The Elephant in the room...

Maybe capitalism needs to be reinvented... actually what we need is something post capitalism.

Get Ready to See This Globalization 'Elephant Chart' Over and Over Again

The non-winners in globalization are the Western World's middle classes.


Luke Kawa  LJKawa

June 27, 2016 — 9:51 AM CDT

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Is Brexit a Sign That Globalization Has Failed?

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Globalization was the driving force behind the growth miracle in emerging markets, lifting millions of people out of poverty over the past few decades.

Now, a backlash against how the global income pie has been divided up is increasingly influencing the political affairs of developed markets.

A chart first published in a 2012 World Bank working paper by Economist Branko Milanovic details which segments of the global population saw a rise in real incomes from 1988 to 2008:

Globalization constituted a massive labor supply shock, allowing corporations to tap cheaper workers. The benefit to consumers in advanced economies took the form of downward price pressures on these goods. Along the way, however, the middle classes in developed nations failed to see this rising tide lift their boats.

"The biggest losers (other than the very poorest 5 percent), or at least the 'non-winners,' of globalization were those between the 75th and 90th percentiles of the global income distribution whose real income gains were essentially nil," according to Milanovic. "These people, who may be called a global upper-middle class, include many from former Communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated."

Toby Nangle, co-head of asset allocation at Columbia Threadneedle Asset Management, called this "globalization as an elephant" visual, "the most powerful chart of the last decade."

This chart is now making the rounds on Wall Street as strategists search for an economic rationalization of the British referendum vote, the success of U.S. populists, and the rise of separatist movements in Europe, many of which are isolationist in nature.

"We equate the same malaise in the U.K. with that in the U.S. as well as the rest of Europe, reflected in the populist leanings of the electorate," writes Deutsche Bank AG's Global Head of Rates Research Dominic Konstam. "This calls for a radical policy rethink from the established political class and, at this stage, there are limited options but all of them have one thing in common: the need to redistribute spending power from those that have to those that have less."

The fact that this narrative has spread to these corners, rather than being confined to the left side of the political spectrum, is itself noteworthy, according to Duncan Weldon, Resolution Group's head of research.

"When people like Deutsche Bank are starting to say, 'maybe capitalism needs a form of reinvention,' maybe that's the time to start listening to that," he said during an interview on BloombergTV. "It's not Bernie Sanders; it's a global investment bank."

The easy access to credit prior to the collapse of the U.S. housing market helped paper over the angst stemming from this unequal distribution of income in the western world, Weldon said, but the extent of the problem has been laid bare in the aftermath of the crisis.

Strategists at Bank of America Merrill Lynch echoed Konstam's words in a note yesterday, calling Brexit a harbinger of a move towards more insular stances by governments in advanced economies — and referenced Milanovic's chart to bolster their case.

"While globalization, immigration and the free market have strong support from the winners of these themes – the plutonomists and the highly educated, in our view they seem to have underestimated the frustration of developed market middle and working classes," write Equity Strategists Ajay Singh Kapur and Ritesh Samadhiya. "We think Brexit could just be the first surprise in a re-calibration of the world away from globalization towards more inward looking policymaking. Away from Wall Street and more towards Main Street. Away from financial asset reflation to more income support and wage inflation."

Conor Sen, portfolio manager at New River Investments, placed the proliferation of this chart (and the associated focus on those who've lost out from globalization) on a continuum with other narratives that have captured popular attention since the financial crisis.

Reinhart and Rogoff brought a focus to government debt burdens that lent support to austerity movements; Piketty, meanwhile, suggested that inequality was destined to get worse because the rate of return on capital is higher than economic growth.

"What's now captured the interest of intellectuals is the elephant chart, the idea that over the past 30 years the winners were emerging market middle classes and the 1 percent in developed markets, but the developed markets' middle classes were stagnant," he wrote. "And I think we've finally found the correct framework for thinking about intersection of politics and macroeconomic trends."



Impact Hub Oaxaca Transforms Lives

Many of you know since 2006 Halloran has been supporting the Oaxaca region through Impact Hub Oaxaca, CATAPULTA and with individual grants. The environment here is incredibly beautiful, yet incredibly complex and hard for so many. We think of our contribution as part of a long term effort by many where a new generation is empowered to create their own solutions to the challenges they self identify. With Impact Hub Oaxaca we set out to create a place where the true beneficiaries are the ones designing their own future yet with access to best practices of a global community seeking to do the same thing in communities around the world.

In the last year we took our greatest learnings over our 5+ year history, shed the old ways of working that were not productive and re-imagined ourselves and our mission with our community. Getting it right is not easy - identifying the right set of programs and tools, the right membership model and services while communicating what we offer in a way that resonates with the community - This is hard stuff.

The GOOD NEWS is WE ARE NEARLY THERE!! Our new path is working but we need a little more time to make the turn complete. Please consider helping us by supporting our Indie GoGo campaign. Seriously, if there were a cause where just $10-11k would make a huge difference, this is it… If you want to know anything about Impact Hub Oaxaca don’t hesitate to ask me. Here’s the link to our campaign!







the metabolic theory of ecology

I think I've finally fully absorbed and adopted the belief that cities are the eminent playgrounds  for solving our planetary challenges. But Santa Fe Institute author Geoffrey West makes it clear why we are so drawn to cities - they are more efficient. As in biology when organisms grow they require less resources for the same amount of output. This is why our problems also scale with growth - this efficiency is not controlled, so for example crime is more efficient as well. So what are the self reinforcing cycles that propagate undesirable efficiency. What might act as inhibitors for selected strains of development(like crime) within the overall systemic scaling efficiency?

According to the Santa Fe Institute site, this has to do with the interplay between innovation, resource appropriation, and consumption. Specifically, "as population grows, major innovation cycles must be generated at a continually accelerating rate to sustain growth and avoid stagnation or collapse." Even more striking, they find that "local urban dynamics display long-term memory, so cities under or outperforming their size expectation maintain such disadvantage for decades!" (emphasis my own :-)) 

Here are selected passages from the article.   

Fractal growth in New York (NASA night Satellite View)
The universal metabolic rate power law 
The best known of these is for metabolic rate (the rate at which energy is needed to sustain an organism), which scales as a so-called power law with an exponent of ¾ over an astonishing 27 orders of magnitude. In English, this means that doubling the size of an organism from, say, 10g to 20g, or from 100kg to 200kg, only requires an increase in metabolic energy (food intake) of about 75%, rather than 100%, as might naively be expected. Remarkably, this systematic economy of scale permeates biology. Similar systematic scaling laws hold for almost any measurable physiological trait or life-history event: life spans, growth rates, DNA nucleotide substitution rates, genome lengths, tree heights, and the mass of cerebral grey matter. 

The theory predicted, in agreement with observation, that, from cells and whales to community structures, the pace of life systematically and predictably slows down with increasing size, and that this is accompanied by increasing economies of scale. Much of this body of work became known as the metabolic theory of ecology.

Its application in cities
Infrastructural measures, such as numbers of gas stations and lengths of roads and electrical cables, all scale sublinearly with city population size, manifesting economies of scale with a common exponent around 0.85 (rather than the 0.75 observed in biology). More significantly, however, was the emergence of a new phenomenon not observed in biology, namely, superlinear scaling: socioeconomic quantities involving human interaction, such as wages, patents, AIDS cases, and violent crime all scale with a common exponent around 1.15. Thus, on a per capita basis, human interaction metrics (which encompass innovation and wealth creation) systematically increase with city size while, to the same degree, infrastructural metrics manifest increasing savings. Put slightly differently: with every doubling of city size, whether from 20,000 to 40,000 people or 2M to 4M people, socioeconomic quantities – the good, the bad, and the ugly – increase by approximately 15% per person with a concomitant 15% savings on all city infrastructure-related costs.

The larger the city the greater the efficiency
The world is urbanizing at an unprecedented pace, requiring new and growing cities, especially in India, China, and parts of the developing world. No wonder cities have continued to grow. When we move to a city within an urban system that is twice as large, we become, on average, 15% more wealthy, more productive, more creative…and we do this using a fraction of the infrastructure. The discovery of economies of scale and the resulting fruits of innovation and wealth creation brought a fundamentally new dynamic beyond classic biology to the planet. This surprising universality is observed in urban systems in the United States, China, Japan, Europe, and Latin America and transcends history, geography, and culture. What a remarkable outcome manifested in the emergent behavior resulting from human interaction and social networking!

The key to planetary sustainablility lies in cities
Perhaps of even greater relevance is that the long-term sustainability of the planet is inextricably linked to the fate of our cities. We are urbanizing at an exponential rate, with more than half of the world’s population now living in urban centers. The biggest global challenges we are facing from climate change, the environment, availability of energy and resources, social unrest, and financial markets are generated in cities, but cities are also the hubs of innovation, wealth creation, and power. Put slightly differently, cities may well be the problem, but they are also the solution. This strongly suggests that there is a great urgency to develop a more quantitative, predictive, computational framework that can complement the traditional, more qualitative, narrative approaches to understanding cities – a framework that can help inform today’s and tomorrow’s practitioners and policy makers.



Millenials Believe in Impact Investing


Impact Investing Needs Millennials

As impact investing tries to make the move from philanthropic thought experiment to powerful instrument for global change, a vital demographic and financial reality is emerging — it’s going to be millennial investors (particularly those inheriting or building significant private wealth) who make or break it.
Since the term was coined in 2007, impact investing — the idea that private capital can be deployed to alleviate pressing social needs like access to clean water, affordable housing or preventative healthcare while returning a financial profit — has attracted significant public and media attention. However, impact investing’s legitimacy as an alternative asset class remains elusive.
Impact investment continues to suffer from limited transaction flow and anemic dollar commitments. Most relevant to stunted growth, however, is cultural resistance — the inertial apathy of traditional financial players who are wary of novel, risky investment structures and skeptical about trading some amount of profitability for social return. Without the commitment of commercial financiers to include impact investments in their core portfolios, or pressure from mainstream investors to insist that they do, impact investment’s route to scale is uncertain.
Enter the millennials (the roughly 80 million Americans born between 1980 and 2000, and their peers around the world), who conceive of financial return differently, and more expansively, than their elders. For millennials, pressing social problems are not just the preserve of philanthropists or governments. Millennials consistently cite social impact as one of the most important roles of business. Of all the generations alive today, millennials are the most willing to trade financial return for greater social impact, according to “Millennials and Money,” a 2014 study from Merrill Lynch’s Private Banking and Investment Group.
According to another study, U.S. Trust’s “Insights on Wealth and Worth,” wealthy millennials are almost twice as likely as their grandparents to regard their investments as a way to express social, political, or environmental values (see chart), and nearly three-quarters of millennials believe that it is possible to realize market-rate returns investing in companies based on their social or environmental impact.
Millennial Impact chart
These opinions matter. Millennials are poised to share in the largest intergenerational wealth transfer in human history — one widely-cited estimate puts its value at $41 trillion in the United States alone by the year 2052.
Millennials therefore represent a sizeable, well-capitalized cohort of investors with a generational commitment to furthering the social good and a desire to engage their peers — and parents — in doing likewise.  As recent events show, they are beginning to act on these principles. At the recentNexus Global Summit on Innovative Philanthropy at the United Nations, which we attended, 600 largely millennial-aged participants from 41 countries representing nearly $750 billion in private and family wealth spent three days exploring and sharing case studies of social investments. Some of the investments had the sophisticated deal structures of large corporate transactions, some showed private sector engagement driving infrastructure development and quality-of-life improvement, and all demonstrated growing connections between policy and profit at national and international levels.
When we contrast our inspiring experience at Nexus alongside the still-limited impact- investment landscape, we conclude that three actions will be critical to accelerating the mobilization of capital by millennials and allowing impact investing to scale to a projected $1 trillion market by 2020.
First, private-sector entrepreneurs need to keep identifying opportunities to build companies that can accept and use impact capital to grow to scale, providing an increasing capacity for deal flow. Some commentators have compared the opportunity presented by impact investing to the early days of venture capital. We find such comparisons premature, but agree in one respect: to scale, impact investing will require a small contingent of ambitious investors prepared to make sizeable bets on promising entrepreneurs in order to demonstrate the asset class’s viability.
Second, millennials should vote with their wallets and demand that retail banks, wealth managers, and advisory firms provide a suite of financial products that range across the risk/return/impact triangle. Wealth management firms acknowledge that they are not yet positioned to give impact investing equal footing to conventional investments. In the “Millennials and Money” report we cited above, Merrill Lynch described one client’s impact investment as “a tricky undertaking for both client and advisor…the collaboration, in many ways an experiment, is ongoing.” For the same investment, the report asks, “what measures should be used to judge the social impact of these investments? How long should you wait for that impact to take hold, let alone a profit stream?” These are the questions investors are looking to advisory firms to answer, not just ask.
Of course, not all millennials will inherit or create millions in personal wealth. But our generation is remarkably consistent in attitude, regardless of financial position — 92% say business success should be based on more than profit. Millennials also believe in the power of private capital. More than half of millennials in the same study (conducted by Deloitte) believed that business, not government, will have the greatest impact in solving society’s most pressing challenges. We expect that wealthy millennials will pave the way for the mainstreaming of impact investment products for their peers as well as their Baby Boomer and Generation X parents and grandparents, whatever the size of their portfolios.
Third, growing impact investing will take collaboration and cooperation. Public- and private-sector actors will need to partner with academia to aggregate information on impact investing deal activity, compile best practices in impact measurement, reduce transaction costs, and inspire new participants through social engagement. The first report of the U.S. National Advisory Board on impact Investment is an important first step; the next challenge for government is to design and foster a supportive regulatory environment, one that regards private capital as positive force to be harnessed, and impact investors as partners in social progress.
We anticipate that millennials’ growing commitment to impact investing on multiple dimensions — dollars committed, deals completed, financial returns achieved, and development goals addressed.  Most importantly, however, we look forward to a growing alignment of developed world capital with a social conscience, driven by one of the core millennial mantras: doing well by doing good.
Link to article









Beaming is a mobile app that offers a return to relevancy and intimacy with social media by allowing you to place any kind of media file, at any location, for a period of time you define, triggering a push notification when your friends pass by.

You can think of beams like shareable time capsules …or mobile post it notes.. 

What we’re really doing is taking online content, placing it in a physical context and personalizing it. It’s simple to use and will easily integrate into other social platforms. This isn’t about check-ins, it’s about relating our existing digital lives, our music, photos, and posts, to the physical spaces around us.

Our go to market strategy is aimed at the 18 million college students in the U.S.. Our competitive advantage is our approach to technology, our experience in delivering it, and its integration into culture. 

We've bootstrapped to date but now raising $1 million Series A to ramp up development and launch on 10 campuses. If you want to know more send me an email at




Tom Chi and The Factory

Tom Chi gave three  brilliant talks last April at ¡CATAPULTA! our Festival for social innovation:  one on social innovation, his well known rapid prototyping workshop and an on stage conversation with David McConville.  

Yet by far the most revealing time I had with him was in his studio called the Factory near the Haight in San Francisco where we spent three hours talking about life as it should be. Tom describes the Factory's mission as follows:

To lead a medium/large organization toward a more socially and environmentally sustainable future via breakthroughs in access and capability of new technologies. 

Specialties:Vision, Optimism, Reasoned Decision-Making, Focused Execution 

But it's also clearly where he's prototyping the future of business and business environments. From the moment you enter The Factory, every detail of engagement is an experiment in purposeful innovation that works at a the level of mind and body. From the sitting tea room that welcomes you to the programmable LED chandeliers to the performance stage that spills you into a chill out room with seats that intentionally have you looking up to the sky  compelling  you to reflect on your presentation from a 10,000 foot level.

Like many leaders in the social innovation movement, Tom had an ah ha moment when he questioned his assumptions around wanting to build the biggest, highest impact company in the world. He then realized even if he did so, he would still only be contributing precisely .3 percent to the World's GDP. Instead he decided he could have much more impact advising the biggest companies in the world, but from the vantage point of The Factory. Companies come to him and enter a world optimized for innovation. Outside their usual environment, fully immersed for a few days of mind opening play, rapid prototyping, reflection and development, Tom inspires their own ah ha moments leading them to rethink their brand, their products and the impact they have on humanity. 

This is the first of several blogs as I hope to turn these into an article for a major publication. 



learning to swarm

I’m not a cynical person at all.

Yet perhaps one carryover habit from my Wall Street life is the acknowledged effect of a crisis in spurring change.

So we had one of those in 2001 and 2008 and here we are again. The stock market is booming. Tech is bubbling - again. Still no significant systemic changes since these last two crashes.

There will be another crash, and another... But there is one place where we are seeing systemic change happening...

People on the ground keep rising up, Tianamnin Square, Arab Spring, Occupy Wall Street, and in individual communities like Ferguson. Unlike other time periods we have social media and the great flowering of technolocial tools in your own backyard. This is bringing elevated transparency and an "in your back yard feeling" that makes things more personal, more real.

The remaining challenge with social media is the acting together part. We can see things more clearly perhaps but we haven’t learned to act together in a peaceful but direct way that changes the balance of power. Imagine...



beaming application wins venture competition

I am obsessed with discovering new trends or patterns in society and culture and then have created events and sometimes companies that take advantage of them. My brother Bryan on the other hand likes to invent things and for the past 30 years as a software developer.

 After many years we finally decided to combine our interests. My brother and I were a second review winner of the San Diego Plug'n Play accelerator program in San Diego giving us $25k, a 5 month boot camp and a chance to pitch in Silicon Valley for our company beaming, a GPS mobile phone application that allows you to leave digital photos anywhere in the world for friends to discover - like a time capsule.

Mankind has always sought to leave its mark in time and the cave paintings at Lascaux, and in the Voyager Golden Record hurtling through space. Now we hope to allow anyone to create this impact - one with practical application that creates emotional connection. Its called beaming. Here we go.........



from impact hub to social singularity

A great history of how an eight year old grassroots global network has evolved - through its founding, crisis, rebirth and rebranding - The Impact Hub Network as told by Michel Bachman.  Upon seeing this I re-discovered a post I made here six years ago called "a social singularity." One great thing about blogs is that you record thoughts and later rediscover them. 

It is my hypothesis that the reason the Impact Hub network, while making amazing strides as a self-organizing entity, has not yet reached its full potential is that it does not have a visual realtime feedback mechanism showing the activities of what its members are doing and how this view changes "the overall shape" of the network. I believe a mechanism like this could allow networks like this one to evolve and adapt to the environment much more rapidly.  Perhaps the most recognizable example of such a mechanism is the stock ticker.

Stock tickers give real time information about the stock market's individual "members" while providing an overall picture or shape of the whole.

"This concept of a community constantly reinterpreting how it should act in the world in synch with a constantly evolving shared horizon is an important one.

This is consistent with research on termites by Pierre-Paul Grasse in the 1950s that suggests, by analogy and reflection, a connection in the way cooperative networks of people operate: that the regulation and coordination of the building and maintaining of a nest (i.e. the planet) was dependent upon stimulation provided by the nest, as opposed to an inherent knowledge of nest building on the individual termite’s part.”

Like a termites nest, the collective action that emerges within the network is strongly influenced and inspired by the activities of what other members are doing and the overall shape of the network.

In the face of what many view as earth's darkest hours of violence, repression and climate change somehow the human species seems poised to act collectively to alter its course. There is no one directing this shift, it is the intelligence of the swarm reacting to a new image of its nest - the planet. This is truly mysterious. A higher level of intelligence is seemingly acting autonomously."

At Catapulta the week of April 7-13 we intend to take these ideas and others to another level with the help of, an accelerator of movements. Here we will convene many networks, including the Impact Hub Network, and look to discover the nature of the broader social innovation movement happening right now. Part of a social singularity perhaps? In any case, higher levels of intelligence seemingly acting autonomously.