The Costs of Caution

Some wise words on organizational learning and how a business process develops over time:

The gradual accumulation of checks in an organization is a kind of learning, based on disasters that have happened to it or others like it.

Key point:

Whenever someone in an organization proposes to add a new check, they should have to explain not just the benefit but the cost. No matter how bad a job they did of analyzing it, this meta-check would at least remind everyone there had to be a cost, and send them looking for it.

If I taught an MBA class, you better believe this would be in it.

Egads! Someone is wrong on the Internet..

Another interesting blog post found via stumbleupon. The basic argument is that energy efficiency won't save the environment. It's a good point and backed up by a valid economic argument, although it's missing some points, which leads to a somewhat *ahem* pessimistic conclusion. At least they're acknowledging economics as the correct starting point, albeit sort of in the same way creationists try to use evolution to disprove itself.
My reply:

A good article and worthy of attention, but I think you’re missing a few crucial points about the larger picture.
1. Efficiency is not the same as conservation. Conservation is the setting aside of resources based on the expectation of future value (usually economic value). Efficiency merely reduces the required inputs of an activity, allowing us to do more of what we want with the same amount of resources.
2. There is one very important class of product that does not necessitate the use of (significant) additional energy or resources. It’s called human capital or more commonly, knowledge. It is produced and replicated across all societies and cultures, everywhere that humans live. It has allowed us to escape the natural population cycles of other animals and prevented mass starvation, ever since Malthus earned economics the name of ‘”the dismal science”. I see no indication that people are running out of new scientific ideas. Quite the reverse, actually.3. We will use up a lot of certain resources but actually, that’s OK. When resources become scarce their price rises, creating an incentive to use less and substitute away. The higher the price, the greater the incentive. That’s precisely why the high oil prices of early 2008 jump-started so much activity in renewable energy, alternative transportation and non-fossil fuel versions of plastics etc. Non-energy products can be recycled and new materials can be invented.
In Conclusion: Have we used fossil fuels to bootstrap our economy in an unsustainable way? Yes. Will the environmental impacts cause more damage than we expect? Probably. Can we invent solutions to both of these problems? Absolutely. It won’t be easy, but what’s different about that?

A piece on how consumers are reacting to the recession got me thinking about fiscal stimulus and the Big Picture:

(...)this is a realignment of savings and borrowing to real income growth. The subsequent contraction is already causing a re-allocation of labor and capital and will continue to do so for awhile.

As for fiscal stimulus, I see this primarily as an efficiency/equality tradeoff. Company failures create an immediate and concentrated cost, offset by a long-term and diffuse gain. Allowing too many firms to fail would promote diminishing returns of efficiency at the cost of equality, which can be inefficient in of itself (Ref: income equality vs. GDP growth discussions). Debate and action with regards to this trade-off will be furthermore skewed by political incentives to favor the immediate and tangible outcomes.

Private individuals bear the cost of corporate failure at a rate equal to gap the between x, the speed of at which labor conditions change and y, the speed at which labor can re-allocate.

Government policy with regards to creative destruction in global business cycles (stimulus policy) and to industry-specific trends (trade policy) should strive to reduce this cost in order to maximize long-term growth. Most governments implicitly recognize this imperative, but often choose to try and retard the speed at which labor conditions change, rather than increasing the responsiveness of the workforce.

Conclusion: Fiscal stimulus is useful economically and very useful politically but not necessarily the best way minimize personal costs or promote long-term growth.

Designing Social Web Apps

Every once in awhile Techrunch has (or rather links to) a really interesting piece that lifts them beyond the realm of Start-up Newsfeed & Commentator to Industry Analysis. This is one of those pieces.

One possible (less dark) side to these losses

Maybe you didn't really need all of that money anyway! (Maybe?) On the other hand, it will still be very hard on those close to or in retirement now.

The article's idea is that people have been encouraged to over-save and take excessive risk. My thoughts:

This reminds me of a book review I read approximately 1 month ago, where the book's author argues the financial sector is built on 'pimping risk'
Seems like a very credible argument to me, given a few direct and indirect glimpses I've had into the industry. Their incentives are aligned to make money off two sources: new vehicles that have not been competed down to commoditization (such as hedge funds) and expensive vehicles that charge high commissions based on sector hype or recent performance. Both things are the continual attempt to achieve superior returns (at superior costs of course) and this chase often leads to superior risk. All of which is not to say that the industry does not add value, but who do you think the bulk of that value goes to? Call it tragedy or call it farce, finance is the grown-up version of 'Telephone'.

On Locavorism

Bad news: it's not that simple

Sure, some of our food travels farther than necessary, but it does so largely efficient ways. As a result, the environmental effects entailed in transport are not the main story. There are however a lot of costly externalities, especially from meat production.

My comments here.

Not Challenged at your Job?

Maybe you're unhappy because you're 'smart'..
An interesting article with an extreme bias towards the intelligent and ambitious set.

My comment:

Excellent piece - I think you capture and convey well the feelings of a significant portion of the population. And of course you have stirred a lot of controversy with your explicit grouping of ’smart’ ( reads defensively as ‘better’) and ‘not smart’. Anyone who perceives themself in the latter group will probably feel insulted. Veritas has some nice comments there.

I think there is basically one criterion for Success: create something good or destroy something bad.
(Btw, be Really careful about that second one.)

Here’s the Problem: you will probably not Succeed at a 9-5, at least not anytime soon.
That’s because a 9-5 not designed for Success, it’s designed for Stability. Decent income, minimal risk. And let’s face it, creation and destruction are risky! But with that risk comes greater potential reward. Wealth doesn’t just appear, it has to be created (natural resources being the blatant exception).

So if you want out, you need to plan for risk. That means saving of course, but it also means communicating your plans to those around you. Finding partners and supporters is every bit as important having the idea in the first place.
Just don’t fall into the trap of not engaging people because you don’t have one yet. Your brilliant idea will be a variation of someone else’s idea.

I wish this wasn't so funny

I've been spending a lot of time of the last year reading paperwork: employment contracts, credit card applications and (most extensively) all the details on our new 'lucky-we-never-get-sick' high deductible health care plan. As much as I enjoy finding the best deals I can for us, I think the fact that I find this 'FAQ' so intensely funny indicates a life a bit out of balance.

My worst things ever.Yes, ever!

A short list of things I have had the extreme displeasure to know:

Food: Tacos, with sliced parmesan cheese. Let's just say not all cheeses are created equal.

Song: Busy being fabulous - Eagles

"And you were just too busy being fabulous
Too busy to think about us
I don't know what you were dreaming of
Somehow you forgot about love
And you were just too busy being fabulous, uh-huh"

Maudlin, sappy non-event. The refrain is so bad it just makes me shudder.

Movie: Anger Management
I'm not much of an Adam Sandler fan in the first place, although 50 first dates isn't terrible and Zohan looks interesting enough. But, this movie seriously made me angry, which is saying a lot because I almost never get angry. Annoyed, yes, irritated sure, but enraged, almost never. I was so incensed by this movie's complete lack of respect for my intellect that I had to go hop on my rowing machine for a good half hour just to prevent myself from breaking random household objects out of sheer spite for the world.

Not the usual

A little different style today. Feeling a bit reflective on life, love and moving on.

How do we confront such loss? How do we mourn? The things that have been are over and yet they seem to remain, fading memories stacked on dusty shelves. Do not desire that which was, for the light once made cannot be recaptured. Only one choice then; to walk, head held high into the fading sun, a passel of moments at our side. Dark and bright, ebbing and burning, to atone, to inspire and to create anew.

Saving money

I have to admit, I have developed a very strong interest in finances over the last two years, i.e. since I started working for my money. My interest originated in my thrifty upbringing, but lately its become something of a race to save up a down payment by the time the housing market bottoms out. I figure I have 9-12 months at this point, but prices probably won't rebound sharply either..

So I have been exploring possible avenues of savings. The easiest so far have been opening a high yield savings account and finding better credit cards. Since we just use them to buy things we would get anyway, it's a straightforward savings of 1-3%+. My favorite usages are Chase Freedom (3% utilities/restaurants/dept stores) and Citi Dividend Platinum Select (5% gas, groceries and drugstores for 6 mo, 2% after).

I recently discovered a very interesting site by CapitalOne allowing you to design your own card.
You enter your approximate credit rating and then pick from a range of features. Two options in particular seemed notable; With a credit rating of good or excellent you could get 2% cashback on everything for the first 12 months and 0% on purchases for the first 9 or 12 months respectively, for the arbitragers out there. Also, an intriguing alternative of 1% cashback and a flat bonus of $.10 (or 10 points). This is really only worthwhile for purchases of $10 (2% return) or less, but if anyone can think of consistently worthwhile purchases for $1, I'd love to hear it. 11% seems awfully tempting, but its hard to justify a daily trip to the Dollar Store for 11 cents when it only nets $40/year.
In sum, while it's interesting to see what what they're willing to put out there, the 2% option is the only one I have seen that really surpasses any regularly mailed offers.

All the colors of a newspaper

When I was younger, I saw an old black and white picture of zebras and I thought,

"Gosh I'd like to see those in color some day. Just imagine!"


The world can be a cruel, cruel place.

All Symptoms Point to Yes

I've been waking up married for about a week now. I think it might be chronic.
Symptoms:
Lovey-doveyness between self and partner
Occasional moments of shock and panic
Hearty social approval from acquaintances and strangers
Strange object stuck on ring finger. May be inoperable.

Fortunately our quality of life should remain high, provided we follow regular treatments to make sure it does not lead to any of its common complications, such as pregnancy.

First, go to the appropriate place. Next, win.

I love trying and learning new things but often times it can be a big hassle to join a new community or system. This is especially true of ongoing activities, such as workplaces, where people are not necessarily interested in helping new entrants learn the name of the game.
There's a basic level of knowledge needed to operate that everyone has, except you of course. Often linked with the local culture of a group or region, these things come in the form of implicit (undocumented or unspoken) steps, and they drive me nuts! However, they are often very important to the activity at hand, so they are definitely worth pondering.
They also tell me one or more of the things below is true about, you, the person that I encounter in this new context, and how you treat me:

1. You are not consciously aware of their existence. Having participated in the culture for so long, you simply no longer notice the steps and rules unique to the situation. Depending on your degree of personal empathy, you will expect me to understand some or all of these things already, likely without even realizing this may be an unreasonable assumption.

2. You are aware of the existence of the implicit rules, but don't fully understand them and are embarrassed to reveal your lack of knowledge. This can lead to a lot of jargon and vague statements, spreading further confusion.

3. You understand the rules but have insufficient motivation to record and explain them. Perhaps your time is too valuable (or in relatively high demand). Maybe you just don't know who I am or why you should bother to help me. As Peter said in Office Space: "...it's not that I'm lazy, it's that I just don't care"

4. You understand the rules but deliberately withhold knowledge in order to maintain a tactical advantage. This is true in many businesses, as well as politics on all levels. Thankfully, the many of these places have opened up dramatically, as the Internet has lowered the cost of recording and spreading such knowledge.
Such knowledge hoarding won't go away any time soon though; there will continue to be such secrets as long as the benefits of keeping them outweigh the benefits of sharing. I figure that for a particular person in a particular area of knowledge, the trend would look something like this:

accumulation of knowledge -->



Of course this trend is quite debatable and depends heavily on the knowledge at stake. Perhaps 'willingness to help without competitive compensation' would be more accurate. Also, the curves could vary in interesting ways depending on the subject matter.

No doubt there are many counter examples to the trend, mostly falling under the umbrella of altruism. I would postulate that most such cases are prompted by biological factors rather 'rational' behavior, in the economic sense of the word. Such cases of conflict between benefit to self and benefit to a larger group provide some of the most interesting cultural indicators.

Hard questions

I few months ago I was at a Christian music festival, Spirit West Coast in Monterey. While out and about, we were collared by a roving pastor/organizer. They were sending bibles to the troops in Iraq and they wanted people to sign them to add a personalized touch and some encouragement. I might have blown them off but Angie wanted to do one together. So I took the first turn, opened up the front flap, readied my pen... and sat.


And sat.


I quickly realized that I never think about Iraq as anything other than a news item, safely Over There. Which is just how they want it, right?
Then I noticed that must surely be upper middle class because I could count on one hand the number of people I know from my high school class that have served there.

This bible could easily go to a combat soldier on the front lines, i.e. the entire country of Iraq. What could I possibly say to such a person?
I'm sorry you're there, fighting an unneeded war?
I admire your bravery and/or insanity in the face of danger and death?

I finally settled for 'May this book bring you some hope through the danger and darkness you face. I hope you return home safely and soon.'

Throughout it all, Todd Agnew was playing 'Peace on Earth', which was far too appropriate for comfort.

I was reminded of this all recently, when I head an NPR piece by a journalist who's father had been killed in Vietnam. She was continually bothered by people who would say 'what a waste' and completed her GI-funded education partially just to prove them wrong.
Seeing as how Iraq is our new Vietnam I hope we have learned how to treat our soldiers better this time around. From what I have heard pacifists during the last war treated them like crap, like it was their fault. This treatment sounds ironically combative, failing to refute the 'us vs them' mentality that enables conflict. Our political commanders ignored the historical lessons of Vietnam. Let's hope we civilians can react better.

Riches and Fame-ishness

I went to a mixer at Facebook a few weeks ago, (yes that Facebook). CEO Mark Zuckerberg was there in flip-flops and an Arm and Hammer t-shirt. It's funny how someone so close in age can be in such a different world.
I was so certain that he wouldn't be there I hadn't bothered to think of what I would say. I asked him a question about using Facebook as a platform for politics but I don't think he understood my full implications and I was too flustered to explain. In retrospect, I wish I had asked him one thing: How much has being rich and famous changed the way your friends treat you?

Names are just words, words, words

It's not an assumption I've really examined before, but why do we have names?

Names are just a string of characters that may or may not have a literal meaning in some language. Sure, names used to convey information such as personality attributes or occupation, but that time is long past. The only thing names seem to convey these days is a general indication of your ethnic heritage. Even their primary purpose as a unique identifier of a person is slowly losing effectiveness; I know of another person with my exact first and last name that lives within 100 miles of me, and both my names are uncommon to rare.

My primary conclusion is that we have names precisely because we cannot vocalize mental images of faces. However, computer networks are making it extraordinarily easy to broadcast images these days, and even live videos. Will this make our textual names less important?My guess is no. Rather, as the world reaches into 10s of billions of people, every opportunity to distinguish ourselves from eachother will be needed.

It seems certain that our individual identities, whether in a face or a name, will continue to shrink in importance next to abstract concepts and large organizations. Yet, it is through our relationships with other individuals that we build our identities and derive meaning.

The Aim of "Web 3.0" - Capturing Human Context

Given that the aim of the Internet is to deliver information, or perhaps to deliver it with more ease than other sources, I have been wondering how it might be improved.

My conclusion is that the biggest informational challenge is no longer "What is the answer to my question?" but "What question should I ask to find something useful in [a given area]?"

This meta-question is not provided by traditional informational services (encyclopedias, search engines, etc.) because it contains a value judgment; information sources have no business telling you what to pursue or be interested in.
Instead by this role is traditionally filled by friends, family, communities, research tanks and even business competitors. Most of these entities now have varying degrees of presence online and yet many of my informational searches are first prompted by things I hear directly from other people.
Mostly want what we want is trusted expertise: deep knowledge, created through experience and backed by reputation. After all, if you knew one or more such people for a given topic, would you ever bother with an Internet search? Of course not!

We don’t really want a network of web pages, we want a network of people that have made their information available on web pages.

(The publishing of knowledge is key here because is makes the system scalable in a way that 1 to 1 conversations are not.)
Now consider the main problems of finding experts on the Internet: you don’t know who they are, you don’t know how deep their expertise is and you don’t know if you can trust them.
Each step has a cost of time and further reduces your final pool of experts that you will listen to. Each step also takes more time than the last, perhaps exponentially more, unless that meta-information about the search is shared with you by others. Trust is the most costly hurdle of all.
These steps are also true for off-line searches as well. In Economics they are called transaction costs: expenditures (usually of time) that must be made before any trade can be conducted. Since each trade by definition makes both parties better off, enabling more is better for everyone. The Internet is celebrated for reducing transaction costs, but I think it has a ways to go yet.

The purpose of government

This is not entirely my idea; call me silly but it's partially inspired by some Terry Pratchett novels. As I see it:

"The primary purpose of government is to prevent rapid change."

Examples: Protecting the citizenry, defending the nation, preventing civil wars, upholding property rights, disaster recovery, maintaing a stable currency, preventing severe market flucatations, providing due process...

something silly

Phone conversations from the next room:

"Green! Green!"

"Yellow?"

"Hay, hot Orange-blue?"

"Gold. Gold."

"Gray, black's peat."

"Ochre, gold-brown."