Recently in Economics Category

I find that the Japanese, myself included, use the phrase, "Japan is the world's second largest GDP" as some sort of mantra to try to keep Japan relevant in a world that is exceedingly uninterested in Japan. I was talking to Oki Matsumoto, a good friend and the CEO of Monex about this. He told me about a talk he gave at Keio University about the increasing irrelevance of Japan and showed me the following slides which I post with permission.

This first slide is the percentage of the world GDP of various countries in 2004 and projected in 2050. On the far left is the US at 38.3% in 2004 and a diminished but significant 20.3% in 2050. Japan however goes from 15.4% in 2004 to 4% in 2050. Still 2X that of Italy's projection, but not the mammoth we seem to think will will continue to be. The first yellow block is China and the second one is India. Clearly they are the big growth markets according to the predictions.

You may say, well that's 2050. That's a long time from now.

The second image shows Japanese GDP plotted from 1980 to 2006. It shows our once 18% GDP down to a a modest 9.1% in 2006. Furthermore, the text on the right explains that we've gone from the world's highest GDP per capita to the world's 18th.

It's really no wonder we're having a hard time getting attention in Japan. With an aging population and a less-than-competitive economy, there are ways to manage, but you don't get there by denying the facts and continuing to beat you chest IMHO.

I'm reading The Art of Happiness by the Dalai Lama and Howard C. Cutler. In it, they suggest that we should focus on pursuing happiness as our goal in life and the we should be careful to make a distinction between happiness and pleasure. Doing crack, drinking alcohol and even enjoying nice weather are mostly pleasures and not real happiness.

One of the core elements of happiness, according to the Dalai Lama, is compassion. Cutler describes how many psychologists will argue that man is inherently greedy and that the first thing that babies try to do is look for a nipple to suck milk - an inherently greedy desire. However, Cutler argues that babies also have a basic instinct to connect with people and illicit a smile or compassion. Babies will stare at you and smile and this makes you feel good and care about the baby. This basic social behavior is an important instinct for babies in addition to the sucking for milk. The argument is that compassion is also a basic human behavior and not something that you have to learn after you are older.

The Dalai Lama describes ways of increasing compassion. One exercise he suggests is to meditate or think deeply about someone or something (like an animal) and think of that person or animal suffering. You could imagine a lamb in fear before it is about to be slaughtered or a friend in some deep pain. As you imagine this, a feeling of compassion emerges. The Dalai Lama explains that one should be able to feel compassionate towards everyone and everything.

In general, I'm a fairly compassionate person, but I do have people and things that annoy me. Recently I've started to practice meditating on those things that annoy me and building compassion and understanding. I still find it difficult at times, but as I do it more and more, I'm finding that I'm becoming happier and happier.

We then realize that we need to develop patience to build compassion. Our patience grows by being challenged by annoying or hurtful people and events. It is these people and events that ultimately are our teachers. We should learn to cherish and be thankful for these annoying things, because without them we would not grow and become even happier. (So thank you all of you annoying people! ha!)

Compassion vs greed is something that we've been talking a lot about in the context of amateur vs professional. I think that compassion and the happiness one gains from giving and sharing is one of the fundamental driving forces of the sharing economy just as greed and the "economic man" are fundamental elements of capitalism and neo-classical economics. I think that in order to really understand how the sharing economy works, we need to understand how happiness works and what makes people choose compassion over greed.

We often make decisions which involved trying to decide which decision will make us happier. We often mistake pleasure for happiness and make the choice that may be more pleasurable instead of the choice that would provide more long-term happiness. The Dalai Lama says that just framing questions to yourself in terms of what will give you more happiness and making a distinction between happiness and pleasure will help us make the right decisions.

It often takes self-control or will to choose happiness over pleasure. As I become more conscious of my happiness, I realize that awareness of this distinction and awareness of your happiness helps to reinforce and provide feedback for your decisions. This feedback makes it easier and easier to make the "right" choice.

Update: Added "patience" in paragraph about teachers.

Just when I thought I had come home, I'm off on a longish trip again.

I'll be going to Switzerland, Germany, Croatia, Macedonia, US and Puerto Rico. Haven't been to Europe in a few month so looking forward to it, but not looking forward to being away from home for so long again.

I just offset 300,000 miles of flying with 60 tons of wind energy carbon credits at NativeEnergy. Should last me for a bit.

See you on the other side.

Yesterday, we started planning our veggie garden and started a compost bin. I'm trying to figure out what percentage of my total food intake I can grow at home. We have a relatively large yard by Japanese standards so most of this will be a matter of personal energy. I'm going to start small this year but try to increase my nutritional independence from commercial networks every year.

My goal is to be able to cover nearly all of our fertilizer needs through the composting of all of our biodegradable garbage this year.

Thinking through the various scenarios, I realized that I could significantly reduce inputs and outputs from our house by going this route. When I imagine walking over to the garden every morning, picking my veggies, then chucking the waste into the compost bin, I get a happy feeling inside. I realize this is pretty simple and not so significant, but "just add water and sunlight" is very appealing.

I think that I can also make a significant impact on my energy inputs through photovoltaics and maybe some day get off of the power grid. This requires a larger financial investment but is an area that I've already done a bit of work in this area from my time at ECD.

In my lab/office/Tokyo pad we just finished setting up (thanks to the folks at WIDE) a dark fiber connection to the WIDE box at the Japanese Internet exchange. It is currently a 1G connection. WIDE is a research project and I'm only paying for the dark fiber. WIDE is routing for me. I am not going through a single licensed telecom provider for my Internet connectivity. Consequently, going from 1G to 10G is just a matter of buying more hardware and has no impact on the running cost. More bandwidth is just about more hardware. The way it SHOULD be.

It's exciting to think about making my footprint smaller and smaller in nutrition and energy and thinking about nutrition, energy and bandwidth more and more as assets that I operate rather than services from big companies.

I was going to Twitter this as I was sitting here drinking my morning tea, but it turned into a blog post. Thanks Twitter. ;-)

Phillip Torrone blogs about the future of credit cards on the MAKE blog featuring yours truly on the World of Warcraft card. ;-) He writes about the interaction of credit cards, real money and virtual game money.

By Thomas Crampton

Add international money transfers to my list of activities that are now easier
online than in the "real" world.

I had always found bank transfers a pain because they generally required a
visit to the bank with stacks of forms to fill in. If lucky, my money disappeared
for up to eight working days before arriving in the destination bank at a horrible exchange rate.

Recently I wrote about my experiences using an online foreign currency exchange service that was easier, cheaper and faster than the bank.

Since it is easy to transfer small amounts, I now find the service a lifesaver.

What other new Web-based services could be useful for people who live abroad?

Note: I may cross-post comments on the IHT blog and they may be reproduced in the paper for publication.

By Thomas Crampton

Extracts from my article on how the top six Paris hotels were caught fixing prices.

Fines ranged from 258,000 euros for the Hotel de Crillon to 55,000 euros for the Hotel Meurice. The Hôtel George V was fined 115,000; the Hôtel Plaza Athénée, E106,000; the Hôtel Ritz, E104,000; and Le Bristol, E81,000.

Email featured prominently in the government's case:

"I have the pleasure here of sending you our results and await yours," a sales coordinator at the George V, identified only as Madame X, said in an e-mail dated Feb. 2, 2001, sent to counterparts at the Hôtel Ritz, the Hôtel Plaza Athénée, the Hôtel Meurice, the Hôtel de Crillon and Le Bristol.

The e-mail included a chart showing levels of occupancy, average room prices and revenue information for the previous December.

They were not very happy to have us reporting on this story.

In the gold-festooned lobby of the Hôtel de Crillon, housed in a building constructed for Louis XV on the Place de la Concorde in the middle of Paris, the communications director declined to make any comment on the fines and insisted that a reporter attempting to speak with guests leave the premises immediately.

Some were not surprised by the price fixing.

A frequent guest at the Hôtel Meurice, an opulent hotel that is owned by the Brunei Investment Agency, said he was not surprised by the collusion. "In this level of hotel you can always negotiate the level of prices anyways," said Luc Janssen, a Belgian who stays at the hotel often.

In what other sectors is price fixing likely or highly suspected?

By Thomas Crampton

A 30-minute business idea in globalizing the many eBay sites around the world.

While it may not work for my bathroom sink on sale now in Paris, if you found items that were cheaper in one market than another and the shipping costs were low, you could safely bid in one country's ebay to sell in another.

This is something that you could automate for certain objects.

The idea was suggested by Mahesh Murthy at the SIME conference in Stockholm last week and I cannot see anything against it.

The only hinderance is if eBay started offering such a service.

Posted by thomas crampton

After spending several days in the Paris suburbs and filing stories non-stop all day today, a few things struck me.

I have written about the first incident that sparked the riots and today's latest news (more violence already starting tonight and plans by French government to use curfew.)

The underlying feeling I got from the young people in Clichy-sous-Bois - where the troubles began - is total despair with no way out.

Seems there must be CK Prahalad opportunities for these young people to make a fortune - or at least a living - if they are given half a chance.

What ideas for businesses or projects that can bring hope to despairing young people in a high rise ghetto?

Are there successful models of what can be done?

By thomas crampton

Here's a home video clip a friend sent that claims to show Paris police shooting in the suburbs. Fairly strong stuff.

Disclaimer: I do not know anything further about the site or the clip.

Posted by thomas crampton

Defining the poor is common (The World Bank's one dollar per day level, for example)

But who are the rich?

If you can read this posting, you are likely rich.

Anyone with a university education and an income at or above the lower-middle class level for an OECD country is rich, I would argue. Being rich is more about having time and freedom to make choices about your life than bagfulls of money.

Joi's latest posting may suggest a way to measure wealth through a Technorati rating!

What is the best metric to define someone as rich?

Posted by thomas crampton

My minor hand operation this week highlighted to me how journalism/blogging are literally manual labor.

Also, my ability to tell many people about this injury reminds me of how repetitive strain injury/carpal tunnel syndrome only became something of broad public concern when the chattering classes (ie: white collar workers, including journalists) were hit due to their typing on computer keyboards.

Throughout the industrial revolution, however, the same problem had afflicted manual laborers who could not bring their problem to a wider audience. (Lately there seem to be fewer complaints about it here at the International Herald Tribune, perhaps because there is a greater understanding of ergonomics.)

Must be many examples of diseases that only became well known when they also became diseases of the rich. Any interesting ones?

Posted by Thomas Crampton

Got an early exclusive look at a fascinating survey by ACNielsen about online shopping worldwide.

The study of 21,000 web users in 38 countries, to be made public later today, found that online shopping habits vary radically by country.

The US is way behind Europe in the amount of online shopping (ranking 11 worldwide), perhaps because mall shopping is so much easier than shopping in a European city. This encourages Europeans to shop online.

What people purchase online is very different country-by-country. In South Korea one third of online shoppers purchase nutritional/cosmetic goods, while the global average is just 10 percent.

Payment for online shopping - not surprisingly - are dominated by credit card (visa) and bank transfer globally.

BUT cash on delivery is the second most popular way to pay for purchases in Europe!

I was surprised by Europe's cash on delivery preference, but affirmed it last night at a dinner in Paris. French people at the supper said they do not trust the web so prefer to see the goods before paying. They also said their lack of trust makes them very reluctant to use eBay!

Similar to cellphones, the technology of online shopping may be uniform, but the way in which people interact with it varies by country.

Anyone come across other differences of usage of an identical platforms?

Posted by Thomas Crampton

Inevitable with the narrow-casting of magazines that Germany now has a magazine about divorce.

Reminds me of the launch of a magazine in the US for gay parents. (Apologies for this being a Times Select link.)

These magazines, Rosenkrieg along with And Baby magazine, show how publishers often miss obvious socioeconomic groups due to prejudices or oversight.

Both gay parents and divorcing couples are willing to pay large sums of money for information relating to their situation and there are many advertisers keen to hit those demographics. For years, however, no magazines addressed those issues.

Be interesting to compare the categories of popular Blogsites with the available publications to see where the low barriers to entry of Blogs has discovered a demographic ripe for a glossy publication.

This once again shows the strength of interacting with consumers (readers) during conception of a project.

We just launched the Technorati Live 8 site.

Technorati Live 8

Technorati has teamed up with Live 8 to bring you the latest conversations about the campaign to Make Poverty History. Read first hand accounts of the concerts and events, and get all the news and opinion from the blogosphere.

We've also put together some resources to help you find your way around Live 8 and the blog world:

What is Live 8? Which organisations are behind Live 8?

Are you new to blogging? Find out what it's all about.

Get a Live 8 badge for your blog.

Join in the conversation and find out how to make your posts show up on Technorati.

Do more than just blog - contact the G8 leaders.

The posts listed on the Technorati Live 8 site have been written by bloggers worldwide and appear in real time from Technorati's index of 1.1 million blogs. Find out more about Technorati.

Joe Trippi called us about two weeks ago with this idea. Thanks to a guest appearance of Suw Charman as the producer of the site and extra hard work by the Technorati team, we were able to get this site out in time.

This is such a good opportunity for nations like the United States and Japan to helped their damaged images and also show their solidarity to a cause that they shouldn't have to think twice about. I'm amazed at how poor the response of some of the developed nations has been to this call. Hopefully this concert and the voice of the blogs will help get their attention.

Technorati Tags: live8

Jim Downing @ Smart Mobs

like a monkey driving a car

This article in Businessweek says that "the study of neuroeconomics may topple the notion of rational decision-making. According to the new science of neuroeconomics, the explanation might lie inside the brains of the negotiators. Not in the prefrontal cortex, where people rationally weigh pros and cons, but deep inside, where powerful emotions arise. Brain scans show that when people feel they're being treated unfairly, a small area called the anterior insula lights up, engendering the same disgust that people get from, say, smelling a skunk. That overwhelms the deliberations of the prefrontal cortex. With primitive brain functions so powerful, it's no wonder that economic transactions often go awry. "In some ways, modern economic life for humans is like a monkey driving a car," says Colin F. Camerer, an economist at California Institute of Technology".

Why Logic Often Takes A Backseat

I generally don't like the idea of trying to turn everything into economics. It often reminds me of trying to make music with math. This idea that we act irrationally is obvious to most people and if neurologists can help explain it to the economists, good. But I don't think it's just our economy that's being run by monkeys.

Adina has a nice essay about why participants in what Benkler calls commons-based peer production are not necessarily communists. If you don't have time to read Benkler's 80 page Coase's Peguin paper, I suggest you read Adina's essay which picks up some important points that you don't get in the abstract.

Iowa Electronic Markets

The Iowa Electronic Markets are real-money futures markets in which contract payoffs depend on economic and political events such as elections. These markets are operated by faculty at the University of Iowa Tippie College of Business as part of our research and teaching mission.

Jimbo told me about IEM when I met him in Linz. A paper (PDF) describes the past elections and how the markets have been amazingly good at predicting their outcomes. IEM has a current market quote which is updated every 15 minutes. As of this posting, it is 40.6%/59.4% Kerry/Bush.

On IRC, crw, just pointed out a blog post on The SaltwaterPizza that used Google to see how many people said they were voting for one candidate or the other. The sample size was 104,789. This gave 46.8%/53.2% Kerry/Bush.

The results are disappointing for those of us who are hoping Kerry will win, but these alternatives to traditional polls are very interesting none the less.

Ashraf Ghani is Afghanistan's finance minister. He was interviewed by David Kirkpatrick

Here are my notes.

Bjorn Lomborg

What if hospitals only dealt with patients who made the most fuss. That's what it seems like we do with global resource allocation for global problems. Why don't we prioritize? What if we had an extra$ 50Bn to allocate. What would you spend it on?

HIV aids?
Schools?
Climate age?
Malnutrition?

We need rational basis on our spending.

The Copenhagen Consensus was a group of leading economists who got together to try to prioritize based on best information available.

What we would do:

1- Prevent HIV - $27Bn will save 29M lives
2- Micronutrients - $13Bn will help more than 1/2 the world
3- Free Trade - would create more than $2000Bn / yr
4- Treat Malaria - $12Bn could come back 10X or more

What we wouldn't do?

Kyoto (global warming) is not a good use of money

Focus on high benefit projects.

We now have the list. We have to get the rest of the world on board.

Bill Joy

I think there will be a crisis or catastrophic event that will take our attention away from terror or war and as a positive response may redefine our focus of the century.

A global pandemic/epidemic - the positive response: New found respect for natural systems and focus on health.

Environmental tip. A phase change with a irreversible climate change - the positive response: Understanding balance with natural systems.

Over self-consumption like the oil supply - the positive response: Might help wastefulness and make it a century of efficiency.

The Agency Costs of Overvalued Equity - Michael C. Jensen

Here are my notes. They are rough notes and may be a bit inaccurate or unclear.

Lago

Rational Ignorance

Academic life is ruining the internet for me. An example: Today I read Joi Ito’s wandering entry on money, economics, and physics, and the first thing I thought of doing was to post a bibliography of all of the reading that should have been done before that post was made. And then I realized that posting such a bibliography is the equivalent of shouting at the television. It doesn’t matter what I say about it. The TV (and the internet) can’t really hear me.

Lago reacts to an interesting point that I in fact pondered yesterday before posting my thoughts from my lunch with Seth. Is it better for me to post my superficial musings with Seth in the one hour that I had before I needed to move on to the next thing, or do I scribble them in my notebook and write a more rigorous treatment with references. I decided, as Cory often says, that my blog is my notebook and that even though many of my thoughts were half-baked, it was better to write early/write often than to back burner the thoughts and probably never get around to posting them.

If you read on in Lago's post, he does raise a very interesting way to look at the trade-offs of shallow vs rigorous. What is the cost of rigor and is it worth it?

I am not an academic. I am an extremely busy businessman who happens be lucky enough to meet quite a few smart people from a variety of fields. As one good friend has told me, my primary purpose is to connect people. It probably adds more value to society for me to spend one hour getting two people excited enough to talk to each other than to sit and ponder a notion by myself. My blog is not a rigorous treatment of the topics that I'm interested in, but rather a collection of links, questions, thoughts and points of view. A great variety of people read this blog and I'm sure that just about any professional thinker in on any topic I write about will find my treatment of the topic rather superficial. The question is to me is whether this is valuable or whether my lack of rigor could actually be a disservice to the discourse.

Getting back to my last post... I actually did think about spending the weekend dragging out my old notes from Hayek, Coase, Arrow, Chandler, Shannon, Mauss, Simon, etc. and digging into my memory and trying to tie all of this together. Instead, I posted a my rambling thoughts because I knew I'd never do it if I put it off. Also, I realize that I will never be able to compete directly with full-time academic and that it is not my position to answer these questions in a rigorous way. I suppose that if I can end up getting Seth, an economist and a rabbi to sit down and chat about world views over dinner at some point, I will have served my purpose.

I don't want to ignite a academic vs non-academic flame-war here. I'm just trying to point out, as Lago does, that we are all making decisions about how much to study in order for us to make the right decisions. I don't have the time or the ability to do "all of the reading that should have been done before that post was made." Having said that, I would encourage people to post "a bibliography of all of the reading" since I am interested and so are many other people.

John Brockman, literary agent extraordinaire and editor/publisher of Edge introduced me to Seth Lloyd via good old fashioned email. I had lunch with Seth today.

Seth is known for his seminal works in the area of quantum computing and is visiting Japan for a year. We talked a bit about Japan, but I jumped at the opportunity to talk to him about some of the loftier things that are puzzling me these days. My first love was physics, but I dropped out when college physics turned out to be more about math than the art of physics. I'm now a repressed physics lover who can't keep up with the math. Therefore, I always jump at the opportunity to have someone explain physics to me in an intuitive way.

Seth explained that historically, physicists have always talked a lot about energy and the conservation of energy. Energy changed form, but there was always the same amount. They later found that you would lose a bit of energy over time and they attributed this to entropy. Recently, people have realized that entropy is sort of randomized molecules and looks a lot like information. Seth explained that the whole universe could be viewed as a big huge computer and you could apply information theory on physics and vice versa.

At this point I tossed out some of the questions I've been asking all of the smart people I've been meeting these days. What is money? Is economics really the way we should be analyzing and managing the exchange of value in society? How are non-financial assets such as trust, beliefs and culture created and transmitted? Does more money beyond a certain point really make you happier and if not, what is happiness?

Seth talked about how money was similar to energy in that it was conserved, at least on paper. Seth pointed out that most things that make you happy require money and energy, but that money and energy in themselves do not usually make you happy. In a sense, they are a necessary part of the process, but not the end. You do get an endorphin rush from the process of scoring more points in a game, gambling, or making more money, but the happiness you get from chasing these obsessions is not the same happiness you get when you finish a great meal or finish a session of meditation.

Seth pointed out that if you are struggling to survive in a tough environment, eating fatty and sweet foods and conserving your energy are probably good things. When you have enough food, sitting around eating sweets on the couch suddenly becomes detrimental. Is there an equivalent to this with money? I believe that free markets and democracy are great things and are the foundation of civilization and progress. I believe that efficiency and greed play a big role in creating healthy economies. Having said that, I do not believe that just because we have free markets and democracies, that people will be happy or that we will have peace. My question is, at what point, if any, do you have too much money? At what point is greed pointless and destructive? Can countries and economies become addicted to economic growth or become financially obese?

Neoclassical economists tend to model human behavior with a simple formula where more money makes you happier and people will do everything they can to earn more. This is like saying that the more calories you take in the healthier you will be and that eating more makes the world a better place. It's obvious to most real people that we decide what to spend our time and money on based on a variety of psychological, cultural and societal influences. Very few of us only spend money to make more money. The question I posed to Seth was whether there were models from the study of energy and entropy or from quantum computing that could be applied to try to understand some of the issues at the edges of economics? Are there ways of measuring and analyzing non-financial, non-conservative value such as culture, love and trust? Were there non-economics models for modeling some of these things? Was there a way to determine whether certain types of pursuits of happiness tended to help the human condition more than others? Was there something in information theory that could help us understand the value of social networks or ties?

Seth said he would ponder some of this stuff and get back to me. I promised to try to render some of my thoughts into a more focused question or problem.

This morning, we had a breakfast between the Global Leaders for Tomorrow, Social Entrepreneurs and Religious Leaders. I got a great table with a broad range of people from developing nations, religious leaders, economists, and entrepreneurs.

We started out the discussion talking about the nature of money. We talked about how greed and the idea that more money means more happiness is compulsive behavior and the notion that more money makes you more happy may hold true in developing nations, but is not necessarily true in developed nations. We talked about how this notion of more money means more happiness may be contributing to some of the problems in society. One representative of a global financial organization talked about how similar to the "poverty line", maybe there should be a "greed line". An economist pointed out that there was a book written about economy as a religion where the author asserted that pollution should be moved to developing nations because poor people were worth less in a purely economic model. Obviously, this is not right, and we asked the religious leaders to address some of the issues such as caring, giving and happiness.

Religions are memories of history, rich with ritual and values. They need to create a double language, one for internal dialog and another to share ideas with others. One point I made was that many religions were designed for environments where people were still struggling to survive and the focus was on rituals and believes for such an environment. Many religions focused keeping people alive rather than providing them with a primary religious experience. For environments where the struggle to survive is not as big of an issue, it might be that religions need to help support people more with things such as their obsessions and ethics.

It was noted that people who live in developing nations still needed money and that it was important. However, it was pointed out that many of the economic values have a detrimental effect on developing nations such as promoting crime. It was also noted that many churches in developing nations focus on promotion economic values. (Join the church, get rich.) The notion of sharing and sacrifice which are very important values that religions promote are often subverted to raise money for the churches.

David Green of Project Impact in India talked about how he performs cataract surgery in India. He provides 1/3 of the procedures for free, 1/3 for a low cost and 1/3 for a high price. The rich pay the high price for first class service, but the basic operation is the same. He is able to subsidize the operation for the poor and still make money. He is so successful that instead of paying $300 for the lenses, he was able to create a manufacturing operation and lower the cost to $4 a lens and has become the second largest manufacturer in the world. He provided this as an example of a good economic model can provide a great deal of good.

I'm going to reply to some of the comments on the items, but I thought I'd post this thought I had this morning in the context of the discussion about dichotomies and money/privilege.

It is interesting to note that 90% of people interviewed in the US think that people around them respect entrepreneurs while only 10% of people interviewed felt the same way about entrepreneurs. The culture of the US was build during a primarily industrial revolution oriented social backdrop. Japan, however, built a great deal of its culture during the backdrop of an agrarian society.

The traditional caste system in Japan had the Emperor at the top, and the nobles next, then the warrior/samuri, then the clergy, then the artisans and farmers and below them came the merchants and tradesmen. Money was considered a zero-sum game, the people involved not being considered to be contributing a great deal of value to society. Farmers and artisans were clearly working and producers in the community. During the hundreds of years of peace in Japan, the nobility, the warrior class and the clergy played the role of the intellectual and the cultural class.

My mother, who was raised in a privileged family was not allowed to touch money until she was 18. She has a servant who took care of the payments. In Kyoto, I don't pay cash at many of the places I go, it is discreetly billed to me later. During the Edo period an interesting shift happened. The wars stopped and the warrior class had less to do. Culture blossomed as did trade. The merchant class gained power and helped drive the economy of Japan, but they were not rewarded with the same kind of cultural/social status that their American counterparts were. This stigma about being rich, making money and having financial power survives in Japan today and is in fact one of the big reasons that Japan continues to have structural problems and entrepreneurship is so weak.

The other notable point is that those who traditionally wielded power have lost their power. The nobles lost most of their money either during the Edo period or during the War. (Our family lost its property during the Meiji Restoration, lost its factories during the war, lost its money from giving all of the money to the war in the form of war bonds and gifts, lost its swords and family heirlooms to the US occupation forces, and finally lost just about everything under the current tax system that is basically designed to eliminate family wealth within a few generations. All that was left by the time I got there was our foolish pride.) The current ruling political party of Japan was funded by the Japanese gangster and the CIA in an effort to stomp out the left-wing and the ethics of those in power have become twisted caricatures of the original traditions.

One important Japanese businessman once told me. Power in Japan is not about having money yourself. It is about having the influence to move money.

Disclaimer: I am not supporting or condoning the Japanese here, but making a generalization and an observation about role of money in society which contrasts with what American's might believe.

Andy Oram just posted an interesting article on the O'Reilly Weblog.

Andy Oram

Can computers help reverse falling employment?
Information technologies are implicated in a worldwide and world-historic crisis: falling employment.
[...]
Each labor-saving device means the idling of thousands of people, wasting their years of experience, rigorous training, and practical insights.
[...]
Anyone who writes programs or plans system deployment should start thinking, "What can I do to bring average people back into the process of wealth creation?"

This has sparked an interesting discussion over on Slashdot.

My personal opinion is that short term quarter-by-quarter capitalism can't possibly think long term enough to deal with many of the larger social issues. I don't think it's just about creating jobs. I think issues such as the environment, poverty, privacy, even computer architectures defy short term profits/gains thinking sometimes. I think it's a good idea for computer professionals to be socially responsible and think long term whenever possible. (See CPSR and EFF).

I think the idea of creating jobs directly by writing software for small businesses is a bit complex. I think that "good jobs" come from innovation and new industries. Many old industries such as the restaurant business are rather zero-sum. I think that increasing the public domain and the commons (spectrum, computer software, creative content...) is the best way to allow people to innovate and be entrepreneurial without being shackled in the well-funded proprietary world. I think that focusing on creating and sharing intellectual wealth in the commons is the best way to create jobs.

M. S. Granovetter .The strength of weak ties : A network theory revisited. In Sociological Theory (1), 1983. is an important paper for understanding social software. Unfortunately, it's an academic paper and therefore NOT ONLINE. (I'll rant about that later). In the paper, Granovetter describes strong ties and weak ties. Strong ties are your family, friends and other people you have strong bonds to. Weak ties are relationships that transcend local relationship boundaries both socially and geographically. He writes about the importance of weak ties in the flow of information and does a study of job hunting and shows that jobs are more often found through weak ties than through strong ties. This obviously overlaps with the whole 6 degrees thing. I do believe there are some "nodes" but think that it is much more complex than a simple power law with a few number of local maximums.

After reading Shannon "Pet Rock Star" Campbell's piece on her quest for a job at a temp agency and the "Nickel and Dimed: On (Not) Getting By in America" page, I decided to look at all of "this stuff" from the perspective of jobs.

I was recently at an advisory board meeting for a trade school. We had just done a survey of employers asking for what they their primary criteria for choosing new employees was and it was overwhelmingly about execution and character and very little about skills. Skills, they said, could be taught later. I believe that "character" in the context of a job is your self-esteem and your passion for what you are doing.

What I would like to assert is that social software can help people with their self-esteem and can also help you find others who can find your assets and interests more valuable and place people in jobs where one can have "character". I wrote about this self-esteem thing earlier and in a trackback on that item, you can find a link to "Exhibit A". Boris writes first hand about the development of his self-esteem through blogs and IRC.

Shannon is a really interesting "case" for me. She is witty, has great character, is a brilliant musician, is a poster-child for the Creative Commons (I first heard of her when Larry Lessig was raving on about her over lunch), and she's worried about her interview at a temp agency in South Carolina. Something's wrong here. I know several other people on my IRC channel who are looking for jobs where they are surrounded geographically by people who don't understand or are unable to "leverage" the assets of that individual.

What I can see emerging is a way to amplify the strength of weak ties. (I knew this before, but it's becoming more crisp to me now.) IRC allows me to see the style and personality of many of the people online. Blogs help me see what their interests are and focus is. LinkedIn provides a professional context for referrals. I think that supporting the process of developing your assets and character and finding a job that best suits you will be one of the single most important benefits of social software. I know I've been ranting about Emergent Democracy and about level 2 and 3 in Maslow's hierarchy of Needs, but I just realized that social software may be most important in addressing level 1, finding the job that brings home the bacon. I know this is stupid of me and everyone is saying "doh" right now, but this, to me, is a big "ah ha".

I recently hired two people who were IRC regulars. I felt very comfortable after "getting to know them" over the last few months on IRC. Of course face to face meetings and interviews were essential, but the time spent with them on IRC really added to my ability to judge their character. I realize now that I am actively recruiting from my network of weak ties on the Net and also using the Net to meet interesting people to connect with others who might be good collaborators for those interesting people. The Net has always been a big part of my arsenal of networking tools, but I think it's reaching a whole new level.

Philip Greenspun blogs about the idea that stocks are going up in the US because more and more public domain is moving into the hands of large corporations. He gives the example of Disney being the beneficiary of the the copyright extension and the restriction on flying thru the airspace over Disneyland.

Thanks to rvr and bluehaze on #joiito.