Shared Spaces

This is the world of Jayne Lucier:

Jayne is currently working towards a PhD in Computational Linguistics at the University of Washington. She's single, fit, twenty two years old, with short brown hair worn spiky, brilliant green eyes behind a pair of barely there glasses, a penchant for plaid skirts and vests, grandmother boots and backpacks over purses. With a little exaggeration, she could pass for a Miyazaki anime character, though there are hints of the more mature woman in her smile and posture.

Jayne lives in a shared space with three other girls - Tanya, Candice and Mykie - in which each has a separate room but they share a communal kitchen and den along with two shared bathrooms. The rent isn't cheap, even with the four of them sharing it, but in this day and age that's hardly unusual. The walls in the common rooms have artwork screens placed at convenient locations, with the rule being that while anyone can set any or all art at any time, they can't be something that would send the parental units screaming in anger or fear. A couple of other larger screens are for more traditional uses - gaming, news, the latest shows - and they're on a first come, first serve basis, though if a roommate doesn't reclaim it every hour it's up for grabs.

Every girl has a smart phone and a pad, which the shared space uses to determine who is where at any given point. The phone's usually considered a better bet - pads, while important, usually tend to end up in backpacks. Jayne's room also has a full screen on her desk, along with a wireless keyboard that she can use in lieu of her device's still cumbersome onscreen keyboard. Besides, with the keyboard it gives her more real estate to write on.

The morning ritual is usually pretty much the same - up at 7am when Jayne's pad communicates with the audio in the room, playing everything from Gustave Holst to Emilie Autumn from her playlist at random, into the bathroom to take a shower while the pad on the medicine cabinet reads out comments from the students' she's doing Teaching Assistant for, as well as any messages that came during the night. She can also bring up the house status, both from the sensors on the internal systems - #toilet 1 has a leak and needs to be repaired,  report sent to building maintenance - and from the external ones: Candice->Mykie: The SalonCare Shampoo is MINE. You take it, you DIE!!!! . Yeah, Candice has issues.

The medicine capinet, cupboards, fridge and linen closet all have RFID scanners, as does her closet, though that one she could disable if she wants. She can see at a moment's glance what she has, where it is, how long it's been in there, what's likely close to needing to be replaced. The medicine cabinet informs her that she still needs to take four more doses of the Amoxycillin, which was prescribed to her after a fall cold turned into bronchitis, and grimacing, she pours out the foul smelling liquid into a small cup, drinks it, makes another face, and puts the lid back on, the top's click sending a signal via a simple active RFID transmitter in the bottle to decrement the count. 

The shared apartment has its own online presence - all of the ones in the building do. It includes a message queue (which she moderates - as the oldest and farthest along in her studies, there was no question that she would) between each of them, a shared chat thread (which is usually pretty quiet, but sometimes can see a lot of activity, especially when Tanya brought Jack home a few weeks ago which immediately set of a bidding war. Jack never knew how close he came to having Mykie hijack him, but she settled for a pair of Avril tickets. It also contained their respective calendars, showing who had what duties when, who was out of the house, who needed a few moments of privacy with a significant other. It didn't always work, but there was enough incentive there to keep it up to date that the girls participated.

Jayne dressed, frowning at the long list of clothes that were currently marked as dirty. She'd need to do laundry tonight, or she'd be down to one particularly inappropriate pair of rave pants and a peekaboo mesh blouse for teaching in - probably not something that Dr. Hannaford would be particularly pleased to see her in - though no doubt a few of her more erstwhile students might.

"Reminder - laundry tonight," she said to the air, and the air dutifully recorded her reluctantly claimed penance.  Somehow they never got around to automating laundry.

Dressed in a white blouse, forest green vest and green plaid skirt and knee-hi's, her hair up in a bun, she knew the image she projected, but frankly didn't care. It was her teaching image, and the one time she'd shown up in jeans and t-shirt (because she had forgotten to do laundry) everyone from her professor to half her students to her friends in Vladivostok and Stockholm had written notes of worry and concern. 

Closing the door (it automatically locked when her phone left the room unless she voice-overrode it) Jayne wandered down the hallway, looking at the latest artwork choices of her roomies - Kandisky (Tanya), a DNAngels anime drawing (Mykie), Hot Firefighter for October (Candice - that one bordered a little too close to the edge of the parental unit rule) and Waterhouse's Lady of the Lake (hers). Candice splayed out on the couch, texting furiously with her ... girlfriend, Jayne remembered, the gender and identity tended to change weekly - while Mykie came out of her room with her oversized pad in her backpack and the zombie-look of Starbucks withdrawal plastered on her face. 

Mykie was their resident artist, and the pad she carried was her canvas and palette as well. She'd taken one look at Jayne when she'd let the empty room (Kirsten had graduated the previous semester) and immediately pulled out her electronic pad, slapped a sheet of paper on it, and started drawing. The schoolgirl that had emerged from Mykie's pen had ended up both on her wall and on her "school wall", one if physical media, the other in virtual, and Mykie had been delighted to let Jayne use that as her "logo". 

Tanya emerged from the refrigerator, a bowl of cereal and nearly empty jug of milk in hand. 

"We're almost out of milk," she said around the cereal already in her mouth.

"Already on the delivery queue," Jayne replied, "and it's your turn to meet and greet the delivery man."

"Oh, da- ... sorry, I forgot. I've got another appointment."

"Did you calendar it?"

"Um, er ... no ..."

"Fine, then you either work it out with the delivery guy or you get to pick up the tab for all the groceries this week, 'cause I'm not going to have the milk spoiling and soggy ice cream because someone forgot."

"I ... okay. I'll see if I can reschedule."

"Good. 'Nuff said."

Jayne despaired at Tanya - she was a good kid, but she tended to have her head in the clouds, and they weren't electronic ones. She grabbed a sweet roll from the pantry, threw another one Mykie's way that was caught deftly as the artist headed out the door, and waved an unreturned bye to her remaining roomies. 

As she walked out the door, the local shared space handed her off to the outside world (her choice, she usually wanted to maintain context awareness). She could still bring up the apartment's shared space if she needed to, but the phone typically latched onto whatever context (usually spatial, but occasionally temporal) was most appropriate for configuring the apps available to her. Jayne liked called her phone her context machine.

She grabbed the phone from her vest (she liked the vests because they included an outside pocket ideal for phones and inside one ideal for pads) and pressed the UW bus app, which picked up her location automatically and passed it to a central dispatch which in turn aggregated the calls and arranged for a least time path between pickup points. The app returned a modal notification: "Green Bus in 10 minutes". She'd bought a year pass, but if she hadn't, the app would have simply debited the fare from her account. The university had taken their time getting the system in place, but this had proved one of their biggest successes. It pushed ridership up dramatically while insuring that they didn't have buses driving empty when they didn't have to. There were still a few traditional loops, but they were being phased out as the number of non-online students dropped precipitously.

Jayne shared an office with Doug Stillwell, a PhD student in Computational Linguistics, though truth be told they could have just about hotelled the grad student offices, which were, for the most part, little more than closets. They'd already started doing that in other buildings, and she suspected that Informational Systems was probably next. When she needed to face-to-face with a student, Jayne usually preferred to meet them in the mini-cafeterias in the basement. The professors were still very jealous of their own offices, and could not understand why the younger generation seemed to be so blasé about giving up theirs. Of course, Jayne thought, the whole university institution was undergoing so many changes that it was likely not to exist in a remotely recognizable form ten years later - the Post-University Deconstructionist Movement, as the more philosophical members of the school called it.

The bus dropped her off at Mary Gates Hall, and she ambled to her classroom. She'd spent the evening grading papers online (for her XML class) then laughed quietly as she realized that there'd never been a paper anything - she'd read through each q&a pair as they came up on her screen, marked up wrong answers both inline and in a separate comments block and invited additional comments and clarification, gave each answer a rating, then summed up the rating for a grade. In a few places, she'd annotated with links to their textbooks at the appropriate paragraph or external links to the web, and in a few others she'd added video commentary directly, though she preferred not to do that - more than once, she'd found her face staring back at her on Youtube under the heading "Hot for Teacher", usually with a contemporary rock song playing in between her pauses. Never give students ammunition they can use against you.

She entered her classroom with ten minutes to spare, and stood in the doorway as Doug (soon, Dr. Doug, as she liked to tease him) finished up his own lecture on semantics. Doug was ... cute - puppy dog nerd cute, but was finally growing into his 6' 7" in frame. He'd never be a face person, but he was passionate about his research, was damned good with the electric mandolin, and not only could he get a computer to sit up and beg, but he looked good in a Steampunk outfit, as he'd shown when he arrived at the office after a weekend at a con. They'd already been out on a couple of dates, but neither were in any hurry.

The classroom itself was tiny, no surprise there, but what was surprising was that it was intended for a class of  up to 300 students, even though there were only sixteen seats in the room itself. A teacher in this day and age was expected to be a television performer; the video setup in the backroom was mostly automated, though there was usually a kid - Steven or Kaitlin for her own classes - who sat and monitored all the classrooms just in case from a central station. The school, like most universities, had realized that students could record lectures and leave, and that seats in butts was becoming an increasingly anachronistic concept. Some students still showed up for class, but for the most part classes were taught remotely, and questions were handled asynchronously and offline. 

As a consequence, her classroom was tiny, but her blackboard was infinite. The classroom's shared space had picked up her pad the moment she walked in the door, but wouldn't relinquish control until after Doug chose to, which he did with a flourish ...

"... and up next, the sexiest Computational Linguistics teacher on the UW campus, the ever lovely and charming Jayne Lucier."

"I'll get you for this," she mouthed at him as he walked past her, and he winked in reply.

Still a little flushed, she headed to the front of the room, her pad activating the university presentation app, automatically slaving the monitors to its controls. She rather liked the presentation that she'd come up with last night - her presentation skills weren't quite at the level of Mykie's, who could do absolutely incredible game quality work, but like most people her age she'd cut her teeth editing digital video and presentations - it didn't hurt that she had also paid Mykie a reasonable sum of money to help her put together clips for her talks.

The students filed in - she was female, she was pretty, and she liked interacting with live students, so she had a pretty full room - but she also noted that her class was currently being audited by 1,052 people worldwide, though she set a maximum of forty participating students just to keep ahead of the homework. The auditors could take the tests and would eventually see the answer keys so they could self correct, but they didn't get credit. Still, they could (and did, vigorously) participate in the chatter stream, and often times would provide help or assistance even as she was giving her talk (there were a couple of professors at MIT who interacted with her show regularly, as well as several engineers at Google, Microsoft and Intel, and she doubted she'd have much trouble landing a job or a post-graduate position once she was done with her own PhD).

The teleprompter monitor just outside of the camera's vision, which showed her with the composite background from her pad as compared to the green-screen behind her, flashed the ten second signal  ... five, four, three, two, one ..

"Welcome to XQuery 102, Week Fourteen, class 25. I'm Jayne Lucier, your instructor. Last week, we examined the use of faceted search methods in order to ..."

---

This particular sketch - not quite a story, more a bit of exploratory narrative - originally came to me in a dream . It highlights both what could be in the very near term future and where we are not quite yet at. There are a few key highlights that should be food for thought:

Smart phones in particular truly are context machines - at any given point, they know who you are (assuming you are the owner of the phone), know where you are, and know when you are. This is a powerful combination. With these three pieces of information, shared spaces become possible. A shared space is place that can take advantage of that context to make facets of itself available. The applications that you need at home (whether shared or not) are different from those that you need at work or on the road. 

Shared context can be combined with membership to identify groupings of services, and to provide appropriate levels of access for those services. Jayne and her roommates could purchase specific food for themselves as well as food used in common with that handled by automatic debiting, could have the food ordered in the background, could have it delivered at a time and space most appropriate for everyone (though someone still has to put it away :-). Shared spaces allow the access to display devices (the various public screens in the apartment), services (online delivery of movie content) and responsibilities (who gets to take out the trash or wash the dishes this week).

Such a shared space is a web presence (Facebook for places, if you will), and it's about more than just people - the toilet announcing that it has a leak, giving a telematic warning to the building's superintendent, or the shared space of an individual, the clothes in her closet and the medicines in her medicine chest. It's also a space that knows it's own physical boundaries - Jayne walking out the front door hands her off from the apartment's shared space to other broader shared spaces. She can still log into the more focused ones, of course, but ultimately it is the ability to move from one appropriate context to the next that makes remote devices so compelling.

Shared spaces also open up some interesting issues; monetary transactions become largely background issues. We're getting close to that now, but for the moment, such transactions are still largely at the institutional layer (and the need to wander around with dozens of cards). Things like QRCodes and Near Field Communication (NFC) should speed that along - the ability to go from visual to device to web is powerful, as is the ability to use the device as a physical replacement for credit cards, vendor cards, metro bus cards, membership cards and so forth. Of course, security becomes a much bigger concern as well - loss of a phone could be inconveniencing, theft of one could be financially (and reputationally) damaging, but I frankly do not believe that this factor alone will be sufficient to deter these technologies from moving forward.

Indeed, one area that I think QRCodes in particular could help is that it provides a powerful way to change your shared space. Go into a store and scan it's QRCodes, and all of the apps that are available for that store become visible, from deals to chat rooms to means of optimizing payment. Go to a convention and can it's QCode, and you then have the whole shared context for the convention's activities, feeds, maps, and presentations. Scan a course's QRCodes, and you have apps that provide links to syllabi, bios, resources, feeds.

In this respect a shared space is a portal, but its a portal of both links and applications, and what's more its a portable that knows you and can provide you services based upon access levels and need. Because it knows time, it can look at your calendar, it can update lists of things that need to get done, and it can even make inferences once enough history is gleaned.

One additional aspect of this is that we're moving to a world where physical proximity is no longer necessary in order to interact with the world, because we can replace this with information about context. Mass transit systems -- especially buses -- are comparatively inefficient - they still require that you move to an access point in the system in order to get on it or get off it, and that access point may be very inconvenient from where you need to go or be picked up from (this is especially true in suburban neighborhoods). On the other hand, by aggregating requests and using that to determine the optimal routes moves you to a door-to-door service while at the same time providing for the most efficient distribution of stops. While some communities have a similar system today that's phone based, for the most part these are limited to people with disabilities, and as such have a comparatively small participation rate. 

Similarly, teaching, training, sales conferences, and the like have been moving to a distributed model for some time, though the public educational system is perhaps slower there. In many respects one of the central problems with distance teaching is the belief that it is necessary to build elaborate software presentations on top of content. That's certainly possible, and I think as we move forward the ability to present effectively online will need to become a much bigger skill-set for teachers at all levels, but at the same time, the rise of collaboration tools means that it becomes increasingly possible to use proven pedagogical principles in order to teach - even Q&A type essays can be handled in this manner, and over the web (and especially over mobile) this may in fact be the most effective means to teach complex content.

Additionally, there's a need to recognize that mobile devices (pads in particular) will become the de facto mechanisms for both giving and receiving instruction moving forward - and that these will be used asynchronously. We don't think with our butts. We think with our heads focused upon a particular instructor or information provider, and the reason that the lecture is still a fundamental tool in the teaching lexicon is that such a lecture is a means to achieve that focus. 

Yet attending a lecture when awake, when distracted either mentally or physically (school chairs, anyone?), or when attempting to digest a previous lecture on a different topic, is usually counterproductive. By separating the presentation from the perception, it makes it possible for the student to determine the time when he or she is focused. It also makes it possible for the crowd sourcing phenomenon to extend beyond the immediate moment, giving it time for people to ask questions or make points, and for informational gestation to occur.

The idea behind putting this scenario out is to help understand where the technology is (and more importantly where it isn't and could be) and to envision given that what improvements in technology (or even what technologies themselves) are needed to achieve that technology. I hope to do this again in different contexts.


First published at http://blogs.avalonconsult.com/blog/e-learning/shared-spaces/

Bad Call? Microsoft buys Skype

Software titan Microsoft just purchased Skype, whose voip-based services have made it one of the largest players in the web telecommunications space. The deal, for $8.5 billion in cash, provides a major benefit to Microsoft, which has struggled to remain competitive with their Live Meeting offerings and significantly expands their consumer base, but also indirectly provides benefits to Facebook, a Microsoft investee - by marrying Skype capabilities with Facebook's core systems, Facebook can get a significant leg up on phone connectivity between its members significantly expanding its standing as a social communications medium.

For Skype, the acquisition by Microsoft also places the company into a position where they can expand their offerings into the enterprise space that Microsoft has a major presence in, a market that Skype had difficulty penetrating before. This in turn provides a direct challenge both to Google, which has been trying to expand its Google Voice offerings to do the same (in conjunction with Google Docs and their email services), as well as Cisco's enterprise VOIP and virtual meeting software and hardware.

What I find intriguing about this particular buyout is that Skype will in effect become a separate division of Microsoft, one reporting directly to Steve Ballmer. Not only does this put one of their divisions almost completely in Silicon Valley, where Microsoft has had but a token presence until now, but it also emphasizes the underlying realization by the company that VOIP has become a major pillar and diffentiator for the largest software concerns, and needs to be treated as more than a minor offshot to their office strategy.

This last year has also seen an increasing validation of a strategy to try to keep companies intact with only a secondary ancillary branding as a Microsoft entity. This can be seen in Facebook, which bears little outward mark of being a Microsoft invested company, and ironically, if (and it's a big if) Microsoft can get Facebook and Skype to play well together, there may be some advantages to be had.

At the same time, the acquisition of Skype may also be a case of Ballmer chasing after brand and market share rather than technology, an approach which has burned him more than once. VOIP is reasonably well understood at this stage, and Skype's been sold once before because it couldn't make the revenue match predictions (it was losing money in its PC to PC communications, which of course was its prime attraction). Admittedly, it was still outcompeting Live Meeting, but there's a major question about whether the effort to integrate Skype into the Microsoft line-up (and the costs attendant with any such reorganization) may ultimately make this a losing proposition. If Microsoft reduces its service offerings there, it also reduces the appeal of the Skype service, and given the fairly mature state of the VOIP market, the primary paying customers may very well end up sticking with their dedicated providers.

In the end, I suspect that this will be modestly successful, but not a major game changer. The buyout helps Microsoft recover lost market share in a critical market if the integration remains minimal, but if Ballmer tries to bring Skype too much into the Microsoft fold he risks both customer and employee defections. Moreover, while voip should be a major part of a company strategy for a company the size of Microsoft, it may also prove a distraction to those areas where it needs to be far more focused, such as the related mobile market space, and even with a fair amount of cash still in the books, the cost of acquisition and integration is going to eat up a not insignificant part of that at a time when other markets are likely to be more profitable long term.

Moreover, there's the question of whether this deal was motivated more by the need for Ballmer to show himself as being aggressive in the marketplace than it was for the stockholders. Ballmer has been far less aggressive in the market space than Gates was, and has often been swayed more by the desire to get the hottest properties rather than the ones that made the most competitive sense for the company. Skype was an old maid - it had been sitting out in the marketplace for a while, represents older technologies, and really was most valuable for its installed customer base - most of which were looking to pay as little as possible to use its services. This doesn't really bode well for Ballmer moving forward - indeed, it may prove to be the final misstep in a series of questionable buyouts and investments. 

A New Job and New Ramblings, or Information Architecture 101

Hi! Chances are if you came from links for the MarkLogic site, you're probably looking for XMLToday.org (I run both) but if you're just here to see some rambling thoughts about information architecture from a graybeard, then no doubt you are in fact in the right place.

About the new job - about a year ago, I came out to Annapolis, Maryland in order to work as a contract data architect for Lockheed on the US National Archives ERA project. NARA was fun to work with. Lockheed, not so much. In January, in a cost cutting move, several consultants were let go. The usual scramble for work began, aided for once with a fairly healthy bank balance and being in a place where there is a hunger for XML architects. Eight weeks later, after a number of interesting encounters, I landed at Avalon Consulting. They had what I was looking for in a job - challenging work, decent pay, sane ideas about remote working and a lot of very bright people that liked to do good things in the information space. That it gave me a chance to work with MarkLogic again was a big plus, as I've rather become addicted to the platform.

So What's the Problem?

Recently, I stumbled across an interesting article on the X Prize for zero-emissions automobiles. While I think the article had some merit (I especially liked the concept of using the skin of an automobile to store and release energy), the associated commentary actually got me to thinking about a bigger problems: how do you get from the world as it exists today to one where we have far smaller dependency upon oil, are able to significantly curb carbon emissions and still have a society that is able to grow in terms of its intellectual innovations even as it meets the demands placed upon it by its population?

There are of course several camps of thinking here. The first is the BAU - business as usual - camp, which basically says that we can continue doing what we do today and expect some miracle solution to save us. In this scenario, each problem that emerges is essentially isolated and unrelated to any other, resources are limitless because there will always be some magical piece of technology that will keep us empowered and keep our environment clean and productive, and that you can create economies based upon the movement of electrons representing financial tokens. I refer to this world view as Kurzweil City, named after famed futurist Ray Kurzweil and his belief in the power of technology.

The second camp is the apocalypse view - world oil production is falling even while the population is rising, the environmental systems are under extreme stress and will soon result in massive climate change, and we've passed the event horizon. In this view, the end of civilization as we know it is nigh, and we will be in for a painful, long term depression that will ultimately end up with us huddled in our unheated houses, guns at hand, waiting for the morning as the ravening mobs strip the landscape like locusts under cover of night. The resulting Kunstlervilles, named for writer James Howard Kunstler, ultimately resemble nothing more than 18th century frontier towns set against a backdrop of rusting automobiles and decaying suburbs.

While my own views tend to be more Kunstler than Kurzweil, I think that both are missing the point. Humans adapt. It's what we've done successfully for more than three million years, and there's absolutely nothing to indicate that, as a species we've lost this ability to adapt. At the same time, we usually adapt best in times of maximum adversity ... we're not terribly good at anticipating the need for change, but once change has happened, we are actually quite good at seeing what the landscape looks like and changing our behavior accordingly. What that implies is that both Kunstler and Kurzweil are correct, but the scale on which they are correct are different.

Consider, for instance, the twin problems of climate change and peak oil, both of which I think are in play. It's quite probable that the global climate is in fact heating, but there are three questions that, in my mind, are still very much unanswered:

1) Have we accounted for all externalities? That is to say, can we see with any conclusive proof that there are factors that aren't anthropogenic that are causing the changes in the environment?

2) Are the models that we're creating sufficiently powerful to create an accurate (rather than politicized) view of the behavior of weather? and

3) Are we certain that non-linearities in the model won't ultimately end up inducing a negative feedback look that will dampen factors? I'm thinking most specifically of the North Atlantic Gyre here, and the potential for causing localized cooling effects that could ultimately dampen out the heating effects, though there are other feedback loops in the system that I don't think we've fully taken into account.

Climate change is very important to us right now because our civilization is remarkably sensitive to weather based disruptions, from hurricanes to the massive snow-storm that blanked the eastern US this year, while leaving the Olympics snow-free in Vancouver, but we need to understand that there is a distinction between such climate vulnerability and specific trends. Indeed, the most rational course of action is to develop plans for considering many potential futures, then to fine tune them as any given scenario comes to pass.

Peak Oil is another such issue, and likely a far more immediate one. Again, however, the problems that are associated with Peak Oil tend to be problems that have occurred because we've built an oil based economy, and that economy is becoming increasingly tenuous. I have concentrated on the historical aspects of Peak Oil in other posts as well potential effects down the road, but here I want to look at the question of how do we deal with scenarios where oil supplies become unreliable.

The BAU scenario is becoming evidently increasingly unsustainable long term, but the interesting thing is that slowly and far from uniformly, things are changing. One of the most obvious consequences of the oil-based economy is that it has shaped our cities. Most European and Asian cities were formed before the power resources inherent in oil were available, and as such tend to reflect a pedestrian model.

In North and South America, on the other hand, most of the population growth has taken place in the last one hundred years, and as such has fitted very closely to the rise (and to a certain degree fall) of oil as the primary motive and heat source. Small, largely isolated communities were connected first by rail, then by road, growing larger until they eventually overlapped other communities. Political autonomy in this communities was lost as the benefits of centralized authority took hold.

More importantly, work centers shifted out of these small towns to urban centers, in part because of economies of scale, in part because of the strong need for managers to have their primary operations personnel - financial systems, research and development, production and so forth - as close to the management structure as possible in order to minimize communication and resource management problems.

A certain amount of ego was involved as well - you aren't truly successful as a business unless you have a tall, new tower to dominate the landscape, a symbol (fraught with obvious symbolism) of the overarching control you have compared to everyone else. Because power was centralized, this meant that such psychological issues could readily be rationalized as business ones. Similarly, workers in this system were important only for their skills, and as such required constant babysitting and/or bullying lest they revert to the lying, cheating scum that management knew them to be.

This meant that the work was at an increasing distance from the homes. Here's where I break with Kunstler - I don't believe that the suburbs were created due to poor urban planning, but rather occurred because urban planning can at best only nudge the development of a city by zoning - and fails to take into account the fact that in many cases agglomerated townships had their own views of zoning and planning that were consistent at the time but failed to factor in being swallowed by larger entities.

People moved to the suburbs because of three factors:
1) Cheap oil made living at a distance still more affordable than living closer nearer to the urban center, and provided the opportunity to own nicer property at lower prices,
2) Once a family is established in a house, they will live there for a while, and will only move when economic benefits outweigh the benefits of maintaining residence. This meant that expanding populations will end living farther and farther away because there are simply not enough niches closer in, and this factor usually meant smaller communities getting absorbed into larger ones.
3) Cheap oil and the fact that that the US in particular was a net oil exporter meant that there was significant money for the development of large scale interstate projects and traffic artery construction.

This means that the underlying structure of most cities came about at a time when energy was cheap and money was plentiful, and are increasingly at odds with an era where energy is expensive and money is scarce. It is this mismatch, as much as any, that is causing so many problems in our society.

Yet it is worth appreciating the fact that most of this change has occurred within the last fifty years. While, for a certain generation, this may seem like the bulk of their lives, social memory usually doesn't get baked into stone until after a couple of centuries. In many places, such as here in Victoria, the pre-oil era didn't really end until comparatively recently, and there are many still alive who remember a time when the oil economy wasn't so heavy an influence. This means that for many people (especially the younger ones), the oil economy is itself a relatively transient event, which is what offers up some hope.

The year 2007 is notable for the fact that for the first time, Christmas sales online exceeded Christmas sales in the brick and mortar world. More books are now sold online than are sold offline, and an increasing number of those are eBooks. From the Internet today, you can provide your measurements to any number of vendors  and get a full wardrobe sent to you within a few days, a wardrobe that likely is closer in style and fit than anything you could find in stores. Malls, once the center of retail activity, are increasingly becoming ghost towns, and in some places are being razed and left to go fallow again. Meanwhile online retail presences are growing, even in one of the harshest recessions in living memory.

Once critical business support centers - accounts receivable and payable, research and development, marketing, sales and even management - are increasingly becoming distributed, and in more and more cases are becoming virtualized altogether. The office towers, constructed in part because of the need to consolidate business functions, and in part as somewhat phallic representations of power and dominance, are emptying out, not just because businesses are folding but because businesses increasingly have no need for them - they're white elephants from a different era.

Intellectual services - legal services, medical advice, accounting, design, marketing, etc. - have been migrating to a virtualized state for the last couple of decades, as professionals in these fields chase the money to where the market is ... in this case online. Traditional publishing is in freefall because of this, but after a couple of decades of transition, online publishing is beginning to distinguish itself as a profit center, adjusted to the environment of the web.

Physical services - from hair care to acute medical care to restaurantiers and pubs - make up the bulk of the suburban businesses, but it's easy to underestimate their significance. These are services that effectively can't be virtualized (you can't get a haircut online), but can be distributed. What's more, these businesses are shifting away from the major corporate chains, which are facing increasing challenges because their primary benefit - an ability to distribute large amounts of food inexpensively through the use of uniform packaging, marketing and purchasing economies of scale -  are now being challenged by the mix of higher oil prices and stricter environmental regulations.

Indeed, this last point needs to be reiterated. Many business analysts made the mistake of assuming that the primary reason that companies such as McDonalds proved so popular was because of their effective uniformity of marketing. I don't think that was actually the case, or at least all that major a part of it. The real benefit was logistical - by taking advantage of economies of scale due to inexpensive energy and oil availability, such companies could reduce the overall cost of a meal to well below what the local market could provide, forcing many of those companies out of business, except at the boutique end.

However, once that factor fades - once the real costs of shipping those Big Macs and Fries enter into the equation and the cost of mass producing the raw inputs for those meals rise, the local stores (with much shorter supply lines and generally fresher and healthier product) are more effectively able to compete. This is why the next decade will see a dramatic rise in the number of independently owned restaurants compared to the chains.

The same is true of the big box stores, save that their demise will likely come due to the Internet rather than competitive local stores. However, what's interesting here is that the goods being sold will be more locally produced, likely through networks of vendors working either independently or in conjunction with mediating merchants online.

Again, distribution and shipping costs play a big part here, and these will force a relocalization of both raw materials and finished goods. While the middleman may not be completely cut out of the equation, the chances are good that the middleman is likely not going to be spending large amounts of money on mall outlets when they can spend the money online to minimize distribution costs.

This raises questions about the viability of the Walmart model moving forward. Walmart is fundamentally dependent upon the oil economy model. It's goods are generally produced in low labor cost and low materials cost regimes, then distributed in bulk on oil-intensive transport tankers. They have been competitive because of their ability to undercut local producers. As that competitive edge disappears (and local vendors begin to become cost competitive again), expect the big box stores to be closed.

Manufacturing has similar patterns. Manufacturing overall tends to be local, and because of the potential environmental issues, manufacturing in general has been more distributed than other businesses. Because outsourcing of manufacturing is becoming increasingly expensive, local manufacturers should end up being far more competitive than they have been, and will better be able to supply localized economies.

What this means is that urban use patterns are now shifting - intellectual work no longer needs to be tied to an urban center (because these services are being done over the web), which strengthens local suburban communities. Manufacturing and physical services  similarly are becoming more localized and shifting away from either urban centers or outsourced vendors. This will tend to strengthen suburban centers as the needs for such services rise, though such centers will likely become more municipal than commercial.

The final factor in all of this is energy production. As you shift towards more localized and distributed forms of energy production (and alt-energy forms), this tends to provide additional revenues that accrue at the local level. Large scale energy production - coal, oil, nuclear, etc. - on the other hand, favor transnational corporate control of energy resources, as does the oil distribution network (especially when the country is a net importer of oil). This money in turn usually cycles itself back into the local economy, where it can be used to continue upgrading existing infrastructure, setting up a virtuous cycle again.

This process won't happen evenly, and it definitely won't happen without some (perhaps a lot) of pain. It will give more power to specific regions, and metropolitan areas within regions, at the expense of the larger nation-state (the US, Canada and Mexico especially) and rural areas (which currently tend to have a disproportionate amount of influence in the US especially given their greater weight in the Senate).

It will also favor those regions that have the best mix of urban and rural distribution, available water supplies, ports and the like, while coming down especially hard on those regions that are missing key pieces of this mix (for instance, Scottsdale, AZ has few water resources and little in the way of arable farmland, even though they have the potential for solar energy, while areas like Seattle or San Francisco are reasonably well endowed with all of these).

However the speed at which this occurs will depend largely upon the effectiveness of the existing economic power structure in obstructing the changes. That it will occur is a given - these are very hard and fast megatrends at work here - but such an economic transition favors very different players, and the oil economy players have the advantage of incumbency at this stage.

I'm coming to believe that political considerations - the structure of power sharing within a society - are increasingly driven by economic considerations rather than vice versa, though politics generally dictates the degree to which economic costs are externalized to the society at large.

Many economies globally are now going through a period of economic decline as positions favoring the oil economy are being unwound, mostly due to the realization that the underlying assumptions of effectively limitless energy resources, which lays at the foundation of our current credit-based economy, are no longer valid. These assumptions were facile on the surface, but were vital for the oil economy to get access to the necessary funds that would finance the continued development of political structures and labile populations friendly to this economic viewpoint.

The very likely second leg of deflation, now beginning to unfold in Europe as the Maastricht treaty disintegrates though likely to come back round to North America as American and Canadian investments in Europe are hit by the largest margin calls in history, are only continuing the unwinding of these assumptions, further weakening the oil economy and likely causing the political unrest necessary to affect meaningful political change, even if such change ends up redrawing political boundaries to more accurately reflect economic rather than historical realities.

To that end, I'm increasingly of the opinion that while you will see political volatility and a great deal of economic instability over the course of the next fifteen to twenty years, these changes are the necessary precursors to the transition to a new economy and new political reality. It will force us to rethink a great number of assumptions, from the nature of work and the mechanisms of valuation to how we build our cities (and countries) moving forward. It will look superficially more agrarian, but will hide a sophisticated technological underpinning.

It will offer fewer opportunities for "getting rich", but potentially a healthier, more satisfying standard of living for a larger percentage of the population. It will not be uniform - by the end of the twenty first century it is very likely that there will be regions that are technologically and socially far more advanced while other regions may almost be feudal in nature, based largely upon choices made in the next decade.

This should be an interesting time.

Economic Hurricane Season

This is my first blog on this platform in a while, though I will likely be writing more from here moving forward. My life seems to have moved into one of those strange interstitial periods where, despite the best of intentions, little seems to be happening. Over the years I've noticed that these are often gestational times, when the batteries are recharging and projects that had been sidelined or abandoned are re-examined and revitalized.

Future Proof: Kurzweil Cities and Kunstlervilles

According to a number of serious and well-intentioned articles written in the last century (not to mention the Jetsons), by 2010 we were all supposed to live in giant cities with mile-high sky-scrapers, flying cars, pneumatic tube transit, and robot servants. Admittedly, this view gave way to a somewhat more dystopian version around 1980 or so - think Blade Runner, for instance - in which overpopulation, over-urbanization and technology gone wild created a dark and threatening world.

Perhaps one of the biggest exponent of the power of technology to change the world for the better is Ray Kurzweil. Inventor, author, visionary, Kurzweil's central thesis has been that as Moore's law continues in its seemingly unrelenting progression, humanity and the machine will become ever more indistinguishable, and that ultimately there will be no problem that can't be solved with the suitable application of intellect.

At the other end of the spectrum for Kurzweil is James Howard Kunstler. Kunstler has been writing about the relentless spread of urbanization and the problems that will occur as systemic shocks - peak oil, peak water, climate change, aging populations and so forth - cause profound changes to the way that we build our cities, ultimately resulting in the destruction of the suburbs and the end of technological society as we know it. His vision of late 21st century life looks a lot more like the mid-19th century, and it is, curiously, surprisingly appealing even in its starkness.

I've dubbed these scenarios Kurzweil Cities and Kunstlervilles - views of optimism and pessimism that, when looked at through somewhat different lenses, could just as readily be interchangeable in terms of their values as utopias vs. dystopias.

As many people have noted, cities are organic over a large enough period of time. They exhibit emergent behaviors that seem eerily similar to the way that lower order life-forms act. They grow in response to available energy sources, expanding outward as energy enters the system, contracting back in on itself as energy leaves. Highways and streets are the arteries, carrying car and truck corpuscles from one part of the city to another. The nerves are the power and information conduits within the city. When cities collide, they either form systemic cells or absorb one another, the older former towns slowly losing their distinct identity over time.

This metaphor, or abstraction, is an important thing to keep in mind when looking at the future of cities. Cities grow in response to increases in population. This may seem obvious, but I'd contend that its actually a very subtle point - the larger the population, the more likely that the necessary number of interactions can take place to push the city to a new level of abstraction, while at the same time the greater the drain on the energy resources available to that city. In a city where the energy drain is higher than the energy sources (where energy can be physical energy such as electricity or the abstraction of energy in the form of money) the quality of life in the city drops - there are fewer job opportunities, the standard of living goes down, the government becomes more authoritarian, the ability to support urban services decline.

Technology cannot create new energy - it can only make it possible to use existing energy more efficiently, and always at the cost of powering the technology itself. This has always been the fundamental flaw of Kurzweil's vision - Moore's law does not come for free. Every generational doubling in processing power occurs because more energy goes into the technologies to make it happen. Costs for fabrication plants for creating new microprocessors increase geometrically as well - the cost to create a typical fab is now well into the billion dollars category.

The problem that's led to the current crisis is that the energy costs here are borrowed. Intel or AMD generally doesn't have anywhere near the amount of cash on hand to build new fabs. Instead, it borrows the money against future earnings - it is in essence borrowing energy that hasn't been created yet.

This future borrowing has been endemic in US culture for a long time. Cities (and larger geopolitical structures) generate their revenues in one of a few ways - they either take possession of a power or resource source and sell from that, they receive revenues from the state (which simply pushes the problem up a level of abstraction), they place a tax on the current revenues of its citizenry and associated companies, or they create bonds to borrow from the future earnings that the project in question will produce, adding in a premium in order to compensate the bond holders for the potential risk of the bond defaulting.

When the weight of such credit exceeds the potential of the system (as it exists) to pay back those loans, the system collapses. That's what is happening now. The system is becoming less energetic, and as such, the ability of the system to support its abstractions is diminishing. The US government is working diligently to prop up the system, but it's constrained by the same problems - any money that it creates is a promissory note on new energy production, despite the fact that energy production in the US has been declining since the early 1970s. It may be able to sustain the status quo for a while longer - but the next crash will likely be harder.

So is Kunstler in our future then? Not necessarily. Kunstler's central thesis is that an oil-dependent economy will eventually lead to collapse as the supply of oil continues to diminish relative to demand. Oil is important, both as a fuel source and as a resource for production of goods, but its important to differentiate these two use cases. The principle use of oil today is for transportation, moving things from point A to point B. If you can switch cars over to electric or electric-hybrid use this will significantly reduce demand on oil - perhaps even to the point where US production can easily accommodate all other uses of oil. Flywheel systems, and shock kinetics also add potential power, especially for larger vehicles that have more intrinsic momentum).

To do so, however, other changes become important. Electricity production needs to become more distributed. Efficiencies in solar power production are raising the possibility that cities can actually become net power producers - both with regional power "farms" and solar enabled houses and businesses. Beamed power - in which solar power collectors in space are used to create coherent microwave beams that can provide power to collectors even in cloudy areas, could dramatically increase capabilities. Geothermal taps, wind power, wave power and more efficient super capacitors make energy production in coastal areas more feasible. More efficient monitoring and routing of power (smart grid) can also insure that energy is made available to those places that have the largest demand, rather than getting wasted.

There are even places for such technologies as nuclear fission plants, which, despite the publicity of both Four Mile Island and Chernobyl, are generally much safer today. The principle problem here comes in taking care of the high upfront costs and the still troublesome waste disposal issues.

What this implies however is that the future will likely be neither Kurzweil cities nor Kunstlervilles. Instead, for a while it will be a mix of both - cities that can most effectively harness net energy production will thrive and grow, and the standard of living there will improve. Cities that can't will sink into slums and abandoned neighborhoods, crime will rise and people who can afford to leave will for those places that offer better standards of living. The dominant cities of the twenty-first century will be the ones that make the transition first, and it is likely that these cities will also end up creating stronger regional trading blocs that circumvent political boundaries (a case in point would be the Vancouver/Seattle/Portland corridor, which has the potential to become a cohesive political entity as energy and resource systems merge, despite crossing both state and national boundaries).

Indeed, this last point is worth reiterating - political boundaries may be conservative, but they also eventually snap in the face of energy flow structures. Regional trade and energy blocs are comparatively new abstractions, eddies along the older nationalistic boundaries. They will gain in cohesiveness over time, eventually overshadowing older nationalistic boundaries altogether. This means that, again taking the case of "Cascadia", while inhabitants of Portland, Seattle and Vancouver will continue being citizens of their respective states, provinces and countries, they will increasingly think of themselves as being Cascadians as trade and energy alliances build.

Ultimately, the cities of 2020 or even 2050 will likely end up being not that different from today, at least on the surface, though individually they may look quite different. Some places, like Detroit, may not even exist - it was conveniently placed in the 1920s through the 1960s to bring together the raw materials, energy sources (from Pennsylvania oil) and cheap labor to mass produce cars, as well as conveniently placed to distribute them. None of these factors are in play anymore, so the city is dying.

On the other hand, when a city enters into this mode, it is also, ironically, at its most fluid - investment terms are favorable, it's easier to raze dead neighborhoods, townships that are tethered to the city are able to break free and make more effective decisions at lower levels of abstraction, Detroit in 2050 may very well be a network of independent towns, each powering their own subgrids, each producing its own own products and services. Education and the arts may may very well be growth industries by that point, with energy production subsidizing the initial costs, and this is perhaps the real lesson to be gained from Kurzweil and Kunstler both - by moving off the oil grid, by moving away from a caustic and self-defeating consumerist culture, it may be possible that both scenarios come true; the future is a region full of universities towns and centers of learning and the arts - urban enough to bring together the necessary confluence of people but rural enough to sustain the agriculture basis of the region. I could live with that.

Future Proof: Freelancer

I have been a freelancer for most of my working career. The specific jobs vary, of course - I've been a freelance writer, a freelance journalist, a freelance programmer, a freelance information architect, a freelance trainer, a freelance teacher - the list goes on and on. While there is a standing joke that freelance is another word for unemployed, I'd definitely have to disagree there ... I have had years where I've cleared six figures as a freelancer, though there have also been a few years where I've made just barely above the poverty line.

There are certain professions that lend themselves well to freelancing, most of them in the information sphere. Programming is a natural - projects have a beginning, a middle and an end. After the project is done, you may or may not need the skill-sets of the person involved. Ergo, freelancing. Writing is another intellectual pursuit that has a definite terminus. You teach classes for a quarter or two, but unless you're tenured there's no real advantage to keeping a teacher when all you're looking for is someone to impart this particular wisdom at this time.

There are similarly professions that don't lend themselves well to freelancing, though they are becoming rarer. Indeed, as I'm writing this, I'm scratching my head about what professions can't be done in freelance mode. And that, in a nutshell, may be the problem.

Full time work makes a great deal of sense in an industrial society - the need for producing X number of widgets per hour every day means that you need to have labor there every hour of that day, you need managers for that labor, then need managers for the managers. The cost of disruption in that labor is high - if someone quits then you have to get someone else trained up in that new role, and you have holes moving through the organization until you can find someone from the outside. This translates into significantly reduced productivity.

Most of the "benefits" provided by business have their origins in this mindset as well - health care originally made sense by having an onsite doctor or working closely with a nearby hospital, in great part because it made sense financially to insure that workers had as few disruptions due to illness or injury as possible. Pensions (and later investment vehicles) similarly emerged as a way of keeping employees long term - people were far less likely to quit for a competitor (and take potentially valuable information with them) if the company held on to their retirement savings. In general, retention was the rule.

However, today, this process is going in reverse. Businesses are disaggregating. Conglomerates are selling off or IPO-ing divisions because the costs involved in a large labor force are increasingly outweighing the benefits. Health care costs are skyrocketing as the workforce grows older, as the multiple layers of "managed care" extract ever larger portions of the pie, and as fewer doctors and nurses enter the field. Pensions had long been something of a running joke - a borrowable pool of funds for the company that was often used to invest in fairly risky investments, and as those investments failed to play out, companies are now faced with new retirees asking for their pension funds just as those funds have been wiped out by malinvestment and mismanagement.

What makes this worse is that the technologies are increasingly in place such that people no longer need to be in one place to work, and that if a person does in fact leave they seldom have the same negative impact on productivity (in the short term) that they once did - even if that person is a stellar performer. Longer term, of course, losing those start performers can be the death knell for a company, but the difference is that the impact is seldom felt for a while.

Thus, for many companies, the ongoing recession is a chance to reduce their existing obligations - purge their full-time ranks and then, as people become more desperate, rehire them on a contingency, freelance or part time basis. From an accounting standpoint, this is the best of all possible worlds - you don't need to pay for ever-increasing health care, don't need to make contributions into a pension plan that you know will never actually be fully capitalized, don't have to dilute existing stock, can hire more people when demand rises and can then lay them off when demand falls, either on a project basis or over the course of a general economy's rise and fall.

However, from the labor standpoint, this is also the worst of all possible worlds. As a freelancer, you are essentially running your own business, but almost invariably without the level business support that corporations routinely have. You become responsible for your own health care, for doing your own taxes (and usually get taxed at a fairly high premium for being "self-employed"), for your own retirement. Work becomes episodic and sporadic - you either are searching for new work or you are facing a glut that you can't fill, but you don't dare outsource it because you need the money to tide you over in the lean times.

Most independent freelancers compensate for the sporadic nature of the work by charging a premium for services - a contractor should, in theory, cost a company more than a full time employee short-term because the freelancer is paying for his or her overhead that would otherwise be paid for by the company. However, in practice, unless you are highly specialized, you are competing with a (currently growing) pool of similar contractors which mean that companies can effectively bid on competing contracts to keep these wages low.

This practice is exacerbated by agencies, which usually end up acting as a buffer between the freelance labor force and companies. Most of them may offer very short term benefits for the duration of the contract - minimal health care policies, for instance, that the employee usually has to purchase - but usually nothing beyond that. In exchange for that, they absorb that 20-30% pad that freelancers would otherwise save up for down-time, meaning that from the hiring company's standpoint, the labor is still expensive, but can be let go at a moment's notice without significant contractual problems - and because the agency itself can cap the wages, the wages are still less than they would be for an independent contractor.

Currently 29% of the workforce in the United States is contingency contract, up from 24% in 2005. That includes both part time workers (those that are deliberately held below the minimal 35 hour line that costitutes full employment) and freelances who may work 40 hours or more a week but are hired on a temporary basis. It's likely, as companies continue to shed jobs that this will grow to between 33 and 37% by 2015, meaning one in three people will be working outside of the established "safety net" of full or salaried employment, including a rising percentage of professionals - management executives, medical practitioners, financial services professionals, lawyers, engineers, marketing and communication specialists, designers, system architects and software developers, along with the whole plethora of "creatives" - artists, writers, musicians and so forth.

Of those, roughly 70% are female, which reflects less upon a bias against women (though that's there too) and more on the fact that women have entered the workforce more recently than men, are more likely to be in information-centric careers and are thus perhaps more indicative of future trends than men are. It's worthwhile noting that the percentage of contingency workers under the age of 40 is also much higher than it is for those older than forty, though how much of this is due to structural changes in the workforce vs. the fact that younger workers are more likely to have fewer commitments that make contingency work more attractive is hard to tell, save that the under-forty contingency percentage has been creeping up steadily for decades.

The question for policy-makers is what to do about it. First, its worthwhile to note that there is a world of difference between a freelance lawyer or programmer who has specialized knowledge and can usually afford to handle insurance, taxes and retirement savings and the part time Walmart worker who likely can't - and for clarification, I'll refer to the first as freelance workers and the second as contingency workers.

The freelancer in general should bite the bullet and incorporate as a small business, and press for better legislation to provide more legal rights to these microcorporations. I see this ultimately happening, especially as the number of web businesses rise - businesses that have significant "virtual" presence, but that may represent a group of one or a handful of active partners. Overall the IRS has taken a dim view of such small organizations, but they represent the bulk of all new incorporations, and as the force multipliers of technology have increased the ability of such small companies to have an oversized presence, it's likely that most of these businesses will stay small, people wise.

Unfortunately, contingency workers may not be as well positioned. In the 1930s, Franklin Delano Roosevelt worked with the Federal Reserve to create a plan to put Americans to work long term - an decision was made to allow for a certain amount of inflation in the monetary base in exchange for full employment. In essence, every year the monetary base was allowed to grow by between 2% and 3%, which devalued the dollar by a corresponding amount. Prices rose, and with them real wages dropped, but as more people were entering into the system at that point than leaving it, it meant that people entering the system were actually making marginally less that, in the aggregate, freed up a lot of capital, which in turn was used for starting new projects and hiring more people while keeping people happy that their wages (at least on paper) were stable or growing slightly.

This worked for a while because it was a Ponzi scheme - so long as the work population itself was growing, such a model was sustainable. However, in the last eighty years, the demographic pyramid has inverted, and there are now more people near the end of their career than there are starting out. Add into this the effects of technology in making work more efficient, and you get the rather ugly situation that we're in now - a situation where you have more people who are staying in the workforce at the higher wages that their skills and experience should support (and who are desperate now to refill their coffers after the last couple of years) and fewer people at lower wages that support the Ponzi scheme.

What this means is simple - many of the jobs that are being shed now by business are not coming back. Middle management has been hemorrhaging for the last two decades because the value provided by these managers is no longer as critical. Retail sales jobs are disappearing at a rapid rate as retail centers collapse in the face of low demand and Internet distribution. Manufacturing looks to be in its death throes in the US (if the bankruptcy of Chrysler and GM are any indication), and it is likely that moving forward the jobs being replaced will not be at the upper end but at the lower with new designers and engineers who are more familiar with cutting edge tools, fabrication methods, and technologies. Construction will likely be at an ebb for the next decade. There are more marketing people out there than there are markets, and again as new jobs do arise, they will be in areas where you have the young and savvy rather than the experienced.

What makes this worse is that even in those areas where growth may occur - health care, energy production, high speed rail, education and the like - you are generally going to be talking about specialist jobs requiring long term training - and an education/training system that is still bound up in a large corporate model. What's more, even if the education did exist, the absorption rate for these professions is comparatively small - you need more doctors, for instance, but if even one half of one percent of the unemployed work force were to go back and get medical degrees, it would easily swamp the field.

This will set in place the great forces of the next decade. Each recession is likely to result in higher unemployment than the previous one, while each recovery will see a smaller percentage re-employed. Against this will, paradoxically, be the growth of spot shortages in the labor markets in specialized areas - those that are capable of going freelance and are successful at it will end up creating loci of specialized job growth, but the growth will remain limited.

This is always a dangerous mix for political stability. Shadow economies usually emerge once you get a certain level of unemployment - people still have an imperative to survive, and will do so any way they can. Drug trafficking typically rises during recessions, even as prices for those drugs fall, because drug dealing provides not only income but organizational structure (albeit very dangerous organizations). Prostitution rises as well for much the same reason. Both left wing and right wing paramilitary organizations usually tend to do quite well during these periods, providing both places to live and organizations to be a part of, and such organizations, while possibly carrying out political agendas, usually provide "security" services to that same underground economy. The Internet in this case will likely only hasten this process; it is very easy to set up online communities and exchanges that can't be easily regulated, taxed or even monitored. As people become more desperate, expect that barter and trafficking on these sites will increase dramatically.

On the other hand, its also likely that a virtual side of the shadow economy will show up in online games and other environments. Already, there are people that are making a living either producing goods and services in games like World of Warcraft or Second Life, are playing automated gambling sites, or are fully engaged in eBay or other online markets. The irony here is that while this market is likely growing dramatically, its metrics are so different from those of the "real" world that it's hard to tell how many people who are technically unemployed are actually making a living there.

Note that these are also freelancers, though they don't show up in official measures as such - and there's a lesson to be learned from this. Over the next decade you're going to see a generation grow up on the Internet, learn to make a living there, and develop an entirely new conceptualization of business there. They're growing up in a grey area that's neither "corporate" nor governmental, becoming very entrepreneurial while at the same time working outside of the bounds of contemporary business.

Many (and certainly the best and brightest) of these younger men and women are going to grow up with nothing but disdain for the modern corporation. The more that they establish themselves on the Internet, the less likely that they are going to put up with office politics, small cubicles, long commutes, and the increasing uncertainty of job stability in an organization that could cut 10,000 jobs in one fell swoop. The talented ones will be on the cutting edge, creating new virtual company after virtual company, each staffed with perhaps a couple dozen people tops that communicate with one another from remote locations, each company with a killer product or idea that will chip away at market share of conglomerates piece by piece.

When the economy does improve, this generation will not come to work for the old corporations. The smart companies will change in response. Most won't. Many of these companies will sink into irrelevancy, no longer able to tap into a mindset that is radically different from anything that the senior managers can even begin to imagine. These people will have become used to starting with next to nothing and being exceptionally frugal - they will be anti-consumerist, highly innovative, and with very little use for traditional social structures.

Hiring managers, beware. The freelancer is about to take over your business.

Swine Flu: End of the MBA Farmer?

While there are legitimate questions about the potential severity of swine flu, it is still a dangerous flu for a simple reason - most flu viruses in circulation are very minor variations on existing strains, which means that most people who get the "flu" end up with symptoms that have more to do with histimine reactions - runny eyes and nose, aching joints, maybe a day in bed feeling lousy - then they're past it.

Swine flu, otherwise known for its genetic markers as H1N1, isn't an existing, commonly circulating flu. It's relatively new although with very old antecedents, which means that most people have no immunity to it. This means that it will likely spread remarkably quickly, will leave a significant portion of the population sick with it, and could prove to be deadly even for adults.

What epidemiologists are discovering about this particular flu bug is very disturbing - first, that it is a variant of the Spanish Flu virus that accounted for more deaths worldwide than World War I, which was waging at the time. Spanish flu was extraordinarily virulent, and when it finally died out, it became very quiescent - effectively disappearing altogether from the cloud of seasonal viruses that normally lay people low in late winter.

However, in addition to this, it now appears that the term Swine Flu is more apt than was even apparent on the surface - Swine flu itself first appeared in hog factory farms in the 1990s, mutating rapidly in the high density "population" of pigs kept in tiny pens little larger than the pigs themselves. The flu wasn't lethal for pigs, and the particular strain of swine flu that did jump to humans was of a variant that didn't "catch", failing to reach critical mass or virulence to be a true pandemic.

The early 1990s also saw the graduation of a crop of new business school MBAs, instilled with a twin philosophy - automation was the wave of the future, and one could apply the new thinking of the 1980s to every business endeavor in order to transform these into hyper-efficient super businesses, including agriculture. "Archaic" farms that had established an understanding of animal husbandry over centuries were quickly put out of business and bought out by new "factory farms" that used a combination of technology, mass-injections of antibiotics, close-confinement of the "stock" and waste disposal being passed to the community.

The last issue eventually caused enough of a reaction that many of the now very wealthy agribusiness concerns realized that setting up factory farms in Mexico, which had far laxer environmental laws, lower labor costs and generally a less empowered populace, might actually prove more profitable (just as such farms had tended to relocate in states that had lower taxes, environmental restrictions and wages originally).

In the end, this strategy, while increasing the overall production of beef, pigs and chickens dramatically, also caused the price of these meats to drop fairly dramatically, further eroding the ability of other farms to compete and driving them out of business. Meanwhile, south of the Rio Grande, these elongated factory farms proved the ideal breeding ground for increasingly antibiotic strains of viruses. It was only a matter of time before such a strain would jump to humans (indeed, it's likely that Mexican workers at these plants were also virus laboratories, providing many more opportunities for animal to human transmission), and from there, additional vectors took it into the general population - other kids playing with the infected kids bringing home the virus usually without knowing they had it.

The epidemiology of viruses is well known, yet advanced knowledge of medicine isn't going to help when you have viral factories that speed up the evolution of viruses a thousand fold. Even if this particular virus proves not to be especially virulent, the next one or the one after that may well be. Perhaps it is time for us to start questioning whether the factory farms are in fact yet another artifact of the "greed is good" mentality that's proving to be so destructive to the rest of society. Beyond the ethical dilemmas of keeping animals in such conditions, these factory farms are increasingly proving to be businesses that do harm than good, and as such at a minimum need to be rethought in light of that, and perhaps even need to be abolished (not just moved to places where people can't protest them).

Chrysler, Hedge Funds and Contracts

President Obama is beginning to look less like Franklin Delano Roosevelt, and a lot like his distance cousin Teddy. After several months of trying to come up with a viable solution for preserving Chrysler, yesterday the ailing car company went into formal bankruptcy, which means that the auto unions and the government at this stage essentially now own the company.

For the last week, Obama has been working with all of the major parties - automaker Fiat, unions, banks, hedge funds and similar investors and lien holders on the company, to try to stave off bankruptcy, while trying to keep from adding even more federal loans to the beleaguered company. In the end, while most parties agreed, the major hedge funds balked, demanding preferential treatment in terms of payback and seeking to get 2-3 times as much return on their investments as every other players. Obama finally lost his patience, ordered the company into bankruptcy, and effectively hit the reset button, wiping out several billions of dollars of equity outstanding as part of the process.

No doubt the financial industry and its captive press will scream bloody murder here, but the events of the last week represent the emergence of a new, big-money hostile political environment that will likely only strengthen from here.

In financial circles, one of the most sacrosanct documents is the contract. Filled with obscure legalize, most contracts are dense, deliberately obscure, and are often designed to seek the maximum possible advantage of one side over the other. Contractual obligations have played a major part in the most recent financial crisis, especially when such contractual obligations have overwhelmingly benefited the financial industry. A prime example of this was the defense given by investment banks that, even while being funded to the tune of hundreds of billions of dollars by the US government, paid out lavish bonuses to superstar investment bankers, analysts and C-level officers - they were contractually obligated to pay these bonuses, and as such couldn't go back on them.

Contracts are important. However, the problem with contracts is that while they may in fact describe the contractual obligations between two parties, there is *always* a third party involved. Call it the public good, call it government, call it society, but in all cases it should be seen as the interest that the rest of society has in insuring the peace and stability of that society. One of the underlying concepts that has taken place over the last forty years has been the rise of the doctrine of private business - that so long as companies do not in fact engage in specifically illegal activity by the letter of the law, government has no role in the contractual process - even if the companies engage in activity that violates the spirit of the law. Grover Norquist's famous quip about wanting to see government so small that it can be drowned in a bathtub is perhaps the most pithy encapsulations of this philosophy.

Tim Geithner, a former Federal Reserve regional governor, and Ben Bernanke, the current Federal Reserve chairman, have been steeped in this zeitgeist for so long that it is central to their world view. Barack Obama, on the other hand, has seen what happens when the rule of contract exceeds the rule of law, and as he becomes more comfortable with his own authority, is also beginning to exercise what may very well become known as the Obama Doctrine - that contracts that harm the public good even while being within the letter of the law can be abrogated by the third party in those discussions - the government, keeper of the public good.

There are many in the investment community (and in political circles) who are fearful that this approach will cause investors to not want to reinvest in the banks, for fear of their investments essentially being annulled. This has always been powerful weapon to wield against those who would seek to change the status quo; however, it is an argument increasingly without teeth. Those who invest should understand implicitly that no investment is guaranteed to be without risk, regardless of whether that investment is a few shares of penny stock or a sizable investment in a car company ... or a bank. The owners of a business who fail to press the people who manage that business to be more responsible, more innovative, more willing to respond to changes in demand, and more ethically responsible should hardly be upset when those companies fail.

Indeed, this is perhaps one of the fundamental problems that this society faces: there is an implicit assumption that one can make a business grow and thrive simply by pouring money into it, especially at the senior management levels. In essence, money is being used as a way to get reward - dividends - without otherwise having to do any work. It also has become a way of dodging the responsibility of managing that company well; rather than planning for changing environments, trying to produce better products and services, most senior managers have become adept at manipulating the markets instead to increase dividend yields for their owners.

It's increasingly obvious that sweat equity, which has long been a very secondary aspect of business, is once again coming into its own. To me Obama has just turned Chrysler into an object lesson, one that banks and financial institutions in general should pay a great deal to. It looks like the silent partner is beginning to speak up, and what he's saying is going to completely reshape the way that America does business.

Future Proof: The Disaggregation of Business

91. Our allegiance is to ourselves—our friends, our new allies and acquaintances, even our sparring partners. Companies that have no part in this world, also have no future.

Cluetrain Manifesto

The following blog is written in support of Cluetrain Plus Ten, a celebration of the 10th Anniversary of the Cluetrain Manifesto.

The news today in the papers was rather stunning - the United Auto Workers union was buying part of GM and Chrysler. General Motors, once the largest and most powerful car companies in the world, is being sold to its workers because the company became too fixated upon the business of making money and not fixated enough upon the business of making cars. Presumably, those workers, who still are in the business of making cars, may actually understand where their priorities really are.

This process is going on everywhere. The newspaper publishing industry is disintegrating, not because there's not enough news, but because there's too much of it - millions upon millions of "citizen journalists" who are reshaping the fabric of news, armed with inexpensive camcorders and laptops and iPods. Big box stores are being replaced by hundreds of thousands of specialized retailers, operating over the Internet or with minimal brick and mortar presences. Office parks are emptying out, as the workers of the companies that used to be in them work from homes and coffeeshops and conferences a thousand miles away. The giant businesses loom over all of this like hulking dinosaurs, scary until you realize that most are dying, and that what you are seeing are the skeletal ribs of decaying corporate carcasses.

Recessions come and go (though most in the last eighty years have not been quite so bad as the current one) and in most of them, older, less efficient businesses often disappear along the wayside, beat out by newer, flashier, more nimble opponents. Yet it is likely that this time around, we're going to see a mass extinction event, because the very nature of business itself is changing.

The large-is-better business model evolved through much of the late 19th and 20th centuries because it was the most efficient mode for communication channels - a hierarchical business model is a network with a bias towards centralized information dissemination and execution. Direction was passed from a leader to his subleaders, who would then break down the tasks pertinent to their domain and pass it down to their respective subleaders, until eventually you had specific tasks assigned to individuals at the leaf ends of the network. It also had the advantage of working well in a geographically centralized manner - each subtree usually represented a geographic aggregation of some sort.

Additionally, such command and control structures had the additional benefit of pushing information back up through a series of management filters - if it was not perceived as being important enough to engage the time of a given lieutenant, it wouldn't pass beyond that lieutenant to his superiors. This meant that, in theory, only the most important information would make it up to the top, and the role of the centralized decision maker became at least somewhat rationale.

In practice, however, such filters also served to isolate these same decision makers from interacting with the outside world. Hierarchies by their very nature tend to promote privilege - the higher up the chain you are, the more you are rewarded, and in practice the less you are likely to interact with the people that actually use your business products or services - instead, you interact with your counterparts at other businesses or organizations. And as a consequence, hierarchies can become forts, with the leaders of the hierarchy only vaguely aware of (and usually far less mindful of) the actual work done collectively by the others in the organization that in turn pay his paycheck and bonuses - or of the people who pay for that work.

The hierarchical model is well suited for broadcast - information from a centralized source gets disseminated through the hierarchy, while the hierarchy in turn acts as a filter to analyze and consequently respond to this data in aggregate. This has the side-effect, however, of dehumanizing the response channel - you are less interested in whether Jane Doe was motivated by your messaging (advertising or otherwise), but far more interested in the fact that a 32 year old Caucasian single woman who makes $64,000 a year, lives in a $550,000 house and is a vegetarian purchased your product. Jane Doe is a person, the latter is a demographic profile that can be used to see whether Product X is successful in getting Jane Doe to fork over her hard-earned money.

The Internet establishes an alternative set of communication channels that are very different from the hierarchical model. In effect, it makes for ad hoc, collaborative, overlapping interest groups. It makes aggregate collectivist behavior far easier to accomplish, and it means that information can spread very quickly, as it passes from interest group to interest group through common members.

Most companies originally thought that such interest groups were a good thing - after all, most of marketing involves targeting your message toward a given interest group while trying to reduce the exposure of the message outside of that interest group (as the non-interested groups produces far fewer responses - it's not as cost effective to advertise to people who either lack the means or the desire to purchase your goods or services). Company X could market its new organic power bar to such interest groups, and expect a much higher conversion ... which in fact did happen.

What these companies were not expecting was that the members of this interest group would also pass negative information about the products (and the company) to one another ... and that they would talk back. This wasn't supposed to happen. If the power bar didn't taste very good, this was information that would spread just as quickly, and it was beyond the control of the company to fix. If the organic components really weren't, if the green message on the wrapper was at odds with the fact that bar was produced in a factory in China under less than ideal conditions, if the CFO was involved in an affair with the CEO's wife, all of this information would get passed on ... and the company had no way of controlling this back-channel communication.

Corporate communication is very impersonal - its intent is not necessarily to inform, but rather to protect the hierarchy - to promote the successes, to spin damaging news, to obfuscate the communication access to the primary decision makers and in general to reduce potentially embarrassing contacts between the decision makers and the outside world. The problem of course is that as the dialog channels between people improved, the cold, mechanistic nature of corporate speak also became far more obvious - and more sinister. People react negatively when they realize that communications are one-sided - that while there may be a semblance of human communication going on, there's actually no one on the other side that is in a position to actually do anything about it ... it's a waste of time.

Beyond this, corporations are made up of people, and when those people feel that they have been abused by the company, they now have at their tools powerful ways of disrupting those corporations. When people are laid off in a poor and demeaning way, when they are customers who have been "shafted", they will lose whatever loyalty they may have had to the company in question - and will become increasingly shy about giving loyalty to any corporation. They will develop ideas and tools outside of the context of companies - something especially significant because it is often those very ideas and tools that the company would otherwise turn into products and sell themselves. They will encourage others to boycott companies and suggest alternatives that will reduce sales for the company in question.

In one scenario I saw recently, a disgruntled former customer of a cable company established a website and devoted himself to convincing others to take their business elsewhere. In the end that one customer probably cost the company $1.5 million dollars in revenue, all over a cap on services that might have cost the company perhaps $30. Such anti-customers really didn't make much of a difference pre-Internet - the company could have acted with impunity because the real ability of that customer to affect the company was limited. Today, a single Twitter from the right person (who might either be the anti-customer or sympathetic to the anti-customer) could have hugely negative consequences for a company.

The real difference between a company and an interest group (a social community) is surprisingly small - usually an agreement for revenue sharing. This means that whereas fifty years ago it may have taken several thousand people to establish and run a business of any complexity, today you can get by with perhaps fifteen or twenty - which in turn mean that such companies need a much lower threshold of net revenue to be viable concerns. This is increasingly as true in capital intensive sectors as it is in information services. Componentization and modularization of parts in various sectors mean that you can construct and customize even durable goods at only a slightly higher margin than a much larger factory, and because you don't have the significant overhead associated with the larger factory, the marginal costs even out.

This means that, even as dinosaurs like GM thrash about in their death throes, there are dozens of smaller companies making specialty cars that are far more responsive to new technology and market demands, at a small fraction of the overall costs that GM needs to develop a given car line.

The upshot of this is that we are in for a long period of business disaggregation - where huge conglomerates spin off companies to sink and swim, where small, ephemeral companies navigate more effectively than large ones, where the distinction between consumer and producer becomes blurred to irrelevance. People won't be any less loyal, but they'll be loyal to those "projects" that they themselves have a controlling interest in. Brand names are only significant as ways of identifying those prosumers who are most adept at navigating this world, and are increasingly tied into the "personal brand" - "I trust Jane Doe because I can communicate with her, her ventures generally succeed, and she knows how to involve others in her ideas."

It should be an interesting decade.

Where has all the money gone

I entered into an interesting twitter exchange recently, to whit:

BrendanWenzel: A lot of people have "lost" money, but who is gaining it all? Wealth is never destroyed, but transfered. Who is it being transfered to?
kurt_cagle:Actually, in this case, "wealth" is just being destroyed, because assets are being repriced downward.
kurt_cagle:Most real wealth was made 2004-2006 by people in top 1%; we're just now discovering the fact that we've been robbed.
BrendanWenzel: So you are saying that these worthless assets never had value and were just a tool to steal wealth?
kurt_cagle: ... a tool to steal wealth? Um ... yup, pretty much. Did any investment banker really produce $30 million worth of value? No.

The numbers vary - from $2 trillion dollars to more than $40 trillion dollars depending upon how measure it, but in any case, a lot of "wealth" has seemingly gone up in smoke in the last year. Retirement, pension and college funds have been cut by 50% or more, municipal bonds have turned to dust, treasuries at the local, state and national level are bare. The world has, seemingly overnight, gone from being hyperfrenetic with activity to being, well broke ... and broken.

The question that Brendan brought up is a sensible one - where did all that money go? Is there someone out there who's now sitting on a pile of everyone else's money? No ... and yes.

People, including bankers who should know better, tend to look upon money as being, well, solid. You work every day, you get a paycheck for your efforts that represents a contract with your employer. That contract is usually slanted toward the employer - you provide the labor, and at the end of two weeks or one month or some other milestone, the employer gives you a piece of paper transferring a certain amount of value from the companies earnings to you. You take this to the bank, the bank deposits it, and from there you can "spend" this value.

Suppose, however, that the company has not made this money in earnings yet. Instead, they went to a bank and said "give us a line of credit, here is our plan to make value in the future". The bank evaluates the plan and the individuals involved, and if it feels like the plan will return a reasonable amount of earnings within a reasonable time, it will give the company that line of credit - a form of a loan, along with a fee to be added in order to compensate the bank for the risk that the company won't in fact make these earnings over the stated time.

This means that the money that you are making is not based upon existing value, but upon future value production. In essence, the company is in turn taking a risk that you will produce, though it is usually a pretty safe one. If you don't, then you will no longer receive that compensation, and someone else will be hired.

Yet, say after a couple of years, the company is not making enough money - the guess that was made concerning the profitability of the venture was off. The company's already sunk money into infrastructure, into salaries for the people, into energy costs, and into intangibles - marketing efforts. The company can go back to the bank and ask for an additional loan, but the bank at some point needs to determine whether the ongoing effort will ever prove profitable - otherwise, it is simply throwing bad money after good. The bank decides that "no, we're not going to give you the loan" and assuming the company doesn't find other investors (typically with more stringent requirements because of increased risk) it will close its doors, and everyone will be out of a job.

Now in this particular venture, you may have made money - though much of that money went into paying off necessities - housing, transportation, energy, food, information access and so forth - so you may have actually just broken even or even fallen behind. However, when the company fails, it can't turn around and ask for that money back. It's been spent. The money that the bank has also loaned has been lost - the loan becomes non-performing, because it no longer generates revenue, and the bank also took a loss.

If the bank charges fees on the establishment of the loan, these fees are things that can be assessed early - at the time the loan is made. At some point, the bank manager might realize that taking the fees are less risky than waiting for the loan to mature. They sell the loan as a "security". Now, this security is still potentially valuable, because it represents a steady stream of income in interest, and an investor can buy the security as a long term performing vehicle - so long as the person or company who took out the loan can continue to make payments.

Now the bank, at this point, has been lobbying the government to let them sell these securities, and a particularly business friendly administration gives the go-ahead. All of a sudden, a bank can make a loan, pocket the fees for that origination, then sell the loan as a security taking additional fees. What this means is that the bank no longer has any real incentive to insure that the person or company taking the loan can actually pay it back, because by the time it becomes an issue, it will be someone else's problem. The bank has essentially siphoned off a fairly significant amount of money in the transaction without actually creating significant value.

What this means is that they will be encouraged to make many more loans, because there is no moral hazard if a loan goes bad. If the loan is a mortgage or a lease, the bank may also encourage the ones acting as brokers in the sales of these properties to try to get top dollar, because it increases the fees that they can take off the transaction. The mortgage broker sees no problems in that - he too gets a percentage off the top, so the more valuable the property, the more he makes. The county assessors that determine the baseline price will try to increase the property price as well, because that increases revenues in the tax coffer, and if tax revenues go up, well, its good for the city or county.

Now, normally, this breaks down if interest rates are high - because the person who actually commits to the purchase has to pay the interest on top of the agreed upon price and fees. However, if interest rates are kept generationally low, then even though the house may cost more, the individual payments may be smaller, especially if they can be spread out over a longer period of time. Then of course, you also have speculators who buy up properties with no intention of paying the long term price - they simply become brokers themselves, selling to someone else at a higher price in three or six month, because real estate prices always go up. The buyer may also simply not have the financial resources to purchase the property in the first place under normal circumstances, but with a bit of "creative accounting" they are encouraged to buy.

Now this chain goes all the way up and down - ratings agencies are encouraged to rate securities higher than they should be, corporate raiders use risky securities (junk bonds) to effectively purchase companies, replacing actual earnings with debits against future earnings. Stock brokers use this debt to leverage purchase of stock with very little actual money committed, and so forth.

All of this activity involves replacing existing earnings - real work - with promised earnings - credit, and because there is comparatively little oversite, the actual obligation on the part of the wage earners and company earnings climbs and climbs and climbs, until you get a situation where a person would have to work continuously, 24 hours a day, for century or more to produce the real work that's been obligated on her, usually without her direct consent. That's clearly unfeasible, and the system ultimately collapses as each company or person fails.

Debts that the banks and shadow banks hold have to be written off, rather than being treated like assets. This reduces the amount of money that the banks can commit to writing loans, and also instills a sense of hyperconservatism in extending new loans, because they can no longer service the old ones. This causes credit availability to collapse, which means that companies can no longer pay their workers (as the paychecks were paid from the loan which was to be repaid by earnings).

As workers lose their jobs, they cut back on their spending, which causes other companies to go out of business, which only exacerbates the situation. Companies are forced to lower their prices in order to move any product, and a deflationary spiral sets in. Everything loses value as the availability of money dries up and markets plummet.

Eventually, demand for goods reasserts itself, as things wear out, as population grows, or as people become less fearful about the future. However, the damage has been done - the negotatiated value of things have dropped dramatically, whether that's the cost of a new car or the cost of a stock, and people who purchased the stocks thinking that it was a safe investment now discover that they're holding worthless paper - the company has either gone out of business or, if it survived, now has a much smaller cash position and it will take time for it to get back to its earning potential, significantly reducing the long term return on investment.

So, given that, chances are pretty good that there's not one person out there who is now sitting on everyone else's money. The money never really existed, save in potentia. What disappeared was the expected potential of that future labor.

However, that doesn't mean there aren't scoundrels. Companies who buy and sell these securities have profited immensely by the transaction fees and bonuses, which also came from future earnings. It would be much like you being paid for the next thirty years of your wage earning time up front. If the business fails, it makes no difference to you - you've already been paid handsomely, and can turn around and spend that money any way you choose.

Yet that money has to come from earnings at some point, and it does. It comes from pension funds that fail, leaving people who have invested with nothing. It comes from reduced pay elsewhere in the industry, as credit has been compromised. It comes from tax revenues, which decline dramatically in a recession because people don't have the wherewithall to pay. In other words, the thirty million dollar "bonus" that the hedge fund manager or bank CEO takes home comes directly or indirectly from the earnings of others, who now have to work longer just to get back to where they are.

So, yes, it was a ponzi scheme, a bubble with a skim, caused by the greed of "financial professionals" and political officials, aided by tax cuts that were highly favorable to these same people, and a war that made it possible to hide similar fraud elsewhere. It is still going on, and it has bankrupted this country for years to come.Where has all the money gone