Philip Greenspun’s Weblog

The New Yorker magazine ran an interesting article in January 2007 about Michael F. Bennet and the Denver Public Schools. Bennet was recently named the new U.S. senator from Colorado, so the article is timely again.

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… you get to keep selling mortgages that are guaranteed by the federal government (and that probably won’t ever get repaid). This from a November 19, 2008 Business Week story: “FHA-Backed Loans: The New Subprime.”

As the government gets ever bigger, there will be more and more situations in which gains are privatized and losses are socialized (paid by us taxpayers). The real question is why anyone starts a business that does not tap into federal guarantees of one sort or another. What kind of fool would take the risk of failure?

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At a New Year’s party today, I sat between a Harvard administrator and one of Harvard’s brightest faculty stars. They were discussing a recent faculty meeting at which the president and dean failed to inspire them with a bright vision of the future. I said that they shouldn’t expect inspiration from bureaucrats at Ivy League schools. By dint of their limitless wealth, these schools will always be at the top of the heap regardless of what the bureaucrats do. The innovations will come from scrappy new schools such as University of Phoenix, which figured out new ways to deliver face-to-face and online education such that hundreds of thousands of people were able to earn degrees that would otherwise have entailed huge sacrifices of schedule, calendar time, and money. There was no reason for a school like Harvard to deliver education any differently than it was delivered 350 years ago, i.e., a lecture hall, a blackboard, a bunch of physically-present students, and a library with physical books.

The Harvard professor objected “But there is a lot of great innovation in education going on at Harvard right now.” My ears perked up. Were they going to do something with Internet-supported cooperative work? With using teleconferencing to collaborate with universities in China and India? Maybe the minimal step of capturing lectures on video so that students could review them later? None of the above, as it turned out. “We’re putting more art projects into the curriculum and we’re going to curate some existing campus spaces as contemporary art galleries.”

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The death of our economy and other news seems to have eclipsed the Darfur story in the daily papers. The latest New Yorker magazine has a very interesting article on the day-to-day life of U.N. employees working with refugees in Chad. Definitely easier to read the article than to head over there and see what it is like first-hand…

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My Amazon Kindle is just slightly past its one year anniversary and showing signs of very ill health. Half of the pixels on the screen are stuck following a light knock. I called Amazon and they’re happy to fix it… for $180 plus $7 in shipping (free if you’re a Prime member). The Kindle is more fragile than a laptop computer but less likely to be pampered given that you use it in all the situations where you’d use a book.

I may have to rethink my enthusiasm for the electronic book. Realistically the way that people handle books, the Kindle is not going to last more than one year. That means you’re spending $360 for the initial purchase and $187 every year for hardware repairs. Some of the Kindle editions of books are edging their way up towards $20 (see this Naipaul biography, for example). Suppose that you read one book every two weeks, or 25 books per year…

Kindle: $250 per year for hardware (spreading the cost of the initial Kindle purchase a bit) plus $312 for books at $12.50 per book = $562 per year. Good for individual travel and treadmill usage; bad for having to worry about forgetting it somewhere; bad for taking on vacation with family due to difficulty of sharing; terrible for illustrations and photos.

Paper: 25 books at $15 per book = $375 per year. Probably 50 percent of those books can be recycled into gifts, so the true cost is closer to $200 per year (assuming you need to buy gifts for friends and family periodically). Heavy for long trips; awkward for treadmill usage; good for carefree life (risk of forgetting in coffee shop limited to $15); great for sharing; great for illustrations and photos.

Library: free! Great for Great Depression 2.0.

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The Case Shiller Housing Index was down 18 percent between October 2007 and October 2008 (source). Boston was down only 6 percent. Should we celebrate Yankee ingenuity and work ethic? We did almost as well as Charlotte, North Carolina (-4.4%), which has a favorable business environment and very strong job creation.

I am more inclined to credit the fact that it is almost impossible to build a house in Boston. Most of the land close to the city center is already occupied by a wreck of an old structure. Due to zoning regulations, that structure usually can’t be torn down and rebuilt. The old structure is too big for its lot under the law, but the city won’t force a tear-down. Once torn down, however, the lot is subject to current zoning law and you’d be lucky to put up a dollhouse in place of the old 4500 square foot three-family. That is assuming you had the money and patience to work through a year or two of historical, planning, and zoning board meetings. Once you get your approval you’ll find that construction costs per square foot here are close to double what you’d pay in parts of the country where houses are routinely built. Should you be forced by zoning laws to rehab an old structure rather than start from scratch, the costs can go up even more. An old wreck of a house in Boston is thus worth a lot more than an old wreck in Atlanta, but mostly because it is easy and cheap to build a nice new house in Atlanta.

A Boston Globe story, subtitled “Boston lags others in adding homes”, adds a bit of weight to this theory. There are ever-fewer jobs in the Boston area, but the housing stock, mostly made out of wood, is deteriorating at least as fast as the job market. Those folks who have high paying jobs therefore compete intensely for the few nice houses in nice neighborhoods.

Given the energy-intensive nature of life in New England, with its cruel winters and increasingly hot summers, it would be nice if the zoning and planning process could be streamlined to allow the construction of double-walled German-style houses, built starting in the early 1990s but finally entering American consciousness in 2008 (nytimes story). Perhaps we need a state law that says anyone wanted to tear down a drafty old New England wreck of a house and rebuild a German-style house-within-a-house can do it without local approval as long as it is within 15 percent of the same above-ground exterior volume as the old house. That would create a lot of jobs here in Massachusetts and a local industry with expertise that could be marketed outside of the state.

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I had a chat with a guy at Adobe Systems the other day. The latest version of Adobe Photoshop CS4 can’t read Kodak PhotoCDs. Why not? Kodak was the author of the plug-in that enabled Photoshop to read the proprietary file format and isn’t supporting the code anymore (the Kodak Web page on the subject hasn’t been updated since 1998; another Kodak page says “this product is discontinued. Kodak no longer offers technical support by telephone or e-mail.” The company apparently can’t even be bothered to maintain a list of links to software that can read these disks.

Why should Kodak support this format? Merely to be nice to the tens of thousands of customers who purchased millions of disks from them? Perhaps not. Kodak has already pocketed their money and can’t expect to get more from this particular product (though the PhotoCD customers were probably Kodak’s biggest and most loyal customers overall). However, the company may yet want to try to sell something innovative. Who in their right mind would take a risk on an Eastman Kodak technology now, knowing that the company wouldn’t pay a programmer for two weeks per year to make sure that PhotoCDs were still readable by Photoshop and other common applications?

Kodak’s management has already pushed the stock down quite a bit in the past couple of decades (chart), but given how they are shooting themselves in the foot with PhotoCD, it might still be a good short. Note that the decline of film does not explain Eastman Kodak’s decline. Its erstwhile competitor, Fujifilm, has to bear the additional cross of “film” in its corporate name, but nonetheless has managed to grow to $28 billion in revenue (source) while Kodak was shrinking.

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This interesting New York Times op-ed covers the bailout of Long-Term Capital Management, organized by the Federal Reserve Bank, back in 1998. Who were the creditors? “The major creditors of the fund included Bear Stearns, Merrill Lynch and Lehman Brothers, all of which went on to lend and invest recklessly.” Other highlights…

“The ad hoc aspect of the bailout created a precedent for what has come to be called “regulation by deal” — now the government’s modus operandi. Rather than publicizing definite standards and expectations for bailouts in advance, the Fed and the Treasury confront each particular crisis anew.”

“It has become increasingly apparent that the market doesn’t know what to expect and that many financial institutions are sitting on the sidelines, waiting to see what regulators will do next. Regulatory uncertainty is stifling the ability of financial markets to engineer at least a partial recovery.”

[The Wikipedia page on LTCM is interesting. It clarifies that the bailout, though it involved the Fed as a matchmaker, did not end up costing taxpayers. The Ivy League’s best and brightest collected some of America’s highest salaries for their sophisticated financial engineering at LTCM. Their hard work is reduced to one phrase: “picking up nickels in front of a bulldozer”.]

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On a recent Delta Airlines flight, I was enjoying the individual seatback video/music/games player when a public address interrupted my button pushing. The little display went blank and then displayed line after line of text indicating that Linux was booting. It reminded me that American society has earned a greater return on open-source software than on any other investment. Imagine if the airline had to pay Microsoft or Apple $100 per seat to license an operating system. They probably wouldn’t have installed the little monitors, which generated jobs for engineers, mechanics, plastic molders, etc. The fact that the monitors are in the airliners has generated a lot of jobs for programmers as well as jobs in Hollywood when people buy movies while flying.

About ten years ago, in http://philip.greenspun.com/humor/bill-gates , I proposed that the Federal government invest in open-source software for its own use and let others benefit from the raft of new solutions. The idea seems to have fallen on deaf ears and, even now that the government is paying more attention to stimulating the economy, there is still no money for open-source. The Feds keep spending on Windows and other Microsoft products, which buoys Redmond, Washington, but it doesn’t seem likely to generate sustainable growth.

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I just finished Three Cups of Tea, a book by and about Greg Mortenson, a heroic guy who has spent twenty years building schools in Pakistan. The book is interesting for its descriptions of life and culture in the high mountains of Pakistan. It starts as a chronicle of a climber’s simple desire to repay the hospitality of a small village by building a $12,000 school building. The author and subject’s goals eventually morph into the book’s subtitle: “One Man’s Mission to Promote Peace, One School at a Time”.

It is supposed to be inspiring. We don’t need a big military to keep angry Muslims from killing us. All we need to do is build a school and fund a mostly secular education for every Muslim child on the planet and this would be easier and cheaper than running our war machine.

One problem with accepting Mortenson’s conclusion is that he spends no ink trying to show that a good secular education makes a Muslim friendlier to the U.S. The September 11th attackers had above-average secular educations (example 1 and example 2). Bilal Abdullah, recently sentenced for an attack on an airport in Scotland, had an M.D. His main accomplice was studying for a Ph.D. in computational fluid dynamics. Perhaps it is possible to use a public school to distract someone from the Koranic instructions to wage jihad, but Mortenson doesn’t provide any evidence to suggest that this is effective. (In fact, he provides evidence to the contrary, chronicling the celebrations at Pakistan’s leading universities on September 11, 2001; the Pakistanis who had the best secular educations might not have had the courage to kill Americans, but quite a few of them thought that it was a great idea.)

The book more or less disproves its thesis that building schools for poor Muslims worldwide would be straightforward. Our hero is a guy who was willing to endure twenty years of dangerous bus and truck rides, kidnapping, personal poverty, and frustrating delays. He had a strong enough stomach to eat rancid yak butter, raw Ibex flesh, and the various bacteria living on the fingers of his hosts. He essentially converted to Islam, at least while over in Pakistan, praying in mosques with his hosts. He comes into a lot of conflict with local Muslim clerics, all of whom want bribes and some of whom are concerned that his schools will lead Pakistani children into secular ways. How many other Westerners would have the patience, stamina, and physical constitution to do this?

Towards the end of the book we learn that Mortenson is not the only person building schools in Pakistan. Every time Mortenson builds a spartan school for 50 kids, the Saudi Arabians build a splendid school for 5000. Where Mortenson pays his teachers $1 per day, the Saudis give their teachers briefcases stuffed with cash, enough that each teacher is able to purchase four wives and breed a tremendous number of children who are passionate about Islam. The Saudi-funded schools don’t teach secular subjects, according to Mortenson, but only Arabic and Islam, with a special emphasis on the parts of the Koran that compel Muslims to kill infidels.

You might ask what the government of Pakistan does. At least according to Mortenson, they don’t bother to build schools or hire teachers for any children living outside of a major city. The Pakistani government appears in the book only when antagonizing India with military mobilizations, supporting angry Muslims inside Kashmir, building nuclear weapons, etc.

Finally there is a question of fairness. There are many children on this planet who live in countries whose governments are either too poor, too incompetent, or too indifferent to provide them with an education. The U.S. does not have enough money to build and run schools for all of these children (actually given the way that we run school systems, we don’t even have enough money to run schools for our own children in the long run). Should we favor children in Muslim countries because they are predisposed to want to kill us? Why does a kid in a high mountain village in Peru or Ecuador not get a school? Merely because he or she is very unlikely to become a suicide bomber?

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