Sunday Jul 06, 2008

Energy Efficiency and Economic Opportunity

Japan sees a chance to promote its energy-frugal ways: "According to the International Energy Agency, based in Paris, Japan consumed half as much energy per dollar worth of economic activity as the European Union or the United States, and one-eighth as much as China and India in 2005. While the country is known for green products like hybrid cars, most of its efficiency gains have been in less eye-catching areas, for example, in manufacturing ... Japan's strides in efficiency are clearest in heavy industries like steel, which are the nation's biggest consumers of power." -- International Herald Tribune

Seems that high oil prices are offering the Japanese new markets around the world for their technologies. China seems particularly interested. For obvious reasons.

Sunday May 11, 2008

Immigration a Key to Innovation

Great article in Newsweek from Fareed Zakaria -- The Rise of the Rest -- about how large chunks of the world are dramatically improving and growing significantly in an era of ever reducing violence. Finally. A positive view of globalization, and one distinctly lacking all the fear about the US falling to second class (or even third class) economic status (which is nothing more than propaganda). The gloom-and-doomers and isolationists in the US are an obviously and obnoxiously vocal minority, and they will miss this positive view because it's actually based on embracing the entire world with that nasty word -- immigration. Zakaria says that "the potential for a new burst of American productivity depends not on our education system or R&D spending, but on our immigration policies. If these people are allowed and encouraged to stay, then innovation will happen here. If they leave, they'll take it with them." 

Avoiding Competition

You catch that Fortune article -- You have 7 years to learn Mandarin -- about China surpassing the United States economically in seven years? Whether it's seven years or fifty doesn't really matter, I suppose, since people will be arguing about how to measure this for a while. And the measurements themselves are changing, it seems. How convenient. Whatever. I think it's cool either way because it offers new opportunities, and that´s what I´m after. In fact, aside from the word freedom, I can´t think of another word that describes Americans better than the word opportunity. Can you?

But Fortune seems defensive. We are supposed to "worry" about this, and we are told that American individuals "can avoid competition with Chinese workers by doing place-based work, which ranges in value from highly skilled (emergency-room surgery) to menial (pouring concrete). But the many people who do information-based work, which is most subject to competition, will have to get dramatically better to be worth what they cost. For government leaders: Improve U.S. education above all."

The first part of that paragraph is ridiculous. You can't "avoid competition" in a global economy, and I´m not "worrying" at all. Why not embrace the change as an opportunity? In fact, wouldn't be cool to live in China for a bit to check all this out first hand? Wouldn´t it be cool to learn some Chinese and interact with Chinese from their perspective for a while? I don´t see very many people in the US thinking this way about the rise of China (and India, for that matter, and some other emerging markets around the world, too). In fact, Sin-Yaw Wang has it right when he comments about the Fortune piece: "The new generation of business leaders, now in their 20s or 40s, must learn to do business in China and with Chinese. 7 years is not that long to master a language, especially when one is not even trying." I agree. And I´m reading this view (the not trying bit) over and over again. It´s defensive. Oh, well. I suppose that´s an opportunity for those who see it differently, right?

Monday Apr 28, 2008

Blowing Hot or Cold on Japan

Japan May Escape Recession as Chinese Surge Increases Exports: "Japan's manufacturing sector is actually a showcase for how to implement globalization,'' said Jesper Koll, director of Tantallon Research Japan, a hedge fund. "Whether it's Russia, the Middle East or Latin America, take your pick, Japan's on top of it.'' -- Bloomberg

Good economic news about Japan is rare, but this article above cites the possibility that Japan may dodge a recession (due to the slow down in the US) because some key Japanese industries have diversified into rapidly expanding markets in China and throughout Asia. That's cool. And perhaps other Japanese companies here, and even entire industries, will take a lesson from the manufacturing and auto guys and learn how to be a "showcase for how to implement globalization." We'll see. The results will be obvious either way.

Sunday Apr 20, 2008

Benkler on Open Source

Nice TED talk from Yochai Benkler on Open Source economics and the disruptive nature of community development. To me, this is all about empowered individuals acting in their own interests (financial, altruistic, whatever), so that the collective also benefits. Also see Coase's Penguin, or Linux and the Nature of the Firm and The Wealth of Networks.

Sunday Apr 13, 2008

Mega Regions

Unlike emerging economies within specific nations -- such as Brazil, Russia, India, and China -- there is another way to look at the global economy, which is via something called the mega-region. That´s the real driving force of the global economy, according to Richard Florida in Wall Street Journal -- The Rise of the Mega-Region.

Florida says that "
[t]he world's largest mega is Greater Tokyo, with 55 million people and $2.5 trillion in economic activity. Next is the 500-mile Boston-Washington corridor, with some 54 million people and $2.2 trillion in output. Also in the top 10 are mega-regions that run from Chicago to Pittsburgh, Atlanta to Charlotte, Miami to Tampa, and L.A. to San Diego. Outside of the U.S., you can find megas around Amsterdam, London, Osaka and Nagoya, Milan, Rome and Turin, and Frankfurt and Stuttgart."

He also says that
"China is not our real competitor. Rather, we should be thinking about the great mega-regions around Shanghai, Beijing and the Hong Kong-Shenzhen corridor, which account for roughly 43% of the output of the entire country."

Interesting perspective. Florida recommends a few ways of dealing with the megas, but the one I found most engaging was the promotion of density to increase innovation and production. So much for suburbanization, I guess. I´m not sure how this works with the Internet, though. The Internet enables massive distribution (or decentralization, I guess) of talent, innovation, and, in many cases, production. Does that support or undermine this mega density perspective? Perhaps both.

Sunday Jan 13, 2008

Rich in Rare Metals

Japan has world's biggest 'urban mines' -- "The total volume of metal resources, including gold and silver, that are used in electrical appliances and electronics in Japan is the world's largest, surpassing natural metal reserves held by each major mineral-producing country." -- Associated Press

This doesn`t surprise me at all. The place is totally wired with all sorts of funky electrical gadgets. Even the toilets are plugged in. In fact, I can operate all the features of my toilet from the other room with a convenient wireless handset. Now, the fact that my toilet has features and has to be plugged in is nuts enough, but the wireless bit takes the whole experience to an entirely new level. And my bath? Well, it talks to me. In Japanese, of course. At least that one is not wireless. Yet.

Wednesday Dec 19, 2007

Japanese Innovation

Gen Kanai comments on a recent Newsweek piece -- Why Apple Isn't Japanese. Gen's take is certainly interesting and, sadly, pretty tough to argue with.

The article is pretty critical. The bits I found most interesting were the language and culture issues, since I experience those walls every day. They are so much bigger than anyone on the outside realizes, and I think they go a long way to explaining Japan's lack of growth in certain global markets.

The article also states that Japan will have to compete with new sources of innovation in the future: "Over the next century, disruptive innovations won't be coming only from countries like the United States. They'll also be emerging from dynamic, hungry, rising economies that offer plenty of room for risk-taking, flights of fancy and cross-border synthesis." Although these sources are not directly stated, it's clear that the nations are primarily China and India, which are both embracing capitalism and globalization at blindingly fast rates, and both don't seem to struggle with the language and culture issues like Japan does.

Now, I've been told that these observations represent the distinction between emerging markets and mature markets. But I no longer buy it. Too much of that article describes my direct experience, so I no longer accept the excuses. But will Japan eventually react and change? Are the Japanese hungry enough to compete in a global economy? I actually think they will react and compete. And in ways that may surprise many of their critics. That's the cool thing about innovation and market disruptions. They cycle. When you are disrupted, that sets up the perfect circumstance to innovate do some disrupting yourself.

Sunday Sep 03, 2006


Here's a giant article on India's economic growth -- The Next Industrial Giant Is ... India? Fascinating to see the competition between India and China in this article and the very real distinctions between their economic systems. I'm looking forward to spending a great deal of time in both countries in the coming years.

Saturday Jul 08, 2006

Connected Capitalism

I love the term "Connected Capitalism" coined by Simon Phipps to describe how "open source works by everyone contributing what they want without compulsion and using what they need without restriction -- as a counterpoint to people who try to call open source 'communism'. Think Benkler."

That's a jam packed Simon quote from a comment he left to a recent James Governor blog about press coverage on Simon's keynote at OSBC a couple of weeks back. Ben Rockwood also has some interesting and valuable thoughts on the subject. Ever since I tripped over open source here at Sun about six years ago, I've been fascinated -- mostly because the culture reminded me of things I had seen in the past but couldn't really fully participate in. There is so much to talk about, but I'll just carve out my favorite little bit from Simon's comment -- connected capitalism.

I see a nice consistency between capitalism and open source. If open source were really about communism, as some detractors assert, I'd dump it pretty quickly. Not because of any political belief (I don't waste time on such issues), but because it would be incapable of providing me enough value so I wouldn't want to contribute to it. I'm looking to earn a living with multiple and diverse streams of income but in a way that contributes to the community (whatever community), not detracts from the community like the robber barons of times past (and some present, I suppose). If I don't have the ability to get something out if it, I'm gone. It's that simple. Food is important. So is health insurance. I have a significant amount of experience with the medical community, and I'm determined to have enough money to pay for as many circumstances I can imagine. And a steady flow of cash well into retirement should come in handy as well. So, my perspective is especially economic and I'm getting more and more focused on that every day. It's my primary goal, in fact. But I've never been a believer in the zero sum game, either, so that's why I like the concept, culture, and dynamic of open source. It's the perfect solution.

As an economic system, capitalism has done a lot of good and certainly provides some pretty massive incentives for growth. It has some pretty big holes, though, and many people react negatively to the term. Perhaps because used alone it can sometimes connote "big" and "exclusive" and "exploitive" and the connections supporting it generally pervade insiders -- the special ones, the privileged ones, the rich ones, the ones who control things like Big Oil, Big Unions, Big Education, Big Agriculture, Big Banking, Big Construction, Big Shipping, Big Government, Big [insert your favorite big thing here]. So, if that's the reason someone doesn't like the term, I can understand it. And, for the most part, I agree. Those things bother me, too. Breaking into some of those entrenched industries without paying off the controlling parties is challenging. Those industries are not communities whose members openly welcome new contributors, that's for sure.

I tried to break into the construction industry in New York as a small business owner, and, boy, did I learn a lesson in, ah, capitalism. My goodness. It had nothing whatsoever to do with open competition or competing based on talent, better pricing, better service, better equipment, better ideas, or better innovation. Instead, it had everything to do with paying to play in a controlled market, and it represented an absolutely stunning destruction of innovation and inspiration. I had to pay to enter the kingdom of those who had gone before and who were carefully guarding the gate to their paradigm -- at all costs. The controllers viewed their game as zero sum for sure, and I didn't fit in very well at all. In my case, I ran into several powerful construction and trucking unions (I was non-union), dozens of well-connected contractors (I didn't have their money), many government agencies (I didn't have political connections), and a few other rather strange characters (I'd rather not talk about). At times, the lines supposedly separating these groups blended all too closely, which was confusing and unsettling at best. The experience was both disgusting and exhilarating, and everything I believe today about economics and politics I learned from those early battles in the construction business. Back then I worked with some well-meaning business people -- true entrepreneurs -- and I learned all about what creative, innovative, talented individuals could build and how easily a powerful, centralized, controlling group could take it all away -- sometimes violently -- because the leaders felt threatened. I came to believe that open competition terrified people who contributed so very little..

I've always wondered about this though. In capitalism, why can't the individual and the community (or company, government, or union, or school, etc) benefit simultaneously so the cycle is self referral? To me, open source goes a long way to solving this problem because the culture of that system openly welcomes new contributions from creative, innovative individuals anywhere -- and the more the better. This is not necessarily exclusive to open source software development; it's probably present in other engineering and scientific disciplines as well. I sure saw it at Tufts University where I worked for a few years with physicians, veterinarians, and a variety of researchers. Heck, I bet any true craftsman or artist in any field would get this concept of individual, contribution, community. In other words, the community benefits but so does the individual contributing. In fact, the more one contributes, the more one benefits. It's that whole "you get out of it what you put into it" thing, and it supports the notion of enlightened self interest, which Simon rightly explains can be a problematic term but one I have no problem with (other than the fact that I need to assert it much more often). So, you enrich the commons and all the individual people within the community managing the commons benefit as well, and those especially hard working people have a limitless opportunity at their fingertips. Opportunity is there for all but it's proportional to how hard one works and how much one contributes. And around it goes. Generally speaking, of course. And by "enrich" I don't necessarily mean only in pure monetary terms. Rich means many things to many people: money, reputation, connections, access to shared resources, conservation, safety, insurance, learning, skill development, contribution, feeling of well being, donations, participation, desire to help others, etc. Simon explains all this much better, of course, but I'm trying to understand it based on my past experiences and on my future plans.

Now, elements of this absolutely remind me of capitalism -- but a very, very special form of capitalism. It's called entrepreneurialism. Small capitalism, I guess. Capitalism for the little guy. Capitalism the way it should be. Capitalism where everyone is welcome to participate and dare and risk. Capitalism that the old capitalists and the old communists would both have a hard time dealing with. That's the kind of capitalism I like. I just call it entrepreneurialism because my perspective starts with an independent individual being able to take care of him/herself so as not to be a burden but to do so by being connected so contributions benefit all. I think small entrepreneurs understand this more than big capitalists do (yes I'm splitting hairs a bit here) because the entrepreneurs usually start small and depend heavily on connections to others for resources, whereas those big capitalists tend to rely more on buying their way around since they already have lots of resources. It's certainly not true in all cases, but that's what I've seen along my way.

So, when Simon puts "connected" in front of the term "capitalism" it gives the entire principle a new, de-centralized, individual, empowering feeling and that's something every entrepreneur can understand. Hard work, perseverance, talent, skill, opportunity, luck. Not for Big Enterprise, but for the individuals who can't help but dream of what's possible. In this context, the term "connected" is critically important because it implies rather directly that for all this to work one has to connect to the community and help manage the stuff in the commons. Connected also implies responsibility, and if you are connected to people rather than capital it's more important that you do the right thing, not necessarily the most profitable and selfish thing. It's the connection to the community that creates the opportunity to create individual value, and that's what has hooked me. It solves my problem. I can be entrepreneurial without being a robber baron. The elite wouldn't understand this because they are not connected to anyone other than elitists like themselves. Whatever economic system they use in whatever society they live tends to exploit the commons, not contribute to it, and over time that pisses people off on all sides of the political, economic, and social fence.

"Connected Capitalism" works well for me. And I've yet to see a more powerful expression of the entrepreneurial spirit than the dynamics of a thriving community. Have you?


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