Larry Smith http://lwsmith.ca This site is intended for the exclusive use of Larry Smith's current and former students. Its use by other persons is expressly prohibited. Mon, 04 Apr 2016 00:52:35 +0000 en-US hourly 1 https://wordpress.org/?v=4.4.10 Who Killed Imagination http://lwsmith.ca/2016/04/who-killed-imagination/ Mon, 04 Apr 2016 00:52:35 +0000 http://lwsmith.ca/?p=123 There are only two skills that are guaranteed to be in demand over the next fifty years: innovative problem solving and the advocacy of such innovations. A key attribute of future career success is therefore imaginative power. For many adults, imagination seems an impossible job requirement. Yet almost all children have imagination in abundance. But while once it was there, later it is gone. So who killed the imagination of children?

There are many culprits. There are the parents who tell children to stop daydreaming; but children do need to stop being imaginative about their personal hygiene or bedtimes. There are the teachers who insist on established norms; but children should not be imaginative when they are spelling or counting. There are the coaches who insist on a precise play or yoga position. There is the need to stop children from disobeying the rules of the road, or other safety requirements. There is the grandparent who tells the teenager to grow up; but teenagers do need to learn maturity. There is the career counselor who tells a young person to be realistic. And indeed, the young do need to stop fantasizing about becoming astronauts or rock stars. But none of these logically required constraints require the death of imagination: merely that it be channeled to where it belongs and away from where it does not. But the result is nevertheless the death of imagination. So there are more villains to be identified.

There is a parent who prizes the manageability of the well behaved child who stays within well-defined norms. There is the adult who lets youth devour entertainment so packaged that nothing is left to the imagination, even as the adult does likewise.

There is the teacher or coach who finds a disciplined classroom or team both convenient and stress-free. There is the manager who values predictability and consistency. There is the tax collector and bureaucrat whose primary job is to enforce rules, whether sensible or not. Those who profit from the status quo disparage those whose imaginations set off too many questions. There are those who are too lazy to engage a creative vision, so much easier to watch a movie. There are these and more who together create a popular culture that actively resists change, the inevitable companion of imagination.

What begins as a reasonable effort to help a child master the world turns into a full-scale assault on imagination in every form, until for most people imagination is pushed into the farthest recesses of the mind, there to atrophy. And so we have today’s world, where even an urgent need for innovation is met with the tweak of existing practice, no more than the pretense of a new idea. Ask students an open-ended question, and watch them panic. Governments extol the economic benefits of innovation and offer no new ideas to encourage it. Even technology companies and explicitly creative enterprises either iterate yet again a previous idea, or admit defeat and buy innovation from outside suppliers. Movies recycle old scripts endlessly. New products are innovative because they are thinner. Video games break new ground by being louder and faster. And so it goes. Even as the need for innovation grows more critical, and in spite of the potential of great advantage, true innovation remains scarce. Those who can regain their lost imagination will benefit greatly.
How do you reignite your imagination? The answer is simple: practice. Since many people will practice their tennis game or the intricate details of Asian cookery, applying the same technique to imagination is much less common. So start now and regress to the best part of your childhood.

Cook something different, much different. Take a new route home. Read something different. Learn something radically new. Watch a movie and in your mind re-write the ending. Compose the lyrics to a song as you careen down the highway. Doodle creatively on your performance appraisal. Do something seriously different with your friend or partner. The process will be painful at first. Gears in your mind rusty with disuse will grind, often to a halt. So you just push through harder. Enjoy the occasional flicker of an imaginative impulse, and redouble your practice.

Slowly and then more surely, the glory of your childhood can return. With the imagination of the child and the battle scars of the adult, you are ready for true adventure.

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How Soon Will It Happen? http://lwsmith.ca/2016/02/how-soon-will-it-happen/ Sun, 14 Feb 2016 20:28:06 +0000 http://lwsmith.ca/?p=118 One day, it is sure to happen. One day artificial intelligence [AI] will become so effective that it would be able to perform a large measure of professional work. Of course, professional workers have been steadily losing part of their work to software for many years. Hundreds of applications, including spreadsheets, contract templates, valuation models and computer-assisted design, have chipped away at the tasks of knowledge workers. This effect has been basically hidden as the total demand for professional work of all kinds has soared, driven by the demands of a technologically complex and global economy. In the absence of today’s computer aids, there would have been a severe shortage of professional workers. And this moderating effect continues as the world’s work shifts to knowledge workers. Still, the threat, or the promise, of AI grows in force.

As the ability of AI to learn improves, it will inevitably take over more of a professional’s typical work. And it is certainly the case that machine learning is advancing, and that the pace of its development is increasing. The issue we therefore face is clear: will AI’s absorption of professional work proceed at the sedate pace of the past, allowing society adequate time to adapt; or will machine learning accelerate to produce a seriously disruptive effect? Or perhaps we are looking at a catastrophic effect? The latter effect is far from certain, but it is not implausible.

There are two schools of thought. One holds that AI has now developed most of the fundamental insights it needs to take machine learning to a level that rivals most applications of human thought, or even to exceed them. Indeed, with deep data mining, it is already impossible for a human to process effectively the volumes of data available. As a result, it is argued that only evolutionary advances in AI, together with increases in cheap computing power, are all that is required for a radical transformation of the labour markets. Therefore, the only real question is when, not whether. And the implied answer is sooner, rather than later.

Let us note that autonomous vehicles are moving forward faster than anticipated primarily because of advances in AI. We must ask whether this is a harbinger of much more disruptive effects.

Alternatively, it may be argued that AI is still in need of further breakthrough research, whose outcome is far from assured and whose timing cannot be anticipated. Moreover, most of today’s AI applications are still very routine and are far from high-level analytic thinking. For example, data mining is not much more than brute pattern matching and introductory statistics. And while the ability to drive a car is impressive for a machine, it is completely unimpressive for a human. Any 16-year old can drive a car without crashing it too often. Turning that kid into a lawyer is a rather different matter.

[We omit comment about pure science fiction “singularities”. Speculations are, of course, valid exercises in honing one’s imagination. It is not the basis for prediction, or career planning.]

In light of these uncertainties, ones which continue for some time, each of us must decide why we are better than the machines, or how we could quickly become better if the need arose. Instead of ignoring the possibility, let us examine it.

We should ask if it is possible for a machine to become human, or almost human in its thought processes. Here the answer is clearly and aggressively that we do not know. Any assertion to the contrary is unfounded. The reason has nothing to do with what technology might be invented. Rather, we do not know what it really is to be human. If we are wondering whether a machine can mimic us, we would need to know what we are.

Yes, we are a calculating machine. Yes, we have memory and processing power. Yes, we react to our environment and we understand the electro-chemical basis of emotion. But we are still a mystery to ourselves. Yes, we are hard wired to get angry or sexually aroused. But what makes us look to the sky and imagine infinity? What makes us imagine what we have never seen and never will? What makes us know we are here? What makes us wonder what our destiny is, or if we have one? Where do these ideas come from?

Speaking solely for myself, I am more than an inference engine. What are you?

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The Unsurprising Financial Markets http://lwsmith.ca/2016/01/the-unsurprising-financial-markets/ Sun, 17 Jan 2016 21:20:51 +0000 http://lwsmith.ca/?p=112 There is no doubt that the world’s financial markets play an indispensable role in fueling economic growth and development. There is equally no doubt that large amounts of capital are misallocated and therefore wasted. Part of the misallocation occurs because far too many conflicts of interest and instances of self-dealing continue to be tolerated. That is in addition to those who with malice aforethought create false information to mislead the unwary. However, responsibility for the greater part of this misallocation arises from a different source: those who claim that the future cannot be predicted usefully. Notice how this plays out.

Those who are optimistically inclined, whether genuinely or not, and those who are optimistic in order to promote sales, deals and commissions are of course often contradicted by events. Are they then held to account? Rarely. The prognosticators always invoke their great excuse, claiming that nobody could see the anomaly coming, that they were all wrong together. After all, the future is unknowable, they plead. But they plead not for forgiveness, but for acquiescence in the state of their version of reality.

Of course, they are right about one aspect of predicting the future, the aspect they use to excuse all else. Indeed, the future cannot be predicted in great detail, or in any detail in some circumstances. But that does not mean it cannot be predicted usefully. The definition of useful in this context is quite clear. Can you use the prediction to guard yourself from danger, or in some cases to advance your economic interests? And for economic predictions that are thoughtfully applied, the answer is emphatically yes.

This blog has long argued that the only realistic outlook for the global economy is slow growth, at best. The reason is entirely clear: all of the world’s major marketplaces face serious and multiple problems. The governments of the United States and the European Union, for example, are near dysfunctional. And interest rates are so low only because growth is illusive. To predict sustained growth at historically high rates requires us to assume that all or almost all of the world’s major problems are resolved nearly simultaneously. That is an assumption only the heroically blind optimist could make.

Nevertheless, modest growth in the United States and no immediate crisis like 2007-08 were enough to propel the financial markets upward, with no allowance for anything to go wrong. Strictly speaking, it actually meant that everything had to go right!

As this blog has pointed out, these multiple, complex and overlapping problems inevitably produce both high uncertainty and high volatility. So how could you be surprised that energy and commodity prices are unstable? Or perhaps you are surprised at exactly how low energy prices have fallen? But it is the essence of volatility in uncertain times that the swings will be very wide, if not wild.

Notice what assumption was necessary in order for energy and commodity prices to be even approximately stable. China would have had to slow its massive economy from unsustainable to sustainable growth rates and would have had to do so smoothly. China would have had to do this even though it had never done it before and its financial and regulatory institutions are still in development. It would have needed timely and reliable statistics, and minimal corruption. It could not overshoot its targets in either direction. And why we are surprised that China has struggled with this great challenge? And as China struggles, the energy and commodity markets weaken further.

So now that reality has emphatically asserted itself, the optimists have bailed and the markets have tanked. Of course, once you really do believe that the future is completely unknowable, adversity easily causes over-reaction. So the markets are likely to fall far further than circumstances warrant. But even that observation is uncertain. So where does that leave the individual?

Since everyone’s circumstances are different, there is no single way to effectively respond to today’s environment. But there are several basic approaches that serve in times of great uncertainty. Avoid inflexible obligations. Try to insulate part of yourself from the external environment. One way is to seek out individual investment opportunities that are not strongly dependent on the overall economy; ideally, you find an investment that is strengthened by volatility and slow growth. They do exist.

Last and not least, make sure your career strategy is aggressive. Add to your advantage by enhancing your innovative capability. Remember the highly innovative problem solver is always in demand.

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Economic Outlook 2016 http://lwsmith.ca/2016/01/economic-outlook-2016/ Tue, 05 Jan 2016 00:59:42 +0000 http://lwsmith.ca/?p=109 As you will see from previous posts, there are few surprises. The comments in the post of January 2015 still stand: global growth will be slow, at best. Too many countries have too many problems for a return to the relatively high rates of the past. There is no particular reason to be impressed with the reliability of these forecasts since the evidence and logic are so clear. Wishful thinking has no place in this discussion. The goal is to be neither optimistic nor pessimistic. The goal is to be correct. And while the forecast may be sobering, the truth is always helpful, or can be.
Mature industrial states, like Europe and Canada, will have painfully slow growth. Canada of course is particularly sensitive to low energy and commodity prices. China continues to struggle to both sustain growth and avoid volatility. India is making only modest headway; other newly industrial states are coping with the consequences of unsustainable boom. Russia is stuck in the twilight zone of personality politics. Most of these governments and their electorates are overwhelmed with the complexity of the challenges before them. Moreover, given this complexity, the economic environment becomes ever more unpredictable. As a result, the financial markets remain inherently volatile.
The American economy is doing relatively better than most other states and this helps all of us. But its challenges remain very high. The government is perpetually on the edge of paralysis. Cheap oil is a bonus stimulus, but its effect cannot be counted on long term. While U.S. employment growth is reasonable, many of these new jobs are in lower wage service industries. Moreover, this relatively adequate growth is still being fueled by abnormally low interest rates. As those rates rise, the effect is uncertain. Maybe it will be accommodated reasonably well; maybe it will chill growth substantially. There is no way to know, because, as noted before, the circumstances are unprecedented. So where does this leave the individual?
The answer is equally clear, if not exactly welcomed. If the overall environment is going to be difficult for the foreseeable future, then the onus is on individuals to look to their advantage. This means pursuing one’s career more aggressively. It means having a detailed plan to get promoted. It will often require using your own resources and time to invest in the development of your skills. In addition, you will have to be a person of ideas, new ideas. It will no longer be enough to repeat the ideas of others, or those you learned years ago in a classroom. If you relax your commitment and focus, you will dramatically increase the odds of a nasty surprise.
Moreover, your investments will have be chosen with exquisite care, forcing you to turn your back on the herd. And if you spend almost all of your income on your current consumption, then you are skating on the thinnest of ice. Warning, warning, danger, danger.

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Monetary Stimulus: Prudent or Panic http://lwsmith.ca/2015/01/monetary-stimulus-prudent-or-panic/ Mon, 26 Jan 2015 00:42:59 +0000 http://lwsmith.ca/?p=101 The Bank of Canada has just lowered rates to protect the Canadian economy from being disrupted by collapsing oil prices. And the E.U. central bank has just announced it intends to massively expand the European money supply. Except for oil prices, nothing much has changed.

As I have long argued in this space, there is little reason to expect growth to resume its historical rate within the medium term. The only way we could get strong sustained growth is if every one of the world’s immediate challenges is resolved quickly. There are so many problems in so many places that this was always an optimistically unrealistic outlook. The E.U. struggles to avoid falling back into recession; China is under stress as it copes with dramatically [for it] slower growth, never mind the inherent contradictions in its public/private authoritarian system; the United States has neither a functioning government nor a coherent economic policy; most of the other high-growth economies of the world, like Brazil and India, have come to the end of their brief interlude of effortless growth; Russia is offline; the commodity markets are chaotic and stock markets understandably volatile. At least the American economy is generating respectable growth. But the U.S. economy cannot carry the global economy on its back, and has not been able to do so for years. And American growth is itself still inherently fragile. After being force-fed money since the last recession, we should not celebrate this progress uncritically.

Remember that when the storm hit in 2008, the deluge almost extinguished the fires of the economy. So we poured gasoline on the embers in order stay warm. Again and again we throw the gasoline of cheap money into the economy. Finally, after 7 years the U.S. economic fire looks sustainable. But given how much gasoline we poured on the campfire, the forest itself should have burned down.

What, Dear Readers, happens when the run of absurdly cheap money comes to an end? The simple answer is we do not know. We have never engaged in such aggressive monetary policy and so there is no precedent, no historical norm to guide us. Will we calmly absorb higher interest rates by gradually re-adjusting our spending? Or will we panic and drastically reduce spending? Who knows?

Notice the difficult choice the world now has before it. Interest rates will stay low because economic growth is so limited. Or interest rates rise because growth is strengthening and needs to be restrained. Either way, high sustained growth is excluded.

Recognize that I am not objecting to this degree of monetary stimulus. All things considered, it was necessary since the global economy was in grave danger. But this stimulus comes with heavy costs: the distortion of property and stock markets, the accumulation of high indebtedness and a literal addiction to cheap money.

Longer term we will struggle to break this addiction. For the moment, slow growth means low rates continue. So what does the individual do? Look aggressively for profitable investments. Support start-ups and small high growth companies. Develop a career strategy that builds a strong competitive distinction. Make sure that no matter what happens you will be in demand for expertise and knowledge that cannot easily be found elsewhere.

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Finding Your Passion http://lwsmith.ca/2014/03/finding-your-passion/ Mon, 17 Mar 2014 23:05:25 +0000 http://lwsmith.ca/?p=98 [This post was written in response to the email that is being generated by the Waterloo TEDx video, Why You Will Fail to Have a Great Career.]

Since pursuing your passion is a necessary, but not sufficient condition, for a great career, it becomes logically essential to find your passion as a starting point.

Nevertheless, many persons struggle to find their passions. What mistakes are they making?

Often they assume that finding one’s passion is a matter of luck. They see that some persons seem to have found their passions as children. Often, others just seem to just trip over their passion as they move into adulthood. The process seems random and difficult to see as a methodical process of search.

Yes, some are lucky. Teaching is their passion and as a 5-year old, they wake up in classroom and they are home for life. And even as they have new experiences, they notice that their first love grows only stronger.

Others have the luck of being born into a family in which a family member or friend shows them a domain that immediately engages them, or slowly sneaks up on them. In the absence of the lucky circumstance of their family, the search would have been longer and more challenging.

But notice that some who pursue a childhood or family “interest” do so only as a convenient default choice. It was there and so they chose it to avoid further thought or uncertainty. It is hardly an interest and never mind a passion, although they may speak of it very positively – the better to tell themselves or others that they made a “wise” choice.

The majority do not have the advantage of circumstance, and therefore have no choice but to search for their passion methodically.

Many of these persons fail to find their passion because they either fail to search methodically, or they do not search persistently. Some will simply not commit the time and energy to a search that can often be frustrating. In fact, they want their destiny to find them; they do not want to find it themselves. But only rarely does destiny come knocking.

You cannot find your passion idly staring into space, hoping for it to appear as a revelation, expecting it to appear from one book, article, blog posting or casual conversation. Passion is rarely found in a bar or on Mother Google’s home page.

Those who search and find their passion place themselves in intensely stimulating environments, and stay there until the job is done. It can be intellectually exhausting.

There are many such environments. Some read voraciously; others seek out many persons in many situations and engage them in intense conversation. Some do both. Others visit every major museum and gallery in North America. They find their passion by immersing themselves in a panoply of human experience.

But you cannot just read, talk or experience. You must also have your mind in high gear. You must be fully engaged, reading and thinking to a purpose. You must be constantly saying to yourself about whatever book, fact, argument, person or experience is at hand: Why? What if? Why don’t they?

Yes, it is intense. And yes, too few are practiced in this art, no matter their level of education.

But you will never find your passion in the modern way: by surfing or browsing. Recognize the superficiality implied by those words and by our impatient thoughtless world.

You will have to stand against the popular culture to find your passion. Too many do not have the independence of mind or force of commitment to do so.

Take the time you need. Recognize your mind’s natural tendency to resolve its painful uncertainty by rushing to judgment, even to the judgment that it is time to give up.

How will you recognize your passion when you encounter it? Usually, it is quite easy. One moment you are reading in hopes of finding a topic of great interest; then you find you are reading and do not want to stop. It almost feels as if you cannot stop. Or you find yourself in a regular conversation, and you start talking with excitement about an idea or possibility. Or you find yourself in an activity and you lose track of time itself.
The rule of passion is simple: the mind cannot stop thinking about that which it loves.

It is what you would do even if you won a lottery.

For some the realization is sudden, as if they reach a critical mass of experience and it coalesces into a complete and compelling vision. For others, it is a slow process, each piece coming into view separately until the puzzle is revealed.

Even with a passion identified, there is a common pitfall. Some persons know or find their passion, and then with little thought, relying on no more than popular opinion, they dismiss the passion as one that “cannot be turned into a livelihood” with any reasonable degree of assurance. And they move on to try to find a second, more practical love. That is not necessarily a bad choice since one could certainly have more than one love. [It does though seem unfortunate that some struggle to find one passion, and others have multiple ones.]

But before you look for a second love, you should carefully, intensively and creatively examine whether your first found love could support a career. Research the experiences of those who have found ways to pursue as livelihoods the strangest of passions. Never take conventional wisdom as anything other than folklore, to be tested against your logic, information and experiences.

We must also reiterate in conclusion that passion is necessary for a great career, but it is not sufficient. There’s no magic here. Success also demands patience, persistence, focus, discipline, independence of mind, resourcefulness, experimentation and high creativity.

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Economic Outlook 2014 http://lwsmith.ca/2014/03/economic-outlook-2014/ Sat, 08 Mar 2014 21:55:47 +0000 http://lwsmith.ca/?p=91 There has been no post on the macro-economy in more than a year for the simple reason that there has been little upon which to comment. As we have long argued, growth in the developed world is going to be slow at best. And so it has proved to be true. The outlook for the next year is similar. The good news is that the threat of recession has abated; but secure and sustained growth at our best historical rates is unlikely. The reasons which account for persistently slow growth remain the same. Rising competition around the globe restrains employment levels. For example in the US, the number of people seeking to work has fallen sharply, explaining a primary cause for decline of the US unemployment rate. While the US has finally passed a budget, it is too soon to declare that America has stepped back from complete political dysfunction. And all of its long term problems await. Europe continues to make small progress, even as some of its states drift along, one millimetre from disaster. Political and military tension in and around the Ukraine merely adds to the uncertainty. India is now in one of its frequent periods of political paralysis, with most of its long term challenges unaddressed. China is holding its own for the moment, as its authoritarian government continues to struggle with the country’s inherent contradictions. We should keep in mind that about half of China’s GDP and employment arise from its state-owned enterprises. Its commitment to the marketplace remains half-hearted at best.

The most fundamental reason that the world’s political institutions are struggling to create coherent policy is because they are all having to adjust to a global economy. This is a radically new circumstance, the entire planet recently stitched into a web of commerce, finance and communication. How to cope challenges us all.

It is important to note that this anemic growth is occurring even though we are fueling the economic engine with extraordinarily low interest rates. It is as if we pouring gasoline on a slowly smoldering fire and the embers just burn a bit more brightly. Where is the fire? Clearly the fuel is water-logged with the problems noted above. With interest rates at near zero, all we get is slow growth!

Overlaying all the factors that account for slow growth is the greatest economic uncertainty of all: what will happen when the world’s central bankers start to remove the monetary stimulus that is giving us such low rates. Such historically low levels cannot be sustained indefinitely, one presumes. Surely inflationary pressure will increase. Or will it? Or have we killed inflation for a generation? Or is inflation about to erupt with a vengeance? But would that at least mean growth is seriously accelerating? Or might we get low growth and high inflation? The plain truth is that the situation is so dynamically complex and so unprecedented, we cannot answer any of the above questions with any reasonable degree of assurance. We can guess or we can hope. But that is not forecast.

But let us guess that as growth starts to accelerate and inflation moves up modestly, the central bankers will respond with measured, that is, small steps. That much might be clear. But we have no way of knowing what will happen next. Will investors panic or stay logically calm? Will real investment come to a halt? What happens to consumption of big-ticket items like cars? What happens to the world’s property markets? What happens if we stay calm when the bankers start withdrawing the stimulus and then freak out when it becomes clear they might spend the next five years raising interest rates? Slow torture? Again, there are no rigorous evidence-based answers to these questions.

Welcome to a world with economic uncertainty higher than it has ever been since the Second World War.

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Opportunity Amid the Tumult: Part 2 http://lwsmith.ca/2012/12/opportunity-amid-the-tumult-part-2/ Sat, 29 Dec 2012 20:08:03 +0000 http://lwsmith.ca/?p=81 As this space previously anticipated, 2012 produced disruptions, dislocations and crises in a slow growth world. China slowed as it changed its leadership in a totally opaque manner. India slowed, amid the usual chaos and corruption, but with citizens demanding improvement. The European Union endures its slow-motion public debt crisis, the result of indecision coupled with bad decisions. And then there is the United States.

The only modestly positive event was the re-election of Mr. Obama. This was helpful to America solely because the alternative candidate was so wrong-headed about so many issues, when he was not being totally vacuous. The difficulty is that Mr. Obama remains, what we have long noted, a president devoid of strategic vision or a killer instinct. As a result, he now presides over a fully dysfunctional government. The largest economy on earth dances on the edge of disaster, without any coherent economic policy, never mind actual budget. As with the previous debt ceiling fiasco, the debate over the “fiscal cliff” is incoherently stupid, ignore of the facts unless it is denying them. All the while, Mr. Obama pleads for compromise and good will as if he were teaching a civics class in high school. He is still incapable of saying that compromise is impossible because the other side are fools. So America proves itself incapable even of managing its short term finances; all its long term problems, like the erosion of its educational system and its unfunded health and social system, are unaddressed.

Let us remember that Mr. Obama barely won against an inept opponent and with America’s changing demographics on his side. The Senate and House of Representatives remain as before, with the idiots in charge in the House and the no-ideas-at-all Democrats barely able to run the Senate. Mr. Obama failed to defeat his enemies in the House, and there is no sign that he really tried. His highly accomplished financing and campaign machinery is rolled out only in presidential elections and only for him. Notice that the media barely covers any of Mr. Obama’s initiatives to regain the House and strengthen his hand in the Senate; that was because there was not much to cover.  But he cannot bring himself to do so since he would have to shed his bipartisan identity. Unfortunately, America needs a political street fighter.

So the world’s future is its immediate past, as the pressures of the global economy cause political indecision abetted by a confused and misinformed public.  Canada retains its better than normal situation, the result of a handful of sensible decisions made years ago, but still struggles not to get swamped in the churning waters of planetary pressures.

So what is an individual to do in such an environment?  Bet on the consequences of stupidity.

The economic environment continues to become harsher. The usual consequences of more competitors is the need to work more effectively and innovate faster, even as profits inevitably shrink and worker compensation falls. This result of the global economy would have been challenging enough with rapid growth.  But slow growth removes the lubrication of the rising output, making adaptation even more painful. Bet on this.

Serious advantage awaits those whose products and services offer either edge or escape.

Edge in the competitive wars means either a powerful productivity tool, or a commanding marketing facility.  Be a innovator who develops them. Or an entrepreneur who introduces them. Or an investor who supports those who do.

But many companies offering productivity or marketing tools seem not to be thriving.  And this just adds to the opportunity since it is being poorly exploited by some of those who claim to see the opportunity.  The problem is that they are fighting yesterday’s economic wars, with tools too modest to achieve much advantage.  They look for quick and obvious answers, ones that do not take too much rigorous thought, that do not require challenging conventional wisdom, that do not require uncertain experimentation and that do not march into spooky realms of creative thought.

So we are swamped with analytics of all kinds. But the world does not need more data; it needs answers, solutions and decisions. So where is the software that tells managers what to do, directly and exactly? Impossible? Too complicated? Are you so sure?

[A few companies know that “decision” software  scares people; so they call it analytics when it is something quite beyond. Know who?]

Escape is also a sure bet. In a fiercely demanding world, escape from its pressures is highly valued today, and will be more highly valued tomorrow.  And as with edge products, much opportunity abounds, left by those who look for the obvious and easy. The world of escape products is wildy uneven, producing handsome profits one minute and punishing losses the next.  The classic problem is that an escape product [game, song, movie etc] quickly loses its appeal since diminishing benefit sets in quickly.  So social media booms since it is the newest escape product.  But what happens when its appeal fades, as it will. Or what strategy might help it evolve into an ever morphing seductive environment? It does not have that attribute yet.

So you think that the users, so many unique people together, will find ways to entertain themselves forever? Really? Then why is YouTube, which used to be sure user-generated content was all it needed, looks to other sources?

Why does the movie and game industry produce such erratic profits? Too many sequels? Too much imitation? Too little creativity? Too little risk taking? What is really wrong with this picture?

Further discussion involving opportunity will be provided in subsequent postings.

May 2013 be a year of success and conquest.

[Why was there such a long interruption between postings? Larry was thinking.]

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Opportunities Amid the Tumult Part 1 http://lwsmith.ca/2011/12/opportunities-amid-the-tumult-part-1/ Sat, 31 Dec 2011 16:44:44 +0000 http://lwsmith.ca/?p=75 As we have long noted, the world faces a prolonged period of disruption and dislocation. The best we can expect is slow growth and volatile financial markets. Too many countries have too many problems that will take time to address. That presumes that these problems are being addressed, and largely speaking they are not.

China’s financial system remains vulnerable with limited regulatory oversight and high “private” debt levels, while its secretive government is in transition. India’s public services are chaotic, while it still fails to mount a broadly-based educational system, even as its population surges. Europe struggles to cobble together any semblance of a coherent strategy, while its deficit containment policies guarantee economic distress in much of the E.U. Meanwhile, the U.S. is missing in action, with its president lacking either vision or the desire to fight, leaving the clowns of Congress running amok.

There will inevitably be a number of false “dawns”.

Canada’s only immediate problem is the turmoil of its trading partners.

Moreover, that most insidious enemy of all market economies gathers strength, as the disparity between the rich and the middle class and the middle class and the poor continues to widen almost everywhere. This trend cannot continue. One way or the other, it will stop.

What is the individual to do in these tumultuous times?

First, remember that the world has faced graver situations before, and emerged intact. Remember too that almost all countries have the resources to solve their challenges; the problem is the lack of public leadership and the will to act. Resolving these issues will certainly require a hit to the standard of living of most of us. But that only means most of us would give up some the junk we do not need, nor ever did.

Second, the real threat to our well being is not the mountain of debt that so excites us. Rather, it is the vast waste of human talent that has already occurred, and the added waste which inevitably awaits us. Part of this waste is the result of society failing to offer a secure platform for accomplishment; part of it is the result of ignorant, frighten, confused and thoughtless individuals making truly idiotic decisions.

Third, decide explicitly that you will understand and use the distress to advance the deployment of your talent. The way forward for any individual could hardly be clearer. Concentrate on creating innovations that either increase productivity significantly, or that make a major contribution to solving an urgent social or marketplace necessity. Necessity, it should be noted, is always in the mind of the beholder. Your advantage rises in direct proportion to the fact that this is not what most persons choose to do.

Fourth, you must turn your back on the herd. It will not be easy, but in challenging times, the herd’s reaction is almost always to jump off a cliff. And if the first cliff does not kill them, they just look for another cliff. So let the herd chase get-rich-quick internet fantasies, develop ever more useless phone apps, multiply social networks until no one has time to work, create games of no originality, develop stock trading strategies to bamboozle the unwary and when in doubt sell more advertising.

Fifth, look for productivity or product innovations the old fashioned way – with equal measures of hard work and craftiness. [Notice how reading that sentence makes the herd’s approach so beguiling.] Of course, only a fool would look for innovations in a fields or markets in which the innovator had no or little inherent interest.

Since many good ideas exist but are ignored, look for innovation using all of the search technologies available. Search creatively. Use mathematical analysis intensively. That includes asking experts wherever they are. And when aggressive search fails to yield an answer, or provides only part of an answer, conduct equally aggressive research and development. In other words, create your own intellectual property – the true currency of the 21st century.

Where would you get the resources to conduct your own R&D? Subsidize your research from your “day” job. Create a cash cow to fund your research. Use your craftiness to fund cheap ways to conduct research. Use volunteers/friends/family to help. Be resourceful.

Are these tactics not obvious? Clearly to most they are not and that is why serve you so well.

But might your search and R&D both take considerable timet? Yes, they might. And here is one other “secret” of success. Patience in a world of impatience just might make you a warrior prince, if not king.

The next post will address specific industry opportunities. Right now I have an opportunity to harvest.

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Planetary Outlook 2 http://lwsmith.ca/2011/08/planetary-outlook-2/ Fri, 12 Aug 2011 15:54:10 +0000 http://lwsmith.ca/?p=69 As we pointed out in Planetary Outlook a year ago, there was no reason to expect anything other than disruptions, dislocations, erratic growth, volatile markets and bouts of optimistic and pessimistic over-reaction. Too many countries had too many problems for them to be solved quickly or smoothly. In addition, since the European Federation is a work in progress, decisive action could not be expected. And the United States government is dysfunctional, with a President who is conflict adverse without strategic vision or the courage to take action.

Canada, an oasis of stabilty, is affected through its trading realtionships. Almost all its principal problems lay outside its borders.

So nothing that has happened over the past year could be considered either surprising or unexpected. Investors, of course, are surprised by everything. How could they not with an attention span of three seconds and a planning horizon of four seconds? The liars and the thieves therefore win all too often.

The next year is entirely clear: more of the same. Yet for the alert among us, this is not necessarily bad news. While society is hurt by economic growth much below its potential, those who can see in the land of the blind can prosper. And they can do so without being either liars or thieves.

All the alert need do is to take opportunities from the ignorant, the foolish and the fearful. Opportunities will be ripe for the taking as the mob ignores or denies them.

The educated, young and old, must take their game up many notches to avoid becoming commodities, chewed up as collateral damage.

The next posting will address these opportunities more specifically. Right now, I have an opportunity to harvest.

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