A Question Of Strategy

An anonymous commenter encouraged me to read the Martin Ford book The Lights In The Tunnel (available free in .pdf form here).

Chapter Two is titled "Acceleration" with the first sub-heading being, The Rich Get Richer, where-in Mr. Ford illustrates the process of technologic acceleration using the example of Bill Gates and the old daily doubling model (this time with pennies instead of grains of rice). I notice a logical fault in Mr. Ford's thinking though.

Mr. Ford asserts that as Bill Gates increases his wealth through continued expansion of the technology acceleration Microsoft contributes to, necessarily others become less rich as a result of the advancing automation of industry (and human labor occupation generally) made possible thereby (which Mr. Ford analogises as the titular Lights in the Tunnel growing respectively brighter or dimmer). This seems consistent with a purely technological process, but ignores the actual condition and process of wealth possession (or so I have read; no direct experience sadly).

While I am confident he theoretically could, I suspect Bill Gates can't remember the last time he balanced his own accounts personally. This statement requires a brief look at the process of "wealth". Fortune doesn't exist as stacks of material in a storeroom somewhere; even in the days when it did that was a temporary solution to a handling problem, not a model for economic activity generally. With great wealth comes the necessity to manage it, an activity that typically doesn't generate great wealth for it's practitioners ("bankers" - those who own banks - employ financial managers, not vice versa). Bookkeepers, who's work is Accounted for by others so that specialists in Investment can transact in Markets to obtain some degree of ownership in something to result ultimately in some financial gain to Bill Gates.

See the problem here? Mr. Ford's Tunnel model fails to acknowledge the universe of financial betterment attendant to Bill Gates' richness. Not only does this illustrate the severe limitation on modeling-as-prognostication, it calls into question just how well Mr. Ford understands the strategy of human wealth.

Just to get this out of the way, when Bill Gates finds himself a bit short of cash of an evening, he stops at a convenient ATM just like most other Americans do. Unlike most of the rest of US, if he's thinking ahead he sends an employee to do that for him or has his bank (quite possibly literally his) deliver it to him. And Mr. Ford seems to think that Bill Gates is only about half way through his computer/technology related exponential growth, too.

The strategy of wealth is to create a series of interconnected mechanisms that each independently work to increase their net worth while avoiding inhibiting the efforts of allied efforts doing so themselves. Net worth, the value of something after removing the expenses incurred from maintaining and operating it, is one success standard that works against the change process due to the desirability for stability to nurture continued strength of alliances and control of costs in pursuing a chosen strategy. Mr. Ford's Tunnel model doesn't seem to even recognise the effect such contrary interests exert on market transaction decisions.

The Bill and Melinda Gates Foundation exists to keep Bill and Melinda in a sufficiency of the folding stuff and does so by creating as many opportunities for others to do so for themselves as can be arranged through the efforts of as many others as Bill and Mel can comfortably keep track of. Not only does this call into question Mr. Ford's financial example, it casts doubt on his "overcoming automation" concern. Agreed that automation removes humans from an existing application within the job market, but there without doubt exists mechanisms whereby they can adapt to changing circumstance - even from the most extreme of disadvantage, thanks to Bill and Mel among many others. Wealthy people (which condition doesn't actually include wealthy companies/corporations all that well) don't hoard their gains in a vacuum; they employee other people, both directly and at often surprising remove, to perform that process to their mutual benefit. The human psychology of "control" is intimately involved and any examination which doesn't take that into account is a profoundly flawed model.

None of which makes Mr. Ford's book a failure. His point about a lack of examination of the process such changes effect on financial and economic considerations is well taken. As too is his direction of attention on the short-term costs such a process inevitably levees on individuals. I look forward to reading his prescriptions in this area of concern especially.

It is a strategic maxim that Opportunity = Risk. Indeed, it is the emergence of the latter that creates the former. You can't have the one without the other and it is this which distinguishes Opportunity from Chance. Accept this most fundamental condition of human existence and you free yourself from useless resistance to change to concentrate on adaptation of your personal circumstance to benefit instead.

Addenda: Mr. Ford's Tunnel model posits Bill Gates as a single market source and uses the market transaction of a $50 cell phone sale as example; behind Door "A" is Bill Gates, behind Door "B" is tens of thousands of potential individual sales. Since Bill Gates (through his dominance of other's purchasing decisions by way of their financial relationship) represents a potential single sale of tens-of-thousands of phones on his own individual decision, I choose Door "A", Mr. Ford, as doing so potentially represents a reduction in my transactional costs by an order of tens-of-thousands to one. None of which precludes my yanking open Door "B" as well, you know. People like Bill Gates are simultaneously both a single point of sale and a group purchase opportunity, a circumstance Mr. Ford's model doesn't address very well. Which is more a failing of models than anything else.