Who Thought That Bond Markets Might Address Climate Change Before Governments and Corporations?

Amita Sharma at KPBS did some fascinating reporting on how rising sea levels will impact a planned expansion of San Diego's convention center. She rather deftly turned climate change into an investment issue.

Maps generated by researcher Daniel Cayan at Scripps Institution of Oceanography and Richard Gersberg at SDSU suggest that by 2050, sea levels will rise between 18 inches to 4 feet along San Diego Bay, causing flooding in areas that include the convention center. Because of this, investment markets may curiously enough offer a way to begin addressing climate change, something that governments and corporations have been slow to do. This, from Sharma's report:

Commission planner Diana Lilly says she's aware of the maps and doesn't think they should be dismissed.
"We certainly are concerned about the issue of sea level rise and how it affects the convention center expansion," she said.
The market may also care. The $520 million project would be financed by bond investors. And they like to know when there are risks.
"In a securities offering you must disclose all material facts that could conceivably affect an investor in a transaction," said Gary Aguirre, a securities attorney in San Diego."Let me ask you would it affect an investor? Would it be valuable information to know the project for which the funds are being raised could be underwater before the bond was paid off? To ask the question is to answer it. Yes, that should be disclosed."

Per Aguirre's point, if you buy a bond that won't be paid back for 30 years, you'd like to know that the project you're funding will last at least 30 years. To invest in a project that might be forced to close after, say, 10 to 20 years is to lose money. As investors shy away from such projects, this could force communities to coordinate to arrive at solutions that address reality rather than deny it.

As odd at it may seem to some that the bond market - an engine of capitalism - may help to address climate change, it's worth remembering that bond markets helped to bring us democracy. Here's a section from my book, The Fourth Economy, that tells the story of how bond markets changed European governments in the early 19th century.

The King of Prussia Bows to Nathan Rothschild

Investors had a bad track record with absolute monarchs. Monarchs were too likely to spend money on unproductive causes (like huge palaces, for instance) and to default rather than submit themselves to moneylenders. Investors soon realized that parliamentary governments were more reliable than monarchs in terms of repayment. They therefore charged absolute monarchies higher interest rates. Often during the eighteenth century, Britain was able to borrow money at half the rate that investors demanded of the more frequently defaulting French.

In 1815, Napoleon was defeated at Waterloo and a king once again took the French throne.[1] Nonetheless, France had created an arms race among Europeans and unease among royalty, and this put a great strain on some of the more traditional economies, like those of Prussia and Russia. These countries were forced to seek financing for both modernization and armaments.

After the war, the Prussian king, Friedrich Wilhelm III, turned to the Rothschilds for a loan. Prussia was a great power. It was the country that would eventually bring about the union of Germany, and Prussia was home to the city of Berlin, which would become the German capital. The King of Prussia was no petty aristocrat when he came to Nathan Rothschild in the wake of the Napoleonic wars, asking for financing to modernize his country and army. Prussia was one of the great powers in Europe.

Yet Nathan Rothschild’s response to Wilhelm’s request for a loan was symbolic of the great shift in power that had occurred.  In a letter dated 1818, Nathan Rothschild explained to the Prussian King:

…the late investments by British subjects in the French funds have proceeded upon the general belief that in consequence of the representative system now established in that Country, the sanction of the Chamber to the national debt incurred by the Government affords a guarantee to the Public Creditor which could not be found in a Contract with any Sovereign uncontrolled in the exercise of the executive powers.[2]

Rothschild basically said that investors preferred parliaments to absolute monarchies, and he was defining terms for the loan in this initial negotiation, as any lender might do. What was highly unusual and completely remarkable was that a mere banker could dictate the terms of the loan to a king in this stage of negotiations. And these were not just any terms. He was requesting that Friedrich Wilhelm III submit to a parliamentary form of government in order to qualify for the loan he had requested. Through negotiations this clause was modified, but not by much. The finalized contract included a clause that basically demanded constitutional reform as a precondition for any further borrowing. This, perhaps more than any other act, signaled a watershed moment: a banker was now dictating terms to a king. Before the King of Prussia could borrow his next round of financing, he would have to share power with parliament. Just consider what this says about the rise of the banker in relation to the state. Nathan Rothschild, member of a group who in one generation could be forced off of the sidewalk by children, was now ordering one of Europe’s most powerful kings to give up power to Parliament. Step off the sidewalk indeed. The French armies wanted to topple kings and institute republics in their place. What the great General Napoleon was unable to do in Prussia with military force, Nathan Rothschild the banker was able to do with capital.

---

[1] Nathan Rothschild, who knew before other investors that Napoleon had been defeated at Waterloo, used information about Napoleon’s defeat to play the markets and to quickly make a small fortune, enlarging his capital and influence.

[2] Ferguson, The House of Rothschild, 270.

Investment markets force us to look forward. Right now, that future looks warm and soggy. Apparently, that's easier to ignore when we're talking about the abstract affect on future generations than when we're talking about the concrete affect on investment bonds we're selling today.

Amita Sharma's full report on how climate change is impacting plans for the convention center is here.

Alternatives to Marriage

Weeks ago, I flew beside an attractive young mother who told me that she got married even though she didn't want to. "I don't intend to leave my husband. We have two children. But I didn't like the idea of being married."

"Why did you do it then," I asked her.

"My mother is very traditional She's Chinese and once our first boy was born it drove her nuts that we weren't married. I did it, really, for her."

"What difference does it make," I asked. "Why would you have rather not married?"

"I heard guys at work talk about their wives and they would talk about them as if they were some duty, some burden. I did not want to be that. I wanted more than that."

I was left thinking again that this generation has such a fascinating row ahead of it as it creates and navigates new kinds of arrangements, new social inventions, in domains as varied as boardrooms and bedrooms. It confirmed for me that we're living in a time of great change in that category.

And then we watched the century-old play by George Bernard Shaw and I heard this dialogue between Pickering -a gentlemen higher up in society - and Doolittle, who is part of the working poor. I realized that this is not a new thing, this matter of various kinds of departures from the "traditional" marriage. In fact, ad hoc relationships are at least as traditional in the sense that they've been around for as long.

PICKERING. Why don't you marry that missus of yours? I rather draw the line at encouraging that sort of immorality.
DOOLITTLE. Tell her so, Governor: tell her so. I'm willing. It's me that suffers by it. I've no hold on her. I got to be agreeable to her. I got to give her presents. I got to buy her clothes something sinful. I'm a slave to that woman, Governor, just because I'm not her lawful husband. And she knows it too. Catch her marrying me! Take my advice, Governor: marry Eliza while she's young and don't know no better. If you don't you'll be sorry for it after. If you do, she'll be sorry for it after; but better you than her, because you're a man, and shes only a woman and don't know how to be happy anyhow. - George Bernard Shaw, Pygmalion

Perhaps this young mother I thought of as so modern had gained her insight from reading Shaw's dialogue from a century earlier. Force the man to "be agreeable to her" by being a slave to her, knowing that she is free to leave if she's displeased. It turns out that I'm not only not up with the times - I'm at least a century behind them.

Here's a song you can hum as you contemplate this.

The Missing Dynamic in DC

What's missing in Washington is not a dialogue between Republicans and Democrats. What's missing is a dialogue between wild optimism and brutal facts, between faith and reality.

"Leadership does not just begin with vision. It begins with getting people to confront the brutal facts and to act on the implications."
- Jim Collins

Robert Samuelson writes about President Make-Believe in the Washington Post today, in response to Obama's rhetoric in his inaugural speech Monday.

Of course, there are conflicts between the young and old. In 2000, there were 45 million Social Security recipients; by 2025, the Social Security Administration projects the number at 79 million. Already, paying for retirees is the largest source of federal spending....
On climate change, the difficulty is greater. Environmentalists argue that emissions from fossil fuels (coal, oil, natural gas) need to be cut 50 percent to 80 percent by mid-century to avoid a ruinous warming. The problem is that there’s simply no plausible way to get from here to there without, in effect, shutting down the world economy.
Consider a recent study by the International Energy Agency in Paris. Under current policies, it forecasts that world energy demand will rise 47 percent between 2010 and 2035 and the increase in emissions of carbon dioxide — the largest greenhouse gas — will be almost the same. 

Whether the topic is as long-term as climate change, as seemingly intractable as Middle East politics, or as inevitable as eventual shortfalls in social security and medicare funding, reality is going to win over any distortions of it.

I'm not advocating gloom or doom. Far from it. Jim Collins in his Good to Great book also adds a context for his quote about confronting brutal facts, and it lays out the tension between facts and optimism, a tension from which it seems anything grand emerges.

"A key psychology for leading from good to great is the Stockdale Paradox: Retain absolute faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time confront the most brutal facts of your current reality, whatever they might be."

We're not going to create anything good by clinging to just blind faith or just brutal facts. In the same way that neither man nor woman can conceive a baby by themselves, so it is with facts and faith: any new and great creation will come from the dynamic between the two. Neither works particularly well in isolation. 

Those Wildly Symbolic Americans

Today, Martin Luther King's Birthday (well, holiday commemorating same), Barack Obama was sworn in for his second term. And January marks the 150th anniversary of the passage of the 13th amendment that freed slaves. That is delightfully symbolic.

So given Americans' seeming penchant for symbolism, it's hard to imagine that they'll be able to resist voting in a woman in the 2020 election, the year that will mark the 100th anniversary of the passage of the 19th amendment that gave women the right to vote.

It takes us awhile, but we might just get past these silly prejudices yet. And isn't that cool?

Freedom is Not the Same as Empowerment (or, It's Not What You Spend, It's What You Invest)

The Legatum 2012 Index has just been released. It ranks countries by a rich set of variables to measure prosperity. It doesn't just measure things like GDP and unemployment but also health, education, safety, personal freedoms, and entrepreneurship and opportunity.

Norway, Denmark, and Sweden top the list. These three countries spend and tax a great deal (tax rates an average of 46% of GDP and government spending an average of 48%  - nearly half - of GDP). In the following chart, you can see the top 21 countries, ranked from left to right. The lines measure taxes and government spending as a percentage of GDP. Further, there is a simple trend line that shows that as national ranking drops, so do spending and taxes.

Spending seems neither good or evil but instead necessary for the creation of a prosperous nation.

The Legatum Institute’s measure of prosperity is both complex and reasonable. If a country’s people have high incomes but few freedoms, it gets a lower score. The score also drops if its economic prosperity comes at the expense of health. The index makes an attempt to measure future prospects. Education is one obvious way to measure that but one of the more interesting variables is that of entrepreneurship and opportunity; if your people currently have high incomes but there is little entrepreneurial opportunity or activity, your ranking drops. (It doesn't seem as though they included environment, though. It seems that a measure of prosperity should take account for the loss of natural resources that comes from drawing down oil or fresh water reserves or polluting air and water.) 

This seems to affirm that prosperity is more complicated than just declaring freedoms. "You are free to learn what you would like" is not nearly as empowering as "You will have access to free education, education that we will hold to a particular standard. And not only are your parents required to send you to school but we have laws that prohibit child labor." And this may be the simplest explanation for why cutting government spending and taxes does not simply lead to more prosperity and may actually diminish it. Freedom is not the same as empowerment.

Edward Deci distinguished between three different styles of parenting or managing. I would say that the styles also apply to governing. The first style is controlling, dictating to children, employees or citizens what to do. The second style is abandonment, or freedom, letting children, employees, or citizens do whatever they want. Deci's third and recommended style is what he called autonomy-supportive. In this model, children and employees and citizens alike are the one's - ultimately - who have the power to choose and decide what to do. But rather than just given freedom to do what they want, they are supported by parents, teachers, and governments who enable them to realize their goals with a combination of education and resources. 

Deci's third style of governing suggests that a government that enables its people by helping them to be healthier, better educated, and to have better access to capital, information technology and a fair legal system will be more prosperous. And Legatum’s prosperity index seems to support that very claim. Empowerment is not the same as freedom nor is it free.

High tax rates and government spending can inhibit prosperity but not nearly as much as a failure to invest in quality healthcare, education and governance. Prosperity depends on investment and that is just as true of nations as it is individuals.

Jedi, Wiccans, and Scientologists

From a fascinating article on the fundraising behind Scientology's recent cathedral building here:

And the ranks of the faithful are dropping. In 2008, there were 25,000 self-identifying American Scientologists, down by over a half from 55,000 in 2001, according to the American Religious Identification Survey. (Over the same time period, the number of Wiccans more than doubled from 134,000 to 342,000.) The 2011 British census showed a total of 2,418 Scientologists across England and Wales; about 73 times as many Brits identified themselves as "Jedi."

That's kind of interesting.

Wanna Bet? Because I'm Tired of Arguing

I'm done arguing. As part of a new year's experiment (my variant on new year's resolutions) for the next few months, I'm going to make bets instead of arguing.

Arguments have so many problems. They alienate and anger people. They tire spectators on the sideline. They are a way to assert a worldview but more often a worldview that can't be tested but instead can only be tolerated or enjoyed like a familiar story.

By contrast, a bet demands a certain amount of precision and can be proven right or wrong. It demands prediction. And it allows you to quickly silence those who are just playing devil's advocate and merely want to tire you with petty, inconsequential probabilities.

I don't know how this is going to work but here's how I imagine it.

Old world argument ...
"We have the right to bear arms. It's in the constitution."
"But we could put in place some regulations that protect the right to own guns without pretending that anyone anywhere can have any kind of gun."
"Hitler confiscated guns. If you regulate firearms it's not only against the constitution, it makes you just like Hitler. (Plus did you know that he was a vegetarian?)"
"You don't think that gun regulations could help?"
"You can't outlaw guns! That ..."

And so it goes. Tiresome. Imprecise. A mix of rational and irrational claims all tumbled together like turds and chocolate. Here's how I imagine it could go instead.

New world bet ...
"We have to reduce the deficit. And we have to do it with spending cuts because taxes are already too high."
"You think that we can cut military spending and entitlements enough to close a trillion dollar gap?"
"No. We shouldn't cut defense. We should only cut welfare and entitlements."
"Okay. I'll bet you $20 that you can't balance next year's budget without touching the military or raising taxes, listing specific cuts that you honestly believe we should make. And if you win that bet, I bet you $2,000 that you can't get 6 out of 10 random people on the street to agree to your cuts. And if you win that bet, I bet you $100,000 that you can't get your Congressmen or Senator to publicly agree with your cuts. They'll just be too afraid to alienate constituents and would never vote for those cuts."
"What?"
"You have a conviction that we should reduce the deficit and that we don't need to raise taxes to get there. I could say things about how taxes as a percentage of GDP are the lowest they've been in 50 years. I could say that we've never had more retired people as a percentage of the population, thereby driving higher costs for retirement. I could point out that never has it been so expensive to prepare for a career,making education more expensive. I could argue that while people hate how much government costs they mostly agree with the expenses that drive its costs. I could make all sorts of points about how spending can only compress so far but you won't listen to any of it, dismissing me as misinformed and delusional. So instead, here's a chance to either admit that you were wishing government was cheap in the same way that 16 year olds wish that a BMW was affordable or demonstrate the real conviction about your beliefs and cash in on the fact that you are right and I'm wrong. So, which bet do you want?"
"Those are ridiculous bets."
"Well then tell me which of your convictions you'd place money on."
"That's stupid."
"So you don't believe in your own beliefs. Fine by me. What do you think about those Padres?"
"They've got a great, young team."
"So, do you want to bet against me when I say they'll lose the division?"

Now I may be caught up in my own imagination in ways that are unhealthy, but I somehow see this new "bet, don't argue" policy as making life more interesting. Don't believe in climate change? Think that the scientists are wrong and the oil companies, politicians, and talk show hosts are more objective about this topic, have more understanding than the scientists? Fine. Let's bet about the weather over the next decade. I'll bet you $10,000 that big storms and average temps don't go down and $1,000 that they go up. You think that Iran is stupid enough to bomb Israel? I'll bet you that it won't happen over the next decade. And so on.

Also, people with money on the line are more likely to be precise in their arguments than people who have nothing at stake. A bet has to have a measurable outcome: someone wins an election, a poll comes in a certain way, the stock market moves in a particular direction, job creation does or doesn't materialize - and at a certain rate (or not). Among other things, if you can't define the conditions that would enable you to win or lose your bet, you don't really have a coherent argument anyway.

I think this is going to be interesting. I suspect, though, that fewer people are willing to bet than argue. I'm willing to bet on it.

China's Eugenics Program: A Billion Person Experiment to Create Humanity 2.0

China is creating its next generation through eugenics. Geoffrey Miller reports at the Edge that,

The BGI Cognitive Genomics Project is currently doing whole-genome sequencing of 1,000 very-high-IQ people around the world, hunting for sets of sets of IQ-predicting alleles. These IQ gene-sets will be found eventually—but will probably be used mostly in China, for China. Potentially, the results would allow all Chinese couples to maximize the intelligence of their offspring by selecting among their own fertilized eggs for the one or two that include the highest likelihood of the highest intelligence. Given the Mendelian genetic lottery, the kids produced by any one couple typically differ by 5 to 15 IQ points. So this method of "preimplantation embryo selection" might allow IQ within every Chinese family to increase by 5 to 15 IQ points per generation. After a couple of generations, it would be game over for Western global competitiveness.

Is this a matter of parents and society doing what is best for their children? Could this result in some Utopian future in which no one has genetic defects and everyone represents a vast improvement on their parents, the generational equivalent of new product releases - "brighter! harder working! better looking!"? Is it a natural evolution of evolution from something random to something intentional? 

Or are we heading towards a Dystopia in which future people are the product of past ideals? (Imagine trying something like the miracle of Silicon Valley with males genetically engineered by Romans to be the perfect gladiator.) Perhaps random is the only really safe way to prepare for an unknown future.

It is hard to believe that as methods for "choosing" your best off-spring become better known that people throughout the West won't adopt these methods as well. I see no reason why that ought not to make you both very excited and very afraid for the future.

Dwindling Labor Share of Company Output is not a Profit Problem - It's a Power Problem

Liberals are concerned about this chart:

Their problem is, labor is not getting as much of the money generated by US companies. The fear is, capital is getting too much, leading to growing income inequality.

I don't buy it. And I'm what most Americans would consider a liberal (or as they would describe me in the UK,  a moderate). I think that it is wonderful that profits are rising relative to wages. To the extent that this is driving inequality in incomes (and it is) that is not a problem with increased profit. It is a problem with profit-sharing.

In an ideal world, we could hire someone to work for a few months, after which the software or movie or product they created would continue to sell for years, turning a huge profit. In this ideal world of intense (but intensely short duration) work towards the creation of something that would create an on-going profit steam (for a prolonged period), profit would be huge relative to wages.

Profit is a great signal that you are employing resources well. No profit means that you made just enough to pay labor and resources and capital (interest, for instance, on loans). When profit is zero, you are not really adding value to the inputs that were already there. Now by contrast, if you make a lot of profit, you are adding value. You brought together inputs that cost, say, only a million and turned it into profit worth, say, one hundred million. You transformed something that was worth just a little into something worth a lot. You didn't just shift money. You created it.

The problem is not that companies are generating more profit. That's wonderful. The problem is that we still don't have good mechanisms for sharing company profit to the Indians and not just the Chiefs (as in Chief Executive Officer, Chief Financial Officer, Chief Operating Officer ...).

In terms of business evolution, the right thing is happening: companies are becoming continually more effective at creating profits. In terms of the politics of business - how work and wealth is shared - the corporation still more closely resembles a fiefdom than a democracy. Once businesses better determine how to share incentives and power over decision-making and wealth-creation, they'll not only become even more profitable but the distribution of that profit will less dramatically contribute to income inequality. The problem is not profit. The problem is that we've yet to get to the next stage of business evolution to better share that profit.

Barry Bonds in the Wild, Wild West - Pioneer or Outlaw?

Barry Bonds had one of the most amazing careers in the history of baseball. His career batting average was nearly .300. He hit 73 home runs in one season and 762 for his career. Based just on stats, it wouldn't be an exaggeration to label him baseball's greatest player during his life. Yet he did not win enough votes to reach the Hall of Fame this year.

Jim Thorpe was considered the greatest athlete in the world during his life. He lost his Olympic medals from 1912 when officials learned that he had lost his amateur status by playing semi-pro ball for a couple of years.

Today, of course, the US unashamedly fields an Olympic Dream Team whose average salary is in the 8-figures. Times have changed and the assumption seems to be that the world's best athletes will be professionals. Pay is expected for great athletes.

In the future, people are likely to regularly use performance enhancing drugs in the course of wanting to feel younger and more alive. In whatever form, they'll probably be taking supplements and drugs that make them stronger and smarter. It is hard to imagine that in such a future professional athletes will do less - as opposed to more - than the average person to enhance their performance. Whichever performance-enhancing drugs the common people are taking, the professionals will likely take - at a minimum - a larger dose. And perhaps in that world, Barry Bonds will be seen as a pioneer rather than an outlaw. Perhaps.

Meanwhile, in this world, he's standing out in the cold with people like Roger Clemens and Pete Rose. And while I understand that stats can't be the only criteria for admission to the Hall of Fame, you have to wonder whether a team of the best players - in their prime - excluded from the Hall of Fame might not beat a team of the best players who are in the Hall of Fame.

The Real Beatles Conspiracy

I don't know why no one has seen through the Beatles and Rolling Stones conspiracy. It was an obvious, last-ditch effort by the British to maintain control over the colonies (albeit an admittedly different sort of mind control, the kind of thing designed to make us hum distractedly rather than go all 1776 on them). It was an obvious attempt to revive the empire after  World War II. They weren't even subtle about it, boldly calling it  the British Invasion.

Insert (Unnecessary) Drama Here

I suspect that people inject drama into otherwise banal situations because they've abandoned anything that even remotely resembles a hero's journey. This serves two purposes: it helps to distract them and it makes it easier to convince themselves that they actually are in the midst of some great and noble struggle.

Alan Watts Foretold Our Future - Decades Ago

I'm reading a book* of Alan Watts' from 1966 and come across this disturbingly prescient passage.

"... increasing efficiency of of communication ... can, instead of liberating us into the air like birds, fix us to the ground like toadstools. All information will come in by super-realistic television and other electronic devices as yet in the planning stage or barely imagined. In one way this will enable the individual to extend himself anywhere without moving his body ... But this will be a new kind of individual - an individual with a colossal external nervous system reaching out and out into infinity. And this electronic nervous system will be so interconnected that all individuals plugged in will tend to share the same thoughts, the same feelings, and the same experiences. There may be specialized types, just as there are specialized cells and organs in our bodies. For the tendency will be for all individuals to coalesce into a single bio-electronic body."

Who is he calling a toadstool?

*The Book On the Taboo Against Knowing Who You Are

Time for Democrats to Use Political Judo and Give the GOP What it Wants

Isn't it a principle of martial arts to use your opponent's energy against him? He lunges for you and rather than pushing back you accelerate his forward movement with a pull and a flip, doubling the force against him and avoiding it completely? Hold that thought.

When LBJ signed the civil rights legislation that ended segregation, he commented that the Democratic Party had lost the south for a generation. Good old boys were a big component of the Democratic Party, or had been until it made racists feel unwelcome. Sometimes a party's policy victory can lead to political defeat: before the Civil Rights legislation, Democrats had won the White House in 8 out of 10 elections; after, they won only 1 of 6 presidential elections.

The Republicans continue to insist that we need to reduce the deficit by spending cuts alone. I think that the Democrats should feign defeat and give them exactly that. They should loudly protest and register their disapproval and predict disaster but should still pretend to (or perhaps really) be unable to overcome negotiations stalemate over a debt ceiling discussion, for instance. Let the Republicans have their huge budget cuts and watch voters avoid them for a generation.

If Republicans got what they claim they want, two things would happen. One, short-term the economy would contract. Horribly, because this unemployment would have little or no cushion. Two, it would mean a massive slashing of entitlement spending. At this point it is worth noting that recipients of entitlement spending call it by different names, using labels like "my social security check," or "my medicare insurance coverage." Now at this point Republicans would protest that their plans to slash social security are only for future generations, but of course that would do nothing for current deficits. One way or another, they'd have to cut something now. And it would not be small cuts.

Even short of economic catastrophe and hardship for millions, it would be worth taking the Republicans seriously and coaxing out of them a real balanced budget that does not involve tax hikes. Cutting a trillion from a 3 trillion budget would alienate huge swaths of the electorate. Like civil rights legislation that lost the south, Republican's balanced budget sans tax hikes could alienate at least enough voters to ensure a Democratic White House as far as the eye can see.

Maybe it is time that Democrats stopped resisting Republicans and instead let them use their own energy to lose voters. A little political judo seems in order.

Highlighting Overlooked Career Options: Department Store Santa

Millions of graduates will enter the job market in 2013. It will be the best market in years but still young adults are forced to choose with little information. In the hopes of making this important decision easier, I've decided to highlight career options, with particular emphasis on jobs that most young people are unlikely to consider. With that in mind, I've interviewed a department store Santa.

Me: What made you choose to become a department store Santa?

Department Store Santa: I had considered a number of options. My aptitude tests suggested that I would likely be good as a textile manufacturer, hedge fund manager, or department store Santa.

Me: And you choose Santa because?

DSS: I'm off 11 months of the year.

Me: Of course. And are you happy with your choice?

DSS: It's tougher than I thought but it also has some surprising benefits.

Me: Tough?

DSS: Well you don't have to conduct some fancy study to determine whether there is an obesity epidemic among our kids. You just have to ask a Santa. These kids are huge. By 10:30, I can't feel my legs.

Me: That is tough. Surprising benefits?

DSS: Kids are gullible. Plus they are sort of savvy about the economy. This year I got a huge boost to my income by telling them that because of budget cuts Santa could no longer afford to give gifts for free. They'd have to give me $5 for every request. That really added up.

Me: They believed you?

DSS: Believed me? Of course these kids believe in me. Although I had to tell some of the more skeptical kids that my workers weren't actually elves but were instead suffering from malnutrition because I could afford to pay them so little.

Me: Any tips about how to prepare for the job?

DSS: Eat what you want, whenever you want. Try not to exercise much. Don't bother to shave. And learn how to avoid specific promises: be vague so the kids' expectations are left fairly inarticulate. Basically, all the things that drove your old girlfriend crazy make you perfect for this job. More guys are qualified for this job than actually consider it. Oh, and do spend a little time on oral hygiene. Kids are terribly distracted by odors.

Me: Thank you for your time.

DSS: Of course. Now you'll get off my lap?

Why Avoiding the Fiscal Cliff Might Actually Hurt the Market (and the Economy)

The fiscal cliff agreement is likely to make the market fall.

The quality of the discussion in Washington will define the quality of the budget deal we get. As of now, it doesn't seem as though the quality is particularly high.

What could easily happen is that a deal gets through Washington that is good for the economy short term but is bad long term. That is to say, the cuts in spending and the hikes in taxes will be minimal, like cosmetics when it is cosmetic surgery that's needed instead. This is good short term because it means that a fragile economy is not hurt by a contraction in consumption. This is bad long term because it means that the deficit will remain unresolved.

If, by contrast, we get a real deal that phases in significant spending cuts and tax hikes, the market will surge. And eventually, so will hiring and salaries.

As of now, that dialogue doesn't seem to be happening. Instead, it is as if the two parties are speaking two different languages and so far, no one has stepped forward to translate.

The Miracle of Christmas

There is about a 1/365 chance that Jesus was born on 25 December. The Catholics ask you not to forget the mass in Christmas and the Protestants ask that you not forget the Christ. But Christmas never has been a purely Christian holiday, its origins a mash up of various and sundry holidays from Romans, Vikings, cults, and the good people of Coca Cola (who commissioned an artist to create an image of Santa in a bright, Coca Cola-red suit).  The holiday is rooted as deeply in Saturnalia excess of sex and feasting as it is in gift giving and piety.

It’s easy to be dismissive of the emphasis on rampant consumption in the guise of gift giving. There’s always someone who points out that this misses the point of the day but in fact that is as much a part of the holiday as nativity scenes. The holiday would not be so popular if it weren’t malleable, something that most anyone can shape into a day of their own design, even if it is a day for Chinese food and a movie.

For me, the real magic of Christmas is similar to the magic of Las Vegas. Who would think that such a popular tourist destination would spring up in the middle of the desert, and yet there it is. Who would think that Christmas should be considered a time of warmth and light just days after the year’s shortest day, the period of time when winter begins its most bleak weather? How absurd and absurdly wonderful is that?

The miracle of Christmas is simply and wonderfully this: we manage to create a time so very different from the time we’re in. Cold becomes warm. Dark becomes light. A time when nature yields so little becomes a time when people give so much. And for that, it doesn’t really matter whether your celebration tends towards the prurient or the puritan. That alone is enough to make it a “most wonderful time of the year.”

Texting and Recession Hit Japan First. Coincidence?

Japan's lost decade was from about 1991 to 2000, a period of high unemployment and slow or even negative growth. In this regards, they were ahead of us. Our lost decade was from 2000 to 2009, a period when job creation rates that had averaged nearly 2 million a year dipped into negative territory. In this, they were ahead of us. They were also ahead of us on some technology.

In 2001, I was in Japan riding the subway, I couldn't help but notice that so many Japanese seemed to be averting their eyes, looking into their lap as if it were bad form to make eye contact with other commuters or even to look at them. "Very polite people," I thought. Then I did look at them more closely. I realized that they were playing with something. My first thought was that they had worry beads or the equivalent of Japanese rosary beads. I didn't understand it.

"What are they doing?" I asked my contact at the client's, a man from Canada who'd been in Japan for years.

"They are texting," he said.

"What's that?"

"They type messages to each other," he said.

"On their phones?"

"Yes."

"Why wouldn't they just call each other? How could that make sense to type out a message on a tiny keyboard with your thumbs rather than talk to someone?"

"I don't know," he said. "It's just something Japanese do."

Ahead of us on texting, a form of communication that seems to represent the triumph of the need to connect over the drive for efficiency. And ahead of us on a decade of slow or no economic growth. Maybe productivity simply doesn't matter as much as connection. And once we've got access to the latter, we expend less energy pursuing the former.

Mayan Apocalypse Nothing. We've Already Had the Battle of Armageddon. Seriously

Given all the attention the Mayan Apocalypse is getting, it’s likely that most people have forgotten about the actual Battle of Armageddon.

The Ottoman Empire was ruled by Turkish sultans for hundreds of years. These Turks claimed the Caliphate, which essentially made them protectors of the holy lands of Islam. It was a position roughly akin to that of the pope during the Dark Ages. But during the First World War, the Turks aligned with the Germans. It would prove to be a huge mistake for the Arab world.

In late September of 1918, the British General Allenby led an odd coalition of troops against the Turks at Megiddo. His troops included soldiers from around the world, as befits the last, decisive battle of this First World War.  The mix of Indians, Australians, American Jews and Brits would have itself been remarkable. Allenby had already conquered Jerusalem, the first head of a Christian army to take the city in 700 years. That, too, was notable in its own right.  Also, in a conflict between two great religions, it seemed curiously appropriate that Allenby was a descendant of Oliver Cromwell’s, the man who led a successful revolt against a king to return Britain to religious purity.  And as if all that was not epic enough, Lawrence of Arabia rode with him into battle.

Allenby may have been the last general to use a mix of cavalry and airplanes in battle. It worked. He routed the Turks and the consequences were sweeping.

The British had come to realize that the Middle East had oil and after the end of the war they divided the region with the French.  The British added Iraq and Palestine to their sphere of influence that already included Saudi Arabia and Egypt. They expressed their support for the Zionist movement, setting in motion the return of Jews to Israel. The caliphate collapsed, taking with it Islam’s dominant authority and leaving in its place conflict over the true definition of, and authority over, Islam ever since.

Thus, one of the last battles of World War One became one of its most defining. Contemporaries and historians refer to Allenby’s battle against the Turks as the Battle of Megiddo. We more often refer to Megiddo, however, by a name that had taken on apocalyptic tones even before Allenby’s time: we call it by its more ancient name of Armageddon.

So the Mayan Apocalypse will be no big deal. Apparently, we're already living in post-Apocalyptic times.

Tim Minchin Rejects the Notion of Goals

“I personally believe in not setting goals. You don’t get opportunities if you think you know what you’re meant to be doing.”

“I’m incredibly squeamish about ‘I’ve always wanted this …’ ‘this is my dream!’ ‘I’ve always wanted X.’ and all that sort of stuff.  I hate that sort of non-specific language. It doesn’t mean anything to me. I don’t get what you’re saying. You have a dream that doesn’t seem to be influenced by any other factors but your fantasy of it. Probably more of us have the sort of life where happily, lots of opportunities come your way and you need to be ready to receive them by having your eyes not on the prize but on everything around you. I guess if I had to impart wisdom to my children – something I hope I never have to do -  I would just say to work incredibly hard at whatever you’re doing and then people will respect you and they’ll ask you to do something else.”

-         -  Tim Minchin

Protection from an Oppressive Government

It takes little time before defenders of the 2nd amendment argue that they need arms to defend themselves from an oppressive government.  Our founding fathers, obviously, had to take up arms against the British. There are at least two points worth making about this. One, the revolution was an effort of a people, not a person. It was a well-regulated militia, not an unregulated, lone assassin who fought the British. Two, there was no mechanism for Americans to vote for the right to vote; overthrowing a distant empire is very different than taking up arms against your neighbors because you are unhappy with the most recent election.

There are more problems with the argument than this, of course. Obviously the definition of oppressive is left to the one with the arms. A man abusing his wife and children would of course find a policeman intervening on their behalf oppressive. So obviously he'd need to be equipped at least as well as the National Guard, much less the social worker or police who might show up at his door.

Besides, the US is a nuclear power. If one is intent on being armed well enough to resist this government, there would be dozens of Irans within our borders, groups intent on acquiring the technology to resist the greatest military power known to history. It's hard to imagine stronger refutation of an argument than realization that following its logic takes one to conditions ripe for a Mayan apocalypse.

We already regulate arms. We don't let individuals have sufficient firepower to threaten the Pentagon. There's no reason to let individuals have firepower enough to hold off a local SWAT team. 

Inventing Santa Claus (who magically appears the week before year end inventory)

In the words of children everywhere, what did Santa brings us? Mass consumption and sales enough to empty shelves just before year end inventory.

One of the more curious social inventions was Santa Claus. Santa did not just make children happy. He made store owners happy. Santa as we know him - the gift-giving saint who holds court in department stores - did not exist before factories began to produce more products than could be sold via old habits of consumption. Like the display windows, Santa was part of an attempt to create a fairy tale land where consumers were convinced that shopping was a kind of magic. He also helped to clear out products just before it was time to perform year-end inventory. He did not just give gifts to children. He was a gift to the stores.

Santa began to appear in department stores in the late 19th century, just as American factories began to produce goods at a greater rate than anyone had dared to imagine even a generation earlier.

Christmas gift giving helped to stimulate sales after the American Civil War. In 1867, “Macy’s department store remain[ed] open until midnight Christmas Eve, set[ting] a one-day record of $6,000 in receipts."[1] Around 1870, Christmas made “December retail sales more than twice those of any other month.”[2] The fact that stores could sell so many products merely one week before year-end inventories was kind of magical.

In that same year, 1870, 

“The United States had the largest economy in the world, and its best years still lay ahead. … This American system of manufacture had created, for better or worse, a new world of insatiable consumerism, much decried by critics who feared for the souls and manners of common people. The world had long learned to live with the lavishness and indulgences of the rich and genteel; but now, for the first time in history, even ordinary folks could aspire to ownership of those hard goods—watches, clocks, bicycles, telephones, radios, domestic machines, above all the automobile—that were seen in traditional societies as the appropriate privilege of the few. All of this was facilitated in turn by innovations in marketing: installment buying, consumer credit, catalogue sales of big as well as small items; rights of return and exchange. These were not unknown in Europe, which pioneered in some of these areas. It was the synergy that made America so productive. Mass consumption made mass production feasible and profitable; and vice versa.”[3]

---

[1] Beniger, The Control Revolution, 260.

[2] Beniger, The Control Revolution,

[3] David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (New York: Norton, 1999). 307.

Bernanke Offers a Solution to the Fiscal Cliff (or, the real lesson from Spain and Greece)

Federal Reserve Chairman Ben Bernanke offered a simple solution to the deficit problem: wait until unemployment drops to 6.5% before enacting measures to raise taxes and cut spending.

Bernanke actually announced that his monetary policy would continue to stimulate recovery until unemployment drops to 6.5% or inflation rises to 2.5%. There is no reason that similar guidelines could not be used for fiscal policy as well, though.

Analysts are forecasting how many jobs will be lost if automatic tax hikes and spending cuts are triggered in January. It could cost as many jobs as we've gained since the bottom of the Great Recession. This is not because deficit reduction will always cost us jobs. This is because deficit reduction will cost us jobs when unemployment is still high. Using a guideline like Bernanke's for fiscal policy would change that.

The real lesson from Greece and Spain is simple: if you spend like drunken sailors on shore leave during good times and then sober up to begin cutting spending when times are hard, you'll first create a bubble and then a collapse. This is the worst possible combination.

Job losses from some combination of tax hikes and spending cuts are inevitable. What is not inevitable is that these job losses will matter terribly much. If unemployment is at 4.5% and we're creating 200,000 jobs a month, the job losses from deficit reduction will neither be hard to offset nor particularly hard on the economy. Timed properly, the tax hikes and spending cuts might actually shed jobs at about the rate that the economy is creating them. That's possible. Deficit reduction now when unemployment is at 7.7% and we're creating about 150,000 jobs a month could, by contrast, easily tip us into recession and cause unnecessary hardship.

We needn't force a trade off between deficit reduction and another recession if we simply wait. There is no reason that fiscal policy could not follow the same guidelines that Bernanke just laid out for monetary policy.

But there is a deeper problem. We live in a time of incredible potential and great risks and yet our epitaph will be that in face of all that we were re-hashing arguments from Economics 101 and second grade arithmetic. This fact is more worrisome than any short term deficit or recession. It's as if you still have to tell your teenager to brush his teeth. Ridiculous.

Multitasking in Meetings a Century Before Laptops (Love Letters and Other Distractions)

I have this tendency to think that multitasking with emails and such during meetings only became rampant with the introduction of laptops. Before, I thought, one could at best daydream. I was wrong.  Reading a book of British history, I ran across this account of the British government during World War I – hardly an affair one could safely ignore. And yet they did, starting with the Prime Minister.

… as the cabinet talks went on, covering munitions, strategy in the Mediterranean and the possibility of prohibition, the prime minister was distracted, as he often was. He was writing to the twenty-eight-year-old woman with whom he had been deeply in love for three years. He wrote to her most days, and sometimes several times a day, letters crammed with gossip and, though from a sixty-three-year-old man, as wildly passionate as any from a brimming youth. Meanwhile, as [Prime Minister] Asquith was scribbling with only one ear on the cabinet debate, a few feet away another minister was also writing. Edwin Montagu had long been one of Asquith’s most trusted supporters and now, still in his mid-thirties, had recently been brought into the cabinet. …. He too was only half paying attention to the cabinet debate. In fact, he too was writing a love letter: “My very dear one, I have never received, I need not tell you, a letter so thrilling and delicious as yours this morning. God bless you for it!” And his letter was to the same woman as the prime minister’s letter.

Montagu did not just describe his affection. He described the cabinet meetings themselves, sharing details that confirmed suspicions of the time. He signed off another letter,

Yours very disjointedly and disturbedly (Winston [Churchill, at the time just another minister, not yet prime] is gassing all the time) …

It has only been a century. In light of that, perhaps it makes sense that little has changed.

 The book is Andrew Marr's The Making of Modern Britain.

From Jobs Shortage to Labor Shortage - a Forecast of Good Times

Given we've yet to fully recover from a recession begun 4 years ago, it is easy to be pessimistic about the future.  But pessimists will miss a demographic trend that is likely to dramatically change the job market over the next few years. At the risk of sounding like a contrarian, I'd like to predict a worker shortage that will soon improve employment opportunities.

Baby boomers are retiring, leaving the job market in droves. The generation coming of age is the product of lower birth rates. This suggests a coming labor market crunch, a worker shortage. This can be seen in the small gap between the number of people retiring and the number entering the job market.

Each year, more than 3 million new graduates enter the job market to take the place of nearly 2.4 million retirees. If every retiree left behind a job for a new worker, that would leave nearly 700,000 new graduates without  a job. But the American economy has historically created close to 2 million jobs a year, just as it has in the last 12 months. 

Decade    Avg. Annual Job Creation

1960s                   1.7 million

1970s                   1.9 million

1980s                   1.8 million

1990s                   2.1 million

2000s                  -0.1 million

Last 12 months     1.9 million.

If you create jobs faster than people enter the job market, the unemployment rate drops. If the American economy adds 2 million jobs while only 700,000 new people enter the job market, the unemployment rate will drop about 1%, just as it did in the last 12 months. The lower the rate of job entrants, the low the rate of job creation necessary to lower unemployment. If the American economy continues to create roughly 2 million jobs a year with this lower rate of (net) new entrants, demand for labor will rise faster than its supply and wages will rise.

The history of recent decades suggests that the rate at which the American economy creates jobs changes less rapidly than does the rate at which children become adults and need jobs.

In the 70s, the American economy created 1.9 million jobs a year and yet unemployment was 2.5% higher at decade's end than it's beginning. By contrast, in the 80s and 90s, the economy created roughly the same number of jobs and yet unemployment steadily fell. The baby boomers born in the late 40s began hitting the labor market in the 70s. Birth rates roughly 21 years earlier explain unemployment rates as much as job creation rates. Whether 2 million new jobs lowers or raises unemployment depends on how many young adults are entering the job market.

In 1966, roughly 2.7 million young people turned 21 and unemployment was 3.8%; by 1972, 3.8 million turned 21 - rose a million - and the unemployment rate rose to 5.2%. By 1975, 4 million turned 21 and that year unemployment hit 8.2%. It seemed to take awhile for the economy to absorb these new adults as employees. As the rate of new job entrants increased, so did unemployment rates. From 1984 to 1988, the number turning 21 dropped from 4.1 million to 3.5 million, and unemployment dropped as well, from 7.3% to 5.3%. From 1991 to 1997, the number turning 21 dropped further, from 3.7 million to 3.2 million and unemployment also dropped further, from 7.3% to 4.7%.

Here's a table showing changes from the beginning to end of the decade:

Decade    Change in Number Turning 21       Change in Unemployment Rate

1970s                  +0.7 million                                     +2.5% (from 3.5 to 6)

1980s                  -0.7 million                                      -0.6%  (from 6 to 5.4)

1990s                  -0.3 million                                      -1.4% (5.4 to 4)

2000s                  +0.5 million                                     +5.9%  (4 to 9.9)

2010s*                    0 million                                      -2.2% (9.9 to 7.7)                                 

*so far

There is more going on here than demographics, but an increase in the rate of people turning 21 seemed to drive an increase in the unemployment rate. (The aughts were fraught with issues more complicated than demographics and every decade had its issues separate from birth rates of decades earlier.) A drop in the rate of new 21 year olds seems to cause a drop in unemployment; a rise in that rate of new 21 year olds seems to cause a rise in unemployment. These two rates tended to move together.

This bodes well for our decade. Not only is the rate of new 21 year olds dropping but the baby boomers are now retiring. Job creation rates don't have to be terribly high to bring down unemployment rates quite a bit.

Many critics have claimed that the American economy is not creating jobs fast enough. What critics miss is that this economy does not now need to create as many new jobs to lower the unemployment rate. In fact, we already have a strong recovery. Soon, the evidence of this will be seen in paychecks. 

The really good news is that this decade should reverse the terrible decade of the aughts, when we lost more jobs than we created. The even better news is that for the first time since the late 90s, workers will find themselves in a stronger position to negotiate for pay, benefits, schedules, and the design of jobs. In fact, the job boom of the 2010s may be even better than that of the 1990s. 

Happy holidays!

Why the New Economy is Changing Us From Specialists to Systems Thinkers

The current issue of the Atlantic has a couple of fascinating and hopeful articles about how manufacturing is coming back to the US, creating jobs to replace some of the millions lost in the last few decades of outsourcing.

In the old model, jobs could be outsourced because specialists didn't depend a great deal on one another. Like plugging in different brands of monitors and mice to a computer, marketing, engineering, and manufacturing can all be plugged into one another, little dependent on one another for their tasks. Once manufacturing was independent of design, why not outsource it to the country where labor was cheapest?

Of course it took time to get these factories up to speed, but you would likely make the same model washer machine or refrigerator for about 7 years. If it took 6 months to even a couple of years to get all the problems resolved in manufacturing, one still had years to profit from smooth, predictable operations.

The old model was driven by specialists who worked independently. Now, a new model is emerging that requires a systems perspective rather than specialists.

As it turns out, when a product evolves it requires changes on every front. Manufacturing capability could drive a new consideration in engineering and design. Design breakthroughs may drive a change in how the product gets supported in the field, after sale. Marketing insights into trends may drive changes in all of this. Systems are defined at least as much by the interaction of parts as the parts that are interacting. These interactions suggest steady communication and adaptation between the specialists whose work increasingly is defined in coordination with one another rather than in such isolation that it can easily be performed on separate continents.

The impact of this shift is that manufacturing jobs are coming back from China to the US. The reason for this is that the coordination required to design and redesign rapidly evolving products requires specialists to spend more time coordinating than working heads down on their own piece of the puzzle. Products might be updated every 2 years now instead of every 7 and assuming that specialists can work through their issues in serial is to set in place a plan that works out the kinks in design and manufacturing about the time that the product is obsolete. Specialization is less profitable.

Systems thinking is to this new, entrepreneurial economy what pragmatism was to the information economy. In place of specialists we will increasingly need systems thinkers able to coordinate, design, and create whole  products instead of just focusing on manufacturing or design issues as if they could be worked separately from each other. It is not just that our modern world will be defined by the health of systems as varied as ecosystems, financial systems, or health systems. On this score it seems obvious that systems thinking will be important. But as it turns out, even systems considerations as seemingly prosaic as product creation will be important to this new economy. It may even be this door through which systems thinking enters the popular vernacular.

Anti-Immigrant Economic Drag

Since 9-11, it's been noticeably harder for immigrants to enter the US. James Fallows writes in the the Atlantic of Liam Casey, whose company is headquartered in Ireland and employs about 4,000 people, mostly in China. Casey named his company PCH, after the Pacific Coast Highway in California.

The PCH connects two of my favorite cities, San Diego and Santa Cruz, and runs through a host of other great communities like Monterey, Carmel, and Big Sur.

Unable to get a Green Card and stay in California, Casey named his thriving company after a place he dearly missed but was unable to live in.

Most Americans seem unaware of how few immigrants we allow into the country and how many jobs even an employed engineer helps to create, much less an entrepreneur.  

Entrepreneurship not Capital: What Limits San Diego's Economy?

San Diego's new mayor Bob Filner has a thousand competing claims on his attention. Where he focuses will make all the difference in how effective he is. If he wants to be really effective, he’ll adapt his policies to new realities.

The most important new reality is that we’ve entered a new, entrepreneurial economy as different from the information economy as that was from the industrial economy before it. The limit to progress has shifted to entrepreneurship and adapting to that will drive sweeping change.

An industrial economy is limited by capital. As a community gets more financial and industrial capital and learns how to make them more productive, it becomes more prosperous. Funding for factories, invention, and infrastructure yields a huge return.

An information economy is limited by knowledge workers. As a community focuses on creating more knowledge workers and making them more productive, it becomes more prosperous. Funding for great public schools, universities, and R&D yield a huge return.

It’s not obvious that our limit to progress is still capital or knowledge workers. This can be illustrated right here in San Diego. Qualcomm alone holds $12 billion in cash. Last year SDSU, UCSD, and USD sent about 20,000 graduates into the world. 

Republicans argue for tax cuts on capital gains, suggesting that we simply need more capital to create more jobs. Democrats argue for more education, suggesting that we simply need more knowledge workers to create more jobs. The policies to support such arguments are increasingly expensive and seemingly less effective than they used to be.

I simply don't buy these arguments. Instead, it seems to me that 200 more great entrepreneurs would do more for job creation in San Diego than would another $10 billion in cash or another 10,000 great college graduates. The new limit is entrepreneurship.  The big question of the information economy was, “How do we create more knowledge workers and make them more productive?” The big question of this fourth, entrepreneurial economy is, “How do we make more people more entrepreneurial?”

There is, of course, a great deal to a transition into a new economy, but most of it follows from communities shifting their focus from the old question to the new. In our case, making more people more entrepreneurial will create demand for more capital and knowledge workers, raising returns and creating better jobs. We will still need more knowledge workers and more capital in the new economy, but these now follow rather than lead economic progress. There are implications for government policy, for education, and most of all, for corporations. For now, it's enough to ask a new question.

Economy	Period	Big Question
1st, Agricultural	1300 – 1700	How do we get more land and make it more productive?
2nd, Industrial	1700 – 1900	How do we create more capital and make it more productive?
3rd, Information	1900 – 2000	How do we create more knowledge workers and make   them more productive?
4th, Entrepreneurial	2000 – 2050	How do we create more entrepreneurs and make them more productive?

 What' s true in San Diego is true across the US. 

In 2009, American corporations held about $5 trillion in liquid assets. Since 2008, about $2 trillion in cash has been added to bank deposits. Think about how much the need for capital has changed in the last century. An iconic startup in the 1900s and 1910s was a car company. For that you needed a lot of capital – financial and industrial. Today's iconic startup is an Internet company and for that you need a group of smart knowledge workers armed with laptops. It’s hard to argue that such ventures are limited by capital.

It's more plausible that we're limited by knowledge workers, but this, too, is a difficult claim. In 1900, fewer than 5% of 14 to 17 year olds were formally enrolled in education. By 2000, fewer than 5% were not. It's hard to imagine ever again matching the dramatic gains in knowledge workers of the last century or the economic output that came with them. The gain from 5% of teenagers to 95% enrolled in formal education is huge. There is no way to match that dramatic gain with the remaining 5%.

Capital matters. So do knowledge workers. But they aren’t enough. And yet our policies - trillions in tax incentives for investments and trillions more in education - are all predicated on the notions that the limits to progress are capital or knowledge workers. Maybe if we didn't spend so much trying to educate the last 5%, or offering tax breaks to encourage the next billion in investment, we'd have money to spend to make entrepreneurship easier, to make it a more obvious career choice for our young people. As it is, we're facing new realities with dated strategies - like adventurers who insist on staying in the boat even after they've hit shore.

We’re living in one of the great transition points in history. Whether that’s painful or wonderful depends a great deal on whether we cling to old policies or embrace new ones. That might start with something as simple as communities everywhere in the developed world starting to ask the right question.

Did All the Fuss About Xmas Start with a Pun?

Every year certain people are compelled to prove their religious righteousness by accusing pagans and secularists of taking Christ out of Christmas, turning Christian's most important holiday into Xmas.

It could be more innocent. Xmas might have begun as a romantic and goofy pun based on sound. X stands for Kiss in signatures and Kissmas does sound a little bit like some loopy romantic's intentional mis-pronunciation of Christmas.

Or it could be Satanic.