Reflected Glory

Yesterday, Sam Palmisano, IBM's CEO, was the opening keynote at the National Governors Association annual meeting. Among the usual corporate boiler plate citations of relevant corporate involvement (a rather longer and duller version of "I fell your pain") he thought it noteworthy to mention that among IBM's accomplishments was its involvement with Apollo 13; not the Apollo program, but specifically Apollo 13.

IBM has had a long association with NASA providing onboard guidance computers for the Gemini program, the guidance computer on the Saturn 1B and the and instrument unit on the Saturn 1B and Saturn V not to mention System/360s for the Houston flight control center and systems on Apollos 14, 15, 16 and 17.

I know Apollo 13 is perhaps the best known of the Apollo flights (although I remember 8 and 11 better), but citing the one mission that was almost the most spectacular disaster in NASA's history (not forgetting Apollo 1 and Challenger) doesn't seem like the best way of basking in NASA's reflected glory.

Some computer interfaces I have known

1) Tektronix teletype terminal (300 baud) to some anonymous mainframe - 1981
2) HP basic desktop computer (model unknown) - 1982
3) IBM 5250 into System/34, System/36, System/38, AS400 - 1982-89
4) IBM 3270 into VM/CMS, 4331, 4361, 4381, 3033, 3083 - 1982-89
5) IBM 3270 into ICCF and CICS/VSE 4381 - 1982-89
6) IBM PC DOS -1982-89
6) IBM PC Windows 3.1 - 1990
7) IBM PS/2 and OS/2 -1991
8) Dell Optiplex PC Windows NT 3.5 - 1993
9) Apple Macintosh II System 4 -1996
10) Apple Mac 6100 System 5, System 6, System 7, System 7.5 -1997
11) Dell XPS 5100, Windows NT 3.5, Windows XP Professional, Fedora Core 2, Core 3 - 2000
12) Dell Laptop (model # forgotten) Windows XP Professional -2002
13) Home built Intel based PC Windows XP Professional - 2003
14) Apple Powerbook (Motorolla) OS X -2004
14) Dell 1500 server, Windows 2000 Server, Fedora Core 3, Core 7, Ubuntu 8.04 LTS -2003-09
15) Home built Intel Core 2 duo Windows XP Professional - 2005
14) Apple Macbook Air OS X - 2008
16) Dell server, Ubuntu 9.04, 9.10 - 2009
17) Hosted VM, Ubuntu 9.10 - 2009
18) Home built Intel Core 2 quad Ubuntu 9.04, 9.10. 10.04 LTS, VMware Workstation 6.2, 6.3, 6.4, VMware Player 3.01, 3.1, Windows XP Professional - 2008-2010

VMWare Player 3.1 and Ubuntu 10.04

I almost gave up on 10.04 as a host OS since Player 3.0.1 didn't get on well with it; frequent freezes and hard reset. However, last week (May 25) VMware released Player 3.1: and that has cured the problem. So far 6 days entirely problem free.

PR Disaster? Or something more machievellian?

First some observations about the Deepwater Horizon oil spill. According to 60 Minutes, the Deepwater Horizon did have a pretty good safety record until last month. BP's recent spate of safety problems may have as much to do with its takeover of ARCO as anything else. The well that the Deepwater Horizon drilled was apparently at a record-breaking depth below sea level; working in these conditions means charting new technological territory. The government can't "take over" the effort to plug the well since the only people / companies with the requisite capabilities (knowledge and physical assets) for working at these depths are BP and the companies (Transocena, and Halliburton) who are its partners in crime.

As frustration rises so does the level of inflammatory rhetoric. Even those who may know better likely feel compelled in their public utterances to ratchet up the level of accusations and demands for action. BP and the US government need each other. BP needs access to new oil leases, and US (and thus the government) needs the energy. But BP screwed up by appearing to be trying to shift blame onto its partners and the government screwed up by not setting expectations and by making illogical or impractical demands of BP, and by making promises on which it can't make good.

On side note, it's interesting that states don't want the ferderal government to spend federal tax dollars - unless it's on their state. Bobby Jindal, a one time opponent of the stimulus bill, now appears quite keen (an understatement) to accept help from the feds.

OK. So much for the boring stuff; what about a conspiracy theory. Of all the oil majors, BP was the first to embrace the idea of a transition to greener non fossil fuel energy. Its new 'flower' logo and the name change from British Petroleum to BP reflected both its increasing internationalization (if I remember this was about the time it bought ARCO) and a vision of being about more than just petroleum products.

Suppose that in the aftermath of the Deepwater Horizon disaster, the government acts to transition more quickly than before towards green energy. Of all the majors, perhaps BP is best positioned to take advantage of such a shift in policy. So given the spill (and I'm not saying that BP blew up the rig intentionally; I am sure it genuinely was an accident), does BP benefit more, relative to its competitors, by making the oil industry look good or making it look irresponsible. Since I doubt that any legislation could be directed exclusively at a single company, all the oil majors would bear the same burden. And those companies with the greatest diversity and the least dependence on oil will profit the most.

"I'm just saying...", as they say.

Another Normal Accident

The explosion on the Deepwater Horizon, the oil platform leased by BP from Transocean, seems to be another or Chuck Perrow's "Normal Accidents" - that is something catastrophic that arises when a number of smaller errors and problems compound. According to Mike Williams, an electrical engineer on board the rig when the explosion occurred, who was interviewed on 60 Minutes, there were a variety of factors, "a series of mishaps", that together seem to have lead to the disaster. The drill string was raised accidentally while the BOP (blow-out preventer) was being tested, causing damage to the "annular" rubber seal at the top of the BOP. Chunks of rubber were coming up in the drilling fluid, but this dismissed as not "not out of the ordinary - not a big deal"; presumably, this may not have been and unusual occurrence. One of the BOP control pods was partly inoperative - but then there are two for exactly that reason and the second was thought to be operating properly. Because the drilling operation had been delayed by unexpectedly tough going , the project was 200% over time, and there was increase pressure to speed up the end of project. This lead to a decision to withdraw the mud from the bore hole before the third and final plug was set. Each element on its own was clearly serious, but not catastrophic; their albeit improbable coincidence was.

Walter Taub

Walter Taub was an actor and my uncle. This picture I took in about 1976 in the house I grew up in in Sussex. He and his wife, Luxi, visited infrequently, largely a result of the authoritarian Czech Communist government. He was fairly well known in West Germany as well as in Czechoslovakia. 

I saw him only twice on the stage, once in Salzburg at the Festival in about 1975, and once at the Burgtheater in Vienna in 1977. I understood little since my German is very rudimentary, but I do remember that he seemed to have what people refer to as "stage presence". When he made his first entrance, there was an expectant and appreciative murmuring from the audience. He waited it seemed several seconds before delivering his first line, heightening the anticipation. Perhaps it was a combination of notoriety and charisma and the audience’s response to both. An unspoken dialogue between actor and audience. He had a deep resonant voice - somewhere I've got a vinyl recording of his portrayal of Švejk which I should try and find, if only to see it corresponds to my memory of his voice from 30 years ago. 

I do remember he had a good sense of humor, something that he must have needed: he signed Charter 77, a document critical of the Communist regime in Czechoslovakia. To suppress what the government saw as seditious activities, it decreed that while he could continue to act on the Czech stage, his name could never be mentioned in the program or the reviews; a pretty good way to squash someone's career. Things could have been worse, were it not for his friendship with Willy Brandt, the West German Chancellor. Brandt intervened on his behalf and he was allowed to travel to the West (though his wife, Luxi, could never accompany him outside the country). He was thus able to continue to work both in films and on the stage. Both Lux and Walter were in West Germany in 1968 when the Russians invaded Czechoslovakia. They could have remained there; Walter had plenty of work. But Lux was determined for many reasons to return home to Prague. I never asked her about this, but my father suspected this was a decision she later bitterly regretted. 

Prague, when I visited in 1977, was pretty gray but the architecture was wonderful. The underground was being build then and I remember huge stretches of Národní, with water mains and electrical conduits dug up and suspended on scaffolding that stretched for what seemed like miles. 

Despite the political restrictions and economic mismanagement (not something on which communist countries have a monopoly, or so it seems) that meant queuing for bread and meat, Lux, as something of a celebrity, had what in relative terms was a fairly easy life. She was well known at the best restaurants in the city, and dined out regularly. But I don't think she was very happy. By the early 1990s her memory was fading and in 1995 or 96 she was taken into hospital and I went to Prague for a couple of weeks to see her. She died the day before I was due to return to France.

Oral history

My father died about two and a bit years ago: he was 91. Although I had urged him to write about his experiences, he never really had the patience, and as a result much of the richness and variety of his experiences are now lost. Much as I was moved by Umberto Eco's depiction of the loss of knowledge when the monastery library burned, I am also perturbed that without some effort to record for future generations certain profound experiences, we will be collectively the poorer. Although no one reads this bolg (that's fine - my reason for writing it doesn't include seeking fame on the internet), I hope that in some way serves as a contribution to an electronic 'oral history'.

At the end of the war in Europe (WWII), my father led a small team of doctors from Britain back into Czechoslovakia. Since there was still fighting on the Eastern front, their route was strangely circuitous. One of the team's first tasks was go into the Nazi concentration camp at Terezin. The team had brought DDT, a pesticide that was in short supply in Europe. Their task was to rid the camp of potential carriers of disease.

My father was somewhat circumspect about what they found - they were the first people to enter the camp after the Nazi's left - but I do remember him recounting the unspeakable sight of mountainous piles of human bodies. The corpses were so emaciated they assumed all were dead, but to their horror, found that some (many) were actually alive. They spent several days sorting the dead from the living and spraying them with DDT. What happened after the first day or two, I'm not sure. My memory and my father's telling of the story (which I last heard perhaps 25 years ago) are unfortunately fading from memory.

Ubuntu 10.04 LTS and VMware Player 3.0.1

After three days it's pretty clear these two don't really play well together. Interestingly I'm having the same kinds of problems as I had a while back with VMware Workstation 6.5.3 and Fedora 9: the mouse and keyboard freeze without warning, ssh from other machines is blocked and there is no alternative but a reset. I read somewhere that 10.04 has done away with HAL and I have a sneaking suspicion that Fedora did the same with Core 9. Perhaps that's the issue...

Who knows. I don't have time to look into it. If I was a good citizen I might soldier on and submit bug reports but since I have already wasted far too long recovering from the mess the crash during the 10.04 install made of my RAID array, I'm not feeling all that charitable. So everything is being backed up (twice) and I'm going back to 9.10 which has worked well for six months. Perhaps in year when the bugs are worked out I'll give 10.04 another try but frankly I'm loosing my appetite for the latest if this amount of faffing around is the cost.

This of course is the side of the open source development model that commercial software companies stress though I had studiously turned a blind eye to. There is no direct accountability for poorly written products, and so what one gains with hundreds or thousands of beta testers, one looses in a lack of discipline, control and accountability. Swings and roundabouts, and there is no free lunch.

Not so Safecopybackup

Last year I moved my offsite backup service From Mozy to Safecopybackup.com. In hindsight, a very very poor decision. Here's why:

1. While the client application appears to be tracking files in real time, and even tells you that backups are complete, they're not. A few files (and yes they were ones I wanted) I modified yesterday hadn't been backed up for three weeks.
2. Recovering data from a complete drive failure is nearly impossible because there is a limit of 200MB in the files that the web interface will allow you to zip and download.
3. Don't think that the Windows webDAV will allow you to get around this restriction; it collapses regularly and stops when files are "not found" on the server which happens frequently.
4. Files are sometimes restored with garbled file names.

So while you can see your data on their website, for all practical purposes it's not recoverable, unless you have a month and want to download files one at a time.

What I imagine most people look at when considering a backup service is the security of the store, the easy of setup and the simplicity and regularity with which files are saved. What I certainly didn't look at was what happens when you have a large volume of data to restore. Even when I had to restore the odd file here and there, something that bought me into direct contact with the restore function, the penny still didn't drop. Having spent almost a week restoring files piecemeal, it's not something I'm likely to forget any time soon.

Some thoughts about software RAID

Last week I upgraded from Ubuntu 9.10 to 10.04 LTS. I will leave it to you to decide whether this was such a good idea: But now it's done.

Somewhere in the process the system stalled (X-windows froze and there was also no way to ssh in from outside). The hard restart cause mdadm to see both my RAID10 and RIAD5 arrays as missing two of the four drives. The array wouldn't assemble. Then I may have done something stupid. I have in the past been able to recreate the array using mdadm --create. It's almost certainly not the right way to deal with the problem but experience as March notes, can be a bad teacher, and is has worked on several occasions.

When the arrays restarted the ext3 file systems on both /dev/md0 (Raid10) and /dev/md1 (Raid5) were completely destroyed.

I have three takeaways from this episode:
1) I should probably have tried to learn about mdadm recovery procedures, but there's not enough time in the world to do everything one ought, and I doubt that I will do so even now.
2) What is the weakest link in the system? The hardware (specifically the disks which haven't failed in 3 years) or the software of which mdadm is a part which has failed so many times I've lost count. If the goal is not just the illusion of security RAID offers but actual security, one has to wonder whether it's really such a panacea for somewhat naive end users like me.
3) When choosing a backup service, ask not how fast it can back stuff up but rather how quickly and easily you can restore your data.

Why I'm becoming a Luddite

"If there's a problem, technology will solve it". For much of the 20th century this has been the mantra, applied reflexively and unquestioningly. Technology, at least the bits I interact with, does have real benefits. My home is warm and well lit. I have access to more information than I know what to do with all without getting up from my desk. The list of benefits is long. So why am I worried?

This evening, I caught part of a broadcast of a panel discussion at the World Economic Forum in Davos (here is a summary). The Session PanelistsBill Gates, Co-Chair, Bill & Melinda Gates Foundation, Jakaya Kikwete, President of Tanzania, Ellen Kullman, Chair of the Board and Chief Executive Officer of DuPont, Nguyen Tan Dung, Prime Minister of Vietnam, Ngozi Okonjo-Iweala, Managing Director of the World Bank, Patricia Woertz, Chairman, President and Chief Executive Officer of Archer Daniels Midland. An impressive panel.

But I came away with serious misgivings. The three Americans all expressed a deep-rooted faith that technological innovation was the solution. Interestingly this was not a view shared by the Prime Minister of Vietnam, the President of Tanzania, and the Managing Director of the World Bank who suggested that there were other approaches that should be perused, including fixing distribution infrastructure and local markets, irritation, fertilizers and simple mechanization.

The kind of innovation Woertz Kullman and Gates were talking about is the engineering of new strains of crops that are higher yielding and pest and drought resistant. This sounds good but the economic model is less appealing (unless you are a ADM). In order to pay for this crop research, ADM has to ensure that farmers come back every year for seeds, which they will because as a by-product of some of the crop 'engineering', the plants are sterile. This has two implications. First Farmers, who have faced increasingly concentrated and powerful buyers, now increasingly must deal with powerful suppliers too. So from an industry analysis perspective, framers are in what Porter would term a relative unattractive industry (there are many of them and low barriers to entry).

But while I sympathize, that's not my main concern. What really worries me is complexity, interdependence, and tight coupling: all of which, while making the system of agricultural production more efficient, also make it more fragile and likely to fail catastrophically. Charles Perrow coined the term "Normal Accidents": we've just seen one in the financial crisis of 2008/9. entities become more interdependent and inter-linkages proliferate, perturbations that once would have caused small local ripples now generate cascading tidal waves. A full scale depression was averted with the injection of large amounts of money. But money can be found fairly quickly - food on the other hand, cannot.

Imagine a day when all the food on the planet comes from one or two 'high yield' strains, for example one strain of wheat and one of corn, those that are the most profitable for ADM to sell and for farmers to buy. Then something happens. "What can possibly go wrong?" technophiles ask. "After all, these strains have been vetted and passed by the FDA, and have been used for years without a problem". To which my reaction is "how did we get antibiotic resistant strains of staphylococcus"? We didn't see that one coming. Neither will we be able to anticipate the ways in which these strains on which we will all be dependent will fail; but they will, and since they are all genetically identical the entire system will fail at once. Injections of cash will not help if the raw material for the food manufacturing system dries up. It will ripple through the entire industrial food value chain; livestock will die, food prices will soar, staples will disappear. The Irish Potato Famine of 1845, but this time on a world-wide scale.

It may be 50 or 100 years before we get to that point: but if we continue on our current trajectory driving out requisite variety and building complex interdependent systems in the pursuit of efficiency, I predict there will be a "normal accident", and one of a scale that could do for us what a large meteor did for the dinosaurs.

One week on...

VMWare player

Shortly after my last operating system related post, I decided to try VMware Player instead of VMware Workstation. Not quire sure what prompted this but when I found that the latest version of Player (3.0) allows the creating of new guests, much of the rationale for Workstation disappeared. Six weeks later, Player is still in place. No hitches at all. Amazing.

Throw-back to the stone age

Google in China - Reprise

Anne Lawrence, in a fascinating case study, drew attention to the dilemma Google faced with involvement with Chinese language search and its decision to place servers in China. This posting suggests Google is reconsidering its position.

VMware Player

I have been a (relatively) happy VMware Workstation user for several years now. I was interested when VMware announced Workstation version 7 - until I discovered that there was a significant upgrade charge.

Since VMware Player 3.0 was announced at about the same time, I thought I'd see what Player was like: and that was three weeks ago and I haven't used Workstation since.

I'm not a real techie - I just want something that will run Linux and Windows side by side, and to be able to test new OS releases before migrating to them permanently. Sun's VBox, which I looked at and rejected as feeling like a bit of a toy a year ago, hasn't really improved as far as I could see. Player, in contrast, seems a serious piece of software. VMs seem to suspend and restart faster than with Workstation 6.5.2, and the switching bar at the top of the screen takes less space which I like. I've not found anything I need to do that I could with Workstation but can't with Player. Since version 3 supports the creation of new VMs, for people like me who simply want to have multiple OSs on one box, Player seems viable - and it's a no charge item.

Many years ago - here I'm thinking about about mainframes and IBM's VM product as much as desktop VM solutions - a big question was overhead; how much of performance hit does one take when running an operating system as a guest in a VM? With the falling price of memory and processing, the question, at least for much of my work (document reading / editing, and a small amount of C++ and PHP), has become largely moot. Only rarely do I notice any performance issues. So, thank-you VMware; sometimes technology does make our lives a bit easier.

A shiny new system

Last week, in a moment of weakness, I forgot my rule to never update the kernel of the host OS. Whether I've really followed it assiduously I don't really remember, but in hindsight it seemed like a good rule; because the following morning the system started but GDM didn't. I could ssh in from outside but no console. Being a bit of a newbie (or rather an oldie who hasn't yet learned his way around Linux), I didn't manage to figure out what had happened (probably something to do with the proprietary ATI/Radeon driver which I installed in another moment of weakness a year or so ago), or rather how to fix it. So, after a considerable amount of messing around, patience began to give way to a sense of needing to do something drastic. So I decided to replace the host Ubuntu 8.04 LTS system with Ubuntu 9.10.

The first big difference is support for software RAID right out of the box. This was excellent news, since the host OS sits on a RAID10 array and my data on RAID5, and keeping everything in tact took some effort when I moved from Fedora to Ubuntu 8.04 LTS.

Not everything went smoothly. VMware Workstation 6.5.3 doesn't install properly. The installer hangs when configuring VMware Player, and while there is a workaround, there are other issues. A patch needed to get it running with the 2.6.29 and later kernels only seems to work on 6.5.2 (for which the patch application script was written) and I wasn't able to modify it to work on 6.5.3.

So back to VMware Workstation 6.5.2; here there is a mouse / screen position problem. The mouse is 'lost' to the guest at the edges of the screen. Some searching suggested a GTK problem but fortunately VMware can be directed to use it's own shipped version of GTK (add "export VMWARE_USE_SHIPPED_GTK=yes" to /etc/vmware/bootstrap).

So far so good; 24 hours in and everything is back to normal.

At one point, before I found the mouse issue fix, I did contemplate going to Sun's VBox. It's pretty, but...

I converted my guests to ovf format; this required some editing of the ovf and mf files, the former because the sound card wasn't recognized by VBox import, and the latter because editing the ovf file means changing the SHA1 sums in the mf file. After converting the guests, I tried booting them: the Windows guest crashed, I think because Windows is rather fussy about its (virtual) hardware and perhaps the removal of the sound card was too much? I'm guessing here. The Ubuntu 9.10 guest came up but VBox doesn't have a video driver that presents the guest with a 1680x1050 screen so it took a while to get the guest to fill the screen. It was a bit flaky sometimes reverting back to 640x480, and once just scrambling the signal completely. All in all (and this is just my lay-persons opinion) it felt rather Mikey mouse compared to VMware.

So back to VMware it is. And now I promise I'll never install a propriety video driver again (yup, we've heard that before...).

Third party rating agencies

DPReview is a website that has been providing reviews of digital camera for 10 years. It is an example of how things can so easily go wrong.
I recently noticed that almost all the cameras they reviewed were "highly recommended". So I looked at all the reviews they have done since 1999 and an interesting trend emerges.

The graph show the average of ratings awarded each year using 5 for "highly recommended" to 1 for "below average". 14 of the 19 cameras reviewed in 2009 were "highly recommended".

This kind of 'grade inflation' is understandable; the site relies on equipment makers loaning them the cameras for (pre)review and doing so early so as to attract eyeballs to the site. Manufacturers are understandably more likely to lend equipment to sites that give them high marks. So getting hold of new cameras is easier if you give the makers better ratings.

However the value to consumers declines as ratings are compressed into the top category. Telling one from another is no longer a case of looking at the bottom line, but now requires making a subjective judgment (often based, in no small measure, on someone else's subjective judgment).

Ratings inflation also compromises the site's brand for integrity and objectivity. If the raters are basing their assessments on something other than their response to the product, namely the desire to get product to review and eye-balls to the site, how much faith can one place in what they write? (And to my eyes, some of what they write bears absolutely no relation top the test images they comparing.)

Of course, this kind of compromised objectivity applies not only to reviewers of digital cameras; the financial instruments that were the building blocks of the "normal accident" (Perrow, 1984) that befell our economic system last fall, were rated by supposedly impartial third parties - and look how well that worked out.

Bullwinkle Bear 1991-2009

After a short illness, Bullwinkle Bear, "Woodles" to her friends, succumbed to the dual ravages of kidney failure and diabetes.

A dear and loving friend, she helped me decide on a new career, shared the burden of many late nights reading, saw me through comprehensives, my thesis defense and data collection. After relocating to the US, she shared with me the joy of my time at Stanford, helped finish my thesis, find a job, begin teaching and navigate my way to tenure.

A constant companion, I will be very lonely without her company; my work buddy has left me to figure the rest of this out on my own. Than you, Woodles, for your love and devotion; you are forever with me in spirit.

The perils of socilized medicine

There is much ado from the political right about the perils of "socialized medicine". One of the claims used to support this position is that "big government" will be making decisions about the allocation of scarce resources. This is framed as violation of our civil liberties - apparently the right to acquire whatever scarce resources are available if one is willing and able to pay the market price. The government should not making these kinds of allocation choices.

Why then is there not a furore at the CDC's recommendation yesterday concerning the allocation of limited supplies of the H1N1 vaccine? In this not government rationing? Isn't this government interfering with our right to choose? No: it's just a recommendation. Those making the final decisions on allocation of the vaccine are doctors.

Oh, but isn't having doctors making allocation decisions (like who should get the heart transplant) based on something other that willingness to pay also a violation of our civil liberties? That sounds like socialized medicine all over again. It's all rather confusing.

Not at all: doctors - at least the good ones - will simply sell to the highest bidder like the any rational homo-economicus. And the others must therefore be... (gasp) ..."socialist".

Globalization and trade

Data from the World Trade Organization show that since the end of the Second World War there has been an exponential (in the mathematical sense of the word) increase in trade between countries (red line in the chart). One striking aspect of this is the lack of sensitivity to the price of oil (blue line), which seemingly contradicts Jeff Rubin's thesis in his new book "Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization". In fact there is a positive correlation (0.48) between oil prices and trade, which remains (0.43) when trade flows are lagged two years.

However, Rubin's predication is that oil will increase in price by an order of magnitude within a very few years - presumably then the current (lack of) relationship will change?

If he's right, then do we still have the infrastructure to reverse the off-shoring that has been going on steadily for the last decade or so? This is not just a question of physical assets, but skills, some of which take time to learn.

A fragile world

The world we inhabit for such a brief moment in time is fragile.

"There, contained in the thin, moving, incredibly fragile shell of the biosphere is everything that is dear to you". (Loren Acton)

In my next three posts to this site, I want to dwell briefly on three aspects of fragility: globalization and trade, the ecosystem, and human nature and civility. They are different but I contend linked. I mentioned the first a while ago, albeit rather briefly (if not cryptically) but want to return to it. The second ties into the first and my fear is that the third depends on events in the other two.

Risk postcript

In reading my prior post, one might interpret my observation as implying that bankers' decisions have less serious consequences than the decision of pilots. Unfortunately, that may not be the case.

Data collected by C. Pritchard (1990) suggests that suicides rise by 1.72 per million for every 1% rise in unemployment*, which has increased by 4.2% from May 2008 to May 2009. This would suggest that the deteriorating economy has contributed to about 1,700 additional deaths in the last year. This may be a conservative estimate since it does not take into account other factors such as home foreclosures. By contrast there were on average only 66** accident related aviation fatalities a year over the period 1989-2008, and only 16 per years between 2002 and 2008***.

However the point of my last post still stands; paying people more money does not seem to make us any safer.

* Panel data regression based on this data available on request.
** Deaths caused by an illegal act are excluded from the calculation.*** 2009 however is turning out to be a bad year - 49 died in the regional air crash in February in Buffalo, NY, the incident that prompted the Senate hearings mentioned below, and 228 perished in the Air France Rio to Paris flight on June 1st. Pilot error may have been a factor in the first; the cause of the second has not been determined.
Pritchard, C. 1990. Suicide, unemployment and gender variations in the Western world 1964–1986. Social Psychiatry and Psychiatric Epidemiology, 25(2): 73-80.

Compensation and risk

In testifying before a hearing of the Senate Subcommittee on Aviation Operations, Safety and Security recently, Roger Cohen, President of the Regional Airline Association asserted that there was no data to suggest any relationship between pilot compensation and the risk accidents due to pilot error.

The same lack of relationship between compensation and risk-taking that puts others in jeopardy seems to exist elsewhere; for example in some large banks and one insurance company. Despite high compensation, the senior managers in the cockpits of some of the nations largest financial institutions were unable to prevent a crash.

We seem unperturbed that those in whose hands we place our lives earn minimum wage, while those who look after the money seem to make more mistakes yet are paid a thousands times better (literally).

Perhaps the banks' shareholders might think about this next time they take a regional flight to a shareholders meeting.

Type-casting

There are no good or bad people, per se: we simple ascribe these generalizations to others based on

1. our experiences in interactions with us
2. our observations of their interactions with others
3. reports of their interactions with others

A person might behave well or badly towards you and yet behave in quite the opposite manner in relationships with others. Does this make them good or bad? We are surprised when hardened criminals do selfless things, or when philanthropists turn out to have been terrible parents. The problem is with our inability to deal with complexity, a matrix of relations rather than a vector of friends and enemies.

A fly by night rant

I'm a little tired this morning because I was woken at about 3:20am and couldn't get back to sleep. The cause of my insomnia was a comment made by a Fox "News" anchor that I found troubling (and regrettably consistent with my take on the channel's approach to broadcasting).

The comment in question involved the setting up of a segment following a commercial break which was to be devoted to ridiculing those (namely PETA) who suggested that President Obama's killing of a fly, and his seemingly indifferent attitude to the intentional ending of a life, might be something worth talking seriously about in terms of the questions it raises.

What bothers me about the Fox News anchor's comment (and its tone) is its lack of reflection. The implication was clearly "why the fuss; it’s only a fly". It is a predictable knee-jerk reaction to an organization that Fox likely labels "dangerous nutters" - yet in the organization's response was surprisingly low key.

Stripped to fundamentals, what we saw was the premeditated killing of a complex self-sustaining multi-celled organism. Fox chose to ridicule those who it imagined would take exception to the callous destruction of any complex multi-celled life-form - animals - while it vilifies anyone who entertains the possibility of destroying a non-self-sustaining single cell for any reason whatsoever - just because the latter is human.

It is this inability or unwillingness to make connections and consider comparisons between situations that might share some common underlying attributes that is troubling. It is the same kind of disconnect manifest in those who advocate killing doctors who perform abortions or suggest that right to life applies to embryos but not to those sentenced to death. Without taking a position on any of these questions, one inevitable conclusion is that the right to life is not absolute, but that it comes with implicit boundary conditions; what these are differs depending on who you ask.

It is this same lack of reflection that prevents one from seeing one person's terrorist as another's heroic freedom fighter, depending on ones vantage point. This could be said of those who fought a guerilla war to liberate the colonies from the British, the Basque separatists, the Taliban mujaheddin (who were widely seen as heroes during the Soviet occupation of Afghanistan but are now longer held in such high regard), the Irish Republican Army and even some who resisted the Coalition occupation of Iraq.

It is thoughtless compartmentalization - "that principle applies there but not here" - that allows a single person to hold two axiomatically contradictory positions. The typical workaround that allows inconsistency to be ignored is simply "oh, but that's different". The questions, too infrequently asked in the media, must be "How exactly are they different? and why does that particular distinction matter?" Ultimately, such unexamined contradictions reflect either intellectual laziness or indifference to a coherent ethical position.

All of this is not to say that killing a fly ranks along side water-boarding, the Iranian election, North Korea's antics, the regulation of the financial services industry, and health care reform; the fly, like Letterman's stupid joke, is not one of the pressing issues of the day. But it does offer a starting point for a discussion on the right to life that gets past the ideology dogma and into the realm of ethics and morality.

Quit "wining"

Wine, the windows emulator for Linux, is going nowhere - for good reason. Wine is an open source project relying on input and effort from volunteers. The Wine website explains the rational for the community's efforts (see also OS/2, Microsoft and Open Source) as aiming to provide an alternative to Microsoft's quasi monopoly in desktop operating systems by allowing those Windows applications to which we are now accustomed and find hard to do without to run under Linux. Yet 5 years after the release of Office 2003 SP1, the service pack install fails. Given the popularity of MS Office, appropriately described by Bill Gates as one of the "killer apps", this seems somewhate at odds with the community's mission.

Clayton Christian's work on the disk drive industry suggests why: the community listens to itself, not the larger market that it hopes to serve. It's hard to listen to the views of those with whom one as yet has no relationship but it turns out to be essential.

A quick look at the most popular Wine applications shows the problem. Of the 25, only two are not computer games, and both of these (Adobe Photoshop and Canon's Digital Photo Professional) serve one niche market. Together these two applications get only 7% of the community's 'votes'. Microsoft Office 2003 Installer gets only 5 votes (Final Fantasy XI Online Final Fantasy XI has 401) and is so far down the list that it doesn't even show up without filtering.

If the Wine community only works on projects its predominantly gaming community wants, few if any potential Office-under-Wine-under-Linux users will use Wine and thus will not join the community - and there will be no impetus to improve Office running under Wine. We have a vicious circle, ironically exactly the catch 22 situation that the Wine community talks about on it's "Why Wine" page. If Wine is serious about fostering an open source alternative to Microsoft's operating systems, it needs to break this cycle or end up like 3D0, a small footnote in history.

Not quite what they had in mind?

Allan goes on a road trip in his father's car and gets into an accident. He calls his dad who wires him the money to get the car fixed. However, Alan's dad says there will be conditions - he'll have to drive more carefully in the future and he may have to take more driving classes when he get home. Instead of fixing the car, Alan spends half the money on drink, drugs and hookers, and expensive gifts for his friends; with the rest he hires an attorney to prevent his father from forcing him to take additional driving classes when he gets back. The car, unsurprisingly, is not fixed.

Key

Allan	Banks receiving bailout money
Alan's father	Tax payers
Money to get the car fixed	TARP + ...
Road trip	Writing CDSs and buying CDOs
Drink, drugs and hookers	"Performance" related bonus payments
Expensive gifts	Dividends
Attorney	Washington lobbyist
Additional driving classes	Government regulation and oversight

Medical records

Medical research is expensive and inefficient. New drugs, for example, must undergo lengthy trials before getting FDA approval. But not all the problems emerge during these trials; the FDA has insufficient resources to retest drugs it has already approved, and is often unwilling to withdraw approval for drugs that are on the market on the basis of evidence that is often not collected in a controlled manner. This puts people at risk; fixing it by expanding the FDA's testing activities is expensive.

Electronic medical records offer a way of collecting information about drugs that would allow the FDA to see patterns in large sample studies (since the sample is the population). This will make drugs safer.

There are other benefits to electronic medical records. Not all research in medicine is done in carefully planned studies in teaching hospitals. Much, though it's hard to say how much, is done by general practitioners and specialists who read journals, have ideas, and try things out; for example, new combinations or dosage levels of drugs.

Collecting information about such 'in situ' clinical trials - in aggregate of course - provides additional research data for scientists seeking to better understand things such as the interaction of drugs and physiology, and the progress and virulence of diseases.

These are just some of the benefits that need to be weighed against the potential risks of sensitive personal medical data falling into the wrong hands. There are implications for the private insurance market, but that is another story.

Virtual Elegance

The machine on which I do my simulation was a Fedora 9 based system with 4 320GB drives configures in three RAID arrays. The OS itself was in a RAID10 partition spanning all 4 disks. The swap partition is a RAID0 array, again across all the disks. Finally a RAID5 partition holds my data and three virtual machines (2 Fedora guests and one Windows XP).

The system was crashing several times a day - the mouse and keyboard would freeze in the guest and the only way out was a hard reset. Since Fedora is not one of VMWare's supported OSs, I decided to try Ubuntu, which is. The question was: could I pull the Fedora host OS out from under all this without disturbing the RAID array with my data and my VM disks. The process was complicated by the fact that the Ubuntu installer does not have RAID10 support, and an intervention is needed during the installation to download mdadm and configure RAID10 from the command line.

Many years ago, when I worked for IBM as an SE, I used to extoll the virtues of VM for its ability to allow testing before going live to all my S/360 customers; 25 years later this advice was still valid.

I set up a guest with four virtual disks on which I set up RAID partitions (10,0 and 5) to match the host configuration. I installed Fedora on the RAID10 array and mounted the RAID5 partition as /data, exactly matching the host OS configuration. Next I made a copy of the disks so I could repeat the migration process several times. Then I started the guest using the Ubuntu installer iso image, went though the installation process. When I finished I restored the Fedora disks and started again. After running though the installation three times to a point where I felt fairly comfortable, I did the same thing on the bare iron - and to my surprise and delight it worked like a charm. The RAID10 array was reformatted with the new OS while the RAID5 array was untouched and reassembled.

This kind of major change close to the hardware would normally have been the cause of a huge amount of grief - for example discovering that there is no RAID10 support in the Ubuntu installer might have thrown me for a loop if I had been working directly on the host. It's also a one shot game as backing out of an installation is impossible once any partition changes have been made. Testing the procedure in advance with VMware was invaluable. The feeling I had was that of the magician who's just pulled the tablecloth out from under a fully set table of dishes, glasses and cutlery.

It truns out that Fedora was the cause of the problem. With Ubuntu 8.04 LTS, the system hasn't frozen in 6 weeks. I've used Fedora since the first release of Core 1. It feels odd not to be using it, but at the end of the day I have other work to do.

Corporate Jets - the business case

What would be the case for leasing a corporate jet?

• The CEO needs to work while he travels.

Actually most working professionals work when they travel so it must be something else.

• The CEO's time is worth more than that of most working professionals.

A CEO with a salary of $10M (the average for Standard & Poor's 500 company) might save time if there is no waiting in line and no waiting for scheduled flights. If this saves him or her 4 hours per day of traveling, and the CEO travels 3 days a week or 150 days a year, and typically works a 16 hour day, the cost of this CEO's lost time would be about $1M a year. This is not quite enough to pay for the cost of owning and operating a small jet such as the Hawker 800XP which comes to about $2.4 per year. But if one adds the CFO and the COO who might be traveling with the CEO or traveling on the days when he is not, and assume that they are paid half the CEO's salary one could argue that time savings could amount to $2m.

Interestingly Avicor, an aviation consulting company, does not make this claim. What they do suggest is that meetings in-flight are where the money is saved - you can't hold a confidential meeting in coach (or business class for that matter). Here it's the travel time that counts. If one adds in-flight time to the time saved on the ground, and if one assumes flight durations on average of 3 hours, the CEO's useful time might come to $1.75M; the CEO and the top management team together would then likely save the cost of the jet.

Of course this is predicated on two assumptions. One is that the jet is in almost constant use. And second is that there is no alternative. While flying coach may not work as an alternative, teleconferencing, for example Cisco's telepresence, may be a lower cost alternative. In which case the saving would be considerably less. But that's a calculation for another day.

A Principle Agent Problem at CNN

Last night I woke to hear John Roberts and Kiran Chetry talking about Oprah and her private jet. In an address to graduating students at Duke University, Oprah said (not unreasonably) that “It’s great to have a private jet. Anyone that tells you that having your own private jet isn’t great is lying to you.”

Chetry, speculated, as news readers are increasingly wont to do, whether this comment might change public opinion - which has been a bit of a downer for private jet industry - and thus go some way to rescure the beleagured small plane makers. This is a lamentable confusion between principals and agents.

There is a distinction that might help here: private jets are fine; corporate jets are another matter. Why? Because what individuals spend their own money on should generally be of no real concern to anyone else. Since Oprah owns her production company, when the company buys (or leases) a jet Oprah, as an officer of the company is spending money that belongs to Oprah, chte company's owner.

Executives of public companies who buy corporate jets are not spending their own money - they spending their shareholders' money. When companies are going broke and shareholders see the looming possibility that they will loose their entire investment in that company, it's understandable that they are unhappy with the people thy have appointed as their agents spending what remains of their money on what they may consider to be unnecessary luxiaries.

There may well be a case to be made that corporate jets do pay their way - but that is cost justification agents must make to their shareholders. Agents should not assume that they have the same rights regarding the way they spend the company's many as Oprah and others who own the companies they run do.

Integrity

After a scandal in the UK concerning MPs' bogus (and apparently fraudulent) expense claims broke in the Daily Telegraph, one MP named in the piece said in an interview that he was paying back the money he had claimed for 'fittings, furniture and household items'; he added "I just want those people I represent to know, whether they vote for me or not, that I have personal integrity".

So let me see if I have this right: if you dip your hand in the public coffers and then return the money after you are caught, this is integrity?

I would have though that integrity would have mean not committing the offense in the first place.

The table cloth trick

The machine I do my simulation work has 4 x 320GB drives arranged in a RAID10 array for the host OS, a smallish RAID0 array for swap space, and a RAID5 array for my data including the two VMs, one a Windows XP for writing the other a Linux VM for coding. I have been a Fedoa user since Core 1. The host OS was Fedora 8 and the guest Fedora 9. However, the system was crashing several times a day - the mouse and keyboard would freeze in the guest and the only way out was a hard reset.

Since Fedora is not one of VMWare's supported OSs, I decided I needed to try Ubuntu, which is. The question was: could I pull Fedora out from under all this without disturbing the raid array with my data and my VM disks. Ths process was complicated by the fact that the Ubuntu installer does not have RAID10 support.

So I thought back to my early days as an IBM SE and wondered what would I have done with VM (back then VM was an IBMoperating system product - perhaps it still is)? The beauty of VM was that you could run any operating under it to test stuff out before going live on the bare iron. With this in mind, I set out to create a virtual replica of the physical system under VMWare.

I set up a test Fedora guest with four virtual disks and set up raid partitions to match the host configuration. Some surfing turned up a procedure for breaking into the Ubuntu installation and starting the raid system and then mapping the drives before copying the files into the new file system and completing the install. This is the kind of process that often goes off the rails half way though and that's the point at which a hasty and often irreversible decision adds another day and considerabel hand-wringing.

I practiced this install three times from start to finish using this test Fedora guest VM, each time deleting the newly created Ubuntu guest and replacing it with a copy of the original Fedora one. When I felt fairly comfortable, I did the same thing on the bare iron - and voila, it's working.

For me this kind of major upheaval close to the hardware would normally have been the cause of a huge amount of grief; testing and practicing the procedure in advance with VMware was invaluable. (I feel rather like the magician who's just pulled the tablecloth out from under a fully set table of dishes, glasses and cutlery).

Now all that's left is to see whether Fedora was indeed the cause of the problem.

A Research Question

We are told, usually by financiers, that 'sophisticated financial instruments' like CDSs and CDOs are essential to the functioning of the economy. Yet the economy seems to have been doing quite alright before they were invented.

The chart above is a log plot of the Dow Jones industrial Average since 1928; '2' is the Dow at 100, '3' is 1,000, and '4' is 10,000.

The trend line sits quite nicely in the data. The R-squared for the trend line is 0.926; in other words a simple exponential growth function accounts for over 92% of the variance in the Dow. Of course high R-squared are normal in this kind of time series data. I also appreciate that small changes at the margin may be worth considerable sums of money. Nonetheless, intuitively the economy as a whole does seem to have been growing at a relatively steady pace for almost a century.

"Ahh" say the financiers, "but just look at the growth they generated in the last 15 years". Suppose we do that:

We do indeed see a sharp increase in the rate of growth. Of course this sharp increase in growth corresponds to the Internet bubble. It's followed by something of a correction. Over a longer period of course is the growth in the use of consumer credit and then, beginning at the turn of the century, the housing bubble. With the collapse of the banking sector and the shrinking availability of credit, the economy has retracted and the Dow has dipped well below its historic trend line.

Of course this is vastly oversimplifies things and, as they say in the advertisements, "the past is not necessarily a guide to the future". Nonetheless there is something rather compelling to the thought that "plus ca change...".

My rather simple view of economics suggest that GDP growth can come from two things: more people, and greater productivity. GDP per capita therefore can only change if productivity changes. I lump two things into productivity: gains from trade and specialization and technology. Leaving trade aside, this upswing in the last 15 years might reflect improvements in productivity from new technology; and new 'sophisticated financial instruments' might be seen as an example of a new 'financial technology'.

We should be wary of this explanation, however, on two counts. First a McKinsey study a few years ago suggested that the gains in productivity from new technology have been vastly overstated. Second, new sophisticated financial instruments might possibly be better thought of as bets or gambles than as technologies.

If they are bets, not useful technologies, then there will be no change to the trend line with their adoption, only movement around that trend over time. If so, the correction (which may be a little overdone) brings us back close to where we should be. More importantly, in the long run the impact of these 'sophisticated financial instruments' may be a wash.

So that's the research question for any budding macro-economists: are these instruments technologies or gambles? So to those who say these instruments are an essential part of the modern economy I would say "show me the data". Demonstrate their contribution to GDP; that is how much smaller, if at all, would the economy be were we not to have these instruments available to us? Some empirical evidence is needed, since all we have at the moment is hype and unsubstantiated assertions from interested parties. And that's never as good as real evidence.

More on AIG

Like many people I am concerned that employees and managers in the Financial Products Division of AIG, the arm of the company that wrote the under-priced CDSs, are receiving large bonuses. It is more all the more irksome because they are now being paid by US tax payers, many of whom are struggling with the fall out of AIG's bad decisions.

However, I am opposed to some of the suggestions being floated in Washington to recover that money, for example that of Charles Schumer, who is advocating new completely ad-hoc tax laws. This is the kind of response that makes people wary, indeed suspicious, of government. Such ad-hocary increases uncertainty and makes the Government look weak and capricious.

The time to argue about bonuses was before the money was handed over, not after the fact. Of course, as was I'm sure clear to many at AIG, they had the government over a barrel and the government would have found it enormously difficult to make the surrendering of bonuses a pre-condition of the bailout.

While AIG took excessive risks that have contributed the crisis, it did so because we (regulators, government and the electorate) allowed them to do so. Blaming a few fat cats is easy - they make wonderful scapegoats, but not all of the blame is theirs.

Stewart vs. Cramer

First let me declare my bias: I enjoy Jon Stewart’s show (sorry Dominie). Having watched it pretty regularly for 8 years, I think he does a better job pointing out inconsistency and illogicality in public figures than 90% of the serious television so called journalists (a reflection on the regrettable state of the broadcast media). And that was really his point last week.

Conspiracy theorists and Fox News junkies may impute to Stewart “a hidden agenda”; in some ways they are probably right - I imagine that his “agenda” includes such subversive ideas as a belief that hypocrisy, and unethical behavior in public figures should be called out. Is he “Fair and Balanced”? Probably not. Is Fox News? Of course not.

But this is all quite irrelevant. To dismiss Stewart because he is a comedian or because he probably votes Democrat is a superficial and misguided heuristic, because his substantive points have not been answered.

Cramer was shown explicitly encouraging ethically dubious market manipulation in his internet show; as an insider was may reasonably assume he had more knowledge than most about CDOs and CDSs; given is background and access to insider information, his advice on Lehman stock seems more to reflect the interests of his industry associates than those of the people his show claims to represent.

Stewart’s understandable outrage stems perhaps from seeing his mother’s 401k fall in value while those whose actions contributed to the collapse take home very large bonuses, something to which he alluded on the show.

Of course, some will argue that the problem was not just on Wall Street and I agree. Politicians of both sides contributed to relaxation of oversight regulation the evisceration of the agencies that should have been carrying out that oversight. And many people (encouraged I’m sure by unscrupulous real estate agents) made very foolish decisions that left them overextended. Yet someone who made a bad decision on their choice of mortgage looses their home; they don’t get a six or seven figure bonus (paid for by us, the tax-payers) as a reward for their poor choices.

AIG

AIG needs more tax payer money. While this seems a little like throwing good money after bad, what happens if we don’t? Here’s my lay-person’s take.

If AIG goes under, presumably it will not make good on its credit default swaps (CDS), the insurance-like products it sold to the banks. These CDSs were bought by the banks to protect the mortgage-backed securities they had written; in the event that the collateral (the properties against which the mortgages were written) turned out to be worth less than the mortgages themselves, their mortgage-backed securities (or collateralized debt obligations, CDOs) still had something behind them. If AIG doesn’t make good on its CDSs commitments, the banks’ CDOs are worth less than they currently and those banks will likely fail their ’stress tests’. Consequently, they will be forced into bankruptcy as well.

Some think this is a good idea (and perhaps in some ways they’re right), yet the cost to many could be horrendous. Without the banks to lend to business and consumers the economy will contract further, more people will loose their jobs, their houses, their 401k savings. Property prices will fall further, personal credit will be more difficult to obtain, consumption will decline, and the recession will deepen.

Of course, though keeping the banks alive may lessen the severity of the recession, we will have preserved the very system that was in no small measure to blame for getting us into the mess in the first place…

OS/2, Microsoft and Open Source

There seem to me to be important parallels between IBM’s OS/2 and open source. To explain why I want to start by recounting my take on the history of OS/2.

In the early 1980s engineers at IBM realized that the DOS memory addressing architecture would need more than band-aids like HIMEM.SYS and the idea for OS/2 was born. OS2 was to be a new desktop operating system designed from the ground up. I remember going to the OS/2 announcement meeting in 1987; although some applications (Lotus 123 for example) were written with an API graphical interface, and IBM had announced that OS/2 would have a API GUI, OS/2 would remain command line driven until October 1988.

The delay in providing the GUI is in part attributable to a difference of opinion as to what mattered most in a desktop OS. OS/2 was a joint project between IBM and Microsoft. IBM’s relationship with Microsoft dates back to 1980 and the first IBM PC; IBM needed and OS and Bill Gates promised to provide one - which he did and we had MS-DOS and IBM-DOS (which was effectively MS-DOS with an IBM logo and a nice linen-covered beige box).

The OS/2 project ran into difficulties in the late 80s as differences in design philosophy and conceptions of the most appropriate business model for a desktop OS began to surface. IBM has staffed the OS/2 project with developers from the MVS labs. MVS was IBM’s flagship mainframe OS and was built on two central pillars: reliability and recoverability. IBM’s engineers took this notion of what a good operating system should do to the OS/2 project. Because IBM saw the PC as a tool for small businesses rather than consumers or end users, reliability and recoverability were seen as key to productivity and to the marketing of the PS/2 and OS/2 products.

Microsoft had a different view. Gates had a vision of a PC on every desk. He saw the consumer and end user market as his top priority. Consequently, Microsoft focused its resources on developing a simple graphical user interface. Two projects were underway at Microsoft; the GUI for OS/2 and Microsoft’s own GUI, called Windows. These differences in approach led to a parting of the ways; Microsoft left the development of OS/2’s GUI to IBM, concentrating its efforts on Windows. When Windows 3.1 was released in 1990, it was in many ways more user-friendly than OS/2; it was easier to set up and peripherals were easier to attach. However it was far less stable and had zero recoverability.

With the parting of the ways, IBM and Microsoft each followed their own strategies. Although IBM worked hard to make OS/2 easier to setup and Microsoft to make Windows more reliable, the foundations had already been laid and the rest, as they say, is history. Gate’s business model turned out to be more appropriate (if profitability is any measure). IBM’s last release of OS/2 (Warp 4) was announced in 1996 and support for OS/2 was discontinued on December 31, 2006, just as Windows Vista was being rolled out towards general release in January 2007.

So what has all this got to do with open source?

Open source developers choose what they work on. There is high status attached to contributing to the OS kernel, so we have in GNU/Linux a very robust OS. However, I still have a hard time getting Firefox browser plug-ins to load under Linux and as a consequence, there is a fair amount of web media content for which I have to resort to Firefox for Windows ( I’m running Fedora 8, Fedora 9 and Windows 2000 under VMWare workstation on Fedora 8 ).

I’m worried that if an open source OS like GNU/Linux is going to move out of the technical user market and into the non-technical desktop market, more work needs to be done on these rather mundane kinds of things that are important to the technical illiterati but not so much for coders and the like. Otherwise, just as Windows beat out OS/2 because it was easier for non-technical users to set up, maintain and enhance with add-on software, so Vista will maintain it’s lead over both desktop distributions of GNU/Linux and OSX (which is hamstrung by Apple’s insistence on tying it to its own hardware, a policy that nearly sank the company in the late 90s). And that, in my view, would be a shame.

A Great Day for America

Barak Obama’s victory last night seems to send two messages; first that race is no longer the impediment to equal opportunity and success it was only a few decades ago, and second that ordinary folk are less sure about the wisdom of unregulated markets than Chicago economists think they ought to be.

While his victory is monumental, any euphoria should be short lived, tempered by the realization that the country faces serious problems that will require bipartisanship and strong leadership to surmount: an economic recession; an underfunded social security; lack of access to health care; terrorism and religious fundamentalism; nuclear weapons in Iran, North Korea, and Pakistan. And those are just the issues that confront us today.

John McCain, in a gracious concession speech, called for all Americans to support the president elect; let’s hope that those whose candidate didn’t make it to the Oval Office will head his call.

Normal accidents

Perrow (1984, “Normal Accidents: Living with High-Risk Technologies”) noted that tightly coupled systems are more prone to accidents.

Population ecologists (Hannan, M. T. and J. Freeman, 1977, “The Population Ecology of Organizations” ) tell us that specialization is a response to the demands for efficiency. Specialization leads to increasing interconnectedness and interdependency; in other words tight coupling.

The near collapse of the world financial system this fall, a crisis brought about by a very small perturbation (only 2% of mortgages are in foreclosure), seems to be a good example of a normal accident.

As firms increasingly outsource and reduce buffers between system elements in the quest for efficiency, are we going to see similar accidents in other sectors I wonder?

A question answered

A few weeks ago, I posed a question: how will the bailout plan simultaneously unfreeze the credit market and ensure that taxpayers are not left with the bill. I think I now have an answer. Nationalizing the banks (taking share in exchange for cash) fixes the weak balance sheets in a way that buying troubled assets at fair market value did not. And it appears that the terms are not that shabby; a guaranteed 5% return with greater upside potential if the banks' shares do well.

In other words, the plan, in its original form was never likely to work without the taxpayer taking a bath. This new approach looks a lot better.

A passing thought

Sometime early next year I imagine, AIG will hold its annual shareholder meeting. Someone will walk into that meeting holding a certificate for 80% of AIG’s shares. Will the name on the share certificate read “Secretary of the Treasury Henry Paulson”? If so, how will he cast his vote? Just a passing thought…

The Market for Lemons

Akerlof (1970) pointed out that when there is asymmetric information with the seller knowing more about the true quality of the product than the buyer, the only items up for sale will be lemons. The Treasury is likely to be in just this position when it offers to buy toxic assets from over-extended banks. Talk of ‘eventually making a profit’ from the purchase of such lemon-flavored assets thus seems, at best, overly optimistic.

Identification

Identification: a feeling of belonging to something larger than oneself.

When one group is treated differently from other groups, people might be forgiven for adjusting their frame of reference. The larger group to which they once thought they belonged - and owed some allegiance - may be replaced by a smaller more proximate group. The Wall Street bail-out risks creating such a shift. Small business owners may wonder why it is acceptable for them to fail but not for large Wall Street firms. Home owners struggling to pay mortgages, other who have lost their homes.

Arguments about vital interests and the like, while intellectually comprehensible, are hard to swallow in a culture that holds dear the notion that everyone has an equal shot - but by the same token faces the same risks. If care is not taken in how the Emergency Economic Stabilization Act is implemented, fissures may appear in the rather delicate fabric of our society (sorry Lady Thatcher - there is such a thing as society).

Moral Hazard

Allowing those investment banks that found themselves unable to meet their obligations to creditors not to fail creates a moral hazard problem that will haunt not only the financial services industry but all businesses in the US for a generation.

• We have signalled to outside directors that they need not exercise due diligence in oversight of the companies on whose boards they sit.


• We have signalled to managers agents that their risky behaviour has no downside and thus that there is not cost to risky behaviour in the future.


• And we have signalled to owners - shareholders - that they need pay no heed to the actions of those working on their behalf. Their investment is guaranteed.

Everyone - owners and managers alike - how has an incentive to take ever larger risks. If they win fine; if they loose, not a problem, someone will come to their aid. The problem is that those who are being asked to provide that aid is all of us, the US taxpayer. We have created an expectation, not just in the banking sector, but thought the business community that if you are large enough, no harm will be allowed to come to you, if you’re big enough. Small business owners may create half the wealth in this country but they are not equal recipients when it comes to a transfer of wealth from Main Street to Wall Street and beyond.

Help wanted…

Something I do not understand about the TARP: suppose the Treasury buys the troubled assets for what the market thinks they’re worth. How this is to be achieved is still not clear though the Chairman Bernanke mentioned a reverse auction in his testimony to Congress on Wednesday.

But assuming some price discovery is possible, then we acquire them for the market’s best guess as to what they are really worth. The price reflects all the available information about future development in economy and the housing market in particular. In other words, at these prices, the best estimate of their net present value is zero; we will be paying as much for them as the markets expects we will get back. In other words, everyone’s best guess as to their worth means that the taxpayer should expect to neither make nor loose money on the deal.

However, if we pay the market price, the banks still have under-capitalized balance sheets; this, as far as I understand it, is what is preventing other banks from lending them money. So buying the assets at the market price makes no difference to the lack of credit, the problem that is making the impact so much more wide-spread than a problem for just the banks; their balance sheet are still too weak.

If, however, the plan was to buy the assets at their book value, which would certainly shore up the banks’ balance sheets and fix the liquidity problem, the taxpayer is almost guaranteed to loose. Paying anything above the market price for the ‘toxic assets’ represent an expected subsidy to the banks and an expected loss to the taxpayer.

So my question is this: is the above logic wrong? If not how do we avoid getting stuck will the bill if the bail-out works? (Two questions actually).

A poor man’s Letter from America

Many years ago - I think in the 1940s - Alister Cook, an Englishman by origin, but an American by adopted home, began writing and delivering a series of weekly radio broadcasts called Letter From America. Cook was a remarkable journalist with an ability to find interest in the seemingly mundane and to show how mundane things that we had though were interesting really were. Remarkably, that capacity remained undiminished despite his having lived in the US for over 60 years.

I make no claims to have Cook's, wit, insight or eloquence, (or for that matter, his wonderfully calm, gravely and gravitas-laden radio voice that I still hear clearly in my head as I write, though it is probably 10 years since I heard one of his broadcasts). Nevertheless, the one thing we do share, is that like Cook, I came to this country in my 30s - well late 30s; 39 to be precise. Having grown up in England, with a different cultural heritage, the move has been a times slightly bewildering, but at the same time interestingly revealing. Culture, the set of symbols, myths and things that we take for granted, is obviously something to which one pays almost no attention as one grows up - it becomes an almost invisible and indivisible part of who one is. But when ones is transplanted, that terra firma disappears and the ability to fall back on almost instinctive understanding of “the way things are done around here” evaporates. That’s the hard part.

The interesting part comes because finding things are not what one is used to, brings into sharp relief questions about the way we organize ourselves and assumptions we make, for example about government, the rule of law, the political process, indeed institutions more generally.
In this present observation - I hesitate to say the first of many, since I have no illusions about my ability to be either disciplined or creative in the endeavor - I am struck by materialism. Some take the position, which I do not, that materialism is intrinsically evil; that lusting after the things money can buy is somehow bad in and of itself. A desire to earn money has its good points; it promotes effort and industry. In the right context, it fosters innovation and entrepreneurship. These are good things, things that have made America an exciting as well as wealthy country.

However, the downside of materialism, may come from our overwhelming preoccupation with both the acquisition of money and almost incessant bombardment of enticements for things that money allows us to buy. We are at once fascinated by the lives of those with extraordinary wealth, people who receive more in a week than I can realistically expect to in the rest of my working life. Potentially, a preoccupation with money, and the lives of those who have a lot of it, drives out of our thinking, for no other reason than we have a limited amount of time to think about things, the willingness and subsequently the ability to consider more abstract issues in a nuanced way. Issues such as justice, rights and equity. In turn we are enticed by easy, often overly simplistic solutions to complex problems. A simple solution means we need to spend less time worrying about a problem.

Compounding this, we increasingly delegate to others, usually our elected representatives, the task of considering these questions, but then fail to exercise serious oversight. This creates a fertile ground for corruption to set in. Perhaps this is what is meant by the phrase “a decadent society”.

Tim Russert - in memoriam

Tim Russert, anchor of NBC’s Meet the Press, an influential Sunday morning political talk show, died suddenly on Friday, while taping a segment for today’s broadcast. He was only 58. With his passing, the country has lost a great asset - one of the very few journalists who held politicians accountable for their earlier commitments. Unlike Bill O’Rielley’s truly dreadful program, Meet the Press really was a “no spin zone”. Russert combined searching questions with hawk-like attention to his guests’ replies. He followed up relentlessly if he thought they were pulling the wool. Yet he did so with a seemingly endless reservoir of good humor that made even the toughest questions seem completely matter of fact and eminently reasonable (which they usually were). His insight, professionalism and tenacity are a model of television journalism, which has lost perhaps its greatest exemplar of recent years. And we have lost the benefit of his quest for truth in political advertising. Sunday mornings will seem strangely empty; he will be greatly missed.

Not something you see every day…

Image (c) Bill Johnson, www.mymotherload.com