Wednesday, October 29, 2008

Please vote

Tuesday, October 28, 2008


The iPhone, Microsoft Surface, and the Wii Remote are offering radical new options in how we interact with our electronics. But for the humble keyboard and mouse/trackball/trackpad, Google and Apple have had all the cool interfaces. Google Maps and Google Earth. CoverFlow and Spaces. Now Amazon has WindowShop, which could seriously improve the online shopping experience by creating an easy browsing experience. When WindowShop is merged with the power of database queries, sort filters, and personalized recommendations, I’m not sure I’ll miss the mall.

Monday, October 27, 2008

Ticket Me Elmo

German speed cameras have been repeatedly catching an Audi’s passenger, but not the driver, because the Audi is British and has the driver and passenger positions reversed. And the passenger is a Muppet, who cannot be ticketed.

The photo that the German police have released is from 11:11 on 08/08/08. Surely the driver deserves an award for timing.

Tuesday, October 21, 2008

Current flowing to and fro

My electric bill has been absurdly high for about 10 years. A while back the state told me I had one of the highest per capita electricity usages in Massachusetts, and gave me a brand new refrigerator as a prize. (Really. It’s in our basement.) Energy auditors have twice told me that my electric bill isn’t mathematically possible. I’ve had electricians try to figure it out, the power company has tested and replaced my meter, and still my electric bill has remained impressively insane.

Well, rewiring the house may be paying off. Our latest bill shows that our usage has been cut roughly in half. We don’t know which piece of the rewiring may have solved the problem, so there will always be a bit of mystery to it. And we don’t know whether the improvement is permanent, though another check of the meter two weeks after the bill seems to confirm the usage reduction. I know I can’t get that $10,000 in unnecessary electricity costs back, but can we keep the refrigerator?

Monday, October 20, 2008

National values

In American Scientist, Roald Hoffmann conveys excitement about theoretical chemistry. There’s still work to be done, molecules to dream up, puzzles and problems to solve. These sorts of intellectual pursuits for the sake of knowledge and for the sake of progress are the real America to me. I grew up hanging around a national lab, where scientists from all over the world saw that America valued science. Crystallography moms and math dads passing on the value of teaching, the value of learning, the value of research and collaboration. That’s the American idea, or at least a working hypothesis.

Sunday, October 19, 2008

Choose your vendors well

Robert Reich writes about our general preference for ignoring the moral implications of our spending decisions:

[A]s moral beings we want to think of ourselves as stewards of the environment, intent on protecting future generations. But as consumers, we often disregard this moral aspiration. Many of us continue to buy cars that spew carbon into the air, and some of us spend lots of time flying from one location to another in jet airplanes that have an even greater carbon footprint. And we often buy low-priced items from poor nations in which environmental standards are lax and factories spill toxic chemicals into water supplies or pollutants into the air. How do we square our moral stand on the environment with our purchasing habits? Beyond buying the occasional "eco-friendly" product, we typically don't even try.
Many of our choices as consumers are not simple A/B choices, of course, and there’s a complex web of linked effects further up the supply chain that we typically can’t even determine. But I know I feel better when I can support local producers, local farms, and small businesses.

Monday, October 13, 2008

My first unregulated derivative market

Slate has posted a set of children’s books that are appropriate to difficult economic times, showing characters living in poverty or privation. The piece’s title—Mom, What’s a Credit Default Swap?—is a funny title, but should really be about an entirely different and missing set of books that can explain economics and finance in comprehensible terms. I suspect a lot of people would appreciate some of those books right now.

We don’t teach consumer finance in the typical high school curriculum. Home economics no longer includes any economics related to the home. But even if we corrected that, financial literacy does not translate into understanding macroeconomics or the financial sector. As we’ve seen, degrees in economics and careers in the financial sector do not translate into understanding macroeconomics or the financial sector. So how do we, the concerned and undereducated public, figure out what would be good public policies going forward?

One key to the appeal of children’s books is that they generally contain lessons. Here are some lessons I’d suggest we can use to guide us going forward, even without understanding the details of what happened:

1. Things go wrong sometimes. Have contingency plans.
2. Transparency helps.
3. Regulation helps.
4. Enormous companies can become societal burdens. Keep companies smaller.
5. Honesty and verification are important. Investigate and punish fraud.
6. Markets of all sorts go up and down, and not always at convenient times.
7. If we have safety nets for our citizens, harder economic times don’t have to be as punishing.
8. When good economic times return, remember that there will always be some people who are not as well off.

Different people would come up with different lessons from this financial crisis, of course. But almost anyone can come up with some lessons if they try. It’s at least as productive as watching the Cat in the Hat Treasury Secretary choose arbitrarily large numbers to play with.

Tuesday, October 7, 2008

Fed on the money

People defaulting on mortgages is an effect, not a cause. The major economic problem (other than sheer panic) is that banks are sitting on their hands, refusing to lend money. The bailout bill is a triumph of trickle-down theory: the premise is that if we give the banks enough money, they’ll feel comfortable lending money again. After all, isn’t that what banks do with money? 20 years ago that would be good reasoning, but today banks use their money to speculate in unregulated markets with no leverage controls. Giving the banks more money is just giving a fresh stake to someone with a gambling addiction living in a suite in Vegas and hoping that they’ll go pay their rent back in Poughkeepsie like they used to.

So the bailout bill didn’t actually reassure the stock market. The Fed announced plans today to enter the commercial paper market, meaning we the people will start doing direct short-term lending to large businesses. With Fannie and Freddie nationalized, we are already lending to homeowners. If 10% of the bailout bill had been steered to the SBA, we could have quadrupled our lending to small businesses. Keep the change—be the liquidity you wish to see in the world.

Monday, October 6, 2008

Shakespeare on the media

Actor’s Shakespeare Project has a new home at the old Armory in Somerville, where they’ll be putting on Coriolanus and John Webster’s The Duchess of Malfi, the two less known of this season’s productions. They presented charmingly unadorned live previews from the coming season during their open house last week, along with showing off their new offices and performance space.

So while pundits and reporters were filling time an hour before the vice presidential debate, we were listening to Ben Evett speak these highly relevant words Shakespeare wrote 400 years ago for Caius Marcius before he becomes Coriolanus:

They’ll sit by the fire, and presume to know
What’s done i’ the Capitol; who’s like to rise,
Who thrives and who declines; side factions
and give out
Conjectural marriages; making parties strong
And feebling such as stand not in their liking
Below their cobbled shoes.
In addition to the plays, we love attending ASP’s Conversations panel discussions each season. The panelists provide fascinating background and perspectives for understanding the plays in their historical contexts and exploring the production choices, but the relevance of the plays to the modern world really speaks for itself.

Sunday, October 5, 2008

Fireworks on the Mystic

Clear skies, and 30 minutes of starbursts among the stars. Standing amidst the boats we gasp and point and smile, as fire bridges the gap from water to air. The earth element is now only echoes, repeated percussions behind us.

An hour earlier, we had scouted possible locations to watch the fireworks from the uncrowded side of the Mystic, and the payoff was a yacht club dock paralleling the shore. The fireworks launch was right in front of us in the middle of the river, so we had a perfect view of the low-level display as well as the higher aerial shells. And thankfully no flash-bang salute shells, which would have been ear-splittingly loud at that closeness over water. There were other people and a couple of dogs scattered across the dock, and the fire department had set up as a precaution back on the shore, but it felt like we had lucked into a private show.

Friday, October 3, 2008


The debate last night showed two quite different styles. Thanks to Wordle for these images comparing Joe Biden’s and Sarah Palin’s word frequencies.

Thursday, October 2, 2008

Market efficiency

Curious about the process of selling textbooks to university bookstores? The bookstore would like free shipping and unlimited return privileges. But the returned copies are rarely in new condition, so they’re usually now worthless, and we receive zero income for the destroyed inventory. So we make the bookstore pay for shipping and we limit return quantities.

To choose a recent example, a bookstore orders 9 copies of the book, and 2 months later decides to return 5 of them. We point out that our return policy limits the return quantity on their order to 3 copies after 30 days. And we get a cheerful reply:

Thanks for your prompt reply. I will return these copies, and have coded the title to restrict future orders. We'll let any instructors adopting the title in the future know that we have to short order your titles, and special order the balance due to the returns policy.

(We probably should have just listed this one as “special order only”, though we might not have even sold the four.)
In other words, they’re pissed off that we are only willing to throw out 3 additional copies of the book in order to sell them 6 copies at a discount. They feel we should throw out 5 additional copies of the book in order to sell them 4 copies at a discount. Underlyingly, they’re pissed off that publishers are no longer totally dependent on the bookstore. Their response to that situation is to encourage students to order their books through other sales channels, making the students less dependent on the bookstore as well.

I know I’m not supposed to send a reply saying “Sounds good!” But it does sound good. The current process of selling through university bookstores adds 35% to our printing costs due to returns. The only marketplace factor which costs us more is the used textbook market, which is largely driven by university bookstores. Our biggest economic risk is also university bookstores, because they declare bankruptcy in clusters (and when that happens, we are out 60 to 90 days of unpaid orders). If the university bookstores want to disintermediate themselves, that’s ok.

Our textbooks are $20 to $50, rather than $150 to $200. Higher prices improve the economics of selling to university bookstores, but I still don’t see how a supply chain with 50% waste is sustainable.

The biggest reason for a student to buy a textbook at the university bookstore is immediate access. That’s also the reason for university bookstores to order too many copies and return half of them. Universities could theoretically ask professors to choose their textbooks sooner, publicize the textbook details, and ask students to order all their textbooks a couple of weeks before the start of the semester. Or publishers could put the first couple of textbook chapters online, which would take care of students while they wait for their textbooks to arrive either through another sales channel or through the dreaded bookstore “special order.”