Monday, April 30, 2012

The Economy Reinvented

I believe that capitalism, socialism, and even a hybrid--what I call cushioned capitalism-- are inadequate economic systems:

Capitalism has winners and many losers, too many of whom end up destitute. And because it takes ever more brainpower, drive, and often technical expertise to be one of capitalism's winners, merely urging low achievers to "buck up and work harder" is likely to work ever less well.

Socialism is flawed because, as Margaret Thatcher said, "Eventually you run out of other people's money." Also, socialism rewards low achievers and punishes, through "progressive" taxation, the segment of the population that contributes most to society. Already, the top 5% of earners pay 59% of the income taxes.

Even cushioned capitalism---capitalism with a generous safety net, is problematic. It's merely a compromise between two deeply flawed economic systems.

A fatal flaw shared by both capitalism and socialism is that their unit of currency is money.

As a thought experiment on which I'd like your opinion, I am proposing the following economic system: one in which everyone was paid the same: enough to live in a modest apartment, drive a modest car, have modest health care, etc. And to increase people's motivation to work hard in school, pursue a challenging career, work hard on the job etc, I propose rewarding people, not with extra cash, but with Contribution Points.

Already, many if not most people do lots of work for no money because they feel they're making a contribution: They volunteer for a favorite cause, they write reviews on Amazon, they contribute their time to improving crowd-created products such as Wikipedia or Firefox. Part of many people's motivation is to get points: for example, toward being a high-ranked Amazon reviewer, even though those points aren't redeemable for anything.

In a Contribution-Points-based economy, anyone who wanted to participate would add their name to a new website; let's call it Then, anyone else could award Contribution Points to anyone else, just as we all can review a book on Amazon and "Recommend" someone or something on Facebook. People would award points on a scale such as -100 (selling crack to children) to +100 (inventing something that helps many people.) For example, a child doing his homework one night might earn 1 or 2 points.

Thus instead of competing for dollars, people would be competing for how much societal contribution they've made. I believe that would immeasurably improve our world.

Of course, the system as I propose it needs a lot of work. For example, the system would need to address such problems as, "How often should someone award a person who's working 60 hours a week for decades trying to cure cancer?" and "Should public figures be excluded?": After all, their fans would bestow many points each time a rock star merely opens her mouth on the radio or on an mp3 player? But if we exclude famous people, we exclude some of society's greatest contributors. And of course, the system would be subject to abuse just as, for example, a hotel owner might write a false bad review of a competing hotel. And would average folks be demotivated by seeing, in a number, that despite their best efforts, their contribution to society were deemed much smaller than that of others?

Clearly, the model needs work. But I predict that when day is done, some version of a contribution point system, plus the self-regulating power of crowd-sourcing would, net, result in people's Contribution Point total being a worthy measure of how well they're living their life, I believe a better measure than the number of dollars in their bank account.

And importantly, I believe that a person's point total being public would be a strong motivator to him or her. Nearly all of us care how we are perceived by others. Our Contribution Points score would be a measure of that. I hypothesize that a person's score would be a greater source of pride than what many people do in a money-based economy to feel proud and impress: buy designer-label clothes, drive fancy cars, buy big houses, etc.

Of course, getting the public to embrace a Contribution-Points-based economy would require a massive education effort, but education has made remarkable changes, for example dramatically increasing the literacy rate. So is it absurd to think we might get sufficient embracing of a Contribution-Point-based society if our major mind molders--the schools, colleges, media, government, and religious institutions--undertook a major effort to help children and adults realize that the value of one's life lies in how contributory it is?

I am well aware that this is a pie-and-the-sky idea and that this germinal proposal needs to be much improved. That's why I'm asking for your reactions. But I believe that radical, big new nascent ideas are a worthy ingredient in our recipe for building a better world.

I welcome your thoughts.

Sunday, April 29, 2012

Questions to Ask Before Buying a Franchise or Business Opportunity

I recently gave a talk on how to vet a franchise or business opportunity. I thought you might like to see my handout. 

Questions to Ask Before Buying a Franchise or Business Opportunity
Keynote Address by Marty Nemko
Work at Home Business Expo, Apr. 29, 2011

The Office of the California Attorney General's site on business opportunities  says:

Running a successful business involves hard work with long hours and substantial risks... Beware of any business offer that promises quick riches and short work weeks:
·        Be skeptical about earnings claims that sound too good to be true;
·        Obtain and review the state's required disclosure documents before you give the seller any money;
·        Talk to others who have purchased the business opportunity, but watch for people who are paid to be references or shills;
·        Do not automatically assume those promises of prime locations, speedy repairs and ongoing assistance will be there when you need them.
Here's a link to the Federal Trade Commission's similar but more extensive advice on how to evaluate a business opportunity:
Asking these questions can help you decide which if any business opportunity you should consider buying: 

Questions for a Franchise or Business Opportunity's Seller

1. Describe what you'll be providing me.

2. Describe what your most successful buyers of your business opportunity do that average and below-average ones don't.
3. May I see the SAMP Registration or Franchise Disclosure Document (FDD) you've filed with the state? (Sellers are required to provide it at least 48 hours before accepting payment. A sample SAMP is at www.
The document is required to include, for example, all costs and any lawsuits against the seller: disgruntled buyers, claims against patent, etc. Supplement by Googling the name of the business plus the words lawsuit, complaints, scam, and reviews. Ask the business owner about any litigation that worries you. A small amount of litigation is common even in good business opportunities but an excessive amount is a red flag.

The document reports only the range of buyers' income so ask:
4.  May I have a copy of the spreadsheet showing last year's profit for each of your business opportunity's buyers?  A verbal representation, for example, being told the average or projected profit, is far less helpful. Even if the seller gives you the spreadsheet, it is important to ask:

5.  May I have a copy of the current complete list of the buyers of your business opportunity and those who have sold or closed the business in the last two years? Of course, it's better if you can pick from the complete current list than to have to rely on a few hand-picked by the seller. The seller may reasonably withhold that list until you've demonstrated you're serious, for example, by completing a long application form. 

If the seller gives you only a few names, you may find others by Googling the firm's name.

Speak with five to ten buyers by phone and visit one or two in-person.

Questions for People Who Have Bought the Business Opportunity

Tell the buyer your strengths, weaknesses, work preferences and time availability and ask

1.  Knowing this business opportunity and a bit about me, do you think I'd be wise to buy one?
After getting an answer to that key overall question, ask about some or all of  these:
            a. net profit
            b. the quality and pricing of products the seller requires you to buy
            c. the seller's ethics and the ethics inherent in this business.
            d. the accuracy of the provided estimate of start-up costs
            e. satisfaction with the training provided
            f. satisfaction with the ongoing support
            g. satisfaction with the marketing support
            h. the typical work week, and how it's spent (including marketing)
            i. the skills that are critical
            j. Would you add another store/territory if you could?

Question for Potential Customers of the Product/Service You'd Be Selling

1. How likely are you to repeat-buy this service or product? Buy a few samples so you can show them to at least a handful of sample potential customers. Tell them the price. Sometimes, friends will buy one time from you as a favor and then go back to buying a bigger-brand-name or less expensive product. Urge them to be honest about whether they're likely to repeat-buy.

Questions to Ask Yourself
1. Am I a self-starter, not a procrastinator? Often long hours are required--and no one will be supervising you to make you work all those hours.
2. Am I willing and able to sell and market?  For example, have you, in the past, consistently been able to close deals while remaining ethical?
3. Will I follow the business opportunity's marketing/selling/service system? Everyone says they will, but many business opportunity buyers fail because they don't.
4. Does this business capitalize on my strengths and preferences? For example, cold-calling, night/weekend work?
5. Am I resourceful? Will I usually be able to solve the frequent problems that arise in running any business?  
6. Am I resilient when setbacks occur, or am I too likely start procrastinating?

Remember the lesson of my dad's story: Never look back, always take the next baby step forward. 

Tuesday, April 24, 2012

"How to Do Life": A graduation gift?

I've written almost 1,000 posts and avoided self-promotion. I'm allowing myself an exception here.

I've just written my sixth book, How to Do Life: What they didn't teach you in school. Rather than send prospective publishers just a Word file, I decided to print up a few books and send that to them.

Even if a publisher publishes it, it's many months until it gets published.

So with graduation season approaching, I thought I'd make the book available to you, so you can get it now, for example, as a graduation gift.

In just 160 pages, it presents invaluable advice on career, money, relationships, health, and life's biggest questions. It's the advice I wish my parents had given me.7

I like to think that whether the reader is 16 or 76, they'll find it most useful and even entertaining. HERE is the link to its Amazon page.

Monday, April 23, 2012

Why You Might Want to Reject Harvard

I wrote an essay, "Why you shouldn't go to Harvard even if you could get in?" A reader sent me this in response. My rejoinders to him are embedded in blue.

It is foolish that you discourage talented kids from applying to top tier schools. And your article is just plain wrong on several counts.

1. My family makes $80,000 per year. Solidly middle class. And I pay EXACTLY $3,000 per year.

That sounds lower than what I thought was typical. I'm not sure if that is typical, anomalous, or a function of your parents' "creativity" in completing the financial aid apps. If typical, that makes a designer-label college a more reasonable choice for someone in your family's income bracket, but not for many of the readers of my essay, whose incomes are in the $100,000-$150,000 range, and for whom paying at or near Harvard's sticker price would be a significant threat to their financial security, not to mention that Ivy often is a cost-ineffective purchase. 

For many although not all Ivy-caliber students, the honors program at a brand-name State U may be a wiser choice. And I'm not just talking in economic terms. There is a pathology extant at prestigious institutions: an  unhealthy stress that comes from the aggregation of the world's most brilliant and driven people all taking courses from the most brilliant professors, the latter who often are obsessed with the unnecessarily difficult and arcane. Also, an Ivy-caliber student at a less-selective institution is far more likely to get valuable student-leader positions and substantive mentoring from key faculty and administrators. Those may do more to abet the student's development and his or her career prospects than a designer label on the diploma.

2. The professors are exceptional. Professors are paid to know their subject, not to be your friend or kindergarten teacher. Unless you have actually taken classes at Harvard, it is not your place to judge their quality, whatever your sources may say.

Perhaps you've had unusually good instructors--On average, in terms of what should be occurring in an undergraduate education---significant elevation of thinking skills, connoisseurship, etc---most research-university professors are far from the best people for the job. By the way, while I have not taken courses at Harvard, I'm not gathering information just from third-party sources---I've taken plenty of courses at a top research university: I hold a masters and Ph.D. in the evaluation of education and other innovations from the University of California, Berkeley and subsequently taught in Berkeley's Graduate School as well as at three other universities. 

3. I didn't prostitute myself to get in. You will not be accepted unless you are genuine, and the admissions officers are outstanding at reading between the lines.

Perhaps you didn't, but many aspirants to designer-label colleges spend lots of time on activities that aren't optimal for their intellectual and human development, let alone are fun. For example, they take SAT prep courses, do crew, play tuba, serve soup to the homeless or do some other extracurricular mainly because it will abet their admissibility. That's selling your personal growth and teenage years so you can have a designer-label on your diploma--not a very Harvard-caliber judgment call.

4. I honestly believe that the Harvard name will give me an advantage when I apply for jobs. You are foolish to believe it won't.

The advantages of the designer label on the diploma and spending four years with Harvard-caliber students are obvious. But I hope you won't suffer the minuses of the experience and its sequelae that are common at places like Harvard--the amount of stress, burnout, and inflated ego that damage their career and personal life. Ivy-caliber students that attend the honors program at a flagship State U derive many advantages. In addition to the aforementioned enhanced opportunities for leadership and getting mentored, you won't need to kill yourself to get good grades, freeing time for more life-valuable co-curricular activities than the esoterica so often focused on by professors at research universities. 

Is it harmful to aspire to greatness?

Of course not, but there are many paths to greatness, and for the reasons I've outlined here, for many, although certainly not all students (for example, designer-label research universities are a good choice for the superacademically-centric genius aspiring to be a researcher), the designer-label U path is most overrated.

You've called me "foolish" a number of times in your email. Beware of hubris. It's a cliche but true that young people are excessively confident that they know more than older people. Retain a measure of open-mindedness. That, as much as attending Harvard, may be key to achieving the greatness to which you aspire.

If I may offer one more bit of advice on making the most of Harvard: You'll likely learn much more of value outside the classroom than in. Do projects with the most brilliant, well-adjusted, ethical, and personable of your classmates: Start a business, invent something, etc.

In addition to my essay and this response to you, you might want to read one or more of the many articles agreeing with my contention before deeming me foolish:


Saturday, April 21, 2012

The College Campus Needs to Go Extinct

I don't understand why the college campus, with its monumental costs and inconvenient access, continues to exist. 

Entities should be created to aggregate course credits and award degrees, with students able to take courses anywhere (in-person in individual hotel rooms, apartments, and, where necessary, classrooms and labs) and offered by professional associations, private education companies, and yes, traditional colleges and universities. 

I understand that traditionally, high school graduates view the campus experience as a halfway house between living with their parents and independent adulthood, but the price has become absurd: $250,000 sticker price for four years at brand-name private colleges--and most students take longer than four years. Yet students, ever afraid to not do what their friends do, go--After all, their parents are paying. And parents, nostalgic for their own college years, and not wanting to even be perceived as short-changing their child, suck it up, sacrifice their financial security and more, and pay the inconceivably large amount, or stick their head in the sand by taking on massive amount of student loan, practically the only loan--thanks to the higher education lobbying machine-- that is almost impossible to discharge in bankruptcy.

It is a travesty that student fees subsidize universities' research, the vast majority of which is apriori known to be a terribly cost-ineffective use of student and taxpayer money. In addition, it's forced charity--much of the sticker price is redistributed to the poor, and to a lesser extent to athletes, "underrepresented" minorities, etc. It's also wrong that students and taxpayers be forced to pay for swimming pools, golf courses, etc. HERE is quite an example.

The college campus has become an expensive dinosaur and deserves to become extinct. 

Thursday, April 19, 2012

SuperShort Advice on How to Be a Good Coach

Sean Burke is about to complete his MBA at Indiana University but decided he'd rather be a coach than a businessperson. He emailed me asking for a bit of quick advice. Here's how I responded:
Specialize--for example, in unhappy MBAs. And if you're like most guys, you'll need to hone your ability to be a superlative listener and a superlative question asker, someone who manages to get the client to come up with the solution if possible, and when you offer suggestions to do it in a way that makes the client feel empowered. See THIS. .
He responded, "Awesome, thanks! That's all I needed Marty.
Sean Burke

I think the advice I gave to Sean is often applicable not just to coaches but to most of us---Too often, I forget to follow my own advice!

Wednesday, April 18, 2012

My Latest Column: The Economy is Biased Against Men

Here is my just-published column: Why the Economy is Biased Against Men.

Update: I'm delighted to report that in its first two days, the column received over 2,000 Facebook "Recommends."