Blobbing for Dollars

Jonathan Blocksom and I have been lobbing blogs back and forth (blobbing?) on the fine points of Xpertweb’s many-to-one compensation algorithm. Here’s his latest:

More on Xpertweb
Britt Blaser, who’s responded to my earlier questions about Xpertweb. The part I found enlightening:

“Another word for a retirement fund is money while you sleep… all money-while-sleeping systems are pyramidal”.

Which is a nicer way to think of things. The difference becomes that the Xpertweb retirement fund isn’t automatically put away until you turn 65. Here’s an interesting aspect of Xpertweb: presumably, corporations can’t participate. So let’s say I want to get some new 3D models everybody’s favorite creativity program. Presumably I would contract them personally, they would assign the copyright on their work to me (a term of the contract), and I would assign it to GollyGee Software, Inc. Aren’t new economies interesting?

I had been reluctant to expose our thinking until closer to release, but this shows why Doc wanted me to go public. The protocols improves as their concepts are debugged.

Some clarifications: There are no set rules for Xpertweb users, since there’s no way to enforce the rules and no central system to collect the money, redistribute it and, presumably, to skim something off the top.

The only mechanism to enforce standards are the agreements made among users of the protocols. The first users will start with an agreement between each mentor and each trainee. This initial agreement will be to deal with each other fairly – simple rules like no spamming, fair grading, timely payment – the general principles that the larger economy has built a legal juggernaut to enforce. The simple mechanism to minimize unfair treatment is that work is delivered prior to payment and payment depends on satisfaction and all promises and actions are published to the world. Of course, one of the agreements is to send each of 5 mentors 1% of all transactions and mentor fees.

The other understanding is that each trainee will enter into a similar, equally public agreement when acting as a mentor to subsequent trainees. This is expected to create consistent mentor-to-trainee understandings which are visible to the world, but there’s no way to know until the system propogates.

Fine Points

Corporate Participants
There’s no reason for corporations to not participate. Jonathan’s company is a corporation, which can participate if Jonathan wants the company to hire an Xpertweb expert to program or design packaging or design OS X icons. Any participating company will have to pay according to the general rule that you grade work on the seller’s published schedule (24 hours would be typical) and initiate an electronic transfer immediately upon grading. This alone is a breakthrough for a large company, but its employees already pay immediately for taxis, travel and meals, so some of them will get used to paying immediately for direct productivity.

The Xpertweb “Retirement Fund”
Jonathan is correct in observing that Xpertweb mentor fees aren’t put aside until age 65 like pensions we’re used to. Instead, tiny amounts start flowing immediately. This raises a key difference between asset-based money-while-sleeping and flow-based money-while-sleeping.

As suggested earlier, it was quite a feat to create a system whereby work is converted to assets. The first example was when hunter-gatherers became farmers. Until then, resources flowed through their lives, including food, which was discovered, harvested, eaten, and maybe a little carried along. With agriculture, food had to be stored and accounted for, leading to the development of writing, data bases, administrators and static ruling classes. When you store food collectively you have, well, a collective. What food was grown by what citizen is a matter of record, not observation. Who owns it depends on the representation of the record-keeping clerk-priest, and the results have been pretty obvious.

Capitalism went further and figured out how to transform the flow of intangible work into an asset (shares of stock) that is fungible, as the lawyers say – countable, tradeable, stealable, discountable, etc. Pretty clever. This system has even learned the magic of converting the expectation of future activities into stock value. Enron, “the crooked E”, raised it to a high art, but that sleight-of -hand is implicit in the equity markets. Anyone who can manage public expectations is set up to profit from those expectations.

Xpertweb is based on delivered value rather than expected value. This emphasizes past performance and gives no weight to future performance – think of it as “Spin Emasculation.” This is the opposite of our instincts and the current economy, which both emphasize hopeful expectations rather than past performance. The virtue of paying for delivered value and proven mentoring is obvious: it transforms our shared economy from forward-looking vaporware to a proven solution.

Pensions are a future promise in exchange for present loyalty. (I wonder if “loyalty” is shorthand for “incredible boredom and quiet desperation.” Just a question.) Pensions are a liability on the books of a company, but that liability creates an offsetting asset known as cash. Pensions also create an almost irresistible temptation for the holder of the cash borrowed from the future pension to change the rules, invest the money recklessly, etc. Naturally, it’s inconceivable that any group as well-spoken and conscientious as our management class – or our Congress – to act so irresponsibly, but there have been reports…

Immediate and growing cash flow is a fundamentally different form of wealth. Interestingly, it’s the kind of wealth that every company and government works so hard to arrange for itself. It’s the reason that Sprint PCS will give you a $300 phone for $50 plus 2 years of crappy service. They want your 30 bucks a month and employ a legion of MBAs to set up those cash flows. That’s the big difference between people and companies: ask yourself the basic question: “How many checks do I send out each month and how many do I receive?

Xpertweb is designed to inspire corporate-like cash flows among its users so that the mentors get lots of small payments from later mentors and trainees. Like ALL many-to-one money-while-sleeping schemes, the majority support the few. As previously emphasized, if you expect to retire on 80% of your income, you’ll need 1% from 80 folks like you to do so. That would suggest an 80-1 ratio of payers to payees. This is no different from any pension fund, but the numbers are visible and obvious.

So how can we – seemingly reasonable people – support such a many-to-one plan? If we do, it’ll be for three reasons.

  1. The 80-1 ratio is lower than under current conditions. By rationalizing and standardizing the ratios, we avoid the obscene, often hidd
    en levels of compensation that are set up by corporate boards to reward those who are close to corporate boards – Jack Welch being a recent example.
  2. Hierarchical rewards can be separated from hierarchical command structures. Presently, pensions and other compansation plans are developed, managed and enforced by people who control the system. Because the Xpertweb fee structure is an algorithm out of the control of its designers, its ratios (80-1 or whatever), even if no better than others, it is totally free from arbitrary re-design to benefit the re-designers.
  3. No one is locked into any relationships. Any Xpertweb user is free to set up under a new mentor at any time or have as many mentors as desired. The doctrine is: establish an Xpertweb persona under any lineage of 5 mentors, pay the 5 mentors according to the agreements you’ve made, and never pay a mentor whom you or that mentor’s trainees have rated unsatisfactory.

It’s hard to imagine a perfect system, but the further the reward rules are from the rule developers, the better off will be the beneficiaries of the rules.

10:18:01 PM    

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