Angel investing

Posted on Updated on

No matter how genius your idea is, or how lucrative it’s potential, success will never be measured as a function of labor. How could it? How do you measure the labor investment of a good idea? Watts? Joules? Calories, British Thermal Units? Do you count the man hours spent at the cocktail/beer/pizza/video game party that generated the good idea?

The point of the Capitalist system is to make it possible for you to bring your idea to profitable fruition. But before that happens you are a drain on society. It’s true. You wear clothes you didn’t make. You eat food you didn’t grow and live in a house you didn’t make. You are a parasite. This is how we all start out. As the ultimate users.

In order for you to be successful you need someone else’s money. Often it’s a bank but, generally, in the case of start ups, it’s an angel investor, one of the flavors of venture capitalism. Someone will come by and shower you with millions of dollars on the hope you become profitable.

So congratulations. You got your seed money. Now you’d better run. Run like never before because you’ve officially began your cash burn. You will burn that cash until it’s gone. Hopefully by the time it disappears you’ve turned a profit and your company has a life of its own. It’s become self-sustaining and productive.

So why did the angel invest with you? Was it altruism or philanthropy? No. And we don’t pretend it was such. It was a cold-hearted and cynical ploy dedicated to obtain wealth. And we’re glad they did it too.

Giving someone the resources they need to succeed is not about “fairness” or “justice” or “compassion”. It’s not something people do because they are moved by plight or circumstance, or because they want to make the world a better place. They do it, in the case of business, because of enlightened self interest.

It’s easy to think of the poor as users and losers. Sometimes that’s fair. Sometimes it isn’t. The point is that it doesn’t matter. Everyone starts out as a parasite, even if it’s just you attached to the uterine lining of your mothers womb draining her physical resources. The concept of the angel investor goes to giving to others based on profit motive. When we think politics or social policy the profit motive is still there but it’s less direct. Some folks never get their angel. The never get to a place of self-sustaining profitability. However it would be the height of arrogance just to castigate others for what we see as their failings rather than as an investment opportunity. It’s why we take the high road and the long view. Because wealth creation can’t happen without it. Unless you can create a self sustaining and profitable individual it represents a net loss for our society as unrealized gain.

Think of it this way. Wealth is built from being building things. Houses, cars, bits of code, whatever. If you have a large group of people failing to live up to their economic potential then we lose out on capturing a part of the wealth they generate. This is how civilization works. People working together for mutual benefit and enlightened self interest. The real world however has created a maldistribution of resources that is ultimately self-limiting unless we can shatter the bottle necks. In that sense we’ll need an angel investor. Lots.


Why the “Socialists” are winning: Education

Posted on Updated on

So why are the socialist winning?  I use the term socialists loose enough to encompass all the vaguely left of center Democracies in Europe and around the world.  In truth there aren’t nearly as many honest-to-god socialists as conservatives would like to think, especially since they’ve made “socialism”, however it’s defined, their primary boogeyman over the last 50 years.  So when it comes to Education and other key metrics of Civilization why do left leaning philosophies tend to do so much better than the exceptional American ones?  Well, the short answer is that they’ve been caring more and longer and more cohesively than Americans have.

There are two ways to look at American education.  From the top down everything looks incredible.  We’ve got wonderful fantastic (albeit expensive and sometimes useless) colleges and universities.  Millions of students every year graduate with an amazing education.  If you look at the TOP, American education is world class.   Thanks in large part to 19th century industrialists, some anti-Communist panic caused by sputnik, and the ability of Universities to use large endowments to make obscene amounts of money.  The Federal government also funds hundreds and hundreds of billions of dollars of research all across the country which also makes a University education utterly fantastic.  Is the University system in desperate need of reform? absolutely but that’s a topic for another post.

The other way to look at American education is from the bottom up.  What happens when a child enters an American school for the very first time?  How do they grow and mature for the next 12-16 years?  When you measure your average  child how do we stack up? Poorly.  On reason is if don’t have the resources to live in a posh neighborhood… well then, It sucks to be you. Moreover, neighborhoods with strong cultural and ethnic minorities have suffered from generations of malicious neglect.  Nations in Europe and increasingly Asia aren’t less poor, or less racist, or better parents, but they’ve been working on building a national paradigm for these students and we’ve only just started.

And We really have only just started to notice.  How come our schools are worse now than the idyllic of Leave it to Beaver?  They’re not.  They’re better.  A lot better.  The art of teaching hasn’t declined it’s been in a constant state of revolution and improvement for 50 years.  The difference is that we’re just now starting to care about students who don’t look or act like the Cleaver family.  A student has behavioral difficulties in school?  no problem.  They can just leave to make it on their own in the world.  In the ’50s that wasn’t hard to do.  Now it’s impossible with long term expensive social ramifications.  Your school didn’t have the resources to teach poor kids or kids of color?  no problem.  Let them work in the fields.  An option that was never really viable.  Your child didn’t have the incredible force of will to maintain the austere and brutal discipline and long pointless hours of rote memorization that was classic old school methodology?  They didn’t have to endure that to succeed in the world.  Did your child have a radically different way of interacting with the world physically and mentally?  Hell, forget school.  We’ll just lock them up in a nightmarish prison (<– sadly I’m being very literal here).   The point is they were uncounted, untested, and ignored on a national and social level.  Now we’re beginning to notice.

There are problems aplenty.  And solutions to sift through.  But we are through demanding things.  Let us no longer demand action or redress.  No more demanding time, attention, and money.  I’m tired of demanding change.  Instead I choose to offer.  I want to offer my time and expertise.  I want to offer my money through taxes or levies.  I want to offer my encouragement not only to the teachers in my community now, but future teachers.  I want to offer collaboration between members of community and teachers when it comes to art, science, math, language arts, literature and more.  I offer my forgiveness for every imagined slight and annoyance that I not only feel for you but your whiny ill mannered children.  I suspect I’ll have to offer that one a lot.  You may have to forgive some arrogance and umbridge on my part.  I want to offer a new dialogue and a path out of relentless mediocrity and stagnation.  And I want to offer you the opportunity to join me in a more positive upward focused perspective

What I hate about the poor

Posted on Updated on

Do you know what I hate about the poor?  That the juxtaposition of true suffering and my own comfortable lifestyle makes me confront my own mortality and a place in a universe composed of a cruel and bitter irony.  I hate that my discomfort with the poor is miniscule compared to their own discomforts and yet I’m still selfishly worried about my own feelings. I hate that my selfishness equates to enormous hypocrisy in the area of David-is-basically-a-good-person style of thinking.  I hate that there’s nothing I can do to fix poverty on my own.  I could beggar myself and still not make a difference, I could run for political office and lose, I could set up a charity and even if it was more wildly successful than any other charity in this history of the world I’d still only make a small dent in the levels of poverty.  Don’t get me wrong, I don’t think that poverty is an unsolvable problem, I just don’t think the world cares enough to solve it.  Including me and being confronted with my own apathy makes me uncomfortable.  That’s what I hate about the poor.

What I hate worse than the poor, is poor bashing.  We think of the poor as a black hole of fiscal irresponsibility, drug use, and insanity.  We, ourselves, are vastly superior in comparison.  Because unlike the poor, my insanity is safely medicated thank you, my fiscal responsibility carefully hidden behind a crumbling wall of credit card debt and student loans, and only the poor would ever do drugs.  There’s this subtle (or not so subtle) belief that you can’t help the poor because by doing so they’ll breed.  They’ll multiply like vermin requiring ever more resources to funnel into their destructive appetites.  That’s  Malthus. A  18th century writer who correctly identified the correlation between exponential population growth and arithmetic increase in food production.  Just a bit later you had Social Darwinists.  People who believe that it was their literal God given talents that made them wealthy.  If the poor weren’t disposed to drugs, insanity, and making poor choices they wouldn’t be poor now would they?  Quite frankly the poor are undeserving.  They are the takers.  That’s Ayn Rand.  Rand was a popular author in the ’50s whose colorful tales were filled with people whose unquenchable thirst for more eventually brought down civilization.  It’s also the modern Republican party.  Obsessed as they are with givers and takers.  Half this country are takers they say, the other half — the virtuous, god-fearing, half — are givers and taxpayers.  They are the untiring folks upon whom stand all the rest, parasites, just eating and growing, and somehow not dying.

The poor are not the lowly incompetents that will spend money on nothing but drugs and alcohol.  Addicts will yes.  If you believe that all poor are drug addicts then you are ignorant scum of the earth.  No offense.  Ok maybe a little offense, because I’m tired of the poor bashing.  Because even when drug addicts get their basic needs met they’re far more likely to get treatment and reenter society.  We have a taboo about giving directly to the poor because they’ll waste it.  Probably doing something immoral.  Except that that’s all wrong.

There is a burgeoning field of work that say the exact opposite of popular anti-poor sentiment of poor shiftless losers.  I don’t know how to reform the social safety net.  I’m not a socialist or a communist (If you think so you need to go do some research on basic economic definitions) but I am fed up with this notion of givers and takers; of the poor being caricaturized as Ayn Rand style economic leeches that will bring down civilization.  I don’t know if we should give money to the poor, but I do know that, if we did, it won’t have Malthusian style repercussions or be a Soviet-style drain on the economy.  Because that’s the worry.  Isn’t it.  That a little of the poor will rub off on you.  That a generous government will reduce all the good upstanding folk to a state of destitution and penury while the poor lounge about on government sponsored holidays.  Like I said just a few sentences ago I don’t know how to reform the social safety net.  Obviously some programs are better than others.  But this time around let’s try a modicum of courtesy and respect shall we?

Deciding between choice and freedom

Posted on Updated on

Total freedom is a wonderful fantastic thing and it’s rarely obtainable in this life among the teeming throngs of individuals colliding with each other in everyday society.  Complete and utter freedom isn’t difficult obtain; it’s just undesirable.  If you want every choice to be solely directed by you alone, all you have to do is to walk into the woods and never talk to a single human ever again.  Perfect. Total. Freedom.  The minute you bring someone into your wilderness paradise your choices become necessarily constrained.  At first, it’s not typically a big deal.  The constraints one person places on you are not onerous and the advantages more than make up for the inconvenience.  If not, then there’d be no such thing as family.  But this is also true writ large.  What is gained by the association with one person is multiplied many times over the more people you have in your society.  Why does the US have the largest most sophisticated military in the world?  because we are the world’s third largest country by population.  We have a tax base of over 300million people in our country to support the military without having to resort to draconian measures that would be destructive over the long term.  The same is true for our scientific endeavors, our roads, waters, electricity, and other infrastructure, education, and every other human achievement is accomplished by this synergy of effort. Fine.  No one’s suggesting that there aren’t clear advantages to collective effort, but could be argued that in a free society such as ours, I should be able to choose my level of participation.  That’s true. It should work like that, but it doesn’t.  It wasn’t happenstance that the US was the first nation to develop nuclear power, the space race, and other achievements of science and technology.  Your participation in all of these programs was compulsory via your tax dollars. So it’s true that cooperation is highly efficacious.  No one really argues this, but what does this mean for choice?

It means you have a great deal more freedom, but fewer choices.  For example, my ability to speed down the freeway as fast as I can is highly constrained.   In fact, when it comes to highway travel my choices are exceedingly limited.  But within those limits, my freedoms are hugely expanded above that of a freeway system governed by lawless anarchy.  My freedom to travel is greatly enhanced because of the freeway system, but the freeway system demands an abridgement of my own personal behavior.  If I choose not to travel anywhere except on foot, then my choices are unlimited.  I just can’t go very far.  Again, what works in a microcosm works in the macrocosm.  As our society develops, new freedoms are invented.  Like this webpage.  This represents an expanded freedom of expression for me.  With new freedoms come new choices, and new limits on those choices.  Usually, these are not in conflict.  This written work is the result of my choices and freedoms, but it is not unlimited.  I must abide by reasonable restrictions, such as the terms of service from wordpress, my ISP, copyright law, and other conditions.  The restrictions of choice and the expansion of freedom are in such sync that expounding on them approaches the absurd.  However, this is not always the case and off the top of my head I can think of three.

Education.  It’s long been assumed that private education with all of it’s lovely choice, adherence to free market principles, innovation, and private funding is superior to public education.  It turns out that it’s not.  What private schools have going for them are wealthy families and wealthy neighborhoods which bring their own advantage and privilege.  Once you account for your population bias, private schools underperform relative to public schools.  Why?  Because of market forces.  I know it’s counter intuitive.  Typically we think of market forces as generating a superior product.  It’s not always true.  A private school isn’t required to follow best practices.  In fact there’s tremendous pressure on private schools to follow ‘traditional’ teaching practices that are ineffective and outdated.  Public schools aren’t given that choice.  The close public scrutiny that private schools escape creates a very demanding environment for public schools.  Districts that promote “school choice” programs do not necessarily do better than districts that do not.  Charter schools do no better on average than public schools.  More school choices, more freedom, should work better.  It doesn’t.  In part because of uncorrectable distortions in the market, human perception, and the difficulty of making rational choices, and imperfect information.  Consider that in 20 states it is still legal to hit a student in public school, and only two states have made it illegal for private schools.  This runs counter to 100 years of education and psychological research not to mention your own basic humanity.  It is unimaginably harmful for students.  Yet there’s pressure (largely in the south.  No surprise) among an uninformed population to maintain this practice.  If we define freedom for students as getting the best education available this will involve restricting choices at the level of parents, states, and school districts.

Healthcare.  This is a big one for a lot of people.  Once we decided that it was in our national self-interest to maintain a healthy citizenry, it became mandatory that people get healthcare.  At the moment the big debate is Obamacare and the individual mandate.  Should we require people to purchase health insurance?  Yes.  Absolutely.  One of the many many unstated goals of Obamacare is to move healthcare from a service industry to an infrastructure.  That means that like the roads, they need to be supported by everyone.  Freedom in this case is access to healthcare when you need it.  Healthcare economics dictate that you have to pay for it when you don’t need it if you’re going to have access to it when you do.  That’s just the way it works.  Should a person be able to walk into a hospital and clinic and pay for the services that he or she needs no more no less.  Absolutely.  Alas that’s not the way the world works.  If you want efficient hospitals and clinics you need a plan.

More importantly there’s another, quieter, revolution happening in medicine.  It’s called “evidence based medicine”.  Sounds wonderful, who doesn’t want their medicine to be based on evidence.  It turns out that it’s pretty much everyone.  Classic example is a parent demanding antibiotics for a child’s cold.  The antibiotics don’t work on colds, they’ll, in fact, cause antibiotic resistance which is harmful and deadly but the parent will get them anyway because they are free to demand it, and the doctors are free to prescribe any damn thing they like for just about any reason they like.  Another great example is breast screenings.  A study came out a few years ago that said women shouldn’t be getting as many breast exams as they were currently getting.  It sounds good, no one likes breast exams, but it caused unholy outrage among women’s groups who feared they would all now die of cancer.  The extra screenings were causing problems and weren’t as effective as researchers initially thought.  Plus they knew a lot more about cancer now than when they first started screenings.  Does that matter to patients?  nope.  But they’re going to demand the extra screenings and doctors will give it to them despite the fact that it’s wasteful and prone to creating expensive complications.  The medical field is full of this kind of stuff.

Charity.  Finally, there is a belief common among the conservatives that antipoverty efforts are best left to the private sector, especially churches.  Never mind the fact that churches don’t have resources to manage their own debts let alone take on a new antipoverty measure, never mind the fact that charitable giving doesn’t come close to what is necessary, or that the giving that is done isn’t necessarily effective at fighting poverty, or the hateful, idiotic, dangerous, inept, self-servicing, unabashedly evil argument that public charity creates dependency, they believe that the role of the federal government should be completely absent.  Why should we care about the poor?  From a completely selfish perspective, why bother?  Because I believe in freedom.  For me.  But I recognize that the accomplishments of this country are drawn from collective effort.  By disenfranchising a segment of the population we can not obtain our next expansion in freedoms.  Indeed they risk shrinking.  Wealth in this country is generated not by the super wealthy (although I’m sure they like to think so), but by the middle class.  The bigger and stronger the middle class is, the wealthier and better off everyone will be.  And by everyone I mean me.  The private sector does important work; I don’t want to dismiss it.  But effective anti-poverty efforts can only be done at the state and federal level.  This will necessarily abrogate a little choice for Joe Taxpayer.  In return he will obtain freedom.