Well here’s another place you can go:
That’s it. Of course this only makes sense if the market is one that people are interested in: a context that matters….
A little aha insight for today. (plus a free bonus funny video 
Take these two statements (related to Thomas Kuhn’s “Structure of Scientific Revolutions”, see e.g. Malcolm Forster’ s text, point #16 and point #23):
1. There Is No Such Thing as a Neutral Observation Language
and
2. Communication Breakdown Can Be Overcome by Inter-Group Translation
We can select the language we use to communicate / interact / do business with, but we cannot do anything without language (or in a “true” / objective language).
If only one paradigm is available (for example, under totalitarianism), then the chosen paradigm is artificial, no “natural selection” takes place.
Technological sophistication (and economic development) is enhanced via the development of paradigm translation mechanisms, such that the market participant can easily choose which market / paradigm to utilize.
For many centuries, beer has been brewed in Germany with water and various grains. There are, of course other inputs, such as energy, various kinds of apparatus needed for production, human labor, etc. More than 500 years ago, princes in various parts of Germany often regulated beer production, such that only specific ingredients were permitted. This was one form of “external regulation” of the beer market, but other kinds of regulation have been known since over 1000 years. (see also Brauordnungen ).
Instead, let’s now imagine a hypothetical entrepreneurial brewer in a hypothetically lawless country. He would do everything by himself, and then sell his finished product from his front porch without any external regulation whatsoever. He starts out selling beer for $1 per pint, and receives many happy customers. He decides to expand the business, and can now produce more beer — and due to economies of scale, he is able to offer the beer now for $0.50 per pint and still make a good profit. Now more people — especially poorer people — drink more beer.
Happy story, but of course the truth is more complex than this fictional scenario. In fact, the beer market is linked to all other markets, too. Note that I said all. I want to emphasize that point, but for now let’s just singl
e out 2 other markets: The market for fresh water, and the market for public restrooms. ![[IMAGE: Regulation: internal + external]](http://past.blog.com/files/2009/10/external-wide1.gif)
As beer production increases, so does the demand for water and also for public restrooms. And the markets for these other inputs are also linked, as are all inputs and outputs — much as the weather patterns are linked to a variety of other factors, down to the flapping of a butterfly’s wing.
The whole notion that regulation might be either “internal” or “external” stems from the feeble intellectual capacity of humans. Since it is too complex to comprehend a world in which everything that happens is related to everything else that happens, humans tend to simplify the description of events. They pretend that events happen in isolation of one another, that they are not interrelated, and they call those things that are beyond their limited focus of attention “externalities”.
For example: Hurricane Katrina was one such “externality” — a natural disaster. Some people maintain that it could have been predicted, but it is nonetheless not considered to be related in any way to the amount of beer produced in Germany or the amount of beer consumed globally. Many Germans helped to alleviate in the disaster relief, but the German support is assumed to not have had any impact on the production or consumption of beer in any way. The invisible hand of free market economies is assumed to work without leaving any such trace whatsoever.
We have simply gotten the fundamental economic theory wrong.
The truth is: There are no externalities. The entrepreneur who feels that there are any externalities is either innocent or ignorant (or perhaps just plain stupid — and certainly not rational).
My hunch is that the focus of attention related to regulation ought to be on scale. It is unreasonble to devise rules that apply globally, being equally applied in all situations. For example, if there were a rule that all people should eat the same food, many people would probably suffer from allergic reactions.
On the other hand, if there are 9 million bicycles in Beijing, then if a bicyclist goes to a bike repair shop to fix a wheel or to renew the brakes, then it makes sense for the repair shop to stock a wide variety of parts — enough such that almost any bicycle could be repaired quickly and easily, and at a cost such that the cyclist will be able to afford the repairs. At the same time, perhaps bicycles in Beijing need to be different than bicycles in Amsterdam or Tokyo, or perhaps different in China than in the United States or in Nigeria.
Each product or service, each input or output, will have an appropriate scale of regulation – just as the tolerances of standardization vary, so will their scopes. As technical complexity increases, so does the complexity of regulation — whereas some aspects of regulation may very localized, other aspects may be very far-reaching.
During the industrial revolution, it was not readily apparent to what degree industries were interrelated. Today, ignoring these relationships is foolhardy. It is time for everyone to give up on the bogus distinction between internal and external regulation.
I got out my Henderson / Quandt (“Microeconomic Theory: A Mathematical Approach”) and revisited theories I haven’t looked at in many years — I actually read it in paper!! 
That’s as close as I could get to a text to address the issue I merely scratched the surface of yesterday. It’s the concluding statement of chapter 3 (“Topics in Consumer Behavior”, p. 61)
And what is more: IMHO having found this whole explains a lot about how some of the world’s current biggest crises have come about.
Well, let me back up a bit. I have spoken with a small sample of friends and colleages. Economists, business men, stock market traders, futures traders, … — and the resounding reply is: “By golly: You’re right!
We all agree that markets are inherently regulated institutions, and IMO the conclusions of von Neuman / Morgenstern’s game theory treatment of risk and uncertainty are different. According to that theoretical approach, markets already exist, and risk-aversion is an afterthought. After discussing this at length with my sample of experts, we have come to the conclusion that the regulation of markets is definitely not an afterthought, but rather: Regulation is a sine qua non for markets.
Now the next step is to recognize that there is in fact no global market — but rather there are a vast multitude of overlapping markets across the globe. Most of the traditional economic theory is based on an assumption of descriptive standardization (incidentally, “standardization of descriptive practice” is what I wrote my master’s thesis about 
. I was indeed amazed when I asked my friend Clemens “what is a market?” he said that product (or service) specification is integral (he volunteered this information, without having me suggest it beforehand). But since he trades on the exchange nearly every waking moment of his life (I’m lucky he had the time to speak with me , I think he is especially sensitive to this issue – but I’m digressing. The point is: basic economic theory apparently assumes descriptive standardization. For example: that a facelift done in Germany or England or the United States or Pakistan or China or India are all the same product/service. That is, IMHO, a gross error — such a gross error that it’s even ludicrous that it has survived in the theory of economics textbooks to this day! It should be obvious that the specifications for “facelift” may very well differ from country to country, hospital to hospital, and so forth.
So my wheels were turning all night — and now I’m coming up with a hunch (it’s very far from a solution – it’s not even a hypotheis yet). I’m guessing that it has become easier (as the Internet spreads) for the consumer (in aggregate: the people behind the demand curve) to select the (level and kind of) regulation they wish to receive: ebay.de and ebay.com and ebay.fr and ebay.co.uk are not all the same market, but rather each of these markets runs according to different rules. Likewise: hotels.com and hotels.de differ. Likewise movies.com and news.com are regulated differently. Each and every domain follows different rules and regulations about the kinds of transactions permitted at those markets. Another example: twitter.com does not allow posting content other than plain text, and each individual transaction is limited to 140 characters.
Since each of these markets follow different regulations, the transactions in one marketplace cannot be easily compared with the transactions in another marketplace (thanks for waiting – this is, finally, where Ricardo comes in . In order to compare goods and services offered in different marketplaces, it is imperative to compare the regulations that apply in each marketplace.
True — and it’s also the reason why you get different results when you search for “money” at Google.COM or Wikipedia.ORG, and these results are also different from the result of typing money.com into the URL bar.
Obviously, specifying such specifications according to the Wisdom of the Language (as I intimated yesterday) follows a federated approach (from “top level domain” downwards). This is the basic foundation upon which further specifications can be defined (in this regard, see also my post last year about the proposed expansion of top level domains: Apple Farmers Unite? .LOL, .ROFL, .LMFAO…).
What other methods of cross-site specification might be available in the online setting? This is something I would like to learn more about. I expect that this is an extremely complex matter — we must acknowledge that even the Wisdom of the Language has it’s limits: Not only must the regulatory mechanisms of brand-name websites such as google.COM versus nytimes.COM (.COM web sites) and/or slashdot.org versus wikipedia.org (.ORG web sites) be specified, but also such regulatory measures as the specification of “hotels” at keyword websites (e.g. hotels.COM versus hotels.DE) need to be specified.
LOL: Wake up and smell the coffee! This IS the real world!
Good for you! You prefer to get them fresh and warm? Not interested in making your own bagels? Do you know how to make bagels? Hmm… I wonder how you might find recipes or tips for that, but never mind….
(to be continued…)
You may see a link between this post and the Wisdom of the Language and/or On the Web, It’s Freedom 2, Publishing 0 — and I wouldn’t blame you. But in those posts I was painting quite close up views of traditional publishing / advertising / information retrieval (also known as “search”).
Here, I want to take step back and think more “out of the box” (or at least out of that box) — presenting a more “birds eye view” of the way publishing + advertising could / should work in the wider economy.
These industries are undergoing change like hardly never before. Clay Shirky has recently compared these current changes to the revolutionary and far-reaching changes that took place 4-5 centuries ago with the advent of the printing press as an agent of change (citing Elisabeth Eisenstein’s seminal work in this area). Professor Shirky, in his post “Newspapers and Thinking the Unthinkable” suggested that we have no idea where we’re headed — but I do.
In order to describe what Professor Shirky claims is unthinkable, I want to zoom out to such a wide overview level that much of what people consider “here and now” will become infinitesimally small details — they will in fact become indiscernible minutiae, not out of oversight but rather out of the design of being able to see the “bigger picture“.
So please put aside all of your books, put down your pens and pencils, stop thinking about what you thought might matter and create a tabula rasa to go on this quick and easy fundamental “new deal” view of the publishing and advertising industries (and their role in the economies of nations and also internationally / globally).
Traditional economic theory views markets very abstractly. In this abstract view, marketplaces are simply places where buyers and sellers can meet to exchange information freely. Decades of economic writing have shown that such “perfect” markets do not exist, but very little has been done to revise the basic economic theory. Now I hope to change that!
Go back several thousand years, or simply imagine yourself in a very simple and traditional farmers’ market somewhere on the globe today. You will indeed find yourself in a marketplace with buyers and sellers. However, there is also something that you will probably not see: The presence of a regulator. Each and every farmer at the market has closed an agreement with the person or institution running the market. If, for example, there were a farmer at the market who claimed to be selling apples but instead sold balls of wax, then that farmer might very well be prohibited from offering his/her wares and/or taking part in any kind of market transactions at this market. He/She could perhaps go out on the wide-open field and try to sell his/her wares to anyone who happens to pass by and trust him/her to offer good products — that are worth a “fair” price. But here, any transaction that occurs is only between 1 buyer and 1 seller. The buyer and the seller may form some kind of mental image of what they consider to be fair, but such images are mainly psychological constructs derived from past experience (which may lead to “rational expectations” or “irrational exuberance” or indeed a wide variety of different possible psychological states). [ps 15:42 GMT actually, in my opinion this hypothetical example with only 1 buyer and 1 seller resembles a barter exchange more than what I would consider to be a "market"]
Let’s for the moment leave this more or less idyllic notion of simple transactions directly between buyers and sellers alone behind, and instead go back to the community where the marketplace is in fact a communally regulated construct. The regulator of the marketplace usually charges a fee to sellers and the sellers traditionally need to factor this fee into the cost of doing business. Besides that, the regulator will normally restrict market transactions in some way — though at some farmers’ markets today, you may occasionally find a salesperson who seems to push these boundaries, nonetheless nearly all such marketplaces today are regulated in some way. Not only are farmers’ markets regulated this way, but also supermarkets and grocery stores, mechanics / service shops,… indeed close to 100% of products and services are regulated this way (perhaps one exception might be transactions that are prohibited by law and therefore are assumed not to take place).
There seems to be 1 very significant exception to this rule: The right to freely express ideas means that there is assumed to be no regulation of expression — in other words: publishing and advertising industries should (at least in theory) be unregulated. Let us simply overlook the exceptions to this rule (such as laws regulating copyright, decency, libel and related issues) and assume this to be true. What do we see in the “real world”?
We see newsstands offering a wide variety of publications for sale (such newsstands are actually regulated marketplaces). Each publication may contain other publications (and in that sense the publications are also marketplaces — and they are regulated by their publishers, editors and teams of journalists, etc.) and so on until we reach the author in his or her room who is permitted to write freely — apparently free of any regulation whatsoever.
If I have made my point well, then you are now “with me” – you recognize (as I do) that “free markets” and “free speech” are in fact both so far-fetched ideals, and that it seems ludicrous to subscribe to theories that are based on such notions as the foundations upon which the theoretical constructs of economics and journalism are built.
Have you noticed? There’s this thing people keep talking about — they call it a crisis. They talk about banks, and they call it a crisis. They talk about news, and they call it a crisis. What do such crises have in common?
Are you ready for the punch line? It’s the fact that regulation is viewed as an “externality” to market transactions.
And simply because the underlying theory is screwed up, the business model is screwed up — and the ultimate result is that the market participants (the buyers and sellers) are screwed.
Simple! What economists call a technological shift — a quite significant one — has occurred: it’s called the Internet. The Internet puts the wide open (“wild west”) “liberal” quasi-markets [which actually behave more like barter exchanges - as described above] right next to “regulated” markets — and because most people do not understand how to tell the difference, they treat them as the same. Most people cannot recognize that whereas one product is being sold from a table set up in an open field — more or less without any regulation whatsoever — the product right next to it — which seems to be identical — costs more because the regulatory tax must (somehow) be factored into the unit cost. So why take the one that costs more?
The answer is that we must teach people that regulation is an integral part of the way that markets work. We need to rewrite the books: We do not need a theory about unicorns, we need a theory about horses.
Well what he don’t know is: the website doesn’t matter — what matters is the web site. The distinction is simple — I’ve said this for years already: it’s the same distinction as that between a building and a property. Someone tells you to “go to 100 Main Street”, but what they really mean is go to the building located at 100 Main St. — and whether the building is a log cabin or a skyscraper or a resort villa or a king’s palace doesn’t matter.
When the location / name is merely a label (as for a car or a building), it is merely to identify something. In contrast, information cannot be identified, because it is not a thing. Information is a change in knowledge — a knowledge transfer (yes: it’s very abstract). So the name we attribute is basically an intangible good: a concept… — what kind of concept? Online, it is the common concept that all members of the community subscribe to (and that is normally a quite compex amalgamation of several facets, including a legal structure, a language and most crucially a subject / topic / interest / context — and perhaps a few things more).
Well, so when someone says (like Dave Winer keeps doing) that it’s time for 1000 twitters to bloom, then OK: Let’s see how that works in a practical way.
If there were 1000 twitters, which one would you visit?
[tick... tock... -- silence]
The web will continue to change – after all: printing presses didn’t stay the same as Gutenberg’s first press, did they?
IMO, the most significant change from the point of view of information storage + retrieval is already happening — namely: the transition from arbitrary + meaningless labels such as msn.com + bit.ly to more meaningful ones such as to more meaningful ones such as twitter.com + bing.com. Ultimately, when we get back to the original raison d’etre of the internet (namely to function as a distributed network), we will no longer care so much about global hegemeny (much as the Dutch East India Company or similar trading conglomerates of many centuries ago) in publishing or media conglomerates. Such conglomeration is now over. Anyone who doesn’t see this is simply missing the boat.
then start using the Wisdom of the Language today!
but it doesn’t.
The interesting question is, I guess: What is the litmus test?
My hunch is that a social network might be measured by the degree of social impact it has. So far none of the websites that call themselves social networks have had any significant social impact.
95 Theses (Martin Luther), Common Sense (Tom Paine), others like this (e.g. Copernicus, Newton, countless others)….
Maybe the problem is: there aren’t many. Perhaps Karl Marx was right after all: Maybe humans have been turned into instruments of the capital they have idolized. Maybe we have alienated ourselves not only from our own labor but even also from that social cohesion that used to be part and parcel of our membership in society. So, to allude to Rousseau: People are born free, yet everywhere they have lost sight of humanity.
have time and again mentioned the notion: “Disintermediation“.
Answer: It doesn’t. There is no way to transfer a message without using a medium.
The problem is: In the United States, “media” has come to mean “newspapers“, “television” and “radio“.
The solution is: Americans need to wake up to the fact that there are new media — besides newspapers, television and radio.
How do I know a Renaissance is happening right now? I don’t. The new result from the new transparency is: “Don’t call me a liar, just believe everything that I say“.
I don’t have this figured out yet — this is more / less a brain dump of a bunch of loosely related thoughts / ideas:
1. there is no longer a separate class of “news”
2. instead of a limited number of facts, the number of facts is now innumerable
3. people no longer find “cosmic debris” credible, and realize that it is no longer particularly important what happened particularly in the last 10 minutes (and even if it were, the traditional “news media” wouldn’t be the ones to watch)
4. on the other hand: sources are uninformed – they do not even know whether a fact is “newsworthy” or not
5. it is now obvious that the traditional news never just “happened” – it was always created. and today it is ever moreso, with “crowdsourced” stories gradually becoming the norm rather than being the exception to the rule)
6. the news that happened (and that still happens) does not require expert reporters to get reported (indeed: if something gets reported by “professional” reporters / journalists, it will come off as shilling some kind of paid placement).
So I’m thinking that because of this, that it’s the end of the world as we know it … there is no more news, there is no more advertising, there is just content. Within context, content has meaning, otherwise it is meaningless — and therefore devoid of value: in other words free.
Valuable information will increasingly found at the intersection of context with content. Fused together, this is the quintessential source of reliable information. For example: if you want to know what is a-twitter (in a commercial setting), you will have to visit twitter.com — since otherwise you will not be in the relevant space.
The 20th century was an aberration. For a short while, it was possible for a “big brother” system to develop. The Internet will destroy this – and therefore Google’s attempt to “organize all the world’s information” will sooner or later FAIL.
That’s right: Google’s failure to become the Pope of the Internet is inevitable. The Laws of Supply and Demand will not make an exception for oversized mammoths, so “deal with it!” means you can either hold on to a doomed gargantuan media conglomeration / technology (the way General Motors stuck with its own idiosyncratic “good for GM = good for USA” maxim [without recognizing that "bad for GM = bad for USA" ;]) or you can evolve, adapt, innovate, … and survive.
For more on the fusion of content with context, see also: “On the Web, It’s Freedom 2, Publishing 0“.
1. What is the difference between journalists and bloggers?
2. What does the answer to #1 tell us about how to build news media that incorporate the way new media works?
Note that I use the term “New Media Works” [ the name of my personal website: http://NMW.INFO ] in a very particular way — namely, to indicate those media in which the media themselves “work” to give “results” (for example: what’s commonly referred to as a “search engine”, in which algorithms work to return “search engine results pages”).
It’s also occured to me that because I’ve been listening to the “Rebooting the News” since Dave Winer and Jay Rosen started it earlier this year, it is quite probable that their way of thinking has influence my way of thinking. I’m not saying that my ideas are a result of their ideas, but rather I want to simply recognize that their expertise and experience in their work has been shared graciously, and I simply wish to acknowledge the fact that they have been willing to share their knowledge — and that I hopefully I will profit from their unselfish sharing… and maybe I will be able to “return the favor”.
This answer is in fact quite simple: Not much.
The major difference is not the between bloggers and journalists themselves, but rather in their surroundings and environments. A journalist (and/or reporter — I am sure that others will be far better able to describe this profession than I can, as I am simply representing my “gut feeling” impression) is “embedded” in a much larger news organization. This organization works in concert to create the news. A blogger likewise creates news, but he is less limited by organizational norms — so bloggers may be more creative than reporters / journalists.
Now both bloggers and journalists want to “make money” — after all, they need to pay the rent and feed themselves (and perhaps also their children) just like everyone else. Now the facts — the stuff that bloggers, reporters and journalists report about — exist “out there”, so what do bloggers, reporters and journalists add, which people might be willing to pay for? My hunch is that it is their opinion. If we value someone’s opinion, we will be willing to pay to get their opinion. This is obviously the case, for example, when we go to a doctor and pay him / her for a physical checkup. In that case, the person giving the opinion is some kind of expert — but let’s for a moment leave aside the issue of subject or topical expertise. If the issue is very important, then we are inclined to get a second and third opinion. Let’s say we get three opinions — what will we then do with this information?
You may find yourself behind the wheel of a large automobile — and you may ask yourself: How do I work this?
We’re talking about building a system to collect, moderate, evaluate, synthesize and draw results from numerous opinions — and the basic issue is: Is it preferable to collect 1 million opinions on 100 topics, or should we prefer to have 1000 groups of 1000 individuals work together to arrive at “answers” to those 100 topics? And in my humble opinion, the ultimate question is: Which is more efficient?
Which 100 topics are we talking about here? How do we arrive at these 100 topics? In fact, there are many more “facts”. In fact, the number of facts is indeed infinite! Shouldn’t we broaden our scope to include more facts? This harkens back to one of the “founders” of modern science — Francis Bacon wrote, nearly 5 centuries ago:
“Men have sought to make a world from their own conception and to draw from their own minds all the material which they employed, but if, instead of doing so, they had consulted experience and observation, they would have the facts and not opinions to reason about, and might have ultimately arrived at the knowledge of the laws which govern the material world.“
(see http://en.wikipedia.org/wiki/Francis_Bacon )
That’s the media landscape today: People pitching stories are trying to sell their readers something — it’s basically pure “spin“. Readers simply select which spin they buy into, much in the same way that they select which physicians they will ask for medical opinions.
This is the case whether the spinner is a blogger or a reporter or a journalist or a pundit or a whatever: all of these one-way media are essentially spin engines (and note, also, that increasingly search engines are being built to dovetail with these spin engines — for example: Google News is precisely such a Google collaboration with such traditional “spin” media publishers). However, what we need to figure out today is how we can translate these various traditional environments or surroundings (contexts?) into a machinery that works in an open and fair way — much in the way almost all new media works. I don’t have an answer to that yet, but I’m … “working…” on it — can you help?
