The rise and fall of the web

This is my part of a joint newsletter with Rohit Talwar, his was published just now as a guest blog.

The rise and fall of the web

20 years ago, the web was in its infancy and the first conferences appeared where we could all discuss what was coming next. Even then the need was obvious for search engines, portal sites, firewalls, social networking, online shopping, auctions, discount buying schemes and so on and even the seedier side of the web was already obvious back then. Not much around today on the web wasn’t being discussed 20 years ago. It just took that long to emerge and evolve into what was anticipated. What has happened is exposure of the naïve optimism of some of the early debate.

Over the coming years we saw the expected creation of companies like Amazon and ebay, Facebook, Twitter and Google, and the rise of already existing companies such as Microsoft, Apple and Samsung, in some cases from niche player to market dominance. Without exception, the companies I mentioned deserve praise for struggling through the difficult phases of market creation and the sometimes huge and prolonged losses leading up to break-even and eventual profitability. They all started with a dream and made it happen, knowing they would succeed if they worked hard enough at it.

Without wanting to remove any of that praise, it is hard not to wonder if at least part of the dream is starting to turn sour. Is there evidence now that power corrupts? Does possession of a strong market position always lead inevitably to market abuse?

In each case, there are recent examples of less-than-saintly behaviour, but some issues are spreading as a problem, so rather than pick on individual companies, I’ll focus on the issues. In each case, a large company with little effective competition is in strong position to force these policies since they know customers and clients can’t easily just walk away. There is no cartel, but if a problem happens to affect all the main providers for a service, or it is a de-facto monopoly, you really have no choice.

Privacy invasion or at least scant regard for privacy is the biggest issue for some, introducing policies that make it hard for users to remain private. In this case, the reason is obvious. Privacy conflicts with extracting maximum market value from a customer’s personal data. I don’t personally want everyone to know what I just bought online, what I watch on TV, what games I play or what music I am listening to, or to have full access to everything I ever typed on a social networking page. The choice we seem to be presented with is simple. If you don’t want to be fully exposed 24-7, either don’t use the web or a mobile app, or be prepared to spend time frequently to check every site you use carefully for their latest policy changes to make sure an oversight doesn’t allow your privacy doesn’t fall through a new hole they just dug. But even that may not be the real choice now. The emerging pattern seem to be that changes may be introduced retrospectively, eradicating any value in privacy commitments in existing policy. If that behaviour spreads, then any privacy you think you have today is merely an illusion.

Burning the candle at both ends is another recent issue. Although the web has few of the costs associated the with high street, large web companies are charging high fees now to companies to sell via their site, much the same as property developers with the best locations can charge high fees to shops. That end of the candle is well alight, but customers are finding the discounts offered are often far less now too. Now that they have been psychologically hooked by the web empires, prices are rising.

Walled gardens were a consideration for regulators when mobile and broadband networks were emerging – I took part in several workshops discussing their merits and drawbacks. Telecoms regulators understood well that dominant telecoms companies might try to force customers to use only services within their own areas of control, i.e. to stay in their walled garden, and they legislated accordingly to protect customers. It was presumed that competition would suffer greatly if people were not free to wander as they pleased and exploitation would follow soon after.  However, although some of the web giants are heading rapidly and determinedly down exactly that path, the authorities are either looking the other direction or unable to do anything about it. It seems that any regulators that do exist have too vague boundaries on their remits, or the companies fall outside their jurisdiction geographically, or they simply have too many issues to deal with and can’t keep up. It is unacceptable that we now by default have arrived at a business platform that lends itself to abuse but isn’t being properly controlled by the normal regulator processes that apply as standard elsewhere.

Arrogance is a term we hear thrown at web giants frequently now, and it does seem appropriate when a large company ignores protests by its customers and imposes policies that significantly affect the terms and conditions that applied when they first became a customer. Even incrementally small changes can add up to large change in a short time, but if customers have invested time and effort building a profile or establishing a place or network on a site, the personal costs of migration can be too high. There ought to be equivalent rights protecting the interests of customers online just as in the physical world, but online providers appear to be able to make their own conditions of use with much greater scope for abuses, knowing that very few customers will read many pages of small print. Especially where websites feature heavily in everyday use, and where not being a user might even may be a career or social impediment, there should be more protection from arrogance and unilateral determination and management of user rights. Some regulatory body should be making sure terms and conditions are fair and balanced because the market isn’t doing that by itself.

Another aspect of arrogance is the enthusiasm to avoid taxes by exploiting holes in the law, and reading between the lines, it is as if the companies think they know best how money should be spent for humankind’s best interests, not governments. They may be right about government, but that doesn’t excuse arrogance.

Reintermediation is a direct consequence of walled gardens but is an issue in its own right. Early analysis of the web suggested it would lead to perfect markets, where people would be in direct contact with suppliers, thereby cutting out the middle man and his costs while forcing perfect information and hence maximum competitiveness. With good search, it would be easy to find all potential suppliers for something and compare them directly, and there would be no need to go via an agency. What we have now is interesting in that the search sites have themselves become intermediaries, and comparison sites another layer of that, listing results from a subset of suppliers. So instead of removing an intermediary we generated two new ones, three if you use an app store to do it. Everyone wants a slice of the pie of course, but the web was meant to bypass that, and it simply hasn’t. People can go direct, but it doesn’t take long to discover that using a search engine will often put hundreds of pages of the wrong sites before the one you search for. Most of the listings on the first several pages will often be intermediary sites.

In spite of all this, the potential of the web hasn’t gone away. It still allows word of new sites to spread rapidly, for reputations to be made and lost, for empires to spring up overnight, and for old ones to crash and burn. Boredom is under-rated as a motivation to change too. Social network sites in particular are highly vulnerable to their customers simply getting bored and leaving, but new designs and novel ideas can present a real threat to any of them. The sword of Damocles hangs over all.

For all their size and momentum, none of the web giants is guaranteed longevity. As some of yesterday’s giants discovered, a startup can replace them in just a few years. Maybe the first generation of web giants has climbed high, but decadence and abuse of power have made them ripe for conquest. All we need now is to wait for the imminent emergence of the second generation.

Technology Convergence – What’s your Plan? Guest post by Rohit Talwar

Rohit is CEO of Fastfuture and a long-standing friend as well as an excellent futurist. He and I used to do a joint newsletter, and we have started again. Rohit sends it out to his mailing list as a proper newletter and because I don’t use mailing lists, I guest post it here. I’ll post my bit immediately after this one. I’m especially impressed since his bit ticks almost as many filing category boxes as it uses words.

Here is Rohit’s piece:

Technology Convergence – What’s your Plan?

I have just returned from South Korea where I was delivering a keynote speech to a cross-industry forum on how to prepare for and benefit from the opportunities arising from industry convergence. South Korea has made a major strategic commitment starting with government and running through the economy to be a leader in exploiting the potential opportunities arising from the convergence of industries made possible by advances in a range of disciplines. These include information and communications technology, biological and genetic sciences, energy and environmental sciences, cognitive science, materials science and nanotechnology.  From environmental monitoring, smart cars, and intelligent grids through to adaptive bioengineered materials and clothing-embedded wearable sensor device that monitor our health on a continuous basis – the potential is vast.

What struck me about the situation in Korea was how the opportunity is being viewed as a central component of the long-term future of Korea’s economy and how this is manifested in practice. Alongside a national plan, a government sponsored association has been established to drive and facilitate cross-industry collaboration to achieve convergence. In addition to various government-led support initiatives, a range of conferences are being created to help every major sector of the economy understand, explore, act on and realise the potential arising out of convergence.

I am fortunate to get the opportunity to visit 20-25 countries a year across all six continents and get to study and see a lot of what is happening to create tomorrow’s economy. Whilst my perspective is by no means complete, I am not aware of any country where such a systematic and rigorous approach is being taken to driving industry convergence. Those who study Korea know that this approach is nothing new for them – long term research and strategic planning are acknowledged to have played a major role in the evolution of its knowledge economy and rise of Korea and its technology brands on the global stage. Coming from the UK, where it seems that long term thinking and national policy are now long lost relatives, I wonder why it is that so few countries are willing to or capable of taking such a strategic approach.

Rohit on the Road

In the next few months Rohit will delivering speeches in Oslo, Paris, Vilnius, Warsaw, Frankfurt, Helsinki, Denver, Las Vegas, Oman, Leeds and London. Topics to be covered include human enhancement, the future of professional services, the future of HR, transformational forces in business, global drivers of change, how smart businesses create the future, the future technology timeline, the future of travel and tourism, the future of airlines and airports and the future of education. If you would like to arrange a meeting with Rohit in one of these cities or are interested in arranging a presentation or workshop for your organisation, please contact rohit@fastfuture.com

Starbucks isn’t wrong to avoid tax, the law is wrong. A universal payment tax would fix it.

Tax avoidance is in the news a lot at the moment. Maybe that is partly because tax as it is now is seen to be unfair and unjust so people feel less bad about trying to avoid it.  In response, the idiots in charge of our taxing seem to think they should ask people and companies to pay taxes voluntarily.

Companies usually exist to make money, and it would be bad management to voluntarily pay more tax anywhere than is required by law. The world offers a wide range of tax regimes and of course a multinational corporation will do its best to exploit the different rates. But governments are meant to be in charge of law, that’s what they are for. It is their job to ensure that the law is fair and that everyone has to pay their share of taxes. But they aren’t doing that at all well. Governments are at fault, not companies or individuals that choose to pay the (creatively) legal minimum. The tax net may be full of holes, and companies are walking through them, but it is government that designed, made and maintains the net. 

Companies such as Starbucks can legally avoid paying UK tax by paying fees for licenses, use of the brand name and other intellectual property to overseas companies in low tax areas. The value and price of intellectual property can be set at pretty much any arbitrary level, and it can be moved around the world instantly so it is an especially useful tool for tax avoidance schemes. We have been in the information economy for decades now, and it is a reflection of competence and extreme sluggishness of the tax authorities that tax law hasn’t kept up. Starbucks have paid their due taxes, there is just a huge mismatch between what is due and what should be due in a competent tax regime.

It isn’t an impossible task to tax properly. There are lots of ways of taxing things so that all companies pay a fair contribution. The situation now is simply ridiculous and government should pick a mechanism and implement it quickly.

The most obvious perhaps is that the government could regulate that all companies must pay tax on the same proportion of their global profits as the proportion of their revenue that is earned in the UK. And that must include web sales and downloads, and most importantly, any intellectual property such as licenses. If Starbucks buys licenses to operate in their particular way, the license sellers would pay the appropriate taxes on the corresponding proportion of their global profits too.

Of course, that would get complicated if overseas suppliers could simply refuse to pay or even to surrender data on their accounts. But that can be solved by allowing accountants to offset purchases only from licensed companies. The responsibility to either pay the tax themselves, or buy from someone also paying tax here would then stay with Starbucks.

Another way of ensuring companies pay proper tax would be to demand payments based on an industry average cost pattern. This would be subject to arguments and would be more complex so would be more expensive to administer.

A third way is using a purchase tax in place of corporation tax. Every company would pay the purchase tax on everything they buy. If it appears as a cost on the UK balance sheet, purchase tax must be paid on it. What a company does overseas should be of no concern of the UK authorities, but if they want to put a UK operating license from a subsidiary or partner on their UK accounts, tax must be paid on it. If this tax is set at the right level so that the total government tax take stays the same overall, the economy should benefit through simplicity and administrative cost reduction.

It is possible to have different tax levels for different kinds of purchase, exceptions, special cases and so on, but each paragraph of extra regulation is another than can be interpreted and used by creative accountants and lawyers.

One of the implications of having a simple purchase tax is that there is a huge incentive to simplify the value chain into as few links as possible. If money is taxed each time it leaves a company, then having fewer company boundaries in the value chain would be cheaper. Keeping as much of the value chain in house as possible would reduce this, but there would be strong pressure to allow reclaiming of purchase taxes across boundaries in the value chain. Of course, that is getting quite close to what VAT is, and we are all familiar with that already. Companies collect VAT on their sales and claim back VAT on purchases. It therefore doesn’t discriminate against companies on the basis of value chain design. It just collects tax on the difference in value between the raw materials and finished products.

So, why not abolish corporation tax entirely and switch to a refined version of VAT, at a higher rate if need be? Why indeed. This refined VAT would be payable on all purchases, from anywhere, but we could modify it so it could still be reclaimed by businesses for purchase from other UK VAT paying suppliers. The important thing is notionally to seal the borders so that all purchases in the UK are taxed. I am not personally in favour of making this refined VAT reclaimable, I think that draws an unjustifiable distinction between companies and individuals that can then be exploited by company owners and is the source of much tax evasion even today. I think facilitating virtual companies and optimising end to end value chain design is the best approach.

Extending this approach, why not also replace income tax and national insurance by a sort of VAT on salary? That would amount to a flat tax, but people who get paid more would pay more tax too, and that in itself is already an improvement to today. If this VAT also was applied to payment of dividends, capital gains, bank interest, inheritance and all other forms of payments, then the person on the ordinary payroll would pay the same rate as the owner of the company, someone selling their shares, the shareholders, inheritors, everyone. What’s not to like? Rich people pay more, poor people pay less. Everything is simple, all loopholes removed. All outgoings from companies taxed at the same level, and all forms of income ditto. A single page of tax law to replace 18000 pages. People living off shore wouldn’t escape any more because their UK-sourced income is taxed at its UK point of payment. Their income from other countries is the affair of those other countries. Just like usually happens today, the money is taxed when coming into the company as a sale, and once when paid out to someone as wages or dividends. But twice would be a huge improvement on the hundreds of times money is taxed today via all the hidden taxes. This revised system would be far simpler and more transparent and if it is kept simple and transparent, with no added loopholes, people would see its fairness. The more secure net means that everyone would pay less tax except those who had previously been avoiding it.

A wannabe tax-avoiding ‘consultant’ might arrange to work for free in the UK, with no UK payments to be taxed, paid instead by an offshore company into an off-shore account, but to avoid tax, that money would need to have come from an overseas operation. If it came from UK profits, it would have been taxed when the money came into the company, and again when it was paid out to the overseas one. People paid by overseas companies out of overseas money are not the UK’s affair. As far as the UK is concerned, they are working for free.

Smarter people than I have calculated that we’d need to set the rate to take about 20% of each transaction. Just a bit more than VAT already is then (VAT adds 20% on so takes 20/120ths=16.67%). So, if that is right, and we seal all the holes and charge it on everything, we can all look forward to a country with no other taxes except a slightly refined form of VAT, that is paid on everything.

So it wouldn’t matter how you got your money. 20% would be paid when you are given it and on any interest the banks pay you on the remaining 80% from saving it. When you spend it, another 20% is gone, leaving 64% of actual value. This compares favourably with today where hundreds of taxes hide away unobserved. They should all go.

I am greatly in favour of the simplicity this offers, but it isn’t without problems. What about selling shares, or houses? If you have to pay 20% on the full cost every time you buy a new house that would greatly penalise people who move often. It also cripples the stock market if people pay 20% each time they swap shares. People would demand exceptions, but each time exceptions are created, new opportunities to avoid tax arise, that can be exploited by clever accountants. So any exceptions would have to be few and well designed with tax avoidance avoidance in mind.

The future of women in work

Women v men: the glass ceiling is full of holes

Most people I think would agree that at least in the West. the glass ceiling stopping women getting to the top maybe hasn’t vanished but has at least huge gaping holes in it. Most big companies and organisations have anti-discrimination policies, and many go as far as having have quotas and other forms of positive discrimination. There are still some where women get a second class deal, but not many now. So assuming that the war is almost won on that front, what does the future hold for women in work? Well, mixed news I think, some good and some bad.

Winner and loser industries

Technology tends not to have all its impact in one lump, rather working over decades to accomplish its full impacts. Such it is with Artificial intelligence and robotics. Lots of manufacturing shop floor jobs have already been gradually replaced by robotics, with more impact to come, and many analytical and professional tasks will gradually be displaced by AI, with many others outsourced. Traditionally male-dominated jobs are being hardest hit and will continue to be, while gender neutral or female-dominated jobs such as policing, social work, sales and marketing, teaching, nursing etc will hardly be affected. Many of the men made redundant will be able to readjust and re-skill, but many will find it hard to do so, with consequent social strains.

Just as power tools have reduced the economic advantage of being physically strong, so future AI will reduce the economic advantage of being smart. What is left is dominated by essentially emotional skills, and although the polarisation certainly isn’t complete here by any means, this is traditionally an area where women dominate.

Looking at this over the whole spectrum, this pic shows some example areas likely to suffer v those that will flourish. Obviously I can’t list every bit of the entire economy.The consequences of AI are mainly influenced by the fact that few jobs are 100% information processing or intellect. Some is usually interpersonal interaction. Administrators will find that the pen-pushing and decision parts of their jobs will decline, and they will spend more of their time on the human side, the emotional side. Professionals will find that they spend more time with clients dealing with the relationship. Managers will spend more time on motivation, leadership and nurturing. Interpersonal skills, emotional skills, empathy, sympathy, caring, leadership, motivation – these are the primary skills human will provide in the AI world. The information economy will decline and gradually be replaced by the ‘care economy’. Although men can and do offer some of the skills in this list, it is clear that many are more associated with women, so the clear conclusion is that women will acquire an increasing dominance in the workplace.

Global v local

However, another consequence of the same forces is that globalisation of work will start to reverse in some fields, because if high quality human contact is essential part of the job, it is harder to do it from a distance. Some jobs require actual physical contact and can’t be done except by someone next to the customer. Looking at a diverse basket of forces, this is how it works out:Another trend in favour of women is that with increasing restructuring or businesses around small cooperatives of complementarily skilled people, networking is an increasingly important skill.

Low pay will still be an issue

Although women will generally have an easier time than men if emotional skills dominate, the evidence today is that most such work is not highly paid, so even though women will have less difficulty in finding work, it will not be high paid work. High end interpersonal skills such as senior management will fare better, but with extensive industry restructuring, there may be less need for senior managers.

Polarisation of pay

In spite of these trend that affect the vast majority of people, star performers aren’t affected in the same way. Although the markets are already depressing wage levels for groups where there is a lot of supply available, the elite are being rewarded more and more highly, and this trend will continue. The hard facts of life are that a very few individuals make a real difference to the success or failure of a company. The superstar designer, scientist, market analyst, manager or negotiator can make a company win. Letting them go to the competition is business suicide, so they justify and demand high remuneration. Sadly, 99%of us are outside the top 1%. Think about it. There are 70 million people in the global top 1%. Even spread across every sector, and ignoring those too young or old to work, that is stiff competition.

Market gender neutrality

Especially on a large scale, the marketplace is essentially gender neutral in the sense that customers generally don’t care whether a business is run by men or women (it certainly isn’t neutral in the mix of male and female customers for particular products and services of course). The market cares about marketing, price, quality, availability and location and a few other things. Gender has little impact. Companies can’t survive on the gender make-up of their staff, only results really count in the market.

Turbulence in the market caused by rapidly changing technology, especially IT, accelerates levelling of the playing field by favouring new business models and adaptable companies and wiping out those that can’t or won’t adapt. By contributing to accelerating change, IT thus acts in accelerating the downfall of a patriarchal business environment in favour of one based purely on merit. It expedites the end of the war of women v men but when it runs to completion, women will play against men and against each other on a truly level playing field.

Women v women: attractive v plain, young v old

Now that the glass ceiling is less of an issue, the battleground is moving on to appearance discrimination, which obviously links to age too. We now often hear older or plainer women complaining that the best jobs are going to pretty young things instead of the more experienced women who sadly have left their prettier days behind, especially in high profile media and customer facing jobs.

A real world example illustrates the problem well. A while back, the BBC’s treatment of older women was ruled discriminatory by the courts because they had favoured attractive younger women to put in front of cameras over older, less attractive ones. However fair it might be, such a ruling puts the customer in conflict with the regulator. Although such a ruling may appear fair, actually all the female presenters lose, as viewers will simply swap channels to programmes hosted by presenters they want to watch. The trouble is that regulators can rule how companies must behave internally, but they can’t prevent customers from using their free choice what to buy. If some viewers prefer to watch attractive young news readers, they can and will. Those programmes hosted by less attractive ones will see a reduction in viewer numbers, and consequential drop in revenue from advertising on those programmes, or in the BBC’s case, just a drop in viewers. Unless the customer has no choice in what they watch, the courts can’t level the playing field.

It isn’t just on TV that such discrimination occurs, but throughout industry. In male dominated areas, with mostly men at the top, attractive women will be favoured at interview time, and will then tend to dominate senior posts, so that quotas can be filled but men get to choose which women fill them. In airlines, it is hard not to notice if you fly frequently, that the most attractive stewardesses end up in first and business class, with the less attractive and older ones serving the economy cabin. And on a front reception desk, bar, sales jobs, and PR, attractive women have an obvious advantage too.

It looks as if this issue is likely to dominate as we move into an economy where women as a whole have the advantage over men. And it will be much harder to legislate equality in this case.

Experience v looks & IQ

With the pension crisis growing daily, it is inevitable that people will have to work longer than today. Social skills tend to grow with age and experience in contrast with intellectual speed and agility and physical beauty, which tend to decline with age. This is a fortunate trend as it enables work to be done by older people at just the time that retirement age will have to increase.

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.

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

Will Barclays become a Not-For-Profit company?

It has been interesting watching the protest by Barclays shareholders.  It made me think about what is happening here. I wonder if what we are seeing is the start of a new trend, or whether it has been going on for ages but I just never noticed it before. Anyway, a picture paints a thousand words.

Us and Them

Staff in many big companies (mentioning no names, but this is more widespread than it ought to be) will have experienced the feeling that the company thinks of them as a drain on resources. It feels to them that they are continuously made to work harder for less. Temporary staff and contractors may be treated even worse, as disposables even. It is sad because the staff are the ones who do the work, and they ought to be fully rewarded for doing a good job. Government and the tax man are well used to being treated as the enemy, but have big enough guns to fight their corner. Suppliers are well used to having to fight for every penny, but usually can demand a decent return because of their competitive position. Society is a big stakeholder in most companies, as is the environment, but mostly they have to put up with what they are given, with government and regulators supposedly protecting them from the worst abuses.

It has always looked a bit ‘Us and Them’, but the number in the Us camp is falling. Society was the first casualty. Boards realise that they can use globalisation and tax specialists to legally avoid tax, exploiting any holes in the system left by incompetent tax authorities. This problem makes daily news now, with company after company being shamed for hiding away from their tax duties in cracks in the rules. The rest of us have to pay more tax because some of the richest companies avoid paying theirs. Global companies search globally for the biggest cracks and set up there.

Customers, and savers in particular, used to be treated better too. Some banks have started using confusion marketing and other dirty tricks to reduce how much they pay to those who provide the money they need to rent to others. I am a long-standing customer with Barclays and have certainly noticed their policy to do all they can to avoid paying me interest any more. They rely on the fact that most of us won’t care enough to actually bother to move accounts. So at least as far as some big banks are concerned, customers have migrated gradually over decades out of the friends list and are now firmly in the ‘them’ camp.

The shareholder used to be the focus of corporate loyalty. Staff were forced to work harder to generate better shareholder returns. It seems that idea has been trumped in Barclays, but they aren’t the only one. I may only have noticed this new aspect of evolution, but now that I think about it, it is really only the latest extension of a long trend of paying higher and higher executive rewards, which I certainly have noticed. CEOs and directors have been overpaid for quite a while, as I have blogged about previously. A small number are worth what they are paid, the rest could easily be replaced by any number of people just below them with no noticeable loss to the company. But for boards to treat shareholders as competition for rewards seems new to me.

If a big company has previously been owned by a family, the small number of major shareholders are often board members themselves, or at least have good representation, so there is no problem. When a company has been listed for a long time, shareholders can be spread over a large population, so it is hard for them to defend their interests. The web makes it easier for them to organise protests, but it is still very difficult to mobilise enough to actually change anything. A few large pension funds or other investors may have some clout, but they may have a very hands off approach and may not be very interested in intervening. It is then that directors can start to manipulate the company as if it were their own. As directors often have directorships in a number of companies, they can act for their common interests, advising on high rewards for each other, until they end up taking the lion’s share of rewards for themselves and their friends, with shareholders pushed into second place. The ‘Us’ camp has been reduced to the board room. Everyone else is competition.

It isn’t quite so simple though, as a few other parties can demand high shares, even if they are not seen as friends. In big banks, the rewards have to be shared with experts, without whom there would simply be no rewards to share. This includes their own traders, tax consultants and a few others. Boards have to pay the going rates for them. They aren’t friends so much as partners. They have to be treated with respect simply because they can demand it.

If this trend were to continue a while longer, shareholders may end up with less and less. The more distributed the shareholder base becomes, the harder it is for them to mobilise their power, so the less effective power they hold. Boards can ignore them more and more easily. Customers will pay more, savers will be paid less, staff will be paid less and worked harder. Taxes will be minimised, risks passed as much as possible onto society and the taxpayer. The maximised profits and minimised risks will be directed as far as possible to the Us people running the company. It could essentially become a not-for profit organisation, with very highly paid board members and other key partners, low profits, and thus little left for dividends and taxes.

 

Augmented reality will objectify women

The excitement around augmented reality continues to build, and my blog is normally very enthusiastic about its potential. Enjoying virtual architecture, playing immersive computer games while my wife is shopping, or enjoying artworks transposed onto walls in the high street are just a few of the benefits.

But I realized recently that it won’t all be wonderful. I’ve often joked that you could replace all the ugly people in the high street with more attractive ones. But I didn’t really consider the implications of that. And now I have, I think it will actually become a problem.

In spite of marketing hype and misrepresentation of basic location based services, AR is only here in very primitive form today, outside the lab anyway. But very soon, we will use visors and contact lenses to enable a fully 3D, hi-res overlay on the real world. So notionally, you can make everything in the world look how you want, but only to a point. You can transform a dull shop or office into an elaborate palace of spaceship. But even if you change what they look like, you still need to represent real physical structures and obstacles in your fantasy overlay world, or you may bump into them, and that includes all the walls and furniture, lamp posts, bollards, vehicles, and of course other people. Augmented reality allows you to change their appearance thoroughly but they still need to be there somehow.

When it comes to people, there will be some small battles. You may have a wide variety of avatars, and may have invested a great deal of time and money making or buying them. You may have a digital aura, hoping to present different avatars to different passers-by according to their profiles. You may want to look younger or thinner or as a character you enjoy playing in a computer game. You may present a selection of options. The avatar they choose to overlay could be any one of the images you have on offer, that you spent so much time on. Maybe some people get to pick from some you offer, or are restricted to just one that you have set for their profile.

However, other people may choose not to see you avatar, but instead to superimpose one of their own choosing. The question of who decides what the viewer sees is the first and most obvious battle in AR and it will probably be won by the viewer (there may be exceptions, and these may be imposed by regulations). The other person will decide how they want to see you, regardless of your preferences.

You can spend all the time you want making your avatar or tweaking your virtual make-up to perfection, but if someone wants to see Lady Gaga walking past instead of you, they will. You and your body become no more than an object on which to display any avatar or image someone else chooses. You are quite literally reduced to an object in the AR world. If you worry about objectification of women, you will not like what AR will bring.

Firstly they may just take your actual physical appearance (via a video camera built into their visor for example) and digitally change it,  so it is still definitely you, but now dressed more nicely, or dressed in sexy lingerie, or how you might look naked, body-fitting any images from a porn site. This could easily be done automatically in real time using some app or other. They could even use your actual face as input to image matching search engines to find the most plausible naked lookalikes. So anyone can digitally dress or undress you, not just with their eyes, but with a hi-res visor using sophisticated software and image processing software. They could put you in any kind of outfit, change your skin colour or make-up, and make you look as pretty and glamorous or as slutty as they want. And you won’t have any idea what they are seeing. You simply won’t know whether they are celebrating your inherent beauty with respect, flattering you and simply making you look even prettier, which you might not mind, or stripping or degrading you to whatever depths they wish, which you probably will mind a lot.

Or they can treat you as just an object on which to superimpose some other avatar, which could be anything or anyone, a zombie, favourite actress or supermodel. They won’t need your consent and again you won’t have any idea what they are seeing. The avatar may make the same gestures and movements but it won’t be you. In some ways this won’t be so bad. You are still reduced to an object but at least it isn’t you that they’re looking at naked. To most strangers on the high street, you were mostly just a moving obstacle to avoid bumping into before. Most people will cope with that bit. It is when you stop being just a passing stranger and start to interact in some way that it starts to matter. You probably won’t like it if someone is chatting to you but looking at someone else entirely, especially if the viewer is one of your friends or your partner. And if your partner is kissing or cuddling you but seeing someone else, that would be a strong breach of trust, but how would you know? This sort of thing could and probably will damage a lot of relationships.

It’s a fairly safe bet that the software to do some or all of this is already in development. Maybe some of it already exists in primitive forms but it will develop quickly once AR display technology is really with us. The visor hardware required is certainly on its way and will be here by christmas.

In the office, in the home, when you’re shopping or at a party, you won’t have any idea what or who someone else is seeing when they look at you. Imagine how that would clash with rules that are supposed to be protection from sexual harassment  in the office, but how to police it?

The main casualty will be trust.  It will make us question how much we trust each of our friends and colleagues and acquaintances. It will build walls. People will often become suspicious of others, not just strangers but friends and colleagues. Some people will become fearful. You may dress as primly as you like, but if the viewer sees you in a slutty outfit, perhaps their behaviour and attitude towards you will be governed by that rather than reality. So we may see an increase in sexual assault or rape. We may see more people more often objectifying women in more circumstances.

It applies equally to men of course. You could look at me and see a gorilla or a zombie or see me fake-naked. I won’t lose any sleep over that because I don’t really care all that much. Some men will care more than I will, some even less. I think the real victims will be women. Many men objectify women already. In the future AR world , they’ll be able to do so far more effectively.

We can still joke about a world where you use AR to replace all the ugly people with supermodels, but I think the reality may well not be quite so funny.

 

Capitalism 2.0

Introduction

I am trying to get a handle on how capitalism could be redesigned to make it appropriate for tomorrow’s world. I’ve argued in recent blogs that it won’t carry on working without change for much longer. It has developed lots of cracks already:

http://timeguide.wordpress.com/2010/10/26/socio-economic-conflict/

http://timeguide.wordpress.com/2011/10/17/polarisation-and-economic-recovery/

http://timeguide.wordpress.com/2012/01/04/we-need-to-rethink-capitalism/

and I have already considered a few areas I think we can improve on:

http://timeguide.wordpress.com/2012/01/27/simplifying-tax-and-welfare/

http://timeguide.wordpress.com/2012/01/25/social-security-and-social-proximity/

http://timeguide.wordpress.com/2011/12/12/do-we-need-banks/

http://timeguide.wordpress.com/2011/06/01/the-future-of-government/

So this blog entry is the next chapter in a long series (it will be reassembled, tweaked and published in my next book, so read it here free while you have the chance).

Now I find myself challenging some of the systems that make people wealthy even though I’ve accepted capitalism as perfectly normal and right all my life. With global change accelerating, in this period of global upheaval, the rise of new powers and decline of old ones, we have an opportunity to rethink it and perhaps make it better, or perhaps countries new to capitalism will make their own way and we will follow. If it is failing, it is time to look for ways to fix it or to change direction.

Some say futurists shouldn’t get involved in politics, but competent futurists see things on the road ahead that non-futurists generally don’t.  If some of those things challenge ideologies, it’s our role to inform those concerned. It doesn’t mean taking sides, but it should involve pointing out things that are going to be opportunities or problems.

The undeserving rich

Magistrates in Britain once had a duty to distinguish between the deserving poor, who were poor through no fault of their own, and the undeserving poor, who were simply idle. The former would get handouts while they needed them, the idle would get a kick in the pants and told to sort themselves out. This has disappeared from our welfare system, but the idea remains commonly held.

Looking at the other end of the spectrum, there are the deserving and undeserving rich. Some people worked hard to get their cash and deserve every penny, some worked less hard in highly overpaid jobs. Some inherited it from parents or ancestors even further back, and maybe they worked hard for it. Some stole it from others by thievery, trickery, or military conquest. Some got it by marrying someone. Some won it, some were compensated. There are lots of ways of getting rich. Money is worth the same whoever gives it to you,  but we have different attitudes to the rich depending on how they got their money. I think that will increase.

I don’t think there is anything wrong with being rich, nor in trying to become so. There are examples of people doing well not just for themselves and their families and friends, but also benefiting their entire host community. Only jealousy could motivate any resentment of their wealth. But the system should be designed in such a way that one person shouldn’t be able to become rich at the cost of other people’s misery. At the moment, in many countries, some people are gaining great wealth effectively by exploiting the poor. Few of us consider that to be desirable. It would be better if they could only become rich by doing well in a system that also protects other people. Let’s look at some of the problems with today’s capitalism.

Corruption

Corruption has to be one of the biggest problems in the world today. It has many facets, and some are so everyday we don’t even think of them as corruption any more.

As well as the blatant corruption, most of us would also include rule bending and loophole-seeking in the corruption category. Squeezing every last millimetre when bending the law may keep it just about legal, but it doesn’t make a behaviour creditable. When we see politicians bending rules and then using their political persuasiveness to argue that it is somehow OK for them, most of us feel a degree of natural revulsion. The same goes for big companies. It may be legal-ish, with a good enough lawyer arguing on your side, to re-label or to move money via a certain route that reduces the taxes required by law, but it doesn’t make it ethical. I’d put that in the corruption category.

Then of course it is possible to break the law and bribe your way out of trouble, or to bribe lawmakers to include a loophole that you want to exploit, or to make a contribution to party funds in order to increase the likelihood of getting a big contract later.

If you want to be a little less conspicuously corrupt, you might spend a bit to indulge in what is called lobbying. That essentially is paying in cash or in kind, via nice dinners or tickets or promised social favours, or just well-paid clever chitchat, to get an MP to help push the law in the general direction you favour. Maybe it isn’t technically corrupt, but it certainly isn’t true to the basic principles of democracy either, so it corrupts democracy.

So there are degrees of corruption, but they all have one thing in common. Using positions of power or buying influence to tilt the playing field in your favour to gain advantage.

Exploitation

Once someone starts bending the rules, it affects other behaviour. If you are happy exploiting the full flexibility of the letter of the law with little regard for others, you are also likely to be liable to engage exploiting other people, in asset stripping, or debt concealing, or how you negotiate and take advantage, or how you make people redundant because a machine is cheaper.

‘Companies aren’t charities, they exist to make money’, ‘business is business’. There are plenty of expressions that the less noble business people use to excuse bad behaviour and pretend it is somehow OK. There are degrees of badness of course. For some companies, some run by people hailed as business heroes, anything goes as long as it is legal or if the process of law can be diverted long enough to make it worthwhile ignoring it. While ‘legal’ depends on the size and quality of your legal team, there is gain to be made by stretching the law. It can even pay to blatantly disobey the law, if you can stretch the court process out enough so that you can use some of the profits gained to pay the fines, and keep the rest.

So corruption isn’t the only problem. Exploitation is its ugly sister.

The price of bad behaviour and loose values

A common problem here is that we don’t assign financial value to honourable behaviour, community or national well-being, honesty, integrity, fairness or staff morale. So these can safely be ignored in the pursuit of profit. Business is justified in this approach perhaps, because we don’t assign value to them. If a company exists to make profit, measured purely financially, those other factors don’t appear on the bottom line, so there is no reason to behave any better. In fact, they cost money, so a ruthless board can make more money by behaving badly. I think that is one thing that should change. If we as a society want businesses to run more ethically, then we have to make the system in such a way that ethical behaviour is rewarded. If we don’t explicitly recognise particular value sets, then businesses are really under no obligation to behave in any particular way.

As it is, I argue that society has value sets that are on something of a random walk.

http://timeguide.wordpress.com/2011/09/26/an-almost-random-walk-for-civilisation/

There is no fixed reference point, and values can flip completely in just a few decades. That is hardly a stable platform.

Stupidity

You might think that the people at the top would be the smartest, but they usually aren’t. I’ve blogged a few times on this. Briefly, we often pay board members far more than is necessary:

http://timeguide.wordpress.com/2010/01/13/boardroom-pay-policy-most-cxos-are-paid-too-much/

and we often put stupid people in charge:

http://timeguide.wordpress.com/2011/05/30/why-do-we-let-stupid-people-make-important-decisions/

Not a good combination, and it ultimately undermines the workings of the whole economy.

So with corruption, exploitation, loose values, no real incentives to behave well, and sheer stupidity all fighting against capitalism as we have it today, it is a miracle it works at all. But it does. If we address these existing problems and start to protect against the coming ones, we will be fine. Better than fine. We’d be flying. But there are some new problems coming too.

One really key problem is automation. It is good to automate, it adds the work of machines to that of humans. But if you get to a point where there is no work available for the humans to take, then that doesn’t work so well, overall effectiveness is reduced because you still have to finance the person you replaced somehow. We are reaching that point in some areas and industries now. Here is where I think we ought to look for the solution – re-evaluating ownership.

Ownership

Ownership is something we really need to look at. I believe it is the key to fair wealth distribution in an age of accelerating machine power. The world economy has changed dramatically over the last two decades, but we still think of ownership in much the same ways. This is where I believe the biggest changes need to be made to make capitalism sustainable. At the moment, of all the things needed to make a business profitable, capital investment is given far too great a share of control and of the output. There are many other hugely important inputs that are not so much hidden as simply ignored. We have become so used to thinking of the  financial investors owning the company that we don’t even see the others. So let me remind you of some of the things that the investors currently get given to them for free. I’ll start with the blindingly obvious and go on from there.

The right to do business and to keep the profits.

The law, protecting the company from having all its stuff stolen, its staff murdered, or its buildings burned down.

The full legal framework, all the rules and regulations that allow the business to trade on known terms,  and to agree contracts with the full backing of the law.

Ditto the political framework.

Workforce education – having staff that can read and write, and some with far higher level of education

Infrastructure – all the roads, electricity, water, gas and so on. Companies pay for ongoing costs, maintenance and ongoing development, but pay nothing towards the accumulated historical establishment of these.

Accumulated public intellectual property. It isn’t just access to infrastructure they get free, it is the invention of electricity, of plumbing, of water purification and sewage disposal techniques, and so on.

Human knowledge, science, technology knowhow. We all have access to these, but that doesn’t necessarily mean that there should be an automatic right for anyone to use them without due compensation to the rest of the community. We assume that as a right, but it wasn’t really ever explicitly agreed, ever. It has just evolved.  If someone invents something and patents it, we assume they have every right to profit from it. If they use an invention in common ownership, such as the wheel, why should they not pay the rest of society for the right to use it for personal commercial gain?

Think of it another way. If a village has a common, everyone has the right to let their animals feed off the grass. That works fine when there are only a few animals, but if everyone has a large herd, it soon breaks down. The common might be absorbed under council control, and rented out, returning due value to the community. So it could be for all other commonly held knowledge. And there is a lot of it. Thousands of years worth.

Culture is also taken for granted, including hand-me-down business culture, all the stuff that makes up an MBA, or even everyday knowledge about how businesses operate or are structured.

And language, and social structure that ensures that all the other supporting roles in society are somehow provided.

so.. should business pay for it, as it pays for capital and labour?

This all adds up to an enormous wealth of investment by thousands of generations of people. It is shared wealth but wealth nonetheless. When a company springs up now, it can access it all, take it all for granted. But that doesn’t mean it is without value. It is immensely valuable. So perhaps it is not unreasonable to equate it in importance to the provision of effort or finance.

Reward is essential, but fair’s fair

A business will not happen unless someone starts it, works hard at setting it up, getting it going, with all the stress and sacrifice that often needs. They need to be assured of a decent reward or they won’t bother. The same goes for capital providers, if they are needed. They also want something to show for the risk they have taken. That should always be retained in our thinking when we redesign. Without incentive, it won’t work. But it is also right to look at the parallel investment by the community in terms of all the things listed above. That should also be rewarded.

This already happens to some degree when companies and shareholders pay their taxes. They contribute to the ongoing functioning of the society and to the development to be handed on to the next generation. just like individuals. But they don’t explicitly pay any purchase price or rent for the social wealth they assumed when they started.

The amount that should be paid is endlessly debatable. But it does offer a way of tweaking capitalism that ensures that businesses develop and use new technology in such a way that it can be sustained. We want progress, but if all jobs were to be replaced by a smart machines, then we may have an amazingly efficient system, but if no-one has a job, and all are on low-level welfare, then they can’t afford to buy any of the products so it would seize up. Conventional taxes might not be enough to sustain it all. On the other hand, linking the level of payments from a company to the social capital they use when they deploy a new machine means that if they make lots of workers redundant by automation, and there are no new jobs for them to go to, then a greater payment would be incurred. While business overall is socially sustainable and ensures reasonably full employment, then the payments can remain zero or very low. But we have the makings of an evolution path that allows for fair balancing of the needs of society and business.

The assignation of due financial value to social wealth and accumulated knowledge ensures that there is a mechanism where money is returned to the society and not just the mill owner. With payment of the ‘social dividend’, government and ultimately people can then buy the goods. The owner should still be able to get wealthy, but the system is still able to work because the money can go around. But it also allows linking the payments from a business to the social sustainability of its employment practices. If a machine exists that can automate a job, it has only done so by the accumulated works of the society, so society should have some say in the use of that machine and a share of the rewards coming from it.

So we need to design the system, the rules and conditions, so that people are aware when they set up a business of the costs they will incur, under what conditions. and that if they change their employment via automation, then the payments for the assumed knowledge in the machines and systems will compensate for the social damage that is done by the redundancy if no replacement job exists. The design will be difficult, but at least there is a potential basis for the rules and equations.While, we’re looking at automation, we can use the same logic to address the other ethical issues surrounding business, such as corruption and exploitation, and factor those into our rules and penalties too.

There remains the question of distribution of the wealth from this social dividend. It could be divided equally of course, but some political parties would have their priority lists. I make no comment on what is right or wrong here.

Summarising, there are many problems holding business and society back today. Addressing them will make us all better off. Some of them can be addressed by a similar mechanism to that which I recommend for balancing automation against social interests. Automation is good, wealth is good, getting rich is good. I am not suggesting for a second that we should replace capitalism. I am just suggesting that it is now in need of a system update, some maintenance work. When we’ve done all that, we will have a capitalist system that rewards effort and wealth provision just as today, but also factors in the wider interests - and investment – of the whole community. We’ll all benefit, and it will be sustainable.

We need to rethink capitalism

Sometimes major trends can conceal less conspicuous ones, but sometimes these less conspicuous trends can build over time into enormous effects. I think that is the case now with automation versus economic turbulence. Global financial turmoil and re-levelling due to development are largely concealing another major trend towards automation. If we look at the consequences of developing technology, we can see an increasingly automated world as we head towards the far future. Most mechanical or mental jobs can be automated eventually, leaving those that rely on human emotional and interpersonal skills, but even these could eventually be largely automated. That would obviously have a huge effect on the nature of our economies.

Sometimes taking an extreme example is the best way to illustrate a point. In an ultra-automated pure capitalist world, a single person (or indeed even an AI) could set up a company and employ only AI or robotic staff and keep all the proceeds. Wealth would concentrate more and more with the people starting with it. There may not be any other employment, given that almost anything could be automated, so no-one else except other company owners would have any income source. If no-one else could afford to buy the products, their companies would die, and the economy couldn’t survive. This simplistic example nevertheless illustrates that pure capitalism isn’t sustainable in a truly high technology world. There would need to be some tweaking to distribute wealth effectively and make money go round a bit. Much more than current welfare state takes care of.

Some argue that we are already well on the way. Web developments that highly automate retailing have displaced many jobs and the same is true across many industries. There is no certainty that new technologies will create enough new jobs to replace the ones they displace.

We know from abundant evidence that communism doesn’t work. If capitalism won’t work much longer either, then we have some thinking to do. I believe that the free market is often the best way to accomplish things, but it doesn’t always deliver, and perhaps it can’t this time, and perhaps we shouldn’t just wait until entire industries have been eradicated before we start to ask which direction it should go.

So here is the key issue: Apart from short-term IP such as patents and copyright, the whole of humanity collectively owns the vast intellectual wealth accumulated via the efforts of thousands of generations.Yet traditionally, when a company is set up, no payment is made for the use of this intellectual property; it is assumed to be free. The effort and creativity of the founders, and the finance they provide, are assumed to be the full value, so they get control of the wealth generated (apart from taxes). 

Automated companies make use of this vast accumulated intellectual wealth when they deploy their automated systems. Why should ownership of a relatively small amount of capital and effort give the right to harness huge amounts of publicly owned intellectual wealth without any payment to the other owners, the rest of the people? Why should the rest of humanity not share in the use of their intellectual property to generate reward? I think this is where the rethinking should be focused. I see nothing wrong with people benefiting from their efforts, making profit, owning stuff, controlling it. But it surely is right that they should make proper payment to everyone else or jointly share profits according to the value of the shared intellectual property they use. With properly shared wealth generation, everyone would have income, and the system might work fine.

There are many ways this could be organised, and I haven’t designed anything worth writing about yet. Raising the issue is enough for this blog.