OPINION
OP-ART
ON ECONOMICS
Approaching the Break of Dawn
Why a seemingly pitch-black outlook can be a
good thing; are brighter days just off the horizon?
By Mark Phillips
'7he pace of economic
change makes it
1, feel like the world
is ending. Occupy Wall
Street, the perpetual
potential collapse of the
Euro, China's strength,
persistent unemploy-
ment and the growing
income gap in the U.S.
— taken individually
each is troublesome —
collectively, it is dizzying.
But there is a silver lining:
The same factors driving
these changes also cre-
ate a world of incredible
opportunity.
Technology is perhaps
the biggest driver of the
recent changes. The pro-
ductivity gains of the PC
revolution gave way to
the communication gains of the Internet,
which paved the way for social network-
ing — and the complete consumerization
of information.
It is estimated there are 10 times the
number of cell phones in the world than
there are cars. For many people, particu-
larly those in the Third World, their first
experience with computing is a phone,
and it is fully connected to the Internet.
What does that mean for you and me?
The market for software (apps, websites,
e-commerce) is exploding and anyone
with a good idea can find his or her way
directly to the marketplace.
Businesses that relied on being the
middleman or knowing something that
no one else knew are threatened with
extinction (if they still exist). Industries
that made a living by selling the delivery
mechanism (books, records) rather than
the thing itself (a story or a song) are
doomed. What survives is the raw creativ-
ity.
The art of each individual remains
unique, and, in today's world, a creator is
uniquely able to distribute that art to tens
of millions of people — with nearly zero
production or distribution costs. The big-
gest challenge is finding your audience.
True, the demise of the middleman
now requires entrepreneurs to find the
market themselves, but social networking
has made that challenge less daunting. It
doesn't take an army of followers to pay
the bills. A thousand people, willing to
pay you $5 a month for what you provide,
can give you a good start on making a
living.
Low-cost production is another driver
of change. What information technology
does for the digital world, low cost pro-
duction does for the physical world. There
is global overcapacity for producing most
goods. A product idea can be dreamed
up in one corner of the world, designed in
another, produced in a third and shipped
to the fourth — all in less time than it
used to take to prototype most industrial
products. Competition is fierce and costs
are driven down.
The challenge with this trend comes in
finding a way to sell your product (if you
can't do it online) or, if you own a factory,
figuring out what makes you special. On
the sales side, modern retailing relies on
research and trend analysis; much the
same can be said for producing.
It is no longer enough to come up
with a mediocre product. Like the case
with the aforementioned creator, those
producers who understand their audi-
ence, connect with their customers and
produce items in a specific segment will
survive.
Wealth creation is a third change
engine. Global GDP keeps growing, with
the largest gains from previously under-
developed countries like Brazil, Russia,
India and China (the BRIC countries). The
wealth created in those countries has
spawned an internal demand from their
rising middle class. More importantly, it
has set off a tidal wave of demand for U.S.
financial assets.The suddenly ultra-rich in
those countries need a place to put their
money, and the U.S. remains the safest
and most attractive place in which to
invest for the newly rich.
Wall Street saw the demand in the early
2000s and devised reams of synthetic
financial assets (bundled derivatives) to
soak up that demand. And, even when
that went bust, demand remained strong
for U.S. Treasuries, and as the air has
cleared, the financial houses are back at it,
meeting demand.
In a world of high technology and low
barriers to entry, white-shoe banks don't
have a monopoly on absorbing invest-
ment demand. With a good idea, the right
licensing and a solid plan, the doors are
available to access that capital.
Change doesn't happen in a vacuum. It
comes from individuals finding new op-
portunities with the tools around them.
If you are stuck for ideas, spend some
time learning new skills or playing with
new technologies. Read about challenges
that people like you are having and think
of ways to solve them. Like the old saw
about writing, "write what you know," the
same can be said about opportunity: Cre-
ate from what you know.
Remember that while the world around
us can change, we are ultimately the driv-
ers of change. There are no guarantees of
success, but it is in our hands to try. IRT
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By Howard Lovy
ri
t the end of World War I in Hungary,
my grandfather, then about 9 years
old, cowered inside a wine barrel in
the cellar of his house, while upstairs his
home and the homes and synagogue of
his fellow Jews were ransacked, looted
and burned by returning soldiers who
blamed (who else?) the Jews for losing the
war.
My grandfather's house was a target be-
cause my great-grandfather was wealthy.
And, through whatever convoluted "logic"
prevailed in Europe at the time, wealthy
Jews were considered to be the reason
behind the defeat of the Central Powers
and the economic crisis that followed it.
To slightly alter a phrase chanted today
by Occupy Wall Street protesters, "This is
what anti-Semitism looks like!'
Some elements of
the conservative media
have tried to overlay
anti-semitism onto
Occupy Wall Street.
Now, here's what anti-Semitism does
not look like, although I must admit that
when I first read about them, and watched
them, I was outraged. Videos captured
from the OWS protests across the country
show hate-filled demonstrators spewing
out the same old garbage about how Jews
are responsible for the economic crisis.
A sign directs us to:"Google: Zionists
control Wall Street." A widely circulated
ESTERS ARRESTED'
video shows a man at the Occupy Wall
Street protest spitting out"Go back to
Israel" to another man in a yarmulke.
An African American man says,"The
small ethnic Jewish population in this
country, they have a firm grip on America's
media, finance ..."
In Los Angeles, protester Patricia McAl-
lister says: "I think that the Zionist Jews,
who are running these big banks and our
Federal Reserve, which is not run by the
federal government ... they need to be
run out of this country."
It makes my blood boil. But, unfortu-
nately, it's not even surprising. It is the
"drawing-room anti-Semitism" that infects
much of the left and makes me want to
completely tune out anything else they
might have to say.
It's always been there, this age-old myth
that Jews control "the money," and they
just can't see that they have been duped
by the oldest"government conspiracy" in
the book. Distract from the real problems
by blaming the Jews.
I keep wondering why I am never in-
vited to the conspiracy meetings, anyway.
Continued on the following page
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Using 'Jew-Bait' to Obfuscate the Issue
GDP per capita (Current $u.s. in Thousands) 1960 - 2010
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Red Thread Magazine
16 December 2011 I RED TIMM
Source: World Bank November 2011
Photo Courtesy of Digital Journal
www.redthreadmagazine.com