Collapse and Flat Technology

The backlash and analysis is beginning.

I should join in since the first of my September statements just arrived showing a 10% drop in a diverse basket of international growth, domestic plodders and domestic technology funds. I have a feeling that is just a pinprick compared with next month...

How could this have happened?

One line of toxic reasoning is that Fannie Mae/Freddie Mac were forced to take-on subprime mortgages by Congress desiring to spread homeownership. But that appears to have been only a small slice of the entire pie since FM/FM only held 40% of the subprime mortgages (and many of those bundles were acquired late in the game in an effort to shore up the broader market).

There is also the moral/economic analytic dimension based on moral hazard theory that the S&L bailouts of the late 80s combined with the hedge fund debacles of recent years gave a sense of cushion on the downside. But I don't tend to think that fund managers look much at worst case downside; upside is where the profit is and moral hazard reasoning is meaningless when golden parachutes will automatically deploy in contractual severance packages.

Instead, the best available analysis (thanks, Ted) divides across two arguments: (1) risk was hidden (information loss/information assymetry) due to the complexity of the security instruments, lack of regulation and restraint, and short-term profit objectives; (2) quants and algorithms screwed up resulting in (1).

The latter argument is summed up in the NY Times: "Beware of geeks bearing formulas" begins the article with a quote from Warren Buffet. This is the same bugbear that attacked in the 80s with automatic trading; deploying technology results in unexpected outcomes.

Perhaps. And perhaps the current election is unduly influenced by the flattening of information resources in the internet-driven world.

But there are inevitable corrections to extremes that result in people losing money or power, and the technology will continue to be pervasive while the users of the technology will get smarter about its impact. On the political front, factcheck.org demonstrates how there is already an evolution from pre-internet rumor-driven political feelings to partisan exploitation of technology channels, and then on to sensible corrections to those partisan swings.

Perhaps. I just hope my son's 529 plan recovers enough in the next 8 years to make it better than just a wash.

Startles and Moral Reasoning

I was startled awake today by the work at University of Nebraska, Lincoln, that showed a potential link between political affiliation and startle response. Partisan Republicans exhibit greater startle response to threats than do partisan Democrats, seemingly supporting the penumbra of classic definitions of "liberal" like this fine Bertrand Russell offering:

The essence of the liberal outlook lies not in what opinions are held but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment. This is the way opinions are held in science, as opposed to the way in which they are held in theology.

There are other results that seemingly bear this out, including Jonathan Haidt's findings that political conservatives simply value tradition and fairness at different levels from liberals. Preservation and stability trumps flexibility and risk.

Other recent interesting finds this week include Pyschiatric Times reporting that adult ADHD sufferers have lower educational and professional outcomes than non-ADHD individuals, even when IQ was held constant:

Adults with ADHD are not achieving the educational and occupational successes that they should be, noted researchers in the Journal of Clinical Psychiatry.

In a case control study, Dr. Joseph Biederman and colleagues looked at 222 adults with and 146 adults without ADHD to determine if educational and occupational functioning in ADHD represented low attainment or underattainment relative to expectations based on intellectual abilities.

In the control group, educational levels were significantly predicted by IQ scores, and, in turn, employment attainment was significantly predicted by educational levels. However, in the ADHD group, patients did not achieve successes as expected based on IQ and educational levels. In fact, only 50% of patients with ADHD were college graduates, yet based on IQs, 84% should have been. Similarly, only 50% achieved semi-professional or major professional levels, although 80% were expected to achieve such based on their education. Most importantly, the researchers noted, ADHD was associated with significantly decreased educational obtainment independent of IQ.

“These findings stress the critical importance of early identification and aggressive treatment of subjects with ADHD,” the researchers concluded. “Appropriate intervention could be highly beneficial in reducing the disparity between ability and attainment for individuals with ADHD.”

The take-away to me continues to support the notion that an evolutionary effective brain that trades-off risk aversion with creativity (and the kinds of transcendant and even randomizing cogitation that is essential to creativity) is in a wide valley of contributory genetic and environmental inputs that are easy to get just slightly wrong, whether we are looking at dysfunctional and excessive behavior among artists, interference with educational success for ADHD sufferers, or enhanced mental capabilities among borderline autistic individuals. The continued maintenance of this diversity of types suggests that the diversity is or was more adaptively useful than the obverse.

Finally, Marc Hauser works the landscape of moral decision making in a recent Newsweek article, once again describing how remarkably uniform a "moral grammar" we seem to share, regardless of ethnic background or political affiliation. In discussions among friends and family on this topic, I always come away with a more complicated picture of the moral dilemmas. How can you guarantee that dropping the fat man onto the railroad tracks will stop the train? How can you be certain additional help will not arrive before cutting the woman out of the cave mouth? How can you be certain that the death row inmate really committed the crime?

In every case, the trade-off is not between what is morally permissible and obligatory, but between the individual's level of certitude and the killing of one or many. I can therefore almost always answer the dilemmas with a refusal to act until the situation is so dire that action is required. Flipping the switch to divert the trolley car is the exceptional case that demonstrates pure utilitarian moral reasoning, but almost all others require persmissibilty to be modified to something like "permissible only given a lose lose situation where there is the strongest signal that other lives may be lost."

That kind of reasoning requires a low startle response, of course.

Gray Laptops and Luminous Clouds

Last Friday my new laptop arrived, throwing me into a dark, confused fog that is only beginning to lift. I know, I know, it should have been a joyous and exciting time for me, but the time commitment needed to make it functional has been somewhere between distracting and onerous.

The machine is impressive enough: a Sony VAIO FW (no, not the recalled model) with 4GB of RAM, 250GB of disk, and a Blu-ray device with HDMI output built-in. Although large, it was a concession to a round of deliberation about how I use computers. My old machine, a Gateway with a 13 inch screen and 1GB of RAM running XP, was simply too slow and lacked sufficient screen real estate for effective software development. With 10 Firefox windows open and a running Eclipse instance, things would start to drag and switching became ponderous. Part way through my deliberations over what to get, I seriously considered a Mac Air, which would have not met my requirements at all but was just so delicious I had to give it consideration. I thought briefly that the Air would work because I have five Linux servers hosted in a high-rise in San Jose, California and could use them remotely for my development needs. Almost--but not quite--due to networking speeds and the need to sometimes work offline. The larger Macs were also considered, although the price points to get serious bang were too steep. In the end, the VAIO was a good trade-off, with the Blu-ray add-on a concession I made to myself because I was not going for the high-end Mac.

And then the work began.

Luckily, I have cultivated a model of continuous holographic reflection of all work-related materials through the use of a source code control system called Subversion (SVN for short). In this model, every document, note, source file, image, etc. I create is checked-in to a repository hosted on one of my servers through an HTTPS connection and WebDAV. Change logs are maintained on the server, and periodic backups are created to other machines in the cluster as well as to a portable USB drive and, soon enough, to Blu-ray writeable media tossed in the trunk of a car.

So the first thing I did was install SVN on my new machine and check out everything to my local hard drive. Nice. But to get everything working took 4 days of software installations and configurations. I configured 10 different POP and IMAP accounts, PHP5, Apache HTTPD, MySQL, PHP5 plugins, Eclipse, Subclipse, ITunes, FabFORCE DB Designer, The GIMP, Microsoft Office, Microsoft Visual Studio 8, Adobe Flash CS3, Cygwin, Inkscape, Firefox, Propel, Xemacs, and many more. I updated everything to the latest versions and got automated and manual patches. I rebooted many times (wasn't that supposed to be fixed back when I worked on Windows 2000?)

All the complexities were smoothed out gradually and incrementally, of course, and I am fairly happy with the screen real estate and performance of the new machine after I disabled most of the security features of Vista. I even picked up the Blu-ray edition of Blade Runner, The Final Cut and ran HDMI to our LCD TV to confirm it all worked (note: no start-up lag unlike some BD console players; also, HDMI and LCD can't be running simultaneously due to HDMI-based DRM policies, which seems like ridiculous overkill).

But I wondered why I can't have a computing universe where the ease of the SVN management of my own resources was replicated in the software installation world? There is a hint of that capability in recent Linux installations that can download and install software packages and their dependencies with a single, short command. Still, configuration and customization remains daunting and can even be exacerbated because the installation process doesn't communicate all the details about where resources go (and the destinations change with some regularity).

Ideally we can imagine a computing cloud where apps are no longer installed locally, just web-based, and all of our configuration settings and password management is remote (and trustable) as well. Hints of that have been emerging with Java Web Start, Adobe AIR, Microsoft Silverlight and, to a lesser degree, Google Chrome. Each is an attempt to move web-based applications away from the limitations of a browser-based model and support more sophisticated interaction models. One company I work with has shown the model can work for specialized enterprise computing needs, so I think there is hope, but the evolution is nevertheless slow and may even require re-imagining the computing platform itself.

I'm guessing I have several dozen more gray laptops, virtual tablet devices, holographic mental interfaces and whatnot to go before everything becomes as neat and easy as I'd like, disconnected from individual platforms and universally available on-demand from some luminous computing cloud where replicants slave away maintaining and upgrading software in those tilt-up buildings in Silicon Valley.

Ignorance and Efficiency

I picked up John Rawls' A Theory of Justice last Friday and digested segments through the weekend. This evening I caught up with 3 Quarks Daily and was connected to a Libertarian critique of both Rawls and other Libertarian efforts to appropriate Rawls for their own devices.

Rawls' core principle is that given a "veil of ignorance" about the capacities, needs and external facts surrounding a decision-making event about resources, an individual will choose a fair distribution of resources since they can't be certain how the resources will ultimately be distributed. By being fair, the decision maker will maximize their own chance of a fair outcome.

This is a game theoretic resolution that parallels ideas like tit-for-tat and reciprocal altruism. It is also used to further justify a model of economic interventionism that assigns fair distribution of resources in a society. Hence the concern of Libertarians, though I see David Gordon's roll-up as an incremental and technical fight within the Libertarian community and about which I have little comment.

Instead, I find it interesting that if we acknowledge the implications of limited knowledge we arrive at inherently specialized models for decision making: in this case implications about the fairness of government policies concerning welfare or health care policy. This closely parallels the veil of ignorance expressed in Quine's notion of "gavagai" where we have to accept the limitations of strong notions of meaning and instead rely on decision procedures to achieve a tentative understanding of the immediate epistemological landscape.

One aspect that the purely philosophical treatment of this problem does not address, however, is how to handle the problem of procedural inefficiency. What do I mean by that? Well, we can take the standard critique of command economies as interfering with efficient allocation of goods and services. We can also take the apparent administrative inefficiencies of modern American health delivery. Both reflect differences in economic theories and have strong historical exemplars, but are polar opposites in delivery and informational mechanisms. If these are inefficient models compared to other examples, is there a principle of ignorance that can guide us in how to apportion resources in the face of these failures? For example, let's say that equality of health care is a good because if we could divide-up health care resources evenly and equitably it would result in that equality. Yet, if the mechanism of achieving equality also costs enough that it compromises other aspects of quality, what is the cost/benefit inflection point that recommends one approach versus another? We could seek to maximize some measure of person health outcomes/dollar using a basket of measures like those measured by the Commonwealth Fund's analyses of the United States' problematic health delivery system, but at what point do we agree that government is the best mechanism for delivery?

I tend to think that a principle of ignorance must remain in effect. Given uncertainty about efficiency in allocation, it is best to create a basket of solutions that try to achieve the same outcome. So, given the massive administrative costs of US health care delivery, we can create mandates for integrated billing and informatics for some domains while supporting tax incentives to improve delivery for other domains. There is then competition among outcomes in the basket of solutions and our ignorance is reduced through small, evolutionary outcomes.

Treasures and Syncretism

Needless to say, late summer is a busy time for me. Between consulting gigs, investment pitches, collaboration planning, and reporting to my investors and government agencies, I rarely have time to give the blogosphere the attention that it needs.

Still, while wandering through the National Gallery while on a quick hop into DC, and just coming down from being mesmerized by the Afghanistan collection, I sought out the Rauschenberg at right. RIP, Robert. With hope, the vaults of the nuclear enterprise in your collage are now just cold warrior memories.

The National Museum of Kabul collection was amazing, though, showing how Alexander's conquest came quickly to be reflected in the artistry. A different era, perhaps, where resistance to foreign occupiers was tempered by an acknowledgment that power is more important than fairness or respect for self-determination.

But truly sad was the gigantic gap in the timeline view of Afghan art and culture from the 1200s up through the discovery of graves during the Soviet occupation. That the analysis and remains stayed in Kabul from the Soviet era contrasts sharply with the later destruction of the Buddhist statues at the hands of the Taliban.

Inspiration and The West

Is the western United States uniquely inspirational for science and art? That old hypothesis of mine came back to me last week as I looked down over the Rio Grande river valley from 10,000 feet up on the Sandia Tramway.

The vast stillness of the valley, the faint X of airport runways, the thin green ribbon of the river and its fragile accompaniment of cottonwoods and salt cedar, the layering of atmosphere as the monsoonal cumulonimbus began to darken—all inspirational in the same way that they were when I was growing up in New Mexico.

But how does that translate into a crossover of science and art? My other data points were that Jaron Lanier grew up about a mile from me (I would later get to know his dad, Ellery, when Ellery was working on his doctorate in psychology), and that Alvy Ray Smith was also a southwesterner who, in turn, grew up just across the New Mexico/Texas border from Jim Clark of Silicon Graphics and Netscape fame. Then there is Robert R. Wilson who was a Manhattan Project physicist, sculptor and Fermilab architect. And recently, when visiting Southern New Mexico, I saw paintings by a bio-informatics professor and former member of The Institute for Genetic Research (J. Craig Ventner’s original effort) hanging in the lobby of a grocery store.

The tramway ride, it turned out, was part of a mini vacation within a vacation combined with work for DOD in the previous several days. It was my first time monitoring an experiment being conducted on live test subjects and it was fascinating, although somewhat tedious. Bookending the work phase with beautiful scenery, meals under evening thunderheads, historical markers along the Jornado del Muerto, and a quick flight back to the Bay Area, was invigorating and inspirational.

Royalty and Pronouns

SCOTUS released the groundbreaking 2nd Amendment decision today in DC v. Heller and, as I parse through early analysis of the linguistics and historical semantics of the majority decision, the use of a sub-form of the so-called "royal we" in the discussion of court decisions strikes me:

In United States v. Miller, 307 U. S. 174, 179 (1939), we explained that...

Now this is interesting in that it paints a picture of unity in the way a court operates. A reasonable alternative might have been:

...the majority decision concluded that...

Instead, Scalia is both time traveling and invoking a certain personification of SCOTUS wherein its often bicameral nature is subordinated to the body as a whole. Unity out of many, indeed.