Apple University?

Is Jobs is the embodiment of Apple or is Apple already Jobsian, imbued with his ethos?

That, in a nutshell, is what the market would love to know most about Apple. Not what products are in the pipeline, but what the company's future will be once Steve Jobs leaves the stage.

Horace Dediu comments on a project that in 2008 was announced as "Apple University." The thinking then was that this was some sort of higher-education project along the lines of iTunes U. Today, however, Fortune reports that "Apple University" is actually an internal effort:

According to the article in Fortune and some additional details from another source, Joel Podolny has been building an understanding of how Apple is run. He’s then been asked to codify this understanding into a curriculum that can be taught to Apple employees.

Other companies have attempted to preserve and to pass on their cultures. In Silicon Valley "the HP Way" is legendary. "The AOL Way" is a bad joke. "The Apple Way"? Knowing Jobs' drive for perfection, I'll guess it will take its place alongside HP's rather than AOL's.

What remains to be seen, though, is whether it is possible to pass along Jobs' famous esthetic sense. Can tastefulness be taught? Is it possible to instill the intuition that tells one, "This is ready to sell"?

That esthetic sense is not limited to the entirety of a product. Jobs famously not only is able, but more than willing, to consider details most people would deem trivial. Nevertheless, he is not considered a micromanager because he doesn't typically get wrapped up in them: only the metaphorical rough edges capture his attention.

The other, seemingly magical component to Apple's success in the last decade has been the company's ability to identify viable markets for new products. The company's track record has been enviable, if not quite perfect (e.g., Apple TV), but what isn't clear is how much of this track record is due solely to Jobs. If "the Apple Way" can inculcate whatever abilities are needed to continue this pattern of successful diversification (without loss of focus), the company's future is secure.

(Daring Fireball provided the link to the Fortune article.)

Living happily

The art of living happy is, I believe, the art of being agreeably deluded; and faith in all things is superior to Reason, which, after all, is but a dead weight in advanced life, though as the pendulum to the clock in youth.

Humphrey Davy (1828), quoted in The Age of Wonder: How the Romantic Generation Discovered the Beauty and Terror of Science, Richard Holmes (2009)

For a scientist, as Davy was, to express such sentiments is a bit surprising. However, I'm not quite at the stage of "advanced life" Davy was when he wrote this, so for all I know I might be ready to embrace some degree of delusion in my later years.

India and Pakistan

We (the U.S.) gave one a ton of money. We gave the other the back of our metaphorical hand. So, uh, how did that work out for us?

The New Yorker has the answer.

(Spoiler alert:

India has become the state that we tried to create in Pakistan. It is a rising economic star, militarily powerful and democratic, and it shares American interests.

And:

If the measure of our aid is the gratitude of the Pakistani people and the loyalty of their government, then it has clearly been a failure.

Or maybe that wasn't such a surprise to you? Well, read the article anyway, because there are a lot of unsavory facts about our involvement with Pakistan that U.S. taxpayers really should know.)

The deficit in chart form

James Fallows in The Atlantic headlined his piece, "The Chart That Should Accompany Every Discussion of Deficits,", and indeed, that chart would cut through a lot of nonsense coming from unrepentant trickle-down proponents. The chart elegantly captures the amount of the U.S. deficit projected from 2009-2019, in trillions of dollars, due to each of five factors:

• the wars in Afghanistan and Iraq
• the George W. Bush tax cuts
• the recovery measures
• the costs associated with TARP and bailing out Fannie Mae and Freddie Mac
• the economic downturn

The economic downturn is a large and persistent factor, as you'd expect. The TARP and Fannie/Freddie costs were significant in the last couple of years but practically vanish going forward; the recovery measures, too, loom large in the shorter term (until 2013) but drop to a relatively small amount after that.

The cost of the wars is a persistent burden over the decade, like a layer of fat over everything else, accounting for hundreds of billions in spending every year.

However, by far the biggest contributor to the deficit over the decade are the Bush tax cuts. Right now their impact rivals that attributed to the economic downturn; by 2014 they outstrip the downturn's effects, until by 2019 they dwarf the latter.

I have never been tempted to include a graphic in this blog -- until now. However, by way of compensation, let me point you to the source for this chart, the Center on Budget and Policy Priorities article "Economic Downturn and Bush Policies Continue to Drive Large Projected Deficits." The CBPP article provides important context for the chart.

"Paper Tigers," Wesley Yang

Are you Asian-American? Then you must read Yang's article in New York magazine.

“The loudest duck gets shot” is a Chinese proverb. “The nail that sticks out gets hammered down” is a Japanese one. Its Western correlative: “The squeaky wheel gets the grease.”

Going along to get along is a strategy with built-in limits in an individualistic society like the U.S., but it is the strategy that Asian cultures inculcate with great success, even when the subjects have never set foot in an Asian country.

Interestingly, although Yang cites story after story reinforcing the need to break the Asian cultural straitjacket from within, he is ambivalent about putting in place yet another strategy-for-success for himself:

I see the appeal of getting with the program. But this is not my choice. Striving to meet others’ expectations may be a necessary cost of assimilation, but I am not going to do it.

Often I think my defiance is just delusional, self-glorifying bullshit that artists have always told themselves to compensate for their poverty and powerlessness. But sometimes I think it’s the only thing that has preserved me intact, and that what has been preserved is not just haughty caprice but in fact the meaning of my life.

Sounds like Yang is yet another passing stranger. More power to him.

Algorithmic complexity in financial markets

A fascinating essay by Donald MacKenzie in the London Review of Books is a good introduction to the software used to conduct certain kinds of automatic trading on today's exchanges. The programs attempt to spot significant leading market indicators like atypical buy or sell orders, or unusual share price fluctuations, and to respond to them before the rest of the market can do so. Of course, would-be buyers and sellers are both using software, so computers essentially are vying with other computers for market advantage on behalf of their human or corporate masters.

The prospect of making large amounts of money in this way has led, rather naturally, to an arms race: software on both sides attempts to gain advantage either by ever more clever concealment of buying or selling so as not to perturb the current share price unduly, or by ever faster recognition and response.

What the computers are doing is what human traders always have tried to do: take advantage of market inefficiencies to benefit themselves or their clients. Nothing here is illegal: no one is acting from a privileged position, e.g., as an insider with non-public information. However, the interaction between programs can have unforeseen consequences, such as the "flash crash" on 6 May 2010 that caused overall U.S. share prices to fall by some six percent in less than five minutes.

An investigation of the crash concluded that an innocent attempt to carry out a large, but not unprecedentedly large, sale of futures contracts triggered a feedback loop in which trading software, behaving exactly as designed, was driving down the price of such futures at alarming speed. Automatic "brakes" (enacted via software, of course) were applied by the exchange in which the futures were being traded, temporarily suspending trading. The safeguard was designed to allow human investigation of, and intervention in, such atypical occurrences. The pause worked, in the end, but not before the market tripped over more automated behavior, namely, the inability, by design, of some of the software to cease trading entirely.

I'm glossing over details in MacKenzie's account (and MacKenzie's account itself is undoubtedly a gloss on the actual details), so be sure to read it for yourself. The point to take away, though, is that the safeguards built into all this software are limited. The trading pause imposed by the exchange, for instance, was five seconds. That pause was not intended for computers, remember: it was designed for human beings to investigate possible computerized misbehavior.

This is a situation that in the terminology of the organisational sociologist Charles Perrow is one of ‘tight coupling’: there is very little ‘slack’, ‘give’ or ‘buffer’, and decisions need to be taken in what is, on any ordinary human scale, a very limited period of time. It takes me five seconds to blow my nose.

To quote one description of Perrow's concept of tight coupling,

Tightly coupled systems are highly centralized and rigid. Output is closely monitored within specified tolerances. Subsystems are interdependent. Change causes massive ramifications throughout the system. Tightly controlled time schedules with little slack are sensitive to delays. Production sequences must be strictly followed. Substitutions are not easily accomplished and equipment breakdowns can bring the entire system to a halt. Safety features must be designed into the system because human intervention is not easily accommodated. Emergency override features may be built-in, but systems design makes on-the-spot, field expedient solutions difficult.

Moreover, "the market" sometimes consists of a set of "trading venues," each with its own set of software controls, the whole coordinated nowhere by anyone. This kind of market undoubtedly is complex beyond the ability of any person to understand. And here we come to the heart of the danger MacKenzie sees:

Systems that are both tightly coupled and highly complex, Perrow argues in Normal Accidents (1984), are inherently dangerous. Crudely put, high complexity in a system means that if something goes wrong it takes time to work out what has happened and to act appropriately. Tight coupling means that one doesn’t have that time. Moreover, he suggests, a tightly coupled system needs centralised management, but a highly complex system can’t be managed effectively in a centralised way because we simply don’t understand it well enough; therefore its organisation must be decentralised. Systems that combine tight coupling with high complexity are an organisational contradiction, Perrow argues: they are ‘a kind of Pushmepullyou out of the Doctor Dolittle stories (a beast with heads at both ends that wanted to go in both directions at once)’.

Like our computers themselves, whose software environments long ago exceeded any human being's ability to understand them in toto, the software-mediated trading environment we have created is a system we simply do not understand. Until or unless humans develop a new science of "accident avoidance" that doesn't require full understanding of complex systems, there will continue to be unforeseen consequences of innocent activities in our markets.

(Thanks to The Browser for the link to MacKenzie's essay.)

Why bin Laden had to die

It's pretty obvious to me why a live, captive bin Laden would have been inconvenient to the U.S. government, but in case you'd like to see the reasons bin Laden had to die rather than be captured laid out in black and white, Prof. Paul Campos set them out in the Daily Beast. The bottom line:

The killing of bin Laden illustrates how the war on terror isn’t really about pursuing rational policies designed to lessen the already-small risk of terrorism, but rather about appeasing a nation in the grip of deeply irrational, but politically useful, fears.