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Tag: incentive

Municipal Governance On The Blockchain

treesviewAs a member of the City of Edmonds Planning Board, I hear a lot about what the public wants and what they do not want from their local government.  As a seaside town, property values can be greatly impacted by water and mountain views.  As such, there is an incentive to remove trees blocking views.  In other parts of town, the urban forest is extremely beautiful and there is great incentive to preserve trees from high density developers. So what happens when a town wants to regulate trees?  In our case, it was NOT an Edmonds kind of day. Perhaps it’s time to try municipal governance on the blockchain. 

Problem:

Many municipalities are adopting laws which may restrict the cutting of trees on private property in response to factors such as canopy loss, erosion control, wildlife protection, urban forest management, development, view amenities, climate change, etc.; or to enhance tree cutting to make way for new development and associated tax dollars. However, most models for tree regulation are unpopular with their imposing fines, permit fees, high density development, and government regulation on private property. Yet, these fines and permit fees are required to fund a bloated top-heavy tree code in the first place!!

Proposal:

Incorporate cryptographic and/or block chain technology to create a web-based public ledger and tree inventory that everyone can see and anyone can audit. By adding simple gamification features, the tree code may become self-regulating as players interact with the game. This may minimize government involvement, except in the most exceptional circumstances.

Discussion:

Think of it like a huge public accounting ledger that everyone can see, but can only edit their own data.  Instead of accounting for money, the ledger accounts for trees.  The game starts when a property owner registers his or her own trees on the ledger.  The city will issue cryptocurrency based on the number of tree units the property owner claims. These tokens would go into an electronic wallet on a blockchain associated with the property parcel number.  Each year, the resident will be issued more tokens by the city as their trees grow – the value of the tokens is derived from climate data or LIDAR surveys.  Some years may increase token values, some years may decrease token value based on estimated growth rates.

When a person wants to cut down a tree, they need to spend tokens to do so. Ideally, A property owner would not cut down more than they can grow. If they don’t have enough tokens, then they need to buy them from adjoining neighbors who are also trying to grow more than they must lose. If trading is restricted to adjoining properties (not commoditized like carbon credits), then community actions must be agreed upon by neighbors to settle any difficult situations.

The city would rarely get involved except to peg the value of the tokens on climate data. Algorithms programmed into the public ledger would manage the token values and electronic wallet exchanges automatically.

Shifts incentives

This sounds innocent enough.  But in reality, it changes all of the incentives that we are now attempting to manage with convoluted linear rules and imposing government regulations on private property.

For example,

  • It rewards tree preservation.
  • It rewards early and active registration,
  • It is self-enforcing because neighbors have a vested interest, and the ledger is public.
  • It is self-governing because neighbors need to agree on price.
  • It is self-limiting – an area cannot get rapidly stripped without progressive costs.
  • If a developer tries to take out a lot of trees, the neighbors can make it very expensive to do so – or negotiate concessions, etc.
  • If an arborist is needed, then the business case exists to hire one.
  • The municipality is able to referee disputes and establish coin allocations based on canopy quota or weather conditions, etc.
  • It provides tree liability (or asset) disclosure at property sale.

Business case

Today, proposed tree code regulations expose the citizens to cutting fees as high as $1000 dollars per tree. Violations for unauthorized cutting can approach $3000 dollars per tree. This money is required to fund a tree department that may consist of up to 3 arborists (for a small seaside town in Washington state; pop. 50,000), a permit reviewer, an enforcement arm, and possible court challenges. It could cost a million dollars per year to have an effective tree code for a city under 100,000 people, or 10 dollars per person per year just to regulate.

A price point of 1 dollar per citizen per year would therefore not be an extraordinary amount of money for a city to resolve a difficult social problem with modern technology.   Several thousand small cities dot the American coastline making this a strong candidate for private entrepreneurial partnership simply to maintain and audit the public ledger.

Conclusion:

A new generation of web applications and cryptographic technologies would allow this activity to happen autonomously. No new labor is required. No regulators are needed, no special penalties or enforcement mechanisms are required.  The city can stay out of the private property tree business completely.

Technically, this is called a multi-agent algorithmic game on a decentralized autonomous platform.  The difference is that today, these things can be made to look and feel like a game that is fun to play – people may play it. How many other Municipal Governance functions can be self-governed on a blockchain such as motor vehicles, animal control, gun control, schools, parking, water rights, energy, executive power, or any intrinsically valuable shared community asset.

 

BizDev with Cascading Info Game

Social Flights is a complicated game.  Aviation is a complicated business.  This makes Social Flights a challenging business model as much as a great opportunity for those who can figure it out how to play for keeps.

The Challenge

The challenge is to bring on as many as 5000 independent Travel Tribe leaders distributed broadly across a wide geographic area.  Their task will be to strategically build flight plans for private aircraft in their communities. Community leaders will be compensated financially for driving revenue … much is common to a traditional sales channel.

However, each of these community leaders will have already accumulated a vast set of strategic knowledge and experience that can benefit Social Flights across the system. Likewise, Social Flights needs to bring each of them up the ladder of domain specific knowledge in the aviation business.

For compensation, Social Flights offers a tiered affiliate program that pays out various levels of commissions on flights booked according to the affiliate’s tier.  One concern is that this strategy may not create an incentive to share information broadly if one is protecting their own tier standing or their own order of influence.

Cascading Information

Another approach would be to use a cascading information system.  This is a gamification theory that suggests: information should be released in the minimum possible snippets to gain the appropriate level of understanding at each point during a game narrative.

Initially, information would be released by social flights in our initial training program.  Later, other players of the game can release information to each other in specific packets defined by the flight scenario.  Such packets of information can be rewarded with other packets of information – or access to more scenarios. The Cascading information theory promotes loyalty, engagement, influence, and time involved in the game of building flight plans.

Gaming the game:

From the onset, Social Flights encourages gaming the game.  This means that we expect to learn a great deal about our business by watching other people play it.  There are far too many scenarios and permutations of business strategies for us to predict how and where they would apply.  All we can do is specify a baseline game scenario form and watch the ways the game is gamed.

In a sense, Social Flights would also be subject to the Cascading Information Theory, thus demonstrating how a corporation would enhance their own engagement, loyalty, influence, and time-quality in the communities where they operate.   

(reference: Gamification.org – wiki; Cascading Information Theory)

The Mashup of Gamification and Collaborative Consumption

I found an interesting article by Kim Gaskins at Sharable.net titled: Where the Game Layer Really Counts: Sharing & Peer Communities.

I sensed some resigned frustration from her as she reflected upon a somewhat trivial nature of current innovation in this new social genre called “gamification”. Predictably, in the end, Gamification amounts to little more than feeding the advertiser’s insatiable addiction to that extra dose of personal data coursing through the veins of unbridled consumption capitalism.

She is not alone.

In reading her article, I was, however, stuck with a particular stroke of clarity. Kim provided the following diagram showing the intersection of Social, Economic, and Environmental reality that she calls the best gaming opportunity for business and societal benefit.

This is a very important observation. Kim identifies the intersection of three “communities” and suggests that a game opportunity may exist.  Even though the article appeared in Sharable.net community blog, she stopped short of saying “This is where you put the shared asset”.  So I’ll say it for her:

This is where you put a shared asset.

At the Ingenesist Project, we developed something called The Value Game that we are testing in several different business models. The value game is very simple: Three communities are brought together to interact around a shared asset.  Each community interacting with each other, while also acting in their own best interest, would be acting in the best interest of the asset.  The result, we expect, will be the preservation for optimum utilization rather than forest-to-dump consumption.

Meanwhile, the fact of interaction between these communities creates “social currency” that articulates the true social value of the asset. Where social currency is readily convertible to financial currency, the paradox of market capitalism is broken.

Kim’s observation is important – she is talking about a marriage between collaborative consumption and gamefication.  People need to watch this mash-up very closely and we must innovate in this domain very rapidly.  We will need millions of value games playing out in communities across the world if we are to hedge the inevitable implosion of financial currency while also preserving our most valuable shared asset for future generations.

Thanks Kim – you are on to something very important.

Critical Value of Conversational Currency

Can the value of conversation fluctuate when compared to a “basket of conversational currencies”?  The translation is as follows;  If several conversations are taking place at the same time, does yours hold more or less value depending on the value of the others?

Same as a Lie?

If you ask a newspaper whose lead story was trumped by an unexpected celebrity death, the answer is yes.  If you tell a political activist whose rational message is lost to  more radical activists, the answer is yes.  If your speech is interrupted by a heckler, the answer is yes.  If you are caught lying about your Nuke Plant, the outcome is unintentionally the same – a loss of credibility, value, equity, and associated increase in risk, volatility, etc.

In today’s world of floating currencies, almost every currency rises and falls against other currencies at one time or another. But a currency that is persistently weak or continually falling relative to others presents a problem. If the dollar’s value were to continue to fall to new lows, eventually this would trigger rising inflation pressures. That’s because inflation can be defined as the loss of purchasing power of a unit of currency.

Inflationary Pressure on Conversational Currency?

Likewise, weak and falling conversational currencies are also bad for growth, since they scare away investment by another conversant. Who wants to invest time and knowledge in a conversation if there exists the real possibility that one’s investment will be eroded by a falling currency? At the very least investors require special incentives (i.e., premiums) to invest in an conversation with a weak currency.

Incentives Packages of Social Media Space

Weak conversational currencies are symptomatic of a variety of factors: cheap talk, lack of references, weak economic growth prospects, lack of confidence in the other participants, weak currency demand, and bad fiscal policies (e.g., wasteful discussion, high cost of participation, low quality venue or presentation). Strong conversational currencies, on the other hand, typically reflect tight topic control, vetting policy, strong growth prospects, confidence among participants, strong currency demand, and good fiscal policies.

The Critical Breath Mint

For better or worse, in order to “mint” conversational Currency, a discussion must be made accessible to largest audience possible.  The discussion must also be directed to those most “qualified” to engage in the discussion. When the value of the conversational currency reaches a low level threshold in either factor, the discussion ends with no resolution to continue and no tangential discussions taking place.  This can often be attributed to disruptive innovation making old conversations obsolete.  But it can also happen to worthy conversations infected by a parasite such as spam, hecklers, radicalization, flame wars, and emotional versus rational articulation, vendetta, sabotage, etc.

Critical Level of Conversational Currency

The critical level of conversational currency is where supply and demand cross.  The value of conversational currency will be determined by the ability to match the most worthy knowledge surplus with the most worthy knowledge deficit.  We use the financial analogy because the idea is the same – a currency is a currency.  Many of the same rules, methods, and calculus hold.  What is missing in Social Media are an inventory and accounting system for knowledge assets. While such systems are emerging on FaceBook, Twitter, Linkedin, etc.  Some intervention is needed to integrate a social media system we can bank on, literally and figuratively.

Matchmaker, Matchmaker, Make Me a Match

The $40 Billion Dollar Dowry

Every organization wants to attract the most qualified employees and match them to jobs for which they are best suited. The human resources department is responsible for matching a knowledge surplus to a knowledge deficit through the hiring process. Fortunately for them, there is no knowledge inventory in society and managers don’t necessarily know what they want.

Human resources, training, and labor relations managers and specialists held about 868,000 jobs in 2006. The following tabulation shows the distribution of jobs by occupational specialty:

Training and development specialists    210,000
Employment, recruitment, and placement specialists    197,000
Human resources managers    136,000
Compensation, benefits, and job analysis specialists    110,000
Human resources, training, and labor relations specialists, all other    214,000

An HR Generalist pulls an average income of about $50,000 per year; A Director earns up to $140,000 per year. The total HR national payroll is estimated at $40 Billion annually.

Commodity Management:

Human Resources creates the impression that people are merely commodities to be treated as expenses rather than assets; or at best, like office machines or vehicles, despite assurances to the contrary.  The HR profession is built on the assumption that people cannot manage themselves, that human behavior is random and intangible, the independent variables for success are always known by management, and that the key words on a resume is the best predictor of a good match.

Innovation Economics; the science of incentives:

Social Media is providing systems for people to organize and manage their own career.  True knowledge inventories are forming as social groups coalesce around standard taxonomies of professional practice outside the corporate construct.  Knowledge assets are being vetted in communities of peers and the resume is being replaced by a Social Network Profile and “Search Engine Footprint” which more accurately predicts the quality and quantity of knowledge assets.   In the near future, a predictive search engine will be able to predict the probability that various collections of knowledge assets can execute a specific business objective at a known cost.  Scenarios can be tested and compensation will reflect true supply and demand.

Superior Value Comes in Many Different Packages:

So what happens when top management meets the new Human Resources Training and Content Development Manager who was sent by the Social Networks Search Engine to build the new corporate Blog and Social media strategy – sporting facial tattoos, a nose ring, and a black kilt, and dreadlocks?  If the fact that a top manager is not comfortable with a person of a particular culture or lifestyle can be perceived as detrimental to the innovation capacity of the organization, that organization is threatening its own survival.

Don’t Shoot The Fiddler

The story of Fiddler on the roof centers on Tevye, the father of five daughters, and his attempts to maintain his family and religious traditions while outside influences encroach upon their lives. He must cope with both the strong-willed actions of his three older daughters—each one’s choice of husband moves farther away from the customs of her faith.  The story resolves with a slow acceptance of the new world and creeping redefinition of what love is and what love can be.

In an Innovation Economy, the perfect match is no longer determined by those inside the construct of tradition, rather, it is determined by those entrepreneurs on the outside redefining tradition – and  earning 40 billion dollars.

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