Monday, August 31, 2009


This is the most compelling version of these comparison charts that I have seen.  You really do have to look at the entire period since 2000 as a secular bear market.  The difference between the Great Depression and the Japanese Great Recession is that the US bubble burst in two separate waves -- stocks and then real estate.  All three are tied together by the de-leveraging of asset ownership.  Being forced to gradually cancel debt is like running the non-zero logic of economic cooperation in reverse.

Friday, August 28, 2009

Data Dump

Humans sometimes have the strangest squirrel mentality; god forbid you should forget where you put those winter nuts last fall.

Scientists who collaborate via email, Google, YouTube, Flickr and Facebook are leaving fewer paper trails, while the information technologies that do document their accomplishments can be incomprehensible to other researchers and historians trying to read them. Computer-intensive experiments and the software used to analyze their output generate millions of gigabytes of data that are stored or retrieved by electronic systems that quickly become obsolete.

"It would be tragic if there were no record of lives that were so influential," Dr. John says.
Yes, entirely tragic if all we could discover about them were the vast number of published papers, articles, books, lectures, and presentations mirrored throughout the web. That won't even begin to answer what the consistency of their ca ca was like on 090828.

The growing scale of new science projects, however, has university data custodians worried. "We are swimming in data these days, and people are overwhelmed," says digital curator Sayeed Choudhoury at Johns Hopkins University, the principal investigator for a national consortium of data preservationists called the Data Conservancy.

"Our ability to collect data now outstrips our ability to maintain it for the long run," says William Michener at the University of New Mexico, who leads a data-preservation network called DataONE. "We lose an awful lot of data that is collected with public funds."

"The problem is to actually capture the way scientists interact with the data," Dr. Szalay says. "Today's graduate students are starting to use instant messaging in their scientific work. We have to figure out how to capture these."

"Digital information lasts forever -- or five years," says RAND Corp. computer analyst Jeff Rothenberg, "whichever comes first."

There's no question that new tools mean new discoveries, new ways of working, and new relationships to power and history; how science changes as a result of networked computers is valid question. What's silly is this breathless, stuck-in-the-past conservationist mentality that privileges the recording every little cough and shift (kinda reminds me of Kenneth Goldsmith's book Fidget) over the synthesis of new ideas. Why are we always so constantly worried that certain things will simply pass out of existence -- species or languages or some geek's IM messages? Why are we so concerned that it is getting more and more difficult to write the "definitive history" of a scientific discovery or an artistic idea or a given year because so many things collaborated in its creation. Why do we spend more time worrying about keeping our data in one repository to end all repositories than we do in figuring out how to have our data make more data? We still think like puny humans.

So what if we lose bit here and there -- we have already arranged for everything of importance to go viral.

Thursday, August 27, 2009

Tete a Tett

Gilian Tett is saying some extraordinarily crazy shit that you normally would only be able to read in the dustiest fringes of the blogosphere and never expect to see on the front page of the FT.

However, the unpleasant truth is that there is never going to be any complete intellectual system to explain how financial systems should work. After all, as I wrote last week, ideologies are always rooted in shifting power structures and struggles. And just as the old intellectual model proved imperfect, any new "theory" that might yet replace it – with or without a Tobin tax – will have limitations too. What is needed now, in other words, is not so much a new creed or magic wand policies, but policy makers, politicians, investors and bankers who are willing to engage their brains, and keep remaking policy, as the world evolves.

Think Pig

All of this is apropos of one very simple proposal, the so-called Tobin Tax, which would levy a tiny transaction fee on every trade.  The fact that we're not hearing a word about this in the US is incredibly telling.  There's not going to be any reform -- Obama is Hoover, not FDR.

Wednesday, August 26, 2009

The Gridlock Book

Another book I finished recently and that I can recommend wholeheartedly is Michael Heller's The Gridlock Economy.  It's a brief meditation on the economic consequences of various forms of ownership and types of regulation, and it couldn't come at a better time, given how hysterical the ideological debate surrounding these issues has become.  Over time, we seem to have completely lost track of the fact that the reasons we have the social, legal, and economic institutions we do (or should) is because they work.  There is everything to be gained from thinking through the principals behind capitalism or communism or markets.  But in the end, our choices have to be primarily based on an empirical evaluation of whether these forms are producing what we want.  Heller's book takes a mighty step in this direction, philosophically, and then follows it up with a number of practical case studies and suggestions that put this empiricism into practice.

Let's consider private property.  There are people that see property as inherently natural and inalienable and there are others that see it all as robbery.  Heller sees it as a social technology.  A certain regime of property rights has particular consequences for how people behave.  If you want to see people behave differently, you should invent a new technology of ownership or tweak an existing one till you get what you want.  Within broad limits, we have a way to do this (called a government).  The apparatus may be broken right now, but that's a separate issue we'll come to in a moment.  Consider the wise words of Interfluidity:

The only bilateral contract is a gentleman's agreement. Binding contracts involve an implicit third party, the state which (through its courts system) stands ready to enforce the terms of private arrangements. The state is not, and cannot be totally neutral in its role as contract enforcer: Communication between contracting parties is always imperfect; the universe presents an infinite array of unforseeable possibilities; even very clear contractual terms can be illegal, repugnant, or contrary to the public interest.
... every contract is a negotiation between three parties, the two who put a signature at the bottom the document, and the state which will be called upon to give force to the arrangement when disputes arise or someone fails to perform.

Once you get past the basic philosophical admission that contracts are a three party system and that ownership will always have something to do with the state, that legal rights are fundamentally subordinate to the cooperative action they were invented to support, you can start to appreciate the cases where a given ownership system has produced terrible results.  The most famous of these is the well-known tragedy of the commons; if we all collectively own a piece of land, we are incented to take as much as we can from it and contribute as little as possible to its care.  This type of public ownership doesn't work (at least in many common cases).  Unfortunately, people mixed a healthy dose of ideology (not to mention anti-communist paranoia) with this empirical observation, and together the two hardened into a rigid doctrine recommending the privatization of everything. 

This, alas, also doesn't work in many common cases.  The bulk of Heller's book is devoted to examining such cases, which he terms tragedies of the anti-commons, and trying to uncover why they happen and how we might prevent them.  The simplest illustration of the idea is an ingenious Quaker Oats marketing scheme from the 50's called the Big Inch where they gave away deeds to square inch parcels of land in the Klondike.  The land was eventually forfeited back to the state because the freeloader brats didn't pay their real estate taxes.   This was just a funny story really, but you can imagine what would have happened if someone discovered oil or gold on it.  But there are a host of real cases where too many, rather than too few private owners caused a particular resource to go underused rather than getting overused:
  • Robber barons on the Rhine during the middle ages -- everybody sets up a toll booth and eventually nobody can afford to ship anything along the river.  Bad for commerce, and bad for the barons; all the castles now lay in ruins.
  • Patent thickets in drug development -- a scientifically viable research program might lead to the development of a drug whose path to market necessarily involves licensing the many patents that were involved in its discovery.  Negotiating a collective settlement amongst these holders, any one of which can block the entire process, is about like herding cats, so it's best not to waste your time developing this sort of drug.
  • Ownership of spectrum rights in the US -- The management of our spectrum is a disaster all the way around.  The largest owner is the military, who doesn't allow anyone to interfere with their bands despite the fact that you can't exactly run out and ask the enemy not to broadcast on that frequency.  Next come the broadcast TV networks, who got their spectrum for free and "own" it but cannot sell it.  They have no impetus to use it efficiently, or to let anybody else make use of it.  This incumbent position is what has delayed digital TV for so long, while in the meantime cell phones went digital quickly because the people who licensed that spectrum had to pay for it; they saw greater wisdom in cramming more signal through the same bandwidth.  Finally, you've got the big cell carriers who pay up front for the right to gouge us with their monopoly later, and have on occasion even bought spectrum to leave dormant, just to be able to block their competitors from improving their networks in key areas.  All of these factors contribute to the fact that the US has some of the highest cellular rates in the world, not in spite of the private ownership of spectrum, but because of it.
  • Certain real estate markets are famous for the way fragmentation of ownership makes it impossible to assemble a parcel large enough to build something useful on.  Tokyo and New York are particularly famous for this.  Heller divides the problems here into three types:
    • Block Parties -- where one small owner with a low value parcel can block a much larger construction project by refusing to sell.  Sometimes this is solved via eminent domain.  Sometimes it's just a bargaining tactic.  The point is that the problem is real, and yet we have no good way of solving it in general.  We have no simple mechanism for rejoining land split asunder, and instead just rely on ad hoc solutions that don't tend to be fair.
    • Share Croppers -- a common problem arises when family businesses or farms are divided amongst many heirs.  If just one heir wants to sell, the whole works often has to be sold because dividing the land is such a costly and difficult legal problem.  Apparently this has happened to many blacks' family farms, and is a major hurdle in using Native American land allotments now that generations of inheritance have made the pieces so tiny.
    • BANANA republics -- this stands for "build absolutely nothing anywhere near anyone" and I can tell you from first hand research it's a major source of profitability for certain companies.  Just try to get a cell tower put up or a landfill, power station, or transmission line built.  This isn't directly the result of overly fractured property ownership, but operates indirectly through the ability of many players in the legal system to block one another.  The benefits of even sensible property definitions at the physical level can be ruined by gridlock at the political level.
  • Property rights in post-communist Moscow -- apparently they decided that if a little bit of ownership was a good idea, a lot must be better, and they made the rights to buy a storefront separate from the right to use it, the right to rent it, the right to collect the rent from it, and the right to occupy it.  Needless to say storefronts stayed empty and for years everything was sold in the street.  This is another example where the divided ownership problem is not spatial but legal, but the underlying principle is the same; if the scale or type of ownership isn't adapted to the scale or type of practical use for an asset, then clear property rights can do more harm than good.   
  • Finally, he tells an interesting history of oyster farming that is too complicated to recount here.
Before you despair that we'll never get anything done again, let me point out that we can prevent anti-commons situations that lead to underuse, and in fact, Heller gives a number of historical examples where these problems were overcome.  A simple law and accompanying court ruling at the beginning of the aviation era were sufficient to guarantee planes the right to fly over your land above a certain height.  The Google book settlement may establish a legal regime sufficient to allow for all books to become searchable.  Vitamin A enhanced "Golden Rice" was brought to market by a WHO patent consortium scheme.  And folks like IBM and even Uncle Sam (with their airplane technology falling behind due to patent lawsuits after WWI) have created patent pools that aggregate rights and license them to everyone who is interested.

The overarching message of the book is simply that we need to put ideology aside go back to the basics when it comes to our regulatory principles.  The idea behind private property was that it would give everyone an incentive to use and take care of what was theirs, and that together these incentives would allow for a competition that benefited everyone.  Property, in fact, should be defined as the type of ownership and control that lead to this outcome.  The economy is dynamic though, and the type of property that we need to produce the things we want changes over time.  If Adam Smith's same logic is to apply, we have to make sure that our system of ownership and control changes along with it.  If we don't, we will all just end up stepping on one another's invisible toes.

I've finally found it

The all time greatest business ever.  Bar none.  Period.  It gives new meaning to the Armageddon Put.

Tuesday, August 25, 2009

Money is the body-without-organs of capitalism

One of the things I've had to do in the last year as an investor is read a bunch of macroeconomics.  This didn't use to be necessary, because the type of investing I do is generally just a sort of comparative analysis -- my company will eat your companies lunch.  It doesn't directly depend on the overall economic level, so it's easiest to just bracket the complexity of determining changes in that level, and assume that we are at equilibrium.  There are some obvious exceptions to this way of thinking about things.  The tech bubble and the housing bubble were both pretty obvious, and of course in investing there's no way to ignore the secular trends that are always changing what the "equilibrium" looks like. But the bubbles were so enormous and so obvious that you could just turn them into exceptions and special cases, stay out of the way, and never fundamentally confront the fact that there is no possibility that our economic system is anywhere near equilibrium.  You could do this, that is, right up to the point where the whole system broke down, and went through what was quite obviously a sort of phase transition. 

Unfortunately, I have discovered that you cannot go looking for an explanation of the non-linearity and instability of the economy in traditional macroeconomics.  Despite the fact that macroeconomics as a discipline was actually born out of the Great Depression, and the fact that Keynes explicitly wrote a General Theory of Employment, Interest, and Money (so as to distinguish it from the special case neo-classical single equilibrium theory that had ruled up to that point) macroeconomic's real genius appears to have lain in proving that nothing like its birth could ever have happened. 

There are lots of reasons why macroeconomic theory is not terribly useful, but in my opinion, the biggest problem is that these guys never take the idea of money seriously.  They are always basically assuming money away as just a fiction useful for the exchange of real goods.  Needless to say, money exists.

As far as I can make out, the one good thing that macroeconomics offers is a view of the economy as a closed system.  Your perspective on the economy changes when you realize that one guy's spending is another's income.  A simple idea which is appalling easy to lose sight of.  While this insight is fundamental, I think it was historically as much a blessing as a curse.  The limited mathematics (ie. no computer simulations) people used to deal with such systems back in the formative years led them to adopt techniques from statistical physics that describe linear closed systems that inevitably tend towards equilibrium.  The classic drunk looking under the lamp post for his lost keys type stuff that characterizes a lot of science.  Nowadays, of course, after chaos and complexity theory and computer simulations and whatnot, we find it easy to imagine closed systems that don't tend towards equilibrium over relevant time scales.  And we find it very easy, in fact necessary if we want to talk about the physics of life, to think of themodynamically open systems, that continue to be "systems" precisely because they don't come to equilibrium.

Which bring us to today's article.  I link to Mark Thoma's version of it, because he makes some good comments and because you have to love a guy who is sitting on the side of the Utah highway writing about what the Japanese think we should do with our toxic assets.  But the main show here is the Keiichiro Kobayashi article that you will have to scroll down to read.  Here's the punch-line (for my purposes, his main point is actually that you need to do something about the toxic assets to get any recovery)

I have elsewhere attempted to construct a theoretical model that satisfies these requirements, in which I assume that assets such as real estate now function as media of exchange given the development of liquid asset markets but are unable to fulfil this function during a financial crisis (see Kobayashi 2009a). With a model like this, we can regard a financial crisis as the disappearance of media of exchange, which triggers a sharp fall in aggregate demand. In this case, both macroeconomic policy (fiscal and monetary policy) and bad asset disposals can be understood as responses targeting the same goal – restoring the amounts of media of exchange (inside and outside monies).

This model sounds interesting because it amounts to the hypothesis that trust (or credulity or suspension of disbelief and resulting greedy speculation or whatever) spontaneously creates money, and lack of trust destroys it.  This is a nice model of a non-linear two state system.  The trust/suspicion switch is sort of ad-hoc here, but later you might go back and try to understand what combination of endogenous variables causes this (ie. understand the change as a phase transition). 

Of course, you're not done at that point.  Once you've got a non-linear model that incorporates money and finance into the closed system, you still have only described a part of it. Today there's a large actor in the system now that doesn't obey the classical equations.  It's become pretty clear that government is "pumping" the system from outside (just don't call it pump and dump).  This is by Keynesian design of course.   Keynes's reached a certain level of generality in pointing out that the Depression was a (local) equilibrium phenomenon resulting from the paradox of thrift, and that the government, being outside that system at the time, was the only thing that could knock it out of the bad equilibrium it had settled into where people were too poor to save anymore.  Now, we actually have to reach a higher level of generality that incorporates the government within the system, because it has become so large that there is no way to analyze things without it. 

What's that you say?  Did I hear you whisper something about the capitalist axiomatic, that most abstract synthesis of state and industry?

Monday, August 24, 2009

What is the sound of one hand smacking forehead?

I wish I could put my finger on what exactly makes Free Exchange seem to me so ... superficial ... in general, but today's comments about natural selection in politics go in that direction.  The note is mostly a collection of quotes and is hard to excerpt, but you can get a sense of what I mean by reading the deep thoughts that conclude a discussion of why our political system produces moral monsters:

The system is quite disgusting when one steps back and takes a look at it, but there's nothing particularly surprising about it. As best I can tell, this is how things have always worked everywhere.

Jack Handy couldn't have said it better. 

Fortunately, some commentator weighed in with a more useful quote from a James Buchanan book called The Reason of Rules, that looks like it might be interesting.

"[S]uppose that a monopoly right is to be auctioned; whom will we predict to be the highest bidder? Surely we can presume that the person who intends to exploit the monopoly power most fully, the one for whom the expected profit is highest, will be among the highest bidders for the franchise. In the same way, positions of political power will tend to attract those persons who place higher values on the possession of such power. These persons will tend to be the highest bidders in the allocation of political offices. . . . Is there any presumption that political rent seeking will ultimately allocate offices to the 'best' persons? Is there not the overwhelming presumption that offices will be secured by those who value power most highly and who seek to use such power of discretion in the furtherance of their personal projects, be these moral or otherwise? Genuine public-interest motivations may exist and may even be widespread, but are these motivations sufficiently passionate to stimulate people to fight for political office, to compete with those whose passions include the desire to wield power over others?"

I really really wish we would get over being shocked by the moral failings of a completely a-moral machine.  The transcendental field of politics is beyond good and evil.  The important thing is to analyze the actual mechanism, figure out in general which mechanisms produce which results, and try to engineer the rules and meta-rules so we go in the direction we want.  Evolutionary thinking, being a tautology, is true always and everywhere, as Mr. Handy so aptly concludes, but that doesn't mean that it's always applicable to the problem at hand.  The whole point is to design a political system that lacks the feedback loop of natural selection.  Long live Anarcho-Theism.

Go Larry, Go Larry

Larry Flynt has been doing some thinking:

I'm calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.

Let's set a date. No one goes to work. No one buys anything. And if that isn't effective -- if the politicians ignore us -- we do it again. And again. And again.

The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.

I'm not sure why exactly we need a national strike when we can just vote them out of office. I'm also not sure that the sight of me, and the 3 other people I know who support publicly funded elections, taking the day off to hang around the Hustler offices would produce the desired economic crippling and media sensation. But if Larry wants to throw a party, count me in.

Sunday, August 23, 2009

The gift that keeps on giving

Paul Krugman (and others) have taken to task some oh-so-superior-sounding-I'm-a-real-journalist at the Atlantic for saying that the right thing to do was to go along with Bush because hoocoodanode that things like the terror alert colors were just political theater?

But I’d like to return to one point: even after retracting his statement about people who correctly surmised that terror warnings were political being motivated by “gut hatred” of Bush, he left in the bit about being “reflexively anti-Bush”. I continue to find it really sad that people still say things like this.

Bear in mind that by the time the terror alert controversy arose in 2004, we had already seen two tax cuts sold on massively, easily documented false pretenses; a war launched with constant innuendo about a Saddam-Osama link that was clearly false, and with claims about WMDs that were clearly shaky from the beginning and had proved to be entirely without foundation. We’d also seen vast, well-documented dishonesty and politicization on environmental policy. Oh, and Abu Ghraib was already public knowledge.

This is basically the admission I want out of people who were war supporters, and, to state it dramatically, I think it's the essential key to avoiding fascism.  We have to call people out when they behave like a crowd.  It happens to all of us sometimes, and some of us all the time, and if we aren't at least made to feel silly about it afterwards, it becomes all the more ingrained the next time around.  Somewhere, somehow, we have to make it more difficult for people to give up personal responsibility for their decisions, rather than making the deference to authority or experts of whatever type constantly easier.  Consider that we had two giant asset bubbles over this same time frame, and you'll begin to see that we had a more systematic problem.  Our current reaction seems to be pulled from the shot-and-a-beer for breakfast genre -- now we are supposed to just trust them to work things out with healthcare, the deficit, financial reform, etc ... We're getting a lot of "trust me" and not a whole lot of concrete new mechanisms that would force people to think for themselves. 

The centralization of political and economic power that took off under G-dub has only accelerated with O-bam, and (worldwide I hasten to point out) we are making it constantly easier for individual actors to keep the benefits and pass off the costs, with the whole system held together on the naive assumption that the same technocrats who presided over the freeing of the horse will now have the good sense to shut the barn door.  And that's the non-conspiracy-version of the hypothesis.  So, I completely agree with P-krug that it was perfectly rational to suspect that Bush was full of shit, and those who chose to overlook this should be made to face their own knee-jerk kowtowing, but I also think those who are making the same mistake now with Obama should take a hard look at their reasoning -- so far, Obamanation is just doubling down on the Armageddon Put.

Saturday, August 22, 2009

The Grid Book

I recently finished Art historian Hannah B. Higgins's interesting monograph: The Grid Book.  It's a fun quick read with a wealth of historical details about humanity's use of grid based forms over the years.  She takes her tour of the grid in the broadest possible sense, so the book ranges from the ancient to the modern, with the ten chapters spanning grids from 1) the humble brick all the way up to 10) the modern day computer's origin in the punchcard system of mechanical looms.  In between, we find discussions of 2) the evolution of writing from pictograms to cuneiform to the modern alphabet where every letter fits nicely in its module (before you can get a complex society with a legal regime, you have to standardize written language, and this problem becomes really pressing if you want to build a far flung empire), 3) the use of the gridiron to lay out cities (urban planning actually goes back much further than I realized), 4) the invention of latitude and longitude and the use of the grid to make accurate map projections (with an interesting aside about the T,O maps from the middle ages that were a stylized projection of the known world with Jerusalem at the center), 5) the history of musical notation and its role in the evolution of composition (with, strangely, no mention of how modern computer music is so tied to the grid that one practitioner sees fit to call himself Squarepusher), 6) the role of credit-debit accounting ledgers and eventually double entry bookkeeping and excel spreadsheets in facilitating larger business ventures (I'm always amazed when people don't list double entry book keeping and the joint stock company amongst the top ten technologies that changed the world), 7) the development of perspective in art and the way this resonated with the Cartesian philosophy of the era (with some informative stuff about how to use a hanging screen and some graph paper to make perspective drawings), 8) Gutenberg's ill-fated invention of the modular grid for printing pages (after that the rabble got hold of the word of God in their own barbaric idiom), and, finally, 9) the influence of the simple box, with its attendant ability to stack goods, containers, or people or atop one another as well as its way of breaking up pictorial space (along the way she made mention of this interesting sounding book about the history of the shipping container, as well as some perceptive remarks on Mondrian's boxes that echo Morton Feldman's "frozen but vibrating" comments).

The focus throughout is on the way the grid forms evolved to organize the solutions to certain collective action problems and on the way these solutions, once standardized, influenced the way new problems were dealt with and even what was considered a problem.  Technology is never neutral, and the grid is no exception.  Throughout history it has created its own reality as much as it has been a tool for approaching the existing one.  Higgins does a good job of illustrating how this happens by tracing how each grid leads to some advance in our ability to coordinate our actions and control and understand the world, how the grid form, once established, becomes a sort of straight-jacket for our thinking into which everything is made to fit, and finally how people begin to break open the grid and make it more flexible, to adapt it to new uses or construct new forms on top of it.  The concrete narratives she tells of each of grid's history, and the range of different forms she discusses, are the book's strong points. 

Where it doesn't quite measure up, in my opinion, is in the theory department.  The overall theoretical background she is working from is very French, and when she looks for a more abstract narrative to draw some moral from her stories she reaches for all the usual suspects -- Derrida, Deleuze, Foucault, Virilio.  This is fine.  Their ideas are absolutely relevant here, and she doesn't misrepresent them.  But somehow it doesn't feel like she's deeply understood what I take to be the main message of the thinkers, namely that society is a huge machine, that the products of human society are best understood by reference to the processes that produced them, and that explaining these as the products of the ideology of some political "they", or explaining the reworking of those products as the rebellion of an ideological "us", isn't even an explanation at all.  As Deleuze put it, "the abstract doesn't explain, but must itself be explained".  This tentative grasp on the theory, together with her repeated bluffing on some of the more technical aspects in the book (there are a lot of vast but un-spelled-out implications when it comes to things like relationship of pitch to rhythm in musical notation, the way accounting works, and what relevance of fractals and special relativity have for our artistic conceptions) as well as some of the just generally wanky commentary she occasionally proffers, leads me to conclude that ... well, she is an art history professor after all, so what do you want?  She just doesn't have the analytical chops to tackle some of the more abstract questions. 

What she really wants to say is that the grid is one of the first forms produced by the self-organization of humans societies.  It is a visible marker of the spontaneous organization that we use to cooperate with one another; a regular, modular, predictable yet flexible structure that is one of the basic building blocks of human social existence.  In other words, the grid is at the same time the byproduct and organizing force of civilization, in the same way that a vortex is the byproduct and organizing force of a hurricane.  The grid is the first rule that everyone can grasp and use to orient themselves, no matter where they want to go.

Once you have this basic idea clearly in mind, the questions start to get easier I think.  Clearly, you need to try and figure out what kinds of machines produces grids, just as you would wonder what forces the bees to make hexagons.  It becomes a question of social algorithms.  The histories of the grids that she narrates provide a lot of clues as to the conditions under which humans organize grids -- density, connectedness, and the rough equality of standardized building blocks are some of the obvious places to start -- but she doesn't try to isolate these variables and think of it in these machinic terms, and this is what I found myself wanting after hearing about all of the history.

Along these lines, I started wondering a while back about the complexity of some of the basic shapes like circles, squares, etc ...  Naturally, we consider something like a grid to be a very simple form.  And yet, it doesn't seem to arrive in nature all that frequently; if you look around, all the grids that meet your naked eye will have been built by humans.  The same would be true of prefect circles or spheres.  If these shapes are so simple, why aren't there more of them?  I don't see quite to the end of this argument yet, but I have discovered the first objection only reinforces my sneaking suspicion that the circle is actually really complicated.  One of the places you can find prefect geometric forms that have nothing to do with humans are in the orbits of planets or the regularities of crystals.  Those aren't simple machines at all though!  If you need half the bloody cosmos to draw a circle, you can't very well call it simple.  Similarly, you need a lot of atoms to get a crystal formation.  The grid may be an apparently simple pattern that actually requires an enormous machine to produce it.  Humans may finally have been around long enough to truly become the salt of the earth.


A loosely organized surf session that began with Bauhaus typography has brought new shit to light.  Edward R. Tufte, of The Visual Display of Quantitative Information fame, wrote two books about politics early on in his career.  Check out the relative obscurity of Political Control of the Economy and Size and Democracy as evidenced by the number of reviews on Tufte's Amazon page.

Wednesday, August 19, 2009

Goddamn it Warren! the debt is already there ...

... we're just shifting around who owes it to who. 

That's my basic response to Buffett's op-ed in today's NYT where he complains about our ballooning national debt.  Obviously, the piece is worth reading, and I suppose I probably agree with everything he says in it -- we had to dump money on the market through both fiscal and monetary policy in order to keep the financial system in place and to avoid another debt-deflationary cycle like the Great Depression.  This has worked much better than I expected, but we do have to think about the consequences of it.  The Federal Reserve has to figure out how to take back all that liquidity, and the Federal government has to think about how to get back towards a balanced budget.  Otherwise, the country will eventually go bust either through and explicit default, or implicitly through an inflationary collapse in the dollar.

The problem with the op-ed is not in what it says, but what it leaves out.  It leaves out the fact that this debt is not being created de novo.  It is essentially being transferred from the balance sheets of banks and households to the government.  It leaves out the fact that we have no choice but for this transfer to continue, and neither does the rest of the world, because without it the rush to pay down this debt would leave everyone with more of it, as the value of their would fall even more rapidly.  It mentions but poo-poohs that fact that we've had much higher government debt-GDP ratios in the past, and that other countries have much higher ratios now, all without any appreciable effect on interest rates or inflation.  It leaves out the fact that it is very difficult to get inflation when no one wants to spend any money, to buy any cheap plastic crap or build any factories, when all anyone wants to do is pay down their debt. 

Don't get me wrong, I worry about all this borrowing and liquidity re-igniting another asset bubble which in turn brings back the animal spirits and lands us all in an inflationary bust similar to Germany between the wars.  I worry about the Chinese getting sick of holding dollars.  I worry about the economic effect of the inevitable increase in taxes.  I worry about all of these things happening some day, and I worry about what day that will be -- but I'm pretty sure that today is not yet that day.  And until that day, I worry that scare-mongering about the nation's finances will ultimately only give us a self-defeating push back towards a depression.

Tuesday, August 18, 2009

File another one under 'unintended consequences'

via Bloomberg:

Copper, nickel and other base metals stockpiled by speculative Chinese investors including pig farmers may be sold when "market sentiment turns," said Scotia Capital Inc.

Pig farmers in Guangzhou province were buying copper or nickel, Liu wrote, citing CCTV. Residents in Wenzhou city of Zhejiang province, "famously investment savvy," are reportedly using bank loans to stockpile copper scrap, with one merchant saying he has stored 20,000 tons, Liu wrote.

Housewives in Wenzhou may have stockpiled metals as "they just have too much cash on hand," Eramet's Deng said.

Did I mention that there might be too much liquidity out there?

Friday, August 14, 2009

Philosophical lineage

That whole long reflection on science fiction philosophy can serve as a preface to, and restatement of, some thoughts on the line of philosophers that leads from Deleuze back to Lucretius (and maybe beyond, for all I know).  The good Herr Doktor asked me about this the other day when his dad was around.  How would I describe what held together Deleuze's precursors and fellow travelers -- Whitehead, Bergson, Nietsche, Spinoza, Lucretius?  I have been extracting ore from this metallic line for 5 years now, so I should be able to put some sort of summary to it.  So here goes -- and I'm going for intelligible summary here, so don't bitch if you know some of these thinkers and think that I'm cutting some corners.

I think the three key concepts are immanence, self-organization, and evolution, though in reality these are just different facets of the same vision.  The most fundamental place to start is the idea of immanence -- everything that exists comes from within the world, there is no transcendent principle or plan that stands outside it organizing things.  This thesis has the effect of leveling hierarchical ontologies like Plato's that posit some fundamental qualitative difference between this world and the world beyond, a world of appearance and a world of reality.  By contrast, this line of philosophers continually appeal to this world, and to the idea that everything within it is constructed, that nothing is given by fiat, or smuggled in from outside of time.

Ontology is the study of Being, by the way.  If you want to read more about everything being constructed, you can check out this unfinished essay on the body without organs (aka the un-organ-ized body) that I have been working on.  Not recently of course.

Every thing is thus a temporary, more or less stable, agglomeration of parts, separated from the rest of the world only relatively, by its ability to cohere in space and time.  Things actually spontaneously come into being as the parts the compose them settle into some stable self-organization.  In fact, all organization, on this view, is self-organization -- where else would it come from? You probably want to know what the parts are made of, and the answer is other parts.  You can almost measure your distance along the line by the consistency with which this answer is applied.  Lucretius stops with the atoms. Deleuze goes all the way.

Because these things emerge from within the world, because they are constructed rather than given, they are also constantly evolving, both internally, and in terms of how they are swept up in their surrounding context.  The basic ontological picture that emerges is of an eternally flowing river where the patterns of flow constitute the stuff of our world.  Immanence.  Self-organization.  Evolution.

The ontological similarity is only half the reason for tracing this line of thought though, and the less important, purely technical half.  There is another more profound side to this worldview, which has to do with the way it encourages you to actually live.  Because this vision of immanence, of the shifting porous boundaries between things, has an intensely ethical dimension.  It strikes down any transcendent morality and immediately uproots humanity from its "rightful" place at the center of existence -- we come into being just like everything else.  This is an ethics that is entirely amoral, an ethics that refuses to stop with any set of arbitrary moral principles graven in stone.  It is an ethics where you can still hear the echo of "ethology", where the limits to what you are and how you behave (if indeed, there is any sense in distinguishing these) are not pre-ordained but simply defined by what you can do.

(Aside: this ain't existentialism neither.  The point is not to sit around whingeing that God is dead.  Nor is it to say that we have to "create our own meaning" in life.  There's no freakin' meaning, so let's get on with doing whatever we wanted to do.  'Cause we still want stuff even though it doesn't mean anything.  Meaning is mostly just some bullshit we made up to keep ourselves in line.)

So this line has an importance beyond the technical similarity of these thinkers' shared ontology.  These are thinkers of freedom and liberation who take the absence of ideals as an invitation to discover what we are capable of.  How can we live better?  How can we connect our flows up to others an expand ourselves?  What can humanity become if you unshackle it from the limits of a thousand petty gods?  What can you become if you first pass through this purifying philosophical fire?  What expanse of unknown joys lies before us, and how do we begin to chart this territory?

As you can see, there's an almost new-agey-ness to these thinkers.  They are all about joy and creation and the meaninglessness of death.  Not, however, because they believe in the greater reality of some other world, but because they believe so firmly in the importance of this one.

That little flight of fancy leads directly to the last important thing that links these thinkers together -- a deep concern for aesthetics.  In fact, you might say that for any of them, aesthetics, rightly conceived, is the most fundamental category.  Aesthetics is a sort of post-existentialist version of morality; what else is left as a means of judgement when you dispense with morality and accept that no one formation of the world is any more fundamental than another?  This radical leveling returns aesthetics to the center of philosophy, and perhaps that is why all of these philosophers (with the exception o Whitehead) are such brilliant writers and stylists, such poets.  Philosophy is for life and if it doesn't move you to see the ever-unfolding beauty of the world -- if it doesn't, in fact, do its part to unfurl a new bit of beautiful existence -- then it is not doing its job. 

A flat ontology of immanence, a deep belief that philosophy is more than an academic discipline, and the centrality of aesthetics as a means of judging philosophy's effects on life.  That's how I'd sum up this line of thinkers.  You can immediately see how it's a line of bastard rebels who could never become the establishment.  It's every man for the universe.

Thursday, August 13, 2009

Behind in the Times

This New York Times op-ed is worried that the Supreme Court might overturn the ban on corporate contributions to political campaigns.

The founders were wary of corporate influence on politics — and their rhetoric sometimes got pretty heated. In an 1816 letter, Thomas Jefferson declared his hope to "crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country."

This skepticism was enshrined in law in the early 20th century when the nation adopted strict rules banning corporations from contributing to political campaigns. Today that ban is in danger from the Supreme Court, which hears arguments next month in a little-noticed case that could open the floodgates to corporate money in politics.

Does this guy really not understand that companies have already done an end run around this restriction?  Sure, another nail in the coffin can't hurt (from the corporate perspective) but our zombie populace was hardly in danger of stirring anyhow.  It's like this guy slept through the whole war and then woke up for the final pitiful battle.

His name was Paul Volcker

Dani Rodrik is onto something obvious, which makes it all the more unbelievable that his view is not more widespread.  I excerpted the main points for your enjoyment, but the piece is good throughout.

What hampered Greenspan and Bernanke as financial regulators was that they were excessively in awe of Wall Street and what it does. They operated under the assumption that what is good for Wall Street is good for Main Street. This will no doubt change as a result of the crisis, even if Bernanke remains at the helm. But what the world needs is a Fed chairman who is instinctively sceptical of financial markets and their social value.

Here are some of the lies that the finance industry tells itself and others, and which any new Fed chairman will need to resist.

Prices set by financial markets are the right ones for allocating capital and other resources to their most productive uses.  That is what textbooks and financiers tell you, but we have now many reasons to be wary.

Financial markets discipline governments. This is one of the most commonly stated benefits of financial markets, yet the claim is patently false.

The spread of financial markets is an unmitigated good. Well, no. Financial globalisation was supposed to have enabled poor, undercapitalised countries to gain access to the savings of rich countries. It was supposed to have promoted risk-sharing globally.

Financial innovation is a great engine of productivity growth and economic well-being. Again, no. Imagine that we had asked five years ago for examples of really useful kinds of financial innovation. We would have heard about a long list of mortgage-related instruments, which supposedly made financing available to home buyers who would not have been able to purchase homes otherwise. We now know where that led us. The truth lies closer to Paul Volcker's view that for most people the automated teller machine (ATM) has brought bigger benefits than any financially-engineered bond.

Once the crisis got rolling, I think Bernanke did a reasonable job of not letting the entire system come apart.  The problem is that we are very very quickly returning to business as usual, which will essentially guarantee another crisis in short order, just as the way we handled the tech bubble bursting guaranteed the inflation of a housing bubble.  We are a rich nation, but eventually someone is going to call in the 'Armageddon Put'.  Everything always comes back to the same point -- the real battleground in the market has shifted almost totally to politics, and if we don't change how we elect our government we will end up with that most ultra-modern version of fascism, THE CAPITALIST AXIOMATIC.

Tuesday, August 11, 2009

"The ball drops right there" and the spontaneous fascism of time

Chronos wants to die, but has it not already given way to another reading of time?

1) In accordance with Aion, only the past and future inhere or subsist in time.  Instead of a present which absorbs the past and future, a future and past divide the present at every instant and subdivide it ad infinitum into past and future, in both directions at once.  Or rather it is the instant without thickness and without extension, which subdivides each present into past and future, rather than vast and thick presents which comprehend both future and past in relation to one another. 

Monday, August 10, 2009

The Feds will always lose! Do you hear me? The Feds will always lose!

Guy comes into the office today.  He's got a structure.  Boy, has he got a structure.  A can't miss proposition you might say.  50% going in returns. Principal protected three ways from Sunday, AAA rated, risk free.  Blah blah blah.  I'm just gonna go look for a cash machine. 

This sounds like a scam, but it's a more sophisticated one than it seems at first blush.  First of all, it's all completely legal and above board.  Well known financial institutions are involved (comforting ¿no?).  In fact, the whole thing is made possible by team Obama and the hard working boys at the Federal Reserve.  I like to think of these investments (which are, by the way, getting downright common) as a sort of 'Armageddon Put' because the logic of them always ends with, "so the only thing that can go wrong is if the US government were to default, and in that case who cares about your portfolio, 'cause the only things that's going to matter is bullets and bottled water."

You would think that this drastic form of risk management would cause people to question the very system that produces such an outcome, but, alas, once you've lived through mutually assured destruction as a kid, apparently nothing much worries you, excepting DOS attacks on Twitter of course.

Anyhow, the mechanics of said structure are complex, and, of course, highly confidential.  Which is why I propose to insert several blank lines in the blog before disclosing them ...

That ought to do it.  The idea is to start a bank.  Yep.  Well, first you fund a special purpose vehicle (SPV) which holds convertible debt that will convert into bank equity (when? why? stop nitpicking! who's sittin' on a million fucking dollars?).  And then this vehicle invests in a special carved out portion of a bank holding company (BHC).  But the upshot is that you put up equity for a bank.

This bank is like any other bank, except it has a fresh clean balance sheet, so it can get regulators to bless it leveraging up 10:1 by taking deposits because it has no hidden write-off lurking in the wings.  So, great.  You put up $1 of initial capital, you take $9 of deposits, and you have $10 to invest in something.

What something, you ask?  Well, it turns out that the TALF is still alive.  One might have thought that the slow uptake and the rapid narrowing of spreads on the instruments it was meant to support had made it obsolete, but apparently the delay was merely caused by legal wranglings over who could invest whose money in what, and now, just as the program is arguably useless, it is poised for massive growth.  Taxpayers delight.  So this bank will invest in the equity of a fund that participates in the TALF program.  Wait, you say, can a bank invest in equities rather than making loans?  Am I the only one around here that gives a shit about the rules?  But don't worry, we'll structure it as debt with a variable interest rate calculated on the basis of the profits, just like the special purpose vehicle that invests in the bank holding company. 

So the bank makes a "loan" that forms the equity piece of a fund that invests in the TALF program.  A refresher on the TALF.  The idea was that private investors put up some equity, Treasury matched this equity, and then the Federal Reserve guaranteed debt (ie, very cheap debt) issued by the equity up to a maximum level determined by the face value of the assets that were to be purchased minus a certain haircut dependent on the credit rating of the asset.  The debt is 'non-recourse' which means that it only applies to each individual asset that  is purchased, and not to the overall fund -- essentially, if you make a mistake and buy some crap that turns out to be worth less than the debt you used to buy it, you don't have to pay for the difference out of what you (hopefully) make buying the other assets.  This is basically meant to make you think a little about the price of the crap you're buying, but not too hard.

Anyhow, the Treasury eventually selected some firms that could use this structure to buy TALF eligible securities like AAA CMBS and such, which at the time of inception were trading at big discounts.  Now, they are trading at small discounts, but whatever.  These guys can still put up $1, have the Treasury put up $1 and go out and buy $12 of TALF barf.  The effective leverage is 6:1 for the equity.  It differs by type of asset, but let's just use 6:1 because I think that's actually the minimum leverage available in the program.

Great, now we have an SPV that owns a BHC, which owns the equity of a TALF fund, which owns ... some AAA rated auto loans or other drek of that sort.  The leverage on the initial investment is 10:1 times 6:1 on the TALF money, or 60:1 in total.  This is really all there is to the idea -- leverage on leverage.  So, the investor puts up $16.7 million, and controls $1 billion in securities, $983.3 million of which is guaranteed by the Federal Government either via the FDIC (remember the bank holding company takes deposits) or via the Fed's TALF program.

To top it all off, the guy had another bank come in, look at the structure, and guarantee the principal (ie the amount you would see the initial SPV with) so that you don't have to risk anything at all to get the ball rolling, you just have to sign off that you are liable for that amount, and then go to your bank and borrow against that principal protection.

AND SO HERE'S THE POINT -- holy shit, man, this is crazy!

This is like government guaranteed three-card Monty on a huge scale.  I'm not cynical enough to think that this is exactly what the Fed had in mind when they set these structures up.  I am cynical enough to think that these guys don't really know what the fuck they're doing though, because frankly this shit is so complicated and has so many unexpected consequences that no one could possibly know what the systemic effects of these programs might be once a bunch of clever people are offered lots of money to hack into them.  There is no way a few guys at the Fed are going to keep up with this.  All of which means that every program and subsidy set up now will be visited tenfold upon our heads at some point down the road.  Hang on St. Christopher on the passenger side.

Sunday, August 9, 2009

De Rerum Natura

One of the things I would love to have time to do in life is sit down and actually write something about every book I read.  Given that it only takes a quick glance at the impromptu window sill/bookcase I have looking out over 8th Ave to see how far behind I am on this, it is probably a pipe dream.  But hey, you have to start somewhere ...

Today's reflections are brought to you by Lucretius.  A little background.  Titus Lucretius Carus wrote The Way Things Are about 50 years before Christ got himself strung up.  It's an epic poem of sorts, though a strange one because there are no gods or heroes or battles.  It's an epic philosophical poem, a sort of jazz odyssey of epic poems.  It's also a bit weird because it ends with a long and terrifically anti-climactic description of the Athenian plague of 429 BC.  Not precisely Disney, though one assumes he got his funding abruptly cut, or something of the sort.

At any rate, I'll work my way around to a sort of summary of the poem, but first, let me explain why I read the thing to begin with.  You see, I was looking for something fairly specific here -- I was looking for science fiction.  It actually all started with this offhand comment from an overly erudite physics prof:

My favorite poststructuralist is Gilles Deleuze (with or without Guattari). I like to think that he was really writing an elaborate series of works of science fiction, in a non-fictional format (much as Stanislaw Lem did in Imaginary Magnitude and A Perfect Vacuum), only without letting anyone in on the joke.

Clearly, calling Deleuze a science fiction writer is meant dismissively (though only partly, as elsewhere he states that he thinks Lem is one of the 20th century's great thinkers, full stop).  I don't actually think Deleuze would feel all put out by this description though, and the more I have thought about it, the more I have come to think that all really creative philosophy is just a form of science fiction.  Consider how Robert Nozick put it in The Examined Life:

Do philosophical thought and questioning, by their very nature, though, eventuate not in novels by James or Proust but in something more like the intelligent Martian's primer of human life?

There's something about philosophical thinking that consists in trying to think beyond our human confines.  This has always been true, and of course is one of the reasons that philosophy has historically been so tied up with religion.  The more modern version of this idea places philosophy alongside mathematics as the study of the logical foundations that govern not just humans, but all of existence.  In either case, the point is to reach conclusions that go beyond our mortal limits, so to speak.  While I don't really agree with the theological or mathematical hijacking of this enterprise, I do agree with the basic idea; philosophy is there to help us think our way out of the wet paper bag of early 21st century flesh and culture -- as far out of it as possible.  Philosophical thinking should clearly run in both directions then, towards explaining how things came into being to begin with, as well as towards illuminating how they might evolve in the future.  So in relating it to science fiction, I don't mean to limit philosophy to a sort of futurism, committing an inverse error to the way its obsessions with foundations has often limited it to the past.  My point is just that the whole enterprise is meant to help us see our place in existence as a bridge between past and future, as a brief passing moment in the evolution of the planet and the universe.

Anyhow, since reading Deleuze, seeing the web evolve in tandem with capitalism, and watching 2001 and Solaris too many times, I have become obsessed with this idea of philosophy as a type of science fiction, and have started thinking about how you would try to communicate with whatever passes for intelligent life 5000 years hence.  In fact, in some sense, I would almost define 'philosophical thought' as something that this future intelligence could relate to.  To put it most succinctly, can we write anything that Google will want to read?  We have evolved and we will continue to evolve, and there's is no guarantee, given sufficient time, that our progeny will look any more like us than we look like the primordial ooze (certain persons excepted).  Is there any way to send a missive across this vast spiritual distance? 

When I first began to consider these questions, I thought that I had stumbled onto something uniquely modern.  I was phrasing everything in terms of the computer, in terms of artificial intelligence and an extension of biological evolution.  Without either of those concepts, how could you conceive of humanity as a bridge from ape to superman, as Nietzsche put it?  But I also began to wonder, quite naturally, given the way I was trying to project forward my own consciousness of this issue, whether this idea might actually have occurred to philosophers in the past.  Was there anybody who wrote something on this topic 5000 years ago that I was interested in reading?  We always imagine these guys as pre-scientific morons who couldn't possibly have grasped the idea that humanity had at some point come into being and would at some point pass out of it. 

But then I read Spinoza, and found him remarkably modern.  And I started thinking that self-organized computational systems which use humans as circuit elements have been around for a while.  The social/economic/political machines that built the great pyramids, sailed across the Atlantic to discover the new world, and erected the Empire State building, are not any dumber than Google, though we may find it more difficult to speak their language because they move so slowly.  Humans have had a chance to observe these processes for a long time though, and it may be that science fiction philosophy only rediscovers an ancient insight wrapped in modern form. In other words, why wouldn't people have been able to look around and see their continuity with the world around them and to see how their intelligence may only be one aspect of the intelligence of nature?  And then I wanted to know how far back this might have gone.  Who was the first person I could find who was able to articulate this vision of humanity?  Who was the first science fiction thinker?

So I checked out Lucretius.  You can judge for yourself whether he was on the bus.

There is no end,
No limit to the cosmos, above, below,
Around, about, stretching on every side.
This I have proven, but the fact itself
Cries loud in proclamation, nature's deep
Is luminous with proof.  The universe
Is infinitely wide; its vastness holds
Innumerable seeds, beyond all count,
Beyond all possibility of number,
Flying along their everlasting ways.
So it must be unthinkable that our sky
And our round world are precious and unique
While all those other motes of matter flit
In idleness, achieve, accomplish nothing,
Especially since this world of our was made
By natural process, as the atoms came
Together, willy-nilly, quite by chance,
Quite casually and quite intentionless
Knocking against each other, massed, or spaced
So as to colander other through, and cause
Such combinations an conglomerates
As form the origin of mighty things,
Earth, sea and sky, and animals and men.
Face up to this, acknowledge it.  I tell you
Over and over -- out beyond our world
There are, elsewhere, other assemblages
Of matter, making other worlds.  Oh, ours
Is not the only one in air's embrace.

With infinite matter available, infinite space,
And infinite lack of any interference,
Things certainly ought to happen.  If we have
More seeds, right now, than any man can count,
More than all men of all time past could reckon,
And if we have, in nature, the same power
To cast them anywhere at all, as once
They were cast here together, let's admit --
We really have to -- there are other worlds,
More than one race of men, and many kinds
Of animal generations.

Pretty spectacular confirmation of what I went looking for -- more science fiction than this one could hardly desire from a Roman. 


Evolution's third replicator: Genes, memes, and now what?

That's the title of a Susan Blackmore piece over at the New Scientist.  You've probably all had all of these ideas before, and frankly I'm not sure the article adds much, but I feel like I should do the third replicator a favor ...

WE HUMANS have let loose something extraordinary on our planet - a third replicator - the consequences of which are unpredictable and possibly dangerous.

What do I mean by "third replicator"? The first replicator was the gene - the basis of biological evolution. The second was memes - the basis of cultural evolution. I believe that what we are now seeing, in a vast technological explosion, is the birth of a third evolutionary process. We are Earth's Pandoran species, yet we are blissfully oblivious to what we have let out of the box.

This might sound apocalyptic, but it is how the world looks when we realise that Darwin's principle of evolution by natural selection need not apply just to biology. Given some kind of copying machinery that makes lots of slightly different copies of the same information, and given that only a few of those copies survive to be copied again, an evolutionary process must occur and design will appear out of destruction.

The whole idea is actually still so vague as to be useless, but one might pause to wonder whether, instead of worrying about exactly what substrate was used for the copying, and dividing up history in that manner, you should just look at all of these as varying ways to copy information.  Maybe the fabled 'third replicator' stands in relation to memes the same way RNA stood in relation to DNA back in the day -- it's really just a more efficient replication of the same information?  In fact, maybe the whole thing is a trend towards faster and faster copying of information by whatever technology becomes available. 

If you start to look past the simplistic meme-gene division (which despite its pretense to dethrone humanity from its unique position as a thinking species, actually serves pretty well to reinforce it) you start to see that their our replicators everywhere.  Businesses replicate.  Capital replicates.  Governments replicate.  Are these all just memes, or are they something else?  Do we need 4th, 5th, and 6th replicators to describe them?  And how do they interact with the three that she proposes? 

As an aside, mostly what an article like this points out to me is how we really have no science of evolution.  We have nothing beyond what Darwin left us about replication, variation, and selection.  Of course, we have a lot more detail about how the little chemicals perform this and about how the lumbering robot phenotypes change as this happens, but that's not really a science of evolution per se.  Consider for instance whether the third replicator should even be considered evolutionary in that sense -- when was the last time competition for space forced you to delete a file?  If these digital replicators go like mad and vary like crazy but have plenty of space, is there any reason for them to compete for survival?  What does it mean to have survival of the fittest when everything is fit?  Given their mutability, are they even stable enough to be considered replicators?  And if nothing really dies off and nothing really stays the same, would it be better to say that the process has less to do with replication than with a form of growth (similar to thinking of development as an evolutionary process).  We don't even have a science of evolution that seems to recognize that replication is just a special, very scalable, case of growth. 

And finally, now that I'm on a roll, the article reminds me of another frustration I have with evolutionary theory -- it never explains anything.  It is either a tautology (there will be more of things that successfully make more of themselves, gee thanks) or it is silent (how did that mutation happen? why did that new replicator take off?).  It is a theory in the sense of being falsifiable -- if we crossed paths with the divinity on the B train tomorrow evening and he showed us a plan for the universe, we would be able to throw away a bunch of books -- but it's not a theory that actually explains why anything happens because it's not a theory that talks about any causes.  This is why it always puzzles me when people rhapsodize about the creative power of evolution and how it produced such amazing diversity.  Evolution is not creative and it does not produce diversity.  Look at the algorithm again.  Chance might be called creative, or cross-pollination or resonance between lines of lumbering robots -- maybe in-volution is creative, but certainly not e-volution.

Luckily, I'm sure Google is working on a better theory.


Saturday, August 8, 2009


It's quite possible that Serra's Torqued Ellipses are my favorite man-made objects.  The permanent installation of the four of them in their own private wing in Beacon is really a thing of genius.  Together they form a a remarkable unity and even give a sense of progression, beginning at first with a simple hollowed out form, then progressing through a-concentric interiors before ending in a grand spiral.  There's something about the way they manipulate your sense of space and proportion that is like the canyons of Utah or the clear night sky in Colorado, and yet is is all the simple consequence of twisting the top and bottom of an elliptical cylinder.  And given that they are, like, seven gazillion ton sheets of steel, it occurred to me today, sitting slumped and sheltered in the central chamber of the spiral, that they will outlast us all.  Dia will crumble to dust and yet these giant sculptures will sit still amid the carnage, enduring any return to nature, quietly gathering even the post-apocalyptic desert wind.

The Best Kind of Censorship

Is when they can get you to do it to yourself.

The issue that the App Store reviewers did find with the Ninjawords application is that it provided access to other more vulgar terms than those found in traditional and common dictionaries, words that many reasonable people might find upsetting or objectionable. ... The Ninjawords developer then decided to filter some offensive terms in the Ninjawords application and resubmit it for approval for distribution in the App Store before parental controls were implemented. Apple did not ask the developer to censor any content in Ninjawords, the developer decided to do that themselves in order to get to market faster. ... You are correct that the Ninjawords application should not have needed to be censored while also receiving a 17+ rating, but that was a result of the developers' actions, not Apple's.

Recently we've seen Apple flex its monopoly muscle in a number of incidents ranging from blocking Google's Voice App (it's still not clear whether that was Apple or AT&T, but it hardly matters) to blocking music service that might compete with iTunes. The whole process reads like a chapter straight out of Jonathan Zittrain's book The Future of the Internet And How To Stop It. You can download the book at that site, and it is well worth reading; the thinking goes far beyond the dust-jacket summary that tends to exhaust the intellectual content of many of the long blog entries that pass for books these days. The basic idea remains simple though -- if we get ourselves into a situation where we no longer have open networks, open devices, and open platforms, we will dramatically constrain the creativity that was fostered by anybody being able to program their computer, hook it up to internet, and distribute their program for everyone else to use. In other words, you don't buy an iPhone, you rent it.

UPDATE: Christ, I'm repeating myself again.

Thursday, August 6, 2009


I have to say that the ten-dimensional chess arguments are starting to wear a bit thin at this point.  The front page of today's NYT sums up just about everything wrong with our government.

Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.

“We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’ ” Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. “Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”

The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.

When did our government become just a way to negotiate with industry?  How did they get put in charge of writing the laws?  And when did it become so commonplace to have former house members heading up lobby groups? 

What the fuck is Obama thinking?  The market is supposed to be where companies compete with one another, not the floor of congress.  If Obama doesn't change this, he will be a complete failure, no matter what else he does.  There's no way to soften that statement.  If there's anything we should learn from the last year, it's that we can all suffer tremendously from the way corporations capture our political process.  If we don't get this one fundamental thing moving in the right direction, I can guarantee that we will end up exactly where every third world country controlled by a few businessmen ends up -- broke.

Monday, August 3, 2009

Wrong Conclusion

Paul Krugman blew it with this one:

Just to be clear: financial speculation can serve a useful purpose. It’s good, for example, that futures markets provide an incentive to stockpile heating oil before the weather gets cold and stockpile gasoline ahead of the summer driving season.

But speculation based on information not available to the public at large is a very different matter. As the U.C.L.A. economist Jack Hirshleifer showed back in 1971, such speculation often combines “private profitability” with “social uselessness.”

Now, you might be tempted to dismiss destructive speculation as a minor issue — and 30 years ago you would have been right. Since then, however, high finance — securities and commodity trading, as opposed to run-of-the-mill banking — has become a vastly more important part of our economy, increasing its share of G.D.P. by a factor of six. And soaring incomes in the financial industry have played a large role in sharply rising income inequality.

What should be done? Last week the House passed a bill setting rules for pay packages at a wide range of financial institutions. That would be a step in the right direction. But it really should be accompanied by much broader regulation of financial practices — and, I would argue, by higher tax rates on supersized incomes.

Unfortunately, the House measure is opposed by the Obama administration, which still seems to operate on the principle that what’s good for Wall Street is good for America.

Neither the administration, nor our political system in general, is ready to face up to the fact that we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer.

Letting them gouge us and then trying to get it back is clearly the wrong approach.  We should change the rules so that they don't get it in the first place.

The idea is to set up rules that create a non-zero sum game.  This is an endless process, because every non-zero sum game, pretty much by definition, creates a surplus, and while it's not a definition, I suspect that essentially every surplus attracts a parasite.  Goldman Sachs is clearly a parasite.  You don't deal with a parasite by first letting it feed off of you and then trying to catch it -- that's like becoming a parasite on your own parasite, and is wildly inefficient.  It's better just to not let it feed off you to begin with, at least if you can come up with some way to do this without destroying the surplus on which the parasite lives to begin with. 

There are all kinds of proposals on the table for making the speculation in the financial markets serve a socially useful purpose.  You can have a small transaction tax.  You can clear markets once per second rather than continuously.  You can regulate credit, leverage, and derivatives in a much more thorough manner.  Regulating pay after the fact is the least effective and least transparent means.  It's also not very fair in my opinion, a fact which will undoubtedly be disputed by more than a few readers (ie. all of you).

Incidentally, this is the way I would argue against the proposal that we allow people to sell their votes.  Forget about the morality or democracy and the inalienability of certain rights (which humans have hitherto proved rather expert in alienating of the own free will).  The problem with letting people sell their vote to the highest bidder is not that it is immoral, but simply that it wouldn't work.  Even if I am extremely enlightened and place a very high price on my vote, the person who buys it will always be able to come up with some new tax or law that makes my vote look under-priced in retrospect.  The markets for votes will never reach an equilibrium clearing price.  Similarly, if we continue to let Goldman Sachs profit by writing the rule book, with the notion that we will just take it back in taxes afterwards, we will never be able to raise taxes enough to compensate for the new rules that enable them to further increase their profits.  If you get to write the rules, even a 100% tax is for the little people.