Ascription is an Anathema to any Enthusiasm

Businesses that provide a platform for third party developers are directly analogous to real estate development with the platform vendor in the role of landlord. The ultimate landlords are, of course, nation states. How all that is governed is the primary turf under dispute in politics. For example in colonial Boston the state delegated to Harvard University the rights to build a bridge over the river. Running the bridge was quite profitable, and later when the state wanted to build a second bridge Harvard sued them for breach of contract. Later the state licenced a lot of toll roads and canals, which mostly turned out not to be profitable. When the private operators folded the state got left holding the bag. Historically you needed to get a license from the king to run pretty much any business. Some of these where “licenses to print money,” others less so.

Vendors Apple, Microsoft, Google, Facebook, etc. etc., like states, manage their platforms to create economic growth on the platform for all the various reasons. For example Tivo averages $8.78 per subscriber per year and one way for them to increase revenue is to raise taxes or get more customers to move onto their platform. But an example like that can be extremely misleading. The bloom of economic activity around a platform offers many options, and the king can manage those licenses in numerous ways. The traditional technique is to employ the relatives. But more profitable is to spin off private businesses to friends and family.

The European kings handing out license for regions of the new world was mixed bag for the license holders; but the US government handing out license for the cross continental railroads was a pretty good deal. The railroad barons managed to retain the rights to much of the land around the rail lines. That’s an interesting contrast to the Louisiana purchase where the Federal government believed it would recoup the cost of the purchase by selling the land, but since we already had a long tradition of taking rather than paying for land it never did.

The railroad barons (like modern platform vendors) would advertise to attract settlers (developers) to their real estate (platforms). Here’s a story:

IN THE BEGINNING, there were 10 families of Germans from Russia, who arrived in Fresno, CA on June 19, 1887.

On May 8, along with 219 other immigrants, they had left the villages of Straub and Stahl am Tarlyk, on the Wiesenseite of the Volga River, journeying westward traveling by wagon, train, and boat through Poland, East Prussia, and Brandenburg to Bremen, Germany, the port of embarkation. When they docked in New York, they intended to go to Lincoln, Nebraska.

52 days later, on June 19th, 31 of these pioneers arrived at the old Southern Pacific Railroad Depot in Fresno, California. They brought their families to this great San Joaquin Valley to seek a better life for themselves and scouting for other families in their home villages in Russia.

According to Alex C. Nilmeier, of Fresno, his grandfather Philip Nilmeier had become acquainted with a Jewish salesman on board ship. He was a man of the world who believed the San Joaquin Valley had great potential as an agricultural area. Philip Nilmeier was able to convince ten families to change their destination from Lincoln, NE to Fresno. In 1919, he said that certain articles in a little booklet, setting forth the attractions of Fresno County, for working people, also induced him to break away from the homeland.

That worked out! But golly, think about the risk these folks were taking. All on the basis of a little booklet.  The visitor center of a national park I once visited had a picture taken about that time showing a barren landscape spotted with occasional hovels, in the foreground a family stood in front of theirs. The caption informed us that these were sod houses, since there was no other building material and that everybody died that winter.  I doubt their little booklet used the modern name for that park The Badlands. A tremendous load of Survivor Bias is built into the stores that get told about all these platforms.

Digital identity systems have a natural progression. They are introduced first in applications where the individuals being identified are weak and powerless. That pays for the first copy costs, creates an installed base of craft knowledge, debugs the technology, clears questions about how to use the system in practice, sets standards. It is then resold to communities where the identified individuals are, at least going in, less powerless; but yeah it’s a cheap proven system. So if you want to see the future you need to look at how industry solving identity problems for the powerless, e.g. cattle, prisoners, children, shipping containers.

Here’s an example that’s actually a bit different. The start up costs of this system were paid to identify one largely powerless population, i.e. prisoners, but it’s moving not toward a more powerful one; but toward a less powerful one, i.e. cattle. Virtual Fencing for cattle. It’s an obvious idea of course. Each animal wears a collar and with the help of GPS tracking they are taught to remain within the bounds of the virtual fence, and then you can move the fence around to manage your pastures. (Great, we are back to the turf maintenance and ground-cover problem again.)

I am reminded of the cowboy’s lament

I want to ride to the ridge where the west commences
And gaze at the moon till I lose my senses
And I can’t look at hovels and I can’t stand fences
Don’t fence me in.

This is rolling on the floor funny:

” … Theorists love the model of job market signaling . In this model agents perform a costly effort which produces nothing useful. The only point is that it is less costly to the able. Thus an equilibrium exists in which the able signal their ability by performing the costly effort (the example is obtaining a BA). Employers require the lowest level of signaling such that it is not optimal for the less able to produce the signal of high ability. The able can save on pointless effort by paying the less able to be honest. This is a collective action problem. They can implement this strategy by taxing each other to pay a subsidy to those who admit they have low ability and, therefore have low incomes. Obviously the policy helps the less able (they get something for nothing). Therefore, in a model of job market signalling a progressive tax and transfer program can be Pareto improving …”

So true!

At some point in the last 24 hours a blog on some random web page slipped thru my peripheral vision. I only recall the tag line it was using.

“When supply and demand need a hand”

What a great tag line for an intermediary, a market maker, the hub in a two sided network, a dating service. I’m guessing here I but I bet it was an Ad for a head hunter, directed at the hiring side. But it’s a nice tag line for any number of scenarios where you want to reduce the transactional friction, for example it’s not a bad way to talk about what is often the motivation for specifying standards.