Category: From the Old Server

Time to stick my neck out with a prediction:  Arnold will lose the California election today, for reasons that have nothing to do with his recent spate of bad press.  Arnold will lose simply because there are enough craven risk-averse people in California terrified at the prospect of trading a known (Gray Davis) for an unknown (Arnold as politician).  Either (a) the recall will fail and Gray Davis will keep his job, or (b) a lifelong political hack such as Cruz Bustamante will prevail over the replacement candidates without experience in politics.

[Update October 8:  Sometimes when you stick your neck out it gets chopped off…  Arnold seems to have won by a landslide.  This on top of the humiliation of arriving home from flying and finding out that philip.greenspun.com (my main server) was down for 11 hours (it runs on the photo.net box and none of the new staff there seems to have noticed or have monitors installed).]

Full post, including comments

Summer is over.  Fall has begun.  Christmas is not yet upon us.  Thus it is a good time to clean up personal investments.

One thing that I recent did was close all of my accounts with firms that do investment banking and IPOs.  There is an inherent conflict of interest between wanting to collect fees from companies selling shares to the public and providing impartial advice to individual investors.  A typical example of where the conflict arises is the July 28, 2003 settlement between the SEC and JP Morgan and Citigroup (source).  It seems that the two firms assisted Enron in defrauding investors by manipulating its financial statements.  A more direct example was furnished by the great “stock analyst scam” of the 1990s, which resulted in a $1.4 billion settlement in April 2003.  A good archive of stories about this settlement is available at http://www.washingtonpost.com/wp-dyn/business/specials/wallstreetprobe/.

Hear are the firms involved that agreed to pay the SEC to settle conflict of interest charges:

• Citigroup/Salomon Smith Barney
  
• Credit Suisse First Boston
  
• Merrill Lynch
  
• Morgan Stanley
  
• Goldman Sachs Group
  
• Lehman Brothers Holdings
  
• J.P. Morgan Chase
  
• Bear Stearns
  
• UBS Warburg
  
• U.S. Bancorp Piper Jaffray

(source: Washington Post).  If you have an account with one of these organizations and you’re not yourself a corporate criminal or wanting to execute an extremely complex leveraged buyout… perhaps it is time to ask yourself why.  If they have to choose between your best interest and that of a Fortune 500 company from whom they stand to earn $100 million per year in fees, how can they possibly choose you?

Sometimes there is no alternative but to deal with an organization that has been convicted of violating federal law and cheating its customers.  For example, if you want to send your kid to an Ivy League college you will become a customer of an organization that was prosecuted for tuition and financial aid price-fixing in violation of antitrust laws.  If you want to listen to your favorite musician and don’t have time to waste on Kazaa you’ll be buying a CD from a record company that was very likely guilty of violating those same antitrust laws.  If you want to run the same software as everyone else you’ll be a customer of Microsoft, no stranger to the Federal court system.

In the world of personal finance, however, plenty of pure alternatives are available.  Vanguard and Fidelity offer a huge range of investment instruments.  Suppose that you move your money to Vanguard, a company that is actually owned by its investors and that does no investment banking.  You don’t have to scrutinize every communication from Vanguard to figure out if they’ve colored their message to benefit one of their big corporate customers.  Vanguard’s instruments are 0.5-1% lower in fees than those offered by the typical investment bank/full-service brokerage.  When people were making 8% after-inflation annual returns it didn’t seem ruinous to pay an extra 1% in fees.  However, we live in an age where investors might consider themselves lucky to earn 2% above inflation; do you really want to give up half of your return to a stock fund manager, financial planner, or whatever?

What’s worth buying these days?  This blog seems to be mostly a techie hangout so let’s consider the challenges of middle-aged techies (like me!).  If you are a computer programmer over the age of 35 you should probably plan like a retiree and figure out how to live on whatever money you currently have.  Remember that retirement doesn’t necessarily mean that you’re old or that you’re rich; it could simply be that you’re no longer a useful component of the labor force.

For any retiree, inflation is the big risk and we seem to have all the makings of a couple of inflationary decades right in front of us.  George W. “Hoover” Bush may need to invade quite a few more countries in order to win the 2004 election.  We only attack poor countries because it minimizes the chance of getting our ass kicked.  Then we start feeling sorry for the defeated inhabitants because they are so poor.  So we have to spend $200 billion “rebuilding” until whatever country we invaded reaches the standard of living of Arkansas.  The government is going to get the $200 bil by borrowing.  The easiest way to pay back the borrowed money, especially to foreign suckers who bought our bonds, is by inflating the U.S. dollar so that a $7 trillion debt isn’t scary anymore (because $7 trillion might be a typical annual salary for a Walmart cashier if we go for Latin American-style inflation).

Regular bonds are a terrible choice when inflation starts to gallop.  With a bond you have a promise from the government or a company to pay you, for example, $1,000 in 2030.  But what if $1,000 in 2003 is only enough to buy a Big Mac?  Tough luck.  You could buy real estate on the theory that Americans will keep adding working longer hours and outbidding each other until a typical mortgage is for 80 percent of a three-job couple’s income.  The problem with real estate, however, is that municipal governments will attack your investment with savage real estate taxes and by every estimate the price of U.S. real estate is absurdly high right now.

A reasonable inflation-protected choice is a standard common stock mutual fund.  You’re buying shares in operating companies.  Even if inflation runs wild as it did in the late 1970s, owning 1 percent of General Electric will still make you a very rich person.  The latest gimmick in stock mutual funds is the “tax-managed” fund that tries to minimize capital gains distributions by (a) selling the big losers every year to get capital losses, and (b) penalizing people who pull their money out after a year or two.  Research shows that careful tax management can beat an ordinary index fund by about 0.5% in after-tax returns (I once looked into a JP Morgan tax-managed index fund; its expense ratio was 0.8% higher than the standard Vanguard index fund and therefore all of the benefit of the tax management would have gone into JP Morgan’s pocket; fortunately Vanguard has a few tax-managed funds of its own).

The ultimate in inflation protection is an inflation-indexed bond from the U.S. government.  You can learn about these in this Motley Fool article.  They can be purchased through Vanguard or Fidelity.  If you don’t have enough money to hold the individual bonds, both Vanguard and Fidelity offer inflation-protected bond funds.

To summarize…  (1) consider voting against the Wall Street criminals by moving your assets to a non-criminal non-conflicted organization such as Vanguard or Fidelity, (2) if you’re someone whose performance is evaluated by a clueless MBA and whose job could conceivably be done by a guy sitting at a computer in a low-wage country, plan for early retirement by investing in assets that won’t wither in the face of inflation.

 

Full post, including comments

In “Where Nobody Knows You’re a Music Thief” by Daniel Akst in the Sunday, October 5, 2003 New York Times we find the first serious advocation of letting the RIAA monitor all Internet activity so as to prevent file sharing:

“The answer is probably authentication. Sooner or later we will need to know who everyone on the Internet is, and who confirmed their identities. Internet access providers who admit unauthenticated users will have to be shut out, even if that means shutting out whole countries.

“In such a world, there would be no doubt about who was violating copyright laws or otherwise misusing the electronic commons. It’s sad, I know. The ability to shed one’s identity online seemed a dream for a while, but as the poet Delmore Schwartz reminds us, ‘in dreams begin responsibilities.'”

This is sort of an echo of an idea put forth here in this blog on Thursday, September 25:

Prediction:  RIAA will get a law passed making it illegal to email sound recordings.  To enforce the law the RIAA will have the right to read anyone’s email at any time.  Encryption of email will need to be outlawed so as to thwart terrorists and music thieves.

[Of course as noted here on September 5, the most likely explanation for the declining sales of clunky physical objects containing brief musical recordings (e.g., CDs) is that the product is unappealing compared to subscription music services such as XM, Sirius, and 500-channel digital cable (which includes 50 channels of commercial-free music), $12 DVDs at Walmart, and other entertainment options that did not exist when Edison cylinders were introduced 125 years ago (or when CDs were introduced more than 20 years ago).  It is a testament to the power of the RIAA that their posited connection between Internet file sharing and their sagging sales is accepted uncritically in the mass media.]

Update:  I mentioned this story to Robert Thau, author of the core of the original Apache Web server.  He said “If the Chinese government had proposed this scheme, the New York Times would have editorialized against it.”

Full post, including comments

This section is for recording random interesting things that happen at BloggerCon…

One constant debate was on whether blogs will substantially improve journalism, public discourse, and worldwide understanding.  At first this idea seems laughable.  All of the money is in Big Media and in our society money = impact.  As an example of how pathetically uncommercial blogs are, consider this one that you’re reading now.  It is the #2 most popular blog on Harvard’s server.  The ranking page shows that it has been viewed about 450,000 times in six months.  Google AdWords pays publishers roughly 50 cents per 1000 pages in which its ads appear (see this story for how serving Google ads, like other forms of advertising, can only be done if you’re willing to accept some limitations on your future speech).  So the total revenue for a moderately popular Weblog is apparently on the order of $400 per year, i.e., only barely enough to pay for a DSL line.  The New York Times has a larger budget than this for even the smallest story.

There are smart people out there in Blogland, e.g., Larry Lessig.  Lessig is of course much more interesting than 99 percent of the day-to-day journalism out there.  But if you don’t know Lessig, how would you find him among the clutter?  Perhaps technology will help us.  Right now there is no good way to ask an information system “Show me blog entries that people at least as discriminating as Larry Lessig thought were interesting.”  Maybe it will happen in 10 years or so.  As Jin S. Choi says “Mere matter of programming.”

Meanwhile the profusion of garbage leads salaried journalists to cluck with disapproval and quote the old adage that “A lie gets halfway around the world before truth gets its boots on” (Winston Churchill by way of Christopher Lydon).  Some audience members argued that truth propagates faster than ever.  My personal experience is that Google makes it fairly easy to check the veracity of a story.  If some organization is out there trying to debunk an urban legend Google will bring up their page.  In the pre-Google era people had no easy way to evaluate whatever they heard from a neighbor.

One woman on a panel is an author/editor at gawker.com, which today carries a somewhat cruel story about Lori Berenson, the MIT alumna imprisoned in Peru since 1996.  Hearing about Lori, though we did not overlap at MIT, always makes me sad.  Visit http://www.freelori.org/ to learn more.  You can help Lori’s parents with a Paypal donation or frequent flyer miles.  I kicked in $250 on the following theories:  (1) MIT alums should stick together, (2) the money won’t be squandered on administration as at most non-profit orgs (this report on Harvard shows what a successful non-profit looks like financially and how little they need $250).

A woman from the Harvard School of Education made what I always felt to be the canonically stupid comment on any Internet application:  it won’t help people who lack Internet access and the people who are working on the app should turn their attention to the “digital divide.”  Her main concern was American kids in the inner city.  It is true that a decent used PC can be obtained for $200, less than the cost of the most fashionable running shoes, but what remains expensive is Internet access.  I was tempted to jump up and push my idea that the Federal Government should sponsor a universal wireless Internet over the U.S., with access free to people who don’t need much bandwidth, a system that would cost a tiny fraction of whatever it is going to cost us to invade whatever country that is next on our list.  Fortunately a much more intelligent audience member spoke first, noting that Moore’s law would eventually take care of the economic divide (ed: unless the telcos and cable monopolies have their way) but the real divide would be literacy and if we want the underprivileged to benefit from the Internet we should concentrate on teaching them to read and write.

Speaking of the benefits of IT… after I introduced myself as a CS teacher from MIT and made my first comment, the guy two seats over pulled me aside.  “Aha,” I thought, “those trenchant observations really made this guy think.”  He said “I hate to bother you but since you said you were from the MIT CS department I thought you could help me with this Macintosh, which seems to have crashed and no amount of paperclip sticking into the little buttons on the back will revive it …”

Full post, including comments

One of the panels at BloggerCon concerned blogs and education, mostly for full-time K-12 and college students.  Whenever people talk about education it seems inevitable that debates will break out concerning what to do about public schools: “Why shouldn’t a kid in the ghetto have the option [vouchers] of attending private school, the same as George Bush’s and Bill Clinton’s children?” and “I worked in the U.S. Air Force for four years before moving to the San Francisco Public Schools and let me tell you that, for a government agency, schools are remarkably efficient.”

Full post, including comments

This weekend is the BloggerCon conference at Harvard.  A young audience member had the courage to ask “What should I say when someone asks me what the point of having a blog is?”

Indeed this is a variant of the early 1990s question the first personal Web sites went up “What is the point of having a personal Web site?”

What then IS the point of personal Web site or blog?

Let’s go back to the beginning.  The commercial publishing world supports basically two lengths of manuscript: the five-page magazine article, serving as filler among the ads; the 200+-page book.  If you had a 20-page idea and didn’t have access to the handful of “long-copy” magazines in the U.S. (old New Yorker, Atlantic, etc.), you could cut it down to a meaningless 5-page magazine piece or add 180 pages of filler until it reached the minimize size to fit into the book distribution system (cf. any diet book or business bestseller).

Personal Web sites are interesting because they support 20- or 30-page essays beautifully, with search engines directing interested readers to those essays right at the moment that they’re curious about that topic.

Blogs are interesting because they support the 2-paragraph idea.  It is sort of ridiculous to create a separate .html file for every little aphorism or fleeting thought and it would be a shame to clog search engines with pages that have such a high machinery-to-content ratio.  Blogs and the RSS format make it work.  Everyone can write like Nietzsche or a Marcus Aurelius, even if few people ever come up with enough clever small ideas to fill a 200-page book.

Of course there remains the question of why write at all.  You don’t make any money from writing and wouldn’t it be more pleasant to concentrate on getting full value out of your digital cable TV subscription and luxury SUV?

What did folks at the conference have to say about this topic?  One panelist noted that Benjamin Franklin was an early blogger (personally I prefer Marcus Aurelius as an example).  Emerson, a Harvard alumnus (just like Ted Kaczinsky) was dredged up.  He would have loved blogs (“A chief event of life is the day in which we have encountered a mind that startled us.”).  The journal is a well-respected literary form and the blog is simply a more efficiently available journal.

Some panelists seemed insanely optimistic.  One guy noted that the nation-state wasn’t working.  We are afflicted with racism, wars, etc.  We need a new way to aggregate the wisdom of people and blogs are the answer.  Listening to this, I was struck by a horrifying thought:  George W. Bush must represent the aggregated wisdom of the American people, i.e., us.  Adam Curry compared the Weblog to the telephone in its potential to revolutionize society.  If the early results are mostly lame he related that “the telephone was first used to call ahead to say that a telegram was on its way.”

My personal answer:  my main site (philip.greenspun.com) is there to relate things that I’ve learned so that others don’t have to repeat my mistakes; this blog is here to entertain friends and if other folks stumble across it and are entertained or find their thinking sparked in new directions, that’s gravy.

Full post, including comments

According to this New York Times article, Sun seems to be losing a few $billion.  This has caused the stock to crash.  Sun has roughly $6 billion more in the bank to lose, so don’t look for them to show up in bankruptcy court anytime soon.  Still, perhaps there is an analog here.  The record companies are suffering because the only thing that they have to sell is the CD, which was introduced more than 20 years ago and which is a derivative of the 125-year-old Edison cylinder.  Sun is suffering because its main product is a 33-year-old operating system, Unix, that has been only incrementally improved, and the Reduced Instruction Set Computer (RISC), developed by IBM in the late 1970s.  What else does Sun have to sell?  Java, which is kind of a strange mix of 1970s ideas (from C and Smalltalk).  When your products are this old it is easy for competitors to build cheaper knock-offs.  Sun has been remarkably unlucky in that the knockoff, GNU/Linux, was built mostly by volunteers and that its price is $0.

In the case of recorded music the solution is pretty obvious, i.e., some sort of subscription service that delivers music conveniently to the consumer wherever he or she happens to be.  The details might be intricate but it doesn’t take a great leap of imagination to believe something could be built that people would want to buy.  Can we say the same for Sun?

The market for “solutions” to the IT problems of rich and confused big companies would seem to belong solidly to IBM.  The market for complex desktop applications and professionally-configured desktop operating systems would seem to belong solidly to Microsoft.  Slugging it out with Intel in the hardware market seems like a losing game.  In fact, Sun appears incapable of competing in any current computing market.

What does that leave?  How about a completely new infrastructure for computing?  No user would ever have to configure his or her network (a friend went to a dinner party last weekend in which a 70-year-old woman related her 3-hour support call with the cable modem company; “I did a lot of pinging”).  No user would ever see a hierarchical file system with directories or folders.  No user would ever be asked by an application program whether he or she wanted to “save changes?”  People would have access to their data and computing power from wherever they happened to be.  Sun could sell the devices (handheld, desktop, laptop, in-wall).  Sun could sell the servers that made it all work.  It would all be 100% proprietary so that Sun could make some profit.  That’s my best idea.  WinXP, Unix and the MacOS all look extremely similar when you step back a bit from the problem.  The people for whom these are acceptable systems already have bought as much computer as they need.  The big untapped market is among people who aren’t willing to devote a big part of their lives to the care and feeding of this style of operating system.

Perhaps the process would start with Sun buying a cable TV and a cellular phone company in one city and writing code until half of the businesses and citizens in that town were hooked.

Let’s see if the comment section yields some better ideas for Sun…

Full post, including comments

Here’s an unusual story involving two countries, Japan and China, that I visited in September 2000.  My trip was a bit different than the one described, as you can see from the photos:  Japan (click on Tokyo and then on the fish market series); China.

Full post, including comments

Hmm…, the Let’s Bash Microsoft posting seems to have served its function (135 comments and counting!).  Perhaps today would be a good day to bash the RIAA, a reprise of the comprehensive CD industry bashing posting of September 5, 2003….

A simpler formulation of the troubles of the record industry:  the CD is a direct descendant of the Edison cylinder circa 1877.  I.e., the record industry is demanding growing revenues from a product that is 125 years old.  In 1909 a consumer might have been delighted at the idea of purchasing a Grand Opera Amberol, taking it home, and spending the rest of his life devoting storage space in his home to the physical manifestation of the audio stream.  A consumer in 2003 might, however, be forgiven for insisting that paid-for music arrive ethereally, on-demand, and, if there is physical management to be done that it be done by a commercial enterprise at a remote location.  This explains why Sirius and XM are gaining customers while the market for physical CDs is shrinking.

[I’ve talked to a bunch of people who own MP3 jukeboxes.  When asked “Would you have paid $200 extra to have the machine preloaded with high-quality music from your choice of genres?” all said “Absolutely.”  But the product doesn’t exist so these folks resorted to ripping their old CDs (not downloading; they are all too busy) rather than giving the recording industry any new revenue.]

America is still the world’s greatest Corporate Welfare State but really how is it possible for the government to help an industry that refuses to abandon a 125-year-old product that consumers don’t want anymore?

Full post, including comments

This just in from my friend Arthur, one of the energetic crew that keeps Google amazing us all, a bit of nerd solace for turning 40:

“Happy birthday, and remember than next year, you’ll be in your prime again — 41!”

Full post, including comments