I think you’re spot on.

We need more solid reflections like this.

Well done

-Alister

Cheers,

Pedro

“Google’s metaknowledge creates real value”

This was my first indication that this was some kind of joke. What constitutes value is arguable and highly subjective. The pragmatic answer is that value exists in peoples minds at the moment of exchange. I trade my 10 marbles for your yo yo. We agree, at that moment, that 10 marbles and one yo yo are equivalent. This is the only definition of value that stands the test of time. All the other definitions are verifiably false.

The value of Googles’ meta data is, essentially, zero, since the data is collected for free and the metadata is freely given with nothing returned. Now wait, Google does invest a lot of money creating meta-data. They still give it away, no value there.

The second statement that struck me was:

“The key is no longer to control scarcity but to manage abundance.”

I thinks this is backwards. If things have a value in a person’s mind, it is because that person believes a thing is finite and scarce. If a thing were infinite I wouldn’t trade any of my scarce or finite stuff for it. Why should I? The only way to create value with something that is abundant is to manage its abundance, that is, create scarcity. The correct wording should be:

“the key is to create scarcity by controlling abundance”.

This is seen on a daily basis through the use of copyright in the content distribution industries, like music and video. Music and videos can be copied and distributed for nothing these days. It takes an artificial scarcity induced by copyright and enforced by the state to create a market where people are willing to give up something scarce to have a video or a song.

But you appear to overreach yourself a little when talking about other industries. If the rich countries buy all their cars from China, then eventually their aeroplanes, then their pharmaceuticals, I doubt they’ll all be able to make a living on the thin air of selling each other stuff and taking in each other’s washing. You can borrow for a while, but one day you have to pay the Chinese and Saudis for producing all that stuff. I’m sure that they’ll accept enough of the “products” that America is offering in exchange for their goods.

So, the web brings opportunities for efficiency in publishing, marketing, even customisation of products (like cars). I don’t see what that has to do with the fundamental ability of American manufacturers to compete with the East. People DO want to be in the business of stuff, such as oil, cars, planes, machine tools, servers etc. Most of the dollars spent on such things are retained in the USA. But ultimately those dollars won’t be able to buy so much stuff (like oil) from overseas unless there is a fundamental improvement in productivity. As far as I can recall, the only notable improvements in productivity in the dotcom boom were in IT itself, without any actual benefit to the rest of industry.

2) Don’t blame anyone but yourself for not understanding and/or not profiting from (or losing your shirt on) derivatives. They’re not that complex and many avenues of trading them for individuals exist (now the margin requirements are probably a bit large, but they were not recently).

Just because you, personally, don’t understand something doesn’t make it bad. Probably many of the derivatives trades don’t understand the points you are trying to make.

3) “unregulated leverage gone mad” – note how very few of the completely unregulated hedge funds have gone under. The failures are all in VERY regulated banks. Why should a “platform” be unregulated (open access for all according to the Platform 3.23 standard by government mandate?) but a financial “platform” requires regulation?