Shoot me now

I'm listening to NPR have a call-in discussion show about Alan Greenspan's legacy. Listening to NPR discuss anything economic is like watching blind, one-legged men playing soccer. The are current chatting about how rising gold prices means the dollar is in danger -- and it's all Alan's fault.

Update: NPR has declared that fiat money is always ultimately worthless. I think they want to go back to the gold standard.

Amusing

There is more to good (and great) experiences than usability. I don't agree with everything in this article on "What makes products great" but I did find this very amusing:

"Every time I read Jakob Nielsen," I wrote in 2000, "I get this feeling that he really doesn't appreciate that usability is not the most important thing on earth. Sure, usability is important (I wrote a whole book about it). But it is simply not everyone's number one priority, nor should it be. You get the feeling that if Mr. Nielsen designed a singles bar, it would be well lit, clean, with giant menus printed in Arial 14 point, and you'd never have to wait to get a drink. But nobody would go there; they would all be at Coyote Ugly Saloon pouring beer on each other."

There is more to great experiences than usability, but do not overlook the value in making it easy for people to do what they want to do.

Media price discrimination

Films price discriminate in many ways. First movies are released in the theatre -- you pay $8, and $8 more for popcorn. Per person. And you need to really like the movie to make the effort of seeing it in the theatre. Then it comes out on DVD -- you pay $20 and can watch it at home, forever. Then it plays on TV and now you don't pay anything at all, you just need to watch ads. People will watch movies on TV that they would never see in the theatre.

The internet is collapsing these windows. People use camcorders to record movies in theatres, and then sell DVDs which are quickly given away as torrents. Consumers who want a DVD are driven to the illegal DVD because there is no legal equivelent.

Moreover, the old system was skewed towards big budget action movies that look best on big screens. If theatres are the first tier of pricing, then you want to differentiate that experience from alternatives.

This excellent Roger Ebert review of Bubble details a movie that probably would not be treated too well by the theatre->DVD->cable cadence. Some theatre owners are boycotting the film because they fear the simulteneous DVD release will hurt them. Personally, I've added Bubble to my Netflix queue but will never have watched it in a movie theatre.

Funny

Jeremy Clarkson cracks me up. His car reviews continue to be splended. And until Top Gear comes to iTMS, you'll have to download the torrents yourself.

Yay Google!

Google has finally added a delete button to gmail. While google's philosphy is to make deleting irrelevant by improving search, the truth is that their internal search does not work nearly as well as their net-wide search, and deleting unwanted emails improves the quality of their internal search.

Mp3s and fame

It took a while, but online file trading has finally produced its first "stars". The Arctic Monkeys began by playing in clubs and releasing their music online. They built a sizable fan base, got radio airplay, and and became fairly well known in the UK. They were courted by many labels and eventually picked Domino Records.

Their first release is a single "I Bet You Look Good on the Dancefloor" -- but I wonder whether trading this song online is illegal. After all, the band themselves released it online for free a few months ago. Perhaps precise digital rights management could distinguish between the original release and the new, label-backed release, but it seems that offering music, for free, online is a viable way for bands to build audiences, make more money, and eventually get signed on by a label.

Corruption and growth

This excellent article by James Surowiecki details how the failure of Chicago-style economic liberalism in Bolivia has now lead to a dramatic political swing to the left. While free market economics delivered at the macro level, corruption and inefficiency at the micro level retarded growth to a mere 0.5% a year.

Neoliberalism failed in Bolivia because a macroeconomic checklist is not enough to make an economy work. Incorporating a new business in Bolivia, for instance, takes fifty-nine days, entails fifteen separate procedures, and costs twice as much as the average person earns in a year. So, according to a recent World Bank study, most of Bolivia’s businesses remain “informal,” which means that they have no legal protection, and limited access to credit markets. Corruption is rampant—a survey in 2000 found that it was a greater problem in Bolivia than in about ninety-five per cent of other countries surveyed.

I don't beleive that Bolivians turned to socialist market policy because they believe they will be particularly effective, I don't think they have a clear or well formed opinion one way or the other, I believe that they chose a populist because they believe the populist will be *uncorrupt and uncorruptable*.

The desire to be lead by someone *uncorrupt and uncorruptable* is part of human nature. The victims of the terribly destructive governments in Africa do not care whether they live under a free market or centrally planned economy -- they just wanted to be not killed and robbed from.

There was a news story on NPR this morning about the lobbying scandal that's currently in the US Press. No one on the call argued that the only way to take money out of politics was to take the politics out of money. They all longed for someone honest to come along, take charge, and do the right thing. A seperate NPR story in the afternoon discussed how Hammas is doing better than Fatah in Palestinian elections because they are seen as less corrupt. Fanatics in general rail against the corruption they see around them.

How to tackle the low level, endemic corruption that plagues third world countries is beyond me. It seems clear, though, that macro level Chicago-school prescriptions (privatize, reduce deficits, cut spending) do not deliver growth without micro level Chicago-school prescriptions as well (strong property rights, low real taxes, low nominal taxes). But imagine how invasive applying these prescriptions would be -- these countries would effectively need to have their civil administration run by others. Not that people do not implicitly choose to do this when they emigrate countries, of course.

Cheese and wine pairings

Not a usual topic for this weblog, I know, but I liked this article recommending pairing bad wine with good cheese:

If you've got some ropey plonk to get rid of, throw a cheese and wine party. But don't use the good stuff, as new research shows that the wine buff's favourite accompaniment masks the complex flavours of wine.

From subtle emmental and mozzarella to the battery-acid bite of gorgonzola, cheese dampens down the aromatic fruits, oaks and astringency of red wine, according to tests on wine tasters.

"When you have cheese at the same time, all of these flavours are masked a little," said Hildegarde Heymann at the department of viticulture and enology at the University of California, Davis.

I think the article has it backwards -- you should pair lousy cheese with good wine.

It is common, at the end of a meal, to have run out of food but still have a glass of red slightly oxidized red wine left at the bottom of the bottle. I've found that drinking this with parmegian cheese (cheap, supermarket parm) is a delicious and cheap dessert. I find drinking tannic red wines by themselves to be foul, but drinking them with any salty cheese to be quite wonderful.

Funny

This made the laugh out loud.

Has Neilson lost it?

Usability guru Jakob Neilson has a screed on the evils of search engines.

Search Engines as Leeches on the Web
Summary: Search engines extract too much of the Web's value, leaving too little for the websites that actually create the content. Liberation from search dependency is a strategic imperative for both websites and software vendors.

The problem is that if you advertise on Google, say, using their Adword program, and they charge 5 cents a clickthrough, then any value you get from improving your website (resulting in, say, more sales if you are an ecommerce site) will simply be captured by Google as they raise their rate. In this way, all the benefits from investment are being captured by the search engine, not the person actually doing the investing.

When you search on Google you get two sets of search results -- "paid search" (on the top and side) where companies pay to have their names pop-up when you type in certain keywords, and "organize search" which is what pops up in the body of the page. Google makes all of its money off paid search, but it's worth noting it did not invent the field -- the first paid search company was Overture (bought by Yahoo!). Unfortunately, Overture forgot the whole organic part and therefore was ignored by users, while Google's organic search is quite excellent so it could get more users to then offer to its paid search customers.

Google's ability to price adwords are constrained in by alternative advertising vehicles (Yahoo!, MSN etc.), organic search, and other ways to get your URL well known. Buyer and seller power in general is constrained by substitutes. Neilson argues that sites should improve customer loyalty -- if customers come directly to the site you don't need to pay the greedy search engines. He is incorrect in this matter -- if the average new lead is worth $1 because of the chance they will buy and the amount they will buy, then the search engine can charge up to $1 for that lead. If the site improves its customer loyalty and now that same lead is worth $2, the search engine can simply charge $2 up front.

Has Neilson lost it?

Usability guru Jakob Neilson has a screed on the evils of search engines.

Search Engines as Leeches on the Web
Summary: Search engines extract too much of the Web's value, leaving too little for the websites that actually create the content. Liberation from search dependency is a strategic imperative for both websites and software vendors.

The problem is that if you advertise on Google, say, using their Adword program, and they charge 5 cents a clickthrough, then any value you get from improving your website (resulting in, say, more sales if you are an ecommerce site) will simply be captured by Google as they raise their rate. In this way, all the benefits from investment are being captured by the search engine, not the person actually doing the investing.

When you search on Google you get two sets of search results -- "paid search" (on the top and side) where companies pay to have their names pop-up when you type in certain keywords, and "organize search" which is what pops up in the body of the page. Google makes all of its money off paid search, but it's worth noting it did not invent the field -- the first paid search company was Overture (bought by Yahoo!). Unfortunately, Overture forgot the whole organic part and therefore was ignored by users, while Google's organic search is quite excellent so it could get more users to then offer to its paid search customers.

Google's ability to price adwords are constrained in by alternative advertising vehicles (Yahoo!, MSN etc.), organic search, and other ways to get your URL well known. Buyer and seller power in general is constrained by substitutes. Neilson argues that sites should improve customer loyalty -- if customers come directly to the site you don't need to pay the greedy search engines. He is incorrect in this matter -- if the average new lead is worth $1 because of the chance they will buy and the amount they will buy, then the search engine can charge up to $1 for that lead. If the site improves its customer loyalty and now that same lead is worth $2, the search engine can simply charge $2 up front.

Macworld 2006

His Steveness has released new Apple products--rejoice! Here are some reactions:

The current apple.com site is cluttered with more animated rubbish than it ever has been filled with before. Please, Apple, make everything stop.

Software goodies:
They've added a new application, iWeb which adds desktop integration to web publishing. Other companies have taken a swing at this in the past -- maybe Apple has cracked it. Given how much more dynamic web pages can be now, I'm not sure how useful this is. Blogger, for example, is much better than it used to be thanks to clever use of Ajax and other new, web technologies.

Hardware goodies:
Intel on Mac is go. The new iMac g5 now runs on intel's Core Duo chip and supposedly it is more powerful than the old iMac. Right now I feel bad I bought one a year or so ago, but we'll see what happens to second hand prices since there will be certain software incompatibilities going forward. If resale value falls through the floor, then the new iMac's are very good.

The PowerBook has been retired and replaced by the MacBook Pro which also runs on intel. I have no idea why Apple renamed the laptop -- it looks the same as the old PowerBook.

Some people thought that the iBook would be the first portable to get the updated intel processor. This seemed reasonable to me at the time, but now I'm not sure why. The old powerbook g4 was by far the weakest processor in Apple's family, making (IMHO) the powerbook the least desirable computer in the lineup. Updating the excellent iBook (which ran on a "G4" that was actually an updated G3--a far superior chip) would simply give you even less reason to buy the PowerBook. I should have realized this at the time. Oh well.

My guess is that the Power Mac was not updated because the pro-apps they use still don't run on the new intel chips. Folks with iMacs don't run pro-apps, so it matters less for them.

Are arts programs better than science programs for at-risk youth?

I heard an interesting NPR report today where they were discussing the trials and tribulations of an arts program for at-risk youth in Chicago. They made an off-hand comment that some researcher had found that arts programs did a better job than science or athletic programs for helping at-risk youth.

I thought this was very interesting.

If one of the main challenges for poor kids are limited social capital, and difficulty building social capital, then an arts program could be more effective than a science or athletic program. If key social skills include 1) showing up on time, 2) learning to play well with others, 3) dealing with adversity, 4) public speaking, then I see how a program emphasizing public, group performances (putting on a play) is more effective than one teaching math skills or running a sports team.

The calculation of torture

The opening paragraphy sums up the position of the no-torture-at-any-cost crowd:

Torture is wrong and ineffective. Everyone knows that. So how come it's making a comeback?

The article goes on about how various intellectuals have made it possible for torture to become acceptable through various tortured (apologies) mental leaps and tricks. In the writer's view, however, torture is wrong and not permissable.

I would argue that the public's openness to torture is that they beleive it works, at least in some instances. This view is bolstered by articles like this one, recounting anti-terror operations in Iraq. Certainly the threat of violence encouraged the captured insurgent to name other members of this cell:

A shaking Nashwan and Adel are loaded onto the Stryker. As they are placed in the back, one of the American soldiers whispers to the detainees in English: "We are taking you to the peshmerga."

Actually, Majeed's battalion, a former Iraqi National Guard unit, is mostly Sunni Arab, not Kurdish. But as they are ushered off the Stryker and toward Majeed's office, Nashwan and Adel don't know that. As far as they can tell, they're at a Kurdish base. Perhaps as a result, a transformation has come over Adel. The defiant young man who said he wanted to kill the Americans is now sobbing uncontrollably. As he passes Fox, Adel whispers something in Arabic. Later, Alleathe translates: "He said, 'I am sorry about today. I didn't mean it.' "

Inside Majeed's office, Nashwan holds his hands together in prayer. Adel looks nervous. The American officers suspect that Adel had thought relatives might persuade the police to release him. Now he expects to be beaten. "I thought we were staying with the Americans," Adel says.

Fox turns to Majeed: "Find out the information."

The people I have met opposed to torture in all circumstances always seem to argue that it is both ineffective and inhumane. If it is ineffective, why not oppose it on utilitarian grounds alone? If it is inhumane, why bring effectiveness into the conversation at all? I think that the former assertion is their wish, and the latter their belief.

Housing irrationality

Winterspeak reader MP sent in this article which argues that the price of housing has not gone up because monthly cash payments have decreased (due to lower interest rates). Based on a month-to-month cash basis, the cost of housing is about the same as it was back when prices were lower and interest rates were higher.

I don't buy this because I don't think the cost of financing should impact the value of an asset. For example, would you buy amazon.com if it were trading at $100/share? Suppose I offered you a margin account with generous rates -- would you buy it then?

[Note -- a margin account is a brokerage account that let's you borrow money to buy stocks, just like a mortgage lets you borrow money to buy a house].

The answer is that the rates on the margin account have no impact on whether or not I think amazon.com is a good deal at $100/share. If I think amazon.com is fundamentally overvalued -- that the profit it makes now and is likely to make in the future don't justify a $100 share price -- then I don't care how cheap the financing is, I just won't want to buy it.

There is a link between interest rates, the amount the bank charges you for a loan, and discount rates, the amount you need to be compensated for delaying accepting money in the future instead of today, however, and that is that the two are meant to be kind of the same thing. If you value being paid in the present much more than being paid in the future, you will demand a high interest rate for postponing payment. If you don't care much between being paid today and a year from now, you will demand a lower interest rate for postponing payment. Most of what you buy when you a buy a house is the right to live in it in the future, and if you don't need to be compensated particularly much for waiting, then that does justify a lower discount rate and hence a higher purchase price today.

But I don't think that people have a fundamentally longer term perspective toward home ownership today than they did in 1995, I think they are looking at cash-in/cash-out on a monthly basis and doing whatever they can to make mortgage payments. In essence, they are being offered amazon.com at $100/share and asking what their margin requirements will be before buying. I don't think this is the right way to think about buying a stock, and I don't think this is the right way to buy a house.