Young Rewired State

I’ve spent the last two days at the Google HQ in London attending Young Rewired State [hit link for more info about event] (#youngrewiredstate), and it’s been nothing short of epic.

And of course, I’ve taken some photos.

The schedule (shamelessly copied from the site) was as follows:

Saturday 22nd August:
10:00 Start
10:30 Planning session
12:30 Lunch
13:30 Hacking starts
17:30 Dinner
18:30 Home (Hacking overnight allowed!)

Sunday 23rd August:
10:00 Back to hacking
11:30 Brunch
12:30 Back to hacking
16:00 Presentations to Judges and Press
18:30 Prizes announced

On the first day we split into groups and started thinking up ideas. At about 4pm we finally settled on our idea: to make something very similar to RentACoder, but much simpler, targetted at talented coders who need experience in order to get a proper job. Here are a couple of screenshots of the final result (click to embiggen).

We decided on a PHP/MySQL project and as luck would have it, I was the only PHP/MySQL programmer in the group! So it was fairly frantic work (solid coding from 10 till about 3 on the last day) and we ran into all sorts of problems with versioning and people overwriting each others’ work in FTP, especially as the CSS people tended to be working on the same files as I was at the same time!

IRC

As with all hack days, IRC was one of the most important methods of communication. Literally everyone had their laptops out during talks, especially during the presentations at the end and there was a fairly constant stream of chatter on the channel. @samhale123 also put up a bot on the channel to tweet things over IRC – we had several hours of fun attempting to overload the script / twitter / the server!

Immaturity with Twitterfall

Google

Google is an amazing place with by far the best decor I’ve seen in a company building. The floor is laid out like the London underground and the meeting rooms are more or less in the right place for stations (with consistent naming). There are ducks on the ceiling and random awesome other bits of furniture / decor adorning the walls / ceiling / floor.

We were also given a load of Google freebies, including Google yo-yo’s, Google cakes, Google water, Google pens, Google notebooks…

This actually was a telephone box!

Google and Youtube Cakes

People

Of course it was a floor full of geeks, which essentially means a brilliant selection of geek T-shirts (I spotted several from ThinkGeek, at least one from the xkcd store…). The mentors (helping out with coding / guiding the groups) were also working in all sorts of fantastic companies; one of our mentors is working at last.fm, one at moo, one with the BBC etc. And needless to say there was a wide array of OS’ – the large majority seemed to be using Macs, those with PCs were probably split 50/50 between linux (mostly ubuntu, one debian that I know of) and windows.

There was also a brilliant selection of judges, including people from Wired (for some reason looks very familiar; came to school to give a talk maybe?), C4, etc.

Some of the judges

The presentations were good fun – there were something like 40 people from the press / outside making the buzz all the more exciting. And we (@workforpeanuts) won the “Wish I’d thought of that” award!

Anyways, this is the first hack event that I’ve ever been to, and if this is anything to go by, I’m definitely game for another at some point. Heck, maybe DEFCON next year… *MANY* thanks to @hubmum for organising such an amazing event.

And I took other cool photos so go for it and browse!

Price Elasticity of Demand

I remember ranting about the failures of the model of price elasticity of demand. I finally found some time to have a look at the maths of it, and actually it turns out that it works rather nicely.

Taking a standard P_ED of -0.8, Wolfram Alpha (which I affectionately call ‘Walfa’) kindly plots the graphs for me (click to view the Wolfram Alpha page):

It makes sense: asymptotes at the axes are a theoretical assumption. On the other hand it completely wrecks any assumptions about straight lines.

In other news, I’m away for the next week on a walking trip in Snowdonia which should be immensely good fun (and photographic).

Inovazone

It suddenly strikes me that I haven’t been blogging much recently. Exams finished several weeks ago but I have been somewhat busy.

In particular I’ve been working on a new site for a client, Inovazone. In the words of the site’s inventor, Alastair Darwood:

How does an invention go from a scribble on a page to a world-changing product that advances humanity? The answer is that at the heart of the invention there lies a set of distinct and crucial necessities that the invention is addressing … Until now, the only way in which necessities were discovered was through large companies carrying out expensive research, or a spark of genius from someone who suddenly sees one and thinks of a solution. Inovazone is designed to change this. The idea is that users of the site post their ‘necessities’ (short explanations of problems, ‘necessities’, they think need to be solved to benefit them (or humanity)), or rough outlines of inventions they would like to see and anyone can browse the necessities if they want to and look for interesting problems to try to solve through innovation. This could be in the form of an invention or simply a quick online response to the post on our comments system.

Interestingly enough, there doesn’t actually yet exist a site or system available to the general public that serves this particular function by providing a framework within which ideas for inventions are openly submitted and accessed, so I agreed to work on it, especially considering the core of submitting and displaying necessities is a relatively simple PHP/SQL project.

Submitting a necessity. Click to embiggen

What I found particularly compelling was that, according to Alastair, everyone with whom he’s discussed the site has expressed enormous enthusiasm for it, and even a seasoned inventor he’d talked to had described the idea as long overdue and predicted huge success. Although I originally liked the idea and somehow felt it would do pretty well owing to its novelty, I for some reason assumed one would obtain mixed reactions in discussions.

Original image at http://rockstartemplate.com/wp-content/uploads/2008/12/social-bookmark-icon.jpg

In terms of the hard sell, we’re employing several different methods to publicise Inovazone. We’ve created a Facebook fan page and a Twitter account – feel free to follow us (@inovazone). One.com also kindly provide adwords coupons so with some SEO we might be able to appear in ads on relevant Google searches.

The site is currently about to go into beta testing. From wiki:

Beta testing comes after alpha testing. Versions of the software, known as beta versions, are released to a limited audience outside of the programming team. The software is released to groups of people so that further testing can ensure the product has few faults or bugs. Sometimes, beta versions are made available to the open public to increase the feedback field to a maximal number of future users.

The idea of this is simply to fine-tune what we already have rather than to add more features, though both these are desirable outcomes from this round of testing; though for me personally the primary objective is to see whether the system works well with a large user base. So for that to happen we need some willing volunteers to go test out the site: anyone reading this is welcome to join the test group. Go ahead and post as many necessities as you deem reasonable, and comment on existing ones. Try out creating new subcategories and send us feedback about features that you think should be created or made better via the awesome uservoice-powered feedback utility. I’m especially interested in bugs and vulnerabilities you find; if you somehow work out how to delete posted necessities or spam the site with adverts, or if the site spews out a series of errors while you’re using it under normal circumstances, get in touch (there is a contact page). Chances are the database will be reverted to its initial (more or less empty) state before the site is released in a few weeks’ time, so disasters should be recoverable.

Before you (readers) go, I’d be interested to hear your feedback on the idea of the site – do you think it has potential? Will it be useful?

That’s all from me for now. The site will get a working and hopefully regularly-updated blog pretty soon for general status information and news so you probably won’t be hearing much more about it from me.

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Why not to do AS Economics

Before I start I’d like to make it very clear that despite the failure of the AS Economics syllabus and examination to present Economics as what it is: a science, I personally still consider it one of the most interesting and useful subjects to learn. The Mathematics of game theory in particular leads to surprising and deep conclusions about human beings, and nothing, not even UK examinations, can change that. In addition my dislike of the subject at AS has nothing to do with my teachers – the actual lessons and discussions were invariably absorbing and relevant to current affairs, which made the unfortunate syllabus some ‘genius’ working for the government came up with so much more tolerable.

So, the exam is finally over, and it’s time for an elucidation of why doing it at AS is such a bad idea. I’ll split it into two parts: why Economics is taught wrongly at AS, and why not to do it at AS, which are arguably two different things.

Why it’s taught wrongly

My primary concern is the fact that it is treated explicitly as an essay subject rather than a highly mathematical and scientific subject. The natural language of Economics is maths and logic – Economics is about allocation of resources and decisions. This inevitably invokes game theory which was developed by von Neumann explicitly for decision making. Insulting the poor guy and choosing to waffle about market failure instead of putting to use the tool he spent is life creating just seems a waste of time to me.

The models that are taught seem, after thinking about them for a bit, either completely useless or completely nonsensical. Firstly uselessness: almost all the models that are taught at AS involve graphs with straight lines which seem to go extremely fuzzy at the axes. Even the shape of these lines is unclear, so to extrapolate that if a certain line shifts, with the fallacious and limiting assumption of ceteris paribus, then price will rise, which luckily coincides with what you’d conclude from common sense, is just bad practice. So much time and effort is put into learning and understanding how these graphs work, and ultimately the same problem can be easily solved by common sense, and a more complex problem would be more efficiently and more accurately solved using Maths rather than graphically. In real life, as my teacher pointed out, the government wouldn’t sit there poring over a diagram of SRAS shifting to help them set fiscal policy. Secondly nonsensical: (this will only make enough sense to be nonsensical to those who have done AS economics, if you know what I mean…) consider a rightwards shift in the Keynesian LRAS: long-term economic growth:

Since the flat part of the curve represents mass unemployment, economic growth appears to have caused mass unemployment! At one point I asked my teacher about it, and his response was something like ‘the model is basically a lie, so don’t read too much into it’.

Why not to do it

The Mark Scheme is the key deterrent. Doing the exams feels like pretending to be a psychic – even though you might write something that is completely correct and answers a perfectly reasonable interpretation of the question, you could still fail to pick up a single mark because you haven’t read the examiner’s mind and your answer isn’t compatible with the rigid mark scheme he has written.

The structured answer required of candidates to a long essay answer typically consists of a definition, some explanation of why the process works, and evaluation. For the past six months, evaluation has been the bane of my existence: it is basically explaining at great length why your answer is wrong and/or inadequate. Evaluation is basically saying ‘the answer could be different if the initial conditions were different’. In the words of KPZ: No spit Sherlock! A typical evaluation might be ‘the significance of this factor that I have just painstakingly described is actually completely negligible because the quantities involved are so small’ or ‘I do not know the size of the multiplier so I have just wasted my time writing half a page on why the multiplier augments the increase in aggregate demand’. This is perhaps a function of the essay style of the exam, and the lack of calculation, making the entire affair a hand-wavey vague generalisation of how a generic economy might behave if only one thing is permitted to change at a time.

A structured answer in my opinion to a question like ‘evaluate the likely success of supply-side policies’ is to begin with assumptions and at that point determine the likely precision of these assumptions; in effect setting initial conditions for the solution of a differential equation with error bars. For example giving some formula for the probability density of the value of a constant, e.g. ‘The size of the multiplier M ~ N (1.3, 0.3)’ or ‘M = 1.6 +/- 0.2′. Now that all this is empirically established, there’s no real need to evaluate: it would be pointless afterwards saying ‘the result could be wrong if the multiplier had a different value’ since you’ve already quantitatively given an explicit formula for the probability that the multiplier is different. The next step would be to set about using a model to calculate the precise effect of various supply-side policies, taking into account the uncertainties in initial conditions set out in the assumption, and also taking into account the potential innacuracy of the model. Now you have a very secure answer with already inbuilt evaluation. Such an answer would probably receive an extremely low mark because it contains no evaluation, and the discounted cash flow model and Black-Scholes probably don’t feature in the mark scheme. And I haven’t written a definition of a supply-side policy.

Another ridiculous feature of the exam is the number of marks: a question requiring merely a bog standard definition can be worth up to 6 marks. To make things worse the number of marks available per paper has doubled since last year so a previously 4 mark question would be worth 8 marks. All this means it is extremely stressful taking the exam: only a single line of question is sufficient to inflict four pages and thirty marks of suffering upon a candidate. To make things worse it’s almost impossible to guess how the marks are allocated, and exactly what the question requires.

Probably the hardest part of the exam for me was the supported multiple choice, a feature of the microeconomics module. This is the most blatantly exam technique-oriented part of the exam in my opinion, as it is possible to gain marks by explaining why some of the other alternatives are incorrect – the so-called knock-out marks. Multiple choice is actually in itself an excellent way to test knowledge, and having to jump through hoops and explain in depth something that you already clearly understand from having chosen the correct answer in the first place strikes me as woefully torturous to the candidate. To make things worse, the amount of stating the obvious required in these questions is insufferable.

Final thoughts

So in conclusion, AS Economics should not be called AS Economics. It should instead be called something like AS Exam Technique, or AS Mark Scheme guessing. The amount of correct or accurate or useful economics contained in the course is truly minimal, and the exam almost killed me (and my hand). The only reason I can give for anyone to actually do AS Economics is if they want to do it at university, where the true elegance and beauty of the subject is really done justice (or so I hear). Otherwise you’re in for a year of hating examiners and their awkwardly constructed mark schemes.

On a lighter note, this is what was on the actual mark scheme of a past paper, word for word:

Q: With the aid of a diagram, explain how high guaranteed prices resulted in milk surpluses (Extract 2, lines 9-10) [6 marks]

A: High guaranteed prices encourage farmers to increase output because they know that there is a ready market for their produce. Therefore, they will use more fertiliser, better seeds etc to ensure higher output.

Hmmmm…

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The Pirate Bay Situation

It’s big (and by now fairly vintage) news in the torrenting and general technology community that a verdict has been reached for the lawsuit against The Pirate Bay’s four founders. I won’t say much about the gory details of the trials – there are plenty of articles on good websites that will give you all sorts of facts; I’m just going to state some of my opinions on the matter. In case you don’t already know, the verdict was a jail sentence and a $3.6M fine.

Firstly my thoughts on file sharing in general. BitTorrent is used for a whole host of good things – I’ve used it on multiple occasions to grab up-to-date linux distributions and it’s a fantastic way to download without limitations on server upload speeds (private trackers have exceptionally high ratios and speeds but linux and other open source stuff tends to download fast as well even on public trackers). There’s also the whole debate about whether or not piracy really does harm the economy as much as Sony would like us to think. But personally I think there’s no hope for companies trying to shut down piracy because it stems directly from the entire point of the internet: sharing information. If torrenting somehow gets shut down (an incredibly unlikely scenario), an alternative P2P system will immediately spring up to replace it, and there are a great many out there waiting to be exploited. But basically what I’m saying is that an attempt to target the infrastructure of filesharing is just a pathetic way for companies to seek some sort of revenge for probably mostly imagined and definitely largely over-hyped and bloated losses.

It is transparently obvious that the trial is much bigger than just The Pirate Bay – the verdict poses a threat to the entire community of file sharing. The Pirate Bay may have had certain special circumstances that made this verdict even vaguely plausible: something to do with Sweden possibly. But the verdict has set an incredibly dangerous precedent – if the team really end up facing significant jail time and massive fines, it would serve as a massive deterrant to anyone even considering starting up a novel platform for sharing, be it open-source software, ideas or whatever. My opinion is that the entire spirit of a collaborative internet is being broken apart piece by piece, while the pirates will still always find a method of sharing illegally obtained and distributed material. The supposedly illegal side always tends to be far more determined to keep sharing than the average supposedly law-abiding person who is probably fairly ambivalent anyway about whether or not to share those photos on Flickr.

There’s also a huge amount of wastage. I noticed Isohunt have put a notice on their front page linking to some legal material. I wouldn’t be surprised if other trackers are calling their lawyers right now, preparing for a legal assault on their communities. I’m not saying lawyers’ pay is waste, but the sheer amount of effort and time going into nit-picking against a multi-corporate legal mob in front of an unconvinced and generally non-tech-savvy jury seems to me at least a somewhat inefficient use of resources.

And to keep everything in perspective, the recording industry are fighting against a phenomenon they themselves are helping to create. The measures being adopted to prevent piracy such as music DRM make life a misery for law-abiding citizens who pay for their music; for example iTunes forced all its customers to re-download and thus re-buy all their music just to (supposedly) remove one layer of DRM from audio files. All this hassle actually makes pirated music of higher quality than purchased music, a ridiculous situation created by companies like Apple. How can anyone blame me if I decide to download a torrent of a few songs (which I’ve already paid for) just to be able to play them in something other than iTunes?

In my opinion, it will become increasingly difficult in the future to download plain DRM-free music and films, and indeed the risk of being caught doing so will probably increase, as will the penalty. The current trend is that more and more companies are getting involved – once it was just bodies such as the MPAA and RIAA who were targeting file sharers. Then more private companies joined in for the money such as MediaDefender, and now even ISPs and governments have joined the witch-hunt. If you want my take on this, I suggest that if you already download and share pirated material, do so while you can and max out on it; the window of opportunity to get hold of clean untrackable media may well be closing.

Good hunting

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Copyright Infringement

This is in fact my Economics essay for the Barnett Prize. The person who marked it thought it was a terrible essay (fair enough), but I still think it’s interesting to discuss. So here it is, however horrific an essay, after being cut down to exactly 1500 words, and with a less bellicose attitude towards the RIAA than normal (for the sake of being PC). It’s entitled “Steal this Essay”. This is also an experiment to see how well WordPress’ ‘import from Word’ feature works. I have to say, I’m impressed by how it deals with footnotes and citations/bibliographies.

Using a specific microeconomic case study from either the UK or abroad, assess how governments can deal with market failure.

Copyright infringement is a growing concern in the music and film industry. Despite the best efforts of governments, private firms, law-enforcement agencies and cyber-police, the amount of music and film in illegal circulation over the internet has grown at an exponential rate since the conception of Napster, the first peer-to-peer (P2P) file sharing service to hit the internet. According to Ars Technica (1), usage of Bittorrent, a popular tool used by file sharers, grew 24% in five months, and Bittorrent is apparently responsible for 80% of the world’s traffic. Global music sales dropped from $38bn in 1999 to $32bn in 2003 and American studios reported $2.3bn in losses to film piracy in 2005 alone (2). Free market forces are failing: talent starved of adequate funding will fail to flourish and music, entertainment and culture may be eroded as a result. Without consumers willing to pay for goods produced by talented artists, such artists will be unable to invest profits in creating more music (they may opt to record fewer CDs), and supply of the product decreases, increasing its cost which in this case further exacerbates losses leading to a vicious cycle. With revenue from their music falling, artists may choose to switch careers, discontinuing their contributions to music: the labour supply decreases, as does the pool of musical talent. Culturally, the negative externalities of this are highly significant, resulting in a shallower music culture.

In my opinion, the primary reason for file sharing is simply convenience. The internet allows even very large amounts of data to be transferred at zero cost and supersonic speeds; the temptation to cheat the system becomes irresistible: the opportunity cost of buying a CD from a local store, which involves both monetary as well as time sacrifices, is far greater than the single mouse click it takes to download the entire album. Pirated media can be seen as a substitute good for which consumers pay with risk of getting caught rather than with conventional currency; industry is losing out to this illegal competition.

Existent government measures have proven ineffectual at best. For a while law enforcement worked: the RIAA[1] and MPAA[2] succeeded in intimidating file sharers into accepting monetary settlements out of court, thereby recouping losses and deterring potential copyright criminals. However when exonerated file sharers began to sue the RIAA back (3), subsequent copyright lawsuits became somewhat anathematised and digital rights organisations procured an increasingly unpopular and disrespected reputation for aggressive methods (as illustrated). One of the primary difficulties is the issue of evidence: piracy is exceedingly difficult to detect with ever-advancing encryption technology. Taking the current trial of The Pirate Bay[3] as an example of ineffectuality, on the second day of the trial half the charges have already been dropped (4) (at the time of writing this). To make things worse, the music industry’s attempts to cover itself from piracy only punish the law-abiding: employment of digital rights management on music by online retailers such as Apple renders the files unusable with anything but iTunes and iPods, causing frustration, heavily discouraging the buying of music.

The government has attempted to enforce the law through Internet Service Providers (ISPs): since they provide the means to perform illegal activities, perhaps it should be their responsibility to police their networks. In 2008, the UK’s largest six[4] ISPs[5] agreed (5) to a code laid out by the government: if an ISP has reasonable evidence upon which to suspect a customer of illegally downloading music, it will throttle his download speeds significantly. This appears promising: a large proportion of the country is now under surveillance by ISPs and users have an incentive to stop file sharing; Virgin Media even sent out warning letters to several hundred of its file sharing customers. However the government is pitting itself directly against the free market forces: as pointed out by the Wired article (5), it is far more probable that they were merely taking measures against losing customers: firms appreciate the revenue from them. In addition, ISPs abiding by this code are likely to lose business owing to a pervasive sense of intrusion from being constantly monitored. Besides, imposing regulations on businesses raises supply costs (employing a monitoring team for example), shifting the supply curve leftwards, resulting in a more expensive, and less abundant, good or service:

[Insert bog standard Economics AS/AD diagram]

One suggestion was for the government to accept the fact that internet users will share files, and rather than fight this unwinnable war, to tax broadband usage and return tax revenue to industry, thus compensating for the market failure. Unsurprisingly this has been met with much fury: not only does this demonstrate great cynicism and mistrust on the government’s part, but it may actually exacerbate the problem: consumers might decide that since they have paid for their illegal downloads they are entitled to download copyrighted material.

Alternatively, similarly to using disturbing television advertisements about lacking TV licences, the government could attempt to threaten the population into submission. There is good evidence that advertising works with anti-smoking campaigns, so there appears to be a high probability of success with this measure. Again the government is no longer working against the free market: it is rather injecting information into the market and allowing consumers to make a better-informed decision. Unlike regulation, such measures preserve human rights and can be highly effective in combination with other measures. Unfortunately, unlike the case of smoking and even TV licences, a savvy file sharer knows he can hide his activities indefinitely: threatening advertisements do not work for such people (who also tend to be the heaviest sharers). Education may eventually curb the problem through generations of law-abiding citizens, but such slow-acting measures may not be sufficiently effective in the short run to avert cultural erosion.

In September 2007, it was discovered that a large (needless to say illegal) cyber-offensive was being planned (6) against The Pirate Bay by MediaDefender[6] in an attempt to halt file sharing activity. Although it was discovered and averted, perhaps such measures are the only ones that will work: aggressive attacks on the central hive of activity; this is after all what governments are accustomed to doing when dealing with terrorists and criminals. However, despite a worldwide offensive on terrorism, ever since September 2001, little, if not negative, progress has been made against it; what guarantees the success of an offensive against a worldwide network of highly intelligent anonymous criminals?

Perhaps to understand fully the nature of this market failure, one should reconsider the extent and type of damage done by file sharing, and also take into account its positive aspects. According to US District Judge James P. Jones (7), ‘17,000 illegal downloads don’t equal 17,000 lost sales’. If a customer wants some music but is not prepared to pay the price quoted on Amazon (indicating he is not willing and able to pay for it), he would not be in the market in the first place, so the music industry should be indifferent to whether he downloads that music illegally in the end. Of course this line of reasoning cannot be extended too far, but the point is that not every illegal download harms industry. In fact there was a study (8) (English synopsis (9)) commissioned by the Dutch government which concluded that in fact file sharing contributes €100m per year to the Dutch economy. Apparently much downloaded content becomes treated as sample content to be bought later, and downloaders tend to buy more games than non-downloaders (possibly an effect of exposure to online marketing). In addition, the positive externalities of file sharing include broader cultural wealth. By annihilating file sharing, the government would lose out on positive externalities as well as negative ones. The report concludes that most losses can be attributed to things other than piracy, including competition with other forms of entertainment. Notably in The Netherlands, downloading media for personal use is legal. Perhaps an unconventional solution to the market failure is to legalise file sharing, thus maximising the social benefits and accepting the (minimal) social costs. Besides, surveys show that 80% of British people would be in favour of this measure (10).

In conclusion, business has taken a radical new direction since the concept of ‘free goods’ first appeared. Google provides millions with enormously powerful search facilities for free and receives its revenue largely from advertising. According to Wikinomics (11), ‘free and collaborative’ (complete with externalities) is the future, whether we like it or not. I believe governments should embrace this future and work with the market, rather than fight it. Whatever the solution to the problem of copyright infringement eventually turns out to be, I suspect, and hope, that the RIAA and MPAA will not be closely involved, that free market tools will be capitalised upon, and that the positive externalities of change will be fully appreciated.

Bibliography

1. Bangeman, Eric. BitTorrent use soars as MPAA fights on against P2P sites. ars technica. [Online] 17 04 2008. http://arstechnica.com/old/content/2008/04/bittorrent-use-soars-as-mpaa-fights-on-against-p2p-sites.ars.

2. File sharing. Wikipedia. [Online] http://en.wikipedia.org/wiki/File_sharing.

3. Oregon RIAA Victim Fights Back. Recording Industry vs The People. [Online] http://recordingindustryvspeople.blogspot.com/2005/10/oregon-riaa-victim-fights-back-sues.html.

4. enigmax. 50% of Charges Against Pirate Bay Dropped. TorrentFreak. [Online] 17 02 2009. http://torrentfreak.com/50-of-charges-against-pirate-bay-dropped-090217/.

5. Buskirk, Eliot Van. British ISPs Agree To Curb File Sharers’ Internet Access. Wired. [Online] 23 07 2008. http://blog.wired.com/music/2008/07/uk-could-announ.html.

6. Leyden, John. Pirate Bay sues media giants for ’sabotage’. The Register. [Online] 24 09 2007. http://www.theregister.co.uk/2007/09/24/pirate_bay_counterstrike/.

7. Cheng, Jacqui. Judge: 17,000 illegal downloads don’t equal 17,000 lost sales. ars technica. [Online] 19 01 2009. http://arstechnica.com/tech-policy/news/2009/01/judge-17000-illegal-downloads-dont-equal-17000-lost-sales.ars.

8. Ups and downs – Economische en culturele gevolgen van file sharing voor muziek, film en games. TNO. [Online] 2009. http://tno.nl/content.cfm?context=markten&content=publicatie&laag1=182&laag2=1&item_id=473.

9. Ernesto. Economy Profits From File-Sharing, Report Concludes. TorrentFreak. [Online] 19 01 2009. http://torrentfreak.com/economy-profits-from-file-sharing-report-concludes-090119/.

10. Orlowski, Andrew. 80% want legal P2P – survey. The Register. [Online] 16 06 2008. http://www.theregister.co.uk/2008/06/16/bmr_music_survey/.

11. Tapscott, Don and Williams, Anthony D. Wikinomics. London : Atlantic Books, 2007. ISBN 978-1-84354-637-5.

12. P2P Survey Results. In HIIT. [Online] 2007. http://inhiit.blogspot.com/2007/09/p2p-survey-results.html.

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[1] Recording Industry Association of America

[2] Moving Pictures Association of America

[3] A large Bittorrent tracker and hub of illegal piracy

[4] Virgin Media, Sky, Carphone Warehouse, BT, Orange and Tiscali

[5] Internet Service Providers

[6] Anti-piracy company

A Sceptical Take on the Financial Crisis

By no means am I denying that the world is in some pretty deep financial you-know-what. But from where I’m seeing things – mostly from my computer in London – there appear to be several potential misconceptions about the entire crisis about how it began, how it will end, the people involved in it and how bad it is. I’ll admit that I don’t read the FT every day. However from the few financial RSS feeds I’m subscribed to and the occasional article I read in the Economist or Moneyweek, I keep feeling instinctively compelled to draw conclusions which I don’t think necessarily ring true and increasingly feel the need to stop and wonder whether the journalism I’m being fed really represents what is going on out there in the real business world. I’ve always been advised not to believe what I read, so here’s me questioning it.

Doom Prophets aren’t all geniuses

Newsnight (BBC), Squawk Box (CNBC) and various other financial and news programmes seem incredibly fond of bringing in various great geniuses who supposedly predicted this crisis for interviews. I have no doubt that there are people out there with a far superior understanding of the market than even the most experienced bankers, and that indeed some of them did predict this crisis. However with a new doom prophet appearing on CNBC practically every week I begin to wonder whether some of these people just got lucky. While it may seem ridiculous to suggest that someone who predicted such an apparently surprising turn of events did so purely out of luck, it is a fact that every economic system ever devised has had problems with it which would result in some amount of instability, be these problems due to imbalance of power or wealth, or some cyclic boom/bust sequence. If such a perfect system did exist which somehow balanced fairness with economic efficiency and stability and utilitarian (or otherwise) happiness (or utility, if you like), it would surely be in place somewhere, if not everywhere in the world. The so-called doomsayers therefore only have to pick one of these problems and hope to be proven correct. Since there is a limited number of obvious problems which can lead to a disaster, when that disaster happens, chances are that there will be a substantial handful of people who hadn’t a clue what they were doing yet still managed to predict it. I reiterate my previous disclaimer: I’m not saying every doom prophet was playing dice with his predictions; I’m merely pointing out that with such a large base of doomsayers, it’s statistically probable that when something happens someone will have got it right.

It’s not -that- bad

Reading the news and scrolling through the business section of the BBC website (or looking at the RSS feed), I can’t help but notice the frequency of articles containing painful details of firms laying of thousands more workers, or taking severe losses, or going into administration – the list goes on (almost) ad infinitum… There was an interesting post on Lifehacker a while back about information overload due to the financial crisis. As media become increasingly efficient at broadcasting the only type of news that customers love: bad news, the average citizen becomes increasingly over-alarmed at increasingly over-dramatised situations. My mum for example has an interesting impression of the world: she advised me not to respond to a snowball thrown at me for fear that if I throw a snowball back the original thrower in question would pull out a gun and shoot me. This I hope is an extreme example and I’m more than sure the crisis is dead serious. However the amount of dystopian news/journalism flooding into my brain through my eyes and ears every day does seem to suggest the picture isn’t quite as black and white as the BBC says it is.

Maths works!

I was actually quite outraged when I woke up one morning to hear Nick Ferrari denouncing Mathematics as the cause of the financial crisis and going on proudly to broadcast to London’s Biggest Conversation his ineptitude at all things numerical. Of course I had heard of how financial mathematical models had failed to take into account risk as they should have done. However from what I see of comments on financial articles, statisticians appear to have become even more unpopular than CEOs, and I cannot sit back and accept this. I believe it’s not the Maths that was at fault. The models that were created were perfect considering the assumptions made by the quantitative analysts and theorists who dreamt them up in the first place. If all the assumptions made were true, a perfectly-constructed mathematical model would have always provided the best answer possible. In fact, even the people who came up with the models, on the whole, aren’t to blame in my opinion. They were forced by the complexity of the problem to make certain assumptions. With the market so chaotic, what option did they have but to model it as a basically stochastic system? The people who really are at fault are the ones who chose, with incomplete knowledge of the Mathematics, to act upon the results of it. Michael Hintze, head of CQS, apparently once said something to the effect that ‘Maths is a great place to start but a terrible one to end’. I couldn’t agree more: Mathematics functions under the general rule: Garbage In, Garbage Out. It will work perfectly given perfect data. But owing to the incomplete nature of information in the market, it simply cannot be relied on as much as those who did rely on it thought it could. So rather than complaining about how Maths has failed the world, Nick should have been complaining about how it was abused to the point of disaster.

We won’t do this again, promise

There are occasional optimists who claim that the situation we’re all in at present is good for the world in the long run. The line of argument often quoted is something like ‘we will learn from this’ and so ‘the world will become a better place’. The idea is that market failure and economic disaster may be averted in future owing to great revelations during this slight blip. There was a person last year who came to talk at St Paul’s who pointed out that ‘better’ is a very subjective word when it comes to technology. He used the example of sending a man to the moon. Back in 1969 it took an 8-bit computer, some pretty good theory and some enthusiasm on the part of a NASA team to beat the Russians to send a man to the moon. According to the speaker (apologies as I have forgotten the name) the red tape that would need to be dealt with in order to send a man to the moon now would be impenetrable and it would be highly unlikely for NASA to fund a trip to the moon. There are also several advantages of CRT screens over LCD screens which have been lost such as wide viewing angles and low latency. Omnipresent surveillance is also a direct result of improved technology although some would argue the Labour government has more to do with that. The speaker’s argument was that rather than progressing linearly, some things get better and some worse as technology advances, and progress can be seen more as a rotation than a step forwards. I suspect the same happens with Economics. Bloomberg was a huge hit, yet it has made trading so much more complicated and made it so much harder to make money against a semi-automated market brimming with information. Whether that is a step forwards or backwards is up to you to decide. Returning to learning lessons, the government can’t be everywhere at once and watchdogs and regulators won’t be able to prevent the inevitable cycle of boom and bust which seems to be a feature built into Capitalism. After all, since when has man learnt lessons from his mistakes?

Will the world ever learn?

So to conclude, all I’m saying is that I think the truth is somewhat different to what most people interpret from what they read in the Financial Times LEX Column. As Moneyweek exaggerated, generally speaking there is no such thing as a ‘good investor’, merely a lucky one. Mathematicians cannot and should not be held responsible for misuse of their work, and the future will not necessarily be a better place because everyone has somehow learnt lessons. We will probably not learn enough from this, or any, crash/recession/depression/[whatever state of badness it is now] to avert all possible future crises. I guess the moral of the story is not to believe everything you read. Or perhaps simply to read less into what you read. Or perhaps simply to read less!

Why File Sharing Isn’t Bad for the Economy

I notice from my Slashdot feed that the RIAA have been giving up on a lot of cases recently. For one they failed to extract $222K from someone who shared 24 files on Kazaa. There was also a case (the same one maybe?) in which the defendant subsequently turned on the RIAA following his success in court and sued. There have been two cases that I know of since the beginning of the Christmas holidays in which lawsuits have been dropped by copyright firms. Fairly recently a Dutch study (thank you Slashdot) found that actually file sharing is good for the Dutch economy. Then someone wrote a book/blog post/ebook/news article about the concept of free stuff in an economy and how it works really quite well. It appears that the whole DRM thing is rapidly turning on its head, against law firms and in favour of open source and freebies. Here’s a concise exposition of all I’ve gathered that seems to make sense regarding this phenomenon.

17,000 illegal downloads don’t equal 17,000 lost sales

- US District Judge James P. Jones

Mike Henley, a former member of CompSoc, pointed out something that I think makes a lot of sense. If music downloaders suddenly no longer could download it for free, I suspect many of them would just stop downloading full stop. The reason they download is more because it’s convenient than any reason concerning the price: there are simply so many good deals out there that good music is already available for decent prices. Therefore it can be deduced that they are actually not harming the industry – they aren’t reducing demand and removing themselves from the market by downloading for free since the market wouldn’t contain them in the first place.

- Me

I think everyone who’s outraged about people downloading and enjoying stuff that they should be paying for and blaming them (amongst Maths, public schools and gnomes) for the economic downturn should really consider the fact that, As Michael observantly pointed out in a comment, most people who currently download for free just wouldn’t buy music in the first place if the download option didn’t exist. If you don’t know you’ll definitely like a product, why risk £12.99 buying it? This judge has definitely got it right.

The way I see it (not why it’s right/wrong but why it’s taking place) is that a new market for music is being created involving mostly bittorrent and uploaders. The ‘product’ is really a few megabytes of data – an mp3 file. The cost to the producer (warez-bb.org uploader for example) of sharing this product is approx. zero. (compare £10 with the millions recording companies must spend on equipment, overheads, disks, labour etc) Chances are they downloaded it themselves in the first place. Every time someone downloads the share, nobody has to pay to get it copied. So there are no production costs, and ‘competition’ (kudos is the new dollar – believe me it’s true – warez-bb forum uploaders survive on the number of thanking replies they get) results in a price of zero and a well-archived and user-friendly method of obtaining free music.

Dutch Study Says Filesharing Has Positive Economic Effects

- Slashdot

Interesting as the economics of this may be, I’m not prepared to learn Dutch. However from what I can deduce: those who opt to download are probably more exposed to online marketing and are thus more likely to buy products that can’t simply be downloaded for free – concert tickets, firefox.com gadgets… To make things better, the actual act of transferring data via downloading costs both parties virtually nothing. A CD on the other hand would involve paying for the media, case, P&P, etc.

I’m reading a book (yes, another one – still haven’t finished the other[s]) called ‘Wikinomics’. It’s about open source and collaboration. I think it’s fairly clear that the internet is bringing a whole new business model to the world (there was an article in the FT on this but I didn’t bookmark it) which revolves around goods and services which the consumer doesn’t actually pay for. Google deliver unbelievably powerful search power to millions (billions?) of users around the world, for free. How nice of them. In fact, our young enterprise idea was (still is come to think of it) based on this system of providing free stuff and using advertising/sponsorship to earn the actual income.

Finally, it’s probably a safe bet that the RIAA and MPAA are fighting a losing battle. Digital music and films are just so easy to copy and distribute that whatever crazy measures ISPs, Microsoft, Sony, the RIAA, the MPAA and Apple dare put into place, a workaround will be found, probably within minutes, and probably in a secret underground hacker convention in Germany or China. Besides, lawyers aren’t exactly popular, especially if employed en masse and paid an unreasonable fee to crucify people like you and me.

I think I’ll leave you with a thought from xkcd.com:

Blackle

I’ve found this slightly ridiculous site and think it’s important to point out the significance of the error the creators made.

Blackle is, in short, a black version of google.com. With the amount of traffic Google receives, the amount of energy used displaying its search results is phenomenal and according to research done by the creators of Blackle, by displaying a black instead of a white background on Google, the world could save 750 MWh/year (=86KW). So, let’s take a closer look at this idea.

The underlying assumption is that black screens use less energy than white ones. I agree fully that this may have been true in the retro days of CRT screens: fewer electrons will need to be fired at the front of the screen so less electricity will be required. Unfortunately CRTs are somewhat backward and our world is very much a flat panel place nowadays. There are two types of flat panel: LCD and plasma displays. LCD stands for Liquid Crystal Display and the principle is actually really quite beautiful.

A liquid crystal can be seen as a polarising tube: when light is shone down one end it gets polarised. However this tube is composed of several layers like a lot of very flat cylinders concatenated end-to-end, each with a polarising slit. In its natural state the crystal (tube) is twisted so that each layer is slightly out of line with the adjacent ones. Imagine looking at a slinky end-on then twisting it. When light is shone on one end of this twisted liquid crystal, the first layer polarises it. The second layer then blocks some of this light because it is polarised in a slightly different orientation and allows some through, re-polarising it. This is repeated for all the layers of the crystal and eventually some light gets through. The last layer’s polarisation is orthogonal to that of the first layer.

When electricity is passed through this crystal however, it straightens out and becomes an untwisted polarising cylinder which just polarises light like a normal polarising sheet.

To construct an LCD screen, a sheet containing an array of cells made of these crystals is placed in front of a sheet of normal polarising material. A backlight is placed behind both these sheets. An electronic grid allows electricity to be passed through any cell independently of all the others. In the un-electrified state, all the liquid crystals are arranged so that the polarisation of the back face (next to the polarising sheet) is in line with that of the polarising sheet (say, vertically) and of course the crystal is twisted 90 degrees so the front is polarised horizontally. This way, light from the backlight can get through both sheets since the back of the crystal is aligned with the sheet and light can get from the back to the front of the crystal. However the front of the crystal is fixed in orientation so when the sheet is electrified and all the crystals untwist, the back of the crystals end up horizontal. Now the crystal acts like a second polarising sheet but in an orthogonal direction to the first sheet. No light gets through and the screen is black.

So, what does that mean? No electricity needs to pass through the crystal to display a white screen but every single cell (pixel) needs current passing through it to display a black screen. The assumption was false for LCD monitors, which in 2006 accounted for 80% of all computer monitors.

The other flatscreen technology is plasma displays which physically illuminate each pixel with a separate light source (some sort of LED I’d imagine). These I think do conserve energy when displaying a black screen.

So the website, at the user end of things, actually does the opposite of the stated intention for 80% of computer monitors. To make things worse, the functionality of this site is much lower than Google. Since it’s a Google custom search, the site only has the Google features available to Google affiliates and lacks things like Google cache, translator, webapps etc.

Enough about the frontend – now for the backend. The site must receive tens of thousands of hits every day, and must therefore need some quite meaty servers to deal with the traffic. Let’s say it requires a server that draws 500W (including cooling), an average power consumption for a server. According to the internet archives, Blackle has been around since the beginning of 2007. Over 2 years this server would have burnt through 8.8MWh. The site advertises it has saved a total of about 1MWh. Blackle has in fact caused the world to use an extra US household’s year’s supply of energy. Oops. In fact, even if the server drew 60W (ridiculously low), it would still have used 1.05MWh to date, and the creators would have actually increased world energy consumption by 50KWh.

So yet again someone with good intentions has done the wrong thing. Far from solving the world’s energy crisis, the creators of Blackle have created something which is inconvenient to use and actually does the opposite of what it was originally supposed to do. It is, I wholeheartedly agree, a brilliant and novel idea, but sadly one which doesn’t work at all.

Shanghai: First Impressions

I’ve only been in Shanghai for a bit and have just about got over jet lag. I ended up doing an all-nighter last night, taking some night shots of the cityscape from my (highly elevated) bedroom window and watching the smoggy sunrise in awe, just to get my sleep-cycle right and ended up snoring through a Chinese music concert in the evening – oops… So, first impressions.

Immediately after touchdown, the first thing to greet my sleep-deprived eyes was a colourful and gleeful rendering of the cheerful glory of an olympic host, painted onto the side of a member of the China Airlines fleet. Up till now, that remains the only apparent relic I’ve seen of last Summer’s excitement.

Beijing 2008 Advert

As I expected, apart from the airport which was magnificent and unbelievably (to a Londoner) efficient (somewhat different from dear old Heathrow), there are aspects of this place which are somewhat … different. The most striking part is probably the population density. Officially Shanghai has a population of about 20 million, although I suspect that figure is a gross underestimate owing to the number of homeless and unregistered civilians living in this district. With such a population squashed into only 6500 square Km, the city has over 3000 people per square kilometre. Not bad one might think, but the crowds are multitudinous and dense. It is a result of this crowd culture that Chinese people get their (deserved) loud reputation. Even in the most serene places, people will communicate at top volume, choosing to shout rather than to talk normally so as to be heard. Walking around just about anywhere constitutes shoving your way through a throng of people – which itself wouldn’t be so bad if they were normal people. The sad fact is that every person here, without exception, appears to be dying of some disease or other and every line of sight seems to end in someone spluttering, coughing and/or blowing his nose into the air. Hygiene awareness when coughing and sneezing (often while cooking) is approximately zero – bodily fluids/gases exit bodily orifices liberally into the open air without thought or care for anyone unfortunate enough to be nearby. Combined with such a high person to square kilometre ratio and you end up with a fantastic disease spread rate. The smoking situation is also quite chronic. The taxi from the airport reeked blatantly of cigarette smoke. Crowds emit smoke puffs as you push your way through and buildings stink of nicotine. Oh, did I mention the pollution? Don’t get me started on the smog.

typical crowded street

my photo of the iconic view of Shangai showing smog

me cynically photographing more smog

Meanwhile, the traffic is absolutely manic. Shanghai is very much a biking city (electric scooters and bicycles are much cheaper than cars), and such vehicles, when combined with a cavalier disregard for pedestrians, traffic lights and other road users, make for quite deadly weapons. Crossing the road is like waging a war. Seas of pedestrians from both sides of the road meet in the middle in a cacophony of shouting, bustling, coughing and spitting while being constantly punched through by honking road bikes and the occasional impatient taxi. Sometimes there’s a policeman in the middle of it all pretending to direct traffic (both pedestrian and vehicular). There are effectively no real rules for the road. Cars cut lanes and cross junctions at full speed without warning or looking around, and diesel motorbikes frequently mount pavements, pushing aside pedestrians. My dad while he was here personally bore witness to an accident in which an infelicitous pedestrian was hit by a car whose driver just drove off, without care for whatever mess he had left behind. You’d think people would at least take out some sort of physical insurance against such a dangerous road situation, but it seems that taxis deliberately disable seatbelts (the ones I’ve been in have had them ripped out and covered over with cloth).

My camera can only do max 4 second exposure. This is the result

no seatbelt

When most people think of the police, the first two words that jump to mind tend to be ‘law’ and ‘bastards’, often in reverse order. In China, things are very different. During my very first trip to the market I saw a policeman grab an item from a shop and stroll away calmly with the ill-fated shopkeeper running after him, tugging his arm. They are far from law, but they sure are bastards. There are no rules, no morals, and few properly enforced civil rights laws (thoughtcrime law on the other hand…) – the police are just bullies with sticks and uniforms (and guns).

As far as first impressions go, the internet actually isn’t bad. I’m using the [still censored] connection in my dad’s apartment (he works in Shanghai) and the upload speed is faster than what Virgin Media give me back home in good old London. The download speed, about 1Mbps, is still one tenth what I get in London, which is still perfectly ample for surfing. Remote desktop on the other hand is torturous. I’m still worried about thoughtcrime and censorship, and since my blog is on the blocklist (well, all wordpress blogs are, I think) I’m typing this up on Notepad and subsequently posting it through remote desktop.

There are though good things about Shanghai. I’m overdramatising the bads a bit as, well, that’s what I do as a cynic. But the prices are undeniably good and conversion is convenient (10Y = £1 almost exactly). Stuffed bao (sort of buns) go for 10p in the supermarket, and clothes prices beat Primark hands down. The underground actually works (unlike London), and there are some great photos to be taken, particularly night shots while I’m recovering from my jet lag.

my attempt at night photography without a tripod

So, that’s what I think of Shanghai after about 3 days. Brilliant place, though a little crazy. If you want me to test some websites to see if they’re blocked, do comment / contact!