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It should relieve the pain…

http://www.youtube.com/watch?v=vbIGbZ6gq_Y

Image by Fotoshpere via Flickr

After reading Anatole Kaletsky‘s piece in the Times newspaper today I felt I needed to pick up some of my old economics books and do some revision. I have to admit, even after a second reading I am not sure I fully grasp the mechanics of implementing what he was suggesting.

I will try to summarise his article. He believes there is every chance that the current package of government aid will not be enough to stimulate the economy. He therefore suggests that the government borrow more, but do so at zero cost from the Bank of England. Apparently, Britain’s proportion of cash circulating in the economy as a percentage of all deposits is the lowest in Europe, leaving the economy and banks dangerously exposed to a liquidity crisis. He therefore suggests that the banks are made to deposit 10% of their monetary liabilities with the Bank of England. The catch is that they will be paid zero interest on these deposits (an effective windfall tax) which would enable the Bank of England to lend the money to the government at zero cost increasing the government’s war chest to kick start the economy.

Sounds like a good idea. I think.

Anyway, it got me thinking about economics and our/the electorates understanding of government policy. Implementing economic policy and managing the economy is such a large part of how we evaluate the performance of political parties, yet our understanding of the subject matter is, on average, very limited. When it comes to election time will we be able to judge for ourselves how Gordon has steered us through the crunch? Is he the saviour of the Western world or has he squandered billions of tax payers money?

How can our democracy operate effectively when we can not evaluate the performance of our politicians? Should economics become a compulsory subject along with English and Maths?

The other day I was doing my daily trawl of news using my trusty netvibes when I came across one of those Google killer articles. My initial reaction was to ignore it as I do not need a new search engine. However, for some reason I had a quick read.

The article was about Kosmix. Kosmix is in fact not a search engine, it is a “topic guide”. What it does is group together lots of sources of information from Google, Wikipedia, YouTube etc about something you want to know more about. I would say it is more of a Wikipedia killer…

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I posted in October that we would be setting up a philanthropic arm to estatecreate.com (not so originally called estatecreate.org). estatecreate.org’s objective will be to get involved with social innovation projects where we can make a difference by providing expertise and resources to help bring new social innovation projects to fruition.

Active Free Media (AFM) is an initiative started by Colin Mutchler. AFM aims to enable people to be able to create more awareness for social campaigns and initiatives that they believe in that do not have the financial backing to get their share of voice.

I met Colin for breakfast this morning. We had a excellent session and came away with a clear vision of how he will get an initial prototype launched. What a great way to start the day.

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• Social Innovation Camp: Which project will win at the end of the weekend?

I just can’t see that it will. Robert Peston has been out and about getting feedback from retailers who have been very negative about it. See his post here.

I am no great economist, however, if I had to make the call I would treat the challenge like a marketing campaign.

When you launch a new product, the key is to get momentum. If your budget is limited, which they always are, you usually focus all of your marketing around a tightly defined target audience which will get the most benefit from the product and talk about it the most. The aim is then to get that group to tell their friends/colleagues/family and, possibly, pass on the benefit to them.

A 2.5% reduction in VAT looks like the opposite strategy. Targeting everyone, nobody benefits much, little passed on and no momentum. I am sure there could have been a more effective approach. Very frustrating.

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The Courvoisier Future 500 was published in yesterday’s Observer magazine. estatecreate.com made it into the 500 and has got me an invite to the launch party this Thursday. I can’t say I have ever tried Courvoisier, but I am looking forward to trying it…

Image via Wikipedia

I have just read a guest post on Techcruch by the CEO of Redfin on how to deal with a downturn. You can read the whole post here. I loved his 9th point, however, I am a little worried it may have resonated maybe a little bit too much…

9. Be a Roman

What disgusted the ancient Romans about barbarians was their lack of discipline. Oxford Professor Peter Heather writes, “As far as a Roman was concerned, you could easily tell a barbarian by how he reacted to fortune. Give him one little stroke of luck, and he would think he had conquered the world. But, equally, the slightest setback would find him in deepest despair…” This is why, 2,000 miles from home, several hundred Romans could slaughter several thousand barbarians.

Startups are founded by barbarians. But to survive the ups and downs, you have to make yourself into a Roman. The most talented entrepreneur I know nearly self-destructs on the 18-month birthday of each of his ventures. By that point a startup isn’t brand-new anymore, and it isn’t Google either. The closer you get to becoming a real company, the less glamorous reality seems: you’re grimy from clawing for money and breathing hard now from exertion, which would be fine if you could convince yourself you’re not the only one struggling. Everyone struggles. Keep fighting.

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Image by via CrunchBase

I have just read Jon Fine’s column in Business Week – he interviewed Michael Wolff, who wrote the new Rupert Murdoch bio The Man Who Owns The News Here is an exerpt:

Michael Wolff: MySpace. They [meaning News Corp] know they have a huge problem. They’re quaking in their boots about MySpace. It always was a little rustling when I was there, there was this rustling—

Jon Fine: What do you identify as the problem?

MW: Facebook.

JF: OK. But Facebook is still smaller in America, and—

MW: Absolutely. But you know the rhythms of the Internet business, which I think are still, at this point, immutable. Something else comes along – a better technology, a better flavor of the month – and you, the former, are downgraded. Possibly to the point of being downgraded out of existence.

You can read the whole article here.

I have been an avid follower of MySpace v Facebook over the last 3 years. The two businesses initially had markedly different strategies. MySpace traded on being the cool place to hang out, driven by its band pages. Facebook has always been focused on being a “social utility”, replicating real world relationships online and providing new and innovative ways of communicating with friends on many different levels.

About a year ago, MySpace finally did something about the usability of its site – it redesigned its profile pages and introduced a range of Facebook like features.

The problem MySpace has, is that it does not really know what it is. There are now lots of places to find and share music and videos which work better than MySpace (LastFM, YouTube etc) and it is not as good at connecting people as Facebook. With no USP and some highly focused and ambitious competitors you can understand why News Corp might be losing sleep about MySpace.

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