Boom economics

In a Facebook discussion of my previous post comparing the current web boom with the last one, I observed that one difference between the two was that the current boom takes place in a generally weak economy, contrary to the last one. Which creates troubling incentives: a lot of rich people have a lot of cash and very few places to put it. Dumb money is an attractive nuisance.

A friend with proper economics training had a striking reply.

You’ve hit the nail on the head, JK. There’s a lot of big, but dumb money out there. Thanks to the global “easy money” policy that's currently in effect, investors can’t get interest income, so they’ve thrown caution to the wind in order to chase equity returns. Clearly, the markets reflect that, but a lot of the big, dumb money is also going to VCs, private equity and hedge funds, and the investors have no idea where that money ends up. A lot of it is chasing presumed IPO candidates, even if their business propositions are flimsy. (To be considered an IPO candidate, no one really wants to mess around with a company unless it can get to a ^$1 billion market cap, even if there’s only a 5% chance of that happening, with the other 95% chance being failure. So, it’s an all or nothing proposition.) This is very similar to the dot-com era, and the business models are getting more flimsy all the time. In contrast, the businesses that are having trouble getting new or increased funding are traditional businesses that have more solid prospects, but which will never reach the size necessary to IPO. Their odds of actually providing sustained employment to, say, 100-500 people are much better than the typical VC-backed firm, but that’s not what the agents of the big, dumb money care about, as such companies do debt financing, which yields pitiful returns these days compared to what people think they can get in equity investments. The trouble is, the current equity returns are illusory, as we have the greater fool theory in full effect right now.

Conventional metrics indicate that we're in a frothy market. One that I like to keep an eye on is the (Robert) Schiller PE10. It calculates the P/E ratio of the S&P 500 using the average of long-term (10-year), inflation-adjusted earnings as the denominator. This helps to see what’s going on more clearly, as short-term noise is smoothed out. The current PE10 is over 25, which is well above a more desirable level of about 15. Sure, we can continue to go up from here, as we did in 1999-2000, be things have never gone well longer term when we’ve reached this level.

Boom

Matthew Yglesias reminds us how crazy Web Boom 1.0 was during the late ’90s. There were a lot of companies whose business plan was:

1. Raise venture capital money
2. Use that money to do a bunch of marketing to “build the brand”
3. Oh yeah, invent some kind of business, though it was kind of better if it didn't make sense
4. IPO strong because the brand was well-known
5. Profit

People would tell you this in so many words, with a straight face. If you told them that this was not, y'know, a business, they would tell you, “You don't GET IT. This is the New Economy, man.”

The bullshit is thick this time around, but it's not that thick.

Yet.

Geeks against democracy

Klint Finley at Techcrunch has an article Geeks For Monarchy about neo-reactionaries like Mencius Moldbug. Lots of good links.

It’s not hard to see why this ideology would catch-on with white male geeks. It tells them that they are the natural rulers of the world, but that they are simultaneously being oppressed by a secret religious order. And the more media attention is paid to workplace inequality, gentrification and the wealth gap, the more their bias is confirmed. And the more the neoreactionaries and techbros act out, the more the media heat they bring.

Man of Steel

Max Landis, the screenwriter of Chronicle, offers us a reading of what Superman is about, inspired by Zach Snyder's Man of Steel.

Geeky humor

James Mickens' meditation The Night Watch is a very fine example of a certain kind of geeky tech humor.

The main thing that I ponder is who will be in my gang, because the likelihood of post-apocalyptic survival is directly related to the size and quality of your rag-tag group of associates. There are some obvious people who I’ll need to recruit: a locksmith (to open doors); a demolitions expert (for when the locksmith has run out of ideas); and a person who can procure, train, and then throw snakes at my enemies (because, in a world without hope, snake throwing is a reasonable way to resolve disputes). All of these people will play a role in my ultimate success as a dystopian warlord philosopher. However, the most important person in my gang will be a systems programmer.
....
You can’t just place a LISP book on top of an x86 chip and hope that the hardware learns about lambda calculus by osmosis. Denying the existence of pointers is like living in ancient Greece and denying the existence of Krackens and then being confused about why none of your ships ever make it to Morocco, or Ur-Morocco, or whatever Morocco was called back then. Pointers are like Krackens—real, living things that must be dealt with so that polite society can exist. Make no mistake, I don’t want to write systems software in a language like C++. Similar to the Necronomicon, a C++ source code file is a wicked, obscure document that’s filled with cryptic incantations and forbidden knowledge. When it’s 3 A.M., and you’ve been debugging for 12 hours, and you encounter a virtual static friend protected volatile templated function pointer, you want to go into hibernation and awake as a werewolf and then find the people who wrote the C++ standard and bring ruin to the things that they love. The C++ STL, with its dyslexia-inducing syntax blizzard of colons and angle brackets, guarantees that if you try to declare any reasonable data structure, your first seven attempts will result in compiler errors of Wagnerian fierceness ....

The Ghost Who Walks

The Phantom is a big hero in Africa^* the jungle. No, really.

* Commenter Erik catches me seriously failing to read correctly. I hereby give myself the Edgar Rice Burroughs Memorial Award For Stupid Western Fantasies Of The “Jungle” for this embarrassingly stupid error.

Californian Ideology

A recent conversation reminds me of Richard Barbrook and Andy Cameron's classic article about the Californian Ideology.

This new faith has emerged from a bizarre fusion of the cultural bohemianism of San Francisco with the hi-tech industries of Silicon Valley. Promoted in magazines, books, TV programmes, websites, newsgroups and Net conferences, the Californian Ideology promiscuously combines the free-wheeling spirit of the hippies and the entrepreneurial zeal of the yuppies. This amalgamation of opposites has been achieved through a profound faith in the emancipatory potential of the new information technologies. In the digital utopia, everybody will be both hip and rich. Not surprisingly, this optimistic vision of the future has been enthusiastically embraced by computer nerds, slacker students, innovative capitalists, social activists, trendy academics, futurist bureaucrats and opportunistic politicians across the USA. As usual, Europeans have not been slow in copying the latest fad from America. While a recent EU Commission report recommends following the Californian free market model for building the information superhighway, cutting-edge artists and academics eagerly imitate the post human philosophers of the West Coast’s Extropian cult. With no obvious rivals, the triumph of the Californian Ideology appears to be complete.

The widespread appeal of these West Coast ideologues isn’t simply the result of their infectious optimism. Above all, they are passionate advocates of what appears to be an impeccably libertarian form of politics they want information technologies to be used to create a new ‘Jeffersonian democracy’ where all individuals will be able to express themselves freely within cyberspace. However, by championing this seemingly admirable ideal, these techno-boosters are at the same time reproducing some of the most atavistic features of American society, especially those derived from the bitter legacy of slavery. Their utopian vision of California depends upon a wilful blindness towards the other — much less positive — features of life on the West Coast: racism, poverty and environmental degradation. Ironically, in the not too distant past, the intellectuals and artists of the Bay Area were passionately concerned about these issues.

Written back in 1995. Still relevant.

Russian politics

I have a Russian friend on Facebook who is fascinated by Russian radical politics much as I am by American radical politics. We exchange a lot of lore. From him, I have learned just how weird the Russian political spectrum is. This is largely because Russian conservatives looks back to a golden age conceived as a kind of mythical version of the 1950s much as American conservatives do … but for them that means Sovietism. So the left-right axis for them is very weird.

So for example, they have a political party movement called the National Bolshevik Front with a flag which looks like this:

Yes, that's a hammer-and-sickle in place of a swastika on a Nazi flag. Holy Jonah Goldberg, the mind boggles. So in that spirit, my Russian correspondent offers this astonishing propaganda painting depicting the left-right political axis.

He explains:

Notice that on the right side, half of things depicted are tools for murder (bogatyrs, T-34 tank, PAK-FA stealth fighter, etc). Hitler on the left side is in his “nice guy” image, implying “cultural imperialism”: Third Reich = United Europe = European Union. Also, note that this picture is a commentary to the Ukraine's recent pact with E.U. (the guy in the middle is Ukrainian). Kremlin wants to keep the Ukraine in its own Eurasian Union. Hence, propaganda wave: European Union = Hitler = “fags”.

Kremlin considers White Nationalists (at least Eastern European ones, yes, including Russian) to be a subset of “Cultural Marxism”, a “radical spearhead” of it. In a “first, Waffen-SS parades, then, gay pride parades” logic.

And Kremlin's alternative is vague “pro-White Orthodox Communism” or something like that. Which is shared by Communist Party of Russia, but in more radical form.

Russian politics turns out not just to be stranger than I imagine, but stranger than I can imagine. My Russian correspondent expands on the point:

Russian politics explained

From Kremlin POV, Marxism as a political force was funded by Wall Street as a tool against old European empires who prevented the emergence of single global market which Wall Street wanted to have. In other words, the Left were the tool of banking capital against industrial capital. When the Left in Russia disconnected itself from its sponsors through the bloody power struggle known as Great Purge, it split in two: Trotskyists in the West and Stalinists in the East (Russia, China, Vietnam, Cuba, etc). After the fall of USSR, Western Trotskyism evolved into Neo-Con movement, which transformed “permanent revolution” into “democracy promotion”, i.e. bombing the shit out of third world nations and stealing their resources via CIA-sponsored coups (”color revolutions”).

From Kremlin POV, Third Reich was used by the West as an instrument to weaken the Soviet Union, repeating WW1 German fiasco when British promised Germans alliance against Russian Empire, but turned against them when the war actually started. Official justification for it in the West is “Hitler's bad, Stalin's worse”. Modern Western democracies support Neo-Nazi movements in Eastern Europe (Baltics, Poland, Russia, the Ukraine, etc) through network of NGOs, so “Hitler” isn't some temporary aberration.

In the modern world, there are three primary powers: China, Russia and the West. Both China and Russia are post-Stalinist countries, and they are de-facto allied against the post-Trotskyist West. So, “Russian political matrix” is actually “global political matrix”, while American political matrix is a local American/Western thing that stops being relevant the moment it leaves boundaries of the Golden Billion. That being said, modern conflict is not just a product of Cold War, but a continuation of the Great Game: the global competition of Russian Empire and British Empire. It's just now the map also has Americans (modern version of British Empire) and Chinese (who re-emerged as big player after Soviet Union killed itself, and sworn not to repeat USSR's mistake of group suicide).

As for homophobic part of Kremlin propaganda, it has nothing to do with Christianity, but with Russian prison culture, where bottom recipient of anal sex (or anybody who touched him or things he touched) is marked as pariah. Since half of Russian male population go through prisons, and nobody wants to end up at the bottom of the food chain, Russian homophobia is shared by atheists and the Left.

Face of “Ultimate Evil” in Kremlin propaganda:

This is Marat Guelman, and Pussy Riot was his project. “Trotskyist”, “Jew”, “modern art sponsor”, “loves America”, “hates Russia”, “mocks WW2 veterans” (read: “loves Hitler”), “loves orange color” (read: “loves color revolutions”), etc. The books beneath his foot are History of Russia and Dostoyevsky's Demons (which was about people like him). And the best part: THIS GUY IS ON KREMLIN PAYROLL. Kremlin took cues from Orwell's 1984 and maintains its own supply of Emmanuel Goldsteins, recycling them if necessary. Kremlin even uses disempowered Oligarchs (like Berezovsky) in Emmanuel Goldstein role, which is especially effective since their crimes are real and still painfully remembered.

Aside of “Emmanuel Goldsteins”, Kremlin also maintains supply of “useful Jews” like Berel Lazar. When Stephen Fry accused Putin of “new Holocaust”, Berel Lazar accused Stephen Fry of “trivializing Holocaust”. Kremlin's logic: “we can't name you by name, but we can use your own ideology against you”.

As for Chinese Communist Party, it shares Kremlin viewpoint about West being run by “Trotskyist ZOG”, but isn't as vocal about it, because it feels more secure in its position. Russia, on the other hand, always balances on the brink, and this insecurity transforms into pre-emptive geopolitical actions (like in Syria) and psy-ops (think Russia Today). In Russia/China alliance, Russia acts first, China joins second.

My Russian correspondent sharpens the point about Russian antisemitic rhetoric:

Modern Russia isn't anti-semitic.

After Putin disempowered Oligarchs (read: “the Jews”), Russia turned from being ultra-antisemitic to being the least anti-semitic nation in Europe.

Russia, once an extremely anti-Semitic country, has become an “Island of Peace” for Jews since the fall of the Soviet State

So, people who bitch about oligarchs/bankers/illuminati/reptilians/NWO/etc (read: “the Jews”) are viewed as retards. ESPECIALLY among Far Right.

The difference is that Russia is politically incorrect. Both Jews and non-Jews use words like “zhid” (“kike”) ironically or even un-ironically. My Jewish friends had to specifically ask me not to use them in Anglosphere because “us kikes sometimes find it offensive”. Real anti-semitism, like link above shows, is extremely low by European/American standarts. Russians don't feel insecure about “bankers” because Putin took them down. Russians feel insecure about Putin.

Another mind-boggling observation from my Russian correspondent:

Communists = angry old white guys and provincial vatniks (rednecks) longing for “good old days”

[They] are ethnic nationalists, and also Christian conservatives. “For white Russians, Communism and Orthodox Christianity” and against “blacks, fags and kikes”. Stalin is good because he is “true Communist, kicked the kikes out of Politburo, restored Russian Empire, resurrected Church and Tradition”. As for Hitler, Communist think that “Hitler is a good guy, too bad kikes tricked him into attacking Russia”. One problem is that Stalin is Caucasian, i.e. “from Caucasus”, i.e. black. So, Neo-Nazis love to troll Commies in “hey, you call yourself Nationalists, yet you worship black-assed highlander”. Sorry for slurs, but that kinda how they talk. Also, note, that Communists consistently on the Kremlin side, and were even used by (Jewish) Oligarchs like Khodorkovsky to press Kremlin for more de-regulation.

All modern Russians believe that [about Hitler]. They had “Hitler envy”. “It would be so cool if Stalin was actually Aryan National-Socialist”, “it would be so cool if Molotov-Ribbentrop Pact wasn't broken”. Looking at sorry state of affairs Russia is now, despite all the suffering, it's hard to blame them for feeling entitled. And of course, if tomorrow swastika flag raises above the Kremlin, everybody would cheer — Commies, Nationalists, Democrats.

It should also be noted that Russians are natural Germanophiles, and always were, since at least Peter The Great. National Socialism has an added benefit of being “Western” (i.e. “better”) ideology in Russian eyes. In Russian Liberals, it is represented in Reagan-worship. “Cool Aryan capitalist empire, fucking towelheads up — God bless America”.

Skinheads in Russia are basically Western fetish. “It's from Britain, so it's cool”.

“Hitler is a good guy, too bad kikes tricked him into attacking Russia”!?! I have to laugh, else I would have to cry.

NIMBY

In a Facebook discussion, Rhett Aultman observes:

NIMBY is a manifestation of externalities. The failure to capture externalities is basically the blind spot of capitalism (both institutional and black market). Democratic governance is the backstop for externalities. Ergo, NIMBY is the tangible manifestation of our age's dialectic between the errors of capitalism and democratic governance.

Feature creep

My favorite Dilbert strip.

You need more features

What Osama bin Laden means

Ian Welsh’s crackerjack post Bin Laden’s insights and the Egyptian Coup covers a lot of territory beyond what it says on the tin. Here’s just a taste:

This critique is not just a critique from an Islamic perspective, it strikes to the heart of the West’s ostensible ethics, to the equality of all humans, to the right of self-determination, and even to the western theoretical preference for democracy. Democracy is a powerful idea, but bin Laden (and others) have observed that the West only believes in elections when the right people win. This was best on display when Hamas, in Palestine, won elections the US had insisted occur (over Israeli objections) and the US then backed a Fatah coup to make sure that Hamas did not take power. (Hamas later kicked Fatah out of Gaza, leading to the current divided rule of Palestine.) It doesn’t take a genius to see that this applies to the current Egyptian situation. Whatever one thinks of Morsi’s government, it was elected in what seem to have been fair elections.

So, if you play the West’s rules, if you win fair and square in elections, and the West doesn’t like who came to power, they will help undo the results of the elections. If you try and get rid of a regime you don’t like through violence, the West will support the regime, making it unlikely you will win, and if you do win despite all that, they will undermine or destroy your regime through economic sanctions. All that failing, as in Iraq, they may well invade.

The problem with this critique is that it is, substantially, accurate. Hate bin Laden or not, this is a model of the world which has predictive and analytical utility. It explains the past, it predicts the future, and it does both well ....

Healthcare.gov

On Facebook, my friend Miles Kurland says what a lot of people in my biz have been thinking:

As a web developer, people keep joking about Healthcare.gov to me, and I pity the folks who had to do the work on that site — given the data integration work with the large variety of providers and the overall complexity of the system.

But I think that criticisms of the site, and the ACA (Obamacare) often focus on a perceived failure of government to be able to do “big things”, and I think that's misguided.

Because the website is a synecdoche for the system as a whole, whose complexity derives from that very notion that private insurers — not government — should manage health insurance. But it's empirically been shown that Medicare is run more efficiently than the private insurance companies.

A complex, difficult to grasp ACA resulted in a complex, difficult to build website.

It would have made more sense as both policy and as technology for Healthcare.gov to have been a simple form with the instructions being: “Sign up for Medicare for All”.

I suppose that there's one good thing about this debacle: it will be an example that web developers can point to about how software tends to expose flaws in human systems.