The Knowledge Economy and a Cross of Gold

2001 Bluffton College Presidential Leadership Lecture

October 2, 2001

“I come to speak to you in defense of a cause as holy as the cause of liberty – the cause of humanity.”

- William Jennings Bryan, 9 July 1896

Winds of change fanned flames of controversy the year in 1899.  Across the country, upheaval caused by geopolitical and economic power realignment left Americans searching for a standard, a basis upon which they could denominate their existence.  With the industrial machine drowning out the sound of the plow and scythe, a revolution was brewing – one that would change the landscape of the globe for a century.  

Productivity, industrial might, and cash now measured wealth, once denominated by property ownership.  The idle holders of idle capital vilified by William Jennings Bryan at the Democratic National Convention in 1896 were the educated industrialist elites who, according to him, turned a deaf ear to the working masses.  While all acknowledged the need to establish a currency standard, fierce battle lines were drawn on the 11^th meridian of the Periodic Table of Elements with impressive skirmishes in the “A” section.

In the face of this tumultuous time, another debate was growing equally rancorous.  As the 20th century dawned a movement was afoot to establish the infrastructure to consolidate the movement of wealth throughout the nascent continental country.  Financial panic, alleged by many to have been instigated by proponents of a central bank, provided a stimulus to create the Federal Reserve Bank by 1913.  The centralization of the mode of wealth and knowledge transfer, be it tangible or intangible, has long been known to be the path to dominance.  After watching the Duke of Wellington defeat Napoleon at Waterloo, Baron Nathan Rothschild was quoted as saying, “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man that controls Britain's money supply controls the British Empire, and I control the British money supply.”  While observing that, “whoever controls the volume of money in any country is the absolute master of all industry and commerce,” President Garfield provided the inspiration for today’s presentation in his words spoken in 1880.  “I am an advocate for paper money, but that paper money must represent what it professes on its face.  I do not wish to hold in my hands the printed lies of the government.”

Today, we will explore the realities of a crisis of humanity more polarizing than the debate of gold or banking.  We will probe the enigma of the knowledge economy that has no standard – a wealth without denomination.  We will address the challenge presented by President Garfield 120 years ago and resolve to valiantly seek to address the problems we encounter.  What is knowledge, how is it’s quality assessed, and who controls its distribution?  Informed by the debates of yesterday, we will seek solutions for the challenges we face today. 

Let me begin by making the following observations.  At the turn of this century, the International Leadership Forum estimated that the adult global literacy rate was 73%.  That means that the written word was meaningless to over 1.3 billion adults.  With many countries boasting rates of 95%, many had rates under 50%.  An UNESCO report estimates that approximately 250 million children between the ages of 5 and 14 are working and going to school.  Fifty percent of this group works full-time.  When one considers the numbers of people trained beyond nominal literacy, the numbers are more poignant.  Less than 40% of the world’s population, over the course of their lifetime, can enter tertiary educational institutions.[1]  Sixty three percent of the world’s literate population lives in economically “developed” countries with African, Central and Southeast Asian countries disproportionately illiterate.  These statistics should, in themselves, hold considerable weight.[2]  However, this is not a lecture on education of the masses.  No, today, I’m concerned with a far more complex topic that, while impacted by the numbers above, is far more unnerving.

We find ourselves at a point in history where considerable acclaim is cast upon those who have achieved greatness in the pursuit of corporate goals.  Forbes and Fortune herald one after the other multi-millionaire whose fame is built on success in entrepreneurial imperialism of one sort or another.  During the last four years of the past decade, more millionaires and billionaires (in economic adjusted terms) were created than in the cumulative running of all of human history.  Are we really that much smarter and that much more productive than all civilizations that preceded us?  Are our institutions of higher learning producing genius with every diploma?  Do we live in Garrison Keillor’s mythical town where, “every student is above average?”  Or is it possible that we have built a tower of Babel?

Let us examine three elements of the knowledge economy.

First let us ask the question posed by Mr. Bryan.  In the knowledge economy, we must ask ourselves the unsettling question of basis.  In antiquity, wealth was denominated by raw materials.  Those who had the most land, the most gold – in short, the most tangible property – were the wealthiest.  In the evolution of economies, these basic elements were replaced by the metrics of the industrial age.  In industrial economies, productivity, distribution, and market share served as the more abstract surrogates for the wealth of ages gone by.  Now, in the knowledge economy, we find ourselves confronted by an economic reality without basis.  Prior to the dot bomb, we were told that value was measured in “eye-balls” and “stickiness”.  Billions of dollars flowed into the creation of a virtual presence that conveyed virtual information virtually anywhere.  Pause; let us consider what virtual means.  Our faithful Webster tells us that virtual refers to a hypothetical particle whose existence is inferred; being in essence though not formally recognized.  In other words – NOT.  When value is ascribed to virtual reality, how is it denominated?  More importantly, how is one to know whether it is real or imagined?  As the educator and the educated, how can we learn to discern reality from that which is not? 

Revisiting President Garfield’s conundrum – we need to know that face value is based on value or it’s a lie.  Is “knowledge” the presence or absence of literacy, the letters of degree conferred on an individual, the prestige of institution or commercial affiliation, nationality, race, creed?  Or, is knowledge something more than these? 

I would suggest the sine qua non of knowledge economy is the need for a gold standard.  Copyright law of the United States established that facts have neither owner nor value.  The organization and presentation of facts in various expressions have value.  Our society is filled with data; our challenge is to transform that into usable information leading to wise deployment creating value.  Yes, here’s where I appeal to the student populous movement – educational assessment should not be based on the recitation of facts established by U.S. law as valueless – now here comes the part where I shamelessly pander to the faculty – but in the useful synthesis and application of the same.  Knowledge built on rout memorization is valueless, knowledge built on application and problem solving has value.

Second, we explore the problem of ownership.  There was a time when ownership was rather unambiguous.  Possession was 9/10ths of the law.  Land, buildings, shipping lines and trade names were clearly defined by title.  In the knowledge economy, we are confronted with the timeless problem of counterfeit.  When he realized that conventional warfare was not swinging in his favor, Hitler, in an effort to decimate the United States and Great Britain economies began the process of printing counterfeit dollars and pounds.  The French tried the same technique in Vietnam and the U.S. introduced 20 Peso notes in Cuba for the infamous Bay of Pigs invasion.  Why is it that from Duke Sforz of Venice in 1470, to Napoleon, to Hitler, to Kennedy counterfeiting has been an integral part of war?  Because savvy tacticians know that economic chaos is one of the world’s most effective weapons.  Introducing counterfeit undermines all economic systems as confidence is lost in the representation of legal tender.

So too, in the knowledge economy, counterfeits are an untold tactical weapon.  In a recent study made of United States patents, our company found that over 35% of all current patents are intellectual forgeries.  This means that the patent claims rights already secured by another party or already existent in the public domain.  One cannot help being overwhelmed in Malaysia with copies of Microsoft Office being sold for $2 in the shopping malls of Jabor Bahru.  Passing off as proprietary that which is not is an unmitigated disaster looming over our current economic system.  For the knowledge economy to have any viability, forgery detection must be implemented. 

Last Spring, the University of Virginia gained national attention when one of its faculty implemented a computer system to determine whether term papers submitted by students were plagiarized or authentic.  In certain sections, as many as 25% of the papers were copied, in part or in whole from other sources – often the papers of classmates.  Is it any wonder that we go on in life to copy the works of others in business, education, and other walks of life when, in high school and college, we get away with intellectual theft?  I think not.  However, I believe that educators and students alike must realize that these patterned behaviors establish foundations that lead to ruin.

Many have proposed that with the ubiquitous nature of the internet, we are becoming a boundary-less world.  Traditional geopolitical barriers are eroding.  People are interacting with one another irrespective of time zone, language, tradition, or status.  In real time, I collaborate with business partners overlooking Tiananmen Square, Big Ben and Tierra del Fuego.  However, in these times of heady multinationalism, we must consider the often-overlooked dependency that is being created in this unrestricted world wide web.  Knowledge must be transferred and shared for it to achieve its greatest impact.  However, as we see the expansion of telecommunications-facilitated trade, we see an equally expanding malignancy of inadvertent isolationism.  Geiger & Diller closes its doors while we shop on-line.  Balmer’s purchases are now made at Talbots.com.  All the while, we lose the priceless, informal interactions with our neighbors telling us of places, people and events that once were intrinsic to the broadening of our minds and perspectives.  We miss the touch of the hand, the warmth of a smile and the sharing of a friend’s tear – in our wealth, we gain poverty of soul and mind.   In the midst of this efficiency, what has the knowledge economy lost?  Is the local ISP the Rothschild of the knowledge economy?

We have sacrificed human interaction.  In our global economic conquests, we have lost the innovative impact of observation.  Rather than go to places, we visit them virtually (remember, that means we DON’T).  I would like to suggest that one of the greatest threats of the knowledge economy is that we will actually see a reduction in global understanding.  We will see, hear and trade with only those who are wired into the web.  Rather than learning from the wisdom of the cultures that have passed before us, we will see only that which the content providers deem appropriate and, in so doing, we will see a contraction, not an expansion of knowledge.  In short, we will choke the inventory of innovation and inquiry in the morass of irrelevancy.  We must resist the centralization of information and knowledge.  Efforts must be made to learn from the richness of indigenous knowledge that may never find its way to a web browser.  We must develop multiple venues and vehicles for the exchange of knowledge so that the trade routes are not the monopolistic empire of the few.

So today, we must heed the warnings of history and listen to the voices of the past so that we build a legacy of renaissance, not repression.  We need to encourage one another to add value, not volume, to the knowledge of the ages.  We must commit ourselves to respect and value the uniqueness of the intellectual property of each member of the human race and decry piracy of the same.  And finally, we must vigorously resist the temptation of sloth and in its place actively participate with the global community.  We must resolve to move forward the democratization of knowledge and be relentless in our efforts to bear the standard of substance in the face of maelstrom of virtual value.

Let now ring true the statement made by Mr. Bryan on that hot July day in 1896, “The humblest citizen in all the land, when clad in the armor of a righteous cause, is stronger than all the hosts of error.”

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[1] http://unescostat.unesco.org

[2] http://unesdoc.unesco.org

STRONGER Patents Act 2019 - An Even Bigger Fraud

On August 22, 2019, Ambassador John Kenneth (“Ken”) Blackwell wrote an article entitled Congress Must Stop The Erosion Of Patent Rights.  Making reference to the proposed STRONGER Patents Act of 2019 sponsored by Steve Stivers (R-OH), Bill Foster (D-IL), Tom Cotton (R-AR) and Chris Coons (D-DE), he argued that ‘inventors’ should enjoy more unquestioned ‘rights’ and that the Patent Trial Appeals Board (PTAB) should be “reined in” as they were invalidating “over 75% of patents issued by the USPTO.”  Ambassador Blackwell is on the wrong side of history…again.  You might remember this masonic Ohioan from his infamous role as Secretary of State of Ohio during the controversial election of George H. W. Bush when he said of a court ruling against his bigotry that he would rather go to jail that follow the court’s order.  He must have forgotten that Masonic (he’s a Mason) values include honor and integrity.  But then again, he’s a Fellow of The Family Research Council – an organization that has never let honor or integrity stand in its way.

You probably don’t care about patents.  I doubt you have given them a moment’s thought today.  But you should.  You are currently paying a tax to a broken innovation propaganda machine to the tune of an estimated 12.6% in many of the products and services you purchase.  And its fair to say that over ½ of that tax is flowing to companies and individuals who have defrauded the patent offices and, by extension, you.  So, put bluntly, you’re being robbed.  And the worst part of it is the U.S. Government and its global counterparts are not only complicit – they KNOW that it’s happening and choose to do nothing.

Whether it’s the PTAB, the Court of Appeals for the Federal Circuit, or ‘second-set-of-eyes’ patent examination – the facts are tragic.  With just a second opinion, close to 70% of the patents that are granted by the world’s patent offices are deemed invalid.  Imagine what would happen if 60-70% of the dollars in your wallet or in your bank account were counterfeit.  How long would you put up with that?

Ambassador Blackwell, Representative Stivers and Foster and Senators Cotton and Coons are dead wrong.  But its not just the STRONGER Patent Act of 2019 that’s the problem.  It’s the issue I addressed in last week’s blog post regarding propaganda.  Since 1981 when Japan eclipsed the United States in legitimate patent filing, the U.S. Government’s official response was to liberalize the criteria for getting patents.  This resulted an order of magnitude increase in patent activity.  Did we get smarter?  No!  We got better at stealing, lying, and plagiarizing.  And while it’s popular to blame the Chinese for ‘stealing’ innovation, where were the politicians when Siemens’ and GE executives stated that they took innovation from universities because “universities don’t have the legal war chest to fight them,” in 1997 at RSNA?  Where were the politicians and industry associations when the (dis)Honorable Gerald J.Mossinghoff – former Assistant Secretary of Commerce and Commissioner of the USPTO – told an audience in Washington D.C. that if, “you bring me someone else’s patent and a check for $50,000, I can get you the same patent”?  Where was Congress when UPSTO Commissioner Q. Todd Dickinson comfortably stated that his job was not to ensure patent quality but rather to “get his customers their patents.”

We’ve gone nearly 40 years making the fraudulent patent the foundation of our “knowledge economy” illusion.  Foolishly, naïve countries like Singapore, Australia, the United Kingdom and the European Union have decided that it’s better to play ball than to hold up quality standards.  Not surprisingly, the weight of the World Bank, the OECD, and every national initiative to build “knowledge economy” businesses have suffocated nascent innovation under the bloated ‘entrepreneur’ enablement interventions rather than building vibrant economies flourishing with transformative ideas.  Tragically, with the exception of the Kingdom of Denmark – yes, the one that won’t sell Greenland to Donald Trump – no other country has been willing to call the bluff underpinning the Propaganda Economy’s leading currency – the fraudulent and plagiarized patent.  And now a Conservative Republican is chiding Congress to defend the system his generation contaminated beyond repair.

It used to be that I was simply a locust eating, sackcloth-wearing prophet when I testified in Congress at the Patent Quality Hearings in the early 2000s.  But times have changed.  By measuring the quality that the Ambassador, Congressmen, and Senators patently ignore, M·CAM has succeeded in out performing the equity markets with our indexes and funds since 2013.  And while academicians, economists, and legal apologists all seek to count patents in their Monopoly game while ignoring the multiply confirmed counterfeit majority of these artifacts of manipulation – not invention – our indexes and our funds show the value of separating the truth from the fiction.  And regrettably, if STRONGER Patents gets passed, our performance will likely improve.

You don’t care.  When you pay too much for food, medicine, smartphones, appliances, cars, voice-recognition customer service, building materials, seeds and so many other things, you don’t know that this theft is truly OUR PROBLEM.  And the ignorance born of our confusion in believing that we’re increasing ‘knowledge’ while in reality being constrained by curated propaganda paralyzes us in the face of the tyranny of messages like those spouted by Ambassador Blackwell.  Do you care?  Share this and last week’s blog post in as many circles as you can.  See if someone somewhere offers a counter-message to the Ambassador’s before Congress takes us back to the Dark Ages.

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Dateline 1945 – The “Knowledge” Economy Propaganda Machine

 One hundred years ago, Everett Dean Martin was appointed to serve as chairman of the National Board of Review of Motion Pictures in an effort to advance the emerging movie entertainment genre.  Having spent nearly a decade of his life as the First Congregational Church in Lombard, Illinois, he became a national evangelist for the psychological paradox he saw unfolding with the proliferation of technology outpacing education of citizens sufficient to keep them fully informed of how to consume media and messages.  Having seen how the technology of late 19^th and early 20^th century religion had been effectively co-opted by business, politics, and civil society, he campaigned against those who appealed to self-serving and “ignoble” instincts to shape public behavior, belief, actions and thought.  In the wake of the demagoguery that inflamed the horrors of World War I, he knew that, “the crowd is a state of mind,” and the capacity for masses to fixate on delusional ideology gave near omnipotence to the “enemies of humanity”.  In his 1920 essay The Mob Mind vs. Civil Liberty, Martin anticipated the “pandemonium of propaganda” that was inevitable when technology afforded greater access to ideology than to expansive and liberal education.  It is with some irony that the motion picture board to which he was appointed would one day help fulfill his greatest fears.

“Certain crowd-movements in America today give marked evidence of this unconscious motivation. Notice how both the radical and reactionary elements behave when, as is frequently the case with both, the crowd-spirit comes over them. Certain radicals, who are fascinated with the idea of the Russian Revolution, are still proclaiming sentiments of human brotherhood, peace, and freedom, while unconsciously they are doing just what their enemies accuse them of-playing with the welcome ideas of violence, class war, and proletarian dictatorship. And conservative crowds, while ostensibly defending American traditions and ideals against destructive foreign influence, are with their own hands daily desecrating many of the finest things which America has given to the world in its struggle of more than a century for freedom and justice. Members of each crowd, while blissfully unaware of the incompatibility of their own motives and professions, have no illusions about those of the counter-crowd. Each crowd sees in the professions of its antagonist convincing proof of the insincerity and hypocrisy of the other side. To the student of social philosophy both are right and both wrong. All propaganda is lies, and every crowd is a deceiver, but its first and worst deception is that of itself.”

This critique, written one hundred years ago today could be republished in 2019 with no editing and be seen as the epitaph to the century past.

Martin died in 1941.  He didn’t live to see the immediate fulfillment of his worst fears.  The V-2 rocket, the U-boat, signal intelligence and encryption, broadcast propaganda all unleashed the inhumane fury that he sought do desperately to warn humanity against.  When in response to the industrial consequence of largely German propaganda-fueled innovation the Allies realized that they had been bested, a more malignant propaganda economy was born.  Unable to compete with superior ideas and innovations for the most part (save the notable atomic initiative), the industries of Allied economies in the 1940s were dictated by espionage-acquired intercepts and salvaged technologies – not by the ingenuity of their engineers and scientists.  From 1945 – 1959, Operation Paperclip (the collection of German engineers and scientists through overt and covert operations) did more to fuel the second half of the twentieth century than any other single action.  While telling the story of technological supremacy to reinforce the “winning” narrative dear to the US psyche, the nation was duped into believing that Americans were dictating the industrial technology agenda rather than scaling and appropriating the intellect of others.  We weren’t defining what America needed.  Rather, we were reflexively responding to evidence of the supremacy of “others”.  Remember, the modern computer was not born of U.S. or British science.  British, US, and Australian intelligence were driven to produce countermeasures to the superior technology that Japanese and German cypher engineers and mathematicians invented.

I spent the past few days in Boston and Silicon Valley.  The frequency with which I was accosted with the term made popular by Peter Drucker fifty years ago in his book The Age of Discontinuity – the “Knowledge Economy” – was deafening.  At one point, I snapped.

“We don’t live in a Knowledge Economy,” I said.  “We have been living in the Propaganda Economy.”

The words barely escaped my lips before I realized that this observation has been what I’ve spent the past three decades of my life attempting to overcome.  Reflecting on the dire prophecies of Everett Martin, recounting the socioeconomic adoration of Peter Drucker, I realized that since the end of the Second World War, we’ve abdicated “knowledge” for reflexive and compulsive enterprises which serve not the benefit of humanity in the main but rather seek to satiate the unconsidered consumption of incremental industrial output.  We are told what to fear (and desire) – morbidity, mortality, economic and egoic existential ‘threats’.  Then we’re told what and how to consume antidotes for manufactured “needs”.  We’re deluded into “choosing” among indecipherable “alternatives” (Apple vs. Android; Prescription vs. Wholistic; Industrial vs. Organic; Green vs. Polluting) while being ignorant to the ever-narrowing aperture delimiting unconstrained innovation.  We have over 10 million patents on less than 50,000 products.  We have the proliferation of “information” curated by advertiser-fueled “technologies” without considering the inherent influence or bias that shapes the sanctioning of messages.  And against this backdrop, we hear the cacophony of hypnotic academicians, advisors, politicians, pundits, and industrialists celebrating “knowledge”.

I recently lectured in Palo Alto.  The room was filled with the venture funded experts at the “cutting edge” of technology.  For three hours I described the consequence of incremental vs. fundamental innovation.  In simple biologic, physiologic and chemical terms, I described how they could integrate known, established, science to make disruptive impacts in their respective areas of work.  While I spoke, several individuals frantically sought to ‘google’ the concepts, terms, and research I was referencing commenting on how none of them were ‘trained’ to think in the wide-ranging scope of my talk.  From photosynthesis to membrane oligomerization; from Particle Swarm mathematics to lossless encryption; from genetics to social psychology…the range was extensive…and entirely necessary and effective.

“I think we need to rethink how we think,” was the comment articulated by one of the participants in the end.  “Nobody is thinking like this.”

“I hope you don’t think like me,” I responded.  “I just hope you think.”

Walter Powell wrote that, “the key component of the knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources,” in The Annual Review of Sociology in 2004.  In 1969, Drucker polarized labor into those who work with their hands or the heads.  And herein lies the fallacy upon which the propaganda is built.  For “knowledge” to enable an economy, it cannot be the curation of the observations and recitations of others.  Rather it must be the synthesis of cognitive acuity, analog practice, and a fundamental curiosity born not of consumer expedience but rather from qualitative examination of conscious existence.  In other words, if the ‘problem’ is what you’re ‘solving’ than you’re contributing to a Propaganda Economy.  Because in a genuine Knowledge Economy, we’re arranging matter and energy to optimize existence – not “solving problems” born of myopic perspective shaped by myths, mantras, and media. 

Returning to Everett Martin one more time – his genuine admonition to work towards adult education which would outpace (and hold in check) technological development is one that bears consideration.  The notion that by our second decade we have acquired all the “education” we need to function in society supports the crowd thinking against which he unsuccessfully warned.  It’s time that we enter into continuous education.  And start it by turning off your computer, your iPhone, or your electronic device and read something written before 1945.  See if you could learn a thing or two from knowledge before it was so economically hijacked!

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Don’t Let Your Sight Indict My Blindness

You probably never heard of Michael Servetus.  That’s fine because he was a heretic and was burned at the stake atop a pile of his own books – and green wood – under the orders of John Calvin on October 27, 1553.  And thank god for that.  Because if you describe yourself as a “Christian” today, Calvin’s accommodation of Catholic dogma kept doctrinal coherence to the “faith” that silly Michael sought to hold accountable to its own sacred texts.  The notion that the statement in John 1:14 – “…the Word was made flesh, and dwelt among us…” implied that Jesus came from God and was therefore not a temporal co-equal in the illusion of the Trinity was so dangerous that the thinker had to be executed.  Never mind the fact he was the first physician to correctly understand the role of the heart, blood and lungs in keeping the human body alive.  Forget his contribution to astronomy by calculating the occultation of Mars by the Moon.  He questioned a 1,200-year-old dogmatic illusion.  He must die!

Newton to Aristotle and Descartes; Galileo to Pope Urban VIII; Copernicus to Ptolemy; Alexander Winton to horses and carriages; what is it about “belief” that is dependent on extermination of observation?  It’s one thing to hold oppositional perspective.  Two observers of the same fact, pattern, occurrence or phenomenon may process the “same” observation differently.  This interaction can enrich knowledge by the plurality of perspective.  That is in stark contrast to observation held in opposition to unquestioned (or unquestionable) dogma, consensus inertia, or “belief”.  Far from enriching knowledge, this begets an existential crisis and provokes the impulse to exterminate the heretic.

An editorial note: these observations are just that – observations.  I don’t make them because “I’m right”.  I make them because they’re a perspective I have. 

Over the past 25 years, I’ve been immersed in the world of intellectual property while living here in Charlottesville Virginia – home of Thomas Jefferson.  In his letter in 1813 to Isaac McPherson, Jefferson famously wrote of the patent system…:

“Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody.”

The pursuit of “ideas which may produce utility” was a laudable aspiration.  But Jefferson never imagined a world in which German patent reparations taken by the U.S. at the end of World War II under Operation Paperclip would be used in the Cold War in areas ranging from rockets and missiles, to industrial chemicals, to medicine, to physics and mathematics.  He never imagined “Jack” Mullin would reverse engineer and appropriate (steal) the ferromagnetic tape (invented by Danish engineer Valdemar Poulsen in 1898 and perfected by the Third Reich in the late 1920s) upon which the digital revolution would be born.  And he certainly never imagined the collusion that President Ronald Reagan would enable – under the direction of Gerald Mossinghoff – between the patent granting process and industries desperate to obtain more patents faster to counter the growing innovation “threat” from Japan.  Collusion is a strong word but let’s examine the facts.  To lubricate the fabrication of faux “invention”, Congress authorized the United States Patent and Trademark Office to levy “user fees” which the Office would retain if it reduced the pendency of patents and increased its issuance of claims of invention.  And he certainly would have been appalled by 1985 President’s Commission On Industrial Competitiveness which suggested that Cold War deterrent by patent number (as opposed to quality) would be the solution to a growing competition from Asia.

Into Reagan’s world came the ecclesiastical council of Bronwyn Hall, Adam Jaffe, and Manuel Trajtenberg working sub rosa with the National Bureau of Economic Research (NBER).  While their work was far from a secret, their bias was.  Drawing data from patents issued between 1963 to 1999, they would become to innovation econometrics what Luther and Calvin were to the Reformation.  And it’s their opening assumptions that are both false and the basis for generalized error.

They recite that: 1) patents contain detailed information about “the innovation itself”; 2) they are sought for a monopoly incentive; and, 3) citations are a proxy for acclaim or “importance”.  Referencing the 1981 NBER work of Jerry Hausman, Bronwyn Hall and Zvi Griliches (though ignoring the uncomfortable weak correlations between research and development and patenting activity that they reported), these researchers instituted an econometric doctrine of “counting” patents as an indicator of inventive or innovative effort.  From that time until the present, academicians and economists have been blinded to the numeric glaucoma of the 1950s (did the U.S. or the U.S.S.R. have more Germans?) that begot the qualitative blindness rendered complete in 1981 (can we build a database to justify our desire to “out-invent” Japan by patent numbers?). 

For a moment, consider the published work of Deepak Somaya from the University of Illinois.  In his 2012 paper in the Journal of Management entitled “Patent Strategy and Management: An Integrative Review and Research Agenda”, he describes the motivations for patenting far afield from Jefferson’s market compromise.  And while the mountain of evidence at the Court of Appeals for the Federal Circuit and the Patent Trial Appeals Board continues to grow showing that granted patents are more often than not found to be in error when challenged, neither academicians nor economists are willing to consider that the artifact of a patent does not represent “invention” or “innovation”.

“The motivations of firms in obtaining patents provide considerable insight into the potential strategic uses of patents. Among the many reasons for patenting described in prior work are blocking (defensive and offensive), preventing copying, building fences and thickets, earning licensing income, avoiding litigation by others, use in negotiation and exchange, motivating and rewarding R&D personnel, measuring performance, attracting investors, and building image and reputation (Blind, Edler, Frietsch, & Schmoch, 2006; Blind et al., 2009; Cohen et al., 2000; Cohen, Goto, Nagata, Nelson, & Walsh, 2002; Duguet & Kabla, 1998). Research has also shown that different firm-level strategic motives predict characteristics of the firm’s patents as well as reactions from rival firms to these patents (e.g., filing oppositions) (Blind et al., 2009).”

Where is the consideration of patents representing laborious inquiry, genius, and invention?  Tragically, nowhere to be found!  So much for assumptions 1 & 2 of the catechism.  Not surprisingly, the third assumption that suggests that “citation” means you’ve been celebrated for your contribution is an error of academicians who seek tenure rather than reading patent law.  In the ivory towers of academic research, citation means someone recognizes you.  In contrast, in the world of patents, citation means that you are rendered irrelevant or surpassed by the “state-of-the-art”.  Each citation removes an option by a determination of “patentable distinction”.  The more cited a patent is, the more its range of market control options are limited!   This isn’t tenure, it’s competitive market restriction!  It is worth noting that, in academic research, being cited doesn’t necessarily mean you’re being celebrated.  Good research includes the challenging of previous work.  But don’t tell citation counters that unfortunate detail.  To be found – in their univariate world – is to be celebrated.  Not true in science; definitely not the case in patents.

And herein lies the problem.  To get funded research in the field of econometrics around innovation, one seems to be compelled to turn a blind eye towards the dubious selective relevance of NBER data; the fallacious conclusions drawn from the work of researchers who themselves didn’t check their assumptions; and, rationalize data to ignore the ground truth that, since 1981, patenting has been more about the mutual assured destruction doctrine built on missile silos of expensive litigation and costs of enforcement rather than on genuine innovation.  No wonder that Apple and Samsung were fighting over who “invented” the rectangle and who controls the movement of fingers across a screen.  Ah, poor Thomas Jefferson!

Around 80 AD, the Roman poet Martial may have coined the term “plagiarius” to describe the seduction and expropriation of things.  In the 17^th century, the term became more explicitly part of literary parlance.  And in 1993, IBM started developing machine intelligence to detect plagiarism in text and code.  Not surprisingly, the cunning use of thesaurus and word substitution became inextricably part and parcel of patent filers in the 1980s.  The more convoluted the term “could” be, the more interpretation might be afforded to what wasn’t actually invented.  The courts concluded that a patent applicant could be “their own lexicographer” meaning that “meaning” didn’t “mean” what it “meant”.  Against that backdrop – to say nothing of the profit motives for granting and maintaining a plethora of “strategic” patents in the US, Europe and Asia – is it any wonder that we’re awash in patents?  Let’s see: if a printer was paid to print counterfeit $20 bills, might he print many?  So too, a patent office paid to issue and receive maintenance fees for the preservation of prolific (and dubious) patents may have an incentive to, that’s right, issue patents.  Precisely what they’ve been doing for four decades.

But are we prepared to measure quality rather than quantity?  Well so far, no.  While industry left the Constitutional intent of patenting activity nearly 40 years ago by turning patents into competitive deterrents rather than celebrations of ground-breaking invention, compliant researchers found the existence of a data artifact in the form of patents to be the only thing that was countable so, guess what, they counted them.  In 2001, when I first applied machine intelligence to the question of plagiarism in patents and reported in Congressional testimony that up to 1/3 were possibly at risk of being merely the product of thesaurus linguistics, did anyone take notice?  When Commerce Secretary Donald Evans began the drumbeat of Chinese IP theft while ignoring the rampant domestic evidence of innovation expropriation among competitors and within institutions (HP v Compaq; DuPont v Monsanto; Columbia University and its transgenic mouse; etc), did anyone ask if China was merely taking to scale abuses that were alive, well, and celebrated in the U.S. and Europe?  Are any market participants aware of the looming threat of machine intelligence applied to patents?  Not really.  And why?  For the simple reason that we’re still blindly reciting a counting game while the rest of the world calls the U.S. and European bluff.  Oh, and for the record, the Chinese aren’t “inventing” much.  They’re largely building jurisdictional thickets around the hedges that G-20 countries manicured for years.

In 2013, M·CAM started running an equity fund that measured the difference between companies that come up with new ideas and companies that merely expropriate the ideas of others.  We did this to prove the consequence of measuring what others ignored.  In 2015, that effort gave rise to the creation of the CNBC IQ100 powered by M·CAM.  During its publication period, the index out-performed the S&P500 around which it was inspired.  Now, we publish three indexes – Innovation a^® United States (formerly the CNBC IQ100), Innovation a^® Global, and the Martin Global Innovation Equity Trade War.  These indexes are based on a very simple premise:  if one genuinely contributes to ideas that build market opportunities, it is reasonable to expect that entity to ultimately perform better than those who merely copy the work of others.  And, as long as the Cold War mentality of patent counting prevails, I suspect our performance will be rewarded.  After all, if the smartest people in the room aren’t willing to ask the tough questions on the quality of that which they count, does counting count?

Which brings me back to the charred remains of our heretic.  Tragically, Michael asked the “wrong” question.  If the sacred text says, “In the beginning,” he puzzled, “doesn’t that mean ‘beginning’”?  And if in the beginning was the Word, and then the Word was made flesh, doesn’t that imply sequence?  And if there’s sequence, doesn’t that mean that the flesh and blood came after the Origin?  Alternatively, is the text misreporting the facts?  Servetus wasn’t demanding his position.  He was just saying that you can’t hold literal infallibility of text and the doctrine of the Trinity with credibility.  Pick a story.  Stick with it.  A great surge of our innovation policy was born of the Cold War.  Numeric deterrents mattered.  I don’t mind if we, as a society, decide to redefine patents from being temporary market incentives for genuine contributions to science and the useful arts (sorry for quoting the Constitution there) to being mine-fields of deterrents to disrupt those who would challenge incumbencies.  All I care about is that we pick a story and stick with it.  When the consensus illusion stands in the way of explicit observations, I’ve got a problem.  And with the emergence of “trade wars” justified by IP theft, there’s a lot burning at stake.  (Yes, I couldn’t miss the pun.  I’d say “I’m sorry” but I’d have to be my own lexicographer because I wouldn’t really mean “sorry”.)

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Optics of “Truth” – From Constantine to Einstein to FINRA

One hundred years ago this month, a group of astronomers commenced their observational engineering in Sobral, Brazil to prepare for the Total Eclipse of the Sun of May 29, 1919.  Sir F.W. Dyson, FRS, Professor A.S. Eddington, FRS, and Mr. C. Davidson were intent on measuring the “Deflection of Light by the Sun’s Gravitational Field” in an effort to confirm Professor Einstein’s 1911 General Principle of Equivalence which would alter Newton’s “Law” of gravitation.  Enlisting astronomers, scholars, politicians, and clergy from three countries, their results, published in November of 1919, solidified the public’s canonization of Einstein and his world view.

Sixteen hundred ninety-four years ago on May 20, Emperor Constantine convened the ecumenical Council of Nicaea to resolve the official story of what would become “Christianity”.  In a gathering of astronomers, scholars, politicians, and clergy from three countries, he sought to quash deviant narratives that would call into question any version of “truth” other than his approved version.  Among the Council’s task was to resolve the three hundred-year-old questions of which version of accounts of the teachings of Jesus and the commentary of Apostles (notably Paul who ironically had no knowledge of Jesus or his teachings from experience) would be accepted and which were heresy.

Between May 20 and May 29, 2019 I’m engaging in an effort to shed light on an equally occult collection dogmatic beliefs – money.  And as I’m wont to do, I like to learn from successful propaganda campaigns throughout time to see how perspective is codified as “truth”.

I’m fortunate to have been born in a family that included an astronomer (my father) and a linguist (my mother).  While I can claim no expertise approximating either of their life-long learnings, my osmosis exposure to their worlds fueled my inquisition of the two seminal May events listed above.  Without the former, we would not have our current scientific framework and without the latter, we’d have one less reason to separate ourselves from each other based on cosmological and metaphysical dogma.  Ironically, both involved the quadrangulation of men of astronomical, political, scholarly, and ecclesiastical persuasion.

While I won’t do justice to the meticulous records of both events (which I commend to your reading), I found interesting resonance in these two events.

• 1.      A priori Singular Assumption Supremacy:  In the solar eclipse experiment, scientists postulated that during a total eclipse of the sun, the visible light from stars near the sun would deviate in its path in a manner that would be perceptibly different from the same light from the same stars without the solar mass influencing its passage.  By observing the photographic plates of the exact same stars without the eclipsed sun and those same stars during the eclipse, deviation of light in the X-Y coordinates “should” be quantifiable.  In the Council’s case, the assumption was that hand-scribed copies of texts over a three-hundred-year period across at least three language translations would contain an inerrant consistency.  The gathered scholars would be able, when assembled, to confirm truth by comparing all variations and settling on the negotiated deviation which would constitute the “authentic”.  In both cases affording one variable the capacity to arbitrate all other considered and unconsidered postulates, extrapolated consequence hung on a single argument.

• 2.      Dismissal of Dissent:  Considerable treatment is given to the optics of the telescopes and lenses used in the solar experiment.  From the nature of mirrors to the precision of lenses to the photographic plates, going into the observation, the scientists knew that their instruments would produce error.  The Oxford and Principe observations demonstrated inconsistencies in the lead up to the eclipse.  Further, while care was taken to consider meteorological conditions, variations for atmospheric differences in the upper atmosphere were unconsidered.  Never mind, the assumption was that, on the day, the standard deviation of the reference would be treated as static and serve as the basis for comparison of true deviation.  Similarly at Nicaea, the known error was the notion of a unitarian divinity (the notion that the Father and Son are co-equal in all respects).  The Arian Controversy had caused a power dispute between Alexandria and Constantinople and (I know this is going to come as a surprise) the Roman emperor wanted his perspective to prevail.  So the triune nature of the godhead became the lens through which everything was filtered.  Oh, and if you didn’t agree, no worries, your perspective was considered…. Oh, no, you were banished and labeled heretic, excommunicated or subject to the sword.

• 3.      Selectively Objective:  Going into the solar observation, 13 candidate stars were selected for their photographic magnitude (the sufficiency of light to expose to plates) and their proximity to the sun.  Great lengths were taken to explain the rationale for only 7 (61%) being used to confirm the study findings.  While the records of the Council of Nicaea are a bit clouded on the point, it appears that about 78% of the candidate “books of the Bible” (which were not officially concluded in the “canon” until the Council of Rome in 382) were considered as definitive while the remaining set that didn’t substantiate the a priori doctrine were excluded.  In short, in both cases, only that light which confirmed the hypothesis was considered.  All of the rest was rejected.

• 4.      Infallibility of Consequence:  When the findings of the light experiment were published in November of 1919, the consequence was the effective elevation of Einstein to detriment of Newton.  When the Council of Nicaea arrived at the outcome that was pre-ordained by its convening monarch, Rome and Constantinople were elevated and the Arians were excommunicated.

It was with great interest that I performed a few calculations on the Principe 4” lens plates – the ones that “proved” Einstein’s theory.  One would consider that, if the gravitational effect of the sun was to deflect light, that deflection would be equally altered by: 1) proximity of the sun to the starlight; and, 2) the x-y coordinate shift observed in both right ascension (“longitude”) and declination (“latitude”).  Unfortunately, the calculated deflection (based on Einstein’s theory) and the observed deflection don’t meet either of these presumptions.  The correlation between solar distance and the observed change in right ascension is 0.4 while the effect in declination is 0.36.  In other words, even in the instances of the selected objective, the “effect” wasn’t the reported effect.  Similarly, when one considers only the over 5,000 Greek, 10,000 Latin, and over 9,000 other texts of the canon from 382 until Erasmus’ work in the early 16^th century including parchments, fragments, and other copies reproduced by scribes who may or may not have had any experience with the images of the letters they were copying, the textual agreement is somewhere around 40% as well.  This statistic is derived from a simple compound error calculation between literal translation precision, penmanship and reproductive accuracy, to say nothing for the disputed content between the Codex Sinaiticus and Codex Vaticanus which were resolved based on dogma – not literal archaeological evidence.  Ironically “error” exceeds “consistency” in each of these examples.  While the masses are told of “truth” and “laws”, it is heresy to review the inherent error in the “ground truth.”

So whether, on this Sunday, you venerate a divine composite of mysteries, metaphors, myths, and messiahs or whether you are so “enlightened” as to venerate mathematics, mechanics, metrics, and measurable, our collective paradox is that the assumptions upon which both stand are exactly that – assumptions.

For the last four weeks, I’ve been in communications with the Financial Industry Regulatory Authority (FINRA) about what is and is not authorized in communications regarding some of our commercial business.  For those unfamiliar with FINRA, their job is to insure that investors receive fair and complete information upon which to make decisions.  FINRA has copious rules upon which they opine to attempt to certify compliance.  However, FINRA never has had to deal with a business like ours.  We have done a number of novel things – quantifying the effect of intangible assets (things that are not recorded on corporate balance sheets) for banks, businesses, governments and investors.  And it turns out that while we have measured many things with a precision not afforded by any other metric, FINRA only has room in its world for things that “fit” their template.  In their effort to achieve “compliance”, they have mandated that we alter or eliminate historical material to make our presence less disruptive.  That’s right, FINRA has explicitly sought to manipulate full, complete, and accurate information rather than adjusting their optics to account for something that challenges the consensus hypothesis.  What’s worse, with a recently completed business partnership with another not-for-profit government recognized organization, we’ve been advised that we may not be able to report the nature and substance of a reality that the whole world will be able to see on a daily basis and associate it to investors’ decision-making information.

In short, FINRA’s actions – like those of Constantine, Erasmus, James I, Eddington, Dyson and Davidson – evidence the operating definition of “truth”.  They define it simply as that which confirms catechisms held by controlling consensus.  If it preserves ideology and the hierarchy dependent on manipulating the masses, it’s “true”.  If it challenges this status quo and disrupts occult power and influence, it’s heresy.

So what can we learn from the 4 Propaganda Pillars?  Well, the answer is simple.  Start by questioning ALL assumptions.  Is it likely that a deity would insist on the penmanship of scribes across three languages and two millennia to convey an oral wisdom and lived experience?  Is it likely that an geocentric observation which takes into account none of the earth’s magnetic, meteorologic, or other effects to say nothing of the unknown kinetics in multiple dimensions that may describe light emitters both near and far forms a universal “law”?  Is it likely that a government agency under the thumb of financial interests will want independent data that competes with incumbent interests represented as true, fair, and balanced?  Of course not.  Second, encourage dissent.  Welcome those who innocently inquire together with those in vehement opposition.  Encourage each party to come to the table with their own insights and welcome discord that remains unresolved yet respectful.  Third, acknowledge subjectivity.  In the case of our business, we explicitly publish our methodology and approach.  We’re not saying it’s “right”.  We’re simply stating our perspective.  And in our case, we’re applying that perspective to information that is public but is unused by financial institutions and regulators.  So we’re even telling people where and how to look at something that is not commonly seen.  And finally, engage with arrogant humility.  What I mean by this is simple.  What we do represents decades of research and scholarship.  The perspective we have is based on ample consideration.  Therefore, the views we share with the world are correctly OUR VIEW.  That DOESN’T MAKE IT RIGHT!  It just makes it us.

Who knows?  With an approach that doesn’t require swords, cruelty, division, and harm, maybe we can form a more profitable union!

VI^a/W

Of Great Hunters and the Game

Eighteen years ago today, I was sitting at a much larger computer terminal on New Year’s Eve frantically corresponding with a Managing Director at Banc of America Securities in Palo Alto, California.  Three hours behind me, it mattered little to him that the first New Years of the new millennium would be spent with me negotiating a credit agreement to provide capital to my company to cover the bank’s own reneging on its capital and business commitment weeks earlier.  After all, my midnight would pass and he’d still have three hours before the champagne corks would be launched.  And on that night, I made a promise.  For as long as I ran M·CAM, my last act on the last day of each year would be to write an homage of gratitude to those who, in the preceding year, had made my year wonderful.  I think of this the Incarnation of Gratitude Litany.

As if to test my resolve, my morning this morning included an invitation to be lured back to the table of re-trading against myself and my values.  The difference between now and 18 years ago is a simple one.  It came in my understanding of a moral riddle given to me in the Golden Pagoda (Kinkaku-ji) in Kyoto long ago. 

Impassioned to convey sage wisdom into my life, an aged monk grabbed onto my coat and motioned for me to sit beside him.

“Turn the bamboo for your omikuji,” he said handing me a large bamboo section with a small hole drilled in one side.

I rolled the bamboo and, after a few seconds, turned it to one side allowing a strand of wood to slip out of the hole.  On the strip was a series of kanji characters.  Handing it to the monk, I watched as he took it and melted into an expression of sheer amazement.

“Ah, this omikuji hasn’t been drawn before.  It is very special,” he said as he shuffled over to a wall of tiny cubby holes each containing a miniature scroll.  “We’ve heard about this scroll but I’ve never seen it.  You must listen very carefully as what I have to tell you is very important.”

I sat as he relayed the following story.

A great hunter always provided food for his village.  When he would enter the forest, he would find deer, rabbits or birds, shoot them with his arrows or catch them in his snares and bring them back to the village so that all were provisioned.   In the forest, there was a line.  Before that line, hunting big game was appropriate as it could be carried back to the village without any concern of exhaustion.  Beyond the line, the hunter should only pursue small game as dragging a deer back would require too much effort and, as such, neither he nor the village would benefit.  He and his village thrived.  Then one day, he went into the forest to hunt.  Deep in the forest, he had seen nothing.  No tracks in the snow; no hide, hair, or feather.  And then, standing on the line of demarcation he saw them: a deer and a rabbit.

“You know what to do,” the monk exclaimed.  “You’re the great hunter.”

“What’s the punchline?” I inquired.  “How does this end?”

“Right,” he replied, “You know!”

2018 taught me that I misunderstood hunting as a pursuit.  The reason for my struggle with the omikuji was up until this year, I thought that the hunter had the next move.  His wit, his cunning, his aim, his strength.  But what I learned in 2018 was that the deer and the rabbit were not prey.  They were not provision.  They were seduction into the reflexive illusion of “choice”.  Was the hunter going to be trapped into expending every last bit of energy to haul the deer back?  Was the hunter going to start collecting rabbits and birds for their portability?  Was the hunter going to be wise enough to invite either the deer or the rabbit (and any other woodland creature, for that matter) to follow him back to the village?  Was the hunter wise enough to turn away from the hunt and teach the village to become self-sufficient?  Was the hunter thoughtful enough to realize that he wasn’t provisioning but rather enabling dependency?

So, in keeping with my year end tradition, I honor and celebrate my dear friends Bob Kendall and Amanda Gore who stood with me once more as steadfast, intrepid allies in my mission.  I honor Cody Lloyd for giving me a father’s joy on January 15 of this year when he sent me a letter I will cherish for the rest of my life in which he informed me of his abiding love and passion for my daughter Katie.  I honor my son Zachary for his embrace of living that involved joining the team at M·CAM.  I honor Nicolas Wales for his relentless pace climbing actual and metaphoric hills and inspiring the same in me.  I honor Dex Wheeler, Pam Cole and Dylan Korelich who struggled mightily across the year to help the entire team at M·CAM thrive and achieve unimaginable successes.  I honor community that has formed around the Breathing Enterprise’s Gatherings and the persistent value of family that they have manifest in my life.  I honor my beautiful wife Kim for her persistent, generative passion.  But in this end of 2018, I will, for the first time honor one more person.  Someone who has never featured in any of my gratitude posts over nearly 20 years.  As the sun sets on 2018, I honor my resolute passion to be the very best of humanity!  I honor my unflagging generosity and loyalty.  In short, I honor me.  I’m grateful to finally sit, puzzle solved, and watch the deer and the rabbit make THEIR next move.

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And Then?

I wrote the following 33 years ago...fitting for a day of collapsing confidence in the markets...

The sun rose.  Rising ever so slowly yet rising nonetheless.  As it made its ascent into the vast blue expanse overhead, shadows of dawn were transformed into fully illuminated objects of the day.  All was very quiet, as silent as undersea chasms into which the light of dawn never penetrates.  Nothing moved. All was perfectly tranquil.

Projecting from the rubble below, a network of iron beams - twisted, mangled, and rusted, reached upward as a tree stretches its gnarled limbs from a fissure in the bedrock.  Fragments of glass flashed in the fresh new light.  On the ground, a mixture of steel, glass, plaster, concrete, and asphalt combined to form a landscape never observed before.

The sun rose higher.  The higher it climbed, the warmer the air became.  Still nothing moved.

A bridge support stood in the desolation, land that once bustled with activity.  The bridge, both a functional superstructure and a monument to a concept that those who created the structure  never totally understood, was annihilated, reduced to mere powder.

The sun continued its ascent.

Towering above the bleakness stood geometrically symmetric metal skeletons; wires draped from them like wild grapevines dangling from bare trees in the dead of winter.  Once laden with surges of power, giving vibrancy to their designers, now they hung - powerless - in this realm of desolation.

The sun reached its zenith, thoroughly permeating the silent surroundings.

Partially submerged, yet still conspicuously there, was an enormous metal formation in the shape of a pointed ellipse.  Lying on the floor of an inlet, this colossus was sheltered from all the dangers of the open sea. Chains bound it to proportionately minute supports on land - the chains still insuring against any unwanted movement.  Atop this immense construction, two long narrow tubes pointed menacingly at the sky - daring anything to intrude into this silent, seemingly forbidden territory.  

The sun began its descent.

A spire rose upward, splitting the air.  Upon the pinnacle stood a simple, strikingly prominent figure - an upright bar intersected by a horizontal bar - a cross.  This figure cast an endless shadow across the desolation.  Once this had been a solid firm construction - now fleeting.

The sun sank lower in the sky.

A causeway was clearly delineated on the ground.  This, combined with many other such causeways, converged at one point.  At this point stood a stone.  Along the road stood forsaken buildings once bustling with international commerce; houses empty shells, silent as the stones from and trees from which they were constructed; vehicles, once transporting their owners from one place to another in a seemingly endless cycle.

The sun set casting an orange red hue on the giant stone at the roads' convergence. Upon this stone, a simple inscription read:

"To Whom It May Concern, We Were"

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