the eclecticist

Nature vs. Nurture

2011-02-21T14:52:00.000-08:00

The question of “nature vs. nurture” has long fascinated me. Specifically, I have often tried to understand the extent to which nature was the ‘cause’ of the way a person is, and how much was left to nurture (or, more generally, the environment in which a person grows up and lives). It is only recently that I have adjusted my tentative answers to these questions quite a bit.

About 15 years ago I adopted the general tenet that "genetics provides a range and one's environment determines where one lands in the range,” which served me well. I never had any better way of describing the nature vs. nurture issue, nor did I think I needed one. Recently, though, stimulated by some stuff I learned in a lecture about neuroscience from a Cal professor named Hinshaw, I think I have come up with a new, and possibly more powerful, model for thinking about this issue.

Basically, I started with several revelations and new (new to me, not necessarily to science) pieces of info:

1) Imagine a peanut allergy that is completely determined by a single, simple gene. If you have the gene, you have the allergy. If you don't have the gene, you don't have the allergy. On the surface, the allergy seems to be 100% genetic in origin, and in some sense it is. But, in another sense, it's not. The reason I say that is that if you grow up in a world where there are no peanuts, you may think you have no peanut allergy, even if you have the gene. You'd never KNOW you had the allergy, and there wouldn't even be a test for it, because no one would know to look for it. So, in the case of someone with the allergy, it's "100% genetic" in origin (this is equivalent to saying that genes give you a 100% chance of having the allergy, with a range of +/- 0% determined by your environment). But, if you look only at outcomes, and you have a person who doesn't show the allergy, you could make a reasonable argument that in some sense, the outcome is 100% explained by environment, even though the allergy is also, in the previous sense, purely genetic in origin.

2) If you imagine a baby who is born with a healthy brain and body, but then locked in a box with feeding tubes and absolutely no sensory input, that baby's IQ after several years will probably be exceptionally low (perhaps below 35, where 100 is average). The "range" for this person, with a "normal" life, in terms of IQ, might have been 85-115, but the "range" considering these extreme conditions might be as wide as 15-100. There is nothing about this that makes the "range" invalid, but it appears to make it somewhat less useful, because it would seem there are multiple ranges, for normal vs. abnormal or rare scenarios. One might easily make a slight modification to the "range" model to try to account for this. We might call it the "additive" model. This additive model might be one where you get a "genetic IQ component" of [50 +/- 50] and an "environmental IQ component" of [50 +/- 50]. You could then add an "extreme cases" component that contributed [0 +/- 50]. In fact, scientists have sort of proposed this when they have broken down the "nurture" factors into "normal" and "abnormal" conditions. Still, though, this model seems unsatisfactory for explaining the sensory deprivation condition.

3) Many studies are done on twins to try to determine the nature vs. nurture influence. Identical twins obviously have the same DNA, but may have very different "environments" in which they live their lives. One classic study looks at the variation in height between twins and non-twins, as well as between twins raised in the "same" environment vs. twins in "different" environments. It tries to apportion the observed variation to either genes or environment. Such studies usually show something like, "90% of height variation is explained by genetics and 10% by environment." On the surface, this seems completely intuitive and reasonable. Further, you might take the extreme example of someone who had their legs amputated as a child. This "environmental" factor may cause an extreme outlier, similar to the example from #2, but other than that, the "range" model seems to be very consistent with the findings of the actual studies on twins. This is where I had a sort of epiphany.

I assert that what most people *think* the twin results show is actually only 1 of 2 possible interpretations of studies of this type. First, let me tell you what I *thought* it must mean which is what I think most people assume it means. They assume that the twin studies on height mean that, "height is 90% determined by genetics and 10% determined by environment." Indeed, the study could be showing that. It could also, however, be showing something very different. It could be showing that our environments are 9 times as homogeneous as our genes. I'll explain what I mean by this through an example. Imagine that we could, with a magic wand, make every baby born tomorrow have exactly the same DNA. If we could do this, and then we measured the heights of the same babies 30 years later, 100% of variation in height would now be attributable to environment, not to genetics. Of course, the range (or, more precisely, the standard deviation) of this variance might be much smaller. In fact, comparing the standard deviation of the variance between babies born on a day with "the same genes," to the general population might yield some sort of actual, meaningful quantitative measure. This is exactly how the twin studies are supposed to work. Twins are this "comparison group." The problem with these studies is "what does 100% environmental" mean? What if we could, tomorrow, make all babies born somehow magically grow up in "the exact same environment." First, this is difficult to even conceptualize. They can't be "the same" because they can't all live in the same bedroom in the same house, even if we could clone their parents and make exact copies of the weather patterns and whatnot. Another way of saying the same thing is:

If, today, genes account for 90% of variation in height, and then next year we do a magic experiment where we make the environments "less similar" for children growing up, we might suddenly find that now genes only account for 80% of variation in height.

In fact, studies confirm this hypothesis as well. If you break down the twin studies of height, in particular, they appear to show approximately a 95% genetic component for height amongst the higher socioeconomic classes, and only about an 88% genetic component for those in the lower classes. This might be precisely because the environments for the higher socioeconomic classes are more homogeneous (more similar food, medical care, or activities).

So, saying that 90% of variation is due to nature could ALSO be interpreted as "the environment is far less homogeneous than our genes." The studies that are done aren't wrong - they do precisely what they purport to do; they attribute variation to its sources. What I thought that meant, but what it does not necessarily mean, is that "90% of height is caused by one’s genes."

This brings me to the formulation of a new mental model for this topic. I think that if you imagine a coloring book, like children draw in, with black outlines on a paper but color to be added by the artist, this is perhaps a good metaphor for the nature vs. nurture question. If the lines on the paper are heavy, thick, black, and close together (perhaps even forming a solid block of black ink), there may be no way to use a crayon to ever create a pink flower on that part of the paper. The best you may be able to do is a dark-brown flower in a black box. On the other hand, if you imagine smearing heavy paint over the whole page, you might be able to nearly completely obscure thin outlines beneath and change the paper to anything except a pure white color.

The metaphorical extension of this coloring book model is then to talk about the differences between people in terms of "Do they have the same picture, with slight differences in the lines?" "Do they have different pictures outlined but colored similarly?" "Do they have some condition so extreme (red paint splashed across the page) that you can't even make out the underlying outlines (mental illness, severe trauma, etc...)?"

This model is sort of like the "range" model in the general sense that, under normal circumstances, the broad strokes of the final picture are determined by the outlines, with the details added by the color. These details, while small in some ways, can radically change the net "impact" of the picture, and they can be harmonious or discordant. I think, though, that this model/metaphor may be more useful for explaining extreme or "edge" cases and outliers. My next step would be to try to create a mathematical equivalent to this model. I don't pretend that I can quantify the actual impact of nature vs. nurture (the quantification of which may not even be a sensible concept), but I do hope that I can show the relationships between factors.

In the height example, if we imagine an overly simple world where height is ONLY determined by genes and nutrition, I could imagine a 2nd (or higher)-order polynomial that would account for the extreme range of possibilities (3 ft - 10 ft), but would also, under normal circumstances, allow the "magnitude" or "contribution" of the genetic variable to dominate (say, in a ratio of 9:1) the nutrition variable. This would require that the two variables interacted either by multiplication or by raising one to the power of the other. This would distinguish this model from the "additive" model, which I think is basically the same as the range model, which would allow the terms to interact with each other only by addition and subtraction. The difference is between a model that might be "x- squared plus 1/2 y-squared" and a model that might be more like "2 times x + 1/2 x times y." Another way to think of this mathematical difference is to imagine what happens when one factor is set to 0. In the additive model, this can't completely overwhelm the other factor. In this multiplicative model, it can. I'm not sure which one is more "right" and rightness might only be defined by which is more useful in practice, but I propose this new model as a useful one, especially for trying to unify the 'range' of possibilities in 'normal' people with the prevalence of extreme factors, mental illness, and the like.

So, how useful is this model? Personally, I would say it's moderately more useful than the "range" model. I'll give an example where it seems no more useful and one where it seems more useful:

No More Useful: Taking something more complex, like cancer for example, rather than say, "I'm genetically 2x as likely to get cancer as another person but then I influence that by living a healthy lifestyle," we might instead say something like "I have the risk factors and precursors for several types of cancer, but my lifestyle choices far outweigh those factors" or "Despite living a healthy life, I haven't been able to control the several genetic cancer risk factors I inherited." Of course, these are very subjective statements, and it would be useful to try to quantify, at least roughly, how much impact lifestyle has compared to genetics. Perhaps such a set of equations could be derived. This would require the same kinds of twin studies done now, but it would also require some sort of quantifiable measurement of "environmental homogeneity." Further, it would require comparing these things over time (since we don't know what to use as a baseline for "sameness" of environment). Such studies would be both longitudinal and latitudinal. In education and medical research, for example, they have been extremely hard to do. In this case, the two models seem to describe the situation equally well.

More Useful: Taking sexual orientation, I think the coloring book model may be more useful than the range model. I have found little use in trying to ascertain an underlying "range" of homo-vs-heterosexuality for an individual and then adding in a set of influences that occur after birth (both internal thoughts and external influences). I think the reason for this difficulty is because it tries to place homo- and heterosexuality as opposite poles on one axis (I think this has been a common attempt since Kinsey made it in "Sexual Behavior in the Human Male" around 1950. This may be the problem. A homosexual and a heterosexual may be very "similar" in some dimensions, either genetically, environmentally, or both, and very different in other dimensions. Thus, the "range" model seems unable to capture the complexity (specifically, the number of 'dimensions') whereas the coloring book model is inherently two-dimensional, better capturing this multi-dimensional possibility (although the dimensionality of the determinants of sexuality may be large).

I believe that a multiplicative model (or similar), which assumes that every factor may be both minor or conclusive, and allows for complex interactions between factors is a better mental construct for addressing such issues as “What makes a person homosexual, nature or nurture?” or “Why did one child turn out ‘smarter’ than another?”

Taxes and the cost of living

2010-11-29T12:16:00.001-08:00

My friend David said, "This has bothered me for a while. Why don't taxes take cost of living into account? I am bothered that someone making the same I do that's living in the middle of nowhere pays the same as I do."

Months ago, I promised to respond. This is my response.

First I will examine the assumption David makes that taxes don’t take cost of living into account.

There are many kinds of taxes. Income taxes and sales taxes are the ones with which we’re most familiar, and I assume David’s comment was primarily about income taxes. But, do income taxes take cost of living into account? I think that there are two different kinds of arguments that they do:

1) Argument from progressive nature of tax code - Basically, the tax code allows for different sized deductions that do factor in cost-of-living. For example, mortgage interest income is deductible from taxes. Mortgage interest income is higher where housing prices are higher, and housing prices are a major contributor to overall cost of living. So, if you make $100,000, would owe $35,000 in taxes, but save $5,000 due to your mortgage, and then move to a more expensive place and start saving $10,000 due to a larger mortgage interest, then, in a sense, the net taxes you pay are 'including' the cost of living (at least the cost of housing). It's important that this deduction comes off the "top" of your income, because that means that the more you earn (until you are sufficiently far into the highest tax bracket), the more these deductions are "worth" to you.

Sales taxes are less progressive. The rate is the same for everyone. Still, though. where the cost of living is higher, the sales taxes are ALSO a larger amount in terms of absolute dollars. One way in which there is some progressivity is that the major purchase category for which sales tax is not charged (basic food items) constitutes a larger portion of the spending for lower-income individuals. Nonetheless, sales taxes generally exemplify David's statement. If you move somewhere more expensive, you pay more in sales taxes, even though it also costs you more to live in that place.

2) Argument from cost-of-living determining salary. Returning to income taxes for a moment, it is important to consider that income taxes are based on your salary. If it costs 10% more to live in a place, but you also get paid 10% more, in some sense the taxes should not "need" to factor in cost-of-living. To really do this calculation correctly, and be precise, you'd have to look at net taxes (because there are different rates and different deductions, depending on income), but in theory, this would work, and no further adjustments would be needed once you adjusted the salary to compensate for cost-of-living.

What this really means, as far as answering David's point is: "That person living in the middle of nowhere *doesn't* make the same amount as you." Let's say you earn $60,000 per year in San Francisco. That guy out there in Des Moines who earns $60,000 per year is probably one level higher than you in the corporate hierarchy. He's probably saying, "I can't believe this guy who's one level lower than I am makes the same amount I do!" If he said this, though, he'd be wrong, because his standard of living, at the same salary, actually is higher.

#2 brings up a tricky point in this whole topic - there are three independent levels of taxation: federal, state, and local. This makes it hard to figure out exactly what 'fair' means. Some taxes differ from place to place. Others (like most federal) don't. This does make it confusing because the 'local' part of a sales tax might be different in different locales, but the 'state' part might be the same. In fact, the 'wealthier' counties/cities, with higher costs of living, probably also tend to have the higher taxes. This, like all progressive taxation, is 'fair' in one sense and 'unfair' in another.

Taxes can be based on property, sales, use, business profits, value addition, income, or other factors. In each case, there will tend to be an extent to which these taxes automatically adjust for cost-of-living differences and an extent to which they don't. Sales taxes, for example, do a mediocre job of aligning with cost-of-living differences. Imagine two people, earning the same income, and buying the exact same stuff, in two different places. The stuff simply costs more in one place than another. The person in the more expensive place will pay more in taxes than the person in the less expensive place. Property taxes are similarly mediocre. Property taxes punish people where values of assets are going up and reward those where values of assets are going down. Income taxes and corporate profit taxes (which are similar in their function and structure), probably do a little better job of adjusting for cost-of-living differences, but are still imperfect.

One more complication is to look at the usage of services. A big city might use more or less services, per capita, than a small town. The cost of providing a sewer, for example, is lower in a big city than in a rural area per capita ceteris paribus. Therefore, the taxes paid for such a thing should be lower. In reality, though, because the land used to build a sewer system is so much more expensive in the city than the country, taxes end up being higher in the city despite the fact that the cost of living (to which the cost of land is a contributor) is already higher.

Finally, there is another point I should make. For the most part, I think incomes adjust for costs of living, and so income taxes don't need to. But there are places/instances where taxes and costs-of-living are out of whack. We still have to ask ourselves, though, if we should do anything about it. Let's say that in some sense, David's situation is 'unfair' and he pays a 10% penalty for living in a certain place. We could change this, by lowering the taxes in that area to compensate, but that would just make the problem worse (even more people would flock to this magical place, driving costs up further). So, instead, we must trust the market to solve these problems. What David should do is demand more income from his employer to cover the taxes. If they refuse, he should move. Eventually, this will force companies to locate where the cost of living is lower.

Pelosi

2010-11-24T10:35:00.001-08:00

Nancy Pelosi is the epitome of what's wrong with politics. She's a pure partisan who cares only about "winning" and doesn't care about actual policy-making goals. She understands little about economics, international relations, history, sociology, or government.

This article is just the most recent example of her continual partisanship. If she was a real partisan because she had some ulterior motive, which was ideological, I might be able to forgive her. But she doesn't have such a goal. She isn't even an ideologue. She doesn't believe in ANYTHING. She just thinks her job is to get elected as many times as possible and get as many other people on her "team" elected as possible. THAT IS NOT THE GOAL.

This article basically says that her new goal is to keep the president from compromising with the Republicans. With the Republicans in control of the House, how is anything going to get done without a compromise? Oh, wait, Pelosi doesn't care about getting things done - she only cares about winning. The Obama White House didn't exactly take the most conciliatory approach or bipartisan stances, yet Pelosi believes they did too much compromising.

Tax legislation, for example, must originate in the House. So, how are we going either make any deal about the tax cuts without a compromise between the House and the President?

Pelosi is worthless and should retire from politics before she destroys the Democratic party, which is clearly floundering under her "leadership."

What's Going on in Korea?

2010-11-23T18:47:00.000-08:00

What is going on with the two Koreas?

Events leading up to today

There are many events that go on, including abductions of S. Koreans and others, as well as frequent near-skirmishes between the militaries of North and South Korea. Here are a few selected, and hopefully relevant, issues that have come up recently:

Since the 90s, at least, N. Korea has been working on a variety of nuclear weapons programs. All attempts by the US and others to stifle (or even identify) all such programs seem to have failed.

From about 1998-2008, S. Korea pursued what is called the “Sunshine Policy.” This was a policy of accommodation and rapprochement with N. Korea. It seemed, at times, to be succeeding, when economic or social ties between the two countries improved.

Before, during, and after the Iraq War, the US reduced the number of troops in S. Korea by about half. Removing troops from the border area is often considered an aggressive move, because the troops are within range of N. Korean artillery. It was generally believed that if the US were to seriously attack N. Korea, the first thing it would do is remove troops from that area before commencing massive bombing of the North. The Iraq War provided a good excuse to remove troops because they were needed in the Middle East.

North Korea appears to have tested a crude nuclear device in 2006. It is unclear to what extent they had integrated such capability with a delivery mechanism (such as a missile).

In 2009, N. Korea again tested a nuclear device underground, as well as several missiles. It is still unclear to what extent they have been able to weaponize a nuclear device.

In March, a S. Korean warship was sunk by an explosion, killing 46. Several reports later concluded that the explosion was caused by a N. Korean torpedo.

In late September, Kim Jong Un, son of Kim Jong Il, was designated as the next leader of the country. Some felt there was internal dissent or tension at this time, possibly between factions within the military.

Last week, N. Korea revealed a previously undisclosed uranium-enriching operation. The equipment was modern and recently constructed.

In general, winter is a hard time in N. Korea. The economy there struggles to produce enough food, energy, or medical care to take care of its people. Frequently, especially in the winter, the North is dependent on food, heating oil, and medicine aid from the US, Japan, Europe, China, and S. Korea. In recent years, deals for such aid were often struck at the “Six Party Negotiations” between China, the US, Russia, N. Korea, S. Korea, and Japan.

No serious reaction from S. Korea or the US over the torpedo attack or the uranium enrichment has been made public (and probably, nothing had yet really occurred). The Six Party Talks are not currently underway and the US has made cessation of nuclear activities a precursor to resuming them. N. Korea has requested direct, bi-lateral negotiations with the US, which the US has refused.

Here is a more thorough timeline: http://www.nytimes.com/info/north-korea/news/.

Today’s events

The events that unfolded today actually started a couple of days ago. South Korea regularly does large-scale military exercises near North Korean waters. Some territorial waters are disputed. S. Korea generally has the better, if not airtight, claims to these waters in the eyes of the international community. Although invited to participate, the US was not involved in the recent exercises. The North asked South Korea not to use live ammunition in the exercises, but the South did, anyway. The South was generally firing away from N. Korea (from north to south). A few days ago, N. Korea seems to have requested that the exercises not occur (or perhaps again that they not use live ammunition). The South seems to have ignored this request. In fact, the South continued the exercise and fired some shots into a region of ocean to which N. Korea disputes S. Korea’s claim. There were no N. Korean targets there, just disputed water.

Today, N. Korean artillery began shelling an island near N. Korean waters. The island has both civilian and military structures and people on it. Two S. Korean marines were killed and some civilians and soldiers were injured. South Korea returned artillery fire and launched aircraft which apparently struck targets in N. Korea. Information about the extent of the damage or casualties in N. Korea doesn’t seem to be available. After an hour or two, both sides stopped firing and S. Korea began evacuating people and putting out fires on the island. Their military remains at the highest alert.

Why did they do it?

The first interesting question is what motivated this attack, which was a clear escalation. Complaining about somebody else doing live-fire exercises and shooting at civilians’ houses are obviously very different “levels.” It is almost impossible to understand the motivations of the N. Korean regime, which don’t always seem consistent, let alone understandable, predictable, or rational. I believe there are several possibilities for explaining N. Korea’s blatant escalation today:

1) The North believed a return to the Six Party Talks was imminent, perhaps over the uranium revelation, and is trying to gain some kind of advantage in the negotiation. If you create a problem, you can offer “stopping the problem” as a concession in negotiations. I don’t know that this strategy would work, but the North seems to have used it before.

2) They are trying to force a return to the Six Party Talks before the cold of winter deepens, perhaps because they believed that the West was going to “let them starve” this winter. Perhaps, behind the scenes, the US was already threatening N. Korea with something and this is their way of “changing the equation.”

3) The new leader is being given some sort of opportunity to ingratiate himself with the military or prove himself to the military.

4) Because of the weak response or lack of response to the torpedo incident and the uranium facility revelation, perhaps the North is overconfident. Perhaps they believe the US and S. Korea don’t have the will to respond and the N. Koreans are simply pushing the envelope.

5) There is internal division in the North, and an aggressive or militant faction is testing its ability to act independently from the leadership.

6) There is a lack of command and control in the North, and soldiers accidentally escalated a situation without the permission of the leadership.

What must S. Korea and the US consider in response?

It is very difficult for the US or S. Korea to respond. There are several considerations:

1) The US cannot allow provocations like this to go unanswered, because it seriously undermines alliance with S. Korea and Japan and casts doubt upon America’s ability to defend its allies. It risks emboldening China to use (or continue to use) N. Korea as a proxy bully to influence S. Korea and Japan while diffusing blame away from itself.

2) Any military response risks further escalation. Tens of millions of S. Koreans are within range of N. Korean weapons on the border. N. Korea has a huge, standing army.

3) China has not been willing to enforce any serious sanctions on N. Korea.

4) Everyone seems worried about internal stability in N. Korea, and whether there is some sort of struggle going on there, as well as what would happen were the leadership to fail or be removed.

5) N. Korea may have a nuclear device that can be “fired” or “launched.” No one is quite sure. It is unclear whether the US knows where such devices are and could pre-emptively destroy them. Given that we can’t find the enrichment facilities, it seems unlikely we could pre-empt such a launch. Such a device could probably only reach S. Korea, but possibly Japan.

Andy’s recommendation:

There must be a serious response and it must take China into account. We must break the pattern of letting N. Korea provoke the world, then negotiating, then giving away carrots in negotiations. That pattern encourages continued aggression. We must also somehow punish N. Korea without escalating the military situation if possible, and without causing an all-out war.

In many ways, the ideal response would be a total blockade of the North. This would again re-balance the negotiating positions. In eventual negotiations, the US would then be offering simply to stop blockading the North, rather than offering it incentives to stop attack S. Korea. However, the North has previously claimed they would consider this an act of war (they have to say that, for obvious reasons), and China has never honored such a blockade. China is the biggest trading partner for the North. Even if such a blockade were to succeed, millions of N. Koreans could die from cold and starvation.

Therefore, I believe the US should pursue a multi-pronged strategy:

1) The US should declare a partial blockade of N. Korea and should move an aircraft carrier East of of Japan. It should pledge to board and search all ships entering N. Korea under the non-proliferation initiative framework to check all cargo for contraband. It should reserve the right to refuse passage to any or all ships into N. Korean waters as well as to seize any cargo meant for N. Korea. It should not necessarily enforce this blockade, but should set up the infrastructure to do so. All aid shipments should be suspended.

2) The US should signal consideration of committing an additional $1 trillion to missile defense programs over the next 20 years. It should signal that these missile defense systems would be designed to protect Taiwan, Japan, and S. Korea, and that such systems would be designed to “destroy all missiles launched from the region, including all nuclear missiles.” It should indicate that such programs could still be cancelled.

3) The US should immediately propose to sell the Aegis weapon system to the navies of S. Korea, Japan, and Taiwan to “promote regional safety and stability.”

4) The US should immediately request that India be added to the UN Security Council.

5) The US should also immediately pledge $10M (a token amount) to promoting “democracy and freedom of information in Asia.”

6) S. Korea should immediately pledge “support to Google, Microsoft, Yahoo!, and other American, Japanese, and S. Korean internet companies” to provide a haven for search engines, internet media, etc. in S. Korea from which to “serve Asian users.”

7) S. Korea, Japan, and the US should immediately announce new rules requiring any acquisition of any American, Japanese, or S. Korean company by any Chinese entity must be reviewed by the respective governments.

8) The US should tell China that it must publicly denounce the N. Korean attacks and announce public support for the Six Party Talks to resume.

9) The US should propose a resumption of the Six Party Talks.

10) The US should explain to China that many of these provisions can be reversed, and should agree in private with China on whether to back a coup d’etat by the military in N. Korea, should one occur.

11) The US should announce that if a “peaceful actor” were to change the regime in N. Korea, the US would recognize that entity as a new government and would lift the restrictions on N. Korea.

12) The US should move a token number of troops (perhaps 500) away from the Korean border. It should claim that they are being “redeployed” for “security reasons.” It should announce that it is contemplating further “redeployments.”

13) The US should immediately order Patriot-missile-type systems as well as other defensive weapons moved to S. Korea “sometime during 2011.”

14) The US should propose replacing SEATO with a new organization, complete with a true mutual defense pact, to include the US, UK, Japan, S. Korea, Taiwan, Australia, and India. It should propose placing its remaining troops in Japan and S. Korea under the command of this body, which would operate much the way NATO does. It should gain commitments totaling 40K troops and many naval assets from the other countries. It should set a timetable for building up such an organization’s capabilities by 2015. The US should further propose that a broader organization, to include Pakistan and other SEATO members, but without the mutual defense pact, also be created.

In all cases, these are measures which could be negotiated away but which would, if not negotiated away, actually be pursued. I believe these measures (or measures like these) strike the right balance between punishment and escalation, while pressuring China, but don’t give enough provocation to the North for it to escalate the military attacks.

GDP in Q3 (2011)

2010-11-08T16:50:00.000-08:00

The Tutorial

Below is an analysis of the US GDP numbers for Q3 as well as a tutorial on reading these charts.

The chart I like the best is the one that shows contributions to percent change in real GDP. First of all, it's inflation-adjusted. That takes care of one variable. Second, it's broken down into the units and terms we're used to. We normally think of GDP in terms of the annualized % growth rate. Saying the GDP grew 1.7% in Q2 means that the rate the economy was growing during Q2 would result in the economy being 1.7% larger after one year. It's kind of like talking about credit card interest rates or loans in terms of "APR." It's a standardized measure we're accustomed to interpreting.

The US GDP grew at a rate of 2% in Q3'11. This isn't 2% before inflation, it's 2% after inflation. If inflation was 3% (annualized rate), it means that the absolute GDP growth rate would have been 5%. Remember, too, that the GDP didn't grow 2% in Q3. It grew at an annualized rate of 2%. If that growth was spread out evenly over the year, that would mean that it grew about 0.5% during Q3.

GDP is calculated as the value of all goods and services produced in three sectors (consumers, business investment, and government) +/- net foreign trade. The reason why you have to add or subtract foreign trade is that otherwise, if we produced more, but sold more overseas, it would look like our economy hadn't grown, even though it had. Similarly, if we bought more outside the US, it would look like we had produced things which we didn't (someone else produced them and we bought them). Remember, GDP is a measure of production; even if parts of it are calculated my measuring consumption. It's not a measure of the amoung of wealth saved up in bank accounts or a measure of consumption. It's also only sort of a measure of how much we've really invested. The GDP is broken down into durable and non-durable components, but these breakdowns don't tell the whole story. We could build 100,000,000 tractors and the GDP would seem really good for one quarter, but the long-term quality of this investment strategy is questionable at best. The way this chart works, if you add up the contribution from consumption in Q3 (1.79), the contribution from investment (1.54), and then the contribution from government (0.68), then add a negative (2.01) (for foreign trade), you get the overall annualized rate of 2.0%.

Breaking the numbers down in this way helps one understand the numbers enough to make use of them. Let's say you work at a company that paints office buildings. These paint jobs are durable goods and services. They are things which would contribute to the 1.54 contribution from investment. Here is a chart that shows the breakdown of the US GDP by sector. This shows NOT how much each sector contributed to the growth in the GDP, but simply how big each sector is. Notice how the investment component is fairly small. Business investment makes up only perhaps 10-15% of the total GDP. This means that the 1.54 contribution is REALLY LARGE. Over 3/4 of the total net growth in GDP was attributable to the private investment sector (which is nearly all business) despite the fact that that sector is only about 1/10 of the overall economy.

So, if you're an office painter, you might think, "Wow, great. That means that my industry is booming! I might have lots of new customers!" A deeper look, however, dashes these hopes. Let's look at the breakdown of the Gross Private Domestic Investment component. Of the 1.54, 1.44 is just a change in inventories. Our painter now seems less optimistic. Only 0.10 of that 1.54 is made up of investment in "Structures" which are the things he paints. The painter might take some solace in seeing that inventories are up, though, and think, "Maybe stores will be trying to get rid of inventory and now is a good time to stock up on paint!" And indeed, that might be a good idea. He would need to look at a more detailed breakdown to see how much he could learn about the inventories for paint in particular (because, again, it might be that while inventories are up in general, they aren't up among paint manufacturers or vendors).

Technical note: In general, if you want to see if a contribution from one area is large relative to another, you must "normalize" them by a) dividing the contribution from a sector by the total GDP growth, and then b) comparing this to the percentage of the total GDP which this sector comprises. Where (a) yields a larger number than (b), you've identified a sector where growth was relatively fast.

My Analysis

I apply the above process to the GDP across all the different components, and I look for things that stand out. Here is the summary of what I see in the Q3 2011 numbers:

Imports: The imports number in Q2 was a HUGE drag on the economy. In Q3 it's not dragging the overall number down as much, but it's still significant. We're importing a ton of goods, and a lot less services. This is pretty important, because it means that if you're an a service industry, the relevant parts of the GDP might be "growing" faster for you than in general.

Personal consumption: This is, by far, the largest sector of the economy, and it posted its best number (by % contribution) of the last 11 quarters.

Exports: Exports grew during Q3'11. This is not intuitive, because net foreign trade contributed negatively to the overall GDP growth. But, exports grew. Imports just grew more quickly. This is really important because if you're generally a company that, say, helps exporters, your likely pool of customers grew. Just because there are more importers doesn't mean there are less exporters.

Sellers of "goods": If you work for a company that sells TV's at Best Buy, these numbers are so-so. You don't really care too much about imports and exports, because it doesn't really matter to you where the stuff at Best Buy comes from, you just want to know if retail sales are generally "strong" or "weak." Personal consumption (much of which is sales at retail), here, is a fairly strong contributor. However, much of this positivity comes from services, not goods. Non-durable goods make up about 16% of the overall GDP, and account for about 10% of the growth in GDP.

Government: State and local governments make up about 59% of the whole government sector in the country. This number has actually fallen, as local governments have laid people off and the federal government has spent massive amounts of money to stimulate the economy and run huge, huge deficits. As recently as 2008, local and state government accounted for 63% of all government spending. Many years ago, as much as 70% of government was state and local. The shift from state and local spending to federal spending is good and bad. From the standpoint of suppliers to the government, it means fewer, large, centralized contracts. It may also mean more jobs in Washington and less jobs in Columbus, Lansing, and Albany. Generally, when the economy is growing and yet the government sector is shrinking, that is a really good sign for businesses and long-term prospects. It means that manufacturing and trade activity are flourishing.

Connection to jobs: Many, many things influence the growth of jobs in the country. The GDP doesn't tell the whole story when it comes to jobs. But, it does provide a starting point. If the GDP is growing, economic activity is growing. Usually, this leads to jobs being created (sometimes with a lag). However, the population of the country is also changing. People immigrate and emigrate, they age and die. New people are born. It is overly simplistic, but if the country's population is growing 2% per year and the real GDP is growing 2% per year, one might expect the unemployment rate to stay constant (because there are just as many new jobs being created as there are new job seekers). This type of analysis is very crude, but it is consistent with what we're seeing today. If we just looked at consumption, investment, and government, we would see a GDP growth rate of 4.01%. That's roughly equivalent to the rate that we're "consuming" things. However, half of that consumption "growth" is being supplied by foreign producers. Thus, not very many jobs in the US are being created. It's tempting to think we should, therefore, stop imports. This is wrong and usually doesn't work, but it seems intuitive. Remember, though, that stopping imports isn't what matters. Increasing exports creates jobs. Ceasing imports doesn't create jobs, it just makes things more expensive. We should try to grow exports, consumption, and investment. Those are all drivers of jobs. We should grow government where it's efficient, but the overall size of government is probably already big enough. Government is generally less efficient than private industry, and it certainly lags behind private industry in two important categories: 1) making smart investments, and 2) creating productivity-enhancing technology.

Summary: In summary, the GDP growth numbers are mixed. The economy is growing, but it's not growing fast enough to create a lot of jobs. Some of that growth is government, which isn't as sustainable in the long run as other kinds of growth. No one sector, right now, is horribly under- or over-performing. An overall growth rate of about 3.5% is a much more healthy level. Hopefully we'll reach that kind of rate again in another quarter or two, but I'm not holding my breath. I think we may be in for several more quarters of lackluster 1.8-2.8% growth.

The Personal Savings Rate and Job Growth

2010-05-02T15:25:00.000-07:00

Why are we in a jobless recovery? When will the jobs come back? It's going to take a long time, and the reason is because we're still paying for the job growth we had last decade. I'll explain what I mean.

First, let's examine when the recession actually occurred. One rule-of-thumb definition of recession is that in order to have a recession you must have 2 consecutive quarters of negative GDP growth. Basically, this means that the total value of all goods and services (+/- foreign trade) produced in a quarter went down. This is equivalent to "the economy getting smaller." The chart below shows that we were really in a recession from approximately January '08 to about June '09 (+/- a couple of months on each end). Right now, our economy is probably back to about the same size that it was before the recession (roughly). So, why don't we have all the jobs back?

Here's a chart of US GDP growth over the past few years (just look at the top line):

As long as the economy is getting bigger, there is a reasonably good chance that all that increased activity will turn into income for someone (through paychecks, government spending, stock dividends, etc...). When people spend that additional income, they are likely to cause businesses to add workers. Sometimes there is a lag, and it's not always that simple, but that's the basic idea. So, if the economy is growing at 3% per year, jobs are probably being added (I'm ignoring productivity growth for today). The population is also growing (due to immigration, mostly) and so there is more or less a match between the number of job seekers and jobs available (on an aggregate level). Back in 2005 and 2006, for example, companies were employing lots of people who were building many products and selling many services. In fact, because people were borrowing so much and saving so little, almost every single dollar that was earned was subsequently spent on something else, so it took a lot of "jobs" to produce all those products and services.

One complication is: what if people save the extra money instead of spending it? On the surface, this would seem to allow for "growth" without jobs. Is that exactly what's happening now, you might ask? In practice, though, money saved is invested. Either businesses borrow against these savings to expand or individual households save this money for later. Saving money for later obviously delays the spending of the same dollars on cars, iPods, and Starbucks, but businesses are smart enough to handle this case. It takes many years to develop some products or build new houses or stores, so if all that money were really being saved up to spend next year or even next decade, some economic activity would start today to plan for how all that future spending is going to happen. So, on the surface, the fact that our savings rate has gone up would seem to explain the shrink in GDP. But, if we imagine that businesses are smart enough to account for this, then it doesn't explain anything.

The problem we're having today is that our savings rate as a country was SO LOW (at times it was probably negative) during the last decade, that we took on lots and lots of debt. Although the personal savings rate (as opposed to the total savings rate, which includes businesses and the government) now is a much more respectable 5-7%, that savings rate is something of an illusion. People aren't really putting this money into a savings account; mostly, they're paying off old debts (including mortgages). Savings is really the difference between income and spending. It can be money that's put into a savings account or money that pays off a car loan. Both count as "savings."

Let's say that of every $5 "saved" by households in the US right now, $4 is going to pay down mortgages and other debts that originated some time between 2000 and 2009. The "job" that built the house or iPod purchased back then is finished; the work is already done. That means only $1 of that money is being "saved" for future consumption (like retirement savings, saving for a rainy day, saving to buy a new house, etc...).

Let's call the current personal savings rate 4% (the approximate average over the last several quarters). Next, let's pretend that the consumer sector of GDP (about 2/3 of US GDP is personal consumption) is exactly equivalent to the group that's doing the personal or household savings. So, that 4% savings rate could represent about 2.68% (0.04*0.67) of growth potential for the US economy as a whole. To simplify, we could think of that personal savings rate of 4% as representing enough dollars to cause a 2.68% increase in total GDP next year (or spread out over many future years). But, if 3/4 of that amount is really going to pay off last year's debts, then the amount that's really being "saved" to be invested or spent represents a potential contribution to GDP of only about 0.67% in the future.

So, is it a wonder that businesses aren't adding jobs? They're seeing that, right now, people are saving instead of spending. However, they're also seeing that what they're "saving" can't be spent in the future on new goods and services; it was already spent in the past. That money is just paying for all the stuff people have already bought. So, the same businesses aren't eager to add workers, because they don't see very great prospects for growth. Incidentally (and not surprisingly), some of the few areas that have done better during this recession are repair and service shops. This makes perfect sense; all the money people *are* spending is going back into old purchases. In the case of cars, at least this causes more mechanics to be employed. For many things, though, it has no positive impact on current or future employment.

Intentional Homicide Rates

2010-03-31T21:12:00.000-07:00

The population of Iraq was estimated to be approximately 31,234,000, as of 2009 (source:wikipedia). There were an estimated 4,645 "deaths from violence" in 2009 in Iraq (source:www.iraqbodycount.com).

That works out to an intentional homicide rate (assuming all deaths from violence were intentional (which is actually probably an overestimate)) of 14.87 per 100,000 people.

Another estimate of the homicide rate for Iraq, from the Wikipedia, is 21 per 100,000 people in 2009.

The murder rate in Washington DC in 2009 was 23 per 100,000 people. And it has come WAY, WAY down. The rate has been double that or more in previous years.

The answer is clear. We should pull out of Washington, D.C.*

*Actually, to be fair, the rate in Baltimore was actually quite a bit higher than DC in 2009, but we can't pull out of Baltimore because of The Wire.

The Conquest of Happiness

2009-12-06T15:42:00.000-08:00

I've been reading The Conquest of Happiness by Bertrand Russell. It is a brilliant book by a brilliant man, combining psychology, history, philosophy, sociology, and other disciplines to diagnose the modern, human condition. Here's an excerpt from page 114:

"The happiness of my gardener is of the same species; he wages a perennial war against rabbits, of which he speaks exactly as Scotland Yard speaks of Bolsheviks; he considers them dark, deigning and ferocious, and is of opinion that they can only be met by means of a cunning equal to their own. Like the heroes of Valhalla who spent every day hunting a certain wild boar, which they killed every evening but which miraculously came to life again in the morning, my gardener can slay his enemy one day without any fear that the enemy will have disappeared the next day. Although well over seventy, he works all day and bicycles sixteen hilly miles to and from his work, but the fount of joy is inexhaustible, and it is "they rabbits" that supply it."

and later..

"What joy can we experience in waging war on such puny creatures as rabbits? The argument, to my mind, is a poor one. A rabbit is very much larger than a yellow fever bacillus, and yet a superior person can find happiness in making war upon the latter. Pleasures exactly similar to those of my gardener so far as their emotional content is concerned are open to the most highly educated people."

Russell's inherent hedonism does keep me from subscribing wholesale to his ideas, but he is, nonetheless, insightful and instructive.

The Politicization of the Nobel Peace Prize

2009-10-11T12:38:00.001-07:00

The award of the Nobel peace prize strikes one as absurd and baffling. What has Obama done to deserve the prize? His own statement was that the reward "[must be] less a recognition of his accomplishments than a 'call to action.'"

I agree with John Bolton (former ambassador to the UN), who said, "It is indicative of the politicization of the Nobel Peace Prize process. This just carries it to the n-th degree." In fact, the Nobel Peace Prize process has been somewhat ridiculous for some time and continues to be.

To analyze this further, I must first ask, "For what is this prize awarded?" Is it a prize for pacifism? Is that good? Should Neville Chamberlain have won the Nobel prize for his refusal to confront Nazi Germany? Is it a prize for taking steps to reduce violence? This is the only context in which the award, in 1994, to Yassir Arafat makes any sense. If one believed, at that time, that he had renounced terrorism (which seems not to have been true), then it might make sense to reward/award him for having renounced violent tactics. The problem with this definition, though, is that one must support violence in the first place/

The sad truth is that the committee's goals are far more simplistic, naive, and political. The committee says that "His diplomacy is founded on the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population." What? What the hell does that mean? That the Nobel Peace Prize is awarded to those who further a democratic world government?

When people were being slaughtered in Rwanda, in the 1990's, the majority of the world preferred not to intervene. If President Clinton HAD intervened, and had saved hundreds of thousands or millions of lives, would he thereby have become ineligible for the Nobel Peace Prize?

The Nobel Committee's goals are so obviously politically motivated, its understanding of international politics, conflict, and war so obviously weak, and its own criteria for designating winners of the prize so poorly thought out, the prize should cease to exist. The money would be better spent increasing the size of the prize for the other Nobel awards.

Big changes in GDP masked by small change in GDP

2009-06-06T09:18:00.001-07:00

I had to do some analysis on the US GDP for a class, anyway, but it's pretty interesting, so I thought I'd post it here.

This chart is titled "Table 1.1.2. Contributions to Percent Change in Real Gross Domestic Product" from the Bureau of Economic Analysis website, last revised 5/29/09.

Looking at the contributions to GDP is very important.

Several factors jump out:

1) There is a roughly 1% swing Q4’08 to Q1’09 in Government spending and investment. This is a major contributor to the low GDP in Q1’09. Had government spending made the same contribution as in Q4’08, the Q1’09 GDP would have declined at an annual rate of roughly only 4.7%.

2) The largest and most interesting factor of all is the shift in gross private domestic investment. The contribution of gross private domestic investment to GDP declined by almost 5% (annualized rate) between Q4’08 and Q1’09. Within this number, two subcomponents are particularly significant: nonresidential investment and inventories. Both contributed significantly to the decline in Q1’09.

3) Consumer spending increased significantly. Whereas consumer spending contributed nearly –3% in Q4’08, in Q1’09 it actually contributed positively to the GDP. The change from one quarter to the other was near 4% (annual rate contribution).

4) Net Exports rose. Whereas net exports were roughly equal to net imports in Q4’08, in Q1’09, exports made a significant positive contribution to GDP.

Based on these factors, I see significant improvement. Falling inventories are one-time adjustments – in the long run, inventory must be repurchased. The fact that real GDP growth accelerated while inventories fell means that the economy’s fundamental health increased by more than the 0.6% difference between Q4’08 and Q1’09. The obvious source of weakness and reason for concern is residential and non-residential investment. To indicate a sustainable recovery, I would look for those areas to improve significantly, while ideally retaining a positive or near-zero contribution of net exports to GDP and for government spending to stay with the +/- 1% band in terms of contribution. The key with government spending is that somehow the federal stimulus roughly offset the massive decline in state and local spending.

I would also look carefully for the non-government savings rate to flatten out. All this money that isn’t being invested in the “gross private domestic investment” as well as earned from exports has to go somewhere. If the savings rate flattens out, then the GDP will not be dragged down by continued unwillingness to spend or invest.

Retroactive Name Justification is the new Name Recursivity

2009-04-12T10:47:00.000-07:00

Remember acronym recursivity?

An example of acronym recursivity is the name of Wine. Wine stands for "WINE is Not an Emulator". WINE is, of course, a form of emulator (or is it?) to run Windows programs on Linux.
Jason and I created such a thing, once. We made a website called JASON. After naming it, we decided it stood for Jason and Andy's Super Oliphaunt Nubian.

In 2009, acronym recursivity is passe. I propose a new awesome kind of naming: Retroactive Name Justification or "RNJ". Recursively, it could be "RNJ is Name Justification."

bgiga is my newest startup venture. It's actually named bgiga because I happened to already own that domain name.

However, since then, I've come up with several reasons "why" our business (which is about job seeking/candidate discovery) is called bgiga:
1) bgiga is short for "better gigs for all."
2) bgiga means "billions of jobs."
3) bgiga makes for cool slogans like, "bgiga: go big" and "bgiga: get big."

There is a more scientific purpose behind retroactive name justification as well. Lately, I've heard a lot of bad names for startups. Many of them survive, but they are nonetheless suboptimal. The reason they are suboptimal is that they are hard to spell, are confusing, or have alternate readings. For example: http://www.expertsexchange.com/ or http://www.gottgame.com/). For http://www.flickr.com/, it has been documented that they lose as many as 150K hits in a single month to "flicker.com." There are tons of other examples. Even Google is only a decent name by accident. L&S meant to name it "googol" but they didn't know how to spell "googol." Lucky for them, everyone else tends to misspell it in the same way. So, being able to choose a good, easy to spell, easy to remember name FIRST, and then decide what it means (if you're clever enough to do so), has certain merits.

RNJ is the new acronym recursivity.

What's in a Name?

2009-04-07T19:48:00.001-07:00

Names are just the common nouns of yesteryear, adorned and obscured by the stained looking glass of history.

GDP and the recession

2009-04-05T17:46:00.000-07:00

I have made a graph that shows "recessionary" periods (according to Andy's new definition he just made up) in grey boxes during the post-war period, on a graph of "% Change in GDP from previous quarter, seasonally adjusted, annualized rate" based on data from The Bureau of Economic Analysis, via Economagic.com.

Note that recessions have become less frequent in the last 20 years, less severe, and have been of "average" length. Also note that GDP growth has generally been far more stable. The average % change in GDP for this data is 3.244%.

The Stimulus Plan

2009-04-04T15:01:00.000-07:00

I have reserved judgment for a long time about the stimulus plan, and now I am finally ready to comment on it.

Fundamentals:
There are a few important things to point out about stimulus plans in general...

Stimulus measures must happen fast to work.
Stimulus money must be put into places where it will be consumed or invested. Where it will be consumed or invested depends on the marginal propensity to save (if it's saved, it isn't consumed or invested). Let's say that you and all your friends make up an economy. I give you $100. Let's say that you typically spend 95% of what you get (you save 5%). So, you buy $95 worth of goods and services from your friends. Then, they have the $95. Each of them saves 5% of that, and spends 95%, etc... So, whether that "savings" percentage is 1% or 10% makes a big deal after you've kind of multiplied out all the economic activity.
Whether the stimulus should target boosting consumption or boosting investment is not obvious. Both things can be good, and no one can tell you what the "optimal" ratio is. The optimal ratio probably changes over time, anyway. The US is currently "consuming" more of its GDP than it has historically, on average, so a case can be made that stimulating "investment" right now is better than stimulating "consumption."

Bad things about the stimulus plan:

The US economy has had a very, very low (or negative) savings rate and too much borrowing. Only just recently (since the economy broke down), have Americans started saving. Too many things in the stimulus plan are simply designed to jump start borrowing and spending of the exact same types we had too much of before.
The stimulus plan doesn't give employers enough incentives to raise employment. The stimulus plan should lower the payroll taxes, because this helps employers hire more workers and/or means people take home more of their paychecks, and it also helps small businesses and self-employed people immensely.
The stimulus plan doesn't do enough to help states. The states spend 2x as much money as the federal government does. They (the states) have no money. In order to raise money, states raise property, car, excise, and sales taxes, for example. These kinds of taxes directly and negatively affect the exact kind of spending the federal government is trying to stimulate (such as buying cars). Instead of simply having state and federal taxes offset one another, the federal government should cut out the middleman by making up state tax shortfalls, so they don't have to do things like raise sales taxes.
Much of the stimulus money will be too slow. The building of schools, bridges, etc... will happen too slowly to stimulate the economy. The economy will likely be out of the recession in a year or two, but most of the money spent on a new bridge will trickle into the economy slowly over a 5 year period or so.
The stimulus does nothing to address certain causes of structural unemployment and weakness in the economy, such as screwed up tax incentives, over-investment in houses (it actually further encourages this), illogical industry subsidies, broken labor union contracts, etc...
The stimulus plan doesn't adequately encourage "creative destruction." Rather than propping up ailing industries, we should be easing the bankruptcy process, encouraging business formation, and incentivizing business investment.

Good things about the stimulus plan:

If you're going to "waste" money in a stimulus plan by having it come too slowly, at least "waste" it on things that have long term value, like infrastructure construction. That's better than simply spending it on transfer payments. If you're going to do transfer payments as stimulus (transfer money from people with high savings rates to people with low savings rates) do it fast so it can stimulate the economy now.
The stimulus plan does increase unemployment benefits, and gets us a step closer to a working national wage insurance scheme.

M&A Failure Rates

2009-03-26T14:10:00.000-07:00

There are a lot of statistics out there about how often mergers (and/or acquisitions) "fail." Failure is typically defined as something like "not meeting financial goals" or "not increasing shareholder value." I've seen failure rates everywhere from about 55%-70%. This would mean that, basically, 2 out of every 3 mergers "fails."

The conventional wisdom *used* to be that they failed because of financial, legal or other reasons. Basically, there were agency issues and complexities that weren't teased out in the due diligence process, and those things caused the endeavor to fail.

In the last few years, the conventional wisdom has changed. The new convention is that mergers fail due to a lack of cultural compatibility or a failure to adapt the cultures to mesh together. Yet, the story goes, they happen anyway because of the egos of executives and because of the interminable pressure to grow. I'm sure that these reason *do* explain many M&A failures, but...

I would like to interject. Specifically, I would like to point out that there are two major flaws with the simple statement: "Most M&A activities fail."

1) Most startups fail, but that doesn't mean startups are a bad idea or are fundamentally done incorrectly. Maybe only 1 in 30 startups really makes it, but when they do make it, if they return 40X their investment, the system, as a whole, works. In fact, it works BETTER than NOT having 30 startups, lumping all that activitiy together into a single larger company, and hoping that *it* works (this is basically how Japan's economy works). The startup system allows for more flexibility, creativity, and specialization of labor.

So, if 2/3 of mergers fail, but if those that succeed garner huge profits, it might be perfectly logical that they continue to occur. Let's say Coke and Pepsi merged (which would never be allowed, but pretend it were). Maybe, if they merged, the simple economies of scale in production and distribution would allow them to eke out a 5% cost savings. Maybe this would pay for the merger efforts, or maybe it wouldn't. However, what if the reduced competition ALSO allowed them to raise prices by 20%? Then, the boon to the shareholders might be immense. Because of the enormous upside, companies might risk doing something that fails more often than it succeeds.

2) There is another systematic, failure-inducing tendency. M&A activity success is often measured by increases in returns to shareholders. But, this is wrong for 2 reasons.

The first is that comparing to the past is not necessarily relevant. What matters is how the merged entity's stock does compared to how the separate companies' stocks would have done over the same time period. Of course, we can't know this, but perhaps companies decide to merge when their industries are contracting (to achieve economies of scale) or when growth is slowing (in fact, I think this is true). If this is the case, you would see a systematic biasing of the results when comparing to rates of return before the merger activity takes place, when the entire industry/market was different. Of course, there's also the possibility that the company is acquired for "non-financial," strategic reasons, but I think mostly this is not relevant. Ultimately, all the strategic factors should affect the returns of the company's stock eventually. Again, the question is more fundamental: "What would have happened if we didn't do the merger?" NOT "How did we do after the merger compared to before?"

Second, since so many acquisitions (or mergers) are paid for with stock, another related possibility is that companies tend to pursue mergers when they know their stock is overvalued. There is no "insider trading" rule against making acquisitions when you know your stock is "high." When AOL merged with Time Warner, it *knew* its stock price was probably unjustified. So, if companies tend to buy when their stock is high, of course they are going to tend to underperform, stock return-wise, after the merger. A counter-argument to this is that the acquiree might be more likely to sell when their stock is undervalued, and that should offset this fact, but I suspect that's not true because: a) the acquiree makes up less of the total, anyway, so it wouldn't fullly offset, and b) the acquirer has "insider" knowledge of its own stock, but not of the target's, and it (the acquirer) makes the decisions (sometimes the acquiree doesn't even want to be acquired at all).

A little more research and regression analysis could probably separate out some of these factors. I hope someone, somewhere, in some grad school (other than Stanford, because poor old Jim Collins suffers from the correlation=causation disease BIG TIME), who has taken statistics (see previous note on how Stanford sucks), will do this research.

Kyoto Protocol

2009-01-25T17:34:00.000-08:00

The Kyoto Protocol is and has been a deeply flawed, unfair system. Here is one example of how China is scamming the UN carbon credit program:

http://news.yahoo.com/s/ap/20090125/ap_on_re_as/china_s_golden_dams_3

Counter-insurgency (COIN)

2008-12-19T13:23:00.000-08:00

General Petraeus is nothing short of a genius. I won't bother recounting all his achievements and virtues here; rather I will cut right to the chase.

The new US counter-insurgency strategy (COIN), which Petraeus was instrumental in developing over the last several years, identifies a counter-intuitive, but critically important, strategic issue.

The main idea is that increased short-term risk for American soldiers, tactically, reduces longer-term, strategic risk.

In a traditional, symmetric war, civilian deaths and collateral damage in the short run can shorten the overall war. This is essentially the paradigm of shock & awe pioneered by other brilliant men, such as Colin Powell. The ultimate in shock & awe, and the inspiration for the strategy in many ways, was the atomic bombing of Japan. It killed civilians, but it probably saved lives by shortening the war.

In asymmetric, insurgency/counter-insurgency war, under-reacting and overprotecting civilians, while remaining out and about, allows intelligence gathering and turns civilians against insurgents.

Imagine the alternative. You're out there, trying to pacify terrorists in Iraq. You could easily think, "I'd better keep US troops from dying and find the insurgents." "If I don't keep US troops from dying, public opinion will turn against the war, even if I'm winning." "If I don't find insurgent bombers, I will not be accomplishing my mission or protecting the new nation of Iraq."

But Petraeus argues for exactly the opposite. He argues for a war focused on defense. He argues that such operations to catch terrorists alienate the population. The collateral damage creates more terrorists. This is NOT obvious. It seems obvious, but only if you have never understood the shock&awe strategy in the first place. Traditional thinking is that it's better to over-react and and kill too many civilians at first, because it will decimate the enemy and shorten the war.

Lest you think you understand what I'm saying, think about this... "Did Rumsfeld send too few troops to Iraq?" If you think so, then you think we should have engaged in MORE activities early on. But, that would have made MORE people affected by US troops and probably resulted in MORE collateral damage. Even if you don't realize it, people like Gen. Shinseki and Colin Powell, who have criticized the war, were arguing for THAT. They were saying we should have sent more troops in and been a blunter instrument. We could have stopped the looters and crushed the insurgency early on and we'd be in a better position now. It's the opposite of the strategy Petraeus is advocating. He's advocating that we send more troops NOW, but that we had the right number at the beginning. He's arguing that what we need to do now is go out and put US soldiers in harm's way. We need to tell them to make protecting civilians their priority, even if it results in more US casualties in the short run.

The reason we need to do this is because it will reduce the quantity of terrorists created and turn more of the populace against the terrorists. This will ultimately do more to shorten the war than will hunting down the terrorists.

Don't confuse this argument with the idea that we should simply not be there at all, because then we couldn't alienate people. That is 100% wrong. What Petraeus is arguing is the opposite. We *should* be there, because if we don't protect civilians, then we can't be seen as the better alternative to Al Qaeda. When we abandoned the Afghani rebels and the Shi'ites in the early 90's, we did exactly this - we left them alone. We caused Zero collateral damage, and we earned nothing but the hatred of Iraqis and Afghanis during that time. We said, "We're not helping you; you're on your own." And nobody thanked us for it. Instead, they spent the 90's plotting against us. Understanding that problem is a basic precursor to understanding what's going on in the world today. The terrorism problem we have now built up during the 90's, when Clinton was President and we did little to nothing to stop Al Qaeda or Saddam Hussein.

Thwarted Pirate Attacks

2008-12-17T23:11:00.001-08:00

... on Chinese ships, and by Indian Navy, among others...

http://news.yahoo.com/s/ap/20081218/ap_on_re_af/piracy_13

Rice on Piracy

2008-12-16T22:23:00.000-08:00

A quote from Secretary Rice at the UN, speaking about piracy:

"To make piracy costlier and more difficult to undertake, the United States, with the agreement of the Somali Transitional Federal Government, believes that the Security Council’s authorization today that states may pursue pirates into their places of operation on land will have a significant impact. History has demonstrated again and again that maritime operations alone are insufficient to combating piracy."

Pirates!

2008-12-16T19:31:00.000-08:00

Piracy has become a problem that's so big it's now almost comical. The problem runs far deeper than the loss of a few ships off the coast of Somalia. There are several reasons why piracy is such a big problem:

1) There are many other areas around Africa where piracy is rampant. There are even more historically active pirate hotspots in and around Indonesia.

2) Piracy is connected to terrorism. It's not that the pirates are terrorists, exactly. But consider this: the people who shot up Mumbai recently came in on boats. In fact, they hijacked a fishing boat somewhere near India, which they used to get into port. This is a colossal problem.

Imagine if a hijacked tanker were blown up at the mouth of the Port of Long Beach. This could disrupt the flow of imports and exports to and from the entire US west of the Mississippi for days or weeks.

Right now, there is a hijacked Ukranian boat in the hands of pirates loaded with tanks and other heavy weapons. There is also an oil tanker. It would be simple to cause an Exxon Valdez-caliber disaster in an incident of eco-terrorism.

Even worse, a large boat makes the perfect mobile weapons laboratory. If kept in the right place, there would be no one who could even legally board/search it.

For all these reasons, and many others, I was excited to see this story today, about how the UN has authorized operations at sea and on land to get at the pirate menace.

3) Piracy creates a need for rapid-reaction forces to interdict sea traffic. India, China, the US, Japan, Great Britain, Australia, and others will obviously need to plan how they will deal with a remote hijacking five thousand miles away. Will pirates be able to hijack Chinese missile shipments near China and then get into Indian waters? If so, will the Chinese try to attack the ships? Will the US be able to push India to board a Chinese flagged ship full of military equipment? The potential for international military and political incidents is immense.

A Bonds Primer

2008-12-15T13:29:00.000-08:00

It's time for another super-condensed lesson bonds...

Bonds are a loan to a company. The traditional type works as follows:
You loan the company $1,000 (you buy the bond). The company pays you interest (the coupon rate, or interest rate) every period. At the end, they pay you back the principle of the bond. In this sense, it is very similar to a CD. You loan the bank $1,000 for 6 months, they pay you a certain amount of interest each month, then they pay you back the $1,000 of principle.

Many variations exist.

Because the bond is tradeable and has a limited duration (for example, 10 years), the prices of bonds can change. You might buy one that has 2004's interest rate, and will only last for an additional 6 years. Someone else collected the first few years' worth of interest and then sold it to you. The YTM (yield-to-maturity) is an attempt to capture the value of the bond that's "left".

The price of a bond varies inversely with the prevailing interest rates. Here's why:
Let's say you buy a 10-year bond in 2005 for $1000 that pays 5% interest per year. Every year it pays $50. Now, let's say it's 2006 and the interest rate has gone down. Today, new bonds are offered for 10 years with a 2.5% interest rate for $1000 (the $1000 is called the face value or par value). If you bought bonds today, and you wanted to get $50/yr in interest, then you'd have to buy TWO of the 2006 bonds, because each one pays only $25/yr. Therefore, your bond from 2005 is now worth TWICE as much as the bonds from 2006. If you sell your 2005 bond on the open market, it will have a price of roughly $2,000 (actually, there are other factors that go into the price, but that's the main idea).

So, you can make money in 2 ways from bonds: 1) the interest payments, or 2) the price of the bond goes up and you sell it. The price of a bond can go below $1,000, but you will still get $1,000 if you hold the bond when it's due (the end of the bond, also called the "call date").

The interest payments for most bonds are paid quarterly, yearly, or twice-yearly. The interest is often taxable, but not always. There are also "zero-coupon" bonds, where instead of receiving interest every year, you buy the bond at a discount and get a larger lump-sum back at the end. It's as if all the interest is lumped together and thrown into the principle. These kinds of bonds have two main differences: 1) they do not generate income in the short-term 2) you do not pay taxes on the interest as regular income every quarter or year.

In general, bonds give you a higher return than cash, but with a higher risk. They will generally give you a lower return than stocks with a lower risk than stocks, because if a company goes bankrupt, bonds are paid off first, before stockholders get anything.

Here is a list of types of bonds, with descriptions of each. I have made a chart that summarizes the main types; and specifically the types in which you might be interested. One key thing to remember is that bonds can be taxable, or tax-free. Mostly only government bonds are tax-free. These tax-free bonds look like they have much lower interest rates (or yields), but they may be better or worse for a given investor, because you don't have to pay taxes on them. How valuable the tax-free bonds are depends on what tax bracket you're likely to be in while collecting the interest and how the rates compare to the taxable bonds.

Here is a chart that explains the bond ratings. The rating is a measure of the risk. The higher the rating (like AAA), the lower the risk. Bonds with ratings of BB+/Ba1 are generally considered speculative, higher-risk (AKA "junk") bonds. This doesn't mean they are bad. It means that they carry more risk and pay higher interest rates than the higher-rated or "investment-grade" bonds. Like with stocks, if you want to buy these higher return bonds, you should probably not pick individual ones, but should pick some kind of junk-bond fund or mixed bond fund. Such a fund might also be called "speculative" or "high-yield."

Two other interesting notes:
Callable bonds can be "ended" early. Some are callable by the company (seller), and some by the owner (buyer). If you have a long-term bond with a very high interest rate, it might seem like a great investment, but if it can be recalled by the company, you will get your money back, but you may not be able to continue receiving that interest for the life of the bond.

Although there are many choices, they are generally priced very fairly. It hardly matters which you pick because they're all roughly worth the same amount, given that people have bid up or down the prices for you already. The factors that are most important for most people are: 1) taxable or non-taxable, 2) interest-bearing or zero-coupon, 3) risk level (rating) - higher risk, higher reward.

Country Right-Sizing

2008-12-01T15:48:00.000-08:00

Have you ever thought about whether it was "fair" not to let the South secede? We seceded from Great Britain. Why shouldn't the South have been allowed to secede from the north? I was thinking about this topic in the context of South Ossetia's and Abkhazia's relationships to Georgia.

These were semi-autonomous provinces, whose autonomy from the Georgian government was encouraged by Russia, which Georgia tried to pacify and re-conquer/re-occupy. Is that fair? Is it right to force someone to be part of your country?

Here, I explore this issue somewhat. A few notes...

A Country of One
The right size for a country, or a nation, is probably not one person. It's probably not just two people, either. Whether defining a nation-state as a collection of ethnically or culturally similar people who live in a common society with shared infrastructure and societal rules and norms, or as a group who individually participate in a social contract for their mutual defense and benefit, there will likely to be many people in the same society.

Why do we Unite?
Whether to manage the use of a pasture or water-supply, or to protect from invasion, the smallest size that makes sense is at least a whole village or town. As communication and transportation have improved, though, the much larger nations, with millions of people spanning multiple thousands of square miles, have made more and more sense.

But what about uniting cultural or ethnic groups? In the old days, there was much more overlap between cultural or ethnic group and mutual defense or common markets than there is now in Western countries. In other parts of the world, though, such as Africa, the Middle East, and Central Asia, there are still many who see ethnic or cultural similarity as the primary basis for participation in a common government.

The Case Against Secession Differs
The case against secession differs vastly depending on why you are united in the first place. If you're in a society that unites or conquers for common benefit and mutual defense (much like the 13 original colonies of the United States, or the Roman empire), then a secession that endangers or weakens the whole can be rationally (and perhaps legitimately) resisted. When Benjamin Franklin originally said, "Either we all hang together or we all hang separately" he was quite serious. It was literally untenable for the colonies to secede separately, because they were too small, in comparison to England. Disunity would endanger them.

The case against secession from an ethnic group or a culturally defined body politic, though, is quite different. The argument in that case focuses on two factors:
1) Whether or not people actually represent a distinct group, and
2) Whether being a distinct group entitles a people to self-determinism or autonomy.

The Nation State is a Fairly New Concept
Weird as it may seem, the nation-state is a fairly new concept. Multi-ethnic empires have been around for a very long time. Even the Akkadians and Sumerians were cognizant of the need (real or perceived) to incorporate other cultural groups into their "empires" for strategic (or sometimes just greedy) reasons.

While there were culturally defined groups which also functioned as political entities, these tended toward the city-state size until the 19th Century, when they had really outgrown the feudal model of control. It wasn't even until the late 19th Century that Germany or Italy was united as a single country.

One problem that we have had since about the 19th Century is that the Slavic world, the Caucasian world, and, in general, the entire area from Japan to East Germany, has struggled mightily with the tension between culturally or ethnically defined political entities and political entities defined more by what we might call a "social contract."

So, What Size is the Right Size?
The tension between these two notions of government comes into play when the East and West clash (as well as within the Eastern and Western worlds, separately). When we think about whether South Ossetia is more "Russian" or more "Georgian" what we are really asking, in some ways, is whether or not Georgia is a country based on an ethnicity or based on a compact between individuals for mutual benefit and their common defense. If the latter, we then ask, in which country are these people better off and to what extent are the different parties able to defend such claims?

Russia's position of advocating for South Ossetian and Abhkazian independence is ideologically nearly untenable. If Russia believes these people need to be part of Russia for strategic reasons, or that the benefits accruing from such a relationship outweigh those of unification for the tiny regions with Georgia, then it must complete its own (Russian) takeover to realize such gains. If Russia believes these peoples are ethnically similar to Russians, then they cannot pretend they want these tiny states to function autonomously. If they think that these people are ethnically similar to NEITHER Russians NOR Georgians, then it would make sense to encourage independence, but it would make even more sense to encourage the independence of many others who are currently part of Russia, but are less similar, ethnically.

Which Side Should We Take?
Whereas the American Civil War was largely about the right of self-determinism, state vs. federal control, and the disagreement over the economic and strategic viability of differently sized unions, with most of these issues taking the form of arguments about slavery, the situation in Russia is more of a conflict between a "nation-state" mentality and a "social contract society."

When we ask ourselves whether we should have supported Georgia more or less in the reconquista, we really must ask ourselves, "Are we advocating against the idea of nation-states?" When we compared stopping the ensuing Russian attacks on the Georgian capital to halting the German advance in the 1930's, were we really saying that we feared the (re-)surge(nce) of a Slavic nation-state?

Democracy is more than just self-determinism, because true and complete self-determinism is just anarchy. So, given that democracies limit self-determinism and individual liberties in key ways, we must ask, "for whom are these rights to be protected?" For ethnic groups? Or for societies organized willingly for the common benefit? Answering this question will help us frame our approach to the five-day war in Georgia this August.

Anderson Silva

2008-11-28T21:18:00.001-08:00

Remember, Anderson Silva is NOT invincible:
http://www.youtube.com/watch?v=267i7rKeECA

My Life

2008-11-28T21:00:00.000-08:00

I think my life can more or less be summed up as the average of these two pictures:

Yep, that about does it.

Predictions and Predilections

2008-11-28T20:23:00.000-08:00

I have lately had the feeling that it was time for alternative rock to make a comeback. Maybe it was a new-Metallica-album induced feeling, or maybe it was Gavin Rossdale's re-emergence. Whatever started it, I can't say.

But, I did just buy several Stabbing Westward albums, a Local H album, a Gravity Kills album, an Oleander album, and a Toadies and a Veruca Salt song.

I don't generally like to go way out on a limb with a hard prediction, but that's exactly what I'm doing right now. It's time for a 90's rock revival.

Here's a link to get you started.

The Origins of Donnie Darko?

2008-11-28T16:37:00.000-08:00

For some reason (I can't remember why), I had a 1950 movie called "Harvey" in my Netflix queue. It's one of the movies that Netflix has made available, via Starz, for instant viewing on the Xbox. However, it's only available until Dec. 1st. Noticing this, I moved it to the top of my queue today.

What I found was most surprising. This movie is very good, and it features a 6' 3.5" rabbit that can stop time.

More research shows that Donnie Darko was probably based, in all or part, on the Bunny Man legend of Fairfax County, Virginia.

And the legend is based, I suspect, directly or indirectly, on the movie, "Harvey." Because Donnie Darko was such an important catalyst for me in thinking about time and space, its origins are of particular import. After seeing Harvey, I decided to watch Donnie Darko again. Whether it was intentionally based upon Harvey or not I can't say, but it is clearly closely related, and Donnie Darko makes a whole lot more sense to me this time through.

I am also quickly coming to believe that Donnie Darko was heavily influenced by Dark City.

Asymmetrical Information Warfare

2008-11-28T14:16:00.000-08:00

This story, which includes official ackowledgement of something that has been going on for weeks (or maybe months), shows just how prevalent so called "information warfare" tactics are becoming.

The military seems to have adapted to this problem fairly well, but there will be future attacks. It's important to remember, though, that this isn't just a case of the military trying to "catch up with the internet." Information asymmetry and the denial of, or intereference with, communications and signals intelligence is nothing new for the military.

In fact, quite the opposite, much of the technology we take for granted today (wireless, the internet, radar, satellite communications) was developed, at least in part, by the military to address these information warfare issues.

Innovation Nation

2008-11-25T13:51:00.001-08:00

I recently finished reading Innovation Nation by John Kao. I actually read most of this book months ago, feverishly and late at night, because I knew I was going to meet Mr. Kao the next day.

First of all, I was very surprised to see a quote from Eric Best, who is, of course, my ex-girlfriend's father.

Secondly, the book was fairly good, and has caused me to slightly tweak my understanding of what constitutes good governance of the economy. Since roughly 1997, when I took economics, learned about Milton Friedman, and read Hayek's The Road to Serfdom, I have been an ardent supporter of free markets. I have never, however, been a market libertarian. It is obvious that government has a role to play in building infrastructure, the common defense, and generally, in addressing externalities, both positive and negative.

My studies in political economy under Beverly Crawford at Cal taught me a lot about how exactly governments have done this, and I became an avid student of Alexander Gerschenkron and what I might dub the modified linear stage theory of economic development. In essence, the modification to the theory is that governments play a keen role in helping nations "skip" stages of development, but only when they start out behind and are catching up.

The change I'm now making to this theory, partly inspired by Innovation Nation, is the idea that "infrastructure" extends beyond physical, legal, or organizational things. While I still think that the government should not be in the business of "guessing" which technologies are going to make it and seeding them with massive investments, I have come to believe that there is an aspect to technological infrastructure that I had not previously considered or understood. Governments must explore technology to create a framework for its commercialization. This framework is a combination of trained and accessible labor (and appropriate laws), an intellectual property scheme, and working capital markets willing to invest in high-risk ventures.
The government need not be the investor, but it does have a role in making sure this infrastructure exists, because there is a positive externality to "things" such as The Silicon Valley. The value of the Valley is larger than the sum of the profits enjoyed by its participants and residents.

I am going to write a letter to Mr. Kao and explain my thoughts on this subject. Helping him couch his concepts in more "sound" economics-y language will help lend his ideas credibility.

Ulysses

2008-11-25T11:40:00.000-08:00

I am about 1/4 of the way through Ulysses by James Joyce. First, I must praise Joyce. This is perhaps the finest book ever written, and certainly one of the finest of all modern novels.

Second, the obvious influence of this novel is astounding. It's clear to me that Tolkien was influenced by it, as were many other famous 20th-century writers. One might go so far as to say that all of the Sartre-Camus-school existentialist writing is essentially one absurdly thorough interpretation of Leopold Bloom's character, taken to certain logically extreme conclusions.

Obama's Economic Plans

2008-11-25T10:47:00.000-08:00

President-elect Obama is pushing a very large stimulus program that's aimed at long-term projects. I was initially very opposed to this sort of program on the theories that:
1) long-term projects don't help the economy in the short run (don't provide 'stimulation');
2) this was just a way of expanding the government's size;
3) these programs were designed to prop up industries such as the construction industry, which don't deserve to be propped up, in my opinion.

However, I am beginning to conditionally support this sort of program, on a couple of conditions:
1) the money should be used for infrastructure building programs such as roads and levees, not for helping the construction industry build houses or office buildings;
2) the provisions of the plan must be temporary in nature. Programs must expire after a few years, not continue indefinitely.

With those conditions, I think this kind of program may be a good idea, because the economic downturn appears it will last at least through 2009, if not into 2010 or 2011.

The President-elect is also saying he'll hold off on raising the taxes of high-income people in this country, which is a very wise choice, because raising taxes now will only stifle the economy further and crowd out business investment and financing.

Yahoo! Fail

2008-11-24T18:25:00.000-08:00

Well... mr Yang is out at Yahoo! And not a moment too soon, judging by what my Yahoo! news reader thinks...

Click on the pic to make it bigger.

Housing Prices Must Be Allowed to Fall

2008-11-24T11:23:00.000-08:00

The Wall Street Journal ran a story today about how home builders are pleading for $250B in federal aid.

This aid basically comes in the form of huge tax breaks for people who buy houses. This is one of the worst possible things the government could do. The builders are correct that housing prices underlie a lot of the financial woes right now. But, the federal government should be doing three things:
1) Encouraging people to realistically assess their housing situations. Rather than encourage people to buy houses, which is exactly what they were doing too much of the federal government should be helping them get out of their mortgages and move. The government should increase the tax credits for people who relocate between states, and create an extra tax rebate for those who sell houses in which they have negative equity.
2) Actively promoting retraining for housing industry employees and aiding them in moving out of the housing and construction industries.
3) Encouraging banks to move people out of unsustainable loans quickly, instead of waiting while the slow foreclosure process takes its toll on both the homeowners and the mortgage banks.

The faster people accept what their houses are worth (or rather, what they aren't worth), and start making rational decisions, the faster we will "hit bottom," both in terms of housing prices and in terms of asset portfolios based on mortgages. It is only "hitting bottom" and getting these assets re-priced which will, in the long run, allow growth to begin again and allow the gears of finance to start turning.

Proposition 8

2008-11-10T11:06:00.000-08:00

I voted 'no' on Prop. 8 (the one about gay marriage). The proposition proposed to amend the California constitution to specifically prohibit marriage between homosexuals. I voted 'no' on this for many reasons, not all of which I will go into at length here. Suffice it to say that I believe this proposition should not have passed, but I don't feel this way because I love gay marriage. I think there were several other reasons why this proposition was bad. I am surprised that the proposition passed, because there are so many good arguments against it.

People in San Francisco (of both the gay and straight varieties) are largely upset that the proposition passed. Many are indignant and convinced that anyone who voted for Prop 8 must be a moron or a homophobe. I disagree with this and I believe that had the "No on Prop 8" organizers been more cognizant of their opponents' points of view, and less smug, they could have defeated the measure.

In fact, I would go so far as to say that the opposition to Prop 8 was wrong-headed and shows exactly what's wrong with the "American Left" even though I, myself, opposed Prop 8, and don't consider myself a part of "the left."

Gay Marriage as a Right

The No on 8 campaign was fixated on the concept of 'marriage as a right,' and of the denial of marriage to homosexuals as a violation of rights. This is completely wrong. There is no such thing as a right of marriage, for homosexuals or heterosexuals, any more than there is a right to do anything which is not specifically prohibited. It's important to wrap your mind around this concept before you continue reading. If you are stuck on the idea that "marriage is a right" you are part of the problem, not the solution. You must first learn what "rights" are, before you can use them as an argument for or against anything. Everything that is "allowed" is not a right. I am allowed to drive in the left lane of the freeway right now, but if they close it for construction tomorrow, that doesn't mean my rights have been violated. There was no prohibition against driving in that lane before, but that doesn't imply that an inalienable right was created.

Why is there no Right of Marriage?

Why would there be one? Marriage is a contract entered into by two parties, with one or two overseeing or governing bodies: religious authority and/or civil institutions, such as city governments. It's not even clear what a right of marriage would be, since almost every other right we think of is an individual thing. I don't have the "right" to marry you without your consent, and if I do have the right to marry you, with your consent, then is marriage, rights-wise, any different than a contract between two private parties?

Historically, without the sanctioning of either the church or the government, all marriages were unofficial. Note, the fact that they are unofficial doesn't mean they aren't valid, it just means that the society doesn't recognize them explicitly. Imagine that the government stopped issuing marriage licenses and the churches stopped performing weddings, for any reason(s). This wouldn't mean that marriage would cease to exist as a concept, but it would essentially mean that all marriage became unofficial. Unofficial marriages could still be contracts between individuals, but there would be no official recognition of marriage's contractual norms by the government or the Church, the two bodies which have historically sanctioned marriages.

The No on 8 Campaign's Mistakes

The No on 8 campaign completely failed to understand what a "right" is when they wrote all their commercials and pamphlets. They also completely failed to respect that, historically, the church has been just as involved in marriage as has been the government. The idea that governments can unilaterally redefine marriage without the consent of the church OR the popular sentiment, while not necessarily wrong, was certainly likely to invite attack, criticism, and opposition, which it did. That people now indignantly assume that anyone who voted 'Yes' on 8 must be crazy or homophobic further proves that the organizers (and many of the supporters) of the No on 8 campaign fundamentally lack respect for religious people and institutions. Without respecting and understanding the other side of the argument, they come across as smug and arrogant. As I learned from a wise man (my father) long ago, it is far easier to argue well against the side you believe in than for it, because when you argue for it, passions confound and circumvent logic and rational consideration.

The City of San Francisco, Mayor Newsom, and all the people now indignant that Prop 8 passed, make this fundamental mistake of arrogance. They assume there is nothing at all which might be correct in the opposition's (Yes on 8's) point of view. This is completely wrong. Of course there are valid points for Prop 8. SF and Newsom assumed that it made no difference what the religious community or even other city governments thought, though, because they didn't adequately consider the arguments against sanctioning gay marriage.

Another example of the arrogance of the 'No on 8' campaign was the education issue. The issue was basically this:
The 'Yes on 8' people were saying that allowing gay marriage meant that 'gay marriage' would be taught in schools. There was a lot of disagreement about whether this was true or not. While it's not fundamentally important that gay marriage be 'taught' in schools, it is fundamentally important to acknowledge this issue. The real issue was: do we want to redefine marriage? Imagine your child asking you, "What does married mean?" And you say, "It means two people love each other and raise children together and have a family." You can no longer say that it's only between men and women, or that the woman will be pregnant and have the baby, or whatever, because the definition of marriage has been broadened. Wrong or right, it's an issue. To pretend that somehow there was no impact on the 'definition' of marriage is non-sensical. In fact, the 'No on 8' campaign should have directly acknowledged that, in fact, they *wanted* to redefine the family and marriage in this way, instead of pretending that there was no 'issue' of redefinition, for which the 'what would be taught in schools' issue was a proxy. Preserving the definitions of words over time IS important.

This brings me to my next point: "What is the harm in allowing only domestic unions instead of marriages between gay people?" The American Bar Association (and the state bars) decides who can call themself a lawyer, and I can't call myself a lawyer. It makes no difference how much I know about the law, how other people feel about it, etc... They don't allow me to sell myself as an attorney, because they feel like a societal purpose is solved by defining the word carefully and restricting many people from using the term. Does this violate my "right" to be a lawyer? Not really, because anyone can be a lawyer if they meet the criteria, which are there to promote a societal purpose (that lawyers be trained and in good standing with their peers). If there is an expectation that marriage is about procreation, then it is entirely logical to define marriage in a heterosexual way. Am I saying it "should" be defined that way? No, I'm not. But it's completely arrogant to assume that somehow you have the sole right to define what marriage means, against the will of the church, the majority of civic governments, or the will of the majority. It may be that society "defined" marriage in a heterosexual way for a reason, and that reason must be addressed before the term (or the concept) can be redefined. Gay people have every opportunity to get married today, just not to people of the same sex. Is that weird? It's no weirder than the idea that I have every opportunity to go to UC Berkeley if I meet their acceptance criteria.

If we allow gay marriage, do we have to allow polygamous marriage? Why not? These slippery slope arguments are tough, because everything is a step in a direction, and sometimes we have to be in the middle, not on one edge, but, if that's the case, then the 'No on 8' people should have been advocating that this was the "right" compromise now, or should have been arguing that all forms of marriage are acceptable. If they are arguing that this is the "right" compromise now (allowing gay marriage but still prohibiting other things, like polygamy), it must be based on some of the same utilitarian principles which justify the government sanctioning of marriage in the first place. Gay marriage advocates need to make the argument NOT that gay marriage is a right (because then, why isn't having 5 wives, one of which is a sheep, a 'right', too?), but that gay marriage is actually good for society, just like straight marriage, is, and should therefore be encouraged.

Why does the concept of marriage still exist at all? If two men, who might be celibate, decide to call themselves a gay couple, and be married, then they have the ability to check off different boxes on forms. If this is important, and we want to allow people to do this outside the government-sanctioned marriage rules, why don't we simply allow anyone to choose one person to share tax breaks with? If, on the other hand, marriage does serve a very specific societal purpose (promoting a certain family structure) and we value that, then it's entirely logical that we can't expand its definition arbitrarily. So, if we can't expand it arbitrarily, then we have to have some criteria to use for expanding it. This criteria might be about the reduction in promiscuity. It might be about promoting "love" bonds as a concept. It might be about creating "two-parent" families for children.

The Paternalism Problem

There is a logical discontinuity in the literature of gay rights activists. They often take the approach that the government shouldn't decide what goes on in the bedroom. That's fine, and a perfectly reasonable position. They are saying, "it's not the government's role" to decide whether I should be gay or straight. If that's the case, though, then the role is left to the people. If the role is left to the people, then why is the City of San Francisco saying that gay people are going to be married "whether you like it or not?" You can't be a progressive and not believe in paternalism. The whole point of the progressive movement is that the government must actively lead the way, sometimes against popular sentiment, to foster change. That means the government IS in the business of deciding things, like what should go on in the bedroom. You can't have the government be "hands off" when you disagree with them, but actively legislate for change when you agree with them. That's just called selfishness (and a complete disregard for other people).

The logical conclusion of the anti-paternalism argument is that all official marriage should be abolished, not that marriage should be redefined in an unpopular way.

Reasons Why 8 Should Have Failed That Have Nothing to do With Sexuality

1) The courts had already decided. Every time we overrule the courts, especially without a more substantial process than getting 50.1% of the (mostly uninformed)voters to say 'yes' one time, on one ballot, we lessen the grip of the rule of law and slide closer to the anarchistic populism that has signaled the end, historically, of many fleeting attempts at democracy.

2) We can't put propositions on the state ballot to decide every issue. It is City Governments that issue marriage licenses, and so by putting this on the state ballot, we have taken that power away from local governments. San Francisco is allowed to have different laws than other places, and we shouldn't limit that allowance for local independence.

3) Amending the constitution is generally undesirable. We shouldn't amend the constitution to solve problems. This argument is related to number 1, but is slightly different. Not only do we lessen the power of the judicial and legislative branches by amending the constitution by ballot proposition, but we also imply that amending the constitution is appropriate redress for grievances. In general, it should not be.

How Should the 'No on 8' People have Made their Case?

First of all, they should have stressed the constitutional, rule of law, and anti-populism points I mentioned above, but they should also have taken a different tack on the 'social' issues.

The commercials should have shown an orphan being played with by two lesbians. They should have said, "The courts have already decided. Do you want to take these loving guardians away from this child or force her to be told that her parents are not married? Would you rather put her in a foster home or allow these people to simply continue their loving family?" The, the commercial should have shown a dumpy looking foster home or a statistic about how bad foster parents are on average. That argument directly addresses the societal benefit of marriage and explains it. Will it appeal to everyone? No, of course not. But, it might appeal to one in 20 people, which would have been enough to defeat the proposition.

The 'No on 8' campaign should have had an Episcopal, Anglican, or Presbyterian Bishop on TV saying the proposition was bad. He should have been saying that marriage is about commitment and protects people from the sins of promiscuity and helps stabilize families. He may represent only one voice of the church, but the idea that the church is divided, and potentially transforming itself, is important. Rather than pretend the church has nothing to do with marriage (which is absurd), those people within the church who advocate for gay marriage should have been highlighted.

The 'No on 8' campaign should have admitted that they are progressive paternalists. They should have said, "Society has changed. It's time to lead the way by redefining marriage for our society. Let's stop promiscuity, discrimination, and single-parenting. Let's allow loving couples to raise children in two-parent families regardless of what gender they are. Besides, the courts have already decided, so if you respect the American system, you should accept the ruling of our judicial branch. What if 51% of the people thought you should move to a different town one day. Do you want to live under the tyranny of the majority? Or the rule of law? The law has spoken. The law has redefined marriage in a way that helps society. Respect it."

I think those arguments would have swayed 3%, or so, of the people in the middle, and that would have been enough. That argument isn't arrogant, because it doesn't say, "I'm right and you're wrong." It says, "There are good things about two parent families, equality, marriage, and the rule of law." Do you want to be the one to take those things away?

Expectations for the President-elect

2008-11-09T14:31:00.000-08:00

President Elect Obama must quickly act to reset expectations, or a new Newt Gingrich will sweet the Republicans back into a majority in the Senate in 2010.

Here is what I recommend, issue-by-issue:

On Iraq:
Obama should keep Gates as his Secretary of Defense. Not only is the man capable, but he's been one of the masterminds of the strategy that is currently working. Obama should push to have some of the US troops there as long as needed, probably until some time in 2012 or so. He should then request that a small contingent remain to fight terrorism and support the Iraqi government. I imagine this being a base of about 20,000-30,000 soldiers, similar to what we used to have in Saudi Arabia. Part of the point of this whole war, after all, was to move our permanent bases out of Saudi Arabia.

On Afghanistan:
Obama should immediately confer with General Petraeus and craft an aggressive plan for pacifying Afghanistan. Much as we will have spent three quarters of a trillion dollars in Iraq, we should now be prepared to spend several hundred billion dollars to clean up and rebuild Afghanistan and parts of Pakistan.

On the Economy:
Obama must avoid the temptation to over-regulate the economy, and the banking industry in particular. We don't need safeguards to keep people from borrowing or lending money. We need regulations that ensure that transactions are transparent and understandable, and that the risk level of securities can be assessed and insured correctly. We need markets for all securitizable entities, so that things like collateral debt swaps don't get traded "off the market" in one-to-one exchanges, which provide no information to the broader market. Yes, this is a form of regulation, but moving things out into the open is the regulation we need; simply restricting what people can do is not what we need. Too much restriction and businesses will turn against Obama.

On Taxes:
Obama needs to start being honest with people about how taxes are going to rise. The net tax paid by most people will go up under Obama, not down. The "tax cuts for 95%" are misleading, because half of those people pay little federal income tax, and even if the taxes are raised on, say, businesses for their part of health care insurance, this ultimately affects employees. They either get higher payroll taxes, lower salaries, or fewer jobs. There is no such thing as a free lunch. Obama needs to explain how raising taxes could help the economy. If he doesn't, then he will come under harsh criticism for taking money out of circulation precisely when the economy is sputtering. If the total federal tax receipts go up as a result of policy, during a rough economic time, Obama will appear to be doing the opposite of what Keynes suggested.

On Energy:
A cap&trade system, or anything that puts the burden correctly on polluters, is good. The alternative energy and green fuel subsidies he's proposed are probably a bad idea because: a) they are distortive and b) they don't help the economy enough to justify them as "stimulus" measures.

If you still think the subsidies are a good idea, think about the ethanol/corn subsidies of the last few years. Not only has ethanol not made the hoped-for major strides as an alternative, but the government has spent TONS of money promoting it, raising corn prices, which has raised many food product prices worldwide. Lest you think that was just "the wrong specific thing to push" ethanol seemed very logical. Corn was cheap and abundant a few years ago. The US can produce lots of ethanol. Many cars on the road could already use E85 (which is 15% gasoline and 85% ethanol) and making more cars that could run on ethanol required only minor engine modifications. Just because something seems like a good idea, doesn't mean that it is. The market is much better at deciding which ideas are truly valuable. Obama should use it.

The Champ is Here!

2008-11-09T14:26:00.000-08:00

Tuesday is the last day I will have a Google badge. It's slightly sad, although not very sad, since my new job is so much better.

#1 highlight from my time at Google:

Getting to meet Muhammad Ali. I'll never forget this. It was in 2006, and, of course, he could barely move or walk.

I didn't know he was coming until the day he was there, and I wasn't part of the group meeting and eating with him. But, I hung around, watched, and waited. I kept hearing him say, "The champ is here!" in my mind, over and over.

At one point, his eyes became fixed on me. Whether or what he was thinking about me, I will never know, but there was still a fire in the eyes of that man that burned me.

He was the only person who has ever intimidated me by his gaze alone.

Junior Bonner

2008-11-07T20:20:00.000-08:00

Steve McQueen as Junior Bonner is totally badass. And he gets Barbara Leigh:

This movie also has really weird pseudo-montage scenes, and is far better than people appear to give it credit for being. This is one of Sam Peckinpah's last attempts at a subtle drama.

Incoming Freshmen

2008-11-07T15:27:00.000-08:00

Entering freshmen in the top 10% of their high school class:
Berkeley: 98%
MIT: 97%
Harvard: 95%
Stanford: 89%

They say it's a bear market right now. Luckily, I was well trained for a bear market. Go bears!

Partisan Politics as Usual

2008-11-07T10:52:00.000-08:00

One troubling thing about Obama's candidacy was his choice of Joe Biden as his Vice President. Biden is a very partisan Democrat, almost never, in the senate, voting out of line with the Democratic party platform.

Biden has always received large contributions from big unions and never votes for anything that the unions wouldn't like.

I didn't pay much attention to this, but in light of the choice of Emanuel as Obama's chief of staff, I begin to wonder if there is a pattern.

Since the election, the two biggest things the Democrats have done are:
1) The installation of Emanuel, known more as a political pugilist than a compromiser or for any ideological or intellectual gifts.
2) Attack Lieberman and begin trying to remove him from influential committees in the Senate, presumably because of his support for McCain.

Now, politics goes on all the time, and both sides are equally bad. But, I have to wonder, are the Democrats afraid that the Republicans are planning to simply try to filibuster every bill that goes through, and they are gearing up to combat the Republicans at every turn; now that they have them down, to keep them down?

Or, are the Democrats thinking, "We've been out of favor for 28 years and the country has been ruined, so now we're taking over?" The problem with this is, if that's what they were thinking, they should be focusing on some new ideological promise, not on simply punishing the Republicans. No Senate Republicans tried to cause a recession, so I'm not sure what point punishing them serves.

More generally, if the country needs a significant ideological shift (which I do not think it does), then the Democrats should be trying to provide it. They, the Democrats, have been an ideologically bankrupt party for at least the last 10 years, and really since Reagan gained the White House. If the country doesn't need a significant ideological shift, then the Democrats should be focused on how to pass compromise legislation that everyone can support.

Who's (Not) Building Datacenters?

2008-11-05T13:24:00.000-08:00

The recent economic climate has put many datacenter construction projects on hold. I know of several, major, South Bay-area projects (totaling approximately 700,000 square feet) which have recently been scrapped or delayed indefinitely. Those that are being built are also facing rising energy costs (a major component of the price of operating a datacenter).

What will these delays and rising costs mean to businesses? For large businesses, these factors might delay datacenter buildouts, which can impede or delay IT equipment purchases. A 10,000 square foot datacenter might hold 7,000 servers. At a price of $4K each, this would be $28,000,000 worth of servers. A rough guesstimate might place the IT equipment value that those 700,000 square feet of datacenters could hold at roughly $2B. That's a lot of Silicon Valley business for Dell, Rackable, IBM, HP, Sun, Cisco, Juniper, and others that can't be fulfilled until there is a place to put those servers and power to power them.

Another possible impact to business is that rising costs and declining datacenter availability might help propel SaaS offerings (think Salesforce.com) and cloud computing platform providers (think Amazon EC2). Perhaps the tradeoffs between an SAP-based CRM module and Salesforce.com will tilt a little more in Salesforce's direction when there's no datacenter floor space to hold new servers.

Russia Tries to Bully the President-elect

2008-11-05T07:58:00.000-08:00

I did not think Obama's first test would come quite so quickly...

(All quotes from this article):

Russia has decided to place new missiles near Poland. In the same speech where Medvedev argued for greater powers for Russia's president (a dangerous move in a place where democracy is daily falling by the wayside), he also stated that Russia was deploying these new missiles. But, he went two steps further.

1) In addition to deploying their own missiles, Russia also said this, "Equipment to electronically hamper the operation of prospective U.S. missile defense facilities in Poland and the Czech Republic will be deployed, he said."

2) He specifically linked this action to Obama:

"He announced deployment of the short-range missiles as a military response to U.S. plans to deploy missile-defense facilities in Poland and the Czech Republic — former Soviet satellites that are now NATO members.
Speaking just hours after Obama was declared the victor in the U.S. presidential election, Medvedev said he hoped the incoming administration will take steps to improve badly damaged U.S. ties with Russia. He suggested it is up to the U.S. — not the Kremlin — to seek to improve relations."

The President-elect should be tough on Russia. He should explain that it is *not* the fault of the US that Russia feels threatened. Russia is threatened because its nearest neighbors, former Soviet republics, do not want to be under a Russia umbrella. They choose to pursue NATO membership because it benefits them. Further, the US needs to deploy missile defenses in Eastern Europe and Central Asia because renegate republics (such as Iran), which derive some support from Russia, have been allowed to menace the world.

Finally, Obama should take a lesson from Bush. Bush genuinely tried to be a friend to the Russians in his first several years in office. In this, he was betrayed. Obama should not make the same mistake. With oil prices down right now, Russia's strategic position in the world is weakened. The US should not let up on its pressure.

The Obama Era

2008-11-05T00:24:00.001-08:00

The future looks bright. We have a good President-elect, to whom I donated my money (if not my vote), and I anticipate he will make great enchancements to our national esteem and prosperity.

Literary Audiophile

2008-11-04T12:45:00.000-08:00

I have always been a lover of books, and I am a good aural learner, but today I have embarked on a journey unlike any before. Having nearly finished, and greatly enjoyed, the McCullough biography of John Adams, I have decided to take on even more ambitious audiobooks. Today, I purchased Don Quixote which will fill 35 CDs, and Ulysses, which will fill 44.

"The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings."

The Devaluation of Intellect

2008-11-04T10:02:00.000-08:00

From my soapbox, it so often appears that movies, pop-culture, conversation, politics, or our society in general is trending toward an anti-intellectualism. It seems like populism, political correctness, hedonism, and so many other substitutes for genuine rational reasoning have become the norm. But, maybe they have ever been the norm. Maybe Epicurus, Cicero, Spinoza, and Newton felt the men of their times were opponents of reason and friends of simplistic passion.

Having said all this, though, I am coming to another realization. While intellectualism still seems important, raw intellect, itself, seems to be of less value than I once thought. I know a great many intelligent people who do no more in service to their species, community, or universe than does the mentally handicapped guy who tears my ticket at the movie theater. In fact, in some ways these intelligent pretenders to importance do even less for the world, because they have not even the virtue of inspiring by their very incapacity.

Western Civilization and American History

2008-11-03T10:14:00.000-08:00

I join with the American Council of Trustees and Alumni (http://www.goacta.org/) and the National Association of Scholars (http://www.nas.org/who.cfm) in calling for more education in the classics, Western Civilization, and American History.

Despite having had a great public education myself, it is glaringly obvious that I was somewhat shortchanged on these very important topics. Except for 2 or 3 classes in high school and then several good professors at Cal, I didn't get a sufficient dose of the real philosophical and historical underpinnings of Western Civilization. I don't know why these topics are so out of favor. Almost nothing could be more important for the learned American mind.

Mr. Petraeus Goes to Islamabad

2008-11-02T18:59:00.000-08:00

General Petraeus should be arriving in Pakistan right about now. I think it's very good timing. The man who seems to be the most able and intelligent US strategist is now in charge of US Central Command, and has launched a review of military posture and strategy regarding Afghanistan, Iraq, Iran, and Pakistan.

The timing of the General's review could not be better. Whatever changes he proposed can be claimed by the new President-elect, and thereby, hopefully, gain political support.

It is time for the US to ratchet up the pressure on Pakistan and Iran significantly. One of the best ways to do this is to successfuly deny bases of operation in Afghanistan to the Taliban, al Qaeda, and others.

The timing could not be better, because the new Pakistani government needs to make its "with us or against us" choice right now, and Ahmadinejad looks like he may have some trouble to contend with in the next Iranian elections.

The Seal of the President of the United States

2008-11-01T14:30:00.000-07:00

Here are (clockwise from top left): The Great Seal, the Seal of the President, The Great Seal of Barack, displayed at some of his campaign speaking engagements, and the Seal of the Vice President.

There are several problems with Obama's seal:
1) It is arguably illegal to create something this alike to the Seal of the President of the United States. Probably nobody cares about enforcing this rule, but still, technically, it's a rule.
2) It has as its slogan, in place of "E pluribus unum," "Vero possumus" which roughly translates to "Yes, we can." There are many problems with this slogan as Obama's selling point:

It was suggested by someone else and Obama initially objected to it. His commitment to its message is questionable.
It is not a logical slogan for a balanced country. It is a progressive slogan only.
It detracts from the overall point of the seal because it does not relate to the Eagle, arrows, or olive branch in any obvious way.

3) It does not include the snake in the mouth of the eagle. Why omit this symbol? Typically, this symbol is interpreted in one of two ways

The eagle will root out corruption (the snakes amongst us or who tempt us).
The eagle will confront its enemies.

Also, the animal is an eagle. Eagles are known to be keen-eyed and far-sighted animals. The snake, an enemy from within or without, was seen at great distance. Displaying the snake is part of the way the eagle shows its capability. It is able to use its arrows, at a great distance, because of its keen eyesight. The snake helps prove this is still a vital, competent eagle, not simply a show piece. Why would this be omitted? Does Obama not plan to root out corruption or to confront our enemies? I suspect that, regardless of what he intends, the desire not to 'make enemies' or 'seem warlike' is exactly the reason this was omitted. Somebody in the campaign said, "let's de-emphasize the confrontational or violent parts."

Too bad for us that they thought marketing was more important than the richly historied philosophy and symbolism.

Iraq and Afghanistan

2008-10-31T19:29:00.000-07:00

The mainstream media (NY Times, CNN, Fox News, CBS, ABC, etc...) has utterly and completely failed to understand Iraq and Afghanistan. Despite a closer correspondence between reality and their reporting, now, I still have absolutely no confidence that the media will adequately report on what's occurring in these critical regions of the world. Their level of incompetence has cost the American people money and lives. Their incompetence is even more reprehensible given that they have now had so much time to figure things out.

From initially allowing General Clark to use CNN as a podium from which to run for President, to utterly failing to explain or understand the complex relationship between Afghanistan and Pakistan, to Wolf Blitzer and Anderson Cooper's mindless biases against McCain, Bush, the Republicans, and the Iraq War in general, to the completely inadequate coverage of China and Russia's involvement in the Middle East, the mainstream media has been abysmally bad.

I actually think that, while they are biased, it is the media's incompetence, more than bias, that has caused me such agony.

An example:
Once, in about 2004, on a mainstream national TV network, I heard a story which appeared to describe an Iraqi in Kirkuk lamenting the fact that Americans were "killing Arabs" and ranting about how much the Arabs "feared the Americans." I remember being struck by the man's facial expressions; he seemed almost to be delighting in describing the alleged carnage. Then, I started listening more closely to his voice (which was nearly inaudible, because of the voice-over translation). When I did succeed in picking out the original speaker's voice, I realized - he wasn't speaking Arabic! He was a Kurd, and he was speaking Kurdish (which sounds more like Farsi). The story that was allegedly about an Iraqi man lamenting the killing of his own kind was actually about a Iraqi Kurd nearly rejoicing in the restoration of parts of Kirkuk to the Kurds after years of a policy of genocidal arabization at the hands of Sunni Arabs.

Completely apart from the veracity of the report (which I doubt) or the motivations of the interviewee (of which I am suspicious), the most troubling thing was that the big cable network, with its legion of analysts and reporters and producers and translators, had no idea what it was reporting. Sadly, this is not an isolated incident. I have heard so many cases of ignorant reporting that confuses who lives where, who gets along with whom, and who did what to whom when, that I see no point in watching the mainstream TV media's coverage of the Iraq War.

Why does it matter that the media is so bad? It matters because it results in the deaths of Americans, unnecessary expenditures from the American coffers, and damage to the prestige of the United States abroad.

Rather than ignoring the Iraq War now, as both the domestic and foreign media are doing, they should be evaluating why they were so wrong. The answers are quite obvious, but they are nonetheless failing to do so. The media's expectations that the war would be over quickly were largely created by... the media themselves. Did you know that the term Shock & Awe was misapplied by the media? Not only was the media reffering to the Iraq campaign as a shock & awe campaign inaccurately, because it wasn't one, but nobody in the military really said it was. There is a scant amount of evidence that, once, an anonmymous government official said that the strategy to be employed was "based on" schock & awe, but that's it. In fact, General McKiernan's christening of the 3rd Army's plan "Cobra II" directly disputes the idea that the campaign was planned as a "shock & awe" campaign. Anyone who knows any military history understands that Operation Cobra was not about shock & awe, even in an abstract or metaphorical sense.

If the media had, from the outset, recognized how far we were from "winning" the war in Afghanistan (which, early on, the media seemed happy to declare finished), and also had realistic expectations for how long it takes to occupy and rebuild a country (Iraq), the US government would not have been so paralyzed. All the comparisons of Iraq to Vietnam tied the US Government's hands. Sending more troops to Iraq, exactly what was needed in about 2004/2005, but was not accomplished until 2007, was seem as political suicide because the media had portrayed such a strategy as an admission of defeat and similarity to Vietnam, which it was not, and would not have been. In fact, even though that strategy has worked, it's delay by and portrayal in the media until the last few months, cost President Bush dearly and will quite possibly have cost McCain the election in a few more days. I do blame Bush, to some extent, for not simply doing it anyway, sooner, even though the media, and therefore the country, was likely to completely misinterpret it.

McCain, however, championed it from the beginning. Obama, for his part, still seems unaware that it has worked, why it worked, or what should follow.

Had the media correctly assessed Afghanistan to be more like Vietnam (which is so obviously within their grasp because in the 80s the very same American media referred to the Soviet's troubles there as the USSR's Vietnam), people around the world would be conceding that the US was right on Iraq all along and would be fretting about what to do in Afghanistan. Instead, most of the people in this country and around the world are still complaining about Iraq and ignoring Afghanistan. While all you spoon-fed CNN lovers have been sitting around gobbling up the ignorance, did you realize that more American soldiers died this month in Afghanistan than in Iraq?

Don't delay another day. Start admitting, right now, that you were wrong about Iraq. It may have taken longer than it could have. It did not go as smoothly as it could have. Too many people died. But, the strategy, eventually, started to work. What you should have been spending your time complaining about, all along, was the failure in the strategy employed in Afghanistan. But, you wasted your time, and now we're JUST STARTING, as a nation, to understand what's happening in Afghanistan. Your ignorance, much like the media's, is responsible, to some degree, for the number of American soldiers dying in Afghanistan today and the lack of support for that war by the Europeans.

It's the Economy, Stupid (and your vote)

2008-10-29T15:55:00.000-07:00

I think one could argue that the economy is the #1 issue in this election. I would then add that the #1 problem to be addressed in the economy is what role the government will play in "fixing" it.

Government will certainly play a role, and they certainly should, but what role they should play is neither obvious nor clear.

It is important to remember where blame should be placed for the problems that are going on.
#1: Consumers - People who borrowed too much money, for houses and on credit cards, who don't save enough, and who bet that "real estate prices can't go down" bear the largest responsibilities.
#2: Banks - Banks should share almost equally in the blame. It takes two to tango. Banks made bad loans and they are now paying for it. Unfortunately, we're paying for them paying for it, too.
#3: Regulators and Government - In some ways, the regulation scheme failed (see my earlier post about debt swaps, for example). Also, the "ownership society" President Bush promoted is partly responsible for the eagerness to buy homes (and to qualify people for home loans).

Government has 2 roles to play in the recovery:
A) Changes to regulatory schemes and rules.
B) Fiscal and monetary policy, in terms of interest rates, bailouts, stimulus packages, and general macroeconomic policy.

(A) is going to happen. The banking industry will be largely re-regulated. We should solve problem #3, above, through government regulation. We should *NOT* solve problems #1 and #2 above. Doing so is called socialism. If the government starts deciding how consumers should spend their money or how banks should offer their products, then it is encroaching on personal liberties and on capitalism. The government can effectively update the rules for banks without having to become so large and invasive so as to *be* the banking industry.

(B) is also going to happen. Interest rates will be lowered. Stimulus packages may be passed. Measures like this are great because they're temporary. They take effect soon, and that matters to the economy now, and then they end, which is good.

The concern with Obama is along both (A) and (B).

Along line (A): Obama is far more likely than McCain to see the current crisis as an opportunity for government to get more involved in figuring out how poor people finance their houses, for example. This, however, would be a huge mistake. It would be the same form of market distorting government policy that Bush's "ownership society" was, which is a part of what got us into this mess in the first place.

Along line (B): Obama has promised massive government spending which will likely worsen the deficit. McCain has much more of a history of rejecting wasteful government spending and trying to keep the budget deficits in line. Also, Obama has promosed long-term infrastructure projects as a form of economic stimulus. Not only does the research show that this doesn't work (it doesn't take effect quickly enough), but in reality, it's just an expansion of government programs. It just makes the goverment more directly involved in long-term attempts to "build" things.

McCain is exactly the right kind of person for the current economic climate, because he's a pragmatist and willing to compromise, in the short run, but there is little danger of him allowing any slow drift toward a more socialized state, in the long run.

This is the most powerful argument for McCain and against Obama, right now, and it's probably the most important issue in this election (and ironically, it wasn't an issue until about the last 2 weeks).

Multiple Sclerosis

2008-10-28T22:58:00.000-07:00

There is a branch of engineering/business/computer science that deals with very complex systems and their failure modes. Systems that are so complex that we can't really measure every part of them or understand every interaction can generally be described along two dimensions:
1) Complex systems - these are systems where there are simply many different processes or participants
2) Tightly coupled systems - these are systems in which actions are linked in long chains, meaning that a small change in one place might affect something else, far away.

A university might be a complex but loosely coupled system. There are many complicated interactions going on in different classrooms, but they are more or less independent of one another.

The Berlin Airlift, for example, was both complex and tightly coupled.

The body is generally a very complex, but fairly loosely coupled system. It is very redundant. Typically a problem in one cell doesn't affect too many other cells. One problem with MS is that it attacks one of the points within the system-that-is-the-human-body in which the coupling is tighter. The nerve cells affect many other things directly and without as much redundancy.

Maybe, like cancer or so many other conditions, everyone "has MS" to some extent. Maybe everyone has a natural balance between the reactions which, when unchecked, cause the destruction of the myelin sheathing around nerve cells. The basic problem is that some people have a biochemistry, or DNA, or a lifestyle, or whatever, that makes these reactions more common or likely. So, why do women in the 20's get MS 4x as often as men in their 20's?

Perhaps another dimension to the problem is that people have variable levels of coupling of the immune system and the nerve tissue. Maybe something about being a women ties the immune system more closely to the nerve cells. There is a precedent for women's bodies ability to differentiate between foreign and normal cells being quite different than mens'. It might make sense that women's immune systems "mature" faster than men's. If there is a tighter coupling between their immune systems and the MS-like problems, perhaps they, with the same natural change in biochemistry or rate of nerve tissue development, or a host of other factors, are more likley to exhibit the problems.

Essentially, I am proposing that things are easier to "mask" when they are loosely coupled. Loosely coupled things don't manifest themselves until they are very common. One doesn't refer to a college as a "Spanish-speaking" college until many of the interactions which go on inside it independently start happening in Spanish. But what if you were playing a huge game of telephone on campus? Then, you would expect that once a critical mass of people started speaking Spanish, the whole chain might happen in Spanish.

My dad said that he thought he had read that pregnancy triggered the onset of MS in young women. Maybe pregnancy is the key difference that increases the tightness of coupling of the changes in body chemistry to the immune system to the nerve cells to the MS condition.

Re-Regulation

2008-10-28T13:40:00.000-07:00

The most important consequence that I foresee coming from the current financial crisis is the "re-regulation" of the banking industry. As I have written before, although regulation is sometimes good and necessary, less regulation is better than more regulation, all other things being equal.

There is a great danger in my mind that the US will over-regulate the banking industry again. Why? Two reasons:

1) The majority of the problems right now are not due to faulty regulation. They are due to speculation by businesses and irrational behavior by consumers. Should regulations help avoid catastrophes that result from these things? Yes. But, should a lack of regulations be seen as the sole or even primary cause of these problems? Certainly not. If that's what we see when we look at the situation, we are missing the point and failing to learn the most valuable lessons of all, here. The most fundamental cause of the problems going on right now is consumers running up too much debt, especially in real estate. The other major cause is banks making wildly speculative investments. The third, and smaller, though still important, cause is genuine fraud, deception, or uncertainty resulting from unclear, unenforceable, or out-of-date rules and regulations on financial instruments, institutions, and securities.

2) Re-regulating is "popular" right now. It is easy to see the next president succumbing to the cries for regulation. I think, probably, with a Democratic Congress, and being a Republican, McCain is less likely to heed these execratory howls.

Leaving the Ranks of the Undecided

2008-10-28T00:27:00.000-07:00

I have left the ranks of the undecided today, and decided to vote for McCain. I still like both candidates and think both would make fine presidents.

I can explain my basic reasons for voting for McCain in a nutshell:
1) I like lower taxes better than higher taxes. In all likelihood, taxes will be lower under McCain. McCain is still more of a small government guy. Obama is more of a big government guy. In general, I think government is inefficient at doing things. So, I generally side with small government-types.
2) McCain is willing to buck his own party. Obama has voted with his party 96% of the time (and Biden is even worse). Take immigration-- would Obama compromise and build a fence in order to also rationalize immigration policy? I don't know. He voted as if he wouldn't. Would McCain compromise and allow some "amnesty" in order to secure the borders? Yes, he championed just such compromise legislation, which was ultimately defeated by both Republicans and Democrats. Also, with Democrats controlling the Congress and White House, the Government deficit would likely soar. Finally, both Obama and Biden take huge amounts of money from public sector unions such as the Teachers' Unions. These unions are unfair to their members, violate the spirit of the campaign finance reform McCain championed, and are obstacles to reform in schools. I trust McCain and Palin more to fix education than Obama and Biden, because they're not beholden to these unions for money and votes.
3) McCain has done tons of things in the Senate. Can you name one thing Obama has done since becoming a Senator other than run for President?

In the end, Obama is an inspiring figure, but more so personally than politically. Politically, he's basically positioning himself as a tax-and-spend liberal. To be fair, he might not be, but he hasn't shown anything else, yet. McCain is committed to bettering this country while maintaining his Republican principles. Yet, he's not a bigot, a xenophobe, a pedant, or a proselytizer. What more could I ask for?

Why are the Polls so Crazy?

2008-10-27T10:36:00.000-07:00

Why do John Zogby's polls swing so violently? Why are they so volatile? First, it is clear that the pollsters suck (witness the inaccuracy of exit polling in 2000). Second, I think that there is another reason why the polls are swinging so wildly.

I think that in this election, there are a lot more people who are "undecided" than there are people who admit to being undecided. I think this for several reasons:
1) Amongst intelligent voters, there is no obvious choice. Both candidates have real appeal.
2) This campaign season has NOT been about the stereotypical "issues." Neither candidate is talking about abortion, crime, education, or any of the other typical hot-button issues very much, because their positions on these things hardly differ. The only issue that has come up repeatedly is tax. McCain is on the populist side of this issue (he's generally for lower taxes than is Obama).
3) Neither candidate has positioned himself as "the religious choice" which means that people who just vote for or against such candidates don't have a straightforward way to choose.
4) Much of Obama's support is from young people and other groups whose turnout is very uncertain.
5) Much of McCain's support is from religious people who don't particularly like him and may not turn out, either.

I have seen Obama with leads anywhere from 4% (statistically, barely significant) to 15% (which would be the biggest landslide in recent history) in the course of about 2 weeks. That seems weird to me. Nothing interesting enough has happened to actually change peoples' minds that much, unless their minds weren't really made up in the first place.

Any lead of less than about 8% or so for Obama could still end up being very close, due both to the Bradley effect and to the uncertainty of turnout.

I suspect that this election will be far closer than people think. If I had to bet, I would still bet that Obama wins, mostly because of people casting their votes "against" the party in power, whom they blame for the current economic conditions. The irony of this is that it would give the democrats both the Congress and the White House, which is generally the worst possible recipe for government spending and deficits.

The (First) Invisible Hand

2008-10-26T14:06:00.001-07:00

I recently learned that Machiavelli actually used the term "invisible hand" in The Discourses. He refers not to an invisible hand of economics, though, but an invisible hand of politics. Turning what was accepted thought at the time on its head, he argued against the Florentine Humanism School's belief in the primacy of unity.

Machiavelli thought, far from making stamping out disunity and dissension a priority, contemporary princes should try to emulate the trials and tribulations the Romans faced in sorting out the disagreements between "the rich" and "the masses." Machiavelli, though he would not have used these terms, was essentially saying that a process of dispute and dissension between the "people" and the "aristocrats" has a lower transaction cost than does the combination of methods required to attain total unity, punctuated by periodic government-shattering upheaval.

Funny Shirts

2008-10-23T14:44:00.000-07:00

I just saw two grandmotherly looking women at Starbucks. One had a pink shirt that said, "MOM upside-down is WOW." The other, slightly older looking one, had a shirt that said, "I only date musicians."

Renaissance Man and the Classics

2008-10-22T15:45:00.000-07:00

Do people still value the Renaissance Man? I think that the Renaissance Man is undervalued. Knowing about, or how to do, a very wide range of things is worth more than just the sum of the disparate subjects-- it is only by this great variety of learnedness that a person can be created for whom new, uncategorized situations are tolerable and even "straightforward."

Specifically, one part of being a Renaissance Man that is now thoroughly ignored is study of the classics. The totality of modern (since the Renaissance) learning is still perhaps only equal, in scope and value, to the learnings recorded between about 500BC and 500AD.

I should really credit Matt Ward with recognizing the value of the classics, however obsessed with the pharmacon and the bad festival he may be.

There can be no Afghanistan without Pakistan

2008-10-20T13:23:00.000-07:00

We need to get our Afghanistan strategy under control.

The US has just signed a big deal with India, Karzai went to school in India, and the Taliban has trained terrorists that fight against India in the Kashmir. To protect itself, Pakistan cultivates a common "Islamic" identity with Afghanistan. It is no wonder that Pakistan is not entirely committed to getting terrorists out of the treacherous mountain areas on its border with Afghanistan.

The US must provide a combination of good enough carrots and big enough sticks to entice Pakistan to help more. This should simply be charged as a cost of doing business with India. It's worth it, though, because doing what we have to to be friends with India and Pakistan is the way that we protect ourselves from terrorists in Afghanistan and from China. If we allow ourselves to be sucked back into the India v. Pakistan conflict (and if we don't keep that conflict from growing), we will find ourselves battling with Islamists and with China for influence in the region.

No, the other Longoria

2008-10-19T18:22:00.001-07:00

Yes, yes, occasionally a Sportscenter anchor will make some quip about Desperate Housewives or Tony Parker while recapping a Rays game, but seriously, how can I be the only one who finds it so remarkable how similar Eva Longoria Parker and Evan Longoria's names are?

They are not related. Can you think of a single other Longoria? It's not as if their names were Michael Smith and Michelle Smith.

I mean, that's really weird. At almost exactly the same time that Eva Longoria was becoming a household name, Evan Longoria emerged as a budding baseball superstar.

Offers of Assistance

2008-10-17T18:53:00.000-07:00

I hereby offer my assistance in the following subjects to any and all takers:
1) Financial Planning
2) Business and Commerce
3) Calculus
4) History
5) The Liberal Arts
6) Literature
7) Ethics
8) Computer Science

Upon request, I will help craft a reading list and/or study plan, and will personally tutor in any or all of these subjects.

Talent vs. Hard Work

2008-10-17T16:33:00.000-07:00

For a long time, I basically believed that the less talent a person had, the harder they had to work to achieve the same thing. I still think this basic premise is true, but I have come to see how short-sighted it is as a concept.

Those who have talent should, in fact, work even harder than those who do not. Those who have talent have a comparative advantage in activity. To NOT work hard, for them, wastes more than does lazyness by the talentless.

Pandit Nehru, John Adams, Abraham Lincoln, Bejamin Franklin, Isaac Newton, Julius Caesar, Winston Churchill, and many of the other great men I have studied, had unfathomable natural gifts, AND worked harder than everyone else around them.

When I think about what makes them great, it seems to be equal parts natural ability and hard work.

Perhaps greatness amongst men is only greatness when the great minds of men are put into motion to aid mankind.

Founding Mythologies

2008-10-16T10:43:00.000-07:00

I concur with David McCullough, when he says (in the biography of John Adams) something to the effect of:

"It's not clear whether Franklin actually said, 'We must all hang together or we will all hang separately' or whether John Hancock actually signed his name in oversized letters so that 'King George could read it without his spectacles,' but it doesn't really matter; these legends have endured because they are in character."

Bullying

2008-10-15T12:51:00.001-07:00

There are many types of bully. Some people bully physically. Some bully emotionally (I will withhold love, respect, or attention from you unless you do what I want). Some bully socially (I will put you in positions of subordination publicly). Some even bully intellectually (I will thrash you with facts and the implication that if you don't agree with me, you must be unintelligent).

Recently, I have become aware of a new kind of bullying - bullying by flattery. Someone is actually bullying someone else I know by flattering her. By constantly building her up and complimenting her, he is creating an intolerate expectation for her performance. He is then using this expectation level to govern her behavior and to prevent her from exerting any control over the work they are doing together. Subsequently, he feels himself powerful (like all bullies, he has subconscious (and perhaps even conscious) doubts about his potency).

I have recently become more involved in the project they are working on, and I intend to break him of his bullying ways.

Cicero, The Roman Empire, and the Supreme Court

2008-10-12T11:28:00.000-07:00

"The ministers of the law are its magistrates; the interpreters of the law are the judges; we are therefore all slaves of the Laws, that we may enjoy freedom." - Cicero

Looking for causes of the Roman Empire's downfall is nothing new, and I don't offer the following so much as a tally mark in the column of this or that particular cause, but rather I offer it as a testament to two things:
1) The greatness of the founding fathers and the constitution of the United States, and
2) The interconnection between the Roman Republic's downfall, and the drafting of the constitution of the United States.

When Hannibal threatened Rome, the Senate realized it must invest greater and greater power in a military executive in order that the Republic survive. This tension, between parliament and absolute monarch, republican senate and president, or Presbyterian kirk and glorious revolutionary, has plagued nations ever since. Although 220 years is not enough time to be sure, it appears the United States may have solved this problem. The three branch government, with its independent judiciary and the supremacy of the rule of law which our constitution implies and our courts protect, has resolved this dilemma perhaps better than any other attempt in history.

Marbury v. Madison, United States v. Nixon, FDR's attempts to pack the court, and even Bush v. Gore have tested the separation of powers, and in each of these (and most other) cases, the court (and thereby the rule of law) has triumphed.

If the Romans had had a Supreme Court that established powers of judicial review and independence, perhaps we'd all be speaking Latin today.

Blame the Bankers and the Bankees

2008-10-06T22:09:00.001-07:00

I would like to point out that, while it's fun to rail against the greed of Wall Street, we should also rail against the irrationality and stupidity of Main Street.

It takes two to tango. 50% of the problems we're experiencing right now are because American consumers borrowed too much money. They paid too much money for houses, borrowed too much on credit cards, etc... I can't tell you how many people told me that Bay Area housing prices couldn't go down. Even though prices have already gone down, they still tell me that Bay Area prices can never go down as much as other places. OF COURSE THEY CAN. Get your heads out of the sand.

The other 50% of the problems we're having should be blamed on the bankers. Everyone from individual mortgage bankers all the way up to commercial bankers and investment bankers made mad loans. You wrote bad loans -- now you have to eat them. Lucky for you the US taxpayers (like me) are going to partially bail you out. I expect thank you notes from all the people who overpaid for houses or are mortgage bankers. You're welcome for continuing to pay taxes (actually paying even more taxes this year) which will largely go toward bailing you idiots out over the next few years.

Everyone who thinks that spending hundreds of $B on the war in Iraq, which, by the way, fraught as it may be with problems, is actually accomplishing something, should seriously check themselves. If they also went out and borrowed a bunch of money to bid up the price of a house somewhere, and are now irrationally sitting on that house (even though they should probably just be selling it at a loss), then they are part of the reason that *I* now have to pay back a share of the $700B the government is about to eat up so *your* stupid loans won't wreck the economy and cost *you* even more money.

And by "you idiots" I mean 'all you people who overpaid for houses, encouraged people to buy houses, think that renting is "wasting money," think housing prices can't go down, etc...' All that kind of talk is idiot-speak.

Renting is often good for the economy. It keeps people mobile and reduces their liability to interest rates. Please mail the thank-you notes right away.

You're welcome,
Andy

Failed States

2008-10-06T12:44:00.000-07:00

Somalia is unquestionably a failed state. In fact, it has failed catastrophically. With no real, functioning government, it is lawless and anarchic at best. Al-Qaeda and/or other Islamists use it as a base to the extent they can, pirates and bandits run rampant there, and violence is widespread.

It failed in 1991, and after that time, was a humanitarian disaster. While at least 5 different militia-backed factions fought for control, several hundred thousand people died. Most of the relief food that was sent was stolen and sold. Finally, the US, Pakistan, Malaysia, and others attempted to subdue one of the most aggressive and confrontational of the factions, the SNA, led by Mohammed Aidid. The Blackhawk Down incident, and the ensuing "Battle of Mogadishu" constitute the pivotal chapter in this attempt, after which the attempt was abandoned.

After being attacked by these militias, which Bin Laden has claimed he trained and supported (although these claims are difficult to verify), the US withdrew from Somalia. Since that time, Somalia has remained contested and lawless. In 2006, the Islamic Courts Union (ICU) attempted to control and suppress all the people of Somalia, but was opposed by Ethiopia and Eritrea, with some American support. It has really not gotten much better since that time.

Failed states are dangerous. While casualties are difficult to swallow, and the US clearly made several military and political miscalculations in 1993, they should have remained in Mogadishu to straighted things out. Instead, after perhaps alienating more civilians by fighting in the streets of Mogadishu, the US withdrew, leaving the people, already bitter at the United States, to suffer even more.

Even today, the ICU attempts to control the country to impose such Draconian policies as the outlawing of public sports viewing or movie watching. Somalia remains a haven for Al-Qaeda and related groups. As in Sudan, the United States should intervene directly to support improved stability, personal liberties, women's rights, and democratic institutions in Somalia, as well as to aggressively disrupt and destroy the terrorist networks operating from Somalia.

IT and the Business Climate

2008-10-03T13:25:00.000-07:00

This week we have seen a broadening of the financial crisis as auto-makers and other businesses have started to be more directly affected. In the case of the automakers, they can't sell as many cars because people can't get financing as easily.

One looming question, though, is why other industries have not been affected more by the mortgage crisis and all its banking-and-insurance-industry fallout.

Is it simply because consumer confidence has not fallen that low and because individual consumers have not been hit as hard as we think? If that's the case, continued real estate price drops may quickly sour consumer sentiment further.

The fact is, we still have not actually had a recession, in the technical sense. We also still have not seen the surge in unemployment we might expect. Perhaps these things will materialize soon. Perhaps not.

I think that one factor is that businesses, due to improved IT, have been able to adjust very, very quickly to changing conditions. When you have good systems, you can quickly adjust inventories, workforces, etc... Whereas in the old days it may have taken a manufacturing company 3 months from the start of a panic before genuinely changing its purchasing strategy and inventory levels, I think that today's technology allows them to change their behavior in under 3 weeks.

You Should Not be Allowed to Comment on Politics Until You Know Anything About Politics

2008-10-02T23:21:00.001-07:00

Ok... I really hate to have to do this, but I've been hearing too much of this crap about how Palin screwed up in her interview with Katie Couric.

A couple of disclaimers:
1) I don't love Palin. I have mixed feelings about her. Above all, I feel she is an unknown commodity.
2) I know what Hamas is. In all likelihood I know more about Hamas than Palin, Couric, or you.
3) I was a champion debater once, and I know and have studied the formal rules of logic.
4) I object to the kind of questioning that Katie Couric is doing in this interview in general.

But... just because you all seem to be asking for it, I am going to do an analysis of a clip that was sent to me of an interview question that Palin answered. I didn't watch this interview when it first came on, and I still have not watched the whole thing. I don't even plan on watching the whole thing. I wish I had never seen this clip, because it's a waste of my time. Having said all that... this clip was offered to me as an example of how incompetent Palin is. I have no idea if she's competent or not, but I will assert that a) Couric appears incompetent and biased and b) the clip proves nothing of interest. Palin appears to give a normal politician-style answer to a virtually non-sensical question.

In the clip, Kouric asks this question, which I will quote word-for-word here:

Kouric: "What happens if the goal of democracy, Governor Palin, doesn't produce the desired outcome, for example in Gaza? The US pushed hard for elections and Hamas won."

Ok. Now... a little pop quiz for all of you out there. What was the question asked? The question was, "What happens if the goal of democracy... doesn't produce the desired outcome?" What the hell does that mean? The goal of democracy doesn't produce anything. What I *think* Couric meant was, "What happens if democracy doesn't produce the desired outcome?" Couric's question is a really weird, tricky (or silly) sort of a question, for many reasons. Here are a couple:

1) If you answer the question, "What happens if democracy doesn't produce the desired outcome?" with reference to Hamas, you are sort of admitting that what happened there was "democracy." This is like asking the question, "Have you stopped beating your wife?" It's not a reasonable question, because there's no logical way to answer it except to dodge it, unless you *have* previously beaten your wife. I could ask, "What's your favorite color of M&M's? Some people prefer red over blue, for example." But then... could I legitimately get pissed off if you talked about how you like green M&M's? Isn't that kind of a reasonable answer to the question?

2) The question also presupposes that we agree upon what the desired outcome was. Does Couric think there's an outcome to the elections in Gaza that would obviously have been good? Many people believe the alternative to Hamas, Fatah, is also a terrorist organization. So... if you answer the question she asked, do you have to presuppose that Fatah members winning more seats was the desired outcome? At the time (and still) many people believe that Hamas members winning was the desired outcome because of Hamas's connection to terrorism. People who think that generally believe any or all of the following:

By winning elections, Hamas leaders will be held more accountable. People may now assume that if conditions in Gaza worsen, it is Hamas's fault.
Because Hamas as a party triumphed, they will, as a party, now be held accountable for their positions. They will be forced to soften their line against Israel. To a very minor extent, this has already occurred.
Because Hamas was elected, it will now act more like legitimate governments do in order to appeal to other countries.
Because Hamas has been [at least partly] legitimized, it will no longer be forced to define itself solely as a paramilitary organization and can therefore reduce or drop its terrorist activity. This is still a very realistic possibility.

Note: Last time I checked, which was four seconds ago, the question doesn't specifically ask what Palin thinks about Hamas. It cites Hamas as an example of a group that won an election. Again, this presents several problems: 1) It is not at all clear, although Hamas members won an election, that Hamas as a party even believes democracy is good; 2) It is not at all clear that the election that happened in Gaza would be considered "democratic" by our standards. Saddam Hussein was elected, too. That doesn't mean Iraq was a real democracy. Another good example of a person who won an election in a place that alleges it is democratic, but really isn't, is Mahmoud Ahmadinejad, the President of Iran.

I ask several questions here: 1) Does Couric believe that Gaza is a "democracy?" If so, why? Is she asking Palin if she believes Gaza is a democracy? 2) Does Couric understand that Gaza is not an independent nation? Typically, we talk about "democracies" as existing at the national level. Do you understand that this is a loaded question? I don't know if Couric understands it or not, but to refer to Gaza as a democracy or "not a democracy" is perhaps to imply it is a sovereign nation. Do you understand why a politician may be reticent to do this? 3) Does Couric realize that Palin is answering the question asked, or that Palin understands that Iran is similar to Gaza in the sense that it has elections, yet isn't really a functioning democracy? It appears that Katie Couric doesn't realize this. It seems obvious to me that Palin is aware that in both places (Gaza and Iran) elections occurred, and the people who were elected may support terrorism.

Palin answers, "Yeah, well, especially in that region, though, we have got to protect those and support those who do seek democracy and do seek protections for the people... um.... who live there and we're seeing, today, in the last couple of days, here in New York, a speaker, a President of Iran, Ahmadinejad, who would come on our soil and express such disdain for one of our closest allies and friends, Israel, and we're hearing the evil that he speaks, and if that, if hearing him doesn't allow Americans to commit more solidly to protecting the friends and allies that we need, especially there in the mideast, then nothing will. If Americans are not waking up to understand what it is that he represents, then nothing is going to wake us up and we will be lulled into some kind of false sense of security that perhaps Americans were a part of before 9/11."

At this point, the camera shows Katie Couric, who looks very agitated. Why is she agitated? I'm struggling to understand how she thinks Palin didn't answer the question. I mean, her answer wasn't really that great or insightful, and it was somewhat indirect. Basically, the question was, "What happens if 'elections' elect leaders we don't like?" Palin's answer was, "We need to protect those who seek democracy and seek protections for the people." This is a logical, if somewhat mundane, answer. Further, she gives the example of Ahmadinejad and urges Americans to realize we must oppose him and people like him, especially in the Middle East. Lastly, she points out that since 9/11, we cannot tolerate the repressive regimes of the Middle East, such as that of Iran, or the hate-spewing, anti-Israel ones, of which Hamas is another example.

Comparing Gaza to Iran is not an entirely illogical thing to do. In fact, it's somewhat relevant. In both cases, a terrorism-supporting party which advocates attacks against Israel was 'elected' in elections of questionable fairness. Uh... why did someone send me this clip? How is this unique amongst all the TV interviews that politicians give? It sounds pretty run-of-the-mill to me.

I hope you readers out there also realize that Iran actively supports Hamas. Here's a quote from a news story from September 13th, 2008 (shortly before this interview):

Iranian news agency Khabar quoted him as saying to Hamas leader Ismail Haniyeh that he and the Iranian people as a whole consider it their religious and national duty to support Hamas “until the big victory feast which is the collapse of the Zionist regime.” He added that the group’s violence against Israelis would always be “a source of pride for all Muslims.”

Uhh... you realize, right... that Hamas and Iran are linked in some ways? Oh wait... you probably don't realize that, which would mean that Sarah Palin might know more than you do. Grow a brain before you send me these clips. I don't have time to help you sort out the basics of foreign policy, let alone language and logic.

Now, if you want to interpret Palin's answer more deeply, and I am not asserting that this is what she meant, but if you want to look deeper into it, then I think it has some implications for Venezuela and possibly Egypt. Palin's answer was basically, "We need to protect those who support those who seek democracy and protections for the people." This is an indirect way of saying, "We need to give weapons and money to the democractic forces in places like Iran and Gaza." Now, everyone knows that Ahmadinejad is bad, even if we aren't really doing anything about it. The "we need to wake up" message could equally apply to Venezuela, though. We need to wake up and realize that Chavez is an oppressive, authoritarian dictator-communist. We DO need to wake and up do something about him, as we do about Ahmadinejad. One can also infer from Palin's comment that, even if we don't openly fight Hamas, we need to oppose them more strongly because they support the destruction of Israel. It may not be politically expedient to say that we should openly fight Hamas, but that is not an unreasonable position, which she may have been inferring.

The alternative answer, which Palin did not give, was, "We need to respect the outcome of the elections." Not only is this not true (nowhere is there a rule that if Hitler is elected, you must then think he is a nice guy), but as I mentioned before, it's not at all clear that what happened in Gaza were even fair elections to begin with. The most clear thing about Palin's statement is that we need to protect those who genuinely promote democracy. Further, you might imply that she also says we need to "wake up" and stop adhering to the philosophy that once someone is elected in some weird, rigged election, they are somehow legitimate and on equal footing with other world leaders. If the elections in which Hamas won the majority of seats was legitimate, then a legitimate government now exists which opposes Israel's right to exist, and opposes individual liberties in general (such as many womens' rights). Palin's answer in this case should be understood as "we should back the opposition." If the elections were NOT legitimate, Palin's answer should be understood as "we should back the genuine democratic forces." Right or wrong, these are fairly straightforward viewpoints, even if she explained them in a slightly (although, by politicians' standards, not very) indirect way.

I'm sure there was more to this interview, and maybe in the other parts Palin made more or less sense -- I have no idea. But, at this point, seeing how Couric was already turning against her for her perceived failure to answer the question (even though Palin basically did answer, and Couric clearly didn't understand her answer), I don't know what I would gain by watching any more. Now, I have no faith that Couric isn't out to purposely make Palin look bad, which is fine, but it isn't interesting to me and it shouldn't be on a show that even pretends to present unbiased information or "news" of any kind.

SCC/SCM in Open Source

2008-09-30T15:59:00.000-07:00

Source code control (SCC), versioning, and the all-inclusive "software configuration management" (SCM) are hard things to do well. Most programmers think they know a "good" way of doing these things, and most firms think they have "good" systems, but I think that most firms and individuals actually aren't very good at these things.

Although I am a self-styled expert on this topic, I really am more of an evangelist for a certain approach to the problem than I am an actual expert. After all, I don't have 10,000 hours / 10 years of experience in this topic alone (well, actually, I have more like 20 years of thinking about the problem, but nowhere near 10,000 hours).

I bring this topic up because I was thinking about it today in the context of open-source development. When you have an open source team, one essential role on the team is that of release manager. Another important role is that of what we might call "technical director" or "architect." How an open source project team structures its source code control has a major impact on who contributes what. If, for example, untested code can be submitted, then a lot more innovative ideas can pop into the codeline, and a big firm might be able to get their bugs fixed by submitting them and watching for other contributors to find the problem. If, on the other hand, a single person has to moderate all submissions, for example, then to what extent is the project really open source? It is, in a way, but it's only as open as the moderator decides to make it.

Another way to ask the question is, "is it free as in speech?" If so, then how do you do versioning? If not, then how is it free software/open source and not simply, "a voluntary project managed by one or more individuals?"

Obama needs an IT guy with a brain

2008-09-30T14:25:00.000-07:00

I unsubscribed from the Obama campaign emails today. I just couldn't take it anymore. Today I got an email signed by both "Jon Carson" and "David Plouffe" in a confusing email-within-an-email-yet-not-a-forward that started with:
"I've never asked you to make a donation before."

While this may technically be correct, because I've never heard of Jon Carson before, the only reason I'm on the mailing list is that I made a donation. I have received other solicitations via the same mailing list, as well. It's ridiculous that they either a) don't realize who they're emailing or b) don't care.

Also, I'm unsubscribing for another reason. A few days ago I got an email suggesting that I register to vote if I wasn't already. The Obama campaign had created a little portal thing that advertised itself as a one-stop shop for registering, signing up for an absentee ballot, and getting information. I decided to make sure I was signed up for an absentee ballot. However, the Obama website claimed (no matter how I searched) that I was not registered. I suspected that I was, but before I had a chance to follow up, the next day, my voter info booklet thing arrived. So, I was registered (as I thought, as a Republican).

I am not claiming that this tool was made to purposely manipulate, but the Obama campaign should at least ensure that their tools work right and don't either a) deceive or b) waste peoples' time.

My complaints have still not been answered by the Obama campaign, although I made one last attempt to vent my frustrations when giving the reason why I was unsubscribing from their email list.

The Categorical Imperative and Moral Relativism

2008-09-29T12:13:00.000-07:00

I have been trying now for several years to write some kind of essay explaining what I think is wrong with moral relativism as a philosophy. I don't think moral relativism is "incorrect" per se, but my instincts tell me that it is dangerous not to balance it with some belief in an absolute reality and an absolute morality. Suffice it for now to say that I think one ought to believe, paradoxically, in both the purely relative nature of reality as well as the purely, absolutely objective natural universe, and that only by holding this paradox in mind can one understand and participate fully in reality. Also, only by valuing both sides equally can one be a truly "moral" person.

My new plan of attack is to try to use Kant's categorical imperative as a wedge to crack open the hedonistic, lazy moral relativism that has grasped so many of my peers. Briefly stated, the categorical imperative is essentially this:

"Act only according to that maxim whereby you can at the same time will that it should become a universal law."

This 'imperative' almost perfectly captures the paradox that I'm grappling with. It can be contrasted with 'hypothetical imperatives' like, "If I wish to stay cool, I should avoid the hot desert." The problem with moral relativism is that it puts things on equal footings that shouldn't be. All opinions are not equally valid, as long as a reason for them is hypothesized. One need not believe that everyone has a right to be heard, or that everyone's opinion is equally valid, to believe that all people are equal. The belief that we need to be more "the same" (that it's desirable for us to have the same material comforts, the same place in society, the same natural and unnatural advantages and opportunities) is a form of socially entropy that threatens to homogenize and thereby destroy society.

We need a categorically imperative approach to issues like equality, fairness, and justice in society. If we believed, essentially, that only those things which we could universalize could contain "moral" insights, then we would not impose the will of the majority, the popular sentiment, or any of the other adversarial notions of morality upon people.

An application of the categorical imperative might look something like this:
1) We shouldn't allow some killing of humans unless we would allow all people to kill. We don't want to allow all people to kill, because it violates our natural sense of what is right and wrong. Therefore, murder is generally prohibited. But what about killing in self-defense?
2) We refine the approach thus: We shouldn't allow killing unless it is justified. Then, self-defense, war, and execution all potentially have a place in our morality. But then, how do we justify killing?
3) We refine the approach further: Killing is justified when inalienable human rights such as life or liberty are taken away or threatened. We have thus defined categorical imperatives that life and liberty ought to be granted to all.
4) We have thus justified killing if it protects life or liberty. This allows us to make decisions like the decision to assassinate a butcher before he murders 100 people. We then run into problems about what is required to "prove" that he was going to kill 100 people. This eventually leads to further imperatives.

These issues are inherently "moral" issues, because we force ourselves to evaluate whether principles are universalizable or not. This approach admits both absolutism and relativism. Without both, we are making a system that only applies to half of life, or a system that does no more than say that if we believe something.

Leadership

2008-09-27T10:54:00.001-07:00

Over the last several months I have been evolving a new theory of what leadership is. The theory goes something like this:
Leadership is choosing the time and place to take risks, and the size of the risk to take. This definition is not totally satisfactory to me, though, because I think that taking risks is still too easy of a thing to do. If someone is well versed in probability, they can effectively figure out times and places where the reward:risk ratio is best, and that would constitute leadership. But, this seems too simple.

In fact, I would argue that leadership is more than just taking risks. Leadership is doing things that are unpopular. Defining unpopular here is difficult, and it's more than simply the fact of something enjoying less than 50% support. For lack of a better one, I have decided to use the Rousseauian term General Will to express "the wants of the masses." The leader goes against the General Will. Doing this well is the stuff of history.

Caesar

2008-09-22T23:40:00.000-07:00

"Caesar could brook no superior, Pompey no equal." - Lucan

And thus the consulate was torn asunder. And thus the world was changed forever.

"Let the die be cast."

Arm Strength is for Suckers

2008-09-22T20:50:00.000-07:00

I have been watching NFL Football my whole life, and much of that was spent watching great quarterbacks such as Montana and Young. I have devised a new formula for predicting quarterback success. This formula is meant to purposely downplay such traits as arm strength, height, passing accuracy, and other factors. Basically, once a QB reaches the pro level, it's not minor variations in arm strength that correlate with success. Instead, I propose these factors:

Backing up a veteran QB for 2-3 years. This time is spent practicing, understanding the offsense, and building confidence and maturity. QBs who just jump right in seem to struggle mightily.
Being tough. Good quarterbacks are tough and have no fear. You don't have to be the fastest guy to scramble for gains, but you have to be tough as nails and unafraid.
Establishing comeback potential. Once everyone believes that you can put up points in a hurry, two things change. First, the defense plays you differently. Second, your guys don't give up on you.

I assert these are the three measures of a QB that best predict success.

Aaron Rodgers vs. Alex Smith

2008-09-21T17:06:00.001-07:00

I was afraid to say it at the time, and I am obviously a 49ers fan, but it is now abundantly clear that the 49ers should have picked Aaron Rodgers instead of Alex Smith. This is true for two reasons:

The 49ers have wasted $50M on Smith
Rodgers went to Cal.

Pakistan: With Us or Against Us?

2008-09-21T14:25:00.000-07:00

For the last year or two, it has been very hard to figure out to what extent Pakistan legitimately wants to crack down on terrorism within its borders. Specifically, I'm talking about the al-Qaeda style terrorists who seem to be mostly up in the mountainous areas near the Afghanistan border, not the separatist or religiously minded terrorists largely targeting India and living in the Kashmir.

Musharraf essentially threw himself in with the US after 9/11, got a lot of support from the US, survived several assassination attempts, and did help hunt some terrorists, for a while. Toward the end of his presidency, though, it was unclear to what extent he was:

Unable to stop terrorists from basing their operations in Pakistan - Did the various security apparati of Pakistan still really work for him? Did he fully control the army? Did the army have the capacity to battle the Taliban/Al-Qaeda types up in the hostile mountain regions?
Unwilling to stop terrorists from operating in and from Pakistan - Did he fear that he would lose his grip on power if he pushed too hard against the militants?
Pretending to stop the terrorists - Was he never doing anything more than appeasing the Americans and being obsequious in order to gain our financial and military support?
Aiding the terrorists - Was (or is) Pakistan actively helping certain terrorist groups to destabilize Afghanistan or otherwise influence the balance of power there?

Right now, Pakistan is in a critical situation. With new leadership there, it is still unclear where they stand. The recent bombing of the Marriott only makes this situation more dire. Pakistan has said it will oppose any attempt by Americans to perform military actions on Pakistani soil (which the Americans would not have to do if Pakistan could/would fight the militants themselves). Most people didn't really understand the point of President Bush's "With Us or Against Us" statement at the time, but this is exactly the situation he was talking about.

The US must push Pakistan to actively hunt down and deny safe haven to all terrorist groups on its soil. As a sovereign nation, with rights to its territorial integrity, Pakistan has an obligation and responsibility to actively oppose anti-American or anti-Afghani military activity and illegal activity occurring on its soil. Should Pakistan shirk this responsibility, it cedes its territorial sovereignty automatically. If Pakistan should choose to say that its government officially supports the United States and opposes terrorism, but chooses not to fight the militants or police lawless safe-havens because a) it is afraid of increasing anti-government sentiment in Pakistan against the government of Pakistan, b) it is afraid of retaliation, or c) it is afraid of negative repercussions in its relations with other countries, then Pakistan is not "with us" it is "against us."

Most of the disaffected in Pakistan have no legitimate gripes against the United States that come anywhere close in importance or magnitude to their gripes against their own government. If the government of Pakistan allows illegal, hostile, violent, anti-American groups to fester because it doesn't want them to turn into anti-Pakistan groups, then it is an enemy and is "against us." This is exactly what Saddam Hussein, Chavez, Ahmadinejad, and a host of other bad guys do and have done.

It is sometimes tempting to think, "Well, if we stop intervening or interfering, they won't hate us in the first place." This is absurd, though. During the 90s, we didn't intervene in Rwanda, didn't push the Russians too hard, withdrew from Mogadishu, did almost nothing to Iraq in 1998, offered no more than token support to Iranian reformers, let the pro-US forces in Beirut fend for themselves, "bargained" with N. Korea, didn't push Egypt to open up to democracy, etc... What did we get for all these efforts? The worst terrorist attacks against the US (and western allies) in history, a reinspired, militant, aggressive Russia, an openly hostile, brutally oppressive regime in Venezuela, a Saddam that gave reward money to the families of suicide bombers, pursued a policy of genocide against the Kurds, and fired on American planes patrolling the no-fly zone, a nuclear-armed North Korea, a colossal genocidal tragedy in Sudan, a resurgent Al-Qaeda in Pakistan and Somalia, and an Iran in clear violation of the NPT.

That strategy, which is tantamount to appeasement, and in part on the continuation of which George Bush got elected, clearly did not work. After 9/11, we adopted the much more realistic and morally consistent "with us or against us" strategy. We should stick to that strategy now with Pakistan. If they don't do enough to prove they are "with us," then, effectively they are "against us." If they don't stop terrorists from operating on their soil, the US should.

Boring People who "Like" "Food"

2008-09-21T12:40:00.000-07:00

I have a new theory about why so many people are so into "food," "travel," or "the outdoors." These are things that people say they're into when they are essentially boring people.

I mean... yes... someone can be a genuine nature lover. A guy I know from work goes to great lengths and hikes through muddy swamps and whatnot in order to take pictures of outdoor scenes. But a) he's a very good photographer and b) he's also into all sorts of other stuff.

Here's my point. How many people are NOT into good food? Most people like it. How many people never travel or never go outdoors? There are probably some, but, basically, when I talk about the 25 year old girls who list their hobbies as 'food' and 'travel' I mean... which of their peers dislikes these things? These are not hobbies. Eating is not a hobby. Everybody eats. In fact, eating good food is not a hobby. If you are a single person living in a city, going to restaurants is not an interesting hobby - most people do it. Do you think they don't enjoy the good restaurants more than the bad restaurants? Who doesn't like to go to good restaurants with their friends and have fun? That's just regular people stuff. Is there nothing better you can think of to list as a hobby? Nothing that would differentiate you from... all other humans?

My new hobby is breathing. Not just breathing... but breathing well. Sometimes I think about breathing a lot. I check my pulse. I even jog to try to improve my breathing. I hold my breath and time myself. I'm pretty into breathing. That's my hobby. I'm so unique.

I have a friend who's a chef. If she said her hobby was cooking, it would only be inaccurate in the sense that she gets paid for it, so perhaps it's more than a hobby. I'm not talking about people who are chefs.

Now... I like food, restaurants, travel, and the outdoors. However, I also like tons of other things -- things that are more unique and distinguish me more from other people. So, if asked, I might say my hobbies are "foreign movies," "philosophy," "RPG/FPS/RTS games," "the History Channel," "building computers," "basketball," "starting businesses," and "writing letters to Condoleezza Rice." It's not that I don't like food, it's that I spend my life on a broader range of activities than enhancing my sustenance-taking experience.

If you imagine the boring 22-year old girl from San Jose who lists her hobbies as food and travel, yet knows little-to-nothing about cooking or geography, put her hobbies in perspective. She is a boring person with no hobbies to speak of.

Before you say you are "really into food," ask yourself... are you? Are you more into food than other people? Than all your peers? I'm sure you know more about some kind of cuisine that someone else you know... but are you into Mediterranean food? Do you know much about it? Do you think that "white meat" is "bland?" Do you know which desserts came from Italy, and not France? Do you know the difference between real Japanese food and fake Japanese food? Are you sure? Do you know what part of a cow the sirloin comes from? Do you know what Swiss Chard is? Would you fall for the Pizza Hut trick? Do you understand that all things are not made better by adding more salt? Are you sure that in a blind taste test you wouldn't systematically prefer the dishes with more salt? Most people do. Of course, then again, most people think they can taste the salt content of food, but most people can't (they can only taste the salt crystals on the oustide of food).

I'm not a foodie, and I don't claim to be one, but I suspect I know more about food than most of you do, and yet you list your hobby as "food." I think this means you're boring.

There's something even more sinister than this, though. You might be worse than boring; you might be spoiled and vain. Let's say that there is some 25 yr old girl from SF who posts all her pics of herself at restaurants, with her friends, and all their food. She claims she "loves GOOD sushi, not that shit that they have at Korean-owned sushi restaurants" (nevermind that sushi is Korean, too, or that you could theoretically have a good hamburger made by a South African guy in Mexico). She has been to lots of places in the world with her parents, for a semester abroad, and on trips that her boyfriend pays for. She lists her hobbies as "travel" and "eating - i love to choW dOWn!"

Now, take another girl who's 25 and lives in the Bay Area, but can't afford to eat at fancy restaurants or go on trips to Rio and Tokyo. Does she actually have different hobbies? No, she doesn't. In fact, the second she got a chance to go to Tokyo, she would start putting down "I love REAL Japanese food" and "travel" as her hobbies. They are already her hobbies, because they are already things she cares about; she just can't afford them. When you say that your hobbies are travel and "finding good restaurants" or whatever, and you aren't really that into either one, any more than anyone else is, then the only way in which you're actually differentiating yourself is that either a) you are well enough off to afford these things, b) you get people to buy you these things, or c) you have nothing else to do, so the second you have free time you always spend it traveling or going to restaurants.

Congratulations - you have showed how unique you are. Find a real hobby. Or, better, yet, do something with your life.

Venezuela

2008-09-19T16:51:00.000-07:00

Hugo Chavez's recent expulsion of the US Ambassador should not go unpunished. Venezuela has become a pariah state and Chavez is endangering the lives and livelihoods of the tens of millions of citizens of his country and its neighbors. He is following the age-old formula of wasting the fruits of his peoples' labors on silly pet programs, unneeded weapons, and the mechanisms of an authoritarian state, while blaming anything that ails Venezuela on the United States.

He has banned the free media, supported the FARC, and suppressed his political opposition. These things alone should warrant his removal from power. Attempting to remove Chavez from power should be considered, but at this time, it appears that the more prudent thing to do is to force Venezuela to face consequences for its behavior. These actions should be aimed at the government, not the people, of Venezuela. In cases where the population should be affected, the US should make every effort to inform the citizens of Venezuela about what Chavez is doing.

The US should immediately restrict access by the Venezuelan government to the international banking system, as well as interdict and search any and all vessels crossing the open seas which may be suspected of carrying illegal drugs, legal or illegal weapons, illegal human cargoes, terrorists, or laundered money. The US should seize any contraband or weapons found. The US should put Venezuela on the list of state sponsors of terror. Finally, the United States should also push the UN security council for a resolution authorizing the use of force to prevent contraband or weapons from flowing into Venezuela.

Credit Crisis 2

2008-09-18T12:33:00.000-07:00

Building upon the same ideas I was talking about a few days ago, I'm going to take another stab at "explaining" what's going on with banks right now.

The financial crisis is worsening, but this shouldn't really surprise anyone. What is perhaps more surprising is that it's not having a bigger impact on the economy outside of the financial sector. I will return later to the question of why this is the case. But first, let's review some of the problems:

We're like a person with the hiccups who keeps thinking he's cured, only to be surprised by the inevitable next hiccup. What will it take to shock or relax us all the way out of this mess? One of the major problems is that people keep underestimating how bad their debt portfolios are:

A bank has bad loans. Eventually it realizes some of these loans are no good, writes them off, raises some more money to meet the reserve requirements, and then for a while, things appear to be OK again. Rinse. Repeat. Why don't they get all the debts written down in one go? This is an oversimplified way of looking at the problem, but I think there are many factors that are clearly part of the answer:

1) Because they (all the way up to the CEOs) are completely unrealistic about housing prices. Underlying much of this "bad debt" are mortgages that are underwater, people that can't afford their payments, and declining real estate values. If you find yourself thinking things like, "maybe housing prices have gone down, but not around here, or only a little bit" then you are making the same mistake the CEOs of investment banks are making. If you think that -5% to +5% is a reasonable range for the rate of growth of housing prices for the next year, you are not calibrated. My analysis of the fundamentals, which I hope to organize and publish on this blog, says that housing prices could still fall by as much as 40%. I'm not saying they *will* fall by 40%, but I'm saying that anyone who's "sure" that prices couldn't fall another 20% is crazy (and wrong). There is no evidence to suggest that it's impossible or very improbable that prices could fall 25% by next Christmas.

2) Because they are making the mistake of caring about sunk costs. It doesn't matter what size "loss" you have to take. That money is gone. If, starting today, it's better to hold these debts on your balance sheet, that's what you should do. If, starting today, it's better to get these debts off your balance sheet, that's what you should do. It basically makes no difference whether they've "gone down." In fact, the more they've gone down, the bigger the tax benefit of dumping them will be. Individual consumers are making this same mistake. There are tons of people out there who *should* be selling their houses. In order to sell, they would have to accept much lower prices than they want. They think it's better to "wait it out" and sell later, when prices are higher. They are very often wrong. Many people in this situation would be better off if they sold the houses now, even at the low prices, stopped paying the mortgages, and used the cash for other purposes. But, they aren't sophisticated enough in their understanding of personal finance to actually understand their *own* financial situations.

3) Because the CDS (commonly referred to as "swaps") and other such derivative instruments are so difficult to understand that financial analysts, accountants, and executives can't easily assess their exposure to various asset value declines.

Firms never should have let themselves get into this situation. They turned a blind eye to the risks they were taking with financially engineered derivative instruments and securitized debt.
The regulatory scheme for these products (commonly dealt in by investment banks) was "bad."
Many of the debt swaps, for example, were not traded on any kind of market. They were just traded between individual parties. This created complex domino chains of default and risk. It meant there was no "market price" for people to "see" and react to. It has become fairly well understood that the point of capitalism isn't just to facilitate free exchange, but also to support free "markets."
There was a lack of adequate or logical insurance requirements for these instruments. Firms didn't have to purchase the insurance they should probably have been required to have. Because they didn't have to purchase this insurance, rising insurance premiums did not serve as a signal that something was wrong between about 2003 and 2006, while these problems were incubating.
There is a lack of transparency to these products, making it hard even for professional investors to analyze them.
People were greedy, and took advantage of the obscure nature of these products to take financial risks that might otherwise have been discouraged, because the potential upside was so large.

I think that I agree with McCain that the chairman of the SEC should probably be fired. The SEC had the responsibility for regulating brokerages and others. It failed to do a good job. The regulation of commercial banks, which is handled by different bodies, seems to have worked much better.

CEOs of investment banks are underestimating the "badness" of debts in part because people are irrationally holding houses they should sell, keeping them off the market, and making prices appear artificially high. Maybe this is happening more than people realize. The slow deleveraging of individuals may be hindering the "right" amount of deleveraging by banks. If this is the case, I see two possible scenarios:

1) Maybe this will start seriously affecting individuals soon because no possibility of refinancing will exist and more and more people will be foreclosed upon. With more foreclosures on the market, prices will finally fall and more people will have negative equity and finally be forced to deleverage. In this scenario, individual consumers, especially home-owners, will get hit hard by this problem over the next couple of years.

2) Maybe the values of these houses, which were largely imaginary, were exploited by the banks and mortgage brokers to such an extent that they will now pay the majority of the price of adjustment. Maybe they "captured" so much of the real estate boom that consumers won't be as affected by it as they otherwise would. We have already seen $500B in real estate wealth disappear, and I suspect that number will double or triple over the next year. Even $1T of losses would leave the real estate market overvalued, in my opinion. Even after $1T of losses, we will probably see real real estate appreciation over the next 10 years lag behind the rest of the economy (to complete its correction).

President Bush deserves some small measure of responsibility for some of this. I don't know how many people he really influenced, but his ownership-society policies that pushed people to buy houses did contribute to the irrational exuberance about the real estate market.

The Disutility of Yelp

2008-09-16T10:09:00.000-07:00

Ok. Yelp reviews are so senseless.

Point the first: What is the review based on? Is it on the food? The cleanliness of the bathroom? The price/value? Whether they deliver? The reason this matters is that when someone gives a place (2/5) stars because "for $8 the burrito (which was good) should have been bigger" or (5/5) because "They D-E-L-I-V-E-R (I stoke!)" this throws the ratings off. The only way this isn't a problem is if both: a) there are many reviews and b) the weirdness of peoples' reviews is normally distributed. These are not both always the case.

There is already a place where it shows the number of $'s. So, the reviews would be more helpful if they were just on quality (I can then divide quality by price to determine value). But people all have their own criteria, which means that you get a mish-mash of reviewing criteria, which destroys the value of the rankings.

Point the second: Everybody thinks they're a foodie now, but they're not. I just read a review where this guy went on and on gushing about how some restaurant was the greatest thing ever because it had Italian food AND seafood. Seafood is Italian food numnuts. Italy is a huge peninsula, surrounded by fisherman. What did you think they ate? I guess he thought that Stouffer's lasagne was authentic. This guy probably also loves the Olive Garden and Pasta Pomodoro. How does this review help me? There are SO many like this.

Point the third: Expectations. Let me illustrate it like this. Most In&Out's have 4 stars on Yelp. Many fancy restaurants that have excellent food also have 4 stars. This happens because ratings are based on what people expect when they go there, which is, of course, inconsistent. Now, I love In&Out as much as the next man, but this just proves that strict quality of food is not represented by the ratings. I know that's not the only point of Yelp, but it's the main point, isn't it? If it isn't primarily about finding good food, what is it for? If I can't differentiate between In&Out and Morton's from the ratings, how meaningful are they really?

The people on Yelp are like the people in the Pizza Hut commercial, who are served Pizza Hut food in a fancy restaurant, give it rave reviews, and then act (except for one dude who's my hero) embarrassed to learn it's from Pizza Hut. The guy who's my hero simply says, somewhat defensively, "It's good!" He is able to do this (not be superficial and tell the truth about how he feels) because he is not a pretentious douche.

Point the fourth: The Pinay mafia. Not to pick on the lovely Flip girls, but it appears that there are huge amounts of reviews on Yelp from big groups of girls who are essentially competing to be cool in the eyes of their friends via Yelp. They compete to be leet, gush about 99% of restaurants at which they "had fun" regardless of the food, and then trash a restaurant randomly because they are 21 and don't have enough cycles behind them yet to have learned how to compensate for their PMS.

The Solution:
I suggested my method to Alex, which is to look at tons of the reviews and the pictures of the reviewers and try to construct some sort of essence of the restaurant. Here's an example... hmm... city-girls like this place b/c it has takeout and their boyfriend is "practically a regular" (which is non-sensical, b/c if he were the regular, she should be cutting & pasting his review). The pinay mafia also loves the teriyaki chicken (because Filipinos like sweet things). All the people who gave it 5 stars are white. 50% of reviewers said the sushi is super fresh and 50% said it was NOT fresh (because regular people are not equipped with a fish freshness detector in their bodies - instead they got the standard factory package (poorly trained eye and nose and little to no knowledge of fish or food preparation))(I am willing to bet that if you take the sushi people think is not fresh, put it in the fridge until it's 8 degrees colder, mist it, and serve it to (most of) them again, they will think it's super fresh, even though it's now 1 hour less fresh). Finally, several Chinese guys complained that it was overpriced and the portions were small (despite the fact it has 2 $'s). Nobody named Yuki or Ayako has reviewed the restaurant.
CONCLUSION: INCONCLUSIVE. There is no conclusion. You have no clue whether this is a good sushi restaurant or not until Yuki and Ayako go there or a real food critic tells you whether the sushi was fresh.

Alex's solution:
Find individual reviewers you agree with and just follow their reviews. This method has the virtue of being a whole lot quicker than mine. It probably works better. However, it is less comically amusing.

This is part of a longer rant that is forming in my mind about how the internet and the 2.0-captain-ajax-interblag and whatnot isn't as cool or revolutionary as people think it is.

To hammer my point all the way home:
I think a site that showed a pic of the exterior of the restaurant (and address), interior, parking lot, and menu with prices would be more useful.

Now... the UPC code... that was revolutionary.

Tbilisi Screwed Up

2008-09-15T23:57:00.000-07:00

The Georgians really miscalculated in this whole thing. They knew full well they were going to set the Russians off, but I think that they (the Georgians) thought the US would actually support them militarily.

Now, thanks to this, everything is all screwed up with Russia. On the other hand, things were deteriorating pretty badly with Russia, anyway. But one still has to place some blame on the US Government for not explaining the world to the Georgians a little bit more clearly, sooner.

Trying Hard to Support Both Campaigns as Much as I Support Both Candidates

2008-09-15T20:12:00.000-07:00

I am totally getting spammed by the Obama campaign since my donation. Here is my exchange with them. Their fund-raising drivel comes first, followed by my response (this message is annoying for a million reasons, not the least of which is it kind of implies that I didn't just donate money to this campaign a couple of days ago):

"On Mon, Sep 15, 2008 at 12:33 PM, David Plouffe, BarackObama.com <info@barackobama.com> wrote:
Andrew --
Even Karl Rove had to admit yesterday that the McCain campaign's lies and negative attacks have gone "too far."
John McCain is running the most negative and dishonest campaign in modern presidential history. He has demonstrated that he'd rather lose his integrity than lose this election.
It's right out of the Bush-Rove playbook. Unfortunately, as Karl Rove knows better than anyone, these shameful tactics have worked in the past.
This year, we can't let that happen.
Our goal is to bring 50,000 new donors into our movement by Friday at midnight.
And if you make your first online donation today, your gift will go twice as far. A previous donor has promised to match every dollar you donate.
Double your impact right now. Your matched donation of $5 will become $10 if you donate today.
The culture of corruption and dishonesty that has hurt America so badly the last eight years is playing an even larger role in McCain's campaign.
Just this past week, John McCain hired a Washington super-lobbyist to fill positions in a potential McCain-Palin White House. At least 177 lobbyists have been on McCain's campaign staff, and apparently he hopes to run the White House the same way.
Also this week, the McCain campaign continued to repeat a number of outrageous lies, even after watchdogs in the media called them "shamelessly misleading," "thoroughly dishonest," and "a toxic mix of lies and double-speak."
They also lied about the crowd size at one of their rallies -- reporting 23,000 attendees when there were only 8,000.
McCain's campaign -- run on lobbyists and lies -- is no match for this unprecedented grassroots movement. More than 2,500,000 people have stepped up to own a piece of this campaign.
But if we want change, we must continue to grow this movement and put an end to these dishonorable political tactics. And we have just 50 days left to do it.
Right now, a previous donor -- an ordinary person just like you -- has promised to match your donation if you step up today.
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Thanks for all you do,
David
David PlouffeCampaign ManagerObama for America

Mr. Plouffe,

I donated to the Obama campaign because I like Sen. Obama. I also like Sen. McCain. Sending this kind of faux muckraking stuff to me doesn't make me hate Sen. McCain or like Sen. Obama better - it confirms what I already thought, which is that both campaigns are engaged in exactly the same kind of negativity.

I donated $25 to the McCain campaign and $25 to the Obama campaign. I haven't yet decided whether to donate any more to either. But you are unlikely to get any more from me by saying, "he did it first, neener neener, give us money." Despite how mind-numbingly immature both sides' campaigns appear at times to be (evidenced by emails like the one from you to which I'm replying), I still feel that we, as Americans, have two great candidates this time. Telling me that one of my heroes (Obama) is "great" by disparaging another of my heroes (McCain) isn't exactly the way to win my vote, either.

Regards,
Andrew Barkett
Technical Program Manager, Google, Inc.
Sr. Management Consultant, TAOS Mountain Inc.
Sr. Management Consultant, NVIDIA Inc.
Member, Bay Area Council

PS I reserve the right to post your original solicitation email and my reply on my various blogs and other media outlets to which I have access.

You Are a Bad Person

2008-09-14T09:53:00.000-07:00

I have been thinking for a long time about how most people think they're "better than average" people, yet that's absurd, statistically. I read a poll once that said that 80% of people consider themselves better-than-average drivers. Of course, this is basically impossible (technically, it's possible, but the point is still that people overestimate their own talents (or underestimate those of others)).

So, my frustration is that most people think they are good people. In fact, most people think they are better than most other people. But they aren't. Roughly half the people out there are worse than average. It's just a fact. So, the chances are about 50/50 that you fall into the "worse person" half of the spectrum.

I have finally found a way to explain this...
Let's say we're having an argument about whether you're a selfish girl or not.
Me: "You're a selfish girl."
You: "No, I'm not. I may have been acting selfish just now, but I don't usually act this way."

Here's my new zinger punchline: Serial killers don't usually kill the people they see. They kill only a small fraction of the people they see. But killing a few people is enough to make you a terrible psychotic murderer. Maybe being selfish some of the time is all it takes to be a relatively "selfish person."

Bill Gates / Jerry Seinfeld Ad

2008-09-14T07:51:00.000-07:00

There has been a lot of talk about the new Microsoft Ads. Many people hate them, which is no surprise, and they certainly are odd, but I offer this analysis of one way in which I think they are going to be highly successful.

Who looks like the computer nerd in these frames?

From left to right (top to bottom): "Bill Gates," "PC guy," and "Mac guy". Umm... exactly 2-3 of these guys look like the IT nerds I know. The third one (the guy on the (bottom) right) looks vaguely like Zach Braff, which is a different kind of geeky that has nothing to do with AV clubs and everything to do with Hollywood. Real IT guys are: fat, inappropriately dressed, have lame haircuts, etc...

They shop at places like this:

I, for example, shop at Shoe Barn most of the time, because it's cheaper and you can't tell the difference between my Shoe Barn shoes and expensive shoes. When I am going to buy (or build) a computer, the first thing I look at is the price/performance charts for CPUs. If you ask a Mac owner what CPU her Mac has, she rarely knows.

This is how a computer guy buys shoes:

Computer guys eat churros:

Computer guys sometimes have health problems. They do not work out enough or eat right. This is part of being a computer guy. What the hell is the Mac guy wearing? He's coke-addict skinny and it appears he's wearing a collarless Kung-Fu-the-Legend-Continues shirt. Who would win in a fight between these two guys? No contest, the bigger guy wins. He also appears to have his original digital watch from 1985 and a cheaper haircut. So, he wins the fight and he saves money.

The Apple Ads have always pissed me off because a) they make fun of me, b) they are about how getting a Mac makes you "cool", c) they are factually inaccurate and misleading, and d) they aren't funny, they're just smug.

This one says, "Unless you become a Mac user you can't get that Japanese girl that you want." WTF:? A) This is not true, I am living proof, and B) Why do you fall for this crap? Getting a Mac will make girls like you? That's why you like Macs? Aren't you insulted that a computer company would market to you that way instead of like... reading off performance specs? I am. That (ceasing to care about what's under the hood so you can get a fancier outside to impress girls) is not a computer-guy thing to do. It's like driving around in a Passat with the top down because it'll make chicks like you. This is not a real car. Real car people do not buy those.

Real computer guys eat pizza all night, drink soda with both sugar and caffeine, don't wear fancy clothes, are moderately anti-social, play video games all the time, have no clue where to get that black collarless shirt, shop at the Shoe Circus, and usually don't have girlfriends (but when they get them, it is never because of their Macintosh). Computer guys should learn only enough about Macs to help girls (that buy them because they're pretty) fix them when they're broken (which is always) in order to aid in getting laid. Furthermore, while fixing these computers in hopes of getting laid, computer guys should berate Macs for always being broken and to discourage superficial behavior on the part of women.

PS I had to watch all the Mac Ads on YouTube because either apple.com or quicktime (or probably both) were broken this morning.

PPS Please note: I am no great fan of Microsoft, either, but their commercials are less annoying (and more accurate in their depiction of reality) than Apple commercials.

PPPS Also, my computer nerdry is unassailable, so don't get any ideas: I taught myself how to program when I was 7. I have built more computers than you have owned. I have been an IT guy and a software developer. I am totally impatient with you when you can't operate your computer. I know at least 8 programming languages. I used to work inside semiconductor factories. I was the king of BBS games. I work at Google. I now also work at nvidia, which makes graphics cards that are basically only used for computer games. My greatest fear and aspiration is that I will (accidentally) develop an evil AI. My roommate and I made an online cockfighting ring that we made money off of. I have released my own shareware, I have installed many distros of Linux, and I currently have 2 desktops and 4 laptops in my room.

The Nature of Free Will

2008-09-13T20:31:00.000-07:00

Free will without logic and causality is useless, because while we may be free to choose, we won't be able to tell what we're choosing. Imagine a world where there is no strict relationship between cause and effect. In this world, events would seem completely random. I could choose to open the refrigerator, but it might spontaneously close itself a moment later. Or, it might stay open, but the little light might not come on. This means that I would not be truly “free” to turn on the light in the refrigerator, because whether it came on or not would be purely a matter of chance and I would have no influence upon it. Free will only makes sense in the context of a universe with a high degree of predictability and stable rules of cause and effect.

If free will only makes sense in the context of an ordered universe, which works like a long line of dominoes of cause and effect, then our “choices” are little more than the decisions about where to set up dominoes that will fall later in the chain. I do not choose to tip over every domino in a chain. In fact, even if I set up the dominoes quite carefully, I don’t even know for certain that each one will tip over. This small degree of uncertainty about the dominoes represents the uncertainty that we humans have about the physical universe. We assume that rocks don’t suddenly leap up off the ground, but they could, in a theoretical sense, do just that, according to the laws of quantum mechanics. In fact, individual atoms do weird things like that all the time. The probability that all (or even most) of the atoms in the rock spontaneously decide to move in a gravity-defying direction, though, is so small that you might have to live for trillions of years just to see that happen with one pebble, somewhere on the earth, one time. Even in trillions of years, it’s unlikely that it would happen.

We might have another choice beyond the choice of where to set up our dominoes, though. In fact, none of us really tips over the first domino. Our very births are just dominoes in some existing chain. But, we might have the ability, metaphorically, to tip over dominoes “out of order” like an eager kid starting in the middle of a long line because he’s eager to see that line of dominoes fall.

We might also have the choice available to us of what dominoes we see fall. We might be able to choose to watch one trail of dominoes now and another later. We might not restrict our perspective to watching a single trail of causes and effects. The importance of this choice should not be overlooked because if no one ever chose to look in a certain direction, at lines of dominoes off in some dark corner of a room, we might never even know those dominoes exist.

These few choices are the main (perhaps only) ways in which we can express our free will, which is dependent on the order and causality in the universe, the rules of physics, and the relationships between causes and effects maintaining a degree of consistency over time (predictability). The ironic conclusion is that in a world with no “lines of dominoes” – a world in which things happen arbitrarily – we are not free to choose our paths.

We must then, be chained to the laws of cause and effect in order to be free, the same way we must have limited rights under our government to maintain our liberty. For example, if I am free to kill at will, I can deprive you of your freedom to live, and thereby, your free will. Such is the order of the universe. It is a paradox that freedom can only exist partially, and partial freedom sometimes seems like no freedom at all.

There are many odd implications of this idea that freedom is inherently partial. First it means that, the same way a society cannot be organized by anarchy, truly free will on the part of its participants is an impossible way to organize the universe. Truly and completely free will is not possible without cause and effect, and cause and effect can exist only in an ordered universe. An ordered universe has rules, and these rules place limits upon the imposition of our wills. These conclusions raise moral, ethical, and philosophical conclusions: are people who don’t understand cause and effect less free?

Intelligence, logic, and even religious faith are ways of decoding, demystifying, or subjugating the seeming arbitrariness of the universe. Gravity seemed completely arbitrary until it was understood by Newton. Gravitational effects on an interstellar or light-speed scale seemed arbitrary until Einstein refined Newton’s theories of gravity. If education or faith reduces arbitrariness, do they then increase free will? Am I making a “more free” choice if I do so within the context of a greater understanding of how the universe would work should I make no choice (or a different choice)? In some ways, this feels intuitively correct. If I truly have no clue who I am voting for (if I just choose the longest name, or the one that comes first alphabetically), have I exercised less free will than someone who consciously votes for a particular candidate for particular reasons? If I have no idea how to drive a car, should my “choice” to steer it into a lake be viewed in the same way as a similar choice by Dale Earnhardt Jr.

There is also a further moral implication. If someone has no understanding of cause and effect, if they can’t predict what will happen tomorrow, what have I really done if I throw them in jail? What have I taken away from them? As far as they understood the world, this might have happened, anyway. Uncomfortable as this implication may be, it seems that if a person were completely unable to predict events, and therefore completely unable to exercise free will, then he would have no freedom for me to take away by my putting him in chains. This sounds silly, and it doesn’t apply to humans very well, but it’s exactly the argument we use for other living organisms. We treat plants as if they have no free will (and they don’t seem to). Whether it is sunny, whether they are watered by rain, or whether they are eaten by animals appear, from the plants’ points of view, to be completely arbitrary events. Since plants have no free will, we have no qualms about deciding to lock them up, move them around, or kill and eat them.

Perhaps the most relevant implication, though, concerns education. Because understanding the universe reduces arbitrariness, and in a world with less arbitrariness -- a world in which we can see all the perfect lines of dominoes as they are -- we have the most true freedom to choose what to look at and if or how to interfere with the lines of dominoes. Education, logic, intellect, or religion -- anything that helps us understand the universe -- sets us free.

10,000 Hours or 10 Years

2008-09-13T19:59:00.000-07:00

What does it mean to be an expert on something? What does it take? A lot of research has been done about this, and, unfortunately, I don't have links to all of it here. One pattern that I have seen emerging in the research, though, is that there is some kind of threshold of experience that seems to be strongly correlated with mastery.

I have heard two different estimates for this threshold. I have heard that one must spend 10,000 hours on an activity to attain mastery. For example, a study that correlated different factors with athletic success found that number of hours spent practicing was a better indicator of success in a sport than such aspects as whether one's parent(s) played the sport, natural physical ability, or intelligence.

Another estimate that I have heard is that it takes 10 years of active participation to become an expert. Of course, there are lots of things people do for 10 years without mastering. But, doing something diligently, like, say, as a job, for 10 years does seem like enough to achieve mastery. If I programmed in Perl for 10 years, I think I would be an expert on it. If I worked at playing the saxophone for the next 10 years, I might not be the best player in the world, but I would likely be considered an expert by almost everyone who assessed me.

In fact, these two estimates aren't too far apart... if you do 10,000 hours of something over a 10 year period, it amounts to 1,000 hours per year, or about 2.74 hours / day. That seems pretty believable. So, if you do something for 3 hours per day, with a little break in the middle, you'll be an expert in roughly 10 years.

Credit Crisis

2008-09-12T12:48:00.000-07:00

The front page of the WSJ today had an article titled "Credit Crisis Strains Government's Options". It posed this question: "Why haven't the steps taken so far calmed the system? What can policy makers do next?"

There are many aspects to this crisis, but I want to focus on three, very specific issues: consumer deleveraging, bank regulation, and housing prices.

Consumer deleveraging
Deleveraging, or shedding debt, is a process that both corporations and individuals go through at times. It's not necessarily unhealthy, just as borrowing money (leveraging) isn't necessarily unhealthy. The key to deleveraging, though, is that it takes a long time. People can't just immediately shed loans. The process of, say, moving to a different house, selling a house, or selling other assets and paying off debts, can take months. So, although the housing price drops started affecting people as much as a couple of years ago, we are still feeling the aftershocks of deleveraging adjustments.

Bank regulation
I will leave the broader question of whether we have too much or too little bank regulation alone, but I am going to argue that in some very specific ways the regulation scheme is causing a problem. Banks, right now, are having a hard time raising money. There is a lot of money out there, though, so why can't banks get it?
1) People are unsure how to assess risks right now, because the various bond rating schemes and whatnot clearly did not protect investors (such as foreign sovereign wealth funds) as much as was expected in the last year or two. Regulators are causing a further moral hazard by bailing companies out, which makes risk hinge as much on the likelihood of a bailout as on the inhereny stability of a bank's finances.
2) Hedge funds and private equity are restricted by rules that cap their ownership of banks at 25%. It's understandable that banking regulations should apply to companies that own banks, even if they don't refer to themselves as banks, but right now, that means that places like Lehman can't get any more money from Blackstone.

Housing prices
A lot of imaginary wealth was created in housing prices. Housing prices are only fundamentally affected by a few factors: population, construction costs, availability of land (and zoning) and incomes. Housing prices in most places rapidly ran away from the fundamentals. When I offered my old landlord $625,000 for a house that he thought was worth $900,000, I was probably still offering too much. I'm saying that many of these houses were overvalued by 50-100%. That's a lot. As that funny money evaporates, individuals and corporations feel poorer. In a sense, they are. There is no way for that adjustment to occur without the prices continuing to fall and people continuing to adjust their finances to compensate.

Furthermore, both banks and individuals need to be punished for what they did. Banks shouldn't have been loaning money so freely, and consumers CERTAINLY shouldn't have been bidding the prices of houses up so high. Unpleasant as it sounds, the quickest way to get back into equilibrium is probably to let banks and individuals suffer quite a bit because of their bad investment decisions.

Right now we have uncertain interest rates, uncertain credit availability, arcane financing rules, uncertainty about further bailouts and uncertainty about further stimulus packages. It's impossible to make these things certain, but the Fed and the Treasury should take a line like this:

We'll keep the interest rates as low as we can, but we're going to hold non-energy, non-food, non-mining products inflation constant. We're not going to bail anyone out unless it's imperative for the economy. People who made bad decisions are going to have to adjust to the way prices are now. We're going to find a way to let the money that's out there flow into the banking system to help equilibrate things and support loan prices. And, in the future, the banking and financial insurance industries are going to be rationalized to have less regulation that works better.

Con Artists

2008-09-12T12:33:00.001-07:00

I just got wrapped up in an elaborate con attempt. I was in Starbucks, preparing to order my customary grande Mocha Light Frappuccino, and the guy in front of me in line (about 65, smallish, dressed like a middle-class grandpa, with some kind of Eastern European accent) was really chatting up the girl behind the counter. He was making all kinds of jokes and turning to me and trying to include me in his banter. I was sort of half-heartedly participating by saying things like, "Boy, you said it!" and "Yep! We all do!" and stuff like that. Then he suddenly asks me what I'm going to have. I realized he was trying to buy my drink. At first I assumed this attempt was genuine; he's a lonely old man trying to make friends. Just then, though, three women walk up behind us.

They were very nice looking women without actually being attractive, if that makes sense. All three were about 45 years old, 2 were Vietnamese, and 1 White. All three were wearing lots of makeup and jewelry and were dressed more or less like 45-year-old moms would dress. I think they were probably on their lunch break from work.

The old guy starts chatting them up, too. He's saying ridiculous things, like "Ladies, ladies... NO smiling." And they all kinda start faux giggling. One of them kinda mock-punches another one on the shoulder, and the guy jumps in. He goes, "No, no. Don't hit her! Hit me!" And then he grabs one of their hands and starts hitting himself with it. Then he kisses her hand. They all start laughing more. I think this was the most exciting thing that had happened to these ladies since the last time they watched Mamma Mia! Anyway, during this whole thing, the old guy is also "paying" for his stuff. He hands the cashier a credit card, but he also hands her a $5 bill. He keeps saying something about a tip and asking what I want (as if he was attempting to buy what I wanted for me). This goes on for about 2 minutes. Finally, the cashier says that the card has been denied, but the total of all the stuff the guy was trying to buy was about $18 (he had a bunch of little cookies and other things in packages, a sandwich, a mug, and some drink). At this point I started to get suspicious.

My drink, which I had ordered, by yelling to the barrista, "I'll have my usual" during the confusion, was now ready. The old man sort of tried to claim my drink as part of his stuff and was insisting that the cashier "force his credit card through," whatever that means. Another barrista-girl came and rang me up, and I finally had to put my arm on the guy's shoulder and say rather forcefully, "Thank you, but I'll pay for it." He then backed off and as I walked away and the three ladies were looking in the display case, he kinda walked outside, leaving the merch on the counter. Then, as I was sitting down, I saw him hop on his old bike and ride away.

I'm not sure if his angle was:
1) To get the girl to pocket the $5 and "override" his credit card rejection.
2) To get me to pay for his stuff
3) To get the women to buy his stuff
4) To get SB to give him more than $5 worth of stuff for $5.

Whatever it was, it didn't work.

Putting My Money Where My Mouth Is

2008-09-12T00:57:00.001-07:00

I just donated $50 to Presidential campaigns. I donated $25 to the Barack Obama campaign and $25 to the John McCain campaign.

Exact Postage

2008-09-11T23:24:00.000-07:00

I successfully put exact postage on something today by using a $0.63 stamp, three $0.17 stamps, and a $0.03 stamp. For some reason putting exact postage on things always feels like a great achievement to me. It's like playing Tetris with money.

My Life for Aiur

2008-09-09T13:50:00.000-07:00

One of my coworkers has this license plate. I don't know which one it is, yet.

I can't wait for SC2.

Greed

2008-09-08T11:27:00.001-07:00

People who have few motivations other than self-promotion and money tend to see events from the perspective of how it would enable them to loot somebody.

The Iraq War is not about looting Iraq, nor has it ever been. It is also not somehow a way for George Bush or Dick Cheney to get rich. This is naive and distracting from the real and important issues. These things are what's called "conspiracy theories." Conspiracy theories have only three sources, of which I'm aware:
1) Boredom - People come up with conspiracy theories because they're "fun" or "interesting."
2) Naivite - People believe in conspiracy theories because they don't know enough to realize how improbable the theory really is.
3) Lazyness - People believe in conspiracy theories because it's easier to believe some powerful force is keeping them down (or ignorant) than to face the facts that: a) everything is not perfect and b) it takes a lot of effort to (still imperfectly) understand complex things.

Ironically, a real conspiracy, supported by real evidence, would not be a conspiracy theory like what I am describing. By "real evidence" I don't simply mean, "circumstantial, confirming statements." You can come up with circumstantial, confirming statements for anything. Here's an example:

Arizona causes pneumonia.
--The rate of pneumonia is 4x higher in Arizona, even though AZ has relatively low amounts of air pollution. How can that be? There must be some SECRET thing in AZ causing pneumonia!
--WRONG - old people move to AZ, and old people get pneumonia way more often. There's nothing to the 'conspiracy.' I know you may take offense at this, but most of you people who think that Dick Cheney organized the Iraq War as part of some grand conspiracy to help his former employer sound just as ludicrous as my Arizona example does. The military-industrial complex is far smaller now than it has been, on average, since World War II. It isn't likely to grow significantly, as compared with the Nation's GDP, either.

The Iraq War has never been about greed. But when you, yourself, know no higher purposes than greed, it is hard for you to understand the complexity of what's really going on.

The Case Against McCain

2008-09-08T09:45:00.001-07:00

For those of you who think McCain is so terrible, I offer this from Pat Buchanan:
http://buchanan.org/blog/2008/02/top-10-reasons-not-to-vote-for-mccain/

I think it's important to see what the xenophobic, bigoted part of the right thinks of McCain, because it's very instructive about what he's really like (very moderate and reasonable).

I offer you this Sophie's choice: Admit McCain is a pretty cool guy or admit that you agree with Pat Buchanan.

PS - I still like Obama, too.

Sunk Costs

2008-09-04T10:59:00.000-07:00

Humans have an irrational, but very natural, tendency to overvalue "sunk costs." In fact, the correct value of sunk costs is always exactly $0.

Here's an example: You've spent $1,000,000 so far, inventing a better widget. You've been working on it for a year. Tomorrow, you will wake up and be faced with this (weird) choice: either spend another $500,000 to finish the widget, or buy a patent from someone for their widget, which does exactly what you want your widget to do, for $499,999.

It is tempting to somehow think, "If I spend the other $500,000, I'll have something worth $1,500,000, whereas if I buy the other widget, I'll have something only worth $499,999." Ignoring the possibility that you've actually created some prototype widgets which, themselves, have value, this thinking is incorrect.

If you forget about tax consequences for a second, it makes ABSOLUTELY no difference how much you've already spent in the past, all that matters is what choices you have NOW, going forward. If the 2 widgets are equally useful, then you can either spend $500,000 to get the widget or $499,999 to get an equivalent widget. You should choose the cheaper option, regardless of whether or not it makes the previous $1,000,000 "a waste."

So, many people have a tendency to throw good money after bad, and to stick to projects that they've already "invested" a lot in, when, in fact, they should usually be ignoring what they have already invested. Even when people understand this concept as it relates to business, though, they often fail to realize that it should apply to all aspects of life. It doesn't matter how much time you've put into convincing someone to act a certain way or teaching yourself a certain skill. All that matters is "What are my options going forward?" A careful evaluation of these options will account for the possibility that "finishing something" is more efficient than dropping it and picking it back up later. For example, it might be "worth it" financially, to quit college and take a job. However, it might be "hard" to re-enter college later, and so it's "worth" losing money now to finish college now. One must be careful not to confuse that with the more sinister, "Well, I've gone this far, I ought to stick with it." That line of thinking is virtually useless.

If it doesn't make sense to be doing something, anymore, you should stop doing it, no matter how much you've invested in it so far.

Getting to Know Me

2008-09-03T17:02:00.001-07:00

There are all sorts of ways that people publish their identity for others to consume: photobucket, myspace, bumper/band stickers, autobiographies, etc...

I hereby publish and announce my identity via this reading list:

1) Mackey - Lebanon: A House Divided

2) Everitt - Augustus: The Life of Rome's First Emperor

3) Webb - Born Fighting: How the Scots Irish Shaped America

Rita Hayworth

2008-09-02T22:58:00.003-07:00

I love Rita Hayworth in The Lady From Shanghai, especially the part when she's lying on the deck of the yacht, singing.

Bad Lawyers

2008-09-01T22:43:00.000-07:00

Sometimes I think the worst crime in America is choosing a bad lawyer.

Rotten Apples

2008-09-01T15:32:00.001-07:00

I'm fed up with my iPhone. In fact, I'm fed up with Apple in general. Here is a brief overview of why Apple totally sucks:

1) Their computers suck. They are expensive, difficult to use, fail all the time, only have 1 mouse button, make you pay for what's supposed to be a free operating system, aren't totally compatible with most things, use a bunch of proprietary formats, insult the user continuously, and represent the school of thought that it's what on the outside of the computer that counts. It takes about a million hours of customization before you can do simple things like move windows around quickly. It takes another million hours to turn off all the idiotic visual effects that waste CPU. A third million hours is required to be able to use the keyboard, which is obviously required for speed, since there's only one mouse button.

2) Their crap is all about ergonomics and not about functionality. Apple is the new Sony. Their stuff is proprietary and they allow people to develop for it only grudgingly. It is obviously Apple's goal to sell you all the software you own at super high prices - have you not noticed this?

3) Macs are not better for graphics. They have never been better for graphics. This is a bunch of crap. The only people who think this are people who never used sophisticated graphics hardware or software on a SGI or a PC. I have never found a Mac to be the better value for gaming. I have never found a Mac to offer the most impressive graphics performance for gaming. I see no reason why a large-scale rendering farm would benefit from using Macs. I know of no serious movies that were rendered using Macs. Even if there was one, I would question why it was rendered on Macs, since they do not offer better performance. I know of no software for the Mac that doesn't have a similar offering (or probably 40 similar offerings) on the PC or a Linux format.

4) The iPhone is overrated. My iPhone software crashes or goes weirdo all the time. iTunes sucks and is slow. I've had one iPhone replaced because the first one broke. The "genius bar" insulted me repeatedly telling me that I had physically tampered with the headphone jack on the broken iPhone, which I did not. They kept offering me training classes about how to use my computer and to use the Internet more productively. My current iPhone gets super hot for no reason, goes really slow sometimes for no reason, and a day doesn't go by in which I don't experience weird behavior or bugs. There are so many quirks to how the iPhone software works that I sometimes am surprised when it is functioning normally. The main feature of my iPhone is as a phone, but the call and sound quality on the iPhone is poor, the bluetooth functionality is nerfed, and there is no service available for Verizon, which has the best coverage, in my experience. There are tons of ludicrous design flaws, like the inability to continue loading web pages with the screen turned off. The camera totally sucks. The navigation system on the iPhone totally sucks. The navigation system on my Chocolate from Verizon a couple years ago was vastly superior, so I know it's possible to make that system work.

5) Apple zealots. I don't like these people and I don't ever want to be associated with them. They are arrogant, smug, and insulting.

6) The whole "computers for schools" thing is the most transparent bunch of crap. I hate Microsoft, because they made a bunch of shady licensing deals and stifled competition. But I draw the line at convincing schools to pay extra money for computers they don't need. Kids should be learning how to use Linux and Windows, since they're the most important and common operations systems. It'd be like convincing driver training classes to buy Volkswagon Beetles. Why would you want this? Learning to drive it is less transferrable to other things, and it's more expensive that a 'regular looking' car of comparable performance.

I will be looking for a replacement device for my iPhone starting right now. I used to recommend Macs sometimes to people who were computer illiterate, but I won't be doing this for the foreseeable future. Vista is far easier to use and more stable now than the Mac OS. Computers with Vista seem to be far cheaper. Vista is more compatible with other systems in the world for most users.

Apple sucks. I'm tired of being told by people who know very little about computers how great their MacBook or iPhone is. I've been using an iPhone for quite a while now. It is nothing special. Even if it didn't have a bunch of bugs, it wouldn't be a revolutionary device. It's time for a crop of better devices to supplant it. Go to hell, Apple.

Tuna are hot

2008-08-31T19:54:00.001-07:00

I just learned that Blue Fin Tuna are warm-blooded. Their body temperatures are 15-20 degrees warmer than their environment. This heat reserve allows them to catch prey in areas that are too cold for some other fish.

Measuring Code

2008-08-31T13:12:00.000-07:00

Using lines-of-code or cyclical complexity to measure software is like using average word length or frequency of the letter 'n' to measure the quality of a novel. Having said this, though, there are situations in which knowing how many words or pages a book has might be useful.

Both candidates

2008-08-31T12:56:00.001-07:00

Why can't I like both candidates? What is wrong with that? Obama and McCain are two of the best and most exciting politicians in Washington. They both have shortcomings, but both are great leaders and could make good presidents, in my opinion.

Sure, McCain isn't an expert on economics, by his own admission. But he's honest and humble about it, which is refreshing. And he's been in the Senate for a long time, so he has analyzed and voted on bills that affect the economy for an equally long time. That's great experience.

Obama doesn't fully subscribe to the basic premises of market economics, and whether that's because he's fundamentally more of a New Dealer or because it's simply politically expedient not to, I don't know, but either way it's mildly disappointing that he wants to selectively ignore the lessons of the last 100 years of capitalism.

Sure, Obama's messianic tone and image are reminiscent of one of the less good parts of George W. Bush, and sure, McCain is more similar to Bush in terms of economic policy (they are both Republicans, after all), but neither is very similar to George W. Bush, so stop pretending that either is. And George W. Bush was good at some things, so being like in some ways isn't bad, anyway.

Sure, Obama seems to be committing the same error that Bush did by not admitting he was wrong about Iraq, and sure, McCain's positions on Iraq and Iran might be more aggressive, but neither man is stupid, and I don't think either is going to start senseless wars or withdraw troops if it leaves us (or the Iraqis) worse off (even if they say they will). Furthermore, you readers out there should blame Obama's inability to "change his mind about Iraq" on yourselves. It is senseless to punish people for changing their position. Changing one's mind is not a crime. Pretending to believe something just to get votes is much worse. You need to start discriminating between the two.

Both Obama and McCain are visionary men, who understand things about the ways in which the world has changed (Obama seems enlightened about how class and race relations in the US have changed and McCain understands how international relations and defense have changed). Both of them are willing to take on the establishment, and both have proven that they can do it successfully. Both are honorable and respectable. Either would be a good ambassador for, and representative of, our country. Either would make a competent commander-in-chief. I think either would do what was right, not what would get him the most votes.

Both have already restored much of what has been missing in American politics for the last 16 years.

The State of Nature

2008-08-31T12:39:00.000-07:00

The so-called state of nature is a very important concept in philosophy and political science. What is "natural" is harder to call "wrong" and what solves problems in "nature" is easier to justify as useful. I have been re-reading Capitalism and Freedom by Milton Friedman, lately, and I had this thought about the state of nature of man:

Man is neither totally free nor totally un-free in the state of nature. In an ancient society, I may have been free to do many different things, owing to the lack of laws and enforcement, but I might not have been free to violate certain essential customs or traditions. I might have been punished to the point of exile or death for violating certain rules. In any group of people, norms or rules will evolve and develop that limit individual freedoms. In such a primitive society, some will test the rules, and others will enforce them. Sometimes the rules will change.

The push toward freedom *is* the state of nature. Our constitution enshrines this by limiting the powers of government and then making it hard to amend the document, itself. Progress in political science, ethics, and even economics, should be viewed as a move toward a system that allows more freedom. Often, limitations on freedom are necessary, such as a prohibition of my right to kill you, or your right to steal my food. If freedom-limiting tactics, like taxes or new regulations, were generally seen as "temporary," we might be better for it. Rather than making tax cuts temporary, we should make tax increases temporary. The Patriot Act should be temporary and free trade agreements should last indefinitely. Religious freedoms should be protected and relegation of a group to cult status should be temporary.

Rather than making new regulations every time an industry experiences a market failure or corruption, we should make new rules with the expectation that eventually a system will be designed which needs less additional regulations. We will never achieve a society with no market safeguards, no rules, and no intervention by government, nor would one be desirable. But, we should always try to unburden people of rules and redistributions when we can. We should, at least, remind people that freedoms should not be taken for granted, and that our society should have, as its goal, the continued emancipation of its citizenry.