Post Economics

Steps toward better software and content

Saturday, December 1st, 2007

The Wikimedia Foundation board has passed a resolution that is a step toward Wikipedia migrating to the Creative Commons Attribution-ShareAlike license. I have an uninteresting interest in this due to working at Creative Commons (I do not represent them on this blog), but as someone who wants to see free knowledge “win” and achieve revolutionary impact, I declare this an important step forward. The current fragmentation of the universe of free content along the lines of legally incompatible but similar in spirit licenses delays and endangers the point at which that universe reaches critical mass — when any given project decides to use a copyleft license merely because then being able to include content from the free copyleft universe makes that decision make sense. This has worked fairly well in the software world with the GPL as the copyleft license.

Copyleft was and is a great hack, and useful in many cases. But practically it is a major barrier to collaboration in some contexts and politically it is still based on censorship. So I’m always extremely pleased by any expansion of the public domain. There could hardly be a more welcome expansion than ‘s release of his code (most notably ) into the public domain. Most of the practical benefit (including his code in free software distributions) could have been achieved by released under any free software license, including the GPL. But politically, check out this two minute video of Bernstein pointing out some of the problems of copyright and announcing that his code is in the public domain.

Bernstein (usually referred to as ‘djb’) also recently doubled the reward for finding a security hole in qmail to US$1,000. I highly recommend his Some thoughts on security after ten years of qmail 1.0, also available as something approximating slides (also see an interesting discussion of the paper on cap-talk).

gOS: the web takes and gives

Saturday, November 24th, 2007

I imagine thousands of bloggers have commented on , a Linux distribution featuring shortcuts to Google web application on the desktop and preloaded on a PC sold (out) for $200 at Wal-Mart. Someone asked me to blog about it and I do find plenty interesting about it, so thus this post.

I started predicting that Linux would take over the desktop in 1994 and stopped predicting that a couple years later. The increasing dominance of web-based applications may have me making that prediction again in a couple more years, and gOS is a harbinger of that. Obviously web apps make users care less about what desktop operating system they’re running — the web browser is the desktop platform of interest, not the OS.

gOS also points to a new and better (safer) take on a PC industry business model — payment for placement of shortcuts to web applications on the desktop (as opposed to preloading a PC with crapware) — although as far as I know Google isn’t currently paying anything to the gOS developers or , which makes the aforementioned cheap PC.

This is highly analogous to the Mozilla business model with a significant difference: distribution is controlled largely by hardware distributors, not the Mozilla/Firefox site, and one would expect end distributors to be the ones in a position to make deals with web application companies. However, this difference could become muted if lots of hardware vendors started shipping Firefox. This model will make the relationship of hardware vendors to software development, and particularly open source, very interesting over the next years.

One irony (long recognized by many) is that while web applications pose a threat to user freedoms gained through desktop free and open source software, they’ve also greatly lowered the barriers to desktop adoption.

By the way, the most interesting recent development in web application technology: Caja, or Capability Javascript.

Requirements for community funding of open source

Saturday, November 24th, 2007

Last month another site for aggregating donation pledges to open source software projects launched.

I’m not sure there’s anything significant that sets Cofundos apart from microPledge featurewise. Possibly a step where bidders (pledgers) vote on which developer bid to accept. However I’m not certain how a developer is chosen on microPledge — their FAQ says “A quote will be chosen that delivers the finished and paid product to the pledgers most quickly based on their current pledging rate (not necessarily the shortest quote).” microPledge’s scheme for in progress payments may set it apart.

In terms of marketing and associations, Cofundos comes from the Agile Knowledge Engineering and Semantic Web research group at the University of Leipzig, producers of , about which I’ve written. Many of the early proposed projects are directly related to AKSW research. Their copyright policy is appreciated.

microPledge is produced by three Christian siblings who don’t push their religion.

Cofundos lists 61 proposed projects after one month, microPledge lists about 160 after about three and a half months. I don’t see any great successes on either site, but both are young, and perhaps I’m not looking hard enough.

Cofundos and microPledge are both welcome experiments, though I don’t expect either to become huge. On the other hand, even modest success would set a valuable precedent. In that vein I’ve been pretty skeptical about the chances of Fundable, they seem to have attracted a steady stream of users. Although most projects seem to be uninteresting (pledges for bulk purchases, group trips, donations to an individual’s college fund, etc), some production of public goods does seem to being funded, including several film projects in the small thousands of dollars range. Indeed, “My short film” is the default project name in their form for starting a project.

It seems to me that creating requirements and getting in front of interested potential donors are the main challenges for sites focused on funding open source software like Cofundos and microPledge (both say they are only starting with software). Requirements are just hard, and there’s little incentive for anyone to visit an aggregator who hasn’t aggregated anything of interest.

I wonder if integrating financial donations into project bug tracking systems would address both challenges? Of course doing so would have risks, both of increasing bureaucracy around processing bugs and feature requests, necessity of implementing new features (and bugs) in the relevant bug tracking software, and altering the incentives of volunteer contributors.

Via Open Knowledge Foundation Blog.

bar : sex :: social networking site : spam

Thursday, November 22nd, 2007

Brad Templeton on Facebook apps that aggressively request access to your private data (relatedly Templeton on the economics of privacy and identity is a must read) and spam your friends:

Apps are not forced to do this. A number of good apps will let people see the data, even put it in feeds, without you having to “install” and thus give up all your privacy to the app. What I wish is that more of us had pushed back against the bad ones. Frankly, even if you don’t care about privacy, this approach results in lots of spam which is trying to get you to install apps. Everybody thinks having an app with lots of users is going to mean bucks down the road, with Facebook valued as highly as it is.

But a lot of it is plain old spam, but we’re tolerating it because it’s on Facebook. (Which itself is no champion. They have an extremely annoying email system which sends you an e-mail saying, “You got a message on facebook, click to read it” rather than just including the text of the message. To counter this, there is an “E-mail me instead” application which tries to make it easier for people to use real E-mail. And I recently saw one friend add the text “Use E-mail not facebook message” in her profile picture.)

The title of this post was my first Facebook status message earlier this year. In other words, social networking sites are all about lowering social boundaries. I am completely comfortable sending messages to people I barely know (if that) on Facebook that I would only consider (and often not) send to close friends and regular correspondents via email or instant messaging.

Ironically social networks could be used to fight spam and otherwise bootstrap reputation systems. I am mildly surprised that although trust is perhaps the most interesting feature of social networks, as far as I know nobody has done anything interesting with them (at least social networking sites) in this respect. An occasional correspondent even suggested recently that reputation is a kind of anti-feature for social networking sites, and reputation features tend to be hidden or turned off.

My other (unoriginal, but older) observation about social networking sites is that while at first blush the sector should be winner-take-all driven by network effects, but instead we’ve already seen a few leaders surpassed, and I highly doubt Facebook will take all. I have two explanations. First, the sites don’t have much power to lock users in, even though it is hard to export data — users have contact information for remotely valuable contacts outside the site, in address books, buddy lists, and email archives, and can recreate their network on a new site relatively easily. Second, social networking sites don’t yet have a killer application. Although Facebook has allowed many third party apps on its platform, I have yet to see one that I would miss, and very few I return to. I doubt I’d miss Facebook (or any other social networking site) much period if I were banned from it (I know that many students would disagree about Facebook and musicians about MySpace).

Bond prices on historical and contemporary civil war outcomes

Sunday, November 18th, 2007

Did Johnny Reb have a Fighting Chance? A Probabilistic Assessment from European Financial Markets (PDF) by Kim Oosterlinck and Marc D. Weidenmier looks at Confederate gold bonds traded in Amsterdam from August 1863 through the end of the war, taking bond price (probability of repayment) as the probability of Confederate victory (meaning survival as an independent state that could service its debts).

A very interesting new window on history, one that is crying out to be applied to other situations were a government faces an existential threat, as the authors point out:

Although this study has focused on the American Civil War, the methodology employed in this paper could easily be applied to several other historical or modern day episodes to provide some insight into the evolution of victory probabilities during a period of civil war/revolution. The methodology might be particularly interesting to apply to a communist revolution given that Marxist regimes generally repudiate a country’s debt obligations and do not recognize international capital markets. For example, it might be interesting to know the evolution of victory (defeat) probabilities during the Spanish Civil War or the Cuban Revolution of the 1960s. Another possibility is to use the technique to estimate the probability that the thirteen colonies would win the American Revolution. The methodology could also be extended to estimate the probability of a victory by Germany during World War I or the Nazis during World War II. Applying the methodology to the world wars would be more complicated given that it is not clear whether the recovery value of the war bonds would be zero in the event of a defeat. We leave these items for future research.

What do bond prices say about contemporary Iraq? I don’t see any nice graph over time, but apparently current prices imply an 80% chance of default over the lifetime of one issue (through 2028), and apparently the “surge” hasn’t improved bond investor outlook.

Interesting, but survival of a government willing to repay past debts is way too coarse for most policy decisions and the probability of various policy decisions are not disaggregated. For these reasons prediction markets contingent on policy implementation and electoral outcomes are badly needed.

Via Robin Hanson.

1 trillion dollars, 1 million lives, 1 fraud

Sunday, November 18th, 2007

What Does Iraq Cost? Even More Than You Think. by Tyler Cowen cites sources putting the direct financial cost to the U.S. government at over $1 trillion, though Cowen’s point is that taking into account opportunity costs, the price is higher.

I don’t believe I’ve posted about this trillion dollar fraud since January 2006. I just have to point out yet again that there’s nothing unusual about Iraq: advocates of war routinely underestimate the costs by a factor of ten (which makes such estimates fraudulent, in my estimation).

Peer producing think tank transparency

Wednesday, October 31st, 2007

Hack, Mash & Peer: Crowdsourcing Government Transparency from the looks like a reasonable exhortation for the U.S. jurisdiction government to publish data in so that government activities may be more easily scrutinized. The paper’s first paragraph:

The federal government makes an overwhelming amount of data publicly available each year. Laws ranging from the Administrative Procedure Act to the Paperwork Reduction Act require these disclosures in the name of transparency and accountability. However, the data are often only nominally publicly available. First, this is the case because it is not available online or even in electronic format. Second, the data that can be found online is often not available in an easily accessible or searchable format. If government information was made public online and in standard open formats, the online masses could be leveraged to help ensure the transparency and accountability that is the reason for making information public in the first place.

That’s great. But if peer produced (a more general and less inflammatory term than crowdsourced; I recommend it) scrutiny of government is great, why not of think tanks? Let’s rewrite that paragraph:

Think tanks produce an overwhelming number of analyses and policy recommendations each year. It is in the interest of the public and the think thanks that these recommendations be of high quality. However, the the data and methodology used to produce these positions are often not publicly available. First, this is the case because the data is not available online or even in electronic format. Second, the analysis that can be found online is often not available in an easily accessible or searchable format. Third, nearly everything published by think tanks is copyrighted. If think tank data and analysis was made public online in standard open formats and under open licenses, the online masses could be leveraged to help ensure the quality and public benefit of the policy recommendations that are the think tanks’ reason for existing in the first place.

Think tanks should lead by example, and improve their product to boot. Note the third point above: unlike , the output of think tanks (and everyone else) is restricted by copyright. So think tanks need to take an to ensure openness.

(Actually think tanks only need to lead in their domain of political economy — by following the trails blazed by the movement in scientific publishing.)

This is only the beginning of leading by example for think tanks. When has a pro-market think tank ever subjected its policy recommendations to market evaluation?

Via Reason.

Knowledge migration

Saturday, October 13th, 2007

Two points riffing off Paul Graham’s Why to Move to a Startup Hub (alternate titles: Why to Move to the Startup Hub or Why to Move to Silicon Valley). Probably more obvious, but it’s a theme of this blog:

Immigration difficulties might be another reason to stay put. Dealing with immigration problems is like raising money: for some reason it seems to consume all your attention. A startup can’t afford much of that. One Canadian startup we funded spent about 6 months working on moving to the US. Eventually they just gave up, because they couldn’t afford to take so much time away from working on their software.

(If another country wanted to establish a rival to Silicon Valley, the single best thing they could do might be to create a special visa for startup founders. US immigration policy is one of Silicon Valley’s biggest weaknesses.)

I suspect a jurisdiction would have to include far more than just startup founders in such a program to have any noticeable impact. But it’s not a bad sentiment. Even on purely nationalistic grounds, any jurisdiction (and especially large ones like China, India, Brazil, and Russia) ought to allow unlimited skilled immigration, preferably permanent, including citizenship.

Graham also points out the importance of specialized knowledge, emphasis added:

Boston investors will admit they’re more conservative. Some want to believe this comes from the city’s prudent Yankee character. But Occam’s razor suggests the truth is less flattering. Boston investors are probably more conservative than Silicon Valley investors for the same reason Chicago investors are more conservative than Boston ones. They don’t understand startups as well.

West coast investors aren’t bolder because they’re irresponsible cowboys, or because the good weather makes them optimistic. They’re bolder because they know what they’re doing. They’re the skiers who ski on the diamond slopes. Boldness is the essence of venture investing. The way you get big returns is not by trying to avoid losses, but by trying to ensure you get some of the big hits. And the big hits often look risky at first.

I’ve been meaning to do a post on the below for awhile but don’t have a whole lot to say, so I’ll use this tangent: New business practices and models have a whole lot going against them, even if superior to existing practices in theory — nobody has experience making them work. I suspect this applies to peer production in spades. Building up a critical mass of knowledge about how open source works has been slow going and still has a long way to go, and I’m fond of speculating that open content/free culture is a decade or two behind free software. Prediction markets are obviously in the same boat, and futarchy is far out to sea.

And so is every useful business, social, political, or other change (but keep in mind that some things don’t work, even in theory).

By the way, a startup considering a move to Silicon Valley should make the decision with the aid of prediction markets.

Via Tim O’Reilly.

International Ghettos

Saturday, September 29th, 2007

I’ve been enjoying Tim Lee’s post on international apartheid and mostly pro-apartheid and weak responses and am happy to see that the Free Exchange post cited by Lee calls ending international apartheid “perhaps the biggest and most controversial idea in development circles.”

The most interesting, anti-apartheid, and strong response came from Kerry Howley in Reason, throwing throwing cold water on the idea that the option to leave is bad for poor areas:

Health care workers who immigrate to the United States may never have acquired those skills were immigration not an option.

Exactly. As I’m fond of saying, brain drain means increased returns to education.

Howley’s post makes another nice analogy:

Applied domestically, the alternate policy would be rather like forcing people to stay in undeveloped inner city ghettos. It would mean telling the children of poor parents that they could never leave the economically backward neighborhood they happened to be born in, even if that neighborhood offered no education or employment opportunities. It would entail prohibiting suburbanites from inviting inner city residents onto their property to perform an economic service.

However, my favorite recent post on this subject falls outside the above conversation — Nathan Smith on The Hawley-Smoot Border Policy:

One factor in the downturn has been little noted: immigration. The Feds have, alas, been getting nasty lately, sending out letters to employers warning them about “no match” Social Security numbers. That started in August. Lower immigration expectations naturally reduce house prices, since part of the price of a house comes from capitalized expectations of its future value, which is a function of demand, which is a function of, among other things, immigration. Rising house prices have done much to sustain the boom in recent years, as people’s rising net worth has spurred them to spend. Current house prices probably reflect the market pricing in immigration expectations. In that sense it could be justified; but an immigration crackdown could turn it into a bubble and deflate it. Falling net worth could create more credit crises, and would surely reduce spending.

Now, there’s a certain justice in people who agitated for deportation seeing their home prices collapse, or — still better — for getting evicted. What they have desired to do to others has been done to them. But here’s the problem: lots of people who are innocent of animosity against immigrants are being punished too. That’s the problem with big government programs: we’re all in the same boat, and wise dissenters have to pay for the stupidity and wickedness of others.

The general economic disruption caused by apartheid enforcement goes well beyond housing, even ignoring (as usual) the direct and tragic loss of utility suffered by enforcement targets.

The future of “music technology” and the “music industry”

Tuesday, September 11th, 2007

A few weeks ago I moderated a panel on DRM at a “music technology” conference. I wrote it up on the Creative Commons blog. Short version is a consensus from non-activists that music DRM is on its way out.

But what I want to complain about here is the use of “music industry” understood to mean the recording distribution industry and “music technology” understood to refer to use of the net by the same industry. Similarly, “future of music” understood to refer to the development or protection of recording distribution industry business models in the face of digital networks. Each of these gets under my skin.

My contention is that the future of music is determined by changes in music making technology and culture. The recording distribution industry has just about nothing to do with it. It seems that every new genre from ancient history to present has sprung from the latest in music making technology and cultural antecedents, and developed its essential forms before the recording distribution industry got a clue (or recently, started to sue).

I may be overstating my case, especially with regards to rock, but fuck rock stars.

If you’re interested in the actual future of music and want to look for it in an industry more narrow than “information technology”, it’s the musical instruments industry that you want.