The Next Economic Paradigm

Tag: virtuous circle

The Virtuous Circle: AI’s Role In Ensuring Economic Stability

Introduction:

In the realm of economic development, the interplay between banking, insurance, and engineering forms a virtuous circle that drives modern civilization forward. However, the crucial role played by engineers, scientists, and technicians in this cycle is often overlooked in economic discourse. Their primary responsibility is to produce material facts, which involves identifying risk exposure, calculating the probability of risks materializing, and assessing the consequences of failures. When these components are harmoniously integrated, finance, insurance, and engineering can collectively support the sustainable and peaceful habitation of our world.

The Virtuous Circle of Economic Sustainability

The Importance of Material Facts:

Material facts are integral to decision-making processes. They are facts whose suppression could reasonably lead to different decisions. However, in our increasingly polarized society, the dissemination of disinformation poses a significant threat to the integrity of material facts. Counteracting this challenge becomes even more complex considering that technology facilitates the creation and widespread distribution of misinformation at an unprecedented scale. Meanwhile, securing material facts requires adherence to a specific sequence, a standard of proof, and an immutable record. This presents a simple problem in need of a solution.

The Role of AI in Securing Material Facts:

Enter the Innovation Bank—an initiative that leverages AI to curate and integrate validated material facts across diverse physical conditions, preempting the risk of disinformation. By acting as a formidable gatekeeper, this powerful system establishes a filter through which disinformation must pass to attain credibility. The value of such a “disinformation filter” transcends individual projects and encompasses the entire economy. Building this AI-driven solution is not only feasible but also imperative.

Join the Movement:

To learn more about the projects spearheaded by The Innovation Bank and contribute to this transformative endeavor, reach out to The Ingenesist Project. Together, we can construct a robust foundation that promotes economic stability, fosters material facts, and guards against the perils of disinformation.

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Do We Really Need To Fail?

Yesterday, I heard a report on NPR about the resource management department in North West Washington, in response to diminished funding – is certifying private boats for emergency duty in clean up, security, and rescue.  This is logical because nobody knows and understands the waters of Northern Puget Sound and The Strait of Juan De Fuca than the local tribes and others who ply those waters daily.

Today, I heard another report on NPR about how the City of Houston has gained far more from the demise of Enron than their existence.  Enron would recruit the top intellect in the country, move them to Houston and reward them for creativity and hard work.  The collapse of Enron released 4000 hugely talented people to the Houston Economy where many have started new businesses with remarkable success.

Vicious Circle or Virtuous circle:

I will not pass judgment beyond what these reports stated, except that there is something very valid about the “Knowledge Inventory” that exists in a community and their specific location.  The Jane Jacobs externality proposes that endowment of creative and educated people drives economic growth in a community by attracting investment and development, which attracts more smart people, etc.

Vicious Galaxies or Virtuous Galaxies

As the NPR reports suggest, the type of investment and development is dependent on the quality and quantity of knowledge assets that exist in a particular location.  Now, let’s extrapolate that to include all disciplines and talents of knowledge that exist in all communities and we encounter a stark reality that there is no knowledge inventory from which to build – except in the response to a failure such as the corrosion of government spending or in the wake of corruption and associated corporate collapse.

Yes, it is often said that adversity brings out the best in people, but is that really necessary?  Do we really need for the whole rig to collapse before we emerge from the ashes? 

We need to build the knowledge inventory today.  People need to know what people know – that is where the truth lives.   We need to know what can be built from the parts that we have in the bin.  We don’t want to try to build something from the wrong parts any more than we want to misallocate the right parts to build the wrong things.  In any industry in the world, none of these situations would pass the stink test, yet this is the state of our communities today.  We don’t even know that we don’t know what we know.  Seriously, is anyone else wondering about these things?

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Social Media Staffing: $3 Trillion Opportunity

As the World Churns:

The cost of placing an employee approaches 30% of that employee’s salary.  In fact, most head hunters charge roughly 30% of the employee’s salary to find the right person to fill the job opening for a client company.  Sometimes the employee is recruited from a competitor causing a net productivity loss in a market due to disruption or “churning”.

The company also has a choice of hiring with the internal HR department.  In this case, they are paying HR personnel to place ads, review resumes, check references, and conduct interviews.  These costs can also run into a substantial percentage of the new employee’s salary.  From previous articles, The Ingenesist Project suggests that these methods may not even result in the best employee selection:

The Unnecessary Market Friction

Text only Résumé is no longer adequate in our complex business environment due to subjectivity, semantic inconsistency, and the time and resources required for fully interpreting the content. The cost of delivering a résumé has been decreased by computers and the Internet while the cost of reviewing the résumé has remained constant.  Keyword search programs often eliminate excellent and creative candidates based on criteria not related to the candidate.   Managers tend to hire what reminds them of themselves – from world that no longer exists.

Estimated wasted productivity:

Suppose that 50 Million professionals; doctors, lawyers, engineers, professors, administrators, managers, and directors are employed in the United States.  Suppose that the average salary is 70,000 per year.  Suppose that they change jobs 3 times in their career and that the cost of placement is 30% of salary, or $21,000 dollars per placement.

The total cost is $ 1 Trillion dollars multiplied by 3 placements in a career equals nearly 3 Trillion Dollars.  Now, divide this by 30 years in a career and we can see that 100 Billion dollars worth of human productivity are spent every year not necessarily matching the most worthy employee to the most worthy employer.  This does not include moving expenses, salary increases, disruption costs, or inflation.

The probabilistic electronic résumé system

The Ingenesist Project specifies a vetted knowledge inventory that resides in Social Media. The knowledge inventory, probabilistic electronic résumé system, and innovation bank together would make the paper and language Résumé obsolete.  The percentile search engine would scan the knowledge inventory of the corporation and scan the knowledge inventory of the labor market and seek matches with high probability of increasing net productivity – not unlike Amazon.com predicts what book you would like to read next.

Options, options, give the market its options

election criteria can be adapted to reflect social priority such as reduced traffic congestion or to reflect strategic objectives such as incremental or blue sky innovation requirements.  Trades across companies and industries can occur opportunistically not unlike interdepartmental transfers or even like trades in professional sports are conducted today.

Companies can manage peaks and valleys in employment by trading across diverse industries. avoiding layoffs all together.  Employees that can stay productive in diverse industries transfer new ideas and discover transferrable efficiencies.  Experience gained would be added to the knowledge inventory to enhance the probabilistic résumé inventory available for continuous improvement and tangential applications of innovation enterprise.

A virtuous circle? … A 3 Trillion Dollar opportunity nonetheless.

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The Global Financial Crisis; The End Game

The year is 2024, no burning cities, no mass hysteria, no bread lines; the economy is on an exponential growth curve.  It took a while, but the financial crisis of ended in an anticlimactic sort of way.  Sure, lots of hedge fund bankers became unemployed, some went to jail, and many companies once deemed titans of industry have disappeared, but nobody seemed to notice much anymore.

Government debt has been eliminated and Wall Street has become the steward of what has become an Innovation Economy rising from the ashes of debt economics.  The transition, in fact, was surprisingly smooth.  Social Network applications such as Facebook, Linkedin, G+, and many more, developed a clever way to make knowledge tangible outside the construct of Wall Street and the traditional corporations and people began trading knowledge like currency.

When inflation hit, the dollar started to fall in value, people began trading a different currency called the rallod (dollar spelled backwards).  The rallod was backed by future productivity resulting from innovation rather than future productivity supporting debt.  When the dollar finally crashed, it pegged to the rallod and the economy began to grow again with an astonishing, yet peaceful, transfer of wealth and power to open sourced self-regulating communities; i.e., society in general.  The vicious cycle of debt economics was reversed just in time.  It’s still hard to believe what happened.

Today the engines of economic growth are tens of thousands of hot new start-ups that exist in the form of “Value Games” related to specific technology areas rather than the old corporation model.  They automatically cluster around a technology and spin off other start-ups at an incredible rate in a strange nesting arrangement called the “tangential innovation” market.  Most innovation is open sourced because the “Patent” (and protectionism in general) is no longer the center of the innovation finance universe, rather, the “secret sauce” of social, creative, and intellectual capital is the most valuable asset today.

About 15 years ago, something resembling the human genome project mapped all knowledge in the form of social, creative, and intellectual capital that exists in society to a very high granularity.  An API standard was created to represent knowledge assets like packets of code that are processed by a community algorithm. The CV/resume is an old bar joke now. Thanks to a visionary government, 1st amendment protections were built into this inventory with anonymity laws and privatized TOU; creators own what they create.

An open source percentile search engine was created to enable entrepreneurs to build unique collections of knowledge assets and predict the probability that various combinations of these assets could successfully execute a business plan.  High diversification induced hyper-innovation around technologies and the resulting innovations are spun out to be reabsorbed by different and diverse communities of practice in continuous iterations forming a virtuous vortex of new systems, methods, and solutions.  Sketched out, these arrangements looked like electrical “integrated” circuits.  Wealth creation is intense.

Since the knowledge inventory has mapped all knowledge and the Percentile Search Engine calculated probabilities and scenarios, the Innovation bank formed to make most worthy and optimal matches between knowledge surplus and knowledge deficit in a community.  Since the probability of innovation success has become predictable, innovation risk is now diversified away.  Innovation insurance products abound. With near-zero innovation risk the cost of venture capital has approached 5-7 % instead of 500-2000% of less than a decade ago.  Banks now issue innovation bonds on the public market to finance innovation in society.  For an investment of such high return and such little risk, participation is near universal.  This created another virtuous circle; the more innovation that occurs, the more money is created.  The more money that is created, the more innovation occurs.

Instead of having jobs, many people in a geographic area are pinged by the Percentile Search Engine which calculates the likelihood that their interaction together will increase the probability of successful execution of a business plan when combined with other knowledge assets.  Instead of earning wages, people collect micro-royalties specified by contracts on capital asset sub-sections. These micro-royalties add up to substantial residual income enjoying a multiplier effect as their work continues downstream over their lifetime. The government funds social security through it’s own innovation ventures. Service workers such as police, teachers, fire fighters, nurses, local merchants, etc., are key beneficiaries because of their impact on the community is directly associated with productivity.

Many of the senior knowledge workers have determined that they can earn more money by taking an equity position in their students, and the students of their student.  Unlike a decade ago, pyramid schemes in innovation economics are sustainable and generate astonishing profits.  Mentors have entered the landscape in vast numbers and apprenticeships have become abundant.  The income potential for the “creating creators” boggles the imagination.   Again, a virtuous circle has formed between the mentor and the student. In aggregate, wisdom is being retained, refined, and transferred efficiently throughout social networks.

University “degrees” have disappeared in favor of unique combinations of knowledge assets that are continually SEO’d for best Percentile Search Engine Placement.  People do not compete directly, rather, they compete with the Percentile Search Engine in the local market place by cooperating among each other.  As owners of their knowledge assets, the entrepreneurial spirit is ubiquitous.  No individual has either a monopoly or an identical knowledge set as anyone else.  Everyone has perfect information about the knowledge assets in a market.  People are pinged for different reasons at different times for different rates depending on supply and demand.  Continuous education is a social event in itself, often mistaken for recreation!

Even the poorest areas of the planet are getting into the action because, by definition, the parts of an economy with the highest potential for technological change correspond to opportunities that return the highest dividends in an innovation economy.  Arbitrage opportunities between master and oppressor have disappeared worldwide.

Like a neural network, the economic system of tangible knowledge is self-correcting, fault tolerant, and self-regulating.  Governments across the globe tried to stop the social network driven innovation economy – but they eventually gave up.  It was like trying to stop water; it flowed between the cracks and simply eroded the barriers.  The most incredible outcome is that innovation now reflects long term social priorities instead of short term Wall Street priorities.

Oil production has been replaced by superconducting wind turbines, global temperatures have stabilized, all cars are electric or “water leakers” (as the hydro’s are affectionately known), many diseases have been cured, and the list goes on.  It is hard to believe this happened in only 12 years.  Then again, the Internet had only been widely used 15 years prior to 2009.  Did I mention, we’re finally sending a multinational expedition to Mars…

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The Capitalization of Knowledge – Innovation Bonds

With a computer readable knowledge inventory, local communities of practice, a percentile search engine algorithm, and the virtuous circle of finance, then future innovation cash flows can be predicted much more accurately and with far lower risk than with, say, the venture capitalists acting alone.

Were risk is predictable, cash flows are predictable and the portfolio of innovations can be diversified so if one business fails there is an equal chance that another will succeed and the risks cancel each other out. The cash flow of all the innovation enterprises can be combined into a single large steady cash flow. Just like companies do to raise money for expansion, the innovation bank can issue innovation bonds on the open market. The revenue from selling Innovation Bonds can return to the community to finance innovation and fund wealth creation at very low interest rates compared with venture capital today.

With a lower cost of venture capital and a system that supports open source innovation an astonishing amount of innovation will be unleashed in society.

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The Capitalization of Knowledge – The Virtuous Circle

We have set up a new game for entrepreneurs to play called Innovation Economics. We have defined a currency and an inventory where knowledge is visible outside the construct of the corporation – and resident in social networks. We have also described a way for entrepreneurs to visualize the knowledge asset and the supply and the demand for knowledge assets. We have given them a tool for matching assets for profit. We have described how social networks will keep the game fair. We have outlined the structure of new business plans; the brain storming session, product development cycle, the neural network, and the multiplier effect. Future businesses will be built upon combination of these four structures and whatever else entrepreneurs can dream up.

We have described all of the pieces needed to form a new economy. Now we need to connect with the financial markets so that knowledge is readily convertible to other currencies.

For review;

With the financial bank, the entrepreneur assumes that they have the knowledge to execute a business plan and then they look for the money. The risk is that the entrepreneur does not in fact have enough knowledge.

With the Innovation Bank, we assume that we have the money, and we go to the bank to search for the knowledge. The risk is not having enough money to purchase sufficient expertise.

With both banks acting together – the risks cancel each other out and the innovation economy tends toward a ‘risk free’ cycle; the more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can assemble.

Now we have a virtuous circle. The more knowledge you have, the more money you can borrow; and the more money you have, the more knowledge you can borrow.

There is no shortage of money circling the globe – only a shortage of risk free places to put the money. The innovation economy is an environment of very high return for a very low risk and will attract a great deal of money to fund innovation enterprise.

Earlier we demonstrated that money represents human productivity. It follows that the places that have the greatest potential for increasing human productivity can create the greatest amount of wealth. Therefore, poor areas and marginalized economies with under utilized knowledge inventories or the injection of specific knowledge inventories, become the highest ROI centers in a risk-free system; a condition the explicitly favors the wealth equalization rather than wealth disparity.

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