Monday, August 29, 2005

More on Gladwell's lameness

Arnold Kling has a longer post on why Gladwell's article on healthcare is lame (I discussed this earlier). He details the distinction between moral hazard and the law of demand (as things get cheaper, people buy more of them) and how Gladwell clearly doesn't understand either.
As an economist, I believe that the law of demand applies in health care. I believe that if patients are insulated from the cost of health care, then they will err on the side of obtaining unnecessary CT scans, MRI's, and visits to specialists. They also will "err" on the side of obtaining useful preventive care.

In the United States, over 85 percent of health care expenses are paid for by insurance companies or governments. This is one of the highest rates of insulation in the world (based on OECD health data, but this particular table is not available on line). Even in Canada, the percent of health care costs paid out of pocket is slightly higher than in the United States. Americans' high rate of insulation, combined with the abundant availability of trained specialists and the latest equipment, accounts for the high level of health care spending in this country. I hope that for the most part this is cost-effective, but I believe that the issue deserves careful study.
Chicagoboyz take the assertion that universal health coverage is all that's standing between poor Americans and poor dental care, and looks up some facts.
In 2003, when a dentist in Wales announced that it would accept 300 NHS patients, some 600 queued to get on the list. After waiting 11 hours, some 300 were turned away. Money quote: A few hundred miles east, in Essex, a friend has been told that she can only become a national health dental patient "if someone dies".

Indeed, due to the "continuing lack of access to NHS dentists " the private dental care market in the UK is large and growing. As a result of low reimbursement, many NHS dentists are converting to private practice. The value of private dentistry grew from £289m in 1994-95 to just under £2bn in 2001-02. According to the New Statesman article above, the "most recent figures show that just 48 per cent of the population in Britain is registered with an NHS dentist. Roughly 1.5 million fewer people have access now than in 1998, and five million fewer than in 1994."

According to the WHO, inequality in oral health appears to be universal, even in countries with a long tradition of oral health promotion, preventive oral care, outreach dental health services and high utilization rates. In Denmark, for example, socioeconomic status greatly affects the risk of dental caries in young children, despite the fact that they are covered by comprehensive public oral health programs. Multivariate analyses show more frequent dental caries in cases when sugar consumption is high, regardless of payment type.
I was particulary interested that socioeconomic status has such a large impact on caries in the young. Floss, toothbrushes, and toothpaste are so cheap and ubiquitous that this simply cannot be a difference caused by wealth or access issues, it must come from things like conscientious health habits which cannot be improved through affirmative action or other forms of wealth transfer.

Saturday, August 27, 2005

Bubble Sitters

Long time winterspeak reader WC sends in this excellent post about "bubble sitters" -- people who have decided that their housing market is overpriced and decided to sit the bubble out.
Bubble sitters vary in their reasons and tactics:

Warren and Sarah Bland sold their Los Angeles house ahead of retirement so their biggest asset wouldn't abruptly lose value at precisely the wrong time.

Jordan and Linda Celkupa decided to bubble sit so they could move to grander accommodations in Hoboken, N.J.

Vicki and Steve Sweeney sold their house in suburban Denver to flee a declining neighborhood; renting affords Vicki the chance to stay home with the children.

Baker sees himself as a pragmatist, motivated by reality-based self-preservation. "I'm pretty sure the prices around here will plummet," he says from his two-bedroom rental in Washington, D.C. "We felt it would have been foolish to stay there."
Amid their diversity, bubble sitters hav
Renters are doing more than sitting the bubble out, they are short housing. Unlike other goods, everyone needs someplace to live so be truly "neutral" housing you need to own the amount of housing you actually need. Renters own *no* housing so they are effectively "short" housing (will benefit if the price falls, will lose out if the price rises). Homeowners, though, are only *neutral* with respect to housing, because if the price goes up they are richer, but they will have to spend more on comparable housing somewhere else, and the gain in value of their own house is precisely offset by the increase in price in their next house. Same thing if prices fall -- they are poorer, but houses are cheaper too. To be truly long housing, you need more house than you actually need with plans to sell or rent out the extra.

What's interesting about the article is the way it seems to understand the importance of the the price/rent ration one second, and dismiss it the next. Compare this paragraph
As evidence that home values have moved out of whack, bubble partisans note that house prices have far surpassed rental rates in some markets. Take San Francisco. From the first quarter of 2000 to the first quarter of 2005, average residential rent in the Bay Area rose 18 percent. Over the same period, the average home value in San Francisco rose 63 percent. To return to a more realistic balance, one of two things must happen: Either rents will rise while home prices stagnate, or home prices must fall. Whichever way, rapid price appreciation has to end.
with this one
Bubble skeptics attribute the divergence between rents and prices to an earlier imbalance. They say that home prices once were too low in comparison with rents in some markets, so prices are merely bouncing back. They point out that values have risen fastest along the coasts, where developers have trouble finding land to build on. And when developers do find land, they run up against environmental and land-use rules that make it expensive to build.

"Prices are supply-and-demand driven, and we have record housing demand going on in the economy today, and in many parts of the country, increasing supply constraints," says David Berson, chief economist for mortgage giant Fannie Mae. "There's no surprise that housing prices are strong."
The supply constraint argument is totally bogus because it may explain high prices but does not explain high prices and low rents. If supply is constrained then you would expect both prices *and* rents to be high. The fact that the "chief economist" of Fannie Mae is making such statements suggests that Fannie Mae ought to be privatized.

Friday, August 26, 2005

The new "Goldilocks" economy

Remember the old Goldilocks economy--growth was not too fast and not too slow -- it was just right? Well, this is the new Goldilocks economy, it's not so good and it's not so bad -- it's just OK.

NYTimes hack Paul Krugman has an oped saying that workers salaries are not rising even though GDP is because greedy corporations are taking all the profits they are making and giving them to their senior executives (and paying healthcare costs). I think executive compensation in the US is way out of proportion to the value those guys create, but I also know that it's a tiny fraction of money compared to total wage payout. Even if every executive in the US was paid $0, workers would not get much extra money (last time I calculated that figure it was around $30 extra per year per worker).

I think the US economy is in the middle of a profound restructuring while the world economy is also going through a profound restructuring. Ultimately, America's ability to adapt and find comparitive advantage, and its companies to find innovative new competitive advantage, will determine what happens to wages.

There are 3 main things going on:

1) There is a world wide liquidity glut which means real interest rates are too low. This is not feeding into inflation for reasons I do not understand. It is feeding the US housing bubble.

2) There is a dramatic increase in labor worldwide as China and India inject 2B workers (and consumers) into the global economy, I don't think the world will ever see such a dramatic step increase in productive capital ever again.

3) Essentially, China and India are a "new technology" that enables the same goods to be produced for lower cost. This means that real prices for most household goods are falling. The big exception is petrol, which is more expensive, but is a smaller fraction of household expenditure than it used to be.

So how do I feel about this if I'm a US consumer? If I have a house I feel pretty good -- I'd want to take that equity out and save it somewhere else. If I don't have a house but want one I feel bad because I cannot afford one. If I'm a plain ole renter I feel pretty good because rents have gone down.

My job is pretty secure, but I'm not getting big bonuses and raises (all my extra compensation is going into healthcare). By the same token, inflation is not reducing my real wage even if my nominal wage is pretty flat. And most of the things I buy are actually getting cheaper.

If I have an SUV I feel kinda bad, but people have been making me feel bad about that purchase for years and now they get to say "I told you so". Of course, the same people who were shrieking "SUVs are Evil!" are now saying "Spare a thought for that poor SUV owner!" demonstrating a certain obtuseness on their part, but what else is new.

This all seems pretty mixed to me -- not too good, but certainly not too bad.

Thursday, August 25, 2005

News from the front line

I also recommend this gripping account from Michael Yon of a recent battle in Mosul. I actually enjoy all of Michael's dispatches and have subscribed to his mailing list. I recommend you do the same. It's hard to do justice to the post, so just read the whole thing.
The doctors rolled LTC Kurilla and the terrorist into OR and our surgeons operated on both at the same time. The terrorist turned out to be one Khalid Jasim Nohe, who had first been captured by US forces (2-8 FA) on 21 December, the same day a large bomb exploded in the dining facility on this base and killed 22 people.

That December day, Khalid Jasim Nohe and two compatriots tried to evade US soldiers from 2-8 FA, but the soldiers managed to stop the fleeing car. Then one of the suspects tried to wrestle a weapon from a soldier before all three were detained. They were armed with a sniper rifle, an AK, pistols, a silencer, explosives and other weapons, and had in their possession photographs of US bases, including a map of this base.

That was in December.

About two weeks ago, word came that Nohe's case had been dismissed by a judge on 7 August. The Coalition was livid. According to American officers, solid cases are continually dismissed without apparent cause. Whatever the reason, the result was that less than two weeks after his release from Abu Ghraib, Nohe was back in Mosul shooting at American soldiers.
Wretchard has additional comments here.
merican troops seem to be OK, so what part of it did Osama get wrong [when he gloated about American cowardice in Somalia]? Maybe he kept reading the papers, because without people like Michael Yon it would all have gone down the Memory Hole.
And from the comments section:
The problem with releasing terrorists who have been caught in the act because they cannot be convicted under civilian due process exacerbates the problem of the "Ace Factor". I can't find the online reference to it, but air combat statistics show that the vast majority of aerial kills are accounted for by a small number of people, the so-called "aces".

If you read Yon's account, you will see how the "aces" stand out. Khalid Jasim Nohe is clearly an ace. So is Yon. Look at his pics. No shake. Personally I probably couldn't even find the shutter at a moment like that. Look at Kurilla and that Sergeant Major. Aces and the rest were simply not there. But it is also statistically true that new arrivals to the battlefield tend to rise to another plane after their first combat. Chances are that the rookies will be alright. Hence, a lot of effort is spent getting them over the hump after which their prospects of survival improve dramatically. But I digress.

The point is that releasing an experienced enemy combatant is to release an enemy ace, almost by definition. From an operations research point of view this is the most destructive thing you can do to your own side. The solution is to create some kind of long-term detention system. But that's what Guantanamo Bay was supposed to be and the Left is slowly but surely dismantling it. The consequences were predictable, but it took an embedded blogger to highlight it. The Memory Hole would have swallowed the data.

Silliness from Angry Bear

I like Angry Bear's posts on housing a lot. I am less impressed with his rants on other things. The latest batch, sadly, has no housing in it, so I'll comment on these other posts.

Angry Bear mocks Cato's list of "propaganda" around social security. Now, Cato is easy to mock, as are all idealogues, but Angry Bear is being ideological here as well. They key point is that since SS is a pay-as-you-go system, as the ratio of workers to retirees shrinks, you either need to run deficits, cut benefits, and/or raise taxes to meet your obligations. This is Cato's point, and any serious discussion of social security needs to grapple with this essential choice. Comments like
#9, #10, and #17 only document that the U.S. has a lot of people and that we have a demographic phenomena known as the retiring of the baby boomers. Is the Cato Institute advocating we get rid of some of the elderly as their Social Security solution?
just make you look like you don't have a clue because it is *precisely* this demographic shift that will force us to 1) run deficits, 2) cut benefits and/or 3) raise taxes. Or maybe Angry Bear does nor understand how elderly populations impact retirement programs?

In other news, Angry Bear was impressed by Gladwell's lame article on healthcare in the US. Once he takes a break from calling non-elite Americans stupid for not being angry at the current system, I hope he will discuss how people don't brush and floss regularly because they don't have health insurance(?) The US has poor health care because people excercise less and have worse diets that people on other countries. I don't see how subsidized insurance, care rationed by queue, and fewer drugs for future generations will make this better.

Rents are rising

This NYTimes article argues that rents are on their way back up. As I've argued before, the increase in the purchase price/rent ratio can return to historic norms through lower prices and/or higher rents. I would believe that most of the correction will come from prices, not rents.

Wednesday, August 24, 2005

Google Talk

OK, so google has launched their new IM client -- woo hoo! I fired up Adium, set up a new account, put in my google information, and... nothing.

I mean it works and all, but all my friends are already on Yahoo!IM or AOL. Why do I care about google talk? One thing that's interesting is that google talk seems to be focused on VoIP, which Yahoo!IM certainly offers as well. Sadly, the internal microphone on my iBook seems not to work -- bleg: everything seems to be set up correctly, can anyone help me get my internal mic working?

Update Long-time winterspeak reader WC notes that the phone feature is only available on PCs. In addition, I think the google ads only run on PCs as well.

Tuesday, August 23, 2005

Place your bets

It's interesting to contrast the always amusing Religious Policeman with this recent post by Michael Young (sadly Lee Smith has not written for Slate in ages). The Policeman, a Saudi native, now lives in London and says
Let me see if I've got this right. You see, I live in a country where everything is based on the Koran, it's ruled more by Imams and Religious Policemen than by the nominal "King"; to see what that means in practice, just keep on reading this blog to find out. To the south is Yemen, where the standard fashion accessory is the AK47, and it makes the Wild West look like the Regency Tea Rooms in Bath, England. To the east is a collection of minor Sheikdoms that are relatively liberal, but too small to have any influence. Further east we've got Pakistan that is only prevented from becoming an Islamic Republic by the will-power of its lonely President, and Afghanistan, say no more. To the north-east we've got Iran, with a new super-conservative-Muslim President who's going to make his own nuclear weapon, which he'll no doubt call "Allah's Bomb".
By contrast, Young points out
On Monday, Iraq agreed on a draft constitution dividing the country's regions along sectarian and ethnic lines. While there is a chance it will be amended, it seems almost certain that federalism will be enshrined in the final document. If this is confirmed, many Middle Eastern states with similarly multicommunal or multiethnic social structures will recoil in horror. Having long suffocated their own parochial tendencies through authoritarianism, they must now consider what the new reality in Iraq means for them.

Boxed in by ideological absolutes, the Arab world has developed few practical means, other than repression, to address its divisions. As primary loyalties have gained the upper hand, Iraq's impact on the region can only grow. Even Lebanon, which alone in the Middle East adopted a weak state structure to favor the religious communities, will not be spared turbulence, as Sunnis and Shiites compete over the post-Syrian order. Nor will Syria, where a minority Alawite regime rules over a Sunni majority and over disgruntled Kurds who look longingly toward their brethren in Iraq. Nor will Saudi Arabia, where minority Shiites, concentrated in the oil-rich eastern province near the Iraqi border, remain second-class citizens; nor will Bahrain, where a Sunni regime controls a discontented Shiite majority

Less phone

I've been wanting less cellphone for quite a while now. Looks like I'll have to keep my eye on Vodafone (Verizon in the US) and buy the fogey model.

Monday, August 22, 2005

Lamest Gladwell article ever?

Generally I like Malcolm Gladwell, but I think his latest New Yorker article is really stupid. The article discusses why America does not have universal health coverage and says it is because it is overly concerned with moral hazard and therefore is pushing health risk onto individuals, not taxpayers.

Ironically, he begins with an example that undermines the rest of his argument -- teeth. In typical sappy New Yorker style, we get a list of unfortunates who have bad teeth which then results in a series of bad outcomes:
Gina, a hairdresser in Idaho, whose husband worked as a freight manager at a chain store, had “a peculiar mannerism of keeping her mouth closed even when speaking.” It turned out that she hadn’t been able to afford dental care for three years, and one of her front teeth was rottingDaniel, a construction worker, pulled out his bad teeth with pliers. Then, there was Loretta, who worked nights at a university research center in Mississippi, and was missing most of her teeth. “They’ll break off after a while, and then you just grab a hold of them, and they work their way out,” she explained.... “It hurts so bad, because the tooth aches. Then it’s a relief just to get it out of there. The hole closes up itself anyway. So it’s so much better.”
But dental care is one of those things that is cheap and entirely within the budget of even the poorest people. If you don't eat sugar, brush regularly, and occassionally floss, you will never have to go to the dentist for cavities. All of these are cheap and easy.

My wife is an ER doctor and once or twice a month someone walks into her ER at 3am with a toothache. They inevitably have an absess that has been growing for months and they inevitably don't brush their teeth. Gladwell may think this illustrates someone who has been cruelly left behind by the heartless capitalist healthcare system, but it's really just some poor schmoe who has lousy life skills, made hundreds of bad decisions by not brushing their teeth, and is now paying the painful consequences (and being treated at tax payer expense). In Gladwell's world, the only thing between this individual and pearly whites is money. In reality, this person had the $4 a month toothpaste and floss costs, but lacked personal responsibility and life skills. Since subsidies of any sort, certainly government subsidies, tend to undermind personal responsibility and life skills, Gladwell's "fix" for the problem will only make it worse. The sad fact is that universal health coverage (with dental!) would not have helped this person have better teeth unless it also came with a personal nag who would follow you around and make sure you brushed and flossed every morning and night.

The moral hazard issue in healthcare is a real issue with insurance in general, but "solving" it through "social" insurance isn't a solution at all -- it eliminates the moral hazard by eliminating the insurance. Universal health care takes money from young (healthy) people and gives it to old (sick) people, which to me is not insurance since it does not pool any risk. You can argue strongly the other way since plenty of us need medical care because we get unlucky, but healthcare dollars in the US are spent on extending the lives of very old, sick people by a week or so, so to me the true risk-sharing benefits are swamped by the straight generational transfer, but I can see both sides.

I was dissappointed that Gladwell did not discuss the two, larger issues in healthcare spending -- research and rationing. It is a fact that the rest of the world freerides on American's investment in modern medicine. Canada enjoys the drugs America discovers, but does not pay for that discovery. To the extent that universal health coverage reduces the incentive to invent new drugs and treatment, it is simply a transfer of welfare from future generations to us. I understand why this is politically possible and good for us, but I don't see why this is good per se. I would like Gladwell to discuss why grandchildren, and great grandchildren should have less healthcare than they would get otherwise.

Secondly, any discussion of healthcare boils down to rationing. There is a finite amount of healthcare and it has to be rationed. The arguments Gladwell included on this topic were the second lamest thing in the essay (the upfront section on teeth was the first lamest):
“Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”
But the issue is not "do I go to the doctor or do I play golf?" The issue is "do we keep this 98 year old senile, hypertensive, demented woman alive even though she's just had another heart attack" and "do we try to save this 9 week premature baby alive even though it will have developmental disabilities throughout it's life, if it even survives". These are really hard questions -- the rest of the world rations through queueing and so lets the old demented women and premature babies die (care never gets to them in time) but in the US, since we ration through willingness to pay, we get to decide. Lucky us.

Any serious discussion of healthcare must focus on rationing and how to get people to take better care of themselves. It must answer who does not get healthcare, and how we can get people to eat better, excercise more, and yes, brush their teeth regularly.

Updates More reactions to this on Marginal Revolution. They don't seem too impressed either. Arnold Kling mentions it, and get's a great comment (4th one down). I guess you can't open an article about dental hygeine and then argue for a British style national health service without making people snicker.

Happy Day

Someone at Forbes likes me -- and I am honored to be in this company.

Shiller on Housing Bubbles

The NYTimes has a good but wordy piece on Shiller's assessment of the US housing bubble. At the core of his analysis is a real price index of housing, an index that looks at the changes in price of the same home over time. Most price indices look at average home price and try to correct for changes in size and quality, but Shiller counts the same homes and therefore needs to correct less.

As you can see above, housing has remained remarkably stable in terms of % income it consumes. Despite cries of land getting scarcer etc., housing prices have remained flat in real terms. The exception is the last few years where you see a dramatic rise in home prices. If you superimposed an index of rents, you would see a line that remained flat to declining from 1890 to the present day. The dramatic increase in real prices and the change in rent/purchase makes me beleive that we are in a housing bubble and will see a decline in real prices.

Saturday, August 20, 2005

Incentives matter

This article is an extended whine on why the US is not more like Finland, which is very socialist and yet not a typical European basket case. It seems very obvious to me. As the article notes:
Finland is as big as two Missouris, but with just 5.2 million residents -- fewer than metropolitan Washington. It is ethnically and religiously homogeneous. A strong Lutheran work ethic, combined with a powerful sense of probity, dominates the society
People respond to incentives. In a tiny, homogeneous country, group norms can take the place of monetary rewards. If you identify strongly with your neighbours then you care if they shun you. But the US is 50 times larger than Finland and very heterogeneous -- people here don't care much about what their neighbours think because 1) their neighbours are not neccessarily much like them and 2) they keep changing. In this kind of soceity group norms simply will not work. If my neighbours in Boston stopped talking to me, I honestly would not notice.

Thursday, August 18, 2005

Interview with Brian Dougherty, CEO of Airset

I had the good fortune to interview Brian Dougherty, CEO of Airset -- a company that makes PIM easy and mobile.

(Perma link

Brian Dougherty is a long time Silicon Valley entrepreneur. He has an EE degree from UC Berkeley and has worked in the video game, PC, PDA and cell phone, and interactive television industries. Most recently, he is the CEO of Airset, a web-based application that lets you share calendars, contacts, and bookmarks with trusted individuals and groups.

- How did Airset start?

I've always beleived in the power of combining online services and mobile devices. Airset has a foot squarely in each of these camps. You use a product like Outlook at work, but even if you use an Exchange server to share that with your work group, the rest of your life isn't integrated. Kids, spouse, friends etc. are not on that calender -- it's difficult keeping your work, family, and social life in order.

In part, this is because everyone in the rest of your life is not always in front of a computer, but they *are* in front of a cell phone. So, we created a networked personal information manager where both PCs and mobile phones can be clients, so whenever anyone updates an event or contact it is automatically updated across the network on all devices.

The goal was to network your address book and calendar with everyone you know, the first big challenge we faced was creating a senisble user interface to let you do that. As we studied the problem, we realized that most of the events in your life revolve around a few important group: your work or school colleagues, family, and friends or social groups. So we designed the product to let you manage all of these groups in one place with shared calendars, address book, blogs, etc. for each of the important groups in your life. We knew that people already on some kind of groupware were not going to change platform, so we worked with a third party synchronization company to get synchronization working so if you already used a groupware product like Microsoft exchange for one of the groups in your life, you could sync that information into your AirSet environment so you could see your whole life at a glance. AirSet effectively works like Exchange for all of the other groups in your life who don't have an IT manager to support an Exchange server. In fact, many of our early adopters are small businesses who use AirSet to provide the shared address book and calendar functions.

- Why is synching still so hard?

Lack of standardization in the dataset for calenders and contacts. The WebCal effort has gone a long way to try and fix that. CalConnect is trying to get people to adopt and implement standards, so I think the industry is moving in the right direction and this will get easier over time. Part of the reason there is no standardization is because people continue to innovate.

For example, AirSet is the first multi-groupware solution. While groupware has been around for a while there has not been a product that lets you support multiple groups in one integrated environment. When it comes to calendars and synchronization, this creates a new feature set that existing calendar interchange standards are not designed to handle. For example, I might have an event on my work calendar that I want to share over to my family group calendar so my wife will know I'm out of town. This concept does not exist in Palm Desktop or Outlook, so we struggled with how to support this when we synchronized to those products. We ended up using the category feature which works well with Outlook but created some problems for some Palm users because Palm only supports 16 categories. It's not a problem for most users because they don't use categories with events, but for some our synch ends up overwriting their last few category entries.

For a service like ours, we will eventually end up delivering synchronization to many different applications written by different programmers for different operating systems. (Outlook, Lotus Notes, Act, Palm, iCal, etc.) Our programers don't fully understand what was in the mind of other programmers, programs don't always conform to their own specs. We are 46 versions into our synch software to get Outlook synch right.

Eventually, everyone will gradually conform better to the standards and this will get easier. But right now everyone partially implements the standards and synchronization is a nightmare.

- What about iCal?

I love the UI, just click on the checkboxes and select which calender combinations you see. But iCal is organized around data and we wanted to be organized around people.

One of the epiphanies we had was that you had calenders associated with important groups of people in your life. iCal was too data centric. From our perspective, your life is made up of a series of shared calenders. So when you put something onto a calender it would go the right set of people.

The next release of our software does support iCal import and export and subscribing to iCal web servers.

- What about Upoc?

We certainly overlap with Upoc in that we send messages to groups over the phone. But I think the big difference is that we are more web application centric. Upoc is almost entirely SMS text message driven.

I would also put them in the social networking camp. We would like to do public groups eventually, but we are mainly a private group service. So, if you look at products like Upoc, Dodgeball (acquired by Google), and on the Web side services like myPlace and Friendster, those are products targetted at "getting a life". Airset is for folks who have established their social network and are now struggling to coordinate it across friends, family, and work.

- How have google applications, like gmail, google maps, changed people's views on what can be done on the web

They've had a tremendous impact. There were people doing this before Google, who tapped into Ajax web application development which enables you to do more locally in Javascript reducing latency. We are halfway through ajaxing our site.

Eventually, we hope to get almost everything on our site Ajaxed. This is important because it gives a web services the feel of a local application.

Google maps is a great example, that's the mapping solution we use in Airset, their smooth scrolling is the best visual example people have of an Ajax implementation.

I would also add that the 43folders guys have been doing this for a long time.

Flickr is another example of early innovation in using java script to deliver a higher performance web application. These companies have pioneered a kind of Renaissance in the whole idea of web applications. People tried to do this back in the Boom era, but part of the problem then was lack of support or uniform implementation of javascript, DOM, and CSS standards across browsers so it was hard to do really great stuff. Now we have a consolidation of browers in IE, Firefox, and Safari that all have a very consistent implementaion of these standards. This did not exist back in the days of the browser wars between IE & Netscape.

- Have you seen this type of web ap in corporate applications?

Look at the terrific success of They were the first people to hit the ball out of the park from an enterprise ASP service. They delivered the quality of experience using this type of low-latency web interface.

Eventually, we will have an Airset professional product targetted to small and medium size businesses. We think a groupware ASP based solution makes a lot of sense for small/medium sized businesses -- most people do not work for the Fortune1000. The cost and expense of maintaining dedicated groupware services just makes no sense for a small company. AirSet offers a great solution for these companies..

The basic service will remain free. We don't ever see little league teams or churches paying for groupware and for our vision of unifying your life in one place we need to make it easy for all of these groups to adopt the service. But there are a number of specialized features combined with a professional level of support that we will offer for a fee to the SMB market.

- When building airset, how did you decide what the key feature set would be? Did you use a system like David Allen's "Getting things done" (GTD) or Mark Hurst's "Good Easy?"

In the beginning we were working off of past experience building PIM solutions for the PC and mobile phone industries. However, about 9 months ago, several of us became users of David Allen's "Getting Things Done" system. So the GTD fanatics in the office, myself included, have been pushing to have the product better support that system. For example we enhanced our list features to better support the GTD system. I now create a "deferred action" and "next action" list for myself in each of my groups.

We've spoken with David Allen a couple of times. I get the sense that he's a bit overwhelmed. He has a lot of people in the software world calling him. But he wants GTD supported broadly and is working on a guideline for developers like ourselves.

Some people have asked us for tying to-do's to days. Our development team is in the middle of figuring out a UI for that. We send out a daily schedule summary that has your to-do list items on it. We also plan to put the appearance of to-do items in the calender itself. One UI we are considering is to make it optional to overlay to-do list due dates on your calendar. But we have not settled on how it ought to work because we are getting conflicting request from users, hopefully we can sort out a solution that everyone will be happy with, or at least most people

- Why does GTD seem to be so popular in the software community?

When I read it it simply made sense. When you work in the software community, a lot of your time is consumed processing email and IM. The GTD processing method fits this work paradigm very well.

I don't think he (David Allen) necessarily views GTD through an email lens. But his approach happens to work very well for knowledge workers. As I wade through my e-mails each day I am quickly sorting them into Next Action, Deferred Action, Delegate, and Trash folders. It just works well.

Friday, August 12, 2005

Walken for President

Sign me up.

NPR Lies and people... refuse to pledge?

I'm listening to an NPR story talking about how the mood on Iraq is changing thanks to Cindy Sheehan and the President's refusal to meet her. However, Bush met her June in 2004:
Sincerity was something Cindy had hoped to find in the meeting [with Bush]. Shortly after Casey died, Bush sent the family a form letter expressing his condolences, and Cindy said she felt it was an impersonal gesture.

"I now know [after having met him] he's sincere about wanting freedom for the Iraqis," Cindy said after their meeting. "I know he's sorry and feels some pain for our loss. And I know he's a man of faith." . . .

The trip had one benefit that none of the Sheehans expected.

For a moment, life returned to the way it was before Casey died. They laughed, joked and bickered playfully as they briefly toured Seattle.

For the first time in 11 weeks, they felt whole again.

"That was the gift the president gave us, the gift of happiness, of being together," Cindy said.
The report has yet to mention this fact.

Thursday, August 11, 2005

Housing bubbles and banks

So you are a bank and worried that housing prices are going to deflate. You worry because falling housing prices will encourage people to foreclose on their property if the value of that property sinks below the outstanding debt, which means you get stuck with a bunch of dud loans.

In the US, a sophisticated secondary market for mortgages (and mortgage tranches) means this risk is spread around and probably just factored into the broader interest rate. I'm guessing that Dubai does not have such markets because there, banks are only lending based on the original value of the home. Subsequent appreciation is not fianced by them.

More housing economics

The Economist has a good post (sadly premium content) on where all the extra money from pricey oil is going: outlandish real estate projects.
But the biggest bucks are flowing into property. Artificial lagoons and landfills, spiked with villas, hotels and appartment towers, are growing all over the Gulf. The world's would-be tallest building is already under construction in Dubai, whose latest fantasty development, City of Arabia, with no fewer than 35 skyscrapers, promises to house the world's largest shopping mall.
This "City of Arabia" is quite close to my old high-school and will increase Dubai's housing stock, alone, by about 50%. Almost all investment in Dubai is controlled by a handful of families who run old-skool conglomerates with big import-export businesses, exlcusive licensee franchises, and property. If any one sector goes up, you see splurges in all the other. As one would expect with family owned conglomerates, the money is not being spent wisely.

But Americans are not spending their "China surplus" liquidity wealth wisely either -- they are squandering it by competitively bidding for real estate. As Angry Bear notes, whether the price reduction will be a pop or a hiss is unknown, but look for slowing sales and higher rental vacancy to mark the top of the market. I call this housing market a bubble because prices/rents is out of historical whack, and I will not beleive the bubble is over until we see market increases in rental prices. Unless you beleive property will continue to appreciate the way it has, rentals are a great deal over purchases right now. When people stop beleiving property will appreciate, these bargains will go away.

I recommend reading the rest of the Angry Bear site. It highlights nicely the difficulties Democrats are in over economics, foreign policy, etc. While the posters there rightly complain about Bush's pork laden spending bills, and the insolvency of the long-term federal budget, they do not mention that is was Democrat intransience that made CAFTA so expensive to pass and blocked social security reform (which would improve long term solvency by cutting benefits to rich people). They correct point out that federal deficits just mean higher taxes in the future, but fail to explain why higher taxes now is better. After all, deficits don't matter, interest rates and marginal taxes do and the US seems to be just fine right now.

Thursday, August 04, 2005

Krugman, Hubbard, and Pete Peterson

I recommend this round table discussion between Paul Krugman, Glenn Hubbard, and Pete Peterson. I think I actually met Pete Peterson once, but that was a long time ago.

On the US trade deficit, Hubbard states
GLENN HUBBARD: Remember, though, that the mirror of the current account is what’s called the “capital account,” which tracks funds flowing in or out for investments and loans. Another way to look at the current account deficit is that there’s substantially more investment being done in the United States than there are savings.
Krugman agrees, but compares the current situation in the US to Argentina and Indonesia before their currency collapses
America is not Argentina. What turned the plunge of the peso into an economic collapse was the fact that Argentina’s debt was held in dollars. When the peso fell, banks and businesses found their debt in pesos exploding, and pretty much everyone went bankrupt. We hold our foreign debt in our own currency, so the immediate capital loss from a weakened dollar falls not on U.S. businesses but on foreign central banks—mainly the Bank of Japan and the People’s Bank of China, which finance almost all of our current account deficit.
This key difference, that US foreign debt is held in dollars is the critical difference that makes comparisons between Indonesian and Argentinian currency crises wholly inapplicable to the US position. I worked in a hedge fund during the rouble collapse, and subsequent broader emerging market collapse, and it was obvious to me that the vicious circle that lead to investors being forced to sell into declining markets was a direct result of the homogeneity of the investor class. The only people who held Indonesian debt were western money managers. By contrast, American debt is held by all kinds of different people -- Japanese central banks, Midwester grandmas, East Coast elite, the Chinese government, etc. If one class feels the need to hold a firesale the others will snap up the bargains. This diversification, I feel, insulates the US from the type of currency and interest rate volatility countries with thin capital markets have to deal with.

The key dynamic here seems to be that China, following mercantilist trade policy, is taking money from Chinese consumers and importers and giving it to Chinese exporters, who are in turn tying dollar bills to their exports. The rational thing to do in this circumstance would be to take the money and buy the Chinese exports -- anything else would be foolish! Thus the trade deficit. When the Chinese decide to stop taking from their local peasants and giving to American flat-screen TV buyers, then the trade deficit will go away, but until then American consumers should take the money and run.

Unfortunately, much of that money has run into real estate, and created a bubble there, but that too will correct as rates rise. I am not sure what the effect of a real estate bubble pop would be on the economy. I myself am short real estate but long broader business spending, so personally I am not as hedged as I would like.

Should the dollar fall? Probably. Do I care? Not really.

On the welfare state, Krugman seems somewhat schizophrenic. He wants more government spending and control, particularly in healthcare, and would prefer to ration healthcare by reducing research and reducing medical care to future generations. But he resists cutting social security benefits. This battle between the present and the future comes out pretty clearly here:
HUBBARD: That wouldn’t strike you as a large departure in fiscal policy? The best estimates from the research suggest that tax increases of that size would reduce the economy’s potential growth by as much as a percentage point. That is a huge hit to future standards of living.

KRUGMAN: I would dispute that. Look, Sweden is actually doing pretty decently these days—their economy grew at 3 percent last year, far more than Europe as a whole—despite a tax rate that nobody would consider having here. It does matter how the taxes are done: you can do a lot of damage to incentives with a poorly designed tax system, without even raising all that much money. But I don’t believe that the size of the tax increase needed to sustain the welfare state is a crippling objection.
Krugman would raise taxes on people and then give that money back in social security. He seems not have have heard of deadweight loss:
PETERSON: You can call it a tax if you wish, but I think there is a huge difference between writing a check to the government and letting it be spent on other people’s consumption, and taking money and putting it in your own account. I call that real savings, not taxes. But if you put a word like “taxes” on a plan, it immediately would lose support.

KRUGMAN: Someone will put that word on it.

PETERSON: This is one reason why I’m not opposed to personal retirement accounts as part of Social Security. What I can’t support is the idea to “fund”—I put that in big quotes—the accounts by borrowing trillions of dollars. If the administration would fund them, personal accounts would help to solve our savings problem. These really would be a genuine “lockbox,” in that they would keep the money out of the hands of Congress.
Any one who cannot see the difference between an individual saving money to give to themselves or their children in the future, and having the government taking your money to give to other people, really has no understanding of incentives or human behavior. Personal accounts are savings. Social Security is a tax.

Tuesday, August 02, 2005

Synching is the bane of my existance, update

Recently I wrote about the bad experience I had trying to get my Palm, computer etc. to sync in Tiger (Mac OS 10.4). I ended up contacting the CEO of the company, and it turns out that in Tiger, iSync2.0 forces you to use Apple's address book and calender.

Apple's address book is perfectly adequate for my needs, but their calender is very bad. The key feature it lacks for me is the ability to date tasks -- a task list that shows you every task every day is not useful, I want one that shows you *today's* tasks today and hides tomorrow's tasks until tomorrow. Now-Up-To-Date is the only calender program that does that.

Now Contact, on the other hand, is way too powerful for me. But I'm being pushed to pick between Now-Up-To-Date and Now Contact, or Address Book and iCal, and given how bad iCal is the answer is easy.

So, I am now synching with the Now suite and it's OK. At least it works.

Tomorrow I'll have more thoughts over why the data synchronization experience is still so bad.

Mighty Mouse

Ho ho! This rocks! I would consider a bluetooth version, but to be honest, I'm trying to get away from having to use the mouse at all.

Are durable goods consumers forward looking?

A "durable good" is a good whose value lasts over some time. A good test is whether or not a good is durable is whether or not it has significant resale value, so a car is durable, but a pizza is not.

My old U Chicago professor, Austin Goolsbee, has a paper demonstrating that text books (which often cost $100+) have a vibrant second hand market through the local campus book store, and this second hand market makes people more willing to buy textbooks in the first place. Amazon's used book program works in a similar way. Since the cross-price elasticity between new and used books is so small (that is, people either buy new books or used books, they rarely substitute one for the other), offering both on Amazon does not cannibalize sales, increases page views, and thus boosts overall revenue. (Good post on this on Marginal Revolution).

So, it seems that people who buy durable goods do consider resale value in their purchase. They are more willing to buy because they know the period rental price will be less than the full purchase price (that is, they will "rent" the book for $50 for one year, but not buy the book for $100).

My behavior on eBay is consistent with this finding. I buy stuff on eBay because I know I'll be able to sell it right back for little to no loss if I end up not liking it. This option value more than makes up for the cost of buying and reselling the item.

Monday, August 01, 2005

Synching is the bane of my existance

Palm Pilots have been around now for almost a decade and they still cannot synchronize. It's pathetic, and illustrative of how terrible computing still is at making different bits work together.

OK. So I upgraded to Now-Up-To-Date v5 (which claims to support Palm synching), iSync 2.0 (which claims to support Palm synching), Hotsync Manager 3.0 (which claims nothing), all running on OS 10.4 (which claims to have improved synching) and can I get my calender to synch with my PDA? I'm posting this at 11:56PM, so you can take a guess.

Now-Up-To-Date is so bush league that they put out their product without a manual or FAQ or anything on how synch between their calender and a palm piilot. Now-Up-To-Date's website is here. DO NOT BUY THEIR PRODUCT.

Final payer

This first Slate article argues that zoning is responsible for the current rise in house prices. This is false. Zoning does (and has) increased the price of housing, but this increase is reflected in higher purchase prices and higher rents. The current bubble features flat to declining rents and dramatically rising prices, all with no change in zoning laws.

This second Slate article argues that DVDs are killing the movie theatre, and movie execs cannot prop up the cinema because of anti-trust concerns. This I doubt, because the entire reason movie theaters are in trouble is because of competition with close substitutes (DVD and pay-per-view, as detailed in the article), the presence of which should exempt that industry from anti-trust attention.

One common theme between the two articles is the question of who pays (and who benefits) from a taxes and subsidies. At Chicago, we believe that the holder of the asset which cannot run away from the tax pays the tax in full the moment the tax is levied -- everyone else just keeps passing the buck. So, if a new zoning regulation reduced the value of your house, that cost would be born by you (the homeowner) in full the moment that regulation was passed -- all subsequent sales and purchases would have completely factored in the change in value that came as a result of the new law. It is in this way that an increase in property tax is paid, in full, by current property owners the moment the tax is introduced even though the tax is assessed annually.

With movies, the entity that owns the asset is the movie company, and today also certain headline stars. All other players in the system are substitutable and therefore in competition. This means that all the profits from the movies will aggregate to the companies (and some stars) leaving cinema managers scrabbling for popcorn. The article seems to argue that movie openings have positive externalities, spillover benefits that help the subsequent DVD sales and PPV showings that are now killing their business. In this case, I would expect movie companies to cross subsidize theater owners from profits made elsewhere to keep those positive benefits. But not before cinemas themselves are pushed to the very edge of viability.