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Benevolent Dictators

I'm currently working on a team of data architects.  We usually agree quickly on a given design for most problems, but occassionally we do not.  When there is disagreement, the question becomes whose design wins?  How should we determine the "winning" design?  If the debate drags on too long the team's velocity comes to a crawl.  

In other situations there is a designated "lead architect" whose design approach may not match what most other team members feel is correct.  But again, on-going debate causes velocity to suffer, tensions to flare, etc.  How do you solve these issues?  

August 15...Happy 40th Anniversary Fiat Currency

This year has been marked by the constant talk of the US "defaulting" on its debt obligations by not allowing the debt ceiling to rise causing the U.S. to not pay some of its obligations including interest payments on bonds.  It's interesting to note that this has occurred in the past, albeit in a different form.  This is the 40th anniversary of the end of the Bretton Woods System, which severed totally any convertibility of the US Dollar into gold.  

Set up after WWII, the Bretton Woods System allowed other countries, but not individuals, to convert their dollars into gold upon demand.  This made the dollar the "world reserve currency" that we all hear about today.  In the early 1970's the US had a huge trade deficit and needed to pay its bills (a huge war in Vietnam) so it decided to print more dollars than it had gold.  Other countries saw this and immediately also tried to devalue their currencies to maintain convertibility equilibrium and protect their exports.  But inflation was getting out-of-hand and soon West Germany pulled out of Bretton Woods entirely and other countries such as France demanded huge amounts of gold from the U.S.  On August 15, 1971 Nixon made the dollar a true, undebatable fiat currency, it had no backing by gold, not even for other countries.  Essentially this means the US defaulted on its debt obligations to other countries, one US dollar was worth, well, one US dollar.  Nixon's famous quote was, "we are all Keynesians now."  

What followed was stagflation (out-of-control inflation coupled with high unemployment...an impossibility according to Keynesians) and the slow march to worthlessness of the US Dollar.  If you want to see how easily and stealthily the government can make your savings worthless and ruin an economy, just watch this video from August 15, 1971.  

At the time an ounce of gold cost $35/oz.  Many pundits predicted gold would fall to a few dollars per ounce since the dollar wasn't propping up gold.  Just last week gold hit an intraday high of about $1800/oz.  Mathematically, that is a 15% annualized return.  However, I don't look at the price of gold as rising 15% per year, I look at it as the value of the dollar has fallen by 15% per year.  Essentially gold isn't really a good investment...but it is a good store of value, something the dollar is not.  

Happy Anniversary!

 

QR Codes vs UPCs

QR codes (QR is an acronym for "Quick Response") are those blocky UPC-like symbols that have become ubiquitous in newspaper and magazine ads for the past year or so.  Any barcode reader with QR software installed (and QR software is available freely and is open-source) can read these things.  It is also an ISO standard.  The real benefit is that camera-equipped smart phones can read these things too, without needing to purchase a Bluetooth barcode scanner.  You can even create your own QR generator for free using a generator.  Here is one.  

The UPC numbering scheme was invented by IBM in the 1930's, but the first scanned UPC barcode symbol did not occur until the mid 1970's.  The QR was created by Toyota in the 1970's and has been ubiquitous in that country for many years.  

Why Use a QR over a standard UPC barcode?

  • I can store more data:  A UPC can store about 20 digits of data.  A QR could store almost an infinite amount of data as scanning technology improves.  As of now you can store about 100 digits of data in the same space as the minimum amount of space required to realistically store 20 digits of UPC data without loss of fidelity.  This is mostly because QR stores data both horizontally and vertically.  The less amount of data you store the lower resolution the resulting QR code.  The more data you want to store, the higher resolution the resulting QR code will be.  This also means that many scanners may not be able to interpret that data, at least as of today.  

An example...the QR code on the left simply embeds my URL, the QR code on the right embeds my URL, phone number, email address, and a small string of text.  Both images are 155x155.  The image on the right would need to be 355x355 to show the information at the same fidelity.  As you can see, as scanning technology improves we can embed tons more information within the QR without changes the QR specification at all.  The same cannot be said for UPC.  

 

  • There is checksumming built in.  So, if your QR code is damaged, perhaps torn or even very dusty, you can probably still retrieve at least some of your data.  Realistically you can lose 30% of a QR code before you can no longer accurately reproduce its message.  UPC also has checksumming, but it is far more rudimentary and is simply there to ensure someone has not modified the UPC.  
  • Barcodes are a more closed system.  You can't just create a barcode, slap it on your product, and expect it to work if you sell your product at the local grocery store.  Barcodes must be obtained from GS1 US, a standards organization that provides UPC numbers and barcodes to businesses.  To apply for a barcode is a cumbersome process starting with the registration of your business and any product you wish to barcode.  There are many barcode creation websites that will charge you a small fee (about $10) and create a barcode for you under their business registration.  This saves you some time and steps, but is not feasible for companies wishing to quickly produce many variants of a new product.  The libertarian in me does not like that we have a government organization controlling UPCs.  A more open system, like QR, will allow flexibility over time.  
  • Embedded encryption possibilities:  I should be able to encrypt information in the QR, and I should be able to use any encryption algorithm I want.  Yes, UPC does this, but like UPC checksumming, is rudimentary.  Here is a Dutch coin that began minting earlier THIS MONTH:

 

 

Note the embedded QR code.  Right now this code points directly to the Dutch mint's website and is a static QR code.  Why couldn't the QR code be dynamic, with embedded encryption, that could be used to identify the coin to determine its authenticity?  This opens up lots of new possibilities.  Granted, it would take some additional cost but counterfeiting possibilities could be radically reduced.  In the US we rely on those special yellow highlighters at checkout counters to determining if newer, larger denomination bills are phonies.  And this technology has probably been broken by counterfeiters already.  Using QR codes could potentially work much better, and as counterfeiters break "QR encryption" newer mechanisms could be embedded quickly.  

Martin Luther King Jr

Today is the 42nd anniversary of Martin Luther King Jr's assassination in Memphis.  I'm kinda surprised this hasn't been publicized on the news more.  This is my favorite clip of MLK's where he states that no one should fight American wars.  This has incredible parallels for us in our wars today, especially the new supposedly "humanitarian war" we are undertaking in Libya.  My favorite quote, "We need to prove our moral power, not our military power."  

 

Thanksgiving and the Tragedy of the Commons

I just realized this was sitting in my unpublished bucket...better late than never...  

As we celebrate Thanksgiving here in the US I thought I'd debunk the myth that the shared, communal aspect of Plymouth Colony, as well as the help of the natives, is what pulled the colonists through that first difficult year in the New World.  We all seem to learn this in grade school history.  It's wrong.  

The full text of the Mayflower Compact is long gone, but the journal of William Bradford (the leader of Plymouth Colony) does survive, called Of Plymouth Plantation.  I'll be honest, I've never read the whole thing, the Olde English prose is difficult for my feeble brain to comprehend.  However, this quote is telling:

3. The persons transported and the adventurers shall continue their joynt stock and partnership togeather, the space of 7. years, (excepte some unexpected impedimente doe cause the whole company to agree otherwise,) during which time, all profits and benifits that are gott by trade, traffick, trucking, working, fishing, or any other means of any person or persons, remaine still in the commone stock untill the division.

and

5. That at the end of the 7. years, the capitall and profits, viz. the houses, lands, goods and chatles, be equally devided betwixte the adventurers, and planters; which done, every man shall be free from other of them of any debt or detrimente concerning this adventure.

This is spelled out further, but the gist is the settlers had no private property and no free trade.  Labor was to be organized by the different capacities of the individuals.  If that doesn't sound like Karl Marx in 1875's Critique of the Gotha Program I don't know what does ("From each according to his ability, to each according to his need.").  The Plymouth Colony is what many interventionists and liberals point to in an effort to show that "fair" distribution of property works.  

It doesn't.  Here's the real history...

So that first year the settlers shared their labor and shared their harvest.  And they almost starved.  That's why the natives helped them out.  The natives showed them their native crops and farming techniques.  The settlers shared nothing (maybe disease) with the natives because they had nothing.  This is the Tragedy of the Commons, so named because when property goes unowned or private property rights are ignored there is no incentive for hard work, thrift, and asset creation.  Value and price discovery cannot occur.  Instead, the goal is to take what you can, when you can, from the communal pool of assets, before someone else beats you to it.  So when the crops are ready for harvest why bother saving some of it for next year's seed stock?  That's someone else's problem.  Let's eat everything instead (this is what happens with our oceans, BTW).  Why even work the harvest at all?  Just fake an illness.  You'll still get fed according to the Mayflower Compact.  

For two years the settlers were near starvation.  Bradford and the elder settlers came up with a better solution:

On the other hand the old planters were affraid that their corne, when it was ripe, should be imparted to the newcommers, whose provissions which they brought with them they feared would fall short before the year wente aboute (as indeed it did). They came to the Govr and besought him that as it was before agreed that they should set corne for their perticuler, and accordingly they had taken extraordinary pains ther aboute, that they might freely injoye the same, and they would not have a bitte of the victails now come, but watee till harvest for their owne, and let the new-commers injoye what they had brought; they would have none of it, excepte they could purchase any of it of them by bargaine or exchainge. Their requeste was granted them, for it gave both sides good contente; for the new-commers were as much afraid that the hungrie planters would have eat up the provissions brought, and they should have fallen into the like condition.

Bingo.  The settlers abandoned communal, interventionist, redistributionist ideas and went back to good 'ol private property.  Everyone, the original settlers and the new arrivals too, agreed that this was the proper way to ensure long term success.  

[...] By this time harvest was come, and in stead of famine, now God gave them plentie, and the face of things was changed, to the rejoysing of the harts of many, for which they blessed God. And the effect of their particuler planting was well scene, for all had, one way and other, pretty well to bring the year aboute, and some of the abler sorte and more industrious had to spare, and sell to others, so as any generall wante or famine hath not been amongst them since to this day.

 

Wow, that's the perfect testimonial to capitalism, private property, and libertarianism.  BTW, why did Bradford and the senior settlers have this change of heart?  They watched the Wampanoag who, contrary to what you may have read about Native Americans in general, had very definite ideas of private property rights (inherited property was passed matrilineally, regardless of marriage status) and limited government (they were a confederation).  They were *not* communal farmers.  So, when we celebrate Thanksgiving, what are we really celebrating?  It's different for every person, but for me I am thankful for free markets, capitalism, and private property rights.  That would seem to be the real lesson.  

Election Day Summary

As a libertarian I'm torn as to whether I should even vote.  I'm tired of hearing that I should make my voice heard by voting.  No election (maybe local school board) is decided by any single vote.  My vote is meaningless.  When I say this the response is, "well, if everyone said that then the results would really be skewed."  My response is even when an election is *really* close, no individual vote still will count.  Instead, lawsuits (remember Bush v. Gore in 2000?) and judges will determine which votes are valid (Florida's "hanging chad" vs "pregnant chad" debate).  Then the decision will be appealed by the losing candidate.  Hopefully someone will cede (thanks Al!) else it could go on forever.  

Further, I'm leery of voting because it makes me an accomplice to future crimes, the ripping off of honest Americans.  I would almost prefer not to vote vs giving my stamp of approval to a candidate that may eventually pass such patently unconstitutional laws like the PATRIOT Act (thanks Dubya!).  And our alleged "two party system" offers no real choice.  Let's see, Dubya vs Obama...they both expanded the wars of aggression in the Middle East, they both socialized large swaths of healthcare (don't forget Medicare Part D), they both tax and spend, violate civil liberties, etc.  It's like an election where the two choices are Hitler and Stalin.  Is that really choice?  Sure, we have write-in candidates, but the last write-in winner for a national election was Strom Thurmond in 1954.  Oh boy.  Now, granted, Alaska had a write-in candidate for Senate this year, Lisa Murkowski, and it looks like she is in the running, but it will take weeks to tally up and "verify" the write-ins.  Do you really think that race won't end with a judge's ruling?  My handwriting is terrible, if I wrote "Murkowski" it would probably look like something else...well then, let's void that vote.  Someone wrote "Merkowsky", that should be voided too.  How ridiculous.  

Lest you think I'm a Tea Partier...wrong!  The Tea Party will disappoint their honest followers as well.  Do you really think Sarah Palin is a legitimate Tea Partier/libertarian?  This is the woman who told us John McCain was a maverick on his position on foreign relations.  I'll bet she's whoring herself out for some publicity for her next political run.  But I truly hope she has found her way and won't, for the good of the country and liberty.  

I get disgusted when I go to the polls and am bombarded with partisan volunteers who are trying to hand me literature for their candidate.  What a waste of natural resources!  

But I do love watching the election returns on CNN/Fox/local news.  Especially when they declare a projected winner and have to retract it.  The reason is the polling is inherently flawed.  It's common sense obvious, yet no one talks about it.  First of all, a basic understanding of Confidence Intervals is needed.  Generally polls are conducted at a 95% confidence interval with a +/- 3% margin of error.  It sounds good on paper until you stop and realizing that polling is measuring human action, not something scientifically observable, contrary to what the pollsters will tell you.  Some flaws:

  1. How many times do you answer the phone when a pollster calls?  
  2. How many time are you so disgusted that you don't answer honestly?
  3. Do you really think that the pollsters can get an accurate cross-section of the population to poll?  There is no way that can be known.  
  4. Many, many more issues.  

Sure, the pollsters will point to all of the cases where they were accurate.  But couldn't this just be coincidence?  The West Virginia Senate race was deemed to close to call at 4% point difference on Monday night.  The final result was a 10 point win by the Democrat.  The polling wasn't even close.  10 points is a huge margin of victory.  Elections, for me, are like watching a sporting match where the analysts, play-by-play announcer, and color man are trying to tell you why one team is better than the other, has the advantage, etc, but no one discusses how terrible the play really is.  

I still voted, I haven't made the leap yet to abstain in protest.  But more and more I'm seeing not just the futility in the exercise, but the fact that I'm giving my stamp of approval to someone to steal my liberties and rights.  I wonder what would happen if there were an election and no one showed up to vote?

Libertarians and traffic lights

When I tell people I'm a libertarian they usually respond, "oh, one of *those* people that are against traffic lights and speed limits."  That disappoints me because there is so much more to it than that.  The fact is, there are various flavors to libertarianism, as with any political group.  Most libertarians can agree on the basics though:

  1. self-ownership...each person has control over his own body.  
  2. homesteading/"first use" principle...the first person to make use out of a natural object then has ownership rights to it.  Everything is property and property rights must be respected. 
  3. the non-aggression axiom...agression and coercion against anyone is wrong.  It violates self-ownership and homesteading.  Anarcho-capitalists, myself included, take this to the logical conclusion that a government is really just an entity with a legal authority to commit aggression.  Because of that government is subject to corruption and violates the non-aggression axiom.  

These are sometimes called natural rights because, frankly, they just make sense to most humans.  Non-believers say that those points are great, but we need government to adjudicate when disputes over property rights occur.  But we really don't because all interactions would naturally occur via contract and contract disputes can be solved using private courts.  There is obviously much more to libertarianism than this.  

When people frame libertarians as "those people against traffic lights and speed limits" I get annoyed.  These issues are so minor in our society that I frankly don't even care.  Well, I recently saw a great set of videos from the UK that prove, using real-world experiments, why all of the basic libertarian principles I outlined above really work.  Traffic is a nightmare in UK urban areas.  So, some towns tried something radical...turning off all of the traffic lights.  Watch the before and after videos.  Listen to people's responses.  Listen to the government traffic officials who admit that this works.  

It turns out the abolition of traffic lights actually does accurately portray libertarianism in a microcosm.  You probably have a few doubts that this works already...let me address them before you watch the videos...where they prove the doubts are unfounded.  

  1. Pedestrians will be killed or will never be given the right of way to cross busy intersections.  It turns out that *most* people naturally are cooperative and respect the inherent "first use" principle of the situation...namely, I was here first, I'll utilize the intersection first.  
  2. People will drive faster without lights.  Nope.  Sorry.  When there are traffic lights people focus on the light at the peril of the pedestrians, bicyclists, and fellow motorists on the road.  We've all hit the gas to get through an intersection where the light was "pink".  
  3. People are naturally cooperative, but government-installed traffic control devices create a priority system that is unnatural to people and violates the principles above.  People don't like it and don't really mind violating traffic laws.  Remove the coercive laws and natural cooperation takes over.  
  4. The disabled/blind are totally screwed.  Just watch Part 2 at 3:40.  A blind man expresses why traffic lights DO NOT WORK for the disabled.  

There are 2 items that totally favor the abolition of government traffic devices:

  1. Pollution...sitting in traffic is not great for the environment.  
  2. Look at the money saved on traffic control equipment and signage and energy.  We can make much better use of that money.  

 

Part 2...at about 1:12 you'll see one of the goofiest traffic patterns/intersections you'll ever see in your life.  Great Britain is known for it's "roundabouts", or in the states we call them traffic circles, but that road is crazy.  Clearly it was designed with traffic lights in mind, yet with the lights switched off you can clearly see people are cooperating without any issue.  Accidents will still happen, as will the disputes regarding liability.  But is that so much different from the current system?  

Hyperinflation

This is an old BBC documentary that outlines the hyperinflation of Weimar Germany in the 1920's.  If you are short of time and just want the fun part, it starts around 3:00 in the second clip.  If you watch the whole piece try to substitute Germany's problems with the current problems we face in our modern world.  Maybe I'm crazy but I can see that hyperinflation could be just around the corner for us too.  Everyone on CNBC and in WSJ will tell you that is an impossibility, that modern central bankers understand monetary policy better than the Germans and that adequate controls are in place to avoid that outcome.  Then why is there hyperinflation in Zimbabwe?  

I especially like how the piece covers how Hitler came to power after the hyperinflation episode.  It would seem to me that something similar may happen to us if the economy does get bad enough.  Will we have a dictator that murders Jews?  Probably not, but I can see more war being the solution.  

Lastly, if you want a really short, yet very thorough explanation of post WWI world finance that explains the flow of money and hyperinflation in a little more detail...try Garet Garrett's A Bubble The Broke the World.  But, when you read it, keep in mind it was written in 1932, because he perfectly foreshadows WWII and the rise of a dictatorial Hitler as the only solution for Germany to get out of it's WWI war debts.  It's just spooky.  You will like this short book.  I suggest all of this works, they are fabulous, both fiction and non-fiction.  If you ever read Atlas Shrugged you will especially like The Driver which many have said is the source and inspiration for Ayn Rand's masterpiece. Frankly I think Garrett's work is far superior and is a much shorter book.  It also teaches you how Wall Street finance really operates behind the scenes.   

 

 

 

Keynesian Quote of the Day

Too large a proportion of recent 'mathematical' economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependence of the real world in a maze of pretentious and unhelpful symbols.  

--JM Keynes
 
I read this last night and totally forgot this quotation.  This is single-handedly the most important contribution Keynes made to economics in my opinion.  Even still it's the typically wordy Keynes style that makes him difficult to read and comprehend.  
 
I find it interesting that not a single current Keynesian/post Keynesian/Post-Keynesian/neo-Keynesian (yes these are distinctions with actual differences) actually believes this today.  I read constantly how economists have updated their models for x,y, and z reasons...personal consumption is up 0.03%, etc etc.  Do any of these people think that either a)they found "the" magic formula that is the divining rod for perfect economic equilibrium and prosperity or b)or their math is even remotely accurate?  Go read your Mises my friends!
 

Obesity and Socialism

So our Chinese socialist friends are reverting back to bad habits.  Compulsory exercise is back after a 3 year hiatus.  As with most things socialist/anti-liberty/anti-freedom, the intention is good, but we all know what the path to hell is paved with.  I'm an obese guy, no doubt, and I don't deny any of the points in the article regarding the service economy causing people to sit for long periods...the lack of time for busy people to find to exercise...stress...family...whatever.  But the government can never legislate anything away, certainly not obesity.  

I've actually lost a fair amount of weight in the last few years and I did it entirely because of the free market, the government didn't have to tell me to do it.  First, health care premiums are outrageous and if you need to cover those costs by yourself because you are a 1099, then doing anything to lower your costs and become less of a risk to a carrier is a good thing.  Second, my health plan has offered gym rebates if you visit 120x a year.  That's a great incentive.  Third, try getting life insurance when you are obese.  There's another market incentive.  Lastly, have you seen the prices of beef and ice cream lately?  And the government says inflation is in check, that's hilarious.  

Granted, not everyone will be persuaded to get fit by a $150 check from Blue Cross every year for going to the gym.  Nor will some people exercise and diet because they can't afford their blood pressure meds and life insurance.  I posit that those same people do not value their life as much as me, and I certainly don't value mine as much as someone in perfect shape.  Why should the government dictate that we must all be fit and trim?  Must we next all be blonde-haired, blue-eyed Aryans?  

Of course governments need us to exercise because governments are more and more footing the bill for health insurance.  Even when a government doesn't  pay for our health insurance directly (the US for instance...for now) it legislates that health insurers cannot price gouge certain classes of people (the fat, smokers, those with cancer histories) for insurance.  Governments believe this is just not fair for these classes of people, so we must legislate the problem away.  Governments will say the fat can't get access to health care...trust me, they can, they just don't like the price.  But price controls don't do what is intended, instead they transfer costs from the favored class (the fat in this case) to everyone else.  That isn't fair, and I'm a fat guy so I stand the most to gain by this unfairness.  So why don't I like it....because I don't intend on being fat my whole life...I intend on slimming down and therefore I don't want to support other fat people who aren't trying.  If I don't slim down then at least I don't feel guilty for being a fat guy that some skinny guy has to support. 

I quit smoking too a few years ago because I couldn't afford the price of cigs anymore.  Here the price was due mainly to government sin taxes which then go to fund other pet government projects.  Instead, there should be no sin tax and the insurers should add the market surcharge for a smoker to the premium.  Or, many companies are not hiring smokers because it makes their insurance pool less attractive.  This is great...the market is handling the problem, I just can't believe the government hasn't stepped in and said this is discriminatory.  Yet.  

If government got out of the way and stopped legislating fairness in premiums then fat people would pay much, much larger premiums than the skinny (myself included).  At some point the fat will have to reform their lives or they won't be able to afford their lap bands and stomach staplings that insurers are now paying for.  If they don't reform, they may die younger.  If those fat folks still don't care about their life, then really, should the rest of us?  Should the government make them care?  Let the market figure it out.  

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