Wednesday, December 20, 2006


Excerpts from an interesting article on how the Patels from India took over more than half the room and board industry in the United States.
In the mid-1970's, Patels from Africa and Asia began to emigrate to North America. Any immigrant willing to invest $40,000 in a business could apply for permanent residence, the first step to citizenship. There were limited opportunities for such an investment. Restaurants required the Hindu Gujaratis to handle meat, an uncomfortable activity. Furthermore, a restaurant required one-on-one interaction with guests, confusing for newly-arrived immigrants. But distressed roadside motels could be acquired outright for $40,000.

Human Rights

Communist and dictatorial regimes have poor human rights records -- Stalin, Mao, Saddam Hussein; Tiananmen Square.

But do democracies fares much better?
Two invasions of the Middle East were conducted by the world's most powerful democracy, which went on to flagrantly violate the Geneva Convention on treatment of prisoners of war domestically and internationally.
The world's most populous democracy fares no better.
Even Hitler was, to a certain extent, democratically elected.

What does this portend? Perhaps that human rights violations will continue as long as large powerful central states exist, whether democratic or not.

Monday, November 20, 2006

Democracy does not work in multi-ethnic societies...

Democracy cannot work in a multi-ethnic society, so says the Paradox of Imperialism. An excerpt:
[T]he result of the [World War I] crusade to make the world safe for democracy was less liberal than what had existed before (and the Versailles peace dictate precipitated World War II). Not only did state power grow faster after the war than before. In particular, the treatment of minorities deteriorated in the democratized post–World War I period. In newly founded Czechoslovakia, for instance, the Germans were systematically mistreated (until they were finally expelled by the millions and butchered by the tens of thousands after World War II) by the majority Czechs. Nothing remotely comparable had happened to the Czechs during the previous Habsburg reign. The situation regarding the relations between Germans and southern Slavs in pre-war Austria versus post-war Yugoslavia respectively was similar.

Nor was this a fluke. As under the Habsburg monarchy in Austria, for instance, minorities had also been treated fairly well under the Ottomans. However, when the multicultural Ottoman Empire disintegrated in the course of the 19th century and was replaced by semi-democratic nation-states such as Greece, Bulgaria, etc., the existing Ottoman Muslims were expelled or exterminated. Similarly, after democracy had triumphed in the United States with the military conquest of the Southern Confederacy, the Union government quickly proceeded to exterminate the Plains Indians. As Mises had recognized, democracy does not work in multi-ethnic societies. It does not create peace but promotes conflict and has potentially genocidal tendencies.

Sunday, November 19, 2006

Order from Anarchy

From chaos arises order, as seven European Cities do away with Traffic Signs in an experiment to see whether people can self-organize their interaction with others:
"The many rules strip us of the most important thing: the ability to be considerate. We're losing our capacity for socially responsible behavior," says Dutch traffic guru Hans Monderman, one of the project's co-founders. "The greater the number of prescriptions, the more people's sense of personal responsibility dwindles." ... Psychologists have long revealed the senselessness of such exaggerated regulation. About 70 percent of traffic signs are ignored by drivers. What's more, the glut of prohibitions is tantamount to treating the driver like a child and it also foments resentment. He may stop in front of the crosswalk, but that only makes him feel justified in preventing pedestrians from crossing the street on every other occasion. Every traffic light baits him with the promise of making it over the crossing while the light is still yellow.

Saturday, October 28, 2006

Creativity, innovation and sharing of ideas.

Excepts from an interesting article (Protecting the Golden Goose by Pamela Jones of groklaw) on the clash between the long-term objectives of freedom and the greed of short-term-oriented businesses:
  • Compatibility is a bedrock [Free and Open Source Software] value, but it goes against corporate thinking. Corporations want to differentiate and lock in customers [through incompatibility].
  • Corporations will naturally be reluctant to share knowledge. Whether it's for competitive reasons, for confidentiality, or most probably, due to time pressure, it appears to me that the flow of testing results and the promptness of getting fixes out to the rest of the world is slowing down a bit.
  • Regressions [to isolationism]: Creativity inevitably springs from large numbers of people experimenting, combined with a low barrier to entry to sharing and contributing. Those are essential ingredients in Linux's success.
  • In code, progress is incremental. [IP] laws that seek ... to keep knowledge out of the pool ... end up [creating] a barrier to learning, preventing the rapid progress you could have had from pooling ideas and skills.

Sunday, October 15, 2006

Saturday, October 07, 2006

Miracles: How did the sea part?

Many religions mention a miracle of the sea parting to make way for someone to escape from their captors. This article explains the Old Testament's "crossing of the Red Sea". An excerpt:
Many years ago Aristotle wrote about miracles and he said that the “efficient cause” of a miracle could be a natural agent, with the “final cause” being the will of God. The miracle is revealed by the extraordinary timing of the event. I believe that the “efficient cause” in many of the Exodus miracles was a natural agent (a porous rock, a strong wind, a volcano, etc.) and that science can discover this natural agent and give the mechanism of the miracle. Indeed, as we have seen, the Bible is explicit that the crossing of the Red Sea was enabled by a natural agent, a strong east wind.

Monday, October 02, 2006


Excerpt from a recent blog post advising geek entrepreneurs:
One of the ironies of the programming world is that using Lisp is vastly more productive than using pretty much any other programming language, but successful businesses based on Lisp are quite rare. The reason for this, I think, is that Lisp allows you to be so productive that a single person can get things done without having to work together with anyone else, and so Lisp programmers never develop the social skills needed to work effectively as a member of a team. A C programmer, by contrast, can't do anything useful except as a member of a team. So although programming in C hobbles you in some ways, it forces you to form groups whose net effectiveness is greater than the sum of their parts, and who collectively can stomp on all the individual Lisp programmers out there, even though one-on-one a Lisper can run rings around a C programmer.

Thursday, September 28, 2006

How governments accumulate power

I came across this description recently.

The Chicago School of economics favored and still favors the theory of "regulatory capture." Under this theory, an industry or some portions of an industry cultivate government to obtain laws and rules that favor the industry.

The government trades favors for what it wants. Politicians gain political contributions, side payments, and votes for being seen to control the industry. The industry captures the regulators. End of story.

[Gary North] called the first step of obtaining favors "baiting the trap." But matters do not stop there, he pointed out. The trap is set when the industry becomes comfortable with its subsidy, tax break, tariff, exclusive position, license, or whatever. It then begins to extract monopoly rents and to lower product quality.

This then leads to further steps such as public outcry and a government demand for the industry to police itself. Then come crisis, further regulatory intervention, and eventually a government stranglehold over the entire industry via a panoply of boards and price controls. This is when the trap is sprung. The market is replaced by government power and bureaucrats. Government, its aim being control, traps and captures the industry.

In the shorter term, the interest groups use the state against the public. In the longer term, the state and its bureaucrats rule the roost. In the end, the government bureaucracies expand. Paperwork and soft jobs rule the industry, innovation and competition are eclipsed, and the public suffers from poor product quality and high prices.

This summarizes the argument made in "Walking into a Trap", an essay by Gary North, that originally appeared in 1978 in The Freeman, on the threat to American medicine posed by the State.

Sunday, September 24, 2006

Internet pollution

Spyware, parasites and unscrupulous search engines that encourage the creation of bogus websites for Click Fraud are increasingly polluting the web.

Download this list of hosts, read the instructions and modify your PC settings to prevent this internet pollution. No more recycled ads on third party websites. Goodbye, cookie trackers!

Thursday, September 21, 2006

Why are you satisfied?

Comcast called me yesterday for a customer satisfaction survey. I think they know via cable box that I have not connected my TV or watched any channels so they are calling me every two days to ask if I am happy. When I told her I was "satisfied, rating 5 on 5" she asked me: "Why are you satisfied?" That was a new one. I had to say "I am satisfied because I am not unsatisfied."

Opens up a Pandora's box of vexing philosophical issues.

Apparently this is not so uncommon.

Before and after.

It is but a short way from yesterday's star trader to world's biggest loser today. How does one lose 6 billion dollars? The mind boggles.

Monday, September 18, 2006

America's biggest export is...

.. the dollar.

Watch this space for more on the topic. "Green Paper Flight".

Sunday, September 17, 2006


Elitism is the natural consequence of freedom -- under any metric, some will always be superior to others.

For this reason a community centered on egalitarian, non-elitist principles cannot thrive.

This explains among others, phenomena like: why plutocracy is the inevitable result of starting with either democracy or socialism, why corporations with flat organizational structures quickly develop heirarchies, etc.

Needs more thought.

Cathedral and the Bazaar

The canonical example of bazaar style development, Linux, allows anyone to modify source code, but pre-designated individuals, who are presumably competent, are the only ones authorised to make these changes permanent. Eg., if you want to change something in the kernel of the operating system, you have to successfully make a case to Linus.

Wikipedia lacks this quality control by domain experts, leading to a lack of polish. One co-founder, Larry Sanger, who devised the details of Wikipedia's neutrality concept, is starting an improvement over wikipedia called Citizendium.

Sunday, September 10, 2006

The rise of Fascism

After the US government revealed some weeks ago that it was spying on its citizens and running torture camps abroad, private sector has joined in on the fun -- Hewlett-Packard hired investigators to illegally spy on the activities of its own board members, many reporters and their families.

Where will this lead to and when will it stop?

Monday, September 04, 2006

Too many "realtors"

Is it really impossible to sell or buy real estate without the intermediary activity of a realty agent? Is "realtor (TM)" really a true professional, like a journalist, a doctor or an engineer? Is it justifiable to charge a fixed 6% of sales price for every transaction independent of the amount of time or effort involved? Does a real-estate agent really spend time trying to get you the best sale or purchase price, or is he primarily concerned with making a quick buck on a fast deal?

One attorney, David Barry, is fighting a crusade against some aspects of this bogus industry. In a recent article, "Nine Pillars of the Citadel", he estimates that in a truly competitive and efficient real-estate market, the commisions would be 50% lower, the average realty agent would make 30% more and there would be 83% fewer realty agents.

Sunday, September 03, 2006

Cultural attitudes

Recently, on three different occasions I had the opportunity to share a table with an Israeli and an Indian each time. Six different individuals, and I had the opportunity to watch their attitudes as they discussed friends, family, country, work, vacations, etc.

The difference in cultural attitude was strikingly stark -- Jews have a strongly ingrained value that "you shall not play down your race", the Indians were more than glad to bad mouth their homeland. As an example: The Jews speak their mothertongue at home and bring up their children strongly in the Jewish tradition, but the Indians seem to prefer to speak English at home, rather than their mother-tongue. Small data set to generalize from but: Wow!

Does this not say something about survival of the race vs individual?

The internet and webcams.

When buying a webcam, make sure it has a light that turns on whenever the camera is on, and which cannot be turned off in software.

"Why," you ask, "would I need this?"

For an answer, read this article, titled "Google researchers use ambient audio to augment the television experience."

Head spinning yet? 10ms today, how long tomorrow? Audio today, video soon? Google today, who next?

And when other companies follow the lead of this stellar "do no evil" leader, to what extent will they do so? Perhaps, the next generation of Yahoo and Google toolbars, or even Microsoft Windows, will have this spying feature integrated into them?

Wednesday, August 30, 2006

The impossibility of equilibrium

Interesting article states equilibrium is an impossible state to achieve. Firstly there is a problem of having enough information, then there is the issue of events repeating identically in order to be able to make an accurate measurement and comparison.
"For any one individual, constancy of the data does in no way mean constancy of all the facts independent of himself, since only the tastes and not the actions of individuals can be assumed to be constant. As all those other people will change their decisions as they gain experience about the external facts and about other peoples' actions, there is no reason why these processes of successive changes should ever come to an end" (Hayek 1937 [1948] p49)."
Why, rather when, does the process converge? More importantly, does the convergence happen while people are still interested in the event? As a random example, if the price of horse driven carriages stablized in the year 1950, a number of decades after people stopped using them and had moved on to cars, then is this convergence of any import? All decisions made with imperfect information when the market was still in flux must have influenced the rest of the economy in myriad ways. How does one account for that, if at all?

Friday, August 25, 2006

How (not) to end an interview

Most companies, when they interview, fly the candidate to their office, put him up at a fancy hotel, feed him dinner at a fancy restaurant, but they manage the end -- the closure -- extremely poorly. The majority of interviews end abruptly and they just send the majority of candidates a form letter saying "No". Well, what a waste of money and effort! Doesn't the typical firm lose out on an incredible amount of goodwill, not to mention free publicity, at the end of interviews, by ignoring Kahneman's Peak-End Rule:
... we judge our past experiences almost entirely on how they were at their peak(pleasant or unpleasant) and how they ended. Virtually all other information appears to be discarded, including net pleasantness or unpleasantness and how long the experience lasted.
Here are some sane thoughts on interviewing from a guy who runs a technology start-up. One point that stood out:
I always, always leave about 5 minutes a the end of the interview to sell (my firm). This is very important even if you are not going to hire them. If you've been lucky enough to find a really good candidate, you want to do everything you can at this point to make sure that they want to come to (our firm). Even if they are a bad candidate, you want to get them excited about (our firm) so that they go away with a positive impression of the company. Think of it this way: these people are not just potential hires; they are also customers. They are also salesmen for our recruiting effort: if they think that (our firm) is a great place to work, they will encourage their friends to apply.

Thursday, August 24, 2006

Discrimination in hiring

Came across this interesting thought today:
... government's interventionist policies in the labor market can make the bad kind of discrimination we normally think about more prevalent. For example, European Union countries have very strict laws on firing people compared to the United States. Because of this, it is more costly for a firm to hire somebody.

Now, if I am an employer and I know that I am stuck with a worker once I hire him, don't you think I will be more likely to economize on information (i.e., discriminate) before I hire him? Conversely, in a free-market, I will be more likely to take a risk on somebody and give him a chance (and not indulge my initial "prejudices") because I know if he ends up being a poor selection, I can easily fire him. Those who advocate "fair labor laws" had better be careful what they ask for.

Monday, August 14, 2006

Global warming, really?

Among all the shrill voices condemning mankind for causing global warming, are a number of skeptics. An excerpt from a recent op-ed "Earth in the balance", Wall Street Journal, July 2nd 2006:
Most of the climate community has agreed since 1988 that global mean temperatures have increased on the order of one degree Fahrenheit over the past century, having risen significantly from about 1919 to 1940, decreased between 1940 and the early '70s, increased again until the '90s, and remaining essentially flat since 1998.


So what, then, is one to make of this alleged debate? I would suggest at least three points.

nonscientists generally do not want to bother with understanding the science. Claims of consensus relieve policy types, environmental advocates and politicians of any need to do so. Such claims also serve to intimidate the public and even scientists--especially those outside the area of climate dynamics.

Secondly, given that
the question of human attribution largely cannot be resolved, its use in promoting visions of disaster constitutes nothing so much as a bait-and-switch scam. That is an inauspicious beginning to what Mr. Gore claims is not a political issue but a "moral" crusade.

Lastly, there is
a clear attempt to establish truth not by scientific methods but by perpetual repetition. An earlier attempt at this was accompanied by tragedy. Perhaps Marx was right. This time around we may have farce--if we're lucky.

Monday, August 07, 2006

The next Amazon...

An interesting article from 2004, The Long Tail, now also a book, says the Internet, being an almost free distribution channel, resurrects the majority of items that would otherwise have faded away as non-hits -- those items that do not get mass market appeal, which had low demand at the time of their introduction, which dropped out of cultural consciousness when retailers stopped selling them, the ordinary items from the forgotten past. In fact this so-called Long Tail may have a bigger sales volume than all the hits in the mass market! An excerpt:
What's really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you've got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are. In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity. Venture capitalist and former music industry consultant Kevin Laws puts it this way: "The biggest money is in the smallest sales."

The same is true for all other aspects of the entertainment business, to one degree or another. Just compare online and offline businesses: The average Blockbuster carries fewer than 3,000 DVDs. Yet a fifth of Netflix rentals are outside its top 3,000 titles. Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000. In each case, the market that lies outside the reach of the physical retailer is big and getting bigger.

When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well - niche and one-off products.

Saturday, August 05, 2006

Are you a profitable customer?

More and more companies are beginning to use LifeTimeValue metrics to reward their best customers and to exorcise their devil customers. How soon before the non-profitable customers get warranty denials and poor customer service, just like the practice of denying claims in the insurance industry? (According to the 1999 Kaiser Family Foundation study, 42 percent of physicians said that their most recent treatment denial was ultimately resolved in the patient's favor. Source: Kaiser Family Foundation and Harvard University School of Public Health. Survey of Physicians and Nurses. Menlo Park, Calif: Henry J. Kaiser Family Foundation; July 1999.)

Friday, August 04, 2006

The task of Economics

A quote from The Book History Conspired to Bury, by the libertarian Lew Rockwell:
People tend to make two errors regarding economics. They believe it is either not a science because it deals with human beings, or it is a science requiring positivist methods that do not account for the irreducibly human ability to choose among economic alternatives. Neither is tenable, but the third option is not generally known: to see the task of economics as discovering, explaining, and applying the economic laws that dictate the limits of the intellectual and political imagination while making full allowance for the reality of individual choice.

Sunday, July 30, 2006

Robin Hood, reversed!

Are your tax dollars being funneled into WalMart's coffers through numerous subsidies? So claims a 2004 study, "Shopping for Subsidies: How Wal-Mart uses taxpayer money to finance its never-ending growth", at the Good Jobs First website. The subsidies granted to Wal-Mart take many different forms, but the following are the most common:
  • Free or reduced-price land.
  • Infrastructure assistance.
  • Tax increment financing.
  • Property tax breaks.
  • State corporate income tax credits.
  • Sales tax rebates.
  • Enterprise zone (and other zone) status.
  • Job training and worker recruitment funds.
  • Tax-exempt bond financing.
  • General grants.
This is a very interesting forced redistribution of wealth by government.

Saturday, July 29, 2006

Selling water..

If you believe in homeopathy, you ought to read this wikipedia entry. Excerpt:
... The therapeutic potency of a remedy can be increased by serial dilution of the drug, combined with succussion or vigorous shaking. ... Homeopathic remedies of a high "potency" contain, with overwhelming probability, only water. Practitioners of homeopathy believe that this water retains some 'essential property' of one of the substances that it has contacted in the past. However, water will have been in contact with millions of different substances in its history. According to this molecular paradigm, any glass of water must be regarded as an extreme dilution of almost any agent you care to mention. Thus, critics argue that by drinking water one receives homeopathic treatment for every imaginable condition.
Hmm. It seems that if one drinks the mythical 8 glasses of water a day, he would be very fit.

Thursday, July 27, 2006

Startups killed the research labs

Excerpts from an article that describes why having an industrial research lab is now a white elephant, and no longer a matter of corporate prestige.
The more agile start-ups played an important structural role in making pure research careers less attractive. It's not that everyone was suddenly lured away from doing science by the promise of instant wealth. The competitive pressure that start-ups and new industries put on established businesses ultimately combined with trust-busting, structural changes in the economy, social shifts, and an array of other factors to turn expensive prestige items like research labs into unaffordable luxuries. Thus it stands that to one extent or another, all of the aforementioned labs have been downsized and/or transformed over the years into places where research programs must now yield commercial fruit.

Sunday, July 23, 2006

Confidence and predictions

Epistemic arrogance describes "the difference between what people think they know and what they actually know." Listen to this and related issues in The Scandal Of Prediction, a talk by Nassim Nicholas Taleb, the author of Fooled By Randomness. He is an applied statistician, essayist, and mathematical trader. He is interested in the epistemology of randomness and the multidisciplinary problems of uncertainty and knowledge, particularly in the large-impact, hard-to-predict rare events ("Black Swans").

The Instant information phenomenon

Easy availability of online sources of information and excessive reliance on them is akin to putting on "blinders". Here is an interesting excerpt from Hoover's Vision:
One of the great risks of the Internet Age is the fact that we can do our research with surgical precision. Online service providers offer customised services -- such as a newspaper personalized to cover only your hobbies, your sports, your stocks, your news. But how did we ever discover our hobbies, our sports, our stocks, and our interests, except by stumbling upon them? We did not know to look for them when we first found them. How much have we discovered by browsing an old-fashioned ink-on-paper newspaper and glimpsing a headline about some subject we had never heard of?
And that is exactly why an hour at a real honest-to-goodness bookstore is much more satisfying than an hour at your local neighbourhood chain store.

Point to ponder: What are search engines doing to this problem?

Wednesday, July 19, 2006

Are you an enemy of the environment?

If you own land with a ditch in it and you try to develop the land, you may very well be considered a criminal, an environment destroyer to be specific, and sent to many years in prison.

The alternative is to fight the government for a decade or more, all the way to the Supreme Court. That's what this guy Ropanos had to do. Will such mad adherence to the letter of the law, sticking to inane rules ever stop?

Saturday, July 15, 2006


Live in New York City once, but leave before it makes you hard. Live in Northern California once, but leave before it makes you soft.
--Mary Schmich, in "Wear sunscreen.", 1997.

Wednesday, July 12, 2006

On how children are brought up

Read this article for an interesting perspective on how lopsided state-sponsored incentive systems result in children being brought up "improperly", without strong family ties. This could almost be another chapter in Freakonomics.

English is tough stuff.

Dearest creature in creation,
Study English pronunciation.
I will teach you in my verse
Sounds like corpse, corps, horse, and worse.
-- Thus spake an Anonymous English teacher. Go read the rest, aloud.

Saturday, July 08, 2006

Management as a leak-proof abstraction

Joel Spolsky has an interesting article, The Development Abstraction Layer, on the relative roles of programmers and management in a software firm. Note the bits below about overhead and outsourcing:

A programmer is most productive with a quiet private office, a great computer, unlimited beverages, an ambient temperature between 68 and 72 degrees (F), no glare on the screen, a chair that's so comfortable you don't feel it, an administrator that brings them their mail and orders manuals and books, a system administrator who makes the Internet as available as oxygen, a tester to find the bugs they just can't see, a graphic designer to make their screens beautiful, a team of marketing people to make the masses want their products, a team of sales people to make sure the masses can get these products, some patient tech support saints who help customers get the product working and help the programmers understand what problems are generating the tech support calls, and about a dozen other support and administrative functions which, in a typical company, add up to about 80% of the payroll. It is not a coincidence that the Roman army had a ratio of four servants for every soldier. This was not decadence. Modern armies probably run 7:1. (Here's something Pradeep Singh taught me today: if only 20% of your staff is programmers, and you can save 50% on salary by outsourcing programmers to India, well, how much of a competitive advantage are you really going to get out of that 10% savings?)

Management's primary responsibility to create the illusion that a software company can be run by writing code, because that's what programmers do. And while it would be great to have programmers who are also great at sales, graphic design, system administration, and cooking, it's unrealistic. Like teaching a pig to sing, it wastes your time and it annoys the pig.

Friday, July 07, 2006

The sale of Manhattan in 1626

... since 1803 the heartland of America has appreciated at an average annual rate of 5.5 percent per year, whereas since 1626 Manhattan has appreciated at an average annual rate of ... 5.3 percent. Conclusion: that dimbulb Minuit may have paid too much! [C]ompared to other historic U.S. land scams, Manhattan may not have been the steal everyone thinks.
--Cecil Adams, "How much would the $24 paid for Manhattan be worth in today's money?"

Sunday, July 02, 2006

Video Review: The Money Masters

How do private banks create money?

Focusing on the majority of the US money supply, the method (Fractional Reserve Banking) is as follows:

The Federal Reserve Notes and equivalent Federal Reserve Deposits (mentioned above) are deposited in local banks or to their credit at one of the 12 Fed banks. These funds serve as the base of bank loans, which require a 10% reserve. For example, if $1,000,000 of Federal Reserve notes or Fed deposits are entered on the books with the Fed to the credit of a bank (usually the bank of the person or company which just sold the Fed a Treasury bond/bill or note), that bank may loan all of that money out (at interest), except for 10% which is kept as its reserve. Thus $900,000 in this example may be loaned out by that bank.

In the usual case, the borrower of the $900,000 will not, of course, keep the money under the mattress, rather, it is deposited either in the same bank or in others. This $900,000 in new deposits may then be loaned out at interest by these banks, except for the 10% reserve. Thus $810,000 is loaned out a second time ($90,000 of the $900,000 being retained as reserves).

The newly loaned $810,000 is then deposited in these or other banks, allowing them to lend out $729,000 a third time (retaining 10% = $81,000 as reserves), and so on. This process gets repeated over and over, each time the lending bank(s) retains 10%. It takes a series of 66 loans to reduce the funds available for relending to less than $1,000 by retention of 10% each time as bank reserves. In actual practice, due to numerous exceptions to the 10% reserve requirement, banks may lend the money even more times, resulting in even more money being created by them.

Thus, in our example, an original purchase by the Fed of $1,000,000 in Treasury bonds on the open market, by a series of deposits and loans in one or more banks, results in an expansion of the US money supply (via bank accounts simply created as loans by the lending banks) by a factor of 10x. After the process is completed, the total money in the US economy has been expanded by ten million dollars ($10,000,000), in this example. The Fed got to create 10% of this total, and private banks the other 90%, to lend at interest. In each individual bond purchase by the Fed, not just one bank profits from this scheme, rather the banking system as a whole does. However, in practice, the 4 largest international banks get roughly 80% of the profit, leaving the crumbs (still million$) to the smaller banks in your community.

What did the banks do to obtain this right to lend, relend, and relend again and again the same money (less 10% reserved each time)? Nothing, except lobby and mislead the public, the majority of Congress and President Wilson to think they were supporting legislation to reform banking to a more just form under the Federal Reserve Act of 1913. They continue to hide, obfuscate and mislead the public, to the same purpose, using media they purchased for this purpose, and corrupting the political system in the process.

This critically important piece of legislation – the Federal Reserve Act of 1913 - had to be disguised to accomplish the bankers' scheme, and so it was. That story is contained in the video/DVD, The Money Masters: How International Bankers Gained Control of America.

Friday, June 30, 2006

Whole Food for thought.

On May 13, 2004, John Mackey, CEO of Whole Foods Market, spoke at FreedomFest in Las Vegas. His critique of the freedom movement (Winning the battle for freedom) created a controversy. Here is an excerpt on how he discovered that "leftism" does not work:
The most important thing I learned about business in my first year was that business wasn't based on exploitation or coercion at all. Instead I realized that business is based on voluntary cooperation. No one is forced to trade with a business; customers have competitive alternatives in the market place; employees have competitive alternatives for their labor; investors have different alternatives and places to invest their capital. Investors, labor, management, suppliers — they all need to cooperate to create value for their customers. If they do, then any realized profit can be divided amongst the creators of the value through competitive market dynamics.

In other words, business is not a zero-sum game with a winner and loser. It is a win, win, win, win game — and I really like that. ... Were we profitable? Not at first. ... Despite the loss, we were still accused of exploiting our customers with high prices and our employees with low wages. The investors weren't making a profit and we had no money to donate. Plus, with our losses, we paid no taxes. ... According to the perspective of the Left, I had become a greedy and selfish businessman. At this point, I rationally chose to abandon the leftist philosophy of my youth, because it no longer adequately explained how the world really worked.

He offers insight into the appeal of "leftist philosophy":
... material prosperity, by itself, does not create happiness. We have higher needs, as expressed in Maslow's hierarchy [of needs], and the freedom movement needs to ... consciously create a vision that addresses meeting the[se] higher needs.

That is the secret of the success of the Left, despite its bankrupt economic philosophy. The Left entices the young with promises of community, love, purpose, peace, health, compassion, caring, and environmental sustainability. The Left's vision of how to meet these higher needs in people is fundamentally flawed. But the idealism and the call to the higher need levels is magnetic and seductive, nonetheless. The irony of the situation is that the Left has idealistic visions of higher human potential and social responsibility but has no effective strategies to realize its vision.

Thursday, June 29, 2006

Excessively Sorry

I am sorry. You are sorry. We are all sorry. All the time. At the drop of a hat. The word has almost lost its meaning.

One guy thinks it is because we have stage fright in everyday life -- too self-conscious and tongue-tied to react any other way.

Wednesday, June 28, 2006

Training is a waste of money and time...

Can management skills really be taught? Here are some thoughts from David Meister, management guru, writing in "Why (Most) Training is useless".

“Business,” as a subject, is about things of the logical, rational, analytical mind: concepts such as ‘the value chain’ or the numerous P’s of marketing. Even when it’s analyzing and discussing people, business is often treated as an intellectual process of analysis and discussion: Maslow’s hierarchy of needs, the characteristics of great leaders, etc., etc. Business, at least as it is taught in our business schools and most training programs, is about understanding and knowledge.

These are, of course, both very important. However, managing is a skill, and (as it transpires) has nothing to do with rationality, logic, IQ, or intelligence. Whether you can manage is a simple question of whether or not you can influence individuals or organizations to accomplish something. It’s about influencing people, singly, in groups, or in hordes.

No amount of understanding, knowledge or intelligence will help if you are not able to interact with people and get the response you desire. I know a lot about management from my education. That doesn’t necessarily mean I’m any good at doing it.

The same tension between knowledge versus skill, and rational versus emotional development, exists in many other developmental areas.

Tuesday, June 27, 2006

Book summary: Freakonomics

Fundamental Ideas:
  1. Incentives are the cornerstone of modern life.
  2. The conventional wisdom is often wrong.
  3. Dramatic effects often have distant, even subtle, causes.
  4. Experts use their informational advantage to serve their own agendas.
  5. Knowing what to measure and how to measure it makes a complicated world much less so.
Trivia: The US spends as much money on campaign finance as on chewing gum -- 1 billion dollars per annum.

Chapter 1: Incentives lead to cheating.
  1. When people pay a nominal fine for picking up their kids late from a Day care center, they lose the moral incentive to be on time, and are willing to trade this for a small amount of money, so the introduction of such a fine increases the number of such incidences. The withdrawl of the fine does not lead to a corresponding reduction.
  2. Statistics reveal cheating by school teachers in promoting grades of children to enhance their own image, and also among sumo wrestlers to throw a match to let the opponent hang on to privileges.
  3. Paul Feldman's bagel business shows that only about 87% of people obey an honor code based payment system. Smaller communities are more honest than bigger ones, whether offices or towns.
Chapter 2: Information is power.
  1. Stetson Kennedy "outed" the Ku Klux Klan's secrets on Superman radio shows, leading to its demise.
  2. The internet reduces information assymmetry - eg for term life insurance quotes.
  3. Real-estate agents don't look out for a client's best interest -- 6% on the difference between an average and a good price is a paltry amount.
  4. Voting data from TV program "Weakest Link" show that discrimination against Hispanics ("poor players") and the elderly ("can't stand ya"), and none against women or blacks.
  5. People say one thing and do another, eg, internet dating ads.
  6. Conventional wisdom is cooked up by journalists, experts and such like.
Chapter 3: On Crack dealers.
  1. A crack gang works like a standard capitalist enterprise: you have to be near the top of the pyramid to make a big wage.
  2. Any glamour profession is like a tournament -- one must start at the bottom to have a shot at the top.
  3. Crack dealing and crime devastated black neighbourhoods and set the community back by a decade.
Chapter 4: On Reduction in Crime.
  1. (J K Galbraith) The two key factors contributing to the formation of conventional wisdom are the ease with which an idea may be understood and the degree to which it affects our personal well-being.
  2. More policemen implies less crime.
  3. Legalised abortion, Roe v Wade, prevented unwanted teenage criminals from ever being born.
  4. Question: Is the trade-off of higher abortion and lower crime worth it?
Chapter 5: On Parenting.
  1. (Peter Sandman) Risk = Hazard + Outrage. When Outrage factor is low, people tend to ignore the risk. Risks that one does not control and that are unfamiliar have a high outrage factor.
  2. A good school is important to a child's education. Good peers matter a lot.
  3. It isn't so much a matter of what you do as a parent; it's who you are. Parents matter a great deal, but mostly in ways that have been strongly determined well before the child is born.
Trivia: Chance of baby drowning -- 1/10k, chance of baby being shot -- 1/1MM, which is 100X smaller.

Chapter 6: Quantifying Culture.
  1. Children's names strongly reflect the socio-economic background of their parents, and the latter is correlated with their eventual achievements.

Sunday, June 25, 2006

30 is the new 20

Immaturity Levels are Rising in society as people achieve mental adulthood later in life, if ever.
... a growing number of people are retaining the behaviors and attitudes associated with youth. As a consequence, many older people simply never achieve mental adulthood, according to a leading expert on evolutionary psychiatry. Among scientists, the phenomenon is called psychological neoteny. The theory’s creator is Bruce Charlton, a professor in the School of Biology at the University of Newcastle upon Tyne, England.
Spoiled children aren't merely immature, they're sheltered and unprepared for maturity.

On Kohlberg's stages of moral development, what stage do most people get to? What stage do today's institutions, especially public education, want them to get to?


... academe appeals particularly to introspective, narcissistic, obsessive characters who occasionally suffer from mood disorders or other psychological problems. ... these difficulties go untreated because they are closely tied to enhanced creativity, as can be the case with obsessive-compulsive disorder, major depression, bipolar disorder, and the kind of high-functioning autism known as Asperger's syndrome.

-- The Chronicle of Higher Education, Nutty Professors

Friday, June 23, 2006

Guide to Hiring Women

Compare this hilarious Guide to Hiring Women from 1943 and this behavioural guideline from 2000.

The problem with Pascal's wager

"... since rainstorms are either caused by A) water vapor in the atmosphere or B) aliens who want to drown us, we should start working on B in case it isn't A. If it's A and we work on B by creating a multi-billion-dollar network of space defense lasers, then we profit from being able to stay alive. If it's B and we assume A, then the aliens drown us all, take over our planet, and make it into a global resort/spa for the Pangalactic Federation."
-- TooMuchEspressoGuy, slashdot post.

Wednesday, June 21, 2006

Economics for fifth graders.

Arthur Foulkes from the Mises Institute brings us a great and simple lesson in basic economics.

Lesson 1: Trade
Lesson 2: Money
Lesson 3: Savings
Lesson 4: Competition
Lesson 5: Price

"But when are you going to get to the economics?"

It was the end of my first day volunteering to teach "basic economics" to a group of fifth graders. The teacher looked bemused as she asked the question.

"That's what I'm doing," I whispered a little curtly in reply.

Realizing her offense, she quickly explained her meaning: "You know, with all the graphs and big words and stuff."

I realized this teacher was under the common misperception (perpetuated by most economics professors) that economics is about math, models, and strange lands where a complete lack of real competition is called "perfect competition" and it is possible to visualize (and measure) human happiness using "utility curves."

Go read it all.

Tuesday, June 20, 2006

Can society be stateless?

Excepts from a recent article on the stateless societies:
In pursuing his vision of freeports at sea, Werner Stiefel put into motion in a practical way a plan for a wholly proprietary, nonpolitical public authority. Here was his answer to the question of how to have public administration and yet each and every person be fully empowered over his own person and property. He believed that humankind would outgrow government as we know it today. Perhaps what is most intriguing and heartening about his formula for an internally consistent, open social software is that it is not conjectural, but is extrapolated from a century and a half of empirical data gleaned from observation of the marketplace.
-- Spencer MacCallum, Werner K. Steifel's Pursuit of a Practicum of Freedom.

Read about efforts to establish the framework for a civil society consistent with liberty and natural rights, in this intriguing book: The Law of the Somalis.

Political correctness: "challenged"

The unfortunate thing about using the word "challenged" when referring to a disabled person is, it won't change the nature of their disability, nor is it likely to change peoples' feelings toward them.
-- Phil, rec.humour.funny

Saturday, June 17, 2006

How could God allow that?

Interesting excerpt from Unquestioned Answers, where Nonconspiracy theorist David Ray Griffin takes aim at the official 9-11 story:
... Griffin's background in "process theology". Process theology is specifically designed to answer such post-Holocaust questions as, how could a loving God have allowed such a thing to happen? Griffin has written or co-authored a dozen books and articles on the subject, and roughly the answer is this: We, as creations of the Creator, have free will to choose how and what we create in this life. This very often results in what we call "evil." On the other hand, our greatest power as human beings is to bring that loving God to earth by creating good instead.

To those who assert "God is dead," process theology says no, Griffin reasons. The loving God is alive in our thoughts and words and deeds. God doesn't intervene to set things right unilaterally. Rather, that spirit--through us--embodies divine love. In other words, the world changes--if we change it. Divine power, he says, is "persuasive, not controlling."

Friday, June 16, 2006


You may be interested to know that global warming, earthquakes, hurricanes, and other natural disasters are a direct effect of the shrinking numbers of Pirates since the 1800s. For your interest, I have included a graph of the approximate number of pirates versus the average global temperature over the last 200 years. As you can see, there is a statistically significant inverse relationship between pirates and global temperature.

-- Bobby Henderson, Church of the Flying Spaghetti Monster.

Thursday, June 15, 2006

Are you training your kid to be a garbage sorter?

Do you seek atonement for the sin of excess? Recycling is the answer!

Check out "Recycling is Garbage", the highly controversial NYTimes Magazine article.

Cecil Adams at StraightDope has a more pragmatic view:
... the fact that something can be recycled doesn't mean it should be. Forget the esoteric arguments about externalities, finite resources, and so on--in the end recycling will (or won't) work because it is (or isn't) cheaper than throwing stuff away. This varies with the material being recycled. As a general proposition, any manufactured product that is (a) heavy or expensive in relation to its bulk, (b) homogeneous, and (c) easily separable from the waste stream by consumers can be recycled economically. Metals, notably steel and aluminum, are the obvious examples; both have high recycling rates. Surprisingly, so does newsprint. The poor candidates, at the moment, are plastics and mixed paper (including magazines). Plastics are too light and heterogeneous, while mixed paper contains too many contaminants. In the end we may conclude that this junk is best consigned to landfills. But given the advance of technology, who knows?

Wednesday, June 14, 2006

Dynamic Typing for careers

The European approach reflects the old idea that each person has a single, definite occupation-- which is not far from the idea that each person has a natural "station" in life. If this were true, the most efficient plan would be to discover each person's station as early as possible, so they could receive the training appropriate to it.

In the US things are more haphazard. But that turns out to be an advantage as an economy gets more liquid, just as dynamic typing turns out to work better than static for ill-defined problems. This is particularly true with startups. "Startup founder" is not the sort of career a high school student would choose. If you ask at that age, people will choose conservatively. They'll choose well-understood occupations like engineer, or doctor, or lawyer."

"... most kids graduating from college still think they're supposed to get jobs, as if you couldn't be productive without being someone's employee. But the less you identify work with employment, the easier it becomes to start a startup. When you see your career as a series of different types of work, instead of a lifetime's service to a single employer, there's less risk in starting your own company, because you're only replacing one segment instead of discarding the whole thing."

--Paul Graham, Why startups condense in America

Monday, June 12, 2006

Green Paper Flight

An excerpt from Reasons to Worry -- An article on how the US is exporting greenbacks and getting itself neck deep into debt:
The most important lesson to be drawn from the history of debt is this: It's not the absolute size of your borrowings that matters. It's not even the relative size in relation to your income. The crux is whether the interest payments you have to make are more or less than you can afford to pay. And that, in turn, is a function of whether or not the rate can move, whether or not your income can change and whether or not inflation can help you or hurt you. On this basis, both subprime American mortgage-holders and a distinctly subprime administration may find the months ahead more painful than they anticipated.

Wow! Read the first three lines again. The advice is to perpetually re-finance debt to adjust cash flow. Brilliant. That way one never pays off the debt, just juggles it around. From the NYT, in an article denouncing debt, no less!

Edit July 27, 2006: Is there any wonder that the USA is headed towards bankruptcy? So claims an article from the Federal Reserve Bank of St. Louis Review, July/August 2006.

Saturday, June 10, 2006

Scientist and artist

The beauty that [an artist] sees is available to other people -- and to [scientists] too. Although [the scientist] may not be quite as refined aesthetically as [the artist] is, he can appreciate the beauty of a flower. But at the same time, he can see much more in the flower than [the artist] sees. ... There's beauty not just at the dimension of one centimeter; there's also beauty at a smaller dimension.
-- Richard P. Feynman, "What do you care what other people think?"

Wednesday, June 07, 2006

The appeal of gmail

Gmail from google is perhaps the first e-mail service to have many of the features of CLI email readers e.g., mutt, features such as threaded views; while at the same time, allowing the user to work easily with a GUI.

No wonder power users accustomed to the customisability and speed of CLI interfaces find it to be a frustrating experience -- why is it so difficult to delete a single message, how does one change the basis for threading, etc. -- but at the same time typical users, accustomed to silly and clunky webmail interfaces until now, tend to love it.

Edit: July 30: Business users, on the other hand, find it extremely inconvenient, per this WSJ article.

Thursday, June 01, 2006

Don't call

From the 2005 June 27 issue of Fortune, article title How I make decisions:
Some things today - cellphones and e-mail - are not healthy for growing leaders. Before cellphones, if the boss was away, the next person in line had to make a decision. It was either right or it was wrong, but you had to accept responsibility. You learned and grew from that. Now it's too easy to call for advice. Senior leaders have to start saying,"Look, if it's not dying or burning, don't call me."

What is the government doing to our wealth?

One gets richer (i.e., increases one's future supply of capital goods) by saving (i.e., by investment in capital goods) and not by consumption (i.e., by current exhaustion of capital goods).

This is obviously true of men. And it is just as true of nations.

Unfortunately, modern governments established under the care-taker model of democratic nation-states do not have an incentive to pursue long term savings at the expense of short term politically motivated spendings. Witness modern-day Robin Hood policies, a.k.a., coercive extortion at gun point -- subsidies to inefficient producers, reservations on the basis of caste and class, tax-funded handouts in the name of social equality -- transferring wealth from the productive to the non-productive, just about everywhere in the world.

The present dollar is worth some 10 cents of the 1970 dollar and is bound to lose ever more in the future.

Indeed, What has the Government done to our money?

Wednesday, May 31, 2006

The death of family values..

It seems individuals of our generation think differently from, say, those of our grand parents' generation. Is this largely caused by an over-dependence on the "nanny" state? Anecdotal evidence of how the welfare state corrupted Sweden:
This degenerated morality and lack of understanding for the real and natural order of things is also evident in areas requiring personal responsibility and respect for fellow men and women. The elderly are now treated as ballast rather than human beings and relatives. The younger generations feel they have a "right" to not take responsibility for their parents and grandparents, and therefore demand the state relieve them of this burden.

... the elderly aren't the only one's finding themselves in the periphery of welfare society while the state is looking after its working population. The same goes for the youngest who are also delivered to the state for public care rather than being brought up and educated by their parents.

Friday, May 26, 2006

Saying it as it is...

Choice quotes from Per Bak's "How Nature Works: The Science of Self-Organized Criticality"

On academic attitudes, Pg. 86: I just wish there was a more open-minded attitude toward attempts to view things in a larger context. I once raised this issue among a group, not of geophysicists, but of cosmologists at a high table dinner at the Churchill College in Cambridge. "Why is it that you guys are so conservative in your views, in the face of the almost complete lack of understanding of what is going on in your field?" I asked. The answer was as simple as it was surprising. "If we don't accept some common picture of the universe, however unsupported by the facts, there would be nothing to bind us together as a scientific community. Since it is unlikely that any picture that we use will be falsified in our lifetime, one theory is as good as any other." The explanation was social, not scientific.

On academic publications, Pg. 92: To appreciate the pain and annoyance that one might feel because of [the rejection of an article by both Nature and Science], it should be pointed out that essentially anything can be published, no matter how insignificant - even in Nature. Most published material sinks like a rock and never surfaces again. It is precisely when you have something potentially new and exciting that you get in trouble. Ironically, dozens of articles applying our ideas ... have since appeared with great regularity in those same journals.

On perspective, Pg. 115: In our everyday research, we tend to view our own field as the center of the world. This view is strengthened by our peer groups, which are, because of the compartmentalization of science, working along the same line. No mechanism for changing exists, so more and more efforts go into more and more esoteric aspects of well-studied areas that oce paid off. ... Nobody has an incentive to step back and ask himself, "Why am I doing this?" In fact, many scientists are put off if you ask this question.

Where have you gone, simplicity?

Simplicity is dying. Most products are jazzy, fancy, showy and cheaply made; rather than simple, elegant, well-made and functional.

Case in point: Try to buy a simple suede-bottom one compartment backpack. Almost impossible to find in the stores.

Getting simple stuff has become a mark of expensive taste, of spending lavish amounts of money. Eg: Movado watches, Mont Blanc pens.

As Sarojini Naidu once said of Gandhi's habits: "It is very expensive to keep Bapu in poverty."

Tuesday, May 23, 2006


Saw this article today. Excerpt: If you never say no, you will just be ... trying to do a little bit of everything and, ... will almost certainly be superb at none of them.

Hmm. And that reminds me of a certain guy in Washington who never says no.

Monday, May 22, 2006

The evil that men do...

The geographical nation state is perhaps the most insidious invention of the 20th century. The raison d'ĂȘtre of nation states is two-fold:
  1. to concentrate power and wealth in the few, and,
  2. to distribute and dilute responsibility among the many.
Democracy does this in a remarkably efficient and invisible manner and all nation states devolve into democracy. It is, quite possibly, the most dangerous form of governance for a nation state.

When an autocratic or a monarchic tyrant does evil, his tyranny is plain. When a democratic ruler does so, it can remain hidden and be justified as the will of the people for a much longer period.

Monarchs and dictators, whose actions are evil, are overthrown by revolt and revolution and this threat is a real check on their evil intentions, not to mention a competition for the setup of government. A democracy on the other hand, seemingly, introduces competition in governance by lowering the barrier to entry. However, this is superficial. Democracy replaces the real fear of revolution with the innocuous "If you don't like 'em, just join 'em".

Further, in a democracy, the government is a mere care-taker. Care-takers of property, normally, make shorter term decisions with sub optimal economic consequences as compared to owners.

Power corrupts. Absolute power corrupts absolutely. Even absolute democratic power.

The only alternative is the dissolution of statist power and the restoration of individual liberty.

Sunday, May 21, 2006

What is the optimal form of education?

Modern schooling trains one to be a robot, to be a disciplined foot soldier, to be a clerk, but not to be a thinker. Perhaps this is a natural by-product of the design of the system. It is geared to produce extras for there are far more extras than actors. Actors are left to automatically stand out by creating their own path.

Hypothesis: The most effective impartation of learning is through the apprenticeship model.

Proof by examples:
  1. Classical traditions in South Asia and in medieval Europe, mostly before the advent of modern Western influence.
  2. Gradaute research programs use a substantially similar model to this day.
  3. On the job training of new employees at the most firms.
Points to ponder over:
Can such a change be percolated to earlier stages in life?
Can this model scale to everyone? Does it need to?
Can there be a multi-tiered system, wherein actors are subject to an apprenticeship model fairly early while extras go through the current system?

Wednesday, May 17, 2006

When does democracy really work?

For democracy to work, following two conditions must hold:

1. Informed and qualified voters, of which a representative sample, actually bother to vote: The qualification can be achieved by restricting the domain of sampling for the votes or by implementing meta-moderation on the first level of votes.

See for instance, voting on online sites to improve signal/noise ratio: it works well on slashdot -- votes say informative, offTopic, troll, funny, insightful etc instead of being binary and each user can configure the weightage for the votes separately. Now that is a GOOD implementation.

2. Low stake in the outcome: The democratic process works well where no-one stands to gain significantly from manipulation. When the votes are used as a basis to give goodies then people have an incentive to abuse it. Eg: the US government. It ain't working so well because the players manipulate it to get significant goodies upon winning.

More examples: "Search engine optimization" is indeed an industry but if we consider a "typical search for information and not for a product", such a search is of a high enough quality. The same holds for the average wikipedia entry on a "typical" non-controversial topic. There are a few "high stake" entries that have manipulation issues but that is exactly the point!