Category Archives: city

San Francisco is the front line of capitalism reform, begging the question: who owns the city?

I watched on the news tonight how people who have lived in San Francisco for decades are being evicted from their homes by landlords eager to cash in on the rich rents they can charge to incoming techie types on large salaries from the tech giants.

The news program showed the hippie generation blockading the luxury buses taking people to work at Google. Google pays well to get high quality intellect. There is nothing wrong with that. Those employees have lots of cash but they still need accommodation, so the poor are kicked out of their rented accommodation because they can no longer afford the rents. So it finds itself at war with the longer term residents who made the city what it is, the reason Google wants to be there. 

A simple question sums up the whole problem. Who owns San Francisco? Answering that isn’t simple and leads directly to how we must change capitalism if it is to survive, and since we must, we eventually will. The gentle protests of the weak and disenfranchised in San Francisco will once again put that hippy generation at the front line of change.

I am no expert on San Francisco. I went to Menlo Park once to give a talk, then left, spending less than a day there in total. I’ve seen it many times on TV and the media of course. It is famed for the hippies, Alcatraz, being a gay hub, being the focus of west coast IT development, and a few movies. Some other things happen there, but these are the things it is mainly known for.

A city is lots of things. It is the land, with some buildings and infrastructure on top, and some resources below. Some is owned collectively, some by individuals or companies. Those are very important, but they are only a fraction of what a city is. It is also the people - the activities that go on there, the culture, the customs, the ideologies, the intellectual activities, the business, the entertainment, and it is also a brand – when someone thinks of San Francisco, a bunch of associations appears in their minds, just like any commercial brand, making it very different from London or New York or LA. It is also the geography –  the location, the climate, the risks of quakes. And it is also the history, the accumulated associations over decades.

When a property developer buys a building somewhere, they may add to  its physical value by renovating it, decorating it, extending it, or adding some nice furnishing. But any property developer has a choice of where to buy, and chooses an area they think will increase in value. The increase in value comes from all the other intangibles I just mentioned, (mostly what economists call social capital, but I don’t like using jargon where ordinary words do perfectly well) so the underlying question is: why should all the value increase go to the developer. In essence they are getting all the efforts and talents of everyone else, all the magnetism they create, for free. Why? Why should they get it all? Why should the person living in the flat not get it? It is they who are the magnet. You can get a flat anywhere. The reason you want that one is because of where it is. Does that value-add not belong to everyone who made that place the place to be?

Look at it another way. Suppose it’s the 1960s. You are a hippie and you want to go where it is happening. Suppose all the hippies had a flash of insight and realised what would happen 50 years later. Suppose they all decided to build their own town next door. Suppose they decided that capital isn’t everything, and decreed that the value of each property there would be split. Part would be the physical property and that would increase in value at the construction industry inflation rate. The other part of the property value would be the cultural value, and that would increase to whatever the market stands. The property developer would get a fair ongoing rent for that class of property. The community would get the remuneration for the value they have added. Each year a market valuation would show how much property has increased in value, how much value of new business has been generated because of the local atmosphere. The people who lived there the last year would get a share of that. A hippie moving into the area wouldn’t go to San Francisco, that sterile could-be-anywhere town with no culture. They’d go to the really cool trendy town next door where everyone wants to be and property costs a fortune. But as they live there, as they contribute to the area’s atmosphere, so they too get a ‘citizen wage’, their share of the value add. That offsets the rent they pay the next year.

If they did that, the rewards would go to those who create them. Isn’t that the way it should be? Why should someone get all the rewards just because they provided some cash up front, but perhaps did nothing more to contribute? Why should the property owner also be the assumed owner of the value the community has added to the area? Why is capital more important than investment of time, energy, emotion, and love?

The hippies didn’t do that, neither did the gay community. Now the enormous value they all added to San Francisco is all going to the property developers, 100% of it, even though all they did was own the flats. In gratitude, they are now evicting those contributors to make way for others whose sole advantage is having more cash to offer. That is capitalism. Well, if that is so, capitalism needs to change.

We are watching economics evolve worldwide. In most developed countries, automation is concentrating wealth with the company owners. Buy 100 machines and employ no staff, keep all the proceeds to yourself, and get rich. It looks very different, but actually it is the same. The provision of the capital is assumed to be the only part that matters. The access to a market, the development of all the infrastructure, the culture in which the product will be used, the political stability, the banking system, the accumulated human knowledge that went into every aspect of the product, every other aspect of the modern world that makes the product possible, and makes it possible to sell – all of that is assumed to be of no value and receives none of the proceeds other than the same tax rate that a company would pay if it contributed heavily to culture and society and employed thousands of employees. If it were given an agreed value, that could become a part ownership of the company, proceeds allocated to the capital providers and the silent partner culture capital provider.

Capitalism worked well when the immaturity of technology meant that about half of the wealth generated went to employees and half to the owner. You could get very rich, but others still had enough income to buy your products, and it all kept working. If we automated every job and a few people own all the machines, nobody else could afford to buy and capitalism would grind quickly to a halt. We aren’t there yet, but somewhere like that is the ultimate destination if we don’t start adjusting it. Even those wealthy young programmers could be automated by an advanced AI.

So we need to adjust capitalism. Working out some way of valuing the entire cultural contribution of a society or region so it can stand side by side with the provision of capital would be a good start. Then some sort of culture tax can distribute wealth between the factory owners and those who own the culture in which it exists, i.e. all of us.

Capitalism is a good idea, one that has served America and the free world very well. It doesn’t need thrown away, just adjusted a bit. We need to look at it afresh and realize that capitalism isn’t the same as materialism. Just because something isn’t physical doesn’t mean it has no value. Surely we already understand that with all the media we consume? All we need to do is extend that understanding a bit further, to the other intangibles. Everyone contributes to the character of a city, from the mayor down to the bum on the street with a begging bowl.

So looking at San Francisco and the bus demos, it seems that the nouveau riche of the internet generation are only rich because of the inability of capitalism itself to keep up. Google is only wealthy because the rest of the market is slower to evolve, even most of the IT industry. They can only make money at all because the internet hasn’t evolved fast enough and much of the original dream is yet to be realized. It it had kept up, the perfect market would have no need for ads and they’d have little income.

San Francisco beautifully illustrates the clash of the permanent and the transient, the old and the new, the material and the emotional. Its done it a few times before, and it may again now.

If Gibbon were alive today, he wouldn’t be writing about the rise and fall of the Roman Empire. He’d be writing about San Francisco and the decline and fall of overly simplistic capitalism. I’m no Gibbon, but I hope I managed to explain my point.

The internet of things will soon be history

I’ve been a full time futurologist since 1991, and an engineer working on far future R&D stuff since I left uni in 1981. It is great seeing a lot of the 1980s dreams about connecting everything together finally starting to become real, although as I’ve blogged a bit recently, some of the grander claims we’re seeing for future home automation are rather unlikely. Yes you can, but you probably won’t, though some people will certainly adopt some stuff. Now that most people are starting to get the idea that you can connect things and add intelligence to them, we’re seeing a lot of overshoot too on the importance of the internet of things, which is the generalised form of the same thing.

It’s my job as a futurologist not only to understand that trend (and I’ve been yacking about putting chips in everything for decades) but then to look past it to see what is coming next. Or if it is here to stay, then that would also be an important conclusion too, but you know what, it just isn’t. The internet of things will be about as long lived as most other generations of technology, such as the mobile phone. Do you still have one? I don’t, well I do but they are all in a box in the garage somewhere. I have a general purpose mobile computer that happens to do be a phone as well as dozens of other things. So do you probably. The only reason you might still call it a smartphone or an iPhone is because it has to be called something and nobody in the IT marketing industry has any imagination. PDA was a rubbish name and that was the choice.

You can stick chips in everything, and you can connect them all together via the net. But that capability will disappear quickly into the background and the IT zeitgeist will move on. It really won’t be very long before a lot of the things we interact with are virtual, imaginary. To all intents and purposes they will be there, and will do wonderful things, but they won’t physically exist. So they won’t have chips in them. You can’t put a chip into a figment of imagination, even though you can make it appear in front of your eyes and interact with it. A good topical example of this is the smart watch, all set to make an imminent grand entrance. Smart watches are struggling to solve battery problems, they’ll be expensive too. They don’t need batteries if they are just images and a fully interactive image of a hugely sophisticated smart watch could also be made free, as one of a million things done by a free app. The smart watch’s demise is already inevitable. The energy it takes to produce an image on the retina is a great deal less than the energy needed to power a smart watch on your wrist and the cost of a few seconds of your time to explain to an AI how you’d like your wrist to be accessorised is a few seconds of your time, rather fewer seconds than you’d have spent on choosing something that costs a lot. In fact, the energy needed for direct retinal projection and associated comms is far less than can be harvested easily from your body or the environment, so there is no battery problem to solve.

If you can do that with a smart watch, making it just an imaginary item, you can do it to any kind of IT interface. You only need to see the interface, the rest can be put anywhere, on your belt, in your bag or in the IT ether that will evolve from today’s cloud. My pad, smartphone, TV and watch can all be recycled.

I can also do loads of things with imagination that I can’t do for real. I can have an imaginary wand. I can point it at you and turn you into a frog. Then in my eyes, the images of you change to those of a frog. Sure, it’s not real, you aren’t really a frog, but you are to me. I can wave it again and make the building walls vanish, so I can see the stuff on sale inside. A few of those images could be very real and come from cameras all over the place, the chips-in-everything stuff, but actually, I don’t have much interest in most of what the shop actually has, I am not interested in most of the local physical reality of a shop; what I am far more interested in is what I can buy, and I’ll be shown those things, in ways that appeal to me, whether they’re physically there or on Amazon Virtual. So 1% is chips-in-everything, 99% is imaginary, virtual, some sort of visual manifestation of my profile, Amazon Virtual’s AI systems, how my own AI knows I like to see things, and a fair bit of other people’s imagination to design the virtual decor, the nice presentation options, the virtual fauna and flora making it more fun, and countless other intermediaries and extramediaries, or whatever you call all those others that add value and fun to an experience without actually getting in the way. All just images directly projected onto my retinas. Not so much chips-in-everything as no chips at all except a few sensors, comms and an infinitesimal timeshare of a processor and storage somewhere.

A lot of people dismiss augmented reality as irrelevant passing fad. They say video visors and active contact lenses won’t catch on because of privacy concerns (and I’d agree that is a big issue that needs to be discussed and sorted, but it will be discussed and sorted). But when you realise that what we’re going to get isn’t just an internet of things, but a total convergence of physical and virtual, a coming together of real and imaginary, an explosion of human creativity,  a new renaissance, a realisation of yours and everyone else’s wildest dreams as part of your everyday reality; when you realise that, then the internet of things suddenly starts to look more than just a little bit boring, part of the old days when we actually had to make stuff and you had to have the same as everyone else and it all cost a fortune and needed charged up all the time.

The internet of things is only starting to arrive. But it won’t stay for long before it hides in the cupboard and disappears from memory. A far, far more exciting future is coming up close behind. The world of creativity and imagination. Bring it on!

Out of town centres are the most viable future for physical shops

So the government’s ‘retail guru’ Mary Portas has said that some high streets are doomed and should be turned over to other uses. I don’t share the government’s high regard for her but I do agree that it is time to reconsider the structure and location of retailing.

As usual, I’ll highlight the problem first, then suggest the solution.

I live on the edge of Ipswich. The area is a nice place to live but I rarely go into town. To be absolutely honest, I try hard NOT to go into town. I am sure they don’t want me there anyway, since they try hard to deter me from going in.

In the last year, I’ve been to radio studio three times, the cinema once (that involved over 20 mins looking for a car parking space nearby, eventually parking much further away and walking), and shopping once, dragged kicking and screaming, having to wade through a lake in a waiting-for-brown-field-development car park on our side of town that we used to avoid the trauma of traffic congestion. The planners were presented with a once-in-a-generation opportunity to fix a lot of the congestion when they started redevelopment of the docks, but instead actually worsened the traffic routing and created even more congestion.  I don’t know why they did that, but they did. You could say that Ipswich had been a one-horse town, but the planners shot the horse. Ipswich could have been a great deal better with just a bit of thought. Having said that, there are far worse places, far worse. I’m probably just a troglodyte that owns a shaver.

Like many other towns, a lot of the shops are closing. The issues are familiar all over the country. Congestion, lack of parking and high parking fees compete with easy home delivery from online purchases. Congestion is not the same as throughput, and even though it seems busy, town centre businesses obviously aren’t getting enough business or they wouldn’t be closing. 

I’ve written on the future of high street retailing before:

http://timeguide.wordpress.com/2013/01/16/the-future-of-high-street-survival-the-6s-guide/

http://timeguide.wordpress.com/2011/03/03/future-high-street-retailing/

Online shopping offers formidable competition, and in those previous blogs I looked at what can be done to compete . This time, I want to concentrate on the location of shops.

Sometimes I just want to get out of the house and go shopping. If I don’t have anything particularly in mind, I go to Woodbridge and Felixstowe, mainly because they are just as fast to get to as Ipswich, but prettier, it is far easier to park there, and parking doesn’t cost a fortune. If the trip is purely functional, I will often end up at a retail park. They are easy to get to, I can park close to the shop I want, and it is free.

There has been huge resistance to out of town shopping centres over the last decade or two because they obviously take customers away from town centres, and involve driving so were considered environmentally unfriendly. Let’s look at both of those in the light of the new reality.

Big retail parks are mostly full of enormous warehouse stores that offer a purely functional destination. Some are selling stuff that is best suited to online purchasing and the less competitive ones are likely to die or shrink. As they free up the big warehouses, these could be attractively redesigned to house many shops that once lived in town centres. So when someone goes to their local retail park to look at furniture or DIY kit, they might well spend an extra while wandering through some interesting small shops.  The big stores would act as a functional magnet, and the small shops would add interest and serendipity, making a boring functional trip into an enjoyable experience that could fund a flourishing retail community. Provided the rents and rates are OK, and that parking is free and abundant, this could work well as a model for high street condensation and relocation. It could even rejuvenate physical retailing, especially small businesses.

As for environmental impact, being stuck in a traffic jam is far more polluting than driving along unimpeded. Out of town centres can be placed to work well with the local human geography and roads so that traffic can flow smoothly and make less pollution. Parking must be adequate to cope with latent demand or that will drive potential customers onto the net, or force them to drive round and round car parks looking for places, polluting as they go. People who live in town centres generally have ready access to public transport and it is just as easy to aim routes at out of town centres as it is to town centres. If the old high streets are re-purposed, then retail business would just be moved to more viable locations where they could flourish.

If we move shopping out of town, almost everyone benefits. People living out of town would not have to go into town to shop, and congestion there would probably fall so that it would be less traumatic when they do have to go in for other reasons. People living in towns would still have public transport access to shops, just in different locations. The few who live within easy walking distance of town shopping centres would suffer having to go further to shops, but they will suffer their loss anyway if they don’t move.

For people out of town, well designed out-of-town shopping centres offer the potential of reinvention and to rekindle the joy of shopping. For townies, the alternative to shops that are a bit further away might be to have no shops at all. That’s probably the new reality and we either embrace it or suffer it. Government and planners should recognise that and make policy accordingly.

 

The future of high street survival: the 6S guide

I do occasionally write a blog relevant to the news of the day rather than just what takes my fancy. The news today, apart from Tesco horse burgers, is the closure of another national retail chain, HMV. I learned on the news that HMV stands for ‘His Master’s Voice’. Never knew that, I thought it was a 90s chain. ‘His master’s voice’ is immediately recognisable as an ancient and trusted brand. HMV has a nice up to date logo  though so maybe their marketing department though that is more important to appeal to a generation that has mostly never bought a CD. HMV also didn’t bother to explain the difference to shoppers between what you get when you buy a CD v what you get when you download, i.e proper ownership and rights v part and temporary ownership and severely restricted rights. Still, too late for them to ask me my views. They’re dead.

Some high street shops make excellent use of the synergy between a physical outlet and web presence. As we progress into the age of augmented reality, that will become ever more important. People will expect to be able to buy via either route but still use the facilities offered by the shop. AR also adds huge potential to add virtual architecture, décor  themes and gaming. Reserving online for high street collection, or buying for home delivery while in the shop are well established; less so is using 3d printing to accessorise outfits, or laser scanning body shape so that you can use stores as try-on outlets. These are starting to generate presence and will grow in importance. And some shops are getting extra income by acting as drop off centres for other companies, so that people can collect things on their way home from work, a big thing for the many households where nobody is at home during the day to receive goods.

Socialising is best done face to face, and shopping is a social experience too. Coffee shops and restaurants have been familiar in shops for decades now, but shops could make far more advantage of social networking to offer meeting and hanging out facilities for people using social networks and who share something in common related to the theme of the shop. Clothes shops could offer fashion related events, gadget shops demos of up and coming products, and so on. Establishing shops as something more than just places to buy increases their relevance and brand loyalty, hence survival chances. So, synergy, socialising. I feel a ’6S guide to high street survival’ coming on.

Next S:  service. This should be obvious, and most shops do appreciate the importance of differentiating on service quality. While it used to be a concern that people would use the shop for service and then buy online, having good web presence and competitiveness anyway makes this less problematic. There is nothing wrong with having some premium services and charging for them in addition to free basic service. Some premium services could even be provided for competitor web sites with no high street presence, making a potential income stream even when people do use competitors. Opticians doing prescriptions for online glasses sellers, or clothes shops providing paid measuring services are good examples where this already occurs. Seeing competitors as potential market opportunities rather than just as threats is key.

Suck and see. OK, a bit contrived to get the S this time, but shops are starting to do it. The Apple Store is a good example, where you try it out in the shop but the purchase is essentially an online one. Clothes shops can let you try a garment on and then order it in your size for home delivery, using rapid customisation manufacturing and delivery systems.

Surprise is another one. It is easy to shop online when you know what you want. If you don’t, shops can offer that mixture of expected and unexpected to make you want to visit. Call it serendipity if you prefer.

The 6th S is for Special. This could be customisation or personalisation of products for customers, or it could be an extended relationship with customers in terms of pampering of regular customers, after-sales services, advice, affiliate programs, belonging to social groups… People want to feel special.

There you have it. Service, surprise, suck-and-see, socialisation, synergy and special. The 6S guide to high street survival. :)