February 4, 2005

the ignorance premium

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I LOVED Hamish's recent quip in the comments:

That is certainly the style of the current American Anglo Empire [he was referring to this cartoon]. The rest of the world has more to play for, and consequently may be executing the real deal just a little bit harder.

In the immortal words spoken by Martin Sheen in the deeply flawed but still brilliant Apocalypse Now, "Charlie [The VietCong] didn't need R+R, he just wanted a bowl of rice and little bit of rat meat."

It occurs to me that a worryingly large chunk the people in the Anglo-American middle class basically make their living from charging an "Ignorance Premium".

Know diddly-squat about tailoring? Then you're more likely to pay that extra $300 for that Armani, less likely to save $600 from going with the old man in Chinatown.

But then EnglishCut comes along... suddenly the conversation available to most people gets much smarter.

Know diddly-squat about tech? Then you're more likely to go with the $400 iPod, less likely to go with the $250 Microsoft-powered alternative.

But then Robert Scoble comes along.... and suddenly the conversation about personal stereos gets much smarter.

Suddenly the Ignorance Premium is devalued. Exactly.

With the Ignorance Premium, you're paying extra for not knowing. Instead of MICRO knowledge, your basing your choice on the cooler, hipper MACRO Brand Metaphor. Branding is all about about being cool and hip, because branding is all about propping up the Ignorance Premium.

And have you noticed that Big Media makes their living selling advertising to people like, for example, Armani and Apple?

And then a few days later, for example, you see a news clip on the TV, reporting on what's happening with Armani at Fashion Week, or what's happening with Apple at E-Tech?

And the same people who own the news channel also own the magazines that, for example, Armani and Apple advertise in?

Again, propping up the Ignorance Premium.

Though I have no financial involvement or personal stake with EnglishCut, my reasons for being interested with Thomas Mahon and his bespoke tailoring blog go WAY beyond helping my friend out.

It's about the MICRO Smarter Conversations absolutely wiping the floor with the MACRO Brand Metaphor/Ignorance Preium.

When I say "Branding Is Dead", that's what I'm talking about. The Big-Media, celebrity-pimped designer label is getting this clocked cleaned by phenomenon like EnglishCut. It's watching the Ignorance Premium dying.

As with Robert Scoble, I see EnglishCut as a petri dish for something MUCH bigger. Sure, Scoble's blog is much bigger and more famous than EnglishCut, but the teeth are just as sharp at a close range.

And yes, it's still early days for all this stuff I rant on about, but really, seriously...

This why blogging matters.

Posted by hugh macleod at February 4, 2005 8:20 AM | TrackBack
Comments

Hoo-Boy are you right on this one Hugh. I have just come from 3 weeks in India where there are millions of smart people willing to work for 1/10th of what people in the UK will. Most of the interesting work these days can be done remotely. This is a huge market imbalance and like all market imbalances presents fantastic opportunites for arbitrage. One of the many reasons I'll be moving to Bombay toward the end of the year.

The surprising thing is that more people are nit yet thinking this way. When I was interviewing small tech companies in Pune (100 people or less) for a little project of mine they told me that I was the only customer/potential customer to have gone out to visit them and evaluate them before comissioning work.

They really appreciated that and I suspect I'll get better prices and service because of it. Oh and they gave me flowers - only in India.

Posted by: simon tzu at February 4, 2005 9:36 AM

Hey... I love my iPod and it only cost $300!!!

Posted by: david parmet at February 4, 2005 10:55 AM

Hugh I don’t think you’re wrong but I do think you make some vast assumptions.

First, you assume that the market (and jobs) won’t adjust to a smarter market. They will. They do. But not without pain – look at Argentina.

Second, you assume that the majority of market participants want to be smarter. They don’t.

The US Department of Education says there’s been hardly any change since 1972 in the number of people taking a post-secondary education. Now, a college degree doesn’t make you brighter but it is a general expression of a desire to be smarter.

The point is: There isn’t evidence of a growing hunger for smart information. Just growing access.

Ignorance is bliss and you know it.

Finally, you assume that those that want to be smarter have the capacity to handle the vast quantity of micro-information that is emerging. For that we need curated consumption or possibly something less trendy and more honest.

Regardless, the pool of information is vast, and many people don’t mind paying to be ignorant – even when they know that’s exactly what they’re doing.

When you make $2/hr you can afford mining the information pool with meticulous care. At $60/hr you are ready to let someone else do it. At $300/hr you just copy someone you think is cool.

As India, China, Brazil, and South Africa emerge in the world economy their average wage will increase. This will dilute ours. You will have more in the middle-class world-wide. Those in India won’t act like they currently do and the American Anglo Empire won’t either.

Is the ignorance premium dying or being offset? It’s important to be sharp on the distinction. Smarter conversations depend on it.

Posted by: Jeremy Heigh at February 4, 2005 12:44 PM

Actually, it seems that iPod owners--despite being part of the vast Hipper-Than-Thou Liberal Tech Conspiracy--are actually "smarter," Hugh.

Why? (As I envision you cranking up your Dell in anticipation of withering retort...)

Because the little gadgets are EASIER TO USE and the SERVICE IS BETTER. People who buy on price only deserve what they get: often sub-standard products and crappy back-end service. And if you own a Mac, all the OS integration makes them so damn sticky.

You're absolutely right in a more global sense, though. I'm often frustrated when shopping for myself or my wife that I don't really "know" if a pair of shoes or suit or pants is well made. That type of knowledge has fallen by the wayside as we’ve come to rely on brands.

As someone really smart said, "I'm not stupid, just ignorant."

Posted by: Timbo at February 4, 2005 6:01 PM

> The rest of the world has more to play for, and consequently may be executing the real deal just a little bit harder.

That's bull. The work ethic in the US is miss understood. Let's compare it to say Western Europe where most people get 6 weeks vacation and work 30 hours per week. The US dominates the technology market because of good ole hard work.

If I buy an Armani instead of going to China town, it is because I don't have time to go all over town looking for a suit. I want something quick so I can get back to creating value. There is value in convience.

Capitalism works when you create something, not when you save all you can. Capitalism isn't about bickering for a better price on beaded necklesses. If you spent all day trying to get better prices, when would you have time to draw on business cards? If you want a better standard of living, invent google.

BTW, the reason the iPod is winning is because it is a better product. If Microsoft is losing it isn't because of lack of marketing savy. Its not like I haven't heard of their product.

Posted by: christopher baus at February 4, 2005 6:04 PM

Blogging is an extremely inefficient means for "getting smarter." Seth Godin made a list of what he considers his best, don't-miss posts for 2004 and the count was like 24! Twenty-four out of hundreds! Not only do you have to kiss a million toads to find one good blog, you have to kiss a dozen bad posts for every good one within a blog.

I'm sure Robert Scoble is a great chap, but am I going to read his blog everyday on the off-chance that he will talk about a product I might be interested in purchasing? Hardly.

Seems to me if "smarter conversations" is the goal, blogging is a good start, but not the real solution.

Posted by: Barbara at February 4, 2005 6:16 PM

I have 2 things to say:

1) Way to go Hugh! I embrace the death of Branding - it is outdated and overrated and I will dance on it's grave happily

2) As evidenced by all the comments from the loyal Ipod users - when somebody really loves a brand they get defensive - and take themselves WAY to seriously. Mellow out guys! it's ok for somebody to have a different opinion than you :) (I'm gonna get blasted for that one)

Posted by: Jay at February 4, 2005 7:03 PM

Oh, there's so much to comment on this juicy post. But I'll be brief, I don't think it is an Ignorance Premium - I think it is an Ego Premium.

Posted by: Evelyn Rodriguez at February 4, 2005 7:09 PM

How much extra does not knowing have to cost me before it's worthwhile to get smart? Sure, I can save $600 by finding the tailor in Chinatown. But if the time I spend finding him is worth more than $600, what have I really saved?

Posted by: Katherine at February 4, 2005 7:39 PM

> It occurs to me that a worryingly large chunk of the people in the Anglo-American middle class basically make their living from charging an "Ignorance Premium".

It's hard to argue with this point. In many ways it's true, but then again that is the American Way. The idea of a good product for a fair price seemed to fall (for the most part) to the wayside with our grandfathers. It's all about what the market will bear these days. In other words, "What can we get away with charging you?" I don't know that this is dictated by the middle class though?

I like to think something's changing. I like to believe that our growing voice in the blogosphere has something to do with it. I want to believe that the future of marketing really is "about letting people know that they are part of something interesting" as Larry Weber so eloquently stated. That's probably more along the lines of what our forefathers were thinking... e pluribus unum... from many comes one.

Do people buy the iPod out of ignorance, or because they believe that they are part of something interesting? I'd like to believe it's more the latter than the former.

I think ignorance has been more a tool of the strong in the past. It has a strange relationship to the trickle down theory. Just look at the history of religion for a good example. But, as information gets more distributed it becomes a bit easier to fight the good fight.

I've been self-employed for a good 12 years now. The biggest battle for us has always been against bigger companies with deeper pockets. Money has always been synonymous with power. We were less horified by the crash in the economy than a large corporation because in a world where no one has money to throw around, ideas are king. That's a place where we could compete.

Repeating tired cliches like "ignorance is bliss"... well that just perpetuates the status quo.

"The strong take from the weak, but the smart take from the strong."

Posted by: Brian Eder at February 4, 2005 7:42 PM

I'll do you one better, Hugh. I say your Ignorance Premium falls under the rubric of what I've deemed "Asshole Tax".

Quoting myself from a post a couple of months ago (talk about assholes), "Essentially, you're forking over a premium (tax) on top of what you'd ordinarily pay because you: (a) did not organize your time properly; (b) remember what you shouldn't have forgotten; or (c) otherwise wantonly disregarded the plainly obvious—i.e., acted like an asshole."

The nice thing about "Asshole Tax" as opposed to "Ignorance Premium" is that it acknowledges and excludes the educated choice and/or preference that Christopher mentions. In other words, if you've stayed aware (i.e., not given up your power), examined your options (i.e., acted responsibly) and elected to go with what on the face of things might be a lesser (i.e. overly expensive, faddish, etc) option out of choice, you're really making an informed decision based on your own values and needs (e.g. time, taste, etc).

But hey, I know enjoy any opportunity to take a swing at us MacJobs. And yeah, we drink the Kool-Aid. Pretty, pretty, refreshing, tasty Kool-Aid. Mmmmmm....

Posted by: Colleen at February 4, 2005 8:59 PM

No worries, Colleen... it's OK to like Macintosh. Seriosuly. I don't hold it against you. Truly.

Ego Tax, Asshole Tax, Fucktard Tax, it's all good...

Posted by: hugh macleod at February 4, 2005 10:34 PM

Of course, I could get really Buddhist about it and say "An Ego Premium IS an Ignorance Premium, Grasshopper"...

Posted by: hugh macleod at February 4, 2005 10:46 PM

Hugh,

Gotta love the emotion that flies whenever you mention Mac/Apple/Microsoft/PC.

(Or rather, perceived emotion. Why is The Other always thought of as "defensive" rather than "opinionated"?)

I trust that you don't throw those references in there just to make us jump, though. Remember, with great power comes great responsibility ;-)

As for ego premium, etc., don't try and tell me that people who buy the "alternative" product don't sprain their arms patting themselves on the back for being so, well, damn alternative.

Posted by: Timbo at February 4, 2005 11:52 PM

"If I buy an Armani instead of going to China town, it is because I don't have time to go all over town looking for a suit. I want something quick so I can get back to creating value. There is value in convience."

An Armani suit is no quicker than a Chinese Suit.

But then, fair enough, you were too busy "creating value" elsewhere to know that ;-)

But oh yeah, the economics of convenience is fascinating stuff.

Posted by: hugh macleod at February 5, 2005 12:18 AM

OK, I'll bite...

"Of course, I could get really Buddhist about it and say "An Ego Premium IS an Ignorance Premium, Grasshopper"..."

Ah, if we are willing to be truly claim our ignorance then we'd drop the Ego. But, nope, we're all somewhere on the spectrum of know-it-all.

"Forgo everything that you have thought meaningful, significant, up to now." - Buddha

Posted by: Evelyn Rodriguez at February 5, 2005 3:48 AM

"If I buy an Armani instead of going to China town, it is because I don't have time to go all over town looking for a suit. I want something quick so I can get back to creating value. There is value in convience."

Maybe I can demonstrate why getting an Armani isn't any faster.

Old Way
You: Who makes a good suit?
Armani Advertisement: Armani

New Way
You: Who makes a good suit?
Huge Network of Consumers: Oh, there's this great tailor in Chinatown. I got a suit from him. It fits perfect, and I don't have to worry about running into some other clueless jerk who got the same thing on sale at Macy's over the weekend. He knows a ton about baseball, too. Tell him I said "Hi."

Posted by: kadavy at February 6, 2005 2:07 AM

"Capitalism works when you create something, not when you save all you can. Capitalism isn't about bickering for a better price on beaded necklesses. If you spent all day trying to get better prices, when would you have time to draw on business cards? If you want a better standard of living, invent google."


I totally agree with that, Chris.

Posted by: hugh macleod at February 6, 2005 11:07 AM