Positive Feedback is Making the Stock Market Increasingly Unstable

On May 6th 2010, the Dow Jones Industrial Average for the NY Stock Exchange dropped by 1,000 points in a matter a minutes in an event than has become known as the “Flash Crash”. Fortunately for people invested in the market, the Dow regained most of that loss very quickly. This was an unprecedented case, and a warning – how could the stock market change so much so quickly?


It turns out that the flash crash was caused by a single large stock trade, and the series of high frequency computer trades that quickly followed. This should be taken as a very serious warning of how unstable the market has become.

Stock markets are inherently unstable because of positive feedback. Positive feedback is a basic phenomena in control theory in which parts of a system function to increase the size of any change in either the positive or negative direction (negative feedback works to reduce or dampen any change). The market is full of positive feedback loops . Increasing stock prices attract more investors which produces even greater increases in stock prices. Falling stock prices scare away investors which causes even greater reductions in stock prices.

It is a basic principle of control theory that when positive feedback becomes large enough, the system becomes very unstable and begins to experience wild oscillations. The loud squealing you sometimes hear when there is too much feedback in a sound system with a microphone is closely related to this.

Unfortunately, the amount of positive feedback in the stock market is increasing in size and speed each year, being driven mainly by very high speed computer trading. There was a recent story about a new transatlantic cable being laid between England and the US primarily to allow faster computer trading on the NY stock exchange by firms in London. The current cables have a 65 millisecond delay, and the new cables will reduce the delay to under 60 milliseconds. I’ll save the commentary about the tremendous amount of waste in physical resources and intellectual talent that is going into this for another time. For now, I’ll just point to it as an example of the increasing speed and strength of the positive feedback effecting stock markets, bringing them ever closer to the point of wild instability.

Relativity Denial Returns

When I was much younger, I recall that refuting the Theory of Relativity was a favorite pastime of various crackpots and clowns. The Nazis even derided it by referred to it as foolish “jewish science” and obviously inferior to proper “aryan science”. (Einstein was a Jewish German if you didn’t know). In reality, most aspects of Relativity have been experimentally confirmed, some in extreme detail. The current GPS system even has to take into account the effect of relativity in order to achieve the accuracy it does.

In more recent years, the attention of the crackpots seems to have become focused on refuting evolution and more recently global climate change. Have people given up battling against the Theory of Relativity?

Thanks to a recent article on Talking Points Memo, I found out that the answer is a definite “no”. Conservapedia (the alternative to the reality based and thus liberally biased Wikipedia) has a detailed article on Relativity. It’s initial criticism states that “…unlike most of physics, the theories of relativity consist of complex mathematical equations relying on several hypotheses.”

It gets worse. It’s accompanying article Counterexamples to Relativity describes Relativity as “heavily promoted by liberals who like its encouragement of relativism and its tendency to mislead people in how they view the world”. It states that Relativity denies action at a distance, which clearly contradict the miracles that Jesus performed according to the Bible, so Relativity must be wrong.

The closing arguments in the original Conservapedia article include the following whopper of a paragraph:

Some liberal politicians have extrapolated the theory of relativity to metaphorically justify their own political agendas. For example, Democratic presidential candidate Barack Obama helped publish an article by liberal law professor Laurence Tribe to apply the relativistic concept of "curvature of space" to promote a broad legal right to abortion. As of June 2008, over 170 law review articles have cited this liberal application of the theory of relativity to legal arguments. Applications of the theory of relativity to change morality have also been common. Moreover, there is an unmistakable effort to censor or ostracize criticism of relativity.

Relativity denialism appears to be more alive and well than I thought, and the battle against science continues. By the way, the main contributor to the Conservapedia articles on Relativity was Andy Schlafly, son of the right wing activist Phylis Schlafly.

BP's "Top Kill" Effort Fails - This Could Be Big

This could be really big.

I just heard the word that BP's best hope at stopping the oil flow, the "Top Kill" method, has failed. I wonder about the long term consequences now. I think it is misleading to think of this as a "spill", it's way beyond that. There is now a real possibility that the flow of oil could continue for years until most of the oil in that entire oil field has been emptied out into the gulf. People who have depended on catching fish and shrimp for generations in that area now say it is unlikely that they will be able to go back and resume their livelihoods at anytime during the rest of their lives. These are some of the same people hit hard by Katrina. And this is predicted to be another bad year for hurricanes. My heart goes out to these people.

What to do about BP? Traditional fines don't seem adequate in this case. I would support a permanent ban on BP doing any more offshore drilling off the coast of the U.S. They have demonstrated that they are not capable of doing this safely. That would make the rest of the industry think more seriously about safety. What if in the end it becomes apparent that no "for profit" corporation can drill for oil with adequate safety in water that is a mile deep or more? That is a real possibility that we must be prepared to accept.

There is an argument that BP is not a "bad company", it is just doing what all companies are chartered to do under the current system - maximize their short term profits. In this argument, there are no bad or good companies, there are just companies that do what companies are designed to do. Don't expect anything else to happen when we have set up the system to produce these results.

What is the long term impact of this? Instead of thinking about this as "Obama's Katrina", perhaps it is better to think about it as "Obama's 9/11". It's an unexpected event that could end up defining his presidency and shaping his policy focus in unexpected ways. This could have implications to national policy related to energy, the environment, and possibly to the way corporations are chartered and regulated. This could be big.

The End of Democracy As We Know It? - Part 1

I’ve spent some time reading and thinking about the recent Supreme Court Decision involving Citizens United. I’m not one to typically give in to rash statements, but this does seem to put in place the mechanism for the almost complete control of our government by wealthy corporations. We already have a situation where Rupert Murdoch and his FOX network effectively set much of the strategy for the Republican Party. Alumni from Goldman Sachs have a dominating influence on Obama’s financial policy. And both parties are heavily influenced by corporate donations and lobbyist. This ruling enables the takeover to be complete.

The first shoe to drop was the end of the Fairness Doctrine. This Supreme Court decision was the other shoe. I don’t claim that corporations will completely decide who will win elections. Rather, in practice they will have more like a veto power over candidates they don’t like thanks to the ability to unleash tremendous negative advertising campaigns, and a similar veto power over legislation they don’t like. Special interest will now be in a position to effectively prevent any change that will negatively impact them, regardless of the long term benefits to society as a whole. The long term impacts of this are quite substantial as we enter a period of rapid changes in the global society.

If that isn’t troubling enough, consider this: The ruling apparently applies to foreign based corporations too. There’s some uncertainty over this, but my understanding is that foreign corporations can now spend unlimited amounts of money to influence American elections just like US based corporations.

What can be done to fix this situation? There is a lot of focus on creating a new constitutional amendment that will explicitly state that corporations are not people and do not share in the same rights as people. I fear this is a misguided effort to focus on. First, it will take many years and has only a small chance of actually passing in the end. More importantly though, I don’t think it will actually cause the changes people are hoping for. It is my understanding that the Supreme Court decision is not based on the view that corporations are people. Instead, it is based on the argument that people have the right to organize in groups and speak out on political issues, whether those groups are non-profit organizations, labor unions, or corporations.

The real problem here, and the one we need to address to fix things, is that concentrations of money can have a significant influence on our government process. The idea that very wealthy individuals can exercise excessive influence on our government is also a problem that tends to get overlooked. I’ll give some thoughts on possible ways to address this in my next post.

Economic Recovery or Continued Addiction?

I recently came across a commentary written by Brian McLaren about the concept of economic recovery. He brings up some interesting questions about what we mean by the term “recovery”. When a drug addict hits rock bottom and starts on the path to recovery, we usually mean that this person is reforming their ways, learning from their past mistakes and moving forward to a better life without their former addiction. We don’t mean that they are trying to reestablish their more tolerable state of drug dependency similar to what they were experiencing a few months before hitting rock bottom.

Yet when we talk about economic recovery, there is disappointingly little talk in the national media about learning from our past mistakes and moving forward to a better life without the former addiction to the illusory phantom wealth from complex risky financial mechanisms, excessive debt,and unsustainable speculative bubbles. Instead, the goal of economic recovery seems to be to return to how things were a few years ago before the bubble bursts, plus or minus a few minor regulation changes. It has become a call to get back to our former addictive economic high without addressing the root problems with our addictions, with the hope that we won’t end up back in the gutter again next time. Brian McLaren goes on to discuss some of the addictions we need to face and recover from: material greed, weapons, carbon fuels, quick and easy answers, etc. This struck me as an interesting way to frame these discussions in the national debate.

A Green 2010 Conference and the Status of the Green Economy

I recently attended the “Green 2010” conference at the Cary Institute of Ecosystem Studies in Millbrook NY. It was the latest in a series of regular conferences dealing with the status of the “Green Economy” in upstate New York. The conference as a whole shed some interesting light on the current status of green jobs, education, and attitudes that probably apply across much of the nation.

The first observation was that the conference was well attended – a sellout crowd of about 150 people by my estimate. The crowd consisted of a wide spectrum of ages, from high school students to senior citizens. Certainly there was a strong interest in the green economy, which should not come as a surprise given the current state of the rest of the economy in upstate NY. There were several non-profit organizations trying their best to bring green jobs, and solar technology in particular, into the area. Given that there are many groups trying to do the same thing all across the country, you have to wonder how much any given area can rely on this as a big driver of future growth in their local economy. While the dream of becoming a national center for green technology is not realistic in most cases, it can be argued that the transformation to a non-carbon economy will have such a pervasive impact on society in the next few decades that there will be plenty of work to go around. The goal is to not be left out entirely.

There was a good deal of progress in education and training for green technology jobs in the community colleges and local trade school institutions. Unfortunately, even the people running these programs had to admit that at this time there were very few jobs available for the graduates of such programs. The region already has more people trained to install solar panels than the job market can support.

Clearly the most discouraging comments had to do with environmental education in general. Everyone was used to hearing that students in America were falling well behind other advanced countries in terms of math and science education. I terms of knowledge about the environment though, we are falling behind many thirds world countries too. I’m talking about very basic knowledge here – such as explaining the steps necessary for water in the ocean to end up falling as rain on the land. The majority of American grade school students could not answer this properly. Worse yet, the racial gap within American society on this topic seemed to be even bigger than with other subjects. White and Asian groups did comparatively well, but black and Hispanic groups really struggled. This racial difference even showed up in graduate studies. Based on the lack of minorities getting PhDs in environmental studies, this seemed to be one of the most segregated of all major subjects in our universities. Indeed, I took a quick informal look around at the conference attendees and found two African Americans, no Hispanics, and no Asians. The excellent work of Van Jones notwithstanding, environmental issues often seem to remain a narrow and almost cliquish concern of the white middle and upper classes. There is much work to been done.

What Are Our New Big Mega-Projects?

A recent article in the NY times commented on the lack of any big mega-projects being undertaken. The article points out that in the past we had “The Erie Canal and the transcontinental railroad.. the Hoover Dam, the Interstate System, the subway networks in San Francisco and Washington, the Big Dig in Boston ... and the list abruptly stops. For the first time in memory, the nation has no outsize public works project under way.” Such big projects, the article suggests, can have transformative effects and create significant long term improvement for the economy.

Ok, an interesting observation. But do we really have no big mega-projects under development at this time? Or are the current really big projects just somewhat different than those of the past? I would argue that the biggest development project for the last decade was the build-out of the Internet. This required enormous investments in effort and money, generated significant wealth, and is having an incredibly transformative effect on our economy and our society. I will argue that the long term transformative impact of the Internet and related technologies will transform society much greater than the transcontinental railroad or the interstate highway system. It was government funded, at least at the beginning, though private funds have taken over the still on-going build-out. The current focus now seems to be shifting to the phase of integrating the rest of our communication and business structures into the Internet infrastructure. This is also different form the past mega-projects in that it is global in scope.

What other major mega-projects are now underway? It could be argued that transforming our health care system is one such project. This also suggests another big scientific mega-project that we are in the middle of – understanding and learning how to manipulate genomes. Understanding how DNA operates and controls living organisms, and how to manipulate it is certainly a major effort that will eventually have long lasting economic and social transformative effects on our society.

If we want to focus on more physical projects though, the biggest mega-project we have just started is clearly the transformation of our energy system away from a fossil fuel based system to one that is based on less carbon intensive and more renewable fuels and overall greatly improved efficiency. Government has an important role to play in this, but like the Internet, private funding will eventually have to provide most of the funding. I’d like to think of this as the great physical mega-project of the next 20 years for our society. Its effect on the economy and our society are likely to be profound. It's something we can rally around that should be generating much more enthusiasm and pride than a comparatively limited project like the transcontinental railroad ever could.

Difference Between Capitalism and Free Markets

When people discuss the characteristics and possible reforms of capitalism and free markets, they have a tendency to use these two terms interchangeably. In reality the two are quite different things. Let me explain.

Capitalism is defined as a system of ownership of the means of production, specifically the non-labor means of production, which includes factories, tools, equipment, etc. In a capitalistic organization, these means of production are privately owned. Labor is paid a wage for their efforts, and any profits go to the owners of the capital.

A free market system is simply defined as one in which everyone is able to freely sell their goods and services with prices determined by supply and demand.

It is possible to have capitalism without a free market in specific situations. Examples include organizations that have an effective monopoly on a market – they can prevent competition from entering the market and can set prices to maximize their own profits instead of being restricted by supply and demand. Another example is the awarding of government no-bid contracts to capitalistic organizations.

It is also possible to have a free market that does not involve capitalism. Examples include the traditional farmers market or co-ops competing with each other. In both cases, the clear distinction between owners and workers that is characteristic of capitalism is gone, yet there is still a free market competition that sets prices based on supply and demand.

It’s important to keep these distinctions in mind when discussing future economic possibilities. It is possible to reform some of the major problems of capitalism while maintaining the benefits of a healthy free market, and vice versa.

Placing Palin's Book in the Appropriate Section

A friend of mine "went Rogue" in a local book store recently, and as a public service decided to re-shelve Sarah Palin's book into what they thought was the more appropriate fiction section. I wonder if this is a fad that has been happening (or will now start happening) elsewhere around the country?

While not exactly consistent with supporting more rational civil discussions, I can see such acts happening as the frustration grows within the progressive community. Think of it as a very modest little left wing version of the "tea party" movement.

Living In Ordinary Times?

I attended Catholic Mass while visiting family members this weekend, and I was intrigued by the following statement from the pulpit: “this is the 33rd Sunday in ordinary time”. The phrase ordinary time as used here refers to a particular segment of the church calendar year (i.e. It’s not advent, lent, etc.). But it raised the bigger question about whether we’re living in "ordinary times” in a larger historical sense. Would we classify the last 6 months as an extraordinary time in history, or as more of an unremarkable ordinary time? Have we lived through a temporary lull this summer between recent storms of change, and what will come next? Perhaps. How would you classify the last half of this decade?

The people I discussed this with typically thought we were living in extraordinary times in general, and have been doing so for their entire life. That led to the humorous observation that we often believe an extraordinary period of human history began roughly at the time of our own birth. Such is human nature.

This is characteristic of exponential rates of change. The most recent period of history will always seem to be experiencing much more substantial rates of change than previous times, and will therefore seem to be an extraordinary time. Make no mistake about it; we are living in a time of exponential growth, exponential rates of scientific and technological development, and perhaps exponential rates of social change as well. We are living in an extraordinary time. There is an important aspect of exponential curves that we cannot forget though. If they continue, the rate of change in the coming decades will be even greater than it is today. There is every reason to believe that this in fact will happen. So while we are living in extraordinary times compared to previous history, it is likely that the historical impact of the coming decades will be even more significant than what we’re experiencing now.

Signs of Changes in Economic Attitudes?

During a recent meeting with some friends, the topic of discussion turned to economic reform. We discussed our disappointment that very little has happened in terms of economic reforms as a result of this past year's economic meltdown. In fact, some of us were wondering if this is a topic that we could legitimately express anger over. Fortunately, I'm beginning to see some indication that the momentum is finally starting to build for economic reform.

Yesterday morning I received an invitation to a major conference on Building the New Economy in Washington DC sponsored by The Campaign for America's Future. As appropriate for a conference dealing with economic transformation, registration is completely free and open to everyone. I plan to go.

While an important aspect of economic reform deals with changes to regulations, the other important aspect deals with changes to our cultural attitudes and behavior. I recently came across two optimistic examples of such changes in Good Magazine. The first is a student movement for MBAs at the Harvard Business School to take a pledge to "serve the greater good" and to "act with utmost integrity". More than 50% of the graduating class has taken the oath. The second interesting bit of news that caught my eye was a project at Google that involved employees submitting ideas to change the world and help as many people as possible. Five winning ideas will be selected and Google will spend $10 million to make them real. Are these an indication of a larger transformation happening in our society? We can hope so.

On The Future of American Football

I caught part of a football game on TV for the first time this year. I didn't personally know anybody on either team, and the outcome didn't impact my personal life one way or another, so I had no interest in who won the game.

Now that I've demonstrated that I'm not a good example of the proper American sports fan, let me mention why I find football very disappointing. It has the potential to enable a great deal of creativity and excitement in the games, with both teams regularly scoring above 75 points. Instead, it often seems that it has advanced only marginally from the days of Knute Rockne and the Fighting Irish in the 1920's. If coaches were REALLY serious about exploring some innovative ways to win, this is what I would expect to see in American football:

1) The last play of the first half should ALWAYS be a long pass into the endzone, or a field goal attempt. The only excuse for not doing this is sheer laziness. There are currently too many overpaid lazy coaches in the NFL for my taste.

2) A ball carrier should never run out of bounds, or allow himself to be easily pushed out of bounds, unless he is trying to stop the clock.

3) A center should always hike the ball when the defense jumps offsides. This should be basic fundamentals that every team does starting in high school.

4) Teams should go for it more on 4th down.

5) All punts should be towards a sideline. If someone on the opposing team caches a punt and starts to run it back, the punter failed his job.

6) No huddle offense with a quick snap and a shot-gun formation should be the norm. This business of giving the defense time to check out the offensive formation and get organized is just silly.

7) Rugby players have clearly shown that you can do multiple laterals per play reliably after some practice. It should be common in football to see multiple laterals per play.

8) Runs into the middle of the line should be very rare. Why do coaches still insist on running plays into where the greatest concentration of defensive players are? Makes no sense to me.

9) Most plays should be designed to score a touchdown when properly executed. If a play is only designed to get 5-10 yards, it seems that the coaching staff only did half their planning job.

10) Get rid of the damn nets behind the goal posts. Let fans keep any balls that go into the stands. It means a lot to the fans with the worst seats in the stadium, and trying to claim that it's too expensive for NFL teams to loose a dozen or so footballs per game is basically treating the fans like they're complete idiots who will believe absolutely any lie you tell them.

11) Fans need to form unions to prevent team and stadium owners from treating them as poorly as they do. There's no excuse for owners to abuse loyal fans so badly, or to tolerate lazy coaching staffs that refuse to bring the game into the 21st century, and there's no excuse for fans to accept this. When I see the first attempt by sports fans to form their own union, then maybe I'll regain some interest in football again.

That's my story and I'm sticking to it :-)
Mike Ignatowski

Sports News from Boston

One of the side benefits of our family’s annual vacation in Maine is that we end up getting a copy of the Boston Globe to read at the cottage each morning. One of the big stories out of Boston this past week is that two of their top baseball players, Manny Ramírez and David Ortiz, had tested positive for using illegal performance enhancing drugs in 2003. This was shortly before their big 2004 season when they won the world series for the first time since the pre-Babe Ruth period.

Perhaps the only surprising thing about this story is that people were surprised by it. Historically, baseball players have had their homerun production start to fall off mid-career. When their homerun count suddenly shoots up in mid-career, I’m afraid that the introduction of performance enhancing drugs has to be the standard assumption. The benefits of improved drugs, and the financial incentive to use them continue to grow each year. Presumably so does the ability to hide them from various tests. Many experts claim that it will someday be revealed that the past Olympics in Beijing were the first ones in which genetically modified athletes competed. Tiger Woods had Lasik eye surgery a few years ago which improved his eye sight to better than 20/20. Is he the first surgically modified professional golfer?

The logical conclusion of this trend, as I stated before, is the end of many professional sports as we know them within the coming decade. They will still be around in some form – they are a big business. But athletes who have not been chemically, genetically, or surgically modified are becoming ever more uncompetitive.

By the way, the initial reaction by the Boston Red Sox to the latest drug scandal was - to fire two security guards. I can’t make this stuff up.

Effects of Technology on the Events in Iran

A very interesting question that many people are watching closely "How will the internet and modern technology change the course of what happens in Iran?" More and more videos of the street marches and the violence are appearing on YouTube. One of the most famous has become the video of a young girl named "Neda" dying on the street after being shot by a sniper. This generates anger in the population, not fear. Modern communication technology is so far being used more successfully to organize than to control.

As Radley Balko writes on his blog:

Government has been murdering its own citizens for as long as we’ve had government, particularly when the people begin to pose a threat to those in power. The difference is that now, the entire world is watching. Iran’s brutality is on display for everyone to see, archived for history, in a way that we didn’t have even in Tiananmen, and haven’t had for most of human history. That, at least, is progress.

Has the methodology of political movements around the world undergone a major change?

Rapid Change in the Auto Industry (of all places)

Change is accelerating. The automobile industry, which generally does not come to mind when you think about rapid change, is suddenly at the forefront of a revolution. In a short Newsweek article last month about the auto industry, it was predicted that “We are on the cusp of a period of technical innovation like the automobile industry has never seen... There will be more change in the next five to 10 years than there was in the last 100.” On the technical front, much of that discussion had to do with the change to an all electric drive chain, with a small gasoline engine just to recharge the battery. The fuel efficiency for such cars can approach 100 mpg. Interestingly, the Prius-style gas/electric hybrid, which is at the cutting edge of technology today, will be nothing more than a temporary phase soon to become obsolete according to this prediction.

This past Monday, another dramatic change rocked the auto world. I don't think most people fully appreciated how significant this event was, unless perhaps you live in the Detroit area. The 100+ year old General Motors company officially went bankrupt. The relatively new dotcom upstart Cisco replaces GM it in the Dow Jones Industrial Average. Welcome to the 21st century.

The IBM / Syracuse / NY State Green Data Center, and the Interesting Trends it Illustrates

On May 29th, IBM Syracuse University, and New York State announced an agreement to build a new energy efficient computer center on the Syracuse University Campus. Through an interesting combination of techniques, this center will use about 50% less power than typical computer data centers, making it one of the most efficient computer centers in the world. Some of the key techniques used include:

• On-site electrical co-generation system that will use natural gas-fueled microturbine engines to generate all electricity for the center and provide cooling for the computer servers.
  
• IBM's latest energy-efficient computers
  
• Use of chilled water coolers to directly remove heat from the computers much more efficiently than trying to chill the entire computer data center.
  
• Using waste heat from the electrical generation system to provide heat and cooling for both the data center and nearby buildings.
  

Beyond the technical issues, there are some interesting observations about the future trends that this illustrates.

(1) It is yet another example of the significant improvements in efficiency that are possible in our systems. Typical of such examples, it requires a “systems approach” that focuses on efficiency from the very beginning of the design.

(2) It is yet another example of how innovation is often best produced by a hybrid combination of corporate / educational / government organizations working together. (The original development of the Internet itself is another example of such such an alliance.) Reliance on a complete “free market” approach to innovation is based more on promoting an ideology than examining the actual historical data about what works the best.

(3) This is an interesting result in terms of the benefits of distributed power generation. Power generation systems must be big enough to achieve reasonable economies of scale. Yet they should be local enough so that power distribution losses are minimized, and so that the “waste heat” produced can be utilized for other purposes in the community.

(4) Timing - the announcement was made in May 2009, and the data center is expected to be completed by the end of 2009. This is an interesting result in terms of “right sizing” projects. Very large power generation stations can take many years to complete and bring on line. Nuclear power plants can often take 10-12 years. The ability to bring new technology and techniques on line very quickly is a major reason why modest sized projects are likely to be a major trend. Since technology change is accelerating, the ability to exploit new technology quickly will become an increasingly important factor.

Making Higher Education Sustainable

Among the many things I expect to see undergo a significant change in the next decade or so is higher education. Our universities are actually based on a model that was developed in the middle ages. At that time, any subject being studied would undergo little change during your lifetime. Considering your education "complete" after a few years of intense study was realistic in the middle ages, but it's far from realistic now.

A university education was once considered common only for people from very well off families. Now it's a necessity to achieve even a middle class lifestyle. Yet the costs are often still structured to be unaffordable to all but those students from wealthy families. And the costs continue to rise at an alarming rate.

Something has to change - the current situation is unsustainable. Education must be restructured to be available throughout an adult's life at affordable rates. Like it or not, technology will need to have an impact on the way classes are taught in order to achieve this.

I'm glad to report that this change is actually starting to happen. The Christian Science Monitor has a wonderful article on the movement to OpenCourseWare, universities putting their course content online for free. The movement started in 2003 when MIT put 500 courses online. Now they have over 1800 online courses, all available for free (You still need to pay ~$45,000 a year to get an official MIT degree though). More than 200 colleges and universities have followed suite and offer course contents online. These are early developments that will likely radically change higher education by the time this finishes playing out.

First Impressions of WolframAlpha

WolframAlpha came finally came online a few days ago (you can try it at www.wolframalpha.com). It is touted by some as the most serious competitor for Google, and possibly its eventual replacement. The major advancement in WolframAlpha is it's ability to actually gather data available on the web and answer questions, as opposed to just supplying you with links that may contain the answer to your questions. Of course if this is successful, nobody expects Google to sit passively by and loose market share. Google will undoubtedly come out with its own capabilities similar to WolframAlpha in the near future. We are on the verge of the next major revolution in making the knowledge on the web more accessible and useful to people, spurred on by the competition between WolframAlpha and Google.

I spent some time test driving WolframAlpha recently, and here are my first impressions.

My first test was to try to get a table of life expectancy listed by nation. I typed in “life expectancy by nation” and hit enter. WolframAlpha gave me a list of possible data, and the very first item was exactly the type of table I was looking for. Score one for WolframAlpha. (The United States was number 50 on the rankings by the way, in spite of the fact that we spend far more than any other nation on health care. Those of you involved in promoting health care reform probably already knew that.) Another great feature at the bottom of the data was a little link that points you to the source of the information. This is actually a critical feature for anyone expecting to use WolframAlpha for serious research. Score two for WolframAlpha.

As a second test, I tried to get a table of the carbon footprint of each nation. I typed in “carbon footprint by nation” and the response was “WolframAlpha isn't sure what to do with your input.” I tried to simplify the query and just typed in “carbon footprint”, but still got the same response. Oh my, it seems there is a lot of work to do still.

To be fair, WolframAlpha is described as “an ambitious, long-term intellectual endeavor that we intend will deliver increasing capabilities over the years and decades to come.” Clearly this is a major advance over the current Google search capabilities which will eventually change the way we use the web to gather data, but it is clearly also early in a long development process.

Unfortunately the creator of WolframAlpha, Stephen Wolfram, has left us all with a difficult problem to wrestle with. Somehow the phrase “I'm going to WolframAlpha that” just doesn't quite work. They will have to come up with a better verb if this is to enter the popular lexicon and replace "googling a question".

Swine Flue Conspiracy Theories and Their Consequences

And so the conspiracy theories about the swine flu begin. One example is this YouTube video http://www.youtube.com/watch?v=GBeKB7aKzOs that claims at a minimum that the company Novavax, which claims it could produce a swine flu vaccine in as little as 12 weeks, is hyping the dangers of the swine flu just to boost its stock. The stock (NVAX) has risen by over 300% in the past week.

But the YouTube video goes on to make the charge that people associated with the company deliberately created the swine flu through genetic engineer and released it for personal profit. In cases like this I prefer to stick with the old maxim “extraordinary claims require extraordinary evidence”. It has served me well in the past. Such evidence is certainly not available at this time. Nevertheless, this conspiracy theory will no doubt spread wider than the actual flu before this is over.

It does raise an interesting question though. With so many companies involved in genetic engineering, it is certainly possible that the first mass epidemic from a genetically engineered disease won't come from a terrorist group pursuing some political cause, it may instead come from a company pursuing financial gain. Is this really such an extraordinary claim? Given the carnage caused to the world economy by a small group of executives pursuing large personal financial gains, I find it hard to dismiss such an idea by simply waving your hands and saying “nobody would act that irresponsibly”. If anything, it could be argued that the extraordinary claim is that this would never happen given the tremendous financial windfall that could occur to any company with the right vaccine or antibiotic to combat a major outbreak. Perhaps this episode will be the beginning of a wake-up call about the need to bring genetic engineering under some stricter controls, and to admit that it is just one of those things that is not appropriate for open pursuit in a lightly regulated free market.

Tim Berners-Lee on the Future of the Web

I just watched a TED Talk by Tim Burners-Lee, the creator of the World Wide Web. His main point was that the current Web was mainly a collection of linked documents, and what we need to do next is transform it into a collection of linked data. Once a major portion of our data becomes freely available on the web, it will start generating major social benefits.

Tim mentions two items that resonated with me. First, ALL government data should be freely available on the Web. After all, we paid for it, and we should rightly claim free access to it. (There may be some exceptions, such as personal data of government employees, but this is a relatively small portion of the government data). It seems to me that in a truly free open society, the "Freedom of Information" act should become almost obsolete since everything that it would have been used for in the past is now readily available. That would be a wonderful principle for the Obama administration to follow.

The second issue is medical data. Three years ago I was diagnosed with prostate cancer. We caught it early and now I'm cured, but it is a much more common problem than many people realize. One thing that really surprised me is that I was not asked to fill out any survey on my lifestyle or exposure to various chemicals. It would seem to me that such detailed background data should be collected about everyone who has a major disease and made available to researchers looking for common links. This is just one example of data that should be on the web. In this case it has potential for major health benefits if links can be established to various things that increase the risk of a disease.

There are two interesting items that Tim Berners-Lee did not mention about the future of the web. First, it is establishing new business models. Old ones, such as newspapers and the music recording industry are having to make substantial changes to survive. Significant new developments, specifically the open source software movement and Wikipedia could not have been predicted by any business model analysis before they happened. Yet they are becoming increasingly important.

The second unforeseen development is the use of the web for organizing mass social movements. Moveon.org and various other political movements are examples of this. Allowing groups of people to come together and organize in ways that were previously impractical may be one of the most profound impacts of the web in the long run.

The Key Assets of Our Society

Dmitry Orlov wrote an interesting comparison of how much better the former USSR was prepared for a financial collapse than the current USA is. In short, much of the USSR was already functioning closer to a subsistence economy, with people making due with what could be supplied locally instead of relying almost completely on a complex interconnected national economy. Additionally, the USSR had large oil supplies that could be exported to relatively rich and financially stable neighboring countries in order to help finance its recovery recovery. As the USA undergoes a financial crisis, it doesn't have that luxury of unaffected rich stable neighboring economies to help pull it out.

While this report paints a rather pessimistic picture, I think the author misses some fundamental differences between the former USSR and the current USA. First and foremost, we have a collection of what is probably the largest, most creative, best educated, and most motivated group of civic and entrepreneurial leaders that ever existed. We have a culture that enables and even encourages a massive grass roots campaign to rebuild a new and revitalized economy. We have communications systems that enables rapid organizing and sharing of information on a level that is order of magnitudes greater than anything we had in the past . Nothing like this ever existed in the former USSR, or it could be argued anywhere else at any other time in history. Finally, though our leadership in Washington cannot act as a messiah to deliver us from all our problems, we are fortunate at this critical time to have some of the best new leadership for responding to these new problems that we've had in many decades.

Van Jones, a Yale educated lawyer and social activists, has been leading a grass roots drive to spur an economic rebuilding based on environmentally sustainable green jobs for many years now. When he was first asked if there would be a role for him in the Obama administration, he just laughed at the absurdity of the thought of himself being in a formal government position. Earlier this month he was officially appointed as a Special Advisor at the White House Council on Environmental Quality. This is an example of why there is some long term hope for building a new revitalized economy despite the prevailing short term pessimism.

The Great Disruption is Here

In what could be a landmark description of what is happening, Thomas Friedman wrote a fascinating column on March 7th in which he speculates on the question:

What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

While this is certainly not a new theme, to see it so well expressed in a national newspaper op-ed represents a major step forward in our culture's attitude about the current situation in our society. It may be a key part of a growing rallying cry around the need for dramatic social change. He goes on to quote a number of experts, including Paul Gilding, an Australian environmental business expert, who coined a term for this period as “The Great Disruption.”

Thomas Friedman finishes by saying that both he and Paul Gilding are somewhat optimistic about our future given the changes that are starting to happen. As Gilding says, “When we look back, 2008 will be a momentous year in human history.” I'll add that in terms of a great transformation starting in 2008, let's not forget the single biggest transformative event of all that year, the November elections.

Pew Research on Evolution and Religion

The Pew Research Center's Forum on Religion & Public Life recently published an interesting article on the public attitudes towards evolution among various religious groups. Interestingly, the religion with the greatest acceptance of evolution was Buddhism at 81%. Unitarian Universalism was not listed in the groups of religions, but I suspect they may be even higher because of the emphasis they put on science and reason. The lowest group listed? Jehovah's Witnesses at 8%. The article also listed a number of other useful links to related resources.

People often ask "Is evolution a theory or a fact?" It's confusing because it's actually both. It is considered to be an observed fact from the fossil evidence that life started out as a comparatively small number of simpler forms, and over time gradually evolved into a larger number of forms including some of which are very complex. There have now been a number of cases where the evolution of new species in nature have actually been observed over the course of many decades.

However, the explanation of how this happens, natural selection operating on random genetic changes, is the theory part of evolution. This theory is very well supported by the evidence and is about as well confirmed as the theory of gravity. Yet it continues to generate a great deal of conflict in the public sector because of it's theological implications. Unfortunately, I don't see this conflict being reduced anytime in the near future. According to the Pew research, only 48% of the US population accepts evolution as the most likely explanation of the origins of life on earth. Other polls suggest that this number has actually been declining over the last two decades or so. This is an indication of how much trouble people will have adjusting to the rapidly changing understanding of the world brought on by the exponential growth in scientific knowledge and technology.

Are we really any poorer now? - part 2

In my previous append, I talked about how relationships and trust are an important part of the economy. These are things of value - economic assets just as real as factories and tools. Many of these relationships are formalized in our financial institutions, and their breakdown is directly related to the breakdown of these relationships in our economy.

Another vitally important asset in society is the attitude of people. Do people have confidence in their ability, and confidence that putting in some hard work will pay off? Or is a sense of despair and hopelessness prevalent? The general public attitude can have a tremendous impact on economic well being and growth. But attitude is something that must be built up over time. When it is damaged, as it seems to be now, it takes time to mend.

I don't want to leave this topic with the implication that our society and economy are falling apart. That would be falling into the trap of viewing all value in monetary terms. In reality many of the other components of our society are still doing quite well. I'm not aware of any data showing a significant decline in relationships between families and friends, or in the strength of churches or other civic organizations. Non-profit donations are down, and that will hurt many of them, but for the most part our non-profit infrastructure continues to do good work. Our health care and education sectors are holding together and most people still have access to them. Looking around where I live, I still have the impression that our communities are still strong and providing many of the non-monetary benefits that they were doing last time this year. If anything, for many people the hope and trust in government has increased considerably since last year. Many things of value in our society have been little impacted by the current economic slowdown.

Are we really any poorer now?

There is a painfully obvious agreement that our economy is not as good as it was 6 months ago. But from a high level, you might ask how could that be? We still have the same number of factories, the same number of farms, the same number of hospitals, the same roads, water systems, and electrical systems. We still have roughly the same number of people with the same skills and know-how. And we have almost the same amount of natural resources. There has been a slight ongoing decline in nonrenewable resources, with oil being the prime example, but that is unrelated to the current sudden decline in the economy in the last 6 months. So how can our economy be poorer in any real tangible way?

For any economy to function, what’s needed besides all the above artifacts is a set of organized relationships between the different parts of the economy. Because of a high degree of specialization, no parts of the economy are self sufficient. They all depend on a set of trusting relationships with other parts of the economy to function. The other important aspect of the economy is that it is full of time delays. A factory worker may go to work on a daily basis knowing that he won’t get paid for his effort until the end of the month. A farmer who plants a field knows that it will be several months before any crops can be harvested. When a new business is started or construction on a new factory is begun, it can often take a few years before the effort generates any profit. Investments in research can sometimes take more than a decade to pay off. In all these cases, there is a set of relationships and trust with the rest of the economy that there will be a future payback for the investment and work done today.

So yes, the economy really is not as good as it was 6 months ago, and we are really poorer. What we lost was the set of organize relationships and trust between different parts of the economy. We lost trust in many of the large institutions, and we lost trust that there will be a worthwhile future payback for current investment and efforts. Though not as tangible as physical factories and infrastructure, trusting relationships are a painfully obvious key component of a healthy functioning economy. One of the fallouts of the current economic crisis is that the vital role of relationships will be viewed with more respect from now on.