Net neutrality and the FCC

March 29th, 2015

This is a letter to the editor in response to “How to Break the Internet” in the May 2015 issue of Reason magazine.

Dear Editor,

There are many legitimate criticisms that may be made of the FCC’s approach to net neutrality. Unfortunately, Geoff Manne and R. Ben Sperry do a poor job of making any of them in their May article.

While I agree that Title II regulation is the wrong approach, net neutrality is an attempt to solve a real problem that requires solution.

What Manne and Sperry miss are two points that have gradually become clear to those of us who have worked on these technologies over the last 30 years:

1 – Internet bandwidth is not, in practical terms, a scarce resource. In theory of course it is scarce, just as the amount of air we can breathe is limited by what Earth’s atmosphere holds. But in practical terms, we are not going to run out.

This took a long, long time for technologists to understand – a huge amount of network engineering development and standardization has focused on bandwidth prioritization and allocation mechanisms.

Almost none of which are used in practice. Because it turns out that it is almost always cheaper to simply add more network capacity (“overprovision”), than it is to implement mechanisms to allocate bandwidth as a “scarce resource”.

2 – Contra Manne and Sperry, at least in the US, Internet service provision is not a competitive industry, but a quasi-monopolistic one. This (as Reason should know) is mainly due to regulations at the state and local level. Having 2 or 3 regulated firms offering service in a given area is not the same as free entry into a market.

If truly free competition in the ISP business were allowed, there would be no need for “net neutrality”; competitive forces would solve the problem.

But we don’t have that. I’d much rather see Federal legislation that truly deregulates the ISP business (taking monopoly power away from states and localities). Until that happens, ISPs really do have quasi-monopolistic power.

ISP attempts to tax content providers based on “scarce resource” arguments are spurious excuses for a money and power grab that is in fact simply rent seeking.

As long as that situation is allowed to persist, we do need some limits on how ISPs may abuse that power.

Thank you, Lee Kuan Yew

March 23rd, 2015

lee-kuan-yew

Lee Kuan Yew passed away yesterday.

Much to my regret, I never met him. I did not agree with him about many things.

But he was the greatest single benefactor of mankind in history.

As a direct result of the actions of Harry Lee and his “socialist” People’s Action Party, billions of people were lifted out of abject poverty, through reforms first in Singapore, then copied in China and in much of Asia.

Billions of people.

Today Reuters quotes Lee as saying in 1986 “We have to lock up people, without trial, whether they are communists, whether they are language chauvinists, whether they are religious extremists. If you don’t do that, the country would be in ruins”.

He outlawed long hair on men in the 1970s. Banned the sale of chewing gum. And, of course, many drugs.

Those things don’t fit with my politics. But look at the result. Singapore, once almost a synonym for filth and poverty, today is arguably both the freest and wealthiest country in the world. And – billions of people.

Deng Xiaoping, architect of China’s rise through market economics, based directly on emulation of Lee Kuan Yew’s policies in Singapore, famously said “it doesn’t matter whether a cat is black or white, if it catches mice it is a good cat”.

Lee’s cats caught mice.

And so, despite everything, I mourn Lee Kuan Yew.

And, about our political disagreements? Maybe I’m wrong.

sm lee press conference

Modern times

March 13th, 2015

God said, “I am the Lord thy God, King of the Universe. You shall do as I command, or suffer the consequences.”

Man was unhappy, but resigned.

Darwin said “There is no God.”

Man said “I am free! I may do as I please. I want utopia without effort. I want socialism, and fascism, and communism. There shall be no need for greed or hunger. All children shall be above average. I so command!”

God said nothing, since He did not exist.

Reality said “here are the consequences”.

Man was unhappy. But then, he had always been so.

Movie review – I, Robot

January 10th, 2015

60036238[Yes, the 2004 version; I just saw it.]

For decades, movies about humans vs. aliens or humans vs. robots were thinly veiled parables about racism, xenophobia, loving thy neighbor, etc.

Especially so if one of the main characters is black.

No spoilers here, but at the start of this movie Will Smith’s character hates robots. Hates them for no obvious reason.

But this movie is not about racism or foreigners, or anything even vaguely like that. It is actually about robots.

By the end of the movie, Smith no longer hates robots. But not because he’s learned to be a better person. Oh, no, that is not the reason at all. Because this movie is not about that – it’s about intelligent machines.

I won’t say more – see it. But this movie rejects many standard Hollywood tropes and comes up with something genuinely fresh. And it shows that at least some people in Hollywood (Will Smith, anyway – who is also a co-producer) are able to make movies – even starring black people – about things other than racism. Imagine that!

And it has some important things to say about robots – things that may not occur to you until the next day after you see it.

It’s not an Asimov story – it just takes his robot stories as background. But I think Asimov would have liked it (so will Nick Bostrom).

It’s not a perfect movie, so one star off for that. But see it. 4/5 stars.

All wealth comes from arbitrage

December 19th, 2014

Arbitrage is the act of moving things from a place where they’re less valuable (cheaper, if you like) to where they’re more valuable (more expensive).

Normally the term is used in financial transactions – if a ton of wheat is worth $200 in Chicago and it’s worth $250 in Houston, I can buy it in Chicago, sell it in Houston, and make money. That’s arbitrage.

But – that’s just a financial manipulation; a trick played with numbers to cheat the system. I haven’t really created anything or done anything useful.

Right?

Tho it may seem that way, not right. Economics is not intuitive.

Suppose I have a pile of wood. It has some value. I get tools, work hard with them, and turn the wood into a house.

(If you’re outside America, assume a pile of stones – I know you people think making houses out of wood is crazy.)

The house is worth a lot more than the wood pile was.

This also is arbitrage. We don’t usually call it that, but it is – I’ve moved the low-value wood in such a way that it’s now a high-value house.

Yes, I used capital (the tools) and labor (the work) to do it, but that’s how I did it – not what I did.

This is where all wealth comes from – moving things around from less-valuable conditions into more-valuable conditions.

Capital and labor and technology are useful only when they help with arbitrage (digging holes and filling them up again uses labor, and shovel-capital, and scooping-technology – but doesn’t create any wealth).

Another example – when I was in kindergarten, sometimes I’d get sent with a salami sandwich (this was before in-school cafeterias). I didn’t love salami – I preferred tuna. But a friend had a tuna sandwich, and preferred salami. We’d swap. (Yes, I know that’s not allowed anymore.)

By swapping, we turned two not-highly-valued sandwiches into two more-valued sandwiches – because we each preferred the other’s sandwich. The sandwiches remained exactly the same. But the value increased – by arbitrage.

Back to the ton of wheat in Chicago. Let’s ask why wheat is cheaper in Chicago. There must be a reason, even if we don’t know what it is. Maybe there was a bumper wheat harvest in Illinois (where they keep Chicago), so there’s more than people can eat. Maybe they like rice better. Whatever.

In Houston – the opposite. Maybe there’s a pizza holiday that uses up lots of wheat. Or a bad harvest in Texas…again, whatever.

The point is, by moving the wheat from Chicago to Houston, I’m moving it from where it’s needed less to where it’s needed more – afterwards, there is less excess wheat in Chicago (and more valuable money), and less shortage in Houston. So I made both places better off.

Which means it was not a trick – I really did do something useful. I created wealth. And some of that wealth I get to keep (some will go to the seller in Chicago, and some to the buyer in Houston – exactly how much depends on negotiating skills, buy/sell spreads, etc.).

So arbitrage is where all wealth comes from. It is the sole reason we don’t live in caves anymore.

Murphy’s law

November 17th, 2014

Murphy’s law anticipated the Everett-Wheeler conjecture (viz., “all permutations will be explored”).

Which I find ironic, considering that neither Everett nor Wheeler wrote about keyed connectors at all.

Or, Why I Have No Use for Philosophers

This is my grandfather’s axe. My father replaced the handle, I replaced the head. This is my grandfather’s axe.

Every time I try to discuss anything of substance with a professional philosopher, and often even with someone trained in philosophy, I find myself in an argument over semantics – the meaning of words.

I think this is why philosophy is generally held in such low regard.

The Ship of Theseus is a more elaborate version of the Grandfather’s Axe story that has supposedly been the subject of much debate by classical and modern philosophers (the ship is maintained by replacing planks as they age, until none of the original planks are left – is it still the same ship?).

The thing I find incredibly frustrating is that these philosophers argue about nothing. There is no dispute whatsoever regarding what has actually happened – are any of the parts original? (No.) Is it the same design? (Yes.) We can answer any factual question about the ship unambiguously.

Yet the philosophers keep arguing about it – for millennia.

These people are far worse than useless – they are actively creating confusion and argument where none exist.

Google sells the use of user information.

It is not the same thing.

Selling “Joe Blow works at Acme Corp and shops for sex dolls” is selling user information.

Selling “I will advertize your sex dolls to people who shop for them” is selling the use of the information. Only Google knows you are Joe Blow at Acme with an interest in sex dolls. The advertiser does not; they just get a service that makes use of Google’s knowledge.

Yes, Google knows your stuff. Yes, you have to trust them with it.

But they don’t have to – and don’t – sell your info in order to profit from it.

Slogans

August 4th, 2014

Be nice. Work hard.

Be tolerant.

Correlation is not causation.

Internalize externalities.

It’s a democracy; compromise.

Life is only fair on average.

Spend less than you earn. (Other people do; you can too.)

Subsidy is the root of all evil. (Separate post coming on this…someday.)

In One Time Pads We Trust. (All others pay cash.)

Keep Right Except To Pass.

Abstraction is good, magic is not. Remove magic.

Be polite to armed people.

Don’t buy consumer goods on credit.

…but capitalism doesn’t have to.

The poor popular reputation of free markets may be connected to the prevalence of deceptive advertising, especially for consumer goods and services.

Spend just an hour watching TV after midnight, and you’ll be bombarded with ads for penny auctionsinfant life insurance, sports betting (you’ll win thousands), anti-impotence drugs (or is it penis-lengthening? They’re never clear.), etc.

As Michael Caldara said in the first link above, “we don’t hear calls to regulate infomercials, get-rich-quick seminars, and fad diets”, but – perhaps we should?

I’d prefer vigorous enforcement against common-law fraud, but (in my humble opinion; don’t sue me,) these ads intentionally mislead the ignorant and incompetent. That’s why they air when most successful people are asleep.

To many people this gives the impression that capitalism is little more than legalized theft and deceit. A crackdown on these obvious (to me, anyway) cases of fraudulent advertising might go a long way toward improving the reputation of both government and business. Markets only work to society’s benefit, not to enrich those with the least scruples, when the basic rules of honest dealing are enforced.

If that’s too hard, another path would be an organization of ethical businesses that observe a code of honesty (complete with a membership seal).

This is not 100% cranberry juice. It's 100% Juice Cranberry. Which of course is entirely different. :-(

This is not 100% cranberry juice.
It’s “100% Juice Cranberry”.
Which of course is entirely different.