Consider the following scenario. Over the next few years, several major cities in the U.S. will begin to impose a ban on all new residential and commercial construction. With populations declining in numerous metro areas, they will worry openly about becoming the next Detroit with abandoned neighborhoods signaling a rapid decline in property values.

In the past, many cities and counties invested in open space to insure there would be room for parks and open trails in the future. Now, with property values declining and funding in short supply, a new set of concerns has taken center stage.

Abandoned properties can quickly turn into a rapidly escalating blight that moves like an infestation from one community to the next. Poorly constructed houses and office buildings will see the economics of their existence shift from a net positive to a net negative with little forewarning. When property values decline and maintenance costs increase, more and more owners will decide to cut their losses, and let their property go into default.

As a way to counteract this trend, cities will place a ban on all new open-ground construction, forcing existing buildings to be torn down before new ones can be built. So the only way someone can build a brand new home will be to tear down an existing home.

In the 60s, 70s, and 80s there was a massive effort to create affordable housing, to insure that the vast majority of people could own their own home. Financial tools were tweaked to allow the greatest possible acceptance, and construction standards were lowered to increase affordability. This combination provided a great short-term fix, but disastrous long term consequences.

Until recently, the ever growing population base provided a steady demand for houses. Even poorly built older homes in various states of decay were worth repairing and reselling because the demand kept valuations relatively high.

Real estate, like most other commodities, retains its value as long as there is sufficient demand to match the supply.

Every time there is a change in a local population, the price of real estate becomes an early warning indicator.

Shifting Population Trends

Unbeknownst to most, the 8,000 pound gorilla hovering in the background of our economy is the shifting population base. Any fluctuation in the number of consumers changes the demand-side of the supply and demand equation.

The 1900s were a very fertile century where the earth’s population grew from 1.6 billion people to 6.4 billion within 100 years. Never before in history had the human population exploded like this, and we all became conditioned to think there would be a never-ending supply of young people, and a never-ending supply of demand for real estate.

But a strange thing happened along the way. As doom and gloom predictions started painting scary scenarios of an overpopulated earth where food shortages threatened the very existence of humanity, the full impact of birth control technology, invented in the 1960s, began to take effect.

Today, the population in the U.S. has begun to level off, while at the same time nearly all of Europe and major parts of Asia are in serious decline. Since people create the economy, the lack of people creates just the opposite. This drop in demand will manifest itself in many areas, including a drop in the demand for real estate.

As a rule of thumb, it’s best not to view this through the value-lens of being “good or bad”; it just signals a change in the way the world works.

Population Statistics – A Closer Look

Simply looking at U.S. population statistics can give us a false impression of what’s actually going on.

Source: U.S. Census Bureau

The primary reason why the population is still growing is because people are living longer. As baby boomers work their way into the retirement years, they will be shifting into more efficient lifestyles, shedding belongings, and downsizing their homes.

Another key factor in these statistics is the number of immigrants moving into the U.S. Even though the numbers are declining and there are some signs of a weakening demand, the U.S. continually attracts some of the best and the brightest from around the world.

Over the past two decades, the number of live births has remained relatively steady
Source: U.S. National Center for Health Statistics

Yes, it’s true that in 2007, more babies were born in the United States than any other year in the nation’s history. But as a percentage of the overall population it was far less than in the 50s and 60s.

To be sure, the U.S. birth rate is still higher than the birth rate in many countries in Europe and Asia where population declines are forcing the closure of schools, shuttering of factories, and a rethinking of economic strategies.

Falling below replacement levels of 2.1 has raised a number of red flags
Source: U.S. National Center for Health Statistics

For any population to maintain its current numbers, couples need to average 2.1 children. Any number below that will yield a population decline over the long run.

According to numbers released recently by the National Center for Health Statistics, births fell 2.7 percent last year even as the population grew.

As a percentage of the population, the U.S. sunk to 13.5 birth per 1,000 population
Source: U.S. National Center for Health Statistics

The most telling statistic is the decline in live births, now at the lowest point in recorded history.

This downward trend invites some troubling comparisons to Japan and its lost decade of stagnant growth in the 1990s and very low birth rates. Births in Japan fell 2 percent in 2009 after a slight rise in 2008.

Housing Markets and Opportunities

Number of new building permits (Shaded areas indicate U.S. recessions)
2010 research by the St Louis office of the U.S. Federal Reserve

Over the past four years, the housing market has experienced a devastating meltdown.

Whether you’re looking at new or existing homes, both prices and unit volumes have declined sharply since the peak in 2006. Foreclosed homes and empty subdivisions litter the landscape. In short, the housing market is in shambles.

Perhaps one of the big trends today is a shifting mindset about owning and investing in real estate. As the number of young people declines, and loan money becomes more difficult to come by, demand for property will continue to weaken.

In addition, as the baby boomers move into retirement, there is a big shift away from the uncertainties of real estate, towards a simpler, more affordable lifestyle.

One opportunity today is for someone to devise a new approach to home ownership. With credit ratings now at an all-time low, one option may be a lease-with-an-option-to-buy arrangement where someone who leases a house for two years and makes all of their payments on time can qualify for a loan in spite of a bad credit rating.

Since young people today like the idea of being mobile with fewer ties to a particular location, the idea of loan portability may make sense, where existing loans can be applied to the purchase of a new home.

In the area of construction, we have lots of existing houses, but it tends to be the wrong kind of inventory. Our vast supply of bi-level, tri-level, and quad-level homes are a poor fit for the baby boomers who no longer like to do steps. Growing numbers of telecommuters are finding most homes don’t work well as office space. And homeschoolers are having to turn their homes into a learning environment.

Homes today are being used in vastly different ways than homes 50 years ago when they were built. And these changing lifestyles create a wide array of new opportunities for repair, retrofit, and new construction along the way.

Some final thoughts…

Declining birth rates have a delayed effect. It will be many years before the full impact of these demographic changes is felt across society.

Some regional hotspots will find ways to avoid any effect altogether, while others will suffer significantly from stagnation and deflation as the population declines.

Big challenges create big opportunities. The people who can best assess the impact will be well poised to find the opportunities.

By Futurist Thomas Frey

Sales tax is a a system that is now on the verge of collapse

As a general rule, extreme levels of complexity take a significant toll on society. The price we pay for complexity is far greater than the money involved. With upwards of 90,000 separate taxing districts in the U.S. sales tax has become an overly complicated system deeply entrenched in the fabric of society, but woefully out of touch with the times.

As people become increasingly mobile, both on the seller and buyer side of every transaction, location-based differentiators become decreasingly relevant.

But when it comes to sales tax, here’s what everyone get’s wrong. Sales tax is not a location tax, it is a transaction tax. The transaction triggers the tax. The location just determines the amount and who the recipients will be. Without a transaction, there is no tax.

The fact that every community wants to add their own extra piece to the sales tax puzzle, requiring special forms and special rules for compliance, is what has turned it into an impossibly complicated system.

Cities and communities across the country are now in dire straits. Their programs and services were framed around the income streams of more prosperous times. Bad systems, like sales tax, get remarkably worse during a bad economy. But they also create an opportunity.

For this reason, I would like to propose a way out.

A little Background

Most cities in the U.S. are funded through some form of sales tax, a system designed during an entirely different era, a system that is now on the verge of collapse.

Sale tax is paid by the buyer and collected by the seller. But many different regulations have been developed around which transactions are taxable and which ones are not.

At the heart of current debates is a 1992 landmark ruling by the Supreme Court that determined retailers are not required to collect sales tax from shoppers unless they have a physical presence in the state where customers live. Initially, this ruling applied mainly to catalog companies and home-shopping channels on TV. But it also applied to the emerging online retail industry, giving them a distinct competitive advantage, and consumers a reason to change their buying habits.

Local retailers who have invested in their community, who send their kids to local schools and volunteer for local charities, quickly found themselves competing with faceless online companies, most of whom have never set foot in town. The problem with current sales tax laws are that they create a disadvantage to those who are local. But here is where it gets complicated.

If an online business has a physical presence in a state, such as a store, office or warehouse, they must collect sales tax from the customers who purchase items in that state. Without a physical presence, no sales tax needs to be collected. That sounds simple enough, until you get into the definition of what constitutes a physical presence.

Some states now claim that anyone doing affiliate sales, placing referral ads on their blog sites and receiving a commission, can be construed as being a local sales agent, and therefore the entire transaction is subject to sales tax. As a result, companies like Amazon and Overstock who count heavily upon the no-sales-tax advantage have cancelled affiliate relationships with anyone doing affiliate sales for them in those states.

Sales tax would be distributed evenly between the region of the buyer and the region of the seller

Proposing a Solution

First, let’s start with the assumption that sales tax must be applied to all retail transactions – period, no exceptions. If we eliminate this one variable, then much of the complex decision-making process currently imposed on retailers is eliminated.

Second, with money becoming increasingly digital, the actual collection and distribution of sales tax will need to move up the food chain to the clearinghouse level. I will explain this idea further in the next section.

Rather than having millions of individual retailers bearing the responsibility for distributing the money, some new entity working in close proximity to our existing clearinghouses will handle the intricacies of making sure all funds are properly sent to the right districts.

Third, if we agree to split the amount of sales tax evenly between the location of the buyer and the location of the seller, there will no longer be any disagreement over collection and distribution of tax receipts.

The whole intent of this approach is to build a sales tax collection mechanism that is both seamless and nearly invisible to both retailers and customers alike.

In its present form, sales tax is far too messy for small-time retailers like those who set up shop at a flea market, craft show, or drive a mobile ice cream cart. Consequently, most of these tax dollars are lost.

It is also far too messy for mid-level participants like wholesalers, affiliate marketers, and subcontractors who shouldn’t even be in the mix.

The key to making this all work will be the use of split payment technology, and a new set of standards for the retail industry.

Split Payment Systems

In mid-2006 I published an online article on the concept of what I termed “fractal transactions.” This concept was later republished in the Jan 2007 issue of The Futurist Magazine.

Simply stated, a fractal transaction, now commonly referred to as a split payment system, is an automated point of money distribution. Money flows into the transaction, from one or more sources, and instantly leaves the transaction, automatically distributing money to one or more recipients. While this doesn’t sound like anything earthshaking, it indeed is.

Efforts in this area were underway long before my article, but the number of companies who have announced split payment systems since then has grown dramatically, including some big-name players like Amazon and PayPal.

If, for example, all retailers were required to have a split payment system built into their point of purchase transaction machines, and once a payment was made the sales tax was automatically sent to each of the tax recipients, while at the same time the purchase price was deposited into the account of the merchant, the overall complexity of the sale process would drop significantly.

As a result, new tax-collecting retailers will spring up all across the country and sales tax receipts would jump to a whole new level.

People rarely object to paying or collecting sales tax. But when the entire process places a mental burden of brain-draining time-sucking compliance, filling out of forms, along with the chance of getting audited, it’s no wonder why so few people want to subject themselves to it.

A well-designed split payment system could eliminate all that and more.

Swipe It Reader

Portable Transaction Machines

Rental car companies, overnight delivery services, and door-to-door delivery services have been experimenting with portable payment devices for years.

But recently a new breed of transaction devices have come out of the woodwork. Some, like The Square, Macally’s new Swipe It Reader, and Japan’s Mophie are designed to turn the iPhone into a payment device. Others, like the Verifone Vx670 or the Cardsave 7780 are standalone portable credit card machines. Some even have built-in check readers.

Even though the technology can work with all forms of digital money, there are still only clunky systems for working with cash transactions. Figuring out how to also work with cash transactions will be both a challenge and an opportunity.

Portable transaction machines are becoming very accessible to retailers. This kind of technology added to the front end will eliminate the need for countless bookkeeping hours on the back end, and the overall level of complexity will drop dramatically.

Here is where it gets interesting

If sales tax were collected and distributed at the clearing house level, payments could be made to tax recipients without any of the merchants having to fill out forms or compliance documents.

To establish the location for buyers and sellers, point of purchase transaction machines will come equipped with a geo-location chip to determine the point of sale, and the zip code of the buyer or shipping address will automatically determine the other side of the equation.

Let’s assume a box of nails was tagged with 10% sales tax, the tax money would be evenly split so 5% went to the location of the seller and 5% went to the location of the buyer. The 5% on the seller side of the equation would be split further with some money going to the state, some to the county, some to the city, and a small amount going to two different special taxing districts. Similarly, the 5% on the buyer side of the equation would also be split with some money going to the state, some to the county, some to the city, and a small amount going to a local transportation tax.

Once the system is functioning well within the U.S., since more and more transactions are happening across international boundaries, it would be interesting to allow foreign countries to join in the system.

This could easily become the beginning of the first global tax system.

Above the Line, Below the Line

Traditionally, merchants have been forced to absorb all of the transaction fees, a sizable piece of the purchase price. In many cities transaction fees end up being higher than sales tax. Since these fees are hidden deep within the bowels of the transaction, few people know the full extent of the damage. But just because they’re not obvious doesn’t mean you are not paying them.

If transaction fees were listed separately and added to the purchase price with a separate line charge, similar to the sales tax, people would quickly become aware of the steep charges being assessed.

As an example, our $10 box of nails would be assessed 10% sales tax and another 5.5% in transaction fees resulting in an $11.55 final purchase price.

If it’s okay to force gas stations to publicly display their gas prices, it should be okay to force credit card processing companies to publicly display their transaction fees.

The only reason this is being proposed is because the number of entities involved in credit card processing, authentication, currency conversion, and gateways has grown dramatically over the years. And the amount of these fees can range significantly, with some risky transactions taking over 10% of the purchase price just for processing the credit card.

Collapsing the Time-Float

Many companies have engineered lengthy late-payment cycles to allow them to squeeze out every possible extra penny from a transaction. One of the most notorious companies playing this game is Wal-Mart, delaying payment to vendors after a sale has been complete by as much as 90-180 days.

They rationalize the time float with product return cycles as buyers can return their purchase for a full refund several months after a purchase. But whatever the rationalization, the time-float between product sale and money flowing into vendor accounts can put the vendors at a serious disadvantage.

With digital money today flowing at the speed of light, efficient payment cycles between retailers, suppliers, vendors, and tax recipients will reduce the cost of doing business.

As a country, we are competing in a global marketplace. Our ability to streamline the efficiency of our systems will weigh heavily in the future on our standing among other countries who can work faster and cheaper than we can.

As a side benefit of reinventing sales tax, we may also have the ability to collapse many of the self-serving time floats throughout the financial world with split payment technologies.

When systems change, it’s important to leverage the situation by taking a macro view of support systems to maximize the scale of opportunity.

Some Final Thoughts

My intent here is to stimulate discussion, not to claim all of the answers.

The accounting and bookkeeping industry thrives in the face of complexity. Each new decision point added to the tax code has been very good for the accounting business, but generally bad for the rest of the economy.

Complexity places an insidious brain-power burden on people, and this translates into a significant toll on society. While it may be unrealistic to eliminate complexity by imposing simplicity, we can at least automate it.

Our future is being shaped by our systems. We now have a golden opportunity to do something amazing, and it all begins with reinventing sales tax.

Expanding our thinking about the notion of
corporate-run community libraries

Consider the following scenario. Two years from now in November, you find yourself walking into a voting booth to decide on the fate of your local library. The issue you will be deciding affects you directly because it has to do with the management of your local library. You will be voting on one of four choices for the operational management of your library. The choices you have to pick from include Microsoft, Google, Apple, or your current city-run operation.

Rest assured, this is not some takeover bid by one of these three companies to steal libraries away from their local constituency. Rather, it is a very considered offer to both manage and invest in your local library, while at the same time, extending the influence of their companies.

Let’s face it; the recent economic times have not been kind to community libraries. Many have had to cut staff and cut services in order to keep their doors open. Several libraries systems have had to close branches, while other standalone libraries have had little choice but to close their doors.

While many in the library community may see this as cause for alarm, I would like to open a conversation on how a situation like this can be turned into an opportunity.

While it may be possible to find a combination of paid services and corporate sponsorships to transition a community library off the public tax roles, there may be some more appealing options for allowing corporations to operate public libraries.

Before anyone begins assigning labels of “right” or “wrong,” I would like to engage you in ways to thread-the-needle of possibilities and see if there are any balancing acts that may indeed make sense.

It’s important to keep in mind that corporations will have some sort of profit motive in the background, so the best approach will be to formulate some form of win-win strategy so both the corporation and the community benefit from the relationship.

Library Assets

To begin with, there are many valuable assets that libraries have that businesses will find appealing. Here are a few that come to mind:

• Positive Influence – Most libraries serve as a source of community pride and a gathering place for activities. Even though many people may not use their library, it remain a positive entity in the minds of most.
• Naming Rights – In much the same way corporations spend millions to put their name on stadiums, companies will see great value in putting their name on a community library.
• New Product Test Bed – Libraries are already using many different kinds of informational products, and they are continually adding new ones. By simply shifting the library a little closer to the front of the early-adoption food chain, this might serve as a win-win situation that can be monetized through product development or marketing dollars.
• Information/Communications Channel – Most libraries today do a poor job of managing their outbound communications. A corporate communications department could easily turn libraries into an effective communications channel.
• Fiduciary Role – Libraries are a trusted entity. If it’s done right, the trusted reputation can be exploited in subtle but beneficial ways for both parties.
• Local Face to the Public – With the web making businesses increasingly virtual, an interesting counter-trend will be to create a local presence for all to see.
• Primary Destination – People will make a trip specifically to the library. This becomes important when considering the spin-off potential for other activities they may engage in while they are there, and also other related businesses next door.
• Linking Strategy – Adding other retail and service outlets to a library. As an example, placing a library next to an automobile service center will give people something to do while they are waiting for their car to get fixed.

“Corporate-Branded” Libraries

Keeping these assets in mind, let’s begin to explore what strategies may come into play with “corporate branded” libraries. Each corporation will bring with them their own corporate culture, their own way of doing things, and, of course, their own agenda.

Please note that this is merely conjecture on my part. I do not claim any insider knowledge about their future plans.

• Google Libraries: Even though Google’s founders have been long-time library advocates, they have continually pushed the envelope on copyright and fair use issues, a sore spot with many librarians. A Google Library strategy will likely be framed around further promotion of the agenda to make all printed material searchable. In addition, libraries may be utilized as the functional proving ground for pre-product launches.
• Microsoft Libraries: Microsoft has a rich history of supporting libraries both through philanthropy and corporate support. A Microsoft library would naturally be a showcase for Windows and Office software, and would probably include a training center to help people move from beginner to advanced users.
• Amazon Libraries: With its vast inventory of books to sell, Amazon may devise some very ingenious strategies. While it would appear that they are in direct competition with libraries, there are many areas where their work may be complementary. As an example, one of their strategies would likely focus on expanding the use of e-book readers and downloadable content. They also may wish to define the boundaries between free and sellable content, a boundary which is currently in flux.
• IBM Libraries: After selling its PC division, IBM has been looking for ways to create a new face for the public. An IBM strategy might involve showcasing their rich history of innovation all the way from early punch card machines, to mainframe computing, to the dawn of the PC era. Their goal would be to establish themselves as a leading player in the emerging cloud computing world.
• Wal-Mart Libraries: The motivation behind a Wal-Mart Library will be to draw more traffic into their stores. Further exploiting the store-within-a-store concept, libraries could be built as a loss-leader marketing play inside a Wal-Mart store. They may also be used to feature computer, printer, and other information products that can be purchased in the rest of the store. The home page on all computers will be set to walmart.com. (This may seem overtly commercialized, but may be a positive option for small towns with minimal opportunities for their library to grow.)
• Apple Libraries: An Apple Library may very easily operate like an Apple retail store with a library attached. Geeky librarians will teach people how to build personal profiles, use the equipment, record podcasts, and edit videos. People can use the library to “test drive” or even borrow the equipment before making a purchase.
• Facebook Libraries: Facebook wants to be much more than a social networking site on the Internet. Its goal is to become common infrastructure upon which Web 3.0 and 4.0 will emerge. With this in mind, libraries could become the training centers and proving grounds for much of this Facebook philosophy.

These, of course, are but a few of the possible players in this space.

If any of this seems inconceivable or too unwieldy for one company to take on, let’s look at the math. There are approximately 16,000 libraries across the U.S. If a company set out to privatize 1,600 or 10% of them, focusing on small to medium sized libraries with a per library budget of $2 million, the total expenditure would be $3.2 billion. While this is a rather significant number, it is indeed within the realm of possibilities, especially if there is a way to derive a profit from some aspect of the operation.

Keep in mind that the community will likely still be contributing money to the operation of the library, so the corporation may only have to add some supplemental funds which it will likely view as marketing dollars.

Setting the Boundaries

As with any type of agreement, the first task needs to involve thinking through both the upside and the downside of the arrangement.

In many respects, this type of agreement is no different than what a city will set up with a cable television franchise, electric and gas providers, or even garbage collection.

It is important to establish a series of guidelines to address key operational issues on the front end.

• The city or community will need to retain ownership of the facility and all equipment and content going into the arrangement. The agreement should be for a set amount of time, perhaps 5-10 years, renewable at the discretion of the governing board.
• As a general rule, the public needs be given free access to the library along with free access to information. There may be a charge for certain types of information and services, but this needs be established up front.
• The library has an obligation to archive the local community. Again, details about minimum archive requirements need to be explained in the agreement.
• Libraries cannot be closed. In the event a corporation decides it can no longer continue to support and operate the library, there must be a one year advance notice given to the community allowing ample time for either the city or another company to take over the operation.
• Most importantly, the community needs to retain some sort of veto power over the operation as a check-and-balance system for whatever might go wrong.

The Upside and the Downside

With corporate run libraries, I can see both positive and negative sides to the arguments.

On the positive side, they have the potential to become better managed libraries. Corporations will inject their own unique kind of creativity into the system.

Librarians will likely be better trained and paid a higher salary. The public will benefit from better resources, better programs, and access to cutting edge thinking and technology.

On the negative side, corporations have traditionally been very heavy-handed in their attempts to make a profit, so in this type of situation, some formerly free services may begin to cost money. Over time there may be a growing tension between the corporation and local citizens, and virtually every change becomes closely scrutinized by the public. The biggest downside happens if the corporation ignores the needs of the community and wields a heavy-handed corporate agenda.

Most companies are very wary of anything that could cause damage to their reputation, so most of the extreme scenarios are not too likely.

If the arrangement is structured properly up front, and the community retains ownership of the facility and veto power over any egregious violations, this could indeed become a win-win arrangement for everyone involved.

In fact, the best possible arrangement might be if 2-3 companies get very competitive about running libraries with each trying to outdo the other. In that kind of situation, we all win.

By Futurist Thomas Frey

Click here to view the embedded video.

Short video clip about the opportunities associated
with creating an alternative transportation district.
Recorded at the Plan Fort Collins event on March 3, 2010

Over the past few years I have been carefully watching what has turned into an explosion of alternative transportation vehicles being developed all over the world. These vehicles include everything from electric and fuel cell scooters, to hybrid motorcycles, to electric skateboards, to turbo-wheelchairs, to dog-powered bikes, to Segways and Segway knockoffs.

Nearly every one of these vehicles is different. They differ in size and shape, height and weight, fuel source, speed, and maneuverability.

Perhaps the only thing they have in common is that there are virtually no roads to drive them on, and that’s where we find a tremendous opportunity.

If we do not encourage the use of alternative transportation, we are by default encouraging more car usage. This single-minded approach is limiting not only our mobility, but also our ability to innovate.

Innovation comes in many shapes and forms, but in the area of transportation, it has to come in the shape or form of a vehicle that is compatible with our current highway and street systems.

Because of the thousands of alternative transportation vehicles coming out of the woodwork, most cities have chosen to ban them from the streets.

To be clear, most haven’t bothered to legislate a ban on the vehicles. Instead, responsibility for dealing with them is handed off to the police departments and for them, the easiest solution is simply to not allow them on the streets. And they are also not allowed on the bike paths, sidewalks, or any other existing trails.

Trail Systems

In my home state of Colorado, people take great pride in the elaborate networks of trails that have been created in many of the cities and small towns.

The trails, however, are the exclusive domain of pedestrians and bicyclists, even though the two often have their own set of compatibility issues.

Some communities have invested heavily in the creation of these trails, but few, if any, have invested in the signage, maps, and traffic management systems necessary to turn them into functional transportation routes. Very few first-timers have a clue where they will end up on these trails.

Trail systems still tend to play the role of the ugly step child when compared to roads and highways. Hardly any have lane dividers. Many are not plowed when it snows. Few have names or signage to give any indication where you are in relationship to the rest of the community. If an accident occurs, emergency vehicles are forced to hunt down the location.

Additionally, few trail systems come with any form of support services. In most cases, restrooms are few and far between. It’s hard to find water, food, or shelter in case of rain or hail.

As a result, our current trail systems have become the domain of those who are looking for recreation and exercise, not for people looking to go from point A to point B.

No Current Classification System

When it comes to alternative transportation vehicles, there are very few rules… well, other than you can’t drive them anywhere.

What I mean is that there are no classification systems regarding such things as size, weight, noise, and speed.

If, for example, there was a classification system for electric scooters (We’ll call it the ES-12 Classification) where all vehicles were “silent” electric powered scooters, weighing under 500 pounds, under 4’ in width, with 3 wheels or less, traveling at speeds not to exceed 20 mph, the vehicles become a known commodity and cities could decide whether to allow ES-12 scooters on the streets or trails.

Similarly, if there was a classification system for hybrid off-road wheelchairs (We’ll call it the HW-14 Classification) where all of the wheelchairs are one-passenger vehicles, wheels that are between 12-20” in diameter, less than 3’ wide, traveling at speeds of under 12 mph, a different set of decisions could be used to determine the proper usage of HW-14 wheelchairs.

Once the classification systems are in place, and cities start paying attention to them, the alternative transportation industry will begin designing vehicles to match the various user groups that develop around each category.

The Opportunity

The real opportunity lies in the ability of some bold community to step forward and develop the first alternative transportation district. This district will become the trailblazing authority upon which this growing new industry will turn for answers.

As a first step, the city needs to convene a meeting that involves representatives from many of the major players in the transportation industry – Honda, Audi, Daimler, Ford, GM, Suzuki, Yamaha, and many more. The intent of this meeting will be to set the stage for defining the presently undefined alternative transportation industry: vehicle classifications, industry standards, usage requirements, safety issues, and more.

In tandem with hosting the meeting, the host city will need to take an active role in forming a leadership team complete with industry and community experts to serve both as the ongoing decision-making body and the driving force of action and initiatives.

The community will need to understand both the risks and opportunities associated with this type of venture. Not everyone will be in favor of it, and serious opposition may develop along the way.

At the same time, this is an industry looking for a home. Along with becoming the first alternative transportation-friendly city will come an economic development play that can be used to entice many early stage players to pull up stakes and move into town. Many others will establish regional offices as a way to stay in touch with each new development.

The city will be committing to the development of a trail/road system that operates outside of the bounds of current highways, railroads, trails and bike paths. Since many cities already have pieces of this infrastructure already in place, the commitment will be to improve and redevelop it into a workable phase-one alternative transportation system.

To be sure, this will not be an easy undertaking, but nothing worthwhile ever is.

The future of transportation will not be defined by bigger, faster, sportier-looking cars. Rather, it will be defined by matching every individual’s unique mobility needs with the most appropriate vehicle for satisfying those needs.

First things first. Before we can have flying cars,
we will need to go through the era of flying delivery drones

Imagine yourself in 2030, 20 years in the future, sitting in your living room watching your favorite show on a 3D holographic display, and you witness a product placement scene where someone is eating one of the best pizzas you’ve ever seen. The depiction is so lifelike and intense that you instantly start craving pizza, and simply utter the word “yes.”

Thirty seconds later, a flying delivery drone docks with your house and delivers the exact pizza you were craving along with a six-pack of your favorite beer. It automatically knew what you wanted, and it knew about the beer as well as the pizza.

As this plays out, you will have eaten half of the pizza before you realize what you paid for it.

Marketing people have worked for decades to shrink the time-gap between the marketing moment and the buying moment. In this scenario, I’ve also added a nearly instantaneous fulfillment moment.

With this simple illustration we can begin to see the immense potential of flying delivery drones and the radical changes they will impose on everyday living. At the same time, they become the critical next step for us to advance towards one of our most sacred unfulfilled dreams, the age of the flying car.

Jet Scooter concept vehicle

Flying Cars Defined

So what exactly is a flying car?

Most of us are still stuck on visions of George Jetson’s car, remnants of Hanna-Barbera’s hugely influential cartoon series launched in 1962. Our first generation of mass-produced flying cars, however, will look far different than what George was driving.

Over the years we have seen many versions of flying cars starting with the Curtiss Autoplane in 1917. Decade after decade, designs have evolved along with the conceptual underpinnings of what constitutes a flying car.

In 2009 when Terrafugia launched the maiden voyage of its own flying car known as The Transition, the universal reaction people voiced was, “Interesting, but it’s not really a flying car.” (Photos below)

NASA has begun referring to them as PAVS (Personal Air Vehicles) and has attempted to differentiate flying cars from other flying vehicles and has concluded that for any of these vehicles to become commercially successful, they need to meet the following criteria.

• Seats 2 to 6 passengers.
• 150-200 mph (322 km/hr) cruising speed.
• Quiet.
• Safe.
• Comfortable.
• Reliable.
• Able to be flown by anyone with a driver’s license.
• As affordable as travel by car or airliner.
• Near all-weather capability enabled by Synthetic Vision Systems (NASA’s term for a technology with better-than-human visualization of the terrain and airspace).
• Highly fuel efficient (able to use alternative fuels).
• 800 mile (1300 km) range.
• Provide “door-to-door” travel capabilities, via vehicle roadability, or small residential airfields or vertiports with only a short walk from the aircraft to the final destination.

Essentially, flying cars need to be as comfortable as cars today, extremely safe, and fly from Point A to Point B on its own, with no human interference.

Expanding on NASA’s list, five key technological breakthroughs will be needed for the first generation of flying cars to become viable:

1. Fully automated navigation systems – The average person has a difficult time navigating on a two dimensional surface. The flying car industry will not be able to “get off the ground” without an onboard navigator that “handles the driving”. Yes, people will want the freedom of being able to do some creative maneuvering in certain situations, but that will only be allowed in rare instances.
2. Low-impact vertical take-off – When used by average person, flying cars cannot have a runway requirement. They need to take off and land vertically without blowing the leaves off of trees or shutters off windows.
3. Convenient fly-drive capability – As humanity makes the transition from ground-based autos to flying cars there will be a need for both driving on the ground and flying in the air.
4. Silent engines – Because there are no significant acoustical barriers in the air, the engines on flying cars will need to be virtually silent. Very few cities will want to put up with the noise of thousands of flying vehicles if they all sound like airplanes today.
5. Specialized safety systems – To date both aircraft and airspace have been closely controlled by organizations like the FAA and the NTSB to insure the safety of the flying public. Because of the sheer volume of vehicles being navigated by average drivers (read untrained pilots), additional safety measures will need to be in place. Required safety featured will include such things as collision avoidance systems and drop-out-of-the-sky emergency airbags on the outside of the vehicles.

Additionally, with the potential for thousands of vehicles clutter the airspace, one additional requirement will be that they become virtually invisible from the ground.

The Norman Matrix – Directional layering of airspace

In addition to the technology built into the vehicles, we will also need to develop a workable air traffic control system for exponentially larger traffic volumes.

With several hundred thousand vehicles flying over a city, there will need to be an organized system for managing the traffic, and having all vehicles at a particular altitude traveling the same direction would eliminate many problems. This is an automated navigation system I’ve labeled the Norman Matrix.

In the Norman Matrix, all vehicles traveling at 1,000 ft altitude will be traveling due north, at 1,010 ft altitude 1 degree east of due north, 1,020 ft altitude 2 degrees east of due north, etc. Vehicles will spiral up to make a right turn, or spiral down to make a left turn.

With a fully automated navigation system, this type of maneuvering should be invisible to the operator.

While not a perfect solution (the North Pole becomes a crash point for those flying due north), it does represent a good starting point for engineering a more comprehensive air traffic solution.

Coming Soon – Flying Delivery Drones

As we look over the list of technologies needed, it becomes clear that virtually every aspect of the flying car era will also be needed for us to usher in a workable system for flying delivery drones. But it can be done without the dangers of flying people.

For us to reach a point where large numbers of average people can conveniently fly across town for work, school, and shopping, we will need to spend a few years practicing with non-passenger drones. Once the drones have been perfected, we can easily transition to the flying car era.

Logically, any full-scale drone delivery service should be pioneered by companies like FedEx or UPS. But as with most large companies they tend to be less risk-taking than some of the private and small business innovators. Small companies will develop the prototypes which the large companies will later use.

The U.S. Military has been proving the viability of unmanned drones, with over 5,500 already being used in combat. However, most military drones, such as the Predator and Reaper, are designed to operate more like a plane with runways for takeoff and landing.

Deliver drones, like flying cars, need precise vertical takeoff and landing capabilities. For this reason, some of the innovative companies in the rapidly growing quadricopter field may be better positioned to move into this category. Quadricopters today are primarily used for surveillance and aerial monitoring. (Photos below)

Thinking beyond traditional deliveries, flying drones may be used to deliver water, change out the batteries on your home, remove trash and sewage, and even vacuum the leaves on your lawn. For some, the drones will allow them to live off the grid, and even off the net.

Changing the World in the Process

When the Internet began to scale in the early 1990’s, it did far more than transform communications. The viral nature of the World Wide Web began creating borderless economies, causing individual countries to lose control of commerce.

In addition, to borderless commerce, it created confusion about issues related to power and control, even the sovereignty of nations.

Once the volume of flying cars reaches a significant number, somewhere in the range of 500,000 to 1 million, countries will begin to lose control of their citizens.

Borders will become meaningless to people with flying cars. Yes, it will be possible for countries to develop electronic borders, but that will only create a black market for cloaking devices and invisibility shields.

Flying cars will do far more than transform transportation; they will transform government, taxation, conflict, commerce, culture, patriotism, and much more. As with any new technologies, not all of the changes will be good.

In the early days of the Internet, we could only begin to imagine the opportunities that would eventually accompany this kind of innovation. It will be the same with flying cars.

For me, the best way to phase it is: “Flying cars will unleash our bodies in much the same way the Internet has unleashed our minds.”

By Thomas Frey

Curtiss Autoplane, world’s first flying car built in 1917

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In 1998 AeroVironment was given a contract by the Air Force to develop SkyTote,
a new concept for a cargo-delivering UAV (unmanned aerial vehicles) that lands on its tail.

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Honeywell’s RQ-16 T-Hawk

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Trek Aerospace – Orange OVIWUN 1

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Predator drone on approach

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Terrafugia Transition unfolding it’s wings

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Terrafugia Transition refueling

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Raytheon’s DarkEye Surveillance Drone

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Thomas Frey with AR.Drone by Parrot at CES in January 2010

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Libraries in the future will come in many different forms

NOTE: The following is a reprint of an interview that recently appeared in American Libraries Magazine

Without consulting a crystal ball, Thomas Frey, executive director and senior futurist at the DaVinci Institute, writes and speaks about a promising future for those libraries strongly connected to their communities and quickly adaptable to the changing world around them. Tom Sloan, executive director of the DuPage Library System in Geneva, Illinois, asked Frey to discuss the future of libraries.

Sloan – Unlike many futurists, you have stated that “libraries are here to stay.” Why?

Frey – Libraries have been around in various forms for nearly 4,000 years and have become a cornerstone of activities for the communities in which they exist. Even though the role and function of what’s happening inside will change, the library itself will remain a powerful entity around which communities will rally.

Beyond the evolving nature of libraries, there are very few people who don’t like libraries. The library-hater crowds are very small. While some will argue about the value of dollars going into a library, not many have waged an all-out assault. On balance, the vast majority of people want libraries to remain, and this public sentiment will help solidify the staying power of libraries for many years to come.

An important role of libraries that often gets overlooked is that of archiving the community in which they exist. While many forms of information can be digitized and reside in “the cloud,” and various devices will give us access to information anytime and anyplace, there are a variety of documents and artifacts that are necessarily local.

I’ve suggested libraries install “time capsule rooms” as a way to help archive their communities. The more a library can do to establish itself as an archive of everything local, the better it will be at touching the hearts and minds of everyone it serves.

Sloan – You’ve said that within 10 years the ink-on-paper publishing industry will not be a sustainable economic model. What will the new business model be?

Frey - In January I attended the Consumer Electronics Show in Las Vegas and saw over 20 new digital book reader products being introduced. Over the next few years we will see fierce pricing competition with the cost of book readers dropping to under $20.

At the same time, the number of digital downloads, which cost a fraction of the price of traditional books, will soar, and the sale of ink-on-paper books will plummet.

People today have grown to resent the one-way flow of information. They want to participate, make comments, interact with other readers, and somehow take ownership of the content.

The most successful business models for future publishing companies will involve interactive forums where authors engage in give-and-take sessions with readers and the former static content of books takes on an organic life of its own, and continues to grow along with the discussions.

I can only speculate on the most effective business models, but my guess is that readers will be willing to pay significantly more to engage in things like live webcasts, digital book signings, and vibrant talk-back sessions than they ever paid for books in the past.

Sloan – You have written and spoken about libraries becoming “Electronic Outposts.” What is an Electronic Outpost library?

Frey - An Electronic Outpost is a satellite branch of a central library designed to be an efficiently run community gathering place. Size, shape, and purpose will vary. Some may fit well in shopping centers while others may be better suited to function as stand-alone buildings. Some may be very small, others quite large. Some will take on a homey, living room–like feel, others a more traditional library reading-room setting, and still others will opt for the look and feel of a cyber café.

My hope is that communities will begin to experiment, and electronic outposts be synced with the needs of the surrounding community. In the end, they will serve a different role than that of a traditional branch library.

The possibilities are endless. Some will offer a selection of digital tablets and book readers, other will feature mini-theaters, gamer stations, day-care centers, working studios, and search command centers.

Even though the days of traditional books may be numbered, our need to access information will continue to escalate and our methods for interacting with the information will continue to evolve.

Sloan – What is the “Empire of One” business model and why should libraries be interested in this trend?

Frey - An “Empire of One” business is a one-person business with far-reaching influence. Some exist as private practices like that of a doctor or dentist, others as coaching or consulting businesses, and still others as freelance service providers. A growing number have taken on massive operations with products manufactured overseas, customers all over the world, and a global customer base.

Most work out of their homes. Much like the growing ranks of the telecommuters, they often feel isolated from the rest of the world and tend to crave meaningful conversations with like-minded people.

An emerging new trend is towards creating what’s known as co-working spaces, which serve as social work environments for independent workers. Co-working spaces offer enough privacy so productive work can be accomplished, but also social spaces that allow sidebar conversations to spring to life.

This is an interesting area that libraries need to experiment with.

Sloan – In the 2006 book The Long Tail, Wired magazine Editor Chris Anderson said, “When the tools of production are available to everyone, everyone becomes a producer.” What new roles and functions can libraries adopt to support producers?

Frey - All around me I see people transitioning from consumers to producers. These “tools of production” that Chris Anderson talked about are now easily accessible. For libraries, the patrons are shifting from information consumers to information producers. Readers are becoming writers, audio listeners are becoming audio composers, and video watchers are becoming video producers.

Libraries need to begin offering access to these “tools of production.” They may range from podcast studios, to audio capture and audio editing, to video capture and video editing, to virtual world stations, to blogger stations, to mashup consoles, to graphic editing stations. The possibilities are only limited by our own imaginations.

Sloan – In addition to libraries, you write and speak about the future of business, education, government, and transportation. What trends in these areas do you think will have the greatest impact on the future of libraries?

Frey - Perhaps the biggest impact will come from tomorrow’s education systems. Future education systems will be oriented around an iTunes-like system that enables experts all around the world to create courses with a rapid courseware builder.

Envisioned as a smooth, fill-in-the-blanks template process, the courseware builder will carefully step course producers through the design, build, and launch phases of each course. With courses stored as part of a global distribution center, they will then be made available to people all around the world.

Apple has already launched iTunes U and is currently hosting over 200,000 college courses. These courseware builders will get far better over time, and it will soon be commonplace for kids of all ages to take the majority of their classes online.

The future of education will revolve around hyper-individualized learning, self-paced, organically generated content that is modality diverse, and available on-demand 24/7. Any topic, anywhere, anytime … it will be less dependent on teachers, less dependent on schools, and offer more personal control. Libraries have the potential for becoming the working laboratories for people creating new courseware.

Sloan – Over the past few years you have visited hundreds of libraries and spoken to many library groups across the country. What have you learned about libraries that you didn’t know prior to your visits?

Frey - This may sound a bit odd, but libraries are really a life form. They exist as a human system, and as such tend to take on many of the same attributes as other life forms.

Going back to your first questions, libraries are here to stay because they have a survival instinct. They have created a mutually dependent relationship with the communities they serve, and most importantly, they know how to adapt to the changing world around them.

I am always impressed with the creative things being done in libraries. As Eleanor Roosevelt once said, “The future belongs to those who believe in the beauty of their dreams.” There are a lot of beautiful dreams taking place that will help form tomorrow’s libraries.

Thomas Frey is executive director and senior futurist at the DaVinci Institute where he works closely with the institute’s Senior Fellows and Board of Visionaries to develop original research studies. As part of the celebrity speaking circuit, Frey pushes the envelope of understanding, headlining events with some of today’s most recognizable figures.

Tom W. Sloan is executive director of the DuPage Library System, a regional, multitype library system headquartered in Geneva, Illinois, consisting of more than 130 members in over 300 libraries in the greater Chicago area.

A new breed of worker, equipped with uber-geek data-capturing tools,
are about to usher in a whole new information era

Recently I was preparing for a talk on the future of money, a talk I have given many times in the past, and I became absorbed with one singular thought – the relationship between information and money.

The value of a person, as an example, has traditionally been calculated based on hard number such as money in their bank account, personal assets, 401Ks, earning power, etc. As our ability to capture and process information improves, we are able to assign many more numbers to the intrinsic value of an individual.

Today we find ourselves in an awkward in-between state of trying to transition from a world based on hard currencies to one where things like talent, relationships, knowledge, reputation, personal networks, influence, and accomplishments all have growing significance. These attributes have always held value, but only recently have they been considered valuable enough to serve as a tradable commodity.

In the coming years we will see an explosion of systems designed around the quantification of human attributes and personal influence serving as the basis of new currencies. And these currency movements will be driven farther and faster with introduction of The Terabyters.

What is a Terabyter?

In 2008, Americans consumed 1.3 trillion hours worth of information, which translates into 12 hours of information per person per day. If 12 hours a day seems a bit much, consider the sources of TV, radio, games, social networking, surfing the Internet that continue to play an ever greater role in our lives. From a literary standpoint, Americans consume 100,500 words per day from these same sources. That amounts to 34 gigabytes each day or a total of 3.6 zettabytes total for 2008.

As impressive as these numbers sound, they are tiny compared to the walking information nodes we will see in the near future. These are people I have begun to call the Terabyters.

A terabyter is a person who produces more than a terabyte of new information every day. Today, only a handful of these people exist, but the numbers will soon swell along with the development of new data capture equipment.

Consider the following scenario…

Each morning Winston rolls out of bed, takes a quick shower, and begins to strap on the trademark Gargoyle gear. Named after the characters described in Neil Stevenson’s Snow Crash, a Gargoyle is a person who equips themselves with a wearable computer of sorts, and is constantly collecting visual and sensory data about his/her surroundings, while continually being jacked into the Metaverse (Internet).

For Winston, his role in life is to serve as a human information node in the rapidly growing world of extreme data immersion, and his income is both directly and indirectly dependent upon the amount of information he is able to amass on a daily basis.

The information Winston collects is being continually streamed to the server farms for search engines designed for the physical world. Each video stream coming from Winston is layered with object recognition software, geospatial coordinates, and other sensory response data to the physical world around him into digital information that is searchable.

He represents a human version of the spidering bots that tech companies currently use to scan the digital web. But spidering the physical world requires a more human approach, and that’s where Winston comes in.

Search technology companies such as Google, Yahoo, and Microsoft have agreed to buy the incoming data streams from Winston, and thousands more people like him, based on a percentage of ad sales associated with the display of his information.

Two years earlier, Cisco began a campaign to promote the lifestyle of the Terabyter as a way to force the other industry players like AT&T and Verizon to step up their game. Within a few short weeks, seemingly everyone on the planet knew what the hottest new ultra-cool profession would be.

As a full-fledged Terabyter, people can do whatever they want to, anytime, anyplace, and still make money.

For a mere $5,000 worth of equipment, and a commitment to wear the gear relentlessly, virtually anyone can become a Terabyter, and the money will start rolling in.

Admittedly it isn’t a lifestyle that will appealed to everyone. The equipment is a hassle and the income is rather sparse to begin with. But those who stick with it will see their income grow and, over time, the equipment will become far less intrusive.

However, for the people who start early and stick with it, this is the ultimate lifestyle. Every day is an adventure, finding new places to explore, new people to meet, and never bound to a desk or a computer. Their livelihood is directly related to how active their lifestyle is.

Terabyter gear. Crude today, but evolving quickly

Creating the Terabyter Network

To be sure, there will be many players involved in developing a system to ramp up data collection to this level. All of the Internet service providers will have to gear up, new bandwidth needs to be allocated, routers and switching systems have to be changed out, browsers and operating systems will need to be updated, and search engine thinking will have to be revised.

Invariably, this whole shift will begin with a ragtag operation of sub-terabyters seeding the data universe. The initial capabilities will be quite limited with regional test-beds set up to demonstrate the potential inside a single city. But once a major player like Cisco begins to smell an opportunity, everything changes quickly.

Terabyer gear is already available, but still in crude, marginally-usable formats. Video capture goggles, helmets, and other devices will quickly morph into sleek, barely-visible equipment that can be mounted in, on, and around the wearers.

Once the world gets a glimpse of the potential, along with the right incentives, Terabyter gear will begin to fly off the shelves, system registrations will skyrocket, and a whole new income-producing lifestyle will spring to life.

In addition to the ongoing video stream of a Terabyter’s surroundings, the video images will be overlaid with biosensor response data, assigning emotional values to individual objects, places, and people.

Each month new sensors and data-collection gear will show up in the marketplace and Terabyters will have to decide which elements to replace on their apparatus. .

Some of the initial dissention will stem from whether or not it’s necessary to use humans. Terabyter equipment can easily be strapped onto cars and bicycles, but the most valuable data will come from the places that only humans could go.

To be sure, privacy and security issues will rise to the surface, but these will not be insurmountable matters.

Bridging the Relationship

After viewing the world through the lens of a Terabyter, I’d like to focus your attention again on the emerging relationship brewing between information and money.

Money based on rare commodities will hold its value until the commodity is no longer rare. Similarly, money based on confidence and trust will hold its value until faith in the system begins to dissipate.

For this reason, all money is fiat money, based on trust.

Money today is nothing more than information – digital nuggets that have been assigned value buried deep inside our information reserves. Mining for information is similar to mining for gold or any other precious metals. You have to know what you’re looking for.

Currency has been the traditional system for transferring value in the past. In the future, our ability to manage and control information will enable many new systems for transferring value.

If you’re still struggling with the concepts here, Dan Robles, founder of the Ingenesist Project offers this set of predictions for 2020 based on “an entirely new form of capitalism whose velocity and voracity will take the world completely by surprise.”

Hold on to your hats, the transition is right around the corner. And the change agents who will help usher in this new system will be none other than the Terabyters.

By Futurist Thomas Frey

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The total number of governmental bodies in the U.S. is approaching a staggering number – 90,000. During normal economic times there is plenty of money to go around, but now every city, state, county, parish, township, and special taxing district is competing for the same tax dollars that the federal government is.

Governmental entities are living, breathing organisms, each fighting for survival. With tax shortfalls cropping up in nearly every corner of the U.S. economy, most are struggling to preserve their own piece of the pie. With money declining, many are compensating with unusual policy decisions that they hope will shore up their balance sheets.

But it’s not just about money issues. Along with taxing authority, each one of these governments has its own ability to create and enforce new laws, rules, and regulations. Working with a limited set of tools in their toolbox, governments have resorted to using laws and regulations to solve virtually every conceivable problem. The sheer volume of laws emerging from these 90,000 rule-making bodies is truly stunning.

Abraham Lincoln once said, ““The best way to get a bad law repealed is to enforce it strictly.” Similarly, the quickest way to bring America to its knees is to strictly enforce all of its laws.

Sales Tax Battles

Most of the governmental entities are funded through some form of sales tax, a system designed during an entirely different era that is now on the verge of collapse.

At the heart of current debates is a 1992 landmark ruling by the Supreme Court that determined retailers are not required to collect sales tax from shoppers unless they have a physical presence in the state where customers live. Initially, this ruling applied mainly to catalog companies and home-shopping channels on TV. But it also applied to the emerging online retail industry, giving them a distinct competitive advantage, and consumers a reason to change their buying habits.

Local retailers who have invested in their community, who send their kids to local schools and volunteer for local charities, find themselves competing with faceless online companies, most of whom have never set foot in town. The problem with current sales tax laws are that they create a disadvantage to those who are local. But here is where it gets complicated.

If an online business has a physical presence in a state, such as a store, office or warehouse, they must collect sales tax from the customers who purchase items in that state. Without a physical presence, no sales tax needs to be collected. That sounds simple enough, until you get into the definition of what constitutes a physical presence.

Some states now claim that anyone doing affiliate sales, placing referral ads on their blog sites and receiving a commission, can be construed as being a local sales agent, and therefore the entire transaction is subject to sales tax. As a result, companies like Amazon and Overstock who count heavily upon the no-sales-tax advantage have cancelled affiliate relationships with anyone doing affiliate sales for them in those states.

Maximizing the Failure Points

Rest assured sales tax issues are but a small piece of a much larger problem.

Complexity creates failure points. Every decision point along the way increases the odds that something will go wrong, and we have moved into an era of non-stop decision points.

A country with 90,000 governments, whose primary tools for solving problems involves creating new laws, is a country that has maximized the number of failure points.

As I’ve often said, “The health of a nation is inversely proportional to the number of laws needed to govern it.” From this perspective, we live in a very sick nation.

Over time, these complexity-laden systems will invariably descend into the lower levels of disfunctionality, with anger and finger-pointing setting the stage for more graphic battles to follow.

In a tough global economy, the good people of the U.S. have chosen to tie ankle weights of complexity around their legs as they attempt to swim towards a better economy.

The Futurist Perspective

Backcasting is a tool used by futurists to look at the present from some point in the future.

In much the same way we stand in amazement as we read about the Salem witch trials, or 18th century doctors who used bleeding to cure diseases, or Polynesian tribes who sacrificed virgins to appease the volcano-gods, a country comprised of 90,000 governments is destined to appear equally ludicrous in the future.

One hundred years in the future, people in 2110 will look back at this era of history and marvel at the insanity of our times. They will be amazed at how people managed to live in a country with more laws than anyone can count, a tax code that, according to NPR, is over 67,000 pages long with 1,638 different tax forms, and a justice system that controls one out of every 31 people in the country and has the highest incarceration rate of any nation in history.

All of our defensive posturing for maintaining the status quo will quickly deteriorate into the equivalent of modern caveman thinking as future generations make us the punchline of their jokes and the universal symbol of “what not to do.”

Reining in the Unreinable

So how do we reverse the avalanche of complexity that is cascading around us? In philosophical terms, how do we create the immovable object to deal with the unstoppable force?

The short answer is that abrupt change is simply not possible. Systems that have evolved over decades cannot instantly be traded in for something new.

With a society that is already heavily invested in our current systems, and people already pre-programmed to think and act accordingly, the operating system can only be changed by rewriting the source code. In short, we need to create systems for changing the system.

We currently have no check-and-balance system for impeding the excessive law-writing now taking place. Simply by adding friction to the rule-making process will slow it down. Adding a lifespan to the laws will help force decision-makers to focus on the highest priorities.

Here are a few examples of system changes that may help:

1. All laws must be posted in one central location online. As a first step towards getting a handle on the runaway law-creators, we need to create a law that requires all laws be posted on one central website online. Any laws not posted will be deemed unenforceable.
2. Any laws that have not been enforced in that past 20 years become unenforceable and must be removed from the list. Time spent getting rid of the clutter means less time for creating new laws.
3. All laws must be written on an 8th grade comprehension level. No laws can become law until they are certified as having been written on this level.
4. Most importantly, no government should be allowed to profit from the enforcement of the law. Whenever there’s a profit motive linked to law enforcement, the nature of government changes, and our humanity becomes compromised.

Aspiring to Synergy

History has taught us that governments can only exist if there is an adversarial relationship between a government and its people. For this reason, few have bothered to question the abrasive relationships that have developed.

However, business and government need to maintain a synergistic relationship. Governments provide the operating system and businesses shares the wealth, proving the revenue streams upon which governments operate.

Companies in the U.S. are continually facing new forms of global competition, and anything that makes it more difficult to conduct business, makes them less competitive.

For a country to prosper, it’s not necessary to be perfect. When we find ourselves being chased by a bear, we only need to be faster than the other guys.

Click here to view the embedded video.

A few thoughts on “Maximum Freud”

In 1972, I was young engineering student at South Dakota State University in Brookings, SD. One of the first courses I was required to take was a short-course on slide rules. For those of you who don’t know what a slide rule is – first came the abacus, then came the slide rule, and then came the calculator.

This was a time when the real “cool geeks” on campus walked around proudly displaying their black carrying case for their slide rule that was attached to their belt. Brainiacs on parade, a way of telling the world how smart they were.

Early calculators were first showing their face around 1970, but in 1972 they were still pretty expensive. I remember arguing with my teacher about whether or not the slide rule course was necessary and his response was that “all engineers need to know how to run the slide rule.” Tough to argue with that logic.

But of course his thinking was wrong. Even though I took the course and passed it with flying colors, I’ve never used a slide rule in doing engineering work. Engineers at Hewlett Packard and Texas Instruments who were working on next generation calculators at the time would have laughed at my teacher’s assertion that slide rules were always going to be the centerpiece of the engineer’s tool chest.

Clearly this period of time was the end of an era. It was the end of the slide rule era and the beginning of the calculator era.

As a society we haven’t seen the end of too many eras, but we are on the verge of experiencing many things disappearing in the near future. Most won’t be as cleanly defined as the slide rule being replaced by the calculator. Often times the soon-to-be-obsolete technology will be replaced by two or three other technologies.

As I sketched out the simple diagram showing the end of one era and the beginning of another, the point where the two eras overlapped caught my attention. This period of time was important to isolate because of the extreme dynamics happing there. It also occurred to me that we didn’t have a name for this intersection of technology, this collision of business forces.

So I came up with the name “Maximum Freud”. Yes, it’s a rather wacky name, but it makes sense.

As technologies approach Maximum Freud, this is the period when industry players have to spend lots of time on the Freudian Couch to understand what’s going on. This is a period of extreme chaos, and also a period of extreme opportunity. But here’s the most important part:

All technologies end.

Every technology that we use today will someday go away, and it will be replaced by something else. Every technology will approach its own period of Maximum Freud. So from the standpoint of making bold predictions, the imminent demise of many of our technologies is a certainty.

Here are just a few examples of technologies that are currently approaching Maximum Freud:

• Checking Industry – Already in decline, the end of the handwritten check is drawing near. Within ten years the appearance of a paper check will be quite rare.
• Fax Machine – Museum curators are already dusting off a spot for this once staple of the business world. Already in its twilight, the remaining days of the fax machine are numbered.
• Traditional AM-FM Radio – With commercial-free satellite radio making major inroads, the success of iPods and other MP3 players, and internet radio gaining ground, traditional radio has been loosing ground quickly.
• Broadcast Television – Internet TV is gaining ground. Pay-per-View options along with McDonald’s DVD rentals and services like Netflix are all causing the traditional broadcast TV market to dwindle.
• Wires – As we move further into the wireless age, more and more of our wired infrastructure will begin to disappear. First the cable television lines, then the telephone wires, and eventually the power lines.

As you can see, the Maximum Freud concept can be a valuable tool in determining which of the business and home products you use today will be gone tomorrow. We live in a very fluid, changing world and each step we take towards the future will enable us to experience life in a new and different way.

By Thomas Frey

When Hurricane Katrina hit the city of New Orleans the US Post Office was faced with a major dilemma. For countless centuries, the modus operandi for the post office was to deliver mail to a location, and the individuals who lived at that location would stop by and pick up their mail. But following the hurricane, the floods had destroyed all of the “locations”.

Normally, if a location has been destroyed, the post office will simply put a forwarding address into the system and the mail will reroute to the new location. However, there was nothing normal about the Katrina disaster, and countless thousands of people were suddenly placed in limbo, transported to cities across the country, some to live in the new city permanently, others to continue on a nomadic journey that would find them living in as many as 10-15 different locations over the course of the coming years.

Katrina victims and the people trying to reach them by mail faced a significant delay, at best, as their mail was either held up in the post office of origin or sent to a succession of temporary addresses. At worst, many letters became permanently lost as the legacy systems inside the U.S. Postal Service tried desperately to adapt to some rather extraordinary circumstances.

This disaster brought home the fundamental problems associated with delivering to a ‘location’ rather than delivering to a ‘person’.

The average person in the US will move 16 times over the course of their lifetime, roughly once every five years. In any given year, approximately 20% of the population will change the place they call home.

Complicating the problem further, the average teenager today will hold 11 different jobs by the time they are 30, and with work becoming more project-based, that number is sure to climb.

Over the past decade the telephone industry began going through a similar transformation. In the early 1990 the vast majority of phone lines went to a location. Today, the vast majority of phones sold are going to individuals with little regard to their ‘location’.

Similarly, in 1995 the vast majority of all email addresses were for location-based computers. You had to be using a specific machine to get your emails. Today, the email systems have been adapted so people can receive their email where ever they may be.

All of the more recent communications technologies, such as text messaging, Facebook, and Twitter, have adopted the policy of sending information to the individual as opposed to a location.

While it is true that in some cases we want things delivered to a business at a specific location, such as parts for a manufacturing operation or books for a school, our current systems don’t allow for the separation of individuals and locations. Consider the following scenarios.

• Scenario #1: In the military, soldiers can’t wait for the next letter from back home. Because of the sensitivity of their position many don’t have access to cell phones, and being mobile, moving from base to base, the delivery of letters becomes a logistics nightmare.
• Scenario #2: The number of telecommuters have grown rapidly over the past decade and in many companies, over 30% of the workforce now works from home. In the past it was easy to send a letter to a person at the company’s main address. With employees scattered across several continents, the problem with tracking all these addresses continues to escalate.
• Scenario #3: One of the past guests on the David Letterman Show was Dean Kamazes, an ultra-marathoner who runs 200-300 miles at a time. During the interview, Letterman asked Dean how he managed to eat while he was running. His answer was that he used a cell phone to call a pizza delivery shop and had the driver meet him at a location he planned to be at 30 minutes later. In this case, the pizza was being delivered to a future location.

It is easy to make the assertion that the postal system is stuck in the past. However, there is a big difference between the delivery of a physical item and the delivery of digital item. Rest assured, the postal system is not alone. FedEx, UPS, and local courier services are all heavily immersed in the delivery of physical items to a physical location.

The world of addressing has become a growing source of friction, slowing the connection between buyers and sellers. Most people know how difficult it is to receive a “signature required” package through FedEx or UPS. Wouldn’t it be nice to have the item delivered directly to you, no matter where you happen to be?

So, is it possible to create a technology for the U.S. Postal Service, FedEx, and UPS that will enable them to switch from static location-based addresses to dynamic, ever-changing personal addresses? More importantly, if someone invents the technology, will any of the delivery services implement it?

The starting and ending nodes of our connected world are often major disconnect points. The efficiencies we have come to expect in the online world simply don’t translate well into our current systems in the off-line world.

So where do we go from here? What are the systems we need to create to solve these problems? The answer to these questions is a system that will redefine our future.

By Thomas Frey