Personal information has become a gateway drug for business

We treat commerce as some sort of separate entity today, but it is quite simply one element of the integrated society we have built. Money is nothing more than a promise, a contract between people. It only works if we all have trust in the system. Money was created as a way of allowing people to trade goods and services in a consistent way.

Money only works if we all accept it as having value, if we lose trust in money they we all need to start carrying around purses with precious metals and shiny objects, that we could use to negotiate for goods and services.

Decades ago we moved away from using coins and notes to using numbers, but initially we had to have a copy of the numbers on our person to share with those we were trading (credit cards, checks etc).

Now all we have to do is give someone our numbers and they can suck money from our bank accounts or credit cards for us to pay later, or implement more complex contracts such as loans or major purchases. Your employer pays you the same way, numbered accounts in numbers locations is all that is needed to move money around.

Numbers are easy. You go into a restaurant and they suck money out of your credit card account. You take a taxi and the same happens. It’s very easy to move money around.

But what happens when the system breaks? What happens when a criminal gets hold of your numbers. They go to CVS and swipe a copy of your credit card, who checks? What happens when the disillusioned minimum wage worker at a fast food restaurant scans your card when they take your order and sells your information. And what happens when the bank doesn’t have enough security around your personal and private numbers, and they are stolen? What happens when one of the largest consumer credit reporting agencies, which has been collecting vast amounts of your personal and private data, loses it?

Quite simply we rely on a small series of numbers as our personal identity. These numbers are published in public documents, as well as being collected by many different organizations. And we have almost no control over how they are published, stored or used.

Theft of these numbers, our identities can take place across political boundaries, meaning it’s next to impossible to bring criminals down.

When someone collects and stores our personal information, they are taking on a responsibility to each person whose information they collect. If by their actions or inactions, that information reaches a criminal who steals from us, they have an absolute responsibility for the loss.

If a person dies because a car manufacturer installed brakes incorrectly, they are responsible. If a drug company creates a treatment with an adverse effect that wasn’t fully understood, they are responsible. And if you suffer a loss because a bank, a financial institution or a vendor failed to protect their copy of your personal data they should be directly responsible for the loss, and for repairing any damage it causes.

The law must reflect the importance we all place on personal data. Today it does not. There are some “soft” laws that describe how data must be protected, but when a business fails to implement these rules effectively the legal response is almost imperceptible. Let people know you screwed up, and maybe offer them a service to monitor their finances for a period of time, and then it’s business as usual.

Most of the world uses a Chip and pin credit card system. Where you have to both have a physical credit card and know a secret pin number to complete an in-store transaction. And nearly every county in the world mandates that that transaction must be entirely performed by the purchaser. In the US, this is not the case, we have a chip in our credit cards, but no pin number. And virtually every restaurant in the US uses a system where the waiter takes your credit card off of you and takes it to a machine out of your sight. These weaknesses lead to thefts that the rest of the world have already solved.

The US also relies on a social security number as the sole piece of personal data needed to prove your identity. Nowhere else in the world is this considered an acceptable practice.

Why is the US so weak in identify protection? Because the banks and vendors are not held responsible for loss, it’s normally left up to the consumer. If the bank makes a loss, they hike up their rates to cover it, the consumer pays.

We need a solid legal framework to protect the whole system, and that probably means much more infrastructure than a piece of paper issued to every citizen and legal immigrant when they are kids or first get the right to work, with a single nine digit number on it.

It’s time for the law to catch up with the requirement. And this means strict regulations and draconian penalties for non-compliance.

Today we have the technology to encrypt data, capture and use biometrics, spot fraudulent access using advanced artificial intelligence, communicate directly to everyone, anywhere, anytime and validate any number of ways.

But do we have the collective will to change a system that’s working quite well for banks, who have become addicted to social security numbers, credit scores, and acceptable losses without penalty?

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Why is everyone so upset about Brexit?

Listening to the conversation on the radio, TV, newspapers etc. you would think that the UK decision to exit the European Union is a form of country wide suicide, which has the potential of becoming a global Armageddon. Frankly I don’t see it.

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There are arguments for both the UK staying in the EU and for leaving, the country voted, and the democratic decision is to leave. But it seems those who were hell bent on remaining are a little upset. I get it, but it really isn’t the end of anything.

Being in the EU had some value of course, and being out also has some value. There are different strategies that is all.

I’ve heard people opining that now they won’t be able to travel to Europe, and their kids dreams of living all over the world have been dashed. This is just not true. Before the UK joined the EU, large numbers of people chose to live in other countries including Europe and beyond, and nothing has changed. Let’s face it every English bank robber from the 1940’s, 50’s and 60’s moved to Spain, and there was a lot of work for the Police and courts to deal with finding and extraditing them. Now I believe the ex-crooks choice of destination is a large estate just outside of the M25. Thousands of Brits live in the United States of America, Canada, Australia, New Zealand, Asia and everywhere else. Thousands more live in France, Germany, Spain, Italy etc. and from my experience I can confirm that moving to a country in the EU is no less bureaucratic than moving to one outside the EU. I’ve done both and frankly it’s just down to the friendliness of the people in the town you move to, and many European destinations are known for making life hard for foreigners. Try moving to France and you will see what I mean, some towns are wonderful, some are not.

There is this fear that businesses will move their jobs to Europe, now that the UK is out of the EU. Again this is just not true. Businesses will place their jobs where the business environment is friendliest to them, with the most beneficial taxation and employment laws. Having hired people in Italy, Germany and France, my experience is that the climate is not business friendly and the UK already has a massive advantage in its employment laws, and this is likely to get even better now that the UK government can make decisions that are UK economy focused. It’s one thing for companies to say they will move to be in Europe, but another to actually do it. Today many US and European companies have moved their European HQ’s to Switzerland, now they may choose the UK. There are some great places to do business in Europe, places with superb work forces with highly technical skill sets and language skills, and the UK is one of them, and can compete quite nicely.

There is this fear that the UK will become a closed country with no immigration. ARE YOU KIDDING ME. The UK has the strongest history of immigration from its empire days, and the incredible people that moved to the UK from India, Pakistan, Africa and the Caribbean are a testament to the power of immigration. The question will just be (like it is for the USA, Australia, Canada, New Zealand, China, etc), what are you going to contribute to the UK? People in need have always been able to come to the UK, and that will clearly continue, and people who bring value to the UK have always been able to come to the UK and that will also clearly continue. The only change will be that the UK will set the rules. I remember taking the train from Paris to London and having to go through 2 immigration checks at the Paris end, firstly by the France immigration and then again by the British Immigration at a desk no more that 10 feet behind the French. Why, because the French were allowing (pushing?) immigrants who they didn’t want to keep in France to go to the UK. It was a French way of not following the immigration rules that were setup by the EU. The UK of course always followed those rules. Now the UK can set the rules, and being British I believe they will be fair. So I don’t expect there will be any problems with NHS doctors or nurses, as they will still be encouraged to come to the UK. And I expect that the Polish plumbers (who may well be the best in the world and clearly have an amazing work ethic) will not be pushed out of the UK. Conversely, if you happen to have a skip in your garden while you renovate your house, you may now find it fills up a bit quicker, as I expect there will be less people rummaging through it for metal (this will only make sense to a UK resident).

The fact is that about a quarter of a TRILLION dollars of gold is stored in vaults under London. And London is in the best position of any country to continue to be the conduit for money transactions between continents. Actually being outside of the EU may well provide the UK with an even bigger advantage in this regard if the UK government and its regulatory authorities are smart.

The UK has some of the best universities in the world, some of the most innovative engineers, and some of the best employment laws anywhere for industry and businesses to grow. Since the 1980’s though the UK has focused on moving from building things to selling things, and this has had a terrible effect on manufacturing and raw material production. It’s quite possible for a UK outside of the EU to turn this trend around, and make the UK the leader in new industries that are only just emerging now. What is needed are leaders who truly can inspire the population, and I believe they do exist and the climate is ready for them to take the lead.

The UK is well known as being a green and pleasant land, and that means it’s a wonderful environment for agriculture, animals, fishing etc. Again government policies designed to stimulate agriculture and focused on the UK’s specific interests would be wonderful to see.

Rather than being depressed about leaving the EU, the UK should see this as a chance to lead.

Being in the EU was hard, and being out of the EU will be hard, it’s not the EU, hard is just a fact of life. A choice has been made, and now it’s everyone’s job to make it work.

 

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Enhancing Shareholder Value a.k.a. killing business success

At some point in the 1980’s someone came up with the idea of shareholder value. The idea was that the ultimate success of a company was to maximize the value that the company delivered to shareholders. Seems like a pretty reasonable idea, until you start to see what people who use this term really mean.

What is often done in the name of “enhancing shareholder value” is totally the antipathy of the obvious definition of the idea.

Surely (you would imagine) that shareholders would want to see a company perform well over a long period of time. And you would imagine that performing well would be a simple concept, where the money a company spends on developing and selling its product would be less than the money it brings in from its customers. You would imagine that in the same way you balance your bank account every month a company would be measured as being successful if there was “profit” on the business they perform.

But you would not be correct!

The stock market and therefore the executives of large companies look for increasing returns not just profit. So if a company continually makes a 10% profit every year according to those who measure shareholder value that company is failing.

So the pressure is on to show increases in revenue, and decreases in costs, so that year on year, quarter on quarter the business “grows”, and so the company gets bigger and the shareholders are then told by the “experts” that the shareholder value is increasing.

This drives companies to off-shore their workforce, find lower cost suppliers, reduce their work force and consider unbelievably expensive mergers and acquisitions. In the very short term these things seem to drive down costs or increase revenue and so that’s a good thing. But they really don’t make a company healthier, they kill it.

I’ve seen company executive’s looks to buy a company at any cost, just to get a small increase in revenue this year. It doesn’t matter that the money spent can never be recovered, it’s about achieving a revenue target, not a margin target. It’s often inane.

A large number of acquisitions never make a profit, what they do in move huge sums of money and stock from a healthy company to the owners of a less healthy company. The two merged companies for a short time have increased revenue, but the cost and mess of merging the businesses often leads to reduced performance and so the growth slows down. Angry customers leave, and new customers question the value of entering this created confusion. So all too often the sum of the parts is less than the whole, and within a few years the revenue of the merged business looks like the revenue would have already been of the healthier if the two parts if they had not merged. To me that says that the billions spent on the merger were entirely wasted. At the same time all the changes demanded to streamline the two businesses cause the best and the brightest to leave and huge political infighting between executives takes place to grab the reduced number of top spots. Innovation slows and then the business is forced to go through more rounds of off-shoring and layoffs to reduce costs even further to have to pay for the debt created from the merger.

Of course there are winners from M&A, those who broker the deal, the CEO’s and CFO’s, the banks and the private equity firms all get lucrative multi-million dollar payoffs as part of their self-created wonderland.

And there are lots of losers, employees, customers, shareholders.

I’ve worked for a number of companies who have acquired large businesses over and over again, and I’ve seen the carnage it creates. Apart from the small number of execs and bankers who make the deal happen, I’m at a loss to see who gains, except maybe of course for India and China.

Maximizing shareholder value seems to be the modern euphemism for “Screw you I’m taking it all”.

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The Amazon Choice: CX vs. Talent-First Culture?

By now you’ve likely read the NY Times article on Amazon’s controversial internal culture, and perhaps even CEO Bezos’ response to the reports and allegations. There’s a lot to discuss there but what I see now buzzing in the heads of current and would-be CEOs is the new choice they have, namely that in today’s economy should the ultimate priority be the big CX: customer experience (even at the expense of your employees’ well being) vs. Talent (and the winning the talent war).

With a small presence in California now, my business and I have been exposed to a Silicon Valley talent war which has apparently been raging since ~2012, with Google’s “death benefits” dueling with dogs in the office, Bruce Willis’ chef, and “cash for babies” from Zynga and Facebook. In this “war,” leading and aspiring new economy companies are prioritizing the attraction, development and retention of top talent with a bevy of incentives, seemingly bizarre perks and rewards, and culture-focused initiatives to stand out from the competition. I’ve seen creative, new “we care about you and your family” perks seemingly every week. Based on the success of these companies, some of this has even seeped east to Silicon Alley where ca$h had previously been king.

The premise is simple: get the best, make them happy and keep them, and they’ll help you attract, delight and retain customers. Shiny happy (and healthy) people begat customer and company success and happiness – R.E.M. and Kate would approve. Win-win-win for all involved, right?

Well, now there is a seemingly very different (and successful), model on display from Jeff Bezos and Amazon. This very non-California model is one that prioritizes customer experience (CX) over everything else, including employee health and well-being (and employee retention). While many workers cringed at the NY Times’ latest and earlier allegations, I personally know CEOs and executives who now feel vindicated regarding criticism of their relatively scorched-earth HR policies and see Bezos as having the best new “model for success.”

My question to you and to my young, aspiring CxOs at NYU: If you had to pick one over the other, would it be CX or would it be talent as your ultimate #1?

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Airlines latest scam

Fuel prices went up so airline ticket prices went up.

Security issues became more common so airlines put up ticket prices.

Baggage is no longer part of your ticket price (for most flights) but an extra cost.

That seat you preferred, the airline noticed, and now charge you more for that specific seat.

You want to sit next to your spouse; well in that case it will cost you more.

If you want cold damp squashed sandwiches, that will cost you extra now.

You want to actually get on the plane, well do you want to get on before or after that family with six kids, oh before, that will cost you extra.

You want to get there without having to stop for six hours at another airport on the way, guess what they will cost you extra.

Recently there has been discussion to reduce the size of carry-on bags, allowing extra charges for that bag that you have used for years.

Some airlines have considered charging for an in-flight crap.

You can pay extra for a shorter check-in queue, access to a chair in a waiting room, curb side check-in, in-flight movies, tv and internet access.

Some airlines have tried charging for a pillow or a blanket.

And now there is a line item on airline tickets that just says “carrier imposed fees”. What are these you ask, well they are fees imposed by the carrier. If you call and ask they advise you that they don’t provide any more detail.

It seems that since fuel prices are falling, they can’t call these a fuel surcharge anymore, because there is no reason for a fuel surcharge, so now they are just undeclared “carrier imposed” surcharges.

Airlines are currently very profitable, but they are making these profits but fleecing their customers. With less choice, poorer services and using every chance to charge extra for anything that isn’t nailed down.

As airlines merge, and on most routes there is less competition, there needs to be an advocate for the consumer that looks at fair business practices. But right now this does not exist and the life of an air traveller is just getting worse and more expensive every month.

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Experiences with Carly Fiorina

Many years ago I worked at Hewlett Packard. I had the pleasures of meeting every single one of their CEO’s from Bill and Dave all the way through to
Carly Fiorina. They were all amazing individuals with very different personalities, skills and attitudes.

While I never had the chance to play chess with any of them; If I had I would have expected to lose quickly and dramatically against all of them… except Ms. Fiorina. I don’t think Chess is her game.

Let me explain.

When you play chess there are several things you need.
1. You need to understand the moves, how each piece moves and the objective of the game (to capture the other player’s king).

2. You need to be able to develop a strategy to allow you to capture your opponents king without them capturing your king.

3. You need to be able to think ahead, recognizing how the other player will act in response to your move and how to react to the moves they are making.

I suspect Ms. Fiorina would be excellent at steps 1 and 2, but have no idea how to do step 3.

My experience in watching her was that she was exceptional at building a strategy to achieve a goal, but absolutely terrible at making sure that all the people who worked for her followed her lead and did what was required to deliver the goal.

I saw her tell her management team exactly what she required from them. And then I saw her management team ignore her direction and do whatever they pleased. The results were messy to say the least.

What I didn’t see was her dealing with this direct disobedience. Either she wasn’t aware of it or she decided to ignore their lack of professional respect, either way the outcome was not of the highest quality of leadership.

I’ve read her book, and watched with interest her start into California politics. And by chance a few years ago I caught a speech she gave in Sydney while on a world tour with Bill Clinton. They just happened to have the event in the hotel I was staying in. And I’m hoping she has either learned some dramatic lessons over the past decade or quickly moves out of the Republican potentials for Presidential nomination.

I think that on a chess board she would have no idea how her opponent would react, and would be shocked that her pieces were quickly destroyed and her king captured. If she could purchase additional chess pieces and change the rules, different story, but that’s not how chess is played.

When she joined HP as CEO, I was excited, but within a year I had decided to leave the company I’d been at for a dozen years because what she was doing was just that awful. Many friends and people I respect stayed at HP, but to this day I cannot remember anyone saying a good word about her leadership.

Maybe my experiences with Carly are not the experiences of others, and maybe I just caught her on bad days. But it was a lot of really bad days.

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B2B Branding – It’s all about the customer!

So many companies spend an inordinate amount of time worrying about brand names. Often the reasons are childish. Here are some of the most common ones I’ve seen:

1. Our development team spent thousands of hours developing this code and they love to see it have a name so that they can be proud of it.

2. We use a variety of routes to market and we price the same stuff differently depending on how we sell it, so giving everything a different name allows us to keep control.

3. We acquired a company and that was they name they used, and we don’t want to change it, as the employees from that company tell us it will upset people.

4. We named those products after the children of the CEO, he has five children so we needed to use five brand names.

5. We hired a new Chief of Marketing, and they wanted to make their mark.

6. We were bored with our old brand and wanted to shake it up.

Of course these all sound like stupid reasons to create a brand name, but I can asure you these are all real examples.

For consumer products brand names do make sense, they allow a company to build attributes around a product, group of products or category and then provide a reason for consumers to be loyal to that association.

But the same does not hold true for business purchases. Business people tend to follow a very careful purchasing process that starts with the identification of a problem that needs to be solved and the formation of a team to consider the best ways of solving it. This team will include business, technical and financial people who will all consider the ways of solving it from their perspective. Some of this team will be more eloquent that others and will have a greater say in the final decision, but the process strips out emotion and relies of cold hard facts.

Business products are therefore most successful when they are easy to describe technically, financially and at a business level. The cool name plays very little part in it. In fact a cool name gets in the way. If the product is called the “iflapgrabber 2000” no one will know what it is on an invoice, while if it was called “a door handle” it will pass through the process of review much more easily.

If the response to a request for a quote lists “iflabgrabber 2000, iattach-o-top, iattach-o-bot, iportalblock, isecuritizer and iopener” as opposed
to “a door, hinges, a handle, a lock and a key” it’s easy to see which one will create confusion and which one is easy to say yes to.

Brands in business actually can create barriers, making it hard for people to choose a solution, hard to share it and hard to communicate.

Many companies who sell to businesses are learning this lesson and moving away from individual brand names towards simple descriptive names that make their products easier to understand and consume in business.

If you want to sell more to businesses, think like the people you are trying to sell too. Know what problem they want to solve, who they are and how they would like to solve it.

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Anarchy in the UK – Sainsbury’s style

When I was growing up there used to be this really annoying kid, (that I suspect was slightly mad), who used to have an opinion on absolutely everything, and he used to proceed to tell everyone how they should act in every situation. And every now and again I’d see this asshole limping or walking around with a black eye, because he would have told someone large and aggressive how they should do something and rather than receiving the usual response of “f&^k off” has received a wallop.

And there used to be this incredibly annoying old lady who was always on TV and in the papers telling everyone that they were wrong and that she was right. She even ended up having Pink Floyd write a song about her on the album pigs, with the memorable line “Whitehouse you fucked up old slag” in it, again a highly appropriate response.
And of course the US has their annoying bigoted assholes in the form of the religious right, epitomized by the incredible anti-social, racist sexist and generally nasty behavior of the Westborough Baptist Church.

Now all of these bigoted assholes have something in common, they truly believe that they know better than everyone else, and are proved to be soundly wrong by simple logic and ethical norms. But this doesn’t stop them being sociopathic pricks with a Napoleon complex.

But all of these loonies pale into insignificance when compared to the really incredible sociopathic pricks who now run Sainsbury’s, the supermarket chain in the UK.

Sainsbury’ are a pretty run-of-the-mill, supermarket in most respects. They sell the normal range of crap from poor quality frozen meat products with meat that probably shouldn’t be served to your cat, to vast quantities of sugary drinks and a massive volume of chocolate based products with enough sugar to kill the kidneys of everyone in the country, along with aisle after aisle of beer, wine, spirits, toxic cleaning products and virtually every other form of average supermarket fare.

And they also include a pharmacy in each store, and this is where the descendants of Mary Whitehouse clearly have found their power base.

All the staff in Sainsbury’s are dressed in high visibility jackets, because obviously this increases safety, while at the same time removing any semblance of human dignity, and that should have been a sign…

Some drugs (as in most pharmacies) are stocked behind the counter. And these either need a prescription or are limited to be sold by quantity and with advice on how they should be taken. That seems normal and somewhat expected.

But here’s is where things get very weird at Sainsbury’s.

Sainsbury’s now have a rule that says you can only by a single pack of aspirin. Why you ask? Asprin isn’t a controlled substance. Well Sainsbury’s have decided that for health and safety reasons they will not sell you more than one packet of aspirin at a time.

Now you can buy a packet of 128 tabs if you like, but you are not allowed to by 2 packets of 16.

Why? Well the only reason I can think of is that Sainsbury’s have hired a bunch of brainless sociopathic morons who spend their time telling others how to live their lives.

You can buy a dozen bottles of vodka, or a pallet load of beer, or enough chocolate and coke to lead to your presence on a reality TV show about the morbidly obese. You can literally buy a rope (to hang yourself with) at Sainsbury’s, and you can buy 128 Aspirins, 64 Paracetamol and 64 Iburprofen tablets at the same time.

Just so long as you don’t buy more than one packet of each type. Buying a massive volume in a single packet is okay, but buying a smaller volume across multiple packets is not okay.

I’m sure the Westborough Baptist Church, and every other opinionated idiot in the world, worships at the head office of Sainsbury’s sales training department.

When I was hit by this illogical, petty bureaucratic nonsense as I was being checked out by a pleasant enough (but clearly emotionally beaten by life) lady at the conveyor belt, I asked to speak to a manager. The manager was duly called and some sole-less but in all other respects normal looking bloke in an orange high visibility jacket told be “that it was more than his job was worth to sell me 2 x 16 Aspirins”.

And what could I say, yes he was right it was more than his job was worth. Working for Sainsbury’s is that worthless!

I shook his hand out of pity for his wasted, pointless existence, took my single packet of Aspirin and walked out into the bright evening, in the certain knowledge that if I never shop at a Sainsbury’s store ever again in my life, and never have to think about the petty minded, idiots who spend their time thinking up ways other people should behave I will be happier and freer.

A little update to this story – had a call from Sainsbury’s today, they are changing their policy, you can now get two packets of aspirin at a time. They really don’t get it…..

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Does the end of net neutrality mean the dream is dead?

Capitalism at its best offers a fantastic way for innovative ideas to get their moment in the sun.

The availability of capital to be risked has taken the world from kings and serfdom to a relatively amazing place. The modern industrial universe is on the internet.

So allowing the “owners” of the internet infrastructure to decide who gets to play and can charge different rates for different access is in effect removing the ability of disruptive technology to get a foot hold.

Why would a cable company want Netflix to thrive, it’s killing their old business model?

Why would a bank or insurance company want a financial service aggregator to thrive, they are forcing down prices.

Why would Google want a distributive search service to thrive, it’s could decimate their ad revenue?

Why would anyone who is in a position of power today want to allow new ideas that directly impact their current revenue stream to happen?

Well quite simply they would not.

Today a small number of very large business are intertwined and deliver the backbone and on and off-ramps to the internet. The law has until now required them to openly offer their services without consideration of the type of use their customers are putting the systems too. And this has allowed millions of new ideas to grow and be tried. Many have failed but some have become the best ideas of their time. Each one if them was disruptive, but with the end of net neutrality in the future many new ideas will not be able to compete, as the incumbents will have the ability to make disruption untenable though now legal aggressive pricing tactics.

Anyone who thinks this will not happen when net neutrality is removed just needs to look at every single other time when anti-competive ideas have been legal. Asking the wolf to guard the hen house never works. Business will always use every advantage it has, if it’s allowed it will be done. If its almost allowed it will be done. The only time a business acts ethically is when there is a material advantage in doing so. Many businesses talk about doing good, but that is simply because doing good things can be good for the balance sheet. Business is a matter of survival of the fittest, and when you allow the biggest to have a huge advantage they will always take it.

This is why rules that allow new ideas from new people to gain a foothold are so incredibly important. In the same way that the oil and car industries held back alternative fuels, electric cars and high speed rail, giving Comcast, Cisco, Google, AT&T and the rest of the current crop if internet giants a way to make new internet based ideas unprofitable can only be bad for capitalism. The rise and fall of the roman empire tells a deeply relevant story.

Let’s not allow the rise and fall of the internet to read the same way.

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The only way is to “keep it moving”

Economics always seems very complex, and there is a reason for that. Like all mathematically impossible situations the only way to explain them is to make them seem too complex to explain.

Through all of human history the idea of exchange goods for services has required all the systems we see today, including, laws, education systems, policing, security etc.

Until a few decades ago the idea was that you would exchange services for things of equal value, such as a lump of gold or silvers or a bushel of corn. And to save carrying huge bags of gold around, notes were passed between people saying that they promised to provide the actual gold in exchange for a service. These notes of promise were called money. And to be able to make money you used to have to have a store of precious metals equal to the amount of money you printed.

And then someone has the really smart idea of getting rid of the need to actually have the store of gold to be able to print money. This allowed as much money to be made as was needed, to grow the economy. The only issue is that if anyone ever wanted to swap his or her money for gold the whole system would collapse.

So to make sure a collapse doesn’t happen there was an implicit need to make sure all the money keeps moving around. It’s like musical chairs where there are less chairs than people, so as long as everyone is moving there is no issue, but if the music was ever to stop there wouldn’t be enough places for all the money to sit, then the value of money goes down (inflation).

To make sure the money keeps moving governments used to tax money that was sitting still. This has two important effects:
1. Taxing money means it keeps moving by itself (moving to the government who could spend it on services)
2. Made it preferential for people to keep their money moving to keep it out of the hands of the taxman.

Today we have a huge issue in that the amount of tax applied to money that is not doing anything is too low to encourage people to keep it moving. This means that too much money is just sitting in banks making money without doing anything, and this is really bad, as sitting money can be seen for what it is, and that is a promise that can never be kept.

It’s okay to be rich; actually it’s the best thing to be. But the value of money will only get less if it does nothing of real value. Capitalism is without a doubt the best system the human race has ever had to build the quality and length of human life. But capitalism demands that capital be used to build stuff, it fails if it sits around doing nothing.

Tax lazy money to keep the capitalist system healthy. Either it moves to the government to spend, keeping it moving. Or it forces people to use their money to build things. Either way is much better than notes of promises that cannot be kept sitting in places where its lack of true value can be seen.

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