Hank Williams brought up an interesting issue on his blog today:

The problem is that we are in this awful in-between phase of our planets productivity curve. Technology has vastly reduced the number of workers and resources that are required to make what the planet needs. This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity. When we get to the end of this curve and everyone can, in essence, be their own manufacturer, things will be good again. But until we can ride this curve to its natural stopping point, there will be much suffering, as the jobs that technology kills are not replaced.

This is a subject I’ve written about before. From a purely economic perspective, as technology and innovation increase, economically we ALL should be richer. The same technology and innovation that makes some jobs unnecessary, enables everyone to buy / get more with less input. Whats interesting, as Hank points out, though, is that it appears that this hasn’t been the case for the vast majority of people in the last decade (or at least the gains haven’t been distributed very evenly).

The truth is, that we have all been getting richer (particularly in terms of the technology, food, clothes, etc… we can all buy for less money). However, much of the increase in our purchasing power has been eroded by manipulation of the money supply. So if in theory we should have seen on average a 30% (just using this as an example) deflationary change over the last 10 years (i.e. each of us can buy 30% more stuff with our existing salaries) instead we’ve seen a 30% inflationary change (we each can buy 30% less). That 60% net change then gets transferred from the everyday money holding american public to large banks and debt issuers that have first access to borrow money from the government at a subsidized rate.

What this means is that the problem isn’t that we’re in the “in-between” phase, its that the the “in-between” phase only has a certain capacity to overcome harmful external forces. At some point Hank is absolutely right, technology based deflation will push the cost of all production to $0 (think Star Trek replicators) and currency will likely be irrelevant. We’re obviously some time off from this though, and until that happens it would be nice if everyone shared fully in the gains that technology and innovation bring to the world.

I’m a power user, and being that as it is, I’d be more than willing to upgrade to pro, or at least look at some advertising, if it meant that the product would continue to improve. And there was a very simple way to get me and others like me to do that: stop developing the free version, and add awesome features to the pro version. Eventually, that would be too enticing to pass up.

But instead, Instapaper chose a really strange path, releasing an update to the free version that is a downgrade in a number of ways: only your last ten articles are visible, it doesn’t save your place when you leave an article, and it’s now ad-supported (I don’t really have a problem with this, but taken with the former two, it’s a little ridiculous). There are some added features, including background updating, but not nearly enough to make it a net positive.

The idea, of course, is to make Instapaper Free just objectionable enough to encourage people to upgrade. But now I just feel annoyed, and upgrading almost feels like rewarding bad behavior. As I said before, the right approach would have been to stop developing for the free version, and make the pro features so great that the free version would just feel stale.

As it stands, I’ll probably try out a couple of other tools, including ReadItLater. Honestly, I really want to upgrade to Instapaper Pro, but I’m still put off by that “upgrade,” and the last thing I want is to encourage other companies to do the same later.

In fact, some of the compromised notes directly commented on the status of negotiations with (and potential threat from) Google itself:

In a May 7 management meeting… the attitude towards Google is cautious: “Playing with fire here where we know that Google is building the competitive product.”

But by June 9, things seem to have progressed with Google. After an earlier two hour meeting with Google executives, the Twitter leadership had decided that an “agreement for some period of time makes sense - with our parameters.” But at the same time, they resolved to that Twitter’s own “search results page needs to be great - better than the landing pages on Google.”

While it’s unlikely Google management would sanction eavesdropping policies against competitors, it’s not hard to believe that a lone employee might occasionally do a key word search and stumble upon proprietary and potentially useful information.

I’m a big tech geek. I have enormous amounts of trust in both technology and many tech companies to do the right thing. Still, even I hesitate to put strategy docs on google, when a project may be competitive or otherwise relevant to google’s business. Whether or not Twitter management themselves trust gmail / google docs with this proprietary info, it’s certainly worth noting that it’s becoming increasingly difficult, if not impossible, to prevent ALL employees from storing or transmitting info via Google.

It’s an issue that more and more companies (particularly web companies) are going to have to consider, and it’s something that Google would be wise to address (hello - encryption!) at some point (especially for companies that don’t trust ANYONE with their data).

Nonetheless, this says a lot about not only the utility of google docs, but also the inherent trust our generation of web startups has in each other to do the right thing. Trust is the future, “Do No Evil” is a requisite.

It’s official - the most libertarian, freedom promoting, anti-authoritarian society in history is now reorganizing itself around strong central government. And if my intuition is correct, that says something interesting about the future of real world societies as well.

From its design as a tool to help communication survive nuclear attacks, to its evolution as an distributed web of information, the internet is all about decentralization. And that decentralized nature  has unleashed an explosion of creativity and innovation across the world.

But something is changing, and it’s happening very quickly: we are starting to empower specific organizations and companies with central control.

We used to all host our own web servers. Now it’s generally far more efficient to let Amazon do it for us. Five years ago we used to communicate through our own email servers. Today an increasing chunk of that communication is now happening on managed communities like Facebook and Twitter (and soon Google Wave). These communities have very specific and pronounced structures (laws) that govern everything from how the system acts, to who can participate in it.

And to a large extent these laws are widely beneficial. Unlike email, users on Facebook have a (somewhat) validated identity. There is also a centralization of spam-prevention, abuse procedures, content formatting, and even structure to profiles that maximizes the efficiency of finding and retrieving information.

And it’s not just Facebook, the same thing is happening with Twitter, which is using centralized management and control to improve the experience of un-managed platforms like blogging and SMS. In fact, the biggest critism of Twitter today is that its not exerting enough control.

And while my libertarian blood cells coagulate at the thought of centralization and its inevitable abuse and inefficiency, that doesn’t seem to be happening online. What does seem to be happening, unlike with real world governments, is that these strong central players are organically rising and falling (ahem, MySpace) based on the effectiveness and responsiveness to the people they are governing.

I’m far from a political scientist, but it’s a common belief that as societies advance they form governments to maximize the quality of life for their citizens. The same seems to be true for the online world. The question is what happens as the two worlds increasingly become one.

Every month i see a new headline from the Firefox team about a new feature, tool, or platform they’re building. Some of them even look cool. The problem is I dont care. And honestly most other people don’t either.

The world is becoming 100% internet based. Apps, info, data, communication, its all online. What this means is that everything else is just foundation. Apple gets it. Google gets it. Firefox doesn’t.

The next version of OSX Snow Leopard has a few new features, but that’s not what it’s really about. Snow Leopard is all about being faster, smaller, and more stable. Apple literally is rewriting large chunks of the code just to radically increase speed.

Google is so preoccupied with performance they went out and built Chrome. And wow, is it fast. Google understands that in a world of always on information, winning is all about helping people get that information faster.

And yet Firefox, the scrappy open-source David that took on and beat Goliath (well former Golliath, sorry Microsoft) based on speed and performance, is now increasingly looking like the one that’s out of touch.

In the last month Firefox has crashed on me at least once a day. No doubt there may be a specific issue with Firefox and Mac (Im using the latest Macbook pro), but it seems to be much more wide spread than that. More importantly, compared to Chrome or even Safari, the browser is slow. Yes i know Firefox has made improvements, and will make more with FF 3.5. But the fact of the matter is Safari and Chrome are almost completely focussed on speed and stability - and that focus is starting to pay serious dividends.

For now I’ve literally had no choice but to switch to Safari (which btw is actually really nice - their developer tools are even surprisingly comparable to Firebug!). I hold out hope that Firefox will one day return to greatness. Right now though the third browser war is on, and so far Firefox’s cannons are pointed in the wrong direction.

Google Wave is the talk of the town today, and for good reason. It’s a radically smarter way of structuring personal information management and collaboration. But the most interesting part of the product might be that only Google could have built it. And I say this from first hand experience — because I tried.

Six years ago, I came up with an interesting idea: those threads in email should be shareable containers. They shouldn’t just group emails, they should group docs, live chats, photos, calendar items, etc, and each should be collaboratively shareable and editable in real time by everyone involved in the conversation. All stored, accessed, and edited in the web browser. Sound familiar?

I actually built an interactive flash prototype (slide show of it embedded below) and I spent a few months showing it around feeling out interest from investors. Unanimously, everyone thought it was a great idea and said they’d love to use the product.

But there was a problem. Actually several:

1. It’s a huge project: 2003 was pre-google docs, pre-gmail, pre-most web apps. Even today though, the size and scale of building ALL of these apps and integrating them in a web based system necessitated 100s of developers and likely $10s of millions of development dollars. Especially in 2003.
2. Chicken and the egg: What I designed was actually backwards compatible with normal email protocols and file system management. Still, to really use the value-added functionality everyone needed to be using the system. And given the huge infrastructure and raw numbers of different technologies that it would be replacing, the cost and scale of convincing millions to be the first jumpers was an enormous barrier.
3. Browser / technology limitations: In 2003 Ajax was barely possible in most browsers. Fast forward to 2009 and there are still major limitations in browsers that obstruct some key functionality needed for this type of application.
4. People don’t pay for email: Well businesses do, but the real point is that large Internet companies (Yahoo, Google, and Microsoft) give away web based email and collaboration products for free to most consumers. For companies with other substantive income streams that’s fine. But for a start-up, that’s a major barrier to large scale paid adoption, which would have been key for a project of this scale.

If you see where I’m going with this, each of the challenges above represented potentially game-stopping obstructions to building and successfully running a start-up business built around this product. But the beauty of Google circa 2009 is that they literally have built in solutions for each problem.

Google not only has the financial resources and might to build something on this scale, and give it away for free, but it also has the entire Google Apps code base to build it on. Of equal importance, Google has the clout and control over browser development to actually change the standards (which they intend to do with HTML5 to support the technologies needed to build this product).

Perhaps most important of all though, Google has the attention (and an existing user-base) of billions of people - enough that they might actually be able to pull off the greatest chicken-and-egg product problem that has ever existed.

One way or another though, I applaud them for taking this enormous and needed step towards a much smarter information management design. Despite the value of the product, and the resources behind them, the road ahead will not be easy. But if anyone can drive it, it’s them.

Brian Lowry of Variety got in the act two days later. Mr. Lowry also seems terrified that the news experience is becoming more personalized, and that people might actually get to choose what they want to read. He specifically called our site, Veritocracy, a “worrisome tool” that “limits online exposure,” creating “hermetically sealed thought-bubbles.” (Is it possible that “hermetically sealed” was the term of the week at big media’s weekend getaway?)

To be honest, I’m not sure either has actually used social media. Mr. Lowry, in particular, says that users of sites like Veri “never need see an article or link that challenges their existing opinions.” This is one criticism I never expected, given that we built Veritocracy to make it easier to find multiple perspectives on the topics you want to read about (from blogs, mainstream media, readers, etc). This is possible today only because there are so many unique and diverse perspectives in the blogosphere and social media.

To some extent, this feels like old media looking for a boogeyman, and not taking the time to learn about why these new technologies are so popular. The idea that mainstream media provides a noble, unbiased, universal truth, is simply wrong. If anything, sites like Veritocracy are making better information more accessible, and eliminating the inevitable biases that come from having a limited amount of human editors deciding what people should read.

This isn’t to bash mainstream media — it still has a tremendous amount of value, and I personally read the NY Times, WSJ, BusinessWeek, and, yes, Variety (among others). But it’s now just one form of consumption among many, and I think that scares people who a) work in that space, and b) don’t understand the other side.

Mr. Lowry never talked to me directly about what Veri does or how it works. Instead, he seems to have cherry-picked bits of information from an email that a friend of ours sent out to his own list the day we launched. That’s unfortunate, because as I’ve said, Veri’s goal is simply to help people get better information about the topics they care about. That, to me, is something we all should be rooting for.

More Perspectives: Is Social Media Trustworthy?

Mark Cuban thinks cable will continue to be the dominant platform for TV. He makes some compelling arguments, but he’s wrong on one account: Personalization. Cable’s one-to-many distribution technology makes it a very efficient way to distribute video, but it fails on personalization, and that is the Internet’s killer app for both consumers AND advertisers.

In a world where all the world’s video content is available on embeddable Hulu-like sites, really creative people and companies will create technologies that give us the convenience of TV with the personalization of the Internet. You might watch Joe’s Channel one night, Jane’s Channel the next, and CNBC’s during the day. More powerful systems will give you Pandora like stations. Choose a genre (comedy or sci-fi or action) and get a personalized stream of tv episodes and movies chosen specifically for you. The point is technology moves towards convenience, and Internet TV has the ability to give it to us in personalized ways.

One of the big reasons newspapers are dieing is not because every one of their old subscribers decided to follow them online; it’s because many of those subscribers DIDN’T. The NY Times used to be able to depend on the fact that if you want 10% of their articles, you would be willing to consume all 100% of their paper. Now you find those 10% through links from thebusinessinsider.com, Twitter, or maybe Veritocracy, and the other 90% comes from other papers and blogs. It’s personalization from increased choice (even to make less of them sometimes!) that is the killer app of the Internet, and the reason old distributions platforms will fade away.

The beauty of this transition is that personalization also enhances the experience for advertisers. Combine all of the information about you on Facebook, with the complete history of EVERY tv show and movie you have ever watched, maybe even what you’ve purchased before, and what web sites you visit, and all of a sudden that 15 second ads becomes exponentially more effective. In fact in a world where ads are so much better targeted, you can show less of them, which means people are more likely to actually pay attention.

None of this is easy, but there is nothing technologically that cable will be able to do, that the Internet eventually won’t. The same is not true in reverse. And while Mark does make a good point that standards for video monetization have not progressed quickly, there is enormous economic incentive to do so. Anyone (include some big companies like Facebook and Google) can work on this right now - and many probably are. It’s a big technical challenge, but if i had to bet on either a few cable companies, or millions of entrepreneurs getting there first, my money’s on the latter.

We’re still at least a couple years away before we start really seeing this happen first hand. And I dont fault cable companies and content providers for maximizing large, exisiting revenue sources. BUT and this is the big but, the trend is there, and it will only continue to gain steam. The decision content owners (and cable operators) have to make, is whether they want to stay ahead of that trend and try to exploit it, or fall behind and watch others do it instead.

More Perspectives: Will TV Over the Internet Challenge Cable?

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We started Veritocracy based on a simple idea: to create a personalized news site that really worked. There were and are a lot of social content sites and news aggregators, but we believed it was possible to build a site that wasn’t just finding popular stuff — it was finding the highest quality and most relevant content, specifically for you.

It took a lot of testing, tweaking, designing, and building, and quite honestly it proved a lot more complex than we originally expected. But today, we’re really thrilled to allow everyone in to see what we’ve been working on.

Simply put, Veri gives you a personalized view of the topics and news stories that interest you. The system brings together articles from the blogosphere, mainstream media, and readers, and then helps group them into specific and narrow topics (like a news story, a stock or a movie). As a reader, you simply vote up on the articles you like and down on the ones you don’t, and Veritocracy automatically learns to feed you the best articles on the topics that interest you most.

Instead of searching for information and hoping that what you read is credible and complete, Veritocracy creates a rich and full picture of each story you read about. And of course, since Veritocracy is a social content site, if you have a better perspective on any topic, you can always submit your own. In fact, for bloggers and publishers, Veritocracy automatically helps build organic traffic by connecting you with other publishers and readers interested in the topics you’re writing about.

At the end of the day, we believe that if you create a site that can deliver the best information on a personalized basis, you create a true meritocracy of content distribution as well.

We have a lot more in store in the coming weeks and months, so stay tuned and definitely let us know what you think.

Interesting TED talk (embedded below) explaining the innovation that went into making Benjamin Button’s face entirely digital. Essentially the tech works like this:

1. Brad Pitt’s face and facial movements are scanned in 3D into a computer, which then creates a library of every possible facial expression for Brad.
2. A makeup artist’s models of Brad’s face at every age are scanned in 3D and the computers extend the library to include every possible facial expression for Brad, at every possible age.
3. Brad’s face is recorded acting the film.
4. The computer renders the library of Brad at various ages and facial expressions over Brad’s live action recording.

Amazing stuff, and it raises a really interesting question: how long until step #3 is no longer needed?

If CGI animators can already create accurate facial mannerisms on purely digital characters, it’s only a matter of time before those same animators can create indistinguishably human virtual actors. And of course virtual actors, unlike their human counterparts, have no physical limitations, can be summoned to act and shoot a scene anytime/anywhere, and don’t require multi-million dollar paydays.

We’re several years away from nailing the visual side of this technology (let alone the vocal), but it’s easy to see how the profound benefits of this transition (lower cost, more flexibility) will quickly force a transition to it. Like digital vs. film, as the technology matures, many will reject it, but in the end the better solution will always win.

In the bigger picture, it’s interesting to note that this is another example of technology and innovation leveling the playing field. In a world where fame is completely a product of artistic/intellectual creation, not physical genetics, there will be vastly more people supplying the product, and far more meritocracy for how dollars are allocated amongst them.

Of course MLB still has a long way to go before they become a truly digital-friendly company. But its interesting to think that one of the oldest media companies may have one of the most future-proof business model.

two weeks ago Hulu called and told us their content partners were asking them to remove Hulu from boxee. we tried (many times) to plead the case for keeping Hulu on boxee, but on Friday of this week, in good faith, we will be removing it. you can see their blog post about the issues they are facing.

our goal has always been to drive users to legal sources of content that are publicly available on the Internet. we have many content partners who are generating revenue from boxee users and we will work with Hulu and their partners to resolve the situation as quickly as possible.

we will tell them how users love Hulu on boxee, why it represents a great opportunity for them to better engage with fans of their shows, how boxee can help in exposing their content to new people, and why they should be excited about future opportunities of working with us.

While it seemed like (we all hoped!) the studios were wising up to the inevitability of IP distribution, it isn’t entirely surprising that they cut Boxee off. Internet based TV on your computer can be rationalized as just another marketing channel. Internet based TV on the TV, on the other hand, means the end of the local affiliate stations and cable companies as we know them (both of which contribute significant earnings to, or directly own many of the studios producing TV content).

While this move isn’t likely to kill Boxee in the short term, the question is will other major networks now pull their content from Boxee as well (ABC, NBC…)?

As much as the existing TV distribution system would like to delay it, the day of free, IP based based TV on the TV, is coming. The irony of the situation is that innovators like Boxee are ones that will ultimately save the studios. Even if it means saving them from themselves.

The idea of a deflationary trap is in and of itself complete nonsense. Deflation is actually a natural state of affairs. As productivity increases, standard of living rises and prices fall. Absent government intervention, productivity would actually increase the amount of goods produced, causing prices to drop. Falling prices are a good thing not a bad one.

Fed and government policies rob taxpayers by promoting policies of inflation. Look at what accompanies rising prices: rising property taxes, rising sales taxes, and rising income taxes. Is that a good thing. The answer is no, especially when wages fail to keep up, which is exactly what happened.

Who benefits from inflation? The answer is government, banks, and already wealthy because they are first in line to receive money. Everyone else is screwed. Inflation is theft from the middle and lower classes for the benefit of government and the wealthy.

Over time, the government and the Fed so distort the economic picture, that a mentality sets depicted in the often heard phrase for a few years’ back “Better get that house now, before it’s too late”.

The problem is not falling prices, the problem was the excess of debt that led to massive speculation and ever escalating prices. Krugman continues to put the cart before the horse in this regard. Indeed, Krugman Is Still Wrong After All These Years.

It is impossible for government to spend one’s way to prosperity. Proof can be found in the failed practices of Russian and Chinese central planners over the years, and more recently the failed policies of Japan.

This is not only a clear and demonstrable reason to avoid “stimulus spending,” but it also goes a long way towards explaining the rising inequalities between the upper class and everyone else. From food and clothes to medical care, the gap between what the rich and poor have access to has exponentially declined in recent years. The same forces should have created similar equality of income and net worth as well. Unfortunately, low-interest rate inflationary policy has ensured the opposite.

Thank goodness we now have an inflationary stimulus package to support the middle and lower classes though.

Obama recently said that we should expect “Trillion Dollar Deficits For Years to Come”. While proponents claim that the US can handle increasing deficits and expanded national debt, few believe that there will be no future consequences from these actions. In the words of bond king Bill Gross, who openly supports stimulus spending:

More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to – that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner.

In fact while we are simultaneously increasing our future debt, we are also radically increasing the money supply. At some point we will have to either sharply reverse this course or allow the supply and demand of dollars to significant erode the value of the dollar. The best case scenario is that we quickly recover, and can afford to start contracting the money supply, which will immediately start putting the brakes on our recovery. The worst case scenario is far less rosy.

And if these policy decisions were not enough to dampen long term optimism, Obama’s clear support for economic redistribution, combined with a fully democratic-controlled government, ensure that when and should the economy start to recover, the government will be waiting with a fleet of new taxes and regulations.

So the question is this: If the only way to solve to our problems is economic growth, then why not focus on that long term objective? Imagine a world where instead of short-term stimulus, bailouts, and printing money, our government came out and acknowledged the inevitability of short term pain, but committed to a long term policy of lower taxes, smaller and more efficient government, and increased foreign trade. Its hard to believe that the market and the economy would not see a bright outlook in that future.

While the US may very well be resilient enough to simply grow out of the current situation, true economic recovery can not happen until people believe the future will be better than the present. If we want people as a whole to invest in future growth, the government should begin to promote that objective as well.

While netbooks are all the rage these days, Michael Arrington hit the nail on head when he wrote:

When you ditch the operating system and all it’s weight and focus on a device that runs a browser only (a true netbook), you can make do with mobile phone level hardware. Give people a big screen to really experience the Internet. Make it a touch screen or add a normal keyboard. And keep it really inexpensive. That’s a device people will want.

I couldn’t agree more. I consistently see people forgoing their laptops and desktops for quick web access on their iPhones. The only limitation being that the screen is too small for common usage. At $200-$300, an iPod tablet would be affordable enough for people to buy in addition to their laptop and iPhone. It would be the perfect casual browsing platform. Combined with a camera and the full iPhone application platform, the device would also be a great game, communication, and entertainment platform.

In fact there are a variety of new uses for this type of device as well, including one that most people tend to overlook: reading. While the Kindle has gotten all the attention in the e-book space, just about everyone I know that has an iPhone and reads books, is starting to do so on their Stanza equipped iPhone. Shawn wrote some very interesting comments on this a while back. The reality, though, is that as great a platform as the iPhone/iPod is, adding a bigger screen to the mix would still radically improve the experience.

At the end of the day, given Apple’s ability to reap subsidies from wireless carriers and eek out every last cent of profit from manufacturing, it’s only a matter of time until they make $300-$500 iPod tablet. While the Kindle and netbooks are hot sellers at at this price point, neither will be able to compete with a similarly priced iPod tablet.

In any case, it’s nice to see third parties developing needed functionality, though much of it would be far more useful if it were built into Twitter directly.

Much of Twitter’s success lies on the notion that anyone can build an audience on Twitter, and if desired, parlay that audience into traffic and attention elsewhere on the web.

The problem is, it’s hard to actually track these results. And until you can, businesses by and large won’t invest serious resources into the platform.

While there are services that are starting to address the analytics problem (brightkit’s url analytics feature is one of the best out there), because none are integrated with Twitter, significant value is being left on the table.

Imagine posting a link on Twitter and not only seeing how many people clicked on it, from where and when, but knowing in aggregate who else those users follow, and what other Twitter streams those readers most actively clicked links from. This would be invaluable information to individuals and companies alike.

And follower analytics are just the tip of the iceberg. Imagine being able to enter your site into a twitter dashboard, and tracking which users are most actively posting links to your content, and which are most actively referring users to your site (getting click throughs). Because users read Twitter from so many distinct sites and platforms, it’s impossible to track this type of stuff without building it into Twitter itself.

The point is there is enormous power in tracking analytics on urls on Twitter, and it’s something Twitter could instantly do by simply auto-wrapping urls (disable by preference) in a Twitter shortener (like they do with tinyurl right now).

Of course, since the service could provide significant marketing and ROI value to businesses and publishers, all of this could be available for a paid subscription fee. Whether Twitter decided to offer this at a low fixed monthly price, or decided to make it a high priced, ultra premium service for medium and large sized companies, there is no doubt revenue potential from these capabilities.

At the end of the day Twitter is an information and marketing platform. Without an analytics tool, the company is simply leaving money on the table for both themselves and their users.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingbaseball.com

“Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’ Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat.

“In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides.”

One issue I see is that money (including from tourism) handed to a Palestinian government is not necessarily money handed to the people. If peace broke out with Israel, Palestinians would likely start looking for a new government that specializes in governing, not war-making. That’s not good news for the current government, or its supporters that send it money and weapons.

Nonetheless, the De Mesquitas’ idea is quite interesting, and seems to have a lot of merit. Given enough time, I could see plans like this incentivizing Palestinians to start moving in the right direction.

It would be nice to see more of this type of thinking applied to US foreign policy as well, which apparently might be in the works.

For most users, focusing on “followers” is an almost subconscious act (like following an extra person once in a while because they follow you, or posting or replying to something, just to get something out). And as long as the follower count is a key motivating force on the system, users will naturally over-post and over-follow.

What’s being left out here? Quality. Which, long term, is what will determine whether the system succeeds or fails.

The Facebook Platform, circa this time last year, is a pretty good comp. Users were adding big, annoying apps to their profile, at the expense of FB’s core features. And while it increased activity on the site, it muddled up the interface, and made Facebook look a lot more like one of its subpar competitors.

The key is changing the incentive structure, as Facebook eventually did with its redesign. People might not be downloading as many apps as they were before on FB, but those that they do add, tend to be more useful.

Twitter needs to take similar steps to promote quality over quantity, and the first step should be to deemphasize the follower count. The simplest way to do this is to relegate a user’s stats to a subsidiary page (instead of the user profile), or at least make them far less prominent.

The better solution, however, is to simply allow users to organize the people they follow into groups, much like the tagging system on Google Reader. You could then filter out the posts (or posters) you don’t actually want to read, even if you want to keep them as followers. This changes the entire reward structure of the system, emphasizing quality over crap. Being followed wouldn’t necessarily equate to being read; posters would have to offer real value, or be filtered into a ‘useless’ tag.

This could be a very important step for Twitter, since it directly impacts the system’s core value proposition. In the end, quality is what leads people to use services. This, above all, should be Twitter’s focus in the coming year.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingbaseball.com

While most of us believe inflation is a permanent and natural trend, in the absence of government controlled money supplies, there is actually a natural deflation. In fact, despite the fact the US government has vastly increased the money supply (causing inflation) over the last fifty years, we consistently get more for less with just about every manufactured product.

The effect is most obvious in technological realms, where today $100 gets you a billion times more computing power than thirty years ago, or a two hundred times faster internet connections then a decade ago. This exponential depreciation of processing power, storage, and bandwidth is commonly referred to as Moore’s law.

What’s really interesting, though, is that technology has similar deflationary effects on everything else as well. Ray Kurzweil has written about this frequently, but it’s visible in everything from food (we get more and more food for every one acre of planted land because of technologies like genetic engineering and modern agriculture equipment) and clothing (it’s exponentially cheaper to design, manufacture, and sell clothing than it has even been) to music (compare the cost of manufacturing, shipping and selling a CD vs. a downloadable album).

With the exception of land and human time, in all areas of society we have been conditioned to expect more for less over time. Yet until just a few years ago, the music industry was increasingly charging more, for the same product. And they were able to do this because copyright law gives them the ability to set prices like a legal monopoly.

While one can argue about the merits of copyright law, the reality is that people as a whole have a very reasonable sense of what things should cost. When people in aggregate are asked to pay far more than what they think something should cost, they start looking for alternatives. In this case, the alternative comes in the form of P2P technology.

A while back I wrote that the music industry will ultimately thrive and prosper because of all of this change. At the end of the day, that change comes because of our aggregate abilities to judge fairness. It’s no surprise, then, that for many people, finding ways around unfair pricing, is in itself, quite fair.