So here are the facts for today's problem:
An 18-year old dates a 14-year girl. The child's parents confront the adult about the relationship with the minor, but the adult – who can not only drive lethal motor vehicles and serve in the armed forces, but also vote and sit on a jury competent to decide whether people should be put to death – ignores the parents. One day, the minor's mother enters her little girl's bedroom only to find her missing. She panics: where could she be? Who has her?
Of course, it's her adult lover who has her.
Do you have any doubt what happens to the person who is having sex with the child?
Normal Consequences Are Harsh:
Not if you've been awake any time in the last century. If you have, you've noticed that 13-year-old and 14-year-old children's "consent" is of no consequence at all as a defense against sexual offenses that require legal consent to make non-offensive. You recall that when adults have sex with teens in school, they end up in the news. While it sometimes involves an unwilling child, but as often it involves repeated contact with a willing victim. Even victims aged 17 years create fact situations supporting felony prosecutions, sex offender registrations, and so forth. Even if the two later marry. We are totally unsurprised at the prosecutions: we don't expect adults to be using our children for sexual gratification
This isn't a new policy, and it's directed against male adults and female adults – both of which make the news and both of which appear in the links above. It seems a fairly gender-indiscriminate law, and it seems to be applied to either gender when sex-crime prosecutors discover a case.
So, what should we do with the facts of today's little lesson?
Weird Discrimination Claims
If you're Change.org, you apparently host a petition in support of the defendant, claiming that felony prosecutions of the type that are absolutely routine in the criminal justice system are somehow a private beef against the perpetrator because of the perpetrator's gender or gender-preferences.
Say what?
Oh, and "the online global hacker collective" Anonymous will demand law enforcement officials' resignations.
Prosecutors offered the offender an opportunity to plead to felony less severe than the sexual assault charges ordinarily supported by repeated sex with a child of 14. The defendant rejected the offer of a 2-year in-home "incarceration" that left open a possibility of avoiding sex-offender registration. Where I come from, hetero perpetrators would kill for a plea deal like that. This case is supposed to somehow represent anti-gay discrimination?
CNN's reporter says, "This may have been a consensual relationship in high school ..."
But that description completely misses the fundamental issue underpinning the criminal case: a 14-year-old cannot legally consent to sex with an 18-year-old. And after the parental communication with the defendant that the conduct must stop, it's pretty clear that the defendant acted with complete knowledge that the child's guardians believed the adult was behaving improperly toward their daughter. (And guess what? There's a statute making the conduct a felony – so the parents were on to something.) When the minor disappeared, what was her mother supposed to do, if not seek aid from law enforcement?
Now, imagine the opposite occurred. "No, ma'am, we won't prosecute the adult's seduction of your minor daughter, because we think lesbian relationships are not as serious as heterosexual relationships, or we think pairs of girls are cute and that only sex involving males can be a punishable offense. If your minor daughter goes missing, but we think she's smooching a girl, we won't try to return her, either." We'd be howling, no?
Some reporters, learning the facts, are backing off of initial support for the perpetrator. Apparently, the perpetrator's family lied about things that mattered – like whether the perpetrator was a minor or not at the time of the charged conduct.
If you want an example of idiots discriminating against women for being women, look at school dress code enforcement (even regarding hair; video here, gives a better view of the hair). Now, that's discrimination.
Showing posts with label irrationality. Show all posts
Showing posts with label irrationality. Show all posts
Thursday, June 13, 2013
Thursday, February 7, 2013
Administration: Americans OK To Kill Without Trial If We Say They're Enemies
Consistent with the Attorney General's previously-examined view that the Constitution's definition of treason and its standard of proof are no barrier to intentionally killing Americans with remote-operated vehicles, the President's nominee John Brennan opined during confirmation hearings for the role of Director of Central Intelligence that such killings were completely legal.
In the old days, the fact the Constitution prevented treason convictions without the testimony of two witnesses to the same overt act protected Americans from the risk of persecution on the mere say-so of government officials. And there was always the safety valve of the right to a public trial by a jury, rather than Star Chamber "justice" decided in some high-security venue untrafficked by unauthorized personnel. It might have been inconvenient occasionally, but people were secure they had rights. No longer.
All we need now is to make sure government officials don't believe we're the enemy. We know how to do that, right? I mean, it's not like they're allowed to change their minds ever, are they?
In the old days, the fact the Constitution prevented treason convictions without the testimony of two witnesses to the same overt act protected Americans from the risk of persecution on the mere say-so of government officials. And there was always the safety valve of the right to a public trial by a jury, rather than Star Chamber "justice" decided in some high-security venue untrafficked by unauthorized personnel. It might have been inconvenient occasionally, but people were secure they had rights. No longer.
All we need now is to make sure government officials don't believe we're the enemy. We know how to do that, right? I mean, it's not like they're allowed to change their minds ever, are they?
Sunday, March 20, 2011
Bon Jovi: Real Men Don't Know What Music They're Buying
This latest piece from Bon Jovi isn't a musical number, it's a screed against the tide.
Let's back up a few centuries. Let's say you want to hear world-class music from artists you've read about in the papers. Unless you're in Berlin, London, Paris, Vienna, Rome, or maybe Moscow, you're kinda out of luck: that's where the top acts play. There is no recording. If there's a carriage collision on the way to the venue and you are delayed, there's no way (other than by asking patrons how good it was) to know, or re-hear, what you missed. Homebound invalids get to daydream about music, unless someone can carry them to a pub where a traveling act stops – but the traveling act gigging in a local pub won't be the world-class stuff you read about in the papers, it'll be a knockoff by someone who may never have heard it. Or something completely different. And if two acts compete in the same time slot, you may miss one entirely. And there's only so many seats. And the pubs can be noisy – a poor place to hear music.
Moving forward toward the modern era, we transited through an era in which a large hand-cranked wheels carefully manufactured at great expense spun fragile graphite slabs beneath a needle connected to an amplifying cone (don't drop the recording media!) and into an era in which mass-produced handheld players let users carry an entire hour-long concert on one's belt while walking. For a few hours' wages and no trip across the ocean, the best tenor on the planet – or a rock act that died before you were born – could be enjoyed for as long as the tape held out (which might be years if not left on the dash in the summer sun). If you couldn't bear to part with that much money, bands' labels marketed as "singles" a favorite song, paired with a lesser-known song the sellers hope will get some notice due to the packaging. The "single" might be on a cheap-to-press plastic disc designed to be spun at 45 revolutions per minute (that wouldn't shatter when dropped – nice!), in which case it'd be hard to carry with you (too big), or you could plug the player's output cables into an available-everywhere tape recorder and make your own mix tape full of singles, album fragments, and everything else you might want to hear. Sometimes, whole albums were aired on the radio ad-free and you could tape the whole thing.
Today, whole songs can be found digitally encoded online, with free evaluation ranging from a 30-second clip to a full-song stream. Instead of having to buy twelve tracks from Golden Earring just to hear Radar Love and Twilight Zone, you can buy the ones you like for a small fraction of the federally-established minimum wage employers must pay employees for an hour of labor. If you fall in love with the cheap music, you can drink straight from the fire hydrant: everything that's for sale electronically is for sale on your computer, and so is everything that's not available digitally, because all record shops and secondhand book venues have become major retailers online.
Against this background, Bon Jovi's kvetch against user-previewed per-track online purchase is a quaint "we walked to school in the snow, uphill both ways"-style joke. He literally argues that the "magic" buyers "enjoyed" involved buying closed albums with no idea what they sounded like – buyers were in effect playing a lottery as to whether the music was worth the money. Bon Jovi argues this was a good thing.
Well, maybe if you are Bon Jovi: people recognize the name and buy it. It's a brand. But let's face it: for the average Joe, who wants to get what he pays for, he benefits from knowing what he's buying – and he benefits from being able to see a selection bigger than can be carried in the inventory of a physical-media-peddling corner store.
I for one never wanted to buy the picture on the album, I wanted to know what it sounded like inside. That's why, when Napster was new and I could gather songs from the libraries of likeminded listeners for review by L, we bought more music in a month than previously we'd bought in an entire year.
Let's back up a few centuries. Let's say you want to hear world-class music from artists you've read about in the papers. Unless you're in Berlin, London, Paris, Vienna, Rome, or maybe Moscow, you're kinda out of luck: that's where the top acts play. There is no recording. If there's a carriage collision on the way to the venue and you are delayed, there's no way (other than by asking patrons how good it was) to know, or re-hear, what you missed. Homebound invalids get to daydream about music, unless someone can carry them to a pub where a traveling act stops – but the traveling act gigging in a local pub won't be the world-class stuff you read about in the papers, it'll be a knockoff by someone who may never have heard it. Or something completely different. And if two acts compete in the same time slot, you may miss one entirely. And there's only so many seats. And the pubs can be noisy – a poor place to hear music.
Moving forward toward the modern era, we transited through an era in which a large hand-cranked wheels carefully manufactured at great expense spun fragile graphite slabs beneath a needle connected to an amplifying cone (don't drop the recording media!) and into an era in which mass-produced handheld players let users carry an entire hour-long concert on one's belt while walking. For a few hours' wages and no trip across the ocean, the best tenor on the planet – or a rock act that died before you were born – could be enjoyed for as long as the tape held out (which might be years if not left on the dash in the summer sun). If you couldn't bear to part with that much money, bands' labels marketed as "singles" a favorite song, paired with a lesser-known song the sellers hope will get some notice due to the packaging. The "single" might be on a cheap-to-press plastic disc designed to be spun at 45 revolutions per minute (that wouldn't shatter when dropped – nice!), in which case it'd be hard to carry with you (too big), or you could plug the player's output cables into an available-everywhere tape recorder and make your own mix tape full of singles, album fragments, and everything else you might want to hear. Sometimes, whole albums were aired on the radio ad-free and you could tape the whole thing.
Today, whole songs can be found digitally encoded online, with free evaluation ranging from a 30-second clip to a full-song stream. Instead of having to buy twelve tracks from Golden Earring just to hear Radar Love and Twilight Zone, you can buy the ones you like for a small fraction of the federally-established minimum wage employers must pay employees for an hour of labor. If you fall in love with the cheap music, you can drink straight from the fire hydrant: everything that's for sale electronically is for sale on your computer, and so is everything that's not available digitally, because all record shops and secondhand book venues have become major retailers online.
Against this background, Bon Jovi's kvetch against user-previewed per-track online purchase is a quaint "we walked to school in the snow, uphill both ways"-style joke. He literally argues that the "magic" buyers "enjoyed" involved buying closed albums with no idea what they sounded like – buyers were in effect playing a lottery as to whether the music was worth the money. Bon Jovi argues this was a good thing.
Well, maybe if you are Bon Jovi: people recognize the name and buy it. It's a brand. But let's face it: for the average Joe, who wants to get what he pays for, he benefits from knowing what he's buying – and he benefits from being able to see a selection bigger than can be carried in the inventory of a physical-media-peddling corner store.
I for one never wanted to buy the picture on the album, I wanted to know what it sounded like inside. That's why, when Napster was new and I could gather songs from the libraries of likeminded listeners for review by L, we bought more music in a month than previously we'd bought in an entire year.
Friday, June 4, 2010
Stifel on ACAS
The Stifel "research" derided here as made without any evident basis has been updated, according to an email I got from someone watching a Java-based feed to which I can't post a link. Stifel apparently claims ACAS is likely to cave into bondholder demand for a bigger payoff in the exchange, reducing bankruptcy risk.
As envisioned, ACAS' exchange offer would pay down 39% of the company's outstanding unsecured debt, exchange remaining unsecured debt with newly-issued secured debt (at no change in principal value in the unpaid debt; this isn't forgiveness, it's a new debt agreement without the old net asset requirements, but providing secured lender status), and give the creditors a 2% "thank you for your cooperation" bonus on the exchanged principal value in immediate cash.
It sounds like some of the unsecured creditors want more than 2%, or they want 2% of more than just the debt that's exchanged, or something; but they want a bigger cash payoff.
Frankly, ACAS would do better in court. Creditors before a bankruptcy court are only entitled to what they contracted to be paid and not extra bonus payments. Conversion to secured status is surely consideration enough for the removed net asset covenant. If ACAS can reduce interest payments to non-default rates and continue as debtor-in-possession indefinitely, ACAS could outwait the bondholders until their debentures mature and not pay them a wooden nickel more than they bargained for prior to the 2008 liquidity panic drove the air from ACAS' NAV.
Why is it good news that management might cave into extortion like this? Extortion like this is why the United States has bankruptcy courts in the first place. This is exactly why ACAS should file. The 2% should be a reward for playing nice, not an invitation to commit a mugging. Call the law on the bastards!
I'm not sure who's more irrational, the public whom Stifel (correctly) thinks will panic on the news of a Chapter 11 filing, or Stifel for thinking that caving to extortion is good business (better than standing on principle to enforce one's rights in court, which though ugly can be effective). Shareholders want profit, not placation of stranger bondholders. Why should Stifel think placation is better business now than in 1939, or more likely to prevent further unreasonable demands?
When the irrationality-based post-filing panic hits, I'll be waiting at the bottom with my wallet and my margin account.
(If I were certain of the filing, I'd liquidate and wait to re-buy on collapse; however, I'm no short-term prophet and I don't want to miss the upside, so I'll sit through the punches that come while this plays out.)
As envisioned, ACAS' exchange offer would pay down 39% of the company's outstanding unsecured debt, exchange remaining unsecured debt with newly-issued secured debt (at no change in principal value in the unpaid debt; this isn't forgiveness, it's a new debt agreement without the old net asset requirements, but providing secured lender status), and give the creditors a 2% "thank you for your cooperation" bonus on the exchanged principal value in immediate cash.
It sounds like some of the unsecured creditors want more than 2%, or they want 2% of more than just the debt that's exchanged, or something; but they want a bigger cash payoff.
Frankly, ACAS would do better in court. Creditors before a bankruptcy court are only entitled to what they contracted to be paid and not extra bonus payments. Conversion to secured status is surely consideration enough for the removed net asset covenant. If ACAS can reduce interest payments to non-default rates and continue as debtor-in-possession indefinitely, ACAS could outwait the bondholders until their debentures mature and not pay them a wooden nickel more than they bargained for prior to the 2008 liquidity panic drove the air from ACAS' NAV.
Why is it good news that management might cave into extortion like this? Extortion like this is why the United States has bankruptcy courts in the first place. This is exactly why ACAS should file. The 2% should be a reward for playing nice, not an invitation to commit a mugging. Call the law on the bastards!
I'm not sure who's more irrational, the public whom Stifel (correctly) thinks will panic on the news of a Chapter 11 filing, or Stifel for thinking that caving to extortion is good business (better than standing on principle to enforce one's rights in court, which though ugly can be effective). Shareholders want profit, not placation of stranger bondholders. Why should Stifel think placation is better business now than in 1939, or more likely to prevent further unreasonable demands?
When the irrationality-based post-filing panic hits, I'll be waiting at the bottom with my wallet and my margin account.
(If I were certain of the filing, I'd liquidate and wait to re-buy on collapse; however, I'm no short-term prophet and I don't want to miss the upside, so I'll sit through the punches that come while this plays out.)
Tuesday, April 20, 2010
Bond Bummer
Imagine this: you have spent a small fortune developing a major international blockbuster film involving one of the most highly-recognized action characters in the history of film, and because your distributor has financial concerns, you decide to sit on the film for another year.
Sound crazy? Read about it.
MGM is sitting on an apparently-all-filmed James Bond movie starring the best James Bond they ever had (the James Craig Casino Royale remake being the best Bond film ever, see it). Rather than get solve the distribution funding issues with a business deal, MGM apparently wants to leave this to collect dust on the shelf until MGM is sold to someone.
Groan.
Time value of money, anyone?
Sound crazy? Read about it.
MGM is sitting on an apparently-all-filmed James Bond movie starring the best James Bond they ever had (the James Craig Casino Royale remake being the best Bond film ever, see it). Rather than get solve the distribution funding issues with a business deal, MGM apparently wants to leave this to collect dust on the shelf until MGM is sold to someone.
Groan.
Time value of money, anyone?
Thursday, March 25, 2010
Perspective and Quality
There I was, minding my own business, when all of a sudden this article at CNN from an author I've never heard of declares that the "nice guy" is "disappearing". The author, who apparently runs a column called "relationship rant" (a title that might suggest she's chasing the wrong guys), purports to educate the reader about why the nice guy is vanishing:
I've Been To Atlanta
One of my longest-running friendships is with a gentleman who became enamored of a woman from Atlanta. I knew something was amiss when he was hesitant to introduce her ... I sure introduced him to L as soon as practicable and had him in the wedding ... if there was something about her that he thought made her incompatible with his friends, I wondered what hope there was for the two of them. What had he gotten into?
One fine day, well after their wedding, L and I visited him and met her. She explained that his clothes weren't adequate and that she had replaced them. She made several announcements about how she'd laid down the law on a variety of issues and that he was going to have to learn that was the way things were going to be. She explained that she had learned some folks who didn't work for Georgia's unemployment division, and didn't get mileage reimbursements, had no way to fudge their mileage numbers upward to give themselves a bonus. Imagine!
While this denigration of my friend and his values and his person was underway, I occasionally stole glances at him and I had the sense that he was ... well, not quite cowering, but not exactly bursting with pride in his bride. He understood I was seeing the face she gave the public: brash, loud, controlling. All the attitude one needed to survive in Atlanta at the height of bling-hunting season. And as I learned, that was a lot of attitude.
So J – a card-carrying nice guy – sacrificed several years of his life trying to make himself fit into her life and trying to give her seven and then nine year old boy a chance at sensible parenting. Eventually, he called to take me up on my offer to do "anything I could to help if he ever needed anything" and I drove to Atlanta to pick him and all his Earthly possessions up and bring them to a place where he was not being ground into lubricant for a dysfunctional societal microcosm that prized bling over humanity. He still sends her boy gifts on his birthday, which may be more than he's getting from his father. The gifts are sent to a new address, though: the boy's mother has left him with an out-of-town grandmother so he doesn't interfere with her plans to present herself as a hot commodity and thus bag a better deal for herself in Atlanta, where baggage such as loved ones is a competitive disadvantage.
Back in Houston, J regained work with a respectable national firm and has appeared to find a much higher quality of human for company than he was made to endure in Atlanta. Atlanta isn't small, and Atlanta has to have numerous high-quality people living and working to make the place function without an alarming suicide rate, but something about Atlanta apparently makes it uncool to be a decent human, so for purposes of protective coloration the high-quality people apparently masquerade as heartless grifters. If the author lamenting the disappearing nice guy wanted to find nice guys, perhaps she would do well to find a community that doesn't force them to hide for their own protection.
So my advice for people worried that nice guys are a dying breed is simple: stop ignoring the nice guys. The author that blames nice guys for being willing to be friends with women who think they are looking for life mates is exactly backward: if they wanted life mates and wanted "nice guys" to fill that role, they'd make plain to their "nice guy" friends that they want to settle down with someone who makes them feel the world is a place worth living. Blaming nice guys for being nice, rather than clubbing the girls on the head and dragging them to a cave, is just silly.
They're nice guys. If you don't want a nice guy, go someplace else. Turning them into physically aggressive alphas when they are by preference mentally engaged intellectuals is exactly the kind fo crap that drove J from his bad marriage in Atlanta: the trollop wanted to remake him into an ornament and grind away everything that made him comfortable being who he was. The author of the piece decrying the lack of nice men is falling into the same trap: she doesn't want a nice guy, she just claims she does, then complains it's the fault of nice guys she hasn't got one.
Well, duh.
Today's dating scene has become one that puts focus on the wrong things. It's all about what you own as opposed to what's inside someone's heart. Let's see, we no longer own cell phones, we have iPhones and smartphones. It's not about your home anymore; it's all about the McMansion and how many unoccupied bedrooms you have.The irony hear is that it is not "the dating scene" that determines who is alive in the world, and whom you are permitted to meet. Rather, it is the decision of daters where to go, whom to approach, and how to evaluate new acquaintances that drives our access to quality people. For example, regional cultural differences (that is, differences in what individuals accept as "mainstream" and "normal" values and behaviors) can create an environment in which non-mainstream dating may be the only way to find people who aren't so maladapted to human socialization that they make plausible prospective lifelong mates. The author even admits as much:
"The disappearing nice guy", Audrey Irvine, CNN.com
Today's dating scene has become one that puts focus on the wrong things. It's all about what you own as opposed to what's inside someone's heart. Let's see, we no longer own cell phones, we have iPhones and smartphones. It's not about your home anymore; it's all about the McMansion and how many unoccupied bedrooms you have.But this isn't about "today's dating scene" at all, it's about you when you consider prospective dates. If you want to know how many unoccupied bedrooms your prospect has in the house s/he owns (what? no house? buh-bye!) before you consider whether to go out, the problem isn't the music in the bar or whether men in the town travel in large packs or stroll singly through the park or some nebulous factor created by the "dating scene": the problem is you. If you don't notice the wonderful people because they aren't distinguishing themselves with bling (but are instead distinguishing themselves in ways you choose to ignore, like volunteerism or erudition or kindness), the problem may be that you should stop looking for bling.
In certain cities, specifically Atlanta and Washington, there is an undercurrent of "bling" that undermines the dating scene and the ability for wonderful people to find each other.
I've Been To Atlanta
One of my longest-running friendships is with a gentleman who became enamored of a woman from Atlanta. I knew something was amiss when he was hesitant to introduce her ... I sure introduced him to L as soon as practicable and had him in the wedding ... if there was something about her that he thought made her incompatible with his friends, I wondered what hope there was for the two of them. What had he gotten into?
One fine day, well after their wedding, L and I visited him and met her. She explained that his clothes weren't adequate and that she had replaced them. She made several announcements about how she'd laid down the law on a variety of issues and that he was going to have to learn that was the way things were going to be. She explained that she had learned some folks who didn't work for Georgia's unemployment division, and didn't get mileage reimbursements, had no way to fudge their mileage numbers upward to give themselves a bonus. Imagine!
While this denigration of my friend and his values and his person was underway, I occasionally stole glances at him and I had the sense that he was ... well, not quite cowering, but not exactly bursting with pride in his bride. He understood I was seeing the face she gave the public: brash, loud, controlling. All the attitude one needed to survive in Atlanta at the height of bling-hunting season. And as I learned, that was a lot of attitude.
So J – a card-carrying nice guy – sacrificed several years of his life trying to make himself fit into her life and trying to give her seven and then nine year old boy a chance at sensible parenting. Eventually, he called to take me up on my offer to do "anything I could to help if he ever needed anything" and I drove to Atlanta to pick him and all his Earthly possessions up and bring them to a place where he was not being ground into lubricant for a dysfunctional societal microcosm that prized bling over humanity. He still sends her boy gifts on his birthday, which may be more than he's getting from his father. The gifts are sent to a new address, though: the boy's mother has left him with an out-of-town grandmother so he doesn't interfere with her plans to present herself as a hot commodity and thus bag a better deal for herself in Atlanta, where baggage such as loved ones is a competitive disadvantage.
Back in Houston, J regained work with a respectable national firm and has appeared to find a much higher quality of human for company than he was made to endure in Atlanta. Atlanta isn't small, and Atlanta has to have numerous high-quality people living and working to make the place function without an alarming suicide rate, but something about Atlanta apparently makes it uncool to be a decent human, so for purposes of protective coloration the high-quality people apparently masquerade as heartless grifters. If the author lamenting the disappearing nice guy wanted to find nice guys, perhaps she would do well to find a community that doesn't force them to hide for their own protection.
So my advice for people worried that nice guys are a dying breed is simple: stop ignoring the nice guys. The author that blames nice guys for being willing to be friends with women who think they are looking for life mates is exactly backward: if they wanted life mates and wanted "nice guys" to fill that role, they'd make plain to their "nice guy" friends that they want to settle down with someone who makes them feel the world is a place worth living. Blaming nice guys for being nice, rather than clubbing the girls on the head and dragging them to a cave, is just silly.
They're nice guys. If you don't want a nice guy, go someplace else. Turning them into physically aggressive alphas when they are by preference mentally engaged intellectuals is exactly the kind fo crap that drove J from his bad marriage in Atlanta: the trollop wanted to remake him into an ornament and grind away everything that made him comfortable being who he was. The author of the piece decrying the lack of nice men is falling into the same trap: she doesn't want a nice guy, she just claims she does, then complains it's the fault of nice guys she hasn't got one.
Well, duh.
Sunday, January 31, 2010
Winning The Lottery Can Change Your Life
... or end it. Apparently the research is right: more money doesn't make most people happier for very long.
Marriage is a better long-term investment.
Marriage is a better long-term investment.
Sunday, November 22, 2009
MSFT: Phone Apps Unimportant
On the heels of the news that Microsoft's mobile platform share is collapsing (losing 28% of its share Q32008 and Q32009), Microsoft reverses its long position on platforms (that it's all about developers, developers, developers ...) to proclaim that mobile apps just aren't important as a differentiator because they're so trivial that anything worth having will be immediately ported to any competing platform.
Not that Microsoft has explained who will be porting to its mobile platform over a hundred thousand applications now available on Apple's platform or why Google has said it can't afford to make all the necessary applications available and has urged developers to build mobile-friendly browser experiences for delivering web-based services in lieu of native applications. (Microsoft admits that the app/net line will blur until no-one can tell the difference, which is an admission that (a) Google's approach can work, and (b) MSFT's client platform lock-in strategy is doomed unless it can maintain file format lock or some other mechanism of dependence.) Instead, Microsoft seems to have fallen for a classic analytical failure: since Microsoft's own employees are overwhelmingly employed in desk jobs, the fact has entirely escaped Microsoft that everyone who is not employed at a desk job is more able to access important data from a mobile device than from a desktop computer. Mobile apps aren't a triviality unlike important desktop applications, they are in many cases the successors to desktop applications for people who will not spend much of their lives near desktop computers but will have mobile devices constantly available. Porting from iPhone's development environment to Microsoft's is surely at least as challenging as porting in the other direction.
The fact that Microsoft thinks mobile apps are trivial and easily ported ignores that (a) mobile apps developed with an API not available on another platform won't be ported so much as completely rewritten, (b) the complexity of mobile applications will increase with mobile platforms' power and users' expectation of using the platform as a primary interface to their electronic data and the data maintained by their brokers, bankers, movie rental vendors, and local movie theaters, and (c) developers, as Microsoft ought to have learned while enjoying an operating system monopoly for the last twenty-five years, target the dominant platforms and the remaining platforms tend as a result to fight to stay in the game. Microsoft's management may have, under the influence of its own Kool-Aid, developed the impression that its success in the PC market resulted from the quality of its APIs and not the spurious error messages with which it frightened customers from competitors' platforms, or the insidious effects of vendor-lock.
After admitting that Apple's gaining market share in PC operating systems is a big deal (though he claims MSFT holds 83% of the high-end notebook market, a figure at odds with data showing Apple commanding 91% of that market), it's odd to see MSFT pretending that its small and failing share in the mobile market is anything but an unmitigated disaster. The fact that Microsoft "wants" a commanding share of the mobile market only underscores the severity of the blow it's suffered from a combined field of closed-source and open-source platforms running on both differentiated and commodity hardware. Three consecutive quarters of declining revenue are no fluke.
Meanwhile, developers have apparently not properly understood Microsoft's memo on app porting; Gameloft and other developers are scaling back efforts on Android in favor of their existing customer base on iPhone, where the sales are. With Android's share of the mobile approaching the share of Microsoft's platform and growing, the fact that developers have cold feet about Android development seems a grim portent for the future of similar development on Microsoft's mobile platform.
After admitting that Apple's gaining market share in PC operating systems is a big deal (though he claims MSFT holds 83% of the high-end notebook market, a figure at odds with data showing Apple commanding 91% of that market), it's odd to see MSFT pretending that its small and failing share in the mobile market is anything but an unmitigated disaster. The fact that Microsoft "wants" a commanding share of the mobile market only underscores the severity of the blow it's suffered from a combined field of closed-source and open-source platforms running on both differentiated and commodity hardware. Three consecutive quarters of declining revenue are no fluke.
A look at Gartner's mobile phone market share is instructive: RIM, Apple, HTC, and Samsung all gained market share while the market itself increased 13%. These gains were at the expense of Nokia (42.3% to 39.3%) and "Other" (21.3% to 13.1%). Since RIM, Apple, and Samsung all have their own mobile operating systems, HTC has begun shipping Android (and has added interface elements to protect people from noticing the MSFT operating system on its phones that ship with it), and Palm is migrating from MSFT's OS to a new platform based on open-source plumbing like the Linux kernel and WebKit, it's no surprise that these gains -- and the loss of share among the "other" category -- come at the expense not only of Nokia (which lost 7% of its share) but also Microsoft (whose 28% y/y share loss has to smart). The trend isn't good for Microsoft in the mobile space. To the extent Windows Mobile might have a market segment not subject to attack by iPhones, it's worth noting that Android is being viewed as preparing to eat MSFT's mobile lunch.
Microsoft hasn't got file format lock to trap customers in the mobile space, because people don't depend on Microsoft file formats for many mobile applications. Microsoft's small-percentage position prevents it from leveraging code investments in a proprietary API to keep developers from making other platforms attractive. The poor performance of Microsoft's operating system (this HTC review tellingly damns is with faint praise: looks good hidden, is bad at driving capacitive displays, etc.) can't be very exciting to developers who want a slick and improving platform to make their products look best. What has Microsoft got going for it in the mobile space, exactly? Developers can't be particularly keen to invest resources in a platform whose size is dropping more than a quarter of its share in a year.
Meanwhile, Apple's share of online traffic dwarfs even its growing share of the smartphone market. If iPhone users' demands outstrip their numbers, support for their traffic and their demands should continue to dominate. A few years ago, The Jaded Consumer contacted his broker to complain about its website not behaving well for the iPhone's browser; the broker said mobile users should access the broker through a crippled mobile site formatted to look awful on the iPhone and to waste enormous time scrolling about looking for the page's content. Today, the broker's data can be accessed from users' choice of four different native iPhone applications. The one the Jaded Consumer picked makes access to multiple accounts a snap. The application has been repeatedly revised and supports every feature of the site I like to access – in some cases, even better than the regular web version. How times change.
Sunday, August 9, 2009
Microsoft's Razorfish Sale: Refining Direction, Or Just Confused?
Microsoft's Sale of Razorfish in an auction to the Publicis Groupe suggests Redmond is may be trying to focus resources on fields in which it has native competence rather than parlay its wealth into domination of every market it can imagine. Aquired by Microsoft in its 2007 purchase of Razorfish's then-parent aQuantive for $6B. The $530M cash-and-stock purchase price reported in the Razorfish sale is less than 10% of Razorfish's all-time-high market-cap of about $6B, before the dot-com bubble burst.
After seeking to build a content business in order to draw traffic to feed its advertising business, and to build money-losing game console hardware to lock in business for its games programmers (whom Microsoft expanded by buying successful independent game designers, at least some of whom it later spun back off), and a series of music store partnerships and even a sole-operated music store to feed its DRM licensing ambitions, has Microsoft finally decided to retract operations toward those in which Microsoft has some proven success?
Time will tell whether the sale reflects a new corporate attitude toward disciplined expansion and toward growth in areas Microsoft knows how to compete. With Microsoft freeing Bungee (though retaining a game development contract governing Halo licensing, which presumably rewards Microsoft well), killing MSN Music (and presumably its customers' ability to continue listening to music bought there on any subsequently-bought hardware, see EFF letter on the subject; compare Yahoo and Google refunding their customers on store closure and death of support for content with orphaned DRM), shedding Razorfish, and otherwise divesting itself of businesses that once seemed integral parts of Microsoft's push toward global domination of every facet of the public's electronic lives, one wonders whether Microsoft is refining its push, capitulating, or simply has no idea at all what it is doing.
Whatever it is doing, it evidently can't follow Bill Gates' instructions.
After seeking to build a content business in order to draw traffic to feed its advertising business, and to build money-losing game console hardware to lock in business for its games programmers (whom Microsoft expanded by buying successful independent game designers, at least some of whom it later spun back off), and a series of music store partnerships and even a sole-operated music store to feed its DRM licensing ambitions, has Microsoft finally decided to retract operations toward those in which Microsoft has some proven success?
Time will tell whether the sale reflects a new corporate attitude toward disciplined expansion and toward growth in areas Microsoft knows how to compete. With Microsoft freeing Bungee (though retaining a game development contract governing Halo licensing, which presumably rewards Microsoft well), killing MSN Music (and presumably its customers' ability to continue listening to music bought there on any subsequently-bought hardware, see EFF letter on the subject; compare Yahoo and Google refunding their customers on store closure and death of support for content with orphaned DRM), shedding Razorfish, and otherwise divesting itself of businesses that once seemed integral parts of Microsoft's push toward global domination of every facet of the public's electronic lives, one wonders whether Microsoft is refining its push, capitulating, or simply has no idea at all what it is doing.
Whatever it is doing, it evidently can't follow Bill Gates' instructions.
Saturday, January 31, 2009
Eating Enemy Resources
Serious Attack, or Just Chinese Water Torture?
In Charlie Wilson's War, the title character is amazed the CIA station chief in Afghanistan appears to have no interest in ejecting the Soviets from Afghanistan, and learns that the local station chief seems to hope the Soviets will stay in Afghanistan a long time, suffering expense and frustration as they spend good money on bullets mowing down mostly helpless locals until the Soviets are too tired to pull the trigger or too broke to reload.Maybe in a shooting war this is a shocking strategy, and escalation is warranted to achieve ejection of the enemy. Hence, Charlie Wilson's War.
Outside the context of shooting wars, though, there are some amusing applications for this strategy of wasting enemy resources.
SPAMS and SCAMS
Spam is a nuisance because (a) it wastes your time, (b) it consumes storage and CPU resources for your server or (if administering your mailserver isn't your problem) your client software. It also makes it harder to spot legitimate emails. Daniel Hartmeier responds to automatic-harvested email addresses (including mailing list addresses) with relaydb, which shunts connections from spammers -- even if they come through desirable mailing lists -- to be ministered to by a daemon designed to protect him from the spammer's attention. He cleverly looks at the mail headers not to find out where the email claims it originated -- this can be forged -- but based on where his computer actually received the email (which he knows, because his computer made this record). If that address is not on the blacklist, his software assumes the connection is good and looks at the immediately-prior connection (assuming that the good connection is telling the truth about where it got the message). The minute one of the connections turns out to be on the blacklist, the email is given second-class treatment. In the case of an active connection involving a known spammer (the link explains how Daniel builds this list -- or rather, how his software builds this list for him), his computer services the connection with a daemon that pretends to be a mailserver, but just wastes spammers' computing resources pretending to have intermittent errors, or pretending to have a terrifically slow connection that tends to lose packets. Daniel eats up spammer resources without having to spend much time or attention at all, and avoids most of their junk mail in the process.
One of the benefits of avoiding spam is avoiding the scam attempts they contain.
Those who don't successfully avoid spam will encounter scam efforts. Possible response to email scams is to game the scammers -- including as Daniel does with their connections, but instead with the human scammers themselves. To waste scammer time and energy entertainingly one can mislead scammers that you've fallen for it, and have them run around like a chicken with their heads cut off chasing funds you never sent. In an escalation of this game, one can run actual scams against scammers themselves. The administrator of an anti-scam site has acquired a number of African carvings of Western-themed objects by tapping the same greed scammers ordinarily leverage to get victims to jump through hoops.
Conclusion
While some conflicts with identifiable enemies and known borders might be subject to naked force as a viable solution, some are better approached with thoughtfulness rather than mere money or muscle. Daniel's relaydb seems an ingenius way to prevent spammers (including scammers) from reaching one's inbox -- a delightful way to avoid the problem without spending a fortune in prosecutorial resources and international legal efforts doomed by virtue of non-extradition caused by China and Nigeria having little interest in having the law enforced on domestic enterprises. The more labor-intensive efforts undertaken to run individual scammers in circles are probably great therapy for their perpetrators, but unlikely to impact many scammers and unfeasible for the typical spam victim.
Software vendors should think carefully why they are not offering solutions like relaydb and spamd (both licensable without fee) to their customers.
My own experience suggests that major vendors, including major Unix vendors, simply do not believe improvements to the status quo exist, or are useful. For example, when Apple's Hubbard (of FreeBSD fame) received my question about improving MacOS X's firewall by looking at one of the stateful packet filters being developed, he responded that there was no reason there should be more than one firewall and that anyone working on a firewall for FreeBSD other than ipfw was wasting resources that could be employed somewhere actually useful. The fact that the stateful packet filter pf has become (since FreeBSD 5.3 was released in 2004) part of the FreeBSD base system seems a strong indication that actual users of FreeBSD disagree with Hubbard's assessment that competing firewall tools are a waste of time. (Hubbard's argument to me appeared chiefly based on an argument like how much performance improvement do you expect is possible in a firewall? and utterly ignored that ipfw did not actually conduct stateful packet inspection and thus filtered packets rather than connections, which limits its ability to apply different rules to users capable of proving privilege to access different system resources, for example, and that ifpw does not support failover for firewalls. Hubbard's answer? Nobody is using MacOS X for a firewall, so who cares? The fact someone might be interested in using his company's product for more things if it were more capable seemed oddly off his radar.)
The upshot?
Vendors won't give us what we want, apparently, so we're in for self-help for the foreseeable future. If you use a Unix-based system, consider delaydb and spamd; if not, and you have time to kill, try baiting the spammers a bit and see how much fun you can have :-)
But ... use a throwaway email address!
Thursday, August 28, 2008
'Big Lie' Alive And Well In Post-Soviet Russia
The theory of the Big Lie is deceptively simple: if your story is so outrageous that nobody would make it up, people will buy it.
Take the story related by a Soviet émigré about his first time entering a grocery store in the West. When he spotted the aisle with the condiments, it didn't take long for him to end up his knees, weeping.
Buy, why, you ask?
In the Soviet Union, it was hard to obtain mustard. The reason had been clear for years: a worldwide mustard famine deprived the world of access, and only good Soviet planning made available the tiny amount that was to be had. If you weren't a Party official, though, you could pretty much plan to do without. It'd all been in the news for years, and the empty Soviet shelves bore the story out year after year.
Seeing one grocery store's condiment aisle packed with row after row of mustard containers, all different flavors -- he counted dozens of different brands of mustard before he broke down -- he realized that if his government was willing to lie about mustard then ... what might it not have lied about?
So, what's the news now? Putin says the United States orchestrated the violence in Georgia to manipulate November election results, though he's not saying in favor of which candidate, or even displaying any evidence of American involvement.
The story is crazy for a number of reasons, not the least of which is Occam's Razor.
Occams Razor is the principle that the explanation that requires positing the fewest causes is the superior explanation. To accept Putin's proposed scheme, we need to accept (1) a U.S. desire to make war within a country that seemed poised to acquire NATO membership, (2) Georgian complicity with a U.S. military scheme -- a scheme so quiet that nobody's leaked it or evidence of it in either involved government or on the field of battle -- and (3) Russian zeal to protect its helpless allies in an autonomous zone recognized by Russia as autonomous only after it invaded. To accept the alternative that suggests itself, we need only accept Putin believes what he himself proclaimed: that the break-up of the Soviet Union was the greatest tragedy of the twentieth century. Believing this, it's clear Putin would rather Russia invade Georgia before, rather than after, admission to NATO. Once you believe this, Putin's story falls nicely into the historical context of the Big Lie tradition long-exercised by the Soviet Union as a propaganda tool.
Will it fail this time? Russia offers the crazy story both for his own domestic consumption (where it could succeed nicely), for consumption by those inclined to latch onto anti-U.S. stories of all colors wherever they are generated and however implausible simply because they are eager to repeat anti-U.S. claims, and for consumption by United States voters who will receive good FUD tending to make voters nervous about the peaceful intentions of anyone even slightly tending to be labeled a hawk. The fact that most people don't buy it doesn't mean it won't have meaningful impact at the margins.
The Big Lie is definitely a solid basis for FUD for the masses.
The interesting thing about propagandizing the West is that for-profit media doesn't have a special bias toward viewpoints that are accurate. The bias in Western media is toward viewpoints that alarm people, and will keep eyeballs glued to the set long enough to show another commercial. Lying to the West is cheap, particularly if you are a high-profile personality followed by reporters precisely to get headline stories to sell.
Take the story related by a Soviet émigré about his first time entering a grocery store in the West. When he spotted the aisle with the condiments, it didn't take long for him to end up his knees, weeping.
Buy, why, you ask?
In the Soviet Union, it was hard to obtain mustard. The reason had been clear for years: a worldwide mustard famine deprived the world of access, and only good Soviet planning made available the tiny amount that was to be had. If you weren't a Party official, though, you could pretty much plan to do without. It'd all been in the news for years, and the empty Soviet shelves bore the story out year after year.
Seeing one grocery store's condiment aisle packed with row after row of mustard containers, all different flavors -- he counted dozens of different brands of mustard before he broke down -- he realized that if his government was willing to lie about mustard then ... what might it not have lied about?
So, what's the news now? Putin says the United States orchestrated the violence in Georgia to manipulate November election results, though he's not saying in favor of which candidate, or even displaying any evidence of American involvement.
The story is crazy for a number of reasons, not the least of which is Occam's Razor.
Occams Razor is the principle that the explanation that requires positing the fewest causes is the superior explanation. To accept Putin's proposed scheme, we need to accept (1) a U.S. desire to make war within a country that seemed poised to acquire NATO membership, (2) Georgian complicity with a U.S. military scheme -- a scheme so quiet that nobody's leaked it or evidence of it in either involved government or on the field of battle -- and (3) Russian zeal to protect its helpless allies in an autonomous zone recognized by Russia as autonomous only after it invaded. To accept the alternative that suggests itself, we need only accept Putin believes what he himself proclaimed: that the break-up of the Soviet Union was the greatest tragedy of the twentieth century. Believing this, it's clear Putin would rather Russia invade Georgia before, rather than after, admission to NATO. Once you believe this, Putin's story falls nicely into the historical context of the Big Lie tradition long-exercised by the Soviet Union as a propaganda tool.
Will it fail this time? Russia offers the crazy story both for his own domestic consumption (where it could succeed nicely), for consumption by those inclined to latch onto anti-U.S. stories of all colors wherever they are generated and however implausible simply because they are eager to repeat anti-U.S. claims, and for consumption by United States voters who will receive good FUD tending to make voters nervous about the peaceful intentions of anyone even slightly tending to be labeled a hawk. The fact that most people don't buy it doesn't mean it won't have meaningful impact at the margins.
The Big Lie is definitely a solid basis for FUD for the masses.
The interesting thing about propagandizing the West is that for-profit media doesn't have a special bias toward viewpoints that are accurate. The bias in Western media is toward viewpoints that alarm people, and will keep eyeballs glued to the set long enough to show another commercial. Lying to the West is cheap, particularly if you are a high-profile personality followed by reporters precisely to get headline stories to sell.
Wednesday, August 27, 2008
Trading Out
When asked about timing investment exits, Warren Buffett has said that at Berkshire the preferred investment horizon is "forever." Yet, even long-term investors occasionally sell.
Warren Buffett last year sold Berkshire's stake in PetroChina (ADR's Ticker:PTR), which hasn't done so well as crowed by others in the time since. Sure, Buffett could have timed his top better -- but Buffett's methods don't involve identifying fad peaks or the like, but analyzing value. Berkshire Hathaway (BRK.B -- I'd quote the A shares, but honestly, how many among us will be buying those at current prices?) doesn't promise to outrun bull markets, but to offer safety in times of risk. And why not? It's an insurance company. The fact that it's consistently delivered handsome returns while offering investors a rock-solid and diverse financial foundation says something about the quality of the management that's been at its helm for decades. (Unless you think that every year for these past several decades have been a fluke ...?)
Bailing out of PetroChina at nosebleed prices seems good in principle -- but knowing when a stock is crazily valued is a bit trickier. It requires homework. It requires advance-planned decisions regarding the price at which one is better off investing in other opportunities rather than retaining the investment gain.
One lesson The Motley Fool offered years ago was that paying for quality companies was worthwhile. What I was unable to discern from The Motley Fool is how you tell your slick stock is ripe for market. After accepting that paying for quality can be necessary ... how do you work out when a pick is past its prime?
A look at Warren Buffett's behavior offers an answer: don't buy slick high-fliers unless and until they become bargains. Then, you hold forever. Unless they start looking like they offer downside risk that scares you. Then shift out, into another bargain.
The key is finding a pipeline of bargains. I love ACAS at these prices, but I need to work on my pipeline.
Warren Buffett last year sold Berkshire's stake in PetroChina (ADR's Ticker:PTR), which hasn't done so well as crowed by others in the time since. Sure, Buffett could have timed his top better -- but Buffett's methods don't involve identifying fad peaks or the like, but analyzing value. Berkshire Hathaway (BRK.B -- I'd quote the A shares, but honestly, how many among us will be buying those at current prices?) doesn't promise to outrun bull markets, but to offer safety in times of risk. And why not? It's an insurance company. The fact that it's consistently delivered handsome returns while offering investors a rock-solid and diverse financial foundation says something about the quality of the management that's been at its helm for decades. (Unless you think that every year for these past several decades have been a fluke ...?)
Bailing out of PetroChina at nosebleed prices seems good in principle -- but knowing when a stock is crazily valued is a bit trickier. It requires homework. It requires advance-planned decisions regarding the price at which one is better off investing in other opportunities rather than retaining the investment gain.
One lesson The Motley Fool offered years ago was that paying for quality companies was worthwhile. What I was unable to discern from The Motley Fool is how you tell your slick stock is ripe for market. After accepting that paying for quality can be necessary ... how do you work out when a pick is past its prime?
A look at Warren Buffett's behavior offers an answer: don't buy slick high-fliers unless and until they become bargains. Then, you hold forever. Unless they start looking like they offer downside risk that scares you. Then shift out, into another bargain.
The key is finding a pipeline of bargains. I love ACAS at these prices, but I need to work on my pipeline.
Monday, August 11, 2008
Broken By Design
Looking back at an old comment of mine on Dissoi Blogi, I noticed I'd touched off a flood of philosophical argument. Fun, fun. The original post was on the free rider problem, and I see:
I don't argue that altruistic retribution is a good, but neither do I argue that "free riders" are good. I merely note that they exist. The post I made was about something else: the state of discourse in society about norms, the value of norms, and the individuals who are willing to sacrifice to uphold norms. In the case of norms like tolerance of different opinions -- the norm that enables realization of a value like free speech -- I think a strong case can be made that the norm is unlikely to have much evolutionary support but that it has high utility in combatting problems like groupthink even if its moral value were neglected. Willingness to sacrifice to protect a value like free speech may be a useful norm to cultivate; if so, a public discourse that promotes ridicule of individuals willing to sacrifice to uphold group norms would be counterproductive.
Yet, we have the post that explicitly contrasts the free rider (the opportunistic norm violator) to "the Dumb Ass" (who is depicted as an imbecile for upholding a norm at personal cost). I suggested that, and not free riders, is the puzzle:
I think that the author of Anonymous III makes an error when suggesting that "we've not only failed to make any progress on the free rider problem, but we've failed to ask any of the important questions about what we have reason to do and why." I think that positing an unreasoned cause -- that is, an inheritable biological impulse that has been ascertained by real-world study to exist -- is no reason to demand we start fabricating justifications. Some folks are color blind. Other folks are tone-deaf. There may be some people who just don't see why they should care about others and therefore steal and cheat and lie about it, all without compunction. If there is a cause in human brain structure or chemistry that promotes this kind of activity, you can be sure the folks acting in accordance with this cause don't first stop to examine their souls to ascertain whether they have justification to steal or cheat.
They just do it.
This may be deeply troubling for a philosopher interested in commenting on the application of the Republic to the world in which we live. However, I offer a consolation prize.
The work of a philosopher is not to explain the behavior of strangers whose minds he does not know. For he knows not his subjects' axioms, nor their values by which they arrange the ordered lists of "goods" they hope to achieve in life. (Indeed, the observer knows not whether such a list exists, or whether his subject knows his own values, or whether instead his subject merely repeats, unthinkingly and uncritically, the justifications he is fed by still others, whose purposes and priorities may yet be different.) Discerning from their behavior some rule of reason is for psychic diviners, perhaps, but not the philosopher.
The work of a philosopher is to known himself. When one learns why he himself does what he does, and can align his values with his reason and his conduct with his values, then one has done the great work of a philosopher. This work, taken seriously, isn't quickly over.
Samuel Clements, writing as Mark Twain, once wrote that nothing so required reforming as other people's bad habits. I am inclined to think that pretending to philosophy while arguing the justifications for the strange acts of strangers, are merely procrastinating in avoidance of the harder work of discarding one's own externally-crafted justifications, and conducting the careful introspection required to learn one's own self.
The possibility that strangers may behave strangely, and may react without having an articulable reason, is of no consequence to the problem of deciding the values one believes should maintain and how one should live one's life.
Identifying vacuous justifications in the mouths of others might, of course, have value in determining whether you are looking at a person with whom reasoned cooperation is feasible, or whether the speaker is a mad dog who knows not what he does or why but happens to have a mouthful of rhetoric at his disposal -- in which case one should take care not to mistake justification for reason. But that's another topic.
Once we see that the purely causal story [why individuals sacrifice to uphold society's norms] is different from rational justification [why individuals claim this behavior is correct or incorrect], we can more easily notice how little the evolutionary story has helped us with the original problem. For we still have a free-rider problem: it is still open to any individual agent to consider quite seriously whether he has good reason to adhere to the 'formal system of justice' and answer in the negative. The evolutionary story also threatens to leave us feeling as though we've done more than we have: in fact, we've not only failed to make any progress on the free rider problem, but we've failed to ask any of the important questions about what we have reason to do and why.I don't think it avoids important questions at all to posit that sometimes the justifications made after the fact, explaining to curious onlookers why we did some seemingly noble thing, might really be a smokescreen for something as philosophically unsatisfactory as the suggestion that reason and free will are not always the drivers of human conduct, and that members of a society might accept personal sacrifice to promote social due to things like genetic causes. Morever, the fact that some individuals will cheat doesn't mean that other individuals do not. The fact that individuals will cheat gives rise to coping mechanisms like altruistic retribution, which in turn can lead to irrational problems like groupthink. None of these -- the problem, the offered solution, and the solution's side effect -- is either caused by, solved by, or explained usefully by justifications offered by proponents of group norms.
by Anonymous, in Anonymous Post III
I don't argue that altruistic retribution is a good, but neither do I argue that "free riders" are good. I merely note that they exist. The post I made was about something else: the state of discourse in society about norms, the value of norms, and the individuals who are willing to sacrifice to uphold norms. In the case of norms like tolerance of different opinions -- the norm that enables realization of a value like free speech -- I think a strong case can be made that the norm is unlikely to have much evolutionary support but that it has high utility in combatting problems like groupthink even if its moral value were neglected. Willingness to sacrifice to protect a value like free speech may be a useful norm to cultivate; if so, a public discourse that promotes ridicule of individuals willing to sacrifice to uphold group norms would be counterproductive.
Yet, we have the post that explicitly contrasts the free rider (the opportunistic norm violator) to "the Dumb Ass" (who is depicted as an imbecile for upholding a norm at personal cost). I suggested that, and not free riders, is the puzzle:
Maybe the real mystery is why social cooperation can have come to such a position of disrepute in some respectable segment of society that ... it can be ... accepted to label such cooperators dumb asses.
post Anonymous I to The Free Rider and the Dumb Ass
I think that the author of Anonymous III makes an error when suggesting that "we've not only failed to make any progress on the free rider problem, but we've failed to ask any of the important questions about what we have reason to do and why." I think that positing an unreasoned cause -- that is, an inheritable biological impulse that has been ascertained by real-world study to exist -- is no reason to demand we start fabricating justifications. Some folks are color blind. Other folks are tone-deaf. There may be some people who just don't see why they should care about others and therefore steal and cheat and lie about it, all without compunction. If there is a cause in human brain structure or chemistry that promotes this kind of activity, you can be sure the folks acting in accordance with this cause don't first stop to examine their souls to ascertain whether they have justification to steal or cheat.
They just do it.
This may be deeply troubling for a philosopher interested in commenting on the application of the Republic to the world in which we live. However, I offer a consolation prize.
The work of a philosopher is not to explain the behavior of strangers whose minds he does not know. For he knows not his subjects' axioms, nor their values by which they arrange the ordered lists of "goods" they hope to achieve in life. (Indeed, the observer knows not whether such a list exists, or whether his subject knows his own values, or whether instead his subject merely repeats, unthinkingly and uncritically, the justifications he is fed by still others, whose purposes and priorities may yet be different.) Discerning from their behavior some rule of reason is for psychic diviners, perhaps, but not the philosopher.
The work of a philosopher is to known himself. When one learns why he himself does what he does, and can align his values with his reason and his conduct with his values, then one has done the great work of a philosopher. This work, taken seriously, isn't quickly over.
Samuel Clements, writing as Mark Twain, once wrote that nothing so required reforming as other people's bad habits. I am inclined to think that pretending to philosophy while arguing the justifications for the strange acts of strangers, are merely procrastinating in avoidance of the harder work of discarding one's own externally-crafted justifications, and conducting the careful introspection required to learn one's own self.
The possibility that strangers may behave strangely, and may react without having an articulable reason, is of no consequence to the problem of deciding the values one believes should maintain and how one should live one's life.
Identifying vacuous justifications in the mouths of others might, of course, have value in determining whether you are looking at a person with whom reasoned cooperation is feasible, or whether the speaker is a mad dog who knows not what he does or why but happens to have a mouthful of rhetoric at his disposal -- in which case one should take care not to mistake justification for reason. But that's another topic.
Free Speech
Free Speech.
How often have we heard the phrase? Yet, how often do we mistake its meaning.
What exactly is free speech?
The way I conceive the phrase, it isn't about getting a guest lecturer without paying an honorarium. It's not about cheap trash talk proven wrong on the field. It's not even about truth.
Like "free software", the range of thought about what it means and who benefits or suffers is broad. It's worth keeping in mind, though, that the liberty to distribute (or receive) uncensored ideas -- whether in print or face-to-face -- is not without cost.
In Canada, a chapter has closed in the endless war against free speech, as one newspaper man's censors have declared that his words were not, on balance, a prosecutable offense. The long and costly battle he waged against the government officers sicced upon him by political opponents -- persons who preferred different ideas circulate -- certainly taught his colleagues a lesson: speaking your mind can cost you a pretty penny. And worse:
If the liberty to share even bad ideas without fear of fines or confinement is to be secured only to those with the means and the will to fight at the first sign of encroachment, and to go down swinging while beset by cowards pretending to enforce some standard of "civilization" that requires keeping one's mouth shut when so ordered, then we do not have freedom at all: we suffer the conduct the strong shall dare, and none other.
Many times, I've heard "sure, that was censorship, but do you really want to hear about _______?" The idea that we should protect from censorship only the right to print ideas we like to hear is a prescription for tyranny by the majority -- and publicly-sanctioned censorship. Voltaire's 1770 letter to M. le Riche may offer the most heroic sentiment on the subject: "Monsieur l'abbé, I detest what you write, but I would give my life to make it possible for you to continue to write."
Blogs focusing on censorship issues include Free Mark Steyn, which seems to have collected examples of people targeted by censorship conducted by purported rights protection programs. This is an interesting psychological game: if it's not politically correct to shut down a source of offensive opinion merely because it offends the censor, it may yet be portrayed as admirable to censor it under the rubric of protecting an imagined right of members of some purportedly oppressed class. This has the benefit of playing into the natural urge toward altruistic retribution[1], and to the extent it is dressed up in the trappings of a formal system for protecting marginalized people, has perfect political cover for oppressing nonmainstream political views. I toyed with posting links to some really offensive blogs, and their efforts to combat censorship -- just to prove my heart was in it -- but I decided to avoid the distraction it would cause.
I'll post later on censorship that doesn't involve the clash of East and West, or the intersection of religions, or the diverse mechanisms by which racial hatreds are exercised. These subjects so illuminate the problem that they are not a bad place to discuss censorship, but they are so emotionally charged they work against dispassionate discussion of the problem and its likely solutions.
Next censorship post will address censorship in the field of peer-reviewed research. (Not the act of peer review to identify substandard work, but real censorship prior to the point articles reach peer review.)
Incidentally, I'm tagging this post with 'information quality' rather than making a tag for 'censorship' because I see the things as too connected to want to separate.
[1] Altruistic retribution seems to strengthen group norm compliance by punishing norm-violators for the benefit of a perceived victim, by motivating conduct in accord with the norms even when victims appear helpless. Altruistic assistance and altruistic retribution appear to have different reinforcement mechanisms and to be triggered differently. As I suggested in an anonymous post before starting this blog, altruistic retribution may lay behind formal systems of justice as a mechanism to give an outlet for such drives without triggering endless waves of retribution that would tend to create a state of unending conflict.
Maybe we -- by which I now refer not to the species, but to those of its members with the good fortune of living in industrialized nations that haven't known domestic warfare and insurrection in a few generations -- experience at this moment a state of unending "conflict" ... but have channeled it socially into outlets that involve less violence than those that might obtain in the absence of the rule of law.
Some links on altruistic retribution:
http://www.libertarian.co.uk/lapubs/legan/legan005.pdf
http://lib.bioinfo.pl/pmid:15637787
How often have we heard the phrase? Yet, how often do we mistake its meaning.
What exactly is free speech?
The way I conceive the phrase, it isn't about getting a guest lecturer without paying an honorarium. It's not about cheap trash talk proven wrong on the field. It's not even about truth.
Like "free software", the range of thought about what it means and who benefits or suffers is broad. It's worth keeping in mind, though, that the liberty to distribute (or receive) uncensored ideas -- whether in print or face-to-face -- is not without cost.
In Canada, a chapter has closed in the endless war against free speech, as one newspaper man's censors have declared that his words were not, on balance, a prosecutable offense. The long and costly battle he waged against the government officers sicced upon him by political opponents -- persons who preferred different ideas circulate -- certainly taught his colleagues a lesson: speaking your mind can cost you a pretty penny. And worse:
Two months ago, Rev. Stephen Boissoin was given an outrageous sentence by the Alberta HRC for doing the same thing I did. Rev. Boissoin even met [Government censor] Gundara’s goofy tests. Why was I acquitted and Rev. Boissoin convicted, sentenced and humiliated? Because I’m a pain in the neck to the HRCs, and I have been embarrassing them ever since I YouTubed their interrogation of me. They wanted to avoid the PR disaster of a trial. Rev. Boissoin is more their style: a quiet man they can beat up with impunity.Pugnacious printers probably pride themselves on their battles against oppression under color of law or under guise of protecting some imagined right not to be offended by opinion or foul jokes, and may derive benefit from being swirled all about by controversy. Take George Carlin. Yet, meek men may depend for their liberty entirely on the will of strangers ready to suffer personal sacrifice for mere inedible principles. And there are many, readily cowed, who whose conduct is chilled by mere fear of costly personal entanglement.
via Ezra Levant
If the liberty to share even bad ideas without fear of fines or confinement is to be secured only to those with the means and the will to fight at the first sign of encroachment, and to go down swinging while beset by cowards pretending to enforce some standard of "civilization" that requires keeping one's mouth shut when so ordered, then we do not have freedom at all: we suffer the conduct the strong shall dare, and none other.
Many times, I've heard "sure, that was censorship, but do you really want to hear about _______?" The idea that we should protect from censorship only the right to print ideas we like to hear is a prescription for tyranny by the majority -- and publicly-sanctioned censorship. Voltaire's 1770 letter to M. le Riche may offer the most heroic sentiment on the subject: "Monsieur l'abbé, I detest what you write, but I would give my life to make it possible for you to continue to write."
Blogs focusing on censorship issues include Free Mark Steyn, which seems to have collected examples of people targeted by censorship conducted by purported rights protection programs. This is an interesting psychological game: if it's not politically correct to shut down a source of offensive opinion merely because it offends the censor, it may yet be portrayed as admirable to censor it under the rubric of protecting an imagined right of members of some purportedly oppressed class. This has the benefit of playing into the natural urge toward altruistic retribution[1], and to the extent it is dressed up in the trappings of a formal system for protecting marginalized people, has perfect political cover for oppressing nonmainstream political views. I toyed with posting links to some really offensive blogs, and their efforts to combat censorship -- just to prove my heart was in it -- but I decided to avoid the distraction it would cause.
I'll post later on censorship that doesn't involve the clash of East and West, or the intersection of religions, or the diverse mechanisms by which racial hatreds are exercised. These subjects so illuminate the problem that they are not a bad place to discuss censorship, but they are so emotionally charged they work against dispassionate discussion of the problem and its likely solutions.
Next censorship post will address censorship in the field of peer-reviewed research. (Not the act of peer review to identify substandard work, but real censorship prior to the point articles reach peer review.)
Incidentally, I'm tagging this post with 'information quality' rather than making a tag for 'censorship' because I see the things as too connected to want to separate.
[1] Altruistic retribution seems to strengthen group norm compliance by punishing norm-violators for the benefit of a perceived victim, by motivating conduct in accord with the norms even when victims appear helpless. Altruistic assistance and altruistic retribution appear to have different reinforcement mechanisms and to be triggered differently. As I suggested in an anonymous post before starting this blog, altruistic retribution may lay behind formal systems of justice as a mechanism to give an outlet for such drives without triggering endless waves of retribution that would tend to create a state of unending conflict.
Maybe we -- by which I now refer not to the species, but to those of its members with the good fortune of living in industrialized nations that haven't known domestic warfare and insurrection in a few generations -- experience at this moment a state of unending "conflict" ... but have channeled it socially into outlets that involve less violence than those that might obtain in the absence of the rule of law.
Some links on altruistic retribution:
http://www.libertarian.co.uk/lapubs/legan/legan005.pdf
http://lib.bioinfo.pl/pmid:15637787
Friday, August 8, 2008
Keeping America Safe From Firearms
I had some conversations involving strong feelings on the firearms. It's been a month since the United States Supreme Court held that the Second Amendment included an individual right to keep and bear arms even in an area of exclusively federal jurisdiction. I note that on the date of this post, FindLaw still discusses the right protected by the Second Amendment as having "no definitive resolution" and describing the possibility that the Amendment might protect an individually-enforceable right as a "theory"; FindLaw needs to put publication dates on its articles so viewers can tell how recently the Supreme Court will have to have ruled to obsolete the article. FindLaw's article has a copyright date of 2008, but that's not helpful: their web server stitches the current year into every page it serves, apparently. The most recent case cited by the article has a date of 1982 (unless you consider the 1983 date the case was turned down for appellate review).
In the tradition of charity workers who raise funds to purchase humans from slavers for redemption, perhaps those concerned about firearms -- but uninterested in the kind of mental health surveillance and interventions that would be needed to materially impact the suicide rate -- might want to take a page from the Assault Weapon Watch and purchase from circulations firearms that could be kept in a secure observation environment, either to ensure they are not misused or to document conclusively that even in the absence of mentally ill operators they can cause harm.
I think the Assault Weapon Watch is definitely ahead of the curve in providing up-to-date photographic proof of the danger mitigation that has been achieved by removing potentially lethal weapons from circulation through purchase.
====
As an Econ 101 thought experiment, exactly what do you imagine happens to the attractiveness of slave-taking as a career option when new, large, foreign purchasers show up and offer to put your new slaves back into circulation as available targets in the same place they were originally captured? What happens to the incentive of locals to pretend that they have slaves to trade, when in fact they have borrowed a bunch of children from their extended families for a photo op?
My own impression is that it reinforces slave-taking as a profession to introduce more funding to reward success, and creates a new opportunity to perpetrate frauds in the form of faux slavery.
I shake my head in amazement at the things people will do with their scarce resources. At least the folks at the Assault Weapon Watch are having a good time and building a harmless gun collection.
In the tradition of charity workers who raise funds to purchase humans from slavers for redemption, perhaps those concerned about firearms -- but uninterested in the kind of mental health surveillance and interventions that would be needed to materially impact the suicide rate -- might want to take a page from the Assault Weapon Watch and purchase from circulations firearms that could be kept in a secure observation environment, either to ensure they are not misused or to document conclusively that even in the absence of mentally ill operators they can cause harm.
I think the Assault Weapon Watch is definitely ahead of the curve in providing up-to-date photographic proof of the danger mitigation that has been achieved by removing potentially lethal weapons from circulation through purchase.
====
As an Econ 101 thought experiment, exactly what do you imagine happens to the attractiveness of slave-taking as a career option when new, large, foreign purchasers show up and offer to put your new slaves back into circulation as available targets in the same place they were originally captured? What happens to the incentive of locals to pretend that they have slaves to trade, when in fact they have borrowed a bunch of children from their extended families for a photo op?
My own impression is that it reinforces slave-taking as a profession to introduce more funding to reward success, and creates a new opportunity to perpetrate frauds in the form of faux slavery.
I shake my head in amazement at the things people will do with their scarce resources. At least the folks at the Assault Weapon Watch are having a good time and building a harmless gun collection.
Monday, August 4, 2008
Rationally Pricing Shares of Apple
Folks eager to place valuations on Apple have done all kinds of gyrations based on the predicted earnings and the PEG ratios that are reasonable for assumed earnings growth rates. Being a skeptical consumer of such argument, I have a more basic question:
On June 11, shortly into the last quarter of Apple's fiscal year ending in 2008, Apple released a new product: the iPhone 3G. This gadget sold fairly well, selling out initially in many locations and demanding so much performance from carriers to activate or modify buyers' accounts that activation was problematic in some countries. A headline at Seeking Alpha gushed that "Apple's iPhone [was the] Biggest Consumer Electronics Launch Ever[.]" The article made comparisons to historic launches of consumer electronics -- Betamax, Windows 95, XBox, and the original iPhone -- and concluded that Apple had crushed every other consumer electronics launch ever, bagging some $433 million in sales in the product's first weekend.
There are some tear-down estimates that the 3G iPhone costs Apple less to make than the prior iPhone, with guesses ranging from $100 to $173. Assuming the thing's cost to Apple is $173, and Apple's gross receipts per phone are $433 (surely inaccurate, given the nature of its author's calculations) a rough take on per-unit profit might be something like $260 apiece.
So, Apple's profit for a weekend in which it sells a million units should be something like $260 million, right? Ahh, no. Not even neglecting taxes.
This is because Apple is lying about its earnings. The rule beneath which Apple fibs on its iPhone earnings is the rule governing "subscription accounting". If Apple were to sell a magazine subscription for $48 for a two-year subscription, you'd understand that it would not be entitled to book the whole $48 as revenue when it was paid up-front by a subscriber, because Apple would have 23 more issues to send out. Everyone can tell the magazine publisher needs to send all the issues to earn all the money in a 2-year subscription for a monthly magazine, and it's easy to tell how much is left unearned. So it's no surprise that magazine publishers are allowed to claim that the $48 isn't all revenue -- and isn't all subject to tax during -- the first month in which it is received. The magazine publisher books the cash as received, but books a negative asset representing the stuff still owed to customers, and by adjusting that later number slowly realizes the $48 over the life of the subscription.
Sounds fair, right?
Apple, when it takes money for an iPhone, parts with one whole entire iPhone and its pre-installed software. If Apple never sent the customers another thing, I wonder what court would find Apple owed anything more. It's not at all like the magazine subscription, in which one can immediately tell that twenty-three issues have yet to be delivered: once the customer has functioning hardware and software and is activated with a cellular service carrier, the stuff that's left to be delivered is de minimis if it exists at all. What asset does Apple really owe customers after they've activated the phone and seen that it works as advertised? Why should Apple not be seen as realizing the whole sale the day it's made?
When Apple first introduced subscription accounting for the iPhone, it was pretty clear that Apple was using its ongoing service revenue sharing and the fact that without service the product wasn't fully delivered to claim that Apple should be entitled to stretch the phone revenues' recognition across the life of the service plan Apple's customers were required to adopt. Apple, after all, pre-arranged the service plan for its customers and was a participant in delivering the services through its exclusive carrier partner. Even though Apple had pretty much delivered everything, it certainly hadn't received all the revenue, and it had some (at least arguable) performance left in supporting the carrier in handling visual voicemail through a package that ran on the carrier's own network.
Now, however, there are multiple official and approved carriers in the world -- some of them, non-exclusive in some countries and subject to competition -- and Apple isn't receiving a share of service revenues. Apple receives for its phones a payment by carriers who subsidize the cost of the phone to their own customers as an incentive for the customers to adopt high-end cell plans. Apple isn't delivering something incomplete any more than is RIMM or NOK. If RIMM or NOK aren't entitled to use subscription accounting for handset sales, why should Apple?
Why does this matter?
When Apple says it's entitled to use subscription accounting to spread a phone's revenues over 24 months, it's saying that in the 3-month quarter in which a phone is sold it will book revenue for somewhere between 1/24 and 1/8 of the actual sale made in the quarter, and will amortize the rest across the rest of the 24 months. Rapid sales growth, therefore, won't show up in Apple's quarterly reports. Apple will be able to hide the true extent of its profitability from onlookers, who will be forced to guess about Apple's per-phone price to resellers and the extent of its phone subsidy from carriers.
This might help Apple stave off competitive pressure from parties who would like hard data on Apple's performance as a fulcrum against which to lever future negotiations, but it's hell on investors who are trying to work out just how profitable Apple's sales growth is.
Did Apple take a beating clearing old iPhone inventory in the June quarter? Who knows? It's diluted in all the prior income from old sales made when the iPhone was a hot new item.
Will iPhone 3G sales make as much money as iPods? Who knows? iPod profits, though booked in the quarter of the sale, are mixed into a music business performance result that includes music sales from an online store that, despite surpassing other music retailers and becoming the biggest music retailer in the US, is described as a near-break-even business by Apple execs -- while the iPhones' profits are amortized across two years, which in the high-fashion world of high-end cell phones may be longer than the service life of the phone model that was just sold.
In short, the effort to ensure competitors can't work out the details of Apple's deals means that investors and analysts can't do it, either. Spreading revenue over time and mixing it with non-iPhone revenue streams (e.g., Apple TV) means that Apple has made it nearly impossible to work out what its profit is from the business to which many onlookers cast their eye for profit growth.
The Problem.
With profit (and profit growth) an enigma, pricing Apple shares has become risky. Risk isn't good for those holding shares. You know that the minute the unit sales number drops, folks will run for the doors, so you can't believe for a minute that Apple's subscription sales formulae have actually created a belief in the validity of deferred revenues at Apple. You also, therefore, can't accept the claim that the accounting principle will help smooth seasonal revenues: everyone knows Apple's business is highly seasonal and responds to gifting occasions and academic calendars, and will expect performance accordingly.
Apple's only real effect in using subscription accounting (enhanced by Apple's simultaneous practice of mixing different types of revenue streams into its reported product categories) is to make it virtually impossible to tell how much money Apple is making on iPhones.
But, who cares?
Folks who try to work out the price at which Apple shares "should" trade like to look at multiples like the PE (price-to-earnings) ratio, and the PEG (price-to-earnings, divided by per-share earnings growth) ratio, to see whether the stock is overpriced or is a bargain -- or to project future prices using plausible reference ratios. Once the true earnings for a quarter becomes a black box, and the growth in the earnings from the prior-year's quarter is rendered meaningless by the use of subscription accounting in a small number of high-growth market segments, both PE and PEG will cease to reflect the price of the company in relation to the company's actual performance.
To get a "real" PE or PEG, one would need to use cash flow numbers and other pieces of the quarterly statements to try to "back into" the real numbers for profit and growth. This, of course, is a risky endeavor: the whole point of the Apple accounting and reporting strategy is to obfuscate internals from detailed inspection by outsiders. While this may make it hard to work out how profitable the Apple Store is, or the iTunes business, it also makes it completely impossible to say much about Apple's PE or PEG going forward, assuming the iPhone is a material part of Apple's business.
If the iPhone isn't a material part of Apple's business then this chicanery is for naught. Assuming the iPhone is significant in terms of sales and profits, though, a future whose profits and cash flows result from an admixture of accounting principles and deferral practices will mean a future in which both PE and PEG ratios will be available either based solely on Apple-engineered accounting fictions (that will understate earnings when there is level or positive earnings growth, and overstate them in periods like last quarter, in which products were refreshed and much of the quarter was spent without stock on the shelves; and consequently will also misstate earnings growth because the earnings are falsely smoothed across eight quarters). To get "real" numbers will require -- let's be honest here -- guesswork that works against the very principle of acquiring solid evidence of stocks' value.
Apple's profits from Macs may be soaring, and the iPhone may be flying off the shelves, but Apple's accounting practices aren't going to help anyone perceive the shares as a buy even if they are. Given the impact of oddball accounting and hyperconservative forward earnings guidance, there's really no way to be sure.
The Upshot
Despite excitement in recent years over Apple's music business and its entry into the phone market, Apple's profits at present come largely from Macs. This is good news: the music business may enjoy more music sales, but the iPod unit growth seems to have come to an end. Yes, last quarter iPod sales showed an increase compared to the year-ago quarter, but it was also a decrease from the prior quarter. It was also impacted by super-low-priced iPod Shuffles, which are a "unit" though the profit in them is scant. Apple needs the business to prevent competitors from establishing a beachhead, and Apple does profit from the things, but it's no iPod Touch. So growing units with Shuffles might be "growth" under some definition, but it's not the kind of profit growth that makes investors weep with joy.
The fact that Mac sales are growing means the platform is doing well -- and Apple, as a major developer for the platform, stands to make good software revenues. The platform's growth is good for Apple also because it's darned near the very same platform that the iPhone runs (and the iPod Touch), leading to some potential network effects. Games made for the iPhone may yield development for the Mac, for example. Developers may try developing multilayer games in which iPhones or iPod Touches are used as remotes to control actions in a multiplayer game run on a Mac, or in the cloud, or tracked by the players' clients in an ad-hoc fashion. Wild things might be in the pipeline.
Maybe.
What we do know is that Apple's iPhone growth is unknown (it's just entering dozens of jurisdictions) and the segment of its business with known recent high growth is about a third of Apple's business. Big sales in low-profit-growth areas -- like the music business has become -- effectively acts as a brake on metrics like PEG.
Apple is likely to turn in some more good Mac numbers over the back-to-school and holiday quarters -- benefiting Apple's per-share metrics immediately -- but virtually anything Apple does in iPhones will impact share price solely because of buzz and future sales anticipation, not near-quarter growth metrics. This isn't because Apple can't make money on phones, but because Apple has chosen to report numbers that won't help observers learn what Apple makes when it sells phones. We'll be left with analyst projections and the backs of our own napkins.
If you've read my piece on analysts and on non-analysts, you will understand why I suggest one stick with the backs of one's own napkins.
How do you figure Apple's earnings?What Are This Quarter's Earnings?
On June 11, shortly into the last quarter of Apple's fiscal year ending in 2008, Apple released a new product: the iPhone 3G. This gadget sold fairly well, selling out initially in many locations and demanding so much performance from carriers to activate or modify buyers' accounts that activation was problematic in some countries. A headline at Seeking Alpha gushed that "Apple's iPhone [was the] Biggest Consumer Electronics Launch Ever[.]" The article made comparisons to historic launches of consumer electronics -- Betamax, Windows 95, XBox, and the original iPhone -- and concluded that Apple had crushed every other consumer electronics launch ever, bagging some $433 million in sales in the product's first weekend.
There are some tear-down estimates that the 3G iPhone costs Apple less to make than the prior iPhone, with guesses ranging from $100 to $173. Assuming the thing's cost to Apple is $173, and Apple's gross receipts per phone are $433 (surely inaccurate, given the nature of its author's calculations) a rough take on per-unit profit might be something like $260 apiece.
So, Apple's profit for a weekend in which it sells a million units should be something like $260 million, right? Ahh, no. Not even neglecting taxes.
This is because Apple is lying about its earnings. The rule beneath which Apple fibs on its iPhone earnings is the rule governing "subscription accounting". If Apple were to sell a magazine subscription for $48 for a two-year subscription, you'd understand that it would not be entitled to book the whole $48 as revenue when it was paid up-front by a subscriber, because Apple would have 23 more issues to send out. Everyone can tell the magazine publisher needs to send all the issues to earn all the money in a 2-year subscription for a monthly magazine, and it's easy to tell how much is left unearned. So it's no surprise that magazine publishers are allowed to claim that the $48 isn't all revenue -- and isn't all subject to tax during -- the first month in which it is received. The magazine publisher books the cash as received, but books a negative asset representing the stuff still owed to customers, and by adjusting that later number slowly realizes the $48 over the life of the subscription.
Sounds fair, right?
Apple, when it takes money for an iPhone, parts with one whole entire iPhone and its pre-installed software. If Apple never sent the customers another thing, I wonder what court would find Apple owed anything more. It's not at all like the magazine subscription, in which one can immediately tell that twenty-three issues have yet to be delivered: once the customer has functioning hardware and software and is activated with a cellular service carrier, the stuff that's left to be delivered is de minimis if it exists at all. What asset does Apple really owe customers after they've activated the phone and seen that it works as advertised? Why should Apple not be seen as realizing the whole sale the day it's made?
When Apple first introduced subscription accounting for the iPhone, it was pretty clear that Apple was using its ongoing service revenue sharing and the fact that without service the product wasn't fully delivered to claim that Apple should be entitled to stretch the phone revenues' recognition across the life of the service plan Apple's customers were required to adopt. Apple, after all, pre-arranged the service plan for its customers and was a participant in delivering the services through its exclusive carrier partner. Even though Apple had pretty much delivered everything, it certainly hadn't received all the revenue, and it had some (at least arguable) performance left in supporting the carrier in handling visual voicemail through a package that ran on the carrier's own network.
Now, however, there are multiple official and approved carriers in the world -- some of them, non-exclusive in some countries and subject to competition -- and Apple isn't receiving a share of service revenues. Apple receives for its phones a payment by carriers who subsidize the cost of the phone to their own customers as an incentive for the customers to adopt high-end cell plans. Apple isn't delivering something incomplete any more than is RIMM or NOK. If RIMM or NOK aren't entitled to use subscription accounting for handset sales, why should Apple?
Why does this matter?
When Apple says it's entitled to use subscription accounting to spread a phone's revenues over 24 months, it's saying that in the 3-month quarter in which a phone is sold it will book revenue for somewhere between 1/24 and 1/8 of the actual sale made in the quarter, and will amortize the rest across the rest of the 24 months. Rapid sales growth, therefore, won't show up in Apple's quarterly reports. Apple will be able to hide the true extent of its profitability from onlookers, who will be forced to guess about Apple's per-phone price to resellers and the extent of its phone subsidy from carriers.
This might help Apple stave off competitive pressure from parties who would like hard data on Apple's performance as a fulcrum against which to lever future negotiations, but it's hell on investors who are trying to work out just how profitable Apple's sales growth is.
Did Apple take a beating clearing old iPhone inventory in the June quarter? Who knows? It's diluted in all the prior income from old sales made when the iPhone was a hot new item.
Will iPhone 3G sales make as much money as iPods? Who knows? iPod profits, though booked in the quarter of the sale, are mixed into a music business performance result that includes music sales from an online store that, despite surpassing other music retailers and becoming the biggest music retailer in the US, is described as a near-break-even business by Apple execs -- while the iPhones' profits are amortized across two years, which in the high-fashion world of high-end cell phones may be longer than the service life of the phone model that was just sold.
In short, the effort to ensure competitors can't work out the details of Apple's deals means that investors and analysts can't do it, either. Spreading revenue over time and mixing it with non-iPhone revenue streams (e.g., Apple TV) means that Apple has made it nearly impossible to work out what its profit is from the business to which many onlookers cast their eye for profit growth.
The Problem.
With profit (and profit growth) an enigma, pricing Apple shares has become risky. Risk isn't good for those holding shares. You know that the minute the unit sales number drops, folks will run for the doors, so you can't believe for a minute that Apple's subscription sales formulae have actually created a belief in the validity of deferred revenues at Apple. You also, therefore, can't accept the claim that the accounting principle will help smooth seasonal revenues: everyone knows Apple's business is highly seasonal and responds to gifting occasions and academic calendars, and will expect performance accordingly.
Apple's only real effect in using subscription accounting (enhanced by Apple's simultaneous practice of mixing different types of revenue streams into its reported product categories) is to make it virtually impossible to tell how much money Apple is making on iPhones.
But, who cares?
Folks who try to work out the price at which Apple shares "should" trade like to look at multiples like the PE (price-to-earnings) ratio, and the PEG (price-to-earnings, divided by per-share earnings growth) ratio, to see whether the stock is overpriced or is a bargain -- or to project future prices using plausible reference ratios. Once the true earnings for a quarter becomes a black box, and the growth in the earnings from the prior-year's quarter is rendered meaningless by the use of subscription accounting in a small number of high-growth market segments, both PE and PEG will cease to reflect the price of the company in relation to the company's actual performance.
To get a "real" PE or PEG, one would need to use cash flow numbers and other pieces of the quarterly statements to try to "back into" the real numbers for profit and growth. This, of course, is a risky endeavor: the whole point of the Apple accounting and reporting strategy is to obfuscate internals from detailed inspection by outsiders. While this may make it hard to work out how profitable the Apple Store is, or the iTunes business, it also makes it completely impossible to say much about Apple's PE or PEG going forward, assuming the iPhone is a material part of Apple's business.
If the iPhone isn't a material part of Apple's business then this chicanery is for naught. Assuming the iPhone is significant in terms of sales and profits, though, a future whose profits and cash flows result from an admixture of accounting principles and deferral practices will mean a future in which both PE and PEG ratios will be available either based solely on Apple-engineered accounting fictions (that will understate earnings when there is level or positive earnings growth, and overstate them in periods like last quarter, in which products were refreshed and much of the quarter was spent without stock on the shelves; and consequently will also misstate earnings growth because the earnings are falsely smoothed across eight quarters). To get "real" numbers will require -- let's be honest here -- guesswork that works against the very principle of acquiring solid evidence of stocks' value.
Apple's profits from Macs may be soaring, and the iPhone may be flying off the shelves, but Apple's accounting practices aren't going to help anyone perceive the shares as a buy even if they are. Given the impact of oddball accounting and hyperconservative forward earnings guidance, there's really no way to be sure.
The Upshot
Despite excitement in recent years over Apple's music business and its entry into the phone market, Apple's profits at present come largely from Macs. This is good news: the music business may enjoy more music sales, but the iPod unit growth seems to have come to an end. Yes, last quarter iPod sales showed an increase compared to the year-ago quarter, but it was also a decrease from the prior quarter. It was also impacted by super-low-priced iPod Shuffles, which are a "unit" though the profit in them is scant. Apple needs the business to prevent competitors from establishing a beachhead, and Apple does profit from the things, but it's no iPod Touch. So growing units with Shuffles might be "growth" under some definition, but it's not the kind of profit growth that makes investors weep with joy.
The fact that Mac sales are growing means the platform is doing well -- and Apple, as a major developer for the platform, stands to make good software revenues. The platform's growth is good for Apple also because it's darned near the very same platform that the iPhone runs (and the iPod Touch), leading to some potential network effects. Games made for the iPhone may yield development for the Mac, for example. Developers may try developing multilayer games in which iPhones or iPod Touches are used as remotes to control actions in a multiplayer game run on a Mac, or in the cloud, or tracked by the players' clients in an ad-hoc fashion. Wild things might be in the pipeline.
Maybe.
What we do know is that Apple's iPhone growth is unknown (it's just entering dozens of jurisdictions) and the segment of its business with known recent high growth is about a third of Apple's business. Big sales in low-profit-growth areas -- like the music business has become -- effectively acts as a brake on metrics like PEG.
Apple is likely to turn in some more good Mac numbers over the back-to-school and holiday quarters -- benefiting Apple's per-share metrics immediately -- but virtually anything Apple does in iPhones will impact share price solely because of buzz and future sales anticipation, not near-quarter growth metrics. This isn't because Apple can't make money on phones, but because Apple has chosen to report numbers that won't help observers learn what Apple makes when it sells phones. We'll be left with analyst projections and the backs of our own napkins.
If you've read my piece on analysts and on non-analysts, you will understand why I suggest one stick with the backs of one's own napkins.
Monday, July 28, 2008
Nobody Clicking ID Ads
Just as when nobody clicked Mercedes ads after I lambasted the 2004 E230CDI, nobody's been clicking the anti-evolution ads after I dismantled an anti-evolutionist's position.
Honestly, I have no idea why a person reading my blog would want to click either, except for spite. They'd more likely click a Lexus ad or a link to donate to a scientific society.
Google's supposed to be really smart about this stuff, no?
Honestly, I have no idea why a person reading my blog would want to click either, except for spite. They'd more likely click a Lexus ad or a link to donate to a scientific society.
Google's supposed to be really smart about this stuff, no?
Saturday, July 26, 2008
Congress Grants Self Higher Credit Limit
If my kids had a track record with money like Congress, I'd cut up their checkbooks and credit cards. Congress, however, doesn't have parents to keep it in line. Like a kid free in a candy store after-hours and with little concern about later tummy aches, Congress has gorged itself consuming other people's sweet assets.
To accommodate its undiminishing appetite, Congress has raised its "limit" of the national debt to a fourteen-digit sum.
The fact that the latest reason for the credit limit increase is the housing mortgage debacle doesn't really help us see the cause of it all. Yes, bailing out financial institutions that facilitated bad loan decisions in the context of a scheme to turn a quick buck syndicating loans to buyers unwilling to consider their increasing financial risks might be a foolish idea, and it might be important to prevent loss of confidence in the financial markets, but it's still business as usual in Congress: it's not really their money, so they don't hesitate very long spending it, especially if there's a near-term political angle.
And there always is. One can pick one's evils and rail against spending in Congress -- regardless what political bent you might have; both major parties have Treasury printing-press ink on their fingers. You're a dove? Rail against decades of foreign wars, arms races, occupation expenses in places like Germany which aren't seriously likely to be invaded, and various forts and bases all over the country where it's unlikely the US will be invaded. You're a neo-con? Rail against the public assistance programs that hand food stamps to pimps, pushers, madams, and hookers all over the country while they claim to be unable to find gainful employment or to be too disabled to work. You're a Libertarian? Rail against the federalization of every imaginable criminal offense and the attendant enforcement and penal overhead of a level of domestic regulatory micromanagement that would shock the Constitution's authors to know.
And, regardless what spending most offends you, you get -- as a free bonus -- to gasp in shock at the size of each annual budget that must be committed to interest payments on debt incurred through prior years' overspending. The fact some politicians hope to cast government as more efficient flies in the face of the numbers, unfortunately: the debt keeps rising and there seems to be no effective political force to bring overspending in line with likely future capacity to make interest payments. You can look at various federal budgets at a dedicated federal web site, maintained through funds raised under threat of prison and seizure from citizens living peacefully as they work honest jobs.
In case you're interested just what the debt is, helpful civil servants have made it easy to learn.
If anyone has theories that might explain what forces will lead Congress to turn from the path to national insolvency, I'm keen to hear them. I simply don't see any point of leverage for controlling a Congress perpetually bent on spending its way into re-election.
Thursday, July 24, 2008
Thank God For Bad Rhetoric
I first encountered David Berlinski on Mr. Penick's blog Intelligent Design. In this YouTube video (given here under a different title with some editorialization), Berlinski begins arguing that evolution is criticized by different sorts of people (a join-the-bandwagon argument, humorously opposed by equally silly evidence collected by Project Steve) and then analogizes evolution of whales to the project of re-engineering an automobile into a submarine. Berlinski seems to invite evolution to be imagined as a process controlled by outside designers constrained to build new products out of existing products, a circumstance not in fact found either submarine design or in any articulation of scientifically-based evolutionary theory I have yet to encounter.
To truly appreciate the facetiousness of Berlinski's arguments, one does well to view him in the context of actual opposition -- in a debate on evolutionary theory and its proposed alternatives. Here, Berlinski offers fallacious argument in full view of cameras and onlookers and apparently gets away with it.
He does it beautifully.
This is, of course, why I think it's worth examining: his pitch is attractive to consumers of educational policy argument, and we should give the pitch a review, better to appreciate what it does and does not offer.
When evolutionary proponents held forth certain recorded fossil observations as strong evidence of descent with modification by virtue of their apparent completeness, David Berlinski argued they were insufficient in light of gaps elsewhere in observed fossil specimens:
Even assuming every fossil could or would be observed and recorded, why should anyone imagine phenotypic continuity in the fossil record? Lamarckian inheritance of acquired traits is not the theory under discussion. If one accepts that the mechanism by which ancestors pass traits to offspring is the transfer of genetic material, one would not expect continuity at all. One would expect discrete changes in phenotype to be acquired, associated with discrete changes in genetics. There are, after all, but four nucleic acids. Changes in a creature's inherited genetic structure must represent a discrete change, because the genetic mechanism affords only discrete changes and admits no half-measure: a point on a certain gene is either identical to that in its ancestor, or it is not. And there are only four molecules to fit in the spot in question.[1] Given a mutation, though, the story isn't yet told to mere observers of form: the genetic change may manifest in a phenotypic change, or it may not.
Just to clarify a bit: Brown-haired parents who produce blonde descendants do not do so only by making several successive generations of progeny with increasingly lighter hair. They either have brown-haired children, or they have children who inherit recessive light-hair-encoding genes from both parents -- in which case the offspring's hair will appear sharply discontinuous from that of immediate ancestors. No one is ever surprised that Berlinski's continuous parade of intermediate forms do not appear when unexpected-looking children are born, even if traits cause one to doubt the identity of a child's father (spotting the mother at the time of birth is ordinarily trivial). The same is true if one child is tall and the other short: some kids are just thought to take after one parent's parent, or the like. What of it? Is anyone really surprised all visible changes between do not occur in the context of a continuous progression?
Yet, David Berlinski urges his audience to accept as a test of whether genetic evolution could explain observed speciation whether observed morphological changes among observed fossils are marked by continuity. This is absurd. In light of the discrete nature of the inheritance mechanism, it is in fact contrary to expectation. One would not expect continuity. One would expect isolated points of data -- where specimens were preserved for observation -- and one would expect these isolated points to be different.
And the phenotypic change -- the visible manifestation, if any, of a genetic change -- cannot be continuous if its mechanism is necessarily discrete.
However, discontinuity isn't the only argument Berlinski makes; he tries to make a pitch for unlikeliness, but instead reveals himself not to understand the basic mechanism by which inherited traits are thought to be passed to descendants. Later in the same debate, Berlinski has this exchange:
What kind of test is that? He can keep saying he's unconvinced as long as doing so keeps him in speaking engagements.
And that's the beauty of his pitch. Calm and composed, Berlinski recites his demand for more evidence, only to shrug at whatever is produced. Faced with a fossil record documenting the transition from reptile ancestors to their mammal descendants -- so detailed the controversy is not whether it's the right lineage but where to decide observed fossils should start being labeled mammals -- he sidesteps by asking about the present state of knowledge of spiders' ancestors' fossils. Given an argument about genetics, he insists he never asked about genetics but is interested only in the evolution of phenotypic (he says "morphological") change. So long as he keeps his cool, his interrogators must perforce look like buffoons as they lose their composure in exasperation. Doesn't he know what he's talking about?
Well, apparently not -- but he'll look damned good while he does it. And he need neither propose a theory nor test one to do it.
Testing theories is, in fact, the real way to falsify (and thus correctly reject) them. To be sure, one might test theories in many ways; we are creative creatures and some interesting discoveries have been made using experiments composed of little more than logic. However, the applause-o-meter isn't the kind of test likely to produce consistent results of the sort on which one would want to base public policy. Trying to embarrass, confuse, exasperate, or misrepresent the views of opponents may be a good way to achieve notoriety and get appearance requests on entertainment programs, but it's not worthy of the name science.
If it weren't so easy to spot David Berlinski's rhetorical flaws, just imagine what his argument might support. So, thank God for bad rhetoric. It's a fantastic tip-off to the sort of reasoning that should be immediately discarded in the search for genuine data on which to base one's conclusions.
The most interesting thing about the debate over evolution is the fact that both sides accuse the other of politicizing the debate, and using power rather than evidence to "win" through policy implementation. The primacy of political power over actual data-supported research results isn't confined to evolution, either. We see this also in ecological policy, energy policy, health policy, liability policy -- the problems facing the quest to get good policy (in education, public health, trade, you name it) are beset by folks who care more about being thought right than actually making sure they're right -- people who care more about getting their intended result than getting the right result.
I strongly believe that a lively debate over scientific matters improves the likelihood that bad ideas will be weeded out before they become established as the basis for policies that will only consume resources without useful or intended results. Unfortunately, the sort of public spectacle Berlinski encourages with arguments about people's credentials, about the number of adherents to their point of view, about the number of papers that contain or don't contain the word "evolution" -- these are pure entertainment. They are vacuous of the reasoning one needed to inquire into the evidence about any theory about the world one might hope to test.
This is a serious problem, unfortunately. These entertainment-oriented "rhetorical" tools (argument ad hominem, appeal to authority, etc.) abound in political debates. Debates about scientific matters impacting public policy -- regarding the environment, public health, liability issues -- impact so many aspects of our lives that we should not stand still for analytical incompetence as the matters are deliberated (and supposedly reasoned). The result is that we -- consumers of policy produced by legislatures, employers, benefit plans, and judicial systems -- suffer from policy developed without the benefit of rational consideration.
Despite my strong conviction that ID offers no helpful thesis (if you teach kids "it's magic" it offers them no tool for understanding how to work with the forces -- still operating and yet remaining subject to discovery -- that operate upon and govern the world, and offers no opportunity to improve understanding and interaction with the world -- which in my view one of the fundamental reasons to acquire education), I would rather see legitimate efforts to hone good theories about speciation than merely see destruction by political force of folks whose principal crime is a crackpot theory. We have, on this planet, come to respect some crackpot theories over time (Galileo's theory of the orbit of the Earth about the Sun; Newton's theory that all matter tends to continue in motion until acted upon -- an idea that flew in the face of millennia of observation that things tend to come to a halt when no longer pushed; atomic theory; germ theory; the theory of sterile surgical technique; the dietary theory of the origin of pellagra; it's endless, isn't it?) and it's hard to know from the great sea of crackpot theories which ones will turn out to be supported by evidence once observer can be troubled to collect it. The ecological debate is like this much more than the ID debate, of course, as the ID debate plainly offers a naked theological proposition not subject to test, but my point is that we have to think about the standards by which we will regard theories (regardless of origin) when designing policy potentially impacted by the theories. At present we have in my view a simple political fight, and may be tolerable in the case in which the prevailing theory happens by blind chance to be more correct than its critics, but it's a poor model for consistently developing good policy, and worthless for developing ideal policy.
The most interesting thing about the debate over evolution is the fact that both sides accuse the other of politicizing the debate, and using power rather than evidence to "win" through policy implementation. The primacy of political power over actual data-supported research results isn't confined to evolution, either. In ecological policy, energy policy, health policy, liability policy -- the quest to get good policy (in education, public health, trade, liability, you name it) is beset by folks who care more about being thought right than they do about any activity designed to increase the chance of actually being right -- that is, people who care more about getting their intended result than getting the best available result.
What we need, perhaps, is to develop a general rule for deciding when a theory has sufficient evidence to support expending public resources on it. Any takers for this project?
[1] It's also possible, due to molecular folding issues, that single changes might alter molecular structure in such a way as to prohibit affected sections from being accessed by the molecular mechanisms that enable the creation of proteins that have significant impact in a developing organism. Assuming the mutation isn't fatal, code thus obsoleted might have a substantial and discontinuous impact on the phenotype of those expressing the traits involved. Obsoleted code might thereafter be subject to change or elimination in future generations without much observable impact -- except, of course, that the eliminated code might change macromolecular shapes by folding or other mechanisms in such a way as to alter the likelihood of other segments of the DNA will participate in the kinds of chemical interactions that lead to protein manufacture.
Thus, the right point change might create a folding issue that would have an enormous impact on the genetic material likely to be active in a developing organism. The expected result might be a big change, though it's highly likely such a change would be fatal if it resulted in phenotypic expression. If not, however, the possibility exists that the resultant change would be significant.
[2] In point of fact, since it's possible to have more than one point mutation in a gene, and that particular genes might be subject to repeated mutation over millions of years, I would tend to disagree with Miller that 100,000 is necessarily too high a number of mutations given his assumptions about the number of genes in the creatures at issue.
To truly appreciate the facetiousness of Berlinski's arguments, one does well to view him in the context of actual opposition -- in a debate on evolutionary theory and its proposed alternatives. Here, Berlinski offers fallacious argument in full view of cameras and onlookers and apparently gets away with it.
He does it beautifully.
This is, of course, why I think it's worth examining: his pitch is attractive to consumers of educational policy argument, and we should give the pitch a review, better to appreciate what it does and does not offer.
When evolutionary proponents held forth certain recorded fossil observations as strong evidence of descent with modification by virtue of their apparent completeness, David Berlinski argued they were insufficient in light of gaps elsewhere in observed fossil specimens:
Barry Lynn: Mr. Berlinski, you're never going to be satisfied.This thesis regarding what one should expect evolution to predict in the fossil record underpins Berlinski's argument against evolution as an acceptable explanation for the observable evidence of speciation. When given an opportunity to interrogate opponents in a live debate, he offered this question as an intended show-stopper:
David Berlinski: You're right.
Lynn: Every time we find 16 new things, new fossils, to fill in the so-called fossil record that was missing, you just say, "Find 16 more."
Berlinski: I'll tell you exactly. Here is what Darwinian theory requires: for every significant morphological or physiological feature in a modern species we should have a panoply of intermediate forms that explains how they arrived. We don't have them for some good reasons, but we have nothing like an explanation ...
Berlinski: Would you agree, as almost everyone else affirms, that the overwhelming pattern of the fossil record is sharply discontinuous?While invoking the authority of the crowd he postulates agrees with him, he asks whether phenotypes observed among surviving fossils show the continuity he urges is required to support the theory he doubts. Why, however, should be urge phenotypic continuity as a necessary result of evolution?
Even assuming every fossil could or would be observed and recorded, why should anyone imagine phenotypic continuity in the fossil record? Lamarckian inheritance of acquired traits is not the theory under discussion. If one accepts that the mechanism by which ancestors pass traits to offspring is the transfer of genetic material, one would not expect continuity at all. One would expect discrete changes in phenotype to be acquired, associated with discrete changes in genetics. There are, after all, but four nucleic acids. Changes in a creature's inherited genetic structure must represent a discrete change, because the genetic mechanism affords only discrete changes and admits no half-measure: a point on a certain gene is either identical to that in its ancestor, or it is not. And there are only four molecules to fit in the spot in question.[1] Given a mutation, though, the story isn't yet told to mere observers of form: the genetic change may manifest in a phenotypic change, or it may not.
Just to clarify a bit: Brown-haired parents who produce blonde descendants do not do so only by making several successive generations of progeny with increasingly lighter hair. They either have brown-haired children, or they have children who inherit recessive light-hair-encoding genes from both parents -- in which case the offspring's hair will appear sharply discontinuous from that of immediate ancestors. No one is ever surprised that Berlinski's continuous parade of intermediate forms do not appear when unexpected-looking children are born, even if traits cause one to doubt the identity of a child's father (spotting the mother at the time of birth is ordinarily trivial). The same is true if one child is tall and the other short: some kids are just thought to take after one parent's parent, or the like. What of it? Is anyone really surprised all visible changes between do not occur in the context of a continuous progression?
Yet, David Berlinski urges his audience to accept as a test of whether genetic evolution could explain observed speciation whether observed morphological changes among observed fossils are marked by continuity. This is absurd. In light of the discrete nature of the inheritance mechanism, it is in fact contrary to expectation. One would not expect continuity. One would expect isolated points of data -- where specimens were preserved for observation -- and one would expect these isolated points to be different.
And the phenotypic change -- the visible manifestation, if any, of a genetic change -- cannot be continuous if its mechanism is necessarily discrete.
However, discontinuity isn't the only argument Berlinski makes; he tries to make a pitch for unlikeliness, but instead reveals himself not to understand the basic mechanism by which inherited traits are thought to be passed to descendants. Later in the same debate, Berlinski has this exchange:
Berlinski: Let's turn to the question I so vainly tried to pump an answer from Dr. Scott ... How many morphological changes do think are required to effect the transition those charts of yours [depicting a series of fossils described as ancestors of modern whales] were said to document?Berlinski's idea that one should ask questions about morphological changes rather than genetic changes is also silly, unless he seeks to propose a different mechanism than genetics to explain the transmission of traits from ancestors to descendants. This, of course, hits on the fundamental weakness of David Berlinski's argument: he proposes nothing. He merely shrugs at whatever evidence is offered, and says "yes, but I'm not convinced."
Miller: I will give you a straight answer. And the straight answer is that when you look at two species that are separated by five million years --
Berlinski: Okay.
Miller: -- of geological time the number of changes must be very, very large. However --
Berlinski: Give us a number.
Miller: -- However, recent studies of speciation -- and I'm sorry to pick this specific species, but it's relevant to your question -- in sunflowers have shown conclusively that a new species can be established in terms of a speciation-like isolation mechanism, with as few as ten genetic changes. That's your answer.
Berlinski: I've read the same Science papers you have but those are very close; a dog-like mammal and a whale are very far!
Miller: That's right! And the other end of the room is very far away, and it should not surprise you that I get there with one step at a time, and that's what we're talking.
Berlinski: No matter the number I give you, you will neither assent nor disagree with the number? If I say there are 100,00 morphological changes required to take a dog-like mammal living on the land to a whale --
Miller: Oh, sorry, yes, I will answer that. That's way too high .... The good genetic evidence is that there are about 100,000 genes in a human being. I would best guess there's somewhat fewer in whales. What you're telling me is that to change from one similar organism, an organism that looks more like a whale than any terrestrial animal that has ever lived, to a whale that looks more like a terrestrial animal than any whale has ever lived, would require every gene to change, and sir I --
Berlinski: No! I never talked about genes!
Miller: -- Sir, you asked me for a number and I said, on that basis, a hundred thousand is too high. [2]
What kind of test is that? He can keep saying he's unconvinced as long as doing so keeps him in speaking engagements.
And that's the beauty of his pitch. Calm and composed, Berlinski recites his demand for more evidence, only to shrug at whatever is produced. Faced with a fossil record documenting the transition from reptile ancestors to their mammal descendants -- so detailed the controversy is not whether it's the right lineage but where to decide observed fossils should start being labeled mammals -- he sidesteps by asking about the present state of knowledge of spiders' ancestors' fossils. Given an argument about genetics, he insists he never asked about genetics but is interested only in the evolution of phenotypic (he says "morphological") change. So long as he keeps his cool, his interrogators must perforce look like buffoons as they lose their composure in exasperation. Doesn't he know what he's talking about?
Well, apparently not -- but he'll look damned good while he does it. And he need neither propose a theory nor test one to do it.
Testing theories is, in fact, the real way to falsify (and thus correctly reject) them. To be sure, one might test theories in many ways; we are creative creatures and some interesting discoveries have been made using experiments composed of little more than logic. However, the applause-o-meter isn't the kind of test likely to produce consistent results of the sort on which one would want to base public policy. Trying to embarrass, confuse, exasperate, or misrepresent the views of opponents may be a good way to achieve notoriety and get appearance requests on entertainment programs, but it's not worthy of the name science.
If it weren't so easy to spot David Berlinski's rhetorical flaws, just imagine what his argument might support. So, thank God for bad rhetoric. It's a fantastic tip-off to the sort of reasoning that should be immediately discarded in the search for genuine data on which to base one's conclusions.
The most interesting thing about the debate over evolution is the fact that both sides accuse the other of politicizing the debate, and using power rather than evidence to "win" through policy implementation. The primacy of political power over actual data-supported research results isn't confined to evolution, either. We see this also in ecological policy, energy policy, health policy, liability policy -- the problems facing the quest to get good policy (in education, public health, trade, you name it) are beset by folks who care more about being thought right than actually making sure they're right -- people who care more about getting their intended result than getting the right result.
I strongly believe that a lively debate over scientific matters improves the likelihood that bad ideas will be weeded out before they become established as the basis for policies that will only consume resources without useful or intended results. Unfortunately, the sort of public spectacle Berlinski encourages with arguments about people's credentials, about the number of adherents to their point of view, about the number of papers that contain or don't contain the word "evolution" -- these are pure entertainment. They are vacuous of the reasoning one needed to inquire into the evidence about any theory about the world one might hope to test.
This is a serious problem, unfortunately. These entertainment-oriented "rhetorical" tools (argument ad hominem, appeal to authority, etc.) abound in political debates. Debates about scientific matters impacting public policy -- regarding the environment, public health, liability issues -- impact so many aspects of our lives that we should not stand still for analytical incompetence as the matters are deliberated (and supposedly reasoned). The result is that we -- consumers of policy produced by legislatures, employers, benefit plans, and judicial systems -- suffer from policy developed without the benefit of rational consideration.
Despite my strong conviction that ID offers no helpful thesis (if you teach kids "it's magic" it offers them no tool for understanding how to work with the forces -- still operating and yet remaining subject to discovery -- that operate upon and govern the world, and offers no opportunity to improve understanding and interaction with the world -- which in my view one of the fundamental reasons to acquire education), I would rather see legitimate efforts to hone good theories about speciation than merely see destruction by political force of folks whose principal crime is a crackpot theory. We have, on this planet, come to respect some crackpot theories over time (Galileo's theory of the orbit of the Earth about the Sun; Newton's theory that all matter tends to continue in motion until acted upon -- an idea that flew in the face of millennia of observation that things tend to come to a halt when no longer pushed; atomic theory; germ theory; the theory of sterile surgical technique; the dietary theory of the origin of pellagra; it's endless, isn't it?) and it's hard to know from the great sea of crackpot theories which ones will turn out to be supported by evidence once observer can be troubled to collect it. The ecological debate is like this much more than the ID debate, of course, as the ID debate plainly offers a naked theological proposition not subject to test, but my point is that we have to think about the standards by which we will regard theories (regardless of origin) when designing policy potentially impacted by the theories. At present we have in my view a simple political fight, and may be tolerable in the case in which the prevailing theory happens by blind chance to be more correct than its critics, but it's a poor model for consistently developing good policy, and worthless for developing ideal policy.
The most interesting thing about the debate over evolution is the fact that both sides accuse the other of politicizing the debate, and using power rather than evidence to "win" through policy implementation. The primacy of political power over actual data-supported research results isn't confined to evolution, either. In ecological policy, energy policy, health policy, liability policy -- the quest to get good policy (in education, public health, trade, liability, you name it) is beset by folks who care more about being thought right than they do about any activity designed to increase the chance of actually being right -- that is, people who care more about getting their intended result than getting the best available result.
What we need, perhaps, is to develop a general rule for deciding when a theory has sufficient evidence to support expending public resources on it. Any takers for this project?
[1] It's also possible, due to molecular folding issues, that single changes might alter molecular structure in such a way as to prohibit affected sections from being accessed by the molecular mechanisms that enable the creation of proteins that have significant impact in a developing organism. Assuming the mutation isn't fatal, code thus obsoleted might have a substantial and discontinuous impact on the phenotype of those expressing the traits involved. Obsoleted code might thereafter be subject to change or elimination in future generations without much observable impact -- except, of course, that the eliminated code might change macromolecular shapes by folding or other mechanisms in such a way as to alter the likelihood of other segments of the DNA will participate in the kinds of chemical interactions that lead to protein manufacture.
Thus, the right point change might create a folding issue that would have an enormous impact on the genetic material likely to be active in a developing organism. The expected result might be a big change, though it's highly likely such a change would be fatal if it resulted in phenotypic expression. If not, however, the possibility exists that the resultant change would be significant.
[2] In point of fact, since it's possible to have more than one point mutation in a gene, and that particular genes might be subject to repeated mutation over millions of years, I would tend to disagree with Miller that 100,000 is necessarily too high a number of mutations given his assumptions about the number of genes in the creatures at issue.
Modeling the number of mutations one would expect to be associated with a large speciation project spanning millions of years probably requires more considerable analysis than is plausible off the cuff during a live debate. Whether the number is enormous or not enormous doesn't really address the question of the possibility of descent with modification, it merely invites questions about the likelihood of a particular occurrence and the mechanisms by which different sorts of mutations might be possible.
There are some non-point-mutation sources of genetic alteration, like the so-called "jumping genes", that might be interesting to understand more about before trying to calculate the probability of speciation by descent with modification, or trying to use descent with modification to predict likely future fossil discovery patterns. For an entertaining (and scary) evening, read Doglas Preston's and Lincoln Child's purely-fictional horror-thriller Relic, the bogeyman of which originates with such a modification. While the monster is fictional, the discovery of "jumping genes" is not. A mechanism like the jumping gene might enable in one event to impart the accumulated effect of a whole geological age of mutation through the transposition, intact, of a proven gene from a different species with an evolutionary history as long as a gene's new host. Once isolated from its source species, the new gene would of course be subject to divergent evolution through the (slower and less radical) mechanism of random mutation.
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