baz.com - Brett Thomas' Blog

My old Blog - McFreedom was a very politics-focused affair. I think that's unsurprising given that I started it not long after 9/11, and politics were a bit of an obsession for me. While I'm by no means trying to bury that old site, I've stopped updating it of late as I've been more and more into varied things that didn't seem to fit there. I also tried to "sort of" separate my writing persona, my professional persona and my family persona. While I was interested in doing that for privacy reasons, the reality has been an awkward way to write.

This new blog is going to try to meld all of my interests - politics, technology, family, woodworking, photography...and, whatever else I get into, tomorrow.

Slashdot notes that World of Warcraft players are being targeted by malware. The point is, a password sniffer is being installed to try to get players' World of Warcraft account information. The original BBC article notes that "research by security firm Symantec suggests that the raw value of a WoW account is now higher than a credit card and its associated verification data." That's quite astonishing.

Presumably the accounts are being used to farm gold for resale. I wonder how long a compromised account is really usable, given that WoW only allows one login at a time? If a player tries to log in while a hacker is using the account to farm gold, you'd think that would quickly result in the player contacting customer service.

I guess another possibility is that the hackers are simply cleaning out the accounts. My sense is that a particular account isn't worth much in terms of liquidation value, thanks to Blizzard's "binding" deisgn that makes it so most items aren't resalable after they've been used, once. I'd also think that in this case Blizzard could easily investigate where those items were sent and ban the hackers, but perhaps I'm underestimating the amount of work required, there.

That makes me wonder if, in fact, the farmers aren't just using the compromised accounts to launder gold? It's always seemed to me that the gold collecting accounts must be different from the gold delivering accounts, as I'd expect the latter to get compromised, often. You'd think Blizzard would put in a watcher that would notify them any time someone mailed more than, say, 1000 gold pieces (which, in game, is a pretty significant amount).

Daniel Henninger took over writing the "Wonder Land" column from Paul Gigot when the latter was promoted to edit the opinions page. Unfortunately, while I considered Mr. Gigot's work entertaining and informative about the wonderland that is our nation's capital, Mr. Henninger has been decidedly less perceptive. Or, in an event, decidedly more partisan.

On March 15th, he opines on "The Walter Reed Fiasco," in which injured veterans were treated poorly at that hospital, and apparently had been for some years. Mr. Henninger quotes Speaker Pelosi's spokesman, and then opines:

"The American people spoke clearly in the November elections that they wanted accountability and oversight. Under the Republican Congress it has been almost nonexistent, and you can certainly see that with what occurred at Walter Reed." No, you cannot see that.

Mr. Henninger then goes on to note that

On Feb. 17, 2005--two years ago--GOP Rep. Tom Davis and the government reform committee held a public hearing on the maltreatment of wounded soldiers. The hearing was the culmination of an investigation, begun in 2003, by the committee and the Government Accountability Office. Virtually everything of substance in that Washington Post story was described, in numbing detail, at that hearing two years ago.

So, you cannot see a lack of effective GOP oversight in the Walter Reid scandal when, in fact, the Republicans have controlled both houses of Congress and the executive branch and had hearings two years ago in which all this came out? I'd say Speaker Pelosi's spokesman seems quite right in his indictment of Republicans.

The following week, he writes on the Bong Hits 4 Jesus case - in which an Alaskan high school student off school grounds was punished for a banner he unfurled. In 1969, the classic Tinker case established that students' First Amendment rights do not stop at the schoolhouse door. In that case, the court found that students could express "speech" (in that case black arm bands protesting the war in Viet Nam) as long as it wasn't disruptive.

Mr. Henninger notes his hope that the Court will "take Tinker and throw it out the window." However, he expects that, instead, "They'll tinker, telling us what to do, but unable to give coherent reasons why we should do it." Nowhere in this does he even address what may be the core legal issue - that the speech occurred off the school grounds. Might we not get a reasonable ruling that school administrators aren't particularly able to restrict what students may say away off the school grounds? But, of course, that is not sufficient for Mr. Henninger, who wants the Court to use this to roll back the First Amendment for public school students.

Finally, most recently, he declares premature victory both over the Democrats and Al Qaeda in Iraq, speculating on The Democrats' Surge:

Carried aloft on the gassy fumes of politics, the congressional Democrats may be overshooting on Iraq. Six months from now, they may wish they had been more temperate. Helped finally by the right U.S. military strategy, the Iraq nightmare might be ebbing. Then what?

Well, then the Democrats claim that their insistence on an exit date stiffened the spine of our Iraq allies, and they can claim sole credit for our victory. I certainly agree with Mr. Henninger that the Democratic strategy is cold calculated politics, and reprehensible. But they clearly are engaging in it because they have calculated (correctly) that it allows them to both take credit for victory and avoid blame for defeat - even while increasing the likelihood of it. I abhor their naked calculation on this matter, but I certainly don't dismiss it.

I miss the old "Wonder Land". Mr. Gigot was sometimes too conservative for my tastes - I recall he opposed stem cell research, and not just on grounds of fiscal conservatism. Yet, I agreed with him more often than not. And, he was always insightful and wrote with humor. In theory his influence diffused into the rest of the editorial page, but, in practice, I miss his direct voice.

At the essential Marginal Revolution, Tyler Cohen writes on
Corn prices in Mexico. There, he casually notes that corn tortillas are "an inferior good", with a link to a paper in PDF which argues that, while they are inferior goods, they aren't Giffen goods.

I was pretty sure that I could guess what an inferior good was, and I was correct. An inferior good is one that you only buy when can't afford a better alternative. This opposes a normal good, which you purchase more of when you can afford it. For example, if you're a poor college student, ramen noodles are an inferior good, and (say) hamburgers are normal goods. If you have more money, you buy more hamburgers. However, you also buy less ramen.

The theory of Supply and Demand posits that, in general, for normal and inferior goods, the more they cost, the less of them are purchased. But, Sir Robert Giffen, at the end of the 19th century, speculated on the existence of another type of good, one which is bought more as the price goes up. In order for this to occur, you must have a very poor set of consumers, who spend a larger percentage of their income on an necessary inferior good (e.g., ramen noodles). To over simplify drastically, imagine a college student who exists on a diet of ramen noodles, and McDonald's dollar menu hamburgers. Ramen noodles cost $.50 per meal, and hamburgers from the dollar menu - well, I think you can guess. Imagine further that a ramen meal provides 400 calories, while a hamburger provides 600 (which, in the real world, is probably not an accurate map, but we're not really discussing nutrition, here). Our college student requires 2000 calories per day, or roughly 60,000 calories per month. He has a food budget of $80 per month, to split between these goods, and, generally, since ramen are inferior goods, his goal is to maximize his hamburger consumption in any given month.

At the above prices, he can consume twenty hamburgers in a given month, gaining the balance of the energy to keep body and soul together by ingesting 120 packets of ramen noodles. What happens if Congress slaps a tariff on the import of ramen noodles, jumping their price to $.53 each? Traditional "supply and demand" would expect a decrease in the consumption of ramen noodles. However, since we have made them Giffen goods, we should expect an increase in consumption. And, indeed, at $.53 for ramen noodles, our poor student can now meet his food budget only by eating them exclusively - 150 packets, instead of 120.

Despite a 2002 preliminary (i.e., not peer reviewed) paper by Robert Jensen and Nolan Miller of Harvard that claims rice and noodles are Giffen goods in various parts of rural China, there is apparently some debate as to whether Giffen goods actually exist in the real world, or are only a theoretical construct that never actually occur.

Stanford has done the US a nice little service in setting up a Copyright Renewal Database for books published between 1923 and 1963. The way copyright law worked out, anything published before 1923 was public domain, and anything published in 1964 or later isn't. But things between the two may or may not be, depending on whether a renewal was filed, or not. Prior to this, there was no online database of what had been renewed - this should let you now check to see if a particular book is public domain (and hence usable royalty free). It's nice to see the ever-shrinking public domain get a hair larger.

Normally I try to be a little higher-brow than this, but I did find Hugh Hefner's recent denial of paternity in the Anna Nicole Smith case to be amusing. To the little extent I've followed this case (pretty much only through CNN's headlines) I've been amazed by the increasingly unlikely parade of characters claiming to be the father. Zsa Zsa Gabor's husband? Who'd've imagined?

After all that, it's refreshing to finally see someone claim not to be the father. In fact, if they started publishing lists of who it isn't, that might be quicker...

Scientists have found a single gene that cuts shuts off a growth factor in small dogs. The Boston Globe quotes a biologist, K. Gordon Lark: "All dogs under 20 pounds have this - all of them."

The gene apparently showed up about 15,000 years ago in the dog population. The article speculates it may have been from a "miniature wolf." However, 15,000 years is about right for the human domestication of dogs, so it may be simpler that the gene showed up in an early domesticated dog - as it's apparently not in the wolf population, and it's available in all domestic dog populations. Certainly it either appeared very early in domestication (i.e., the original dog population all dogs are descended from today had it) or it spread very quickly through the ancient dog populations.

It's not surprising to me that dogs have a single genetic mechanism for making them small, as that's what one would expect from an Intelligent Designer every time we find a trait like this that spreads across multiple populations, we eventually find it has a common genetic trigger.

I recommend viewing the original article, if only for the picture of Gibson, the world's largest dog, a Great Dane who is 4' 6" at the shoulder, with Zoie, a 7 1/2" tall Chihuahua. The range of diversity we've bred into dogs in 15,000 years is pretty amazing - especially when you consider a lot of that diversity has been in the past few hundred as we've had the leisure to breed dogs for how they look instead of just how they act. Originally, of course, we bred for actions, primarily, and the sizes were more of a side-effect. Dogs that behaved in more juvenile ways (for dogs) also tend to have more juvenile features - a concept known as neoteny in biology. Neoteny is found in natural selection, as well as artificial - it seems that there is sort of a "clock" that regulates when an organism is mature. If a juvenile behavior is advantageous as an adult, often the easiest route for evolution to take is simply to stop maturing early.

There's a school of thought (Stephen Jay Gould subscribed to it) that modern humans are the most neotenous of animals. Our mental flexibility and love of learning and play even as adults is very unusual among other animals, and we seem to also have very juvenile physical features for apes.

Regardless, this research is a nice piece in the puzzle of dog evolution. It was unlikely to have developed via convergent evolution - it seems that such things are exceedingly rare, not exceedingly common as once thought - but it's good work to figure out the mechanism behind it.

Via Best of the Web

Computerworld claims that Microsoft is going to start selling DRM-free music. This comes after, of course, Apple's recent announcment of a deal with EMI to do the same. Five years after we predicted it'd happen back at EMusic, it looks like our vision for DRM-free music is finally starting to come true.

What's most interesting about this, though, is the source. Microsoft has been a staunch champion of "Digital Rights Management" (a code-phrase for "copy protection" that the music industry popularized around the turn of the millennium), because they themselves are holders of lots of copyrights in the form of their software. You'd think that, being technologists, they'd understand that cryptography doesn't solve this problem. Unfortunately, they make the common mistake of confusing what they wish to be true with what is true.

Some have even gone so far as to suggest Microsoft's recent DRM "enhancements" to Vista have crippled that OS' potential success. I think such optimism about the fate of Vista (and, sadly, DRM) is unwarranted - I still recall Eric S. Raymond's confident prediction that XP was going to flop because the registry was too hard to manage or somesuch. It is interesting, though, that while Microsoft is no doubt incurring significant costs to build DRM so extensively into the operating system, they at the same time have music spokespeople saying things like "Consumers have made it clear that unprotected music is something they want." It's an interesting lesson in how the interests of different divisions of large companies can diverge (see also, Sony: music division vs. electronic division).

Obviously, it's nice to see the big music companies finally starting to come to their senses. I don't think the damage they've done to themselves is completely irreversible - though teaching a generation of college students that piracy is easy, painless and fun wasn't very wise. Like David Byrne (and, yes, it was very gratifying to hear him say his legal downloads are from "eMusic" because of this) I've stopped buying from iTunes because of the DRM hassle. I look forward to returning - iTunes is the client/server solution I wanted to build at EMusic, and the simple act of searching for and buying music is quite convenient, there, if there was no DRM pain to go with it.

It is probably too much to hope at the moment that Microsoft will learn the lesson on DRM end-to-end. But, for the first time in about seven years, I'm actually optimistic that big content-providers may be starting to learn their lesson. I'd love to see video game makers, DVD makers and general software vendors learn the lesson, next. However, I try not make the mistake of confusing my wishes with the truth.

Via Boing Boing

Derek and I went to see the Giants play the hated Dodgers, today. Betsy and I went, last night, too, and it was a really ugly crowd, even before the Giants lost. Unfortunately, they lost again, today. Not looking like it's going to be a pleasant season to be a Giants fan - I'm 0-3 so far, this year, and the Giants themselves are 1-4.

Mickey Kaus thinks that the Democrats have impudently shifted the debate on Iraq from a topic they can win on ("Was the launching the war a good idea in 2003?") to one they may not be able to win ("Should we 'surge' or withdraw in 2007?"):

Debate A looks like a sure winner for Democrats--it's hard to see anything happening between now and 2008 that would convince a majority of voters that starting the war in the first place was a good idea. Debate B, on the other hand, looks much iffier, as the surge shows at least some signs of at least temporary success.

At the end, I think the Democrats have given up on what Kaus calls "Debate A" because they had basically the same position as the President, at the time. Which doesn't make for a very interesting debate.

The Washington Post reports today that the District has filed an appeal in the Parker case, which overturned the DC handgun ban, and found an individual 2nd Amendment right to own arms. They're looking for a re-hearing en banc (in front of all the judges in the circuit).

Gene Hoffman is of the opinion that en banc hearing are in fact fairly rare and it would be unusual in this case. So, while the article above speculates on oral arguments in the fall (which would put a decision probably about a year out), he think the circuit will deny, and that, if they don't, they probably won't re-hear arguments, anyway. I have no personal knowledge, but that certainly sounds more optimistic than the Post article's timeline. If Gene is right, DC should be filing to the Supreme Court in the next couple of months.

The Wall Street Journal, which has been doing a lot of reporting from Iraq and Afghanistan, recently, has an article this morning (paid registration required) about the new approach of a battalion in Iraq. The 1st Battalion, 32nd Infantry Regiment of the 10th Mountain Division of the US Army ("1-32") has been living in along the Pech River in order to be closer to the Afghan civilians they're trying to protect.

This is similar to a report from last week the Journal carried detailing how the US Army is now working much more closely with the Sunnis in Baghdad, using very similar tactics. The approach is to live with the civilian population, as much as possible.

Lieutenant Colonel Chris Cavoli, the Brigade commander, explains, "The basic idea is to kill the enemy to convince the people that you can and will protect them. Then in the breathing space created, you've got to do something to connect the people to the government." He also notes, "The way the fight is constructed is to deliver one message: We're here to protect you, and the bad guys are here to ruin your lives."

While we've struggled (and failed) against two major insurgencies, first in Viet Nam, then in Iraq, the traditional Army approach was to minimize US casualties by securing forward operating bases, and then only leaving them in force to engage both the enemy and the civilian population whose hearts and minds we were trying to win.
We're finally now beginning to develop tactics that go beyond these ideas. Unfortunately, it's not easy on the troops, themselves. There's no Internet, no phones, not even any showers. In part that's because the commander doesn't want to have our troops live better than the civilians they're helping. Lt. Col Cavoli notes, "It's a hell of a thing to ask men to live like that day after day after day," and Spc. Marcus Whited agrees, "I live like an animal here... I've never in my life smelled odors like this."

The Journal includes a video report, with interesting footage of a firefight, and showing how primitive the camp is:

Geekdad has news of TechShop, an "Open-Access Public Workshop" in Menlo Park. They offer metalworking machines, welding, woodworking machines and much more for $30 per day or $100 per month unlimited access. They also offer extensive classes in the machines, and Geekdad mentions some particular classes that sound interesting for kids.

Unfortunately, at 7, Blake is probably too young for these - I still don't let him use a soldering iron, for example (though he can use a drill press if I set it all up extensively and he just has to plunge the bit). In the short term, I'm interested in it because it could be useful to have occasional access to (and training in) metalworking and welding technologies that I don't have the square footage for in my shop. It's also potentially interesting because they may manage to have some woodworking tools that are too big for me to own - such as a wide belt sander, a large jointer (mine is only 6" wide), or a large-capacity lathe. That last is especially interesting as I want to build a four post bed, but lathe capacity is only about 36". Unfortunately, TechShop's equipment list doesn't seem to be complete, as their floor plan shows places for woodworking, but there aren't many woodworking tools I noticed on the list beyond some saws.

Cory Doctorow (and much of the liberal blogosphere) were in a tizzy, yesterday about Professor Walter F. Murphy's claim that he was on a "terrorist watch list" because of his political ideology, and that his luggage was subsequently "lost." Never mind that many people who've been more obnoxious to Mr. Bush fly every day without apparent problem. Also never mind that the source of all this information about the government's motives was the speculation of an airline clerk. Who often don't know what their own airlines are doing, much less the Federal government. What seems likely is that Prof. Murphy got a "random" search - "SSSS" on his boarding pass. The systems involved here by the TSA are a joke, at best (my then four-year-old son once got SSSSed) and there's much to criticize in the lame and pathetic "no fly list." But, seriously arguing that the Bush Administration is using it to crush domestic dissent I think implies a sophistication of purpose that is lacking in everything I've seen Homeland Security do. To say nothing of that fact that the people who actually implement these policies are career, unappointed law enforcement officers who would no doubt go running to the New York Times the first time a political hack asked them to bar John Smith from flying because he called President Bush "Shrub."

Now that the Eye Of Sauron has focused upon terrorist watch lists, Boing Boing has news of the Specially Designated Nationals List (SDN). This is a list of people who are terrorists, might be terrorists, thought about terrorism once, are drug dealers (!) and the aliases or suspected aliased of same. These people are subject to having their assets frozen, and generally have trouble getting credit or doing anything with money. The problem, Boing Boing claims, is that this is implemented by the government, and there's no clear path to get removed. If you share a name with a terrorist (or he uses a name like yours as an alias), you can run into all sorts of financial headaches, with no real way to clear them up.

The list itself is available for download, and Mr. Doctorow notes it's "250 pages long." But, it turns out, it's really not as bad as all that.

First, the list only includes 3,435 entries, and many of those are corporations or foundations. There are only 1,955 individuals, and 3,145 aliases (some of which are corporate) on the list. Second, a real effort seems to have been made to purge the list of common names used as aliases. There's no "Thomas", "Smith" or "Jones" on the alias list. The only "Thomas" in the individual list is "Munacho Thomas Alvar," who is (or was) Minister of Water Resources and Infrastructural Development for Zimbabwe. Third, believe it or not, they include information such as passport, country of origin and date of birth - I find it difficult to imagine that even the most myopic of bureaucrats would confuse me with with a 53 year-old Zimbabwean, even if my last name happens to be his middle. Of course, this points out that the effectiveness of this list is doubtful - any "Bob Jones" alias won't hit the list, because it would annoy too many voters. I'd imagine terrorists can figure that out. Certainly, an argument can also be made that whitewashing the list of only popular surnames is inherently racist.

The complaints I've seen come from the fact that this is then picked up by the credit reporting agencies, who mark people's reports as "OFAC" - which is supposed to be "a reminder to the person checking your credit that he or she should verify whether you are the individual on the SDN list by comparing your information to the OFAC information." And, once you're aware of this mismatch, you can use the Fair Credit Reporting Act's dispute process to remove the OFAC warning.

To sum up: A very small number of people might have name collisions on the SDN list, which would cause them to have to explain that they're not terrorists a couple of times until they get it cleared up. And, a Professor critical of the President was singled out for a random search, and then had his luggage lost, and the clerk at the airline thought it might be because of the speeches he gave.

Stalinism!

The matter of Prof. Murphy which I touched on, briefly when writing on the Specially Designated Nationals (SDN) list, is continuing. The consensus amongst the rightish (defined as "Iraq war supporting", plus Orin Kerr) blogosphere is that Prof. Murphy has mistaken a normal "random" search for inclusion with the no-fly list, and there is probably no repression involved, here.

James Taranto, in his Best of the Web Today column, notes that many who originally supported it seem to be backpedaling from the story. He observes that CruncyCon Dreher "manfully acknowledges having overreacted," and that Mark Graber (who broke the story on Balkinazation) "now writes of Murphy, 'Perhaps he has lost his mind or his judgment has gone horribly awry'..."

Mr. Taranto is known for humor, and personally I find him to be sort of a troll - he often says things, very dryly, that he doesn't mean, and I suspect it is purely for the reaction he'll get. But this, it seems to me, is beyond the limits of integrity, or a serious error on his part. While Mr. Dreher does indeed seem to have changed his mind, Mr. Graber clearly has not. In fact, Graber details all of the "coincidences" that must've happened for Prof. Murphy to not have been targeted by the Bush administration. He then delivers the line Mr. Taranto quotes, but it is the penultimate one in his original article. The final is "But that would strike me as the least likely coincidence in the above account."

Clearly, Best of the Web was at best sloppy and is at worst quoting out of context. I happen to agree that Prof. Murphy was not targeted by the government because of his views. But quoting people out of context, with a straight face, either from ignorance or some attempt at humor, is going too far. I hope Mr. Taranto will publish a correction on the morrow.

Wow. It's taken about four hours (mostly in the background), but I think I almost have my calendaring setup. Finally. Why it took until 2007 to get this working as well as it does, is beyond me.

I keep my calendar on a Treo 680, first and foremost. Secondarily, I sync that with iCal on my MacBook Pro. What I've wanted for some time now is an ability to have a calendar that has the following features:

• Viewable on a website
• Editable on a website by a few people (e.g., my CEO, my wife, etc.)
• Has personal events hidable from some people
• Change on my Treo can be reflected to all other sources, ideally without a laptop sync
• Changes on iCal are reflected to other places (ideally including my Treo) without a Treo sync
• Changes on the web-based calendar ideally show up everywhere else, though that's not completely essential

Well, I think I finally have it working almost exactly how I want it. I've set up a Google calendar. Quite some time ago, I broke up my appointments into "Home", "Work" and "Giants" (tracking Giants baseball games). The first breakthrough for me is Spanning Sync, which does a two-way sync between iCal and Google. They recommend ScheduleWorld for Windows users, though I have no knowledge of it or what it works with (Palm Desktop, Outlook, etc).

I then toyed with GooSync, which should let you sync a Treo and a Google Calendar, directly over the Internet. Unfortunately, when I tried it, it duplicated all of my "Work" and "Giants" entries into my "Home" calendar on Google. Thanks, GooSync! While it's probably possible to get it working, I'm not willing to risk that propagating back, so I deauthorized it, and deleted my "Home" calendar on Google to restart.

Still missing, then, is over-air sync from the Treo, but I'm not too stressed about it. With ubiquitous WiFi (and my HSDPA card), and Bluetooth syncing, I'm never far from being able to get calendar updates from the web to the Treo. Also, I'm planning on getting an iPhone when they come out (farewell, Palm, after a decade!) and I don't imagine whatever solution I come up with now is going to be useful, there.

The biggest disappointment for me right now is that there's no "limited security" option on calendars. You can essentially make a calendar only available as "busy" (which is what I'm doing for my "Home" calendar when it's embedded into my homepage on the Wiki at work) or, you can make everything visible. The Treo has an option of marking an appointment as "Private" but this doesn't have an effect on Google. You can make a calendar "Public" in Google, but that publishes it and makes it searchable by anyone, which is certainly not what I want with my Work calendar. You can also use a "private" URI which lets anyone using it view everything, but that includes things marked Private. Since the reality is that 98% of my work schedule I don't mind anyone at work knowing, maybe I'll end up using that URI on the WIki, and put anything Sooper Secret as "Personal". That sort of thing is really rare, anyway (generally speaking related to financing and HR issues, though I could see that expanding if we ever go public).

The final missing piece is email integration, such that I could create an event, then send out an email to people and have them add it to their calendar. Lightning is an extension to ThunderBird that would seem to provide some support for this. Unfortunately, it doesn't yet either sync with iCal or allow you to publish to Google (which is quickly becoming the Rosetta Stone of calendaring). There is a Provider for Google for Lightning for ThunderBird (whew!) but as yet it requires ThunderBird 2.0, which is still in development.

Soon, perhaps, this will all work - and not require you to be a CTO and spend many hours making it work. But, I'm encouraged. After a decade of thinking "surely someone will fix this soon," someone finally is. Now, if only I could be correct in thinking that about spam, too...

Convenience-store stick-up robber lets stressed-out clerk call 911 in case she has a heart attack. "You have a good day. I'm sorry this had to happen. I'm sorry. God!" Actual quote. Hi, I'm Bob, I'll be your robber, today. Sorry for any inconvenience...

I know! It's an opportunity for a new greeting card line! "I'm sorry my robbery caused you to have a heart attack...[inside, picture of Teddy bear in prison black-and-whites], Hope you feel better BEARY soon!"

The Maker Faire is coming to the San Mateo Fairgrounds, May 19 and 20, 2007. It looks like mostly a collection of random people who like to weld things, but I imagine Blake will love it. I mean, they have a life-sized mousetrap! And think "the game" not "the little springy thing". The Saturday day conflicts with the San Carlos Hometown Days parade, which I expect (as last year), a parent and Blake will be in and a parent and Derek will watch. Maybe next year, when Derek is attending kindergarten, we'll all be in it. That should leave Sunday for Blake and I to go to the Maker Faire, though, and we should be able to train it up which is always icing on a kid outing.

Some time ago - back in the dark days of "Web 1.0" companies before the bubble burst, stock options granted to employees were considered under the Generally Accepted Accounting Principles (GAAP) to have no cost to the company. GAAP is the set of rules propagated by the Financial Accounting Standards Board (FASB) that all public companies must use to figure out their income, losses, expenses, etc. It's a set of common rules that is supposed to make it easy for investors to compare two companies, and evaluate how much profit a company is making. These rules are needed because (as we shall see) there are many "shell games" that can be played to turn a big loss into an on-paper profit, or vice versa.

Stock options became popular as an employee benefit in the 80s and 90s. With these instruments, the board of the company votes to grant the option to buy the company's stock at today's price, sometime in the future. For example, if the stock is trading at $15.25 per share (the "strike price") on the day of the board meeting, the board might grant a particular employee the option to purchase 10,000 shares in the future at that price. If, five years later, the stock has gone down (the options are "under water"), nothing happens. However, if the stock has now risen - say to $30 - the employee can "exercise" the options, buying 10,000 shares of stock that is worth $300,000 for $152,500. This only rewards employees if the stock price rises, which is why it makes a good renumeration strategy - it helps align the employees' goals with the shareholders'.

Under the rules of accounting in force until 2006, the granting of stock options was considered to cost nothing to the company. Because the price they were offering the stock at was the current market value, there was no direct cost. About six years ago, a movement began to start forcing companies to estimate what the future value of the shares granted would be, and to count the difference as a loss to income. The logic, as I understand it, is that the company theoretically could have decided to sell those shares itself and take the money, thus, the lost revenue in not doing that is a "loss". Imagine that the above company granted those shares in 2006. They perform the complicated estimating process, and decide that the shares will probably be worth $40 each in 2014, when the options expire. Thus, they take a loss of $147,500. It's as if, from an accounting perspective, they had paid the employee $147,500. If, in 2006, they had previously had a profit of $1,000,000, they now have a profit of $852,500. If they previously had a profit of $100,000, they now have a loss of $47,500.

Those of us in small, quickly growing technology companies were alarmed by this proposal. We granted lots of stock options, and our stocks increased rapidly in price (or, they did for a little while). If this rule change went into effect, we would have absolutely enormous losses on paper, even though our actual cashflow would not change, at all. We considered our ability to attract top talent through stock option grants to be one of our biggest assets against large, old technology companies. A change like this would also result in lots of "Emusic shows $50M loss on $2M revenue" sorts of headlines, even if we were actually increasing the amount of money we had in the bank at that time. Unfortunately, the bubble burst, and, at the same time, a wave of accounting scandals swept through all industries. "Stock option reform" got rolled into many of the other "reforms" of the past few years. Beginning in 2006, companies were required to begin accounting for the "cost" of issuing stock options.

Of course, when you make changes to the rules of a game as complicated as public company finances, there are going to be unintended consequences. There are two major ones I'm aware of, so far. The first is the "options pricing scandals" that have hit many large firms. Back in, say, 2000, the exact price an option was struck at wasn't a financially important point for the company. To the employee, it was quite significant. Imagine in the above scenario that, the day the board meets to grant options, the price per share was $15.25, but that one month before it'd been $7.12. By waiting that extra month to grant the options, the employee's gain has gone from $228,000 to $147,500. If only the board had met earlier, when the stock was lower! Then (since, back then, options were considered to have no cost to the company) the employee would be even more incented to stay with the firm!

Since this was a neutral financial decision for the company at the time, of course, may boards did just that: Pretended they had a board meeting (or phone call) on whatever the lowest price of the quarter was, so that employees could get the lowest strike price, possible. It helped the employees at no cost to the company, other than a little white lie from the board of directors - what was not to like?

Then, in 2006, the rules changed - retroactively. Suddenly, those options priced in 2000 had a cost. If the board had lied about when they were priced, they had, on paper at least, incurred significant additional costs to the company. Those little "white lies" that had no financial impact suddenly caused many large companies to restate previous earnings as their balance sheets filled with red ink - even though the amount of money they had in the bank (or even had paid to shareholders in dividends) hadn't changed a bit. Many senior executives and board members were forced to resign as these scandals reverberated through the press, eager to find yet more instances of corrupt business leaders enriching themselves "at cost to the shareholders". Even though no actual loss had occurred.

Now, a new unintended consequence has arisen - corporate taxes. In the US, a company counts up the total amount of money it's taken in ("revenue"), and the total money it's outlayed ("expenses"). You do a form of this yourself, every April 15 - take your total revenue, subtract the expenses that the government lets you deduct, and the remainder - your "earnings" - the IRS calls it Adjusted Gross Income, or AGI - is taxed at the set rate. Corporations do something very similar, in which they take their revenue, subtract their allowed expenses, and are taxed at a flat 35% rate on whatever earnings there are. The big change here is that stock option expenses are now allowed as a "deduction".

It cannot, of course, be that simple - this is simple, so far, right? The IRS wants the companies to count the actual difference between the strike price and the exercise price, not some complicated formula that tries to guess what the difference will be some years from now. In our above scenario, imagine the strike price is $15.25 for 10,000 options, which they think will eventually be worth $30 per share, and the company has earnings (before considering the stock options pricing) of $150,000. They then report:

• Earnings: $150,000
• Options Costs: -$147500

But, since the options might end up being worth nothing, they also report an "expected tax liability" of 35% of their pre-options-cost earnings:

• Potential Tax Liability: $-52500

Which means, by issuing those options, a $150,000 profit has turned into a $50,00 loss with no money changing hands! Then, to make it even better, if, four years later, those options are exercised at $30.25, the actual "loss" is $150,000, for actual net earnings of $0, and no tax liability at all. Thanks, FASB! It's so much easier to understand corporate profitability, now!

Beyond the obfuscation, here, there's some interesting shenanigans possible with this stuff. Public companies, presumably, are interested enough in appearing GAAP profitable that they won't grant stock options with an eye towards eliminating corporate taxes. The dilution issues can get awfully nasty when you talk about that much stock, as well. But, for closely held profitable companies, might they not be able to distribute profits to owners by issuing said owners large stock options, wiping out the profits? Then, the owner could exercise the options and sell the stock back to the company two years later, and only pay 20% capital gains on it, instead of 35% corporate taxes and then 20% dividends taxes? Sounds like a great way to reduce your taxes, to me. Of course, I'm not an accountant. Or a lawyer. So I probably haven't even begun to scratch the surface of what could be done with this stuff.

One thing that's clear is that FASB's attempts to include stock options pricing into GAAP has not made things more transparent, nor has it made it easier to determine the actual profitability of a company. Although, if Gene is correct and cash-flow is "the only reality that matters", perhaps the sooner investors can learn that GAAP is incredibly manipulable, the better.

I realize this more Taranto's shtick - and, indeed, I stole this one from him. But, I loved this USA Today headline about the recent study that "abstinence-only" sex education neither increases nor decreases sexual activity (nor incidence of "unprotected sex") among teens is "Study: Abstinence doesn't delay sex". Really? I would've loved to have known that at, say, 15. I think I could've provided some counterpoints.

Megan McArdle makes an interesting point. The coverage has focused on the fact that "abstinence-only" sex education doesn't delay the first sexual activity, a finding that anyone who was a teenager at some point shouldn't be shocked at. Moreover, in fact, as, she notes, "The kids didn't have sex any later, but they also weren't any less likely to use birth control. If this study is correct, it implies that all sex-ed is useless..." She expresses a lack of surprise at this result, though her commenters do suggest that perhaps she's drawing conclusions from insufficient evidence.

Overcoming Bias notes an experiment about music popularity. The researchers took a bunch of unknown bands, and had people rank which songs they liked. In one set, listeners only had the band names and song names. In eight other runs, listeners had access to the popularity of songs as other people ranked them. Unsurprisingly, songs that were rated "popular" in a particular run were more likely to be considered good by listeners. There was a correlation between a song's "intrinsic" rating (how it did in the run with no popularity information) and its popularity-influenced rating, but it was imperfect - being "Top 5" intrinsically only gave a song a 50% chance of being "Top 5" in any given popularity-influenced run.

Overcoming Bias notes, at the end, "No doubt this also applies to many other kinds of popularity, including academic. Beware of overconfidence regarding the quality signal of popularity." As well for markets. It's true that the "wisdom of crowds" can distill out useful information. However, stock markets, in particular, also function as signalers of what things others value. We have a significant bias in favor of liking what others like, because we are highly evolved social animals. Sometimes, that hot new stock is hot because there's something genuinely exciting going on (so far, that's been Google). Sometimes, it's just hot because everyone else thinks it's hot (think, for example, Webvan). The rub, of course, it recognizing which is which.

Back in 1993, the year I first got on the Internet, AT&T ran (at least) four television ads that predicted what you'd be doing in the future. They were pretty much wrong that "the company that [would] bring it to you" would be AT&T - though some of the services are currently facilitated by a company with that name, the ads failed to predict Ma Bell getting purchased by a Baby Bell. The technology they predict, though errant in some of the details, was actually pretty correct.

Someone has archived these ads on YouTube. You can go view them, and cast yourself back 14 years. They predicted that, in the future, you will have:

• "Borrowed a book. From thousands of miles away" - Showing someone viewing and zooming on a physical book


• "Crossed the country. Without stopping for directions" - Showing a couple with an in-dash navigation system


• "Send someone a fax. From the beach." - Showing a man using a tablet computer to send a hand-drawn note on the screen


• "Paid a toll. Without slowing down." - Showing a driver swiping a credit card through an in-dash reader (!) as he zooms through an unattended toll booth


• "Bought concert tickets. From a cash machine"


• "Tucked your baby in. From a phone booth." - Showing a mother using a television screen in a phone booth to say goodnight to a baby


• "Opened doors. With the sound of your voice".


• "Carried your medical history. In your wallet. - Showing a man giving a Doctor his wife's smart card, which contains X-rays, ultrasounds, and such


• "Attended a meeting. In your bare feet" - Showing a man attending a remote conference that blends videoconferencing and modern "webinars" on a laptop screen he's running at a beach house

One thing that's pretty surprising in retrospect is how few of those things in the ad seem to use packet networks. The "borrowing a book" isn't reading the text of a book - it's actually using a picture of the book. You'd never send a fax from the beach, but plenty of people send emails from the beach. Maybe this was just a reflection of the disconnection between the marketers who made the ad look cool and the technologists who describe the future. Or maybe it was evidence of that famous split between "switched network" people like phone companies and "packet network" people like Internet companies. Guess who won that fight.

I'm planning on going to a Giants game this afternoon and bringing my laptop and sending email, reading documents, and the like. With my workload at the moment, in 1993 I'd've been stuck at the office, but, with ubiquitous wireless Internet - which I know of no one who was predicting 14 years ago - it's possible for me to work, there. I know in 1993 I wouldn't have predicted my 17", seven pound laptop that I could just carry with me and get online wirelessly, wherever. Speaking of which, the purchasing of "concert tickets" - if baseball tickets are close enough, the Giants sell game tickets through the ATMs at their stadium. You know. AT&T Park.

This week is "TV Turnoff Week". ParentHacks wonders, 'Do you plan to participate? If so, what's your plan?" Our TV consumption is, I think, very healthy. Blake and I just spent the last few minutes before his bedtime playing checkers, for instance. On the average week - in baseball season - I think our TV is on less than twelve hours a week. The rest of the time, it's even less. That's counting video game time, too, though not computer time. "TV Turnoff Week", in my mind, just calls more attention to it. And I'm not interested in letting a lot of nannies tell me I can't watch baseball on Saturday just because a lot of other people watch more television per day than I do per week.

The way I participate is to educate my sons that Dad and their teachers don't always agree.

Betsy wonders what we should call the current war. She quotes Max Boot noting that the current "Global War On Terror" is unpopular, and then suggests "The war on Islamofascist Terror" herself, but grants it's pretty unwieldy.

Here's my question: Why do we need a "War On" anything? As I understand it, World War I was referred to as "the war" at the time and "The Great War" in immediate retrospect. I've never heard any contemporary accounts of World War II that didn't simply call it "the war". Why do we need a name for an ongoing conflict? Whatever war we're fighting now should be "the war," and the history books can put it in appropriately named context once that context is properly understood. Until then, the whole "The War On" template only helps perpetuate the idea that these things that can be compartmentalized - that the "War in Iraq" and "War in Afghanistan" and "Global War On Terror", and perhaps the future "War in Iran" aren't just different facets of the same flawed gem.

I will grant, however, that if armed conflict with Pyongyang comes to happen, that conflict will inevitably be "The Second Korean War" from the outset.

Glen Whitman at Agoraphilia talks about a dream he's had, of a "separate peace in the drug war":

California does not have the power to repeal federal laws. But it does have to the power to dispose of its own budget and use its own state and city employees as it sees fit. From this point forward, if the federal government wishes to enforce federal drug laws in California, it will have to do so with federal tax dollars and employees. No state tax dollars or state employees will participate in fighting the drug war.

Coincidentally, Gene and I were discussing that very idea, yesterday (brought on by some thinking I'd been doing about Federalism and gun laws, that I may write on, later). Gene's suggestion was that California go even further than that. In addition to refusing to enforce federal drug laws, California could pass a law that says that attempting to enforce federal drug laws is, itself, a crime in the state of California.

My strong suspicion is that, given the ridiculous Commerce Clause interpretation in Raich, the constitutional crisis that resulted would have the Supreme Court saying that Congress is merely doing what is Necessary And Proper to regulate the interstate commerce (or total legal lack) of recreational drugs, and that California has no legal authority to interfere with that. I suppose it's neat to imagine DEA agents getting thrown into California prison for trying to arrest grandmothers with glaucoma, but I doubt it's an issue that California cares enough about to spark a civil war over.