Tag: innovation

The Doomsayers are Right (but so are the optimists)

One hundred years of horror

The first visitor looks grim. He tells you that “the war to end all wars” will soon begin. It will encompass the globe and destroy millions of lives. Cities will be decimated. The Great War will have a scope and level of brutality never before imagined in human history. It will be followed by economic collapse, political upheaval, and tremendous human suffering.

A decade later, the largest economies in the world will teeter, then collapse. Hyperinflation, panic, stock market crashes, breadlines, and financial ruin will be the norm. Hunger, poverty, and desperation like no modern society has ever experienced will span a decade. Before recovery, war will break out again — this one even more catastrophic than the last. Tens of millions will die.

A new form of evil will show its head. Totalitarian regimes aided by advanced weaponry and propaganda machines will lead the mass execution of millions. Weapons of mass destruction will be created, and two will be deployed, leveling cities in minutes with effects lasting years. Governments the world over will grow in power and brutality. Control over all facets of personal and economic life will expand.

The second great war will end and economic growth will resume, but not without constant smaller wars across the globe. Government will balloon out of all proportion. Surveillance will become ever present, even in the freest states. Acts of terrorism will be all over the news. Inflation, regulation, and taxation will increase once again to levels rivaling those that led to the great economic collapse. Countries will go bankrupt, drowning in debt. Police will turn on citizens regularly. Finally, the first traveler concludes, all signs in 2015 point to another painful reckoning.

But the other traveler seems unfazed by his companion’s tale. “Do you have anything to add?” you ask hesitantly.

One hundred years of human achievement

He smiles and begins to recount the next century with excitement. Automobiles are mass produced. Soon, they are everywhere. Temperature-controlled vehicles, homes, and workplaces pop up and spread. New forms of communication that instantly connect people across countries and then the world proliferate at incredible speed. People get healthier and wealthier the world over.

Air travel takes over where automobiles leave off. Humans safely traverse the world many thousands of feet in the air. Appliances do all the most tedious, painful, and time-consuming tasks — and not just in wealthy homes.

Hunger is no longer a problem in developed countries, and it is increasingly rare throughout the world. Common diseases like polio and malaria are all but eradicated with medical and pharmaceutical developments. Average lifespan dramatically increases; infant mortality plummets.

Information is freed in ways never before imaginable. Every book ever written can be transmitted anywhere in the world through crisscrossing networks of data transmission. Humans enter outer space. Satellites beam information, video, and voices back and forth around the globe. Rich and poor alike hold in their hands devices more powerful than anything kings or tycoons of ages past could have hoped for.

Money and memories alike can be sent anywhere, anytime, easily. Anyone can learn anything without access to prestigious centers of knowledge. Gatekeepers for information are no longer impediments to human cooperation and progress. Laboring in fields and factories is decreasingly necessary, as a host of new and intelligent machines take on these tasks.

Finally, the second traveler concludes, humans focus more than ever on creativity, freedom, and fulfillment.

Who’s correct?

Both travelers have described the same future for the same planet. Neither description is untrue, and both are important.

It’s easy to feel confused by conflicting theories about the future. If you have a firm grasp on economics and political philosophy and get stuck in the political news cycle, it’s depressing. You look at the state of our economy and government intervention and see nothing but storm clouds on the horizon. There’s no way the mountains of debt, the constant currency debasement, the damaging social programs and interventions, and the buildup of regulations and nanny-statism can result in anything but an ugly future.

But if you’re up on the start-up scene, you hear tech optimists describing a future of 3-D printing, cryptocurrency, robotics advancements, colonizing Mars, and mapping the human genome, and you can’t help but see the future burning bright.

Both groups are accurately describing the possible and probable future, and there are lessons to be drawn from each.

Will history repeat?

There are striking similarities between today’s developed democracies and ancient Rome. Bread and circuses and political decay may lead to a Roman-style collapse. Then again, we have something today that the citizens of the Roman-ruled world did not: digital technology.

We are able to coordinate and collaborate via dispersed networks in ways individuals in the past never could. The centrally planned state, with all its military and monetary might, is a lumbering beast compared to the nimble, adaptive entrepreneur and citizen today. Yes, the state may use technology to spy and oppress, but always through a top-down management structure. We are a headless conglomerate of individual nodes, networked across the globe, that cannot be destroyed.

Maybe the US dollar will, in fact, collapse. Maybe states will go bankrupt. Maybe government services will fall into disarray. And maybe in the middle of it all, individual humans and civil society won’t even notice.

Do you remember how the Cold War ended? Neither do I. It just kind of did. Do you remember the great collapse of government-monopolized phone lines? Neither do I. Cell phones just emerged and it stopped mattering. The post office is in perpetual deficit. So what? Email and FedEx and Amazon drones will continue to make it irrelevant.

You see, striking as the similarities to great collapses of the past may be, history is not an inevitable indicator of the future. Collapse of government systems in an increasingly complex, market-oriented world may not spell disaster for society at large. It may spell improvement.

Problems are real … real opportunities

Take your knowledge of unsustainable government and extrapolate it into the future. Yes, these bloated systems are unsustainable. Don’t turn a blind eye and pretend it doesn’t matter. Instead, let the insights of your inner doomsayer inform the actions of your inner optimist.

Every government problem is an entrepreneurial opportunity. Stifling licensing or work restrictions or immigration bans can be overcome with peer-to-peer technology, the sharing economy, virtual work software, and more. Bad monetary policy can be sidestepped with cryptocurrency. Defunct educational institutions bubbling over with debt and devalued credentials can be ignored while private alternatives emerge. Clumsy socialized medicine, transportation, and communication systems are all begging for innovation. Entire countries can be exited — physically or digitally.

The innovators must be realistic enough to see problems with the status quo and optimistic enough to innovate around them instead of merely shaking their fists.

Informed optimism as adventure

It’s good to wake up to the tragic missteps of government policy that surround us. But if lovers of liberty only ever point to the problems, predict trouble, and head for the hills, the future may indeed be lost. If, instead, we see those problems as opportunities and talk about the possibility in front of us, we stand a chance. Optimism is a powerfully attractive force that invites bright minds to join us. As F.A. Hayek once said,

We must make the building of a free society once more an intellectual adventure, a deed of courage.… Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.

We must recapture the intellectual and practical adventure of not just demonstrating the failures of a planned society, but building the glories of a free one. Only then will the world look at us and say, “Why are you so optimistic? What do you know? How can I be a part of it?”

One hundred years from now

There are two stories we can see unfolding in our future. One of increasing political foolishness leading to dystopia. One of emerging technology and innovation leading to utopia. Neither is untrue. Both are instructive.

What would you expect to hear from a traveler from 2115? Which story brings out your best self and inspires you to live free and help others do the same?

We need doomsayers: they help discover and highlight the greatest areas of opportunity for optimists and entrepreneurs to seize on. Listen to them, then act to overcome or sidestep or make irrelevant the problems they predict.

Bonus Episode: What is Voice & Exit? Max Borders

Max Borders joins me on this bonus episode to discuss the upcoming “Festival of the Future” called Voice & Exit. We talk about what V&E is, why it’s important to provide a safe space for radical ideas, and how to criticize by creating.

Max is the co-founder of Voice & Exit and the managing editor of The Freeman.  V&E is creating an exciting environment where no idea is too big or crazy and humans are free to be relentless optimists and builders for the future.  This year’s event is June 20-21 in Austin, TX.

This and all other episodes are available on SoundCloud, iTunes, and Stitcher.

A Book That Will Help You Understand Why Bitcoin is Amazing

My friend Steve Patterson – a brilliant and clear thinker, excellent writer, radical, tech enthusiast, and scholar – has written what I think is the best intro to bitcoin you can find.  It’s sufficiently basic, so even a tech noob like me can grasp it, but it doesn’t shy away from delving into the details of how the technology works.

downloadWhat’s the Big Deal About Bitcoin is the kind of book that, as you read it and immediately after, make you feel like you completely grasp the intricacies of bitcoin.  After a few days you can’t really explain or recall exactly what had you so excited.  That is a sign of a book that does a great job boiling down really complex ideas.  Big ideas take a while to understand, longer to be able to explain to others, and longest to become second-nature.  A book this small that can give you the complete intellectual understanding of the concept immediately is rare.  One encounter will convince you of the power of bitcoin.  Another will help you be able to explain it.  I’m reading it for a third time as I try to gain a level of understanding sufficient to convey it to others!

Prior to reading Steve’s book I was excited about bitcoin as currency from primarily a theoretical standpoint.  I know the dangers and limitations of government issued currency and the power and beauty of competitive, market-based currencies.  I was also very interested in bitcoin as method of payment as a practical solution to the archaic, costly, time-consuming methods currently available to individuals and businesses.  Transferring money is ridiculously cumbersome, and the fact that I’ve had to physically enter a bank branch twice in the last month – with several paper documents in hand – is absurd and annoying.  I knew bitcoin had potential as both a currency and method of payment, and I loved buying and transferring small amounts to play around with it.  What I did not understand was the real source of bitcoin’s value and power, the blockchain itself.

The blockchain is nothing more than a public ledger, but one that is completely decentralized and essentially eliminates fraud and most of the biggest problems that have long plagued both physical and digital financial transactions.  But the blockchain is more than just a financial innovation.  It’s a unique distributed software process that can be applied to anything where proof of ownership is incredibly valuable and forging such proof is low cost. (Copying paper money, or paper titles, for example).  It makes units of digital information, which by nature are infinitely copy-able, into unique, scarce pieces of data.  That single innovation has the power to transform the world, and the number of applications and technologies than can be built on top of it are endless.

Don’t get too bogged down trying to understand my explanation – I’m reading the book again to get better at explaining it, but I’m not there yet!  Pick up a copy and read it for yourself.  I’ll be surprised if you don’t walk away thinking bitcoin is the biggest innovation since the internet.

 

 

A World of Kramers

Nobody knew what Kramer actually did.  He was always doing something, but it remained a mystery how he obtained the resources to pull of his schemes, let alone pay for rent and food.

Kramer had a brand.  He was the crazy, out of the box guy who’d help you overcome a problem in an unconventional way.  He was a fringe entrepreneur and occasional activist.  He was relentless in pursuing whatever was his latest fancy.  He somehow made a living just being himself.  This is increasingly possibly, even for less quirky types.

I can think of at least a dozen people I know personally who somehow live a good life, despite the fact that I’m not really sure where their income originates.  It’s so easy now to sell a product, start a business, market and distribute ideas, and connect with partners, customers and investors.  It’s entirely possible to draw a circle around the stuff you care about, become the guy or gal who’s known for doing and talking about that stuff, and with enough hard work, get a living out of it.  It starts by giving your audience things they like.

If you’re known for providing something others value – even if it’s just good jokes on Facebook – you can generate a following.  You can offer to write a book, if your fans will pledge the money via Kickstarter.  You can ask for donations to keep producing whatever it is you produce.  You can sell your services to people all over the world with very low transaction cost.

Before long, apartment buildings could be full of people who don’t commute to an office every day, but instead spend their hours doing an assortment of bizarre and interesting projects.

Regulation Schmegulation

The number of hurdles to jump before you can legally create value is astounding.  There’s a law at every corner, working to impede the peaceful pursuit of profit.

Highly resourceful or talented people simply find ways around it.  They pivot, contort, or even work to alter the law to achieve their goal.  They devote entire divisions of their companies to overcoming these arbitrary obstacles.  But eventually, they can overcome them.  Some entrepreneurs have an amazingly high risk tolerance, and choose to ignore the laws entirely and provide their products illegally.  Others aren’t willing to risk prison but have the smarts, connections, or wealth to navigate and comply with the labyrinthine legal system.

So what’s the problem with state intervention in the market?  Visionaries can find a way to achieve their vision, laws or not.  The problem isn’t for them.  It’s for everyone else.

People with limited means and average ability suffer.  The barriers are often too much for them to overcome and too risky to ignore.  Their ideas languish.  Each new obstacle sucks away too many resources and leaves them unable to move forward.

Even those who with no particular entrepreneurial vision suffer.  The immense dead-weight loss of all the creators devoting resources to fighting, influencing, or complying with the regulatory state destroys value for all.  I’ve met business owners who devote ten or twenty percent of company resources to state created problems, meaning ten or twenty percent fewer resources are available to solve customer problems and make everyone better off.

People think economic regulations hamper big businesses and rich people.  The opposite is true.  If an idea is big enough and an entrepreneur driven and resourceful enough, it can come to fruition, despite the state.  But there’s no way to comprehend just how many smaller ventures never got started, or how much more wealth would be created for all if the ham-fist of regulation were entirely replaced by the invisible hand of the market.

The Art of Science

A fascinating article in the Wall Street Journal this week claimed that great scientists needn’t be good at math.  E.O. Wilson argued that big ideas, not number crunching, are the source of major breakthroughs.  In other words, it’s the art of science, not the science, that inspires the game-changers.

I think there’s something here that applies beyond the physical sciences.  The social sciences, in particular economics, have been in a race of sorts to see who could mathematize fastest.  While complex modelling and statistical analysis can illuminate, they cannot generate.  Data is meaningless without a theoretical lens through which to interpret it.  Path-breaking work comes not from those with the best “hard” skills, but from those with the best paradigmatic innovations.  The best work seems to come from seeing the world differently, constructing theories from the new lens, then running some numbers to see how they look from the new vantage point.

This bit about seeing the world anew has never been more profoundly communicated to me than in a book by the novelist Arthur Koestler, The Act of Creation.  Koestler sets out to reveal general rules of creation that apply across media – from the creation of a joke, to a work of art, to a technological invention.  It is a stunningly informative and ponderous work.

Koestler describes worldviews as matrices of thought; well-worn knowledge and assumptions that we carry along with us and use as shortcuts for understanding our world.  The eureka moment – the burst of laughter in a joke, the flow in the making of a sculpture, the sudden insight that unlocks the innovation – comes when two separate matrices intersect.  Koestler calls this intersection “bisociation”, and sees it as a kind of relieving of tension as two paradigms moving in what appears to be unrelated directions suddenly converge.

A poignant example in the book is Archimedes’ discovery of how to measure the purity of gold in a crown.  Archimedes knew the weight per volume of gold vs. other metals, but he could not melt the crown down to figure out its volume.  The thought matrix relating to weights, volumes and metals was completely unrelated to Archimedes afternoon bathing.  Yet as he slipped into the tub and noticed the water level rise, matrices collided and the bath solved the measurement problem of the crown.  It was not new, fancy calculations that resulted in this breakthrough on determining purity in oddly shaped gold items.  Instead, it was a bisociation of existing knowledge on water displacement with that on metallic weight.

Not only is creation about seeing familiar facts in new ways, it’s about allowing oneself the time and mental play to do so.  Some of the greatest eureka moments have come upon waking from a dream, going on a long walk while the mind wanders, or taking an explicit break from the problem at hand.  It is true, the great innovators have been versed in the science of their craft.  But what separates creators from specialists is not better technical expertise, but new eyes that generate new ideas.

Think big.  Explore.  Don’t let a lack of mastery keep you from probing the mysteries that fascinate you.

What the News Could Never Do

I love Facebook.  It’s a great way to connect to people I enjoy communicating with, see new ideas and articles, enjoy social diversions during the day (when you work from home it can replace the water cooler), and of course keep up on memes and videos of cats.  But there is another function of Facebook I didn’t foresee that has become increasingly valuable.  It does something news outlets can’t do – respond to exactly what I’m interested in at the moment and give me stories about it.

A few weeks back I realized it had been some time since I read or watched anything about new advances in science and technology.  I remembered the excitement I got as a kid looking at Popular Mechanics magazine, and wanted to get that thrill again by hearing the coolest stuff now within the realm of possibility.  I could have gone to any number of news outlets and browsed the technology section.  I could have gone to tech specific magazines or websites.  But these don’t always have articles on the most cutting edge stuff, and if I picked the wrong day, I might get a story about a new app instead.  It would require some browsing.  I could use Google, but Google is best when you know what you want to find, and I was looking for something I didn’t know existed.  In short, I needed to be inspired by the creative power of mankind, and I had no where to turn for a quick overview.

I posted an open-ended question on Facebook: What are the coolest things going on in science and technology? Within a few hours I had dozens of amazing articles, video clips, pictures and stories of everything from 3D burrito printers, to graphene smart phones, to particle accelerators, etc. ad nauseam.  Not only that, the responses were from people who knew something about me and could add some humor, flavor, or insight no other outlet could.  There was even some friendly competition over what was truly the best innovation going.  I’ve only read through half of the things posted thus far, but I still go back to the thread from time to time to be further amazed.

News outlets and periodicals can produce great stories.  The problem is, they have no way of knowing when I’m going to be in the mood for the latest trend in herb gardening or the latest adventure sport.  They publish such pieces, but most of the time my interests don’t intersect with their schedule.  Sure, they archive them, but there’s no good way for me to access the info unless I already know exactly what I want to read.  Enter Facebook.  Now it’s like every one of my digital acquaintances work for me.  I can outsource the article reading, categorizing and rating to a few thousand people I find interesting.  They enjoy the chance to share their interests, and I get the benefit of good stories without wading through all the other fluff.  I do the same for them.

I’ve got a lot more to say about Facebook, but I’ll save it for another post.  I am of the opinion that we haven’t fully internalized how radical is the shift in social order wrought by Facebook.  We have yet to appreciate the tremendous impact on every facet of social and commercial life.  The layers are many.

When to not Play the Game

Yesterday, I talked about seeing life as full of overlapping and complex games.  Doing what is socially acceptable in certain contexts is part of the game.  Playing it is fine, so long as it’s not confused with real life.  Getting bitter at is is not usually productive.  But when is opting out a good idea?  The short answer is, only you can decide for yourself.

Russ Roberts and Bryan Caplan have been discussing being “weird”, the pressure to conform, and the costs and benefits of non-conformity.  At Cafe Hayek, Roberts is more optimistic about the rewards gained by breaking free from status quo games.  At EconLog, Caplan seems to think it rarely pays off.  Both offer valuable considerations.  It is very costly to opt out of social games and prevailing narratives.  But the biggest rewards often come to those who don’t just play games and win, but who “change the game”, to use some business buzz-wordage.

Peter Thiel discusses the common traits of weirdos and great individuals in this fascinating lecture.  Thiel seems to think innovators share traits from both tails of the distribution curve of “normal” people.  He channels the ideas of philosopher René Girard, particularly his idea of Scapegoats.  Girard claims that societies tend to focus all of their violence or conflict (born of envy) on a few individuals, and destroy them as a form of sacrifice while alternately worshiping them.  This deification and sacrifice is seen in religious beliefs and rituals throughout history, as well as the treatment of celebrities by major media.

It seems realizing that a dominate game is immoral or inefficient and refusing to play has the potential to make you a criminal outcast or an innovative hero, possibly both.  There may be ways of opting out of social games in quiet fashion without incurring too much cost, but is there any way to change games, create new games, and achieve greatness while avoiding the wrath of the mob?  I’d like to think so, but I’m not sure.