Friday, 21 October 2011

Give us the money

There's a view that financial resources are a necessary pre-requisite for creativity and innovation. Some say that commercial firms won't produce anything of value unless they can find a way to monetise it.

One curious exception to this idea is the development of the internet. 'Necessity is the mother of invention' seems to have been a driving force in opening up communication between people via computer in a variety of settings. Academics and research scientists at CERN contributed to a mixture of piecemeal developments that eventually led to what we use (and take for granted today):

Tim Berners-Lee was one of the pioneers at CERN and often credited as one of the fathers of the world wide web. He has recently spoken at UK Parliamentary sub committees discussing the idea of a 2 speed internet, charging people a premium for faster data transfer. He argues passionately that web innovation developed (and continues) through a culture of cooperation, free exchange of ideas and collaboration. He describes it as a Worldwide Open Data Movement:

The European Court of Justice has recently banned the issuing of patents for embryonic stem cell research. Research companies protested that this would set back the timetable for research into cures for a range of chronic and life threatening illnesses. News reports warned that scientists and their research could migrate to other territories, where there were no legal barriers to the work. They hinted that profits from drugs would benefit other economies than our own.

On the one hand there is growing criticism of the ways in which drug companies have profited from harvesting tissue samples, stem cells and genetic code for their work, without rewarding individuals who contributted to them. Henrietta Lacks is a famous example of someone who benefitted mankind through her tissue samples, but did not gain any reward for her family.

Lawyers have already quietly shifted their strategy to patenting the drug therapies rather than the stem cells, so the argument seems to be specious.

Dennis Ritchie is another innovator who gives the lie to the 'money first' premise of creativity and innovation.

Dennis Ritchie and Ken Thompson worked for Bell Labs (at AT & T) and were designing a complex muti-user operating system called Multics. Bell Labs stopped the project, but Ritchie and Thompson decided to continue building the operating system themselves and came up with Unics (which became Unix). As a telephone monopoly, AT & T were not legally able to sell computer products.

'So the researchers in Bell Labs did what geeks do – they gave it away to their peers in university research labs, under a licence that permitted the recipients to modify and improve it. In doing this Ritchie and Thompson unwittingly launched the academic discipline of computer science, because university departments were suddenly able to give their students software that was not only powerful (and malleable) but also free. The result was that virtually every computer science student in the world became a Unix geek in the course of his or her education.'

Graduates took their Unix experience with them to industry and continued to modify and improve it in commercial applications.

This was the catalyst for several developments. Richard Stallman founded the free software movement (GNU), following Bob Wallace's Shareware. Linus Torvalds modified Unix and released it as Linux.

C++ and Java were built on the C language that Dennis Ritchie devised. Steve Jobs used Unix as the basis for his NeXT computer workstation. He took this experience back to Apple. OS X is built on Unix and and powers all Apple products.

Money does come for good work, but not necessarily for the original patented design. It seems that holding on tight to an idea only seems to squash it, rather than sharing and helping it grow.

Sunday, 16 October 2011

War on terror?

The USA give an annual subsidy of $3bn to an independent and affluent state. Much of it is in the form of military hardware.

The policy supports the line that Israel is conducting a war on terror.

This is part of state supported military action:

Destroying the means for a population to feed themselves and earn money from food crops does not fit into my perception of a war against terrorism.

However it does support the idea that Israel wishes to systematically remove Palestinians from land and colonise it for Israeli (non Arab Jews). That reminds me of something my parents' generation fought against as part of a world war.

Such action will continue unopposed until the USA recognises that their subsidy is used to displace, starve and destroy one ethnic group.

Friday, 14 October 2011

We're all in this together.........

UK politicians tell us that cuts and economies are painful but necessary. We need to reduce government debt and deficit to secure our position in world markets and ensure that cash continues to flow into the UK and through the economy.

So far so good.

We are part of the global capitalist economy. The focus is on private ownership of the means of production, creation of goods and services for profit in a market. Profit enables businesses to expand and grow. Without profit, companies must cut their coat according to their cloth and trim expenses.

Some UK banks were in trouble and needed government assistance to survive. Some of them stopped paying dividends to shareholders until they were in balance and had made efforts to repay government loans. I have written before about interesting practices used by Bank of Ireland (supported by the Irish government), which included some sleight of hand in dealing with bond holders (who had purchased bonds in other financial institutions, only to find that BOI had taken them over and intended to squeeze them to the limit.)

This post reflects on an interesting new breed of UK capitalism.

It seems that when they don't make a profit but losses, some organisations reduce shareholder dividends, staff wages, capital spending and other outgoings. At the same time, or after a suitably discreet interval, they increase executive pay. A lot. More than the rate of inflation.

Here's the comment of one seasoned investor on this practice and his lone cry at shareholder meetings challenging the economics and ethics of it.

He quotes the reply of one non-executive to his challenge:

'Well .... you do understand it is the Chancellor that you need to blame for all this !!? You see he raised the tax up to 50% last year on all pay after £150k.'

So remuneration committees ensure that executives don't have to tighten their belts in a tough economic climate, unlike everyone else in their organisation.

Mothercare is one company that experiences this pattern.

Will Hutton, editor of the Observer, is said to be in the same boat.

Protests in the United States may spread to the UK. The focus over the Atlantic is banking profits at the expense of ordinary people's jobs. Here the socialisation of capitalism at executive pay levels seems to be a greater concern. If excessive executive pay empties the coffers of the company, the ship is sinking and the boardroom occupants are taking on board more water. Action by ShareSoc is focussed on government regulation. They want to end the practice of directors voting 18x the salary of ordinary workers for new directors and CEO (who probably had nothing to do with any profits generated). Sharesoc are here.

My complaint is a behaviourist one. B F Skinner taught us about reward and punishment through his animal experiments.

If you reward success, it's more likely to continue. If you reward failure, there's no incentive to improve the business or evaluate risk before taking action.

Clearly we're NOT all in this together.

Thursday, 6 October 2011

Steve Jobs the common sense entrepreneur

That's the view of Steve Wozniak, co-founder of Apple computers.

Woz describes Steve Jobs as someone with a very quick mind, who thought things through. He knew when something would and would not sell. Jobs also had a clear notion of when to be ahead of the world and when to be a follower.

Woz describes Steve Jobs' legacy as someone who built Apple into a strong company with great products. The distinction is that people love the products and enjoy doing their work on them, which is rare in technology. Fans associate Steve Jobs with this because he was a manager of the tiny little details that mattered. Above all, says Woz, marketing was his greatest strength.

In an interview with the Washington Post, Woz described the last phone conversation he had with Steve Jobs. He was clearly weak, but Wozniak never asked about personal issues. Jobs reminisced about the old days and sounded his old, boyish enthusiastic self about the future and the impact that Apple had made on the world.

Eric Schmidt (of Google) has some interesting memories of Steve Jobs here.

Mona Simpson, his sister, delivered the eulogy here.


Monday, 3 October 2011

Israel versus Israel

Where do people in the West get information about the situation in the Middle East?

Talking to many Jewish people in the UK, I get the impression that some rely solely on news that is filtered, particularly by commentators from the East Coast of the USA. Few seem to have heard of Israeli English language newspapers like Haaretz, much less have read them online. This enables many to take the view that Israel has a homogenous and completely negative view of relations with Palestinians and see Israel as a powerless victim defending itself against those who seek to destroy the state.

Swedish filmmaker, Terje Carlsson, has made a film about internal resistance to the harsh treatment of Israeli Arabs and Palestinians and the increasing occupation in Gaza, the West Bank and East Jerusalem.

He charts small acts of resistance to settlements and the humiliation of Palestinians crossing internal borders to work, study or attend hospital. Israelis involved are not just radical students, but rabbis, former soldiers and concerned middle aged, middle class people defending human rights.

The Israeli army protects Israeli Jewish settlers and demonstrators and activists risk their lives in taking action. Participants describe it as their moral obligation to demonstrate, to challenge the actions of their government.

RT televised the film, which is available here:

When asked about the response of Arabs and Palestinians to his film, Carlsson speaks of hope fostered by the knowledge that some Israelis want to cooperate and live peacefully together with them. This runs counter to the current charm offensive being mounted by Israel and the attempt to suppress criticism of their policy in the region.