Chocolate and Gold Coins

My Father's Paper

2007-02-12T22:03:00.000-05:00

After my last post, I was curious: was there any trace of my father's illustrious career in all of the world wide web? I took some serious googling but I finally found this:

Abstract : Wind-tunnel tests have been performed to investigate the effect of surface heating on boundary-layer transition on a flat plate. The tests were performed at a nominal Mach number of 2.40 and a free-stream temperature of 205 deg F, and the data were obtained at nominal plate temperature levels of 60 deg (adiabatic recovery temperature), 100 deg, 140 deg, 180 deg, and 260 deg F over a length Reynolds number range from 0.475 x 10(exp 6) to 3.93 x 10(exp 6). The identification of the onset and end of transition was made by inspection of the curves of surface-tube Mach number reading as a function of length Reynolds number obtained through the transition region. Boundary-layer-velocity profiles were obtained at points corresponding to the onset and end of transition to enable the computation of critical Reynolds numbers based on boundary-layer dimensions.

The best thing is, I can actually download the pdf! It is amazing to read something my father labored on more than 50 years ago. I was printed out on an old typewriter (with special scientific notation keys). I just wished I had thought of looking for this while he was still alive. What a kick he would have gotten out of seeing this again.

Death of the Greatest Person I'll Ever Know

2007-02-10T22:52:00.000-05:00

It happens to nearly everyone at some point in their lives: the death of the greatest person that you will ever know. Of course, most of you will not know it at the time. The loss will only really hit you years later when you think "I knew that person - too bad I didn't spend more time with him when I had the chance."

Yesterday, my father passed away at age 84. He lived a most remarkable life. I hinted at that in this post from two years ago:

My father certainly qualifies as a great American. He fought with distinction during WWII. He did cutting-edge scientific research on boundary layer behavior and heat ablation for the infant space program. He created numerous inventions for the various companies and organizations that employed him. And when he came home from a long day’s work, we worked several more hours at home creating gadgets for improving our quality of life. He invented one of the very first automatic sprinkler systems more than fifty years ago. He never profited from it, he made it just for our home.

However that post really did not do justice to the man. He was awesome. For example, during WWII, he helped capture more that 50 enemy soldiers in an amusing but very brave operation. And he really did a lot in the early days of the space program.

What really struck me today was that not only is the body gone - and it was mostly worn out after 84 years - and the mind gone - again mostly worn out - but the stories were gone. The stories were gone forever. He could talk for hours about his childhood of poverty in Montana in the Depression, his college years, his military service in Italy during WWII, and his excellent career as a mechanical engineer. I remember those stories. I was occasionally really bored by those stories - he never learn the art of making a long story short although that was one of his favorite expressions which he would insert at about hour 1 or 2 into the story. But usually I was captivated - he really could put you right there where and when the action occurred.

And now all that is gone - forever.

All that is left of this great man is the memories of his life imprinted in the minds of those who knew him and loved him. I need to remember. My son spent too little time with him and I need to share all that my father had to offer with him. I need to remember every detail that I can - because that is all that is left.

Tax Cuts, Minimum Wage Hikes, and Perpetual Money Machines

2006-11-11T00:11:00.000-05:00

The Democrats have come to power and straight away they are going to make a priority of raising the national minimum wage (which has not be raised in many many years). I was wondering why this would be a priority. Usually labor unions support minimum wage hikes because it is the ultimate in collective bargaining (we all stand together and insist on higher wages) plus it prevents firms from switching to cheaper labor. But labor union membership and power have waned in the US and they have very little political strength – so why would politicians care?

Then it occurred to me that the minimum wage to the Democrats is what the tax cut is to Republicans: they are both the financial equivalent of a sort of perpetual motion machine (you could call it a perpetual money machine if you like). The idea is simple: politicians love to give free money to people. But where does one get free money? It is never free- is it? Well it might seem free if you manage to get it without raising taxes or reducing spending. Both a tax cut and a minimum wage hike seem to fit the bill.

For the moment, let us ignore any pro and con arguments for either tax-cuts or minimum wage hikes. Politicians will not be persuaded or dissuaded by any such logic. All they care is: “Will it help me get elected?” And perpetual money machines do work for politicians: there will always be five to ten percent of the electorate that will believe anything – and five to ten percent will swing any election. So politicians would be fools not to try to get the votes of these silly people.

But here is the major problem: politicians creating “perpetual money machines” are politicians not doing their primary job. They should be doing the hard work of both finding legitimate public goods that are worthwhile taxing the common man to pay for and/or finding illegitimate public spending that should be axed from the budget. But this requires courage: some people will be harmed and they will be angry. You cut farm subsidies and the farmers won’t vote for you. You fund a new project and your opponent will call you a “tax and spend liberal”.

Politicians looking to make something worthwhile out of thin air by some alchemy will inevitably succeed in creating nothing out of something instead. I wish more people would send them the message: “Stop this foolishness and get back to work!”

Idea Contests

2006-11-06T22:10:00.000-05:00

In my previous post, I mentioned as an afterthought an idea for giving partial protection for creating entirely new types of products that cannot be completely protected by a patent. I gave the pumpkin carving kit as an example, but there might be better examples. Think of the automatic toilet cleaner. People have been waiting for some time for this and it hasn’t come. I don’t expect it to come soon. I’m sure that someone can invent one but what then? You do a lot of hard market research for the guy who will swoop down and steal your business.

Here is a good example: Lotus developed the first really good spreadsheet: Lotus 123. A few years later Microsoft came out with a knock-off: Excel. Excel was a bit better – but they had second-mover advantage (and deep pockets). They took over and made the lion’s share. I’m not against competition but I recognize that Excel would not exist without Lotus 123 and Lotus 123 would not have happened if the developers could have known that they would lose out in the end to Microsoft. New products may never see the light of day without some partial protection.

Sunil asked a reasonable question: “[D]on't you think something like that would be hard to enforce? How does the company prove it was first, and not the knock-off?.” It is an important point – there will always be disagreements about who is deserving and who is not.

My proposal is to conduct a contest for the best such invention that solves a well-defined problem. The winner gets a five-year monopoly. No one is harmed here: there aren’t likely to be automatic toilet cleaners in the next five years anyway so what is the harm in granting a monopoly to something that otherwise would never exist?

In practice, entrepreneurs who already have a prototype that they want to protect will suggest most of these contests. But there will be enough time for someone else to finish their model and submit it as well.

The monopoly gives the entrepreneur the ability to do the vital market research necessary to determine if the market is really there for this product. People need to be educated about a new product that no one knows anything about – like a personal computer. And the firm needs to learn how much people are willing to pay for an entirely new product.

The competition will soon have their chance. Five years passes quickly. But a five year running start gives the first-mover a real chance to make a quality product that can take on the competition. Everyone thought Barnes and Noble would crush Amazon dot com but they moved too slow and Amazon grew into the behemoth we see today. It just shows what a difference a few years might make.

Pumpkin Carving Kit Part II

2006-11-02T21:49:00.001-05:00

A year ago, I wrote this nice piece about my son’s Halloween pumpkin and the nice pumpkin carving kit (Pumpkin Masters) he used to carve it. In that piece, I wrote of the reasons why an entrepreneur might have a great idea (like the idea to create a pumpkin carving kit) but still be reluctant to turn it into a business. I wrote:

It seems easy to believe that this was an obvious winner now but there are always a lot of questions to answer before a person with an idea becomes an entrepreneur:

Is there a market here? In this case the market is extremely seasonal – this makes it risky.

Do I have the lowest cost technology? If a competitor can make hand jigsaws for one-half the cost your supplier charges, you will be out of business quickly.

Do I know how to market this product? Will supermarkets stock this item? You might produce a quality product that languishes in obscure shops for years until some bright fellow sees it, sees no patent, and makes a knock-off that he successfully markets in every supermarket.

Well, just this week I had to buy another pumpkin carving kit (we lost last year’s). I went to store to store looking for this nice kit we had last year. All I could find was a cheap knock-off. It cost only $5 instead of $10 but it wasn’t as good. Some of the patterns were of very poor quality and would have been impossible to create: the pumpkin would have collapsed. The carving saw was not the same quality as last year’s saw. It was just a cheap knock-off that was successfully marketed by CVS (the big drug store chain) and perhaps some other big chains to take over this market.

Next year I will plan ahead and get the real kit if I can find it. But it may be that Pumpkin Masters will be out of business by then. They did the hard work of showing that there was a market for pumpkin carving kits only to find that it will be the knock-offs that will get the market.

I feel that there might be an intellectual property right that is missing here. A firm that creates an entirely new good (not a minor improvement in an existing good) that nevertheless is not completely patentable should be given a short period – maybe five years – to market test their product before the knock-offs sweep in and enjoy the fruits of that hard work. This would give the creators of entirely new markets a brief moment of protection before the competition gobbles them up. Otherwise new markets never get created.

I wrote that there were never pumpkin carving kits when I was a kid. Now I know why. It is only just dumb luck that they exist for my son.

Worst Jobs In History

2006-10-09T15:13:00.000-05:00

From the always excellent India Uncut is this link to a BBC TV show about the worst jobs in history. Here is an example:

As a fuller, you are expected to walk up and down all day in huge vats of stinking stale urine. The ammonia produced by the rotten wee may make your eyes water, but it creates the softest cloth by drawing out the grease (lanolin) from the wool. If you can dance up to your knees in urine for around two hours per length of cloth, you'll succeed in closing the fibres of the wool and interlocking them to produce cloth that is kind to the skin. You will be doing your part, along with the weavers, dyers and merchants, in making it a world-beating export.

You may stink and regularly have to fight back the urge to throw up, but you are guaranteed very clean toenails.

This one was far from the worst. It makes you appreciate the quality of life we enjoy today.

Free Parking and Waiting Costs

2006-08-14T17:22:00.000-05:00

I haven't been blogging regularly for some time and have considered stopping blogging altogether. I will delay that decision for a little while. In the meantime, I have one more post that I would like to make.

Where I live in Northern Virginia near Tysons Corner, parking is always scarce. When there are more cars than spots, cars cruise around like vultures waiting for something to eat. There might be available parking further away, but one would have to walk a ways and time is precious and exercise is unpleasant so people cruise - perhaps for 30 minutes or more - waiting for that open space.

Today I observed this behavior at a place where my son was having a summer camp. There were spaces further away but people insisted on cruising for that premium spot near the entrance. The weather was perfect - avoiding the elements was not a factor. There was plentiful parking on the street about 1000 feet away from the entrance to the building. So one would have to assume that people were trying to save time (which is doubtful because cruising consumes time) or they just didn't like to exercise.

Except the summer camp was at a health club. These people had paid money to exercise. One can only conclude that exercise outside the health club is somehow a different commodity than exercise in a health club. Does this make sense?

Should We Tax Transactions Between Family Members?

2006-06-18T07:25:00.000-05:00

There is an interesting post on Half Sigma about why we should keep estate tax:

The general rule is that whenever money is transferred from one party to another, there's a tax. If a hard working middle class person has a problem with his pipes, and he pays money to a hard working plumber to fix the pipes, the plumber has to pay income tax on the money he receives. So if a child of a rich person receives millions of dollars for doing absolutely nothing, why should he pay less tax than the plumber who actually did something useful?

Actually, there is no such general rule in America or elsewhere. The general rule is that transactions are only taxed if they are between a retailer and a retail customers. Transactions between corporations are not taxed and there are important economic reasons why they aren't. Also transactions between family members are not taxed except for large gifts and estate taxes. This might be one reason why some people would like these taxes removed.

I think it is fairly obvious that we should not tax transactions between a parent and his or her underage child. Obviously children are in no position to earn income for themselves and parents have an obligation to support them. Taxing these expenses twice would be double taxation and extremely distortionary.

However, it isn't so clear to me that taxing transfers between adult members of the same family is wrong. If a working wife decides to quit working so she can stay home and be a homemaker, not only does the GNP shrink but so does the tax base. That decision tends to weaken country - we can no longer afford as much national defense. It might be reasonable to treat "homemaker services" as taxable income. But it also seems quite likely that this is a really bad idea as well. It is one of those areas that requires more thought and perhaps experimentation.

Likewise, I can see that in general that it might be reasonable to tax transfers between parents and their adult children. If the parent has died then the inheritance might seem exactly like "winning the lottery" as Half Sigma suggested. It does seem like money that is easy to tax with really causing any distortion, (if the person decides not to die because of the high estate taxes then that would seem to be a good thing).

But I can see the potential for distortion. If you pay taxes on inheritance but not on gifts then parents will be obliged to give before they die. Maybe the government doesn't really want to interfere in family matters. It is an interesting question but not so clear.

A Gaur

2006-05-25T16:53:00.000-05:00

Here is a picture of a Gaur:

It is a very large relative of the domestic cow - it is not so closely related to buffalos and such.

OPEC Loses Control Again

2006-05-19T22:07:00.000-05:00

Last August I wrote:

OPEC, the oil cartel, has temporarily lost control of world oil production. I say temporarily because I have no doubt that OPEC could quickly increase production by simply drilling more oil wells and sucking the oil out more rapidly.

But this raises a question: “If OPEC is making more money with the higher price, why would they want to increase production and reduce the price?” The answer is that letting the price of oil rise is like taking a submarine down to see how far it will go before the water pressure crushes it. It is a highly dangerous game. I think that OPEC must be very concerned that they might just spawn a monster of an alternative fuel technology.

If you control the world oil production and you want to maximize the present value of your total net revenue stream, then how do you set your price? The answer is that you would want to set the price just below the price where it becomes profitable for others to invest in alternative energy sources. If you set the price too high for too long, you run the risk that some exciting new energy alterative will come along and then you would be force to sell your oil at a discount later.

I went on to predict that the price of oil would soon be under $60 a barrel.

Well, at first, it seemed like I was right. The price of oil fell and gasoline prices came way down. It seemed like the spike in price was just an aberration and OPEC still controlled the price.

But the price of oil has headed steadily upwards lately. Today I read this.

I wonder if perhaps the assumption that OPEC still has 10 to 15 years of reserves is correct. Perhaps they have less. This might be like the slog overs of a cricket match: dwindling resources leads to a “go for broke” attitude. If you have only 5 years of oil left then why not get as much out of that as you can? By the time some exciting technology comes in and takes over, you made your money.

Another possibility is that it might be worthwhile to purposefully let the price spike and fall many times. During the spikes, you make large profits. During the falls, you put any competing technology out of business. Investors prefer to invest in venture with more certain returns. Creating uncertainty helps scare off investments in alternative energy.

I’m not convinced about this argument. I think that the longer the price stays above $60 a barrel the bigger the risk that oil will be replaced by something. But I cannot deny the possibility that the price of oil might spike at over $100 a barrel. But I still think that OPEC will bring the price back down under $60 soon. But it will be interesting to see what happens in the next two months.

Public Goods – Who Should Pay?

2006-05-16T19:31:00.000-05:00

My family saw a silly children’s movie on Sunday: Hoot. It is about some teenagers who fight to protect a group of endangered owls from an evil developer.

The movie was not as bad as you might first think. It was really pretty funny for the most part. In typical children’s movie style, all of the adults are nitwits or comic villains and only the children act like ordinary people. It feeds the ego of children to see other children as more capable than adults.

But the plot of the story was not only a cliché but a dangerous economic lesson as well. The evil developer ignores the protected wildlife that they are endangering by developing the land. In the climax, the villain faced with the prospect of loosing his land to the owls threatens to bulldoze a group of citizens assembled for the groundbreaking ceremony. It doesn’t sound funny, and although it is played for laughs it really isn’t all that funny.

But the message is unmistakable: corporations are basically evil organizations with tons of money that they greedily amass and should be forced to pay for the good of the community. Now, it is true that corporations really don’t care for the environment or any other public good (unless it is built into their profit function) and so they might have incentive to break the law to avoid paying a big fine or, in this case, to avoid loosing their land. But I wonder how many people watching the movie wondered if the law – by forcing the entire burden of protecting the owls on the landowner – might create criminals who otherwise might be honest.

Protecting the environment is a pure public good. Who should pay for that good? A simple and fair method would be to make those who benefit most from that good pay for it. If one could know how much each person was willing to pay for the public good, then taxing each person in proportion to his or her benefit would be fair. Of course, it is difficult to impossible to get people to reveal how much they are willing to pay because they cannot be excluded from the good after it is bought. But it is reasonable that most people’s willingness to pay would be close to the same fraction of income. If the community votes to tax each person’s income (or home value) by a fix amount to pay for the good, then the outcome will be roughly fair.

Why then do people think it is fair that only those unlucky enough to have protected animals on their property should have to pay the entire burden of protecting these animals? It is exactly like a community confiscating a person’s home for building a school or a road and not even paying fair market value as compensation. How is that fair?

I used to think that such a confiscation was a bummer for the homeowner but not necessarily economically inefficient. But I realize now that if you place too high a tax burden on a few, they will have incentive to waste precious time and resources to shift that burden onto others. They will also have much more than the ordinary incentive to break the law.

People support these laws because they enjoy the benefits of the environment without having to pay for it. They like to think that it is fair because the only ones who suffer are “evil corporations”. But isn’t getting a benefit without paying for it basically evil?

Cheating the Bagel Guy, Part II

2006-04-22T03:47:00.000-05:00

A year ago, I wrote a piece about cheating the bagel guy. This bagel guy used to be an analyst at the company that I used to work for. He retired some 20 years earlier to deliver bagels. He would deliver about 10 dozen bagels and 6 dozen doughnuts to the office on Fridays. He would leave out a simple plywood "honor box" for the employees to leave money in. He would sometimes complain with messages that people were cheating him.

I recently found this interesting article about this same fellow in the Freakonomics blog:

He had also -- quite without meaning to -- designed a beautiful economic experiment. By measuring the money collected against the bagels taken, he could tell, down to the penny, just how honest his customers were. Did they steal from him? If so, what were the characteristics of a company that stole versus a company that did not? Under what circumstances did people tend to steal more, or less?

As it happens, his accidental study provides a window onto a subject that has long stymied academics: white-collar crime. (Yes, shorting the bagel man is white-collar crime, writ however small.) Despite all the attention paid to companies like Enron, academics know very little about the practicalities of white-collar crime. The reason? There aren't enough data.

A key fact of white-collar crime is that we hear about only the very slim fraction of people who are caught. Most embezzlers lead quiet and theoretically happy lives; employees who steal company property are rarely detected. With street crime, meanwhile, that is not the case. A mugging or a burglary or a murder is usually counted whether or not the criminal is caught. A street crime has a victim, who typically reports the crime to the police, which generates data, which in turn generate thousands of academic papers by criminologists, sociologists and economists. But white-collar crime presents no obvious victim. Whom, exactly, did the masters of Enron steal from? And how can you measure something if you don't know to whom it happened, or with what frequency, or in what magnitude?

They mention that honesty seemed to fall in the 1990's. But I suspect that he was not holding constant a very important variable: relative bagel quality. His bagels were really low quality and many people might have thought that they were not worth the dollar charged. Of course, it isn't right to not pay for something you have already consumed - infact it isn't right to consume something first and pay for it later - but some people might be more inclined to rip you off if they feel cheated by you.

From the statistics listed in the piece, it is clear to me that he was making essentially nothing from his hard work. If his gross sales after 20 years were only about 1.5 million dollars. His net was maybe a quarter of that (at best). His pay as an analyst was the equivalent of 100,000 dollars per year. He really gave up a lot to deliver bagels. I don't really understand his choice.

I would think that companies would be really interested to know who might cheat the bagel guy. That same person might be ripping the company off in multitudes of ways. But I also wonder how well correlated this kind of crime and other kinds of corporate crime. There are many people who would never cheat the bagel guy but would rip off a big corporation.

1YAT: The Value of Quick Thinking

2006-04-20T02:39:00.000-05:00

One year ago today, I wrote:

Often times I only think of the perfect response to a question hours later, when it does me no good. But occasionally it comes to me right away.

Yesterday, my little boy was practicing his piano lessons. He wanted to quit and do something else but I wanted him to practice the last tune one last time: “Tomorrow is your piano class. Practice that tune again. You want to show your piano teacher that you can play it perfectly.” I only meant “perfect” in the sense that he should be able the play it with obvious errors, not that I expected him to be Mozart.

My wife took offense to that statement. She angrily whispered: “ What do you mean ‘perfect?’ Don’t put pressure on him. What do you do that is ‘perfect?’”

I was in the doghouse now. I needed to think quickly – and I did!

“I married the perfect wife.”

My wife considered that answer for a brief moment as if she might have appreciated that reply.

“Name one other thing you can do perfectly."

“I gave the perfect response to the previous question.”

“Ha, ha. Very funny.”

But then she let the subject drop. I breathed a sigh of relief.

I recall that Rahul Bhatia liked this one. Now he is married, he will have to think quickly on occasion.

My son plays the piano really well now.

1YAT: Magic in the Marketplace

2006-04-14T02:35:00.000-05:00

One year ago today, I wrote Magic in the Marketplace:

The key to wealth is having a magic technology. Technology, in the sense that I’m using the word, is any means that you might use to take inputs (labor, capital) and turn it into a finished product or service that customers will buy. McDonald’s might be considered low-tech, but in reality that have sophisticated technology since it isn’t so easy to take high-school students and transform them into a force that produces a consistent quality product. Likewise, Wal-Mart is a very sophisticated technology. There are lots of people who would like to know how they do it.

Technology comes in two types: clone-able and magic. Clone-able technology can be duplicated by anyone simply be observing the end product. A chocolate-dipped frozen banana is clone-able. A really big paper clip is a clone-able. You don’t make any money from going into business by trying to create a new market with a clone-able technology. If you want to make money, you must have a magic technology – a technology that no one can figure out how you are doing it.

This was easily the best piece I wrote in the month of April 2005.

1YAT: The Tipping Game

2006-04-10T02:30:00.000-05:00

One year ago today I wrote:

I think tipping is a simple example of the problem with non-cooperative game theory. Non-cooperative game theory might do well enough to explain the behavior of firms because firms are so motivated by profits that they are not motivated by what others expect them to do. But individuals would rarely behave in the manner that non-cooperative game theory would suggest is rational behavior, because individual are programmed instinctually to cooperate. We tend to do what we are expected to do.

The tipping game is like a two-stage prisoners’ dilemma game. First the server either cooperates (good service) or not-cooperates (poor service). The customer observes the service and then either cooperates (gives a tip) or not-cooperates (gives no tip). Both would be better off cooperating than both not cooperating but the customer would have more money in his pocket if he doesn’t tip even when he receives good service. But people are hard-wired not to behave that way.

I remember receiving a nice letter about this post.

1YAT: Go Start a Blog or Something

2006-04-08T05:03:00.000-05:00

One year ago today I wrote Go Start a Blog or Something

I love reading India Uncut each day. Amit Varma, the great blogger of India is so entertaining. I have to say, however, it is not a good idea to read India Uncut before meals because some posts might turn your stomach. But most of his post are just interesting.

There was one post he made about traditional sari embroiderers losing their jobs due to cheap embroidery machines imported from China that I found interesting. At the end of post he said:

And if you're a hand embroiderer, well, no one owes you a living. Go start a blog or something.

I have to admit that I loved that last line in part because it sounded so cold. I wrote to him: "I have to say that if Marie Antoinette were alive today, she couldn't have said it better herself." A little context is needed here. I had earlier written to him to ask about whether he thought anybody blogging today was thinking perhaps that it would lead to fortune someday (because nobody could make a living doing a blog today).

Of course, it would be silly for India to protect the jobs of sari embroiderers. They are going to be the principle beneficiaries of the new opportunities created by the new global economy. They need to leave traditional jobs to take advantage of the new jobs be created. Some have already taken the carrot, and the rest will get the stick, but change is inevitable. And we should not, for a moment, lament the loss of the old way of life. Without change, we would still be living in caves.

Anyway, Amit took my comment as a criticism and he wrote a long rebuttal, (and he linked to me, thanks Amit). As for the sari embroiderers, I am certain that they will find much better ways of making a living than starting blogs. Of course, some of them might get rich starting a web-based business, it could happen.

The Big Screen Television Set

2006-04-03T05:53:00.000-05:00

When we bought our new home a year and a half ago, it came with a big screen television set in the basement. It came with speakers installed in the walls and in the ceiling to give a cinema-hall quality sound. We thought that would be a nice thing to have with our house.

Well, we moved in and discovered that the television only played the Spanish channel. I figured that we could reprogram the television so that it would get all channels but it wasn’t at all obvious how to do this. We had the cable television guy look at it and he was no help. Unfortunately, the manual for the television set was missing and the guide for stepping us through the reprogramming was so complex, we never could get it to work.

I spent hours and hours fiddling with it. I thought of connecting the cable wires to the VCR and the VCR to the television to circumvent the problem. It did give us the sound but not the picture.

The television had the logo of a local satellite dish company. I figured that maybe the television was cleverly designed so that it would only work with the satellite dish so that the owner would have no choice but to pay for their service. But we didn’t want satellite dish.

We could watch movies with the big screen television – the DVD player worked. But the speakers were useless because the previous owners decided to take some of the necessary equipment out at the last moment (and never told us about it). So for a year and one half we have had a big screen television and speakers and they were only of partial use.

Then this weekend we decided to do something about that. We decided to buy real furniture for enjoying our television. We have been watching television on a screen about half the size of our big screen television. And since we had that television set up in the exercise room so my wife could watch here aerobic exercise videos, we would watch television while lying on the carpet. Lying on a carpet is fine when you are in your twenties but when you reach 40, it really is a pain in the back – literally.

So I went to Best Buy (the electronics store) to ask if about the equipment to make the speakers work and I also ask again (maybe for the fourth or fifth time) if there might be a way to get that television to work. The young man suggested that unplug everything and try to reprogram the channels again. Well – I had tried that before.

But I tried it again - still no luck. I was about to give up for the tenth time when my wife decided to try it again. She noticed that the television was in a slightly different mode than before – at least now the television channel number showed up in the upper right corner but we still only got Spanish channel. She went through the setup a few times.

And then, like a miracle, something happened. The step that I had been looking for literally for years came up and the television began searching for channels. And then we were getting all of our cable channels – right there on the big screen television!

But I feel useless. I don’t know which make me feel more useless: not watching television on a perfectly workable big screen television for a year and a half because I could not figure out how to reprogram it or the fact that my wife was the one who eventually did figure it out. Well, anyway, it works now.

This Blog Did Not Move

2006-04-02T07:46:00.000-05:00

And no one was fooled.

I have thought about a fancier blog template on occasion but I am just too lazy to bother with such things.

This Blog Has Moved

2006-04-01T13:01:00.000-05:00

This blog has moved.

If you are not automatically redirected in 10 minutes, then click here.

Robotic Cameras

2006-03-28T00:23:00.000-05:00

A comment by Patrix in the previous post made me think about robotic cameras. I believe that these will important in the next twenty years in many areas:
1. Remote controlled cameras will allow photography in the most hostile environment and in the very worst weather conditions. They will be able to be everywhere so that a thousand eyes will hunt for the elusive prey and then the operator will move the camera (on wheels or on a tractor tread) to the optimal location. The operator will never have to leave the comfort of his own apartment.
2. These cameras will make the safari even more assessable and more successful. How many people have gone to the wild animal preserve and never saw the lion or the tiger? In twenty years, it will never happen again. The robots will always know where the animals are. And if you cannot afford the trip to the Serengeti, you can rent a robot and go on safari from your own p.c.
3. Guerilla warfare will become as obsolete as the bayonet charge. Robots will find the guerilla hiding in the jungle or in the cave easily. The guerilla’s only hope will be urban warfare.
4. In fact, in the distant future, people won’t fight people. Armies will send their robots out to fight their enemy’s robots. Once one robot army is defeated the country will immediately surrender because you won’t stand a chance against a billion robots.
5. I wonder if people will allow a million robotic cameras to perform surveillance on society to prevent terrorism, crime, and driving faster than the posted speed limits.

What are your opinions on the future of robotic cameras?

March of the Penguins

2006-03-26T09:36:00.000-05:00

I seldom watch movies and almost never write about them, but I wanted to write about this wonderful documentary I saw with my family called, “March of the Penguins.” This small French team spent nine months in Antarctica to film the remarkable story of the reproductive habits of the penguins and the incredible hardships these birds go through just to produce their offspring.

It is just incredible to see all these birds walking single-file in the snow to reach the breeding ground. Once in a while the lead penguin will be lost and they will gather around not knowing where to go. Then someone remembers and leads them on. Eventually they reach the site. And for the males, that is where they will stay for four months.

This is the incredible thing: they don’t eat. They go completely without food for months so that they can help raise one chick. First they spend a couple of weeks looking for a mate. Then they wait until the egg is laid which takes about two months. Then the females – who are in desperate hunger at this point – pass the egg to the male and the females take off to the sea to eat. Sometimes the eggs roll off in the passing and the egg almost instantly freezes and their efforts are completely wasted. They showed some scenes of parents looking at their frozen eggs – just heartbreaking.

The females go to the ocean and eat for two months to build back strength while the male incubates the egg. This is in the dead of the Antarctic winter. Some penguins just freeze to death during the extreme winds and cold temperatures. They need to keep their egg on their feet and keep it warm with their bellies for the entire time – for four months!

When the chicks finally hatch, they give them a little stored food they kept somewhere in their stomachs. It is amazing the sacrifice these birds will go through for a chick.

Then the females return – and not a moment too soon. They take over caring for the chicks while the males return to the sea. Each of these journeys is about seventy miles and when you see the penguins waddle it looks like the equivalent of a human journey of 1000 miles. Many males simply die on the way back to sea – they were just too weak. And many chicks die of freezing and predators. It really is a tough life for a penguin.

After a couple of months, the females leave – often before the males return – because they are so hungry. The males return once again to care for the chick until it is ready to go into the ocean.

And that is the most extreme anti-climax. These parents suffered so much for the chicks and by the time the chicks go into the sea the parents are gone. The chicks swim by instinct. And when it is time for them to mate – after four years – they will go through what their parents did by instinct.

I have to say that the French crew did an incredible job capturing all of this on film. The conditions could not been worse for filming or for just living for that matter. But they persevered. Perhaps they were inspired by the penguins.

In ten or twenty years, such a documentary would not be so remarkable. Robotic cameras (which the French did not use) will allow the filmmaker to film the wildlife in the most hostile environments without putting a human in the wild. But for now I have to admire the French crew’s courage and tenacity in bringing this incredible story

The Consumption Tax, Part II

2006-03-25T06:51:00.000-05:00

One year ago today, I wrote about the virtues of a consumption tax. It is a decent essay and worth reading. I thought I would add to those thoughts but first let me introduce the idea

The idea is that instead of taxing income, which has the problem of discouraging investment since it is taxed as soon as an investment is liquidated even it an investor intends to reinvest these earnings, the government would tax your consumption. The idea is not to tax the goose that lays golden eggs but just the gold eggs.

Here is an excerpt:

My proposal is to treat all flows of money into investment as equal and non-taxable until these investments are cashed in. Flows of money between investments would not be prevented or discouraged in any way.

The simplest way of explaining this idea is to assume that most people have a checking account and a money market account. Any flows of money into the checking account would be considered consumption (in the near term) and would be taxable even if they came from investments. Any flows from the checking account into the money market account would be fully deductible. Any expenditure from the money market account on investments would not be counted since this would be an exchange from one form of investment to another. Using your money market account to pay your credit card bill though would mean you would have to pay tax on that transaction, so you would probably first transfer money to your checking account and then write a check for the credit card bill, but you wouldn't have to.

There two big issues that I can anticipate with this new type of tax. First issue is how to treat the taxation of investments made prior to the enactment of the consumption tax. The second issue is how to treat home mortgage interest deduction.

Read the whole post here.

The idea of a progressive consumption tax (i.e. one that taxes low consumption at a lower rate) has been around for many years but has always been considered impractical. I do not believe it to be impractical at all.

The issues of the progressive consumption tax are many: first there is the issue of transitioning to it, second is the issue of how complex would it be to compute, third there is the issue of tax incidence and who wins and who loses under the new regime, and fourth there is the issue of getting the required information to tax all consumption.

I addressed the first two issues in the essay above. I will just say that transitioning could be gradual and phased in over a decade. Computing consumption is easy if you keep your accounts well. Any money flowing into your checking account is likely to fund consumption. You might write a check to buy an investment – and this would be fully deductible – but it would be easier just to fund investments out of an interest earning money market account.

The third issue – the issue of who pays that taxes and tax fairness – is the real reason I wanted to readdress this issue. There is a big issue here. Republicans are using the issue of tax efficiency to argue for an almost complete repeal of capital gains taxation. Obviously this helps the wealthy. In fact, a wealthy person living solely off of investments might pay less tax as a fraction of his or her consumption than a common laborer – a regressive tax system.

The only fig leaf of respectability for this swindle is that taxing investment income would discourage investment. Basically, you are grinding down investment over time because each transaction requires a check to the government. The government should simply wait until you are finished investing.

But under the current scheme, investors don’t pay much tax on either the goose or the gold eggs. Even if all consumption is liquidated and spent, the investor pays merely 15 percent – a really small tax on a fortune.

The fourth issue is how to compute all consumption. One form of consumption that really should be tax is the imputed rental value of owner occupied housing. Basically, if you were to rent your home out, you could be making a good income. But you are living in it. So you pay yourself the rent. This should be taxable consumption. But how much is this?

The issue of fairly estimating the value of property that never comes up for sale in the market is always a contentious issue. I think the county assessors do a reasonable job – I say this with the knowledge that they have over-assessed my home by 20 percent. Is there a better way?

I thought about a scheme in which owners would simply self-assess their property with a huge penalty if they self-assessed too low. When you sell your home and if you self-assessed for less than the sale price, you pay a penalty based on the difference to compensate for the lost real estate tax. If the penalty is sufficiently high – maybe 30 percent of the difference – then you would want to be honest and reveal the true value of your home. The issue with this, of course, is that everyone will self-assess too low in a rapidly rising real estate market.

Subtle Warning

2006-03-21T17:58:00.000-05:00

Sign seen at a Starbuck's coffee house:

Unattended children will receive complimentary espresso and a free puppy.

I'll have a real economics post up in a day or two.

Three Jokes

2006-03-19T09:26:00.000-05:00

First joke
This joke sits uneasily with these others – it is intended for children. My seven-year-old son read this joke in a magazine and laughed heartily even though he had no idea what the joke was.

Q: What did the cat do when he ate some cheese?

A: He waited by a mouse-hole with baited breath.

Not bad for the genre of seven-year-old humor.

Second joke
Last night we were walking around a furniture store and they were playing an old Bangles tune from twenty years ago. I remember them. A girl band, to be sure, but Susanna Hoffs was a babe. And they had a few hits: Manic Monday, Walk Like An Egyptian, and my favorite: If She Knew What She Wants (He’d be giving it to her). That song had easily the best double entendre in pop music.

I remember hearing the lyrics and thinking it was just a stupid girl song. It seemed to be about a girl who was taking advantage of a guy who was "crazy about this girl". And then I heard it again:

If she knew what she wants
(He'd be giving it to her)

I wondered, “Are they talking about that?

If she knew what she needs
(He could give her that too)

“Indeed, it is about that.”

And indeed there were lots of you men who while looking at close-ups of Hoffs were dreaming of “Giving it to her, giving it to her, giving it to her, yeah!”

Third joke
This one-liner is perhaps the best spontaneous retort ever. I remembered it while reading this post by Greatbong about the remake of Basic Instinct. I’ll just copy what I wrote in his comments:

The all-time best joke that I recall concerning the Basic Instinct movie was from the Late Show starring David Letterman (this was early 1990s). Sharon Stone came on and joked about her role and the infamous scene (which I never saw btw) in which she doesn’t where jettie and the camera see all the way up to her acting ability. She referred to it (inexplicably) as “seeing all the way up to Nebraska.”

Letterman quipped, “Nebraska? I thought Oregon.”

I didn’t catch the joke at the time but years later when I read some info about New Mexico. I already knew that its slogan was the “Land of Enchantment” which makes absolutely no sense. But a little devilish voice made me want to know what Oregon’s state motto was.

Bingo!

Talk about getting a joke years later. One time in my life where ROFL was appropriate.

I'm Feeling Lucky

2006-03-17T11:20:00.000-05:00

Today is St. Patrix Day –um – St. Patrick’s Day. Since some of my ancestors come from Ireland (the Higgins family), I should celebrate this somehow.

Anyway, I was inspired to try a little experiment and I came up with the following list:
1. Gaurav - Yes
2. Amit – No
3. Sunil – No
4. Charukesi – Yes
5. Patrix - Almost
6. Ravikiran – No
7. Michael – are you kidding?

What was I doing?