Archive for January, 2010

Obama and Jobs

January 29, 2010

One of our young century’s most visionary and charismatic leaders gave a speech Wednesday that outlined significant changes in the way we go about our daily routines. His presentation was rich with the promise of a brighter tomorrow: a world in which we are healthier, wealthier, wiser and more closely connected in the bonds of our common humanity.

I’m not talking about Barack Obama. I’m talking about Steve Jobs.

On the West Coast, Steve Jobs unveiled the newest addition to Apple’s product line: the iPad. On the East Coast, President Obama gave his State of the Union Address. The two were notable for their fundamentally different visions. Years ago sociologist Franz Oppenheimer distinguished between the “economic means” to wealth and the “political means” to wealth.

It is important to realize the market and the state have very different natures.

Market power over the individual is voluntary, whereas political power over citizens is backed by force (“the Invisible Gun” ;-).
Market exchange create wealth, whereas political action takes and re-distributes it (at best).
The market strives because of the competitive and rivalrous process, whereas politics get stuck with disagreement.
Markets coordinate people and bring them together, whereas politics drive them apart and opposes groups.
Resource allocation in the market is supported by rational economic calculation (prices) and feedback (profit & loss), but the political allocation is about popularity, privileges, lobby pressure and passing the blame.
Market results are verifiable, as opposed to political promises of jobs created and economic recovery.

Note that political fights still happen in the context of the market, for example within the firm. But the scope is smaller, as private dispute involve only stakeholders, rather than every citizen (since they all have a stake in government decisions). Also, it is the best interest for management to provide mechanisms for resolving disputes. It is not perfect, but management is pressured by competitive forces (from stockholders and the job market) to create a productive workplace which minimizes such situations (as much as humanly possible).

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The Philosophy of Liberty

January 25, 2010

What I learned from Austrian School economics is that the simple right to self-ownership, or individual liberty, as outlined in this video, is not only the foundation for an ethical society but actually provides the most efficient and fair social and economic system available to man. 

This understanding elegantly resolves the apparent conflict between an utilitarian system (towards which I had the most inclination) and a principled system, as well as between individual good and greater good.

This was a surprise to me. As I learned more about economic theory in the last couple years, I didn’t expect it would have such normative consequences (figuring how things *should* work, as opposed to simply describing how they work).
The knowledge logically derived from the axiom of human action (humans act, pursuing ends with means) not only keeps proving its robustness and consistency, it clearly shows the inefficiencies and corruption of central regulation and planning.
I am still looking for arguments and evidence which do not fit the theory, but my default assumption is now that private property and the resulting free-market work better than alternatives, unless explicitly proven otherwise.

 

Note: this video is not perfectly rigorous, but it does provide a good vulgarization of what self-ownership means and entails. There are some subtleties which it omits, such as the case of the child (when does he get to decide for himself?), the comatose (who has no voluntary action) and the criminal (who can be forced to compensate the victim). Also, it does not explain how resources from nature can become property (homestead principle).

Monopolies

January 24, 2010

Why has Apple received so little criticism compared to Microsoft, when it comes to its questionable business tactics and strong arming around its successful products, compared to Microsoft’s Windows back a few years?

Apple clearly has a dominant position with iTunes/iPod and AppStore/iPhone in a number of countries. It uses this advantage to restrict competition in App Store apps (Windows was an open platform in comparison, as Apple allows no competing browsers, voice over IP, or Flash) and as leverage against cellphone carriers (which are begging to offer the iPhone, or upcoming Tablet). The recent mention by an Orange executive of the unannounced Apple Tablet raised the question of reprisals from Steve Jobs (here and here [paid subscription required]), such as a canceled or delayed deal with Orange.

Actually, I think there is nothing wrong here, or worth requiring some anti-trust action. Those are only business tactics as usual, mixed with some marketing and PR subtleties.
Austrian economists arrive at the conclusion, more generally, that there is nothing harmful or anti-competitive about a business having some temporary dominant position, and such a position cannot be sustained unfairly in the free-market.

For one, identifying a monopoly requires defining the scope of the market. If defined arbitrarily narrowly, it will apparently lack adequate substitutes. Is the iPhones in the market for large-screen touch-based smartphones, consumer smartphones, cellphones, communication devices, or social networking tool?

But more importantly, competitive forces (both actual competition, potential competition, and indirect competition) are sufficient to regulate how much control a company (or a cartel of colluding companies) can get over the market. Despite its dominance of a market, the company will always feel the pressure to perform well or else it will lose customers to rival companies. Anti-competitive conditions can only arise legally from the government (and illegally through other kinds of force, like the mafia). Such government-granted monopolies are indeed harmful to consumers and the market.

Mainstream economists have this theory of so-called “natural monopolies“, whereby if a company manages to get far ahead in a capital intensive business with economies of scale, it creates a very difficult situation for competitors and allowing a long-term monopoly (which has bad effects on prices and quality). This theory is often used to justify government stepping in with anti-trust regulations, to “fix the market” and regulate the “unavoidable” monopoly (therefore actually sustains the monopoly).
But as Thomas DiLorenzo explains in this presentation, another presentation, and essay, and history shows that such sustained natural monopolies do not exist in practice. All sustained monopolies to date can be traced back to some unfair advantage secured through government (diamonds, cable TV, phone service, railroads, …).
Also, he explains that the supposed problem of “excessive duplication” is also a consequence of a pre-existing public utility. Because of their lack of pricing, economic calculation is impossible so trade-off cannot be made on a rational basis. Even so, this can be mitigated with “competition for the field”, whereby utility companies bid for a monopoly contract which is open on auction again every few years.

As a final thought, the current (temporary) dominant positions of Microsoft, Google, Amazon or Apple with their successful products are deserved business achievements (no privileged support from government afaik, if you don’t count the intellectual “property” laws which are monopolistic, but are at least are generic). The dynamic competitive process ensures they cannot abuse the consumers. And trying to squash such legitimate successes with anti-trust regulations is counter-productive.

 

“Let me suggest an experiment. […] [In one year] don’t buy or use any of Microsoft’s products. […] At the same time, send the government no money. That is, don’t pay your taxes. Then wait. Watch who comes after you for your money and how and with what weapons.” — Richard M. Salsman

Italy plunders internet video

January 21, 2010

A partir du 27 janvier, en vertu d’un d??cret qui vient d’??tre adopt?? par sa majorit?? parlementaire, les sites diffusant r??guli??rement des contenus audiovisuels devront d??sormais demander une autorisation au minist??re des communications pour distribuer ces vid??os sur Internet.

Starting January 27 2010 in Italy, sharing videos online is forbidden by default and requires government permission.
It is unacceptable in this day and age for any government to take such steps, invading on freedom of speech. I don’t know that the Italian government pretended to provide any, but I’m sure they will find some spin.
As far as I can tell, no mention of this in US media yet.

John Stossel ??? Crony Capitalism

January 17, 2010

As the government grants itself new powers and responsibilities, presumably under good intentions, it creates a huge incentive for well-connected players to game the system. That’s crony capitalism, also called corporatism.
Unsurprisingly, with such attractive returns on lobbying investment (200$ return for 1$ “invested”), getting government favors to gain competitive advantage or maintain an unhealthy business is an increasingly popular strategy, as opposed to regular competition (on quality, price or innovation).
The trick is to sell the regulation as some form of consumer protection, while downplaying other effects on the broader picture and long-term.

Bastiat had already brilliantly analyzed this problem in his essay, That Which is Seen, and That Which is Not Seen.

Disclaimer: I’m a fan of John Stossel, but honestly not Fox 😉 I wish he would have stayed with ABC 20/20. Oh, well…

Why are GPUs so fast?

January 16, 2010

This talk, Why are Graphics Systems so Fast?, offers an interesting overview and insights of graphic accelerators.

A few reasons why they are so fast:
Because of high demand for games and simulations, it is economical to invest in high-end tools and spend time to engineer an optimized solution.
Technically, GPUs get better throughput (FLOPs) than CPUs for a given number of transistors. GPUs use simpler components (no need to deal with out of order or branch prediction) and more parallelism.
There is a lot of parallelism based on vectors (SIMD), but threads are actually quite important to deal with latency of random memory read access (a common pattern).
There is a trend towards heterogeneous or “fusion” chips, such as the iPhone’s. A few complex (CPU) cores and many simple (GPU) cores on a single chip.
The high abstraction in the programming model has allowed the innovation in the low-level implementation and optimization (chip and drivers).

 

This related talk, Amdahl’s Law in the Multicore Era, offers some simple models in the spirit of Amdhal’s law, to analyze the speedup, trade-offs and bounds around asymmetric (serial and parallel) hardware. What is the right mix between serial and parallel? What gain (upper bound) we could expect from improvements in serial components as opposed to parallel components?

Alma

January 13, 2010

Kids, don’t go into the dark and creepy doll store 😉

Boxee Box remote (smart)

January 6, 2010

the Boxee was sporting a new double sided remote. The usual suspects are on the front, but on the back is a full qwerty keyboard for searching for your favorite shows.

Smart remote design with a keyboard on the back. See Boxee blog post for more info.

For now, I still really enjoy my Logitech diNovo Mini wireless mini-keyboard. Very handy for a media PC.