Data is not the new oil

"Data is the new oil" is a phrase that I fucking hate. It immediately causes me to question the knowledge, judgement, and ability of the speaker. I am suddenly overwhelmed with the suspicion that they are the sort of person who thinks Tom Friedman is a deep thinker with profound insights, the sort of management type who reads the Art of War and takes all the wrong lessons from it.

It is wrong, not only in whole, but in every particular part.

Permit me the polite fiction of asking your permission to explain.

What is data?

Per Wikipedia:

Data are characteristics or information, usually numerical, that are collected through observation.^[1] In a more technical sense, data is a set of values of qualitative or quantitative variables about one or more persons or objects, while a datum (singular of data) is a single value of a single variable.^[

Which is to say that data is not as old as writing - it is literally older. Since much of the proto-writing we have are bills of sale and ledgers and tax records. In the modern context that means (and I think this is clear from context) computerized data. And computerized data is very interesting, since computerized data is just any most any kind of information.

Because,while all data is non-exclusive (you knowing the tax records recorded on some Babylonian tablet doesn't preclude me from knowing it), computerized data is also essentially costless to duplicate.  It might be expensive to get, but once you  got it, its basically free to make copies. The same cannot be said for clay tablets.

But still, even the data on clay tablets is not some Vancian incantation, consumed upon use. We do not burn it to power our cars and planes, shape it into "temporary" containers that will outlive us all.

This means that data isn't just not scarce in the colloquial sense, but often also in the technical economic sense; i.e. everyone can have as much data as they want.

Not literally always, since data can still be expensive to gather, laborious to interpret and make use-able, and since secrecy and intellectual property laws create artificial scarcity. But consider pornography.

Pornographers cannot enjoy the protection of secrecy if they hope to make a profit, piracy is rampant (since making a copy is costless and the intellectual property rights of adult performers aren't generally taken seriously), people make amateur films for free (since the computer age has democratized information technology), and people have been making skin flicks for so long that people can get off to videos made before they were born (the stock does not diminish with time). All this translates into a world where the price of the data of pornography is pushed to zero and stays there. It is essentially the case that we, as a society, are post-scarcity in smut. And just as there can be no Saudi Arabia of porn, there can be no Saudi Arabia of data.

Whereas Saudi Arabia is the Saudi Arabia of oil.

What is oil? 

Oil is a kind of stuff. Specifically,  its hydrocarbons buried eons ago now dug up and refined into a fuel that can be burnt for energy. Exploiting (i.e. burning) the "fossilized" chemical energy of buried hydrocarbons like oil is essentially how the human race escaped the Malthusian trap of subsistence agriculture and entered the present era of sustained economic growth and industrialization.

And, not to put to fine a point on it, I think the Industrial Revolution was the single most important event in the history of the world. The Industrial Revolution (and by synecdoche, oil) transformed every feature of daily life in rich as well as poor countries - the keys on which I type this, the power that illuminates this screen, the very structure of the city and civilization in which I live - what oil has not made, it has at least put its dirty little fingers on.

But oil and other fossil fuels are not evenly distributed throughout the globe, and this has consequences. As mineral wealth it easy to control and exploit with violence so, it props up the otherwise weak economies of authoritarian states. Oil wealth can stifling economic growth in developing countries  impoverishing future generations.

And it is not just a valuable commodity but a military necessity. An army with tanks, trucks, and planes will overcome an army without these things in any (conventional) contest. Thus securing a steady supply has been one of the key objectives of American foreign policy. So much so that the idiot in the White House - who never met a subtext that he didn't make text - said that we were only in Syria for the oil

And finally, dreadfully, fossil fuels are the cause of the current climate catastrophe. To use the sterile language of economics, using oil has very large negative externalizes. Which is to say, to make, move, and use it not only harms the makers, movers, and users, but everyone around them - indeed, everyone in the whole world.

With all that, what would it mean for something to be the new oil?

It would have to be great and dreadful, to reshape the whole world in profound ways for good and ill. It would have to be scarce, and unevenly distributed, the sort of thing that a warlord could sell on international markets to finance their tyranny. It would have to be a military necessity, whose abundance or scarcity could make or break empires and war machines, something which even the most scrupulous and ethical of states (lolsob) would be compelled by necessity to buy from the most unscrupulous and unethical. It's use would have to harm the people around its users, and its possessors must, by the mere fact of possessing it, deny it to someone else.

Is data that?

No.

Why do people say it?

Its probably some manner of misbegotten metaphor. "Oil is important, data is important, therefore data is the new oil". Which, is wrong and misleading, and I hate it. Couldn't they be a little more poetic and say something like: "Ink is the new black gold"

Some Disordered Thoughts

So this is a thing that happened:

https://wkow.com/2020/06/23/protesters-pull-down-forward-statue-outside-state-capitol/

Demonstrators had been marching around downtown Madison, frustrated after the arrest of a protester earlier in the day.

The same group also tore down the Col. Hans Christian Heg statue a short time later. The group then went on to throw the statue into Lake Monona. Heg fought for the Union during the Civil War and was a stark opponent of slavery during that time.

I have thoughts, and surprisingly feelings, on this that I would like to share.

Now I can image some preemption along the lines of  "Why are you talking about this when there's so much else going on?"

To which I respond:

A) Its my blog, I can write about what I want. Not everything has to serve some grand political purpose or be . This should go without saying, but so should a lot of things that still somehow need to be said.

Demonstrators had been marching around downtown Madison, frustrated after the arrest of a protester earlier in the day.

The same group also tore down the Col. Hans Christian Heg statue a short time later. The group then went on to throw the statue into Lake Monona. Heg fought for the Union during the Civil War and was a stark opponent of slavery during that time.

B) I don't think I have any message on police brutality, systematic racism, or many other parts of *gestures* all this that doesn't have a better messenger. But I am the worlds leading expert on my own feelings.

So, the story is that yesterday there was a protest in Madison, and after dark the folks who were left apparently decided on using vandalism as direct action. Fair enough, I suppose. And as part of this they tore down, decapitated, and dumped in the lake a statue of Col. Hans Christian Heg.

The TL;DR of Heg's life is that he was an immigrant and an abolitionist. He led Wisconsin's branch of the Wide Awakes. He commanded the 15th Wisconsin Volunteers and was, per the the inscription, felled at Chickamauga.

So naturally, in the context of national uprising against racism, police injustice, and that everything is fucked up and bullshit, protesters did this:



And I think this was worse than a crime; it was a mistake. I could waste your time with a lot of dissembling along the lines of #notallprotestors, but bluntly I think that a lot of people are angry, some people just like to use the cover of protest to smash, and people do make mistakes like this when their blood is up.

Public monuments and statues are symbols. They make public statements about what, who, and how a community should commemorate the past. Given how much of politics is essentially aesthetic and symbolic (a fact which I am not terribly pleased with, but whose reality I acknowledge) erecting such statues is a symbolic and political act. So is tearing them down.

Building a statue of the traitor Lee in a black community in the 1960's says a combination of "Actually the Confederacy was good", "Fuck you" and "know your place".  Tearing down or vandalism that statue is a (long overdue) repudiation of all that.

Building statues is a symbolic act. Tearing them down is a symbolic act. But What is this supposed to symbolize? And more, meaningfully, what is actually symbolizing to people?

I won't pretend to know what the intention behind this was, but I suspect it wasn't terribly thought-out and the people responsible (assuming they are our noble comrades in the struggle for justice, and not fascist running-dogs trying to besmirch the good name of the Real Left) are either scrambling to construct a post-hoc rationalization, trying to quietly pretend it didn't happen, or blamimg someone else. That's what people usually do when the fuck up.

But in understanding how the the general public will interpret acts of anonymous vandalism like this there really is no other way to interpret the "text" than the death of the author.

And in that interpretation how would the general public interpret this? Chaos, destruction, disorder. I'm a bit worried that if this becomes what most people (who you need to remember are less political, less engaged, less informed than you - and will still be in November) associate with BLM, social justice, and left-of-center politics in general. Because, bluntly, there's a whole bunch of comfortable (white) people who don't have a preference between the peace of the conquered and the peace of justice as long there's peace. And if we want the peace of justice, we need to win in November, and win big, and that means getting at least some of those people to vote for us by showing them that its the police who are the rioters and the right that is party of  chaos, misrule and violence.

Letter to the Editor 1

https://www.usatoday.com/story/opinion/2020/02/26/across-country-rural-communities-secede-states-why-column/4851817002/

David Franks <davidfranks31415@gmail.com>	1:05 PM (2 minutes ago)
to letters

Reading his opinion, I could not decide whether Glenn was arguing in good faith and simply stupid, or whether he was arguing in bad faith and secretly yearned for tyranny.

Yes, tyranny. A strong word, but that seems to be the substance of the remedy he envisages. For all his hand-wringing talk of "tyranny of the majority" is to justify a system which would give more weight, power, and voice to a minority of the population, and thus institute a "tyranny of the minority" which is just tyranny of the ordinary sort.

For this end seems to be the only thread that hold his argument together. He begins by lamenting democracy, bemoaning that the principle of "one person, one vote" results in relatively less power in Statehouses for regions which are devoid of people. "It is not fair that our faction lost that election", they moan, "just because we had fewer votes!" 

And how does he propose to remedy this? By massively expanding the powers of Congress to micro-manage state governments - a de facto abolition of federalism. For, since it is the strictest laws that bind, saying that no law may be stricter than Federal law is akin to saying no law binds but federal law. Apparently, being governed by a representative statehouse you dislike is so intolerable that it would be better to give all power to Congress, which already massively over-represents rural people and their interests - a fact obvious to anyone with a passing familiarity with the Federal budget and its consistent and systematic transfers from urban areas to rural areas.

P.S.

I would just like to say how much I appreciate the work of USA Today, which I quite sincerely think is the finest newspaper in America, because it aims to speak the truth plainly to all Americans.

A Fine is Punishment, Not a Price

Yesterday Roger Stone was sentenced to 40 months in prison, followed by 2 years on probation, as well as mandatory drug testing, 250 hours of community service, and a $20,000 fine for lying to Congress and witness tampering. Crimes such as those strike at the load-bearing walls of our political system, and thus out to be taken seriously and punished severely. So which of these punishments is most severe?

It is rhetorical, Captain.

Prison, obviously. American prisons are terrible, and I can't imagine that even for a high-profile non-violent offender a stay at "Club Fed" will be pleasant experience.

Okay, but of the rest which is most severe? The fine? $20,000 is a lot of money, right?

Ehh, maybe not for Stone. Though at present his net worth stands at around $50,000, he was once a millionaire, and since he's been and will be a good little hack, I'm sure wingnut welfare will provide for him just as it has the likes of Dinesh D'Souza after he's served his time. Remember, (social) consequences are for little people. But if you're famous, they let you do it.

No, I imagine after prison itself the harshest punishment is the indignity of community service, of mandatory drug testing, of having to answer to a probation officer. Stone strikes me as a narcissist, and $20,000 dollars to a man who no doubt thinks of himself as a temporarily embarrassed millionaire. is far less precious to him defending the belief that he is special against all evidence to the contrary.

All of this brings me to the topic of punishment. Consider the rational-agent model of crime. I am aware of its limitations, but for a calculated, pre-meditated "white-collar" such as this I think it is quite appropriate. Anyways...

A rational agent decides to commit crimes when they judge the expected utility of committing the crime to be positive, that is (assuming punishments impose dissutility):

Probability(I get away with it) * Utility(Doing the crime)  - P(I get caught) * U(the punishment) > 0

From this we come to the conclusion that if you want people to not commit crimes (or at least white-collar crimes, which are from a dollar perspective more costly than blue-collar crimes) you need to either raise the probability of getting caught or raise the costs of of punishment (I suppose you could also lower the benefit of doing the crime, e.g. protecting yourself from theft by owning nothing worth stealing, but that seems like an unpopular option).

We create disutility by harming people. We harm their bodies (though this has largely gone out of fashion), we restrict their liberties, we impose social sanctions (whose costs are frequently overestimated. People often fear social death more than actual biological death - I know I do!), and of course we cause them material economic harm by taking away some money.

There is something profoundly egalitarian about the first three forms of punishment. Each of us has only one body to suffer in, to be caged, to be shunned. We all have, as an economist would say, equally endowments, and so with harms of that nature it is straight-forward (although perhaps not easy in practice) to harm people fairly, to ensure that the same hurts will always be inflicted in retribution for the same crimes.

Ahhhh, but money is different. We are not equally endowed with it. To fine a rich person $100 is a nuisance, the greatest part of the punishment is the nuisance in dealing with it. The same $100 fine could break a poor person.

And so at last we get to the title of this post:

A fine is a punishment, not a price. To function justly and effectively as punishment it must impose not the monetary cost on everyone but the same disutility, the same economic harm. Fixing this is an attainable goal. American governments - state, local, and federal - could simply copy the practice of scaling fines with income from, say, Switzerland.

There are, of course, arguments against this. Some of these will be empirical (given higher costs of fines, more people will contest - would this lead to a net cost for society), some the usual claptrap (I image the phrase "punishing success" will be used), and some of them will be solid, principled, reasons coming from those who never used them before when they could defend the poor (it creates perverse incentives to finance government through expropriatory fines rather than regularized taxation).

As this is a blog post, I can't address them here without making this longer than you'd care to read, so I won't. If you want more in this vein, you can always leave a comment.

Nice Polite Republicans

You can buy this at here, if you want to for some reason

NPR, like a lot of self-consciously "mainstream" media (*cough* New York Times *cough*) is by self-construction a centrist  organization. By that I mean they've decided that "objectivity" doesn't mean a rigorous and fearless pursuit of facts so much as always being in between the poles (i.e. the center) of political debate, reporting uncritically and at least pretending to take seriously the opinions and arguments of both sides, regardless of how transparently bullshit they are. This strategy might frustrate Zoroastrians and other honesty enthusiasts, but it appears to have worked somewhat; NPR is more trusted among conservatives than CNN, MSNBC, or the New York Times, even thought its trust among liberals is solidly middle-of the pack, and its overall trust. Opinions on NPR are the least divided of any of the news sources polled there and NPR is considered by most Americans (though crucially not Republicans) to be unbiased.

What's going on here? How is it that NPR can despite their best efforts, become as much a symbol of effete liberalism as yoga and lattes? Simple. NPR acquired a reputation in the fever-swamps of the right-wing imagination for being part of a biased "liberal media" because they have some kind of journalistic commitment to reporting  facts in a manner that isn't pure propaganda. With American conservatives it always seems to be Cooper Union one way or the other:

The question recurs, what will satisfy them? Simply this: We must not only let them alone, but we must somehow, convince them that we do let them alone. This, we know by experience, is no easy task. We have been so trying to convince them from the very beginning of our organization, but with no success. In all our platforms and speeches we have constantly protested our purpose to let them alone; but this has had no tendency to convince them. Alike unavailing to convince them, is the fact that they have never detected a man of us in any attempt to disturb them.

These natural, and apparently adequate means all failing, what will convince them? This, and this only: cease to call slavery wrong, and join them in calling it right. And this must be done thoroughly - done in acts as well as in words. Silence will not be tolerated - we must place ourselves avowedly with them. Senator Douglas' new sedition law must be enacted and enforced, suppressing all declarations that slavery is wrong, whether made in politics, in presses, in pulpits, or in private. We must arrest and return their fugitive slaves with greedy pleasure. We must pull down our Free State constitutions. The whole atmosphere must be disinfected from all taint of opposition to slavery, before they will cease to believe that all their troubles proceed from us.

But NPR does not understand this. Or, perhaps they do understand this, but can't act on this understanding without losing the o-so-precious hard-won "trust" of that endangered species, the moderate Republican. I suppose I could be more fair, and say that what the really prize is being in middle, and that broad perception of being unbiased.

But regardless their strategy of center-ism frustrates certain lefty corners of the internet, who joke that NPR stands for "Nice Polite Republicans". I don't think that's true, per se, but I think that it gets at an important point.

Partly its because they can sit down they sit down and have easy, breezy conversations with Republicans like David Brooks, who is is either profoundly stupid or totally full of shit (either he didn't understand the intellectual enterprise in which he was engaged his entire adult life, or he did understand and is lying about it now). And part of it is, I think, aesthetic; that smooth, unflappable "NPR voice" seems out of place in these very flapped times, calmly reporting today's horror, outrage, or scandal. But the last thing is that NPR seems to project an out-of-touchness, a lack of alarm that implies they just don't get post-2016 politics.

Which brings me to this fascinating 2018 interview of Kathleen Belew by Teri Gross. Teri is interviewing Kathleen about her book, Bring the War Home, a scholarly history of post-Vietnam white supremacist movement(s) in America. Listen to the whole thing, its great. But what jumped out to me was starting around the 25:30 mark, Teri asks Kathleen about the 14 words and Kathleen won't say them, and Teri just does not get why Kathleen won't utter a white supremacist slogan.

And not getting that, in these flapped-up times, seems somehow egregious.

The No-Trade Theorem and Misgovernment

 There is a in financial economics a theorem that goes like this:

Suppose that 1) markets are in an efficient equilibrium, 2) there are no idiot ("noise") traders, and 3) the structure of possessing private information is common knowledge. If that were true then there would be no trades whatsoever.

To quote Wikipedia:

The idea behind the proof of the no-trade theorem is that if there is common knowledge about the structure of a market, then any bid or offer (i.e. attempt to initiate a trade) will reveal the bidder's private knowledge and will be incorporated into market prices even before anyone accepts the bid or offer, so no profit will result. Another way to put it is: all the traders in the market are rational, and thus they know that all the prices are rational/efficient; therefore, anyone who makes an offer to them must have special knowledge, else why would they be making the offer? Accepting the offer would make them a loser. All the traders will reason the same way, and thus will not accept any offers.

Now since we know damn well that asset trading happens a lot we know that this isn't true in general. Further for  any trade to occur either 1) some or all of the assumptions of the theorem must be false for a trade to occur or 2) the parties have to have different risk or liquidity preferences.

Which naturally leads me to parking meters.

In 2009 Chicago leased the cities parking meters (and associated revenue stream) to a private company for a large cash payment. A transaction itself isn't of a remarkable sort -  exchanging streams of payments for lump sums is the most basic kind of finance there is.

What is remarkable is that it obviously never make any sense for the city. If both parties have the same liquidity preferences (risk is negligible here) then by the no-trade theorem the transaction shouldn't have taken place. If the meters were worth more than the asking price, then the city would be better off holding onto them, if they were worth less the company wouldn't buy, and if the values were equal then the city is no better off - but since transactions aren't totally cost-less, there would be no trade then either. Same sort of logic as the no-trade theorem.

Of course, its possible that the city has different liquidity preferences than the buying firm. But this seems unlikely, given that the city preferred more liquidity, since they can issue bonds, access the money market, and have fairly predictable expenses and revenues. Its possible that the city could be considered to have a lower discount rate than the buyer, but that a (responsible) government would be more present-oriented than a private firm seems implausible.

So given that the sale happened, which of theorem's assumptions were violated?

There's no market here to be efficient, but we're just valuing a stream of payments which is a trivial problem. How about the structure of information? Again, knowledge about the value of this asset is symmetrical, and both parties know it.

The best case scenario here is that the city was indifferent between buying and selling at the sale price. If you believe that, do you have a toll bridge for sale?

So what we're left with is 2 (plausible) explanations: an idiot trader or a government that's incredibly shortsighted.

Either way, the lesson here is to assume any sale of public revenue streams that has a buyer is be a bad deal until proven otherwise.

Why the Government's Budget Isn't Like Your Budget

It is popular to analogize the household budget the governments budget to your household budget. Now, I'm a big fan of analogies. They can explain complicated notions in simple terms that are, technically, inaccurate, but get "close enough" to how things work.

But the analogy has to work, the correspondences have to make sense. The "government budget as household budget" meme isn't like that. Rather, it is very dumb.

How is the government's budget not like your budget?

Well, how is the government not like you?

1) You will die. Governments live for an indefinite length. This means that while you might have trouble borrowing money to be paid back over 100 years, little Austria can sell 100-year bonds - and the market thinks it'll lend to Austria at 1.2% interest. You try borrowing money for 100 years, and let me know if anyone is foolish enough to lend to you.

This long life with low borrowing costs has other benefits. If the economy (and thus government tax revenue) grows at 2% a year, and the debt costs 1.2% a year, then as long as the borrowing isn't too big, the government can borrow money forever and keep paying it back. This might not be a prudent plan, but its an option that's open to governments that isn't open to

2) You cannot rob people. Fools like to say"taxation is theft". Why this is foolish is for another time, but it does cut to the heart of the matter. If you decide one day you want to make an extra $10,000 you can't just go to a bank and demand to be given that money. Governments can do that. Maybe you think they shouldn't but they can. Your promise to pay someone back is a promise that you'll earn the money to pay them back. The government's promise to pay someone back is a promise that they'll tax the money to pay them back.

3) When you print money, its counterfeiting. When the government prints money, its monetary sovereignty. The US government borrows US dollars. It also controls completely the supply of US dollars. The risk to lenders is not (barring an insane sovereign default) that the US won't pay you back, but that it will print too much money when it does so.

4) Your borrowing costs are higher. By which I mean, right now the US can borrow money for a month for about 2% APY, about a tenth of the costs for the average consumer credit card. This dramatically changes the picture in terms of what is and isn't "responsible" spending and borrowing. If  you could borrow money for that cheap, what would you do?