Saturday, June 30, 2007


Establishing self with Technorati
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Friday, June 29, 2007

How We Got Through the Bush Years...

...and kept our sanity.

Now that the final nails in the coffin of the Bush Administration are just about in, I feel like its time for a retrospective, or tribute, to those elements of culture (mostly the web) that got us through the past 7 years.

1. Daily Show with Jon Stewart
(and OnLisasRadar....Lisa Rein kept the best clips available back in the day)
And now its going to be annoying as he takes on the Democrats ever more and more. The knife cuts both ways, alas. But I will always be grateful for Jon Stewart between 2001 and 2007.

2. Get Your War On
Frigging brilliant!

3. This Modern World
I'm so grateful that Salon kept providing this, as well.

4. The Onion
Ok, they got me through stuff even before 2000, but thank God for the stance they took on things afterwords. Note: Personally, I think the writing has taken a dive recently, but either it will be like Saturday Night Live in its lifespan, with cycles of brilliance and failure, or it is the long term consequence of their move to NYC a few years back finally setting in.

5. WhiteHouse.Org
Especially those WWII-esque POSTERS!!
Got me through the first term, especially.

6. Dan Froomkin (originally White House Briefing)
Froomkin on the Washington Post Web
Especially as the years went on and Blogs came to the fore, he was an essential aggregator.

Wednesday, June 27, 2007

The (Bayesian) Advantage of Youth

File this under What Sustains Capitalism, along with that story several years ago about how something like 70% of Americans think they will someday be in the top 10% of income earners (thus the reluctance to tax the rich, whom Americans see as their future selves). It seems to me that Capitalism is best suited for young risk takers who do not study their history. Because it is suited to the young, offering them hope, it is self-sustaining. Because it is suited to risk takers, it is pre-eminently a male hazard (if you accept conventional evolutionary psychology). And because it is suited to those that don't study history, it is pre-eminently Anti-Intellectual.

May 19, 2007
The (Bayesian) Advantage of Youth
Posted by Clay Shirky
A couple of weeks ago, Fred Wilson wrote, in The Mid Life Entrepreneur Crisis “…prime time entrepreneurship is 30s. And its possibly getting younger as web technology meets youth culture.” After some followup from Valleywag, he addressed the question at greater length in The Age Question (continued), saying “I don’t totally buy that age matters. I think, as I said in my original post, that age is a mind set.”
This is a relief for people like me — you’re as young as you feel, and all that — or rather it would be a relief but for one little problem: Fred was right before, and he’s wrong now. Young entrepreneurs have an advantage over older ones (and by older I mean over 30), and contra Fred’s second post, age isn’t in fact a mindset. Young people have an advantage that older people don’t have and can’t fake, and it isn’t about vigor or hunger — it’s a mental advantage. The principal asset a young tech entrepreneur has is that they don’t know a lot of things.
In almost every other circumstance, this would be a disadvantage, but not here, and not now. The reason this is so (and the reason smart old people can’t fake their way into this asset) has everything to do with our innate ability to cement past experience into knowledge.

Probability and the Crisis of Novelty

The classic illustration for learning outcomes based on probability uses a bag of colored balls. Imagine that you can take out one ball, record its color, put it back, and draw again. How long does it take you to form an opinion about the contents of the bag, and how correct is that opinion?
Imagine a bag of black and white balls, with a slight majority of white. Drawing out a single ball would provide little information beyond “There is at least one white (or black) ball in this bag.” If you drew out ten balls in a row, you might guess that there are a similar number of black and white balls. A hundred would make you relatively certain of that, and might give you an inkling that white slightly outnumbers black. By a thousand draws, you could put a rough percentage on that imbalance, and by ten thousand draws, you could say something like “53% white to 47% black” with some confidence.
This is the world most of us live in, most of the time; the people with the most experience know the most.
But what would happen if the contents of the bag changed overnight? What if the bag suddenly started yielding balls of all colors and patterns — black and white but also green and blue, striped and spotted? The next day, when the expert draws a striped ball, he might well regard it as a mere anomaly. After all, his considerable experience has revealed a predictable and stable distribution over tens of thousands of draws, so no need to throw out the old theory because of just one anomaly. (To put it in Bayesian terms, the prior beliefs of the expert are valuable precisely because they have been strengthened through repetition, which repetition makes the expert confident in them even in the face of a small number of challenging cases.)
But the expert keeps drawing odd colors, and so after a while, he is forced to throw out the ‘this is an anomaly, and the bag is otherwise as it was’ theory, and start on a new one, which is that some novel variability has indeed entered the system. Now, the expert thinks, we have a world of mostly black and white, but with some new colors as well.
But the expert is still wrong. The bag changed overnight, and the new degree of variation is huge compared to the older black-and-white world. Critically, any attempt to rescue the older theory will cause the expert to misunderstand the world, and the more carefully the expert relies on the very knowledge that constitutes his expertise, the worse his misunderstanding will be.
Meanwhile, on the morning after the contents of the bag turn technicolor, someone who just showed up five minutes ago would say “Hey, this bag has lots of colors and patterns in it.” While the expert is still trying to explain away or minimize the change as a fluke, or as a slight adjustment to an otherwise stable situation, the novice, who has no prior theory to throw out, understands exactly what’s going on.
What our expert should have done, the minute he saw the first odd ball, is to say “I must abandon everything I have ever thought about how this bag works, and start from scratch.” He should, in other words, start behaving like a novice.
Which is exactly the thing he — we — cannot do. We are wired to learn from experience. This is, in almost all cases, absolutely the right strategy, because most things in life benefit from mental continuity. Again, today, gravity pulls things downwards. Again, today, I get hungry and need to eat something in the middle of the day. Again, today, my wife will be happier if I put my socks in the hamper than on the floor. We don’t need to re-learn things like this; once we get the pattern, we can internalize it and move on.
A Lot of Knowledge Is A Dangerous Thing
This is where Fred’s earlier argument comes in. In 999,999 cases, learning from experience is a good idea, but what entrepreneurs do is look for the one in a million shot. When the world really has changed overnight, when wild new things are possible if you don’t have any sense of how things used to be, then it is the people who got here five minutes ago who understand that new possibility, and they understand it precisely because, to them, it isn’t new.
These cases, let it be said, are rare. The mistakes novices make come from a lack of experience. They overestimate mere fads, seeing revolution everywhere, and they make this kind of mistake a thousand times before they learn better. But the experts make the opposite mistake, so that when a real once-in-a-lifetime change comes along, they are at risk of regarding it as a fad. As a result of this asymmetry, the novice makes their one good call during an actual revolution, at exactly the same time the expert makes their one big mistake, but at that moment, that’s all that is needed to give the newcomer a considerable edge.
Here’s a tech history question: Which went mainstream first, the PC or the VCR?
People over 35 have a hard time even understanding why you’d even ask — VCRs obviously pre-date PCs for general adoption.
Here’s another: Which went mainstream first, the radio or the telephone?
The same people often have to think about this question, even though the practical demonstration of radio came almost two decades after the practical demonstration of the telephone. We have to think about that second question because, to us, radio and the telephone arrived at the same time, which is to say the day we were born. And for college students today, that is true of the VCR and the PC.
People who think of the VCR as old and stable, and the PC as a newer invention, are not the kind of people who think up Tivo. It’s people who are presented with two storage choices, tape or disk, without historical bias making tape seem more normal and disk more provisional, who do that kind of work, and those people are, overwhelmingly, young.
This is sad for a lot of us, but its also true, and Fred’s kind lies about age being a mind set won’t reverse that.
The Uses of Experience
I’m old enough to know a lot of things, just from life experience. I know that music comes from stores. I know that you have to try on pants before you buy them. I know that newspapers are where you get your political news and how you look for a job. I know that if you want to have a conversation with someone, you call them on the phone. I know that the library is the most important building on a college campus. I know that if you need to take a trip, you visit a travel agent.
In the last 15 years or so, I’ve had to unlearn every one of those things and a million others. This makes me a not-bad analyst, because I have to explain new technology to myself first — I’m too old to understand it natively. But it makes me a lousy entrepreneur.
Ten years ago, I was the CTO of a web company we built and sold in what seemed like an eon but what was in retrospect an eyeblink. Looking back, I’m embarrassed at how little I knew, but I was a better entrepreneur because of it.
I can take some comfort in the fact that people much more successful than I succumb to the same fate. IBM learned, from decades of experience, that competitive advantage lay in the hardware; Bill Gates had never had those experiences, and didn’t have to unlearn them. Jerry and David at Yahoo learned, after a few short years, that search was a commodity. Sergey and Larry never knew that. Mark Cuban learned that the infrastructure required for online video made the economics of web video look a lot like TV. That memo was never circulated at YouTube.
So what can you do when you get kicked out of the club? My answer has been to do the things older and wiser people do. I teach, I write, I consult, and when I work with startups, it’s as an advisor, not as a founder.
And the hardest discipline, whether talking to my students or the companies I work with, is to hold back from offering too much advice, too definitively. When I see students or startups thinking up something crazy, and I want to explain why that won’t work, couldn’t possibly work, why this recapitulates the very argument that led to RFC 939 back in the day, I have to remind myself to shut up for a minute and just watch, because it may be me who will be surprised when I see what color comes out of the bag next.

Democracy: The God That Failed

by by Hans-Hermann Hoppe

Theory and History
On the most abstract level, I want to show how theory is indispensible in correctly interpreting history. History – the sequence of events unfolding in time – is "blind." It reveals nothing about causes and effects. We may agree, for instance, that feudal Europe was poor, that monarchical Europe was wealthier, and that democratic Europe is wealthier still, or that nineteenth-century America with its low taxes and few regulations was poor, while contemporary America with its high taxes and many regulations is rich. Yet was Europe poor because of feudalism, and did it grow richer because of monarchy and democracy? Or did Europe grow richer in spite of monarchy and democracy? Or are these phenomena unrelated?
Likewise, is contemporary America wealthier because of higher taxes and more regulations or in spite of them? That is, would America be even more prosperous if taxes and regulations had remained at their nineteenth-century levels? Historians qua historians cannot answer such questions, and no amount of statistical data manipulation can change this fact. Every sequence of empirical events is compatible with any of a number of rival, mutually incompatible interpretations.
To make a decision regarding such incompatible interpretations, we need a theory. By theory I mean a proposition whose validity does not depend on further experience but can be established a priori. This is not to say that one can do without experience altogether in establishing a theoretical proposition. However, it is to say that even if experience is necessary, theoretical insights extend and transcend logically beyond a particular historical experience. Theoretical propositions are about necessary facts and relations and, by implication, about impossibilities. Experience may thus illustrate a theory. But historical experience can neither establish a theorem nor refute it.
The Austrian School
Economic and political theory, especially of the Austrian variety, is a treasure trove of such propositions. For instance, a larger quantity of a good is preferred to a smaller amount of the same good; production must precede consumption; what is consumed now cannot be consumed again in the future; prices fixed below market-clearing prices will lead to lasting shortages; without private property in production factors there can be no factor prices, and without factor prices cost-accounting is impossible; an increase in the supply of paper money cannot increase total social wealth but can only redistribute existing wealth; monopoly (the absence of free entry) leads to higher prices and lower product quality than competition; no thing or part of a thing can be owned exclusively by more than one party at a time; democracy (majority rule) and private property are incompatible.
Theory is no substitute for history, of course, yet without a firm grasp of theory serious errors in the interpretation of historical data are unavoidable. For instance, the outstanding historian Carroll Quigley claims that the invention of fractional reserve banking has been a major cause of the unprecedented expansion of wealth associated with the Industrial Revolution, and countless historians have associated the economic plight of Soviet-style socialism with the absence of democracy.
From a theoretical viewpoint, such interpretations must be rejected categorically. An increase in the paper money supply cannot lead to greater prosperity but only to wealth redistribution. The explosion of wealth during the Industrial Revolution took place despite fractional reserve banking. Similarly, the economic plight of socialism cannot be due to the absence of democracy. Instead, it is caused by the absence of private property in factors of production. "Received history" is full of such misinterpretations. Theory allows us to rule out certain historical reports as impossible and incompatible with the nature of things. By the same token, it allows us to uphold certain other things as historical possibilities, even if they have not yet been tried.
Revisionist History
More interestingly, armed with elementary economic and political theory, I present in my book a revisionist reconstruction of modern Western history: of the rise of absolute monarchical states out of state-less feudal orders, and the transformation, beginning with the French Revolution and essentially completed with the end of World War I, of the Western world from monarchical to democratic States, and the rise of the US to the rank of "universal empire." Neo-conservative writers such as Francis Fukuyama have interpreted this development as civilizational progress, and they proclaim the "End of History" to have arrived with the triumph of Western – US – democracy and its globalization (making the world safe for democracy).
Myth One
My theoretical interpretation is entirely different. It involves the shattering of three historical myths. The first and most fundamental is the myth that the emergence of states out of a prior, non-statist order has caused subsequent economic and civilizational progress. In fact, theory dictates that any progress must have occurred in spite – not because – of the institution of a state.
A state is defined conventionally as an agency that exercises a compulsory territorial monopoly of ultimate decison-making (jurisdiction) and of taxation. By definition then, every state, regardless of its particular constitution, is economically and ethically deficient. Every monopolist is "bad" from the viewpoint of consumers. Monopoly is hereby understood as the absence of free entry into a particular line of production: only one agency, A, may produce X.
Any monopoly is "bad" for consumers because, shielded from potential new entrants into its line of production, the price for its product will be higher and the quality lower than with free entry. And a monopolist with ultimate decison-making powers is particularly bad. While other monopolists produce inferior goods, a monopolist judge, besides producing inferior goods, will produce bads, because he who is the ultimate judge in every case of conflict also has the last word in each conflict involving himself. Consequently, instead of preventing and resolving conflict, a monopolist of ultimate decision-making will cause and provoke conflict in order to settle it to his own advantage.
Not only would no one accept such a monopoly judge provision, but no one would ever agree to a provision that allowed this judge to determine the price to be paid for his "service" unilaterally. Predictably, such a monopolist would use up ever more resources (tax revenue) to produce fewer goods and perpetrate more bads. This is not a prescription for protection but for oppression and exploitation. The result of a state, then, is not peaceful cooperation and social order, but conflict, provocation, aggression, oppression, and impoverishment, i.e., de-civilization. This, above all, is what the history of states illustrates. It is first and foremost the history of countless millions of innocent state victims.
Myth Two
The second myth concerns the historic transition from absolute monarchies to democratic states. Not only do neoconservatives interpret this development as progress; there is near-universal agreement that democracy represents an advance over monarchy and is the cause of economic and moral progress. This interpretation is curious in light of the fact that democracy has been the fountainhead of every form of socialism: of (European) democratic socialism and (American) liberalism and neo-conservatism as well as of international (Soviet) socialism, (Italian) fascism, and national (Nazi) socialism. More importantly, however, theory contradicts this interpretation; whereas both monarchies and democracies are deficient as states, democracy is worse than monarchy.
Theoretically speaking, the transition from monarchy to democracy involves no more or less than a hereditary monopoly "owner" – the prince or king – being replaced by temporary and interchangeable – monopoly "caretakers" – presidents, prime ministers, and members of parliament. Both kings and presidents will produce bads, yet a king, because he "owns" the monopoly and may sell or bequeath it, will care about the repercussions of his actions on capital values. As the owner of the capital stock on "his" territory, the king will be comparatively future-oriented. In order to preserve or enhance the value of his property, he will exploit only moderately and calculatingly. In contrast, a temporary and interchangeable democratic caretaker does not own the country, but as long as he is in office he is permitted to use it to his advantage. He owns its current use but not its capital stock. This does not eliminate exploitation. Instead, it makes exploitation shortsighted (present-oriented) and uncalculated, i.e., carried out without regard for the value of the capital stock.
Nor is it an advantage of democracy that free entry into every state position exists (whereas under monarchy entry is restricted by the king's discretion). To the contrary, only competition in the production of goods is a good thing. Competition in the production of bads is not good; in fact, it is sheer evil. Kings, coming into their position by virtue of birth, might be harmless dilettantes or decent men (and if they are "madmen," they will be quickly restrained or if need be, killed, by close relatives concerned with the possessions of the dynasty). In sharp contrast, the selection of government rulers by means of popular elections makes it essentially impossible for a harmless or decent person to ever rise to the top. Presidents and prime ministers come into their position as a result of their efficiency as morally uninhibited demagogues. Hence, democracy virtually assures that only dangerous men will rise to the top of government.
In particular, democracy is seen as promoting an increase in the social rate of time preference (present-orientation) or the "infantilization" of society. It results in continually increased taxes, paper money and paper money inflation, an unending flood of legislation, and a steadily growing "public" debt. By the same token, democracy leads to lower savings, increased legal uncertainty, moral relativism, lawlessness, and crime. Further, democracy is a tool for wealth and income confiscation and redistribution. It involves the legislative "taking" of the property of some – the haves of something – and the "giving" of it to others – the have-nots of things. And since it is presumably something valuable that is being redistributed – of which the haves have too much and the have-nots too little – any such redistribution implies that the incentive to be of value or produce something valuable is systematically reduced. In other words, the proportion of not-so-good people and not-so-good personal traits, habits, and forms of conduct and appearance will increase, and life in society will become increasingly unpleasant.
Last but not least, democracy is described as resulting in a radical change in the conduct of war. Because they can externalize the costs of their own aggression onto others (via taxes), both kings and presidents will be more than 'normally' aggressive and warlike. However, a king's motive for war is typically an ownership-inheritance dispute. The objective of his war is tangible and territorial: to gain control over some piece of real estate and its inhabitants. And to reach this objective it is in his interest to distinguish between combatants (his enemies and targets of attack) and non-combatants and their property (to be left out of the war and undamaged). Democracy has transformed the limited wars of kings into total wars. The motive for war has become ideological – democracy, liberty, civilization, humanity. The objectives are intangible and elusive: the ideological "conversion" of the losers preceded by their "unconditional" surrender (which, because one can never be certain about the sincerity of conversion, may require such means as the mass murder of civilians). And the distinction between combatants and non-combatants becomes fuzzy and ultimately disappears under democracy, and mass war involvement – the draft and popular war rallies – as well as "collateral damage" become part of war strategy.
Myth Three
Finally, the third myth shattered is the belief that there is no alternative to Western welfare-democracies a la US. Again, theory demonstrates otherwise. First, this belief is false because the modern welfare-state is not a "stable" economic system. It is bound to collapse under its own parasitic weight, much like Russian-style socialism imploded a decade ago. More importantly, however, an economically stable alternative to democracy exists. The term I propose for this alternative is "natural order."
In a natural order every scarce resource, including all land, is owned privately, every enterprise is funded by voluntarily paying customers or private donors, and entry into every line of production, including that of property protection, conflict arbitration, and peacemaking, is free. A large part of my book concerns the explanation of the workings – the logic – of a natural order and the requirements for the transformation from democracy to a natural order.
Whereas states disarm their citizens so as to be able to rob them more surely (thereby rendering them more vulnerable also to criminal and terrorist attack), a natural order is characterized by an armed citizenry. This feature is furthered by insurance companies, which play a prominent role as providers of security and protection in a natural order. Insurers will encourage gun ownership by offering lower premiums to armed (and weapons-trained) clients. By their nature insurers are defensive agencies. Only "accidental" – not: self-inflicted, caused or provoked – damage is "insurable." Aggressors and provocateurs will be denied insurance coverage and are thus weak. And because insurers must indemnify their clients in case of victimization, they must be concerned constantly about the prevention of criminal aggression, the recovery of misappropriated property, and the apprehension of those liable for the damage in question.
Furthermore, the relationship between insurer and client is contractual. The rules of the game are mutually accepted and fixed. An insurer cannot "legislate," or unilaterally change the terms of the contract. In particular, if an insurer wants to attract a voluntarily paying clientele, it must provide for the foreseeable contingency of conflict in its contracts, not only between its own clients but especially with clients of other insurers. The only provision satisfactorily covering the latter contingency is for an insurer to bind itself contractually to independent third-party arbitration. However, not just any arbitration will do. The conflicting insurers must agree on the arbitrator or arbitration agency, and in order to be agreeable to insurers, an arbitrator must produce a product (of legal procedure and substantive judgment) that embodies the widest possible moral consensus among insurers and clients alike. Thus, contrary to statist conditions, a natural order is characterized by stable and predictable law and increased legal harmony.
Moreover, insurance companies promote the development of another "security feature." States have not just disarmed their citizens by taking away their weapons, democratic states in particular have also done so in stripping their citizens of the right to exclusion and by promoting instead – through various non-discrimination, affirmative action, and multiculturalist policies – forced integration. In a natural order, the right to exclusion inherent in the very idea of private property is restored to private property owners.
Accordingly, to lower the production cost of security and improve its quality, a natural order is characterized by increased discrimination, segregation, spatial separation, uniculturalism (cultural homogeneity), exclusivity, and exclusion. In addition, whereas states have undermined intermediating social institutions (family households, churches, covenants, communities, and clubs) and the associated ranks and layers of authority so as to increase their own power vis-a-vis equal and isolated individuals, a natural order is distinctly un-egalitarian: "elitist," "hierarchical," "proprietarian," "patriarchical," and "authoritorian," and its stability depends essentially on the existence of a self-conscious natural – voluntarily acknowledged – aristocracy.
Finally, I discuss strategic matters and questions. How can a natural order arise out of democracy? I explain the role of ideas, intellectuals, elites, and public opinion in the legitimation and de-legitimation of state power. In particular, I discuss the role of secession – and the proliferation of independent political entities – as an important step toward the goal of natural order, and I explain how to properly privatize "socialized" and "public" property.
The book grew out of speeches I presented at various Mises Institute and CLS conferences during the 1990s. These conferences, organized by Lew Rockwell, Burt Blumert, and, until his death in 1995, Murray Rothbard, had the purpose of advancing libertarianism by locating and anchoring abstract libertarian theory historically, sociologically, and culturally and thereby creating what has become known in the meantime as paleo-libertarianism (in contrast to left-countercultural-libertarianism and cold-and-hot-war "new" and "neo"-conservatism). The Rothbard-Rockwell Report, the precusor to LRC, was the first and most immediate expression and reflection of this intellectual movement. Others included The Costs of War, Reassessing the Presidency, and The Irrepressible Rothbard. Democracy the God That Failed is my attempt to define and give expression to the paleo-libertarian movement.
November 12, 2001