Sunday, November 25, 2012

Post Election Priorities

It's been said that there is no liberal or conservative way to pave a road.  Political differences are usually differences of priority or method, rather than absolute ones.  The following are priorities for the U.S. and for California that it seems difficult to argue against.


- We need a sustainable budget, independent of the current fiscal cliff situation, independent of how we get to that sustainable budget.  This is the single greatest threat to continued American prominence and liberal democracy on Earth.  It's a bridge too far to ask us to reform our tax system to incentivize wealth-building rather than wealth-hiding, and to reward tax-code-jockey attorneys, but we should start thinking about it.  Specifically, people regard taxes as penalties, period.  Start penalizing things you want people to do less of - polluting, crimes, unhealthy behaviors, etc.  (Singapore has used this model successfully for quite a while now, and we seem to think such "social engineering" is okay when it comes to owning homes and marriage.)  In other words, we should stop penalizign earning money and investing.

- Continue the economic and diplomatic pivot to Asia, and focus on containing the remaining threats to liberal democracy and the international order.  The countries which pose the greatest threat on that count, in this order, are Pakistan (which is largely run by extremist Muslims, and has nuclear weapons - how does this escape the notice of hawks?), Iran, and North Korea.  A nuclear weapon built in Pakistan and used by militants will be too late a reminder that the U.S. should not design its foreign policy around oil companies.

- Restructure immigration as recruiting.  Stop letting people in just because their husband is here; make it much easier to get people who have STEM degrees from top universities around the world, otherwise they will continue going to the UK and (increasingly) Asia.  At the same time, we can recognize that there's a legitimate security and economic consideration about the porousness of our border with Mexico that has nothing to do with racism, which unfortunately seems to be what has motivated the most passionate opinions on this issue.  After the election, the GOP has suddenly realized that not every American is a WASP and a reform of their immigration position is necessary.  Let's take advantage of this moment.

- The legalization of marijuana in Colorado and Washington is a more radical opportunity for local politics than many realize, because it will force a confrontation on state vs Federal rights on this and many other issues.  "Small government" conservatives will either have to get on board with CO and WA's right to do so (and to resist Eric Holder's goons) or stop claiming to be small government conservatives.  Furthermore we might finally understand what on Earth Holder has been doing, alienating some of the Dems' base in these states.  How to make sure it remains legal?  Invite states and localities to tax it, as has been done in Oakland.  They can't chill out every single small business.

- If the Dems are serious about staying partners with business (at least high-tech growth industries) then make a serious, concerted effort at smart regulation.  Yes, this will mean repealing and streamlining many regulations and maybe some departments.  The Obama administration has started to do this quietly but it needs to be much higher-profile to give confidence that it will be meaningful and that it will persist.  Staffing it with subject-matter experts who haven't spent their whole lives inside the Beltway will show seriousness in this regard; this can be done without letting foxes guard henhouses.  The FDA is a perfect place to start; implement some form of Andrew von Eschenbach's suggestion to make drug regulation about taking unsafe drugs off the market, rather than approving them before they can be sold.  (On the other side, the GOP is starting to look more like the party of big-business+government cronyism, and less like the party of capitalism.  Time to fix that before the Democrats take that away too.)


- We need a balanced, sustainable budget, and that has to mean pension reform, in some form.  Now that the Democrats have a supermajority, we will know if this can be accomplished.  If either party has a supermajority, and can't pass a balanced budget, then California cannot ever pass a balanced budget.  I do not have high hopes for this and think the state government will see tough times before any real reform ever occurs.  We will hear reasons for why it couldn't occur, but the point remains that even with a state-congressional supermajority, they will likely not pass a sustainable budget.  I hope I'm wrong about this.

- Other considerations are secondary.  It would be nice to see gay marriage having official recognition but in a state that's degrading its parks and universities because it doesn't know how to balance a checkbook, such otherwise important questions become ancillary considerations.


- Is public transportation really that difficult?  Yes, it's damn near impossible to put a real light rail system in (and San Diego doesn't have one) once an area develops, but is a real bus system really that expensive to develop?  My hope is that the local transit systems like UCSD's are putting enough people in place who see the value of one, and will vote accordingly in the future.

- For a California city, San Diego has a curiously unaccountable police department, with questions about officer-involved accidents and shootings often going un-answered.  Curiously in this mayoral election, we had a gay Republican facing a Democrat favored by police.  Filner's administration may not change this.

- If the Chargers want to build a new football stadium, that's fine, but to ask for taxpayer dollars to do it is absolutely unacceptable.  Filner is on record saying he opposes this - let's keep his feet to the fire in case he has some magical change of heart - and in any event, there is no evidence that stadiums help their local areas economically (in actuality they hurt).

Saturday, November 24, 2012

*I*: The Ignore Index

There are sometimes battles or otherwise newsworthy events which are largely ignored in some other parts of the world, despite their seeming importance. This could result from many things: few reporters on the ground near the area, reporters' or news organizations' biases, lack of relevance of news from that part of the world to another part of the world (fair enough), intentional suppression, or just apathy on the part of the news consumer.

However, it seems that even internet news sites have such blind spots, and irrelevance based on geography has no meaning on the internet. Understandably a local Indiana newspaper might not carry stories about a war on another continent. Not so for the internet as a whole.

Two examples: news from Mexico is consistently under-reported, especially considering its long border with internet-monster U.S., and the proximity of the U.S.'s second biggest population centers. But for the occasional drug violence story (reported as if each occurs in isolation from the rest) there is very little to be found online (reporters are specifically targeted by the cartels, so this is maybe not so surprising, but that can't be it. Even when there was clearly a wildfire burning in the mountains just south of the border a few miles from I-8 in San Diego County - I saw it with my own eyes - there was nothing, in the Mexican or U.S. press). And occasionally a flare-up of an international event draws attention to the phenomenon as well: last week a rebel group in Congo captured Goma, even with U.N. troops directly engaging them with missile fire. The civil war there has been going on since 1998, and casualties including famine and disease are estimated at about a half million per year. The military capture of a city of one million, in the context of a long and deadly war, would seem to merit reporting - and it has been reported, but in the American press, it's certainly not carried universally by news outlets and even then it's not nearly a front page item.

An index of internet news (the I Index in the title) could reveal these blindspots. Not to be morbid, but because violent deaths are easier to quantify than, say, political scandals, let's use that as the basis. First, establish a curve for news stories per death, over the entire globe. (The relationship will not be linear.) Then for stories - two American soldiers killed in Afghanistan, a shoot-out leaving five dead in Chihuahua, another action in Congo killing 200 - you could see whether the number of stories falls above or below the curve. Creating an average for each country would quickly show which parts of the world journalism neglects or over-reports, and then there could be further analysis about why this is in each case.

Saturday, November 17, 2012

Dunbar's Number and Startup Adolescence

Dunbar's Number Part 2 can be found here.

Kevin Simler has written about a connection that I've also noticed, that between Dunbar's Number of 150 and startup organizations. He goes further and analyzes startups in terms of anthropology, which is excellent. Looking at it one way, all business analysis really is just a branch of anthropology that uses a scoring system, because the larger civilization these mini-tribes exist in have an agreement about the scores the mini-tribes have to achieve to continue getting the chief's approval to exist as such. (This is called accounting.)

I was often brought into biotech companies when they had stalled out at this number because of external constraints (failure of product in clinical trials) to try to accelerate the process or jump the track to a new indication for the drug. There are growing pains at and beyond this number that often significantly damage the company's prospects in its transition to being a larger organization.  What I noticed is that by the Dunbar Point:

1) Corporate culture, for better or worse, is set in stone. I suspect this actually occurs much earlier in growth than Dunbar's Number, resulting from the personalities of remaining founders and challenges the company encountered - likely in that order.

2) This seems to be an inflection point at which the free rider problem becomes much worse; non-productive people who want a stable income are hired, and, recognizing rationally that at this size firm or larger their own performance won't impact the future prospects of the institution, they often don't work too hard. They also recognize that in the presence of remaining founders, they're not going to climb the ladder far anyway. And finally, karma is no longer real at this stage. There are too many people for us each to keep score on the rest of the people in the organization. Bad deeds go unpunished and good deeds go down a black hole. Karma is only real when there are people who can remember the deeds that you're in frequent contact with and who will and act on them in the future.

3) Possibly because of #2 above, rules that don't make sense or don't seem to connect to the organization's purpose and means of self-perpetuation multiply and become entrenched. This occurs because the people enforcing them now justify their existence in the organization, and because as an organization grows there are more people between any individual and the customer and investors, i.e. the entities in the outside world that the organization needs to perpetuate itself. Consequently it's more important for an individual concerned about their future prospects to please other people inside the organization, regardless of how irrational the rules are with respect to the future prospects of the organization. You're more likely to be fired (and lose money) if you defy a rule to do what you think is best for the company but it makes your boss look bad, than you are likely to lose your job due to downsizing or company bankruptcy if you follow the irrational rule, thus harming the company over the long-term. In the abstract, what is rational in the near-term for an individual departs from what is good for the company. This also seems to hit an inflection point at about 150. There's a great Dilbert (which of course I couldn't find) where Dilbert asks the boss, who's obsessed with screwing over another department as well as the customer, when they're going to think about beating the competition.

It seems to many observers that something happens as previously successful start-ups grow to make them go off the rails, largely because of internal cultural changes that cause them to self-sabotage. My observations of what happens during the startup transition contains that implicit assumption, although we have to admit it might be false: it might just be that we're seeing statistics, and regression to the mean implies that you should expect to see a bunch of companies doing well for a few years (during which time they will grow) and then their luck runs out. But the following suggestions assume that there really is a true negative effect on corporate culture and success in future profits of growth beyond Dunbar's Number.

To #1 and 3 above: these are intractable and I can offer no remedies. Removing founders often doesn't work; and status is important to humans. See this primate behavior experiment to understand why.

To #2: - Set performance metrics and relate them simply, visually, and frequently to the performance of the organization as a whole and against anonymized members of their teams. Automate it to the extent possible, so they can get frequent feedback (not just once a year or quarter) without consuming too much time generating the report. Make it clear that these are the same metrics their bosses are using. Suddenly you see that fake sick day you took, and how it affected a deadline that cut into profits (or some other metric elsewhere in the organization.) Of course, sometimes, the reality is that people's jobs really won't have a huge impact on the company's fortunes. But if you can't think at all of how to measure someone's performance and connect it to how the company is doing, then you either need to think harder, or get rid of the position. And if you're not willing to think of eliminating the position because Suzy in marketing is a nice lady and she knows Jim the Senior Director of XYZ, then you're already way beyond the startup transition.

- Focus on loyalty to small teams of up to 10-12 people. This is the military's strategy of enforcing emotional loyalty within a unit; it's not possible to be emotionally loyal to a large abstract organization unless you were raised in it as a child (like a state or religion.) Not only will this create more feedback for people - easier to to feel rewarded for doing something for a co-worker you respect than the organization, and know there will be real karma as a result (and these bonds of respect are created by the company). This also helps break down other kinds of alliances that form within the company (but not in the company's interests).

- When the founders aren't going anywhere, the new blood you get knows it's not going to the top any time soon, and you can't groom everyone to replace them. That's okay, as long as you're networked with the rest of your industry/space, and the hard work and reputation that they build while they're with you will count elsewhere in the network. Companies that don't expect young blood to leave are stupid, and some have actual functions in HR to address this. People in high-turnover, high-human-capital industries are saying "duh" to this one, but this should be something that's addressed explicitly right from the beginning of their association with the company.

Dunbar's Number Part 2 can be found here.

Intrade Manipulation and the Epistemic Rationality of the Pundits

Karl Rove on FOX, Election Night 2012. 
Delusional, or crazy like a...

Intrade was still only in the high 60s for Obama until polls actually started closing on the American East Coast. Then it only went into the 70s. This, despite other prediction markets having much higher odds for him for many days before that, and of course the various statistics witches like Nate Silver, who was in the 80s two days before. Math whizzes can look at numbers if people decide this question is important enough to merit a more rigorous look, but for now I'll have to go on these facts for my argument:

a) Intrade users think it was manipulated.

b) For a campaign that wants to appear as if it will win, Intrade is a good candidate to manipulate because it's better represented in American media than other predictions markets.

c) There was a single buyer making many of the Romney purchases.

d) It was in the Romney campaign's interest to try to appear as if it had a chance going into the election, because no one gives money to a doomed loser.

The question does remain as to whether it was deliberate manipulation, or purchases by people (or one person) who genuinely believed Romney would win. There are lots of people who believed Romney would win, and if reports are to be believed, Romney himself was one of them. And of course prediction markets do fail when enough people with bad/non-updateable beliefs are investing in them. "Fail" in the sense of not converging on the actual outcome significantly prior to the event, of course. If you had money to put into this contract and you bet on Obama though, I bet you didn't think it failed you. If it was the result of deliberate manipulation, you should be thanking Romney campaign donors who redistributed their wealth into your pocket continually for several weeks so you could bet on Obama. The twenty-first century is an interesting place.

In all the post-election laughing/anger at delusional or propagandist pundits, it is interesting that even moderately well-informed news junkies saw it coming.  But not everyone:  the pre-election denial pieces were fascinating and sounded like a combination of hippies, religious fanatics and alternative medicine nutbars: Peggy Noonan's "All the vibrations are right" is my personal favorite.

But it's also worth pointing out that from one standpoint, Karl Rove's famous meltdown was rational - for next time around. And game theorists know that games are very different when there are more (or indefinite) rounds. Other GOP higher-ups will remember that this was the guy that just would not give up. He's invested. I bet those higher-ups don't care if Jon Stewart makes fun of Rove. So neither does Rove.  Neither do any of the other pundits.  Really, what would have been the benefits to a Dick Morris of calling it like it really was, even if he actually knew how it really was? (That said, Pundit Tracker is the best site ever.)

Of course, Rove may really have believed Romney was going to win, which makes him epistemically irrational. But this false belief may lead to future GOP campaign consulting gigs as described above, which makes him every bit as epistemically rational, regardless of whether the FOX meltdown was theater or not.

Brands Signal Identity: What About Profession?

Robin Hanson posits, based on the peculiar ineffectiveness of advertising, that in fact brands signal identity. It's been observed that we're seeing wealthy countries move from an identity model where identity is determined by what we produce to one where we choose how to signal it based on what we consume. Concretely:  relative to 30 years ago, today you're less likely to hear someone characterize herself as an accountant (or she will do so to less of a degree) than as a wine connoisseuse, Lady Gaga fan, etc.

There is a general argument, most famously made by Tyler Cowen, that economic growth in wealthy countries will remain indefinitely sluggish relative to previous decades because there is a great stagnation, possibly because we're now wealthy enough to turn non-productively inward. A consumption-based identity accords well with that idea.

Saturday, November 10, 2012

The Effectiveness of States over Time, Measured by Language Death

On his Facebook page for Fooled by Randomness, Nicholas Nassim Taleb advances a theory that the rapid expansion of Islam (and Arabic-speakers) in North Africa in the seventh century was aided by a remnant population of Punic (Phoenician) speakers, whose language and culture would be more similar to Arabs than to their other neighbors. This, despite the fact that Carthage had been erased by the Romans in the second century BC, 800 years before; literally delenda, in the words of Scipio Aemilianus. Taleb says:

Many Greek Cypriots still speak the language called "Cypriot Maronite Arabic", that is, 12 centuries after their settlement and integration in the Greek side of the Island. Languages are stickier than we think (People tend to associate languages with states, when the correlation was low before 1917: around the Mediterranean, particularly in Asia Minor, languages had no link to the rule (Armenians spent thousands of years in the area between Cilicia to Aleppo, way past the lifetime of some "Armenian State";etc.).

There's more at the link, where I left a comment that I've expanded into this post. His argument is certainly an interesting parallel to the theory that Hellenistic Alexander unknowingly paved the way in the Near East for early Christianty. But what's really interesting about this is his observation that before the 20th century, state vs language correlation was very low. Something changed to allow states to become more effective at assimilating minorities, linguistic or otherwise, forcibly or otherwise. What was it?

For one thing, authoritarian states prior to the modern era didn't favor the development of patriotism. Why did it matter to autocrats if peasants liked being French or Chinese?   The autocrats and peasants were in different worlds, and the illiterate peasants would spend their entire lives within ten miles of where they were born all their lives, knowing the same hundred people.  In the same way, isolation of rulers from ruled as well as the fact that states didn't really transform the ruled's lives economically or socially, meant that languages and culture persist, despite swapping out rulers that look or talk differently.   Sure, today Spanish has a hard jota and some al- prefices, but that's not much to show for 750 years of Moorish occupation. And how many Mongol words are there in modern Russian? Hardly any, despite 250 years of rule.

Carthage. Ironically, the tourists walking around the ruins
are actually walking around the re-built Disneyland-Carthage
replacing the one leveled by the Romans - then
re-built by the Romans, ironically in part for Roman tourists.

That is not how it works today.  To put it bluntly, Yiddish has largely disappeared from Europe, for obvious reasons.  Why were the Nazis so much faster than than the Moors and the Mongols?  What changed is that in the 20th century, states starting putting in place the tools of the industrial age; not just weapons, but systematic organization and instruction. In the U.S., Native American children were shipped to Catholic schools that methodically removed their native languages from them (this idea in broad outline dates to Jefferson, who like Luther ministering to the Jews, found his disappointment in Indian disinterest in cultural conversion turn to full-on anger). Mass exterminations began, sometimes actually triggered by a spasmodic lurch toward modernity by a centralized authority, as in Turkey and Cambodia, although the latter didn't "disappear" an ethnic minority, but rather a socioeconomic class. Today the Chinese government is quite deliberately overrunning Tibetans and Uighurs with Han families. The power of the state has become much more transformative.  If you're American, ask how many conversations in native languages you've ever heard.  Just over four centuries ago those are the only languages you would have heard.

Whether Taleb's thesis about Punic-speakers' facilitation of Islam is correct, his observation about the relative persistence of culture in the ancient and modern worlds is well-taken. The effectiveness of states - that is, the amplification of ruling classes' ambitions that the technology of modern statehood allows - is not all positive. The Romans may have erased Cartharge but they didn't have the technology or ideas that allowed them to erase their culture. But the social engineers reporting today to Beijing that Lhasa delenda est don't need to signify their subtle conquest with a plow over the city's fallen walls, because success is clear in the measurable dilution of Tibetan culture with modern tools.