Who Needs Consistency?

This survey of current research on cultural factors on influence is really interesting:

?One explanation for these cultural differences is that internal consistency is not as relevant for members of more interdependent cultures. Specifically, collectivists may be less committed to their previously stated preferences because there is no expectation for past preferences to be reflected in current ones.?

There has been a huge amount of similar social research done in the past decade, and I really would like to spend more time understanding it.

The Bush Deficit, Clinton Recession

This election season, you are hearing all sorts of seemingly reasonable claims about economics being put forth by all three parties. While these claims are being made and parroted by otherwise intelligent people, most of them are completely ignorant and misleading. Although informed voters have absolutely no impact on the outcome of an election, you might like the feeling you get by having superior understanding.

Read this recent research from the IRS, and then try these questions to test your understanding.

Q. The tax cuts are having a larger overall positive impact on which group of people?
A. People making less than $100,000
B. People making between $100,000 and $1,000,000
C. People making more than $1,000,000

A. The tax cuts have a greater positive impact on the net worth of people making less that $100,000. First, the maximum tax rebate was the same for people making $70,000 as for people making $700,000, so the rabate was a larger percentage of a lower income. Second, the people in higher net worth categories were already paying a much lower percentage of their net worth as taxes (e.g. if you realize income of $100,000 and have net worth of $1,500,000; you are only paying 2% of your net worth in taxes — as opposed to someone with realized income of 50,000 and a net worth of 50,000, who pays 25% of his net worth in taxes). So the impact of a marginal change in taxes is far less overall for ?the wealthy?.Even a massivetaxcutof 50% would only have the effect of increasing the first person’s potential net worth by 1%, while allowing the second more average person to double his net worth in short order (and a 50% increase in taxes would also not phase the first guy, but it would obliterate the average guy). Finally, the impact of taxes to the wealthy is further blunted by factors such as investments placed in tax shelters, municipal funds, and so on; as well as the fact that many of these wealthy individuals posted losses in the bubble crash which can be used to offset capital gains taxes.

Q. True or false; the rich have done very well under Bush.

A. False. Under Bush, the incomes of the wealthiest Americans have declined for the first time since WWII, and at a much larger rate than the general population. Since Clinton left office, the number of people making $10,000,000 per year declined by more than half. The wealthiest Americans have experienced financial carnage under Bush of a scale not seen for generations.

Q. Which factor is most directly to blame for the current deficit?
A. The Bush tax cuts
B.Increased government spending
C. The Internet bubble

A. The answer is quite clearly ‘C’, the Internet bubble, and for the forseeable future, ‘B’ government spending. During the nineties, the politicians never admitted that most of the IRS revenue projections depended more than anything else on an unending supply of ?bubble juice?. The tax revenues collected shrank at an alarming rate for the first two years under Bush, and primarily because of the previously mentioned stock marketcarnage. The IRS data shows that ?At the same time many of those whose incomes fell the most – those reporting $200,000 to $10 million in income – paid at the highest rates, which meant that the drain on revenues was even greater when their incomes shrank.? In fact, the evidence shows that the Bush tax cuts have actually had the net effect of increasing tax revenues. Tax revenue is far more a matter of income level than it is a matter of taxation rate, and tax rate can often inversely impact tax revenue.Unless we have another Internet bubble, it is unlikely that tax revenues will go up drastically. Therefore, increases in government spending will be the primary driver of deficits for the forseeable future. Note that neither party has a monopoly on increased spending, as federal spending for even non-military purposes (e.g. ?education?, since we all know books are so expensive) has increased at record levels under Bush.

In other words, the Bush Deficit and Clinton recession have about as much to do with Bush and Clinton as the weather does. Don’t blame tax cuts, defense lapses, or military spending. Instead, blame the hoardes of gullible lemmings who bought into the mass hypnosis of the bubble. And blame the budgeting officials who based projections on the assumption that the ?bubble juice? would never end, and who don’t have the discipline to spend less than they take in.

Why not to Bid on Google IPO

I’ve been resisting the urge to say anything about the Google IPO, but since Dan Gillmor has asked the question, I’ll add in my comments.

First, it was surprising to see a Silicon Valley influential being critical of the deal. Most of the SV influentials have already been cut in on the deal.These people who got insider pre-IPOdeals stand to profit a lot even if the price crashes a matter of months after the IPO. In other words, as long as suckers like you buy into the IPO, none of the SV luminaries who are driving the ?market appetite?will get hurt. I was shocked to read that Gillmor did not get any pre-IPO cut of Google.

Now, I think Gillmor misses the point by talking about ?investment bankers want to see this fail, because then they could say it validates the old-fashioned way of doing IPOs?. He misses the point, because to rate something as a success or failure, you have to define what you are trying to accomplish. What is Google trying to accomplish with this IPO? Are they trying to raise capital for expansion and growth? I don’t think so (they already have plenty of money for that). Are they going public to allow more public control? Obviously not, since they explicitly neutered the voting rights of public stock. The only reasonable conclusion is that Google is offering an IPO for none of the traditional reasons, and therefore it would be silly to evaluate success or failure based on those traditional criteria.

I’m not an expert, but I think that the Google IPO is designed to accomplish two things:

  • Employee Retention – Google needs really smart people who work really long hours for little immediate reward. Paying them with stock options that vest over a long period is a great way to retain these young and restless people. Stock options do not eat money from the operating revenue at first, so it’s almost like paying your employees for free. And the perceived value of the stock options (and correspondingly the value as a motivation and retention tool) is limited only by the ability to hype the stock to the gullible public.
  • Sergey, Larry, and EricGraduation Plan – Sergey and Larry plan to cash in for $100 million each at the opening of the IPO. They saw what happened to Mark Andreesen, who was forced to ?vest? his share of the IPO that started the famed Internet bubble, and as a result never quite graduated to the level of top Silicon Valley baboon. With $100 million each, Sergey and Larry will be safely in the ranks of SV leadership and will be able to stay near the top of the heap even if Google fails miserably. This is their insurance policy, or ?retirement plan?. Of course, if the top three baboons at a company do not have enough faith in the company to invest their $100 million in the company, you might ask yourself why the public would want to donate $30 billion to that same company. There is a reason why most IPOs do not let the CEO cash out at the top, and I think we are all going to get a demonstration of why this is.

Now, in those terms, I think the Google IPO will be wildly successful. It will succeed in making it’s top layer of executives completely isolated from any potential bad effects of poor company performance, while motivating and locking in key producers within the company.

So there is really no question about why Google would file this IPO. The real question is why on earth would anybody buy it?

Essentially Google is approaching the general public and saying, ?Could you please give us $30 billion? If you give us this money, we will use it to give our executives a lavish and extravagent payday. We will use some more of the money to give our friends a slightly less extravagent payday. We will also use it to promise some of our employees the possibility of a large payday. Besides this brilliant investment strategy, we have no idea how we will spend the rest of the money. For giving us this money, you will have no rights. But if you convince enough other people that we really rock, your stock price might go up and you could buy some pie for yourself! Mmmmm, good!?

I’ve concluded that the interest in the IPO is more emotional than reasonable, and to an extent that puts even the Netscape IPO to shame. I think that people are mostly excited about this IPO because they secretly harbor a desire to return to the high-flying days of the Internet bubble. They tell themselves, ?This Google IPO might just be a way to kick-start another bubble, and even if this bubble does not last as long, I’ll cash out early enough this time and make up for the chances I blew in 1995!?

And Silicon Valley cannot pass this opportunity up. The nineties were nothing if not a massive transfer of wealth from the heartland baby boomers’ pension funds into the hands of theSV players. The Google IPO is perhaps the last big heist that the SV players can hope to pull off, the last aftershock of the bubble before Soros’s predicted contraction begins in earnest. In recognition that this might be the last great heist, the valley is pulling out all the stops and employing every emotional manipulation technique mastered over the past decade. The quiet buying off of the valley celebrities has already made most of the valley willing accomplices. Many do not need to be purchased; the simple promise of more bubble juice has the whole valley slobbering in unison. Now Google has gone on a shopping spree and bought up as manyrock star marquee namesas can be found in preparation for the IPO. The Netscape IPO proved that rock star power (Andreeson, Bina, etc.) can really jack up an IPO price, so Google has gone all out. Nevermind that Bosworth and Bloch have probably not yet found their desks, and nevermind that you have no idea whether either guy will still be at Google four years from now when the stock price is worthless; their mere presence is enough to create buzz among geeks in the hallways and start a frenzy of speculation about ?Google might be planning to make the uber-duper-snitzer-snazzen; I better INVEST NOW!!?.

So what is my advice? I would suggest that you ignore the emotions for a minute, and objectively write down exactly what you expect to get by giving your money to Google. You might find it’s better to just go give your savings to Sergey right now, and set aside $1 to buy a lottery ticket.

Revision: I can not locate an original source which names any journalists cut in on the Google deal, so I have removed comments about ?including journalists? above. Complete information about people who stand to profit from ?market appetite? is currently not public, and so it is impossible to categorically confirm or deny that journalists are among those people. In the lack of complete information, I would simply urge readers to pay attention to journalists disclosures (for example, Gillmor’s assertion that he has no part in the Google deal), and pay special note to the lack of such disclosures by journalists writing personality puff pieces about the IPO.

DNC Convention Bloggers

Watching ConventionBloggers.com is way cooler than watching the TV. The information comes across as being far more credible, because you can instantly triangulate between various opinions, get lots of personal little tidbits, and form your own impressions. The voices are pretty unedited and raw; there are no Republicans on there AFAIK, but I still am shocked that the DNC is letting some of these things through. The contrast between this and the Mao-esque TV coverage is just amazing.

Massive Database Theft

Who knew about Acxiom?

?Acxiom, one of the world’s largest data aggregators, has information about virtually every adult in America. It also manages and enhances data for major banks, insurers, direct marketers, the credit bureau TransUnion and others. It has developed some of the world’s most sophisticated data analysis software, some of which it uses for homeland security screening for government contracts.?

One wonders how many penetrations went undedected, in addition to the two which have been discovered.

In other news, Greenspan says that the gap in pay for many of the new jobs being created is due to lack of education and skills. I think this situation is just going to get a lot worse as markets like India and China, with their far more aggressive educational systems, develop.

Bloggers as Revolutionaries

This article at ZDNet discusses ?Fixing Flaws in Microsoft’s Big Picture?; repeating the common theme that the company is growing kinder and gentler. The final paragraphs of the article talk about the blogging ‘revolution’ at Microsoft:

?Cultic thinking rarely survives prolonged contact with the real world … that contact is increasing exponentially; there are hundreds of MS employees at all levels engaged in blogging, More start each day. That means feedback, and contact with outside perceptions where before there was almost none. … Each new MS blogger is introducing one small dollop of reality back into the company, setting the groundwork for the inevitable revolution. Microsoft is its people, and its people are learning to be free.?

It’s a pleasant thesis, but completely backwards. As I explained a few years back, the Borg myth is a lie. People at Microsoft blog because they tend to be open, independent, and communicative; not the other way ’round.Blogs do provide evidence that Microsoft is just a bunch of normal people like any other company; but the blogging isn’t the cause of this normalcy — it’s just a new way to communicate that reality.

Boom Day

Today is the day that weexercise ouracoustic startle reflex. I’m finished with my experiments, but the neighborhood still sounds like a war zone. Why is it that loud booms, whistles, and bright lights are always accompanied by the urge to chew starburst?

I just started going through Copi’s Symbolic Logic for the nth time, andpaid some attention to something thatalways felt awkward to me. When presenting conditionals, he defines ?if p then q? as ?~(p . ~q)?. In other words, ?if p, then q? is the same as ?it is not the case that p and not q?.

Obviously, it’s awkward in the sense that nobody talks/thinks that way. For example, you might say ?if you are parked too closely, your door will be dinged?. You would probably not say, ?under no condition will you beparked too closely and escape with your door undinged?; although it is technically equivalent semantically.

Since it felt awkward, I assumed a reason. In skimming, I always assumed that Copi’s definition wassomehow a convenient workaroundbased oncontrapositive.

But thedefinition Copi uses [~(p . ~q)] is not the contrapositive. He’s not doing anything tricky at all.

First, an explanation of contrapositive. If it is true to saythat, ?if you parked too closely, then your door will be dinged?, then it is also true to say, ?if your door is not dinged, then you did not park too closely?. In other words, to say that ?p implies q? is to say that ?not q implies not p?. This relationship between implication and contrapositive is something that we learned in 7th grade (Ms. Birkenhauer), so it is presumably basic knowledge.

If you plugthe contrapositive into Copi’s definition, you quickly arrive at the same statement as the original implication, which proves that contrapositives are equivalent. At least the world is consistent.

So why did he chose the awkward ?~(p . ~q)?? Well, it’s just because that’s the only way to say what is meant by ?if p then q?. Sometimes we might also mean, ?if (and only if) p, then q?; but the fact that there are two possible semantic interpretations for some implicative statements is just an ambiguity of common language. When speaking in the first sense, the ~(p . ~q) is really the only way to logically state what you really mean.

Engineers and Politics

Apparently the ACM is preparing to make a press release about the viability of electronic voting machines.The net result is that newpapers will soon be blaring the headline that ?ACM sayselectronic voting machines are not safe for democracy!? In some bizarre pretense at democracy, the ACM has presented only the arguments which favor their opinion, then asked the membership to have a ?poll? to say whether we agree or disagree. The poll is conducted electronically, of course.

I think this is a really bad idea. Here are my reasons:

  • Paper voting systems are broken. Nobody can deny that. If the election of 2004 is as close as all indications say it will be, the difference in popular vote will likely be decided by fraudulent and/or erroneous votes (in favor of either candidate; the point being that there is a margin of error that will possibly be larger than the difference of vote). Technology such as that used to protect multi-million dollar banking transactions is the only way to guarantee safe and reliable voting. We need to be working toward a solution, and incremental improvements are better than status quo. Engineers should be figuring out how to fix the system; not wasting time playing politics and impeding progress.
  • Most paper voting systems today are machines, anyway. Many of the routes by which the electronic voting system could be compromised are also routes by which mechanical voting systems could be compromised. And current systems have plenty of other well-known compromise vectors. Perhaps we need to have a secondary paper audit trail to audit the paper put in today’s voting machines? The idea that current electronic voting machines do not represent a significant improvement over status quo is ridiculous on the face and stinks of politics.
  • I pay my membership fee for ACM to do things that advance the state of my profession. I do not like to see my money used for controversial political advocacy. I do not like to see ACM present one-sided advocacy and ram it down members’ throats. Just as I reacted when IEEE lobbied to prevent foreign visas for high-tech workers, I find this activism by ACM to be an abuse of my membership money.