All posts by Sam Dinkin

Economics

Economists Agree?!

Economics is the only subject where two economists can share a Nobel Prize saying opposing things.
Roberto Alazar

But all the big names (25 all told including a bevy of Nobel winners) agree on this:

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors.

We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.

Amen. Too late for Poindexter.

Space

Interview with Charles Miller

My Lunar vendor CSI just got a Space Act Agreement with NASA for their LEO Express system.

Sam Dinkin, Transterrestrial Musings:
Any reason other than testing that this system can’t be used for human passengers?
Charles Miller, CEO, Constellation Services, Inc.:
Yes. Unless the passengers plan to take up permanent residence in orbit, we would need to provide a way to return the passengers to Earth. In addition to a safe re-entry system, we would need to add some other systems that people tend to like, such as air and water and seats. There is a significant hit in terms of mass and financial cost to add all the systems are necessary to carry passengers. Nothing that has not been done before, but the canister that carries passengers will be much less cost effective for delivering cargo.

CSI studied concepts for recoverable canisters for NASA under in Phase 1A of our Alternate Access to Station contract in 2003-04. We have also looked at placing our canister inside RLVs, such as the Kistler K-1, for return to Earth. We received high marks from NASA’s AAS program for our ability to adapt our system to include a recoverable cargo capability.

Continue reading Interview with Charles Miller →

Media Criticism

Disecting Supreme Court IPO Decision

In today’s Wall Street Journal, an editorial applauded the Supreme Court for ruling in Credit Suisse v. Billing that investors could not sue investment banks under anti-trust law. They like Justice Stevens’s concurring opinion:

After the initial purchase, the prices of newly issued stocks or bonds are determined by competition among the vast multitude of other securities traded in a free market. To suggest that an underwriting syndicate can restrain trade in that market by manipulating the terms of [initial public offerings] (IPOs) is frivolous.

This is a red herring. If the underwriting syndicate can get super normal profits through commissions during the IPO, subsequent trading is moot.

The main finding in the Breyer Opinion (6 joining, 1 concurring, 1 abstaining and 1 dissenting):

In sum, an antitrust action in this context is accompanied by a substantial risk of injury to the securities markets and by a diminished need for antitrust enforcement to address anticompetitive conduct. Together these considerations indicate a serious conflict between application of the antitrust laws and proper enforcement of the securities law.

I agree that there is a fundamental conflict between Justice and/or FTC pursuing anti-trust claims and SEC regulating securities. But this is not saying that there should be no anti-trust enforcement. SEC should enforce anti-trust laws.

Here’s what they can expect to reap.

Continue reading Disecting Supreme Court IPO Decision →

Political Commentary

ACLU ACU

I just got a call purporting to be from the American Civil Liberties Union. Before they got going, they said, “This call may be monitored for quality assurance.”

I said, “That’s ironic.” Then asked them not to call again. If one can’t have privacy from other ACLU people talking to the ACLU, then there is no worthy defender of privacy left.

I know Rand doesn’t like me to mistake loss of liberty (“freedom from arbitrary or despotic government or control” according to dictionary.com) for loss of privacy. But a great way to curb control is to curb monitoring. I also mourn freedom from waiting in long airport security lines and freedom to keep my hair gel in my carry-on bag.

There were 360 million US one-way airplane trips taken last year. That’s 360 million half hour delays for “increased” security. Let’s express that as lifetimes lost–wasted–due to boredom: 250. Let’s express that as number of trips that took 15 minutes too long: 100%. After 6 years of increased security, we have now lost 1500 lives worth of time from waiting in airport security lines. That’s a higher flux than terrorism for five of those years.

It’s time for the FAA to start keeping statistics on wait time in airports and TSA revamping security procedures so that the cost no longer exceeds the benefit.

Space

Software Testing Hard

Who watches the watchmen on software testing? SpaceX’s control issue might have been found with better testing, but the test case writer didn’t start with a big enough perturbation for the problem to appear. It’s also not clear that the tester software is sufficiently good to tease out problems with the control software. That’s especially true if the same people are writing the control software and the tester software.

The rest of the entry reads like technobabble from a movie like Failsafe. Nevertheless, this is the $64 billion question that can make SpaceX another of Musk’s successes or ground his Mars colonization plans altogether.

Continue reading Software Testing Hard →

Political Commentary

Statue of Liberty Security

I visited the copper statue in New York harbor yesterday. Nearly six years after New York was attacked, security is very high. Prior to boarding the ferry for Liberty Island, one must undergo a metal detector procedure. Once on board one is told to report anything suspicious. On route, one is escorted by a Coast Guard boat with two mounted machine guns. Liberty Island is a misnomer. To see the Statue, one must wait in yet another security line and get sniffed by smell detectors from GE. No cameras or cell phones are permitted to be used in the security area. After a two hour security wait one can witness that she has walled out tourists with bulletproof glass. No tourist can climb higher than her feet. Like the green coat of corrosion on the Statue, Liberty Island and its gateways have acquired security tents antithetical to the freed woman with broken shackles at her feet.

Her inscription is also an anachronism. We are stuck in an anti-immigrant rut as we were in World War II when citizens and resident aliens were detained on nearby Ellis Island, former gateway to 12 million Americans.

The New Colossus

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”

No. The torch is extinguished. The golden door is shut. Keep your tired, poor, wretched, homeless and tempest-tost. We are a new self-important Land of storied pomp that has forgotten its genesis.

I deem her the Statue of Security.

Space

Welcome, Lord British

In the non-space publication PC Gamer in the July issue, we find that video game celebrity and fellow Austinite Richard Garriott will have a regular column where we will find out about his PC Games from NC Soft like Tabula Rasa and also “what one says to Stephen Hawking while riding the ‘vomit comet.'”

While technically he rode ZEROG non-vomit comet with only 12 parabolas (which doesn’t give me much hope for the space editing in the magazine), Garriott’s space persona includes being Vice Chairman of Space Adventures, the company that has the most space tourism cost of goods sold. He is also the son of astronaut Owen Garriott.

So welcome, Lord British! And keep up the good work bringing science fiction to digital–and analog–life.

History

Fuel of the Future

From the May 2007 and May 1857 issue of Scientific American:

We believe that no particular use is made of the fluid petroleum, from the ‘tar springs’ of California, except as a lotion for bruises and rheumatic affections. It has a pungent odor, and although it can be made to burn with a pretty good light, its smell is offensive. This, perhaps, may be obviated by distilling it with some acid; we believe that this is not impossible in this age of advanced chemistry. If the offensive odor could be removed, a valuable and profitable business might be carried on in manufacturing burning fluid from it.

I find the hubris that we can predict we know what energy we will be using for lighting in 150 years astonishing. But whatever it is, if we project economically viable reserves vs. current usage, we can project we will run out of it. It’s a good thing we found a replacement for whale oil and tallow in time.

I think scientists and journalists misunderstand what ‘finite’ means when it comes to resources. Even a compact finite sphere can seem infinite if as you approach the edge, you slow down, the sphere grows, or your direction changes. When resources get scarce, price rises slows down usage, viable reserves grow, substitutes change usage patterns and magically–as if stayed by an invisible hand–we never run out of anything.

For thousands of years the only thing consistently getting more expensive is the value of human attention (Simon).

[Update from Rand, Saturday afternoon]

Per a comment:

Now, I consider myself a moderate libertarian and thus strongly disagree with them on this but while I am a strong believer in innovation and technological progress, the argument about finite resources does give me pause at times. What about industrial metal ores etc…?

Could we not at some point simply run out of materials to use?

I would point out that there’s no such thing as a non-renewable resource. Except, of course, time, and (ultimately) energy. It will be a very long time, though, before we run out of either, at least as a species.

By the way, Sam. What’s with all the marathon posting? Did you just lose your job? Not that I don’t appreciate it. Just sayin’…

Economics

Is There an Eco in Here?

I landed at the Ft. Lauderdale airport yesterday and there was a sign that said that to decrease water use, the airport has changed its thermostat from 74 to 78. Call me hopelessly brown, but it seems to me that they can attract more money to pay for more water via tourism if their airport is comfortable rather than politically correct. Water can be recycled, pulled out of the ocean and the air. The economic value of the savings is summarized by the market price for more water which is still measured in hundreds of dollars per acre foot. An acre foot is enough water to cover an acre one foot deep, or 325,851, gallons putting the price of water in gallons per cent. Skimping on use is pain for no gain. Or is masochism the main point of being Green?

Economics

Hungry for Ethanol

Food prices are up as corn prices have doubled to $4.50/bushel with the $0.51/gallon of ethanol subsidy. As the US is (soon to be was) a huge corn exporter, this is causing higher prices worldwide. Foreign Affairs in the May/June issue says that could lead to doubling the world hungry from 600 million to 1.2 billion. They hope that

relying more on sugar cane to produce ethanol in tropical countries would be more efficient than using corn and would not involve using a staple crop.

No, if sugar cane is more profitable than corn, it will also outcompete staples for land and labor until the price of staples is hungry high.

Scientific American makes the same mistake in the June issue:

[Jatropha, an oil crop] favors hot, dry conditions and hence an unlikely threat to rain forests. There is no trade-off between food and fuel either, because the oil is poisonous.

No, Jatropha will pull away farm equipment, labor and land from other crops driving up the price of every other crop.

Ethanol is an OK energy delivery system to convert solar energy, but if biofuels stay competitive with petroleum (via subsidies for now), all arable land will be converted to corn and other energy crops until the food crop prices are driven up enough to be competitive with the energy crops.

The only way to bring the corn price down is to either bring a multiple of the current acreage under cultivation (all US arable land devoted to corn would get us 12% of petroleum consumption) or reducing the corn/ethanol subsidy.