45 Percent of the World's Wealth

When I think of wealth destruction, I think of fires, floods, wars, and hurricanes. Steven Scharzman of Blackstone said “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half." Given that you'd think a meteor struck Earth or something of that scale.

The most relevant concern is the real wealth that has been destroyed. Paul Graham tells us, "Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. " Nominal dollars are not irrelevant altogether. If you have a mortgage, it is still due on the nominal amount you agreed to pay. Negative equity may induce people to stop paying their mortgage and the property will have to be foreclosed upon. This situation can result in inefficiencies as a result the destruction of real wealth.

I agree that some real wealth could have declined through:

• Depreciation in excess of gross investment. Left alone, wealth will decay and continual investments must be made to maintain that wealth.
• Inefficiencies in the transfer process from debtor to creditor where the collateral is damaged through poor maintenance or malice.

I certainly agree that the pace of wealth creation is slowed and that there may even be some wealth destruction, but I doubt that it 45 percent of all wealth in the world.

The fact that people paid too much for assets a few years ago, and that now the assets are worth much less does not mean real wealth is reduced. I suspect this wealth that Schwarzman talks about is from on 1s and 0s on a computer system. Your house is not any less of a house now because it would sell for a third less dollars. The 3 bedrooms, 2000 square feet, 2 car garage, granite countertops, etc. are still there for your use.

I doubt that 45 percent of the world's wealth has been destroyed with most buildings still standing that were there 2 years ago, airplanes still taking you where you want to go, and your computer accessing a global network that is better than ever.

Is it too easy?

I am actually not too concerned over the sheer number of fulfilled requests by Sprint. It appears this is the number of data points retrieved through Sprint's systems for law enforcement. So, the actual number of people that were under surveillance was likely in the thousands. With tens of millions of subscribers, this is not too shocking.

The bigger issue here is the lack of accountability for the watchers. There are legitimate law enforcement uses for GPS information, text messaging, phone calls, etc. While I think there should be a procedure for the government to acquire this information, the lack of documentation and accountability is very troubling. The temptation to spy on political opponents that have done nothing wrong except disagree with you rises when the DOJ does not answer to anyone. It is not difficult to imagine that people in power that will spy for their own personal advantage. Even now, we cannot be assured that this is not already taking place.

Links - http://paranoia.dubfire.net/2009/12/8-million-reasons-for-real-surveillance.html

http://arstechnica.com/telecom/news/2009/12/sprint-fed-customer-gps-data-to-leos-over-8-million-times.ars

"The government routinely obtains customer records from ISPs detailing the telephone numbers dialed, text messages, emails and instant messages sent, web pages browsed, the queries submitted to search engines, and geolocation data, detailing exactly where an individual was located at a particular date and time."

"The fact that federal, state, and local law enforcement can obtain communications "metadata"—URLs of sites visited, e-mail message headers, numbers dialed, GPS locations, etc.—without any real oversight or reporting requirements should be shocking, but it isn't. ""Soghoian's lengthy post makes at least two important points, the first of which is that there are no reliable statistics on the real volume and scope of government surveillance because such numbers are either not published (sometimes in violation of the legally mandated reporting requirements) or they contain huge gaps. The second point is that the lack of reporting makes it difficult to determine just how involved the courts actually are in all of this, in terms of whether these requests are all backed by subpoenas."

"However, communications or customer records that are in storage by third parties, such as email messages, photos or other files maintained in the cloud by services like Google, Microsoft, Yahoo Facebook and MySpace are routinely disclosed to law enforcement, and there is no legal requirement that statistics on these kinds of requests be compiled or published. "

Some Game Theory

I am reminded of a counterintuitive result that more people nearby will result in less action. The typical example in a game theory course is a crime witnessed by n people. As n grows, the likelihood that the police will be called actually falls. While this phenomenon has been well documented, I have recently observed a case where this is not true. An email was sent out to a mistakenly listserv. The recipients hit reply to all to inform the sender. As a few emails were sent, this took on a life of its own. Between the initial emails, replies to those emails, and emails telling people not to reply to all there were about 50 emails in all.

A couple possibilities

1. The game theory result is still correct. Where n increases, the probability of any reply falls. However, if the first reply to all is sent everybody will jump on the bandwagon.
2. This situation calls for a different set of assumptions than the typical game theory situations of shared responsibility.

It takes all kinds

I saw an article recently talking about Google's presence in Japan. It is one of the few countries they have not dominated.

"Earlier this year, Google’s splash page for Japan abandoned the company’s classic spare design and added links to YouTube, Gmail and other services — an attempt to lure Japanese users who favor sites decorated with a cacophony of text and graphics." ----NY Times

I am not sure why anyone would want a cacophony of text and graphics. It's distracting, loads slowly, uses lots of memory, and has a tendency not the render the same way across browsers, screens, etc.

Future of Journalism

The old business model for journalism is clearly on the decline as we can see from the bankruptcy filings of major newspapers. No business model is guaranteed to persist in an economy that allows creative destruction, but people's needs still need to be fulfilled in one way or another. It takes a lack of imagination to think that journalism is dead. The 20th century newspaper business model is dying for sure. I think that people still want facts to be gathered and commentators and aggregators still need a primary news gathering as support. I believe that some model will allow companies to make money by producing news whether that involves microtransactions, a separation of content and distribution (similar to ASCAP in the recording industry), or something nobody has thought of yet.

I went to a round table discussion on political journalism and I had a couple takeaways. I may turn this into a more detailed blog entry later.

• Journalism was never that well paid to begin with
• Much of what's available on the Internet, TV, etc. is aggregation or commentary rather than primary news gathering
• Newspaper model is clearly in the past. I wish the roundtable had gotten into some detail about possible business models and payment systems. At some point I will go into more depth.
• The issue with non-profit news gathering groups as a solution is that they don't care as much about interesting stories. They may cover "important" stories that nobody will listen to or read since they don't have nearly the incentive to get eyeballs.

Oh come on

Useless Features

Conversation

MC : have you ever used the web in windows to search what program opens a file type and been successful?
DR: no
DR: it's about the most useless feature
MC: i know
MC: it's laughable
DR: up there with copying a file and relying on the time estimate
MC: hahaha