Behind the Gold Rush and the Free Market Economy

Hunter. Gatherer. Guards. Construction Workers. Warriors. The Queen.

Welcome to the Ant Hill, my friend.

Ants are everywhere.
In your back yard.
In your front yard.
On the side of every highway.

In the desert. On the plains. In the mountains. In your house. Invasion.

One of the most successful species on the entire planet. Ants have jobs. An insect caste system. A system where ants can change their caste not by reincarnation but by pheromone. The scout ants go out from the hill in the early morning. Where they find food, a pheromone is secreted. More Ants come. The Gatherers. If there is more food than ants, more pheromone is secreted. More ants come. If there is the need for more food and if there are not yet enough gatherers, ants that normally work in "The Ant Hill Construction and Repair" department switch jobs. A one way caste system change. Once they make that switch. they never go back. Maybe the freedom of the road is too much. Ants don't have TV. It's good to get out.

Whatever needs the ant colony has are transmitted throughout the population through chemical signals. If a twig blocks the entrance, wandering ants on their way back to their apartments send the correct signals to the workers to wake up and go to work. No one runs the ant hill. The Queen is not a ruler. There is no king. Yet, the ant hill is a model of efficiency. Information about the demands of the hill and the supply of both workers and food is transmitted chemically whenever a change is needed.

Enter the dollar. The Mark. The Yen. The pheromone of the free market. It races back and forth sending its rippling conclusions about what the market needs and in turn what the people need, what jobs are most important, which are most available.

Imagine that there is a drought in Columbia. The cocoa bean crop is devastated. Prices rise. Demand remains high. Supply has dwindled. Some workers are layed off. Jobs within the industry suddenly pay less.

Meanwhile some distant country loses half of it's tobacco crop. Orders for Columbian tobacco reach record highs. The tobacco growers in Columbia raise their level of pay for workers. This attracts more workers. More workers come. Many that were left in the lower paying jobs in the cocoa bean industry are now attracted to the tobacco industry jobs. Reapportionment of resources. Ant style. No one dictated the moves. Columbian Pesos did.

In countries dependent on Columbia's beans, coffee prices skyrock. People begin to drink tea. Orders are sent to China. More tea is needed. More workers are needed. The payscale of jobs in the Chinese tea industry is raised.

The Invisible Guiding Hand of the Free Market. Adam Smith wrote of this force in 1777. A monumental work for all mankind. "An Inquiry into the Nature and Causes of the Wealth of Nations." The Wealth of Nations. Adam's book is the Bible of Capitalism. A Tour De Force monologue on division of labour, money flow, and interest rates. Smith argued for the importance of free international trade. He stressed the importance of competition, property rights, and a limited role of government.

Smith was the ultimate defender of laisez-faire thought. The invisible hand works best, he thought, when government played the smallest role possible in the economic system. No entitity is needed to run an economy. The market works best when people pursue their own selfish needs voting daily with their currency.

Smith's Invisible Hand is our inheritance. Us. The adult internet business. We have no central governing body. The complex roles and relationships between free sites owners, pay site owners, sponsor programs, their affiliates, content providers, hosts, free site hosts, credit card processors, and ultimately the consumer form an impossibly difficult matrix of information to disentangle as a whole. Decisions made at the individual level determine the fate and direction of the industry. A sponsor may raise their payout to attract more affiliates, willing to accept lower margins for higher volume. A ripple effect may ensue as other sponsor programs start to lose their affiliates. They also raise their payouts. A free site may offer twice as much free content as others. Competition over that too may ensue as a free content arms race begins.

Easy profits a few years ago attracted many to our business. Decreasing profits now and in the near future may drive many of us out. Only the most industrious and hard-working of us may survive. Like the ant, many of us will find ourselves performing a job we had never thought of before, both within and outside of this business. New jobs within the industry are constantly being created. Jobs for writers, promoters, graphic artists, and programmers. Demand for some of these goes up, even while it becomes more difficult for others.

Five years ago, sponsors were constantly posting messages on boards that they were looking to purchase traffic. Now, I see more messages from people looking to sell traffic. Supply and demand, needs and greed will change the landscape as we go forward. Their will be shakeouts and shakedowns. Buyouts and Bailouts. There will be decline. There will be growth.

The first gold rush is done. The gold rush where you throw up a free site and a few banners and quit your dayjob in three months is gone. It has been for many years. The California Gold Rush of 1849 came and went. People made fortunes very quickly. When the rush ended, people continued to make a living in the gold industry. It changed. People lamented for what once was. That excitement of a quick and easy living had ended. It was replaced by large companies, hard work, and expensive equipment. The field attracted different workers after that. Machine operators, surveyors, and geologists. In 1898 in Nome, Alaska gold was found. And it happened all over again. Those quick to realize the opportunity made fortunes again. The American Cowboy legend Wyatt Earp was one of them. On his way there, the land was frozen solid and he had to spend the winter in the Yukon. When he finally got there, he opened a saloon and catered to the huge population. Profits from the saloon bought landstakes and he left Nome with $80,000. A great sum at the time. A few years later he was in Tonopah, Nevada. Another gold strike. Once again he opened a saloon and made out well.

The Cowboy teaches us a lesson. Opportunities abound. Move when necessary. It's good to be the house. Don't let frozen ground deter you. Sometimes, digging for gold is not the best way to make a fortune in a gold rush.

The invisible hand was at work in the gold rush. During the height of the rush, workers and entrepreneurs were attracted in huge numbers. Later, as the supply dwindled, they came more slowly. Finally, most left. The invisible hand guides us but does not force us. We must keep our eye out for new gold strikes. We must look at the land and make decisions. Should we get out there and dig? Should we buy land grants? Should we open a saloon? No matter, wherever we dig, the ants will be there ahead of us and behind us. Hopefully they remind us that our two guiding hands meet in a beautiful display of the interconnectness of nature and all things.