Saturday, February 28, 2009
This is a well-known problem in the sub-field of Economics called Industrial Organization. In its general form, is is knows as the 'principal-agent problem' and it applies in any situation where one person is hired to work for another. The person who owns the property and/or has the goals is the principal and the person being hired is the agent.
It is easy to show that the agents will always be self-serving unless their system of incentives is well-designed. I support laws and regulations that help shareholders control managers, and I even support laws that place limits on managers under the assumed interest of shareholders. This kind of government intervention is not socialism. It is the protection of property rights and the enforcement of contracts, which is the basic function of government. The failure to do this job properly is one of the causes of the current mess.
I do not usually form opinions or make judgments about events and circumstances in my life. Things happen, and I deal with them. Forming an opinion about the situation is just a waste of brainpower. It is a pointless exercise at best and an obstacle to good decision making at worst.
So when someone asks me what I think of something, it is always hard for me to give a good answer. I usually end up listing facts, like "The last homework helped me learn a lot of stuff." If pressed, I may say that I think one aspect of a thing is good while another is bad. But I almost never form blanket judgments like "The teacher is bad."
I do have likes and dislikes. I will form opinions about the kinds of food that I like, or the kinds of books that I like to read. My opinions about the things I choose to consume or spend my time on are fairly strong and stable, and are not generally affected by the situation or by popular opinion.
But when it comes to things that actually affect me, I almost always have an attitude of Zen equanimity. I accept life as it comes. I try to avoid the intellectual arrogance that would compel me to form opinions and then act as if my opinion were a fact of nature.
Of course, the irony here is that I have just written a blog post talking about something that happened to me that I did not like, and why I did not like it...
Friday, February 27, 2009
"Another telling experiment, conducted on rats, did not rely on cooking. Rather the experimenters ground up food pellets and then recompacted them to make them softer. Rats fed on the softer pellets weighed 30% more after 26 weeks than those fed the same weight of standard pellets. The difference was because of the lower cost of digestion. Indeed, Dr Wrangham suspects the main cause of the modern epidemic of obesity is not overeating (which the evidence suggests—in America, at least—is a myth) but the rise of processed foods. These are softer, because that is what people prefer."
I've known about the connection between processed foods and obesity, but this is a new twist. Previously, I just assumed that processed foods were bad because of the high fat and sugar content. But this adds another reason to avoid them. You burn fewer calories digesting them, so you gain more weight.
I wonder how long it will be before this knowledge gets widespread. It could easily form the basis of a diet plan that could really, without any tricks, let you lose weight without eating less or exercising. Just find foods you like that require more metabolic resources to digest. I'm not sure exactly what those would be, but I imagine that things with lots of starches, complex carbohydrates, and fiber would top the list. Of course, those things are typically better for you anyway, so the basic advice wouldn't change much. We've always known that 100 calories worth of raw carrots is very different than 100 calories worth of candy.
Thursday, February 26, 2009
In Muslim cultures, women always keep their last names when they get married. They consider it rude to change one's identity. At judgment day, they believe that people will be called according to the lineage of the mother.
Shias believe that there is nothing wrong with sex change surgery. People all over the Middle East go to Iran to change their gender.
They believe that Jesus was a human with no human father or genetic mother, that he was created from clay just like Adam.
Muslims believe that the Bible is the 'inerrant word of God'. But they will only believe the stuff in the other holy books if it does not conflict with the Koran. Anything in any other book that conflicts with the Koran is considered to be 'translation error' introduced by humans.
They believe that all prophets were without sin. They believe that David never slept with Bathsheba or had Uriah killed. They believe that Noah never got drunk and naked, etc. Apparently the Koran said that all prophets are sinless. So all those stories that say otherwise are more 'translation errors'.
After the movie, I asked the first question of the Imam, who is from Egypt. My question was "Do you believe that it should be illegal to criticize or mock religion?" After a bit of hemming and hawing, he basically said 'Yes.'
Afterwords, a Canadian Muslim came up to me and asked if my question was about freedom of speech. I said it was, and she told me, "He must not have understood your question. We might protest an insult, but we would never use the government to stop people from saying things."
So I went to the Imam and asked him again, specifically about government laws. He confirmed his belief that the law should stop people from saying things. He talked about the laws against holocaust denial in Europe. He was not complaining about these laws; he felt that they were right and proper, and that all religions should be 'protected' like these laws 'protect' the Jews.
As I once mentioned to my brother, I used to think that the Second Amendment made the USA special, and that most modern democracies had the equivalent of the rest of our Bill of Rights. But I have recently realized that we are one of the few places on the planet with a First Amendment. We are the only place where the legal system has the attitude of Voltaire: "I do not agree with what you have to say, but I'll defend to the death your right to say it."
PS: There are no advertisements in Gmail as I write this. It seems that 'Muslim' is one of the magic words that will make the Google ad system turn off all advertisements. I have commented on this kind of thing before.
Wednesday, February 25, 2009
The rant quickly became an Internet phenomenon. I had heard about it and knew some of the content, but not watched it. But when a student in my class asked me about it, I decided to watch it and think about it. Much of what Santelli says is correct, but the issue is fairly complicated and there are a lot of points to consider.
One thing that a lot of people do not really understand is that foreclosures are extremely expensive. They destroy wealth. A number I saw last year is that foreclosure destroys 25% of the value of the house. In some cases, foreclosure produces a property with zero or negative value. Some of this is the basic costs of moving. Even in the best of circumstances, a real estate transaction will cost up to 6% of the property value just in realtor fees, and moving a house full of stuff costs several thousand dollars. Foreclosures magnify this. There are a lot of extra court and legal fees. The bank has to start the foreclosure process, work with the court system and sheriff to serve an eviction, etc. Another part of the cost comes from vandalism and looting. When people are being kicked out of their house amid a personal bankruptcy and financial ruin, they have no incentive to keep the place in good repair. And if they can make some quick cash by selling off things like the air conditioner, the copper pipes, or the fixtures, why not? Then, if the house sits unoccupied for any length of time, you get squatters, vandals, teenagers throwing parties, etc, and you can easily end up with a ruined husk where a home used to be.
Given that a foreclosure can easily result in the homeowner suffering, the bank getting nothing, and the value of all the surrounding property dropping, it would clearly be in everybody's best interest to negotiate some kind of deal to avoid this. If the bank writes down the loan value by 10% and the homeowner pays off the loan, the bank has gained 15% of the value of the house, relative to the value if it foreclosed on the property. Sometimes the bank doesn't have to do that. If people missed two or three payments before getting their finances in order, the bank can add the missed payments to the mortgage rather than declaring it delinquent. It doesn't lose anything.
One big obstacle to deal-making is that mortgage loans are no longer owned by a single bank. They have been split up and bundled together. Instead of one lender who can negotiate, you have dozens of people with claims on the mortgage payments. In the absence of negotiation, they simply follow the letter of the law. This means that there is a thoughtless, automatic process that kicks people out when they fail to make the payments.
The government program is trying to deal with this. I don't know all the details, but from what I have heard it is a fairly good way to deal with a clear and obvious problem. If it works, then it will prevent a lot of individual pain, and might also help prevent the overall economic problems from getting worse.
However, even though the plan is good in the short run, it could have a lot of bad effects in the long run. A full understanding these bad effects requires some knowledge of economics, game theory, and incentives, but I'll do my best to give the simple version.
There are certain actions that will increase everybody's wealth, but that will only work if people can make a credible promise about future actions. You will only cooperate with someone if you have know that they will not cheat on you on the future. If you lose faith in their promise, you stop cooperating and everybody is worse off.
Mortgage contracts are like this. Banks only lent money because they believed that they would be paid back. Banks will only lend money in the future if they believe they will be paid back. If we change the rules of the game so that people are allowed to stop paying when a crisis hits, then banks will start to charge much higher interest rates to compensate for the potential loss. This will impose large costs on all homeowners in the future. Even though no money is explicitly changing hands, the government program could end up costing honest homeowners in the present and future in order to help a smaller group of delinquent homeowners today.
But the effects are worse than that. If people know that laws will be changed to suit the needs of the moment, it generates a lot of uncertainty. This kind if uncertainty makes it much harder to invest and plan for the future, and the result is that we all end up a little poorer. It is also the case that people will be less likely to be honest if they feel that honesty is not rewarded. This is the 'moral hazard' point that Santelli and others are making. If you know that people in trouble will get a bailout in bad times, you are less likely to make the sacrifices needed to keep yourself secure.
Basically, we face a choice between the large and obvious costs of foreclosures today, and the subtle costs of higher interest rates, more risk, and less investment for years in the future. It may be the case that enforcing the letter of the law and causing millions of foreclosures is the best thing to do for the country in the long run. But I am not convinced of this. Especially when you consider the costs and benefits of other kinds of intervention to help deal with the economic crisis, the mortgage bailout may be a good idea. Even though I understand the costs it imposes more than most, I feel that it may be worth paying these costs. They will be paid in the future, when things will be better, in order to prevent massive costs today, when the economy needs the help.
Seriously, some things should remain in the format where they originated. There appears to be a dire lack of creativity in our entertainment industry.
Of course, when you have the Internet, you don't need the entertainment industry. Or more accurately, you don't need the multi-million mega-studio productions. I will be happy when the 'entertainment Industry' in this country is limited to small private studios like the Foglios. If current trends continue, that won't take long.
Tuesday, February 24, 2009
"We are too big to fail."
This actually disturbs me a bit. It can be seen as nothing more than a celebration of raw power. I liked last year's motto better:
"Our worst critics prefer to stay."
Monday, February 23, 2009
A Detroit newspaper looked at vehicle registrations to find what kinds of cars the people on Obama's Presidential Task Force on the Auto Industry drove. Almost none of them drive cars made by American companies. Almost all of them drive sensible economy cars. This makes sense. After all, they are economists. We care about functionality, not style or politics.
And as the article notes, there is clearly no love for the American auto companies. Decisions will be made based on how the economy will be affected. Don't be surprised if the companies are sent into bankruptcy.
Friday, February 20, 2009
How could you get so emotionally attached to an online game that you would hire a hacker to remove your opponents from the network, putting your own computer's security at risk to do so?
When I related this to my office mate, he said "Wow. Compared to them, I feel cool. It's not often that I get to say that."
Thursday, February 19, 2009
This seemed odd to me. I mentioned that I always do triage on the tests that I take, figuring out what I can deal with before I start working. I usually end up doing the last problem, even if I leave something in the middle blank.
He said. "You are one of the few people who does that. Everyone thinks they have to answer the questions in order, and it kills them. You should answer what you know."
This is basic advice for taking tests, tackling projects, and living life in general. First, you need to figure out what you can do easily, and then you should pick the low-hanging fruit. It seems so obvious, and I cannot believe that so many of my classmates fail to do it. Maybe they are incapable of systemic thinking, or maybe they are no good at predicting how long it will take to do something. Either way, it may explain why I do well relative to people who have memorized and studied a lot more than I have.
I remember not having an Internet connection, or even a computer, in the house.
I remember the Soviet Union and the Berlin Wall.
I remember unstructured recess in elementary school.
I remember when mobile phones were only used for business.
I remember pagers.
I remember most people not having an answering machine.
I remember Wal-Mart not selling groceries.
I remember none of the grocery stores selling whole wheat bread.
I remember people saying Japan was going to be an economic superpower.
I remember when nothing we bought was made in China.
I remember school with no standardized tests.
I remember getting report cards that were written by hand.
Most of the students in my class do not have any of these memories.
I'll add that, in my experience, the women who study martial arts are more fierce and aggressive than the men. Once they get over the cultural conditioning against violence, their instincts seem to be more aggressive. When you spar a guy who is just learning, you can usually tell that he knows it is just a game. But when a girl starts fighting, you have to be careful. They are less likely to pull their punches, partially because they don't know their own strength but also because the concept of play-fighting isn't part of their instincts.
Of course, after a few years of study in any high-quality martial art, everyone learns how to control their instincts and be calm and peaceful. The effect is similar to the one discussed here.
Monday, February 16, 2009
Sunday, February 15, 2009
However, women who are pregnant prefer the scent of family members, because the family is more likely to support them and there is no need to seek a mate. And because birth control pills fool the body into believing that the woman is pregnant, women who are using these contraceptives will be attracted to men who smell like family, men who have similar immune systems. This means that a woman who chooses a husband while taking birth control pills will choose someone that she will not be attracted to when she stops taking contraceptives.
I have seen people comment on everything I have related above, but they always fail to think about the logical implications of this effect. This difference in attraction could be related to problems with dating. Presumably, men are also attracted to women with different immune systems. Their bodies are not being affected, so they will make an 'accurate' assessment. If the women they are attracted to is taking birth control, then the man will feel a strong attraction but then be rejected. Similarly, the men who women are attracted to will not share the attraction.
More important, and more disturbing, is the implications for the genetic fitness of the resulting offspring. Some women may get a divorce when they stop being attracted to their husband. But most will not. Almost everyone says that it is common and natural for sexual attraction to fade over the course of a marriage. And if the couple waits a few years to have kids, then they will be connected by bonds of affection and be committed to each other. So they have children, and their children will have a weaker immune system than children who come from parents with different immune systems.
This is just speculation, but I believe this effect is responsible for a lot of things that currently have no good explanation. The use of oral contraceptives before marriage has been widespread for over 40 years now, which means that a significant fraction of an entire generation has been born to parents who, in the natural course of events, would never have been attracted to each other.
First, there has been a massive and mostly unexplained increase in the number of cases of asthma in the last few decades. Asthma is directly related to a problems with the immune system. And it isn't just asthma. The prevalence of a lot of random immune-related diseases seems to be increasing.
Second, there has been a large increase in the demand for reproductive medicine. Many couples are finding that they have difficulty having children. It is known that a fetus who inherits similar immune system genes from both parents is less likely to come to term.
This could explain the debate about the long-term effects of birth control. There is no evidence that the pills themselves cause any damage to the body. But it is likely that couples who got engaged under the influence of birth control will have problems having children, so there will be a statistical relationship between birth control use and later fertility problems.
These kinds of problems will only get worse. The generation of children born to parents who met under the influence of oral contraceptives is now choosing spouses and having its own children in the same manner. This second generation will likely have even weaker immune systems, and I would not be surprised if a large number of random genetic problems start to appear as well.
People need to know about this. Women need to know that choosing a husband while on birth control could lead to an unhappy marriage and sick children. But nobody is talking about this effect.
I'm not really surprised. This research does not fit with anybody's ideological agenda. Conservatives don't like to admit that people's choices are so strongly affected by biology. Liberals don't like to admit that there could be something wrong with birth control. But they are both wrong, and people will continue to suffer as a result.
Saturday, February 14, 2009
Her assumption is understandable, and I believe it is common. A Crock Pot is an incredibly simple piece of technology. It is just a metal container with a heating element and a piece of pottery. You could make one in your garage with spare parts, even if you knew almost nothing about electricity. It could easily have been invented in the late 1800's and sold in the early 1900's, when electricity was first run into homes. Yet the early days of electricity were driven by technologies far more sophisticated.
The incandescent electric light is a marvel of engineering and design. It is a contraption of glass and metal, made with enough precision to hold a vacuum. Inside you find a filament carefully constructed from of an exotic material. It was far superior to other forms of lighting. People installed electricity for the sole purpose of having electric light. The power outlets that we are familiar with were not invented until later. Really old electrical appliances were designed not with a plug, but with something that screwed into a light bulb socket.
The electric refrigerator is another amazing bit of mad science, a marvel of physics, chemistry, and engineering. To make one, you first need to construct a gas not known to nature, with unique and carefully calibrated physical properties. Then, to design the cooling mechanism, you need to have advanced knowledge of thermal properties of materials, pressure, and fluid mechanics. Then you need to put it all together with clever engineering and advanced fabrication techniques.
If you were an alien looking at the technological history of the human race, you would be stunned to learn that the electric light was widely sold over 70 years before the Crock Pot, and that the refrigerator was a fixture of the food preparation process over 40 years before the Crock Pot was available. From an engineering standpoint, this is madness. How could a species invent something so complicated so many years before it invented something so simple? And why would it take so long to invent something that makes life so much easier?
Answering this question requires knowledge of human psychology. People are amazingly clever when it comes to tinkering with things to satisfy short-term desires, but amazingly bad at imagining new ways of living life. The early tech was an exaple of the former, and the Crock Pot is an example of the latter.
In a way, these earlier technologies are the result of narrow-minded thought. Despite all of their technological wizardry, they show a lack of imagination. This is because they were simply a better way of doing what people had always done. The electric light replaced the gas light. The refrigerator replaced the icebox. They did nothing to change the way people lived, except to make life more convenient, and to make things available to more people.
The Crock Pot is an innovation that, in some ways, represents a more radical type of genius. For all of human history, cooking was a hands-on process that required constant monitoring. The cook started work with raw ingredients, and was required to be in the kitchen until the final product was delivered. This pattern was never changed. Even if something had to bake in an oven for several hours, the cook would usually need to make some adjustment, or be in the kitchen doing something else. This was not just a matter of food quality, it was a matter of safety. Leaving a stove or oven unattended meant risking a deadly and destructive fire.
All kitchen technology before the Crock Pot did nothing to change this way of doing things. Nobody ever thought that it would be really nice if you could throw cheap ingredients into a pot in the morning and have a nice meal waiting for you when you came home in the evening. In fact, the original inventor of the Crock Pot was not even thinking of this. The thing was invented as a more convenient way to cook beans. It wasn't until later that some unsung genius hero realized its true potential.
There are a lot of lessons in this. The first is that you don't need technical knowledge in order to be a great inventor. All it takes is a clever idea, and you can use commonly available tools to make people's life easier and make yourself a decent amount of money. Think outside old habits, dream of new ways of living, and make it happen by connecting your thought to the tools in the world. I am convinced that there are hundreds of things like the Crock Pot that have not yet been invented, but will seem simple and obvious after they are.
The second is that new technology will continue to improve lives for hundreds of years, usually in ways that were never imagined by the inventors. The Crock Pot can only exist because we have electricity in everybody's house, but nobody would ever build an electrical grid just to give everybody a Crock Pot. The early adopters of electricity wouldn't bother to make cooking more convenient, because they had servants to do the cooking.
The final lesson is that engineering skill is a commodity. If you have a clever, simple, clearly defined goal, then you can always find an engineer to make it happen. There is an army of technological wizards waiting for your command. In the absence of original ideas, engineers will inevitably use their talents to make marginal improvements on our existing way of life. This is very useful, and it is a great benefit to humanity, but you quickly hit the point where further improvement is not worth the effort.
This is why nobody should be worried about India and China producing vast quantities of engineers and technical specialists. It doesn't really change anything. True advances in human civilization require invention and creativity that cannot be taught in a school. It requires consumers who are willing and able to try new things, instead of being enslaved to the past. If America can keep its culture of experimentation and innovation, we will continue to find ways to improve our lives. I am confident that we will.
Friday, February 13, 2009
dark brown sugar. Wal-Mart was also out of both things.
This is not too surprising, and I do not blame them for it. The
demand for each of these goods is very low, so it would not make sense
to devote much shelf space to them. At most, they will have six boxes
of flax seed in the store.
However, the people who do buy these things will buy them in large
quantities at irregular intervals. It would not surprise me if the
half-dozen boxes of flax seed and the dozen bags of sugar sat
untouched for a week, and then were all bought in a single day as
people stocked up on groceries after payday, or were preparing to bake
something for a Valentine party.
And of course, the irregular supply is a problem that reinforces
itself. If people know that something will always be available, they
buy just as much as they need to last until the next store visit. But
once they learn that it might be out of stock the next time they are
in the store, they will grab more whenever it is available, to make
sure they don't run out.
However, having said that, I was somewhat annoyed at the massive
amount of shelf space devoted to identical five-pound bags of cheap
white sugar. That one product consumed at least five times the space
of the entire specialty baking goods section. I find it very hard to
believe that they actually need all of that space. There is almost no
chance that people would buy that much in a single day. Wal-Mart
could double the shelf space devoted to flax seed by removing just
three bags of sugar from their massive supply.
On the other hand, the consequences of running out of a staple food
are much worse than the consequences of running out of a specialty
good. Many stores don't even carry flax seed, so they know I will be
back later. But Wal-Mart could lose a customer permanently if they
ever didn't have something that people consider a basic necessity.
Thursday, February 12, 2009
I wrote this email in response, and am reposting it here.
While I certainly hope that soccer replaces American football as the
game to watch, I am not optimistic. Part of that lack of optimism may
be related to the fact that your article made no mention of anything
that actually happened in the game, aside from the 2-0 score.
Maybe that was because you expected everyone reading to know the
game's events, but I suspect that one of the following is true:
1) There was no major, exciting, game-changing event.
2) It is hard to write about or describe the action on the field.
Football and baseball are easy to write about and talk about because
the action is divided into discrete chunks, any of which could cause
an exciting reversal. The state of the game at the beginning of the
play is easily and succinctly described. Soccer is more fluid, and
the state of the game at the beginning of an event can only be fully
described by giving the location, velocity, and direction of the ball
and every player on the field.
While this dynamism makes soccer a superior sport to play, and to
watch with the eye of an expert, it makes it very hard to watch
casually or talk about. The depth of tactics and strategy makes
communication more difficult, even for a sports writer. That
communication difficulty will make it very hard for soccer to reach
the 'tipping point' where it becomes the main social event.
Wednesday, February 11, 2009
There is a winter holiday tradition of kissing under the stuff. So
why it is never associated with a holiday devoted to romance? The
supply cannot be an issue. It is still green and healthy, and it
would be just as easy to harvest it now.
The same thing could be said of, for example, holly leaves and berries
as decorations. Why do the winter holiday traditions and decoration
end at the new year? It is the same weather and environment. Holly
and mistletoe would be far superior as decorations than everything
else you see associated with this holiday.
Tuesday, February 10, 2009
was Dr. Benjamin Hippen, a transplant nephrologist and expert on the
ethics and practice of kidney transplantation. He is working to
overturn the law against paying kidney donors. His proposal, as I
understand it, is very cautious. He wants to set up a system, with
all of the appropriate controls, where the government would pay for
kidneys and then offer them to people on the transplant list. Because
the government pays so much money for dialysis, which does not help
people nearly as much as a transplant, they would save money. The
'break-even' point is about $130,000 per kidney.
He was actually a Philosophy major as an undergraduate, so he was very
comfortable dealing with all of the possible objections to the plan.
All of us at the Philosophy club basically agreed with his proposal,
and it is very rare to find an issue that we can agree on.
This is an issue where the framing of the proposal is very important.
If you say 'we are buying kidneys for $100,000' then people will
object. But if you say 'We are giving people free health care for
life if they donate a kidney' then suddenly it seems like a perfectly
fair and sensible thing to do. It removes the icky feeling of selling
body parts, and $100,000 is more than enough to pay for lifetime
health insurance for someone who is healthy enough to be a suitable
Hopefully the bill will be introduced before the senate this year.
This is one of those interesting issues where party affiliation has no
relationship to how people feel on the issue. I certainly hope it
will be a success, and I think this guy has the ability to make it
One note: Hippen is not a Libertarian, and was almost apologetic about
working with the Cato Institute to publicize his work. But they were
the only ones who would help him. And even they were hesitant,
because his research paper basically says "Iran has a system for
selling kidneys, and it is working great." Cato did not approve of
looking to Iran for inspiration on anything, but the facts are the
I have learned that Dr. Hippen actually does think of himself as a libertarian. But it is still true that he is more practical, and more comfortable with regulation, than a lot of hard-core Libertarians.
from The Economist's archive:
Thursday, February 5, 2009
"In 2006 Barack Obama and Tom Coburn, then freshman senators from
Illinois and Oklahoma, sponsored a bill calling for an online database
of federal contracts and awards. Robert Byrd of West Virginia and Ted
Stevens of Alaska, both notorious for pork, briefly blocked the idea
with an old Senate trick, the anonymous hold. They were soon unmasked
by the blogosphere. The Federal Funding Accountability and
Transparency Act sailed through to passage with bipartisan support."
A republican and a democrat team up to try to get more accountability
in government. A republican and a democrat try to block them.
The real battle is between people who try to keep government limited
and/or working for the people, and people who see it as a tool for
personal gain. You will find examples of both types in both parties.
Wednesday, February 4, 2009
Wal-Mart is like a little version of the United States. It is big,
successful, and efficient. It has improved the quality of life of
millions of people. While it has made a few mistakes, it is better
than any of its competitors and everyone wants to come in. And yet,
for some reason, lots of people hate it and it continues to be an easy
target for unfair attacks.