Millennials as Social Inventors in the Fourth Economy

From marriage to religion to politics, millennials are less likely to identify with institutions of any kind than are previous generations. My prediction is that they'll become a generation of social inventors.

Pew reports that Millennials (18 to 33 years old) are about one third again more likely to identify themselves as political independents (at 50%) than are Gen X (34 - 49, at 39%), Boomers (50 - 68, at 37%) or the Silent Generation (69 - 86, at 32%). 

They are twice as likely as boomers and three times as likely as the Silent generation to have no religious affiliation. 

They've had a steep decline in marriage from previous generations, a continuation of a trend.

And yet these are not disconnected people. Measured by number of Facebook friends (admittedly a number biased by the inclination of young people to use social media and to socialize) they have a large network of friends.

My interpretation? This generation is not subordinating their definition of self or their relationships to existing institutions: instead, they are likely to reinvent institutions to better fit who they are. This is not revolution by the barrel of a gun that would seize control of existing institutions. Instead, it is a revolution that simply walks away from those institutions to create something new and different. They aren't fighting over the ball; they are creating new sports.

In the Fourth Economy I tell the story of economic progress as invention. And indeed, technological inventions like steam engines and computers rightfully get a lot credit for making our lives enormously better. But social invention - acts like the creation of the modern corporation and bank - have been just as important to the transformation of our world and sense of self as any technological inventions. 

Last century, technological invention became the new normal. Today, anyone who buys a car fully expects a better model to emerge within a few years. Anyone who buys a smart phone fully expects a better model to emerge within a few months. We expect constant evolution and occasional shifts in technology. 

This century, social invention will become the new normal. It is gradually dawning on average Americans that our definition of marriage is going through an historic change. What's curious about same-sex marriage is, of course, that gays are showing such an interest in marriage even when millenials are showing less and less. But the reinvention of this social invention we call marriage is hardly the only reinvention that millenials will experience and pioneer. This is the generation that grew up playing video games as much as they watched TV or listened to music; they are used to having participation in, some control over, their experiences. You may not be able to change the outcome of a song or movie but you can change the outcome of a video game. This generation is not going to simply accept the social inventions they've inherited: they are going to expect to be able to change them to adapt to who they are and to reality as they see it.

Same-sex marriage will seem like a paltry change within a few decades. Millenials will popularize entrepreneurship twice: once in the traditional way by starting more businesses than any previous generation and a second time by extending entrepreneurship as social invention into the re-creation of education, government, and the corporation. Their leadership style will be less about ascending to the position of CEO than about creating a successful startup; and this will be true not just in the business world but across the various kinds of relationships they have, from personal to financial to religious to political. 

Economic progress has been the product of technological and social invention. We've already made technological invention a constant. It's the millenials who will make social invention a constant. 

It's little wonder that Pew reports that millenials are also optimistic about their economic future.

Will Corporations Lead Governments in Addressing Climate Change?

Today, Sir Richard Branson wrote an interesting piece in which he sided with Apple CEO Tim Cook. Conservative stockholders have recently criticized Cook for pursuing sustainability programs and his response was to advise them to get out of Apple stock. Branson seconds this sentiment, adding that it is not just profit that drives corporations but purpose.

In Galileo's time, the laity put more trust in priests than scientists; in our time, voters put more trust in politicians than scientists. People distrust scientists because they don't understand them; priests and politicians are easier to believe because they speak in a language that doesn't require us to think hard. By contrast, businesses are used to thinking rigorously about issues, which gives them a real advantage over Congress in dealing with reality.

I've written before about how the popularization of entrepreneurship is something that will transform the corporation. As employees become more entrepreneurial, control over the corporation and the definition of policies will be dispersed more broadly within the corporation. (The corporation will be democratized in ways that parallel the transformation of the church and state centuries earlier in the West.) Senior managers in one country might feel blase about policies that negatively impact employees or residents across the globe. As employees throughout the corporation have more power to define policies, they are likely to put as much value on their own air, water, and climate as they are profits. Management here may not be concerned about habitats there but employees everywhere will be concerned about habitat everywhere. (And, of course, given the dynamics of climate change, everything going on over "there" are just as likely to impact us 'here.")

Corporations may not be people but they are comprised of people. People within a corporation are as likely to care about the earth as people within a school, park, shopping mall or city hall. As more people get to shape corporate policy, it should benefit more people. Churches became better when power was dispersed from the popes to the people. Nation-states became better when power was dispersed from monarchs to voters. Corporations will become better, too, when their power is dispersed from CEOs to employees. And that's already happening as decisions become too complex for any leader to keep pace with.

Sir Branson has called our attention to this before: he thinks that corporations will take the lead on addressing climate change. I think he's right. The issues around climate change revolve around business practices and business is - of course - the domain of the corporation.

Predicting a Record Number of Civil Wars

This decade could be really messy. Already countries like Iraq, Syria, and the Ukraine are making headlines as forces within the country struggle for independence or control.  Given the stage of development so many countries are at right now, we will likely see quite a number of civil wars in the next 20 years or so.

Iraq became a country because some British administrator drew a line around the region. Iraq now includes two or three very distinct groups that don't think of themselves as one nation but instead as three. It seems obvious to say but it's tough to create a nation-state when more than one nation - more than one people - wants to be represented. The Kurds in the north of Iraq have very different values and interests - perhaps irreconciliable differences - from the Sunnis and Shiites in the south.

Before the English and French invented the modern nation-state, the West was mostly defined by city-states, empires, and tribes. A state refers to a form of government. A nation refers to a people who define themselves through some blend of common language, beliefs, culture, history, potential, etc. One nation might include many states. (Think of Italy before 1861, made up of city-states like Milan, Florence, and Venice.) One state might include many nations. (Think of the Holy Roman that at one time or another included Germans, Dutch, Italians, French and Poles.)  A nation-state by definition aligns a nation and a state.

As it now stands, it seems difficult to create a modern democracy without first creating a nation-state.

The Ukraine seems to be comprised of two nations right now. The west faces Western Europe, is liberal, better educated and intent on economic and social freedoms. The east faces Russia, is conservative, less educated and speaks Russian. While it is possible to align these two groups, it is very difficult. And the more that the people define their own policies -as happens in a representative government - the more glaring will be these differences, the harder it will be to reconcile. A strong-man leader makes these differences less important simply because these differences have little chance to be expressed; but as information technology, media, and economic power shifts from the center of a country to its people, such differences become more obvious. It seems as though one of the first things revealed in the transition towards a democracy is that these countries are rarely nation-states; instead, they are petty empires of multiple nations that have been ruled over by a strong central government.

Because of this, civil war almost seems like an inevitable step towards the creation of a nation-state. (It happened in the US when the economy and politics developed to the point that states became less defining of the continent than the country, when united States gave way to The United States.)  Because of this, it's hard to imagine that the number of civil wars will drop any time soon. This is going to be painful.

P.S. Here's a piece that not only adds a different perspective on the Ukrainian crisis from what you might get in most Western media but seems to buttress the notion that a fundamental problem is that there is no organic whole that encompasses the Ukraine, a country that was pieced together by outsiders after WWII.
Jack Matlock, Ukraine: the Price of Internal Division

This Message from the Internet - Now That Your Mind Are Belong to Us, We're Going to Blow Up Your Ideas of Normal

Next month, the Internet turns 25. It has laid the foundation for something extraordinary.

In 1439, Johannes Gutenberg invented movable type printing.

By 1464, 25 years later, the Gutenberg Bible had been created. Previously, only institutions could afford bibles because they were so labor-intensive to transcribe, requiring more than a man-year of labor. Now the bible was something the individual could aspire to own. (Although its cost, initially about three years of a clerk's wage, was closer in price to a house than a meal.)

It was nearly 100 years later (in 1534) that Martin Luther had completed his translation of the Old Testament into German. His translation of the Bible into the language of everyday German people helped to create a new kind of religion based on personal understanding and revelation, no longer reliant on the official pronouncements of the church that had monopoly rights to the Bible. The individual could now judge the church - any church - based on his understanding of scripture; this was a radical shift from the Medieval Church.

A century between the invention of a tool that changed how people thought to social revolution. It might not take that long this time.

25 years ago, as reported by PewResearch, ,

Sir Tim Berners-Lee. Lee wrote a paper on March 12, 1989 proposing an “information management” system that became the conceptual and architectural structure for the Web. He eventually released the code for his system —for free—to the world on Christmas Day in 1990. It became a milestone in easing the way for ordinary people to access documents and interact over a network of computers called the internet —a system that linked computers and that had been around for years. The Web became especially appealing after Web browsers were perfected in the early 1990s to facilitate graphical displays of pages on those linked computers. 

It's difficult to find any data on adoption rates for books produced by the Gutenberg press, but it's hard to imagine that it's been as rapid as the adoption of the Internet.

87% of Americans now use the Internet. Use is 99% in households with income greater than $75,000, and 97% for young adults and college grads. That's pretty close to saturation levels. In just 20 years, we've gone from only 14% of the population who use the Internet to only 13% who do not.

Smartphone ownership has jumped from 35% to 58% in just 3 years. (And curiously, ownership among Hispanics - at 61% - is significantly higher than among Whites - at 53%. I can't help but remember the story of the King of Portugal, present when Alexander Graham Bell first demonstrated the phone, being so amazed when he spoke to one of his people in the other room. "But how does it know Portuguese," he asked.)

By giving the Bible to everyday Germans, Gutenberg and Martin Luther unleashed forces that transformed how we thought about religion, government, knowledge, and ourselves.

Already the Internet has played a role in revolutions in places like Egypt, Syria, and the Ukraine. Does anyone really believe that once you've given everyday individuals access to the wide world that it won't eventually transform our notions of politics, business, education, community, and what it means to be an individual once again? Technologies that change how we think and communicate can't help but change how we live. If anyone thinks that the Internet isn't going to undermine the norms and structures of governments, corporations, schools, and churches simply hasn't thought very hard about it.

The Internet hasn't just re-wired our world. It's re-wired our brains. And you'll see increasing evidence of those newly wired minds restructuring the world around them.

Arizona SB 1062 - Looking for Government Support for Your Religious Beliefs

In the U.S., churches have the right to religious freedom. So do individuals. This great country was the first to institutionalize religious freedom and this has been the basis for the freedom of thought that has not only led to the religious entrepreneurship that has given us Scientology and Latter-Day Saints but the business and technological entrepreneurship that has given us Hooters and the world lead in patents.

Because religious freedom has so little opposition in this country, Arizona Republicans have wisely chosen to pass a new bill under that umbrella.

Arizona's state senate has passed SB 1062.  It makes only a couple of changes to existing law. For one thing, it extends the definition of "person" from "a religious assembly or institution" to "any individual, association, partnership, corporation, church, religious assembly or institution, estate, trust, foundation, or other legal entity." Everyone agrees that people have freedom of religion. Now the Arizona senate has said that businesses are also people.  And freedom of religion means that we can't compel someone - or some business - to do something they don't believe in.

The gay community  feels that this is written to allow discrimination against them. You want a gay wedding at a lovely venue in Scottsdale? The owner of that venue can say "No" based on her religious belief that gay weddings are wrong. I suppose that gays are right that this is targeted at them but I don't see how - given how the law is written - it would prohibit a business from doing the same to someone wanting a Muslim wedding or inter-racial wedding or a wedding featuring a divorced Catholic ... or for that matter someone wanting to eat BBQ while wearing a Star of David.

For some people, the issue is never their exclusion of other people but instead, their right not to associate with those other people, whether they're gay or black or female. But for the most part, laws have evolved to the point that the minority's right for inclusion has greater power than the majority's right to exclude them. This, it seems to me, is a lovely thing and a sign of an evolved society.

But, you ask, don't religious fundamentalists who feel they're under attack for being forced to associate with publicans and sinners have a right to appeal to the government for laws that protect their right to exclude?

Our founding fathers wrestled with the question of when religious beliefs stopped and laws began. As you would imagine about men as brilliant as our founding fathers, they weren't exactly of one accord on the question. Some were traditional Episcopalians. Some were theists. Jefferson once spent time in the White House carving up the New Testament, expunging it of all instances of what he called magic - supernatural miracles that couldn't be explained by modern science. They had didn't opinions but they also didn't want their new country torn by battles over religious claims that were impossible to prove. They saw what that had done to Europe. They didn't believe that religion could be codified by laws. Jefferson and Franklin - admittedly two of our least traditionally religious founding fathers - felt that it wouldn't be much of a God to need the aid of a state.

Thomas Jefferson said, "Truth can stand by itself."  Whether it was the golden rule or the law of gravity, for him truth was something that could be proven by observation. He didn't want a declaration about what was true; he wanted proof.

Ben Franklin shared his sentiments. "When a religion is good, I conceive that it will support itself; and when it cannot support itself, and God does not take care to support it, so that its professors are obliged to call for help of the civil power, it is a sign, I apprehend, of its being a bad one."

You don't like Jews coming into your restaurant? You want the government to support your exclusion of them from your lunch counter? Well, you won't find much support from Ben and Tom or the government they established. Instead of appealing to the government, maybe you could just ask your God to strike them dead. If you can call down lightning to strike dead those you find morally reprehensible even a few times, I'm sure that eventually your community will agree to pass whatever laws you define. It worked for Moses. Of course that sort of thing is evidence that even Thomas Jefferson would acknowledge and not just based on someone's declaration about who is and who is not deserving of brisket.

The NFL Represents The Future of Our Legal System: Reviewing Life's Events Through Instant Replay

The NFL might offer a view into the future of our legal systems and baseball a look into our past.

The NFL has instant replay available for officials. Plays filmed from every angle allow officials to huddle below a hood that looks like a 150 year old camera, and emerge with confirmation of the call on the field or fresh evidence that it was wrong. Nobody argues. They just challenge and then the officials closely scrutinize the play with the benefit of multiple camera angles and slow motion replay.

Baseball still deals with contested calls  the old fashioned way. The manager goes out and hollers at the ump, intent on changing the call. Either this year or next, though, baseball is going to abandon this tradition of proof through persuasion and passion and adopt the NFL's review of the play approach.

Today, our courts resort to the tactics of baseball. You hire someone you hope is sufficiently persuasive and passionate to cause the jury to reverse the call made by the prosecution. If it works, you take your base. I mean, you walk.

Meanwhile, more and more of our lives are being recorded. It's not hard to imagine a civil suit being settled by review of the video. "Yes. Here you clearly assure my client that if there is a delay of more than a month you'll refund him the full amount." Or, "You can see that at this moment, with a look of pure rage, the suspect intentionally - and not accidentally - pushed him over the balcony."

Intel is already making small chips that are designed for wearable devices that could record image, sound, even heart rate and perspiration as indications of stress levels. It's perfectly conceivable that our lives will be recorded on the cloud, accessible by legal request in the event of civil or criminal charges.

It seems perfectly plausible that surveillance nation will lead to instant replay legal proceedings. Of course before that could happen, I'm sure that we'd hear a great deal of passionate and persuasive protests from litigators who do such a great job of persuading juries.

Once Upon a Time, We Had Small-Town Bankers

The 3 Big Lies About The Deficit

The deficit has  rapidly fallen from its peak of $1.4 trillion in 2009. This year the CBO is projecting the deficit to be $514 billion, and I think it could easily come in at $400 billion. Essentially, the deficit is down nearly a trillion dollars in 5 years and to about where it has been as a percentage of GDP for half a century.*

There are three big lies about the deficit that are rarely exposed. The first is that Republicans shrink and  Democrats explode deficits. Data from 1975 through 2014 easily refutes that. The second big lie is that the deficit is something conservatives dislike. And the third big lie is that our deficit is more important than half a dozen other economic questions.

Lie Number 1: Republicans Shrink the Deficit and Democrats Explode It

The blue lines in the following graph show the change in deficit as a percentage of GDP. For instance, in 1975, the first year in this graph, the deficit rose by nearly 3% of GDP. In 2014, the last year in this series, the deficit fell by 1.3% of GDP.

I've used the red state / blue state distinction to indicate whether the Oval Office is held by Republicans or Democrats. When the colored overlay is red (as in the 1975-76 period) the president is a Republican; when it is blue, (as in the 1977-80 period) the president is a Democrat.

As you can see, for this period of 40+ years, most of the blue lines above zero (that is, years when the deficit grew) coincide with Republican presidents, and most of the blue lines below zero (that is, years when the deficit shrunk) coincide with Democratic presidents.

In fact, on average the deficit grew by 0.8% of GDP when Republicans were in office and shrunk by 0.9% of GDP when Democrats were.  (As a percentage of this year's GDP, that's between $100 and $150 billion.)

You may have good reasons to vote for a Republican president but fiscal discipline should not be on that list. 

Lie Number 2: Conservatives Dislike the Deficit

The first regular use of government debt in the West after the fall of the Roman Empire was probably in Venice. The wealthy who could afford to support the government were given two choices: pay enough in taxes to fund Venetian government (specifically, a costly war was the big catalyst for this choice), or loan the government money. If they loaned the money, they'd get paid interest AND get their money back. If they paid taxes, they would simply lose the money. By buying bonds, worst case the government would be unable to pay back the loan and the rich would end up paying the sum in taxes anyway, but at least at a later time and after collecting some interest. Unsurprisingly, wealthy Venetians said yes to buying bonds instead of paying taxes. And soon a secondary market emerged that let Venetians sell those bonds to each other. This was a huge boon to the evolution of financial markets and government bonds were instrumental to first the Venetians and then the Dutch and then British becoming leaders in finance and the wealthiest people of their day.

Wealthy people like debt, like bonds, because they - quite rationally - would rather get their money back than lose it completely.

Government bonds - the debt - of modern democracies make for pretty safe investments. The US government has never defaulted on its debt. The Dutch have been regularly paying on bonds first issued centuries ago.  As long as inflation remains low, government bonds make an ideal investment if you're already rich and simply don't want to lose your wealth. Stocks and real estate are great investments but they're risky; if you are already wealthy, there is no sense in going for a double or nothing investment when the doubling would not change your quality of life but the nothing would. At a certain point it is rational to invest less for change, progress, and high returns than for a continuation of the status quo.

Lie number two is that conservatives don't really like government debt. They do. It's worth remembering that just before Clinton left office, projections suggested that the federal debt was going to disappear in about a decade. Alan Greenspan - the former Federal Reserve Chairman who dislikes social security and welfare and likes Ayn Rand - testified at the time about the dangers of not having any debt. Government bonds are, he said, a key part of investment choices. And he's right. Modern financial markets - that is, markets since before 1700 - have always offered investment choices that included government debt. That stability is a nice anchor to other, riskier investments.

Lie Number 3: The Deficit Is One of the Top 5 Economic Issues We Face
Still, politicians and reporters all talk about the deficit as if it something new and dangerous and more important than questions about how to stimulate economic growth, lower healthcare costs, protect the environment or create jobs and more engagement for workers. When the deficit was 10% of GDP it rightfully deserved some attention; now that it's back within historic norms, it only deserves some attention. The deficit has been fairly constant for centuries and whether economies have thrived or stagnated during that time rarely had anything to do with the deficit but instead had to do with things like innovation, problem-solving, and finding new ways to make people more productive. The deficit is not that important and real discussion about it is occluded by lies anyway (specifically these three lies). Focusing on the deficit allows everyone - reporters, politicians, and citizens - to avoid the real and creative thought that would be required to address significant economic issues.

------------
*The 2014 deficit is projected to be 3.0% of GDP. The average from 1974 to 2013 was 3.7%. The average from 1974 to 2008 - the year just before the Great Recession - was 3.1%.

We'll Learn Whether Obamacare Was Worth it in 2018

We'll know whether Obamacare is worth it at the next Winter Olympics when our athletes can compare their surgery results with those of athletes from all these countries that offer universal healthcare, enabling their athletes to make 2, 5, and 8 comebacks from multiple surgeries for injuries from sports like downhill skiing. If we can approach the per capita medal count of countries like Norway or Canada, then we'll know it's all been worthwhile.

Gaming the System - How Corporations Will Change Work

Philosophers talk about goods to have and goods to do. In terms of the good life, what you do has more impact than what you have. Economic progress in the last century has been about more and more economic goods to have, from cars and shoes to toys and electronics. Economic progress in this century will increasingly be about economic goods to do. This challenge won't be about drawing out our inner consumer but instead will be about tapping into our inner creator and problem-solver. This will mean taking the design of work as seriously in this century as we took the design of products in the last.

Gallup reports that only 13% of employees across 142 countries they've surveyed are engaged in their work. Their definition of engaged is that employees are "emotionally invested in and focused on creating value for their organizations every day." Worse, their 2009-2010 survey of global workers found that twice as many employees are "actively disengaged workers — i.e., those who are negative and potentially hostile to their organizations — continue to outnumber engaged employees at a rate of nearly 2-1."

Levels of disengagement cost companies and their communities twice. It costs because disengaged employees are less likely to take ownership of their results and thus less likely to problem-solve, create, or simply roll up their sleeves and work to get great results. That is, it costs businesses because they're creating less value, making it harder to reward shareholders, employees and / or customers. It also costs communities because when we are disengaged in our work we are less alive.

In her book Reality is Broken: How Games Make us Better and How They Can Change the World, Jane McGonigal argues that it isn't a problem that games (typically video games) are able to suck us in and can be so addictive. (Recently, Flappy Bird creator Dong Nguyen pulled the game because he said it was too addictive.) Rather, she says, the problem is that work and learning are NOT similarly designed.

If your company has more than 20 people whose job it is to design and redesign your products, you ought to think about having at least one engaged in the design and redesign of work - from work environments to the definition of tasks and finding the balance between process and creativity. There has been so much emphasis placed on six sigma, on higher quality products. It is time to put emphasis on measures of employee engagement.

Corporations could do worse than hire game designers to come in and analyze the work employees do and begin to redesign their tasks to engage in ways that more closely resemble games. The bad news is that work is so far from games that this will be hard to do. The good news is that companies have been so negligent in even thinking about work this way that early progress could be as easy as simply trying. It will take some time before companies have done such a great job at gaming work that there is little in the way of returns left.

For more on engagement in work, here are some of my earlier posts on the topic:
Tailoring Self to Fit a Job
Flow as the Compass for Social Invention
Flow & the Pursuit of Happiness

Taylor Pearson recently wrote this:
Redefining Work in the 4th Economy

Gallup offers their report on employee engagement here:
State of the Global Workplace

Does Your Musical Taste Influence Your Politics (or is it the other way around)?

Pandora now reveals your political leanings to advertisers based on your musical taste.

I kind of like that the Beatles and Johnny Cash are artists who bring us together (meaning Democrats and Republicans alike are fans) but what does it say about our country that so many of the bands whose appeal cuts across party lines are metal bands? Isn't that proof of a coming apocalypse? (Marilyn Manson appeals to Republicans and Democrats?)

Artists whose fans are most correlated to Republican

• 1. Kenny Chesney
• 2. George Strait
• 3. Reba McEntire
• 4. Tim McGraw
• 5. Jason Aldean
• 6. Blake Shelton
• 7. Shania Twain
• 8. Kelly Clarkson
• 9. Pink Floyd[7]
• 10. Elvis Presley

Artists whose fans are most correlated to Democrat

• 1. Rihanna
• 2. Jay-Z
• 3. Madonna
• 4. Lady Gaga
• 5. Katy Perry
• 6. Snoop Dogg
• 7. Chris Brown
• 8. Usher
• 9. Eminem
• 10. Bob Marley

Artists whose fans are hardest to predict for either Democrat or Republican

• 1. The Beatles
• 2. Marilyn Manson
• 3. The Rolling Stones
• 4. Johnny Cash
• 5. Pantera
• 6. Alice in Chains
• 7. Paradise Lost
• 8. Moonspell
• 9. Fleetwood Mac
• 10. Tiamat

One other interesting note. Democrats are harder to categorize. This is partly because they're more likely to listen to a wider variety of music. 

Here's the blog post about the relationships in the data.

http://notes.variogr.am/post/26869688460/how-well-does-music-predict-your-politics