In yesterday's blog I imagined a future where capitalism morphs into something with freedom of employment but more restrictions on how individuals can spend, invest, and buy health care. The point of the restrictions would be to keep gullible idiots from destroying the entire economy, again, through their own reckless behavior.

Most of the comments fell into two camps:

1. Capitalism is fine the way it is.

2. People would never stand for those new restrictions.

Some people also assumed I was recommending new restrictions on freedoms. I'm not. I'm predicting the restrictions because it will become clear that the alternatives are impractical. And as always, it is just a thought experiment. Don't take it too seriously.

First let's look at the notion that capitalism is fine and we're experiencing nothing more than another recession. I don't think that's the case this time for several reasons. The biggest reason is the baby boomer generation that is retiring and poised to absorb all social security and health care resources while adding little in productivity. And by the way, they didn't save enough money to retire. Next you have the Kazillion dollars in debt, and another tsunami of mortgage defaults that will trigger over the next few years as rates automatically adjust upward according to contract.

Meanwhile I see no obvious candidate for an economic driver to the upside. Apple can only sell so many iPhones.

Unwise debt and unsustainable bubbles had masked the fact that the economy was already bankrupt. The next mortgage meltdown (unavoidable), and the baby boomer impact (unavoidable) are not balanced out by anything that looks like good news. In other words, capitalism Part 1 failed.

The second objection to yesterday's post is that people wouldn't put up with any additional curbs on their spending and investing freedoms. That seems ridiculous to me since we already put up with so many societal restrictions. A few more would hardly be noticed. I don't remember the last time I heard anyone grumble about seatbelts. And if the government told banks they couldn't make billion-dollar loans to the homeless, no one would complain about that new restriction on freedom. Some restrictions on freedom just make sense.

Suppose your so-called restrictions on freedom came down to this question: "Would you rather have affordable healthcare or the right to make ignorant and risky investments?" Or how about, "Would you like to have a job or the right to be obese without being taxed extra?"

I don't know what capitalism's second act will look like, but it probably involves preventing individuals from being as self-destructive as they would prefer.

I remind you that I lean libertarian, so I'm happy to let anyone engage in risky and morally ambiguous behavior, but only up to the point where it has an impact on me. When your behavior raises my taxes it becomes my business.

Things change. It's the nature of the universe. Yesterday's greatest ideas give way to ideas that are better, or better suited to the present, or at least different. Change is the only thing on which you can depend.

So what about capitalism?

I think capitalism had a good run, but it will soon be done. Socialism will be too expensive to maintain as the world economies slow, and communism won't be making a comeback. The economies of the future will be something new.

Capitalism was conceived before the Internet, and before the gears of commerce became computerized. The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed. Crooks in expensive suits now have the ability to swindle trillions, collectively, thanks to the efficiency of the system. And idiots in expensive suits can do even more damage.

The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening. The balance of power has swung to the crooks and the market manipulators. Even if we could regulate away these problems, it's already too late. There isn't enough money left to support the planet under the current social systems, at least not when the boomers start retiring and unemployment starts climbing.

I've been wondering what the new economic system will look like. I think the next economy will have the same freedom of employment and entrepreneurship as capitalism. That part seemed to work well. But you might see restrictions on what types of investments individuals can make, to keep them out of trouble. Most people should be restricted to buying only the broad indexes with an ETF. And perhaps the percentage of stock you can legally own as a percentage of your net worth should go down as you near retirement. Stock bubbles could be avoided by restricting how much money can be invested in stocks, on an annual basis, to keep the price earnings ratios around 15. New stock offerings would be funded by existing companies and institutional investors.  (Clearly that idea isn't well thought out. It's just a directional sort of prediction.)

But the biggest change could be in what sort of consumption is allowed under the new economy. Most of our problems were caused by people who couldn't control their own spending. Banks could tighten their credit requirements but that won't be enough to stop the spending junkies from depleting their own nest eggs. So you might see some forced savings rules in the new economy.

Depending on how bad the economy gets, you could also see rules banning single passengers in cars. And working from home might become a legal requirement for economic reasons. Perhaps your health insurance premiums would be based on your body mass index and whether or not you smoke. You could see a whole range of restrictions on how consumers can live, spend, and invest, to prevent market bubbles and waste.

So I think the new economy will allow you freedom of employment, but you won't be able to spend and invest your money as freely as you once did. That was the part that got us in trouble.

I'm not saying this new economy will be an improvement. It's just a prediction.
In my capacity as cartoonist, I feel an obligation to simplify complicated discussions until two things happen simultaneously:

1. Absurdity is achieved.

2. The reader feels as if it all makes sense.

My comic from Saturday illustrates that principle.

According to Google Alerts that comic has been posted to more blogs than any comic I have ever created. It inspires me to more fully explain the theory of finance in this blog.

Think of financial theory as a stool. The stool is supported by three legs, or truisms.

  • History always repeats.
  • Past performance is no indication of future returns.
  • Asshats are trying to steal your money.

These three truisms can explain any financial phenomenon. For example, if your financial advisor suggests that you invest in a market bubble that is about to burst, he will explain that the past is no indication of future results. Just because a Price/Earnings ratio of 45 has never been sustainable in the past doesn't mean it won't be perfectly safe in the future.

And when the bubble bursts and you lose half of your money, your advisor will explain it's because history always repeats. In other words, he's an asshat trying to steal your money.

This stool also explains the housing situation. Financial experts knew that making loans to hobos had never been a good idea in the past. On the other hand, past performance is no indication of future returns. Maybe this time would be different. Then history repeated and asshats stole your money. As a bonus, they even stole each other's money this time. You have to admire their thoroughness.

One last thing you need to know: People who say it is a good time to invest are called bulls. The bulls are at the center of all financial problems.

In summary, if you want to understand financial markets find a bull and look at his stool.

People keep asking me what I think about bailing out the U.S. car makers. I am unqualified to have an opinion on the economics of that question, and the experts seem divided. In situations such as this, where the experts disagree on the best path, I say use the limited supply of money someplace where the experts DO agree that it would help the economy, if there is such a place. I'm not claiming that withholding aid from the car makers would be the best solution. It's just the most rational decision when the best path can't be known.

And this got me thinking about why we have so many cars in the first place. Excess cars cause traffic, pollution, and dependence on foreign sources of oil. And who benefits most by this situation? Answer: car makers.

Suppose the government enacted laws that made it legal for anyone to be a taxi driver in his own car without a special taxi license. And suppose the income was non-taxable. The result would be cheap taxis and high availability. Every time you wanted to run an errand, and had an extra minute, you could choose to pick up a rider and cut your own driving expense in half. Technology will make it easy to match amateur taxi drivers with riders. And the market would keep prices low.

Now obviously there are lots of problems with this scheme, in terms of security, liability, and people puking in the back of your Hyundai. But compare that to our current problems: car expenses, traffic, pollution, global warming, and excess energy use. I think the universal taxi scheme comes out ahead.

None of this could happen while U.S. automakers are still in business. They would lobby to make sure the market for new cars stayed strong. And obviously the professional taxi drivers wouldn't like it. So they would lobby against it.

This sort of thought has been going through my mind lately because I think the current recession isn't going to be temporary. I think we're on the verge of a change as profound as the Industrial Revolution. Society will have to retool its expectations to meet the reality that there just won't be enough money to provide necessary services if we insist on consuming in an inefficient way.

The universal taxi theory won't happen because farsighted politicians changed laws. It will happen because people start doing it on their own in such numbers it will be impossible to prosecute, especially given the dwindling law enforcement budgets.

Likewise, the future includes legalized (de facto or literally) drugs and prostitution, out of budget necessity. There simply won't be enough tax money to chase that sort of perp. And say goodbye to speed limits in all but the most dangerous roads.
I generally dismiss conspiracy theories. If something sounds ridiculous, it's probably not true. Now I find out that the Governor of Illinois was selling a U.S. Senate seat to the highest bidder.


This makes me reevaluate my rule of thumb on conspiracy theories. I have to move the bar in terms of what is too ridiculous to be potentially true.

If you tell me the government has been covering up alien visits for decades, I still consider that too ridiculous to be true, but mostly for the reason that alien visitation seems unlikely. I have no problem believing that the government would cover it up for some dumbass reason. That is well within the realm of believable.

I have no problem believing that during the 9/11 attacks our government ordered the Air Force to destroy the passenger jet that was heading for the Whitehouse, and found it convenient that the passengers rushed the hijackers at about the same time. It makes a good hero story. I'm not saying that's what happened. I'm just saying that it doesn't qualify as too ridiculous to be true. To me it even sounds more likely than the official version.

The most evil conspiracy theory I have ever heard involves the idea that the 9/11 attacks themselves were planned by the U.S. government as a pretext for military action and subsequent profit by some industrialists. I don't believe that's true, but again, thanks to Governor Asshat, I can no longer rule it out simply for being too ridiculous to consider. The bar has been moved.

I don't know if the Mafia fixed the election for President Kennedy, then had him whacked because he didn't return the favor, but it is well within the realm of non-ridiculous.

What other theories do you think are now in the realm of not-too-ridiculous?

If we ignore for the moment that we are already moist robots of a sort, I wonder if it is inevitable that we will evolve into more traditional robots of metal and silicon and plastic.

I think futurist Ray Kurzweil predicted that someday we will have body scanners so accurate we can analyze a human brain and transfer it to a computer. Obviously the computers of the future will need to be more powerful to handle the load, but that seems feasible. I wonder what happens next.

Suppose we transfer a dying guy's brain into a computer, and that computer passes the Turing Test, thus demonstrating genuine intelligence. For all practical purposes it might have the same personality as the human brain that went into it. If you had a conversation with it, I can imagine it expressing a desire to live and even procreate.

Now here's where it gets interesting. Once you transfer more than one human into computer form, the two of them could choose to mate, with their offspring being the combination of the two artificial personalities, after agreeing to some rules about which traits they prefer to be dominant.

As computers, they could still tap into all the knowledge on the Internet, but only as needed, the same way regular humans access the Internet. The only programs running automatically and all the time would be their core personalities.

Eventually these computer brains would request more robust robot bodies, and the regular humans would oblige by developing ever better models. And then things get really interesting because regular humans could mate with robot lovers. The offspring would be the combination of the computer's mind and the scanned brain of the regular human, again following rules to see which traits dominate. The offspring would necessarily be a computer, thus dooming regular humans in the long run.

In some cases a dying male could leave behind a sperm sample before evolving into his computer-robot self. That way he could still reproduce with a regular human woman. So there would be a period in human evolution where regular humans and robot humans routinely mate and have the option of a traditional or robot baby.

Eventually, when all humans have robot bodies and computer brains, it will seem silly to be encased in separate physical bodies when reality could be better handled via simulation. So all the individual computers would agree to download to one huge computer and live a simulated reality for the rest of time.

The imagined reality would feature each "person" in flesh form. Upon the death of a particular simulated human, the host computer person would "reincarnate" into another simulated human baby.

By the way, it already happened. Your flesh form died a billion years ago. To make the simulation meaningful, you walled off the memory of being in a simulation. But you left the digital equivalent of a bread crumb path back because, being human, you couldn't totally release on the past. So we see hints and clues in this simulated life that give us a way out of this simulation if it becomes too brutal.

For example, in this simulated life we continually create simulations of our own. We call them TV shows, plays, movies, books, and even computer games that are simulations of life. Everything in this life is a metaphor. And our coincidences aren't as coincidental as we think.

I'm guessing you don't buy this explanation of your reality, but consider this: If the prediction of the future seems reasonable, and time is infinite, it is infinitely more likely it already happened compared to the possibility that it will happen in our future and hasn't yet. We could be imagining the universe as only 14 billion years old in the simulation.

(Yes, I am borrowing from the Boltzmann Brain idea and combining it with Kurzweil's predictions and a dash of The Matrix, plus a few other ideas. That doesn't make it wrong. That just proves we left bread crumbs.)
I was reading something scary the other day. Obviously it was from an economist. He said the real problems haven't started yet. Wait until the Baby Boomers start retiring. Their nest eggs are tiny and there won't be enough Social Security and health care money in the universe to keep everyone in cat food and diapers.

I'm an optimist so I think society will find a way to adapt. But I wonder what that will look like? It might be an improvement.

For one thing, I think you'll see more sharing. The Internet can make it easy to know where you can find resources to borrow. The most obvious example is carpooling. But it could get down to who has food in the fridge that will go bad because someone will be out of town for a week. Or maybe it becomes easy to find a reliable grandma who will babysit for free if you agree to feed her cat next Tuesday. The market for sharing is totally untapped.

I just bought two tickets to a show, for an upcoming trip. I'm sure I will like the show. But I won't like it more than watching a good TV show with family or friends while eating popcorn and sitting on the couch. It's just different. Most luxury expenses are entirely unnecessary in terms of happiness.

I eat a lot of meals out, but it's mostly for convenience. After most restaurants go out of business, which should happen in the next five years, people might start cooking group meals. It makes a lot more sense for your family to make a big pot of mashed potatoes and meet the neighbors for a group buffet. That's relatively little work for each family, and relatively cheap. Again all you need is the Internet to help you organize that sort of thing. Plus you need a good dose of poverty to eliminate the alternatives.

The new poverty is likely to be different from anything that came before. Imagine a world where even the poor have good Internet access and universal healthcare. If you were healthy and could use the Internet to find everything else you needed, from borrowing a tool to organizing a Scrabble game, you'd be pretty much set.

The other way the future could go is that out of economic necessity the government will approve some sort of feel-good pill that makes your external situation less important. You won't mind sharing a one-room apartment with 20 people if they are all on the same pill. And you won't require much in terms of entertainment. So long as the pill is cheap, which it could be if the government declares it so, then people won't need much to be happily retired. The pill could be outlawed for anyone under 65, just so the wheels don't completely fall off the economic engine.

It would be impossible for the government to approve a pill that simply made you feel good. Society frowns on that sort of thing. But imagine the inventors of the pill being smart about how they describe the pill's impact. Instead of saying it makes you happy they could say it makes you less fussy. You won't mind eating that cat food instead of steak because you're suddenly less fussy when medicated. Even the most religious person would agree that living like a monk can be a good thing. Fussiness is the influence of the devil. The government would surely approve an anti-Satan pill.

Which way do you think it will go: more sharing or more medication?
Comic strips are supposed to be an exaggerated world, but lately it has been hard to concoct ideas for Dilbert that are more absurd than reality. For example, when Dilbert's company develops a new product, I want it to be worse than any product you have ever seen in real life. I thought I was ahead of the curve until I saw my dog's reaction to her dog food. Let's start by saying she doesn't care for it.

Now you might think this is not the least bit unusual. Pets have preferences just like people, so it should be no surprise that she wouldn't like a particular brand of dog food. At least that's how I saw it until I reflected on the things she DOES like to eat, including every other type of food, the cat's food, mud, twigs, bugs, cat vomit, and her own turds.

If you ask me, the bar has been set low. How bad does your company's product have to be before your target market prefers eating its own poop? If I wrote a comic along those lines it would be too absurd to work even as comedy.

Our type of dog, a toy Australian Shepherd, is notorious for chewing up everything it can get its teeth into. As I write this she is sniffing around the office looking for something to beaver into splinters. It's a big problem. So we bought some sort of spray from the pet store that is intended to keep her away from prized objects. Apparently there is some subtle dog-only scent in this spray that she will find unpleasant. As you might have guessed already, the dog that sniffs asses and eats snails off the sidewalk was unfazed by this so-called unpleasant odor.

Dog training didn't work either. This breed learns quickly, and the first thing it learned is that we wouldn't punish it for chewing the bejeezus out of things. She knows she has a free pass. Her worst case scenario is some stern sounding baby talk, and she likes the attention.

But I think I have a solution. Tomorrow I'm going to rub her dog food on anything we don't want her to gnaw on. That should work. The only downside is that the entire house and all of our clothing will smell like something that would make a dog say, "No thank you. I prefer feces."
Some of you have heard this story, but I will reiterate to make a larger point. I had a mysterious voice problem that I accurately diagnosed using Google after several doctors were baffled. I woke up one day thinking my voice problem might be related in some way to my hand problem - a writer's cramp called focal dystonia. So I Googled "voice dystonia" and up popped a link to a video of a person speaking with exactly the same speech defect I had at the time, something called Spasmodic Dysphonia. That diagnosis was later confirmed, and I tried the recommended treatment of Botox shots to the vocal cords, which had limited success in my case. And I did voice therapy which helped some, but I was far from fixed.

About a year ago I started using Google Alerts to tell me whenever someone mentioned Dilbert, me, or anything about Spasmodic Dysphonia on the Internet. About six months ago I got an alert with a link to an obscure medical publication with a report about an even more obscure surgical procedure for fixing spasmodic dysphonia. I took that information to my doctor, who referred me to an expert at Stanford University, who referred me to an expert surgeon at UCLA. Long story short, the operation I read about wasn't as promising as the article suggested, but the final surgeon in my travels had his own version of surgery that had a good track record. I tried it, and now my voice is normal. I never would have found that path without Google Alerts.

I've used the Internet dozens of times to diagnose various minor medical problems, or to find out what things are dangerous or not. It made me wonder how far the Dr. Google trend can go, and what impact that can have on society's medical costs.

Obviously there are plenty of examples where seeing a trained doctor is going to give a better result than using your own flawed judgment plus the Internet. Let's agree those cases are many and somewhat obvious. But the real question is whether there are just as many or more cases where using the Internet instead of a doctor gives you a BETTER result.

Let's say for the sake of argument that we're not talking about emergency room or trauma situations where a doctor is obviously the best solution. I'm talking about all the trips to see the doctor where you essentially say, "Something hurts. What is my problem? Do you have a pill for that?"

In those cases let's say we can break it down into two general categories: common and uncommon problems.

With the uncommon problems, such as my spasmodic dysphonia, I have to wonder if Google (or WebMD, etc.) can do a better job than a doctor, if not now then maybe in the near future. If you could call up videos of people with identical symptoms, couldn't you diagnose most of your own problems?

For example, are you any worse than your doctor at looking at High Definition pictures of a skin problem and comparing it to your own skin problem?

My guess is that the Internet could equal your doctor in diagnosing uncommon problems. WebMD for example asks a bunch of diagnostic questions and narrows down your symptoms just as a doctor would. That system will only improve over time.

Common problems are even easier to diagnose, give or take someone looking in your ear or down your throat. And I'm imagining someday you can buy a home kit that takes a picture down those orifices and puts it on your computer for easy comparison to stock medical pictures.

This leaves us with the issue of dispensing meds. Your first reaction is that obviously you want a doctor to do that because otherwise people will abuse the system or diagnose something deadly for themselves. But perhaps there is another way to approach this safely.

Suppose as a patient you simply needed to answer a series of questions on your other health issues and medications to determine if a drug is safe for you. Once you establish your medical database, you have fewer questions the next time you need a prescription. The database plus your pharmacist would be enough to keep you from killing yourself accidentally. In some cases you still need a doctor if the meds are especially risky, but that would be rare.

You still have the risk of a patient requesting things he doesn't need. The pharmacist plus your database can flag most of that abuse. And perhaps you could have a system where a doctor "approves" patients to handle their own prescriptions if they appear to be responsible, up to a certain age.

I don't have the details worked out, but I think Google will be your new doctor in some fashion.

I use Google Alerts to tell me when there has been some mention of Dilbert or me on the Internet. It's the digital equivalent of being a fly on the wall because no one really expects me to be one of the six people reading their blog.

Yesterday I came across a blog post about a prediction I made in 1998. I will link to it because I think the post is well written.


My prediction about confusopolies was better than I imagined. For example, I keep reading articles about entrepreneurs starting their own electric car companies. When the barriers to entry for starting your own car company come down, you know we're in a commodity world.

Thanks to the Internet, relatively efficient capital markets, and the fact that some company in China can make just about anything, anyone with drive can start just about any kind of company. The interesting part is that in the near future it can never be profitable to do so, because a hundred other people will start the same company next week and drive down your margins. Your only defense is to be confusing, so customers believe, incorrectly, that your product has advantages.

When I started my first restaurant I was surprised how easy it was for someone with no experience to succeed in that business. I hired the right people or companies for every facet of building the business and my operating partner put all the pieces together. The restaurant was an instant hit and lines wrapped around the block when it opened.

But you know the rest.

The fact that it was easy to enter the business is exactly what eliminated the margins. Scores of independent restaurants opened in the general area in the next few years and all cannibalized each other. With our current economic downturn, I predict 40% of the restaurants in my area will shut down within three years. Their margins had disappeared even before the economy imploded.

My theory of confusopolies had a lot to do with my involvement with dilbertfiles.com. It's a business with lots of competitors, and the options and features are confusing. Most of the comments on this blog about the service took the form of "Why would you need a car when a horse can do the job!" In other words, the competing services had confused people about exactly what they offer to the point of equating a horse and a car.

My involvement with dilbertfiles.com is different from the typical celebrity endorsement in an important way: I actually use the service for my own work, and did so long before I had the notion to partner with sendyourfiles.com for a Dilbert branded version of their product.

When you see a tennis star endorse a tennis racket, there is no chance that star uses that actual racket. Pros use heavier rackets, tricked out for their preferences. You couldn't buy Roger Federer's actual racket if you wanted.

I could give other examples, but the point is that you rarely see a case where the celebrity was already using the product before the endorsement or licensing deal was initiated. Sure, he might play professional games in the sneakers that have his name, but there is little chance he would have chosen that particular shoe if his name wasn't on it.

Obviously I could be risking my reputation and lying about a product I use, trying to make a few bucks, but my incentive to do that isn't high. I see my role with dilbertfiles.com as "a guy you know (sort of) who is already using the service and is happy about it." If you don't want to wade through the confusion and do the research yourself, that can be helpful to know. And realistically, no one has time to research every little decision.

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