community banking will become very appealing once it is demonstrated to work. Building societies will make a comeback, but even they are more organised than is strictly necessary in a mature web age.  Linking people in a community with some savings to others who need to borrow it to make a business will become easier as social and business networking develops the trust based communities needed to make this feasible. Trust is essential, but it is often based on social knowledge, and recommendations can be shared. Abusers could be filtered out, and in any case, their potential existence creates a sub market for risk assessors and insurance specialists, who may have left companies to go freelance too. Communities may provide their own finance for companies that provide goods and services for the local community. This is a natural development of the routine output of today’s social entrepreneurs. Community based company creation, nurturing, staffing and running is a very viable local model that could work very well for many areas of manufacturing, services, food production and community work. Some of this is already embryonic on the net today, but it could grow nicely as the web continues to mature.

Whether this could grow to the size needed to make a car factory or a chip fabrication plant or a major pharmaceutical R&D lab is doubtful, but even these models are being challenged – future cars may not need the same sorts of production, a lot of biotech is suited to garden sheds, and local 3D printing can address a lot of production needs, even some electronic ones. So the number of industries completely immune to this trend is probably quite small. Most will be affected a bit or greatly. Companies that are deeply woven into communities may dominate the future commercial landscape. And as that happens, both the willingness and the capability to exploit others reduces.

If we move towards this kind of system, companies will be more responsive to our needs, while providing a stronger base on which to build other enterprises. Integrated into community banking, it is hard to see why we would need today’s banks in such a world. We could dispense with a huge drain on our finances. Banks contribute no extra to the overall economy (taken globally) and syphon off considerable fees. Without them, people could keep more of what they earn and growth would accelerate.

Exploitation via celebrity?

With the football thankfully over now, many would agree that perhaps we don’t get very good value for money from our footballers. They get astronomically large pay for poor performance. Individually, few of them seem to be intellectual giants, but the industry as a whole has grown enormously. By creating a monopoly of well supported clubs, they have established a position where they can extract huge fees for tickets, merchandising and TV coverage. The ordinary person has to pay heavily to watch a match, while the few people putting on the show get enormous rewards. Is this exploitation?

It is certainly shrewd business dealing by football, but mainly, the TV companies seem to be stupid. If they declined to pay huge fees to air the matches, the most likely outcome is that fees would tumble to a very nominal level quickly, after which the football associations would have to start paying the TV channels for air time to sell the game coverage direct to fans, or else distribute coverage via the net. They would have no choice. TV companies could easily end up being paid to show matches. And when viewers each have to pay explicitly to watch rather than have the fees hidden in a TV license or satellite subscription, the takings would drop and the wages given to footballers would inevitably follow. But not far enough.

However, they would still be paid very well, probably still grossly overpaid. We may still moan at them, but they are simply benefiting from scale of market, not exploiting. If you can sell unique entertainment or indeed any other valuable service, to a large number of people, you can generate a lot of income. If you don’t need many staff, they can be paid very well. Individual celebrities have emerged from every area of entertainment who get huge incomes simply because they can generate small amounts of cash from very large numbers of people. If many individuals vale the product highly, as in top level boxing for example, stars can be massively rewarded.

It is hard to label this as exploitation though. It is simply taking advantage of scale. If I can sell something at a sensible price and make a decent income from a small number of customers, someone better who can sell an even better product at the same price to a much larger number of people will be paid far much more. In this case, the customer gets a better product for the same outlay, so is hardly being exploited, but the superior provider will get rich. If we forced them to sell better products cheaper than someone else’s inferior one, simply to reduce their income, we would destroy the incentive to be good. No-one benefits from that.

Entertainment isn’t unique here. The same goes for writing a good game or a piece or app, or inventing Facebook. In fact, the basis of the information economy, which includes entertainment, is very different from the industrial one. Information products can be reproduced, essentially without cost without losing their value. There are lots of products that can be sold to lots of people for low prices, that do no harm to anyone, add quality to lives and still make providers very wealthy. Let’s hope we can find some more.

So even without exploitation, we will still have the super-rich. Fine.

There will always be relatively poor and super rich people. But I think that is OK. What we should try to ensure is that people don’t get rich by abusing or exploiting others. If they can still get rich, great! Then at least it is fair, and they should enjoy their wealth, within the law, provided that the law prevents them from using it to abuse or exploit others. Let’s stop worrying about punishing wealth per se, and focus instead on how it has been obtained, and on eliminating abuses.

But there is a natural limit to how much you can use

As the global population climbs, and people get wealthier everywhere, the number of super rich will grow, even if we eliminate unfairness and exploitation totally. But if we take huge amounts of money out of the system and put it in someone’s bank account, they will not be able to dispose of it all. In most cases, without great determination and extravagance indeed, the actual practical loading that an individual can make on the system is quite limited. They can only eat so much, occupy so much land, use up so much natural resource, have so many lovers. The rest of the world’s resources, of whatever kind, are still available to everyone else.

So their reward is naturally capped, they simply don’t have the time or energy to use up any more. Any money they put in investments or cash is just a figure on a spreadsheet, and a license to use the power it comes with. But while power is important in other ways, (and I might write on that some time),  it is not directly an economic drain – it doesn’t affect how much is left for the rest of us. Above a certain amount that varies with individual imagination, taste and personality, extra wealth doesn’t give anything except power. It effectively disappears, and supply and demand and prices balance for the rest accordingly.

Power takes us full circle

When we have spent all we can, and just get extra power from the extra income, it is time to start asking other kinds of questions. Some would challenge the right of the super rich to use their wealth to do things that others might think should be decided by the whole population.  Should they be able to tackle Aids in Africa, run their own space programs, or build influential media empires? Well, we can make laws to prevent abuses and exploitation. Given that, without destroying the principle of ‘To each according to their effort’, I don’t yet see how or even why we should try to stop them.

Was the Roman villa we visited built by well rewarded workers?Probably not. Could something equivalent be built by a rich person who has done no harm to anyone, or even brought universal good. Yes. It isn’t what or how much that matter, but how.

Exploration over. In future, I will have to read up on the owners of stately homes before I get angry at them.