Annual Reading of the Declaration of Independence: Renewal

As I conducted my annual reading of the Declaration of Independence, I was struck by the thought, “What would Thomas Jefferson write today if he were revising this document?”

Well, I have no idea. So I worked on what I can- how would I revise it? So I did. Before you read it there are a few caveats:

  • I focused on what I know- finance and economics. There is scant technology in the original so this is largely not discussed. The current document gives voice to my concerns regarding the current global economic condition.
  • I sought to edit the original document and insert/excerpt as little language as possible.
  • I avoided the issues related to the current public dialog on security, privacy and surveillance. I deeply believe these are very important, but I wanted an undiluted message communicating a critical issue of our time.

Dedicated to the economic well-being and abundance of people everywhere.


IN CYBERSPACE, July 4, 2014 (238 Years after the Political Declaration of Independence of the United States.)

The unanimous Declaration of the collection of Economically Independent Agents across the planet

When in the Course of human events, it becomes necessary for people everywhere to dissolve the economic bands which have connected them with another, and to assume among the powers of the earth, the separate and equal economic station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of humankind requires that they should declare the causes which impel them to the economic separation.

We hold these truths to be self-evident, that all humans are created equal, that they are endowed by their Creator with certain unalienable Economic Rights, that among these are Equal Access to Economic Entrepreneurship, An Unbiased Economic Landscape and the pursuit of Economic Well Being.–That to secure these rights, Governments and Economic Systems are instituted among People, deriving their just powers from the consent of the governed, –That whenever any Form of Government or Economic system becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government or Economic system, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Economic Well Being and Economic Growth.

Prudence, indeed, will dictate that Governments and Economic Systems long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses including concentration of wealth in the hands of a select few, legislation and politics dominated by economic funding and special interests, unchecked power of corporate interests and economic access to those in positions of political or economic privilege, pursuing invariably the same Object evinces a design to reduce them under absolute Economic Despotism, it is their right, it is their duty, to throw off such Government and Economic System, and to provide new Guards for their future security.–Such has been the patient sufferance of these global citizens; and such is now the necessity which constrains them to alter their former Economic Systems including global transactions of trade and state controlled currencies. The history of the present Economic system such as was crafted and evolved since after World War 2 is a history of repeated economic injuries, economic injustice and economic control, all having in direct object the establishment of an absolute Economic Tyranny by a minority controlling Wealth over these people of the world. To prove this, let Facts be submitted to a candid world.

  • The current Government and Economic System has evolved into one of highly centralized control over the majority of the Earth’s Wealth and Resources and Capital flows. This is universally acknowledged to increase economic risk and stifle economic activity and growth.
  • The current Economic System has evolved into one of strict control of capital flows and economic activity through state controlled currencies.
  • The current Economic System has evolved into one whereby Economic Resources are concentrated at unprecedented levels such that economic activity for society at large is at risk. Wealth concentration at current levels is an unsustainable economic system for pursuit of Economic Well Being and is completely unpredictable under stress.
  • The current Economic System has Centralization of Economic Resources thereby creating an unprecedented Economic Risk to the economy of the world.
  • The current Economic System has evolved into one of centralized control of capital among a small cartel of banking and corporate interests thereby subjecting the world to unprecedented economic risk through contagion during times of economic stress.
  • The current Economic System has evolved into one of riskless (arbitrage) profits for those controlling capital. This is a fundamental violation of free market principles. Whereby those controlling capital have profited from a highly advantaged economic position and taken unreasonable risks resulting in their economic ruin being averted solely through extraordinary use of public capital. There have been no legal or economic costs associated with this economic abuse.
  • The current Economic System has evolved into one whereby those controlling capital have been found to perpetrate economic abuse through market manipulation of key economic resources and metrics such as LIBOR, Gold and others. For this, there are no legal or economically relevant consequences.
  • The current Economic System has evolved to grant even more economic privilege to those currently holding it most. Access to Economic opportunity is fundamental and necessary for a vibrant global economy.
  • The current Economic System has evolved into a symbiotic relationship between legislators and their economic donors resulting in the passing of Laws of immediate and pressing importance to donors to economic detriment of broader society. This stifles economic competition and stilts the emergence of innovation in businesses, entrepreneurship and technology.
  • The current Economic System has evolved into one of privilege for the privileged and has neglected to pass other Laws for the accommodation of large districts of people seeking economic growth and well-being. The current donor-patron system of legislation fails to address the economic interests of the greater majority of people in the world. These people of the world often have either never been granted the right of Representation in Legislature or have lost it, a right inestimable to them and formidable to economic tyrants only.
  • The current Economic System has called together bodies of Economic Privilege at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of forging these bodies of Economic Privilege into informal systems of political and economic influence that maintain their economic dominance.
  • The current Economic System has leveraged the unequal economic access to legal representation repeatedly, for opposing with manly firmness any legal challenges to the Economically Privileged invasions on the rights of the people.
  • The current Government and Economic System has evolved for a long time, to cause others to not be elected that represent the economic interests of the lower economic strata; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the vast majority of people of the world remaining in the mean time exposed to all the dangers of economic distress from without, and continued economic erosion within.
  • The current Government and Economic System has endeavored to prevent immigration reform, except for the interests of Corporate patrons. Resulting in the obstructing of Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and thus limiting access to economic opportunity.
  • The current Government and Economic System has erected a multitude of New “Security” Offices, Policies, Secret Legislation, and aggressively conducts active, deep surveillance, and sent hither swarms of Security Officers to harass and surveil our people, and erode our economic competitiveness.
  • The current Government and Economic System has kept among us, in times of peace, Standing Armies of Governmental, Private and Corporate Intelligence without the Consent of our legislatures.


In every stage of these Oppressions We have as a whole failed to adequately Petition for Redress in the most humble terms: Our failure to Petition Effectively have been answered only by repeated injury. A People that bear up under Economic Tyranny without refusal, become thus marked by every act which may be inflicted by an Economic Tyrant, is unfit to be a free people.

We are this day called to Petition Effectively by economic activism in line with the principles of:

  • Equal Access to Economic Entrepreneurship
  • An Unbiased Economic Landscape
  • Economic Well Being
  • Liberation for Control via State Owned and Controlled Currencies

Nor have we been wanting in attentions to the current Government and Economic System. We have warned them from time to time of attempts by their neglect of legislature that they extend an unsustainable economic risk over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their oaths to the Constitution of the United States, or native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these acts of Economic Tyranny. They too have been deaf to the voice of economic justice and of consanguinity.

We, therefore, the Citizens of the Global Economic Community of Humankind, Decentralized, Unassembled, appealing to the Economic and Political Leaders of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of this World, solemnly publish and declare, That these Citizens of the Global Economic Community of Humankind are, and of Right ought to be Economically Free and Independent Economic Agents; that we are Absolved from all Allegiance to trade strictly by State Controlled Currencies, and that Economic Repression via Control of Currency and Capital, is and ought to be totally dissolved; and that as Free and Independent Economic Agents, they have full Power to conduct Commerce, conduct Trade of Goods and Services. Make Contracts, establish Commerce, and to do all other Acts of Economic Activity, Growth and Entrepreneurship, and Things which Economically Independent Agents may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

Calling for a “Magna Carta for the Internet”- Thanks Tim!

In my last post I was bold and earnest in calling the Internet the center of gravity of human rights in the world. It was for me, a dangerous post. It is not the kind of strong opinion that someone looking for a job in a small technology company is counseled to post in social media. However, I wanted to be honest and candid on my thoughts and who I am. (frankly, I see individual authenticity as perhaps the only true competitive advantage there is for people.)

I was exhaling a sigh of relief this morning when I saw the fabulous article by the Guardian about Tim Berners-Lee (inventor of the world wide web). In it, he calls for a “Magna Carta” for the Internet. I want to highlight it here and state that it does reinforce my initial thoughts from a highly credible and insightful source. The Internet is constantly in flux and I continue to maintain that it is the central focus of human rights. This is gaining momentum and companies and investors and governments can adapt or … well you get the picture. Thanks for the voice Tim!

*note- for some reason, WordPress was not able to insert a link into my post of the article which can be found here:

The End of the Beginning – Moving Beyond a Childish Understanding of the Internet and into the Next Frontier of Human Rights

“When I was a child, I spoke like a child, thought like a child, reasoned and acted like a child. But when I matured, I actively stopped behaving and being treated like a child. Currently we see an enigma, but eventually there will be complete transparency. At this time, I only see pieces of the whole, but inevitably I will be able to fully understand what is going on, exactly as I have been fully understood.”

(1Co 13:11-12 paraphrased by Chris Montaño)

Stage 1. “Childhood’s End (1973 – 2013)”

In a recent Harvard Business Review post, Bruce Schneier compares the current state of security on the Internet to a feudal system. I have always liked Schneier’s take on security and privacy. He is a thought leader as well as facile “synthesizer” and communicator. He also has been a rare civilian cryptographer/cryptanalyst that has published several books on cryptography and is respected for his technical work. He recently joined the board of Electronic Frontier Foundation.

In equating the Internet to feudalism, Schneier is talking mostly about IT security and privacy. However, whether intentional or not, I think he is making a broader statement in a quiet manner. I think he has identified an IT reality, but also touched a raw nerve of the realities of a globally, internetworked society. We live with the Internet like serfs lived with feudal lords- in a state where we are viewed as “resources” rather than regarded as individuals with intrinsic human rights.

Imperial, unaccountable, idiosyncratic, personality-driven; feudalism is a system where the masses have little to no legal rights, little to no due process, and virtually no formal institution of political or economic power. Society’s resources may be diverted to the ruling elite and vassals roles are to serve up any and all resources required of us by the imperial. Feudalism is very simple – the masses trade our autonomy for civil structure and protection against chaos.

However, I think that the time is ripe for the next era in the use of the Internet. I think that we are either near or at a tipping point where we will demand that our fundamental human rights be recognized, honored and legally regarded on the Internet. Legal issues aside, I consider Ed Snowden’s recent actions as one of a chain of “weak signals” indicating forthcoming change in how we are treated as individuals on the Internet.

I surmise that this change is inevitable, because feudalism failed to maintain the social contract in an era of growing knowledge and maturing world views. It resulted in major social problems and was consequently dispatched to the dustbin of history as a rudimentary form of government because it simply didn’t work anymore.  Similarly, over the past 40 years we have been taken by companies and the government into an international network of information access that necessitated strong controls to help the world understand what the Internet is, how to use it and become part of the information explosion we are amidst. This was a necessary stage so that we could all reap the benefits of the instant knowledge available for the first time in history.

Stage 2. “In the course of human events…” (2013 – ?)

I have a personal tradition that on the 4th of July, I renew my view of our state by reading the Declaration of Independence. It is a short document and a welcome opportunity to refresh my ideals so that I can face the often times cynical news flow throughout the year. This year, as I read the Declaration of Independence, I was gripped with the perspective that the state of the individual on the Internet is in a near identical situation as the 13 colonies were in 1776. We receive no hearing by the “rulers”, laws are made without authentic consideration of users, we are treated like an information resource to be bought or sold, rather than as persons and given little respect for dignity, privacy, personal information property – let alone legal rights. The colonists found themselves under a form of leadership that wasn’t sustainable. And in response, they worked for several years to develop something completely new.

With clarity and simplicity the signatories stated, “We have grown up. We require you to treat us not only as adults but equals on completely new terms. We are not asking permission but notifying you and everyone else what we are doing.”

There are several points in the Declaration that I wish to emphasize that are relevant to the Internet and our what I believe is our changing role as individuals:

1. Autonomy is a natural evolutionary process that results from maturation.

While we assail feudalism, we need to recognize that for a time, it worked. It served a purpose. But “When in the course of human events…” we grow, we evolve, we understand ourselves and our roles in the world in a more mature manner and wish to exert our autonomy and power. I believe that we have reached the point in the evolution of the Internet where we as individuals will begin to reclaim and assert our rights and autonomy as individuals.

I think this is true, not because of any political or philosophical view I hold. It is based upon the current generation that is dominating the Internet globally. This current generation holds a richly textured, sophisticated technological and societal perspective of the Internet. Having been in the middle of the Internet’s explosion into the public consciousness during the late 1990s, I am truly wowed by their intuitive understanding of how the mechanics of the Internet interact societally. An example of this is the role played by Wael Ghonim in Egypt’s revolution. This generation is truly remarkable and deserves to be recognized as the pioneers they have proven to be in their actions. They are leading this transition into this next era. And as Egypt demonstrates, it won’t be easy. But this transition is part of the natural evolution of society. I believe it is unstoppable. However, I don’t for a moment think it is beyond being repressed and it will certainly be opposed by those who will lose economic and political power.

2. Assertion of the unarguable legality of autonomy, equality, dignity and respect for the individual- you either get this or you don’t.

Our fundamental human rights are not a debatable point; it is how we view ourselves. It is THE super-ordinate value and consequent world view we possess. All that we are as a society and government rests upon this fundamental assumption. We have built our nation on the premise that individuals have unquestionable legal rights of dignity, autonomy and reasonable freedom to pursue our personal growth and maturity [life, liberty and the pursuit of happiness].

The next era won’t discuss whether human rights will be extended to the Internet, it will be about the struggle to assert the human rights we intrinsically hold. There will be no dialog about the fact that we are bestowed with “… certain unalienable Rights, among these are Life, Liberty and the pursuit of Happiness. …” (Please note that this is not an exhaustive list, it is a call-out of some important rights among others.)

It is my view that a mature governmental and business perspective must understand this basis of our society in order to have a long-term, viable government or business. Governments that deny this fundamental truth will eventually be rebelled against as the Founders did against their taskmasters. And companies that are not able to grasp and honor this fundamental truth of customers’ rights and dignity will eventually crash, crumble or decay. The best they can do is control the trajectory of the transition and so maintain a legitimate role.

3. It is harder to change than to suffer, but a tipping point is eventually reached.

It is fascinating to read the 18th century equivalent statement that I expect to find in a contemporary self-help book. Apparently, it has always held true that if the data demonstrate a consistent pattern of abuse without recourse or adequate response, there is no other choice but radical change. Companies and governments love our current system. In it, they hold all the cards and all the money, they make all the laws, and they get most of the benefits. I won’t belabor the 99% arguments that others have made so much more eloquently than I could, but I will point out that we are hurtling toward an unsustainable economic and political imbalance. As circumstances continue concentrating economic and political power, societal pressure is building and will eventually drive change. The combination of non-sustainable economic profits and unabated surveillance by governments and companies is driving us toward this tipping point.

In my view, Ed Snowden’s disclosures of a $20M program that most everyone believed was already occurring doesn’t provide any new information to privacy concerns. It does however confirm that there is rampant Powerpoint slide abuse occurring in the deeper echlons of the NSA. However, in the context of Wikileaks and “hacktivist” movements such as Anonymous, I view it as another “weak signal” that change is forthcoming. While there is a secret judicial branch to match the secret executive branch, it appears that companies have stepped into the role of secret legislative branch of our government.The balance between national security and human rights is more complex and delicate than ever.

It is not only the U.S. government that is grappling with changes foisted by the Internet, Egypt demonstrates that any educated population requires a measure of freedom, order and autonomy. While repression is real and can persist for a long time, ultimately, an open Internet will lead to big changes. Hence, non-progressive governments are scrambling to erect Internet firewalls that edit content that could potentially instill ideas of individual freedom. In absence of active, aggressive repression, the Internet offers an unprecedented channel for knowledge, education and freedom of press. If governmental power is rampantly abused, there will come a tipping point where a rigged legality is trumped by broadly recognized lack of legitimacy. This is a dangerous place to go and I hope we don’t.

What I haven’t seen yet, is the commercial equivalent where individuals begin actively rebelling against their corporate feudal lords. Examples of this could be an anticipated wave of privacy based companies or some form of information co-op whereby individuals band together for network economics and control the flow and payment of personal information assets. There could also be legislation explicitly declaring that content we naturally generate from of our lives is personal intellectual property and therefore covered underneath IP law. That we own it and it may not be stolen or used without our consent. It may be the case where legally, individuals are given special protections to compensate for the resource imbalances between corporations and people. I personally believe that the golden era of personal information arbitrage is over- not because of political or philosophical ideology, but because all economic profits eventually trend to zero. Smart companies, entrepreneurs and investors recognize this and may already be starting companies and adjusting their strategies, expectations and business trajectories.

4. Autonomy is hard and requires commitment, focused attention and our resources.

As serfs maturing into responsible adults, we have a lot to learn and it is going to be hard. It will require our efforts and resources. This is the weight on the other end of the individualism and rights- they are costly and weighty.

Some will rise to the challenge more effectively than others. Some will be able to develop and lead, and others will cling to what they know because it is easy. But I think that history shows that as we mature and grow individually and collectively, our structures and forms of society must either evolve with us or be swept away. Our choices have never been easy. But a reading of that magnificent document that is the Declaration of Independence, reminds me that that growth and maturity is the struggle that builds strength enabling us to move yet further again.

I am not calling for anything other than recognition and legal enforcement of the fundamental human rights we recognized in our Declaration of Independence, United States Constitution and Bill of Rights. I say this because it is who we are and how we defined our society to be when our nation was created. I think that the founding fathers got it right on the human rights ideal. As we have for the past 237 years, we practice our ideals imperfectly, but guided by the ideal of respect for each person and their unquestioned value. I am simply pointing out that I think that this ideal will eventually embody itself in how we are treated on the Internet and that this change is inexorable and inevitable.

One thing leads to another

A great deal of work is being done on renewable energy sources. With very cool stats thrown around such as:

  • the amount of energy impacting the earth from the sun in one hour will supply the entire world’s consumption for a day
  • 1 square meter receives from the sun the equivalent of 1000 watts of energy

I could go on but the point is that energy is all around us. In fact, if we are to believe Einstein’s “signature equation” of E= mC2- then we ARE energy, albeit in a rather cool, slow and static format. There are untapped (and I am guessing unknown) realms of energy extraction from our surroundings that  we have yet to imagine and explore.

So while we wrangle and create endless spreadsheets on the economical viability of one renewable energy source versus another, keep this in mind- the great game of innovation has only begun. It can only get more interesting from here.

R&D Spending- A Tale of 2 Companies

In my last post regarding solar companies, I looked at the continuing revenue build out and the market share battle between First Solar (FSLR) and Suntech Power Holdings (STP.) We saw that First Solar’s thin film offering appeared to be taking market share from the phtovoltaic provider, STP. In this note, I will again revisit the revenue build of this nascent industry as well as look at what I consider to be a primary long term indicator of growth potential, research and development.

Revenue appears to be recovering from March Lows

In spite of stellar growth the previous 7 quarters, the 12 alternative energy companies that I track showed Q/Q declines in the December ’08 and March ’09 quarters. While the June ’09 quarter was a positive Q/Q result, it was still an almost 22% decline on a Y/Y basis. Perhaps the worst is over for solar technology’s revenue growth, however, I believe that fledgling industries such as this with blockbuster demand curves remain anybody’s market for some time. For example, the Internet investment opportunity was kicked off by Netscape, America Online and Yahoo. Today, only one of those companies is operational and Yahoo is fighting to remain a dominant player in light of the fairly late market entrant of Google. Likewise, in solar technology, I anticipate that there may be category defining companies that are private or not even yet formed.

Figure 1. Revenue Build Recovers from the March, 2009 Bottom

Alt Energy Companies 20090923

Source: Chris Montaño, CFA;  Gridstone Research

R&D -The Lifeblood of Technology Companies

In formative industries with great demand curves, I like to look at research and development. While there is no guarantee that spending money on R&D will result in winning products, it simply makes sense to me that companies investing in the future through research have the best chance to adapt to unpredictable market conditions and evolving technology. And even though the demand curve for solar power technology looks massive today, it remains an uncertain and difficult market in very early stages.

I also think that the key to solar technology’s long term viability as a renewable energy source is its economics- can we produce electricity from photovoltaics at the same cost as coal or gas? Without technologies that enable production of electricity at a price point equivalent to coal or gas powered generation, photovoltaic electric generation will remain a niche method. Efficiency of solar cells regardless whether they are thin film or silicon substrate is the cornerstone of economic viability. The company that can produce the highest efficiency photovoltaic device is in the best position to become  a major company through the world’s most ancient energy source and newest business- solar energy.

Figure 2. R&D in Absolute Dollars and as a Percentage of Net Revenue

Alt Energy RandD 20090925

Source: Chris Montaño, CFA;  Gridstone Research

As I look at the graph in figure 2, I am struck by a couple of things:

  1. Photvoltaics are still massively underinvested in view of the market opportunity. I was surprised at the modest quarterly spending in absolute dollars -$53M. Even on a trailing 4 quarter basis, this seems a bit on the small side. I think this means a couple of things- it could mean that there are simply not enough photovoltaic professionals to absorb more R&D dollars. Or it could also mean that the companies are still pouring all of their resources into a technology that is immature and requires so much engineering effort, that the industry itself could be considered “R&D.”
  2. 2.5% of industry revenue needs to climb for photovoltaice generation to achieve “grid parity.” It seems a stretch to think that 2.5% of industry revenue will achieve the products that will generate electricity as cheaply as utilities. The types of efficiencies that photovoltaics will need to attain economical generation without subsidies and tax benefits will likely require a lot more than $53M. And while the trailing 12 month number is a bit more encouraging on an absolute basis ($180M), it is still less than 2% of total industry trailing 12 month revenues.

In view of my previous post where I compared FSLR and STP revenue contribution, I thought it might be interesting to see how STP and FSLR fared in their respective R&D investments. Figure 3 makes an interesting graph depicting the divergent R&D priorities being invested by two companies. First Solar seems quit3 aggressive in its spend while Suntech Power appears to be tapering off.

Figure 3. A Tale of 2 R&D Budgets

STP and FSLR RandD

Source: Chris Montaño, CFA;  Gridstone Research

While it certainly takes a lot more than R&D to make a great company, one thing I am personally convinced of- without world class R&D, it is very difficult to attain and maintain a leading role in the technology industry.

The Hand is Always Moving…

Quick note following up on the disruption/re-alignment/dislocation theme’s articulated by El-Erian. As a proponent of liberal economics, I believe that innovation will occur because it is part of human nature. We are creative beasts. We adapt to changing circumstances with novel strategies with available resources. In short, the “hand” is always moving and is merely a metaphor for our better selves acting collectively.

I wanted to point out a great note from Friedman in the NY Times this morning. He is suggesting a way forward while contextualizing the current morass in a broader scale than the financial markets. (You can read his article here…) Perhaps embedded in the current  disruption is that we need to find more environmentally sustainable uses for our limited resources. We cannot expect to consume our way out this time. Until we find a complete set of natural resources (or perfect alchemy… come on nanotechnologists!), we have a finite set of materials to work with.

With a population of earth expected to hit the 9 billion people or so in the next 50 years, perhaps this is a good idea? From the perspective of seeking to identify themes and opportunities of the way forward from here, sustainable economic growth and renewable energy resources certainly seem logical.