November 2011

At the time of his death, Steve Jobs was working on a universal, cashless payment option using 190 million iTunes accounts.

According to the Australian Payments Clearing Association, Australians have turned from cash in droves in the last few years. Thousands of ATMs have closed and similar numbers of Eftpos machines have been installed.

As I’ve written before, the decline of cash is a global trend from Nigeria to Nicaragua, from Wopping to Washington. For a visionary like Steve Jobs, this presented Apple with a business opportunity and the chance for another paradigm shift. It would work thusly: Apple’s 190 million customers (all who have credit cards on file) would buy stuff, online and off, by simply entering their Apple iTunes username and password.

But it’s not all Apple. A couple of weeks ago, U.S. Google Wallet users with a Samsung Galaxy S2 handset began buying stuff at shops set up for the task. Shoppers simply bump their phones on a machine and money goes from their account into the vendor’s. But that’s relatively small beer. Once the Apple behemoth marshals its faithful for the cashless life, things will change forever.

On a technical note, the next generation of smart phones will allow you to transfer money by either bumping your smart phone against another or by sending an SMS. Ironically, the just-released iPhone 4S is not equipped with what’s called “contactless payments technology”. The best guess is iPhone 5.

All this poses the question: will the cashless future end up being Steve Jobs’s most enduring legacy?

In other news… from the “how computers are taking over our jobs” file, an IBM super computer called Blue Gene can now simulate about 5% of the human brain. The plan is to sort the rest within ten years or so. The implications for the jobs market are stunning for everything from voice recognition (fare thee well call centres) to self-repairing machines (goodbye computer repair shops).

A sovereign wealth fund is essential for Australia. We don’t have one. We should.

While the world must envy our natural resources, they’d have to be shaking their heads at how we’re squandering it. Norway, with less than 5 million people, has saved around $500 billion from its North Sea oil windfall. And they put it in a fund to underwrite their long-term prosperity. In comparison, we haven’t really saved anything.

Folks, the day will come when this historic mining boom — $182 billion last year alone — runs out of steam. When that happens, we need a Plan B, and Plan B will require a pool of money, i.e. a sovereign wealth fund. Shaving a bit off the tanker loads of money our great miners are making will help stabilise the economy, provide more certainty for future generations and be a buffer in times of emergency or natural disaster.

Like the Norwegians, other countries with once-in-a-generation opportunities are way ahead of us. Think oil-rich Kuwait, United Arab Emirates and Bahrain, and copper-rich Chile. Even the Israelis are viewing their recent major offshore gas finds as an opportunity to build a future fund. Sure, they have certain “issues” that threaten their existence, but the basic logic still applies.

In the midst of huge commodity booms these countries are preparing for the challenges of tomorrow, using the good times to cushion the inevitable bad ones.

But how about the future fund you might ask? Ain’t that going to serve us well? Yes but that money pool (now $75 billion) is earmarked for public sector pensions. It will, however, free up tax revenues for other post commodity boom programs.

Finally, here’s an apt thought from Henry Lawson, who, quoting an American in a story set in the late 1800s, wrote “you’ve got the makings of a glorious nation over here, but you don’t get up early enough!”