efficiency – My Mental Model

Power Vs. Efficiency

I’ve been trying to understand power. What is it? Why do people want it? What does it help you accomplish? Is it something I should pursue?

A younger me sought power for the sake of doing good. Average me could do some good, powerful me could do lots of good. Seemed like power was only a bad thing when in the hands of bad people. I suspect that’s the understanding most people are under. I’m not so sure.

Consider this… If we accept this idea that only good people should be powerful, then we’ll actively look to empower those who we think are good while tearing down those who we think are bad. Sounds like most of history right? But who gets to decide who is good and who is bad? It’s not always so obvious. And what happens when the powerless become powerful? Do we achieve balance? Or do we create another dominance hierarchy?

The first quote that ever stuck with me was, “Power corrupts. Absolute power corrupts absolutely.” So by empowering someone, what are we really doing? If we look throughout history, the powerful have never been without corruption. It didn’t matter at which point in history, or which culture, or which political ideology you followed, power corrupted all. Yet when we see corruption among the powerful and call foul, our first instinct is to take the power from them.

That’s probably the beauty of democracy, the power of the people is distributed among the people. At least that’s how it’s supposed to go.

So is everything just about power? Being the oppressor or being the oppressed? I doubt it. There has to be another level to this.

What about me? What would I do if I had power? As someone who prioritizes integrity and the good of others, how would I be corrupted. What if my intentions were to do the best I could for everyone I was responsible for. What if my inner circle included everyone? Why doesn’t that sound like power?

I have an idea.

What if power was the anti-thesis of efficiency? Here’s a simple example: You have someone within a company who gets to hire any person of their choosing for a position. When that person hires their friend instead of the best candidate, it’s a demonstration of power. When that person hires the best candidate, it’s a demonstration of efficiency. It doesn’t matter how powerful a person is, as long as they’re making the best decision for everyone involved, it’s an exercise in efficiency. It only becomes an exercise in power when those involved disagree with the decision being made. Why would you need to impose your will when your decisions are best for everyone and are being welcomed by others?

This idea of only the good should be powerful… there’s another level to it. The reason why we have such a hard time agreeing on who should be powerful is because we have such a hard time agreeing on who (or what) is good. If we could come up with a decision which we universally recognized as good… it would be because it was what was most beneficial to those involved. If that decision was to the immense benefit of everyone involved, I have a hard time perceiving that as power. Taking everyone’s needs into consideration and deciding what was best for everyone involved seems like a remarkable if not impossible exercise in efficiency.

Perhaps we’ve established two ends of a spectrum.

True Meritocracy

The world is a crazy place. It’s probably always been a crazy place, but something’s different right now. Something’s starting to boil over.

A war is being waged between how things have been done, and how they could be done. It’s tradition versus progress. People are afraid. The future is uncertain. If you have it good, change isn’t so appealing. But most people don’t have it so good – so change is coming.

One thing we all seem to agree on though is the concept of a meritocracy. The best person for the job should get the job.. Seems straight forward but I don’t think we really appreciate what that really looks like. In a meritocracy, opportunities are only earned, no longer given.

I consider myself someone who has fought hard for almost everything he has, but I’d be foolish if I said that I had earned all my opportunities. I went to an inner-city high school that probably had the lowest graduation rate in the city. Most of my friends lived in the projects while my family was middle class. When grade 12 came along, they were barely considering college. Meanwhile, my dad kicked my ass into gear, paid for biology and math tutors, and even a guy to help walk us through the application process to universities. That didn’t mean that I wasn’t working my ass off, but still.

And the idea of being able to afford university? My grandparents set some money aside for that. It didn’t cover the full ride, but it let me come out of university with barely any debt. I know I’m intelligent, I know I’m capable, and I know I have a strong worth ethic, so perhaps I earned an opportunity at a university education – but how many other intelligent, capable and hardworking people never had that opportunity? How many of them are working dead-end jobs because they weren’t given the same opportunities along the way that I was?

In my mind, in a meritocracy, resources and opportunities flow to those who are most deserving. So how does one determine who is most deserving? It’s a function of efficiency – If you’re going to do the most with the opportunity, you deserve it most.

In the case of post secondary education, it’s not a matter of payment, access, or even intelligence, it’s a function of who will do the most with that education. How many times have we seen people end up with a bachelor’s degree only to find out that it had nothing to do with what they wanted to do with their lives? How many times has someone who would’ve turned that degree into a bright future, been turned down?

In the case of jobs, how often have we seen friends hired over strangers? I’ll concede that familiarity and trust are important factors to consider when hiring, but the inside track is real. How many times have mom or dad made a call to one of their friends at the firm to get their kid set up? How many other kids who were more qualified were turned down because of it? And here’s the crazy thing, is the kid who got hooked up really better off?

How often do we see kids pushed into careers like accounting or law by their parents, only to discover that it’s not aligned with them at all. Sure it comes with a decent income and some degree of job security, but if that’s not their gift to the world, they’re holding themselves back. If they could make the effort to tap into their inner-genius and align themselves with what they were born to do, not only would they probably make a lot more money, they’d probably be a lot happier too. And for bonus points, that would now free up a spot in their previous profession for someone who was born to do that.

And now we arrive at one of the most interesting and currently relevant oversights of a meritocracy: Inheritance wouldn’t exist.

If you googled: great leaders who come from wealthy families, you might be surprised to at what it returned. Not much. If you do, you’ll notice that google tries to auto-complete the query with ‘nothing’ instead of ‘wealthy families’, the second suggestion is ‘poverty’. This query returns everything you would expect it to. Is that a pattern worth observing?

If you’re born into a wealthy family, are you more or less likely to encounter obstacles and experience adversity? Are you more likely to be given your opportunities or earn them? How likely are you to experience sacrifice? How likely are you to think of your own self-worth as an extension of your family’s success? How likely are you to have a skewed perspective of who you are and what you can offer the world? How likely are to you see equality between you and someone who isn’t as nearly well off?

Maybe this is why Warren Buffett, perhaps one of the most grounded billionaires of all time isn’t passing his billions along to his family. Not because he doesn’t like them, but because he thinks it’ll do more harm than good. Personally, I think one of the best things you can do for your children is to help them discover their own success.

Back at the banks, part of my role was to help devise estate plans for my wealthy clients. More often than not, they were great people who had worked hard their entirely lives to build what they had. Most were philanthropic, but almost all wanted to leave the majority of their estate to their kids while paying the least amount of tax in the process. From their perspective, they earned the money and should be able to do as they please when they pass away – it was about freedom of choice.

So is freedom of choice at odds with a meritocracy? I don’t think so. On first glance, someone might think that my suggestion would be a 100% estate tax with the proceeds used to fund something like free post secondary education. I don’t think it’s that simple. It would be too easy to invest your estate into a business or other asset, and gift that asset to your heirs, only for them to sell it and receive an indirect inheritance. Rules create loopholes. They need to be self-motivated to do it. We have to convince the rich that their families are better off without all the money. It needs to be logical, and it needs to be their idea.

So why is passing your fortune through to your kids so important? The average price of a home here is about 20x the average household income. The cost of living is high across that board. What that means is that the only people who can afford real estate are people who already own real estate, people who in the top 1%, and children who receive financial assistance from their parents. Under the guise of a free market, we exist in a scenario where only the wealthy and their children are capable of buying real estate.

You can only own property if your parents owned property – that’s downright feudal.

But how are you going to convince those parents not to help their kids? I’m sure the parents would much rather spend that money on a vacation home or their favorite charity, but they’re deeply invested in the future of their children and will gladly sacrifice some of their success to see their kids get ahead. But what if they didn’t?

A market will go up when there are more buyers than sellers. A market will go down when there are more sellers than buyers. When the well-off are funding the real estate purchases of their kids, they’re creating buyers. They’re effectively raising the market price on everyone. If they were willing to let their kids experience the realities of an unbalanced market, you’d be helping the market find its equilibrium – where an average income could afford an average home. But they’re scared. They don’t trust the system, and they definitely don’t trust that the system will look out for the best interests of their kids. So they take matters into their own hands and take care of their family at the expense of others. Do I blame them? No, especially because I don’t think many of them make that connection. Caring for your offspring is one of the most powerful instinctual drives we have, including protecting them at the expense of others. So how do we move past it then?

Government as it exists now, if they ever came around to it, would want to put rules in place. There would be regulations, and taxes, and other nonsense that would be more likely to shift wealth to the lawyers and accountants than to the people who would make the best use of it. The movement towards a meritocracy needs to be a movement of the people, and it may have already started.

Warren Buffet and Bill Gates spent some time over the last several years speaking with their fellow billionaires about the impact of leaving their wealth to their families. They’ve made progress. More than 150 billionaires have already publicly pledged to give half their fortune away, including Zuckerberg who pledged 99% of his Facebook shares. Just about every self-made billionaire will have a keen eye for investments so what does this really look like? How is this connected to a meritocracy? Does it stop at the billionaires?

When you’re looking to make an investment, the first thing most people ask is how much will I make? I would ask, “of what?” Investing is not financial by nature, it’s much more dynamic than that. When these billionaires are looking to invest, most aren’t simply writing a check to their local chapter of United Way, they’re looking for the best return on their investment. So what are they getting back? I’d guess it varies on a case by case basis, but I think above all else, they’re looking to put those resources behind those who will do the most with them. How many women are there in the world who are capable of so much more than the opportunities afforded to them today? How many children die from poor health care before they’re able to contribute to society? How much of the world is still off-line and unable to see beyond their own horizon? These kinds of investments might create a return of capital, they’ll almost definite return some warm and fuzzies, but the real genius is the return that’s created for the rest of the world.

Think of how many women there are in the world who are operating at their full potential. Now compare it to how many women in the world who will never have the opportunity to work, let alone at something that they were born to do. Now multiply that number by how many neurons there are in the average brain and you’ll arrive at the world’s largest untapped source of brain power. You could say something similar about most people living in poverty. Imagine the power of bringing those minds online. Imagine what the world would look like if we were all afforded the opportunity to tap into that inner genius – that’s the foundation of a meritocracy.

Does it stop at the billionaires? I hope not. They can’t do it alone. They need our help. They have the money, but we have the power – we just don’t know it yet.

Reddit Might’ve Just Saved Net Neutrality

Reddit is one of my primary information feeds. Perhaps needless to say, I’m a fan. Over the last week or so, I’ve observed something rather significant.

First, the gaming community mobilized against EA and their release of Star Wars: Battlefront 2. EA’s new progression system meant that most of the game’s best content had to be earned. Doesn’t sound too bad at first, until you find out that to unlock all the game’s content, it would take over 4500 hours, or $2,100. To put that in perspective, if you were to play for 3 hours a day, 365 days a year, it would take you just over 4 years to unlock all the content. To put that in perspective, the next generation of consoles is expected out before then. And that $2100 that they’re hoping you’ll spend? That’s above and beyond the $80 price tag for the game itself. Short-sighted greediness for sure, but something was different this time.

Someone on Reddit had a rant, and EA replied with a classic, corporate speak, disingenuous answer. I won’t bother repeating the entire reply as the opening sentence says it all:

“The intent is to provide players with a sense of pride and accomplishment for unlocking different heroes.”

I’m tempted to pick it apart, but I’d just be pointing out the obvious. The response though, was something special. That reply, became the most down-voted comment in the history of Reddit, earning over 600,000 demerits within just a few days. Not only did this make the news across several major outlets and cause the execs at Disney to check in on EA, but EA also froze the in-game payment system until further notice. A win? Maybe, but the gaming community isn’t buying it (literally) as they suspect EA will just unfreeze the payment system once enough gamers have caved in. Well fortunately for the gamers, sales are down significantly compared to the game’s first installment and that’s starting to weigh on EA’s stock price. Effectively, the gaming community found a way to mobilize on Reddit to deny EA the opportunity to make a really dumb decision. All within a few days. All with a few clicks. Very interesting.

Among all the gaming hoopla, I saw a post that said something to the effect of, ‘If we cared half as much about Battlefront 2 as we did about net neutrality, we wouldn’t have to worry about net neutrality’. Well, Reddit responded. Earlier this week, for about 48 hours straight, Reddit’s entire front page was entirely dedicated to the mobilization for net neutrality. This wasn’t a banner, or an ad, or front page image, it was what seemed to be thousands of posts, across thousands of sub-reddits, all being up-voted by the masses. I was almost a little annoyed that for 2 days, I didn’t have normal access to one of my news feeds, but I couldn’t help but be in awe of what I was seeing.

I don’t know if the effort by Reddit or any of the other tech majors will be enough to stop this repeal. Senators don’t pay nearly as much attention to internet chatter as they do to phone calls to their office. Assuming an average call takes 10 minutes, an office could theoretically take 144 calls over a 24 hour period, or 1008 calls over the course of a week. There are 100 senators, meaning a little over 100,000 calls would completely occupy the senate’s phone lines for a week. If that happened, it would probably be the documented as one of the greatest public protests of all time.

At this point, I don’t have a clue how many up votes were cast across how many posts. If I had guess, somewhere between 2-5 million, suggesting that the support is somewhere between 20-50 times what it should probably take to get the government to reconsider their position.

There are a few problems here. First, why is it that in a democratic framework, where the people have not asked to repeal net neutrality, is the Chairman of the FCC introducing measures to repeal net neutrality? The second problem is that internet community, arguably the constituents of this decision, are protesting this decision more fiercely than anything they’ve ever done – and it might be ignored. Finally, and perhaps the worst problem is that we’re encouraged to think that calls into our senators’ offices are what will make the difference here but at this point, we know that’s bullshit. They listen when they have to, and they use public backlash as a measure of what they can get away with while still being able to get re-elected. In all likelihood, there are only two calls that would make a difference here: If Ajit Pai received a call from the president, or if received a call from the chairman of Verizon. Unfortunately for us, both have vested financial interests in restricting how the general population accesses information… so I don’t see it happening.

Doom and gloom, I know. But there’s a bright side. An awesome bright side. Government needs tech, desperately. I’ve been mulling over the idea of a app that would let governments better connect and engage with their people. The current lines of communication between politicians and their constituents minimize inbound traffic which increases the disconnect. Without a live connection to your people, it becomes a lot easier to pay attention to the lobbyist that just took you out for a nice steak dinner. The people need a platform that lets them engage in real time with the people making these kinds of decisions, one that’s easy to use, that people would want to use, and one which decision makers would be held accountable to. The way that EA and Disney reacted to the Star Wars: Battlefront 2 issue was the first time that any modern platform, let alone Reddit, ticked all those boxes. If we manage to stop the repeal of net neutrality, I might even say proof of concept.

While Reddit might be the first to demonstrate the effectiveness of a platform like this, Reddit wasn’t designed to bridge the gap between a government and its people. To do that, it might have to be a little less rough around the edges and frankly, that’s just not Reddit. But that’s ok, because I have a hard time thinking that I’m the only one that’s been inspired here. I suspect there are a lot of smart people out there who are seeing what I’m seeing. We need to revolutionize the way that a government listens to its people and I think the public is figuring that out in a hurry.

One of the greatest counter-productive efforts throughout history has been the ruling class putting a greater emphasis on maintaining their power than helping their people. A lot of us assumed that kind of behavior died off with the monarchies but somehow it’s more obvious today than ever. I think we have the internet to thank for that. The internet revolutionized how we access information which means the government is having a harder and harder time controlling the conversation. They’re still trying, and it’s confusing the hell out of a lot of people, but the truth keeps finding a way.

The best thing about this for me is that when I keep pulling at that thread and try to visual where this takes us, I start to see something pretty special. If we could create a public that’s actively engaged with the governance issues that they’re interested in, able to control the public discourse, and aware of what one another is thinking in real-time, we have a highly capable voter base that’s capable of decentralizing a government’s power. If we can connect that voter base to governing officials who are accountable to public discourse and the ongoing engagement of their constituents, we may just be able to put everyone back on the same team and point them in the same direction. Wouldn’t that be neat.

A Quick Fix to Wealth Inequality?

I was having a chat with a friend yesterday about the incoming Canadian tax reform and he managed to inspire what I think is a rather interesting idea.

When it comes to modern finance, it’s a mess. For the last few years, I’ve been trying to figure out a system of finance to account for the deflationary nature of technology and best practices while increasing productivity. I think I’m close but it requires a complete overhaul of the system, and well as a cultural paradigm shift. I’ll be patient. Until then, I thought I’d mention an idea which works within the current system: Adjusting the local minimum wage to reflect the local cost of living.

If you’re working 40 hours a week, you should be able to earn a living. That’s not to say that we should all be making the same, that’s to say that the floor should be set at what it costs to lead of modest lifestyle in that area.

Consider this, if someone is working 40 hours a week and living in poverty, they’re likely relying on social assistance programs. Those social assistance programs are ultimately tax-payer funded. That tax burden falls primarily on those who aren’t in poverty. When someone grows up in a low-income neighborhood, falls in with the wrong crowd and ends up in prison, it’s the tax payers who pay for that too. No matter how we look at it, we’re all in this together. We either keep picking up the tab, or make an investment in the future.

For starters, imagine the impact this would have on the country’s collective anxiety – Knowing that if you work full time, you’ll be alright. Now imagine the positive cultural impact of an entire generation of kids growing up with parents who aren’t barely getting by. Now think about the reduction of people needing social assistance programs and the reduced government spending. Now think about the reduced taxes for all tax brackets. I guess we would call that trickle-up economics? Just like trickle-down economics except rather than starting with helping those with the most and letting the residual benefits trickle down to those with the least, we start by helping those who need it the most and letting those residual benefits trickle up to those who need it the least.

The definitive test that trickle-up is better than trickle-down? Trickle-up helps more people.

That all sounds pretty fantastic for people who are struggling to get by but that’s a rather large stone to toss in the water and it’s important to understand how this will affect everyone else in the pond, especially employers.

First off, businesses that haven’t embraced automation but probably should will likely need to. The jobs which require the least amount of skill are often the ones which are easiest to automate so businesses will no longer need to rely on cheap labor to sustain their operations. Fast food is already testing out automated ordering systems and burger flipping robots.

As the automation sector booms, the robotics and AI industries will boom and while not on a 1:1 basis, low-skill jobs will be replaced with high-skill jobs.

While measures like these will dramatically reduce low-skill jobs, I think they’ll also have the opportunity to redefine what we think of as an entry-level job. If the objective is to have people perform at the best of their abilities, it’s about time we stopped putting young people in roles where they’re underutilized and calling it paying your dues.

The real victim in all of these is the entrepreneur who has to pay those increased wages though right? Well if your business model relies on paying people a wage below what it costs for them to sustain, then yes – expect to be steamrolled. If you can’t run a profitable business without the use of government subsidized labor, there’s a good chance you’re not fit to be running a business.

What about the businesses who do adapt, but still have to pay higher personnel costs because the average wage is now higher? Because that’s real. Well, it’s going to raise the bar for what we consider to be a well-run business. Ultimately though, it means more money in the hands of the workers and less money in the hands of the owners. Considering how the best entrepreneurs are motivated by the opportunity to create change, I don’t see the smaller paycheck making a difference – especially when you know that you’re putting extra food on the table of the team you built.

From an economic standpoint, if you systematically shift income from the wealthy to the working class then you’re looking at a far more robust economy. More money in more hands makes for a much freer market as more people are inclined to make more decisions with their money. Culturally, fewer wealthy people will mean mean a smaller market for luxury items and materialism may take on a more utilitarian feel. From a philosophical standpoint, this is about equality in how we distribute the value we collectively create.

So set the local minimum income to be equal to the local cost of a minimum standard of living – seems reasonable. Now set the minimum standard of living at a point which allows for a focus on personal development, providing them with the opportunity to become the most productive version of themselves. Also seems reasonable.

Analogies: Capitalism

a long time ago, someone designed a car. It was beautifully engineered and truly revolutionary. It was so well designed that it was pretty much built to last forever.

While the car was a something for the history books, the drivers were inconsistent. Some understood the mechanics and drove respectfully. Some showed less regard for the car and drove as it suited their agenda.

Along the way, drivers began allowing for more passengers. Some for altruistic reasons, some because they paid, and some for the sake of personal relationships.

The car was built well enough to handle a few extra passengers, but as passengers increased and time wore on, key parts of the car started to wear down. All the added weight was creating excessive pressure, leading to wear on parts that the car couldn’t function without.

Some of the older passengers are looking out the window saying the car looks just fine. They can tell that the ride is bumpier but it’s hard to notice in a cushy seat. They know that car was built to last and they know it’s gotten them this far.

Those who are more familiar see that the car is unsustainable. If we maintain this rate of passengers, the car will fail. If we want to reduce the amount of passengers, we can keep the car on the road.

Ironically, we’re so focused on the survival of old reliable, that we haven’t given any thought to the new models. Technology changes everything. As great as that car was, modern technology has changed how we get from point A to point B and it’s important to appreciate those changes. There are ideas which we didn’t have the technology to pull off before but could be more viable today.

It’s dangerous assuming there’s no room for improvement. Might be a good time to look at some options. Even better, why don’t we look at what we need from our car, learn from our peers, and build something new and inspiring from the ground up.

Real Diversity

Google is a pretty big deal. They hire cool people, they make cool stuff, and they’re arguably the world’s most valuable company. I’ve been studying Google closely for over a decade and one of their most impressive assets has always been their organizational culture.

Recently, a Google engineer wrote a 10 page memo outlining his thoughts on diversity in tech. Coverage of this memo made it to the front page of just about every major news feed and the loudest commentary has been pretty one-sided… something to the effect of ‘how dare he?’

After I read the first article referencing the memo, I got the gist of what was going on. A male employee said some things which suggested that men are better suited to work in tech than women. Then I read a few of the comments after the article and got the gist of what was going on there too… men and women are equal in every way and to suggest otherwise is offensive, immoral, and shows a lack of empathy and understanding for the systematic oppression that white men have put on all other minorities since forever.

Oy.

Recently, a well-known tennis legend suggested that Serena Williams was the greatest female player of all time. Then he was asked why not the greatest of all time instead of the greatest female player of all time? To which he responded by saying that she wouldn’t do nearly as well on the men’s circuit. I thought that was a fair and accurate understanding of the situation and by no means diminished Serena’s legacy. I think it’s also fair and reasonable that in order to claim the title of greatest tennis player ever, you’d have to be willing to compete against the best tennis players – regardless of their gender.

This all seemed pretty straight forward to me. Men and women have evolved differently over the millennia and while women became better equipped to care for the family, men became better equipped for the role of hunting and gathering. The evolutionary advantages which men have acquired tend to make us better athletes thus providing an inherent advantage when competing in sports. If that’s true, is possible that other evolutionary differences exist between men and women?

One of my biggest struggles with romantic relationships when I was younger was that I expected the other person in the relationships to see and understand the world like I did. Eventually I was given that book about women being from Venus and men being from Mars. While I didn’t read it, hearing a few passages was enough to help me understand that men and women are wired differently and that it was important to keep those differences in mind. While I think the most significant differences come down to the people themselves, the most consistent pattern I’ve seen in the difference between men and women is that men tend to lean towards logic while women tend to lean towards emotion. If that’s true, wouldn’t men – on average – be better suited towards jobs that relied heavily on logic skills?

In the pursuit of understanding, I asked two of the most intelligent feminists I know about evolutionary adaptation giving men the abilities to do certain tasks better than women. One said that she didn’t want to get into it because it was too much emotional labor. The other was offended by the idea and then said that she was too reactive to have the conversation. Ironically, in the second instance a nearby cardiologist chimed in saying that she agreed with the evolutionary perspective but pointed out that there were always exceptions (like women being better open-water long-distance swimmers because of their fat distribution).

Back to the Google memo. If you were just going to read headlines and comments, you’d think that this kid was a contributor at Breitbart and that his ‘anti-diversity manifesto’ was right-wing propaganda that was designed to prop up white privilege and repress visible minorities in tech. None of material referenced in this articles actually showed that perspective and knowing that Google typically doesn’t hire right-wing nut jobs, I sensed a disconnect. So I tracked down the original memo and read the whole thing.

It’s not that bad. In fact, it’s kinda good. The opening line is, “I value diversity and inclusion, I am not denying that sexism exists, and don’t endorse using stereotypes.” There are several more points throughout the memo that provide the necessary context to understand that James Damore values diversity, and wants to see diversity in the workplace, but thinks that a diversity of the mind is more important than a diversity of the body.

In the pursuit of that point, he suggests that there are several reasons why we’re likely to see lower numbers of women in tech. He acknowledges that there is a systematic oppression of women in tech, but says that this might only be part of the issue and that part of it might be evolutionary. He goes on to reference several studies which compare personality traits between men and women, suggesting – on average – women have higher levels of anxiety and don’t cope with stress as well as their male counterparts. Ironically, I had actually reviewed many of these studies a couple weeks prior as I was exploring evolutionary differences as a result of the Serena Williams conversation.

Science itself is an evolutionary process and from what I’ve read so far, the scientific community has a consensus that men and women are wired differently. Where it becomes more grey is in how that develops into aptitude. I suspect that with the ground that women have covered in the last 100 years and recognizing that the female population in post secondary education now eclipses men, the next 50 years will look much different than the last 50 years. If we do it right, both men and women will have the opportunity to choose the profession that they’re best equipped for – but I don’t think that means that every job will have a equal representation of men and women.

I think that equality is a core concept to any prosperous society but I do think that the populist understanding of equality needs to evolve. Equality is about equal opportunity, not equal outcome. In the world of equal outcome, everyone receives a PB&J sandwich for lunch. In the world of equal opportunity, everyone is given an opportunity to make the sandwich they want to eat.

Everyone is born a little different and it is a life built on that deviation which truly makes us unique to the world. Because we are unique, each of us has the ability to provide something to the world that no one else can and it is the delivery of this gift to the world which I think makes us truly happy. I know that’s a bit abstract and maybe even a bit fluffy so on a more grounded level, we’re all a little different, we all have a unique aptitude, and deploying that aptitude in a manner that helps us get closer to our maximum utility is likely what will make us happy and fulfilled. If that’s true, isn’t true equality giving everyone the opportunity to reach their own, unique maximum utility? If tech is biologically better suited for men, reaching a 50/50 quota of men/women will mean women who would otherwise be better suited and happier doing other activities will work in tech and men who would be best suited for tech will have to work in another field because those spots have been taken.

As hard as it can be to make this connection for some, it always comes down to an equation of efficiency. The most efficient course of action is to encourage people to pursue careers in fields which will help them reach their maximum utility. That’s a career which would see them happiest, most fulfilled, and creating their greatest contributions to society. A perfect society is one in which everyone operates at their maximum utility and I think that’s the ideal of equality that people are pursuing – many just haven’t figured out how to get there yet.

The last thing I’ll touch on here which may be the most important part of this conversation is the lack of conversation. I think that what I’ve written here would suggest that I agree with James Damore’s assessment of women in tech. I don’t. I think that he references some valid information, I think that he makes some coherent points, and I think that he’s legitimately looking to advocate for an ideological diversity over a visible diversity because at the end of the day, it’s what’s on the inside that matters. I also think that there are too many unknown variables to draw direct conclusions between evolutionary biology and aptitude for jobs that didn’t exist 25 years ago. The social, cultural, academic, and systemic variables are key in understanding this dynamic and they’re changing faster than we’re currently able to understand them.

If understanding them is a priority for us, we need to invest in the discussions that will flush out the real questions and invest in the sciences that will give us that data to answer those real questions. I don’t agree with James Damore, but I absolutely agree with how he presented his thoughts and it is a remarkable failure when our ability to challenge these ideas devolves into comments like ‘this doesn’t even warrant a response’, or ‘how dare he?’. It shows a lack of understanding of the topic at hand, a fear of opposing ideologies, and reluctance to engage with someone who doesn’t agree with your perspective. James Damore was fired from one of the most important companies in the world because he intelligently argued a perspective not shared by the majority of his peers. In the pursuit of diversity, Google just took a major step towards preventing the diversity of ideas.

The Wonderful Flaw in Capitalism

So sleep hasn’t come easily to me since I was young, but perhaps it’s both a blessing and a curse. As I lay awake at night wishing I could fall asleep, my mind continues to problem solve. A few months ago, I was doing my best to understand the difference between the idea of democracy, and the application of it in American politics – and effectively understand where things went sideways when 20% of the American public was able to elect someone which most of the world despised. More recently, I’ve been focused on capitalism and more importantly, how it’s led to an unsustainable concentration of wealth. At about 2am a couple nights ago, I woke up Siri to take a note. That note reads:

“The fly in capitalism is the assumption that resources are scarce”

I had said flaw, but close enough, Siri. What I first tried to do was understand what capitalism is at its core. My best definition was the exchange of resources for the creation of value. Whether you’re producing a good, a service, or something in between, capitalism was there to reward you with resources to help you sustain yourself and with the goal of motivating you to create more value in the future. Theoretically, in capitalism, those who create the most value should be rewarded with the most resources. I don’t think that’s the case today.

As the application of capitalism evolved, it became a heavily complex system and as with all systems, they can be taken advantage of. For example, some businesses specifically target customers who don’t fully understand the transaction and end up paying for services they don’t need or products they can’t use – selling ice to an Eskimo. While some examples are blatant, I suspect most are shades of grey. Those shades of grey allow those with a greater understanding of the system to manipulate that transaction of value for resources – ultimately leaving them paying less or receiving more. In this environment, the most significant factor in deciding who receives the most resources isn’t the ability to create value, but rather the ability to understand and play the game.

When I look across the board of the wealthiest people in the world, I don’t see a direct correlation between the wealth they’ve accumulated and the value they’ve created. There are some, like Bill Gates, Jeff Bezos, or Larry Paige who I think should be among the wealthiest individuals in the world, but for each of them, there are dozens of wealthy individuals who have made their fortunes by extracting resources rather than creating value – casino’s come to mind.

So when I understood that, I thought that we just needed to find a way to get back to the fundamentals of capitalism. We just needed to find a better way to ensure that there was a fair and equitable approach to the exchange of value for resources. But wait… if resources weren’t scarce, would capitalism still motivate us to create value?

I know this is all super high level so let’s make this more tangible. The sun currently projects more energy onto our planet than we’re capable of using – and we’re getting increasingly better at harnessing it. 99.9% of the resources ever used on this planet are still on this planet because as it turns out, matter can’t be destroyed. That means that resources aren’t scarce, we’re just temporarily inefficient at turning used resources into usable resources. That’s a technological issue that we’re getting increasingly better at solving – one which I expect to be largely solved within our lifetime.

So let’s be optimistic and think 100 years out. There are solar panels everywhere. Roads, roofs, cars, skyscrapers, and huge chunks of desserts are covered in enough solar panels to passive provide our planet with sufficient energy to both sustain and grow. Waste conversion technologies have advanced to the point where a landfill can be broken down into synthesized raw materials. Additive manufacturing is able to take synthesized raw materials and efficiently build just about anything that our minds can imagine. If that ecosystem sounds familiar, it’s because that’s pretty much how our planet worked before humans came along and started trying to reinvent the wheel. Mind you the earth did it at a much slower pace, but the fundamentals are the same.

Waste is a concept only known to humans. In every other aspect of the known universe, it’s simply another state in which energy or matter can exist. Once we can wrap our heads around that, it’s easier to understand that there is no scarcity in resources, simply an temporary inefficiency in turning used resources into usable resources. That is something that I’m confident technology can solve, and it has me looking rather optimistically towards the future.

In a future where resources aren’t scarce, what would motivate someone to create value for others? This is where the crusty capitalists might say that people are inherently lazy and it’s only through the motivation of scarcity that they’re willing to provide any level of value to others. It’s too easy to find counter-examples for that to be entirely true, but I don’t deny that the fear of not being able to sustain yourself can motivate people to do all kinds of things. What I also think though, is that love is a far more powerful motivator. In this case, it would be love for what one does. More often than not, the best computer programmers, the best musicians, the best entrepreneurs, and the best parents are those who absolutely love what they do. Between their hardware, firmware and software, they’re totally in line with their life’s work. They’re in their element. They love what they do, and as a result, their drive, passion, and work ethic to create value for others far surpasses what they might have done out of fear.

That is the future I see and the future that I’m confident we’re headed towards. We’re a few years out, and there will be plenty of stumbling blocks between now and then, but this is a logical eventuality which is simultaneously an enlightened perspective on how technology drives progress, and how progress drives ideology. The future is bright and oh so cool.

My Thoughts on Privilege

A few years ago, a girl I was dating told me to check my privilege. It was tremendously frustrating for me as I couldn’t understand what she was actually trying to say. She went on to say that as a good-looking white male, I had all kinds of advantages afforded to me which weren’t available to others. I reflected on that statement and it still didn’t resonate. From my perspective, my path had not been easy and both my opportunities and successes were well-earned. I figured a good place to start would be with a definition we could both agree on. So we looked it up:

Privilege: A special right, advantage, or immunity granted or available to a particular person or group.

That sounded rather general to me. By that definition, if white privilege existed, then so did black privilege – and every other kind of privilege for that matter. Tall people are privileged to reach things off high shelves while short people are privileged to not bump their heads on low ceilings. If privilege is simply referring to the advantages held by some and not others, aren’t we just talking about people in general? Maybe.

It would be easy for me to say that white privilege doesn’t exist because privilege doesn’t exist. I would go on to give an example: Would you rather be a black man being pulled over by the police in Alabama, or would you rather be a white guy getting pulled over by freedom fighters in West Africa? Then I’d remind us that while we all share a common blueprint, we all vary in our own ways and those variations provide inherent advantages and disadvantages depending on the circumstance. If circumstance is the variable that determines if we experience an advantage or disadvantage, then does privilege really exist? Like I said, it would be easy for me to say that white privilege doesn’t exist because privilege doesn’t exist – but I would be wrong.

Everything that I just said is valid to an extent but I think that there’s another layer to what’s going on here that better represents what we’re looking at. I think if we explore this a little further, we’ll find some clarity

A granted privilege seems to be simply be an advantage given from one person to another. What I find curious here is that the word granted offers the possibility of earning your advantage. Consider a student who has good grades in high school and then is ‘granted’ admittance to a top-tier university – we’ll call her Priya. Now consider someone who had average grades, who also made it into that university after their parents made a significant donation – we’ll call him Bryce. I think most people would blow the whistle and call a privilege foul here on the latter, but what if the Priya was at a top private school with unlimited tutoring funded by her parents? What if Bryce’s parents grew up in poverty, worked hard, and were simply making a donation to their alma mater?

This is a rather interesting topic for me because in the context of a social conversation, privilege is what I would consider to be a poorly defined topic. It’s like we know that there’s something wrong but we’re not exactly sure how to articulate it. As in many other cases in society, we think we’re dealing in issues of fairness but in reality we’re dealing with issues of efficiency.

Let’s revisit the earlier example in a different context. Let’s say for the sake of simplicity, Priya is unprivileged and Bryce is very privileged. Both are admitted to a top-tier university and both approach their degree as an independent effort. Now they’ve both graduated and while Priya continued to work hard and earned good grades, Bryce worked harder and earned better grades. Now imagine that in 40 years, we’re reflecting on their life’s work and there’s a clear winner – Bryce.

If this were a real world example, what we commonly define as privilege could’ve led to the discrepancy in university grades and the career but that’s the point. What if it wasn’t? It’s certainly possible that Bryce did better because he had more resources at his disposal, but what if his circumstances we’re simply better aligned with his own personal strengths? What if Bryce simply wasn’t motivated in high-school, but once he had the autonomy and challenge that came with a top-tier university, he was motivated to perform? And what if his personality and degree were directly in line with his career path? And what if Priya who worked hard and got good grades her entire life had the genetic blueprint for a world class chef, but became an accountant as a result of her academic focus?

In reality, what we’re really upset at is a series of systems which are inefficient at allocating resources and creating value. The system we have currently is a ‘fair’ entry system predicated on prior academic performance and extra-curricular activities but it’s also the same system that would see Priya become an accountant and see Bryce not gain admission. It’s largely a level playing field, but perhaps it’s time to prioitize making sure people are suited up for the right sport and playing to their full potential.

With the progress we’ve made in understanding our genealogy and psychology, along with advances in our ability to collect and analyze data… I smell a revolution in how we determine fit. Imagine everyone being given the freedom to explore their options, while also being given the information to understand what they’re likely to be best at. Now imagine everyone having access to the same information and how much more efficient we’d all be… at everything. The goal isn’t to make privilege against the rules, the goal is to have a system in place that makes the use of privilege seem foolish and counter-productive.

If I were to offer up my best definition of privilege, it would be an applied, circumstantial advantage. When circumstantial advantages are used to further the collective interests (efficient), people seem not to mind. When circumstantial advantages are used to further self-interests (inefficient), there’s an issue. Our issue isn’t with having different strengths and weaknesses from one another. Our issues aren’t even with those who apply their strengths when competing. Our issue is those who take the short-sighted approach of putting their own interests ahead of collective progress. Our issue is with those who use their resources to create inefficiencies in the larger system at play.

The Future of Real Estate – Part 2 (The Solution)

In my last post, I detailed the problem with real estate – it’s too expensive.

People have been trained to want to buy real estate without understanding what makes a good real estate investment. The system in place allows us to amplify those bad decisions by spending 5x more than we were able to save, effectively spending the next 20 years paying it back. Because it fit into our monthly budget, we were never overly concerned with the cost. The market has now figured that out and in many major cities, is testing our upper threshold of what we’re willing to pay. When you test that upper limit of what people are willing to do, they start thinking outside the box.

The best recent example, which I had mentioned in the last post is how high oil prices gave rise to an environment in which Tesla could be successful. So the fun question that we get to answer here is what high real estate prices are creating. Prices have reached a point where all kinds of businesses are coming out of the wood work with ‘alternative housing’ ideas. Most of it is in its early stages now, but we have some very cool options in the pipeline.

3D printed homes. If you don’t know what I’m talking about, do a quick search. Additive manufacturing is most likely the future of manufacturing, and I can’t see why it won’t also be the future of building homes. If I were to guess, I’d say that the future of construction is automated and the further we progress in that direction, it’ll look like a giant 3D printer. While they’re not ready for the market yet, I’d be surprised if we didn’t see some market ready options within 10 years.

Shipping container homes. Shipping containers are relatively inexpensive, structurally sound, and made from recycled materials. They also apparently double as pretty cool homes. The genius in this approach is that we’ve figured out we can build a modern, livable home out of just about anything.

Mobile homes. Not trailer park mobile homes, just homes that are mobile. One of the more interesting designs that I’ve seen was of micro suites which could easily be moved from building to building. For individuals who like to move around, their suite would just move with them from city to city. For others mobile homes are about getting off the grid. One of the coolest ideas in the pipeline are self-sustaining, modern, smart, mobile homes. Everything from solar panels to water filtration would be built into the home itself, allowing for you to put your home down on any piece of land you’d like.

Modular homes. While 3D printed homes certainly don’t qualify, almost every other new style of alternative housing falls under the category of modular (including container and mobile homes). Modular homes are such a broad category because it’s really referencing the production process rather than the final product. With modular homes, each section of your home is manufactured centrally, then shipped out to your location to be installed. That’s a big deal.

Right now, an average home is built like a Rolls Royce: with hand tools and a 6 month wait-time. What we need is an effective assembly line for homes and that’s what modular housing is looking to tackle. By building in modules, fabrication can be done centrally and then shipped out to the buyer for installation. That central, and streamlined fabrication process means that a home can be built in a couple weeks and with far fewer resources. We’re quite possibly looking at a genuine disruption in how homes are constructed, especially when the build time and cost are a fraction of our current options.

What about the land though? Real estate is always a two part conversation because land is pretty useless without a house to put on it and a house is pretty useless without land it put it on. It’s very possible that as houses become less and less expensive to build, people are just going to charge more for land, effectively providing the same end price. Again, this is what happens when we understand the price of something but not its value. That’s ok though, because I see a solution on the horizon for the cost of land as well.

Land is not unlimited, but we are not even close to using up what we have. What’s really limited is land near urban centers. Urban centers tend to have the most desirable jobs so people move to the city. There’s more people who want to live there than land available so demand exceeds supply and the price goes up. The solution thus far has been densification – finding ways to put more people in the same area and large residential towers are the result. The problem with densification is that the city’s infrastructure rarely keeps up and we simply end up with congestion. Yes you get to live in the city, but good luck getting around and doing things.

There’s more than one way to solve this problem though. Rather than trying to accommodate more people in the city, why not motivate them to leave the city?

The first way you do that is by making the commute more tolerable and I think driverless cars are going to help that in a big way. For most people, driverless cars are likely to cut down on commuting times significantly. Second, commuting takes on an entirely different meaning when you’re not driving. What we think of as a 2 hour commute today, could very easily become an hour in your mobile office a decade from now. Some will still prefer to be within walking distance of their job. For others, a cool modular home, on a quiet lake just outside of town for a fraction of the price will be the more attractive option.

The other way to get people to leave the city is by providing job opportunities outside the city. It was the industrial revolution which created this population shift, but it was really the evolution of technology. Farming techniques had evolved to the point where fewer farmers were needed, just as factories were being introduced and manufacturing jobs in the cities were booming. If I were to guess, it will be technology which brings people back out to the country – and I’m thinking it’s going to be telecommuting. Telecommuting is basically working from home, but with the power of the internet and the way the job market has evolved, it’s becoming more and more feasible. Perhaps one of the biggest transitions will be when coding becomes a primary trade.

When I think of successes like Uber and AirBnB, I see a trend of decentralization. It’s taking a look at the resources we already have access to and simply using them more efficiently. My biggest issue with real estate is that it represents a remarkable inefficiency. We have more than enough land to share, but we’re willing to commit decades of our income to securing a small piece. Every dollar that we spend on a house is a dollar we don’t spend on all the other things our economy produces, yet we’re encouraged to spend 5x more than what we’re able to save. And without understanding these dynamics, we haven’t been motivated to challenge the status quo – until now.

The Future of Real Estate – Part 1 (The Problem)

Real Estate has long since been a frustration for me. Growing up, I heard the same thing that everyone else did… You should own your home because if you lose everything, at least you’ll have your home. Paying a mortgage is better than paying rent because it’s pretty much like paying yourself instead of paying someone else. Real estate is a safe investment because everyone needs a place to live.

As I developed my investment skillset, my perspective on real estate began to shift. Not only did I lack any emotional attachment to owning my own home, Now I also had a much clearer understanding for how real estate behaved as an asset within its markets. What I’ve also realized is the unfortunate reality that while your average real estate professional is aware of these dynamics, they don’t entirely understand them, and will only mention them when it helps to close a sale. If a market is overpriced, you’re more likely to hear your realtor tell you that you’ll make your money back eventually, than to wait for prices to come down.

While we’re going to dive into what the real issues around real estate are and how I think they could be solved, I think it’s important to mention that my perspective on real estate has been shaped by growing up in a city which became one of the world’s hottest real estate markets. While I have the funds necessary to own my own home, I do not. It’s frustrating because I’d like to, but my understanding of the dynamics at work prevent me from making that decision. While I’m confident in my patience, paying rent is still far from ideal.

There are several issues with real estate, and I think they all start to come undone quite nicely when we start asking why real estate is so expensive. Consider this, if we didn’t have the option to borrow hundreds of thousands of dollars that would take us decades to pay off, how much would a home cost? What if we could only spend what we had saved up?

The problem with a mortgage is that it inflates purchasing power. If you saved 100K, you can now go spend 500k on a house. Saved 200k, go spend a million. The lenders know how hard it was for you to save that first 20% as well, which is why they’ll give you between 20 and 30 years to pay it off the last 80%. Yes you’ll have a place to live, you’ll spend most of your working life paying it off. Am I the only one who thinks this sounds like financial slavery? If we all simply said no, I won’t take on a debt which will take 20+ years to pay off, we’ve set the terms on what we’re willing to pay. They can only sell at the price at which we’re willing to pay. Unfortunately we haven’t figured that out yet and we’re too used to the upper threshold of what we can afford to pay.

So what is a home worth? Not price but value. Price is what you pay, value is what you get. Well traditionally, there’s 2 parts. First you buy the land, then you build a house on it. We often find land to be expensive, but why? If I were to buy a business that produced widgets, it would have value because I could take those widgets to market and sell them. If I bought a farm, it would have value because I could take the crops to market and sell them. If I owned a plot of land, which did nothing, would it have value? Well it would be worth whatever someone was willing to pay me for it right? If the land carries no inherent value, why would someone pay me for it?

In effect, what we’re really paying for when we buy land is a reduced travel time between home and work. With a limited supply of land within the city center and a seemingly unlimited demand of people who want to live there, the markets set the current price.

The second piece of this puzzle is the cost of building an actual house. Right now, an average house takes about 6 months to because it’s treated like an individual project, and done primarily with manual labour and hand tools. Sounds like the timeline and process for a Rolls Royce.

So this is where I leave you hanging. We’re keen on city centers now, but will that always be the case? And what happens when we can start building houses like we currently build cars? Well that’s not going to happen… is it? The real question is why it hasn’t happened already. Here’s my final thought: When oil prices were low, nobody cared about electric cars. When oil prices were high, electric vehicles became a more realistic alternative. When oil prices peaked, Tesla walked into a market waiting with open arms. High oil prices delivered Tesla.

What will high real estate prices deliver?