In Praise of Redistributing Wealth

Wealth in the world is unequally distributed. That, at least, is a demonstrable fact. What is a matter of debate, however, is whether wealth is fairly distributed. For all but the most callous Ayn Rand sycophants (yes, I’m a libertarian who doesn’t like Ayn Rand), the “Nays” are likely the winning side of this proposition as well. If anybody in the comments section wants to present a cogent case to the contrary, be my guest. For everybody else, we must move from the apparent economic injustice in the world to viable solutions to it.

(Soapbox thought: We should learn to distinguish between fair and unfair means of gaining wealth. Hard work itself is not sufficient to gauge whether or not one came by their wealth honestly. There are many people who have worked very hard at screwing over other people. Goldman Sachs employees work very hard, I’m quite sure, but that doesn’t make their wealth honest. After all, I understand that mafia bosses work very hard and long hours too.)

For many people, the ‘obvious’ solution is the forcible redistribution of wealth by the State, employing its police powers and geographic and constitutional monopoly on violence.  This, they say, is a fast and effective means of achieving the desired ends. Unfortunately, history has shown it to be neither fast nor effective, and every time it has been tried, it has brought with it ruinous consequences, unnecessary repression, and economic destruction. Everybody has become poorer as a result. Even the “soft” socialism of post-World War II Europe and America, which have taken a Fabian approach to statist wealth redistribution, are seeing the fiscal consequences associated with such an approach. The 1960s and 1970s in America and the 1980s and 1990s in Europe proved that oppressively high marginal tax rates always lead to GDP stagnation. The alternative approach, deficit-financed redistribution is now proving itself to be even more disastrous, as we watch Europe and the American States implode under the weight of their entitlements (by this I do not only mean transfer payments like welfare, social security, and medicare, but in-kind entitlements such as public education and health care).

What is worse, wealth distribution hasn’t really improved. It has shown itself to be a persistent, sticky problem that does not respond easily to policy pressure. Soviet guns and gulags couldn’t equalize wealth. Public education and welfare haven’t been able to equalize wealth. The traditional approaches seem to have failed in their goals, not to mention the unintended consequences that have followed. (If anything, we have witnessed redistribution in reverse, from the middle class to the wealthy, particularly the financial elites. This is thanks to Central Banking and un-tethered fiat money creation, but that is another topic for another day.)

This does not mean, however, that we are doomed to a world of gross inequality. There are certainly elements of society that would prefer us to think this is inevitable, and far too many libertarians have accepted this premise as not only an unalterable reality, but an optimal one. Unquestionably, wealth and income inequality will always exist. Each human being is a unique individual with unique and individual talents and abilities. We are not capable of being the same, and it should not be desired to be so. Inequality is not in and of itself the villain. The problem is when the manifestation of inequality means that billions of people in the world live in abject poverty while others live lavishly.

Fortunately, we have a way to fight this that does not require wise and enlightened policies from government (since those are unlikely to be forthcoming) or the largess of multinational corporations being bequeathed sanctimoniously to the downtrodden. No, we have at our fingertips the tools and ability to lift ourselves out of this world of massive inequality and to redistribute wealth from the ground up without destroying any in the process.

This tool is entrepreneurship, and with the advent of the Internet Age, it is available at unprecedentedly low barriers to entry and to literally billions more people than have ever truly had access to it in the past. Unfortunately most of the people in the world don’t know how to use these tools effectively, and the current system of education exacerbates this reality. Entrepreneurship doesn’t mean the lone, Rand-inspired capitalist shrugging the Atlas and accumulating as much wealth as he can get his hands on. The romance of rugged individualism is dystopian and counter-productive, because it discourages vast swaths of potential entrepreneurs from starting out.

We are social creatures, we are diverse and unique individuals but who all have an internal desire to be part of a community (I do not mean a town or place, but in the way described by M. Scott Peck). Removing entrepreneurship from the context of community has tended to relegate the practice to the few driven egos (which I do not mean pejoratively) who can handle striking out on their own, more or less alone. Entrepreneurship means much more than that. It means groups of people taking control of their lives and their destinies and supplying their own needs better, faster, and cheaper than multi-national corporations can. In making such attempts, they will undoubtedly innovate their ways to solutions that can be packaged and sold to other groups of people for whom such a solution means they can concentrate on solving other problems. There is no requirement that such groups of people be organized around a capital-centric model of ownership. The Mondragon Corporation in Spain is an excellent example of a labor-owned cooperative that has achieved scalability.

Entrepreneurship increases the world’s wealth while simultaneously redistributing it. Entrenched corporate interests are effortlessly dismantled by the power of competition and consumer preference, when they are allowed to operate freely. More importantly, though, it is done without violence or the use of force, without malice or theft, and without the overreach of statist redistribution mechanisms. Where the State has no way of knowing who came about their wealth fairly, and treats all wealthy people the same, the market distinguishes between those who are meeting consumer needs and those who are taking advantage.

We should embrace the redistribution of wealth–it is something sorely needed. But we should seek means of fostering it that are voluntary and bottom-up rather than forced and top-down. One injustice cannot be remedied by another.

Tags: , ,

The Curse of the Disciplines

Much of the creative potential in our world is either locked inside the minds of physicists and chemists who have been trained to think like scientists or in the minds of artists and architects who do not have the scientific knowledge to bring their ideas to fruition. This is the curse of the disciplinary society that has ingrained in our culture by the modern university. Specialization has taken place along arbitrary lines dictated by the academy’s self-serving status preservation motive and its status as guardian of late capitalism.

The silos of knowledge created by the arbitrary disciplines keep human & intellectual capital subservient to financial and physical capital even though technology breakthroughs in the last twenty years have ameliorated intellectual capital’s subsidiary status in reality. With these breakthroughs (and as we are on the verge of nearly a dozen more), the world can be disrupted and reshaped from one minute to the next based on the power of an idea and the willingness of small groups of people to execute on it. The academy, whose endowment funds, “endowed chairs,” research grants, and other financial wheel-greasing, has become the pawn of the status quo interests in business and politics who do not want to face competitive pressure from the market.

In the past, it was the banks and financial institutions alone that prevented new market entrants who could compete with established companies, but with the advent of venture capital and more importantly, the transformation of new businesses’ cost curve in the Information Age, these traditional barriers have become less and less effective. The modern university is now all that stands in the way of a tidal wave of innovation and market competition that will remake our world into a richer, more vibrant, freer place with greater equality in the distribution of wealth, more opportunity, and higher levels of income mobility than have ever been seen in human history.

But to get there, we need to rethink the entire way we organize our learning process to avoid the kinds of tunnel vision that permeate every layer of what passes for our most innovative research today.

Rather than training physicists, we need to find people who are passionate about building structurally sound skyscrapers that have 1-inch walls and then help them acquire the knowledge to create the new materials necessary to make that a reality.

We must break down every barrier between the disciplines by raising up a new generation of innovators who do not even see that there were barriers before, who have not been corrupted by the arbitrary divisions that have been passed down to us by the academy and the standard-bearers of late capitalism. The kinds of specialists who arise from this new approach will be specialized in solving particular, real problems faced by people in the world.

Big Data, Robotics, 3D Printing, Nano-materials, artificial intelligence, alternative transactions, and much more are putting a new reality at our fingertips, one devoid of many of the physical limitations that currently hold us back. But we must be prepared to harness these exponential technologies rapidly and efficiently.

Project Exosphere is a problem-solving syndicate, a renegade alternative to traditional university education creating just this kind of community and environment to cultivate the next generation of innovator-entrepreneurs. As we launch in Chile later this year, we will share our progress and ask for your help in challenging the most ingrained assumptions in our society.

Tags: , , , ,

Learning How to Innovate

Most entrepreneurs will say that the skills necessary to be an entrepreneur and innovator cannot be taught. This may well be true, but that does not mean that those skills cannot be learned.

We should find it a bit remarkable that for all of the talk of hands-on learning and practical learning in the past ten years, that we still do very little of this in school, whether in grade school or university. Worse, what does tend to pass for hands-on learning is usually just some arbitrary simulation of something in the real world. Universities in recent years have specialized in an attempt to re-create reality in the cloistered confines of their Ivory Towers, in spite of the fact that few of their personnel have any experience outside of the academy.

Consequently, practical learning in the university tends to be a representation of reality, through the lens of an academic who in any case is mostly concerned with her own research far more than teaching, and certainly more than student learning (which is not necessarily aligned with teaching). Of course it is not the professor’s fault. Her incentive structure does not promote student learning and real-world experience. Indeed, the professor herself is actively discouraged by the institutional framework of the university to do much that resembles real-world activity.

Changing the institutional mandates of the university would be insufficient to meaningfully reverse this situation. Professors would at best come up with arbitrary simulation activities, as long as their principle motivations are the publication of academic research and teaching evaluations. They might make the course material more fun in the process, but it would merely be dressing up academia to look practical.

There is a growing body of advocates for “un-schooling,” encouraging university students to drop out and for high schoolers to forgo university altogether. PayPal founder and billionaire Peter Thiel is not only one of the most prominent voices in this movement, he has literally put his money where his mouth is, starting the Thiel Fellowship  which gives 20 young people under the age of 20 a $100,000 grant and 2 years to pursue their passion, travel, study, write, and start an entrepreneurial venture.

This is a first and fundamentally necessary shot across the bow of the self-appointed institutional gatekeepers of the modern credentialing cartel.

The challenge now is to take the premise of un-schooling and systematize the life long learning & entrepreneurial ethos without attempting to institutionalize it. This is the paradox my colleagues and I are taking on in Chile with Project Exosphere, which we are launching later this year. Our goal is to create a scalable model for exponentially expanding the entrepreneurial & innovative potential in developing countries by providing a systematic alternative to a formal university education.

Thiel Fellow Dale Stephens, whose non-profit UnCollege is another leading voice in the alternative education crowd frequently discusses the concept of “hacking your education.” This is an appropriate metaphor, and we would describe Project Exosphere as a sort of “educational hackerspace.” We believe that innovation & entrepreneurship can be learned by anybody within the right environment. Such an entrepreneurial learning ecosystem can be characterized by:

  • Community (cohesion, mutual respect, interested interdependence)
  • Problem Identification
  • Solution Process Thinking
  • Action-oriented learning (that is, learning because one needs the knowledge or skills to perform tangible actions toward their passion-goals)
  • Non-disciplinary approach to learning (that is, a unified concept of knowledge, rather than it being broken down into fields of study)

Further, innovation-learning must incorporate three essential pillars of entrepreneurship into all activities:

  • Invention (i.e. solving technical problems)
  • Aesthetics & Design (i.e. making technical solutions apparently desirable)
  • Sales & Marketing (i.e. commercialization of solutions through direct customer contact)

These general skills must be learned alongside specific knowledge required to solve particular problems faced by “customers” in the real world. Consequently, we must abandon the traditional distinction between professor and student in favor of a model of co-discovery, whereby more experienced innovators coach less experienced innovators on how to learn, how to adapt, and how to develop their passions into solutions to problems in the world. This means the coaches must be actively engaged in entrepreneurship themselves while they are coaching.

In the coming days I will be writing further about learning and the philosophical framework from which we are working as well as the radically de-centralized and non-institutional approach we are developing to systematically produce a culture of forward thinking and innovation, especially in developing countries.

At Exosphere we are going to raise up a new generation of innovator-entrepreneurs that are going to re-create and renovate the world as we know it.

Stay tuned to this space for more information and for the coming launch of the Exosphere website.

Tags: , , ,