Capitalism, wealth disparity, and the end of Western Civilization as we know it … what would Adam Smith do?

Thanks to my good pal Keith (Check out his cool Travel blog about the Tuvaluan Island of Nanumea  ) I’m directed once again to the capitalist controversies.

A letter to capitalists from Adam Smith

By David Rubenstein

To: Capitalists of the World

From: Adam Smith

What has become of my beloved capitalism? Countries teeter, protests rage, unemployed multiply, deficits abound the virtues of capitalism are questioned. Based on a few hundred years of observation, I have some fresh thoughts on how to sustain this system for a few hundred years more, or at least do better in 2012 than it did in 2011.  

….  CONTINUED at FT – free registration required.


My (Joe’s) take on that article:

I like the first part – the setup – by far the most.

In my opinion Adam Smith would be fine with the ups and downs and wealth disparities as long as the poor keep getting richer – which is in simple terms what is happening now, esp. when one does not (absurdly) remove Chinese and Indians from the equation.

The disparity controversies  remind me of the OWS ranting against the big system, and I remain somewhat unmoved by that until I can find better data about money flows.  There may be some merit for the case that wealth is flowing “too disproportionately” to the wealthy, but we need a LOT more than simply observing disproportion, which is the cornerstone of smart markets.   Without it you tend to get a race to the bottom, where the lack of incentive  makes it hard to get folks to work “harder” than others.   Simplification?  Yes of course, but if we are ever going to improve the disparity issues we need the American left to recognize how brilliantly the American system has worked over a long history to *improve* things using the architecture of entrepreneurial incentive, combined with a very progressive federal and state taxation system where those with the most pick up most of the tab for those who don’t have as much.
Obviously about 99 % of us would like to see the extra wealth flow to US more than the 1 percenters who are reaping more than what some would call a “fair share”, but …
Let’s try to figure this out by simplifying:  Let’s say if you have a single very clever woman who builds a company that eventually consists of 101 people, the founder (who took risk, mortgaged her  house in process, and developed a brilliant idea into a business) and 100 other folks who were hired after the company was a success, all 100 of now make a living wage of $50,000 per year plus benefits.   Let’s also reasonably assume that the founder remains clever, and her departure would hurt the company to the tune of many millions in profits.
Question:  What is a “fair amount” for the founder to make in this example?    0 because she loves her work and she has no boss ?   50,000 because everybody else makes that?   100% of the extra profit she account for?   Very few would argue for any of these.  Obviously she should make MORE than the others, and LESS than the total extra profit.
Really, the only smart issue on the big economics table is HOW MUCH MORE?
VERY IMPORTANTLY note this.   Assume she’s been making 50k, same as the wage of her workers.  Then, after a great year that she single handedly engineers that give the company an extra 5 million in profits – profit from accounts that are likely to continue into the future –  she raises her pay to 500k  (a 900% raise) and doubles all her worker’s pay to 100k (100% raise).    How do we interpret that action?
OWS is incensed – the new wealth was distributed VERY disproportionately.  She got 900% the raise she gave her workers.
I, on the other hand, think she’s great and would love to work for her.   That’s GREAT pay when you have so little risk, and she’s the architect of the innovations.    Both in fairness terms and in pragmatic terms I want her to get more.   I want SOME of that extra profit, after all, I’m part of the company, but the architects of the wealth creation “should” be disproportionately compensated.
There are exceptions to this simplification, such as CEOs that preside over lowered valuations yet make big money, but in simple terms this is pretty much how things work, and we change that at our enormous peril, because you can bet dollars to yuan that China will choose that model over the OWS more socialistically inspired model.
Key questions are this:  HOW do we optimally distribute and redistribute (tax)  “new wealth”?   and “old wealth”, such as inheritance money?

President Obama on Youtube answering questions

The US Presidential elections are much more about marketing more governance, and it’s been interesting as an internet marketeer to watch the brilliancy of the Obama campaign with respect to online media and especially social media.

For example, right about NOW he’s on YouTube answering questions from voters:

Republican Mitt Romney’s pathetic twitter following is probably an indication of who will win in the coming online media battle for the White House.   Clue – it’s not Mitt Romney.

World Record for Largest Observed Snowflake … on a Google Doodle?

The World record for the largest observed snowflake …

according to the Guinness Book of World Records, was attained this day of January 28th in 1887.  The city was Fort Keogh, Montana and the observer was a farmer.

Google’s doodle of today celebrates his discovery, though it appears he may have been the only witness to this frozen snowflake miracle of nature.

From Wikipedia we learn that Guinness’ recognized the world’s largest snowflakes as those of January 1887 at Fort KeoghMontana; allegedly one measured 38 cm (15 inches) wide.

What’s Up Joe Duck?

It’s always annoying when folks say how busy they are when – almost always – – they are involved in many hours per day of unnecessary TV watching, Facebooking, gaming, making your own hair gel, hobbies, gardening, etc.   Nothing wrong with all those things but it’s not the same as “being busy” doing things you MUST do because of work and other “essential” committments.

That said, I think I’m into the “busy” realm now with more projects than I can possibly complete for some time.   It’s been a good motivator for me, but it’s a little intimidating too.

Here are some of them:

Retire USA Retirement Information.   This is a big project with four other partners where we’ll showcase retirement options in all 50 states.   States and cities are online and I’m building the connections to the 5000+ category records now.    We’ve had an Oregon retirement website for some time and a retirement blog for some time but will be revamping that soon to include more information from more writers and many experts in retirement.

US History, US History Blog, Online Highways Travel, Travel and History.  These are the sites managed mostly by my business partner but with some input by me, especially at our two travel blogs US History and Travel and History.    I LOVE travel blogging and wish I had even more time to travel and blog, but blogging is playing mostly a weak supporting role in my internet projects.   I still need to get my Vietnam trip of Feb 2011 integrated into Online Highways as well as create more opportunities for small businesses at the site.

House Remodel.   My son Ben and I bought a house for him to live in when he leaves home.  It was a good “REO” post foreclosure deal but it needs a huge amount of work to become a great place.    We’ll get some contractor help but do a lot of the work ourselves.  After a few days of pulling up flooring I’m sure glad they invented Ibuprofen.

The Airport Information Directory.  This  project started me off over ten years ago as an internet entrepreneur.   I bought the website and data from another company and revamped it to include advertising.  However after good initial success I fell victim to Google’s changing algorithms.   They seem to be liking QuickAid again so I’ll be posting to that blog more often and revamping some of the old content about airports all over the world.  This is my Airport Codes database of Airports and world airport code and airline code information that also needs some attention.

Twitter.  @JoeDuck  I still love twitter but not quite sure how to use it to business advantage.  I’m setting up individual accounts for many of my websites, but it’s hard to keep engaged with them all.

…. to be continued …


One makes millions, millions make $1. CES 2012 and the decline of Journalism

Here at CES Las Vegas you can feel the energy of the thousands of bloggers, all of whom hope to spawn their own success stories.    I like bloggers and blogging a lot, but I think much of the early promise of blogger as citizen journalist is getting co-opted by commercialization – the need to eat creates a challenging relationship with sponsors and content.   Not a huge surprise, but I think the era of “citizen journalist” is probably going to be short lived as we transition to more of a combination of commercial and/or groupthink models of journalism.

Very few will be able to make it big online doing their own thing, or even make a living here. That’s OK – capitalism and journalism are a game of survival of the fittest, and most people aren’t fit to write quality stuff, even by sometimes  pathetic blogging standards.  Even those who ARE good writers are unlikely to make much money online, and then only when they work for large well capitalized sites.

Many silly articles  suggest otherwise:

guardiantech Guardian Tech …The writer who made millions by self-publishing online

A more relevant story would be how millions make very little rather than how one makes millions, but that story is not as interesting….which brings us to the challenge of journalism in general, especially commercial journalism.

Here at CES there are about 6000 “press”, many in young blogging teams writing for medium to large websites covering the show.     That’s great in one sense but in another it reminds me of pro sports, where millions with *some* talent are filtered to a few thousand who actually make it to the big time and a few hundred who actually make it big.    Again, that’s a virtuous cycle in one sense, though I will smack you if you suggest that the success comes from quality writing or true innovation.   There’s some of that online, but in terms of online journalism its mostly a race to the bottom where gimmicks and garbage will triumph.   Again, that’s OK and inevitable but its somewhat unfortunate that we’ll see seasoned good thinking journalist folks replaced by ditzy kook celebrity gossip.

… end rant …  Gotta go find Justin Beiber here at CES and get an invite to the SOUL Headphone party by Ludacris !

CES 2012 Wednesday – Fox news reporting from CES

CES 2012 Wednesday – Fox news reporting from CES

Originally uploaded by JoeDuck

Here is FOX news reporting (I think live) from CES 2012 here in Las Vegas. As always the show is a sea of consumer technology and people. Some 125,000 (approximate) attendees, 6000 press and 2700 Vendors. This appears to be Microsoft’s last CES and there’s som buzz about the show facing challenges, but my guess is that CES will remains the key tech showcase for the world and that we’ll see Asian companies take up the slack for Microsoft and others who opt out of the show. The costs here for exhibitors can be staggering with the larger players like Samsung and Microsoft spending more on exhibits that the smaller companies here make in several years. Yet generally the small vendors tell me they are happy with the show – for many their big event of the year in terms of meeting buyers and showcasing their stuff.

CES 2012 please … wait … for …. me!

Well I should be reporting live from CES 2012 right now rather than the Medford Oregon Airport where fog kept me from leaving yesterday for CES Las Vegas, the world’s premier consumer electronics show held every January.

I was supposed to be reporting live over at our Retirement blog from this morning’s keynote at the Silvers Summit, the CES Venue for the intersection of retirement and technology.

If I DO ever manage to get out – we’re not going to make our new 9:15am departure – I’ll have a lot of new pictures and technology content a several of the blogs:

CES 2012 at Technology Report will be the main tech reporting from the conference.

CES 2012 at the Retire USA Retirement Blog will feature some of the technology of special interest to those over 50.   Over 50 is hardly a “senior” in my view, but that’s the cutoff for AARP and the Silvers Summit.   In fact I think we need a new name for those of us over 50 and I don’t think “seniors” or even “silvers” is really the right angle here.    What’s next, the “Ripe” generation?

I’ll also be posting a bit at Las Vegas Blog, LasVegas1.   I’m staying downtown at the Golden Gate Hotel and Casino, Las Vegas’ oldest venue at One Fremont Street.   Looking forward to the history as well as the relaxed feel of the downtown area, which has undergone a fair amount of rennovation and remodelling over the past decade in an effort by the downtown hotels to capture some of the shiny luster of the strip, which has been  “the” Las Vegas for most tourists for some time now.

Retirement Information at Retire USA

Wow, I’d forgotten how hard it is to build and troubleshoot a huge website, but things are finally coming together at Retire USA, a project I’ve got going with three other partners.  The plan is to showcase retirement options across all the states in the USA.

Although comments about this are welcome, you’ll find things still a bit rough and there’s lots of data (thousands of individual records) yet to be linked up to state and city pages, though some of this can be found via the Google custom search engine which will seek out Retirement information at our site, combine it with ads, and post the results.

By tonight all the state pages will be active, most with links out to city pages.   Much more to come … soon!

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida GeorgiaHawaii Idaho Indiana Illinois Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan MississippiMissouri Minnesota Montana Nebraska New Hampshire New Jersey New Mexico New York Nevada North CarolinaNorth Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee TexasUtah Vermont Virginia Washington West Virginia Wisconsin Wyoming