When I lived in Minnesota, it was relatively uncommon to hear a foreign language being spoken. When you heard it, you noticed. Now I live in Florida, but not just anywhere; I live on 'Florida's Riviera'. It is officially, Sunny Isles Beach, but the true boundaries include Bal Harbor, Golden Beach and Aventura East of Biscayne Boulevard.
I was mentioning to a friend just the other day that I have stopped noticing that I am living in the middle of Babel. I speak Russian, some German and some Spanish. But that doesn't even begin to cover what we hear in this town. Portuguese, Hebrew, French, Bulgarian, Italian, Hungarian and many more languages are common enough to hear a couple of times per day.
Some of that is because we are a tourist destination. However, tourist season is over now and the proliferation of languages continues. These languages are coming from what I might call International itinerants. The Mansions at Acqualina just announced that they have sold two of their $16 million penthouses, one to a Russian family the other to a South American family, most likely either Argentinian or Brazilian. What is astonishing is that in neither case will these likely be their primary residence. These are second, third or even fourth residences.
A real estate agent I was speaking with told me that, with private jets and 'jet cards', families are going one place for a month, another place for two weeks, etc. The children have a nanny or tutor that travels with the family. They really are not permanent residents anywhere, but they, based upon arcane legal analyses, maintain the fiction of residence at one locale.
This is the future. In reality, Sunny Isles Beach is not part of America. It is a new kind of place. True, the legal jurisdiction is U.S., Florida, Miami-Dade, but the cultural, social and economic reality is that it is a EuroAmerican village. People are from Rio/Banf, Sunny Isles Beach or Moscow/Cern/Sunny Isles Beach or Toronto/Hamptons/Sunny Isles Beach.
The other day at the Starbucks, I heard two men talking. One said that they were next going to go to Rio. The other man asked what it was like there now. The first replied that it is very similar to Sunny Isles Beach in the winter. The second said that it sounded good and that he and his wife would meet them there. Where do they live? The short answer is, 'Where ever they want.'
While the great contemporary civilizations, EuroAmerica, China, India and Islam will likely persist for quite some time, we are seeing here the seeds of the destruction of the Nation State as the dominant expression of sovereignty. If you life in Omaha or Portland, you probably don't notice yet. However, it will be coming to your town, too.
An important aspect of this is how rapidly Sunny Isles Beach formed. In 1999 it was here as a EuroAmerican Village. by 2007 it existed in mature form. That is how quickly it can happen, no matter where you are.
Showing posts with label Futurics. Show all posts
Showing posts with label Futurics. Show all posts
Friday, May 25, 2012
Sunday, May 20, 2012
The Next President Will Be the Worst in a Century
It doesn't matter whether it is President Obama or Mitt Romney. It wouldn't have helped if it had been Ron Paul, Newt Gingrich, Rick Santorum, or anyone else that did run or might have run or could have run. The next four years will be the beginning of the dissolution of the Industrial Age civilization and no matter what the next President does, no matter if he has a friendly, unfriendly or split Congress, the next four years will not go well.
The problem is all that uninstalled productivity enhancing technology that I keep talking about. Over the next four years, a lot of it is going to get installed. It will stimulate the economy, create deflationary pressure and induce substantial technological unemployment. Because the initial result of productivity enhancing technology is to decrease jobs and increase profits, it will exacerbate the already significant tension between the classes. The '1%' will continue to get all the goodies.
The leadership, even with the cooperation of the Fed, will find itself in a no-win situation. If they do nothing, the rich get richer and the rest get unemployed. If they try to stimulate the economy they may decrease unemployment for a short time, but as soon as the enhanced profits seep into the Capex decision making process, unemployment and profits, will go up even faster than it was before the stimulus.
As I have discussed before, automation is deflationary. The Fed needs to do quantitative easing to counteract it. It leads to lower deficits, since the Treasury benefits from QE. However, it will appear that the Federal Debt will continue to rise, even though, after taking out 'interagency holdings' it may actually decrease. There will likely be increased rancor generated over this issue as well.
When I explain this to people they often ask, 'So what is the solution?' We are not accustomed to the answer,'There isn't one.' However, that is the answer this time. If we stimulate Information Age enterprise formation, we can ameliorate it. Essentially, people will quit their jobs before they are laid off. However, once the implementation of robotics and A.I. really get going, it is unrealistic to think that we can keep up in this manner. Also, there is an increasing lag between the time people are laid off from an Industrial Age job and the point at which they have been sufficiently trained to take on an Information Age career.
Of course, any amelioration through the stimulation of Information Age enterprise formation will first require that a proper diagnosis of the problem is made by our decision makers. It is very unlikely that even if the problem is properly diagnosed that it will, or even can, be communicated to the electorate in such a manner as to keep it from being tantamount to political suicide. It will seem that the government is creating rich people at the expense of the 'regular guy.'
The more likely outcome is that scapegoats will be found. They are likely to be 'the 1%', the Chinese, the Arabs, the Liberals or the Conservatives, Wall Street or anyone else that the media can fob off on a barely attentive electorate.
Of course, none of this will help the situation which will get worse and will get worse faster when and if they try to fix it. The next President will be perceived as incompetent, ineffectual and captive to whatever scapegoat that people are buying into.
Is there any way this doesn't happen? Only if we put such a strong penalty on productivity enhancing capital expenditures that corporations are only willing to make them outside the U.S. In that case, GDP will fall, the trade deficit will increase and unemployment, due to falling demand, will increase anyway. As I said, we can ameliorate the ill effects by enlightened monetary, fiscal, tax and economic policy, but we cannot make it go away.
This is just one of the four horsemen of the Industrial Age apocalypse. Continued cultural polarization and fragmentation along with the continued disintegration of Industrial Age corporatism and the infrastructures that served it will be emerging as problems that the next President can't handle. Over the next four years, the fourth horseman, the death of the Industrial Age metropolis, will emerge just enough so that the housing crisis will not improve. This will add to the sense that the next President is ineffectual.
Of course, Presidents are equally judged based upon their performance in International Affairs. While the 'war on terror' will continue to become less significant, China, while not exactly friendly, will not challenge the U.S. overtly and Russia and the U.S. will move toward more cordial relations. The Four Horsemen will make themselves felt on the global stage and thwart any efforts of the next President to craft foreign relations triumphs.
The Future 101, in its prediction of rising unemployment through 2016, is definitely forwarding a minority opinion. However, there are those who concur. Marshall Brain, for example, until recently, has been predicting more or less permanent 50% unemployment. Pundits here, here, and here generally concur. They do not predict it by 2016 and it will actually be into the next presidency when the peak of between 20% to 25% unemployment will become apparent and fears over 50% or higher unemployment will be quelled.
Still, during this four years, leaders and pundits sympathetic to the President's party will begin to properly diagnose the problem and begin to formulate an argument that the President is not at fault and the opposing party, through its truculence and unwillingness to compromise, are the real culprits. This rarely works and in the end, the President lives or dies upon the performance of the Economy. While the economy will grow nicely during the next presidency, like in the Carter years, it will not be perceived as positive to the majority of voters.
Is there a preferred outcome to the election? Historically, assuming a one year lag in cause and effect, the best results come from a Democratic President and a Republican Congress. That, however, is the result of the 1994 to 2000 Clinton years and may not have had anything to do with the political situation. To put it prosaically and succinctly, it is my conclusion that no matter what we do, we're screwed and the next President will almost surely get the blame.
The problem is all that uninstalled productivity enhancing technology that I keep talking about. Over the next four years, a lot of it is going to get installed. It will stimulate the economy, create deflationary pressure and induce substantial technological unemployment. Because the initial result of productivity enhancing technology is to decrease jobs and increase profits, it will exacerbate the already significant tension between the classes. The '1%' will continue to get all the goodies.
The leadership, even with the cooperation of the Fed, will find itself in a no-win situation. If they do nothing, the rich get richer and the rest get unemployed. If they try to stimulate the economy they may decrease unemployment for a short time, but as soon as the enhanced profits seep into the Capex decision making process, unemployment and profits, will go up even faster than it was before the stimulus.
As I have discussed before, automation is deflationary. The Fed needs to do quantitative easing to counteract it. It leads to lower deficits, since the Treasury benefits from QE. However, it will appear that the Federal Debt will continue to rise, even though, after taking out 'interagency holdings' it may actually decrease. There will likely be increased rancor generated over this issue as well.
When I explain this to people they often ask, 'So what is the solution?' We are not accustomed to the answer,'There isn't one.' However, that is the answer this time. If we stimulate Information Age enterprise formation, we can ameliorate it. Essentially, people will quit their jobs before they are laid off. However, once the implementation of robotics and A.I. really get going, it is unrealistic to think that we can keep up in this manner. Also, there is an increasing lag between the time people are laid off from an Industrial Age job and the point at which they have been sufficiently trained to take on an Information Age career.
Of course, any amelioration through the stimulation of Information Age enterprise formation will first require that a proper diagnosis of the problem is made by our decision makers. It is very unlikely that even if the problem is properly diagnosed that it will, or even can, be communicated to the electorate in such a manner as to keep it from being tantamount to political suicide. It will seem that the government is creating rich people at the expense of the 'regular guy.'
The more likely outcome is that scapegoats will be found. They are likely to be 'the 1%', the Chinese, the Arabs, the Liberals or the Conservatives, Wall Street or anyone else that the media can fob off on a barely attentive electorate.
Of course, none of this will help the situation which will get worse and will get worse faster when and if they try to fix it. The next President will be perceived as incompetent, ineffectual and captive to whatever scapegoat that people are buying into.
Is there any way this doesn't happen? Only if we put such a strong penalty on productivity enhancing capital expenditures that corporations are only willing to make them outside the U.S. In that case, GDP will fall, the trade deficit will increase and unemployment, due to falling demand, will increase anyway. As I said, we can ameliorate the ill effects by enlightened monetary, fiscal, tax and economic policy, but we cannot make it go away.
This is just one of the four horsemen of the Industrial Age apocalypse. Continued cultural polarization and fragmentation along with the continued disintegration of Industrial Age corporatism and the infrastructures that served it will be emerging as problems that the next President can't handle. Over the next four years, the fourth horseman, the death of the Industrial Age metropolis, will emerge just enough so that the housing crisis will not improve. This will add to the sense that the next President is ineffectual.
Of course, Presidents are equally judged based upon their performance in International Affairs. While the 'war on terror' will continue to become less significant, China, while not exactly friendly, will not challenge the U.S. overtly and Russia and the U.S. will move toward more cordial relations. The Four Horsemen will make themselves felt on the global stage and thwart any efforts of the next President to craft foreign relations triumphs.
The Future 101, in its prediction of rising unemployment through 2016, is definitely forwarding a minority opinion. However, there are those who concur. Marshall Brain, for example, until recently, has been predicting more or less permanent 50% unemployment. Pundits here, here, and here generally concur. They do not predict it by 2016 and it will actually be into the next presidency when the peak of between 20% to 25% unemployment will become apparent and fears over 50% or higher unemployment will be quelled.
Still, during this four years, leaders and pundits sympathetic to the President's party will begin to properly diagnose the problem and begin to formulate an argument that the President is not at fault and the opposing party, through its truculence and unwillingness to compromise, are the real culprits. This rarely works and in the end, the President lives or dies upon the performance of the Economy. While the economy will grow nicely during the next presidency, like in the Carter years, it will not be perceived as positive to the majority of voters.
Is there a preferred outcome to the election? Historically, assuming a one year lag in cause and effect, the best results come from a Democratic President and a Republican Congress. That, however, is the result of the 1994 to 2000 Clinton years and may not have had anything to do with the political situation. To put it prosaically and succinctly, it is my conclusion that no matter what we do, we're screwed and the next President will almost surely get the blame.
Wednesday, May 16, 2012
Eradicating Poverty
Wallace, my partner in Equitopia Productions is going to be a doctoral candidate this Autumn under Jeffrey Sachs at Columbia University. For those of you who do not know who Jeffrey Sachs is and are not inclined to google him, here is a link to his wikipedia entry. Dr. Sachs is big on eliminating poverty globally and Wallace is proposing in his thesis to use the World Bank to accomplish it.
The path to eradicating poverty is clear. It is a three step process, though they are best undertaken more or less coincidentally rather than sequentially. First, you need to educate your population so that they are qualified to discharge the duties of the jobs that will be internationally available. Second, you must create a rule of law that will maintain a peaceful society, but of equal and even greater importance, one in which contractual relationships can be enforced.
Lastly, and this is most important, a business and economic environment that is friendly to trade and to foreign investment must be created. Simply put, if you offer a well educated population in a commodious economic, social and political environment at a competitive price, the world economic engine will descend upon your country and lift it out of poverty.
The problem, of course, is that poverty is not only a scourge, it is also an effective political weapon. In 1933, Stalin essentially starved 7,000,000 million Ukrainians to death in an effort to impose the collectivist ideology. Profoundly impoverished populations become more pliable and this fact has been used to control or squelch movements many times since.
Additionally, many third world nations resist the formula for poverty eradication because they fear or resent a potential influx of foreign products, foreign memes and foreign ownership. Pride in one's people is normal and, one might argue, a sign of a healthy and dynamic society. Yet, in this case, pride is interfering with the well being of the people.
The World Bank can play a part in ameliorating the latter. The World Bank, specifically, has the stated goal of reducing poverty and, in its most ambitious form, to eradicate it by 2015. Wallace will be exploring in his doctoral sequence new and ostensibly more effective ways of tying loans to specific performance metrics. It should be rather simple, save for the points made above. In essence, some of the nations don't really want to cooperate and often perceive the efforts as a new form of debt enforced colonialism.
However, things change and in the next few decades things will change profoundly and rapidly. These changes can fundamentally modify the dynamics of the battle against global poverty and may do so with blinding speed.
In the Future 101 we explore many of the mechanisms of the Information Age that will lead to an Income Explosion. It will begin in the developed world but it will relatively quickly spread to virtually all populations. As mentioned above, there are very real concerns over the isolation from global economic, social, cultural and political arenas imposed by local governments.
My contention is that these confounding problems will likely show little resolution until a critical point is reached that will precipitate a rapid resolution. The reasons for this will revolve around the strong tendency of technological, economic, social and political change to take place in a profile described by some type of Sigmoid function. This is why at the future 101 we say, 'Don't think exponentially, think sigmoidally.'
As we explore briefly in 'A Superior Knowledge of Futurity' the best analogical model for how the present becomes the future is a system of endogenously related sigmoid equations. When the the degree of relationship is small the system resembles a number of sigmoid functions quite closely. As the degree of relationship increases the sigmoid functions begin to deform. At a certain point they will be prone to periods of extreme discontinuity. I reprint the example here.
The path to eradicating poverty is clear. It is a three step process, though they are best undertaken more or less coincidentally rather than sequentially. First, you need to educate your population so that they are qualified to discharge the duties of the jobs that will be internationally available. Second, you must create a rule of law that will maintain a peaceful society, but of equal and even greater importance, one in which contractual relationships can be enforced.
Lastly, and this is most important, a business and economic environment that is friendly to trade and to foreign investment must be created. Simply put, if you offer a well educated population in a commodious economic, social and political environment at a competitive price, the world economic engine will descend upon your country and lift it out of poverty.
The problem, of course, is that poverty is not only a scourge, it is also an effective political weapon. In 1933, Stalin essentially starved 7,000,000 million Ukrainians to death in an effort to impose the collectivist ideology. Profoundly impoverished populations become more pliable and this fact has been used to control or squelch movements many times since.
Additionally, many third world nations resist the formula for poverty eradication because they fear or resent a potential influx of foreign products, foreign memes and foreign ownership. Pride in one's people is normal and, one might argue, a sign of a healthy and dynamic society. Yet, in this case, pride is interfering with the well being of the people.
The World Bank can play a part in ameliorating the latter. The World Bank, specifically, has the stated goal of reducing poverty and, in its most ambitious form, to eradicate it by 2015. Wallace will be exploring in his doctoral sequence new and ostensibly more effective ways of tying loans to specific performance metrics. It should be rather simple, save for the points made above. In essence, some of the nations don't really want to cooperate and often perceive the efforts as a new form of debt enforced colonialism.
However, things change and in the next few decades things will change profoundly and rapidly. These changes can fundamentally modify the dynamics of the battle against global poverty and may do so with blinding speed.
In the Future 101 we explore many of the mechanisms of the Information Age that will lead to an Income Explosion. It will begin in the developed world but it will relatively quickly spread to virtually all populations. As mentioned above, there are very real concerns over the isolation from global economic, social, cultural and political arenas imposed by local governments.
My contention is that these confounding problems will likely show little resolution until a critical point is reached that will precipitate a rapid resolution. The reasons for this will revolve around the strong tendency of technological, economic, social and political change to take place in a profile described by some type of Sigmoid function. This is why at the future 101 we say, 'Don't think exponentially, think sigmoidally.'
As we explore briefly in 'A Superior Knowledge of Futurity' the best analogical model for how the present becomes the future is a system of endogenously related sigmoid equations. When the the degree of relationship is small the system resembles a number of sigmoid functions quite closely. As the degree of relationship increases the sigmoid functions begin to deform. At a certain point they will be prone to periods of extreme discontinuity. I reprint the example here.
There are two important lessons we can learn from this. The first is intuitive. That is simply the observation that isolation works. Some societies are isolationist with the intent to stop outside influences from destabilizing their society. While the effectiveness of this strategy may seem obvious, here we see a practical demonstration that it is something more than just memic pollution. The socio-economic system becomes structurally destabilized.
Second and more profound, we now see a clear indication of why history is more inclined to revolution than evolution. It seems to be inherent in the sigmoid path by which nearly all trends progress. As these sigmoid functions become more inter-determinant they also become progressively less stable. That may be how improvements in material science may cause perturbations in the development of automobile technologies. Or it can be demonstrated by how growth in the internet impacts social and cultural change.
The point is that the critical factor is the degree of the endogenous relationships. Where the sigmoid equations modify each other only slightly, the result remains primarily sigmoidal in their paths. When they begin influencing each other more, a point is reached where they frequently pass over a threshold from seemingly placid trends to spectacular and chaotic change.
This leads us to a tentative conclusion that simply an increasing degree of global inter-relatedness is destabilizing. It also probably means that as economic and technological inter-relatedness increases globally, efforts by some third world nations to opt out of the cultural and political changes is likely to be futile. We will also surmise that, in all likelihood, these changes, referencing the graph above, when they occur will not be slow or quiet.
The critical sigmoidal function today is probably Internet penetration and the degree of global connectivity. It influences the sigmoid functions of nearly everything. Through usage, virtually everything affects the Internet. It is precisely this that can lead to a revolutionary upheaval. What is particularly fascinating about this is that the revolution is created not by any specific act but rather by the mathematical characteristic of highly endogenous sigmoid systems being prone to instability.
In a way, we can say that it doesn't matter very much what we do to become interconnected with third world nations, rather it is only important that we do. Certainly, the World Bank is forcing interrelationships. But so is the Internet and it is doing so with much finer granularity. My take is, however, that whatever Wallace does, he is going to be inclined toward success.
The Income Explosion is coming, it will be global and it will lay waste to any Industrial Age social or political institutions that stand in its way.
Monday, May 14, 2012
Boutique Villages Charge Forward and Stall
90% of the agricultural lands in the Bahamas is owned by the government. These lands that have always been marginal for growing things, over the next twenty years, will become prime real estate for development. As incomes explode, people acquire a 'live anywhere' capability and retired baby boomers also find they can live anywhere, every nook and cranny will get developed.
However, the Bahamas represents some of the best opportunities anywhere. The Acklins archipelago is about 200 square miles and has a grand total of about 800 people living there. The archipelago has over two hundred miles of shoreline and when developed will likely hold a population of over 1.7 million. Samana Cay is about 17 square miles and is uninhabited. It will likely be developed into something like the Hamptons and be home to about 100,000. Mayaguana is 105 square miles and will likely accommodate nearly 1,000,000 population.
The key issue is that the Bahamian government, who currently owns all this land and claims sovereignty over it until very recently seemed to be cooperating with the the inevitable process. They had created a joint venture with Boston's I-Group to develop a significant portion of Mayaguana. This, in combination with the Honduran free state initiative, was suggesting that at least some of the nations that would be attractive to boutique village developers were behaving in an enlightened and cooperative manner.
It was with sadness, then, that I learned today that the I-Group Mayaguana project has fallen through. This has disturbed at least some Bahamians as well. It is inevitable that The Bahamas will fill up with Knowledge Class Professionals from around the world. The land that it will require has a current market value of over 50 billion 2012USD and most of it is owned by the government. That is a huge sum of money for a government that currently has a 1.7 billion annual budget. It is only a matter of time before pure economics will move the discussion and prevailing attitudes toward development.
When developed, the real estate will have a value of nearly 25 trillion dollars. This is a staggering sum that will motivate people to extraordinary acts. It is possible that the Bahamas may be the first nation to fall to the Information Age, perhaps violently. It may be the first nation to be conquered by an NGO. Or it could be that interested parties will corrupt the government with piles of money just to big to ignore. Again, an enlightened government should learn from history, bow to the inevitable and create a strategy that maximizes their outcome.
Equitopia Productions is exciting. Mycroft's Business Lounge will be fun. However, for flat out size and affluence generation, nothing will compare with the Boutique Villages. As Thomas A. Stewart says, we are at the beginning of the biggest real estate boom in all of history. Furthermore, he underestimates its size by at least a factor of four. Over the next thirty years, Western civilization, alone, will build over a quadrillion dollars of real estate. That is enough money to create a million billionaires.
Of course, my interest is not primarily monetary. I want to build Polymathican villages, specifically designed to facilitate and enhance a Finely Crafted Life for people of refinement and erudition. The schools will be polymathic, the products in the retail shops will be refined, the neighbors will be refined and erudite. Yes, a few visionaries who design and build these villages will become very wealthy. However, thousands, even millions of people will have a home and that is of greater importance.
The first village will be somewhere in the Caribbean. The Bahamas are the most convenient, but if the government will not cooperate, we can build elsewhere. If Honduras can tolerate Libertarians, they should definitely welcome us. Over time, however, the Polymathican global culture will likely reach a population of over 15 million and will require the construction of 500 villages. That is enough so that we can build them in the tropics, in the temperate zones, near the ocean, in the mountains and on the plains. We can make them urban, suburban and exurban.
As with all of the projects that I am initiating, if you are interested in participating in the planning, design and/or construction boutique villages for Polymathicans, drop me your e-mail address and I will put you on my private lists and venues. I cannot and do not want to be everywhere at once, so leadership opportunities abound.
However, the Bahamas represents some of the best opportunities anywhere. The Acklins archipelago is about 200 square miles and has a grand total of about 800 people living there. The archipelago has over two hundred miles of shoreline and when developed will likely hold a population of over 1.7 million. Samana Cay is about 17 square miles and is uninhabited. It will likely be developed into something like the Hamptons and be home to about 100,000. Mayaguana is 105 square miles and will likely accommodate nearly 1,000,000 population.
The key issue is that the Bahamian government, who currently owns all this land and claims sovereignty over it until very recently seemed to be cooperating with the the inevitable process. They had created a joint venture with Boston's I-Group to develop a significant portion of Mayaguana. This, in combination with the Honduran free state initiative, was suggesting that at least some of the nations that would be attractive to boutique village developers were behaving in an enlightened and cooperative manner.
It was with sadness, then, that I learned today that the I-Group Mayaguana project has fallen through. This has disturbed at least some Bahamians as well. It is inevitable that The Bahamas will fill up with Knowledge Class Professionals from around the world. The land that it will require has a current market value of over 50 billion 2012USD and most of it is owned by the government. That is a huge sum of money for a government that currently has a 1.7 billion annual budget. It is only a matter of time before pure economics will move the discussion and prevailing attitudes toward development.
When developed, the real estate will have a value of nearly 25 trillion dollars. This is a staggering sum that will motivate people to extraordinary acts. It is possible that the Bahamas may be the first nation to fall to the Information Age, perhaps violently. It may be the first nation to be conquered by an NGO. Or it could be that interested parties will corrupt the government with piles of money just to big to ignore. Again, an enlightened government should learn from history, bow to the inevitable and create a strategy that maximizes their outcome.
Equitopia Productions is exciting. Mycroft's Business Lounge will be fun. However, for flat out size and affluence generation, nothing will compare with the Boutique Villages. As Thomas A. Stewart says, we are at the beginning of the biggest real estate boom in all of history. Furthermore, he underestimates its size by at least a factor of four. Over the next thirty years, Western civilization, alone, will build over a quadrillion dollars of real estate. That is enough money to create a million billionaires.
Of course, my interest is not primarily monetary. I want to build Polymathican villages, specifically designed to facilitate and enhance a Finely Crafted Life for people of refinement and erudition. The schools will be polymathic, the products in the retail shops will be refined, the neighbors will be refined and erudite. Yes, a few visionaries who design and build these villages will become very wealthy. However, thousands, even millions of people will have a home and that is of greater importance.
The first village will be somewhere in the Caribbean. The Bahamas are the most convenient, but if the government will not cooperate, we can build elsewhere. If Honduras can tolerate Libertarians, they should definitely welcome us. Over time, however, the Polymathican global culture will likely reach a population of over 15 million and will require the construction of 500 villages. That is enough so that we can build them in the tropics, in the temperate zones, near the ocean, in the mountains and on the plains. We can make them urban, suburban and exurban.
As with all of the projects that I am initiating, if you are interested in participating in the planning, design and/or construction boutique villages for Polymathicans, drop me your e-mail address and I will put you on my private lists and venues. I cannot and do not want to be everywhere at once, so leadership opportunities abound.
Sunday, May 13, 2012
At the Core of It All
In the final analysis, the government can encourage Information Age enterprise formation with less strict equity sales requirements for start-ups and loan guarantees that could increase long term Debt-to-Equity ratios to well over 1:1. It is true that annual returns of 70% or more that will prevail in the Information Age enterprises, combined with the risk abatement and growth enhancement through membership in Enterprise Networks, will ultimately be the formula that draws us out of the profound economic malaise that the four horsemen of the Industrial Age Apocalypse will visit upon us. However, enlightened economic policy can hasten the end of our imminent 'time of troubles.'
The Polymathic Institute, which I intend to be a 'for profit but philanthropic anyway' organization, will be doing a great deal of good in the interim. It will do so most notably through the education one receives about the Transformation in The Future 101. Soon we will be adding a companion education on polymathy on our way to ultimately certifiying Polylmaths. However, organizational development will also encourage the development of network ties between visionaries, entrepreneurs, creatives, investors and technologists.
People may become involved in The Polymathic Institute either as a Member or as a Fellow. Both Members and Fellows will receive a subscription to The Future 101 for as long as their status remains current. However, as I say, this is knowledge that simply begs to be used. Consequently, the real value is in the organizations, enterprises, private venues and relationships that we will create and nurture.
As you may know, I have pointed out that turning $10,000 into $10,000,000 in 10 years or less is an Information Age norm for private equity investors. There is nothing magical about it, though it is technically complex. Rather, that is the value added you bring when you enable, through subscription in a primary offering, an entrepreneur with an Information Age idea. If you are or want to be an entrepreneur with an Information Age idea, you will be able to raise the necessary capital while being relieved of no more than 20% of your ownership.
I'm going to be really frank here. The United States, the paradigmatic Industrial Age nation, was founded by a bunch of well educated, relatively affluent men who were visionary but also probably had IQs comfortably above 140. Since then, our leaders have devolved to a median IQ of about 125. I therefore call our system a Mediocracy or 'rule by the kind of smart'. If we are to be successful in establishing an Information Age civilization with an Information Age economy, our leaders are going to need to be of significantly higher intelligence. They are probably going to need to be smarter than 'The Founding Fathers.' We aren't going to elect such people. Visionary geniuses generally confuse and frighten people. consequently, as I have said, we must 'save the world by saving ourselves.'
That is only going to be accomplished by creating the structures mentioned above. They will not create themselves and they will not be created for free. Yesterday, I described Equitopia Productions, an enterprise that will bring together creatives, investors and entrepreneurs to create made-for-Internet television. It, and Enterprise Networks like it, will turn $10,000 into $10,000,000 in 10 years or less for thousands of investors. It will provide Information Age incomes while enabling the visions of tens of thousands of creatives. It will provide superior monetization options for hundreds of thousands of website entrepreneurs.
So, as part of the Membership or Fellowship in The Polymathic Institute, every participant will automatically belong to The Private Equity group.
It is a place where entrepreneurs, creatives, technologists, visionaries and investors can gather to forge relationships and enable Information Age start-ups. While there are Membership and Fellowship fees, there is no underwriting or third party securities sales allowed. For active participants this is a substantial reduction in total costs, since private equity underwriters typically charge 10% plus expenses for best efforts underwritings.
You will not be inundated with poor quality business plans, either. You will not be recruited into an MLM or asked to finance one. Business plans may only be presented by Fellows and Fellows are 'vetted.'
Mycroft's Business Lounge
Because it will be fun, rewarding and enabling, one of the first projects, and we have some really great ones to tell you about, will be Mycroft's Business Lounges... sort of Starbucks on steroids. It will also be a venue in most major metropolitan areas where members of the Private Equity Group can meet in person. It will be The Polymathic Institute's 'home away from home.'
Starbucks has become the office away from the office by default. Mycroft's will be specifically designed for it.
This will be a franchise operation. It will be in a relatively large, preferably stand alone, building. It will be your office away from your office. There will be many benefits over doing business in a Starbucks. First, there will be docking stations for your lap top. If you did not bring your lap top, there will be rentals. Need earbuds? Or a flash drive? Mycroft's will sell them.
Bandwidth will be much greater and allow for effective video conferencing. There will be meeting rooms and private rooms if you want a more quiet or private accommodation. You will be able to rent a projector, white board, flip chart, laser pointer, etc. There will be wireless connections to printers that can double as copiers. There will be a resident IT consultant that you can retain if you are having technical difficulties or just want to know how to do something.
Tables, chairs and rooms will be more club like and less cafe like. Servers, in something somewhat more gracious than a green apron, will attend to you where ever you have chosen to locate.
A concierge is on duty to arrange your details, whether it be a dinner or hotel reservation, taxi to the airport or flowers to your spouse. If you are visiting, the concierge can arrange a tour of attractions. If you need to bring an armful and you would like to leave it for an hour or two, lockers are available.
Coffee is not cheap but refills are free or, in the case of coffee drinks, at a reduced cost. Not only will pastries and sandwiches be available, but also fruits, cheeses and in most locations beer and wine. When possible, after 5:00 somewhat stronger libations will be available. Again, the intent is that for the Information Age Knowledge Class business person, Mycroft's is a home away from home - an office where you need one.
Often in the evenings rooms will conduct seminars and presentations from local and visiting business, technology and future studies experts. Some will be arranged by Mycroft's but others will be businesses renting rooms to conduct their business. A business author simply must include Mycroft's in the book tour and book signings will be a regular event. Of course the Wall Street Journal and various business periodicals will be available at no charge.
There will be a short and inexpensive route to Mycroft's ownership for those who are interested. You will begin by developing the Polymathic Institute Private Equity Group in your target location. You will develop members on the Internet and then trade with others to get your locals. You can and should promote locally as well.
When your list becomes large enough, you will leverage your ability to talk to a large number of local business people into debt and equity funding of your establishment. Franchise fees will be far less than the prevailing market. My interest is in creating a global network, which I do incidentally through your business. Franchise fees will compensate fairly for the use of the business model, but will not be intended to 'maximize profits.'
We will begin with the assumption of one Mycroft's lounge for every half million population in North America, Australia and Western Europe. Eastern Europe and South America will require somewhat larger markets. In total, we will identify 2,000 local clubs that have the potential to become Mycroft's. To take this opportunity you will need to be a Fellow.
Starbucks average a little over $1.o million in revenue per store. Because Mycroft's will be physically larger, will provide a broader spectrum of services and will be somewhat more upscale, they will probably average annual revenue of $2.0 million. Owners should earn at least $400K USD from store operations.
However, that is the start, not the end, of the potential of Mycroft's ownership. It will be a networking heaven for all visitors and Members. The local franchisee will be in a particularly auspicious position to take full advantage of networking opportunities. Consequently, it is assumed that the local Mycroft's franchisee will become a leader of the business community and will enjoy augmented income.
As I have said, I intend to provide every Member and Fellow with a legitimate chance to enter the Information Age Knowledge Class prior to the 'train wreck.' That means a career compatible with A Finely Crafted Life. That means an income that enables A Finely Crafted Life. If this or any of the opportunities that will accrue to Members and Fellows of The Polymathic Institute are of interest to you, send me your e-mail address and I will put you in my private mailing list. From there you will be invited to various private venues to learn more about Membership.
The Polymathic Institute, which I intend to be a 'for profit but philanthropic anyway' organization, will be doing a great deal of good in the interim. It will do so most notably through the education one receives about the Transformation in The Future 101. Soon we will be adding a companion education on polymathy on our way to ultimately certifiying Polylmaths. However, organizational development will also encourage the development of network ties between visionaries, entrepreneurs, creatives, investors and technologists.
People may become involved in The Polymathic Institute either as a Member or as a Fellow. Both Members and Fellows will receive a subscription to The Future 101 for as long as their status remains current. However, as I say, this is knowledge that simply begs to be used. Consequently, the real value is in the organizations, enterprises, private venues and relationships that we will create and nurture.
As you may know, I have pointed out that turning $10,000 into $10,000,000 in 10 years or less is an Information Age norm for private equity investors. There is nothing magical about it, though it is technically complex. Rather, that is the value added you bring when you enable, through subscription in a primary offering, an entrepreneur with an Information Age idea. If you are or want to be an entrepreneur with an Information Age idea, you will be able to raise the necessary capital while being relieved of no more than 20% of your ownership.
I'm going to be really frank here. The United States, the paradigmatic Industrial Age nation, was founded by a bunch of well educated, relatively affluent men who were visionary but also probably had IQs comfortably above 140. Since then, our leaders have devolved to a median IQ of about 125. I therefore call our system a Mediocracy or 'rule by the kind of smart'. If we are to be successful in establishing an Information Age civilization with an Information Age economy, our leaders are going to need to be of significantly higher intelligence. They are probably going to need to be smarter than 'The Founding Fathers.' We aren't going to elect such people. Visionary geniuses generally confuse and frighten people. consequently, as I have said, we must 'save the world by saving ourselves.'
That is only going to be accomplished by creating the structures mentioned above. They will not create themselves and they will not be created for free. Yesterday, I described Equitopia Productions, an enterprise that will bring together creatives, investors and entrepreneurs to create made-for-Internet television. It, and Enterprise Networks like it, will turn $10,000 into $10,000,000 in 10 years or less for thousands of investors. It will provide Information Age incomes while enabling the visions of tens of thousands of creatives. It will provide superior monetization options for hundreds of thousands of website entrepreneurs.
So, as part of the Membership or Fellowship in The Polymathic Institute, every participant will automatically belong to The Private Equity group.
It is a place where entrepreneurs, creatives, technologists, visionaries and investors can gather to forge relationships and enable Information Age start-ups. While there are Membership and Fellowship fees, there is no underwriting or third party securities sales allowed. For active participants this is a substantial reduction in total costs, since private equity underwriters typically charge 10% plus expenses for best efforts underwritings.
You will not be inundated with poor quality business plans, either. You will not be recruited into an MLM or asked to finance one. Business plans may only be presented by Fellows and Fellows are 'vetted.'
Mycroft's Business Lounge
Because it will be fun, rewarding and enabling, one of the first projects, and we have some really great ones to tell you about, will be Mycroft's Business Lounges... sort of Starbucks on steroids. It will also be a venue in most major metropolitan areas where members of the Private Equity Group can meet in person. It will be The Polymathic Institute's 'home away from home.'
Starbucks has become the office away from the office by default. Mycroft's will be specifically designed for it.
This will be a franchise operation. It will be in a relatively large, preferably stand alone, building. It will be your office away from your office. There will be many benefits over doing business in a Starbucks. First, there will be docking stations for your lap top. If you did not bring your lap top, there will be rentals. Need earbuds? Or a flash drive? Mycroft's will sell them.
Bandwidth will be much greater and allow for effective video conferencing. There will be meeting rooms and private rooms if you want a more quiet or private accommodation. You will be able to rent a projector, white board, flip chart, laser pointer, etc. There will be wireless connections to printers that can double as copiers. There will be a resident IT consultant that you can retain if you are having technical difficulties or just want to know how to do something.
Tables, chairs and rooms will be more club like and less cafe like. Servers, in something somewhat more gracious than a green apron, will attend to you where ever you have chosen to locate.
A concierge is on duty to arrange your details, whether it be a dinner or hotel reservation, taxi to the airport or flowers to your spouse. If you are visiting, the concierge can arrange a tour of attractions. If you need to bring an armful and you would like to leave it for an hour or two, lockers are available.
Coffee is not cheap but refills are free or, in the case of coffee drinks, at a reduced cost. Not only will pastries and sandwiches be available, but also fruits, cheeses and in most locations beer and wine. When possible, after 5:00 somewhat stronger libations will be available. Again, the intent is that for the Information Age Knowledge Class business person, Mycroft's is a home away from home - an office where you need one.
Often in the evenings rooms will conduct seminars and presentations from local and visiting business, technology and future studies experts. Some will be arranged by Mycroft's but others will be businesses renting rooms to conduct their business. A business author simply must include Mycroft's in the book tour and book signings will be a regular event. Of course the Wall Street Journal and various business periodicals will be available at no charge.
There will be a short and inexpensive route to Mycroft's ownership for those who are interested. You will begin by developing the Polymathic Institute Private Equity Group in your target location. You will develop members on the Internet and then trade with others to get your locals. You can and should promote locally as well.
When your list becomes large enough, you will leverage your ability to talk to a large number of local business people into debt and equity funding of your establishment. Franchise fees will be far less than the prevailing market. My interest is in creating a global network, which I do incidentally through your business. Franchise fees will compensate fairly for the use of the business model, but will not be intended to 'maximize profits.'
We will begin with the assumption of one Mycroft's lounge for every half million population in North America, Australia and Western Europe. Eastern Europe and South America will require somewhat larger markets. In total, we will identify 2,000 local clubs that have the potential to become Mycroft's. To take this opportunity you will need to be a Fellow.
Starbucks average a little over $1.o million in revenue per store. Because Mycroft's will be physically larger, will provide a broader spectrum of services and will be somewhat more upscale, they will probably average annual revenue of $2.0 million. Owners should earn at least $400K USD from store operations.
However, that is the start, not the end, of the potential of Mycroft's ownership. It will be a networking heaven for all visitors and Members. The local franchisee will be in a particularly auspicious position to take full advantage of networking opportunities. Consequently, it is assumed that the local Mycroft's franchisee will become a leader of the business community and will enjoy augmented income.
As I have said, I intend to provide every Member and Fellow with a legitimate chance to enter the Information Age Knowledge Class prior to the 'train wreck.' That means a career compatible with A Finely Crafted Life. That means an income that enables A Finely Crafted Life. If this or any of the opportunities that will accrue to Members and Fellows of The Polymathic Institute are of interest to you, send me your e-mail address and I will put you in my private mailing list. From there you will be invited to various private venues to learn more about Membership.
Saturday, May 12, 2012
Equitopia Productions
In 2001 I appeared on a public access talk show. I told the host that within a decade he would be able to upload his show onto the Internet and that anyone, anywhere, could watch it. Rather than having viewers in his cable distribution area, he could have viewers in Hong Kong, Argentina, Greece, Russia, South Africa, Cambodia, India. I confess, I did not envision a youtube.com as the primary delivery channel and I still don't. I also do not envision cable networks becoming Internet networks. Finally, Netflix, Hulu, etc. are also not likely to be the final state of Internet television.
In The Future 1o1 premium service I have a 'maintained' white paper entitled 'The Age of Boutique Everything' where I explore in great detail the likely evolution of Internet television. Since I have been thinking about it for over a decade and a half, I do have a bit of a head start on most pundits.
I have a basic aversion to membership in the Chattering Class and consequently, whether you choose to become involved in The Polymathic Institute at the Membership level or the Fellowship level, talk is followed by a bias toward action. In other words, I may spend a whole lot of time exploring Internet television, but I will also provide venues for turning those ideas into projects and enterprises.
Last week, The Polymathic Institute and Wallace Rothman, a young Harvard MBA holder and Columbia PhD candidate, have agreed in principle to form Equitopia Productions, Inc. which will serve as general and managing partner to a series of LLPs that will fund and produce niche market, 'made-for-Internet' programming.
Equitopia Productions will package the created content and provide plug-in modules to niche websites that will allow them to gain income from traffic through streaming and downloading. This will provide blogs, targeted social media, niche marketing sites, etc. with the opportunity to improve monetization through high income and highly compatible product offerings. Polymathica will provide to its members programming of refinement and erudition.
Equitopia Productions will provide dozens, perhaps hundreds, of opportunities to Members and Fellows of the Polymathic Institute to create a career in Internet News and Entertainment. These may be in writing, punditry, production or, through the LLPs, passive investment.
This is just one of many large projects that will provide the opportunity for a Knowledge Class career and income.
The Polymathic Institute supports polymathic education, research, careers and lifestyles. One may become involved as a Member, Fellow or Senior Fellow. If you would like to learn more about becoming involved, please e-mail or message me.
In The Future 1o1 premium service I have a 'maintained' white paper entitled 'The Age of Boutique Everything' where I explore in great detail the likely evolution of Internet television. Since I have been thinking about it for over a decade and a half, I do have a bit of a head start on most pundits.
I have a basic aversion to membership in the Chattering Class and consequently, whether you choose to become involved in The Polymathic Institute at the Membership level or the Fellowship level, talk is followed by a bias toward action. In other words, I may spend a whole lot of time exploring Internet television, but I will also provide venues for turning those ideas into projects and enterprises.
Last week, The Polymathic Institute and Wallace Rothman, a young Harvard MBA holder and Columbia PhD candidate, have agreed in principle to form Equitopia Productions, Inc. which will serve as general and managing partner to a series of LLPs that will fund and produce niche market, 'made-for-Internet' programming.
Equitopia Productions will package the created content and provide plug-in modules to niche websites that will allow them to gain income from traffic through streaming and downloading. This will provide blogs, targeted social media, niche marketing sites, etc. with the opportunity to improve monetization through high income and highly compatible product offerings. Polymathica will provide to its members programming of refinement and erudition.
Equitopia Productions will provide dozens, perhaps hundreds, of opportunities to Members and Fellows of the Polymathic Institute to create a career in Internet News and Entertainment. These may be in writing, punditry, production or, through the LLPs, passive investment.
This is just one of many large projects that will provide the opportunity for a Knowledge Class career and income.
The Polymathic Institute supports polymathic education, research, careers and lifestyles. One may become involved as a Member, Fellow or Senior Fellow. If you would like to learn more about becoming involved, please e-mail or message me.
Friday, May 11, 2012
Another wild thought that will likey pan out
Many years ago I thought of the notion of 'defarming the planet' or, in essence, through hydroponics and anacephalic animals, create manufacturing style food production. It was an idea that seemed more than a little wild at the time (mid eighties) that now is coming to mainstream. I direct you to Peter Diamandis new book, Abundance, where he speaks of vertical farming. Of course, cultured meat is now all the rage.
I do, however, stay ahead of the curve. About six yeas ago, MIT researchers found a way to extend the range of efficient inductive coupling to several meters. This is one possible way to take the supply offboard in an electric car and eliminate the need for expensive and heavy batteries by placing the power supply in the roadway.
It isn't my preferred method which is the technology suggested by Gerard K. O'Neil for transmitting electricity from space. That is putting masers in the roadways and rectifiers in the automobiles. Computers allow us to have the maser 'lock in' on the rectifier and thereby maintain high efficiency while simultaneously eliminating worries over a high microwave environment (think of concerns over the cell phone) while riding in cars.
There is a secondary benefit. Driverless cars rely on GPS positioning. The microwave locking procedure will be able to create even greater accuracy in locating a vehicle and assisting in improving the driverless car efficiency and, perhaps, cost. It can do this because a maser can be modulated to provide the onboard coputer with huge amounts of information related to traffic laws, location of various hazards and
impediments and even the status of semaphores.
A google search returns a similar technology in Korea reported in 2010. This really is something that should catch on and, to date, it has not. I just can't see that continuing for very long.
As we explore in The Future 101 premium service, the emergence of boutique villages and the death of the Industrial Age metropolitan areas, telepresence and the rise of Knowledge Class professions, will greatly alter our driving (or riding) patterns. Combined with this or a better offboard electrical car technology, these factors will be very significantly alter our every day lives.
I do, however, stay ahead of the curve. About six yeas ago, MIT researchers found a way to extend the range of efficient inductive coupling to several meters. This is one possible way to take the supply offboard in an electric car and eliminate the need for expensive and heavy batteries by placing the power supply in the roadway.
It isn't my preferred method which is the technology suggested by Gerard K. O'Neil for transmitting electricity from space. That is putting masers in the roadways and rectifiers in the automobiles. Computers allow us to have the maser 'lock in' on the rectifier and thereby maintain high efficiency while simultaneously eliminating worries over a high microwave environment (think of concerns over the cell phone) while riding in cars.
There is a secondary benefit. Driverless cars rely on GPS positioning. The microwave locking procedure will be able to create even greater accuracy in locating a vehicle and assisting in improving the driverless car efficiency and, perhaps, cost. It can do this because a maser can be modulated to provide the onboard coputer with huge amounts of information related to traffic laws, location of various hazards and
impediments and even the status of semaphores.A google search returns a similar technology in Korea reported in 2010. This really is something that should catch on and, to date, it has not. I just can't see that continuing for very long.
As we explore in The Future 101 premium service, the emergence of boutique villages and the death of the Industrial Age metropolitan areas, telepresence and the rise of Knowledge Class professions, will greatly alter our driving (or riding) patterns. Combined with this or a better offboard electrical car technology, these factors will be very significantly alter our every day lives.
Thursday, May 10, 2012
This and That
IBM's Watson is tweeting at @IBMWatson. I wonder if, when he rolls out as a Physician's assistant whether he will tweet on work time? One could take this as a step toward a passing grade on the Turing Test or as a clever marketing ploy. I always suspend judgment when it is an option - as it is here.
I don't know how I should feel about this. On one hand it is uncharacteristically efficient for the Federal government. On the other hand it really brings home just how many places the Feds have their fingers. Either way, I will put it on my regular reading list. I found this while looking at fusion yesterday. There was an announcement that the Feds were extending the research grant on the Polywell for another two years.
Is there a point at which we should just give up on fusion as a promising energy technology? Yesterday I published my energy futures paper for my premium subscribers. They should understand from their reading of it that fusion is a technology that will solve a problem that doesn't exist. There are, indeed, many practical advantages to subscription.
The biggest news in some time is that a group of billionaires are planning to mine asteroids for the precious metals. I actually did a financial analysis around 1980 on this idea and was amazed that 'on paper' it was a big winner.
However, the problem is that the economically exploitable precious metals resource is so huge that the price of them would likely plummet to a unknowably low level. Whether the project would remain profitable in the face of a glut would be determined only by determining the price elasticity of the metals. However, even then, the supply would take us so far out of the data range that the result would likely not be trustworthy.
As I discuss in the Solar Diaspora unit of The Future 101, space will likely be humanized starting with the lowest Delta V carbonaceous chondrites and moving from there. My conclusion was and still is that this will take place after three critical events take place. First, we need a practical, reasonably priced technology to LEO. Second, we need a staging point in a stable LEO. Third, we will need an efficient deep space propulsion system.
The second is predicated upon the first and the third cannot be adequately tested before the first two. It all, then, boils down to LEO lift costs. Recently, yet another company has announced the intent to dramatically reduce lift costs. While we can be optimistic, the truth is that this claim has been made repeatedly and, so far, none have been able to deliver.
In 1977 I undertook the writing of a science fiction novel entitled 'The Meek Shall Inherit'. In it I had the first major space colony being built in 2032, after about ten years of exploratory missions. I stand by that prediction. Right now my money is on scram jet technology despite some recent setbacks.
The important point actually is that the whole Industrial Age train wreck will take place prior to the humanization of space. We will be seven years or so into the Golden Age. In other words, the humanization of space, while replete with romance is not what you should be paying attention to yet. There will be plenty of time for that and there are just too many important things to deal with first.
That, of course, is the point of The Future 101 subscription or membership. The time between now and 2040 may be the period of fastest change, past or future. It is a time of make or break. To put it bluntly, we need to get through that before we allow ourselves to become too ensnared in 2040 and after events.
1
s out as a Physician's assistant whether he will tweet on work time? One could take this as a step toward a passing grade on the Turing Test or as a clever marketing ploy. I always suspend judgment when it is an option - as it is here.I don't know how I should feel about this. On one hand it is uncharacteristically efficient for the Federal government. On the other hand it really brings home just how many places the Feds have their fingers. Either way, I will put it on my regular reading list. I found this while looking at fusion yesterday. There was an announcement that the Feds were extending the research grant on the Polywell for another two years.
Is there a point at which we should just give up on fusion as a promising energy technology? Yesterday I published my energy futures paper for my premium subscribers. They should understand from their reading of it that fusion is a technology that will solve a problem that doesn't exist. There are, indeed, many practical advantages to subscription.
The biggest news in some time is that a group of billionaires are planning to mine asteroids for the precious metals. I actually did a financial analysis around 1980 on this idea and was amazed that 'on paper' it was a big winner.
However, the problem is that the economically exploitable precious metals resource is so huge that the price of them would likely plummet to a unknowably low level. Whether the project would remain profitable in the face of a glut would be determined only by determining the price elasticity of the metals. However, even then, the supply would take us so far out of the data range that the result would likely not be trustworthy.
As I discuss in the Solar Diaspora unit of The Future 101, space will likely be humanized starting with the lowest Delta V carbonaceous chondrites and moving from there. My conclusion was and still is that this will take place after three critical events take place. First, we need a practical, reasonably priced technology to LEO. Second, we need a staging point in a stable LEO. Third, we will need an efficient deep space propulsion system.
The second is predicated upon the first and the third cannot be adequately tested before the first two. It all, then, boils down to LEO lift costs. Recently, yet another company has announced the intent to dramatically reduce lift costs. While we can be optimistic, the truth is that this claim has been made repeatedly and, so far, none have been able to deliver.
In 1977 I undertook the writing of a science fiction novel entitled 'The Meek Shall Inherit'. In it I had the first major space colony being built in 2032, after about ten years of exploratory missions. I stand by that prediction. Right now my money is on scram jet technology despite some recent setbacks.
The important point actually is that the whole Industrial Age train wreck will take place prior to the humanization of space. We will be seven years or so into the Golden Age. In other words, the humanization of space, while replete with romance is not what you should be paying attention to yet. There will be plenty of time for that and there are just too many important things to deal with first.
That, of course, is the point of The Future 101 subscription or membership. The time between now and 2040 may be the period of fastest change, past or future. It is a time of make or break. To put it bluntly, we need to get through that before we allow ourselves to become too ensnared in 2040 and after events.
1
Sunday, April 8, 2012
Attitude, Exercise and Living to 90+
Mike Wallace of 60 Minutes just died at age of 93. It is very quickly becoming the case that the biblical 'three score and ten' is becoming 'four score and ten.' Th two longest living presidents were Gerald Ford and Ronald Reagan. George H.W. Bush and Jimmy Carter, both 88, are threatening to make it the case that the last four Presidents to die were also the four oldest presidents, The question is, 'Why is this happening?' It is true that medical technology is improving rapidly. However, is that all the explanation? Probably not. Some of it is almost surely about changing attitudes and the changing behaviors that they elicit.
We know that two of the important culprits of aging are shortening telomeres and deteriorating mitochondria. We are discovering that exercise rejuvenates mitochondria. This is a bit of a catch 22, then, because mitochondria are also the producers of our body's energy. Th worse your mitochondria the less you feel like exercising. Yet if you do exercise your energy level will improve. Recently, we are beginning to discover that the same may be true about telomeres. In fact, some researchers are going so far as to say that this is the mechanism by which exercise can actually make us live longer.
This leads to the speculation that we have a bifurcated older population which was definitely implied by the last link above. Those who adhere to the 1950's notion that as we age our bodies become more breakable and, therefore, we need to stop engaging in the more strenuous activities are espousing an antiquated attitude. We now know that this behavior, rather than preserving what is left of the mileage on our body, leads to deteriorating mitochondria, loss of energy and the risk of type 2 diabetes. We also know that it leads to shorter telomeres, loss of muscle mass and higher risks of cancer.
However, there is a growing group of seniors who embrace the philosophy of much more active golden years. They have made the commitment to 'run through the tape.' In other words, they have a different attitude about how older people should behave and the behavior seems to create the physical ability to engage in those behaviors. Until recently, it wasn't clear that this was a feasible course of action. There has always been a question about the direction of the causal arrow with exercise and life expectancy. Do healthy people feel better and therefore are they more inclined to be more active and also live longer? Or are people who are active more inclined to be healthy and live longer?
We now see the mechanisms by which exercise leads to longer life and we can feel more confident in stating that the spread between the classifications of sedentary and very active is about 3.7 years. That is minor compared to the ten year difference between the smoker and the non-smoker. However, it is more than any other behavior modification. As these two behaviors begin to take hold and work their way into the older generations, the current increase in life expectancies in the older decades will continue to increase significantly. 21% smoke, providing a 2.1 year potential life span gain. However the current distribution of activity is very poor, which provides as much as another 2.5 year lifespan gain. This, alone will give the 60 year old of today an increase from a life expectancy of about 83 to almost 88. 90 year lifespans are already in reach.
As I was just saying to a colleague, the fact that we are not going to die twenty years from now but rather forty years from now has little relevance for twenty years. Save for the point at which we really believe it. Then it will become immediately relevant because we will behave differently. We will think of our careers, our marriages, our relationships, and our avocations differently and we will immediately behave differently with regard to them.
We will be discussing these technologies as well as others in the premium service. Furthermore, we will be exploring how the changing attitudes that they will instill will change the economics, politics, lifestyles and culture through the transformation.
We know that two of the important culprits of aging are shortening telomeres and deteriorating mitochondria. We are discovering that exercise rejuvenates mitochondria. This is a bit of a catch 22, then, because mitochondria are also the producers of our body's energy. Th worse your mitochondria the less you feel like exercising. Yet if you do exercise your energy level will improve. Recently, we are beginning to discover that the same may be true about telomeres. In fact, some researchers are going so far as to say that this is the mechanism by which exercise can actually make us live longer.
This leads to the speculation that we have a bifurcated older population which was definitely implied by the last link above. Those who adhere to the 1950's notion that as we age our bodies become more breakable and, therefore, we need to stop engaging in the more strenuous activities are espousing an antiquated attitude. We now know that this behavior, rather than preserving what is left of the mileage on our body, leads to deteriorating mitochondria, loss of energy and the risk of type 2 diabetes. We also know that it leads to shorter telomeres, loss of muscle mass and higher risks of cancer.
However, there is a growing group of seniors who embrace the philosophy of much more active golden years. They have made the commitment to 'run through the tape.' In other words, they have a different attitude about how older people should behave and the behavior seems to create the physical ability to engage in those behaviors. Until recently, it wasn't clear that this was a feasible course of action. There has always been a question about the direction of the causal arrow with exercise and life expectancy. Do healthy people feel better and therefore are they more inclined to be more active and also live longer? Or are people who are active more inclined to be healthy and live longer?
We now see the mechanisms by which exercise leads to longer life and we can feel more confident in stating that the spread between the classifications of sedentary and very active is about 3.7 years. That is minor compared to the ten year difference between the smoker and the non-smoker. However, it is more than any other behavior modification. As these two behaviors begin to take hold and work their way into the older generations, the current increase in life expectancies in the older decades will continue to increase significantly. 21% smoke, providing a 2.1 year potential life span gain. However the current distribution of activity is very poor, which provides as much as another 2.5 year lifespan gain. This, alone will give the 60 year old of today an increase from a life expectancy of about 83 to almost 88. 90 year lifespans are already in reach.
As I was just saying to a colleague, the fact that we are not going to die twenty years from now but rather forty years from now has little relevance for twenty years. Save for the point at which we really believe it. Then it will become immediately relevant because we will behave differently. We will think of our careers, our marriages, our relationships, and our avocations differently and we will immediately behave differently with regard to them.
We will be discussing these technologies as well as others in the premium service. Furthermore, we will be exploring how the changing attitudes that they will instill will change the economics, politics, lifestyles and culture through the transformation.
Sunday, February 5, 2012
A Quickly Approaching Cliff for the Accounting Field
If you are an Accounting Clerk, an Accountant, a Financial, Budget or Treasury Analyst or you train Accountants or you place Accountants, you, at most, have five years left of guaranteed career. That is about how long it will likely take for expert systems and artificial intelligence, currently in development, to reach the marketplace.
In the near future your accounting software will be able to talk directly with the accounting software of your vendors, your customers, your bank and the various government reporting agencies. Invoices will be e-mailed from your accounting software to those of your customers where they will be triple matched and entered automatically into Accounts Payable. When the invoice is to be paid, your vendor's accounting software will notify its bank's software to pay your bank. Your accounting software will apply the payment and automatically notify your customer's accounting software of their new balance.
Payroll information will be reported automatically, wages and deductions calculated, necessary tax reports prepared and e-mailed to the appropriate agencies and the net pay will be automatically deposited in employees' bank accounts. Your accounting software will automatically calculate sales tax and e-mail the reports to the various taxing authorities. Similar imbedded expert systems will take over the inventory control and purchasing functions. In other words, over the next five to ten years, all clerks will become virtual. The live ones will be laid off.
The above scenario is not a someday, gee whiz, event. It requires no new technology. The required documents already exist as files in your accounting software. Currently, they are being printed out, mailed, manually received, entered into the recipient's accounting software, etc.. All that is really required is a File Format Translator so that your accounting software can create a record that your vendors', customers', bank's and reporting agencies' software can interpret. Once this is accomplished, most clerical functions will go the way of chimney sweeps and elevator attendants.
This will likely be stealth automation. One of my premium subscribers talks about how, with every new release, more of his job is automated. In similar form, over the next five years, every new release of your accounting software will automate more of these functions until they are completely automated. Twenty clerk AP departments of today may be reduced to just one or two.
In February of 2011, IBM unveiled Watson, a computer that spectacularly demonstrated that it could beat virtually everyone at Jeopardy. It played and easily bested the two top past champions.
In order to do this the computer was required to hear a natural language answer, usually designed specifically to be ambiguous, interpret the answer, search through its database, often make conceptually remote connections, find the correct information and, lastly, formulate the question to which the answer was related. As this video concludes, Jeopardy is the beginning, not the end of what will be a profoundly transformative technology.
IBM is creating, from Watson, a Physician's Assistant, named Dr. Watson, that will most likely be able to diagnose and treat diseases better than the Physicians it is assisting. It will lower costs, streamline the diagnosis process, reduce unnecessary tests and improve outcomes. Many in the field, as this Washington Post article demonstrates, are amazed by the technology and optimistic about its potential. Very recently, Wellpoint, the largest health benefits company in the U.S. announced that it had reached an agreement with IBM to "put Watson to work in health care."
This is, however, the beginning, not the end of the process. Automated diagnostic systems are beginning to surface everywhere with the ability to outperform the best of their human counterparts. This has led the X Prize Foundation to create their 'Tricorder' X Prize. X Prize boldly states, " With the equivalent of a board of physicians in your pocket, wireless sensors and imaging, you will be able to assess health and determine health care needs with a device in the palm of your hand." Clearly, A.I. and expert systems are ready to completely transform the medical industry, not someday, but now and going forward.
The question naturally arises, 'How soon will IBM or one of its competitors announce that it is creating an A.I. accountant?' Surely, if Watson can beat almost everyone at Jeopardy and his child, Dr. Watson can out perform Physicians in medicine, accounting and finance professionals will not be able to compete in knowledge, cost or accuracy with a Mr. Watson, CMA, CPA, CFA. Dr. Watson is estimated to require 18 months to bring to market. It should not take longer to bring Mr. Watson CMA, CPA, CFA to market. In many ways, he will be easier. For the most part, he will be a 'plug-in' to a system that is well bounded and already residing on your computer.
He will come loaded with all GAAP, GAAS, the APB Bulletins, FASB Statements, IFRS Standards, Corporate Tax Law, local regulatory, reporting and tax requirements and will be programmed with all accounting procedures and standard financial analysis methodologies.
It will be able to do NPV and DCF in its 'head' and program and perform monte carlo simulations, and other what-if analyses in a blink of an eye. It will have all the company's financial history at its finger tips. It will be able to close the books, make standard and adjusting journal entries, reconcile all GL accounts and perform statistical reviews of subsidiary ledgers and do it all far more quickly and accurately than any human. Since it is equipped with natural language capability, it will be able to produce the comments and analysis of the financial statements.
It will be able to produce the various required government reports and e-mail them directly to the proper agency. Every one of the quickly decreasing members of management will be able to, with one click, access Mr. Watson, CMA, CPA, CFA and ask natural language questions. The company will still need a Polymathic CFO to acquire and use a deep understanding of the company's financial data in the management of the enterprise. However, all other Accountants and Analysts will be replaced by the software.
This, too, will likely be stealth automation. IBM in partnership with SAP, Oracle, PeopleSoft, etc. will imbed more Watson-like functions into each release of its software. On one release, it may announce 'The Reconciler'. On the next release, it may announce 'The Adjusting Journal Entry Generator'. The next, it may announce a 'Sales Tax Reporter.' In this way, over time, with each release, fewer of the non-management Accountants will be needed. Next, as the number of Staff Accountants decreases, the number of Accounting Managers will decrease. Smaller enterprises will have their finance operations completely automated and will rely upon a part-time CFO.
As the profession experiences this implosion, it will then move to reductions in required Accounting Instructors and Recruiters. I know many readers will want to reject this outcome. However, with all due respect to Accountants, I have been one, Accounting is easier than playing Jeopardy at the championship level. It is easier than medicine. Watson has conquered those activities. It will conquer Accounting. The question is only, 'When?'
Nobody can know that for sure. However, Dr. Watson was put on an 18 month development schedule. It is unlikely that Mr. Watson CMA, CPA, CFA will require more. If we guess 24 months for IBM or a competitor to 'get to it', an 18 month development time and another 18 months for the major Accounting Software companies to imbed it in their next release, we have, perhaps five years. After that, the whole profession is on borrowed time.
So, unless you are approaching retirement, sometime between 2017 and 2022, you will need to find something else to do. What this will entail cannot really be properly understood without understanding The Income Explosion and Technological Unemployment which I Abstract on this site and explore in great detail at my premium subscriber site. I strongly advise you to read them, if you have not already done so.
Basically, the Economics of the next thirty years is going to be driven by two countervailing forces. First, advanced robotics and A.I. will drive incomes up, perhaps ten fold, from current U.S. levels. Second, 90% of all job descriptions will be eliminated. In the end, the two counteract one another and all will be well. However, all will not be well on the way.
Some jobs and professions will be demand limited. In other words, if the productivity of the medical profession increases tenfold, it is unlikely that people will seek ten times more medical care. As Dr. Watson and similar technologies increase the productivity of Physicians, the number required will fall and it will fall permanently. However, some professions, such as the Polymathic CFO, the descendent of Accountants, Financial Analysts, etc. will grow as economic activity grows.
However, the current jobs will be eliminated today and the new jobs will begin to become significant much later. We see an emerging picture of a period of dramatic unemployment and underemployment in the profession, followed by a slow, but dramatic increase in demand over the subsequent ten to twenty years. However, it will not be a return to business as usual. There will be both an increase in the minimum competency required in the profession as A.I. has taken over all the easier, specialized activities and, parenthetically, a dramatic increase in compensation. While ultimately an optimistic outcome, for current practitioners, instructors and recruiters, this is not a rosy scenario.
As I told my subordinates when I was a Financial Manager, 'Come to me with a problem and you are a Professional. Come to me with a problem and a proposed solution and you are a future Financial Manager.' If I expected it of my subordinates, I clearly should expect it of myself. So, if you are an Accountant, Analyst, Instructor or Recruiter and you understand this site and specifically this article, what should you be doing? What is the proposed solution?
First, as you will come to understand in 'The Death of Capitalism', 'The Rise of the Knowledge Class' and 'The Enterprise Network', the large, hierarchical, usually publicly traded and multinational corporation will not survive the transformation to an Information Age global economy. It will be replaced by Enterprise Networks, operating not under a single, hierarchical and unified management, but rather through strategic partnerships, vendor, customer and consultative relationships. You will not be an employee, you will be an owner-operator of one of the enterprises within the Network.
If it is your goal to become a Polymathic CFO in the Information Age, you will need to either wait until the transformation to an Information Age civilization and economy unfolds and find something else to do until that happens, or you need to push the envelope yourself by immediately leaving the corporate world and becoming a CFO of an enterprise preferably imbedded within an Enterprise Network. If you do not already have competency in all areas of Accounting and Finance, you are probably not qualified to do this at this time.
As you will understand when you read 'The Death of Capitalism' and 'Building a Liberating Portfolio While Saving the World' the investment markets are undergoing profound change. Over the next decade, the emphasis will migrate away from secondary markets, capital appreciation and acquisition strategies toward primary markets, income streams and organic growth. The ability to analyze the performance and potential of an enterprise will take precedence over the ability to analyze markets and market statistics. This means that the jump from Accountant or, even better, Financial Analyst to Fund Manager is a rather easy one. As investment dollars leave the secondary markets and begin to seek start-up or early round private equity opportunities, the outlook for this productive activity is very, very good. This too, needs to be a polymathic profession with expertise that extends to marketing, operations, technology and future studies.
As the quantity of openings for Accountants and Financial Analysts plummet, the opportunities for executive and professional recruiters also will fall. There will, however, be an ever increasing demand for Organizational Developers who will assist in constructing the management teams of the enterprises within Enterprise Networks. When the Transformation is complete a typical 25 million USD enterprise will be comprised of only the "C' jobs. Those will most commonly be CEO, COO, CFO, CIO, CTO and CMO. The Practitioner will first bring qualified candidates into an appropriate Enterprise Network and then, working with an aspiring CEO and the fund manager(s), build the complete management team. When a management team member leaves, retires or dies, the Practitioner will also be retained by the enterprise to acquire a replacement.
There is much buzz being generated currently by M.I.T.'s decision to introduce a certification process for their free, online and automated courses. Stanford has been pushing the envelope on this, as well. What is becoming apparent is that 90% of all University Professors and Instructors will not be needed. Since the demand for Accountants and Analysts will be plummeting until it again reaches its current level some time in the 2030's, Accounting Professors and Instructors will be hit doubly hard.
Like the profession of Physician, employment levels will be demand constrained. As you read 'The Cultures of Affluence' you will understand that the demand for personal development through learning will increase. However, it will not increase tenfold and that increase will be in self-actualization and 'meaning of life' style courses, not Accounting and Finance. So, if you are a Professor or Instructor in these areas, you better start planning your new career and sooner is much better than later. It is very unlikely that there will be any significant rebound once the employment rolls begin to decrease.
Whatever your current situation within the fields and whatever your aspirations for the future, the most important first step is to assure that you are not flying blindly into that future. There are lots of 'Futurists' out there who want to tell you about what the future might hold. Most of them will bombard you with hundreds of potential new 'gee whiz' gizmos.
Many of them are all about the Singularity, a time projected to be around 2045, when computers surpass humans. Some go even further and tell you about a time when humans become machines. Of course, there are a whole lot of Futurists that opportunistically play into the common beliefs of Global Climate Change, Peak Oil, the BRIC age, etc. Some conflate Strategic Planning and Futurism in order to capitalize upon the corporate consulting market.
Really, only I look at the near future, say between now and 2040 or the likely career span for the 40 year old of today, with an unwavering eye toward personal relevance for my subscribers. I look at career, lifestyle, community, personal finance, etc. I do so from the vantage point of having been a Controller, a Manager of Financial Planning and Analysis, a Director of Strategic Planning and a CFO and a business owner. I do so with an imposing wealth of polymathic knowledge acquired over 40 years of intensive study. I am both competent and disposed to assisting you through the treacherous years before us.
You should read the Abstracts here. It should take you less than an hour. Then, you should subscribe to The Future 101. For $54.95 per year, I provide you with a graduate level, online course of study that will provide you with an understanding of the emerging, global Information Age civilization. It will not be 'pie in the sky' or designed to 'blow your mind.' It is designed to be personally relevant. It is designed to help you to identify your correct decisions, attitudes and actions now and over the next year or two.
Also, through The Polymathic Institute I will be building the infrastructure in the form of Enterprise Networks that you can use to begin to implement your Information Age action plan. If you are an Accountant, Analyst, Recruiter or Instructor this is most likely something you should be doing, at least part-time, as soon as possible.
In the near future your accounting software will be able to talk directly with the accounting software of your vendors, your customers, your bank and the various government reporting agencies. Invoices will be e-mailed from your accounting software to those of your customers where they will be triple matched and entered automatically into Accounts Payable. When the invoice is to be paid, your vendor's accounting software will notify its bank's software to pay your bank. Your accounting software will apply the payment and automatically notify your customer's accounting software of their new balance.
Payroll information will be reported automatically, wages and deductions calculated, necessary tax reports prepared and e-mailed to the appropriate agencies and the net pay will be automatically deposited in employees' bank accounts. Your accounting software will automatically calculate sales tax and e-mail the reports to the various taxing authorities. Similar imbedded expert systems will take over the inventory control and purchasing functions. In other words, over the next five to ten years, all clerks will become virtual. The live ones will be laid off.
The above scenario is not a someday, gee whiz, event. It requires no new technology. The required documents already exist as files in your accounting software. Currently, they are being printed out, mailed, manually received, entered into the recipient's accounting software, etc.. All that is really required is a File Format Translator so that your accounting software can create a record that your vendors', customers', bank's and reporting agencies' software can interpret. Once this is accomplished, most clerical functions will go the way of chimney sweeps and elevator attendants.
This will likely be stealth automation. One of my premium subscribers talks about how, with every new release, more of his job is automated. In similar form, over the next five years, every new release of your accounting software will automate more of these functions until they are completely automated. Twenty clerk AP departments of today may be reduced to just one or two.
In February of 2011, IBM unveiled Watson, a computer that spectacularly demonstrated that it could beat virtually everyone at Jeopardy. It played and easily bested the two top past champions.
In order to do this the computer was required to hear a natural language answer, usually designed specifically to be ambiguous, interpret the answer, search through its database, often make conceptually remote connections, find the correct information and, lastly, formulate the question to which the answer was related. As this video concludes, Jeopardy is the beginning, not the end of what will be a profoundly transformative technology.
IBM is creating, from Watson, a Physician's Assistant, named Dr. Watson, that will most likely be able to diagnose and treat diseases better than the Physicians it is assisting. It will lower costs, streamline the diagnosis process, reduce unnecessary tests and improve outcomes. Many in the field, as this Washington Post article demonstrates, are amazed by the technology and optimistic about its potential. Very recently, Wellpoint, the largest health benefits company in the U.S. announced that it had reached an agreement with IBM to "put Watson to work in health care."
This is, however, the beginning, not the end of the process. Automated diagnostic systems are beginning to surface everywhere with the ability to outperform the best of their human counterparts. This has led the X Prize Foundation to create their 'Tricorder' X Prize. X Prize boldly states, " With the equivalent of a board of physicians in your pocket, wireless sensors and imaging, you will be able to assess health and determine health care needs with a device in the palm of your hand." Clearly, A.I. and expert systems are ready to completely transform the medical industry, not someday, but now and going forward.
The question naturally arises, 'How soon will IBM or one of its competitors announce that it is creating an A.I. accountant?' Surely, if Watson can beat almost everyone at Jeopardy and his child, Dr. Watson can out perform Physicians in medicine, accounting and finance professionals will not be able to compete in knowledge, cost or accuracy with a Mr. Watson, CMA, CPA, CFA. Dr. Watson is estimated to require 18 months to bring to market. It should not take longer to bring Mr. Watson CMA, CPA, CFA to market. In many ways, he will be easier. For the most part, he will be a 'plug-in' to a system that is well bounded and already residing on your computer.
He will come loaded with all GAAP, GAAS, the APB Bulletins, FASB Statements, IFRS Standards, Corporate Tax Law, local regulatory, reporting and tax requirements and will be programmed with all accounting procedures and standard financial analysis methodologies.
It will be able to do NPV and DCF in its 'head' and program and perform monte carlo simulations, and other what-if analyses in a blink of an eye. It will have all the company's financial history at its finger tips. It will be able to close the books, make standard and adjusting journal entries, reconcile all GL accounts and perform statistical reviews of subsidiary ledgers and do it all far more quickly and accurately than any human. Since it is equipped with natural language capability, it will be able to produce the comments and analysis of the financial statements.
It will be able to produce the various required government reports and e-mail them directly to the proper agency. Every one of the quickly decreasing members of management will be able to, with one click, access Mr. Watson, CMA, CPA, CFA and ask natural language questions. The company will still need a Polymathic CFO to acquire and use a deep understanding of the company's financial data in the management of the enterprise. However, all other Accountants and Analysts will be replaced by the software.
This, too, will likely be stealth automation. IBM in partnership with SAP, Oracle, PeopleSoft, etc. will imbed more Watson-like functions into each release of its software. On one release, it may announce 'The Reconciler'. On the next release, it may announce 'The Adjusting Journal Entry Generator'. The next, it may announce a 'Sales Tax Reporter.' In this way, over time, with each release, fewer of the non-management Accountants will be needed. Next, as the number of Staff Accountants decreases, the number of Accounting Managers will decrease. Smaller enterprises will have their finance operations completely automated and will rely upon a part-time CFO.
As the profession experiences this implosion, it will then move to reductions in required Accounting Instructors and Recruiters. I know many readers will want to reject this outcome. However, with all due respect to Accountants, I have been one, Accounting is easier than playing Jeopardy at the championship level. It is easier than medicine. Watson has conquered those activities. It will conquer Accounting. The question is only, 'When?'
Nobody can know that for sure. However, Dr. Watson was put on an 18 month development schedule. It is unlikely that Mr. Watson CMA, CPA, CFA will require more. If we guess 24 months for IBM or a competitor to 'get to it', an 18 month development time and another 18 months for the major Accounting Software companies to imbed it in their next release, we have, perhaps five years. After that, the whole profession is on borrowed time.
So, unless you are approaching retirement, sometime between 2017 and 2022, you will need to find something else to do. What this will entail cannot really be properly understood without understanding The Income Explosion and Technological Unemployment which I Abstract on this site and explore in great detail at my premium subscriber site. I strongly advise you to read them, if you have not already done so.
Basically, the Economics of the next thirty years is going to be driven by two countervailing forces. First, advanced robotics and A.I. will drive incomes up, perhaps ten fold, from current U.S. levels. Second, 90% of all job descriptions will be eliminated. In the end, the two counteract one another and all will be well. However, all will not be well on the way.
Some jobs and professions will be demand limited. In other words, if the productivity of the medical profession increases tenfold, it is unlikely that people will seek ten times more medical care. As Dr. Watson and similar technologies increase the productivity of Physicians, the number required will fall and it will fall permanently. However, some professions, such as the Polymathic CFO, the descendent of Accountants, Financial Analysts, etc. will grow as economic activity grows.
However, the current jobs will be eliminated today and the new jobs will begin to become significant much later. We see an emerging picture of a period of dramatic unemployment and underemployment in the profession, followed by a slow, but dramatic increase in demand over the subsequent ten to twenty years. However, it will not be a return to business as usual. There will be both an increase in the minimum competency required in the profession as A.I. has taken over all the easier, specialized activities and, parenthetically, a dramatic increase in compensation. While ultimately an optimistic outcome, for current practitioners, instructors and recruiters, this is not a rosy scenario.
As I told my subordinates when I was a Financial Manager, 'Come to me with a problem and you are a Professional. Come to me with a problem and a proposed solution and you are a future Financial Manager.' If I expected it of my subordinates, I clearly should expect it of myself. So, if you are an Accountant, Analyst, Instructor or Recruiter and you understand this site and specifically this article, what should you be doing? What is the proposed solution?
First, as you will come to understand in 'The Death of Capitalism', 'The Rise of the Knowledge Class' and 'The Enterprise Network', the large, hierarchical, usually publicly traded and multinational corporation will not survive the transformation to an Information Age global economy. It will be replaced by Enterprise Networks, operating not under a single, hierarchical and unified management, but rather through strategic partnerships, vendor, customer and consultative relationships. You will not be an employee, you will be an owner-operator of one of the enterprises within the Network.
If it is your goal to become a Polymathic CFO in the Information Age, you will need to either wait until the transformation to an Information Age civilization and economy unfolds and find something else to do until that happens, or you need to push the envelope yourself by immediately leaving the corporate world and becoming a CFO of an enterprise preferably imbedded within an Enterprise Network. If you do not already have competency in all areas of Accounting and Finance, you are probably not qualified to do this at this time.
As you will understand when you read 'The Death of Capitalism' and 'Building a Liberating Portfolio While Saving the World' the investment markets are undergoing profound change. Over the next decade, the emphasis will migrate away from secondary markets, capital appreciation and acquisition strategies toward primary markets, income streams and organic growth. The ability to analyze the performance and potential of an enterprise will take precedence over the ability to analyze markets and market statistics. This means that the jump from Accountant or, even better, Financial Analyst to Fund Manager is a rather easy one. As investment dollars leave the secondary markets and begin to seek start-up or early round private equity opportunities, the outlook for this productive activity is very, very good. This too, needs to be a polymathic profession with expertise that extends to marketing, operations, technology and future studies.
As the quantity of openings for Accountants and Financial Analysts plummet, the opportunities for executive and professional recruiters also will fall. There will, however, be an ever increasing demand for Organizational Developers who will assist in constructing the management teams of the enterprises within Enterprise Networks. When the Transformation is complete a typical 25 million USD enterprise will be comprised of only the "C' jobs. Those will most commonly be CEO, COO, CFO, CIO, CTO and CMO. The Practitioner will first bring qualified candidates into an appropriate Enterprise Network and then, working with an aspiring CEO and the fund manager(s), build the complete management team. When a management team member leaves, retires or dies, the Practitioner will also be retained by the enterprise to acquire a replacement.
There is much buzz being generated currently by M.I.T.'s decision to introduce a certification process for their free, online and automated courses. Stanford has been pushing the envelope on this, as well. What is becoming apparent is that 90% of all University Professors and Instructors will not be needed. Since the demand for Accountants and Analysts will be plummeting until it again reaches its current level some time in the 2030's, Accounting Professors and Instructors will be hit doubly hard.
Like the profession of Physician, employment levels will be demand constrained. As you read 'The Cultures of Affluence' you will understand that the demand for personal development through learning will increase. However, it will not increase tenfold and that increase will be in self-actualization and 'meaning of life' style courses, not Accounting and Finance. So, if you are a Professor or Instructor in these areas, you better start planning your new career and sooner is much better than later. It is very unlikely that there will be any significant rebound once the employment rolls begin to decrease.
Whatever your current situation within the fields and whatever your aspirations for the future, the most important first step is to assure that you are not flying blindly into that future. There are lots of 'Futurists' out there who want to tell you about what the future might hold. Most of them will bombard you with hundreds of potential new 'gee whiz' gizmos.
Many of them are all about the Singularity, a time projected to be around 2045, when computers surpass humans. Some go even further and tell you about a time when humans become machines. Of course, there are a whole lot of Futurists that opportunistically play into the common beliefs of Global Climate Change, Peak Oil, the BRIC age, etc. Some conflate Strategic Planning and Futurism in order to capitalize upon the corporate consulting market.
Really, only I look at the near future, say between now and 2040 or the likely career span for the 40 year old of today, with an unwavering eye toward personal relevance for my subscribers. I look at career, lifestyle, community, personal finance, etc. I do so from the vantage point of having been a Controller, a Manager of Financial Planning and Analysis, a Director of Strategic Planning and a CFO and a business owner. I do so with an imposing wealth of polymathic knowledge acquired over 40 years of intensive study. I am both competent and disposed to assisting you through the treacherous years before us.
You should read the Abstracts here. It should take you less than an hour. Then, you should subscribe to The Future 101. For $54.95 per year, I provide you with a graduate level, online course of study that will provide you with an understanding of the emerging, global Information Age civilization. It will not be 'pie in the sky' or designed to 'blow your mind.' It is designed to be personally relevant. It is designed to help you to identify your correct decisions, attitudes and actions now and over the next year or two.
Also, through The Polymathic Institute I will be building the infrastructure in the form of Enterprise Networks that you can use to begin to implement your Information Age action plan. If you are an Accountant, Analyst, Recruiter or Instructor this is most likely something you should be doing, at least part-time, as soon as possible.
Thursday, February 2, 2012
Building a Liberating Portfolio While Saving the World
Lately, I have been reading ever more frequently that 'nobody wants a job'. That, of course, is ludicrous. What is really meant is that most people don't want the job they have. They spend 40 hours a week at a job and another 3.5 hours commuting to engage in an activity that they really would rather not do. The problem is, everyone wanted to be a rock star. The vast majority were not good enough to get one of the limited gigs, so,instead, they are changing brake pads at the local garage. All day long they engage in the same dull and repetitive activity.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In the wonderful SAP panel discussion on the future of business, X Prize Chairman, Peter Diamandis introduced the idea of an Age of Abundance. He said that billion dollar companies will go bankrupt overnight to be replaced almost as quickly by new billion dollar companies. In this, he is absolutely correct. In fact, during the Transformation, Real Gross World Product (GWP) will likely grow 70 fold. Not only will new billion dollar companies emerge, there will be seventy of them for every one that goes under. In other words, during the Transformation, new billion dollar companies will arise everywhere. So, let's think about how much it will cost to get into one.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
What will happen in reality is that sometime prior to the age of 50, the investor will decide that the portfolio is large enough, there is no reason to continue to work at their current productive activity that is not optimal and they will choose to 'retire' with a seven figure income and an eight figure net worth. Retire, of course, means to work how one wishes, not how one must. Additionally, the amount that needs to be reinvested each year keeps increasing and, at some point, the investor will have neither the time nor the opportunities to continue the exponential growth in portfolio valuation. However, many will choose to continue to allocate a portion of their income to new opportunities, thereby assuring, albeit at a lower rate, continued growth in portfolio value and income.
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
| Age | Beginning | Income | Ending |
| 36 | 10,000 | 6,500 | 16,500 |
| 37 | 16,500 | 10,725 | 27,225 |
| 38 | 27,225 | 17,696 | 44,921 |
| 39 | 44,921 | 29,199 | 74,120 |
| 40 | 74,120 | 48,178 | 122,298 |
| 41 | 122,298 | 79,494 | 201,792 |
| 42 | 201,792 | 131,165 | 332,957 |
| 43 | 332,957 | 216,422 | 549,378 |
| 44 | 549,378 | 357,096 | 906,474 |
| 45 | 906,474 | 589,208 | 1,495,683 |
| 46 | 1,495,683 | 972,194 | 2,467,876 |
| 47 | 2,467,876 | 1,604,120 | 4,071,996 |
| 48 | 4,071,996 | 2,646,797 | 6,718,793 |
| 49 | 6,718,793 | 4,367,216 | 11,086,009 |
| 50 | 11,086,009 | 7,205,906 | 18,291,915 |
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
- You will need a more complete understanding of the Information Age investment markets.
- You will need a superior knowledge of futurity so that you can make superior investment decisions.
- You will need an opportunity rich and success prone productive environment that can bring you a steady stream of superior Information Age investment opportunities.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Thursday, January 26, 2012
The Coming Age of Abundance
For premium members, we will be analyzing this video cast in great detail over the next few weeks. It is, I believe, the first major statement by the intellectual establishment on this issue. You will see many, many of the ideas of The Future 101 partially emerging in this conversation. They get some of it wrong, much of it correct, but mostly, it is, in this presentation, a series of thoughts rather than a synthesis. In other words, the interactions between them have neither been explored or rationalized.
Tuesday, January 24, 2012
Your Career in the Knowledge Class
The Future 101 presents, at the graduate level, an objectively supportable world view and a superior knowledge of futurity. As such it is primarily an educational service. It imparts knowledge, however, that veritably begs to be used. You may choose to use it by joining our Global Community of Action. It is intended to be a route to early entrance into the Knowledge Class.
Most of the Members of our Global Community of Action will enter first as passive investors and then, as the organization matures, will find and enter as an owner-operator within an Enterprise Network. Because the organization will be pursuing an investment first strategy, by the time they are ready to take on a permanent, productive role, the investment funds will be available for them on favorable terms.
By the end of the Transformation, the profile of careers will match what I have described in the article, 'What will you be doing in the Information Age?', in other words, in descending order of frequency, Designer, Content Creator, Social Experience Creator.... However, at the beginning, most participants will be Content Creators, Scientists and Inventors, Entrepreneurs and Investors. This will partially reflect the investment first strategy, but also will be the result of the need to build the Information Age infrastructure first. In other words, inescapable limitations will continue until incomes explode and cultures of affluence emerge.
Beginning as a Passive Investor:
Our goal of 20,000 Members, at an average Venture portfolio of 10,000 USD, will provide a total of 200 million USD of investment funds. This will grow through retained profits, between now and about 2025, into an aggregated portfolio value of 200 billion USD. This means a portfolio growth, for the individual who made an initial investment of 10,000 USD, to 10 million USD in about a dozen years. The Book Value on 10 million USD of Market Value is about 833,333 USD. A 67% return on Book Value suggests that the portfolio will provide the Member with equity in earnings of 558,333 USD per year.
However, for about 80% of our Members, the investments will be made through an investment fund that will take about 20% for their services. Remember, as I discuss in The Death of Capitalism, only about 8% of the value of an Information Age company is in financial assets. Most of the value is in ideas, knowledge, relationships, etc.
You will be providing capital that will acquire about 20% of the enterprise's equity in earnings. 8% will be compensation for the funds contributed themselves and the remaining 12% will be for understanding the future, something you acquire through The Future 101, and the industry sufficiently to choose a winning idea. By investing through a managed fund, in essence, you will be giving 4% of that 12% to someone expert in the industry and in picking winners. For most people that will be 4% very well spent. Of course, if you think you are very good and can do better than the 12% yourself, then you will likely be in the 20% who choose to 'go it alone.'
So, the typical Member should have the following investment expectation as a component of their Knowledge Class action plan. You will invest 10,000 USD, mostly over the next five years. Within 20 years, your portfolio will have grown to 8 million 2012USD and will have transitioned from a growth to an income portfolio, providing an income stream of about 450K 2012USD per year.
About 160 Fund Managers
As already mentioned 80% or so of the investments will be made through managed funds. The average fund will likely have 100 participants X 10,000 average portfolio = 1.0 million USD of funds under management which will grow to 1,000 million USD over a dozen years. It will provide an annual income of 56,250K USD. The typical fund will likely take positions in ten to forty enterprises. At maturity, the fund manager's share will be 200 million USD and an annual income of 11,250K USD. In other words, Fund Managers, if they are good, will be among the most highly compensated members of the Knowledge Class. The scope of our Community of Action will support 160 fund managers.
There are Venture Funds today. Here is an example of an open Venture Club. Imagine an Industrial Age company with a billion dollar market value. It will likely have a Book Value of about 350 million. If it reached this point by growing at its equity constrained rate of 23% for ten years, then it would have needed an initial book value of $44,158,766.13.
Now imagine an Information Age company with a billion dollar market value. It will likely have a Book Value of about 85 million. If it reached this point by growing at its equity constrained rate of 67%, then it would have needed an initial book value of $503,795.42.
When a company needs to obtain $44 million of initial capital, the options are few. Deep pockets win over vision. The Venture Capital industry is an exclusive club of high net worth money guys. They hold all the cards and they call the shots. They also take most of the company, because they can.
When you need $500K to start a business, a Reg D, Rule 504 raised from visionary members of your expanded network can finance it. A $5,000 investment now becomes a $5 million portfolio in ten years. You can create 100 multimillionaires from 100 smart people of modest means. So, the game is no longer for high net worth money guys. Its for nearly anyone with the vision to participate.
Our Enterprise Network Founders:
Of the 20,000 Members that constitute our organizational development goal, most will enter an Enterprise Network, form a management team for a new enterprise, 'pitch it' to the fund managers and independent investors and become a member of the Knowledge Class, with a Knowledge Class income and lifestyle. However, the Enterprise Networks must be there to be joined. This requires that a percentage of our Members be Enterprise Network Founders.
How this will be done and how the Founders will be compensated is a complex question that will have a somewhat different answer with each Network. Polymathica, a Culture of Affluence that cherishes refinement and erudition, is an example. In fact, it is the one in which I wish to become involved. We will do so by creating the foundational organization for our nascent culture, Polymathica.com.
There people can find and watch refined and erudite television and movies. There the can consume more erudite news, analysis and commentary. There, they can acquire a more polymathic education and proper credentials for a polymath. There, they will find online stores of refined products and erudite services. And finely, with time, there they will be able to find Polymathican boutique villages, when they can live anywhere and choose to live elsewhere. It will be Netflix, Amazon, facebook, Yahoo, Monster.com all rolled into one and created especially for people of refinement and erudition.
Polymathica.com will organize and enable everything with the reward of advertising and commission revenue. People who want to create and sell content, products and services that will appeal to Polymathicans, can go to the Venture Club, a private and premium venue within Polymathica.com, and there meet investors who want to invest in content, products and services that will appeal to Polymathicans. People who want to provide content, products and services to Polymathicans can go to the Polymathica Career venue and find collaborators.
In other words, Polymathica.com becomes the founding organization that enables enterprises that, in turn, provide the environment that Polymathica.com offers to people of refinement and erudition. It is one example of many. In aggregate these Enterprise Network Founders will also be the Founders of the global, Information Age civilization. They will become many of the wealthiest and most influential people in the world and they will have earned it.
The Best of the Rest:
I have highlighted the 160 fund managers and what might be a couple thousand Enterprise Network Founders because, although they represent a minority of the Members of our Community of Action, they are critical to its success. Most of the Members will subscribe to The Future 101 to gain the basic knowledge they will need to participate in the Community of Action and to succeed in the Information Age. They will then move on to Membership with the intent to begin investing and to, over time, create their own Information Age enterprise.
However, none of it happens until and unless we find the organizers, the Founders the visionaries. Without them, the rest will sit around permanently waiting for something to happen. And having something happen is absolutely essential. We are headed for a train wreck, the four horsemen of the Industrial Age apocalypse. They are technological unemployment, death of the Industrial Age city, The disintegration of the corporation and the loss of national identity.
This will take place between now and about 2025. Avoiding it is devoutly to be desired. This is accomplished by acquiring an Information Age career and lifestyle before the worst of it arrives. I call this the 'save the World by saving ourselves strategy.' You want to be involved in it.
I realize that these events, these calculations will likely cause a degree of Future Shock in most people. Keep in mind that in the Information Age, this will not be rich. It will be solid upper middle class.
Since the financial investment comprises about 20% of the company valuation, the owner-operators within our Community of Action will have a Market Value of 200 billion X 4 = 800 billion USD. Consequently, we are pointed at a future, for some as early as 2015 and for most by 2025, where the typical Member of our Community of Action will have a personal financial profile that looks like this:
From an ideological viewpoint, many people decry the current income and wealth disparity, primarily in the U.S. Here is the inescapable logic. The disparity can only be remedied in one of two ways. Either the majority of people will get much more affluent or society as a whole will need to get much poorer. The former is clearly better than the latter and that is what the Income Explosion is all about.
We are at a point in our history of great change. I quote John Maynard Keynes, '"I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe. Indeed, it has already begun. The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed."
We can excuse him for not seeing the paroxysmal event facing us right now. He got the rest exactly correct. In this strategy to save the World by saving ourselves, the biblical passage comes to mine, 'Many are called; few chosen - Many hear; few believe.' I am discovering the truth of this in today's situation. However, a few are enough.
Most of the Members of our Global Community of Action will enter first as passive investors and then, as the organization matures, will find and enter as an owner-operator within an Enterprise Network. Because the organization will be pursuing an investment first strategy, by the time they are ready to take on a permanent, productive role, the investment funds will be available for them on favorable terms.
By the end of the Transformation, the profile of careers will match what I have described in the article, 'What will you be doing in the Information Age?', in other words, in descending order of frequency, Designer, Content Creator, Social Experience Creator.... However, at the beginning, most participants will be Content Creators, Scientists and Inventors, Entrepreneurs and Investors. This will partially reflect the investment first strategy, but also will be the result of the need to build the Information Age infrastructure first. In other words, inescapable limitations will continue until incomes explode and cultures of affluence emerge.
Beginning as a Passive Investor:
Our goal of 20,000 Members, at an average Venture portfolio of 10,000 USD, will provide a total of 200 million USD of investment funds. This will grow through retained profits, between now and about 2025, into an aggregated portfolio value of 200 billion USD. This means a portfolio growth, for the individual who made an initial investment of 10,000 USD, to 10 million USD in about a dozen years. The Book Value on 10 million USD of Market Value is about 833,333 USD. A 67% return on Book Value suggests that the portfolio will provide the Member with equity in earnings of 558,333 USD per year.
However, for about 80% of our Members, the investments will be made through an investment fund that will take about 20% for their services. Remember, as I discuss in The Death of Capitalism, only about 8% of the value of an Information Age company is in financial assets. Most of the value is in ideas, knowledge, relationships, etc.
You will be providing capital that will acquire about 20% of the enterprise's equity in earnings. 8% will be compensation for the funds contributed themselves and the remaining 12% will be for understanding the future, something you acquire through The Future 101, and the industry sufficiently to choose a winning idea. By investing through a managed fund, in essence, you will be giving 4% of that 12% to someone expert in the industry and in picking winners. For most people that will be 4% very well spent. Of course, if you think you are very good and can do better than the 12% yourself, then you will likely be in the 20% who choose to 'go it alone.'
So, the typical Member should have the following investment expectation as a component of their Knowledge Class action plan. You will invest 10,000 USD, mostly over the next five years. Within 20 years, your portfolio will have grown to 8 million 2012USD and will have transitioned from a growth to an income portfolio, providing an income stream of about 450K 2012USD per year.
About 160 Fund Managers
As already mentioned 80% or so of the investments will be made through managed funds. The average fund will likely have 100 participants X 10,000 average portfolio = 1.0 million USD of funds under management which will grow to 1,000 million USD over a dozen years. It will provide an annual income of 56,250K USD. The typical fund will likely take positions in ten to forty enterprises. At maturity, the fund manager's share will be 200 million USD and an annual income of 11,250K USD. In other words, Fund Managers, if they are good, will be among the most highly compensated members of the Knowledge Class. The scope of our Community of Action will support 160 fund managers.
There are Venture Funds today. Here is an example of an open Venture Club. Imagine an Industrial Age company with a billion dollar market value. It will likely have a Book Value of about 350 million. If it reached this point by growing at its equity constrained rate of 23% for ten years, then it would have needed an initial book value of $44,158,766.13.
Now imagine an Information Age company with a billion dollar market value. It will likely have a Book Value of about 85 million. If it reached this point by growing at its equity constrained rate of 67%, then it would have needed an initial book value of $503,795.42.
When a company needs to obtain $44 million of initial capital, the options are few. Deep pockets win over vision. The Venture Capital industry is an exclusive club of high net worth money guys. They hold all the cards and they call the shots. They also take most of the company, because they can.
When you need $500K to start a business, a Reg D, Rule 504 raised from visionary members of your expanded network can finance it. A $5,000 investment now becomes a $5 million portfolio in ten years. You can create 100 multimillionaires from 100 smart people of modest means. So, the game is no longer for high net worth money guys. Its for nearly anyone with the vision to participate.
Our Enterprise Network Founders:
Of the 20,000 Members that constitute our organizational development goal, most will enter an Enterprise Network, form a management team for a new enterprise, 'pitch it' to the fund managers and independent investors and become a member of the Knowledge Class, with a Knowledge Class income and lifestyle. However, the Enterprise Networks must be there to be joined. This requires that a percentage of our Members be Enterprise Network Founders.
How this will be done and how the Founders will be compensated is a complex question that will have a somewhat different answer with each Network. Polymathica, a Culture of Affluence that cherishes refinement and erudition, is an example. In fact, it is the one in which I wish to become involved. We will do so by creating the foundational organization for our nascent culture, Polymathica.com.
There people can find and watch refined and erudite television and movies. There the can consume more erudite news, analysis and commentary. There, they can acquire a more polymathic education and proper credentials for a polymath. There, they will find online stores of refined products and erudite services. And finely, with time, there they will be able to find Polymathican boutique villages, when they can live anywhere and choose to live elsewhere. It will be Netflix, Amazon, facebook, Yahoo, Monster.com all rolled into one and created especially for people of refinement and erudition.
Polymathica.com will organize and enable everything with the reward of advertising and commission revenue. People who want to create and sell content, products and services that will appeal to Polymathicans, can go to the Venture Club, a private and premium venue within Polymathica.com, and there meet investors who want to invest in content, products and services that will appeal to Polymathicans. People who want to provide content, products and services to Polymathicans can go to the Polymathica Career venue and find collaborators.
In other words, Polymathica.com becomes the founding organization that enables enterprises that, in turn, provide the environment that Polymathica.com offers to people of refinement and erudition. It is one example of many. In aggregate these Enterprise Network Founders will also be the Founders of the global, Information Age civilization. They will become many of the wealthiest and most influential people in the world and they will have earned it.
The Best of the Rest:
I have highlighted the 160 fund managers and what might be a couple thousand Enterprise Network Founders because, although they represent a minority of the Members of our Community of Action, they are critical to its success. Most of the Members will subscribe to The Future 101 to gain the basic knowledge they will need to participate in the Community of Action and to succeed in the Information Age. They will then move on to Membership with the intent to begin investing and to, over time, create their own Information Age enterprise.
However, none of it happens until and unless we find the organizers, the Founders the visionaries. Without them, the rest will sit around permanently waiting for something to happen. And having something happen is absolutely essential. We are headed for a train wreck, the four horsemen of the Industrial Age apocalypse. They are technological unemployment, death of the Industrial Age city, The disintegration of the corporation and the loss of national identity.
This will take place between now and about 2025. Avoiding it is devoutly to be desired. This is accomplished by acquiring an Information Age career and lifestyle before the worst of it arrives. I call this the 'save the World by saving ourselves strategy.' You want to be involved in it.
I realize that these events, these calculations will likely cause a degree of Future Shock in most people. Keep in mind that in the Information Age, this will not be rich. It will be solid upper middle class.
Since the financial investment comprises about 20% of the company valuation, the owner-operators within our Community of Action will have a Market Value of 200 billion X 4 = 800 billion USD. Consequently, we are pointed at a future, for some as early as 2015 and for most by 2025, where the typical Member of our Community of Action will have a personal financial profile that looks like this:
| Net Worth | Annual Income | |
| As Owner Operator | 32,000,000 | 1,800,000 |
| As Passive Investor | 8,000,000 | 450,000 |
| Total | 40,000,000 | 2,250,000 |
From an ideological viewpoint, many people decry the current income and wealth disparity, primarily in the U.S. Here is the inescapable logic. The disparity can only be remedied in one of two ways. Either the majority of people will get much more affluent or society as a whole will need to get much poorer. The former is clearly better than the latter and that is what the Income Explosion is all about.
We are at a point in our history of great change. I quote John Maynard Keynes, '"I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe. Indeed, it has already begun. The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed."
We can excuse him for not seeing the paroxysmal event facing us right now. He got the rest exactly correct. In this strategy to save the World by saving ourselves, the biblical passage comes to mine, 'Many are called; few chosen - Many hear; few believe.' I am discovering the truth of this in today's situation. However, a few are enough.
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