Friday, December 31, 2010

Facebook is down! Mayday, mayday!

And on New Year's Eve, no less! All I get is some Swedish root site. What's going on?

EDIT: The mobile site seems to work.

EDIT2: And the regular site is now back in business. Ho hum.

Tuesday, October 26, 2010

So, what economic idea *is* hard to popularize?

In my last post, I ridiculed the idea that the Arrow Impossibility Theorem is somehow underappreciated. Do I have an answer to Tyler Cowen's request for a hard-to-popularize result in economics, then?

Yes, I do: the Put-Call Parity Theorem, and I gave my attempt at explaining it herea while back. It's important because it reminds us that markets can phrase the same transaction in several different ways, making it hard to ban particular ones. This forces you to think carefully about exactly what kind of transaction you want to prohibit when you say that e.g. options trading, fractional reserve banking, etc. should be illegal.

Setting Arrow's Impossibility Theorem Straight

Okay, by now, you might have noticed the econ blogosphere cooing over how awesome and insightful and useful the Arrow Impossibility Theorem is: Here, here, here, here, and here (in random order).

Um, to put it mildly ... no.

First, a summary of the theorem: let's say you want to convert individual preference rankings over outcomes into a social preference ranking that faithfully reflects these individual preferences as best as possible (i.e., create a voting system). You place a few "obvious" constraints on it that it voting system should meet, and it turns out -- you can't! Boo hoo, democracy sucks. (Well, in many senses, it does ... just not for this reason.)

This issue was discussed almost exactly one year ago on LessWrong. Long story short, the result has much less practical application than you might think. The requirements it asks of an aggregation system are far too strict. For one thing, the "determinism" requirement rules out the use of randomized tie-breakers. Keep in mind, there's always the possibility of some hopeless tangle involving a preference ordering like:

Person 1: A > B > C
Person 2: B > C > A
Person 3: C > A > B

Such preferences are completely intransitive, so no method of aggregation has any hope of being faithful. Normal people react to this by saying, "Okay, in the occasional pathological case, just use some tie-breaker that's not slanted in favor of any option -- in the end, it all averages out, so no problem". But Arrow's Theorem throws up its abstract arms and says, "Gosh, how hopeless. You can never satisfactorily aggregate preferences. Look how insightful I am!"

Needless to say, "We are not impressed."

It gets better though. "Black Belt Bayesian" makes the point that the "independence of irrelevant alternatives" (IIA) requirement is undesirable in the first place. (IIA means basically, if you remove some option, it should not change the aggregated ordering of the remaining options.) Why is it undesirable? Because so-called "irrelevant alternatives" aren't. Rather, they give evidence about the relative _strengths_ of preferences and therefore SHOULD affect the aggregated preference ordering!

Why was the econ blogosphere talking about Arrow's Theorem in the first place? Because someone had asked about underappreciated ideas in economics. Well, I think it's clear by now that this one doesn't suffer from a lack of deserved appreciation.

But what's even worse is that Amartya Sen's celebrated Liberal Paradox is viewed as a corrolary to the Arrow Theorem, and is just as ridiculous. It basically says you can't *both* respect people's rights *and* achieve Pareto optimality. Now, how do you imagine that works out? Well, you cheat by equating rights with obligations -- that is, you eliminate the possibility of people waiving a right when it's infringement would make everyone -- everyone -- weakly better off.

But who cares about that case? Not me. The very reason that rights allow for Pareto-optimality is because people can trade them as necessary when they find welfare-improving opportunities! If you equate "property rights in a specific apple" with "the obligation never to trade the apple away" ... well, you kinda throw a kink in all that.

As I said a year ago, if a transaction really is Pareto-efficient, then rights won't get in the way, because the relevant parties will waive the relevant rights! (Epic tongue-twister, too.)

Reassuringly, the folks on the opposite end of the ideological spectrum from me come to the same conclusion.

So are we set straight now?

Wednesday, October 20, 2010

A great chance to meet Silas in person!

Since I currently live in a small, remote town, I don't get many chances to meet my readers. But I'll be spending my vacation time this year in New York City, from Oct. 30 (my birthday!) to Nov. 21. I'll be staying in an internet friend's apartment in lower Manhattan and visiting a lot of my like-minded internet friends -- for all of them, it will be the first time I meet in person.

So, if you live anywhere in that general vicinity and want to meet me, now's your chance! Give me a shout, either by email or in the comments, and we'll work something out.

Also, advice for a non-NYCer for navigating this rough city will be quite welcome.

Monday, October 11, 2010

Today, I smack myself

An idea occurred to me after reading Bob Murphy's overpromised book on infinite banking, which carries the wonderful insight that if you save a lot, you can "borrow" from yourself on favorable terms -- oh, and that's also true if you save through a whole-life insurance plan.

But the real insight is in how much of your money (if you're a typical debt-carrying mouth-breather) goes to financing costs that could be avoided if you simply saved before a purchase, which was backed by some surprising examples.

Now, that doesn't do much for my finances because I'm a big saver. But it dawned on me: even if I'm not a big borrower, employers are, including and especially mine. So if I'm not living paycheck-to-paycheck, then they and I could work out a deal whereby they defer my salary payments (effectively taking a loan from me) and pay me interest much greater than I could get on savings (0%), but much lower than they would pay the financial markets (all costs considered, probably 30+%). Everyone wins.

But how many workers actually want to do something like that? No, it's too bizarre, so alas, I suffer again from being the rare saver...

And that's when I smacked myself -- they've had a program that lets me do that the whole time! They call it the employee stock purchase program, and it lets you set aside money so that at pre-defined six-month intervals you can buy company stock at a 15% discount to its current value, and yes, you can sell it immediately. I never bothered because I figured there was some catch to it that I never fully researched, even as those who used it assured me there's not.

Using the program, if you set aside money, buy at a discount, and immediately re-sell, you get an effective annual return of 38%! (Actually, higher, because the money wouldn't all be "invested" at the beginning of the six-month period.) I had just never realized what this was for the whole time! Stupid, stupid, stupid...

Oh, and there's a severe thunderstorm going on right now.

Thursday, August 26, 2010

The monetary mentality strikes again!

They say I'm caricaturing the view of monetary economists to imply that they just want to get people to spend, spend, spend, whether or not that spending is actually accomplishing anything of value, that this nominal GDP has become an end in itself, completely decoupled from whether it actually accomplishes any good by what we really look for in "the economy".

But then along comes famous economist Alan S. Blinder to prove my caricature right ... again:

So the third easing option is to cut the interest rate on reserves in order to induce bankers to disgorge some of them. ... How about minus 25 basis points? ...

Charging 25 basis points for storage should get banks sending money elsewhere. The question is where. ...

... suppose some fraction of the $1 trillion in excess reserves was to find its way into lending. Even if it's only 10%, that would boost bank lending by 3%-4%. Better than nothing.

There, again, you see the mentality: get the money spent. Out there. Somewhere. Anywhere. Doesn't matter if it's destructive, shortsighted loans. Doesn't matter if it just jumpstarts projects that have to unwind and liquidate in a year. Just spend money and we'll all be fine!!!

UPDATE: After posting this, monetary stimulus ringleader Scott Sumner actually endorsed the passage. Yep, get that money lent lent lent! We'll worry if the loans actually went to genuine economic productivity ... um, later.

Tuesday, August 24, 2010

The Onion sets Time Magazine straight

Oh ... this is epic. Just epic. The Onion says what's been on my mind for years: Time is written like it's for children, dumbing everything down and writing in such simplistic terms that aren't conducive to critical thinking.

Likewise, despite all the criticism the blogosphere gets for being superficial, I've long held that one day of browsing blogs gives me more intellectual stimulation than I've gotten from a lifetime of reading print media like Time. And I used to joke that the average poster on a discussion site communicates better than Time's writers.

Average commenter: "Two plus three equals five."

Time article: "So imagine that you've got a pair of whiz-bang new gadgets, and your friend has stepped up with three of her own. Well, using an advanced mathematical procedure called adding, you can instantly figger how many you've got in total, say Profession David Livinsky of MIT. The result in this case? Cinco."

But enough of that -- just watch the video. They've nailed everything there is to mock about Time.

Sunday, August 15, 2010

Election humor

In case you didn't know, Alvin Green won the Democratic primary in South Carolina, despite being unknown and not running much of a compaign. (My earlier comments on the strange reaction this has gotten.)

Well, thanks to this post from Bob Murphy, I found some clever videos someone made about Greene's campaign. The dialogue is done with a speech synthesizer, but that somehow just makes it come off as being even funnier!

Like in this one:

I just voted for the first guy on the ballot. [Greene's name was first on the primary ballot, which many attributed his victory to. --SB] I used to vote for the second guy on the ballot, but that didn't work out. Now, I only vote for the first guy on the ballot.

Or this one:

No, Greene, we can't spare you for Iraq. We need you to guard this table. If you were not here to guard the table, then who would?

(Quotes from memory.)

I'm surprised they didn't get more views. These had me laughing harder than I have in a while! Synthesizers sure know their deadpan...

Saturday, August 7, 2010

Intellectual Property's Ungrateful Hitchhikers

I'm going to discuss an ethical and decision-theoretic intuition that underpins my support for intellectual property rights, and which seems to be absent, or unintuitive, among anti-IP libertarians. (See the discussion linked in yesterday's post for lots of good examples.)

But first let's consider a puzzle in decision theory. This one is known as Parfit's Hitchhiker and, as best I can tell, comes from Derek Parfit's book Reasons and Persons, though the term "hitchhiker" didn't come up in a search of the book.

It goes like this (well, my version does anyway): Assume you're lost in the desert, with nothing of value on you. You're approached by a superpowerful, superintelligent being we'll call Omega. It is willing to take you back to civilization and stabilize you -- but only if you will withdraw $5 from your bank account and give it to Omega once that's over with. (Yes, such a being might have reason to do this.) It has no enforcement mechanism for if you don't pay.

But here's the catch: Omega can scan you in detail and find out if you're really intending to give it the $5 when you're safe, rather than -- I don't know -- reasoning that, "Hey, I'm already safe, I've already got what I need and all, and you know, this Omega thing is powerful enough anyway, I think I'll just keep the $5." And if it finds that you wouldn't give it the money upon reaching safety (i.e. you don't have a decision theory that outputs "pay $5 to Omega" given that you are safe), then it just won't take you back and you can die in the desert.

At this point, a lot of you might be recoiling in horror: "What? Keep a measly five dollars when this thing saved my life? Are you ****in' nuts?" Yeah -- you're the people with the intuition I was referring to at the beginning -- the one that I have, and the anti-IP libertarians don't seem to. More about that in a minute.

Those of you who didn't recoil in horror may be thinking something like, "Whoa whoa whoa, I don't like dying. See, I would just make a contract -- or heck, even a simple promise -- that I will give Omega the $5. Since I feel honor-bound to abide by my promises, of course I would pay, and wouldn't have such diseased thoughts" as I referred to above. But I didn't make it that easy: note that Omega doesn't ask you anything and can't even receive your messages. Its decision is based entirely on what you would do, given that you know the details of the situation.

Here's the neat thing to notice: you will never find yourself in a position to be deciding whether to take that final step and give the Omega-like being $5 unless you adhere to a decision theory (or "ethic", "morals", etc.) that leads you to do things like "give Omega $5 for rescuing you at least in those cases where it rescued you conditional on expecting you to give it that $5" even when you already know what the Omega-like being has decided, and that decision is irreversible.

(I know, I know, I'm doubling up on the italics. Bear with me here.)

Conversely, all of the beings who come out alive have a decision theory (or ethic, etc.) which regards it as an optimal action (or an "action they should do", etc.) to pay the $5. Omega's already selected for them!

Now at this point, those of you who don't have the recoiling intuition I referred to, or are still worried I'll derive implications from it you don't like, may insist that this is a contrived scenario, with no application to real world -- you can't make your decisions based on what capricious, weird, superpowerful agents will do, so why change your decision theory on that reasoning?

And there is something to that belief: You don't want to become a "person who always jumps off the nearest cliff" just because there's some rare instance where it's a good idea.

But that's not what's going on here, is it? Omega makes its decision based upon what you would do, irrespective of what decision process led you to do it. So for purposes of this scenario, it simply doesn't matter whether you decide to pay that $5 because you:

- feel honor-bound to do so;
- feel so grateful to Omega that you think it deserves what it wanted from you;
- believe you would be punished with eternal hellfire if you didn't, and dislike hellfire;
- like to transfer money to Omega-like beings, just for the heck of it;
- or for any other reason.

So, then, is it normal for the world to decide how it treats you based on (a somewhat reliable assessment of) "what you would do"? Yes, it is, once you realize that we already have a term for "what you would do": it's called your "character" or "disposition" (or "decision theory" or "generating function").

Do people typically treat you differently based on estimations of your character? If you know where they don't, please let me know, so I can go there and let loose my sarcasm with impunity.

So, to wrap it up, what does Parfit's Hitchhiker have to do with intellectual property? Well:

- Omega represents the people who are deciding whether to produce difficult, satisfying intellectual works, conditional on whether we will respect certain exclusivity rights that have historically been promised them.

- The decision to rescue us is the decision to produce those intellectual works.

- The decision to pay the $5 represents the decision to continue to respect that exclusivity once it is produced "even though" they're "not scarce anymore", and we could choose otherwise.

The lesson: if you don't believe that the Omegas in your life "deserve", in an important sense, to be paid, you won't find yourself "rescued". We are where we are today because of our beliefs about what "hitchhikers" should do, and we miss out on rescues whenever we decide to become ungrateful hitchhikers. (Edit: that should probably be phrased as "... whenever we decide that it's right for hitchhikers to be ungrateful.")

(Note: this post was heavily influenced by Good and Real, Chapter 7, and by this article on Newcomb's problem.)

Intellectual works aren't scarce -- just like money

If you listen to Stephan Kinsella or his acolytes, you're probably well familiar with the argument that "Intellectual property rights should not exist" because "intellectual works aren't scarce", though this is often confusingly shortened to "IP isn't scarce". Here's Kinsella's latest compilation of the anti-IP arguments, that being one of them. (Which led to a very lengthy discussion.)

Well, I've been reading Jaron Lanier's recent book, You Are Not a Gadget, which gives a good reply (p. 102):

It is a common assertion that if you copy a digital music file, you haven't destroyed the original, so nothing was stolen. The same thing could be said if you hacked into a bank and just added money to your online account. ... The problem in each case is not that you stole from a specific person but that you undermined the artificial scarcities that allow the economy to function. In the same way, creative expression on the internet will benefit from a social contract that imposes a modest degree of artificial scarcity on information. [bold added]

I've made a similar point before: Money is information -- specifically, the relative amount that the world (believes that it) owes you. When money is stolen from you, then you can certainly force yourself to think of it in terms of

-a physical item being removed from your possession, or of
-a server having "unauthorized use".

But what's really important is the editing of that information: where before, the world thought it had a remaining balance against you of $X, now it thinks that the thieves are owed that $X. This problem persists even after you are given compensatory paper or the bank gets standard compensation for trespassing, and it's what people care about.

MMORPGs (World of Warcraft, Everquest, etc.) have already assimilated this lesson. In such online games, your money really is nothing but a database entry. It doesn't correspond, even in principle, to a physical object, just the knowledge of a relationship.

Lanier's alternate suggestion, following Ted Nelson, is that we could instead simply have an automated system that charges for each time a given intellectual work is accessed. People could "pirate" these (already freely-accessible) works by only using versions stored outside of where there access would be recorded, just as they do today when pirating works. But so long as the public regards this as wrong, and wrong for the same reason as counterfeiting, they would run into the same problem as counterfeiters. And the relatively low cost with which the works could be accessed under such a system would remove most of the sympathy for them.

I note that one particular snag of this is that people will not want to have to think of the costs each time they want to look at a book again. However, if everyone paid a fixed amount each year, and their choice of what to access only determined which fraction of that payment went to each creator, then choosing to view anything would cost nothing on the margin, further eroding any incentive to pirate.

Wednesday, August 4, 2010

Setting spending straight: Now, we're getting somewhere

Setting spending straight: Now, we're getting somewhere

As you might have noticed, I'm quite confounded by the arguments for stimulus, especially monetary stimulus.

In discussing the issue on Less Wrong, I've argued that once you expand out what the economics jargon, it's not even clear that stimulus arguments even claim to be accomplishing something good. And that such schemes are justified with reasoning that would just as wellprove it beneficial to do clearly absurd things, showing a misuse of the term "the economy".

This suggested to me a serious case of lost purpose, where one's policy justifications have become completely disconnected from the original reasoning.

Well, now I've found someone willing to engage these issues: John Salvatier of Good Morning, Economics. He's not Scott Sumner, but he does advocate the same things, and knows his way around the topic.

If you're interested, take a look at our ongoing exchange on the basis for stimulus (and this shorter thread).

Monday, August 2, 2010

About the redesign

To all of you hecklers about to write me that, "Um, I think someone hacked your site, bro, LOL": No, I accepted the services of someone I know from Less Wrong. The eminent Ian Pollock, freelance graphic designer and electrical engineering major, did the redesign. I like this much better that what I had before.

The Möbius strip exemplifies the site's goal: where before, an issue was hopelessly twisted on itself, I cut through the assumptions and let it start making sense again!

If you find yourself in need of a site redesign, well, now you know where to go.

Friday, July 23, 2010

Another parallel between IP and EM spectrum rights

I constantly bring up the EM spectrum in discussions of IP, and for good reason. It's quite difficult to justify rights in one but not the other, leading some people to unpalatable conclusions. Heck, even Stephan Kinsella, the big anti-IP poomba, isn't sure whether there should be rights to radio waves.

But recently, I've found yet another parallel. Consider the case of someone who, like in lots of instructive thought experiments, wants to block the propagation of radio waves from a nearby tower so that people can't receive them (well, extract information from them, but you get the point).

There's a device that lets you block EM waves, known as a Faraday cage. I didn't know how they work before, but it turns out that, by being made of conducting material, their electrons realign so as to produce the *opposite* field from the one around it (which superposes over it and cancels it out).

See where this is going? To protect your right to to transmit information via EM waves, you need to be able to prevent others from ... er ... instantiating the same pattern! Now, where else have people asserted that kind of right?

(By the way, first post ever from my first smartphone, the wonderful Samsung Moment. And no, unlike when Tyler Cowen promotes a product, I didn't get it for free or otherwise get paid to say that. No, the links weren't added from the Moment.)

Wednesday, July 14, 2010

Sumner Severally Suprises Silas

(The title was going to be "Sumner Surprises Me Again", but I wanted it to be an alliteration.)

Once again, I let loose with another complaint about mainstream monetary economics, and once again Scott Sumner casually agrees that there's a dilemma.

I say,

... considering that dinosaur banks can borrow at 0% by only putting up toxic MBSes as collateral, ...

Why can’t *I* get secured loans from the Fed at 0%? Why should big banks have all the fun?

And Sumner replies

Silas, Good question.

Then, I get keyboard crease marks in my forehead.

Sunday, July 11, 2010

Setting monetary stimulus straight

In light of my recent link to Gennady Stolyarov's post about the gloomy future of the economy (especially for young people), I thought it would be a good idea to put it against the backdrop of mainstream economics and the "experts'" solutions.

A characteristic post is this one by the relatively libertarian Scott Sumner. Like pretty much every day, his idea is for the Federal Reserve to do a "monetary stimulus" by injecting money into the economy to prop up nominal GDP. (Yes, nominal GDP -- you know, the one that doesn't mean anything until you adjust it to real GDP and even then commits you to a easily-abused framework.) This, it would do by various mechanisms, all of which aim to "get banks lending". Stop paying interest on reserves, buy more of banks' (junky) securities, rapidly debase the currency ("quantitative easing") so they have to loan or else hold worthless cash, etc.

In frustration at such a stupid policy, I made this sarcastic comment on that post:

Yes, the economy will definitely collapse if the Fed doesn’t print up more money to make shoddy loans for purchases people don’t want, and it’s a shame that folks at the Fed are stopping Bernanke from such a wise action.

And to my utter surprise, Sumner replied:

Silas. I agree. :-)

Note: the smiley was in recognition of my sarcasm, not to indicate he's changed his mind.

So, Sumner realizes exactly what he's asking for, and still thinks it's a good idea. But since it apparently isn't obvious to everyone what's wrong with such a policy, I thought I'd spell it out clearly for once:

Banks aren't lending (in sufficient numbers). Mainstream economists want to prod them into lending. But why won't they lend in the first place? Because they don't expect the future loan payments to justify the loan. Now, when you grip them so tightly that they have to, for some reason or another, make these loans, have you changed the factors causing banks to believe loans won't be paid? No, you haven't. So, the loans will just throw money after wasteful projects, destroying output and making everyone poorer.

Note: even if you -- quite reasonably -- care about unemployed workers, and you dismiss this concern about wastefulness on the grounds that, "hey, at least it will lift off the joblessness albatross for so many families", that still wouldn't make such policies a good idea. The wastefulness means that reality will eventually rear its head and force these projects to be abandoned. Then, all the new skills workers could have developed while working on sustainable projects that satisfy actual demand, instead don't get developed, and whatever they did do has just retooled them for a useless activity, leaving them even worse off. Doesn't sound too compassionate to me ...

But let's say I'm wrong about that. Let's put aside, for the moment, our skepticism about economists' claims that the same policy that forces banks to lend, also causes these loans to work out and get repaid, making them not such stupid loans to begin with. Even then, you're still causing inefficient activities to happen that cause workers and investors to dig themselves deeper on unsustainable activities.

Looking back, one has to wonder how economists ever came to the consensus that making ultra-underpriced loans to clumsy, inflexible banks could ever possibly be a good idea. My suspicion is that it is a kind of Goodhart phenomenon: at the time these economic models were created, the metrics economists cared about did serve as good proxies for general economic health. But as they were targeted by policy, they lost their value as indicators.

Furthermore, economists failed to continually ground their concept of a "good economy" in what is meant by the term in common parlance. They don't keep checking back to see whether their policies would mean that people get the best combination of work, leisure, and consumption (all broadly defined). No: if an improvement doesn't show up as a cash exchange, it doesn't matter. If people aren't spending enough, then obviously that's hurting the economy and they should spend more.

You would almost think the economy is some god that demands sacrifices, given the way economists talk, rather than a characterization of our collective ability to satisfy wants.

So please, understand my anger when I read about how young people have all of their options cut off by the earlier generation, how they can't save or invest because of how much will be taken to make up for the failures of poorly run enterprises, how genuinely productive ventures are quashed by an outdated mentality of how the world should work ... and then Scott Sumner swings in to tell us that the best way to improve "the economy" is with ridiculously underpriced loans from newly-printed money to aging, inefficient companies that just wasted trillions of dollars destroying our productive capacity.

Advice for economists: Ask whether, not why.

-Don't ask, "What can we do to increase aggregate demand?"
Ask, "Why should we increase aggregate demand?"

-Don't ask, "What can we do to keep people from saving so much?"
Ask, "Why does 'the economy' so crucially depend on people not saving, and why do I care about the health of the 'economy' in that sense?"

-Don't ask, "What can we do to get (traditionally measured) output back up?"
Ask, "Why is it necessary for that measure of output to go up? Would it be so terrible for people to produce less, if that's what they really want, based on honest assessments of the future?"

Get the picture?

Saturday, July 10, 2010

Setting the future economy straight

Gennady Stolyarov II does it much better than I can in a guest post on Bob Murphy's blog.

My summary: young people are f'ed. New and existing laws, along with entrenched norms, make it effectively impossible for them to succeed through standard education and career paths. Success has become decoupled from merit, and the upcoming generation will be barred from home-ownership, even if they're responsible. A constellation of irresponsible financial policies by the government shifts most of the cost of government to these young people through ever-growing inflation, taxes, and one-size-fits-all laws. The only answer is for the new generation to break from traditional norms and bypass the standard dinosaur institutions, using new technologies -- mainly the internet -- to meet their economic needs, without the waste and inefficiency that has crept into the system over time.

Lots of thoughts I've had, but put together with rigor I have yet to match on the issue.

Wednesday, July 7, 2010

Why would a Serious Thinker(tm) fear my comments?

Gene Callahan now has the cute slogan on his blog: "Silas-free for over eight twelve days":

I had submitted thoughtful criticisms to his blog more recently than that, alerting him of errors he's making, and of phenomena he might not be aware of. (Example saved from before then.) So why would this Serious Thinker feel the need to reject, on sight, my comments from appearing, and then advertise it?

A self-serving reason I might give is "Well, Callahan actually not a very good thinker and only gets validation from a clique that already agrees with him, so he can't bear to see remarks that might cause him to question his worldview." But I'm far too biased to make such a judgment.

Instead I invite readers to judge for themselves how Deep and Serious a thinker Callahan is by looking at the link above. He uses the example of a monk who can't explain why a prohibition on touching women exists as a characteristic example of how some things can only be learned from experience.

(It looks to me like maybe Callahan just isn't very good at explaining, and doesn't have much of an incentive to change that. After all, that would undermine his worldview that requires knowledge to be mostly inarticulable, not to mention the aura of unquestionable expertise he tries to maintain.)

As you might expect, he justifies the Silas-free-ness by reference to the "many sites I've been banned from" for my unhelpful comments. True -- I have been banned from many sites for that reason -- it's just that they've all been controlled by him! Information cascade, anyone?

Saturday, June 12, 2010

Yay! I'm famous now! For real!

Despite the general lack of updates to this blog, I'm now famous by the Google standard. Try it out for yourself: type in "silas" to Google, and watch the suggestions pop up. The first suggestion after "Silas Marner" and silastic (the silicone/plastic gel), you get ME! Take a look (click to enlarge):

And what if you type in "silas b"? You get this:

So in case you're wondering, I'm available for speaking engagements. I charge $10 million per visit, but I give discounts if I agree with your cause.

Sunday, March 7, 2010

When you can't go back to sleep: thermodynamics

Did you miss my posting? Well, it's been one of those days when you wake up early and can't go back to sleep. My mind's running wild this morning, and I figured I'd make some good use out of it. (It is no longer early as of completing this post because of interruptions from a playful kitty.)

I'm going to continue the lesson about thermodynamics that last left off about a year ago, by discussing some more interesting implications of the idea that "energy per unit temperature" is a measure of degrees of freedom. You see, in the time since then, I read John S. Avery's book Information Theory and Evolution, which, as you might have inferred, discusses life from the perspective of that ever-so-useful field of information theory. He also applies it to cultural (often called "memetic") evolution.

The first interesting insight that this book alerted me to is about molar entropy. Some background: in your chemistry class, you might have learned about the Gibbs free energy of a reaction, ΔG, which is calculated from ΔH - TΔS, where H is the molar enthalpy (internal + flow energy per mole), T is absolute temperature, and S is the molar entropy. For a chemical reaction, you look up the molar enthalpies of the products and subtract off the enthalpies of the reactants. Then you do the same for molar entropies, multiplying by the absolute temperature at which the reaction takes place, and add them. A negative sign for ΔG means the reaction happens spontaneously (well, as long as there is an available pathway).

With that out of the way, what are the units for S? Most tables give them as J/K*mol (Joules per Kelvin per mole, or energy per unit temperature per quantity of molecules). But, as the last post in this series showed, energy per unit temperature measures degrees of freedom, which can also be expressed in bits. So, as Avery neatly derives on pages 81-82, you can also express molar entropy in bits per molecule. (The conversion factor is 1 J/K*mol = 0.1735 bits/molecule.) I find this a much more intuitive way to think about it, because it connects the concept of molar entropy to the underlying dynamic: how many bits of information (on average) do you need to specify a molecule's current state, beyond that which you know from the temperature?

Also, rather than having to empirically derive this value directly (either from reaction data or by integrating its specific heat capacity per unit temperature from 0 K to its current temperature), it can be inferred from the known properties of the molecule: its shape, size, and bond strength. The stronger ("stiffer") its bonds are, the lower the entropy of the molecule, because large deviations from its equilibrium configuration are less probable. (Diamond, with its very strong covalent bonds, has the incredibly low molar entropy of 0.24 bits per carbon atom at STP, meaning you need less than one bit of information to specify every four atoms.)

[ADDENDUM: Avery also adds that if you divide the Gibbs equation through by T, you can describe a reaction in terms of the "information lost", i.e., the greater number of degrees of freedom you have permitted by letting the reaction take place.]

By recognizing this interconnection between molecule properties and complexity (needing more information to fully specify = more complex), one sees more unity ("consilience") to the science as a whole: entropy and bond properties aren't just off in their own domains, but have a lawful relationship. Unfortunately, however, I haven't worked out how to derive entropy from stiffness of a degree of freedom, and I haven't found a text that does it either.

Next in the series: A discussion of Eric J. Chaisson's Cosmic Evolution: The Rise of Complexity in Nature, which proposes specific energy flux (energy flow through a system per unit mass) as a measure of complexity that is applicable to everything from stars to planets to life to vehicles to computer chips to culture.

Monday, January 4, 2010

Mixing economics, thermodynamics, and heterogeneity

... or METH, as some call it. And if you want some more drug innuendo, read on.

On Brad DeLong's blog, a commentator named "MJ" deftly applies insights from thermodynamics to the issue of heterogeneity of goods in economics:

What would statistical mechanics be without a quantitative model of heterogeneous vs. homogeneous distributions? Such a statistical mechanics would miss a few subtle but crucial concepts. Such as entropy.

Note how the negentropic development of increasingly heterogeneous capital allocations over the past decade was accomplished through entropy production: bundling good with bad, compromising tranches, etc... Goldman Sachs made a killing, basically, off of knowingly producing entropy. The entropy production, of course (2nd law), far exceeded the negentropy production of their wealth aggregation- as reflected in the order of magnitude between financial industry's gains and the over all loss.

We're now learning Fannie and Freddie also engaged in entropy production, obscuring the distinction between scores over and under 660.

I can vouch for that as showing a good understanding of entropy, and it gives a good perspective for viewing economics:

1) An efficient economy produces as little net entropy as possible: the entropy it generates (destruction of heterogeneity) should be offset by the entropy it destroys in organizing inputs for their uniquely optimal roles.

2) A sign of inefficiency is when economic actors destroy distinctions (like in MJ's example of very different tranches and borrowers being made indistinguishable) without making a corresponding useful distinction or organization.

Definitely some issues worth fleshing out. I know I've seen papers that try to view economics from a thermodynamic perspective, but they invariably have me rolling my eyes.