Archive for the ‘Economics’ Category

Say’s law and bandwidth

Monday, February 12th, 2007

Ed Felten asks How Much Bandwidth is Enough? (emphasis added):

It is a matter of faith among infotech experts that (1) the supply of computing and communications will increase rapidly according to Moore’s Law, and (2) the demand for that capacity will grow roughly as fast. This mutual escalation of supply and demand causes the rapid change we see in the industry.

Funny how that seems to happen.

Thus far, whenever more capacity comes along, new applications are invented (or made practical) to use it. But will this go on forever, or is there a point of diminishing returns where more capacity doesn’t improve the user’s happiness?

There’s always a point at which purchasing more bandwidth doesn’t make sense given the price of bandwidth and other goods. But will there ever be a point at which more bandwidth, even at zero price, has no utility? I doubt it.

There is a plausible argument that a limit exists. The human sensory system has limited (though very high) bandwidth, so it doesn’t make sense to direct more than a certain number of bits per second at the user. At some point, your 3-D immersive stereo video has such high resolution that nobody will notice any improvement. The other senses have similar limits, so at some point you have enough bandwidth to saturate the senses of everybody in the home. You might want to send information to devices in the home; but how far can that grow?

Human sensory system? The home? By the time there is enough bandwidth to max out the human sensory system and auxiliary devices humans will not be important on the scene.

Paying to create

Thursday, January 25th, 2007

Lucas Gonze writes the musician industry has never been better, citing a LA Times story:

While the U.S. recording industry continues to slide [...], the other side of the music world businesses catering to those who create the music has nearly doubled over the last decade to become a $7.5-billion industry.

My emphasis. Read Gonze’s explanation of the ellipsis.

This highlights how backwards it is to cripple technology and law, ostensibly to ensure creators can get paid — creators eagerly pay to create.

Another quote from the article:

“We are looking at the first creative generation,” Henry Juszkiewicz, co-owner of Gibson Guitars, said last week as he was surrounded by instruments in his firm’s display room at the convention, which ended Sunday. “The cost of creative tools has gone down. And now you have the ability to share with other people your creation. These two fundamental, solid changes are allowing the younger generation to be actively creative.”

The NAMM musical industry group, which sponsored the convention, contracts with the Gallup Organization for a poll every three years. The most recent found that the number of instrument players ages 18 to 34 grew from 24% in 1997 to 32% in 2006.

It also found that last year about half of American households had at least one person who owned a musical instrument, up from 43% in 1997.

Note what the Gibson Guitars guy did not say — that people are buying more instruments in hopes of making money.

Race and international apartheid

Monday, January 22nd, 2007

I usually do not mention race when framing immigration controls as the international equivalent of (former) South African Apartheid — race lies on the South African side of the analogy. But the case of those opposing unfettered ability of all to move, live and work anywhere on earth without respect to nationality is not helped by the fact that race and racism is part and parcel of controls on movement, residency and work, as explained by The Guardian’s Gary Younge in The west persists in using race to decide who can cross its borders:

[W]hen translated into sterling, the mean income of a black Canadian is almost double that of a white South African. Yet a black Canadian is four times more likely to be stopped than a white South African.

Via Mark Brady.

Beneficial brain drain enhanced by weak intellectual protectionism

Friday, January 19th, 2007

Modern research on “” indicates it is mostly beneficial, which comports with my intuition, repeated here:

Over the long term I’d bet brains are not zero sum — a brain drain really just means increased returns to education. Mobility means more people in the developing world will pursue higher education. Add to that increased flow of knowledge and capital to the developing world from migrants and concern over “brain drain” sounds very much like yet another disingenuous excuse for keeping the current system of inter-jurisdiction apartheid in place.

The International Migration of Knowledge Workers: When Is Brain Drain Beneficial? highlights another way brain drain benefits all. Abstract (emphasis added):

We consider the welfare effects of the emigration of workers who produce a public good (knowledge). We distinguish between the knowledge diversion and knowledge creation effects of such emigration, and show that the remaining residents of a country can gain from emigration, even when tastes for knowledge goods exhibit a kind of ‘home bias’. In contrast to existing models of beneficial brain drain (BBD), our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration “lottery”. Instead, they are driven purely by the public nature of knowledge goods, combined with differences in market size that induce greater knowledge creation by emigrants abroad than at home. BBD is even more likely in the presence of weak sending-country intellectual property rights (IPRs), or when source country IPR policy is endogenized.

Very cool.

Via Katherine Mangu-Ward.

Don’t let (potential) rioters set policy

Friday, January 19th, 2007

Via a comment from author Philippe Legrain, a positive Financial Times review (copy) of his book Immigratns: Your Country Needs Them. I want to comment on two short excerpts:

Workers raise their own - and the world’s - income levels by moving from a low-productivity job in a poor country to more productive employment in a rich one.

Which should be enough to win over any modern human (non-neanderthal) to open borders. The ethical argument for open borders is even better.

Policymakers must take account of the many voters who disagree with Legrain, even if this is based on ignorance and prejudice. It is surely better to admit 500,000 immigrants annually and have social peace than 1m and riots.

The reviewer would deny 500,000 people opportunity every year in order to maintain “social peace”. I say let the skinheads and fellow travellers riot — and bring them to justice for any crimes committed. Neanderthalic potential rioters must not be allowed to stall the elimination of apartheid.

Wiki search advertising

Tuesday, January 16th, 2007

has launched. It’s a reasonable idea, searching Wikipedia and sites Wikipedia links to (recalling search engines that have used to seed crawls). It’s much faster than Wikipedia’s built in search, but doesn’t satisfy me, as its Wikipedia results are out of date and imcomplete (indicators of the former include turning up deleted articles and finding nothing for ‘wikiseek’).

I find it interesting that Wikiseek’s footer says:

The majority of the revenue generated by Wikiseek advertising is donated to the Wikimedia Foundation.

That’s nice — apparently Searchme, Inc., intends to use Wikisearch to demonstrate its vertical search prowess — and it inspires a potential non-intrusive revenue model for Wikipedia that precisely copies Mozilla’s: sell inclusion in the search box/search page.

This wouldn’t be worth the hundreds of millions annually that tasteful text ads on articles could be (and the ability to fully fund* the Wikimedia Foundation’s mission), but it would surely obviate the need for begging to cover the costs of running Wikipedia.

* If politicians can use that vacuous phrase to indicate they “support education” I can use it in support of funding free knowledge projects.

Jamendo ad revenue share with artists

Tuesday, January 16th, 2007

is one of the most interesting music sites on the net (in terms business, community, and technology — there’s no competition yet for the vastness and bizarreness to be found on archive.org, yet). They’re trying every Web 2.0 trick and have somehow managed to avoid becoming overwhelmed with crap. I’ve listened to dozens of the 2,100 albums on Jamendo. While only a small fraction of these have strongly agreed with my taste, just about everything (weighted toward electronica and French rock) sounds professional.

Now Jamendo has introduced an advertising revenue sharing program with participating artists.

jamendo revenue share

Several video sites are attempting variations on this theme (among them , Lulu.tv, and ), but as far as I know Jamendo’s is the first attempt in the audio space. One might think an audio site would have a harder time making web advertising work than a video site (videos are usually watched within a web page and can have clickable ad areas or bumpers even if not), but I gather that listening via (usually Flash-based) audio players embedded in web pages is increasingly common (and Jamendo upgraded theirs recently), as will be media players that “play” a web page in a browser interface.

One data point: although Jamendo heavily promotes download of high quality copies, primarily via BitTorrent, their statistics indicate that low quality http “streaming” has accounted for more bandwidth. There are many obvious caveats here, but I think all points above indicate that advertising-supported web audio should not be ruled out, even if it is granted that web video has more potential.

Digg Jamendo’s revenue share page.

A border wall is not one-sided

Monday, January 15th, 2007

Roderick Long:

A wall that can be used to keep people out can also be used to keep people in.

Do we really want to trust the U.S. government – meaning not only the present regime but all future U.S. regimes – with a tool of that nature?

Similar arguments have been made many times regarding handing over power to the security state, but this is the first I’ve heard it specifically applied to building jurisdiction border walls.

Meanwhile the proposed U.S.-Mexico border fence could cost $49 billion, 25 times forecasts last year (zero surprise). Perhaps waiving environmental rules for the fence will save a pittance while continuing the security state’s best tradition of degradation.

Russian neanderthal vanguard

Monday, January 15th, 2007

Tom Palmer points out new laws cracking down on immigrant employment in Russia with a post title comment “Lou Dobbsian Economics Put into Practice in Russia”.

Palmer’s post is accompanied with a picture of marching Russian neo-nazis — neo-communists? — skinheads in any case, with armbands that would be unambiguously nazi if not for a hammer and sickle where a swastika would be expected.

It’s probable that Russian politicians are balder in their anti-immigrant pronouncements and Russian police more brutal in their enforcement, but the laws don’t sound all that foreign.

BBC:

President Vladimir Putin spoke of the need to defend the interests of the native population.

Markets - often a source of employment for Russia’s army of immigrant workers - were singled out.

“Markets” means open air retail, I gather, but delicious nonetheless. Longer BBC article here.

Reuters:

Russia introduced new laws on Monday that experts say are intended to plug a hole in the country’s labor market while discouraging foreigners from settling there permanently.

The laws, passed by parliament last year, are designed to streamline the red tape foreigners have to go through to live and work in Russia legally but will also reduce their numbers.

One change will implement a gradual ban on foreigners working as traders in outdoor markets where immigrants dominate, causing friction with ethnic Russians.

‘We want to get rid of illegal immigration,’ said Denis Soldatikov, a spokesman for the Federal Migration Service.

Television pictures on Monday showed rows of locked shops at a market in the Far Eastern city of Vladivostok heavily dependant on traders from neighbouring China.

‘The move was harmful because it will undermine trade,’ Vitkovskaya said. ‘I only hope no one is going to abide by it.’

But deputy Federal Migration Service head Vyacheslav Postavnin disagreed, saying the markets will adjust.

‘There are Russians to be hired,’ he told Rossiiskaya Gazeta daily. ‘Market owners will make sure that their business continues.’

Whenever you hear similar from those closer to home think of the skinheads and look in the mirror.

Your jurisdiction should open its borders

Saturday, January 13th, 2007

The January 13-19 Economist has a review of (and my first encounter with) ’s book Immigrants: Your Country Needs Them. The title and the review make the book sound a bit wishy-washy, but a review in the Guardian, reprinted on Legrain’s site makes it sound much better.

The central thrust is that immigration is economically beneficial. Fluid migration is as dynamic as every other form of free trade. “If you believe that the world is an unequal place and that the rich should do more to help the poor,” he writes, “then freer international migration should be the next front in the battle for global economic justice.”

Ironically, the book appears to not yet be available in the U.S. Amazon Canada will have it January 30.

Bogotá, as with the world

Saturday, January 13th, 2007

I have never visited , this is not a commentary on a city I do not know. I want to point out that Tyler Cowen’s thoughts on Bogota serve as a (presumably unintentional) metaphorical description of the entire world (sure, what you’re thinking, I just happened to notice this time).

How can such a nice place be in the midst of a civil war and guerrilla uprising? Why do leaders in the highest reaches of government secretly work with the paramilitaries? Does every radio station in the country play Juanes, and how long will their Tower branches last?

That excerpt is gratuitous, some of the rest requires just a bit more imagination.

Wikipedia advertising redux

Monday, January 8th, 2007

Many good comments regarding supporting advertising on Wikipedia (or not) here and also on Slashdot and other blogs. I may further characterize and respond to these in aggregate (see the update to my first post for some of this). For now I want to call out or respond to a few particularly worthy comments and criticisms.

Evan Prodromou’s comment:

One thing I wanted to respond to was that a couple of people seemed to think it incorrect on my part to refer to Wikipedia’s Web traffic as a “resource”. I’m not sure what else to call a potential source of tens, maybe hundreds of millions of dollars annually in income. But if people know a better word for it, please substitute that in.

Let me also point out that wikipedia.org’s current huge Web traffic is not a long-term sure thing. As Open Content, the encyclopedia can be copied onto any other Web site on the Internet, and sites like answers.com show that this can be lucrative. Anyone familiar with the Open Directory (http://dmoz.org/) knows that it’s copied to Google Categories, Yahoo Directory, and dozens of other high-profile sites. In 5 years, will there be thousands of mirrors of Wikipedia on the Web? Will wikipedia.org become more like editors.dmoz.org — an editorial interface for a data set served from many other servers?

If that’s the case, will we look back on the high-traffic days of 2005-2008 as the time when we wasted somewhere around half a billion dollars in potential revenue? Will the WMF really be glad at that point that it did so?

I hadn’t thought of this scenario and don’t consider it likely, but do think it is an important consideration. I think the canonical was seriously disadvantaged in two ways Wikipedia is not — a fairly closed editorial process (e.g., I’ve applied a few times over the years and don’t recall getting any feedback, not even rejection) and probably a horrible editor interface (e.g., I was accepted as an editor at Chef Moz, a sister site of dmoz.org — and ran away screaming).

How could Wikimedia sites lose traffic to copies? Presumably much of Wikipedia traffic comes from Google. If Google published a branded copy (with ads of course) and promoted it in (or above) search results, Wikipedia would presumably lose lots of traffic (and many people would call Google evil for it, at least for awhile). I’m sure there are more creative scenarios in which Wikimedia sites lose traffic.

Peter McCluskey:

Mike Linksvayer has a fairly good argument that raising X dollars by running ads on Wikipedia won’t create more conflict of interest than raising X dollars some other way.

Almost. The second X is Y and an order of magnitude or so smaller than X. McCluskey:

But the amount of money an organization handles has important effects on its behavior that are somewhat independent of the source of the money, and the purpose of ads seems to be to drastically increase the money that they raise.

I can’t provide a single example that provides compelling evidence in isolation, but I think that looking at a broad range of organizations with $100 million revenues versus a broad range of organizations that are run by volunteers who only raise enough money to pay for hardware costs, I see signs of big differences in the attitudes of the people in charge.

Wealthy organizations tend to attract people who want (or corrupt people into wanting) job security or revenue maximization, whereas low-budget volunteer organizations tend to be run by people motivated by reputation. If reputational motivations have worked rather well for an organization (as I suspect the have for Wikipedia), we should be cautious about replacing those with financial incentives.

It’s possible that the Wikimedia Foundation could spend hundreds of millions of dollars wisely on charity, but the track record of large foundations does not suggest that should be the default expectation.

Yes, this could be a major problem. As I said last year, “[advertising] could fund a staggering Wikimedia Foundation bureaucracy, or it could fund additional free knowledge projects.” The possibility that new funds will not be used effectively lowers the expected benefit of running ads. Two items give me some confidence that the Wikimedia Foundation would be less susceptible to waste than the average foundation:

  • Wikimedia Foundation’s history of transparency sets the tone for what would become a much larger organization
  • An incomparable set of watchdogs (Wikipedians)

Regarding subversion of current volunteer motivations and ethics (which is really the point of McCluskey’s post), I would not advocate financial incentives for functions currently carried out by volunteers, certainly not any content-related function. Of course given large amounts of money there would be pressure to convert an ever larger group of volunteers into employees, regardless of what advocates of advertising on Wikipedia might have wanted. The possibility that this would occur and go badly should also weigh against advertising.

Addressing this possibility, I concur with Per Abrahamsen’s recommendation segregating Wikimedia projects and foundation funding of compatible projects:

Wikipedia is clearly able to earn its own money, begging for donations on the front (and every other) page is an insult to both visitors, and to the many worthy cases that are not in that lucky position.

So I support advertising on Wikipedia.

The adds should be non-intrusive, textual, clearly separated from content, and selected algorithmically, similar to the adds known from Google.

However, if the money are really that big (more than the current need), additional precautions would have to be taken. The most important would be to split the foundation into two, with watertight boundaries between. One that ran the current Wikimedia projects, and another solely responsible for distribution the ad-money between causes that promote the goals of the foundation, but had no say in the running of any of the projects. Money do corrupt, hence the separation.

Slashdot commenter FooAtWFU (and others) suggested that the real problem with advertising is that large numbers of contributors would leave in protest, seriously damaging Wikipedia. I doubt it. A very vocal minority would raise hell and some of them would leave, at least temporarily. I suspect most contributors would not even notice the presence of ads. I conjecture that Wikipedia contributors, however superior some may feel, are not that different from MySpace “contributors” (who seem not to be deterred by gratutous advertising). In a relatively short time (a year is my wild guess) a majority of contributors would have become contributors after advertising had begun. Such is the nature of a rapidly growing site.

A 2002 fork of () could be interpreted as evidence in either direction. The fork apparently occurred in part due to “our rejection of censorship, of an editorial line, and of including advertising.” Whatever the merits of these claims, article counts show the fork growing more quickly for about a year and a half. From 2004 on Spanish Wikipedia grew much more quickly and currently is over five times the size of Enciclopedia Libre. So the loss of those ideologically motivated against advertising and perhaps with other complaints could be seen as a terrible blow to Spanish Wikipedia (a year or more delayed progress) or no big deal, considering current relative sizes. Is there any reason to think the proportion of Spanish Wikipedians disgusted by advertising is significantly different than that of any other language?

Of course it is possible if Wikipedia had taken ads in 2002, many more may have left, and perhaps the fork would now be five times the size of the parent instead of vice versa. This would not necessarily be a horrible thing. After all, the two sites (and any potential Wikipedia fork) use the same license, so work done on one is not entirely lost to the other.

This does suggest an experiment however — run ads on Spanish Wikipedia and see how many contributors move to Enciclopedia Libre. The existence of the latter would make it both easier for ad objectors to move and easier to determine who had moved, indicating a probable maximum negative impact on contributions to other Wikipedias, should they run ads, as no other language has an alternative as viable as Enciclopedia Libre — at least not viable for those who hate ads! The largest encyclopedic wikis outside Wikimedia run Google AdSense, e.g., (Russian) and (Swedish).

Debunking debunking bad debunkers

Monday, January 8th, 2007

Yesterday I attended a talk by Aubrey de Grey, the purpose of which seemed to be to get feedback on messaging to potential donors. The feedback was good, but perhaps hard to hear. I hope de Grey uses some of it. Much of the feedback could apply to anyone selling a radical program.

Don’t dwell on your critics. Debunking detractors is too easy, comfortable, and personal. Every second you’re telling me why your detractors are wrong you’re not telling me how your idea will work. Suspicious. Reason puts it well:

[E]very new idea, every plan, arrives associated with a raft of dumb objections, but you won’t convince a smart, educated audience of the merits of your idea by taking time to dispel the dumb objections. The world is full of dumb ideas - many more of them than good ideas. Dumb ideas also arrive accompanied by dumb objections (just look at any average day in politics…), and one of the chores of being involved in a funding organization is to listen to people trying to demonstrate that a dumb idea has merit by demolishing dumb objections to that dumb idea. This is a form of rhetorical alchemy - often performed quite innocently by those sold on a plan that just won’t work - that raises red flags for folk in funding organizations.

Don’t dwell on the of your program (unless they’re short term money makers). De Grey claimed that repairing each of the seven causes of aging (with the possible exception of mutant mitochondria) individually would cure a raft of diseases. If true, this should be more than adequate to fund fixes for each of the seven causes individually without ever mentioning any potential for life extension. De Grey claimed this is a hard argument to make, as curing individual diseases through other means will be less expensive than the relevant cause of aging fix. If true, de Grey is either extremely optimistic about conventional medical research or is lying about the level of funding needed for his program, considering the $US billions spent on individual disease research annually. I suspect de Grey is wrong on this point and hope other researchers and organizations take an engineering-fixes-for-causes approach via funding for individual disease research.

Since my last (peevish) post mainly about de Grey’s work slightly over a year ago, Methuselah Mouse Prize total ($1.6m received plus $2.5m committed) funding has risen by nearly $1m. More importantly $4m has been raised for the research program, with LysoSENS and MitoSENS work having begun. De Grey also had a more concrete plan for ramping up the research program as funding becomes available than I recall having seen before; unfortunately I couldn’t find it quickly at sens.org.

I still highly recommend giving to the Methuselah Mouse Prize/Foundation. Highly recommend would be an understatement. I don’t know of a more important cause.

Somewhat relatedly, I want to reiterate that even without repair technologies, increased lifespan over the past century was concomitant with decreased absolute time spent in a diseased state and that on an individual level, a healthy life expectancy increase is available now, no technology required.

Update 20070109: Reason argues that if the focus is not on fighting aging, progress will only be incidental and inefficient. Perhaps, but if nearly everyone is in a “pro-aging trance” as de Grey is fond of saying, should your marketing really depend on breaking that trance? Let’s face it, in all probability that trance will not be broken and relative to the medical innovations required is not even a major obstacle. Individuals will nearly always choose to prolong health and life (when self-control is not involved anyway), regardless of their emotional or religious attachments to death. In my view de Grey has done a great service by identifying a set of targets for repair and recommending an engineering approach. If there’s value in his approach it will be used by others with smaller goals resulting in faster and more efficient incidental progress against aging. The indefinite lifespan part of his pitch is just Macho Flash:

Macho Flash WORKS internally — at raising the most money from a small group of people (which then also KEEPS us small and insignificant).

BlackNet is a wiki?

Sunday, January 7th, 2007

Wikileaks, currently vapor, may be a joke. If Wikileaks is not a joke and if it successfully exposes a large number of secrets, I’d find it hilarious to see this happening on a public website and without financial incentives. P2P, digital cash, information markets, and crypto anarchy? Nope, just a wiki and a communinty.

Wikileaks FAQ:

WikiLeaks will be the outlet for every government official, every bureaucrat, every corporate worker, who becomes privy to embarrassing information which the institution wants to hide but the public needs to know. What conscience cannot contain, and institutional secrecy unjustly conceals, WikiLeaks can broadcast to the world.

Untraceable Digital Cash, Information Markets, and BlackNet (1997, but these ideas spread widely in the early 1990s):

One of the most interesting applications is that of “information markets,” where information of various kinds is bought and sold. Anonymity offers major protections for both buyers and sellers, in terms of sales which may be illegal or regulated. Some examples: corporate secrets, military secrets, credit data, medical data, banned religious or other material, pornography, etc.

Why is more information not leaked on the net already? The technology exists to do so anonymously and has for a long time. Why is there not (or to what extent is there) a market for secrets? Again, the technology exists.

Perhaps lack of the relevant institutions in each case. One could email secrets or post to a blog anonymously, but what then? Will anyone notice? One could want to sell secrets, but how to find a buyer?

If Wikileaks succeeds it will be because it will provide, or rather its community will be, the relevant institution. Again from the Wikileaks FAQ:

WikiLeaks opens leaked documents up to a much more exacting scrutiny than any media organization or intelligence agency could provide: the scrutiny of a worldwide community of informed wiki editors.

Instead of a couple of academic specialists, WikiLeaks will provide a forum for the entire global community to examine any document relentlessly for credibility, plausibility, veracity and falsifiability. They will be able to interpret documents and explain their relevance to the public. If a document is leaked from the Chinese government, the entire Chinese dissident community can freely scrutinize and discuss it; if a document is leaked from Somalia, the entire Somali refugee community can analyze it and put it in context.

I have not read the Wikileaks email archived at cryptome.

I support advertising on Wikipedia

Tuesday, January 2nd, 2007

Wikimedia Foundation is over halfway through a . I hope that when you give you leave the following public comment:

I support advertising on Wikipedia.

Evan Prodromou summarizes a completely unwarranted controversy regarding a matching fund (bottom of page):

All fine so far, right? But a small logo in the donations notice — seen by non-logged-in users on every page of every WMF site — was considered by many Wikipedians and other WMF editors as dangerously close to the line on advertising — or over it. There have been several prominent users who have left the project because of it.

I’m not sympathetic with these folks; in fact, I’m in solid opposition. I think that Wikipedia’s huge amount of Web traffic is a resource that the Foundation is squandering. Traffic like Wikipedia’s is worth tens of millions if not hundreds of millions of dollars in ad revenue per year. That’s money that could go to disseminate free (libre and gratis) paperback pocket encyclopedias to millions of schools and millions of children, in their own language, around the world.

It’s irresponsible to abuse that opportunity.

I strongly agree and will repeat exactly what I said during last year’s Wikimedia fund drive:

Wikipedia chief considers taking ads (via Boing Boing) says that at current traffic levels, Wikipedia could generate hundreds of millions of dollars a year by running ads. There are strong objections to running ads from the community, but that is a staggering number for a tiny nonprofit, an annual amount that would be surpassed only by the wealthiest foundations. It could fund a staggering Wikimedia Foundation bureaucracy, or it could fund additional free knowledge projects. Wikipedia founder Jimmy Wales has asked what will be free. Would an annual hundred million dollar budget increase the odds of those predictions? One way to find out before actually trying.

In somewhat related news, Mozilla just reported 2005 financial information, showing 800% revenue growth:

In 2005 the Mozilla Foundation and Mozilla Corporation combined had revenue from all sources of $52.9M. $29.8M of this was associated with the Foundation (both before and after the creation of the Corporation). The bulk of this revenue was related to our search engine relationships, with the remainder coming from a combination of contributions, sales from the Mozilla store, interest income, and other sources. These figures compare with 2003 and 2004 revenues of $2.4M and $5.8M respectively, and reflect the tremendous growth in the popularity of Firefox after its launch in November 2004.

The combined expenses of the Mozilla Foundation and Corporation were approximately $8.2M in 2005, of which approximately $3M was associated with the Foundation. By far the biggest portion of these expenses went to support the large and growing group of people dedicated to creating and promoting Firefox, Thunderbird, and other Mozilla open source products and technologies. The rate of expenses increased over the year as new employees came on board. The unspent revenue provides a reserve fund that allows the Mozilla Foundation flexibility and long term stability.

An advertising-fueled Wikimedia Foundation could fund dozens of much needed Mozilla Firefox sized projects. And many Creative Commons (which just successfully completed its much more modest annual funding campaign) initiatives. :)

Update: Welcome Slashdot readers. The major objection to ads on Wikipedia takes two forms:

  • Advertising is profane.
  • Advertising would compromose Wikipedia’s neutrality.

A common response to the first is that those who don’t like ads can run an ad blocker. Easier still, those who don’t like ads can log in — there’s little reason to display ads to logged in users, who probably generate a tiny fraction of pageviews. But I don’t think either of these responses will satisfy this form of the objection, as it is basically emotional. Some people object to the knowledge that ads exist, even if not experienced personally. I suppose these people don’t use search engines. It’s a wonder they can stand to use the net at all. I discount them completely.

The second is completely unrealistic. How would third party text ads, e.g., via AdSense, compromise neutrality? There’s simply no vector for an advertiser to demand changes and zero reason for Wikipedians to comply. Wikipedia is not a small town newspaper beholden to the local department store, not even close. It isn’t even Slashdot, which as far as I can tell has not been compromised by years of running ads. To people with this objection: show me a community site that has gone astray due to advertiser influence.

Sponsors, “being managed by Wikipedia staff (like in newspaper ads, i.e. no uncontrolled 3rd party feeds)”, as suggested by Kuba Ober, are far more dangerous than third party ads, because then there is a vector between advertiser and someone with power at Wikipedia.

There may be an opportunity for Wikipedia to completely rethink and remake advertising, or merely compete in some fashion with what some are calling Google’s near monopoly, but now it would make tremendous sense to use AdSense or Yahoo! or both — and I suspect Wikipedia could manage to keep a greater share of revenue than a normal web publisher. Rick Yorgason mocked up what AdSense would look like in the place of the current fundraiser’s donation banner.

Slashdot commenter jklooserman summarizes objections from Wikiproject no ads:

  1. Wikipedia’s philosophy is non-commercial
  2. Ads put at risk Wikipedia’s principle of Neutral Point of View (NPOV)
  3. The information that constitutes Wikipedia is wealth for the community

I don’t see “non-commercial” in any form on the Wikimedia Foundation home page. I do see this, in large text:

Imagine a world in which every single human being can freely share in the sum of all knowledge. That’s our commitment.

The next line, all bold, asks for help in the form of donations.

Much more money, hundreds of millions, would speed the arrival of that world and fulfillment of that commitment.

As above, there is no realistic scenario for ads undermining neutrality on Wikipedia.

The third objection strikes me as a non-sequitur. In any case, the point of obtaining more resources would be to increase the wealth of the community — of all human beings.

jklooserman also pointed out that there’s a category of Wikipedians who think that the Wikimedia Foundation should use advertising. Add it to your user page if you agree.

More economic neanderthals

Sunday, December 31st, 2006

Trade may have been one point on which modern humans outcompeted Neanderthals (the latter didn’t tade over long distances).

New research claiming that Neanderthals were economic numbskulls got some press earlier this month, e.g., NYT, and here’s a quote from the Economist ($, online see below):

The archaeological record, however, shows few signs of any specialisation among the Neanderthals from their appearance about 250,000 years ago to their disappearance 30,000 years ago. Instead, they did one thing almost to the exclusion of all else: they hunted big game.

No trade, no , what’s not the love for a modern economic protectionistneanderthal? Today’s big game? “” corporations.

The paper is What’s a Mother to Do? The Division of Labor among Neandertals and Modern Humans in Eurasia by Steven L. Kuhn and Mary C. Stiner ($; I don’t see a non-gated version online). John Hawks has a negative review of the article.

Via Peter Gordon, who provides full text of the Economist article, and who also calls protectionists Neanderthals, and also blogged the same economic neanderthal article I did last year.

Las Vegas

Tuesday, December 26th, 2006

Driving around the south, west, and near east parts of Las Vegas, I see an incredible number of shopping centers. Mostly strip malls, but not rinky-dink strip malls, and not with empty parking lots. The only stores I entered were Trader Joe’s and Whole Foods, both packed. How can Las Vegas support so much shopping?

, centered around a few mega-strip malls, is pretty impressive, spread along several (very long) blocks along Spring Mountain Road.

Commercial Center, a cluster of old and presumably low-rent strip malls, appears to be the place for off-strip dining (I didn’t actually try anyplace in Chinatown, though I would have made an opportunity to try Satay had I seen a just-published review). The last time in Las Vegas (2002) I had a very good meal at Lotus of Siam, one of the few places I’ve encountered that sort of listens to requests for very hot food. I forgot the name and returned to Komol instead (across the parking lot), which was passable. Nearby India Palace provided a passable Dosa (their ad said “We Have Dosa!”)

I didn’t notice solar panels on any buildings despite the ideal climate for solar power. I conjecture that solar power is still not economical anywhere and perhaps Nevada offers fewer subsidies and Nevada residents are less interested in appearing green than California and Californians. Did I look in the wrong places?

Why does anyone play slots? What could be more boring? The people playing don’t look like they’re having fun (many of the people playing games with cards look like they are).

I think I read somewhere that the Cirque du Soleil is the Starbucks of performance. Seems apt. Five permanent shows running in Las Vegas, not counting imitators.

The Las Vegas Art Museum looks worth visiting, or will be by the next time I visit the area (which could be years). It appears they decided to be a contemporary museum last year. The current location shared with the Sahara West Library is nice. Unfortunately I only noticed on the way out of town and didn’t have time to look in.

is really neat and not at all crowded. If I look funny in the picture below I assure you it is only due to the extra 86 meters of atmosphere on top of me.

I immediately recognized as the armpit of California. Turns out it’s the armpit of America. Marvel at the sight and especially the smell. Well worth a pitstop on the way out of Death Valley.

Free software and social revolution

Sunday, December 10th, 2006

’s talk Software and Community in the Early 21st Century expresses an aspiration and belief that as nonrivalrous components of the economy become more important peer production can produce radical equality where previous movements with the same ostensible aims have used violence, killed many people, and failed. An excerpt (transcript), emphasis added:

Ownership of software as a way of producing software for general consumption is going out, for economic reasons. But as I said, the economic insight that we can get from watching the transition from steel to software is far less important than the moral analysis of the situation. The moral analysis of the situation presents where we are now as, if I may borrow a phrase, a singularity in human affairs.

One of the grave problems of human inequality for everyone who has attempted to ameliorate the problem of human inequality – which is most thinkers about the morality of social life – the greatest problem of human inequality is the extraordinary difficulty in prising wealth away from the rich to give it to the poor, without employing levels of coercion or violence which are themselves utterly corrosive to social progress. And repeatedly in the course of the history of our human societies, well-intentioned, enormously determined and courageous people willing to sacrifice their lives for an improvement in the equality of human life have had to face that problem. We cannot make meaningful redistribution fast enough to maintain momentum politically without applying levels of coercion or violence which will destroy what we are attempting. And again and again, as Isaiah Berlin and other late 20th century political theorists pointed out, through hubris, through arrogance, through romanticism, through self-deception, parties seeking permanent human benefit and an increase in the equality of human beings have failed that test and watched as their movements of liberation spiraled downward from the poison of excess coercion.

We do not have to do that anymore.

The gate that has held the movements for equalization of human beings strictly in a dilemma between ineffectiveness and violence has now been opened. The reason is that we have shifted to a zero marginal cost world. As steel is replaced by software, more and more of the value in society becomes non-rivalrous: it can be held by many without costing anybody more than if it is held by a few.

This reminds of a 1992 Richard Stallman quote:

If we don’t want to live in a jungle, we must change our attitudes. We must start sending the message that a good citizen is one who cooperates when appropriate, not one who is successful at taking from others.

There’s much to debate concerning the speed, scope, and desirability of political and social change led by peer production. However, I find observations like the above rather satisfying and I believe deeply underappreciated. Peer production will not lead to absolute equality, but it does increase the scope for equality, freedom, autonomy, and decrease the need for violence or threats thereof. In other words, liberal ends achieved through liberal means, for a very broad range of meanings of “liberal.”

This I find more compelling than discussion of liberal/libertarian fusionism embedded deeply in the context of current U.S. jurisdiction politics. But perhaps my thought is too embedded in the free software context, and too cynical about power politics.

Moglen talk via Slashdot, also blogged at Creative Commons. Stallman quote via Dan Connolly.

Iraq withdrawal and civilian casualties

Saturday, November 25th, 2006

I don’t follow Iraq closely, but recent headlines seem to indicate a turn for the worse and that withdrawal of U.S. troops is now on the table.

It should not have been difficult to predict that invasion would turn out badly, but politicians make the same mistakes (less charitably–tell the same lies) repeatedly, in particular when it comes to war (one reason why).

Among all the tragedies of the Iraq war, a small one is that there was no set of conditional prediction markets to consensus check (an analogue of “fact check”?) likely outcomes. An arbitrary expert can always be countered with another arbitrary expert. The nice thing about prediction markets here is that they converge to a single consensus probability (or set of interlinked probabilities for a set of claims) given the possibility of arbitrage. Faced with a market that says what a politician wants to do will probably have ill effects, the politician can ignore the consensus, but can’t counter it will an equivalent, as can be done with any expert.

So should the U.S. withdraw its military from Iraq? Unfortunately I do not know of a conditional market set up to guess the impact. Iraq-related markets I found:

Unfortunately all of these are play money markets and all only concern U.S. troops. What about Iraqi civil war or economic performance? Fortunately we can use one of these markets as an input for a conditional market that attempts to guess the impact of withdrawal on Iraq. I used the second, as it maps directly to a probability, unlike the first, and is not deemed to be an incredibly long shot, unlike the third.

The Iraqi Body Count currently says a lower bound of 47,781 Iraqi civilians have been killed since the invasion. I assume if that lower bound moves to 100,000 or greater by the end of 2007, a civil war has occurred or is in progress.

So I set up Iraq withdrawal and civilian casualties on Inkling, with four stocks:

  • USLEAV07 true AND >= 100k IBC EOY 2007
  • USLEAV07 true AND < 100k IBC EOY 2007
  • USLEAV07 false AND >= 100k IBC EOY 2007
  • USLEAV07 false AND < 100k IBC EOY 2007

I set the intial price of the first two at 12 each and the second two at 38 each, reflecting the 24 percent chance of substantial troop reduction given by Newsfutures traders and a 50/50 chance of civil war (I don’t know of a probability source for the latter). In theory prices should move to whatever traders think the probabilities actually are regardless of their initial settings.

There are two major problems with this experiment. First, a spike in violence may make troop reductions more (or less) likely, which makes it harder to divine the impact of troop reductions on violence.

Second, Inkling markets are sometimes at great variance with others or common sense, e.g., Hilary Clinton is given a 28 pecent chance of winning the 2008 Democratic nomination, others have her around 50 percent.

I surmise that there is something wrong with Inkling. That something could be just that it has no users. I set up this experiment on Inkling because it was trivial to do so, but I’d really like to see Tradesports/Intrade set up real money contracts along these lines.

Update: The first problem can be removed by ignoring deaths through April 2007. I will create a new market reflecting this…

Iraq withdrawal and civilian casualties (improved) is running with the following stocks:

  • USLEAV07 true AND IBC >= 40k May-Dec07
  • USLEAV07 true AND IBC < 40k May-Dec07
  • USLEAV07 false AND IBC >= 40k May-Dec07
  • USLEAV07 false AND IBC < 40k May-Dec07

Update 20061127: The improved market is now actually running, was previously held for admin approval.

Update 20061211: Followup posted at Midas Oracle.

Schoeck’s Envy

Friday, November 24th, 2006

What better way to celebrate than to ponder ? ’s Envy: A Theory of Social Behavior (1969, German original 1966) makes the case that envy and envy avoidance are important determinants of human social behavior and that envy is greater when similarity is greater.

The envy Schoeck writes of is destructive. If I am jealous, I want to take what the other has. If I am envious, I want to destroy what the other has — the envied should be brought down to the envier’s level, at least. This desire for destruction is not bizarre if you adopt the mindset of a magic-filled and world, apparently the norm for most of history and pre-history, and perhaps for most people in the world, still.

In such a world a good harvest or successful hunt may only be obtained through black magic which ensures others will not succeed. Apparently the and analogues intended to ward off the effects of envy are ubiquituous in pre-inudstrial human cultures, as are condemnation of envy and envy avoidance strategies.

If we accept that envy is important and detrimental, what to do about it? Schoeck argues that removing the apparent causes of envy by making everyone (more) equal will not help. A high school teacher is more likely than a manual laborer to envy a university professor, as the teacher can see himself in the professor’s shoes. Envy, or at least envy avoidance in the form of leadership position avoidance, was apparently rampant in , the largest and most sustained effort to build societies based on everyone-is-absolutely-equal principles, according to Schoeck (forty years later, the current Wikipedia article says “While the kibbutzim lasted for several generations as utopian communities, most of today’s kibbutzim are scarcely different from the capitalist enterprises and regular towns to which the kibbutzim were originally supposed to be alternatives.”) Perhaps the furthest claim made against absolute material equality by Schoeck is this (p. 342):

[Complete levelling] overlooks the important function of material inequalities. The envious man is able to endure his neighbour’s superiority as regards looks, youthfulness, children, married happiness, only by envying the other’s income, house, car and travels. Material factors form a socially necessary barrier against envy, protecting the person from physical attack.

Some of the ways mentioned by Schoeck that societies have mitigated envy (apart from condemning it) include belief in fate or luck (which can account for different outcomes in place of invidious magic), belief in non-envious gods, religious endorsement of individual achievement (i.e., some forms of protestantism), and commercial intermediaries. Regarding the last, Schoeck says a buyer will always be envied by a seller in pre-industrial society. Mass production and intermediaries perform envy arbitrage (my made up term) and thus remove a dangerous element hindering the division of labor.

While Schoeck surveys lots of historical, anthropological, personal, and literary anecdotes in support of his claims, it all seems rather hodge-podge. Most egregiously missing is any kind of evolutionary perspective. Animal (pp. 91-97) and psychology (pp. 98-105) experiments are mentioned, but all address envy indirectly at best. I suspect some of the anthropology Schoeck cites will have been discredited in the intervening forty years as well. One example I consider suspect (I mainly include it for your entertainment; I found it hilariously over the top) is Schoeck’s description of Maori muru raids (p. 391):

A man with property worth looting by the community could be certain of muru, even if the rea culprit was one of his most distant relatives. (The same kind of thing was observable during European witch trials.) If a Maori had an accident by which he was temporarily incapacitated, he suffered muru. Basically, any deviation from the daily norm, any expression of individuality, even through an accident, was sufficient occasion for the community to set upon an individual and his personal property.

The man whose wife committed adultery, the friends of a man who died, the father of a child that injured itself, the man who accidentally started a grass fire in a burial ground (even though no on had been buried there for a hundred years) are all examples–among innumerable others–of reasons on account of which an individual might lose his property, including his crops and his stores of food.

Did Dr. Seuss write this? A bit more:

In practice the institution of muru meant that no one could ever count on keeping any movable property, so that there could be no incentive to work for anything. No resistance was ever offered in case of a muru attack. This would not only have involved physical injury but, even worse, would have meant exclusion from taking part in any future muru attack. So it was better to submit to robbery by the community, in the hope of participating oneself in the next attack. The final result was that most movable property–a boat, for example–would circulate from one man to the next, and ultimately become public property.

So who was stupid enough to build the boat? Schoeck cites p. 87 of Eldon Best’s 1924 book The Maori, which is online, but doesn’t seem to say much more about muru than what Schoeck repeats above. A modern interpretation of muru seems to be here. A student paper on the Maori legal system largely citing this link is here, from the same Legal Systems Very Different From Ours class that produced an informative paper on the Aztec legal system I mentioned previously. I highly recommend checking out the site for that class or similar before assuming another culture’s institutions are so bizarre they could not serve a productive purpose.

Schoeck also claims in various places (e.g., p. 304) that society could not function without a modicum of envy, without which social controls would be impossible. On this topic he never moves beyond mere assertion and is not convincing. Innovation is another possible good outcome of envy, though Schoeck’s example is support of this seems rather lame (p. 403):

[T]he man in question may be a discontented, disregarded member of a primitive tribe who makes a show of being the first to be inoculated or treated by a Western doctor, in order to put his own medicine man’s nose out of joint. But his ‘courage,’ and the success of the treatment, induce other members of the tribe to follow his example, so that by degrees scientific medical care can be introduced. Thus, in this particular case (and disregarding certain side-effects), the envious man ‘who always sought to do harm’ had achieved something beneficial for his group.

A modern example may be one who works on free software in part to bring Bill Gates down; the former’s destructive urge is channeled into production.

I enjoyed reading Envy, and much of the enjoyment came not directly from the subject at hand, but from seeing the world through the eyes of a slightly different time period and culture. Some items I found interesting follow.

(p. 258) The Soviet Union had a seemingly low income tax (13 per cent) and high social stratification. Why bother with an income tax … presumably the state pays everyone? I know almost nothing about how communist economies actually functioned.

(p. 289)

[T]he young man who has hung around graduate school until he is twenty-six or twenty-eight to acquire his doctorate or M.A. in the (correct) belief that his college diploma was no longer of much significance is not really content to be a trainee in a bank of a business firm.

If there’s a trend at all, it’s older than I thought.

(pp. 330-332) The first Labour government in the UK produced a crisis of conscience in some of the new members of that government. They were dedicated to equality, but would be drawing high salaries in government. They got over it quickly.

(pp. 373)

In 1959, when the Soviet Union had already set its course unequivocally in the direction of private property and a consumer society

Was Schoeck amazingly prescient or engaging in wishful thinking? Was this conventional wisdom among sovietologists in the early 1960s, or would Schoeck have been considered crazy for this statement?

A biographical page included in the front of Envy contains this amazing sentence:

He was a student of medicine and psychology at the University of Munich from 1941 to 1945.

This sounds completely normal, until you consider the location and years. Schoeck would have been 19 in 1941. How did he escape the army? He looks able-bodied in a photograph. Someone I mentioned this to joked that perhaps Shoeck was so envied during this period for having avoided the Wehrmacht that he became obsessed with envy. What is the real story?

I found Envy interesting and Schoeck’s claims about the importance and nature of envy somewhat plausible, but the subject cries out for treatment by a modern social scientist with far more data, tools for data analysis, and evolutionary theory at hand. Perhaps Bryan Caplan will write such a book. I learned of Envy via one of Caplan’s posts.