First of all, thanks for the comments and the e-mails after my last two posts. It’s good to see the snowballs rolling, gathering momentum.
Why am I doing this? Not because I’ve suddenly become some male-menopausal closet philosopher. But because trust and relationships and identity are integral components of any market, particularly financial markets. Software has caught up, it is now possible to embody some of these principles in software. It is also possible to get them hopelessly wrong, and to throw away the advantages and opportunities that technology, more particularly information technology, provides us.
Aside 1: One of Doc Searls‘ themes at reboot was that blogging is provisional. This is important. These are conversations and discussions, not dogma. Mind Wide Open, as Steven Johnson would say, but not in this context specifically. [And Happy Birthday one day late, Steven, if you ever get around to reading stuff like this]
I’ve been thinking more about why I feel it’s so important to distinguish between trust and confidence, why I am deeply uncomfortable with the definitions getting intertwined. Language is something that’s living, and meanings and nuances change over time. Years ago, I was fascinated to learn that “nice” used to mean “complicated”, as in “That’s a very nice two-move chess puzzle”; that “fond” meant “foolish”, and conjured up images of fresh-faced Wodehousian wonders mooning cheerily over absent first loves. More recently, we’ve had the Governors of the BBC pass judgment on the use and/or abuse of the word “gay”, to Chris Moyles’ consternation and relief.
I remember the first cricket match I ever went to. And what a match; details to be found here. Gary Sobers, Conrad Hunte, Rohan Kanhai, Lance Gibbs, Clive Lloyd, Seymour Nurse, Wes Hall and Charlie Griffiths, facing off against the one-eyed Nawab of Pataudi, Rusi Surti, Chandu Borde, ML Jaisimha, Abbas Ali Baig. Bedi playing his first Test. Chandrasekhar and Venkataraghavan playing as well. Each captain bestriding the field like a Colossus. [A confession. I first tried Colossi, didn’t like it, it didn’t work. Changed the structure of the sentence. Reminds me of the Alipore Zoo curator rumoured to have written to his counterpart at the Sydney Zoo, asking for the despatch of one mongoose. And then asking if he could send a second one at the same time :-) )
India lost. But no matter, it was a great spectacle. With a terrible start. A dispute about an umpiring call led to fans in one section of the ground pulling up the seats and setting them on fire. On New Year’s Day. Setting the backdrop for the newspaper headline “Hell at Eden” the next day.
Which brings me to the point of the story. I was nine. We had to evacuate the stadium in a hurry. There were flames surrounding us. And the only way to get out was to go up, and then jump down. My father shepherded me to the jump-off point, told me that he would jump first, then catch me when I jumped.
I had no confidence that my father could jump down 20 feet without doing himself a major injury; it would have been the most energetic thing I’d ever seen him do, other than hit a golf ball. But somehow he jumped, and landed with limbs intact, aided and abetted by the throng below. [I’m not sure he could have jumped anywhere in Calcutta without landing in a throng, but that’s a different matter.]
I had no confidence that my father would catch me. But I trusted him. And catch me he did.
Trust is binary. Yes or no. Trust is sacrificial, you have to make yourself vulnerable in order to trust. Trust is two-way; A cannot trust B unless it is also true that B trusts A. Trust is a relationship, a bond. It has something to do with emotional intelligence and faith and Pay It Forward. It is based on something holistic to do with the person and the relationship.
Confidence is graduated, it is part of a continuum of values. You associate confidence with words like ratings and levels and “degrees of”. It is one-way, if A has confidence in B then it does not follow that B has confidence in A. It is an attribute about a specific skill or ability.
Trust is Because Of. Confidence is With.
Aside 2: My grandfather was a Founder Member of the National Cricket Club at Eden Gardens, founded before my father was born. Founder Members were entitled to two pavilion tickets, and you didn’t even have to wear breakfast-coloured ties to sit there. Founder Members were entitled to these two pavilion tickets each for life. Between 1967 and 1980 I watched pretty much all five days of every match at Eden Gardens. Using Founder Member tickets. The youngest a Founder Member could have been, in 1969, was 63. I was 11 then, and not the youngest queueing up either. And nobody said a word.
This is an example of what’s happening today. One of the things the Web is challenging is the market lock-ins that prevent natural secondary trading from taking place. More and more, we will see “not-transferable” items becoming more liquid, more tradable. Entertainment and sports event tickets are the likeliest candidates to start with, but even airline tickets will go that way.
To make this happen, we will need better understanding of how identity is altered on such instruments. The answer is not to prevent the transfer, but to solve the identity transfer issue. There will also be cases where the “instrument” is transferable only after a “first refusal” hoop-to-be-climbed; this is reasonable as well. We have to solve the process by which we can portray identity accurately and allow for first-refusal clauses, rather than prevent something as natural as secondary-market trading.
Nothing wrong with “Colussuses”, IMHO :-)
Comes a point when it’s an English word. We don’t talk about how many musea we have visited recently. Only pedants use data and agenda as plural nouns, and when people look at them strangely it is a demonstration that the language has moved on. As it is entitled to do.
I thought nice meant “elegantly-crafted despite any inherent complexity”, although why we would need a word for that is beyond me. Shows what was important to your Regency buck.
…oh, and a serious point which may turn into a blog post.
The distribution of tickets for the football World Cup and next winter’s Ashes in Australia has been criticised for not getting tickets into the hands of the “real fan” whoever that may be, World Cup tickets have largely been given to corporate sponsors. Ashes tickets were sold to the Australian Cricket Family several weeks before non-Australians could buy them,with the predictable result that none are left for anybody else.
Come the matches themselves, half the stadiums will somehow be full of England supporters who will have obtained their tickets in an unregulated secondary market, to the benefit of nobody except the lucky recipients of the original ticket IPO and the scalpers who intermediated between them and the wealthy England fan.
How can we create a primary and secondary market in tickets that does not disenfranchise the loyal but poor fan, and yet allows the market to distribute them according to real demand?
As you suggest, I suspect the answer is something to do with identity and traceability. If you have demonstrated your eligibility for a ticket in the initial distribution then you get one. If you then choose to use it for profit rather than entertainment then you go to the back of the queue for the next distribution.
Or is that too Victorian and moralistic?
One of the things about not allowing secondary markets that licensors complain about (cf the DRM in music world) is that it “steals” sales from them. This is generally recognised as a furphy – preventing me from getting it for “free” does not equate to me going and paying full-price for something – I’m willing to TRY something for free, but perhaps not prepared to take the chance at some expense. Shift to tickets – if there is a flourishing secondary market for (e.g.) airline tickets, then I will be MORE willing to purchase a ticket ‘on spec’ if I know that I can get a reasonable amount of the value back when I change my mind. Now – where that slides into scalping is an interesting discussion in itself, but I don’t understand why a secondary market is such a good idea for stocks and shares, and such a lousy one for airline tickets …
Glad to see this snowball fragment….
The world appears to behave as if secondary markets are only good when they themselves are a zone of lock-in, where someone owns the secondary market as well. Often the owner of the secondary market also happens to be the owner of the primary market.
I can’t see this continuing. Secondary markets are, if anything, even more susceptible to P2P approaches than primary markets.
There are a number of issues to solve before this can happen. One is that of transferability-with-adequate-new-identity-information. I think it’s perfectly reasonable that airline tickets carry the real passenger name, for example, and not just for “security”. A second is that of enfranchisement, how one earns the right to primary market access. Frequent use. Ballot. Membership. Initial investment. Whatever. But once we have sensible rules to enfranchise primary market access, then there will always be some level of supply/demand market economics for the secondary market activities.
Akin to share registration and nominee accounts, yet learning from flight security and money laundering, there may well be models for generic “instrument transfer”. A sort of clearing house. And people will make money just enabling the transfer.
Thank you, Coding the Markets, whoever you are. I’ve followed the links and ordered the book.
I like the distinction between creditworthiness and trustworthiness that Harris draws, but I have a niggling feeling that some elements of the credit process need to change.
One, as there is more disaggregation-with-empowerment, there will be more of a push away from any centralised creditworthiness models to more personalised ones. Even in wholesale financial markets. Traders could have portable trading limits which then work in conjunction with desk or enterprise limits.
Two, the tokens used to demonstrate the credit may themselves change, similar to what prepay and monthly SIMs could do to credit cards.
New forms of “acceptance houses” may well emerge, every disruption creates its own amorphousness and consequent market opportunities, a re-mediation as it were.
But as you say, I’m just mulling ove things. Blogging is provisional :-)
Are we transitioning towards a regime where anything and everything is tradable, speculatable, discountable?
A more livelihood affecting example than foodball, is the listing of Urad Dal( a key ingredient for making Papads) in Indian National Commodity and Derivative Exchange( NCDX). The speculative trade and the resultant hike in price threatened the survival of several grassroot Papad makers.
( Note that Papads are not listed in the NCDX to get any speculative traction!)
Go on Confused! – We need more snowballs now, to avoid a flood of inadvertent brick bats latter.