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July 30, 2006

No Cease Fire!

An Israeli attack into the village of Qana, Lebanon has killed over 50 people, including over 30 children. The usual suspects are calling for a cease-fire.

Lebanon's prime minister said his country would not talk to the Americans about anything but an unconditional cease-fire. [source]

[Kofi] Annan said he was calling for a cessation of hostilities — a limited truce to save lives while a cease-fire with detailed conditions is worked out. [source]

Before you conclude this was an Israeli atrocity, it's important to be aware of two important facts not getting much attention. (1) Hizbollah has fired hundreds of rockets into Israel from Qana, and (2) Israel repeatedly warned the village it would be attacked, urging civilians to leave. I have only been able to find a small portion of Israeli UN Ambassador Dan Gillerman's comments on this matter; I'll link to more if I find it. UPDATE 2006-08-01 07:01:22 UTC: Here is Gillerman's statement, read the whole thing!

Hizbollah is the aggressor in this conflict, Hizbollah uses civilians as human shields, and Hizbollah is morally responsible for this loss of civilian life.

Hizbollah and its sympathizers want to use the attack in Qana as a way to bring international pressure to bear on Israel. A cease-fire would halt Israel's systematic destruction of Hizbollah, a reprieve from fighting that they certainly don't deserve.

Calls for an "unconditional" cease-fire are particularly offensive. Recall that the recent fighting was sparked by Hizbollah's capture of some Israeli soldiers. The safe release of those soldiers should be a precondition of any negotiations. (Not one of the terms of a cease-fire agreement.)

Israel should not blink. I would advocate an even tougher position, such as: "We will totally destroy one Hizbollah-infested village and all people remaining in it each day until our soldiers are safely released." Leaflet-drop the destruction schedule over the targeted villages. Use surveillance to take advantage of the opportunity to destroy any military hardware observed leaving the villages.

July 28, 2006

Arguing About Private Property

Over at Catallarchy, Scott Scheule summarized five arguments intended to rebut various consequentialist reasons to support private property.

This is one of those posts where you absolutely have to follow the link or you won't understand what I'm talking about. Go, read it, and then come back. (Or stay at Catallarchy, they've got good stuff…)

It's important to understand that these five arguments are actually counterarguments against arguments in favor of private property. They interest me because although I may sound like a deontologist most of the time, as you go deeper and deeper (way, way down) into my reasoning you'll see that I'm actually a consequentialist.

Because I'm lazy, I'm not going to read the article Scott is summarizing. And because I'm super-lazy, I'm not going to quote his summaries either. I suggest you open two browser windows so you can see his post and mine side-by-side.

Security Increases Production

This counterargument is based on a fundamental misunderstanding of rights. Increasing one person's security in their property doesn't curtail the liberty of others. Liberty defined as the freedom to do whatever you want is a straw man. But this is a fairly common problem with the word "liberty" and that's why I prefer to use the less-often-confused word "freedom" instead: freedom means the absence of coercion. The introduction of property rights is not a form of coercion. Protecting a person's property does not do violence upon anyone else, it only prevents (property-related) violence against the owner.

On a wider scale, property rights are the opposite of a curtailment of freedom — they are the legal framework for preventing and punishing (property-related) coercion.

Theft is Inefficient

This counterargument is one of a species of bad arguments resulting from the Coase theorem. My fundamental problem with these sorts of arguments is that they … well, they jettison common sense.

Pay the would-be thief $6 so he doesn't steal an item you value at $10? Hello, that's called extortion. That's not an "efficient" solution to anything, homages to zero transaction costs be damned! (And no, you're not "better off" having paid the thief $6 to retain the object. You're $6 poorer! With property rights you would retain the object and the $6.)

Permit me to ramble on a tangent for a moment. The idea that it doesn't matter who starts with a piece of property because people will haggle into an efficient arrangement is wrong because starting conditions are important. Not because of transaction costs; because of overall wealth. There exist poor people who would be unable to make the payments necessary to bring about the "efficient" result. What if I only have $4, leaving me unable to "persuade" the thief to leave my object alone? Such payments need to be placed in the context of the person's demand for ordinary things like food and shelter, too. Perhaps I had $7, so I could pay off the thief or eat, but not both.

I find the notion of the potential "efficiency" of theft offensive. As used in this argument, it smuggles in the utilitarian premise that society ought to be organized in whatever way maximizes "efficiency". And I don't agree with that.

I happen to agree with the outcome of this argument (that "theft is inefficient" is a poor argument in favor of private property). Not because I have my own devastating argument against it, but because I think it's a weird and ill-suited starting point for a defense of private property; it seems arbitrary without having emerged from a more fundamental system of ideas.

Private Property Reduces Uncertainty

This is supposed to be very similar to the first argument, but I'm having trouble imagining how it goes or in what way it could seem convincing. I don't get it.

Private Property Allows for Coordination

Another smuggled utilitarian premise; namely that "coordination" should be maximized.

I wonder whether the argument strikes more broadly than was intended. It seems to open the door to any arbitrary social order. Without a methodology to measure coordination, comparisons of social systems could not be made. (It's not clear whether something like "total real production" would be an appropriate metric — because it could be too property-focused — even if it could be measured.)

Private Property Allows for an Ideal Mix Between Leisure and Work

I'm not able to evaluate the fifth counterargument because Scott didn't summarize it. :) He described only the form of the argument, not its substance.

July 26, 2006

On Spending

For most people, budgeting is about applying scarce funds where they're most urgently needed. People have to make choices, often hard ones, about what they can afford to buy. There are other people, much less common but still numerous enough to regard as a group, who spend much less than they earn.

I've heard many anecdotes about frugal people, and indeed I'm one of them, but I'd like to raise awareness of the fact that frugality can be bad. This occurs when people save without a specific goal in mind.

Saving for a great vacation or a new car or a child's education or to finance a business or for your retirement — etc., etc. — is a good thing. The problem occurs when people forget that the purpose of saving is future spending. Saving is not an end in itself.

It is possible to save too much. For example, a 70-year-old in declining health who has a $5 million net worth does not need to save for their retirement any longer. They're not going to outlive their money. They should use their resources to enjoy the remainder of their life as much as possible. They don't owe anything to their children or grandchildren; the "correct" size of the inheritance is whatever amount balances their quality of life with their satisfaction at giving to their heirs. They certainly should not deprive themselves so that their heirs can have more.

(A caution: I recommend selling enough liquid assets to enjoy a high quality of life. This should not be interpreted as advocating the liquidation of businesses. Capital decumulation is economically harmful. And in practice it's unnecessary; a profitable business can be sold rather than shut down. And an estate large enough to hold a business is so big that it's not likely higher personal consumption would much affect it, anyway.)

The previous example may be clear, but the idea is more broadly applicable. A middle-aged person in good health who has a $5 million net worth probably doesn't need to save any more for retirement, either! There's no reason for such a person to drive a worn-out car and eat the cheapest bread. They can afford better things that would improve the quality of their life without jeopardizing their goals. Just as it is wrong to live above your means, it is also wrong to live below your means. It is wrong to sacrifice your quality of live in pursuit of a goal that you've already met. When your goal is secure, recognize that fact and change your behavior accordingly.

The difference between a frugal person and a parsimonious one is that the latter literally doesn't know when to quit.

On the personal side of this issue, my "problem" is that I'm easily contented. For example, I have no particular desire to buy a high-definition television. My television viewing is modest and is typically programming that wouldn't benefit much from high definition. Shopping for and installing the unit would be a lot of hassle and it doesn't seem worth the time and effort.

July 20, 2006

Network Neutrality

My apologies for being so tardy to the debate. Network neutrality was a hot topic on blogs several weeks (maybe months?) ago, but I didn't weigh in at the time because I thought the analysis was short and I wouldn't have much interesting to say about it. I'm writing now by special request… so I hope it's interesting.

The network neutrality debate has generated a lot of propaganda masquerading as information. I've seen a lot of online "explanations" of the topic that are worse than useless, based on straw man arguments and emotionally charged scare tactics. This should not be surprising — Congress is involved! :) You can always rely on politics to turn a reasoned debate into a cacophony of poor logic.

If you'd like to see the information Congress itself is getting, I encourage you to read some of the testimony before the Senate. The Wikipedia entry is fairly technically oriented and although I detect some biases, it does a mostly good job. If technology frightens and confuses you, just ask the ninja what he thinks. And read on to see what I think.

The argument from radical capitalist premises is simple, which is why I originally didn't chime in on this topic: The portions of the Internet that would be covered by potential network neutrality legislation are privately owned, and the owners — telecommunication companies of various sorts — have the right to exercise control over their network, their property, in whatever manner they see fit. Internet content providers and consumers are each free to bargain with internet service providers to reach mutually satisfactory and voluntary arrangements for internet access. Any agreement reached voluntarily is ipso facto permissible. The proposed network neutrality legislation would infringe upon internet service providers' freedom of contract (by prohibiting certain arrangements) and should therefore be rejected. Period, full stop. The campaign in favor of network neutrality legislation is transparently an attempt by certain internet content providers to use the force of government to gain a stronger bargaining position in negotiations with internet service providers.

There are strong technical arguments against network neutrality, too. The basic idea behind network neutrality is that all traffic should be treated equally, without regard to who produced it, who's consuming it, or what kind of traffic it is. That's a fine-sounding idea, but runs into the real-world problem that network capacity is finite.

There are two critical concepts to understand, bandwidth and latency. I'll use the standard plumbing analogy: bandwidth is like the diameter of a pipe, and latency is like its length. Bandwidth is a measure of how much data can move in a period of time, and latency is a measure of how long it takes for any particular piece of data to move from its source to its destination.

Different network applications behave differently when bandwidth is abundant or limited, and when latency is short or long. Some applications such as Voice over IP require short latency but relatively little bandwidth. This data could be given higher priority (to ensure a shorter latency) without much disruption to other traffic. Other applications like delivering movies over the internet require a large amount of bandwidth but are not very sensitive to latency. These two types of applications can coexist fairly well.

Combine both kinds of data in the same application, however, and you run into trouble. Videoconferencing, for example, requires both short latency and large bandwidth. It does not share network capacity well with other applications. But if all data is treated neutrally, as network neutrality proponents desire, this sort of application will be unusable if the network becomes congested. Other applications that are less sensitive to bandwidth and latency will be slower, but still usable.

The only way an application like videoconferencing could thrive on the internet is if it had guaranteed access to the network capacity it needs in order to operate well. Its data needs preferential treatment. Internet service providers are eager to provide preferential treatment in exchange for more money. Network neutrality legislation would block this possibility.

Network neutrality legislation is not neutral — it would pick winners and losers in the application space, making some kinds of applications (such as videoconferencing) impractical over the broad internet because those applications require preferential treatment on the network in order to function acceptably well. A legal prohibition on paying for preferential treatment would prevent a whole class of potentially exciting applications from being viable.

I haven't said anything in direct response to specific pro-network-neutrality arguments. If you'd like me to address any particular argument, let me know.

July 17, 2006

Hillsboro Plane Crash

This year's Oregon International Airshow was cut short by a plane crash into a residential area. (National and local coverage.) I didn't attend the airshow this year, so I didn't see it, but I feel obligated to write about it since I'm probably the blogger living nearest to the event.

The crash was approximately one mile east of the airport, and just south of the Intel Ronler Acres campus. Here's a map.

The pilot was killed in the crash but there were no injuries on the ground. No one was home at the house that was directly hit.

There was also a crash at this airport last May but that one wasn't related to the airshow.

(Mom, I'm fine. And I'm still not worried about getting hit by a plane.)

July 14, 2006

My Backup Job

So, Intel is laying off 1,000 managers. I'm not a manager so my position is not at risk. But if I was, I wouldn't worry too much. I have a second career waiting for me … in the insurance industry:

Invitation for an interview from Farmers Insurance Group

I have no explanation for this. I have no background whatsoever in the insurance industry.

My only clue is a vague recollection that something like this happened to me about ten years ago. I remember looking through my mail when I was still a student back in Iowa and finding a solicitation something like this. I'm reminded of it because I think that much older letter was also about a position in the insurance industry.

This letter was sent to my current address in Oregon, so I expect that someone has my name and looked up my address. But why do they think I know anything about insurance? Maybe there's another Kyle Markley in the field, but whose address is more difficult to find than mine is?

July 07, 2006

A Few Words on the North Korean Crisis

I've been closely following the news surrounding North Korea's test missile launches a few days ago, and I've been very disappointed by some of the arguments being put forward. There are a few simple things that people need to know that clearly narrow down the set of acceptable options.

First of all, the diplomatic process must be multilateral to have any chance at all of success. It is not correct to view the option of bilateral negotiation from the perspective of "North Korea wants to talk to the United States directly, so why don't we sit down and chat?" No one is going to be friendly and giving — this is a negotiation, not a conversation. Each side is trying to exert influence and leverage over the other.

The United States would have a very weak bargaining position in bilateral negotiations. We aren't providing them with much (any?) humanitarian aid, so we have nothing to threaten to take away! It's the other members in the six-party talks who have this kind of leverage because they're the ones providing North Korea with resources. (Particularly China.) In bilateral negotiations we could offer the carrot of new aid or threaten the stick of a military response, but that's essentially it. Other countries could threaten to withdraw aid that North Korea desperately needs. That's a much stronger negotiating position. Bilateral negotiations could only result in our giving North Korea something it wants in exchange for a promise that they'll immediately break, just like they did in 1994. We can only lose by participating in bilateral negotiations.

Secondly, it's not a coincidence that China and Russia are blocking our efforts at the United Nations regarding both North Korea and Iran. Both countries wrongly believe that they benefit from a weaker United States. Their strategy is to make the United States spend its political capital on these crises instead of getting their own hands dirty. They want us to appear to be the aggressor in all things, so they can sit back and criticize and stymie us on the world stage.

Japan has the right idea, taking immediate unilateral action to impose sanctions. They're on our side and we can count on them.

The United Nations Security Council is an ineffective body. But more than that, it has to be ineffective. Its structure virtually guarantees it because its permanent members are rivals. You shouldn't be surprised that they don't cooperate and instead use the Council as a means to bully each other. It happened with Iraq, it's been happening with Iran, and it's starting to happen now with North Korea. Enough is enough!

The United Nations doesn't work. It can't work. It's an exercise in futility, a total farce, and we're wasting valuable time by involving ourselves with it. The United Nations building should be burned down and its smoldering embers dumped unceremoniously into the Atlantic Ocean. If the building were replaced by a hole in the ground filled with the unpaid parking tickets of the corrupt diplomats, that would be a large improvement over what we have today.

Thirdly, the diplomatic angle not the right way to deal with this situation anyway — either in North Korea or in Iran. The proper response to North Korea's missile launches is to destroy its launch facilities. The proper response to Iran's continued nuclear ambitions is to destroy its uranium enrichment facilities. North Korea and Iran have illegitimate governments, are hugely oppressive to their people, and are an objective threat to their neighbors. They are still part of the Axis of Evil, and they must be stopped.

If direct attacks create too great a risk of immediate war, there's an adequate alternative: use bombs with inert warheads, full of concrete instead of explosives. This would fully demonstrate our resolve and capability to destroy the targets while doing very little direct damage. It would send the message that needs to be sent. Insofar as the goal is to send a message, there are other good targets besides the military facilities. Drop a concrete bomb on the ruler's vacation home, for example. Nothing says "we mean it" like a concrete care package.

My favorite option, actually, would be for some other country to attack the facilities. But Russia and China wouldn't do it, South Korea is probably too afraid of provoking a ground war, and Japan is probably constitutionally prohibited because North Korea hasn't committed any recent overt acts of war. (I don't think its recent missile launches reached Japanese airspace.) I wish this were a realistic possibility, but it doesn't appear to be.

In any case, we should immediately eliminate all aid of any kind to North Korea and Iran. Resources are fungible; aid merely strengthens the ruling regime and allows it to pursue military capabilities to a greater extent while prolonging the suffering of the people.

Assassination attempts would be helpful, too.

July 05, 2006

Loving Bandwidth

Allow me to gush for a minute. I upgraded to Verizon FiOS broadband a few weeks ago, and just experienced my first "wow, that's fast" moment.

The trouble with having a ridiculously fast connection (15 Mbps down, 2Mbps up) is that it's difficult to make use of all that bandwidth. Web browsing is noticeably faster, for example, but it's not a dramatic improvement over DSL because it quickly becomes limited by the latency of making requests to the web server(s).

The largest improvements will be seen during large file transfers. On my old DSL plan (768Kbps down, 128Kbps up) I was limited to about 100KB/s download speed, and rarely saw over 40KB/s in practice. When I got FiOS and started seeing speeds of 150KB/s or (rarely) 300KB/s, I was excited, but knew that these speeds were still fairly slow.

Today I discovered a server that can send me data almost as quickly as I'm able to receive it. I'm trying to get a Java web browser plugin on an OpenBSD machine — a surprisingly complicated process that requires me to download and build the Java runtime environment from scratch (don't ask) — and learned that I can download from Sun Microsystems at 1.4MB/s (screenshot). Yes, that's megabyte, not megabit. Three quarters of my theoretical maximum bandwidth.

I remember when it took about 15 minutes to download a megabyte of data over a modem. Today it takes less than a second. Marvel at the relentless march of progress.

July 04, 2006

SPP Hysteria

There's something called the Security and Prosperity Partnership of North America that's gotten a few people worked up. I confess that I don't know much about the SPP. But I don't believe I have to, because the hysterical reporting convinces me there's nothing to worry about.

It's no secret that I don't like Lou Dobbs and don't watch his show, but I just saw a clip from Lou Dobbs Tonight and was highly irritated. From Lou's introduction:

… President Bush signed a formal agreement that will end the United States as we know it, and he took the step without approval from either the U.S. Congress or the people of the United States.

The content of the report is similarly hysterical. But it's noteworthy for being so utterly vacuous. It's all innuendo and suspicion, with absolutely no specific complaints. And the SPP is condemned for being what it is instead of what Lou wants it to be, viz. focused on North America instead of on the United States in particular. From Lou's conclusion:

I was asked the other day about whether or not I really thought the American people had the stomach to stand up and stop this nonsense, this direction from a group of elites in absolute contravention of our law, of our Constitution, of every national value, and I hope, I pray that I'm right when I said "yes". But this is beyond belief.

Sorry, but I asked for hyperbole as a side order, not as the main dish. This report didn't give me any reasons at all to be suspicious of the SPP. Nor did it explain the reasoning behind all this Constitutional scare-talk. But it did give me another reason to dismiss Lou Dobbs as a respectable source of information.

Anything that turns Lou Dobbs into a blithering mass can't be all bad.

July 03, 2006

Net Worth Report - End of 06/06

June was a fun month. The first two weeks brought a worldwide drop in equity markets. The losses were more-or-less steady in the United States, but sudden and sharp in many other markets. The last two weeks generally brought recovery.

In addition to the end-of-month calculation, I also rolled up my net worth on June 13th, the bottom of the market. This was an easy bottom to call and my only regret is that I didn't have more cash to invest at the time. I was illiquid due to a CD that unfortunately didn't mature until the end of the month. Curse those two weeks! I'm much more liquid now and will be watching for the next dip.

I was holding the CD as part of my credit card arbitrage strategy, and this was the cause of my liquidity crunch. You may recall that I recently had to pay off one credit card because I wasn't able to secure another 0% balance transfer. That CD held enough money to pay off the balance, but didn't mature until slightly after I had to pay off the card. I knew about the possibility of the liquidity crunch when I opened the CD, but decided to risk it. In hindsight I shouldn't have opened the CD at all, both because of liquidity and also because money market accounts turned out to offer higher yields for most of the period.

By this point you're probably wondering where the numbers are, right? Okay…

Net Worth Figures

At the bottom of the market, I was down to $424,221.48. In the first two weeks of the month I lost $15,000, and in the last two weeks I made $22,000. Volatility is fun.

Recall that I'm defining "Adjusted Net Worth" as net worth excluding the value of autos and unvested stock. The "Estimated Contribution" is how much money I believe I'll need to invest in order to meet the following month's ANW target. A declining EC indicates that I'm ahead of plan, and an increasing EC indicates that I need to save more in order to reach my long-term goal.

Goal-Tracking Figures
Adjusted Net Worth$404,501.19$410,882.92
Next Month's Target$406,814.01$413,615.26
Estimated Contribution$388.80$368.22

My credit card balances are 100% backed by time deposits and/or savings accounts earning interest at a higher rate than I'm being charged by the credit card companies. The monthly payment is estimated as 2% of the balance. (Most credit cards are now using a 2% minimum payment, and due to this it is important to have a strong cash flow and/or pay with funds from your credit card arbitrage savings account.)

Credit Card Arbitrage Figures
Balances @ 0% APR$31,934.98$31,768.11
Balances @ 1.9% APR$19.69$0.00
Total Balances$31,954.67$31,768.11
Monthly Payment$639.09$635.36

You can keep track of other personal finance bloggers at NetWorthIQ. I've updated my entry there.

Tiny Island