Four essential topics of 2011, in charts

The Year In 4 Charts: Planet Money does an excellent job collecting four economic charts (themselves chosen from three collections of best-of charts). I’m a dilettante as far as economics and economics go, but these charts do a great job of rolling up what seemed to have been the essential stories of the year.

Spendingandrevenues custom

A picture can nullify a thousand talking points, no?

Organizing and decoding problems

My favorite sort of problem involves the interactions between individuals, groups of people, and mechanical rules generated by individuals and groups. Speculating on how the rules were shaped by the experiences of the individuals and groups is a fun game to play when presented with a curious set of circumstances. Conversely, my least favorite problems are those generated by the institutional brain damage of certain kinds of groups. Software and systems shaped by regulations and the particulars of monetary exchange are tedious at best.

I find it quite amusing when answers aren’t “clean” and technological systems aren’t the best solution. Often, no amount of analysis and brilliant coding can make an improvement. What is needed is to understand what people do, why they do it, and persuade them to do otherwise.

This brings me to economics, specifically behavioral economics. If you take away all the math, economics is largely about how people behave in aggregate. It’s a useful tool in understanding how to work with systems that involve people. But there’s more to economics than explaining how people interact in markets.

Russ Roberts, in the process of explaining how economics is not useful as a mechanism for answering questions like “did the stimulus work?” or “when will the housing market recover?”, gets to what really interests me about economics and finance:

"Is economics a science because it is like Darwinian biology? Darwinian biology is very different from the physical sciences. Like economics it is a very useful way to organize your thinking about complex phenomena. But it is not a predictive or very precise science or whatever you want to call it."

The crux of the biscuit, for me, is right in the middle. Economics is a useful way to organize an intricate and interconnected problem and figure out how to reason about it. In casually studying economics and finance over the couple years, I’ve come to form a better mental model about how the world works.

Its possible that this mental modeling is what I do when I’m coding. I’m poking how some code works, looking at its inner workings, trying to understand how it interacts with the code around it. I sift through revision logs to see how it got to where it is today, talk to others on the team about the code and why it ended up one way and not another. I’m organizing and modeling the code in my head, building up a model that describes .

Lately, I’ve been describing my work as tinkering with lines of code until numbers appear on the screen in the right order. This is invariably greeted with a comforting-to-me response like “I could never do that”. But I really enjoy this. I’m not just debugging my code; I’m sharpening the way the program is organized in my head. Once I’ve got my head around it, I decode that organization into words, code, drawings, etc.

With programs, there is some system of rules, forces, and interactions which describe how the code works or doesn’t. Economics, too, describes a system of rules, forces, and interactions that predicts how a puzzle of human beings operate. Organizing and decoding these technical and social puzzles is great fun.

Clips from unfinished pieces

On the crux of America's challenges:

Part of the American experiment is answering the question, "how can we best take advantage of abundance?" Beginning with manifest destiny and evident in the machinations of Wall Street, one of the story lines of America is the quest to make sure resources of all kind are abundant and generating wealth. But we're arguably at a pivot point. Our money and energy don't go as far as they used to.

How do we make the transition from resource abundance to resource scarcity?

On helping people troubleshoot the Gowalla API:

While this level of self-documentation is quite helpful, sometimes people have questions on the developer list. For this, I've found that asking people to show me whatever it is they're trying to do using curl is invaluable. It's a win-win situation. Often, dropping down to a lower-level tool like curl helps to focus your thinking and makes silly error obvious. If it doesn't become obvious to the API developer, they mail the list with the command they think should work. At that point its either obvious to me and I tell them what to change, or I have a nice, isolated test case from which I can easily try to reproduce their problem.

Who gets screwed when a borrower declares bankrupcty?

Is it possible that bankruptcy-declaring-borrowers are screwing lenders in aggregate? I find it really hard to believe that the banking industry, with its legion of lobbyists and regulatory capture, that any group of uncoordinated individuals could screw the banks.

On the other hand, there was lots of screwing on the part of the banks that led to the financial crisis. Whether it was predatory lending, relying on moral hazard to double down on terrible bets, or asinine compensation structures, the financial industry did something very human. They violated social norms. Except, corporations of this size don't have social norms. They have only market incentives; when the executives, board members, and majority shareholders look at the books, the numbers devoted to "doing the right thing" are probably a rounding error.

On tail recursion and compilers:

Fact of life: modern processors don't execute your code in the order the compiler spits it out.

If your code has, for instance, two adds followed by an if statement, it's pretty likely that second add is going to be executed concurrently or after the conditional. In the world of computer architecture, they call this out-of-order execution, and it's just another service your hard working processor offers to make sure your code runs faster than you ever intended it to.

On shorter cycles of production and the need to get past perfectionism:

Our modes of production are causing us to change how we produce. More and more mediums, be it journalism or software, are produced on shorter timelines. This is leading us to optimize production such that we can bang the content or code that matters into templates that mostly work, but have a tolerance for the rough edges where things don't work.

On Barack Obama's 2010 State of the Union speech that preceeded the health care debate:

Just for grins, I went and read the GOP response to the State of the Union. While they had some vague counterpoints policy-wise, it read mostly as subtle and useless jabs combined with carefully-constructed language to console their base. The GOP is a cynical, gutless organization.

On refactoring and deleting code:

People often say that they would miss having a refactoring browser in languages like Ruby, JavaScript, or anything that is reasonably dynamic. My glib response to this sort of comment is invariably "well, the best refactoring I know is to select the code to modify, hit delete, and start over." Let's take that apart.

I've observed that, despite our best intentions, we are often loathe to change code that we suspect is working, or that we suspect we don't know why it's there. And so, like the planet on which we live, applications accrete into Katamari balls of overly-coupled code that is bound only by locality. Cutting this Gordian knot is often the first step in reclaiming a project.

Deleting code is the knife with which we can attack this problem. Many will acknowledge the goodness of deleting code; it is, quite nearly, a virtue unto itself. I've observed that some of the best developers I know are always on the lookout for ways they can obviate code. So, by way of a strawman, I hope you see that I'm quite correct in this regard.

Language and brains, an update

Does Your Language Shape How You Think? An update on the current thinking around the Sapir-Whorf hypothesis, the one about language and the words therein shaping the thoughts you can and cannot form.

Warning: politics

Embedded within the migraine that is American politics are some very interesting ideas. Economics, markets, ethics, freedom, equality, education, transportation, and security are all intriguing topics. Recently, I figured out that the headache comes not from people or trying to make the ideas work, but in politics. Getting a majority of the people to agree on anything is a giant pain of coordination. When you throw in fearmongering, power struggles, critically wounded media, and the fact most people would rather not think deeply about any of this you end up with the major downer that we face today.

All that said, here are some pithy one-liners about politics:

  • If I were part of the Democratic leadership, I’d be wondering how you take the high road in a race to the bottom. And win.

  • If I were a Republican, I’d be wondering how to dig myself out of this giant hole I made by winning a race to the bottom.

  • If I were a libertarian, I’d be wondering how to convince people that the Tea Party is different from what I believe in.

  • If I were a leader of the Tea Party, I’d be wondering what I’m going to do when someone who claims to be a part of the Tea Party blows up a building or goes nuts with an assault rifle.

  • If I were a politician, I’d wonder how much I have to compromise my values and what I really wanted to accomplish but still get enough votes to keep my job.

  • If I were skeptical of climate change due to human activity, I’d be wondering how I’m going to find a spaceship, because this line of reasoning leads to the conclusion that the Earth is about to become very inhospitable.

  • If I were a nihilist, I’d wonder…nothing.

There, have I offended everyone?

Ain't talkin' 'bout the man

Here’s a fun game. “The Government”:

Try something. Every time somebody complains about the evils or failings of “the government,” strike out “the government” and see what results.

Often, simply striking out “government” reveals a completely different, and far more useful, commentary.

On American political insanity

Still crazy after all these years:

Politicians should tone down the rhetoric. Protesters should read some history before making Hitler comparisons. Talk-show hosts should stop pretending that paranoid nitwits are asking reasonable questions.

The Economist does well to explain the insanity that is propagated by American political media. Reading articles like this help me stay sane. Also: ignoring media with deadlines shorter than a week, and consuming as much constructive satire as possible.

Free Parking Is Not Free

Free Parking Isn’t Free. Turns out those parking lots, while sometimes handy, are actually pretty gnarly, if your goal is to build a nice place to live:

Throughout the 1940s and 50s, as automobile use became prolific in the United States, parking became a problem, congesting streets and overflowing into neighbors' lots. In response, most municipalities instituted off-street parking minimums requiring developers to provide all the parking that the residences or shops would need on-site. This seemingly sensible notion has created a cascade of problems. It encourages sprawl by spreading buildings apart to make room for more parking (requirements usually demand more area for parking than the building it supports). It also weakens urban design, as urban buildings are torn down to make room for desolate surface lots, and hulking parking garages sprouted in downtown areas. It discourages revitalization of existing historic buildings, since developers have trouble meeting modern parking requirements in neighborhoods that were built before auto dominance. And the requirements drive up the cost of development: parking spaces can cost between $10,000 and $50,000 – typically more than the cost of the car that occupies it. High parking requirements can raise the price of homes and apartments by $50,000 to $100,000, a serious challenge to affordability.

When I have more money that I know what to do with, I’m going to start buying up parking lots and turning them into parks. It’ll be my little way of sticking it to people who drive over-large cars.

The joy of enigmas

...thinking about an enigma. There it is before you—smiling, frowning, inviting, grand, mean, insipid, or savage, and always mute with an air of whispering, ‘Come and find out.’

— Joseph Conrad, Heart of Darkness

The economic dashboard

What’s the state of the economy? - a stunningly brilliant visualization of where the economy has been (lagging indicators) and where it’s going (leading indicators). The explanations are excellent too. (Via Flowing Data).

Decoupling newspapers

My wife works for the local newspaper (thankfully, in their less layoff-prone online division). So I’ve been wondering about this whole newspaper business collapse would work out. Clay Shirky’s got an important point:

Society doesn't need newspapers. What we need is journalism. For a century, the imperatives to strengthen journalism and to strengthen newspapers have been so tightly wound as to be indistinguishable.
It's not about the end of newspapers, it's about decoupling the core of journalism from newspapers. We'll see how that pans out. Let's just hope cable news doesn't take its place.

Get excited and make things

Don't keep calm and carry on.

Yes.

Congruous capitalism

Here’s some idealism for you: I would like to think that the future of human endeavors is congruity. There is a lot of emotional writing about rational topics. That emotion often colors the writing to the point of irrationality. It seems to me that this is because many of the prominent systems of our lives are incongrous. These inconsistent and seemingly irrational systems drive us to emotion and our logic suffers for it.

I’ve been reading Failed States by Noam Chomsky. I think you could summarize it as “the U.S. government says it is doing something for reason A, but is in fact doing it for reason B”. People really dislike Ticketmaster, who would defend themselves by saying “we’re trying to make access to live music easier” but everyone knows “we’re trying to maintain a monopoly and squeeze the margin as tightly as possible”. You can play this game at home for any institution that is widely reviled.

Some other incongruous systems:

  • Politics: ostensibly about the will of the people, but really about the short-term interests of those with the clever lobbyists
  • Telecommunications: ostensibly about helping people communicate, but really about maintaining monopolies and minimizing the maintenance cost of those monopolies
  • Insurance: ostensibly about helping people put money away for a bad day, but really about minimizing pay-outs to maximize profit

It is my hope that the businesses that emerge from this economic conflagaration are those that connect more directly with their customers. In doing so, they are more transparent. It is harder for their internal and external goals to conflict. In this way, they can profit from aligning their objectives with those of their customers. Sure, they may not make obscene profits, but that’s fine.

Here’s a tag-line for this congrous capitalism: “May greedy capitalism die by a thousand cuts of moderately-profitable honesty.”

On news: The Economist

At the height of the DeLay/Rove movement, I became very disenchanted with news and politics. The propaganda, the lack of reason and the generally grim outlook were causing me too much stress. So, I stopped following news. This was good for my well-being, but I felt a little guilty about not understanding what was going on.

Fast forward a few years; the economy is booming and the paint is starting to peel on the Rove master plan. I’m taking light rail to work every day, so I have some quality time for reading on my hands. I don’t remember where I got the hunch, but I went ahead and subscribed to The Economist to read on the train.

I originally let my subscription lapse, as I found it difficult to keep up with the magazine on a weekly basis. However, as the mortgage crisis peaked, I resubscribed. I’ve found it extremely useful in trying to understand what exactly is going on, how it compares to previous downturns and as the basis for a bozo filter.

Regarding my earlier discoveries that everyone has an axe to grind and that the news cycle is often too short, The Economist is well aligned. Their axe to grind is the superiority of free markets and democratic societies. They publish weekly and cover a gamut of topics that forces them to only put ink to topics that are actually meaningful.

In summary: The Economist is a great source of news if you are wary of news sources and I heart it. It’s a fantastic place to start understanding the non-sciences that describe our world.

What I'm Thinking

Last night at Cohabitat, we did some lightning talks. The prompt was “What I’m Thinking”. I decided to take a cross-section of topics I’ve been immersing myself in lately. And of course, every good talk needs a gimmick, so I went with some of the fantastic shows on television right now. Here’s a map of the topic:

WhatImThinkingSmall.jpg

And here’s a video of my talk:


What I'm Thinking from Adam Keys on Vimeo.

It’s a whirlwind tour through software, abstractions, economics, finance, Mad Men, business, the messiness of life, Gossip Girl, indie developers, 30 Rock, sweating the details, product development, LOST, life’s interconnectedness and how awesome it is to try to understand all of this.

I hope you enjoy it. I forgot to take questions after the talk, so please feel free to correct me or inquire in the comments.

The Trading Places solution to the credit crunch

Put on your federal government hat. Get the remaining TARP funds out from under the mattress.

  1. Note bank share prices
  2. Start buying shares in banks
  3. Announce you are going to buy every bank in the country
  4. Let the price go up a bit, but keep buying shares
  5. When the old guys get nervous, start selling
  6. Keep selling until prices drop below the noted price
  7. Put the TARP funds back under the mattress
  8. Use the profits to prop-up the already propped-up banks
  9. Insist they actually lend the money this time

At your discretion, send the SEC on an executive retreat and accidentally disable Blackberry email servers.

On news: beginnings

I first started trying to figure out the world, and especially politics, after September 11th. Before that, it was a topic of tangential concern. Afterwards, of course, it seemed critically important. My roommate at the time was a rather strong adherent to Fox News. I started reading weblogs that were pretty much the polar opposite in opinion. Somewhere in the middle, I frequently watched The Daily Show. I say they’re in the middle because, roughly speaking, they are not left or right wing but anti-idiot.

I quickly discovered two things.

First, everyone has an axe to grind. Trying to figure out that person’s axe is an unfortunate necessity to understanding whether they are a good source of news and opinion.

Second, twenty-four hour news and dozens of weblog posts a day are just too twitchy. To support that rate of production, you have to make a big deal about lots of things that are really no big deal at all. A daily news cycle is better but still intolerable. One week is the shortest term over which you can stand back and start to decide which events are meaningful.

Long-story short: I recognize Fox News as propaganda, dismiss CNN and MSNBC as too twitchy, realize that weblogs are too spazzy and that, in general, people are colored by their opinions and vetting them is not interesting to me.

Compare and contrast

Compare. “Suburbs built on top of military/industrial complexes”:infranetlab.org/blog/2009… - intriguing yet awful. Quirky and cute - “people re-enacting Far Side comics”:www.flickr.com/groups/fa…

Contrast. Assaf Arkin notes that the current “recession may bring us more apps that put function over form”:blog.labnotes.org/2009/01/1… Hopefully this means we won’t hear about Rich Internet Apps (blech!) for a while. On the other hand, hopefully we will see more apps that leverage “game mechanics”:bokardo.com/archives/…

Birdland, Forgetting, Libertarianism, Hoboken

Hello, 2009! Let’s try a slightly different format. Starting it out with ““Birdland” by Weather Report”:http://www.youtube.com/watch?v=pqashW66D7o&feature=related can’t hurt.

Shawn Blanc says “the best todo software lets us forget”:shawnblanc.net/2009/thin… I absolutely agree. Shawn also pointed out “Rules For My Unborn Son”:rulesformyunbornson.tumblr.com/, which is indeed a great set of guidelines on being a mensch. A choice “JFK quote from therein on optimism”:rulesformyunbornson.tumblr.com/post/6117…

Provocateurs “Zed Shaw”:www.zedshaw.com/blog/2009… and “Giles Bowkett”:gilesbowkett.blogspot.com/2009/01/f… are in much better form when they are tilting against libertarianism. Which isn’t to say that they’re right or libertarianism is wrong. They’re just better at tilting against social abstractions.

If you’ve ever looked at writing tiny web apps or services with Sinatra, you’re probably interested in “what’s proposed on the Hoboken branch”:gist.github.com/38605. “Ryan Tomayko”:tomayko.com has great taste, I tell you.