Water-based computer calculates everything an economy needs

 Posted by on 3 June 2009  Vintage/Retro
Jun 032009
 

watermachine

A blog post at the New York Times points me in the direction of the “Phillips machine.” Using water in place of cash, it is an intricate assembly of pumps, pipes and valves, mimicking the economy. But it’s not just a Rube Goldberg machine — it actually works! By adjusting various gates and flows, you can make the machine predict what would happen if you, say, raised or lowered interest rates. Or if you increased the money supply. Or changed the taxation rate — or any other of a dozen or more variables.

It was incredible for its time (it was unveiled in 1949) and it’s still pretty neat to think about.

You could easily write a computer program to do this today, but there’s something so visceral about seeing actual water flow which makes this better. Says the New York Times:

Though it’s tempting to view the Phillips machine as a relic of a bygone era, in one way it’s just the opposite; there’s something about it as fresh as the day it began gurgling. Look at its plumbing diagram. It’s a network of dynamic feedback loops. In this sense the Phillips machine foreshadowed one of the most central challenges in science today: the quest to decipher and control the complex, interconnected systems that pervade our lives.

Here’s a video of it, in action.

How would you define “money”?

 Posted by on 19 April 2009  Modern Life
Apr 192009
 

banknotes

Wikipedia, from where I pulled that image above, has a medium-length article devoted to the concept of money. But a new blog at the New York Times is looking for a slightly snappier definition.

The blog is called “Vocab,” and I’ve been following it irreguarly since it started up just about a month ago. I recommend it, if you like words, as I do.

The latest entry asks readers to submit new definitions of the word “money”. As inspiration, the blog cites:

The 19th-century penny weekly “Tit-Bits” ran irregular competitions asking its readers to define various words. (The winning definition of a kiss, for example, was “An insipid and tasteless morsel, which becomes delicious and delectable in proportion as it is flavored with love.”)

How cute! I’ve been rabidly following the entrants for “money,” but many people seem to be ignoring the one stipulation: that the pithier, the better. Many of the definitions are over-involved. I’ve seen two, so far, that I really love, though:

  • Money — Faith-based publishing.
  • Money — Metadata about value.

Love it!

Thinking about money changes how you think

 Posted by on 7 April 2009  Modern Life
Apr 072009
 

Surely it’s no surprise that we’re not perfect rational beings. And yet, that’s economists tend to treat us. As it turns out, though, not only are people not rational, but the very concept of money can change how you think. For instance, there’s a definite change in how people act when confronted with “social norms” as opposed to “market norms.”

I’d read some of this before, but there’s a good summary of recent research into human economic behaviour over at New Scientist. They’ve pegged it to the “credit crunch” which seems like a really quaint way of talking about the “global economic downtown.” Ah, how quickly language changes.

Check it out, it’s worth the read:

“Money seems to have symbolic power as a social resource,” says Vohs. “It enables people to manipulate the social system to give them what they want, regardless of whether they are liked.” Put bluntly, it looks as if money is acting as a surrogate friend. Could that explain why some people focus on extrinsic aspirations at the expense of real social relationships?

Why money messes with your mind – New Scientist

Stock market crisis? Bring out the Marx!

 Posted by on 30 March 2009  Vintage/Retro
Mar 302009
 

karl_marx_001I have some thoughts on Communism. First of all, it can never hope to match capitalism’s clever harnessing of human greed. Secondly, though, it’s never really been tried absent a deporable totalitarian government, and so it gets a bad rap.

People don’t recognize that. They think “communism” and they immediately think of the top-down power structure of Stalin, Mao and Castro.

But communism’s an economic system, not a political system. It’s communism vs. capitalism, and democracy vs. totalitarianism. There’s no good reason that a communist economic system couldn’t flourish under a democratic political system — and I’d love to see it tried.

I’ve been thinking a bit about communism because it seems like capitalism is out of vogue, lately — at least the runaway, laissez-faire capitalism that has run amok the past, oh, eight years or so. It has everyone dusting off their Das Kapitals.

It’s been a while since I read mine, mind you, but luckily Christopher Hitchens has decided to take a survey of the current Marx landscape.

His essay, in the current issue of The Atlantic, is titled “The Revenge of Karl Marx” and tantalizingly promises to cover “What the author of Das Kapital reveals about the current economic crisis.”

I can’t say it goes quite that far, but it’s an interesting read, and it does cover — with quite a bit of breadth — both the limits and the possibilities of Marxist study in today’s economy.

Short version? Marxism is in no danger of replacing capitalism anytime soon. Caveat, as Hitchens puts it: “who was predicting even 30 years ago that Russia and China would today be turbocharged capitalist systems, however discrepant in type? And the present crisis was actually triggered by a “subprime” attempt to transform low-income people into property owners, albeit indebted ones.”

I am worth $6.63, precisely

 Posted by on 23 March 2009  Modern Life
Mar 232009
 

I know this because my barcode tells me so:

barcode

Barcode Yourself is a complete, interactive experience in the series of barcode art, created using the personalized data of participants. Enter an individual’s gender, weight, height, age and location, and the barcode is formed using real-world data.

…

It is here, within the confines of an American obsession with “worth,” in which the fun begins. Instead of shoes, we can try on another person’s barcode. Become a male, 33 years old from Luxembourg, with a perfect body. Congratulations, you’re a crisp 10-dollar bill. A teenage girl in Monaco: $5.25. To be scanned for $4.79, you have to be a 40-year old female living in Canada.

You can also email the guy your address and he’ll send you out a real postcard! Free things from the Internet, yay!

Looks sweet, but how old is it?

 Posted by on 13 March 2009  Modern Life
Mar 132009
 
This delicious Mars bar was lovingly unwrapped, carefully displayed with just the right amount of soft caramel and buttery nougat exposed, and photgraphed by Flickr user fishyfish_arcade.

This delicious Mars bar was lovingly unwrapped, carefully displayed with just the right amount of soft caramel and buttery nougat exposed, and photgraphed by Flickr user fishyfish_arcade.

Mmmm, nothing like a sweet treat when you’re feeling down. A chocolate bar to pick you up and make you feel better. To give you a boost of energy. You know, a Kit-Kat break, right?

We’ve all had the experience of tearing the wrapper off a chocolate bar and sinking our teeth into a nice soft chocolate bar, right? But what about when it’s old … just a little less tasty, just a little tougher, and a lot less satisfying. And have you ever had the (unenviable) experience of unwrapping a chocolate bar only to find that it’s all gone white with age?

I have. A Mr. Big from the Co-Op gas station just down fromy my house. Not fun. Disappointing. But way better than the time my sister opened up a Twix and found live maggots. I am not kidding. We wrote and complained. They sent us a letter of apology and a coupon for a free Twix. I recall that my parents didn’t have any trouble dividing that particular bar among four kids. There seemed no shortage of chocolate to go around.

Anyway, I think we can all agree that chocolate is better when it’s fresher, right?

Well, thankfully, Brock University professor Michael Armstrong has conducted a study on thousands of chocolate bars to see where you can buy the freshest ones. Yes, this is the type of research that NSERC supports. I believe he gave them some song-and-dance about supply chain management and how Canadian companies could become more efficient. However, since he is the same professor who also offers “chocolate appreciation” sessions at Brock, I suspect that he has a personal stake in the study.

I can’t seem to locate the original study anywhere online, however there are several news stories about it (Financial Post, Canada.com, CanadianVending.com, and MiltonCanadianChampion.com) I’ll synthesize the results for you:

When you buy a chocolate bar, it’s an average of 140 days old. That’s about four-and-a-half-months since it rolled off the conveyer belt. The worst offender is Rexall drug stores, where the average chocolate bar is 160 days old — nearly three weeks older than the average.

The freshest bars? Wal-Mart, where chocolate bars average just 106 days young. And if you want the freshest bar possible, pick up a Mars bar while you’re at Wally World, since it’ll be, on average, just 76 days old. Or, if the big box retailer is too far off the beaten path, a Mars bar at 7-11 tend to also be just 76 days old.

But for God’s sake, don’t get a Mars bar from Rexall, where they are worse than the average: a Rexall Mars bar is likely to be 174 days old!

On average, though Mars bars tended to be the freshest — 128 days old, on average. Nestle bars averaged the oldest, at a month older: 159 days.

Wal-Mart and 7-11 did well with all their chocolate bars, actually, with 106 days and 110 days their respective averages. Armstrong’s study also looked at Zellers, Shoppers, Loblaws, Metro, Couche-Tard (I think this is the same as Mac’s) and the unfortunate Rexall, in Ottawa, Toronto, Montreal and Vancouver. It didn’t matter how close the stores were to the chocolate factories, nor whether the chocolate was domestic or imported.

From the Canada.com article:

People might not want to think about how long food sometimes lingers on store shelves. But academics are making it their business to bring that kind of information to Canadians.

Food scientist Massimo Marcone has been pushing for more transparent labelling laws regarding product shelf life. The University of Guelph professor explains that just because something doesn’t carry a best-before date — chocolate included — that doesn’t mean it doesn’t have a shelf life. It just means it doesn’t expire within the government-regulated period of 90 days.

“One of my biggest beefs is with diet drinks,” says Marcone. “Between 90 days and six months, we start seeing a breakdown of the aspartame and end up with products that give an extremely bitter flavour — and we don’t even know the safety of that yet. They should absolutely bear a label.”

A pretty darn good idea for affordable university tuition

 Posted by on 6 March 2009  Modern Life
Mar 062009
 

Eliot Spitzer — yes, that Eliot Spitzer — now has a rehabilitate-my-reputation gig with online magazine Slate, and he’s using the soapbox to put forth interesting ideas on things like CEO pay and “creative destruction.”

His latest column tackles the thorny question of how much students pay to get their post-secondary education. The answer: a lot. Even in Manitoba, where tuition fees were frozen for almost a decade, it’s hardly affordable to go to school. It’s even worse if you want a master’s or other post-graduate degree.

For years, it was hard to get people to listen to this problem, since so many of the baby boomers attended college when you could pay for the whole year’s worth with a good summer job. They just didn’t grasp how unaffordable it had become.

Now, though, as Gen Xers start to take over society’s discourse, there’s much more awareness of the huge burden that student loans can represent. Spitzer thinks he has a solution:

Instead of paying upfront or taking loans with repayment schedules unrelated to income, students would accept an obligation to pay a fixed percentage of their income for a specified period of time, regardless of the income level achieved. Suppose a university charged $40,000 a year in annual tuition. A standard 20-year loan in the amount of $160,000 (40,000 times four) would produce an immediate postgraduate debt obligation of $1,228.50 per month, or $14,742 per year, not sustainable at a salary of $25,000 or anything close to it. Under a smart loan program, the student could pay about 11 percent of his income, with an initial payback of $243 per month, or $2,916 per year, which is feasible at a job paying $25,000. If, after five years, the student’s salary jumped to $100,000, payments would jump accordingly and move up over time as income increases. After 20 years, assuming ordinary income increase, the loan would be paid off.

Even if your eyes glaze over at the numbers, the idea is simplicity itself: let’s not penalize students with sky-high loan payments as soon as they enter the workforce. Instead, let’s tailor the repayment to the student’s actual income.

Get out of foreclosure free!

 Posted by on 1 March 2009  Modern Life
Mar 012009
 

monopoly

I’ve been following this story with a mixture of interest and anti-capitalist glee for a while, and this take in the New York Times is a pretty fair assessment of the size of the issue.

To re-cap the subprime mortgage scandal, banks would give loans they knew might go bad. To reduce the risk, they would bundle those mortgages into pools, which they would then sell to investors. In some cases, those pools would be pooled together, re-sliced up into secondary or tertiary bonds, and then re-sold again and again.

Now, some of those homeowners can’t pay their mortgages, and they’re being foreclosed on.

One teeny, tiny little problem: no one seems able to find out who actually owns the mortgage note, anymore:

Bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.

On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.

With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.

Mr. Garcia has another case in which a borrower tried to sell his home but could not because the note underlying a $60,000 second mortgage cannot be found. The statute of limitations on the matter will expire in October, he said, and if the note holder has not come forward by then, the borrower will be free of his obligation on the second mortgage.

Paperwork? Schmaperwork!

Stickin’ it to big business

 Posted by on 12 February 2009  Modern Life
Feb 122009
 

Credit cards are getting a bad rap these days, since financially stressed consumers are turning to the easy revolving credit to finance smaller and smaller purchases.

Well, if you’re buying gum at a convenience store and poverty forces you to whip out the old AmEx, you can take at least some comfort in the fact that your method of payment sticks it to the faceless suits who own the chain:

creditcard1

And how do I know this?

Basically we mashed up the [bank identification] number database (which is available for cheap from a variety of sources) and the Mastercard and Visa pricing rules (called interchange, which are published on their websites) to write a little app that answers the question “How much does it cost the store when I pay with a credit card”.

In total, the credit card fees charged to businesses cost consumers about $50,000,000,000 / year (by way of higher prices), so it should be of interest to everyone who shops.

Check out your own credit card fees online at TrueCostOfCredit.com. (They just need the first six digits, which are not personally identifiable and are shared by thousands of other card holders, to identify your brand of card.)

(via Consumerist)

Bond issued after the Civil War won’t mature until 2147

 Posted by on 12 February 2009  Modern Life, Vintage/Retro
Feb 122009
 

12jerome2-600

In 1868, Winston Churchill’s grandfather came up with the idea of building a track for horseracing. But the municipality he wanted to build it in — then a suburb of New York City — couldn’t afford to build a road there.

So they issued bonds, with a 7% interest rate, and a redemption date far, far in the future. Out of the hundreds once issued, 39 remain — one of them coming due this March 1. The rest come due in future years — as far forward as 2147 (it’s not quite halfway there).

Why the “long-term” investing? The New York Times delves into the story:

They were the handiwork of a wily 19th-century financier and a couple of cash-strapped towns that schemed to implement a public work at the expense of their wealthy, gleaming neighbor.

“Everybody knew because of the shift of population northward, it was only a matter of time before the City of New York was going to annex the territory,” [a historian] said. “So they issued these bonds with the date of redemption so far in the future because they figured that once the City of New York annexed their town, then the City of New York would assume the payment of the bonds — which is exactly what happened.”

The whole story is a pretty cool read. I mean, I got some savings bonds from my grandmother when I was a kid, but it’s not like I had century-old bonds passed down like an heirloom!

Guaranteed 10% return — for a century

 Posted by on 15 January 2009  Modern Life
Jan 152009
 

I know, I know, it sounds like a Bernie Madoff Ponzi scheme.

But I just read that TD Bank is issuing new “debt notes” that pay 9.5% and 10% yearly interest. That’s incredible, especially when you realize that most investment advisors estimate an annual rate of return closer to 6% or 7% — and they call that pretty good performance.

Now, there’s a couple of catches. From what I understand, if TD goes out of business, your money could be down the tubes — I doubt it’s insured. But I think you’re pretty safe with a Canadian bank. Also, I don’t think that individuals are allowed to buy these directly, you might have to go through a mutual fund or other investment to own them indirectly.

The biggest catch is that these notes don’t mature for a century — June 30, 2109. You can cash out a little earlier, mind you, but you’re still locked in for a while.

For the 9.5% note, you have to hold on until 2019. Now, ten years isn’t all that bad for a guaranteed 9.5% rate of return. Going after that extra half-percent, though, means you’d have to wait until 2039 to get at your money.

Frankly, I won’t be retiring for at least 30 years, and if I had a lump sum that I could sock away at 10% guaranteed, I probably would. Of course, I would never put all my eggs in one basket, but this one looks like a mighty nice basket.

Or, what a nice gift to your great-grandkids, who might need it for college around a hundred years from now.

Cool cars, even cooler customers

 Posted by on 12 January 2009  Modern Life
Jan 122009
 

Do not play “billionaire’s poker” with Porsche, the fund managers were warned. They didn’t listen. Porsche won. Sadly, one of the world’s richest men, beset by financial difficulties, was driven to take his own life.

The full gripping story here:

Porsche’s move took three years of careful maneuvering. It was darkly brilliant, a wealth transfer ingeniously conceived like few we’ve ever seen.

All in all, Porsche managed to briefly become the most valuable company in the world, and made about as much profit as their normal yearly revenue.

(Image from Flickr user basheertome, hat-tip for the story to GiveMeSomethingToRead.)

 Newer Entries