Russ Nelson

I think David Isenberg is a little frustrated with me, because he keeps snarking at me about economics. The problem is that not only does he not "get it", he doesn't understand that he's not getting it. It's like the guy who adds 2 plus 2 to get 5, and then when you say that he's bad at math, he says "Oh yeah? Well I know that 3 plus 4 is 8!"

From the looks of things, David is good at finance -- at least that's what his later posting is about. Trouble is that finance is not economics. Finance tells you how much, but economics tells you why. Finance can let you determine that two things have the same value, or the same cost, but only economics can tell you why people would buy one versus the other.

This seems to be a fairly commonly executed fallacy. Many many people feel free to criticize economics and economists, when it's clear that they don't know the first thing about economics. I think that's because they, like David, confuse finance for economics. They figure that they can balance their checkbook, so they know as much as somebody who has studied economics for years and year. At least, that's my best guess, but I might be wrong.

55.78 km 183015.11 feet 34.66 mi 12577.00 seconds 209.62 minutes 3.49 hours 9.92 mi/hr

Wow, what a great ride. Of course, I got back in at 8:50PM ... perhaps a little late given that I'd lost most of the light at 8:35. But I was on back roads at that point and nobody overtook me (I would have gotten off on the shoulder if they had).

Rode from Knapps Station to North Lawrence on the Rutland Trail. I wanted to see the nice new bridges that "they" had put in. Here's one of them:

I had heard that Harry Dow (et al) had purchased a section of the trail, but I didn't realize that it was the closed section. This is great stuff!

20.42 km 66992.06 feet 12.69 mi 6143.00 seconds 102.38 minutes 1.71 hours 7.44 mi/hr

Went for a ride on the Christopher Muka section of the Rutland Trail.

33.08 km 108514.70 feet 20.55 mi 6387.00 seconds 106.45 minutes 1.77 hours 11.58 mi/hr

Rode out to a friend's house on Bagdad Road. Upwind all the way out, and on the way back, the wind was pushing me up the hills.

Usually, customers seek the maximum value at all times. This could mean paying a lot for very high quality, or paying a little for something that barely suffices. But customers optimize for value -- bang for the buck.

In the American health care system, nobody is optimizing for value. The patient demands the highest standard of care regardless of the cost. The insurance company demands the lowest payments regardless of the quality of the care.

This is totally wrong. We need to move to a system where most people pay most medical bills out of pocket, and insurance companies step in only when the costs are completely unaffordable. To get there, we need to eliminate the deductibility of health care costs. Why should health care be deductible on income taxes when food is not? Food is way more important to your health than is a doctor's care. So is exercise, but neither one is deductible.

We also need to accept that most insurance companies will need to fire most of their employees, and that doctors' offices will need to fire one or more employees. On the bright side, consider that that will free up their labor for production that makes American society better rather than worse, as is currently the case.

David Isenberg drives me batty. He's the fellow who pointed out that a stupid network (intelligence at the edges) produces more public benefit than the smart network that his then-employer, AT&T, was building. Well, of course when you make a public fuss like that, you either change your employer's direction, or you have to leave. He left, and has been a successful consultant since then.

Unfortunately, David doesn't know much economics. Like most people who don't know much economics, he feels free to cast aspersions on what he calls junk economics. He complains therein that some of his friends deny the peak oil hypothesis. Maybe he means me? I don't deny the hypothesis in the sense that I'm not an expert on oil. I have been studying economics, however, and can make some predictions which counter David's "Junk" economics.

First is that there are sources of huge amounts of oil which are not profitable to extract when the Saudis are dumping oil. Second is that nobody is going to invest in these oil sources unless it looks like they can successfully sell their oil. So they're not going to act simply because the price of oil is high. Everybody expects the Saudis to try to push the price of oil up to extract the maximum possible profit.

But if the Saudis are artificially restricting the supply of oil, they can artificially expand it as well. The people sitting on more expensive oil are going to wait to extract it until they're sure that the Saudis can't screw them by expanding production.

As I said at and after David's WTF conference back in 2004, people will not act simply because experts say that peak oil has occurred on such-and-such a date. People will act when they wish to avoid discomfort and not before.

Yes, the end of cheap oil is going to be a challenge. But it's not going to be the end of the world. Probably the only bigger challenge we'll face as a species is the global cooling of the next ice age. That is going to be a problem when the ice starts covering the northern hemisphere.

UPDATE (since a friend pointed out that I hadn't made my point) 5/5.

The world lurches from crisis to crisis. You might think this is a sign of mismangement, a flaw in human nature, or simply God screwing up. (As for the last, I believe that God stops in from time to time to see if we've blown ourselves up yet, so he can promote the great apes, but that's the extent of his involvement in the world.) Regardless of your opinion, that is how people work.

In these crises, many people take different actions to try to resolve the crisis. People fitting underneath a bell curve, they will try all sorts of things. Some of them work, some do not. Sooner or later, a smart person invents something that totally crashes through the crisis. Blows it apart. The crisis is gone, and what we have is better than what we had before the crisis. For example, a hundred years ago, New York City was fast approaching a crisis of equine proportions: piles of horse shit in the streets, and no place to put them. "We" invented the automobile, and have experienced huge benefits in personal mobility.

The key to remember is that nobody can predict who will invent this new thing, nor what it will be. In order to facilitate this solution to the crisis, the best thing government can do is: nothing. Don't favor anyone or anything, let everybody do everything, don't stop anything that's peaceful.

You may ask yourself, "but why don't we get the government to do something to avert these crises before they become full-blown crises?" The answer is simply that the government is doing something. It is actively maintaining the peace. It is choosing not to interfere with peaceful human relations. It is choosing not to favor one solution over another. Choosing not to choose is a choice -- probably the hardest choice to make.

UPDATE 5/12: David doesn't have much to say about this post. I think he is trying to trivially refute me by pointing to the fact that I don't think much of some people who call themselves economists. I've been saying that all along.

13.79 km 45249.84 feet 8.57 mi 2829.00 seconds 47.15 minutes 0.79 hours 10.91 mi/hr

Just a short ride "around the block", but I also found out where is the access road for the cell tower they put in last year -- at the end of Dudy Road on the top of a 440' tall hill. That's surprising, because there are hills very close by which are 50' taller. Maybe they liked this hill because it's close to a road and also has no trees?

I recently got myself a Flickr Pro account, and have been using Flickr for more of my photos. I find myself more and more annoyed at the rough edges in the Flickr user interface. For example, when you want to delete a tag from something, you click on the [x] to the right of the tag. Flickr asks you "Do you want to delete the tag?" Cancel/Ok:

This is almost certainly the wrong thing to do. It annoys people because the website is (in effect) saying "Hey, that might be a stupid thing to do, so I'm going to slow you down so you can think about it." The first couple of times people might pause to think (but what they're likely thinking is "you stupid computer, I told you what to do".) After that, when they want to delete a tag, the action will be "Click X; Click Ok", with no pause for thought.

That is how people think. That is how people are able to learn a complicated game like chess, or go. People chunk information and actions together. This allows the forebrain to go on thinking about other things while the rest of the brain carries out an action previously decided-upon. If an action requires a confirmation, the hindbrain will confirm it as part of executing the action chunk.

The way to work with human congnition rather than against it is to allow for Undo. Undo isn't a new idea -- we were using it 25 years ago. Undo works well with the human brain because it allows actions to happen without confirmations, but it also allows the forebrain (which operates slower than the hindbrain) to realize that it has made a mistake, and correct it with an Undo.

Flickr isn't all bad. They do use Undo sometimes:

When they add an image to a set, they add an indication that it's in the set over on the right, so the "OK" part is useless. They should skip the dialog entirely and insert a temporary "UNDO" below the set listing. Even when they do use UNDO, they spoil its operation with a confirmation:

Of course I want to remove it from the set! That's why I just clicked on UNDO, right?

Following the confirmation is another useless "Click OK to indicate that you are still alive" box.

Of course it's been removed, because the set listing is now gone. The proper way to handle this is to grey out the set listing on the right, and add an "UNDO" button below it.

Even if you've implemented your website using Open Source software like Linux, Apache, MySQL, and PHP, you don't escape the low quality typical of proprietary software unless your software is Open Source.

It's easy to volunteer other people to fix problems. In the Open Source world, the typical response is "great idea; send a patch." Flickr lives in the Web 2.0 world, not the Open Source world. Their software sucks just like any proprietary program. We can't fix it. Only Flickr can fix it, and hopefully, they'll at least fix the problems I've outlined here.

Having watched people poop on the streets in Mumbai, wanting to help stop that, and not knowing what to do, I was pleased to come across the PoopReport's project to help people in India. Specifically, schoolgirls in Uttar Pradesh. They can build a composting toilet for $250, which is a fair sum, but less than the computer you're using to read this posting. Granted, it's not Mumbai, but the problem is still the same.

Our new governor says that state government needs to do more to lower cost of doing business in New York:

To create a more conducive climate for business, the governor said New York must make doing business in the state cheaper by investing in infrastructure and reducing high energy and health care costs.

How the heck is he going to do that? By pressing the "lower energy costs" and "lower health care costs" buttons? He's a Democrat, and Democrats are historically unwilling to do what is actually needed to lower these costs: nothing. Government needs to get out of the way of creative resourceful people with ideas. Government has a positive role to play while getting out of the way: by ensuring that all relations between people are peaceful. But that's government's only role.

He goes on to say:

For his part, Gov. Paterson reiterated his commitment to belt-tightening and fiscal prudence. "Our economy is still reeling," the governor said. "When this storm hits, we can't simply do what Albany usually does: turn around and tax the first business or the first resident we see. Rather, we have to cut wasteful spending."

No, David, you need to cut all spending, not just the wasteful spending. You need to do less for us, you need to do less to us. You need to do less, period. Shut down department after department, and send the people home to get productive jobs. Most of what New York State does is either irrelevant or actively harmful.