Traffic jams and spontaneous order… In Germany

Remember my post about letting people in front in a traffic jam? I recently returned home from a short family trip to Germany and there I witnessed the solution, and I thank Hayek for coming up with the theory to explain the phenomenon.

See, in the northern part of Germany where I was, I noticed that it was an unwritten rule of thumb to always let in one car in front of you. This worked really well, with both lanes accepting it, and behaving accordingly without taking advantage or offence.

As far as I know, there is no direct law concerning this. Therefore it is what Hayek called a spontaneous order. Spontaneous orders are orders that are shaped by human actions in social contexts, but without the coercive force of government or other type of planning and without external enforcing, like a police force. They tend to be highly efficient, as in this case.

Unfortunately I live in Denmark and not Germany, where this rule has not emerged. I believe these two nations to be very alike culturally. The only main difference is that the Danish state is huge and involved in incredible many aspects of the life of its subjects. That is not beneficial for the emergence of social orders. They need freedom, even a little chaos, to evolve. The other path, that of violent government planning, is not able to account of the multitude of situations that spontaneous order typically do, and they need enforcement, where spontaneous orders comes natural, as all will likely on average benefit equally. After all, you do not know where in the morning rush hour traffic you might end up.

So thank you Germany for solving the issue… And thank you dear reader for taking the time to read this.

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Games of chance vs games of levels in gamification

You might not believe it, but we are busy here at Echo.it and will soon reveal more of our unique gamification solutions for organizations. In the meantime, I will share a very important concept with you all that relates heavily to gamification

Designing a good game requires that you design it right, both for its purpose (be it fun or educational) and for its addictiveness.

A simple game is rolling a dice. You roll one and I roll one, and whoever get’s the highest score wins. This is a game, and it might be fun for a short while, but since – all things being equal – we both will win an equal amount of times, the game quickly loses its appeal fast (but it did teach you something about probability I guess).

Well another type of games more or less eliminates chance and instead focuses on actions and strategies players take to advance in the game. These types of games tend to be highly addictive and allow for personal playing styles. Very much like World of Warcraft… or your career?

We want our jobs to be fun and our bosses want them to be addictive. What we do not want, however, is to have potential career advancement depend on chance. Many employees unfortunately feel it does sometimes. So the job for a game designer in a corporate environment is to build a game around the function of employees that mirrors World of Warcraft and not dices. That way the employee will not feel a drift on the whims of Fortuna, but instead will gather a band of trusty warriors and head into that dungeon of a new emergent market segment and find the magic value proposition to turn the lost lead into a gold pot… or something similarJ


Commitment to positivity

I had a pretty boring meeting a while back. It was one of those where you just know it is a show dance going in. Lots of talking around the same topic. Nothing new likely to emerge. No direct take aways and you trying to stay awake by remembering that life slips away with every breath you take.

Well, talking in the morning with sweetie Katja she mentioned that my attitude was wrong and not like what I normally preach. Which is true. I despise negative people and those that blame others instead of trying to fix it themselves (even if it is not their fault).

So true. I am normally committed to positivity, so why not this morning? Well… Maybe I just forgot? After all sometimes life is boring. Sometime looking for the roadblocks makes you miss the road all together. Sometimes, by reasons of your own doing or not, it does, as Sick of It All sings, take “So much strength Necessary to deal  With the everlasting shit storm”. However staying positive is important, as it gives you energy to proceed. So how do we still remember to keep positive?

I made this simple tool: Take a slide. Insert the sentence “Commitment to Positivity” and a picture that simply shows what you have to stay positive about, like a goal of some sort. You can also write a short sentence to make it really clear. It can be a strategy workstream that is troublesome, maybe a loved ones with whom your relationship is slacking, or something else that matters to you and where positive energy is needed to propel your engine. To exemplify I have made one with Steve Morrison our great Lion player who did his best to almost propel us to the playoffs. Unfortunately, it wasn’t enough. But with our commitment to positivity I am sure it will happen one day (at least it looks like Ironworks will be joining us in the Championship, hehe).

Of cause you should not be cheated from a song, so here is Dominated by New York Hardcore legends Sick of It All. I believe this song is what happens to you and the people around you if you forget a basic Commitment to Positivity.

On a last note, the meeting did turn out a lot more useful than I had anticipated, because sometimes even boring meetings are good meetings.


The value of supporting Gus ( @ideasoutloud ) on Twitter: A econ-nerd blog post on transaction costs

Readers of this blogs will by now know that my main fascination with the Internet is that it gets transactions cost of actions down.

Transaction costs are small costs that come from using a pricing-mechanism or in other ways send a signal in a group of trading individuals. As such money need not be involved. In fact money often aren’t directly. There is a cost to using Twitter for instance; even if we do not pay per tweet, it still takes time to do it (and we use electricity, wear and tear on the computer, data subscripting costs etc.)  and that time could be spent chopping wood, shooing horses or whatever way you normally make your living. However we choose to tweet because the small cost that the transaction cost us pales in insignificance to the potential impact it can cause – or so we hope. In fact measuring the actual cost of transaction costs, like those incurred while tweeting, is likely more costing than the transaction. But let’s try for a moment.

So if we ignore all other cost than time spent, and I assume it takes 2 min to  tweet a statement (to think, decide, formulate and tweet) and if it is read by say 200 followers, that is  0.6 seconds per receiver. And maybe some of these receivers RT so that it is spread even more and the price of the transaction goes down further. I might also build followers, getting the price further down over time. But it never goes way.

Imagine if you tweet 15 times a day. That is about 10 whole days a year (I assume you sleep 6 hours) spent on nothing but tweeting. And I am still not taking other costs than time into consideration.  Wow. But it is still not much compared to printing a flyer and start handing it out at the local grocery… Not that long ago people did this. Some still do – They are quite often promoting policies that will raise taxes or products that are bad for your health.

So tweets is all about price signals because you are suffering a cost when you tweet and that cost becomes  an inclination of what value tweeting your particular message has to you. You could have done something else with your time. While at the same time you probably would not do 15 flyers a day, right?

The reason for this adventure in the exciting world of the transaction costs of tweeting is that I believe that if enough people send price signals, the world will change. If nobody picks up those pretty flyers and subsequently does not buy the product, the company behind the flyers will go bust. If enough people tweet about something somebody out there might alter their behavior or decision. Maybe not this time, but over time at least.

So yesterday I tweeted my support to local Australian entrepreneur Gus Murrey who is being kicked out of Denmark despite having received an education and being an active and social-conscious citizen with high entrepreneurial ambitions. I know Gus from my old alma mater and he is a stand up great guy and if it was a place to crash or a nice meal he needed I would always offer help. So of cause I will also tweet his message of political injustice. It was not free, but it was an expense well spent. Happily a lot of other people did this too. Pooled together the joint time investment of people is now up to 28 hours (at 21:30 last night) or with an average hourly pay of 250 DKK it comes to about 7000 DKK value (or with a 60% tax rate; 4200 lost revenue for the tax man) in tweets alone (add media coverage and Facebook comments to get the whole campaign cost if you like). It is too early to tell if the supplier of laws (parliament) have seen the price signal, but it surely is out there.

Thank you for reading this and for supporting Gus and have a nice day!

Read more on Gus’ plight here.


An interesting threesome

Ok, upfront: This is not the naughty kind of threesomes. I am sorry if you thought that, especially since I did try to see if I could boost the views by alluring. Sorry to have cheated you. But hey… Since you seem interested in relations to other people; have a look around the blog.

Ok, with the introduction out of the way, I would like today to talk about choosing a strategy for how you approach life and doing good deeds.

Vodpod videos no longer available.

Approach model, posted with vodpod

 

Let’s draw a triangle and say that each point represents a mode that you can approach life with. In the lower left you have analysis, in the top decision, and the lower right corner you have execution. This framework can be viewed as praxeology if you like. In every situation we as humans face we can choose one of these options. We can contemplate on the issue at hand, go about our usual business or take a decision to change. It seems to me that in many situations, people either just continue doing what they have always done, or they think and talk, but make no decision – That surely is the situation in Danish politics right now.

It is not hard to understand really. Taking a decision can be dangerous; you might pick the wrong path, or you become vulnerable to criticism. But we need to take decisions. This has been known to humanity for a long time. Just think of Dante (1321) in his Divine Comedy (Inferno III) He thought that Heaven and Hell were only for those that actually did something with their life. The rest, the lazy, the neutral and the overthinkers-and-underdoers would go to ante-hell. A place outside everything in the afterlife. Because they failed the test of life: To make something justifiable of it. In his view, people who lived ‘without occasion for infamy or praise’ were not even worthy of condemnation. Even if you are not religious that is worth contemplating.

Our human ability to decide a different approach to the world is what has propelled human civilization to its current amazing level of progress. Most humans now live longer and longer and have better and better lives – and the rest will eventually. But this requires that some humans acts as leaders and make a decision to set us on a new cause. I hope that you dear reader will be such a leader and show people kindness. You know that getting a smile from a stranger makes your day, so start smiling, and keep doing it even if other people don’t always smile back. So think about this, take the decision to be nicer and then act on it. Please.

Because we need kids to start punk bands, and we need entrepreneurs to start companies, and we need people to smile to strangers on the street.


Life gets hard and then it gets good… Like I always knew it would

Hey! My second pencast is up! View it, or read below. Whatever rocks your world!

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Life gets hard and then it gets good, posted with vodpod

As talked about in earlier posts, life entails transaction costs. This naturally means that doing good deeds also carries transaction costs. Logically for you to pay for something that carries a cost you either must have saved up or burrow. This is not to talk about which is the best strategy, but it is to give you some idea about how I think you can get some surplus to invest in good deeds.

If we assume that surplus to be a good person comes from being in a good place yourself let us examine the following graph.

Everybody’s life is a series of highs and lows. It simply must be, because the alternative – a flat line – would make it impossible for us to tell happiness from sadness, joy from anger and so on. The interval between highs and lows might vary, and so can the slope, but generally this graph is your life human. But that is not entirely true, because we can in fact alter the direction of our life in either positive or a negative spiral as illustrated below.

By doing this we can make our highs higher or our lows lower. You might jump to the easy conclusion that this is a material matter only. But I beg to differ; I would say it is the least important aspect. Obviously if you are eating gold for breakfast it might be easier for you to get happy, but the graph testifies that happiness and surplus is relative. If you already played Half-life Episode 2 you will only be happy when Episode 3 hits your console, but before you played Episode 2, playing that made you happy. So I will claim it is simply a matter of attitude. If you view the world, even adversity, in a positive light, you will prevail, be happier and have the surplus to be a good person. Life’s surroundings are objectively important, but your subjective attitude decides how you approach these facts.

So Mike Ness is right when he sings: “Life gets hard and then it gets good… Like I always knew it would” on the new Social Distortion record: “Hard Times and Nurserry rhymes”, and you can use that fact to always invest transactions costs in doing good.

I want to look like that some day!

PS: SocialD is playing in Copenhagen! I got my ticket hope you got yours.

Have a nice day. I am happy you took the time to read this.


Pricing social betterment part 2

This piece is trying to exemplify part 1.

About a week ago I had a trying day I must admit. And worse, because of it, I noticed that I did not do as many nice things or acted as friendly and politely as I aim to be my normal standard. I did wish the shopkeeper a nice day, but on the other hand I shouted out in the car when a driver cut me off. I did not jump the cue at the baker when the opportunity presented itself. But I did not hold the door for the person behind me. And on and on. Now why was that? Truth be told, I was feeling sick, and had a long schedule. My energy reserves were simply running low. That got me thinking.

See in Denmark we have this term: “lidt overskud i hverdagen”. Roughly translated it means having some “surplus” in your everyday life that you use to pass around good vibes, help out, and spread joy. That got me thinking… See in order to share, you have to have surplus. Because doing good carries costs. That is because a good deed, even when you want nothing particular or directly phased in return, is nonetheless a transaction. In economics we know from stars like Hayek, Coase and Williamson that doing any voluntary transaction carries costs. So let’s look at transaction costs. Eggertson defines the allusive term (1990:14) ‘transaction costs are the costs that arises when individuals exchange ownership rights to economic assets and enforce their exclusive rights’. (Eggertson, T. (1990): Economic Behavior and Institutions. Cambridge University Press). So when you bake a cake for your roomie or even hold the door for someone, it cost you to do it. Not juat the raw material, but also the action itself. There are quite simply transaction costs to doing good, because there is transaction costs to life itself.

I will try to in future pieces here to talk about getting the necessary surplus in your daily life and how to most optimally distribute this into transactions that improves the world (I tried to write sentence this without sounding like a televangelist or selfhelp douche… I did not succeed I am afraid).  

I’ll finish this piece this by recalling the worlds of Echo it‘s angel Lars Trope; To be truly wealthy is to aim to create to value in whatever you do. Inspiring stuff.

Have a nice day. I am happy you took the time to read this.