Real accounting for Social Security

FASB has recommended that the US government recognize the future obligations it has for Medicare and Social Security by stating them, as liabilities, on their books today.

Small businesses, sole proprieterships, and governments operate a "cash accounting" system that basically counts money in vs money out in a given year, and does not take any notice of long terms assets or liabilities. Corporations do not use this system -- they are required to place long term liabilities, and assets, on the books today even if those bills will not come true in the future.

Marginal Revolution seems ambivelent about the proposed accounting changes because he would prefer to see the benefits cut, not taxes raised. I think the change is a great thing, because having your benefits cut or your taxes raised are essentially two sides of the same coin (someone who pays the same but gets less benefit is as worse off as someone who pays more and gets the same benefit).

Dick Wolf and TV

The reality of television -- the business side -- is quite different to what people (who enjoy watching television) suspect. Dick Wolf, creater of "Law & Order", understands how the business aspects works very well; he structured "Law & Order" to be profitable, which meant easy syndication and a revolving cast of characters (so no one actor would ever get enough clout to demand an outsize salary). He has a great interview the the WSJ (paid) -- my favorite clips are below:

The Wall Street Journal: We see producers trying to come up with ideas that will play well on mobile phones or the Web. Are these ventures worthwhile?

Mr. Wolf: I'm feeling that maybe I'm totally out of touch. I've been pitched Webisodes. I've been pitched everything. ... C'mon. Please, you think ringtones are going to be a major revenue stream for studios or networks? ... Unfortunately, the business model is irreparably broken, and people are going to have to figure out something new. ... I'm 59 years old. I don't think the world is going to come crashing down in five to six years, but I guarantee you, if anyone tells you what the television business is going to look like a decade out, they are on drugs.

Mr. Wolf: I'd love nothing better than to have people be watching interstitial moments in the show, so they didn't go channel surfing. In reality, I think it's an absolute pipe dream. Look, the bottom line is Americans don't like commercials. ... I don't think anybody wants to watch two-minute spots, but the wonderful thing about show business, television and advertising is nobody knows nothing. ... When I got into the advertising business, they still sold 60 [second commercials]. Then it went to 30s. ... The idea that people in their chairs want to watch something six times as long as that, I don't buy it.

WSJ: Your programs are known for hewing to pretty basic storylines -- a crime is committed, the cops solve it and the legal system tries the perpetrator. So do the 'CSI' series. Would you consider adding more elements of the detectives' personal lives to the L&O series, for example, if advertisers demanded it?

Mr. Wolf: There is a method to ['CSI' executive producer] Jerry Bruckheimer's and my madness, and it's an interest in stand-alone episodes and very little serializing, and very few personal things that are continued over multiple episodes. You can't expect people to make appointment television for off-network viewing five days a week if you script a show and you have to go to people who miss Tuesday and Thursday. It's going to be a continuing problem going forward and the bottom line is the audience is continuing to erode every day. ... I've never heard of advertisers demanding creative changes. They just want ratings.

WSJ: What's the outlook for the rerun value of programs like yours, given DVDs and other new technologies?

Mr. Wolf: DVDs are already a mature business. The serialized dramas do better on DVD than procedurals [shows where the procedure, or police work, is more important than the characters], which are more commonly available in reruns. ... Notwithstanding, the economic model is getting further fractured and the real place where the rubber is going to meet the road is downloads. I don't know if USA or TNT is going to pay top dollar for shows that have been downloaded for six months, nine months, before the DVDs even come out, which means the hard-core fans of the show have probably got a permanent copy on their hard drives.

The Secret of Happiness

I strongly recommend this 22 minute clip of Harvard prof. Dan Gilbert talking about happiness. In general, I don't much like video clips online (unless they are very short -- I can read text faster than most audio and video plays) but this presentation is so interesting, and so well done, that I strongly recommend watching it all.

(incidentally, is it just me, or is there a flourishing movement for good presentations? I'm thinking about sites like Presentation Zen, Guy Kawasaki, Dick Hardt at OSCON (channeling Lessig), and I suppose Al Gore's Inconvenient Truth although I have not watched the movie.)

Anyway, Gilbert makes several fascinating points, namely:
- Happiness is a matter of deciding to be happy with what you have
- While there are certainly better and worse states of the world, we overestimate the difference in how we will feel in those different states
- Regret, and the fear of regret, destroy happiness, so lock yourself into decisions and don't look back
- Synthetic happiness is the same as the "real thing".

One clear idea that comes out of all of this is that ambition is at odds with being happy. If you are satisfied with what you have in life, and decide that no matter how things turn out you will be fine, it's tough to go through the sort of pain and self sacrifice that the truly ambitious are willing to go through to get whatever they want.

The other idea that comes out of this is that there is more to life than happiness. Contentment with what you have does not drive progress, be it economic, scientific, or cultural.

I don't know what you're optimizing when you try to balance happiness with ambition, or the progress that flows from it.

Still the worst article ever

A while ago I panned Gladwell's New Yorker article on pensions. He responded, arguing a number of positions, including the fact that he interviewed many experts, and that what he included in his article reflected the insights of those experts.

At one point, he argues that pensions would be in safer hands if they rested with local or national government, because this would spread the risk further. I certainly agree that putting all of your pension eggs in one basket is a bad idea (as Enron employees found out), but having them gauranteed by local and national government isn't about spreading risk, it's about tying your future income to a source that can print money as needed.

State and local governments have promised pensioners $2Trillian more than they have. When the bill comes due, they will raise taxes on everyone else, and/or cut benefits for their employees. This is clearly a case of people responding to the incentives of all PAYGO schemes, be they corporate, state, or federal, by overpromising on a future they won't be around to deal with. I cannot see any great triumph of risk mitigation, or why this is a better system than *making* people save for their future selves in private accounts.

Silly NYTimes article

This silly NYTimes article blames the recent batch of contaminated spinach in the USA on industrial agriculture. While I'm sympathetic to the idea of the bucolic country farm where animals and vegetables gambol together in harmony and organic fueled ecstacy, the food we eat today is safer than anything in the past.

There are 300 million people in the US, each of whom eat (on average) three times a day, 365 days a year -- which comes out to 300 billion meals a year (3 x 10^11). Out of these, 5,000 prove fatal -- a rate of 0.00000001522 deaths per meal, or, zero.

Nobel Peace Prize

This year's Nobel Peace Prize was awarded to Muhammad Yunus, the Bangladeshi economist, microlending pioneer, and founder of the famous Grameen Bank.

The Nobel Prize committee states:

Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male.

The Grameen Bank primarily lends to women because they have found that women are more likely to sensibly invest the money and pay back the loan -- men are more likely to squander the money and default.

The committee statement makes it sound as if micro-lending is primarily about helping women and integrating them into the work force. This is accurate, but there is even more to the story. The men who live in the same villages as these women, oppose Grameen Bank loans because it reduces their local power and status. In this context, the microloans undermine local communities and social cohesiveness, but is that a bad thing when the community consist of local "tyrannies" where a group of men lord it over women?

YouTube in the air

More words of wisdom from Johnny Debacle: Four Simple Steps to becoming a Billionaire. (fixed link -- thanks mj!)

Life imitates the Onion

If there was ever a headline for the Onion it would be "North Korea Explodes Nuclear Weapon, Colorful Bird Discovered in Columbia".

I present the NYTimes homepage on 4:15 PST, 10-10-06.



Other front page news items: Foley scandal, vineyards in Georgia, and the Azores: "The paths on São Jorge take visitors along a landscape of natural beauty, unspoiled but for the necessity of earning a living." Curse that having to make a living!

Battlestar Galactica 3.0

Best frakking TV show ever.

Google buys YouTube

Google has paid $1.65B to buy YouTube. Good for YouTube! Now I wonder if they will shut down Google Video, or will just operate competing products. I'm guessing they will let dev teams work on competing products.

What does it mean when a company has multiple divisions doing the same work? One the one hand, there is surely duplication of effort, and some wasted resources. I don't know how big the dev teams are on Google's video products, but I'm guessing that they are quite small, less than 50 people, so maybe this effect is small. On the other hand, perhaps the competition will spur each team to work harder, just as competition between firms does. Or maybe the teams will work less hard -- certainly their employer no longer cares which system wins.

The wall in Padua

I spent a very pleasant six months living in Padua (or Padova) and working at the university there. That was just nine years ago, and it seems the place has taken a turn for the worse since then.