Category: Business / Economics / Politics

For reasons I will not go into, this quote feels very satisfying today:

Solution to economic crisis: sack everyone who has an MBA. (Tim Bray)

One expert predicted the recession. He was ridiculed. Watch and draw your conclusions.

If you want to be smart, you must first learn to be free. Build low energy systems. Lean and mean machines.

To explain why freedom leads to better result, we had Adam Smith—yes, I took economics once—who used a crude model to justify the use of free markets (an innovation at the time). But it takes time and patience to convince us that thriving for more freedom is necessary. Certainly, intelligence is fuzzier than we tend to believe.

Fear is freedom’s worst enemy. Fear destroys freedom and ultimately, intelligence. In turn, this is why leaderless organizations are thriving. The leaders are not the trouble, the loss of freedom is.

Harold has an interesting post on democratic workspaces. Actually, I do not think that democracy captures the issue. I think he means non-industrial workspaces. Here is a juicy quote:

many of us have learned how to send e-mails on a Sunday night but few of us have learned how to go to a movie on a Monday afternoon

University professors and independent consultants both have non-industrial workspaces. Almost. Several professors still run their laboratories and courses using industrial-age models.

While I will not disclose my sources, I know that some laboratories in Montreal require attendance from students during the day, for fear that the university would take back the space allocated. This in an era where a cheap laptop in a local coffee shop is a perfectly sufficient setting to do top-notch research in Computer Science.

Classrooms are badly designed in general. You do not want to get university students facing a blackboard centered around the concept of a hierarchical group. You want universities centered around Downes‘ model where people can network, as in a coffee place.

The problem, of course, is that it is difficult to demonstrate that we can outgun industrial workspaces. Industrial workspaces tend to be very good at satisfying bean counters. They are designed with this very purpose in mind.

For all my adult life, the American dollar has been worth more than the Canadian dollar, often much more. No longer! We reached parity today. Maybe Americans should reflect on what this means for them that the value of their currency is going downward so fast. (Hint: stuff is going to cost more.)

It just came to me lately that the Web forms a world of its own, with its own political views. It always strike me how little government presence there is on the Web. In most Western economies, the government account for a large share of the economy (certainly above 20%). On the Web, I would say that official government sites account for less of 2% of all Web sites I visit (anyone has numbers to back this up?).

I pay taxes to Quebec and Canada. I carry a Canadian passport. I have to live by the local laws. Whenever I do anything, I can see the influence of the rule of law. I have to stop my car at every street corner. I see police cars drive by almost weekly. Shops are strictly limited in what they can do. If someone steals from me, I will walk to a police station and fill in some paperwork.

However, my Web persona is very different. My server (daniel-lemire.com) is hosted somewhere in the USA. I rarely think about the local laws. They are pretty much irrelevant. If Amazon.com were to cheat me, the first thing I would do, is to search the Web for similar cases using Google, not call the cops.

The economy on the Web is very different from the economy off-the-grid.

In a brick-and-mortar shops, a great deal of time is spent on having to deal with rules and obligations. If you want to improve your neighborhood, you probably should chat with a local politician. Starting a shop or a factory requires months of work and lots of paperwork.

The Web (or the Internet at large) is very different. If you want to stop SPAM, the last thing you want to do is go to your local politician. There are rules, but the most important ones are not enforced by governments. There are no prisons, but people can setup filters to ignore you. Starting a shop or a web service can only take days. You can also tear down a service or an online shop in seconds.

My point is that the Web is a distinct society, one that is far more libertarian than anything seen in the physical world. It is something of a wild west.

If the libertarians are right, then the Web should see great economic and cultural growth. We always need a frontier were forward-thinking people can express themselves.

Warren Buffet, who used to be the second richest man in the world, ran an experiment in his office. He asked his staff to check which fraction of their income they paid in taxes. Surprisingly, he pays a much lesser fraction in taxes than his staff does. This is a great quote:

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

How can this be, when the majority of the people are much poorer than Warren and thus, ought to tax Warren a lot. No, Warren says he does not even do tax planning: he pays whatever he is being asked to pay.

This is explained away by the fact the poors tend to vote for more tax breaks for the rich. I couldn’t find a quote, but I think it is a well known fact that the poors tend to mistrust the governments to redistribute the wealth.

“People can’t do elementary mathematics” is another explanation. I don’t like this explanation, but that is what it comes down to. In Quebec, we used to have a child care system where poors got lots of money in tax deduction whereas the rich got very little. Then the government created child care programs so that everyone pays the same and gets more or less the same. The problem with this is that it is a measure that benefits the wealthy only, but gives the illusion of wealth distribution because everyone is suddenly apparently equal (except that the rich pay less taxes than they used to).

I’m often amazed at how uneducated about money people are. Take “tax returns”. A tax return is the government sending you back the extra money you paid. This is not an income. Having a large tax return is also a bad thing: this means that you gave the government a large interest-free loan. Yet, time after time, I see people who consider tax returns an income. Heck! The government could probably start taxing tax returns and many would agree!!!

Another one I like is how many people in Canada think that the goods are cheaper in the USA. For example, if you see a $30 printer in the USA, is it cheaper than the corresponding $40 printer in Canada? Depends on the exchange rate, doesn’t it? You’d be amazed how many people do not get that part for the simple reason that they never understood rules of 3.

Repeat after me: income-neutral costs favor the rich. All you need to understand are basic fractions here. The rich should pay more for government services whenever a cost is involved.

(Why am I writing about politics these days? Must be a reaction to Dion’s coming to power.)

According to Greg Linden, despite their best efforts, Yahoo and MSN keep losing the search war against Google.

What is the problem at Yahoo and MSN? After four years of trying, they just seem to be slipping further and further behind. First, MSN showed a drop in web search market share, down to 12.9% from 15.3% a year ago.

As someone who does not own any stock in any of these companies and who does not have a vested interest in any of these companies, I am actually quite pleased that a company run by engineers wins over “traditionnally managed” companies. Naturally, Microsoft is a large company and places like Microsoft Research are not exactly full of suits seeking the latest acronyms. I am quite certain that Yahoo has also large components mostly run by engineers, but I do get the feeling that Google is unique in that the entire company is ran by engineers and scientists. When Google wins, creative technology people win.

Greg Linden is a good example of what a technology person can do despite the suits running the show. Greg is responsible for making collaborative filtering ubiquitous through the Amazon recommender system.

Paul Graham gives us excellent startup advice:

Time after time VCs invest in startups founded by eminent professors. This may work in biotech, where a lot of startups simply commercialize existing research, but in software you want to invest in students, not professors. Microsoft, Yahoo, and Google were all founded by people who dropped out of school to do it. What students lack in experience they more than make up in dedication.

What Paul is saying is that you may know a lot more than the other guy, you may have trained your brain a lot longer and a lot harder, but if you are not as dedicated, as desperate as the other fellow, you’ll lose.

This is why, a lot of eminent professors have what we called, when I was still a graduate student, the accident. What is “the accident”? That’s what happens when a brilliant guy becomes an academic success and he has 20 or 30 graduate students working for him and $2 millions in grant money. He becomes as brain dead as any CEO. He can’t think of new ideas. His students have to explain everything to him twice and he still doesn’t understand what they are talking about. He can’t write code anymore. He can’t build anything anymore.

(And no, becoming a big shot doesn’t imply you can’t build anything because you are out of time. Tim Berners-Lee still writes code. Paul Graham writes his own essays. Scott Adams draws his own cartoons.)

This is also why, when you see someone you know succeeding, you may think to yourself that such a person is a fraud. “I’m much smarter than he is, so he must be cheating his way to the top.” You might be smarter, but if you aren’t as desperate, as dedicated, forget it.

Here’s a picture of Bill Gates in his office.

I’m not impressed.

Slashdot reports that the sex.com domain name sold for $14 million. Recall that people spend billions every year buying software, which effectively costs nothing to copy.

The best route, these days, to become really rich is to find a way to create something that effectively costs nothing to produce, though it may cost a lot to design, and then, find a way to make sure you are the only one who can make an infinite number of copies for free. The problem is that we are collectively wising up to this get-rich-quick scheme.

I think that a more durable model, though a much less effective one, is to find a way to offer a service nobody else can match. Google comes to mind. It is a model based on constant hard work which appeals a lot more to the Catholic boy in me.

According to slashdot, Microsoft CEO, Ballmer, wants to kill Google:

Ballmer then launched into a tirade about Google CEO Eric Schmidt. ‘I’m going to f***ing bury that guy, I have done it before, and I will do it again. I’m going to f***ing kill Google.’

I just don’t get this type of behavior. I strongly suspect these people are not very happy.