Flat Beach

23 Lowell St #2 music room first-born:

Sundialtone - Flat Beach

Also my cousin had a baby so now I'm a second uncle.

Smart for one, dumb for all

Spurred by some links from Economist's View and some conversations with Yang about a highly progressive consumption tax, I have been reading some of economist Robert H. Frank's editorials. The theme seems to be that government, and policy makers in general, have the imperative to eliminate or mitigate "smart for one, dumb for all" incentives.

Some examples of "smart for one, dumb for all" situations: at a stadium, one can get a better view by standing up, but if everyone stands up, then everyone has the same view as before but without their comfy seats. In athletics, one can gain an edge by taking steroids that may have some small probability of health risk, but if everyone takes the steroids, then everyone has the same relative standing but now all have the health risk.

I find the metaphor of an arms race most compelling.

Capitalism is all about competition (relative gains are rewarded). But there is a hidden assumption that improvements in relative value result in improvements in absolute value. In many cases this is true; companies compete to produce a higher quality product, or the same product for a lower price, resulting in value for the society as a whole.

Frank's essays focus on situations where this assumption breaks down.

The relevant recent example is the rise and fall of the housing market in the US. There is growing competition between people to buy more expensive houses. Much of the motivation for this is as a display of social status (that is, consumerism in general). In addition, the best public schools are found in richer neighborhoods, and due to the growing importance of eduction, it's rational for a family to try to live in the most expensive house it can afford.

But what's good for one family is bad for society as a whole. Bidding wars result in home prices way above their value as shelter (this can be measured as the ratio of home prices to rental prices). One difference between the 1950s (the beginning of America's recent prosperity) and the early 2000s is that lending rules became laxer (no/low down payments, for example), which allows home buyers to stretch to the very limit of what they can afford.

There is a symmetric story on the side of the lenders, where competition incentivizes fund managers to make riskier and riskier investments. Due to the lifting of regulations, lenders likewise take this to the limit.

The pattern:

	Home Buyers	Fund Managers/Mortgage Lenders
A gamble with a high probability of small gain and a low probability of significant loss	Buying the more expensive house, risking not being able to afford the mortgage.	Buying mortgage-backed securities that offer higher rates of return but greater risk.
Exponential (feedback loop) rewards based on slight relative gains ("winner takes all")	Better schools which have an exponential effect on future generations' success	Better fund performance which attracts more investors, providing greater opportunities
The illusion of safety in numbers	Home prices will keep going up so the house can always be sold	Everyone else is buying mortgage backed securities/offering laxer loan terms

A really excellent, very human telling of this story from the perspective of all players can be found in the This American Life episode, The Big Pool of Money.

I have started a separate blog. Will be posting there from now on.

Branding

Nice brand analysis of the two presidential campaigns.

Education

Obama gave a speech today on education.

The strongest part about it to me is modernizing the education system. For example, there's no reason we can't give weekly report cards so parents can keep better track of how their kids are doing in school. Further, he understands the type of education children need to be effective in the modern world. "Imagine a future... where research isn't done just by taking a book out of the library, but by e-mailing experts in the field; and where teachers are less a source of knowledge than a coach for how best to use it and obtain knowledge." It's hard to imagine Mccain fostering this type of education modernization given that he doesn't know how to use a computer.

Obama Energy Speech

Great, recent Obama speech on energy. Very Break Through-esque, frames the problem as an opportunity. Very important to get this guy elected.

If I am President, I will immediately direct the full resources of the federal government and the full energy of the private sector to a single, overarching goal – in ten years, we will eliminate the need for oil from the entire Middle East and Venezuela.

...

First, we will help states like Michigan build the fuel-efficient cars we need, and we will get one million 150 mile-per-gallon plug-in hybrids on our roads within six years.

...

The second step I’ll take is to require that 10% of our energy comes from renewable sources by the end of my first term – more than double what we have now.

...

Finally, the third step I will take is to call on businesses, government, and the American people to meet the goal of reducing our demand for electricity 15% by the end of the next decade.

...

In just ten years, these steps will produce enough renewable energy to replace all the oil we import from the Middle East. Along with the cap-and-trade program I’ve proposed, we will reduce our dangerous carbon emissions 80% by 2050 and slow the warming of our planet. And we will create five million new jobs in the process.

More details and how these goals are achievable in the speech.

Cohesive policy

I did the Obama match a donation and exchange a message thing. Am posting my message since it's my current concise reasoning on why to support Obama.

Obama's commitment to solving problems through system-level changes with a big-picture, comprehensive perspective is precisely what this country needs.

For example, corruption of our federal government by special interest groups is not our biggest problem, but it is a root problem, and Obama recognizes this which is why he emphasizes transparency of the political process.

Further, our country is in dire need of a level-headed, diplomatic leader, both on domestic issues (increasing transparency in the financial/credit sector, bringing costs down on health care, stimulating innovation in our use and production of energy) and foreign affairs (fixing the neocons' mess in the Middle East and allaying the anxiety the rest of the world feels about America's recent irrational foreign policy).

Obama's strategies on these issues are not only prudent separately, but are meant to work together. One example: American car companies are not able to heavily invest in energy efficient technology because they need to meet health care costs of their retiring workforce, whereas their European and Japanese competitors do not have this problem. Obama demonstrates his comprehensive thinking on this issue through his proposed "health care for hybrids" legislation.

Obama's comprehensive strategies offer a spectacular chance for the democratic party, whose policies recently have been an amalgamation of special interest solutions with little cohesion.

Thank you for your donation. Make sure to vote and tell others to vote, this is an important election.

Fog of War

I'm surprised I didn't hear about this story. It is generally accepted that Rumsfeld's resignation on November 8, 2006 was the Bush administration's response to the democrats taking control of Congress the day before. That's certainly how democrats spun the story. For example:

"Secretary Rumsfeld's war plans in Iraq have failed. The country is on a dangerous course, and the administration has finally recognised the need for drastic, immediate change," said Senator John Rockefeller, senior Democrat on the Senate Intelligence Committee.

But perhaps the real reason was due to disagreement between Bush and Rumsfeld over Iraq strategy. A confidential November 6 memo by Rumsfeld suggesting troop withdrawal and a change of approach was leaked and published by the New York Times on December 3, 2006.

Some highlights:

In my view it is time for a major adjustment. Clearly, what U.S. forces are currently doing in Iraq is not working well enough or fast enough. Following is a range of options:...

Initiate a reverse embeds program, like the Korean Katusas, by putting one or more Iraqi soldiers with every U.S. and possibly Coalition squad, to improve our units’ language capabilities and cultural awareness and to give the Iraqis experience and training with professional U.S. troops...

Conduct an accelerated draw-down of U.S. bases. We have already reduced from 110 to 55 bases. Plan to get down to 10 to 15 bases by April 2007, and to 5 bases by July 2007...

Initiate an approach where U.S. forces provide security only for those provinces or cities that openly request U.S. help and that actively cooperate, with the stipulation being that unless they cooperate fully, U.S. forces would leave their province...

Begin modest withdrawals of U.S. and Coalition forces (start “taking our hand off the bicycle seat”), so Iraqis know they have to pull up their socks, step up and take responsibility for their country...

Here's the timeline I've been able to piece together: Nov 1 Bush announced he would stand by Rumsfeld for the length of his term. Nov 5 he meets with Gates in Texas (according to this article by right-winger Fred Barnes, this private meeting was without Rumsfeld's knowledge). Nov 6 is the above memo and also the date of Rumsfeld's letter of resignation. Nov 7 the election. Nov 8 Rumsfeld's resignation announced to the public.

The resignation takes effect on Dec 18, and a few weeks later the surge is announced.

I hope somebody does a documentary on Rumsfeld in 10 or 20 years time, like Fog of War (recommended if you haven't seen it).

Cool tip for storing fruits and vegetables

video optical illusions

this one's fun.

The Next Bubble

Eric Janszen's article, The Next Bubble, provides a short history of our now bipolar economy. It all starts with an invention or innovation that creates a new and unfamiliar space for investment. People with credibility move in, less savvy investors follow, not wanting to be left behind. The amounts of money that move around create a haze where certain assets become way overvalued. Eventually everybody comes to their senses, often all at once, like crashing into a brick wall. Investors rush to take their money out as quickly as they originally put it in. Janszen was a honcho at a VC firm during the 90s so he has first-hand experience with the pattern.

While such frenzies have a long history (the article mentions the South Sea Bubble of 1720), their frequency is increasing. Whereas previously the boom-bust cycle occurred on the scale of decades, after the dot-com crash of 2000, the so-called subprime bubble began foaming in 2003.

When the dot-com bubble crashed, about $7 trillion in fictitious value needed to be dissipated in a way that wouldn't create shocks throughout the US (and world) economy. The bubble resulted in a glut of workers without jobs and companies without customers, and on the other side reactionary, overly-cautious investors who no longer wanted to risk their money. Since the 1929 crash, the strategy the US has taken to recover is called Keynesian reflation: cut taxes, increase federal spending, depreciate the dollar, and lower interest rates. These moves are intended to counter the reaction to the crash (ie: keep investors from hoarding their money in savings accounts) and keep money moving so that the economy can resettle smoothly.

Reflation worked pretty well in the early 2000s because the federal government was running a surplus in the 90s, the dollar was high, taxes had room to decrease, and the fed funds rate was 6%. However, it's going to be a lot harder to contain the reaction to this most recent bubble, which is estimated at around $12 trillion in fictitious value. The government has been running a deficit, the dollar is low, and tax cuts from the early 2000s are still in effect. The fed funds rate went from 6.5% in 2000 down to 1% in 2003 to counter the dot-com crash. It recovered up to 5.25% in summer of 2006, but is now at 3%, and may go down another 1% within a week. There is worry that it won't be able to fall low enough to counter the crash.

For the US economy to survive, Janszen predicts that another bubble will need to form. That is, a new frontier will need to open up and provide opportunity for investors, create jobs, etc. I won't give it away, but you can probably guess what it is (hint: it's what the world needs). Or you can read the article, which I recommend.

Budget

Put my clothes on

There are a lot more of these.

Moon Landing

New Groove

Andrew Sullivan makes a strong case for Obama. And it's crude, like Obama.

What does he offer? First and foremost: his face. Think of it as the most effective potential re-branding of the United States since Reagan. Such a re-branding is not trivial—it’s central to an effective war strategy. The war on Islamist terror, after all, is two-pronged: a function of both hard power and soft power. We have seen the potential of hard power in removing the Taliban and Saddam Hussein. We have also seen its inherent weaknesses in Iraq, and its profound limitations in winning a long war against radical Islam. The next president has to create a sophisticated and supple blend of soft and hard power to isolate the enemy, to fight where necessary, but also to create an ideological template that works to the West’s advantage over the long haul. There is simply no other candidate with the potential of Obama to do this. Which is where his face comes in.

Consider this hypothetical. It’s November 2008. A young Pakistani Muslim is watching television and sees that this man—Barack Hussein Obama—is the new face of America. In one simple image, America’s soft power has been ratcheted up not a notch, but a logarithm. A brown-skinned man whose father was an African, who grew up in Indonesia and Hawaii, who attended a majority-Muslim school as a boy, is now the alleged enemy. If you wanted the crudest but most effective weapon against the demonization of America that fuels Islamist ideology, Obama’s face gets close. It proves them wrong about what America is in ways no words can.

If you just want the Obama vs Hillary without the big picture, page 3.

Mainstream media covers horse race

Perhaps obvious, but now some numbers behind it:

In all, 63% of the campaign stories focused on political and tactical aspects of the campaign. That is nearly four times the number of stories about the personal backgrounds of the candidates (17%) or the candidates’ ideas and policy proposals (15%). And just 1% of stories examined the candidates’ records or past public performance, the study found.

The press’ focus on fundraising, tactics and polling is even more evident if one looks at how stories were framed rather than the topic of the story. Just 12% of stories examined were presented in a way that explained how citizens might be affected by the election, while nearly nine-out-of-ten stories (86%) focused on matters that largely impacted only the parties and the candidates. Those numbers, incidentally, match almost exactly the campaign-centric orientation of coverage found on the eve of the primaries eight years ago.

Via Paul Krugman's blog.

Suburbia Sux

This is a talk by an architect about creating better spaces.

http://www.ted.com/index.php/talks/view/id/121

Tubes of spacetime

A talk (good stuff starts around 4:00) on video mosaic-ing for time compression, time warping, panoramic, and 3d views. All by sliding various surfaces through the 3d volume formed by the 2d image extruded through time (an old favorite).