Competitively Cooperative

The modern mind has a strange compulsion for making side issues foundational. Early in this blog I discussed how unity is not foundational. Most people who are calling for unity usually have an enemy in mind that they wish to unite people against. The people calling for unity are actually trying to create an even greater division.

The hegemony argument is another example of people making a side issue foundational. Hegemony has value as a descriptor. But when you make achieving hegemony the primary concern of a system, you change the nature of the system.

Another example of the modern tendency to make side issues foundational is the over emphasis of the role of competition in the free market.

Freedom is the foundation of the free market. The ideal of the free market is that the individual has the ability to invest their time and resources as they see fit.

You can prove that competition is not foundational simply by looking at the way people behave when they have freedom. When people are free, they end up engaging in a mix of both cooperative and competitive activities.

Looking through the table of contents of The Wealth of Nations we see that Adam Smith spends most of his time talking about issues such as the division of labor, rents, the division of stock. All of these issues deal with mechanisms of cooperation in the free market.

Cooperation and competition are complementary forces. The terms serve as valuable descriptors, but people err when they say competition is the foundation of the free market.

The Market as Organized Cooperation

When you get down to the brass tacks, you will find that all financial transactions are cooperative in nature. When you hire on with an employer, you are not engaged in competition with the employer. You are actually making a contract to cooperate with the employer. When you buy food from the local market, you are engaged in a well orchestrated cooperative effort to bring food from the fields to your family.

In most cases, the primary factor in choosing a service is how well the service provider cooperates with you. Service providers compete by their willingness to cooperate.

The Opposite of What You Expect

When you create a system that overemphasizes one side of a complementary force, you often end up with the opposite effect than you intended. The street preacher agitating for unity against his foe causes greater division despite his illusion that he is a unifier. Peace activists who make unjust compromises in a short cut to peace might accidentally lay the foundations for a worse war. A warmonger might accidentally lay the foundation for peace when people listening to his agitations realize that they must address an issue or go to war. As we live in a fluid universe, it is not uncommon for actions to have the opposite effect than intended.

My observation is that systems that overemphasize competition tend to create less competition. When you overemphasize competition in the market, people develop the illusion that they must be big to compete. Look at the current marketplace. You will often see profitable businesses merging simply because their owners feel that they must be big to compete. I've seen many people fail to go into businesses simply because they felt that they weren't big enough or emotionally equipped to compete. When businesses merge, or people fail to enter the market, there is less competition.

Even worse, when people are driven by competition they are apt to undertake anti-market activities to undermine competitors. When you look at the dynamics small towns, you will often find a small number of leading merchants monopolizing main street.

Conversely, emphasizing cooperation has a strange habit of creating more competition.

Most successful small businesses are formed by people who wish to cooperate to achieve a specific end. Let's say a manufacturer needs a new and improved widget to go in their device. When the designers' thoughts are dominated by ideas of competition, they are likely to try and develop the widget internally. A designer who sees the market as inherently cooperative is more open to seeing the widget developed in cooperation with a third party.

The stock exchange is a good example of cooperation. In a stock exchange, people cooperate in forming a market to trade goods. The people in this market are keenly interested in having a diversity of stock to trade. Investors will actively seek out the creation of business so they have something to trade.

Affiliate marketing is an example of cooperation the internet. Affiliate marketing is a system where web sites form cooperative relations with merchants to sell products. Affiliate marketing has drawn a large number of small web sites and small merchants into the online market. Many of these companies would not have existed if not for the cooperative nature of affiliate marketing.

Crass Commercial Intrusion: My attempt at affiliate marketing makes about $200.00 a year. I understand that people who know what they are doing can make a living from the market. My problem is that I am more interested in things from a conceptual level than from an implementation level.

Sadly, people who are driven by competition feel that they must dominate the market and engage in activities specifically designed to undermine the affiliate market. I would not be surprised if affiliate marketing completely vanished in the next couple of years as the major players lock all of the small players out of the system.

Internalizing the Division of Labor

Adam Smith's observation is that the division of labor seems to happen naturally. People want to concentrate on one aspect of the market. A farmer might concentrate on the quality of his crop. The delivery driver would concentrate on the efficiency of his delivery operation. These people would form an informal cooperative network. This division of labor happens naturally.

When you overemphasize competition and de-emphasize cooperation, you end up creating these megacorporations that try to internalize the entire division of labor related to the production of a specific good. If our economic theorists and socio-economic structures were to emphasized cooperation, I think we would start seeing a break up of the mega-corporations as business leaders struggled to create nimbler business structures that were better suited for cooperating dynamic, multidimensional market.

Political Systems

You will notice that I used the word "might" and not "must" in the above sections. Cooperation and competition are simply complementary terms. A politician who takes steps to increase competition may or may not increase competition. Since there is a monopoly in education, it is likely that the Utah Voucher proposal would increase competition. Other subsidy programs designed to spur competition (e.g. farm subsidies) appear to simply give an economic edge to those farmers with the inside connections or the legal expertise to get the subsidies. These insiders use their competitive edge to drive the other farmers out of business, reducing competition.

Neither competition nor cooperation is foundational to the free market. Freedom is the foundation. Since neither cooperation or competition are foundational, politicians and economic theorist are ill advised to create policies that treat the issues as foundational.

Politicians who are interested in seeing the free market succeed should pay attention to how their policies affect the freedom of the people and not on peripheral issues. The disappearance of competition or cooperation in a market might be an indicator of an imbalanced market. Direct political efforts to spur competition are likely to created unintended consequences.

Utah First Friday

I crashed the Utah First Fridays business networking meeting this morning. The keynote speaker was a John Bresee cofounder of Backcountry.com.

The title of the presentation was "WOW - Affiliate Marketing Does That?"

The actual presentation was about other online ventures of the company (I get the distinct impression that affiliate marketing is on the decline). I joined the BCS affiliate program back in 2000. In the following years I displayed their ad some 300,000 plus times. I had 1392 clicks, 10 sales and scored a massive $119.28 in commissions. The actually pay rates have been declining steadily. My rough estimates are that, to pay one year minimum wage salary, I figure I would have to pump about 300,000 hits to an online merchant. That is just about the size of the population of Salt Lake City proper. To actually pay a living wage, I would have to pipe through the population of the county through the merchant.

Speaking about the size of Salt Lake, I had to renew my license this year and took a trip out to the DMV in West Valley City. The DMV is interesting in that just about everyone in this valley has been through the building at one time or another. There are lots of buildings in Salt Lake filled with lots of people. There are very few, however, that have seen such a full cross section of the population. The building was full of the rich, poor, young (16+) and old.

The DMV is getting much more efficient. We used to have to stand in line 5 hours to get a license. If you weren't at the DMV by noon, you were hosed. It was horrible, you would get to the DMV at 2:00PM then watch all of the station closed signs pop up, and have to come back the next day.

This trip was over in 40 minutes. It is a funny set up. I stood in line for 20 minutes to get a number, then sat in a waiting area with my number for 10 minutes. Handing of cash to the teller, reading the line in the eye exam thingy and getting my picture was over in 10 minutes.

BTW, my telling you that I went through the DMV yesterday tells you that I am a Libra. I thought about asking the teller if she sees any differences in the people throughout the year. A person interested in astrology would do well to get a job at the DMV as the set up displays a full cross section of the population near their birthdays. If there really is a discernable difference between the astrology signs (which I doubt) a DMV employee would be in the ideal position to see the differences.

My other about town adventure was a walk through Murray City Park. The park was much larger than I had imagined. The park has a entrance gate and statue of Chief Washakie on State Street. So I always just imagined that the park was just a small rectangular slot of land with a few playgrounds. It turns out that the park is massive with three full size soccer fields, several baseball fields, an aquatic center, a massive ice skating arena, an arboretum, an ampitheatre, a half dozen pavilions and playgrounds. Facility-wise, the park dwarfs Liberty Park and Sugarhouse Park.

Solar Easter

Happy Easter. It was a bright beautiful sunny day. I hope you spent your Easter outside enjoying it.

Speaking of the sun ... I've come across more and more debates on solar energy. There are several new technologies and manufacturing techniques on the horizon that look quite promising.

The deal with all energy technologies is that they not only need to make economic sense, they need to make environmental sense. The waste products and chemicals used to make the last generation of solar technology did not add up to a net positive. They did more harm than the fossil fuels saved. It looks like we are right on that cusp where the technology will work.

Unfortunately, the shrill debate about global warming has people demanding subsidies for the technology.

I wish people understood basic economics. We are on the cusp of solar becoming economically and enivornmentally cost effective. Subsidizing the roll out of solar before crossing the cusp costs a lot and does environmental damage. Once we are on the positive side of the curve ... you don't need subsidies because it is a cost effective investment.

In the aftermath of the oil embargo of the Carter years, there was a massive trillion dollar effort to push alternative fuels onto the market. By trying to push technologies on the market prematurely, the effort actually ended up collapsing and setting back the technologies.

The same thing happened with nuclear. The government went hog wild and pushed out a large number of reactors that produced waste problems we don't know how to handle.

Subsidies are generally the result of applying short term thinking to long term problems. The long term solution for alternative fuels is to let the market grow organically. Big government programs destroy that organic growth. They generally widen the gap in income and have a long history of magnifying the evil side effects of technology.

People demanding that the government should bumble over the market to subsidize solar should look at the history of the government bumbling over itself to build dams, nukes and subisidize big oil. The market does a better job of signaling when to go with a new technology.

In that regard ... I don't think this is the year to buy solar. In two to three years, there will be some really big things on the market.

This is the time to start researching solar. It may be a good time to buy gadgets and start preparing for an investment in solar down the line.

A Salt Lake store just opened a web site called Solar Home (solar home ad). This company sells solar products at a discount. The main solar products are at a point where it takes about 10-20 years to pay back the cost of the investment in energy savings (assuming that the labor to install and maintain the units has no value). In this regard, the most interesting products are the educational products and certain "off the grid" contraptions that can power things in remote locations on for portable power.

In the gadget area, I really like the solar powered fountains. Of course, buying a solar powered fountain or a solar night flower doesn't do anything for the environment. These products don't replace energy consumed from other resources. If you want outdoor lighting, you can get outdoor lighting, without having to wire up the garden.

I think energy efficient appliances is the best place to invest consumer dollars at this point.

Name on a Banana

Reach Upwards is in an ethical quandary about people who offer him money to blog about their company, product or issue. Fortunately, for me, since I lack integrity, no one has ever offered me money to compromise my integrity.

This idea of advertisers buying spots on blogs is interesting from several different angles. Personally, I like the idea of independent people getting money for their blogs. Such a market helps distribute wealth and it provides bloggers with more resources for their activities.

The fact that bloggers are faced with ethical decisions about writing for money increases the overall awareness of the economic forces on the information around us.

Personally, I would love to find clever ways for people to "monetize" their web projects without a minimal impact on their integrity.

After reading Reach Upwards blog, I stumbled onto one such clever idea. The Site BananaNames.com is a clever idea. For a price, the company will write your name on a banana. Take a picture of the banana, then post the picture of the banana on their blog.



BTW, blogs aren't just influenced by money. Inbound links have a tremendous economic value. If you stick to the talking points of a particular political interest, you will get a large number of inbound links. This increases the influence of your blog. People who stray from the party line by talking about issues from multiple angles lose the precious inbound links.

On the issue of links as an economic concern, Newspapergrl is lamenting about link stinginess in local papers. The newspaper will report on a local business, but will rarely link to the local business--despite the fact that such a link would improve the story and help support the local economy. (NOTE, Newspapergrl has her name on a banana. That is where I found the NoaB site.)

Perhaps one of the greatest things about the blogging phenomena is that it has us thinking about the influences on the information around us. In just one short web session, I found discussions of blog advertising, link stinginess and entrepreneurs writing names on a banana for manna.

Web Revenue Blues

I started watching parts of the Tour de France. Watching a peleton move is addictive.

As for other ways of wasting time. I tallied up the income for my web sites from last quarter. It takes a good part of the day to run the reports and all; so I am no longer reporting on a monthly basis.

Reported revenue has dropped to $1516.39 for the quarter. Yikes, I am now under $500 and the revenue is dropping like a stone. Which is odd because traffic is increasing at a steady pace. I usually only get about 90% of reported revenue. I am expecting about $1400 for the quarter .. expenses run about $750 for the quarter.

I sent about 20,000 hits to advertisers and made an average of 7 cents a click. I guess I would have to send about 160,000 clicks to advertisers a quarter to make a middle class living.

Waste of a Day

I wasted the day diddling away on stupid ecommerce stuff. One of the primary advertisers (Commission Junction) for my community sites launched a silly initiate where all of the publishers in their network are supposed to replace HTML links with JavaScript links. (Scott Jangro has some good information on this change.)

The reason for this change is that ValueClick (the owner of CJ) has a pipe dream of building a massive data warehouse with consumer shopping data that they intend to use to manipulate consumer shopping decisions.

They want me to put tracking codes on my site that they will use to undermine my site.

Very bizarre.

There are some nice merchants in the CJ network that I like. For example, I like Questia. This is an online library with several hundred thousand articles and books. They have many texts that are extremely hard to find, as well as new articles from scholarly journals that, again, are difficult to find.

Also, while updating the links, I took the opportunity to make several older pages in the system DHTML Strict compliant. Perhaps if the pages are DHTML Strict, the search engines might send me more traffic.

Black Friday

Happy Black Friday!

Black Friday is the day after Thanksgiving. It is the day when merchants around the US are thankful for consumer credit.

This is the biggest shopping day of the year for physical stores. Oddly the biggest shopping day for online stores is the Monday Morning after Thanksgiving. This is when people get back in the office, punch the time clock, log on to the computer computer and finish their weekend shopping. Some online merchants have started calling Monday after Thanksgiving Black Monday.

IMHO, the real driving force for Black Monday was that companies had broadband and few homes had broadband. I think the Black Monday phenomena descreases with time.

My goal for Black Monday is to get enough cash to buy a server for Community Color. The goal of these sites was to make an open community directory. The idea has yet to catch on.

For all those joining the throngs ... happy shopping!