Remarks to the California Commonwealth Club on May 10, 2006
15-Feb-2007 (Thu) 18:56 UTC · permalink

Introduction

Good evening and thank you for inviting me to speak to you tonight. I'm a technology geek, and it's rare that I'm allowed to address a mainstream audience. Tonight I'll share some observations on the impact of digital technology on society, with a special focus on individual liberties like property rights.

The Internet

The big thing in the last ten or fifteen years has been "the Internet", and it's easy to fall into the mistaken belief that "the Internet" sprang forth fully formed as some kind of product or service of some company or combine. That belief would be very mistaken, however. The Internet industry as we now know it was an outgrowth of a bunch of earlier events including the1960's counterculture, advances in communication and computer technology including some well funded academic and military networks, free or open source software, and of humanity's unending desires to tinker, to share, to show off, to make money, and to discover. Slapping a label like "the Internet" on it is a marketing exercise, and a quite successful one, but it doesn't change any facts. The thing we currently call "the Internet" is the middle of, not the beginning or end of, a much longer story.

Wealth

While I'm exploring popular myths, let's talk about the nature of wealth. A lot of kids and more than a few otherwise-grownups think that if you win the lottery, or rob a bank, or IPO an Internet company, and thus get your hands on a truckload of money, it makes you wealthy. And maybe it will, if the truck is large enough, and if you don't spend or lose the money within your own lifetime, and if hyperinflation or some other outside force doesn't devalue your stash. But wealth-- real wealth-- according to the experts is the ownership of cash flow, not just cash. Owning an asset is great, but you can only sell it once and so the amount of cash it can generate for you is limited unless you can employ that asset as a revenue generator-- like renting it to someone or using it in a business. When a silicon valley venture capitalist hears an investment pitch, her big question is usually "how will this make money?" and not "how cool is the basic idea?" or even "how soon could we IPO?"

Which brings me to tonight's word: monetize. Great wealth throughout history has come to those people who can make money from the natural or sometimes inevitable activities of other people. The extent of that wealth often depends on one's ability to make activities inevitable, or the vision to see what activities are natural or will become natural. Darker examples include copyrighting the "Happy Birthday To You" song or patenting the candle or choking off a competitors' supply or investment. In what I call "meatspace" (as against cyberspace, it's where the meat is), there's a whole system of antitrust laws designed to prevent inappropriate monetization, where "inappropriate" means "bad for the consumer" which really means "in opposition to individual liberties." Our society as a whole almost always wants the greatest good for the greatest number, but recognizes that each individual has to have the right to choose and pursue whatever "good" means. Individuals, as a rule, prefer to sit with their feet up watching professional sports on TV, and to have their food brought to them. And if you want other people to work for you instead of you working for them, you have to figure out how to monetize their activities better than they can monetize yours. And that's tonight's word.

(with obvious apologies to the Stephen Colbert writing team.)

Inertia, according to the dictionary, is the tendency of an object in motion to remain in motion, or of an object at rest to remain at rest. Money has a kind of inertia. It's easier to keep cash flowing than to start it flowing in the first place. But just the same, cash flows have to come from somewhere-- some set of assets, conditions, raw materials, tools, and processes that produce more value than they consume. If you want the cash to continue flowing, you have to keep feeding the monster. Much human action is toward the goal of keeping cash flowing, whether it's getting up and going to work in the morning, or buying low and selling high, or buying out a startup whose technology you don't need but your competitors could have used to eat your lunch.