Wednesday, October 31, 2012

Happy Halloween

I'll be getting things back to normal here tomorrow, but I thought I'd wish you all a Happy Halloween while I still had the chance. Have fun out there, but be careful what costumes you choose...


Friday, October 26, 2012

Clip of the Week (and Song of the Weekend)

I've got a big weekend of boarding up the windows planned (Frankenstorm!), so I'm gonna hit the road here quickly with a quick and easy Clip of the Week post (that will also serve as your Song of the Weekend).

So here are the also-rans: beer can keyboard, The Onion does a "Ted talk", Hunter Pence gets the weirdest hit ever, Stephen Fry drops some knowledge about the U.S. prison population, Barry Ritholtz teaches us why the sky is dark at night, and the people at Improv Everywhere stage a board meeting in a Staples store.

But none of these is your Clip of the Week, because some guy on YouTube put together an orchestral version of Nirvana's "Smells Like Teen Spirit" and mixed Kurt Cobain's original vocals over it. It's pretty awesome. Have a good weekend, people.

Voters are idiots, apparently

While many of us in America take our duties as voters and citizens very seriously (or at least think we do),  educating ourselves on the issues of the day and then trying our best to make the right decisions, many more of us... don't (emphasis mine).
Recent research has revealed that voter irrationality may be more arbitrary than we think. And in a razor-thin election just enough irrationality can make all the difference. Just how irrational are voters? It is statistically possible that the outcome of a handful of college football games in the right battleground states could determine the race for the White House. 
Economists Andrew Healy, Neil Malhotra, and Cecilia Mo make this argument in a fascinating article in the Proceedings of the National Academy of Science. They examined whether the outcomes of college football games on the eve of elections for presidents, senators, and governors affected the choices voters made. They found that a win by the local team, in the week before an election, raises the vote going to the incumbent by around 1.5 percentage points. When it comes to the 20 highest attendance teams—big athletic programs like the University of Michigan, Oklahoma, and Southern Cal—a victory on the eve of an election pushes the vote for the incumbent up by 3 percentage points. That’s a lot of votes, certainly more than the margin of victory in a tight race. And these results aren’t based on just a handful of games or political seasons; the data were taken from 62 big-time college teams from 1964 to 2008. 
The good news, we suppose, is that sports really can cheer us up and make the world seem like a brighter place. The sports fan is left happier and more satisfied all around, not just on the gridiron. When you are feeling upbeat and happy, you feel more satisfied with the status quo in general. And feeling satisfied with the status quo makes you more likely to vote for the incumbent politician, even if that’s totally irrational. 
The study’s authors control for economic, demographic, and political factors, so the results are much more sophisticated than just a raw correlation. They also did a deeper analysis that took into account people’s expectations. It turns out that surprise wins are especially potent, raising local support for incumbent politicians by around 2.5 percentage points.
Oh, boy... taking a look at the schedule (and the electoral map), that means we should probably be keeping an eye on Missouri-Florida, UVA-NC State, Virginia Tech-Miami (not sure what to make of that one), and perhaps most importantly Ohio State-Illinois.

I've covered voter irrationality—and self-deception—before (here and here, mostly), but this takes that to a whole new level. It's one thing to vote based on contradictory principles or on platforms and ideologies that don't make a whole lot of sense. It's another thing entirely to walk into a voting booth and vote for the incumbent just because you're happy that day. But hey... that's democracy, right?

Now, for today's final word on voter idiocy, we'll turn to our friends at Freakonomics, who shared a fantastic letter that was sent to economist Bryan Caplan by a former (and, for our purposes, anonymous) Virginia state senator. I think it sums things up pretty nicely.


"I do want to thank you for confirming by your research that my ideas about the stupidity of voters is a valid thought." Pretty sure that's not exactly the sentiment we hope to hear from our elected officials. But given our level of competence with respect to investments, it's hardly surprising.  

[Slate]
[Freakonomics]

Wednesday, October 24, 2012

Reminder: there is no retirement

Even while our friends over in France continue to whistle past the graveyard and pretend that their official retirement age should in fact be lowered, rather than raised massively, Americans seem to be waking up to the obvious and inevitable. That is to say, for most Americans, retirement is now a pipe dream.
As they struggle to save for retirement, a growing number of middle-class Americans plan to postpone their golden years until they are in their 80's. 
Nearly one-third, or 30%, now plan to work until they are 80 or older -- up from 25% a year ago, according to a Wells Fargo survey of 1,000 adults with income less than $100,000. 
"It is so tough for Americans to save for retirement that the answer seems to be to work longer," said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. 
Overall, 70% of respondents plan to work during retirement, many of whom plan to do so because they simply won't be able to afford to retire full time. 
But working well into your 70's, 80's or even 90's, isn't always realistic, said Ready. Nearly three-quarters of those who plan to work into their 80's say their employer won't want them working when they're that old, for example. Other roadblocks, like health issues, could arise as well.
Never mind the fact that many Americans won't even live until their 80s, this is an ugly statistic and trend. It's also terrible news for the next generation of college grads, who will emerge from school with mountains of debt and realize that there are no jobs for them because their parents (and grandparents?) are still holding them.

The simple fact is, we've convinced ourselves for decades now that low-interest rate policy and deficit spending gives us an economic free lunch, and that we'll therefore never have to endure another recession again. In reality, all low-interest rate policy has done is to pull forward years (if not decades) of economic growth into the current period, as workers spend now and cost themselves the ability to spend later (in retirement). Sooner or later we have to pay the price for those policies, and we're now seeing the side costs of all of that "prosperity" coming home to roost.

A devastatingly low number of 50-55 year olds in our country can currently afford to retire at anything approaching a reasonable age, and this problem will only get worse as our distressing gaps in pension and Social Security funding become more apparent (let's not even discuss their investment return assumptions right now). This is bad news for the older generation and the younger generation alike, and it all comes back to unrealistic monetary and interest rate policies. Thanks, Ben.

[CNN Money]
(h/t Tim Iacono)



There are 250,000 patents impacting smartphones

I'll keep this one short and sweet, because I've been writing about the topic of patents and smartphones a fair amount lately. But I thought this piece from Techdirt did an excellent job of illustrating my recent points, and I'd be remiss if I didn't share it here.
A new analysis shows just how insane the patent thicket is today. Done by "defensive" patent aggregator RPX..., the estimate is that a stunning 250,000 active patents today impact smartphones. 250,000. As the article notes that's one in six active patents today -- and for an industry that is certainly less than 1% of US GDP. As a comparison, the pharma industry, often put forth (inaccurately, in my opinion) as an area where patents make sense, has accounted for a little over 6% of US patents over the past 15 years. Also, there's this: 
... in the pharmaceutical industry, there are approximately 46.8 patents per every 1,000 jobs, whereas in the computer and peripherals equipment sector, there are 277.5 patents per 1,000 jobs. Even the semiconductor industry, known for its highly complex products, has a patent/job ratio of 111.6 patents per 1,000 jobs -- approximately 40% the rate of patents to jobs as the computer and peripherals market. 
It definitely appears that there's something of a "bubble" going on around smartphone patents -- which is what happens when you have a hot emerging area, combined with ridiculously broad patents. It also makes for an astounding minefield for anyone new who wants to enter the space, especially if you don't have a massive war chest to license or fight in court.
Wow. I'm not sure what else to add here, except to say that Apple has very definitely contributed to this growing bubble. Obviously, though, they're not alone.

[Techdirt]


Marathon Badassery, Part VI

I'm at least fairly confident this is the sixth installment of my "Marathon Badassery" series. We've got one, two, three, four, and five here, so unless I missed one this is lucky number six.
It's interesting enough that Runner's World is reporting that a man completed the recent Baltimore Marathon wearing flip-flops. 
The fact that Keith Levasseur posted a time of 2:46.58 makes it even more unbelievable. His goal was a sub-three-hour time, he told Runner's World. 
"I knew it was all about maintaining a very efficient and balanced stride," he told Runner's World. "There were times when my feet and ankles would get tired from maintaining a more rigid stride than I might otherwise have and I would start landing more on the outside of the my foot and cause my heel to slip off the sandal. It only happened a few times and when it did, it would refocus my concentration on my stride and posture." 
Oddball running stunts are nothing new, and countless runners have completed marathons in costumes or barefoot, but Levasseur's speed is remarkable.
Of course, the obvious question here is "why?", and I don't really have a good answer for that one. I don't usually like to recognize these kinds of stunts on the blog unless they're seriously badass—since so many of these stunts are just basic attention-whoring behavior—but in this case I figured why not?

At least this guy really did run a marathon in under three hours, unlike some people we know, and that deserves to be recognized one way or another. Nice running, big guy.

[Boston.com]


Tuesday, October 23, 2012

Quote of the Week

I've always been a big fan of The Onion, and this week I had to pass along what I thought was a particularly awesome bit of work from them.

Introducing The Onion Book of Known Knowledge, clearly the greatest encyclopedia in world history, and also the source of this week's Quote of the Week. I present to you the introduction to the Book's entry on "Christianity", the world's most popular religion.

This week's QUOTE OF THE WEEK

"Christianity, monotheistic religion occasionally rooted in the teachings of Jesus Christ, whom Christians regard as the son of God and a sometimes-convenient model for their own values and behavior. Christ promulgated charity, humility, nonviolence, and other virtues that Christians once in a while regard as sacrosanct and that, when sporadically adhered to, demonstrate the path to a righteous life. The world’s 2.2 billion Christians consider Jesus a messianic figure who will deliver to heaven all who conduct themselves as he did when the mood strikes them and if they have the time."
                             - The Onion Book of Known Knowledge

I think the timing of this little takedown is particularly apt, given the interesting (though rarely discussed) religious undertones which underlie our current Presidential election. With an ever-increasing population of evangelical Christians among the voting ranks, especially in many of the nation's swing states, the opinion of the so-called "Christian right" is typically heard very loudly in November.

In this election, those voters are faced with a bit of a dilemma—the sitting President is a practicing Christian whom many people believe is secretly a Muslim, whereas the Republican challenger is a high-ranking official of the Mormon church, which many Christians sneeringly deride as a cult. This has led to some strange and awkward moments for religious conservatives like Billy Graham, who recently had to remove Mormonism from his "list of cults" so as to encourage his followers to vote for Romney instead of Obama. These are strange times indeed for the Christians in our nation, many of whom are not sure exactly what to do in two weeks.


Of course, I must admit that The Onion's criticisms are hardly unique to Christianity—they could just as easily be applied to Islam, for example—but their short satirical summary certainly does give some food for thought, while possibly helping to explain people like this and places like this. No, not all Christians (or religious people of any persuasion) are bad people or hypocrites, but neither are all churchgoers good or honest people. One does not necessarily lead to the other, even though many people do profess to be good citizens and members of their community simply because they regularly attend services on Sunday. It's a pet peeve of mine, and it's a significant reason behind my personal disillusionment with the church during my adulthood.

Yes, I recognize that I'm treading on a third rail here, foolishly discussing both religion and politics at the same time—typically, it's advisable to talk about neither, under any circumstances. But with a possibly pivotal Presidential election hanging in the balance, it's simply no longer possible to ignore the elephant in the room. Whichever way voters lean in November, religion (and race) will certainly have a big role to play.

[The Onion]

Friday, October 19, 2012

Clip of the Week (Election edition)

Alright, time for Clip of the Week. I really wanted to give the Washington Nationals some love here, but their Game 5 choke in the NLDS (and... this) made me back off of that decision. Nevertheless, this and this are some pretty cool sports videos by any measure.

I also want to give some love to Felix Baumgartner, who jumped from the edge of space in the coolest way possible (or maybe this is cooler). There's some other random stuff out there as well this week, including this Pixar short with the Toy Story characters and this awesome SNL parody of the iPhone5.

But I feel like going the political route this week, so here are two fantastic election-related clips from a couple of late night hosts doing what they do best. I give you Jimmy Fallon and Jimmy Kimmel, with your politically charged co-Clips of the Week.



The 100k chicken coop

Some things, you just have to let speak for themselves. I present to you, courtesy of Needless Markups (ahem, that's... Neiman Marcus), the $100,000 Chicken Coop.
Dawn breaks. The hens descend from their bespoke Versailles-inspired Le Petit Trianon house to their playground below for a morning wing stretch. Slipping on your wellies, you start for the coop and are greeted by the pleasant clucking of your specially chosen flock and the site of the poshest hen house ever imagined. Your custom-made multilevel dwelling features a nesting area, a "living room" for nighttime roosting, a broody room, a library filled with chicken and gardening books for visitors of the human kind, and, of course, an elegant chandelier. The environment suits them well as you notice the fresh eggs awaiting morning collection. Nearby, you pick fresh vegetables or herbs from your custom-built raised gardens. You've always fancied yourself a farmer—now thanks to Heritage Hen Farm, you're doing it in the fanciest way possible!




Alright, fine, I'll comment. This whole thing sounds like it was written and conceived by Elaine Benes for the J. Peterman Catalog. All you need is an Urban Sombrero to cap the whole thing off.

But don't worry, Neiman Marcus is willing to donate $3k of your $100k purchase to The American Livestock Breeds Conservancy... but if you've got $100k to piss away in the first place, you should probably just give it all to the Conservancy in the first place. It'll be a much better use of the money.

[Neiman Marcus]
(h/t inhabitat.com)

Thursday, October 18, 2012

No President has ever been elected...

Here's a fun bit of Presidential election trivia for you, courtesy of the awesome nerds at XKCD. This one comes with the added bonus that it throws in a little bit of a statistics lesson. Right up my alley... (right-click and open in a new tab if the cartoon doesn't blow up big enough for you just by clicking).


Quote of the Week (French teachers' edition)

After a slow start to the week, I've got a whole bunch of posts coming your way today and tomorrow (many of them quick hitters). As for this week's Quote of the Week, this week's contest was in fact no contest at all. French President Francois Hollande won this thing going away, making him (I think) our first ever two-time Quote of the Week champion...

This week's QUOTE OF THE WEEK

"French President Fran├žois Hollande has said he will end homework as part of a series of reforms to overhaul the country’s education system. And the reason he wants to ban homework? He doesn’t think it is fair that some kids get help from their parents at home while children who come from disadvantaged families don’t."
                                       - Valerie Strauss, Washington Post

Ban homework!! That's a brilliant idea... what we really need in order to reform education is for our kids to be studying less, not more. That's the ticket!

Ironically, countries that are rapidly going broke—which France most certainly is—should probably be encouraging homework, rather than discouraging it. The more learning that can be outsourced to the home, the fewer government-subsidized teacher hours need to be purchased in order to educate the populace. But, of course, that just isn't fair.


Furthermore, this is just an instance of mind-numbing ignorance on the part of Hollande. To assume that simply eliminating homework means that affluent children will learn nothing from their parents when they are home is idiotic. The parents will still have the opportunity to hire private tutors, pay for music lessons for their children, buy their children books that the poorer children cannot afford, and generally provide a well-rounded life full of education and learning, regardless of what's happening (or being assigned) at their schools.

If you want to ban homework, you really shouldn't stop there. The real key is to ban non-affluent parents, because their kids shouldn't have to bear the costs of their inevitable poor parenting. Therefore, from here on out, all French children will be removed from their birth parents and raised only in affluent households by considerate parents. Great success!

[Washington Post]

Tuesday, October 16, 2012

The cult of the smartphone

Tim Iacono tipped me off to an interesting Wall Street Journal article about cell phones that I hadn't yet seen. It raised some points that I've been thinking about for quite some time, and I thought they were worth sharing here.
Heidi Steffen and her husband used to treat themselves most weeks to steak at Sodak Shores, a restaurant overlooking a lake near their hometown of Milbank, S.D. Then they each got an iPhone, and the rib-eyes started making fewer appearances. 
"Every weekend, we'd do something," said Ms. Steffen, a registered nurse whose husband works at a tire shop. "Now maybe once every month or two, we get out." 
More than half of all U.S. cellphone owners carry a device like the iPhone, a shift that has unsettled household budgets across the country. Government data show people have spent more on phone bills over the past four years, even as they have dialed back on dining out, clothes and entertainment—cutbacks that have been keenly felt in the restaurant, apparel and film industries... 
Labor Department data released Tuesday show spending on phone services rose more than 4% last year, the fastest rate since 2005. During and after the recession, consumers cut back broadly on their spending. 
But as more people paid up for $200 smartphones and bills that run around $100 a month, the average household's annual spending on telephone services rose to $1,226 in 2011 from $1,110 in 2007, when Apple Inc.'s iPhone first appeared. 
Families with more than one smartphone are already paying much more than the average—sometimes more than $4,000 a year—easily eclipsing what they pay for cable TV and home Internet... But the question for the industry is how much bigger bills can get before the cuts in other parts of the family budget grow too painful. 
The article goes on to discuss an interesting developing battle with respect to smartphone data plans—with data usage now skyrocketing, cell phone carriers like Verizon are now eliminating unlimited data plans for customers who wish to buy smartphones at the subsidized rate. This means that many customers will have to either choose to actually pay full price for their iPhones (which very few can afford to do), or else pay even more in their bills each month.


I've always found it amazing how much people will be willing to pay on a per-month basis in order to avoid actually paying full price for their phones—in many cases, over the course of two years with an iPhone, people will pay 4 to 5 times the actual retail cost of the device just on monthly bills, without even thinking about what they're doing.

It's a topic that blogger Karl Denninger has tackled at length on multiple occasions, especially when Sprint announced that they would be allowing iPhones on their prepaid network without a contract. Citing a Fox Business article, Denninger wrote:
Virgin Mobile USA, a prepaid brand of Sprint, on Thursday announced it will offer the Apple iPhone on a no-contract basis to customers starting on  June 29, but you may want to think twice before jumping ship from your current  carrier if you're already an iPhone owner. 
The "garf" is that you're going to have to pay cash for the phone -- in this case, $549 or $649, depending on the model you want.  No subsidy. 
But.... the plan is $35/month for 300 minutes of voice and unlimited text and data. 
Now consider that over two years if you buy the phone from AT&T it breaks down like this: 
$199 up front for the iPhone 4S 
$39.99/mo for base 450 minute service 
$30.00/mo for 3gb of data 
$20.00/mo for unlimited text messages 
====== 
$89.99/mo * 24 months = $2,159.76 + $199 = $2,358.76 over two years 
Now on Virgin, it's $649 up front and then $35/month * 24 months, or $1,489.00 over two years. 
Want to pay an extra $869 plus additional taxes and fees on the AT&T service that are billed separately but not on Virgin, which simply charges sales tax (this can easily be $200 or more over those two years.) 
Go right ahead. 
For everyone else just tell AT&T and Verizon to***** off.
Interesting analysis. For what it's worth, the cost of using an iPhone on Virgin is still pretty damned expensive, but at least you're not locked into a two-year contract at exorbitant rates just to pay off the effective "loan" that you took out to buy your overpriced phone.

Either way, even though I personally continue to do it (not with an iPhone, with an Android, but that's a story for a different day), I really can't figure out how so much of America can justify spending so much on phone service even as they're cutting back on just about everything else.

Sometimes I wonder, in our desperate attempts to stay "connected" to the world with our phones, are we risking becoming completely disconnected instead? Once we choose to stay home and play with our phones rather than going out and having meals with friends, I think that choice has already been made. It's a weird choice, but we are where we are.

[Wall Street Journal]
[Market Ticker]

Thursday, October 11, 2012

Clip of the Week

And now, your Clip of the Week. I'd love to pretend that there was any competition this week, but there really wasn't. I won't even bother to explain the other contenders, so if you're interested in checking them out, just click here, here, here, or here.

Otherwise, enjoy Coco Crisp making an insanely awesome catch, because playoff baseball is awesome, and so is Coco Crisp. (And if this link gets pulled down, which it probably will, sorry in advance. Try here.)

Quote of the Week

As usual, I've got some catching up to do here on the blog. We'll start things off today with your belated Quote of the Week, then your Clip of the Week will be right behind it. I may throw in an extra post just for kicks, but I'll probably hold off on it until tomorrow—you all know how much I love writing on Fridays.

The leader in the clubhouse for this week's Quote was this post over on the Marginal Revolution blog, which shared some seriously bizarre tidbits about people's intense love for K-Pop (what's K-Pop? This is K-Pop; so is this). Fanaticism knows few bounds, apparently.

But then I came across this post at The Motley Fool, which was frankly so terrifying that I couldn't help but write about it on the blog. So here's your Quote of the Week... go America.

This week's QUOTE OF THE WEEK

"As part of the Dodd-Frank Act, lawmakers directed the [Securities & Exchange Commission] to figure out how much average investors knew about the stocks and mutual funds that they held. Here's what they found: You are an idiot... Statistically, the SEC found that American investors—regardless of age, race, or gender—'lack basic financial literacy,' and that they generally do not understand even 'the most elementary financial concepts such as compound interest and inflation.' The surveys suggest that certain sub-groups, including the elderly... 'have an even greater lack of investment knowledge' of concepts like the difference between stocks and bonds, and are unaware of investment costs and their impact on investment returns.
                                                  - Bill Mann, Motley Fool Funds

What's perhaps most concerning about this post is what Mann later points out—this study didn't consider ALL Americans, it ONLY CONSIDERED THOSE WHO ARE ALREADY DEEMED TO BE ACTIVE INVESTORS. If active investors can't adequately answer a question like "what's a stock", then I admit that I have seriously overestimated the intelligence level of my nation. Unfortunately, it appears that's the case.

Now, granted, my inner tin-foil-hat man does look at this survey data with a fair bit of skepticism, recognizing that the SEC has a vested interest in reporting that investors are gullible fools who need to be saved from themselves (by the SEC, of course). That said, I have a very hard time contradicting the study's results—frankly, it all sounds just about right.


If you watch the Presidential (and Vice Presidential) debates this fall, and you start to notice that the candidates are speaking about the economy and the markets in a way that seems designed to confuse, please know that it's absolutely on purpose—they assume that you don't understand this stuff, so it's in their interest to speak in circles so as to confuse you.

You won't know the difference either way, and you'll therefore be forced to choose the guy who "looked the best" doing it. That is, unless you choose to educate yourself. And if you read this blog, I'd like to think that you're already doing so. Otherwise, I've probably been confusing the hell out of you for a long time now. My bad, guys.

[Motley Fool]

Tuesday, October 9, 2012

Hungry Hungry Hippos

Now... I am absolutely certain that I joked about this, sarcastically and dismissively, when the movie version of Battleship was announced and released. But now, it's a reality, and I just... I don't even know anymore.
It is a poser that even the most creative of screenwriters might struggle with: how to adapt the children's game Hungry Hungry Hippos into a blockbuster movie. Nevertheless, that is the task facing Hollywood's brightest minds this morning after manufacturer Hasbro confirmed last week that it is planning a big-screen outing for the brightly coloured plastic playthings (Ed. Note: this is what we're talking about. Yeah...)
Hungry Hungry Hippos is part of a roster of planned films that also includes Monopoly (a project that at one point had Ridley Scott attached) and Britain's Action Man, the latter despite his American cousin GI Joe having already featured twice in multiplexes. Hasbro has been inspired by the multibillion-dollar success of its Transformers franchise in the hands of Michael Bay, and apparently has not let Battleship's disappointing $300m (on a $200m budget) haul earlier this year upset its plans for worldwide domination. 
The latest proposal to bring its range to cinemas has been hatched in partnership with Hollywood film production company Emmett/Furla, which says it will make three movies in the next two years.
I'm being punked, here, right? This is all an elaborate joke? Whatever. Clue was pretty good, I guess... when does Yahtzee come out?





[Guardian]

Monday, October 8, 2012

3-D printing and patents

I've been writing a lot about 3-D printing lately (because I think it's awesome), and I also recently wrote a post about our nation's patent system (because I think it's broken). Last week, I came across an article from The Economist that brought those two topics together—in a way that might not make me particularly happy.
What could well be the next great technological disruption is fermenting away, out of sight, in small workshops, college labs, garages and basements. Tinkerers with machines that turn binary digits into molecules are pioneering a whole new way of making things—one that could well rewrite the rules of manufacturing in much the same way as the PC trashed the traditional world of computing. 
The machines, called 3D printers, have existed in industry for years. But at a cost of $100,000 to $1m, few individuals could ever afford one. Fortunately, like everything digital, their price has fallen. So much so, industrial 3D printers can now be had for $15,000, and home versions for little more than $1,000 (or half that in kit form). “In many ways, today’s 3D printing community resembles the personal computing community of the early 1990s,” says Michael Weinberg, a staff lawyer at Public Knowledge, an advocacy group in Washington, DC. 
As an expert on intellectual property, Mr Weinberg has produced a white paper that documents the likely course of 3D-printing's development—and how the technology could be affected by patent and copyright law. He is far from sanguine about its prospects. His main fear is that the fledgling technology could have its wings clipped by traditional manufacturers, who will doubtless view it as a threat to their livelihoods, and do all in their powers to nobble it. Because of a 3D printer's ability to make perfect replicas, they will probably try to brand it a piracy machine. 
Manufacturers of famous brands have had to contend with ripoffs since time immemorial. Whole neighborhoods exist in Hongkong, Bangkok and even Tokyo that turn out imitation designer handbags, shoes and watches. China has flooded the world with cheap replacement parts based on designs pirated from the original equipment manufacturers. 
But while the pirates' labour rates and material costs may be far lower, the tools they use to make fakes are essentially the same as those used by the original manufacturers. Equipment costs alone have therefore limited the spread of the counterfeiting industry. But give every sweatshop around the world a cheap 3D printer coupled to a laser scanner, and pirated goods could well proliferate... 
As with any disruptive technology—from the printing press to the photocopier and the personal computer—3D printing is going to upset existing manufacturers, who are bound to see it as a threat to their traditional way of doing business. And as 3D printing proliferates, the incumbents will almost certainly demand protection from upstarts with low cost of entry to their markets. 
Manufacturers are likely to behave much like the record industry did when its own business model—based on selling pricey CD albums that few music fans wanted instead of cheap single tracks they craved—came under attack from file-swapping technology and MP3 software. The manufacturers' most likely recourse will be to embrace copyright, rather than patent, law, because many of their patents will have expired. Patents apply for only 20 years while copyright continues for 70 years after the creator's death.
Oh, boy. I firmly believe that 3-D printing has the potential to transform the way that many industries—particularly those involved in manufacturing—operate in this country, and that it could even help our country to break its long-standing dependence on imported crude oil (if I don't have to ship a product to you, because you can print it yourself at home, then I can pretty much put UPS and FedEx out of business overnight, significantly cutting into the amount of fuel used in this country).

But it won't happen if we don't allow for the elimination of businesses made irrelevant by new technologies. Creative destruction has always been at the core of economic progress in this country (note: "economic progress" does not necessarily mean the same thing as "economic growth", as measured by the circulation of dollars—not all "wealth" is denominated in paper currency), and to the extent that patents impede this economic progress, they must be abolished.


I think we're reaching a very dangerous point in this country when it comes to patents and the way they are used—instead of being used as a tool to protect inventors and small business owners from being ripped off, they're now being used as a cudgel by the largest companies to protect their dominant industry position and create barriers to entry for smaller competitors.

If you doubt this assertion, please refer to this piece in yesterday's New York Times, which notes that Apple and Google this year spent more money on patent lawsuits and patent purchases than they did on research and development for new products. That's a new dynamic (it's the first year that this has been the case), and it's definitely not a positive one for our country.

When we put the interests of big business ahead of the interests of society at large, we put ourselves on a dangerous path toward economic stagnation and irrelevance. Unfortunately, the majority of public policy that has come about in the last decade has done just that—from auto industry bailouts to TARP to overly broad patent law to a whole laundry list of other programs and court rulings, the past decade has been a great one for big business, typically at the expense of the ordinary American.

We need this dynamic to reverse itself, because the nation's economic future is worth more than the income statements of its largest companies. Yes, they are different things.

[Economist]

P.S.- Another interesting dynamic to watch in the 3-D printing space is discussed in this article, which I didn't have the opportunity to address in this post. I don't think that guns are the best use of 3-D printers, but they're clearly drawing a lot of attention for various reasons. Interesting developing issue.

Friday, October 5, 2012

Song of the Week(end)

For this weekend, I'm going way off the map with your Song. How far off the map? China. Ever heard of Chinese Bluegrass? Me either, but here you go...


Have a good weekend, people.

Clip of the Week

Uncharacteristically weak group of clips out there this week, but that should change with the MLB Playoffs starting up this weekend. I would've loved to have posted some great clips from last weekend's Ryder Cup here, but... um... you know... yeah.

There were a couple of solid football highlights as usual, including this high school play and this college play. But football highlights are sort of a dime a dozen, and there's still a lot of season left.

I'm not even going to begin to talk about Wednesday night's who-can-say-the-least-while-looking-the-best Presidential debate, so don't bother asking for highlights here.

Instead, we'll keep things on the lighter side (again), and share the latest episode of Jerry Seinfeld's "Comedians in Cars Getting Coffee", starring Michael Richards (Kramer). On the whole, I've been a bit disappointed by this series, but I think this one is definitely worth a watch, if only because these guys continue to have fantastic chemistry. And of course, Richards doesn't shy away from his racist meltdown a few years back, after which he pretty much disappeared from the public eye. If you're into Seinfeld, it's worth a watch. Enjoy.

Password inequality must end

I know it's been a light week for content, but I've still got a few posts for you on this wonderful fall Friday. I feel like keeping things light around here, so I'll avoid politics and the economy for once (which is honestly why I've been quiet this week—as your mother always told you, if you don't have anything nice to say...). Instead, because I like to provide a public service around here, here's some advice for how to safeguard your ATM pin code so that it's hard to crack.
How easy would it be for a thief to guess your four-digit PIN? If he were forced to guess randomly, his odds of getting the correct number would be one in 10,000—or, if he has three tries, one in 3,333. But if you were careless enough to choose your birth date, a year in the 1900s, or an obvious numerical sequence, his chances go up. Way up. 
Researchers at the data analysis firm Data Genetics have found that the three most popular combinations—"1234," "1111," and "0000"—account for close to 20 percent of all four-digit passwords. Meanwhile, every four-digit combination that starts with "19" ranks above the 80th percentile in popularity, with those in the late—er, upper—1900s coming in the highest. Also quite common are MM/DD combinations—those in which the first two digits are between "01" and "12" and the last two are between "01" and "31." So choosing your birthday, your birth year, or a number that might be a lot of other people's birthday or birth year makes your password significantly easier to guess. 
On the other end of the scale, the least popular combination—8068—appears less than 0.001 percent of the time. (Although, as Data Genetics acknowledges, you probably shouldn't go out and choose "8068" now that this is public information.) Rounding out the bottom five are "8093," "9629," "6835," and "7637," which all nearly as rare... 
Some other interesting anedcotes [sic] from the data:  
- Half of all passwords are among the 426 most popular (out of 10,000 total) 
- People prefer even numbers to odd, so "2468" ranks higher than "1357." 
- Far more passwords start with "1" than any other number. In a distant second and third are "0" and "2." 
- Among seven-digit passwords, the fourth-most popular is "8675309," which should ring familiar to fans of '80s music. 
- The 17th-most popular 10-digit password is "3141592654." 
- Two-digit sequences with large numerical gaps, such as "29" and "37," are found often among the least popular passwords.
Wait a minute... half of all passwords are among the 426 most popular? So then, a mere 4% of the passwords are hogging 50% of the password wealth? This is an outrage! This password inequality must end! OCCUPY PIN CODES!!


I am hereby changing my pin code to 2719, because it sounds unpopular. D'oh, forget that I told you that. What I meant to say was, I'm changing it to 1234, because nobody would ever guess that...

[Slate]
 

Wednesday, October 3, 2012

Quote of the Week

A few months ago, I wrote a post about the Black-Scholes pricing model, its role in the financial crisis, and how economists continue to do themselves a terrible disservice by insisting that their discipline is a physical science like physics or biology, rather than the inexact social science that it is. I wrote:
We all use models in our daily lives, because they help us to make sense of what are often very complex problems. Models simplify, organize, and categorize the variables in an uncertain world so that we can better understand the impacts of our decisions. But they DO NOT, ever, have the power to tell us what to do. You don't even need to know a thing about Black-Scholes (and trust me, a lot of people who should know a lot about it... don't) in order to accept that assertion as fact. 
The intelligent person knows to use a model only as a guide to confirm (or refute) what our intuition tells us. Very often, our painfully simple heuristic models (which you can learn or hear more about from Gerd Gigerenzer's speech, if you're a nerd like me) actually outperform very elegant statistical models. How can this be? The answer lies in this brilliant polemic from economist Robert Wenzel (which is almost as great as a similar recent rant from Jim Grant).
In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed. 
There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.  
And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist.
Wenzel is dead on. We all know that models are useful, but they do not remove responsibility for rational risk management—only people have the power to do that. When callous risk managers at huge investment banks take another man's model on faith, and make huge bets with billions of dollars on the line without sanity-checking the model, that's nobody's fault but theirs.
While my points were correct, I took a little while to get the point across. For a more pithy take on things, we'll turn to Barry Ritholtz, for this week's Quote of the Week.

This week's QUOTE OF THE WEEK

"Economists are neither Engineers nor Scientists, as each of these fields has a significant degree of precision in what they do, and test their hypotheses in a lab. The better choice for Economists are 'Historian' or 'Sociologists.' The sooner the profession loses its 'physics penis-envy', the better off we all will be."
                                                  - Blogger Barry Ritholtz

I'll just let that "physics penis-envy" line stand on its own, because I think it's the single greatest takedown of modern economics that I've ever seen.


As our economy becomes more and more dependent on the fantasy-land models put together on Ben Bernanke's laptop, I sincerely hope that the damage done by these grand experiments isn't so grave that we all end up suffering for decades. But if we allow ourselves to entrust ever more of our lives to these "scientists", we're certainly running that risk.

Monday, October 1, 2012

The future of automotive transportation

While I spend a lot of time on this blog decrying the current state of our economy (and political environment), I try my best to balance that cynicism with a fair amount of optimism about our future, especially where new technologies are concerned. If we can be courageous enough to allow for the breaking down of old paradigms (and for the failure of outdated and obsolete business models), the future for our nation is indeed incredibly bright.

In that vein, a pair of articles that I read over the weekend have me particularly excited. First up, from US News & World Report:
Last week, California became the third and by far the most important state to legalize driverless cars, joining Nevada and Florida. Google has been getting most of the attention here for its work developing driverless vehicles. But it is hardly alone. Major automakers have their own projects under development. 
Google may want to leapfrog existing technology to point the way toward a driverless future. Existing auto companies will seek incremental changes that protect their franchises while moving toward an automated future. It's not clear what the pace of commercialization will be for driverless cars. 
After all, many of the improvements promised at the 1939 World's Fair in New York still have not come to pass. And there will be no shortage of open-road lovers and skeptics reluctant to cede control of their cars to a bunch of computers—shades of Skynet and The Terminator. 
But as Google, Apple, and other new-tech giants have demonstrated, the pace of change is likely to be much faster when it comes to automated vehicles. Using increasingly sophisticated sensors and software, driverless cars hold out the promise of saving lives, fuel, and time. They react more quickly to accident threats. They don't panic. They can tie into traffic grids and do a much better job of balancing traffic flows. They can optimize fuel consumption. 
We already trust a lot to technology when we drive. We generally believe traffic signals and respond to GPS guidance and traffic congestion reports. We expect speed and fuel flows to respond properly when we use cruise controls. We use digitized cameras and back-up sensors. Newer cars monitor weather conditions and automatically trigger any number of safety responses. Increasingly, we even pay for auto insurance using on-board computers to record where and how we are driving. And many of these functions are voice-activated on newer vehicles.
For more on the Google Car project, check out this video on Bloomberg—you have to admit, it looks pretty awesome. But in case driverless cars don't get you all excited, I've got another car-related article that is equally awesome. From Yahoo Finance:
Tesla Motors today unveiled its highly anticipated Supercharger network. Constructed in secret, Tesla revealed the locations of the first six Supercharger stations, which will allow the Model S to travel long distances with ultra fast charging throughout California, parts of Nevada and Arizona.  
The technology at the heart of the Supercharger was developed internally and leverages the economies of scale of existing charging technology already used by the Model S, enabling Tesla to create the Supercharger device at minimal cost. The electricity used by the Supercharger comes from a solar carport system provided by SolarCity, which results in almost zero marginal energy cost after installation. Combining these two factors, Tesla is able to provide Model S owners1 free long distance travel indefinitely. 
Each solar power system is designed to generate more energy from the sun over the course of a year than is consumed by Tesla vehicles using the Supercharger. This results in a slight net positive transfer of sunlight generated power back to the electricity grid. In addition to lowering the cost of electricity, this addresses a commonly held misunderstanding that charging an electric car simply pushes carbon emissions to the power plant. The Supercharger system will always generate more power from sunlight than Model S customers use for driving. By adding even a small solar system at their home, electric car owners can extend this same principle to local city driving too. 
The six California locations unveiled today are just the beginning. By next year, we plan to install Superchargers in high traffic corridors across the continental United States, enabling fast, purely electric travel from Vancouver to San Diego, Miami to Montreal and Los Angeles to New York. Tesla will also begin installing Superchargers in Europe and Asia in the second half of 2013. 
The Supercharger is substantially more powerful than any charging technology to date, providing almost 100 kilowatts of power to the Model S, with the potential to go as high as 120 kilowatts in the future. This can replenish three hours of driving at 60 mph in about half an hour, which is the convenience inflection point for travelers at a highway rest stop. Most people who begin a road trip at 9:00 a.m. would normally stop by noon to have lunch, refresh and pick up a coffee or soda for the road, all of which takes about 30 minutes. 
"Tesla's Supercharger network is a game changer for electric vehicles, providing long distance travel that has a level of convenience equivalent to gasoline cars for all practical purposes. However, by making electric long distance travel at no cost, an impossibility for gasoline cars, Tesla is demonstrating just how fundamentally better electric transport can be," said Elon Musk, Tesla Motors co-founder and CEO. "We are giving Model S the ability to drive almost anywhere for free on pure sunlight."
Make it through that whole thing? Good. To date, I haven't been particularly excited about electric cars, in large part because previous models have mostly relied upon existing sources of electric energy, the majority of which is generated from the burning of fossil fuels (largely oil and coal). In other words, there's no real fundamental change, just a shifting of where the fuel is burned—in a power plant instead of in your car.

But if we can make a shift to solar, then that's a legitimate game-changer in the automobile world. Of course, as I've mentioned on here once before, what would be even cooler is if we could figure out a way to turn all of our highways into piezo-electric energy generators, with the cars effectively powering themselves, at least in part. Spray some transparent solar film on the outside of all the car's windows, and we could take this whole thing even another step further.


Yes, I know that some of this probably sounds insane, but I also think it's completely possible and plausible. The technology all exists, it's just a matter of harnessing it in a way (and scaling it up to a point) that makes it broadly useful and usable.

Do I think that a future of self-driving cars which use virtually no energy is possible? Absolutely. Do I think that we as humans have the courage to embrace that future, if it means destroying entire companies and industries in the process? That jury's still out. But I certainly hope so.

[US News]
[Yahoo Finance]