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?

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?

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.

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.

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.

First, 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.

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.

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.)

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.

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.

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.

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.

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?

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?

Advice..

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.

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.

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.

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?"

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.