Enter a model used by the Dutch, wherein a whole postcode will win each month’s lottery. The winnings are divided up between all residents within that postcode, meaning all winners receive around $13,000. So everyone in the community can be that much better off.

So how can these two ideas be combined? Well theoretically, the 40% of winnings taken by the government should be used to benefit its citizens, correct? What if these citizens received the winnings themselves? Could this allow the government to decrease (or eliminate) the amount of taxes taken out of the savings’ winnings?

As an explanation, people would be able to open bank accounts, knowing the interest they earned would be directed toward a pool of money. This money would then be doled out in a monthly lottery but, rather than have one individual win the full amount, a whole postal code could win it. Of course, this probably means winnings will be in the $10,000 range rather than the $1,000,000 range, but it also means 40% wouldn’t be taken out as taxes, since these would constitute a form of payment to citizens regardless.

The devil, as always, is in the details. Would the bank accounts still be private or state owned? And exact amounts of earnings, winnings and (eventual) tax payments would have to be calculated. But if it encourages people to save and not to spend their own earnings on lottery tickets, might it not be worth checking out?

Let’s start with the basics. A patent is granted to an inventor wherein, in exchange for his revealing the secrets of his invention, he has a 20 year monopoly over the technology. This means that others can build on his invention and invent their own products in the meantime. This encourages innovation and also means that others don’t have to wait 20 years before inventing new products.

Recently, however, this hasn’t been the case. When the total profits from patents are around $4 Billion, but the associated litigation costs are $14 Billion, it is hard to argue that they are helping the economy in any sense. What is going on here?

First of all, the patent office in the United States is falling very much behind in its approval of patents, with a 700,000 patent backlog and a waiting period of three years.

Secondly, the so-called “patent trolls” are buying up patents and using them as lottery tickets. In other words, they are not creating anything but just suing any company they can for infringing upon their patents. Whether they are right or wrong often doesn’t matter, since the other party will usually prefer to settle, rather than fight the case. Needless to say, lawyers on both sides of the case will pick up a percentage of every IP lawsuit they can bring about.

This has the opposite effect of what patents were originally supposed to do: It stifles innovation. Entrepreneurs and small businesses are regularly finding themselves sued for one reason or another, and are therefore often scared to forge ahead in new industries and markets.

Recently, the America Invents Act was passed. This has been touted by politicians (who were quick to pass it) as, well, the “America Invents Act” (some marketing firm might have helped). It is a step in the right direction, in that patent protection is granted from the moment it is filed, rather than issued and, secondly, the patent office itself will have more control over its budget. But will this really stop any of the associated litigation? We doubt it.

So what is the solution? Mark Cuban has mentioned that we should get rid of patents completely, at least in software and processes. According to him most inventors don’t invent for the patent, but to get a new business up and running, so that new patents merely get in the way of innovation. According to him, software should be copyrightable, while if you’re creating a new process “… use it. The benefit is from creating the idea and using it in a business to your advantage. Afraid that some big company might steal the idea? That is life. When you run with the elephants there are the quick and the dead.”

And we are inclined to agree. Business ideas are just too abstract to merit patents, and big companies (remember when Google bought up Motorola for its patents back in August last year?) are finding it much too easy to buy up more and more of these in order to stifle future innovation by suing more small businesses. So when it comes to online businesses, Enough with the Patents.

Despite all this rock hard evidence, however, it turns out that the numbers might beg to differ. Yes, numbers. Those numbers that so often get in the way of a good story-telling; because if we try telling it, studies like the one released by Carnegie Mellon will tell a very different one:

• There are 1.35 male deaths as opposed to .77 female deaths for every 100 million miles driven.
• Male drivers are 77% more likely to die in a car accident than women.
• The reasons for elevated risks of male drivers include speeding, and a higher likelihood of drinking and driving.

Of course, you may think “Well what does Carnegie Mellon know? I mean, they’re one of the best schools out there, but this is driving!” So, let’s check with someone from the Real world. Quality Planning is a company that collects and rates pretty much all the information that can be found for auto insurers. In other words, this is what the experts rely on. So what do they say? Well, let’s take a look at some common violations, and whether they are more likely they are to occur to men than women:

Reckless driving: 3.41 times more likely to happen to males than females
DUI: 3.09 times more likely to happen to males than females
Seatbelt violations: 3.08 times more likely to happen to males than females

Ok. Well even then. Men might wear their seatbelt less often and, ok, we try to race someone every now and then. But we still have better skills, don’t we? Well, unfortunately, no. It turns out that per 100 million miles driven, men will have 33’733 crashes compared to womens’ 14’633. This statistic is corroborated by the Insurance Information Institute (it does what its name implies).

And, lest you thought this was strictly an American phenomenon, it has been prevalent everywhere. The EU has come under fire for trying to equalize insurance premiums for men and women, when all the insurance data shows that women are safer drivers than men. Even the Malaysian Institute for Road Safety Research keeps coming to the same conclusion.

Oh well, we always have the remote, right?

A curiosity: Gary Vaynerchuk, Tim Ferriss and Seth Godin, all prior Best Selling authors and all masters of online marketing techniques, all released their latest books: The Four Hour Body, The Four-Hour Workweek, Expanded and Updated, The Thank You Economy and Poke the Box on a Tuesday. Each of these books was a best-seller.

Sometimes it might be better to just imitate what successful people do.

Bitcoins cannot be tracked
Bitcoins cannot be taxed
Bitcoins cannot be frozen
Bitcoins can be traded without commission (or very low rates, depending on the transaction)
Bitcoins are not controlled by any government entity

So, why should we care? Well, if you live in the United States and want to play poker online, bitcoin is pretty much your only option. In fact, if you want to perform any monetary transaction online that your government doesn’t allow, then you can do so with bitcoin (obviously this doesn’t mean you can break laws like buy narcotics, which are quite illegal to possess).

We won’t get into the algorithm used to create bitcoins in the first place and to establish their value (if you’d like that information you can read about it here). Rather, we’d like to address the question: Will Bitcoin change the world?

Bitcoin gives us a place to buy and sell goods and services online that are otherwise restricted, either due to governments or to private entities (read credit card transaction costs).

The problem, of course, is that governments will not allow bitcoins to be used. Charles Schumer, a democratic senator, has already spoken out against it, saying they’re a drug dealer’s dream come true (we find it odd that a drug dealer would prefer online transactions to untraceable cash, but we can’t rule it out). Will he, and others like him, cut bitcoin’s chances before they can even bloom?

Of course, we don’t know, but then again, not everyone is dead against government controlled currencies and looking for ways to buy pharmaceuticals or to gamble online. Other websites, like Amazon and Ebay, may start accepting bitcoins. Once this happens, it could signal an interesting turn toward bitcoin becoming an international decentralized currency. Until then, except politicians to quash it and not much else.

No, the reason they find the patients worse off is their lack of will to survive. One doctor talks of how patients in Africa with heart failure walked 50 miles “in the broiling sun, with panting breath and swollen legs, to obtain treatment—and then walked home again.” In London, on the other hand, people let their yards become overridden with trash and then complain that social services does nothing about it. They then go in and out of the hospital due to alcohol, drugs and being beaten by spouses, all the while cursing the doctors and complaining about the system.

This argument is interesting, because it can be applied to countries as well. Let’s say that the more people are handed benefits (house, food, livelihood) the less they cherish them and therefore the worse they are at managing them. How can this apply to countries? Well, what are many countries handed that others aren’t? A clear example is Natural Resources, such as oil. For example, Venezuela has much oil, while Chile has none. Nigeria has huge amounts, while Ghana has none. So do countries who have oil manage their gains worse than countries who have to earn their money (via trade and commerce)? We can answer this because we aren’t the first ones to come up with it. Fareed Zakaria, in The Future of Freedom, says the same thing, claiming that natural resources can be a curse. Without them, a government has to provide equal laws that provide a framework for wealth generation and legal recourse, but all bets are off if there is a constant access to oil.

So, if you are handed things on a platter there is more chance that you squander it than if you have to work hard to earn it, whether you are human or a country. What other parallels can be drawn between people and countries?

The US, by raising its debt ceiling, has basically extended its own line of credit. This is as if you had maxed out your credit card but then raised the spending limit (don’t expect VISA to offer that option anytime soon) so you could keep on buying. This is good if the money you then spend earns you more money, so you can start paying back what you owe and you never have to default on your monthly payment. Likewise, if the economy picks up the US can use future gains to pay back what it owes. If the economy doesn’t pick up, however, the US will just accumulate more debt and will have the same problem (albeit more severe) in the near future.

So the US needs to earn more money. What would you do if you needed to earn more money? Well, you could start by cutting down on lattes at Starbucks and other measures. Maybe you could eat in more often. Or maybe you could trade in your car for a bike. These are what is called Austerity in economics. The US decides to cut back on its spending. The most affected sectors are usually welfare benefits and development projects.

But, of course, cutting down on spending only takes you so far. You will also have to start making more money. You could do this by getting a second job, a part time job, freelancing, etc. The US tends to do this by raising taxes and public transport fees.

Here is the problem, however. You new job is across town, but you sold your car for a bike. Your freelance job requires a flipcam, but you can’t afford to buy one. Or you have to network more to get that new project, but you don’t have a budget for eating out. Likewise, the US took away benefits and raised fees for its citizens, while asking for more taxes.

There is one other option, however. This is exports. It’s as if you took all your belongings and had one big garage sale (or sold them on eBay or Amazon), or you decided to sell cakes or become someone’s personal assistant. This, too, is good. Except you discover that all your neighbors and the neighboring towns are going through the crisis as well. This is what the US finds when it tries exporting to Europe, which is going through its own economic turmoil. In other words, the US could try to rely on exports, but other countries are going through a process of debt reduction.

So you can turn to other towns further away. The problem here is that they tend to have much lower incomes than your neighborhood. In fact, what if their income and spending were tied to yours? This isn’t common for people, but more common with countries when they peg their currencies, as China did with the US.

So you could maybe move to a cheaper part of town, or a cheaper town. Except if your potential buyers’ income and spending are tied to yours, this means they can suddenly buy less regardless. In fact, when they are going through hard times, they try to find more ways to raise your income and spending so theirs can go up. In other words, the US could try to have the dollar depreciate, and therefore increase its exports, but America’s second largest trading partner, China, has its currency pegged to the dollar, which means the dollar won’t be cheaper for them. In fact they’ll resist a dollar depreciation. On top of this, when investors worldwide seek a safe base, they buy US treasuries and debt, thereby strengthening the dollar further.

So what do you do? The more you cut back, then less you can invest in your career. You can try to sell your goods or offer your services to neighbors, but they’re going through the same problems you are. Moreover, neighboring towns have their salary and spending levels tied to you and your town, so they suffer when you try to cut back as well. At a certain point you run out of a market to sell goods to, and suddenly your credit card is maxed again. Time to raise the spending limit once more?

Well, this is partly true. We would argue that countries’ traditions tend to become embedded during times of prosperity – it’s more common to say ‘let’s not forget our past’ when one is well off than when one is starving – so it stands to reason that (developed) parts of the world that have been developed the longest are the least efficient. Let’s see if this is true.

One part of the world that sprouts to mind is Western Europe. This part of the world has been well-off more or less since the renaissance, with a break during the first half of last century. So most European ways of doing things have been around for a long long time (although espresso only became an italian drink in the 1950′s, after the war and when Italy was once again becoming prosperous, thereby affirming our theory) which should make Europe relatively inefficient. The United States, on the other hand, has been around for less time. In fact, it became prosperous between 100 and 200 years ago, so it has had less time to have established habits and ways of doing things.

So, if Longer Period of Prosperity = Less Efficiency then the United States should be more economically efficient than Western Europe. For those who have lived in both areas, this should not be news. Try setting up a phone line, bank account, and insurance in France and then try again in the US; the efficiency in America will become obvious. Most of your work can be done online, while in France you will find yourself waiting in several lines in various offices (the difference is evident even for tourists: just look up Paris Syndrome).

But what about other areas? Does our theory still hold? It can get complicated when one looks at East Asia. This area has long been associated with many traditions. Most of these traditions were established much earlier than European or American traditions, and were followed by over 100 years of hard times (involving invasions, world wars and communism, among other things). Many of the traditions held their ground and others went by the wayside, although people are trying to keep them alive these days. On the other hand, prosperity in this region kicked in much later than either Western Europe or America, so it should be more efficient, correct?

The answer would have to be Yes. As far as we know there are no economic indicators for overall efficiency, but in terms of convenience, not only is East Asia much more advanced than the US (let alone Europe), but parts that are newer (such as the city of Shanghai) are much more efficiently run than older parts (such as Tokyo).

When a new area becomes prosperous after a long time of suffering, it tends to cast aside traditions and excuses such as “We’ve always done it this way” and will try its best to compete and do the best it can, thereby becoming more economically efficient and more convenient a place to live in for its residents. So if you’re considering moving, you might want to consider a modern city rather than an older one.

So when is a license needed and when is it not? A tattoo artist should know what to do, and one could, fathomably although often not convincingly, make the same argument for a real estate agent. An interior designer however would convince us through reputation rather than certificates. The same probably goes for hair-braiders and dog-walkers. Coffin makers probably don’t need to worry about harming their customers, and ballroom dancers are often recommended, but rarely asked for official certifications.

At a certain point, requiring a license is the act of a cartel. It is protectionism pure and simple and it operates to keep insiders in and outsiders out, effectively requiring outsiders to pay their way into the inside. In other circumstances this would be called extortion, but by attaching the word “license” we can make it a law, and an idiotic one at that.

The net result is bigger government, less entrepreneurial activity, and fewer jobs. One would think most Americans, especially the Tea-Partyists, would be opposed to all of this. Instead, when proposals to reduce the number of licenses and certifications appeared in the Florida legislature, as reported by The Economist, one member:

“predicted that unlicensed designers would use fabrics that might spread disease and cause 88,000 deaths a year. Another suggested, even more alarmingly, that clashing colour schemes might adversely affect “salivation”.”

The proposal was duly voted down. Though neither here nor there, one thing that needs no certification in Florida is buying a gun. Any 18 year old can buy a gun with no official paperwork, and no need for a Federal Firearms license, from another private individual. Let’s not forget that Florida’s unemployment rate is over 10%, with the nation’s following it. Some smart and relatively easy ways of raising employment don’t seem politically palatable and therefore aren’t adopted. Are there logical reasons behind Florida’s choices for regulation? Or could this show some deeper, underlying problems?

Briefly, he mentions how the best and brightest of our society tend to shoot for elite universities like Harvard, where they then proceed to interact with people more or less just like them and, as the years go by, they tend to reinforce their own principles and become more and more similar. This may seem both obvious and good. We agree that it is obvious. Most of us associate with people similar to ourselves, and studies have been performed to show that most people do the same around the world.

The second point, that it is good for the best and brightest to keep hanging out with the best and brightest, however, might not be so good. Thiel points to a study of entrepreneurs, which showed that those who associated with the most varied groups of people (in different clubs, associations and different activities) tended to be the most innovative. He then ties this back into Harvard, where he says the lack of interaction with diverse people (not necessarily diversity of race or gender, but of interests, goals, etc.) will limit the potential of these best and brightest. He ends with: “Perhaps Bill Gates knew what he was doing when he dropped out of Harvard.”

This is both interesting and (we believe) very true. The only problem is his study was done among entrepreneurs. Someone who is looking for a job may argue that it makes sense for entrepreneurs, who run their own businesses, to try to seek out as many different people as possible. While if someone wants to be a banker she need not do so. Much better to associate with just the banking world. Those of you who read The Tipping Point, however, might remember Malcolm Gladwell’s point about “weak ties”.

These so-called “weak ties” are more useful to you than your strong ties (or close friends). Gladwell states:

Your friends, after all, occupy the same world that you do. They might work with you, or live near you, and go to the same churches, schools, or parties. How much, then, would they know that you wouldn’t know? Your acquaintances, on the other hand, by definition occupy a very different world than you. They are much more likely to know something that you don’t.

So say you are looking for a job in Banking. Well, your friends in Harvard either already know that, or are competing for the same jobs. And if an opening becomes available, chances are you’ll hear it from the same sources as your friends, which brings you no advantage. If, however, you have connections all over town and in various different clubs and industries, the chances that one of them knows an opportunity that your friends in school have missed are much greater.

This works when searching for jobs, business opportunities, general information, or good hotel recommendations in Istanbul. It turns out Peter Thiel’s argument is right on the money, but in an even broader sense than he imagined. Ignore it at your peril.