Social Media Websites are Designed to Spill

And when they spill, what they spill is their users. As in, dumped on the sidewalk, dumped in the street. Because what people really want from a social network is dirt on other people. And who better to supply than the individual to be dirted upon?

Now, Facebook and Google+ realize that if you believe that your dirt will be publicized, then you might hold back your dirt. So they go to some length to make you believe that your information is in control. Yes! You control your information! Just move the magic slider or click the magic button, and your dirt will be carefully contained where only your friends and acquaintances out to two degrees of separation will see it.

Ah, so when I spotted this item, I knew I had to make the point here at Vorpal Trade that social media is a complex beast and that it will burn a great many people, such as those who develop it.

Whoops. Google Engineer Accidentally Makes His 'Plus Sucks' Rant Public.

If a Google engineer can't keep his settings straight, then why would all the rest of us be able to?

Software is complex. Unlike physical reality, the landscape in a software application, and especially web-based applications that Google prefers, changes at the whim of the developer. A "user" of the physical world gets used to things: gravity, light, physical obstacles, the need to eat. Adults are experts at knowing how things work. They aren't surprised when rocks are heavy, trees block your view, or wood rots when exposed to water.

But place mortal humans inside the shifting landscape of a social medium, and they aren't quite so capable. And since it is a matter of competitive advantage to continually evolve the social media applications, to add to them and rewrite them to make them more capable, more complex, richer, better, happier and cleverer, it is unlikely that their users will be able to stay on top of the settings changes and small rules they need to master to keep their dirt in the places they last put it.

Even if Facebook and Google+ really do intent to help you keep your dirt straight, the deck is stacked against them. And since they really don't have any incentive to keep your dirt straight, the probability is zero that it will be.

There are defenses against dirt-spilling social media sites. That is a topic for another post later.

Richard Stallman's War on Software Users

It can be argued that advocating GNU products is tantamount to advocating poor user interfaces. The adoption rate of open source software under the GPL license is very poor among new and novice computer users, as the primary focus on FSF-philosophy software has never been about user satisfaction. It has been about programmer satisfaction.

When this problem collides head-on with memories of one of the greatest user interface advocates on the planet, Steve Jobs, then it isn't surprising that Richard Stallman would have nothing good to say about his competitor. Aside from Richard Stallman's poor sportsmanship, juvenile thinking, and poor attitude towards Jobs, which has caught a lot of peoples' attention, what is really galling is that Richard Stallman expects all the rest of us to discard our "impure" commercial and not-so-free software and take up GNU products.

In short, Richard Stallman wants to be dictator, and Steve Jobs was in his way. No wonder he wrote what he did.

http://www.stallman.org/archives/2011-jul-oct.html

This business of wanting to be king of all software by poisoning the well for everyone else has been a Stallman agenda for a long time. I've often wondered if he would still be an advocate for free software if the world were to require that his name be removed from everything in the FSF and GNU projects, and from all past news articles, so that he got no credit for any GNU or GPL work. Considering the massive efforts by other developers, and lack of much useful software written by Stallman, if he were to erase himself from the history books it would be a recognition of true reality, which is that being an a##h### is not something that should result in credit. But then, Joseph Stalin is still famous for his small role in Soviet Russia, so I guess that sometimes a##h###s get their notoriety whether or not they deserve it.

I really really doubt that Stallman would be willing to give up his fame. After all, what he wants is to ruin all the other software developers financially, then claim most of the fame (a kind of payment, after all) for himself.

End users deserve good software, and sometimes the shortest path to that reality is commercial software that winds up being closed source. It may stick in Stallman's craw, but, hey, I'm willing to live with that.

(Oh, and Richard, that OS is called "Linux", not that other thing you claim but which is a prevarication.)

---

Some of the articles posted about Stallman's disrespectful, parting dig at Jobs:

http://www.readwriteweb.com/enterprise/2011/10/why-fsf-founder-richard-stallm.php

http://www.forbes.com/sites/briancaulfield/2011/10/10/leave-it-to-richard-stallman-to-go-there/

http://latimesblogs.latimes.com/technology/2011/10/steve-jobs-stallman-dissenting-view.html

http://tech.slashdot.org/story/11/10/10/1227229/Richard-Stallmans-Dissenting-View-of-Steve-Jobs?utm_source=rss1.0mainlinkanon&utm_medium=feed

http://gizmodo.com/richard-stallman-steve-jobs/

http://www.neowin.net/news/richard-stallman-says-he-is-glad-steve-jobs-is-gone

http://www.itbusinessedge.com/cm/blogs/tennant/what-richard-stallman-s-hateful-eulogy-to-steve-jobs-really-means/?cs=48799

http://www.macgasm.net/2011/10/07/richard-stallman-steve-jobs-glad/

http://www.zdnet.com/blog/hardware/richard-m-stallman-on-steve-jobs-im-not-glad-hes-dead-but-im-glad-hes-gone/15275

In Hayek vs Keynes Debate, No One Advocates the Investment Process

Over at Bloomberg Nicholas Wapshott is stirring up things among the micro vs. macro dismal scientists. (Keynes and Hayek, the Great Debate (Part 4))

In order for Keynes to be right, he would have to be lucky. Only if the increment in Government spending is a true investment (with continuing payoffs that in total exceed the expense) would there be a lasting impact on the economy. In many cases, including the 2009 surge in U.S. spending, the investments are poorly selected and will not return a surplus. Fast spending, desperation spending, indirect spending, and spending by the Government on behalf of the rest of us are highly likely to fail to be effective or have investment returns, for the same reason that fast spending, desperation spending, indirect spending, and spending by an individual on behalf of another person is likely to fail to be effective.

It is necessary that the spending be an investment for a Keynesian expansion to work. Otherwise, the money is wasted, and the economy may even shrink afterward.

What happens in real life is that politicians spend money because it looks like they are doing something. It doesn't mean that Keynes was right when Bush or Obama request spending. It only means that the entire country is making a mistake, which the entire country will pay for later. It reminds me of the story about the fellow looking for a lost object at night under a lamppost because the light is better there.

Hayek also made the mistake of failing to indicate more directly the problem with mis-investing. Although he did correctly describe that individuals knew where to put the money better than government, he was not active enough in suggesting ways that the investment decisions that citizens make could be improved or increased in their efficacy.

An Introduction to Nanoeconomics

Many years ago I had a heated discussion with a person who lamented the high profits made by some businesses. The implicit assumption made by my opponent was that the seller's profit was at the expense of the buyer, and that it should be curtailed, perhaps even by legislation.

That got me thinking, and I countered with this proposition: That the buyer made a profit as well, and that instead of the seller gouging the buyer, the buyer might even be making so much profit that they were gouging the seller instead.

That conversation eventually became an academic paper and a fairly straightforward formulation of the dynamics of single transactions. It was easily proved that the buyer profits. The buyer has an opportunity cost, which establishes the value of the transaction to the buyer. The three numbers cost, value, and price are different and the differences between them establish the social surplus, seller profit, and customer profit for the transaction. The existence of the profits for both parties makes intuitive sense; if either party were no better off after the transaction, then they would have no incentive to engage in it.

If you draw a picture of the transaction, it looks something like the diagram at left. The seller profit is price minus cost, the buyer profit is value minus price.

For those readers who have been exposed to supply and demand curves in microeconomics, this single transaction diagram will match up fairly well to what you might see if you take a vertical slice from a supply/demand diagram. The customer profit is part of the consumer surplus. The advantage to putting this on a single transaction diagram is that you can see the real profits in the transaction, whereas the supply/demand curve aggregates many buyers and sellers together in one vast undifferentiated mass.

Nanoeconomics diagrams become very useful when analyzing monopoly, monopsony (single buyer), and monopoly/monopsony situations.

Even the U.N. is full of Overspenders, Says Obama

If you spend more than you take in, you will eventually go bankrupt. We've beaten the drum in this blog for everyone to get their acts together and stop overspending, and now we're gratified that even the current Administration agrees with our principles. (U.S. Decries Salaries, Staffing in New UN Budget)

Expanding the Vorpal Charter

I've been making a few changes to the Vorpal Trade blog, including changing graphics, coloring, and the description. When I started this blog several years ago I intended to comment on investing and equity trading primarily. Over time, I am finding that I'm writing a lot more about economics and frugality, especially as they relate to our current and future economic states. I see a lot of traction in writing about this, but as I do so I also see that a lot of these topics involve what my university referred to as "the humanities": psychology, economics, history, politics, and anthropology. These are intimately connected with business and the marketplace, and of course, government decisions that impact the economy.

So rather than re-title or create a new blog, I am going to purposely blur the charter, as reflected in the new subtitle Art, science, and economics of the human condition. I think that the net effect will be that I am covering the same material, but in much greater depth.

It should also be more fun. I will be adding some reviews of literature, music, and other arts, and with luck these articles will also come full circle and lead to new insights in business, investing, and economics.

Was Solyndra a Victim of its own Affluence?

I wish I had published this sooner, because the evidence is already coming out in various articles in the media. Better later than never.

The issue is Solyndra's rapid downfall. The scandal is the company's bankruptcy very shortly after taking a $535 million loan from the U.S. Government. It has been raided by the FBI. The media coverage has strongly implied that the company must have misused the money for it to run out so soon.

When all of the factors are in, I would not be surprised if all of the official investigators will be stumped, because my guess is that Solyndra died from a lack of frugality. It isn't the kind of judgment that usually results from detective work, because the cause is too subtle for some to see.

Sometimes the worst thing to happen to small businesses is that they start out with too much money. If you have too much start money, you don't learn discipline. Then you spend it too fast, and when bad times come, and they always come when you are running any business, you have no skills to apply to the problem. I'd much rather invest in a business where I know that the founders went through some lean times at the beginning, scraping by and eking out a living by saving a nickel and a length of pipe. It isn't necessarily a matter of building character either. I am talking about discovering facts about the real world that will not be discovered until necessity forces you to learn the lesson.

From the very earliest news reports it smelled like Solyndra executives had never learned any lessons about frugality or how to run their business on less money. The most critical clue is the Government loan itself. $535 million is a lot of money for a new business to handle. And any company that spends it all at once, over the course of a year or two is almost certain to have wasted a lot of it.

I will skip commenting on the politics. Any investor, whether government, or private, should know about this learning dynamic of new businesses before putting in their money. The net effect here was to fuel the lack of discipline that seems to have been present at Solyndra.

Starting any new business is tough on the founder. I know that it doesn't seem like I am helping them when I suggest that they starve for funds in order to learn. In the long run, however, the winners among a group of starting businesses will be those who made the best use of limited capital and figured out how to cut their inputs and expenses. The customers benefit, the employees benefit, and the resulting mature, stable business is a much more attractive work of art.

Disrespect for the Penny

Today I saw a plastic tray in a trashcan. There were still cubes of pepper jack cheese and cheddar cheese, sliced apples, and a tub still half-filled with caramel. Perhaps there was a celebration, a baby shower, birthday, or impending wedding, and someone had bought the pre-made tray of cheese cubes and apple slices at a local grocery store or discount warehouse. I only saw the tray for a second, but there was clearly a fair amount of cheese and caramel still in the tray. Maybe even enough food and enough calories for one person's full day calorie needs. And this wasn't just mediocre survival food, this was cheese and fresh apples and caramel. Delicious stuff, and there it was, in the trashcan. It didn't look to me like it's time had expired or that it was left over from last month. No, it looked like it had been discarded simply because no one wanted to bother to save it for the next 12 hours, and had chucked it because it wasn't worth saving the $2 to $4 worth of food the tray still contained.

I also read an article today, Both Parties Misunderstand Taxes, Sacrifice. It was a viewpoint piece at Bloomberg by Stephen L. Carter. I won't say whether I agree or disagree with his point, because I only want to point out one statement:

"a 2 percent cut would save a mere $4 billion annually"

Here is a giant amount of money that is, nevertheless, deemed too small in the context of the debt debates. It certainly won't solve the country's debt problems at one stroke, but why doesn't it warrant more than the word "mere"?

These two events have something very much in common: Disrespect for the penny. People are used to ignoring pennies on the ground, because it costs more in time lost to pick up a penny than you gain from this found money. This attitude has been extended, unfortunately, to an attitude that prevails across America. This attitude is a "princess" attitude, in that the holder of the attitude believes that saving a small resource isn't worth the effort, because clearly that would be beneath them, as they are a, well, princess. And failing to worry about these small amounts therefore clearly shows how wealthy and worthy they are, how important they must be. It is almost as though the ability and willingness to discard small amounts of resource are badges of honor, or signs of royalty. Such attitudes are clear signals to the opposite sex of just how worthy a mate the wastrel must be, because they clearly aren't concerned about such as small loss.

The antidote to recession and economic malaise is eliminating this small but pernicious behavior. Because if everyone does it, then raising taxes and cuts in spending aren't the problem. WE are the problem. If no one saves these resources, and they add up quickly, then we will not be able to balance the budget even if a miracle occurs and the Republicans and Democrats were to unanimously agree. And if we choose to waste small amounts of resources because we are too important to worry about it, then we are exactly the kind of person who is destroying the United States, atom by atom, entitlement thought by entitlement thought, penny by penny.

Prosperity through investment

The prosperity of a country depends upon the collective ability of its citizens to tell the difference between an expenditure and an investment.

If the citizens are trained to expend without consequence, to lack skill at making small investments, and to discount or disparage the need to tell the difference between expense and capital outlays, then the country will gradually dissipate itself and never understand why it is suffering as it does so.

[Update on 11/1/11:

I really should have pointed out this article, which goes into more detail about what it means to make personal investments when spending money.]

Strauss-Kahn and Reputation Shredding, Brought to You by the Internet

I've written about Facebook and similar forces that want you to reveal your life to the world. Related to that discussion is this post about the Strauss-Kahn affair.

http://www.theatlantic.com/politics/archive/2011/07/you-cant-go-home-from-here-why-strauss-kahns-fate-matters/241323/

It seems that the power to destroy people through false accusation may be amplified by the internet, and especially web sites and services that increase the social velocity of information (term invented here :-) ). When bad news travels fast, as it certainly does when reputations are being shredded, the social network increases both the speed of the damage and its magnitude. Although the example here is of a public figure, the same argument applies to non-public figures using social media.

One can easily imagine a future in which certain elements of society engage in vicious rumor attacks on people they don't like. Because of the social network, these attacks will be both easy and deadly to the reputations of the victims, who will receive no reparations. Since the attackers will be, for the most part, either genuinely anonymous or effectively so, and since their attack will be quite legal (it is not a crime to think ill of someone and suggest that they might have done something nefarious), the attacks will increase in frequency and severity.

You might suppose that the "power of the internet" to supply counterbalancing truths will oppose this? It doesn't work that way now. A single suggestion of impropriety damages a reputation, and further discussion doesn't restore it. In fact, extended discussion, even if the vast majority of the information tends to exonerate the falsely accused, tends to damage the reputation of the accused still further. People think, "Where there's smoke, there's fire." They prefer the safe route, to distance themselves from the situation if possible.

But let's set even that problem aside. Let's suppose that everyone pays attention to the web dialog so that victims of reputation attacks get a fair hearing, and everyone goes back afterwards to liking and associating with the victim pretty much to the degree that they genuinely deserve. Will this work? I think not. The problem is that this kind of dialog takes time. People have to read the accusation. They have to read the vitriol, understand the nature of the falseness of the accusation, find the countervailing evidence, write it up and post it, and convince everyone that the countervailing evidence is stronger and more believable than the accusation. I'm exhausted already. Then the friends and acquaintances need to read the material and come to new conclusions. It takes way too much time. The attackers (social terrorists?) still win because they've torn down parts of the lives of everyone. All of this communication and judging and weighing of evidence---all over a false accusation. What is efficient about that?

I don't know of any remedies for this soon-to-be problem. Do you? Please post a message or email me. I'm interested in knowing what you think.