Wednesday, June 16, 2010

The Economics of Information Security

I have uploaded a paper that I've just finished that surveys the literature on the economics of information. It discusses malware, botnets, and other attacks, and the defenses against them.

Frankly, I think it's pretty dry stuff. I initially thought it was going to be about encryption and online retail security, but it seems there's not a lot of economics there, and that particular problem is mostly solved.

Monday, June 14, 2010

Have Pity on Afghanistan

As if their fate wasn't bad enough when they lacked any resources of value (with the exception of opium which, of course, they're not supposed to grow), now they've got one: Lithium. Given their high levels of government corruption, I would expect the natural resource curse to strike.

Monday, June 07, 2010

A New Machinery of Freedom!

David Friedman is considering a third edition of his classic The Machinery of Freedom, and he's soliciting input regarding what to include and what to exclude. If you're familiar with the book and have an opinion, now's the time to express it!

This was the book that convinced me that I was a libertarian (and, for that matter, explained to me what a libertarian was). It's also the book that explained what kind of libertarian I was not. I think every libertarian should read the sections at the end on why most simple libertarian arguments about force don't make sense.

Friday, June 04, 2010

Some Reasons Why I'm Not a Big Fan of Ayn Rand

A lot of libertarians were influenced by novelist Ayn Rand. It's important to keep in mind that she wrote her novels in a different time, when it was radical to suggest that profit and self-interest might not be bad. While I think it's possible to get some useful things out of her novels--a sense of outrage at the destructive capability of government intervention, for example--there's not a lot more to be learned from them. I read it in high school, and was briefly excited. It opened my mind to different ways of thinking about the world. I soured on the philosophy itself pretty quickly, however.

Charles Murray has a  new review of two recent books about Rand, and it has some great criticism. When I look at the lives of the people who created and tried to live by the Objectivist philosophy, I don't really see anything that makes me want to jump on board. They seem miserable, hypocritical, self-deceptive, and prone to witch-hunts and purity tests that seem more like religion than rational philosophy.

There are plenty of knocks against the philosophy itself. David Friedman points out that her derivation of "ought" from "is" doesn't follow. Bryan Caplan suggests that her philosophy is at adds with evolutionary psychology (the same occurred to me after reading Nathaniel Brandon's biography a few years ago; they seemed to think human nature could be overcome by pure rational thought, or perhaps that human nature was pure rational thought--but evolution selects for reproductive success, not rationality. The results were affairs that ended badly.). Roy Childs pointed out years ago that the logical conclusion of her philosophy is Anarcho-Capitalism, not minarchy. A quick Google search will show you other critiques of Objectivism, although some of them are weak.

(SPOILERS for Atlas Shrugged below)
It has also always bothered me that Galt's Gulch is hidden by some kind of holographic screen, which is a pretty serious public good, yet we're also told that there's no taxation. So who pays for the screen? Surely it's not charity; that would be, in Rand's view, evil. The rest of the economics is pretty laughable, too--even with a  motor that pulls static electricity from the air, they could not have a complex, wealthy modern society without heavy trade with the outside world, for natural resources at the very least. They'd be lucky to achieve subsistence. It reminds me of Art Carden's critique of the end of Wall-e: If they decide to try farming, 90% of the population will die within a year.

Thursday, June 03, 2010

Miscellaneous Links

Here are some things that are worth reading.

How can people miss the obvious parallels between alcohol prohibition and drug prohibition, and if they don't, how can they think drug prohibition is still a good idea?

This article on record teenage unemployment prompts Don Boudreaux to write one of his many letters to the editor pointing out that there was a recent record hike in the minimum wage, which the article's author doesn't even mention. Mark Perry provides a nifty graph and commentary. Here's the They Might Be Giants song, Minimum Wage.

After events like the bungled attack on the "freedom flotilla", I first think about the wonders of free trade, but then I turn to something else: Why are we sending any money to Israel? I don't mean to imply that they don't deserve aid because they're evil, or that I'm taking any particular stance on Middle East politics. Rather, I wonder why we send almost $3 billion in aid each year to a country with a per capita GDP of over $31,000. We're sending aid to a very wealthy country. Do they really need our help? Assuming that aid actually does anything (which isn't so clear, in terms of economic development, anyway), wouldn't those $3 billion do more good in a country that is poor? I can't help but think it would do more good in Haiti, even if half of it were squandered.

Wednesday, June 02, 2010

Ford to Kill Off Mercury (Probably)--But Why Did They Wait So Long?

It looks like Ford is going to announce the demise of the Mercury Brand, which seems to me to be an obviously good idea. Mercury has offered slightly-modified versions of Ford cars for years, with the main difference being slightly higher equipment levels. The result was lots of unnecessary costs for producing slightly different sheet metal, emblems, and other cosmetic differences, with no clear benefit. GM did the same thing when it eliminated the Oldsmobile brand 2004, and the Pontiac, Hummer, and Saturn brands in 2009. Personally I think they should kill off Buick as well (in the U.S., anyway--it's still a big deal in China). All these brands lacked clear identities. Some of them had a clear identity at one time (Pontiac was a performance brand, Saturn produced small cars that were more reliable than the average GM car), but "badge engineering" diluted these brands. Ford also sold off the  Land Rover, Aston Martin, Volvo, and Jaguar components of its Premier Automotive Group.

I think successful car companies like Toyota and Honda have shown that two or, at most, three brands is optimal. For example, Toyota has Scion for the youth segment, Toyota for the mainstream, and Lexus as its luxury brand. Honda gets by with just Honda and Acura. Ford is now down to Ford and Lincoln (with some technological cooperation from Mazda). GM has Chevrolet, Buick, GMC, and Cadillac.

Here's my question: Why did these companies wait so long to clean up their messy brand identities? These problems have been around for years. Did it have something to do with labor agreements and the revisions to them necessitated by the recession? Or was it simply reluctance to kill off old traditions? Why didn't the stockholders force the companies to take these steps earlier? Maybe it was a good idea before, but it's not now--but why? What changed to make badge engineering become a bad idea in the last few years?

UPDATE #1: Nathan Prey suggests it has something to do with dealership legalities (by which I assume he means contracts). Katie Francisco suggests that the thing that allows Ford to kill off dealerships now (as opposed to earlier) is a decline in Mercury sales. I think that's borne out by this graph. I pointed out that this suggests Buick should be killed off, too, but Nathan says that big sales in China will keep that from happening here. I still think it would be fine to kill off Buick here and let them continue in China, if only to avoid the costs of the tweaks to distinguish them from their Chevrolet versions (or the shipping costs, if they're shipped here), but maybe those costs are really low, or maybe the Chinese market success depends on them being sold here for marketing reasons.

UPDATE #2: Autoblog asks the same question, and comes to pretty much the same answer.

Tuesday, June 01, 2010

What's Under Your Gas Station

The Kroger nearby put in a gas station. My wife took a picture of the enormous tank before they buried it. I thought it was pretty cool, so here it is.




Think about all the specialized labor and capital that goes into building this gas station.The workers know how to dig and build and hook everything up. There are tools for digging and moving things around, and there must be cool equipment used for building that big tank, and trucks and trailers for delivering it. The total operation must take hundreds of people, maybe thousands, most of them unaware of each others' existence, with no one coordinating the whole thing. Sure, there's probably a guy who oversees construction, but he doesn't oversee the production of the tank or the truck that delivered it. It's an incredible decentralized machine. Amazing, huh?