Curt Doolittle

Theme: Productivity

  • Digital Versus Traditional: Capitalizing Creative And Execution

    December 13th, 2009 § 2 Comments

    Aside from scale, the production work performed by most large agencies, is similar enough to be meaningless. Larger agencies must sell creative, and deliver and capitalize production.

    To some degree this is true of Digital Advertising agencies, venus Digital Marketing agencies. (A digital advertising agency produces ads. Ads that attempt to get the consumer’s attention. This is simply a traditional business model extended to another publication platform. Digital Marketing agencies produce content. By definition, all of it is long-form advertising. If it’s really good, it entertains a consumer who is seeking it.

    While we would like to say that we do, by and large, sell creative, clients buy us for execution. And that’s helpful to us, because Digital Marketing agencies can directly capitalize technology services: we can make money with JUST the technology component. Companies buy us for our execution ability. We can charge for our execution ability. And we can do so because it is frankly, more scarce than the production capability of ad building and distributing. (Note: in our business, we have a separate office that handles Digital Ads. It’s a specialty.

    This difference in capitalization means that a Digital Marketing Agency can serve a larger number of accounts at lower risk, because they can afford to be hired, and to compete, purely on execution, as well as on ideas. It is, by nature, more ‘comfortable’ for a Digital Marketing Agency to participate as a peer in a large account, because we can compete on execution, because execution is simply HARD.

    Technology is a wonderful deliverable, because the quality of delivery is objective.

    Technology organizations must deal with risk mitigation.

    Differentiation between deliverables is rarely subtle. It is the scarcity of content in the short form ad, and the impulsive emotional result that it must evoke at a very low cost in money and attention, and the subjective ‘approval’ that must be given by the client for that ad, that makes the iterative production cycle risky to the traditional agency. The Digital Marketing agency has less of this kind of risk. It has execution risk. Execution requires, usually, a learning curve, coding and testing. In fact, the problem for technologists in Digital Marketing agencies is HARDER than it is for consultants in traditional technology consulting models because the need to work with leading edge technologies increases risk dramatically.

    Writing code for Facebook for example, is an odd interface to program, although the universal authentication model that it embraces is so powerful for clients that it compensates for the difficulty in using it. Making a rich internet experience on Flash or Silverlight while making sure your content is visible to search engines is painful at times, not because of coding complexity, but of keeping unlinked bits of information in sync. Certain platforms (Disney’s) are extremely rich and complex. Others (Best Buy) must handle a great deal of volume and almost entirely utilitarian. Others (Amazon Stores) are incredibly powerful, but rich and complex and not for the inexperienced technologist.

    For these reasons, firms like ours can have “A, B, C, and D relationships”. AOR, Digital AOR, Digital Partner, and Point Solution Provider. We do not need to be an AOR to make money in an account. We only need to be AOR if the cost of selling into the account requires that we capitalize on a creative investment. The traditional agency can only support a client if they can capture enough work to pay for the creative cost of maintaining marginally competitive talent on the account.

    For this reason, it certainly appears, that small creative agencies who are thought leaders have a long runway, DIgital agencies are just getting their feet on the ground and are at lower risk, and traditional agencies are in for a long haul of partial displacement, and holding companies are well suited, as long as they are not overly leveraged, to continue their dominance, because there does not appear to be a means of coordinating enough capital to displace them or give rise to another competitor – like most things. Wealth concentration is largely a matter of timing.

    From: www.puretheoryofmarketing.com (offline)

  • About a Pure Theory of Marketing

    Date: 2009

    I’m the CEO, and one of the founders of Ascentium:  a 600 person, $100M mixed marketing and technology agency1 that we started in 2001. We’re one of the bigger independently owned agencies, and we have grown very quickly, at from 60-100% per year.

    Someone asked me a question about two years ago, when I described the depth and duration of this economy, and what it would do to the agency world. I described the failure of the trial and error method of advertising on the web. The drop in funding for media.  The general economic conditions and what that did to buyers.    That question was “If we aren’t marketing the way we should, then what should we do instead?”.

    I just didn’t have a clear enough answer.  And I decided to do something about it.

    For the past year, I have been working on a way of looking at advertising and marketing.  I’m calling it a Pure Theory of Marketing.  It’s a little different way of looking at the world. But then, our world is different enough that we need a new way of looking at it. Not just at our tools and channels, but at what it is we’re saying to people, and how we say it. And we need to understand WHY so we know WHAT it is we should be doing instead, and why it will work.

    And I started this blog to talk about it with whomever will listen.

    Of course, I’m putting out a book, because, that is what one does for legitimacy in the current environment.  But a book is not citizen of the web, despite the web’s effect on the citizens and book industry. It’s static. It doesn’t change quickly. It cant be revised. It isn’t a dialog.  (You know some of the great philosophers didn’t write much down, and they walked and talked instead for a reason.)  I’m a citizen of the web. Our business is a web-business.  The world still changes too quickly for print. Blogging is so much more rewarding if you appreciate discussion.

    Marketers pride themselves on building a wide audience.  On appealing to many people. But that’s not what I’m trying to do. And I couldn’t if I tried. Instead, I want to reach CMO’s, CEO’s, Senior Agency talent, and frankly our own talent, and that talent that might want to join us.  And I want to help people understand the future of 1-to-1 marketing, as something very different from the era of big media.

    We’re in a new and different world. And it’s a better one, if you know how to make use of it.

    1. Think Razorfish — except they’re owned by Microsoft, and we aren’t, and we predominantly use Microsoft technology, and they don’t; a fact we find somewhat humorous at all three companies. [↩]

    From: www.puretheoryofmarketing.com (offline)

  • Toward A Pure Theory Of Marketing

    Key Ideas:

    1) Business exists in the sociological context. That means that companies, and agencies, are organized in order to sell according to both our assumptions about society, and the way society is organized, and the commonly held beliefs in society.

    2) What we think of as the consumer culture, is part of the process of post-empire, post-war western european cultural dissolution. That culture emerged as a series of identities that made people very similar, and therefore easy to market to using mass media. But we are no longer living in a world of postwar consumer identities. Where people were the same. With same ambitions and beliefs about what made a better life. But we aren’t the same anymore. We’re not even similar.

    3) Our citizenship today comes not from service to the state, or from religious affiliation, or even from cultural affiliation, but from debt participation. We aren’t united in any set of beliefs or myths other than as consumers. As consumers we have different consumptive and productive abilities. So we are buying our identities with goods rather than adhering to mythos and beliefs. In other words, globalization is happening in America as well as everywhere else in the world. We are finally returning to the level of globalization that we had prior to 1900.

    4) Identities are not just fashionable, they’re necessary. Without a shared mythology or shared social beliefs, we literally cannot judge ourselves in such a vast division of labor, or know our status or progress in life, or even what is ‘good’ or ‘bad’ without these identities. These identities are our belief systems. Imagine we lived in a world without numbers, without clocks, without myths, without formulas. Humans beings literally can’t think. they can’t make judgements. Rational civilization has made our mysticism, our world of magic, into one that at least appears to be rational. But we take for granted advanced technologies like time and myths, without understanding that they are formulas that we use to calculate the future. Formulas that we use to make judgements. We live in a complex world where we almost never have enough information to make any decision, which forces most of our decisions to be tie-breakers. Our formulas, our myths and most importantly OUR IDENTITIES, are how we make tie-breaking decisions in real time. Without identities we literally cannot think, any more than we can think without numbers, common sense, or time.

    5) Agencies think its hard to create ads and make money in major media, because of the infiltration of the web. But that’s only a symptom of the social change. The web has helped facilitate that social change. But that change was there before the web. Agencies, marketers, creatives, and even, indirectly, CEO’s, are selling products into the postwar identity, using companies, marketers, agencies, and media channels, that were specifically developed to sell into that homogenous postwar population, each of whom had the postwar identity.

    6) It’s not just ads, not just campaigns, not just marketing that needs to change. We have to restructure business to sell into this new world order. We have to restructure marketing departments. We have to restructure agencies. Mass media will still have it’s place. But it will largely be for poor people, and major media will continue to become the channel for poor people, rather than postwar consumers.

    7 ) Agencies need to learn how to build campaigns and creative for multiple channels, and multiple identities, and to accumulate consumer attention and loyalty, rather than sell broad big-win campaigns into the postwar narrative. We need narratives that appeal to identities. That help people build their identities. Rather than market to absurdity, which is the only common factor the fractured-identity-world we live in can comprehend, and the only campaigns that work today. We need specialized agencies that monitor identities and match them with people, and their disposable income.

    8 ) Marketing organizations need to build ‘wardrobes’ of identities, and survey those identities, not their products, but the identities that those products service, rather than demographics, which are simply geographic representations of the postwar identity. These identities then become markets with measurable success criteria. In effect, giving marketers a portfoilio of measurable assets. Marketers need to learn to build campaigns that consist of multiple narratives that sell into a ’set’ of identities, each of which enriches that identity. And to build accumulating interest by consumers rather than asking for their direct attention. This creates a sense of sincerity. It may be that many marketers cannot exist in the post-postwar world of the citizenship-by-debt-participation society. It’s up to you to change. Society changed already. Campaigns need to keep a heartbeat. A lot more of your job will be to determine what’s popular in six or eight different identities rather than to simply shop popular culture for the most widely appealing message. I’ m overstating this a bit – but marketers all want to do what they did yesterday and call it creative. So we need to overemphasize the difference for a few years.

    9) CEO’s need to demand that CMO’s become to the brand asset what CFO’s are to financial planning and controller’s are to cash. Balance sheets and income statements need to track brand asset on a timely, if not weekly basis. CMO’s need to have a portfiolio of identities and the measurement of how that product sells into an identithy and plans for addressing each identity and budgets for doing so. CEO’s need to hire external auditors who will audit that brand information so it’s not fudged any more than real estate values are fudged. CEO’s need to look at identities and products and services as related investments, and develop budget and funding processes. The unspoken issue here is that many marketers are campaign managers, not brand managers, and you may have to fire a lot of them, or train them with discipline to get them to perform. Conversely, the board should fire a CEO for NOT doing this because if the CEO doesn’t do it, it means he or she is behind the times, uncompetitive, ignorant of the company’s asset holding, and not fast enough to manage a company in our new environment.

    10) Shareholders need to hold companies accountable for brand measurement. Most of the nonsense that is possible for CEO’s to pull off, and destroy asset value, is done because a) we measure only postwar and prewar assets (cash and real property) instead of market potential and employee potential, and b) because accounting rules exist largely to help organizations avoid taxation, or adhere to regulation that increases taxation instead of accurately reflecting the business’ performance, rather than provide accurate pictures of performance in the service of customers and investors, and c) accounting processes are mired in an ancient past, and because of the primarily manual (rather than macro-transactional) nature of the accounting processes is unsophisticated and only reinforces the antiquated culture in accounting.

    11) By building our businesses around the new sociological context: the culture of citizenship by debt participation, we can make more profits, build better brands, dispose of antiquated companies, and literally change society for the better while providing an opportunity to a new generation of entrepreneurs, marketers, and creatives who, rather than sit mired in a decade long economic depression, can help raise us out of it by transforming this complex and fascinating world we live in.

    12) For technologists, I have given you a glimpse of that amazing future that is very different from the engineering that you have done since 1960. Your concept of what makes ‘good’ technology is dead. Put a stake in the vampire’s heart. Pattern oriented, durable code that is deep and rich and flexible is as useless as phlogiston theory. Discreet data and documents are dead technologies. The future is perishable, not flexible. It’s where subjectivism is incorporated into the code. It’s not isolating companies from consumer subjectivity, but collecting and analyzing consumer subjectivity. Not periodicity. But non-periodicity. If you’re smart enough to guess what that means, then you have a career ahead of you. We can change the world if you’re willing to change your thinking. If not. Go find the guys who write COBOL and ask them for a job.

    This set of steps will build the 1to1 marketing capability that business and consumers need today, to service their wants. And it will fix the corporation that consumers feel alienated by – because without these processes, capitalism’s core, which is to serve customers, is being undermined by market failure: ‘general liquidity’ and risk-driven bankers, result in the concentration of capital in large companies that allows businesses to get away with poorly serving customers.

    There is more to it. But this is the core of A Pure Theory Of Marketing.

    And there is only one company that can help you make that change: Ascentium

    www.puretheoryofmarketing.com


    A Pure Theory Of Marketing: December 2009

    Table Of Contents

    1. INTRODUCTION
    2. THE ECONOMY OF MARKETING
    3. THE FUTURE: A THEORY OF MARKETING
    4. COMMUNICATING WITH CONSUMERS: CAMPAIGNS
    5. RETAINING CONSUMER ATTENTION AND LOYALTY
    6. THE MARKETING ORGANIZATION OF THE FUTURE
    7. THE EXECUTIVE ORGANIZATION OF THE FUTURE
    – The ACCOUNTABLE CMO:
    – THE CEO, AND ADDING THE FUTURE ORIENTED ASSET OF BRAND POTENTIAL
    8. THE AGENCY OF THE FUTURE
    9. THE ECONOMICS AND ETHICS OF MARKETING AND ADVERTISING
    10. CLOSING SUMMARY

    Comments on “A Pure Theory Of Marketing”

    “This is a manual for CMO’s, CEO’s, Shareholders, and Consumers. It’s effectively a theory of marketing. And because of that, it’s a prescription for the future. It’s the biggest change in marketing MANAGEMENT since the television era. It will work not because it is a fad, or because it’s inspirational, or because it’s a tactical improvement, but because it is pure economics and sociology: because once consumers, shareholders and investors understand what I’m saying, the will DEMAND that much of it be implemented in companies. Because taking better care of customers is taking better care of investors. In other words, we can solve the problem of ‘the corporation’. It not only tells us how to market: how to talk to people, create the right narratives that will engage them, but how to organize our marketing organizations. We can solve the under-funding of marketing. we can solve the waste of marketing dollars. The problem in marketing hasn’t been marketer’s laziness, so much as their lack of a means of working in a quantitative world, and therefore their dismissal by the executive team as irresponsible. But if you follow what I recommend, the only person who can fail, isn’t the CMO. It’s the CEO. And CEO’s are pretty good at preventing failure – especially when it’s theirs.”

    “I’m not so much simply confident that we should recommend our customers begin transforming their organizations, as I feel that it’s a deterministic process that will punish companies who do not.”

    “I am sure somewhere, someday, someone will figure out that this theory of marketing solves not only a business problem. But it solves a social one as well. Marketers can build a better world, and make money doing it, and make consumers happier, rather than be next in the line of disrespected professionals, with the unenviable claim that at least they’re thought better of than prostitutes, politicians, journalists and lawyers.”

    From: www.puretheoryofmarketing.com (offline)

  • What will the role of agencies be 5 years from now? The Same, More Specialized, Less Influence

    December 12th, 2009 

    The short answer is that the current trends will continue. The traditional AOR relationship will increasingly face being displaced by agency teams composed of specialty firms who can manage the complexities of existing and emerging channels, media, and technologies. This is for simple reasons: our organizations are different from one another, because the tasks we perform are different from one another. Even organizations like Sapient or Ascentium, which have separate business units that perform consulting or technology specialties, have them to augment their business model, not to augment the traditional agency business model.

    The problem, for clients and for agencies, is overall stewardship of the brand across these specialized teams of agencies, channels, and media. Some clients will manage it themselves; others will choose agencies to specifically handle that challenge. And the talent to do so will become a primary challenge for CMOs. Should shareholders and boards begin to demand responsibility for brand performance, as an asset more tangible than our current fixed asset mythology, they will hold CEOs accountable rather than allowing them to offload this responsibility to CMOs who they regularly dispose of as a convenient distraction.

    Over time, we have seen a steady reduction in the ability of any company to project and control its brand. The relative influence of the consumer, brought about by a combination of social, economic, and technological factors, is redefining the way in which marketing is used to influence a company’s brand and by extension make an impact on its sales and profitability.

    And while the dependence on advertising per se to promote a company’s products or services remains unchanged, the ability of a company to influence or manipulate customers through traditional short format ads is also in general decline. There is not enough information density in the short format to develop a vision that is intimate.

    We have been selling a very aspirational message, “the American dream,” for a long time. And now, in most advertisements, we are selling nihilism or sarcasm, which is the very opposite of the contemporary consumer desire for membership in communities, within a class or tribe. Brands have to help people achieve that goal. The short format can do so, but only by segment, not by the broad distribution of low content ads that was possible for general household consumer goods.

    Combine this phenomenon with the change in consumption habits—that’s resulted from the major economic upheaval and that’s becoming ingrained in our culture—and technology’s ability to amplify an individual’s sphere of influence, and we will see the role of advertising shift from selling the aspiration for “the American dream” to facilitating the creation of our individual identities and our interaction with other like-minded people.

    To support these shifts, marketing will become more about providing access to rich format narratives that reach out to segments or communities of individuals who share common beliefs, preferences, and consumption habits. It will be the role of agencies to produce this increasingly complex and micro-targeted narrative content that people will seek out and want to consume. And agencies will be required to execute the distribution of this highly segmented content across multiple platforms, devices, and media.

    In the golden age of movies, the studios not only controlled the creation of content, but, through ownership of movie theaters, they also controlled its distribution. In the future, as agencies increasingly become sophisticated content providers, they will need to, not unlike the studios, develop and execute the means by which content is distributed to multiple screens—on the Web, mobile devices, digital out-of-home media, or via technologies we haven’t even thought of yet.

    And while it is not inconceivable for a holding company to purchase a business or channel like Facebook and limit advertising on it to select customers using select messages—thereby making the Web destination a profitable as opposed to a money-losing distribution channel—it is more likely that these channels will require certain formats and types of content (Facebook apps are effective, Facebook ads are not). This requires an understanding of not only the channels that require rich content versus short form content, but also the technology required to leverage the channel sufficiently to motivate consumers to act.

    It is this combination of the ability to develop and distribute highly relevant and rich narrative content that will be the primary role of the successful agencies in the future. They will be required to marry the account management skills of the large agency, the creative energy of the independent shop, and the technology prowess of the digital agency.

    From: www.puretheoryofmarketing.com (offline)

  • What is the role of agencies in today’s marketing landscape? The Same.

    December 12th, 2009 § 0 Comments

    Agencies play the same role they have for the last century. they create and distribute specialized content in an attempt to increase revenue, create and maintain relationships and ultimately profits for client organizations. What has changed during the last decade is not so much the purpose for which agencies exist, but the relative importance they play in relationship to one another at any given account. The diversity of clients’ content needs in today’s marketplace has led to a greater diversity in agency players who work with one another on any given account. Clients are no longer necessarily looking to one agency of record to fulfill all their marketing needs. And agencies continue to specialize in the service of those diverse needs.

    Historically, agencies were responsible for creating short format “ads” to reach the broadest possible audience and to be distributed across the narrowest channels—broadcast and print media. These short format “ads” still dominate, but with the advent of database marketing, email, the Web, and now social media, content has shifted to richer, more interactive “experiences.” This new content is increasingly influential in consumer decisions because short format advertising is proving less effective at creating loyalty to a company, product, or brand image.

    Response to the demand for and impact of these new forms of content has resulted in the evolution of a new class of “digital” agencies. Starting with the presentation of static content on the Web, followed by the emergence of rich media, and amplified by the emergence of social media—now including multiple applications, devices, and tools—these agencies are connecting consumers with clients and often consumers with each other, all wrapped in the banner of particular brands.

    Today, there are too many areas of expertise, and the organizational methods needed to produce and distribute the content are too diverse, for any single AOR to manage.

    For example, the creative team responsible for innovation using any particular medium requires a high level of mastery to exploit that medium sufficiently to influence consumers who scarcely have the attention to devote to any particular bit of advertising.

    Not only is there a limit to the degree of excellence that can be produced, but then reward must be distributed to these creative people according to the excellence produced. This means again, that excellence favors organizational diversity, which is not typically found in large traditional agencies.

    And finally, the organizational structure that is needed to produce excellence in each medium is somewhat different. While creative people exist in each type of agency, and with differentially specialized talent, the majority of the employees are in delivery focused roles specific to the medium in which they work. As Olgivy states “…about 60% of ..(agency staff) … do clerical work.” a similar trait exists in technology focused agencies where the vast majority of employees fill technical rather than creative roles..

    And the operating principles are very different across each of these cultures. In a traditional agency for example, traffic management is nowhere near as complicated as project management is in a technical or digital agency. While the difference may not be as significant in digital advertising, since it is effectively placing ads according to a process similar to offline ads, it is quite different in digital marketing firms, where the content is both interactive and participatory, and the problem is not the marginal quality of the work as determined by subjective and momentary emotional response, i.e. did I like it, but by sustained attention from the interaction, i.e. did it work.

    Most companies continue to look to traditional agencies to do their advertising: one to many communications that drive brand awareness and when applied to direct response influence propensity to purchase. These agencies are best suited for this work. They are organized around efficient production, from their business models to their talent acquisition, retention, and compensation strategies. But while these large agencies and networks can provide the scale and account management needed by large enterprises, they tend to be more risk adverse in their creative and excel more in their abilities at production than in their disruptive ideas.

    When corporate marketers really want to make an impact, they increasingly turn to small shops that are usually built around a single creative force—likely a refugee from the large agency world who was constrained by his employer’s risk aversion. These smaller agencies are willing and able to take much larger risks with their work, in part because they tend to be lifestyle businesses (specifically compensating the risk taker) rather than growth and profit-oriented firms. While they can deliver groundbreaking ideas, they tend to be limited in their ability to execute and are unable to scale. This is usually the result of limited access to capital and a dearth of business-driven management talent.

    And then there are those agencies in the middle. In today’s agency world, the opportunities for newcomers and growth has been centered around new technologies—this is the area where most new successful agencies are coming from and are generally lumped together under the category of digital agencies. Up until the recent economic downturn, these agencies were attracting new customers, new talent, and most importantly, new investment dollars that allowed them to grow and expand their scope of services and clients much faster than their large and small counterparts.

    Their financial success is owed more to not being saddled with the institutional constraints, high overhead, and aversion to risk associated with the large traditional agencies than to the innate superiority of their ideas. And on the other end of the spectrum, they are free from the limitations to growth and scale that hamper the small creative shops that have less access to investment capital and less operationally talented executive management.

    From: www.puretheoryofmarketing.com (offline)

  • From The Private Sector: We Don’t Need Stimulus We Need Credit

    1) From the private sector: We don’t need stimulus we need credit. Banks simply wont lend. While the process of correcting bank balance sheets is underway, that same process must occur in small and medium sized business before any turnaround can occur. In my largest company’s case, our banks have been failing gradually, and we have been cost cutting, not because of decline in profitability, but because of decline in borrowing capacity, and an inability to find new banks willing to lend. About 20% of the work force was affected. In the other company I own, we are experiencing similar problems. 2) We need an area of growth that creates opportunity, and we need it in an area where we can CREATE DEMAND by innovating (taking risks by trial and error). Demand is not simply naturally derived from abstract confidence, it is created by investment, risk, promotion, advertising, and sales. People consume according to stimuli and status attainment. But they have to be aware of opportunities for stimuli and status attainment. And we must constantly develop new products to inspire them to work, risk, borrow and spend. The government is not stimulating anything that will help us CREATE demand. For example, building power plants, or a new power grid, which reduce costs and allow us to compete by discounted power cost rather than discounted labor cost. It is creating further expenditure requiring infrastructure. This is of course, a temporary fix, that is a long term drain on the economy. Instead, stimulate the creation of opportunities. Or at least, understand that there are a minimum of three classes 1) banking and finance, 2) entrepreneurs, engineers and scientists, and 3) clerks, laborers and craftspeople, and that stimulus generally helps the first and the last, but the middle is where the job creation comes from. And fundamentally, the entrepreneur cannot borrow today. Entrepreneurs, while often called capitalists are rarely possessed of a lot of capital. They are possessed of the ability to unite capital, knowledge and resources (including labor) in pursuit of opportunity for mutual gain. 3) Fixing the problem of an incalculable economy (loss of consumer confidence because of decrease in anticipated opportunities, and therefore disincentive to risk money and credit) is repaired most easily by having the government fund banks to buy back depreciation in home prices, and refinance those new homes, preserving the equity of the homeowner. THis would return to government (the treasury) the accountability for their actions in flooding the economy with unproductive credit, and the resulting distortionary prices.. This one policy enactment (which a number of us tried to promote in the spring of 08) would have the most efficient and quickest effect on changing consumer confidence because it can occur fast enough that the stickiness of wages and prices can correct. Countering uncertainty requires acting on debt reduction (home balance sheets) faster than the contracts (wages and prices) can be renegotiated in the private sector, which is a collection of promises and agreements and habits between individuals. Of course, the old argument is this: everyone wants to use stimulus to build roads because they require unskilled labor, and therefore have an immediate effect on the least flexible people in the economy. But these roads have to be maintained perpetually, and high cost, and generally are not. When, planes on the other hand cause the opposite reaction. Then the question becomes, not just one of redistribution, or debt, but urgency, and motivating all of the productive classes of finance, entrepreneurship and labor, to work together. Not focusing on just one or another, but all three. This is one of the other failures of the bias that comes from overemphasis of monetary policy: forgetting that we have to move all three classes of people in order to stimulate the economy.

  • Credit Funded Jobs Programs

    Another response from “A Shaky Start” on Economists View

    RE: “One way to look at the Bush years is that job growth was lousy so the Fed (and the government policies) subsidized construction jobs by creating a housing bubble. That jobs program abruptly ended. It is now time for a new jobs program. For the longer run, it is time for a different labor policy that will create many more jobs.”

    It’s not just a way to look at it, it’s what happened. THey wanted to create this ownership society as a means of countering the growth of urbanized socialism, and the diminishment of freedom, and competitive prosperity. This is the most important dimension of the multi-dimensional philosophy that they have been following. (We tend to classify them as having a simplistic philosophy but it is not so. It is not useful to underestimate the thought of your competitors.) The rest of it is essentially a universalist christian concept for the material benefit of mankind, (going back to Alexander) that promotes democracy as a means of exporting control over world resources in order to keep prices low, and maintain military and political power. The problem is for their philosophy, that in the end, society has become urbanized, and large and dense. And the epistemology of urbanites is very different from the epistemology of farmers. There is more similarity between the evolutionary tendencies of urbanites and slavery economies, than the evolutionary tendencies of farmers, for precisely these epistemological reasons. THis difference has been understood for a long time, and written about extensively. However, our current status of behavioral economics has not reached a sufficient state of maturity to connect this set of tendencies, with density of population, and availability of opportunity cost at the expense of perceptibility of causality. Furthermore, our calculative institutions (accounting and taxation) as they are currently practiced, effectively launder causality from our information systems, and require us to rely on the farmer vs urbanite dichotomy as a religious or political difference, or ‘taste’, or even as a strategy of class warfare,versus relying upon factual information that allows us to analyze our behavior and make judgments about it. Fortunately we know how to fix these issues, so that the epistemological clarity of farming (visibly of cause and effect) is available to the urbanite. Unfortunately, we have a form of government that distracts us from solving this problem by individual profiteering on the resolution of conflicts between groups and classes. Our biological sensitivity to fairness, which compels us to work hard, and endure costs, in order to punish those who steal from us, or treat us unfairly, seeks to commit violence, control, or punishment between groups in order to feel fairness has been satisfied. However, this masks the underlying problem as one of solving the underlying problem as one of extending human senses, perception, and comparitive and calculative ability such that we can make decisions for collective benefit. There is an argument that such accountability, which would come from epistemological clarity, would still be avoided by the peasantry, because of necessity we much manage consumption through the pricing system. However, redistribution can mollify discontent as it has in much of europe, assuming that there is anything to redistribute, because the population provides competitive value in contrast to other competing groups. I have a more benign view, which is that if a sufficient number of people can understand that this is a problem of providing information, on the scale that was provided by double entry accounting, and the inventory process facilitating taxation, and the standardization of currency, a small number of simple policies can be enacted that will provide us with the information we need, and therefore will allow us to cooperate, profit, and redistribute without the necessity of relying upon democratic negotiation for the purposes of resolving disputes between classes. Capitalism is with us forever as a set of institutions, precisely because humans cannot, in real time, process complexity of information without those institutions. Redistribution is likewise with us forever, since there is a difference between the necessity of incentive and the necessity of calculative power, and the preference for fairness. Likewise, social and economic classes are with us forever, because people requires status differences in order to pursue the mating ritual, and will create them faster than such differences will be redistributed, just as they will create black markets to circumvent anti-capitalist activity. But capitalism and socialism as biases, are only necessary as biases, because we cannot calculate, measure, and compare, the complexity of society in which we live. It may seem simplistic that society can be better managed by implementing changes in accounting, taxes, banking, credit, and the scope of lawmaking, but our society is changing BECAUSE of changes in these things. Instead, these institutions are what made our complex society possible, and our social systems, because they require decision and legislation rather than simply relying on evolution of business practices, simply evolves much more slowly. If we simply correct this problem, we can get away from class warfare, and into cooperating between classes for mutual gain. In other words, we are trying to build a science of economics on testing assumptions because we lack data needed to actually understand causality. We will have a much easier time if we have the data, and we have the technology, in both accounting and record keeping, to maintain causality in our data. Truth=Causality