PicoBusiness

In this article, Kasparov claims that we’re in a period of technological stagnation. Some excerpts:

We feel that we literally have something new every month, but in fact it is progress that is proceeding from technological innovations and revolutionary inventions of the 1960s and 70s. For example, my iPod containst latest technology from 1981. In medicine there nothing similar to penicillin has been invented. If we talk about the Internet, then do not forget that the whole theoretical framework has been prepared in the 1960s in America, and the first communication session was 1969. A patent for mobile communications was registered in 1962, and the first call was made in 1973. The fact that the phones are smaller, thinner, more beautiful, does not change the fact that they are basically the same technology.

An example of real innovation was the emergence of personal computers, introduced by Apple in 1977. After that, it is hard to find innovation of this level.

Ok, first off, it’s well known that technology takes a long time to move from concept to mass production. The fact that packet-switched communications and microwave wireless were conceived long ago does not mean that we’re stagnating. It just means that we’re following the ongoing trend we’ve been following for hundreds of years.

What Kasparov doesn’t address, because it doesn’t support his argument, is what is in the labs and startups right now. And that would be:

• Nanotechnology
• Nano-medicine
• Genetic sequencing and gene therapy
• Quantum Computing
• Safer nuclear fusion

We are building insanely tiny things with incredible, magic-like properties. We are curing diseases that used to be uncurable. We’re building computers to solve problems that used to be essentially unsolvable.

These are all dramatic new innovations that will make the future much brighter. Ignoring them because you want to have reasons to be dissatisfied with the present is just stupid.

Puter of the Gormogons has a thoughtful piece on how one spends one’s hours, minutes and seconds of remaining life.

It’s a good article, don’t get me wrong. But it also made me angry. This, in particular:

One Percenter got a far away look in his eyes and stated that occasionally he will stand in his window and watch his plow contractor, wishing he had the time to clear his own driveway. And to cut his own lawn

This made me mad because Mr One Percenter Hedge Fund Guy has the time. He absolutely, 100% has all the time he wants to pursue whatever he wants. It’s a luxury that most people on Earth will never have. But instead, he hides behind excuses.

That’s what makes me mad. Mr. One Percenter has the time, but he chooses not to use it. He says he wishes he had time to mow the lawn, but, in all frankness, he’s lying to himself, lying to Puter, lying to the universe. What he’s really saying is “I wish mowing the lawn was a bigger priority for me”.

You see the trick I pulled there? I turned the statement from one about the uncontrollable physics of the clock, and made it a statement about free will. Can you imagine? A One-Percenter-Hedge-Fund-Guy who can’t muster enough free will to mow the lawn? Isn’t that (when you really think about it) kind of pathetic?

But, really, I’m being unfair as well, at least a little. I’m sure Mr. One-Percenter knows (to some degree) that he could mow the lawn, if he really wanted to. So, the real question is, why doesn’t he? My guess (and this is only a guess) is fear.

Mr. One Percenter, having conquered the world of high finance, is afraid of losing his position of power. He’s afraid of losing his status, the deference that others show to him. He’s afraid that his current pile of millions won’t be enough, that without access to ever-expanding piles of money, he’ll never be _safe_. So he keeps running on this treadmill, hanging out with people who act like his friends (but would sell him to kidnappers for a dollar if they could), enjoying his fancy cars, and fancy house, and the way the salespeople are so obsequious.

And he says to himself (I’m guessing) “I have to keep going, or I’ll be a nobody.”

Yes. A nobody… with millions of dollars in the bank.

Bill Gates spends his money fighting disease in Africa. James Cameron builds submarines and dives into the depths of the ocean. Richard Branson builds spaceships. Jeff Bezos funds 10,000 year clocks and spaceships of his own.

“Oh, well, those guys are super-rich. I can’t compete with that”. I hear you cry.

Really?

John Carmack (one of the developers of Doom and Quake and other games) builds spaceships. He made millions, not billions. A guy who owned a dry cleaner in New Jersey spends his days dressed up as Batman, handing out toys to cancer-stricken children.

And Mr. One-Percenter thinks he’s trapped, unable to find time to mow his lawn. What he’s really saying (I suspect) is “I’d rather be high-status and stressed out of my mind, than slightly-lower-status and relaxed.”

Maybe I’m wrong. Maybe Mr. One Percenter has made a lot of bad decisions, and is living paycheck-to-paycheck. Maybe he will go bankrupt if he walks away from the job and hours and the stress. But somehow, I doubt it. Somehow, I suspect that what he really is is a slave to the little voice in the back of his head whispering “more, more, more”.

A moment’s courage, and he could walk away. He cash out, settle his debts, and live better than any king of old, probably without even eating into the principal of his accumulated wealth. He could feed the hungry, clothe the poor, touch the hearts of scared and suffering children. He could mow his lawn, build a shed, write a novel, travel to the 5 most dangerous places on Earth. He could do all the things that the vast majority of us will only ever get to do one of.

A moment’s courage, a promise whispered to himself: “I know that lowering my status is scary, but every single book, every single study ever written on this topic tells me that I’ll adapt to it far more easily than I expect.”

And he would be free.

This is a really, really good painting, IMO.

- if you’re not familiar with the series – this presents the scene where the yellow-clad rebel lord Robert Baratheon attacked the crown prince Rhaegar Targaryen, 15 years before the start of the first book.

These are great

I think this is my favorite:

This article about how plants helped form the Earth’s surface is quite interesting, but the lede seems flawed.

If plants are the catalyst that turns rock into mud, once that mud exists, water will cut channels through it. And thus rivers, lakes, valleys, sedimentary rock, etc.

The question then is, will life develop on other planets that breaks down rocks into mud? That seems like the only requirement in order to have a sedimentary surface, like the Earth. The author blithely waves away this possibility.

This post was provocative about the “January Effect” – whether January is a good indicator of the performance of the rest of the year.

There have been 72 Januaries since 1940, and of those, when January is positive, the year is positive in all but 7 years. so that implies that a positive January has a correlation to positive overall years.

But not so fast! says Ritholtz, who points out that in the years that January was negative, the year was positive in 14 years – in other words, a “false negative”.

He then adds those two sums together to point out that as a barometer, January sucks – the stock market goes up 72% of the years, and if January is wrong 29% of the time, that means that it’s no better a barometer than just assuming the market will go up.

And if we were still in December, and making a ‘hedge’ bet or some other fancy financial gamble that based our year’s portfolio on what happens in January, then I would definitely agree.

But the fact is, we are in February, and we now *know* what happened in January. And January was up. And in the years that January was up, the year was up 87% of the time. We can safely discard the other years.

Let me put it to you another way. Let’s say the average resale value of an average 2012 car is 30% of its purchase price in 5 years. If you chose a car at random, you’re likely to get one that’s worth close to 30% of its value in 5 years. Having said that, when you dig further, you find that the import cars have an average 36% resale value in 5 years, and the average domestic car has a 28% resale value in 5 years.

So if you randomly choose an import car, you can expect that your average resale value would be closer to 36%. You’re drawing from a smaller population, with a different set of probabilities than the larger population.

I’m just a statistical neophyte, so it’s possible my interpretation is totally off. But I feel pretty strongly that knowing more information changes your probabilities.

Honestly, I hope I’m not right. Because either Ritholtz *doesn’t* know this, and is really bad at his field, or he *does* know this, and is deliberately trying to mislead his readers for some agenda of his own.

Inspired by this post.

Imagine we have nation with 20% unemployment. The government decides to use Keynesian policies to deal with this, and they use debt at 2% to employ those unemployed people by having them dig holes, and then fill them in again.

At the end of a year, we have no unemployment. A lot of people have income, and they’ve bought food and entertainment, etc. All is well, yes?

Well, no. There is still that lingering debt at 2%. And there is nothing productive built or created with that money. It’s the financial equivalent of a twinkie – tasty, but lacking in any nutritional value. Basically, we’re making a bet that we’ll grow and/or inflate faster than 2%. Not an unreasonable assumption, but not etched in stone.

People spent money to buy those bonds, and now they don’t have that money to spend on other projects. Now, many of those people are foreigners, and to the extent that we can ‘swindle’ foreigners out of their money and use it to employ americans, bully for us… if you like the idea of knowingly swindling foreigners out of their money.

Continuing on the topic of my previous post…

Let’s consider another pair of scenarios – In Universe A the economy goes into recession, and the need for business form approvals drops from 1000/day to 900/day. In Universe B, new software is installed that makes the existing forms processors 10% faster.

In Universe B, the rational thing to do is to fire 100 people, and let the 900 remaining continue to do the work that used to be done by 1000. (I’m fudging a hair on the math, but you get the point, I hope). But this is a form of austerity, and it would be a bad thing, if we follow the Keynesian doctrine.

And if we consider Universe A – the need for processors has dropped, and from a pure dollars-and-cents approach, it makes sense to reduce the staff to meet the demand. But this is also a bad thing, if we follow Keynesian doctrine (in fact, it is probably worse, because of the underlying recession).

But I don’t really see that. In both cases, the government can return that money to the people in the form of lower taxes. In both cases, the people spend that money on things that they want, or save it (which has a follow-on effect on interest rates and borrowing costs). In both cases, the people are free to do what they want with the money. And I can assure you that what they _don’t_ want is for their tax dollars to be spent employing someone to stand around and do nothing.

Which brings me to my current mental model – while I don’t have a problem with the existence of taxes and a government, I do find it morally wrong to take money from someone via taxes if the resulting use of that money is going to be less productive than the use the taxpayer would put it to. I’ll elaborate with another thought experiment in part III.

Imagine that there was a government agency that evaluated and approved business licensing forms. Assume these forms are very complex, and require an entire day’s worth of work to properly evaluate and approve. And let’s say that there are 1000 businesses out there sending in forms each day, and that the government has enough capacity to support that need.

This implies that there are 1000 government agents paid, say, $100k each year, to evaluate and approve forms.

Now, let’s say that someone writes some open source software that can process 1000 forms in a day. You still need at least one person, just in case, but you don’t need all 1000. The government agency installs the software, and fires 999 people.

In terms of Keynesian economics, this is a catastrophe. ~1000 people out on the street. No wages, and therefore significantly diminished spending from those people. There is a meaningful negative impact on GDP.

But yet what normal person would think this was a bad thing? But the Keynesian model suggests exactly that – that automation is something to be avoided, especially when times are tough.

And this one is great

And it gives another bullet point to the ‘countries that have grown and improved their finances even while adopting austerity measures’ – that list now includes both Canada and Estonia.

Ken Rogoff gives a bunch of criticisms of why Capitalism, concerned that it isn’t sustainable. To summarize:

• Public goods are hard to price (e.g. Clean air and water)
• capitalism has produced extraordinary levels of inequality.
• the provision and distribution of medical care
• capitalist systems vastly undervalue the welfare of unborn generations
• Financial crises

These are interesting, and they inspired in me a similar list – five reasons Ken Rogoff isn’t sustainable:

• His cells have ever-shortening amounts of Telomerase, ensuring they will eventually fail to replicate successfully
• His brain is hogging a significant amount of his overall nutrient intake, larger than its proportional share of his body weight
• He is unable to discern which parts of his body are in distress and need medical care, until after they start to show signs of said distress
• He is no longer breeding, thus depriving the world of unborn generations of Rogoffs
• Imagination crises

What….. You’re saying that these criticisms are patently unfair, since they strike at the heart of his personal liberty? You say that it’s unreasonable to establish expectations of performance that no human is capable of meeting? You think that unless I provide a system for him to use that would meet these expectations, it’s unfair of me to levy these kinds of criticisms upon him?

Perhaps you’re right….

This link says that statements by Dr. Krugman indicate that he doesn’t cook. This is the ‘graph in question:

One popular Austrian commentator who has advised Paul, Peter Schiff, even warned (on Glenn Beck’s TV show) of the possibility of Zimbabwe-style hyperinflation in the near future.

So here we are, three years later. How’s it going? Inflation has fluctuated, but, at the end of the day, consumer prices have risen just 4.5 percent, meaning an average annual inflation rate of only 1.5 percent.

After reading this, I find the Chortler’s statement to be utterly ludicrous. There’s no way to tell from that statement whether Paul cooks or not. The only thing we can tell for sure is that Paul doesn’t buy his own groceries.

another characteristic form the elitism of intellectuals may take, namely, their tendency to dismiss the needs of ordinary people for certain freedoms on the assumption that such requirements are the luxury of the few while the masses should rightfully concern themselves with satisfying their more immediate material needs.

Hat Tip: Cafe Hayek

This rings pretty true to me – “People don’t need to be able to buy incandescent light bulbs – they should be forced to use CFRs, and instead focus on buying things to prop up GDP, like good little units of demand.”

Ayn Rand may have had a unworkable and unrealistic worldview, but her predictions about the politics of pull were absolutely correct.

GM is partially owned by the government, and the management has a lot of access to government. So, of course, when GM has bad news, they can work with the government to suppress bad news. Just like the management at Solyndra – they have access to key people in Washington, so they get big loans.

This is the fast-track to aristocracy – the nobles are able to influence the king, and the common people have no voice at all. And this is exactly the kind of government that democrats seem to want – one where the highly-educated elite technocrats are in charge of everything, so they can force us to live the life they think we should, “for our own good”.

And, you know what, if it _was_ for our own good, that might be a political structure worth discussing. But history consistently demonstrates that this kind of access leads to corruption, on a national level. These technocrats will use their influence to enrich themselves and their friends, and attack and impoverish their enemies. This is not democracy. This is not freedom. This is the path to ruin, brought to you by the people who believe in the virtue of a powerful central government.