The cost of individualism

Here in America, we tend to favor the individual rather than the collective in a philosophy known as individualism. We covet and admire the lifestyle of the self-made man, the millionaire who did it all himself, the Madonnas who created their independent fortunes and the rugged individualist. Few can attain such a status, fewer still can actually walk the talk for all their "independence."

So how has that been working out for us? Like many of us, I read the news everyday. Everyday, there is a new problem to be solved. But what is the source of the problem, individual or collective? Are individuals really capable of solving the problems we face, all by themselves?

There are three examples to explore today, in this blog: cyber-security, health care, and the environment. In each case, I attempt to demonstrate the cost of individualism vs. the collectivist culture.

I bring this idea up for several reasons. I had the good fortune to have visited Vietnam a little more than a year ago, twice. While I was there, I noticed something quite striking, in contrast to America: the Vietnamese value cooperation over competition. They seem to have recognized that although it's possible for one man or one woman to solve a problem or attain great achievements, everyone needs to get involved to overcome a challenge. What I hope to demonstrate here is that we need to heed the example of Vietnam and others like them.

In contrast to Vietnam, this country is in a state of hyper-competition. Everyone here is looking out for number one. Anyone who has taken the time to study the example of Microsoft will see that they are constantly at "war" with others. When Steve Ballmer does one of his pep-talks, he is literally boiling over with enthusiasm for his company, his products and his plans. There is nothing wrong with enthusiasm such as his. But many companies have partnered with Microsoft only to become the latest litigation carcass left over after Microsoft has accomplished their goal. Microsoft is the perfect example of competition at any cost as a corporation.

This one-man show, go-it-alone example doesn't do so well in the context of cyber-security. By now, some of you have heard of "botnets", a group of computers that have been infected by a virus or trojan and turned into a "zombie" computer. A botnet can contain hundreds of thousands of computers as a group commonly known as a herd. A zombie computer is a computer that, unbeknownst to the owner, has been turned into a servant of a secret network of computers. This network will send spam, distributed denial of service attacks and collect credit card and other personal information to be used for stealing money. All the known botnets run on Windows computers.

For many years, Bill Gates, one of the founders of Microsoft, has preached the virtues of proprietary code. Creating proprietary code requires a significant level of secrecy, and that requires independence. Yes, they are the biggest software firm in the world. And they have a nice chunk of liquid cash to prove it. But contrary to the image of independence they promote, they are supremely dependent on developers. So they create developer tools that increase dependence on Windows. And They create products that depend on Windows. A case in point is Silverlight, a competitor to the Adobe Flash software so commonly used in places like YouTube. Microsoft makes a point of making Silverlight only for Windows so that people will buy Windows. Yes, there is a version that will run on Mac and Linux (Moonlight), but as Steve Ballmer likes to say, it will run better on Windows.

Microsoft was basically asleep at the wheel when the Internet came up behind them and passed them by in the 1990s. Along came Netscape which scooped up 80% of the marketplace before Microsoft could blink. So what did Microsoft do? In order to buy time, they changed the programming interfaces for Windows without telling Netscape so that the Netscape browser wouldn't work properly on Windows. At the same time, Microsoft got to work building their Internet Explorer browser to compete with Netscape and gave Internet Explorer away for free with the operating system. Netscape is now only a shadow of what it once was. Netscape has been resurrected as open source software in products like SeaMonkey and Mozilla Firefox because the only way they could compete is as a free product.

As someone who works in IT, I've learned something about the "monoculture" in computers. Microsoft has created a huge monoculture of computers with a 95% market share for desktop computers. The weakness of a monoculture is that when all computers act the same, one weakness will affect all computers with the same program. This explains the success of viruses on Windows computers. And who is providing the updates to these computers? One lone source: Microsoft.

This monoculture might explain the problems discussed in this article, which states we are losing big-time in the cyber war against the rest of the world. Windows is turning out to be our biggest liability when it comes to security in government and corporate infrastructure. There is a long and rich history to explain why this is that I can't get into it here, but if you'd like to read more on the subject, go here (scroll down to Security for more).

On the other hand, with Linux, there are many distributions of Linux. Many features of Linux actually comes from Unix. It was created in 1969 by AT&T with the notion that no single user should be able to destroy the work of another user on the same machine. Security was baked in from the start. That is one reason why you won't see many viruses running on Linux. For a virus on Linux, propagation is very difficult, and death is very quick. This not to say that Linux is impervious to virii. Linux is just a lot harder to break.

All software comes from source code. When a programmer writes source code for software, he will include notes in the source that provide documentation on the action of a section of code. When the programmer is ready to test, run or distribute the software, he will run the code through something called a compiler. This strips out the documentation known as comments, and converts the source code into binary code that the computer can understand and run. This binary file is what you get with Microsoft. With Linux, you get the source code and the binary, free and open source software (FOSS).

Instead of being developed by one company, Linux is developed by volunteers all over the world. Instead of closing the source code for the software, as Microsoft does, the source code for Linux is free for all to see and licensed under the General Public License. Everyone, including programmers, is free to run the software for any purpose they desire. They can also look for bugs and fix bugs and to make improvements. They are also free to distribute the binary code as long as they make the source code available to the community. This sharing of the code is what makes Linux so powerful.

As Eric S. Raymond said, "A thousand eyes makes all bugs shallow."

I offer this example to show the contrast between competition, as embodied by Microsoft and cooperation, as embodied by Linux. Microsoft tries to feign independence while mooching off of the rest of world for support of it's operating system and while charging for it. Free software communities acknowledge the complexities of the software and the need for collective review, repair and upgrades of the same software. Their effort to create better software is shared. The result is used like a utility. It is any wonder that the fastest computers in the world are running Linux?

Now lets turn to healthcare.

We're in the worst recession in 75 years and we're fervently looking for a way out of the mess we created. 5 years of war, a bass-ackward tax policy going strong for eight years, and lax regulation of securities have contributed to the mess. All of them are based on the premise that the individual is more important than the collective. We did the war, essentially alone (sorry, England doesn't count), prompted by little or no evidence that the war was necessary. The tax policy was based on the idea that rich individuals would spend money rather than hoard it. And the lax regulation of securities (securitized mortgages, credit default swaps, etc.) was based on the notion that the securities industry would regulate itself. On all of these fronts, we have been proved wrong.

I saw this very interesting opinion article in BusinessWeek. The statistics cited in the article are disquieting if not downright alarming. Here's a sample from the article:

• The country (US) spends a world-beating 16% of gross domestic product on health, yet in international comparisons it lags behind a number of key measures.
• The U.S. ranks 29th in infant mortality and 48th in life expectancy.
• The number of people without health insurance was 38 million in 2007, and that number is guaranteed to have risen in the meantime with the recession that began a year ago.

A lot of this stems from severe mismanagement of the insurance companies. Take AIG, for example. The excesses of that company has been well documented with their lavish parties and executive bonuses. Were they thinking of their customers? Probably not. Perhaps they were a bit too focused on the next tax cut. Evidently, the largest insurance company in the world was busy making insurance more expensive for the rest of us. And that includes health insurance.

The health insurance industry is so focused on profits that the list of pre-existing conditions will only grow longer. As more and more people are excluded from health insurance due to pre-existing conditions, the cost will continue to increase for those that can participate. And so on as more and more people are excluded on costs alone. I thought that the whole point of insurance was to distribute risk among a large population.

Worse still, a recent study suggests that about half of all doctors would quit their practice given the chance for an alternative. This is symptomatic of insurance and government policies driven to cut short-term financial costs of health care. Paperwork is being used to exclude treatments in the same way that pre-existing conditions are being used to exclude people from access to health care. It seems that not only are people being encouraged to go it alone, they are being forced to do so.

I've never really been a big fan of socialized medicine. I see the "other people" gorging themselves to oblivion on fast food, alcohol and tobacco. I see them raising my insurance rates, even though I try to take good care of myself. Why should I have to pay for their stupidity?

Some of you have probably heard of NASE. They have a very interesting concept: allow the premiums to accumulate as savings for each subscriber. When they turn 65, refund the balance after subtracting the costs for service. This is a great idea, since it encourages people to take good care of themselves so that they have a nice retirement fund when the time comes. But in practice, it hasn't worked so well for the company, probably also due to poor management. There have been some horror stories that paint an unflattering picture of the company. In an ideal world, I'd like to see something like this really work.

So, unfortunately, the facts do not bear out any clear successes for capitalist style health care in terms of distribution. Sure, we have the best health care in the world, but who can really afford it? Socialist countries seem to be getting along fine with lower mortality rates and lower customer costs for care. A recent New York Times op-ed article is making a very strong case for Universal Health Care where no one is denied and everyone pays in one way or another. This guarantees complete distribution of risk and funding at the same time. And there appears to be a way to reduce the paperwork by focusing on preventive treatment rather than exclusion.

Health is inextricably tied to the environment. Some of you might be old enough to remember that President Nixon of the Republican Party proposed and helped to create the Environmental Protection Agency. But for some reason, over time, two Republican presidents surnamed Bush, have lost their way and tried to emasculate the EPA. Our current president has done the most damage by restricting or eliminating the power of the EPA. Apparently the neo-cons forgot that they are stewards of the earth, and their creator may not look so kindly upon their achievements. In the last few years, I have read of their second thoughts about passing legislation that would limit or remove power from the EPA.

It's easy to see the schizophrenia of the Republican Party these days when it comes to the environment. They want to gut the EPA and let the market decide how to care for the environment. The market on the other hand, is not satisfied by a clean environment, it's satisfied by money. Obviously, polluted land doesn't have much value, even if you live in Palos Verdes, California. Since the neo-cons took control of the Republican Party, they seem bent on consuming and destroying as much of the natural resources as possible, you know, before the second coming.

For the last eight years, the United States has been loathe to sign any treaties that would help the environment, in particular, the Kyoto Protocol, citing potential for serious harm to the economy of the United States. Here again, the economy rules supreme above the environment. Apparently, there was no discussion of the green collar jobs that would be created given the constraints of the Kyoto Protocol.

And now there is a new treaty designed to replace the Kyoto Protocol. And again, the United States will not participate, yet. It appears that with a new administration on the way, there could be significant change in attitude and action. As a nation, we have an opportunity to demonstrate leadership in protecting the environment, despite what other countries do.

As the world looks to us for leadership, they must be wondering aloud as to what we're thinking. Three countries, the US, China and India produce the majority of greenhouse gases. The US by itself uses 25% of the energy produced worldwide. And under the guidance of the Bush Administration, the US has proven to be unwilling to cooperate with other nations to limit greenhouse gases.

Global Warming and the consequences thereof, whether induced by man or not, is a problem we all face. The US cannot hope to solve the problem on their own without cooperation from other nations, and vice versa. Going it alone is not an option, particularly when we look at the amount of landmass we stand to lose from rising sea levels.


In the realms of cybersecurity, healthcare and the environment, we will need to work together to solve our common problems. I offer the foregoing as examples and incentive to work with each other, and to reason things out. We must work with others internationally, nationally, and locally to solve the problems we face.

Whether it's capitalism, communism or soclialism, no system seems to work perfectly for everyone. But one thing is certain: so long as we continue the idea that it's "every man for himself" and that men and women continue to pursue advantages and control over one another, no system will work. Under those conditions, people will continually game the system to assert an advantage or to attain a sense of security.

As soon as we realize and live as if we're all in it together, then we can solve all the problems we experience together. It is my hope that under the new administration, cooperation will be valued over competition.

Zero Sum Game

The zero sum game idea says that when I win, you lose. In the economic sense, as I make more money, there is less money for you to make, too.

Now consider the trends of the last 20 years or so: as executive compensation reaches stratospheric heights, the top 10% of the earners in this country are earning almost 50% of the available income in the economy. And the top 1/2% are pulling far away from the rest of the top 10%, too. That means it's getting really tough for everyone else to earn money.

What will people do when faced with the problem of trying to feed their children, themselves or just have a place to live? There is a tendency for people to turn to crime when the economy gets hard and cold. And with advances in technology, the opportunities for low risk, non-violent economic crimes increase. Take spam, for example. Who among us has not received spam? Any women out there *not* getting emails proffering male anatomical enhancements?

Just who are these people who ship spam with their assortment of products and malware to boot? Are they trying to put braces on their kids' teeth? Sending their kids to college? Or are they just trying to make it big in an already crowded market?

The point I want to make here is this: when the wealthiest earners are already taking close to 50% of the economy, and they need to feel like they're achieving something, they're only going to hoard more. That means the rest of us have to work a lot harder just to make ends meet. If you don't believe me, ask Robert Reich, a former official in the Clinton Administration. To paraphrase, "giving wealthy people tax cuts to get them to spend more money isn't going to work; they've already spent all they want to spend and they could easily save the rest."

"Wait," you say, "those wealthy people will invest in the economy with their money!" No, they will buy Credit Default Swaps.

In the current financial meltdown, some very smart people took a huge risk with credit default swaps (CDS). A CDS is basically insurance on a debt, such as a bond, or a mortgage. A bondholder gets nervous about his investment, so he buys a contract that allows him to share the risk with someone else. A CDS says, "I'll pay you 2-4% to share the risk of the debtor on this bond in the event that the debtor defaults on his payments." The reason for the meltdown? More than one institution or entity bought a CDS on the same credit obligation for the same debtor, the companies who sold them did not make the contracts known to the public or the government, and there were no requirements for the seller to maintain reserves to pay off the people who called their option on the CDS. Like I said these investments were created by really smart and wealthy people.

It would seem that this is the free market economy in action. But when these same investors saw that they could lose their investment, they went to the government to get help. So, on the one hand, they didn't want regulation of their investment, and on the other hand they created a situation that required government involvement and financing to fix it. Now regulators and legislatures are waking up to the need for adult supervision of CDS transactions.

But I'm afraid we're in a catch 22. Wealthy people can always pay for the legislation they want. Which means, if they're "too big to fail", they can make the government pay for their mistakes. Being too big to fail means they can take the economy down with them. That means the rest of us will pay for their mistakes in taxes.

Some have commented on the incentives to take such risks. Imagine that you're making $2 million a year as head of an investment firm and you manage $20 billion or so. You want to feel like you're really spending money when you go shopping, so you go to Needless Markup...I mean, Neiman Marcus, to shop for some new clothes. The amount of money you spend will tend to scale with the amount you make. But the amount you save will just be a lot more than the rest of us, unless you're Michael Jackson.

The same is true for making money. If you're making $2 million already and you want to get a raise, the chances are pretty good that there isn't much more room for a raise if 50% of the gross income in the country is already spoken for. Finding a legitimate means of making more money becomes harder and harder as the money supply is consumed by the uber wealthy. This is even worse if the Fed shrinks the money supply, you know, M3. Wait. They don't publish M3 anymore. What's up with that?

Now don't get me wrong here. I believe in capitalism to a certain extent. If you're doing good work, you deserve to earn money from it. But notice how everything came together to create an organized catastrophe. People wanted to buy homes before they got locked out of the market. Real estate investors wanted to make money so they encouraged home buyers to hurry up and buy before it's too late. To help those tardy home buyers, really creative financiers wanted to make more money, so they created wacky mortgages with adjustable rates with payments that increased 50% or more after a set period of time. People who bought CDS instruments could see this coming and $65 trillion of domestic and international investment money was diverted to betting that *other* people would default on their loans. Ha, ha. Did somebody say "infrastructure"?

This unregulated and under-reported investment system gave rise to risk that investors were not willing to finance themselves. So the rest of us are financing it, and that is the zero sum game. No wonder health insurance is so expensive. I say this because AIG, formerly the largest private insurer in the world, was hip-deep into CDS investments. And it turns out that the government will start to report on it so that we know who did what and when with these instruments. AIG is just the tip of the iceberg. On November 4th, we're going to see just how deep the other insurance companies got into it, if they still are.

Oh, and by the way, I hear that John McCain is really worried that Barack Obama will "spread our wealth around." He must be talking about the maintenance payments the rest of us will be making, as taxes, to repay the debt that will have to be sold to finance the bailout. A bailout for McCain's most ardent supporters, really big corporations who bought into this mess in the first place. So, who exactly will be paying for this? People who can buy the legal counsel wise enough to limit their exposure to taxation? Hmmm, probably not.

Perhaps spreading the wealth around might just be the best thing we could do to get the economy going again.

Casting the Winning Vote

In the last two presidential elections, there were some spoilers from third parties. For example, many of you have heard of Ralph Nader, who has run his campaign from a variety of parties and platforms. As he ran against Bush and Kerry, he received a lot of criticism for dividing the Demcratic vote. But he had every right to run.

I also remember Richard Boddie from the Libertarian party when he ran against an Orange County Republican Bob Dornan for a seat in the House. He drew enough votes from the Republicans to allow a victory for Loretta Sanchez. Not only that, but he went to the local Republican Convention to pass out fliers promoting himself for office while bragging about what he did to split the Republican vote from Dornan. Ha, ha. For this year, here's an interesting story about Bob Barr that you might like, too.

Yesterday, I went to the registrar of voters to verify my registration to vote. And while I was at it, I saw that there was early voting, so I voted, too. There is good news and bad news. The bad news is that Diebold voting machines are still in use. The good news is that they are running a paper ticker that records each vote for verification later. Hopefully, there won't be any lost votes, changed votes, or other such controversies. But I can now say that I have voted in Utah, I have a Utah license plate, registration, and drivers license. I'm a Utahn...I guess.

I'm kind of libertarian, liberal and conservative. I take what works for me and I leave the rest. I used to be Republican when they were the party of freedom. Now the Republicans would prefer that I am not able to bring my own water aboard an airplane. They want to have ready access to my email (PGP, anyone?), my phone calls, my bank statements - pretty much everything - just in case I happen to have dinner with a terrorist. We used to have "probable cause" now we have "the police state". This from a political party bent on wining an unwinnable war, making enemies around the world and then acting insulted when their authority is questioned. Perhaps they have forgotten what it means to have faith.

But I digress. Back to the voting thing.

I've talked to many people over the years about voting for third parties. When I mention someone like John Hagelin, who ran for the Natural Law party in the 2000 election, I say that I would have voted for him if I had known more about him. He's a particle physicist who can bring an entirely different point of view to the office of president.

When I look in the eyes of the people who wanted to vote for a third party but didn't, I see the real tragedy of American politics: the desire to be on the winning side. I can remember debates about whether or not to show the news relating to precinct reporting of votes on the east coast to the west coast. The debate centered on this very issue. The concern was that if people on the west coast knew how people on the east coast were voting, they'd change their vote so that they could be on the winning side. Sure enough, millions of people changed their vote over the years just to be able to say "Yeah, I voted for the winning guy!" How stupid is that?

There is a similar issue afoot in this and every election. We know now that there are a plethora of third party candidates, and there are quite a few of them on the ballot for president this year. Will people vote for them? Somebody will. But my conversations with people who had a desire to vote for third party candidates reveal something else, and they go something like this:

Me: So who do you like for President this year?

Hiim: Oh, I like Ralph Nader. He says that every child who graduates high school should know how to use the Freedom of Information Act and the Privacy Act to get documents about themselves from the government. We need open government laws and I like that.

Me: Are you going to vote for him?

Him: Are you kidding? That would be a wasted vote! I'm voting for Obama!

Me: So how will your guy ever win if you don't vote for him? I mean, if you're not voting for the guy you want, aren't you just wasting your vote, anyway?

Him: Doh!

See what I mean? The two major parties are depending on the heard instinct to deter us from seeking alternatives. And they know we want to be on the winning side. We want to make sure our vote isn't wasted. So we get two political parties that can pretty much act like one, by precluding any meaningful choice in the elections.

There is one more element in American politics that hasn't been discussed much on national television: equal time. When we watch Meet the Press, or the debates, do we *ever* see a third party candidate get into an argument with either a Republican or a Democrat? I know I sure haven't. Have you? Those debates can get really messy. Does anyone remember what happened with Jesse Ventura?

How can people even get to know the third parties if network television isn't even willing to give them the air time - FREE airtime - that the two incumbent parties get? I guess the greatest fear of network television corporations is that we might actually get a chance to compare Democrats and Republicans against third parties. Hey, if we're watching network television, we're probably not paying for the advertising.

So ask yourself, are you feeling lucky? Are you willing to cast your vote for the guy you really want, or do you just want to be on the winning side?

The Cash Society

As we stand before the precipice and look down, we need to take inventory to see how we got here. The 30 year mortgage has been around for a long time, and recently, within the last 30 years, it has gone through some permutations. As some may recall, around 2003, the Adjustable Rate Mortgage (ARM) became wildly popular.

The decision to create, market and finance ARMs turned our fortunes. Think about the brokers who sold them. Where are they now? Some could see this current crisis coming, but few were willing to openly answer the obvious questions: what happens when the rates start to adjust? As payments on these loans began to increase, so did late payments, defaults and eventually, foreclosures.

Setting that aside, lets look at the 30 year mortgage on its own. A simple calculation reveals that a mortgage paid at 7% annual interest, assuming 10% down, will more double the cost of the home you buy over 30 years.

The pattern is similar for auto financing. The interest costs are significant for autos and they can increase the cost of the car often by 50% or more over time.

Now lets look at credit cards. Some people are lucky enough to have 0% or a low 5-6% interest rate on the balance. This makes the cost seem negligible relative to the benefits and convenience of credit. If you miss a payment, however, the fine print says that your rates could go up significantly. The rates for credit cards held by teetering payers can shoot as high at 30% or more.

The bottom line is that all forms of credit make everything more expensive. Everyone has heard of inflation. We see it all the time in the news. And there are so many ways to measure it, too. Inflation is defined as an increase in the cost of goods over time. While the cost of a broom may rise over time at a constant rate, the cost of food and fuel can fluctuate wildly.

Credit is a hidden form of inflation in the sense that we aren't really trained to see how much it costs. This concept gets some lip service when we go to school. But instead of being taught how to avoid it, we're taught that the cost of credit is the cost of doing business. It's assumed to be unavoidable. This leaves an indelible impression upon a young mind.

For many Americans, credit cards have been used to maintain a standard of living. It is not unusual for people to accumulate $10-20,000 in personal debt through credit cards. This debt is often accumulated through the use of credit cards to pay for living expenses when the economy is slow. Many will use credit cards to purchase vacations and luxury items they couldn't otherwise afford. But few if any can imagine a life without using credit.

 I know at least one man (whom I admire deeply for his business savvy) who doesn't need credit in the sense that most people are familiar with. He built his business on cash. He pays his invoices early for the discounts he receives from the vendors who offer early payment discounts. He owns all of his equipment, and the building from which he runs his business. And since he has no debts, he doesn't panic when the trade gets slow. He just lays people off and reduces purchasing until the level of employment and the need for materials matches the rate of business that he's doing. When business picks up again, he hires and buys.

Without loan payments to make, which are constant over time, he can adjust his cash flow with the business instead of with the bank.

Credit doesn't just make everything expensive due to the interest paid on the loan. Credit is used in this country to create artificial demand. This demand increases prices. That's why the crowd goes wild every time the Fed drops their rates. And I dare say that credit also creates a pool of cheap, skilled and willing labor, tied to the ball and chain of debt. Whichever came first is still in debate.

Let's look at the hidden costs of credit at the checkstand in simple terms: if you don't have the money, you can't buy it. But if you have credit, you can just pay it off over time. This increases demand for goods and services. And demand creates inflation.

As to the labor pool, here's the big picture: You are employed. You have a home loan, an auto loan, and maybe a few college loans, a few credit cards and a family to support. But you have no savings. A vacation is a far off fantasy without a credit card or a line of credit on your house. Worse, you can't choose the job you want or the pay that you want because you have to keep working to keep making payments.

Imagine a parallel universe where you have a year of expenses saved up. Now you can kiss your boss goodbye (ew!) on good terms, and take your time finding the job you want. Or you can take a month off to reassess your direction in life. Whatever. You have a contingency fund to handle most small emergencies, too. With a year of expenses in the bank, the bank wants you to stick around. Like I said - it's a parallel universe.

Now there's a study in contrasts. Why didn't we do this from the beginning? Maybe most Americans are masochists who need someone like a banker to help them.

Remember how much fun we were having as we watched home prices double in Southern California (and spike unreasonably fast elsewhere)? That was due to increased demand for homes created by "creative financing" mortgages. By creating easy money loans, people suddenly had the money to get into the housing market. That is the kind of demand for homes we saw then that could never have happened without ARMs.

Without ARMs, people who wanted to sell their homes would have had to either lower their prices or wait. And that is exactly what is happening now. The ARMs are gone. Prices are falling and people are waiting rather than selling.

Without easy credit, prices will have to fall. There is no way for the economy to quickly correct itself. But from a practical standpoint, we are not completely powerless over inflation. If we live within our means and buy what we need or want with cash, we can keep inflation in check. Confused? Let me explain.

If people refused to borrow money and instead chose to save their money, what would happen to the economy? Producers and sellers would have two choices: lower their prices, or wait.

Now consider this: saving money and only using cash is not just a choice, this way of life creates choices. When you use credit, you are dependent on someone else to make the decision for you. In a credit - I mean, debt economy - the bankers make the choice for you. They decide if you will buy something or not.

But if you have the money in the bank, it's yours to spend. And the banker is going to pay you interest if he wants you to keep your money there. It's not so much that you're in control. You simply have more choices available to you. And by tempering your demand with the amount of money you have on hand instead of borrowing, you help to keep prices down.

A cash society lives on the cash they earn, and has more control over prices by controlling demand and can make spending decisions that are relatively unencumbered by the interests of bankers. Remember, a banker is only your friend to the extent that you are willing to pay him back on the loan, or to the extent he is willing to pay you interest on your deposits.

The choice is yours. Where do your interests lie? Pay or be paid?

Power and Money

A man has only as much power as other men are willing to give to him. Seems obvious, right? But how many people actually think of that and put it into practice?

Here's an interesting thought experiment. The richest man in the world goes to a small town on a road trip. We'll call him Bill. Before he arrives, the whole town is abuzz about his arrival and they learn that Bill has been pushing legislation that is contrary to the interests of the town.

When Bill arrives, he checks into a hotel. He talks to the clerk and asks about a room. The clerk looks and says, "Sure we have a room for you." Bill gives the clerk his name and hands him a credit card. Suddenly, the clerk announces that there is no longer a room available, and returns the card.

Bill is surprised and suspicious. So he leaves to try another hotel. When he gets there, he encounters the same result. A room is available until he introduces himself. He repeats this until he begins to become hungry.

He heads to a local restaurant to eat. But the restaurant knows who he is. He gets a seat, sure enough and the waitress comes to him to take his order. When he finishes giving his order, the waitress asks for his credit card. Bill is surprised by this, but he complies. She comes back to say they're out of food and that he will have to eat somewhere else.

Bill repeats this a second, and a third time. He sees that he needs gas. He worries that something isn't right so instead of trying to use the ATM directly, he goes to the little snack shop to pay there. He is instantly recognized by the proprietor as word has gotten around. While other people are filling up their tanks, the proprietor announces that "We're out of gas, sorry."

Bill confronts the proprietor with this crazy-making reality. "Excuse me, but people are still pumping! I'll give you cash!"

"No you won't!" says the proprietor. Bill is flabbergasted as the proprietor points to a sign above the door. It says, "We reserver the right to refuse service to anyone".

Bill is stuck. No food, no room, no gas. Bill gets really worried when he discovers, after a few phone calls, that this isn't the only town. It's worldwide.

This is the worst possible result of the social contract. When we refuse to acknowledge a man's power by refusing his money.

When we look to our leaders and wonder why they do what they do to the rest of us, we must also look to ourselves and wonder "Did we ask for this? Did we somehow give them permission to do this?" The most probable answer is, "yes."

Holding the Bag

Okay, lets say that they do eventually pass this bill (based on the latest news, it's not exactly a certainty). I heard on NPR that the Fed has $800 Billion in the bank, just looking for usury. So they lend this money to the government. And the security for the loan? Bonds. Lots of bonds.

How do these bonds get paid back? With taxes. For many people the connection between the federal debt, which is now limited to around $10 Trillion, and taxes doesn't appear so easily. The government has to sell debt when it runs out of money. And that happened a long time ago, long before many of us were born. So now we live in a debt economy.

Who buys the bonds? Other than the Federal Government with more than half the outstanding debt (I know, it's weird), foreign governments are the biggest customers taken together. China and Japan come most readily to mind. And then there is the rest of us. Many people have openly questioned what will happen if China and Japan decide to unload their bonds. The net effect is a weakening of our own currency.

When our currency grows weak, foreign goods, like oil, become more expensive, even if demand is low or flat. And one thing that the Bush Administration has been consistent about is weakening our dollar. That's a big part of what makes gasoline expensive to us. And they seem to think it's a plus. When oil was selling at $140 per barrel, there was a bit of press about how high oil prices are bringing jobs home. Nice. Here's one bizarre example.

It's easy to get lost in the details of the situation. Most people are very focused on the details of the pending legislation to fix the Wall Street crisis. But the big picture looks more like this:

• If you work for someone else, you're not going to be able to charge more for your products and services like a business can when the dollar loses its value.
• If you work for someone else, you're not going to be able to use your expenses to limit your tax liability like a business can.

Regardless of who you work for, if you don't have money to pay for the best in tax preparation and legal tax planning, you're not likely to be able to avoid the taxes that are coming to pay for this debt.

And that is the main problem with this proposed $700 billion bailout. The executives of Fannie Mae, Freddie Mac, AIG, Bearn Stearns, etc., all sang the song of free-market capitalism. Whether or not it's really a free market is open to question. And when it came down to owning up to their own mistakes, they want YOU to pay for it. It's only fair.

To put it another way, they privatize the benefits of capitalism while socializing the risks. Remember socialism? You know, the little brother to communism? That's what they're talking about. Big business works better if you privatize the economic benefits and socialize the risks. To put it in layman's terms: Executives keep getting paid even when you lose your job.

Since 1994, Republicans have been doing what they can to "de-regulate" the investment industry. Yeah, they de-regulated it alright. Anyone remember the failed experiment of de-regulating the power industry in California? I do. Power tripled in cost so that people like Enron executives could put their money in the Grand Cayman Islands as a safe investment.

The Bush Administration is really worried that the Democrats will load up the bill with restrictions, such as the restriction on executive pay for companies that get assistance from the government. I guess means testing is okay for poor people seeking welfare or unemployment, but for executives, that would be humiliating!

This week, they're "negotiating" on the terms of the aid. What I find interesting is that the negotiations are in secret. Why all the secrecy? It's our money too. Seems like they want to come up with a plan and spring it on the rest of. You know, like it's "now or never". At least Republicans are starting to speak up and point out alternatives other than handing the banks a big wad of money all at once. And then there is the insurance plan. Hmmm. Don't people buy mortgage insurance anyway? Now that I'm thinking about it, where are those insurance guys? The plan was submarined without informing Treasury Secretary Paulson. Some have characterized the effort behind this plan as a way to divert attention to McCain's "leadership skills".

I see also that the FBI is getting involved. It seems that there are four firms at the heart of the matter and they want to know why. And now they're letting people know that investigating the same companies for wrongdoing will be hampered when we give them a wheel barrel full of money to pay for their mistakes.

At the beginning of this week, we were talking about a huge bailout of the financial industry with almost no oversight or accountability. Democrats have been negotiating with the Bush Administration to require oversight. Many House Republicans still seem to insist that relaxing the regulations could help the situation. Even if there is some oversight, it will only be administrative oversight by unelected officials. Whether it's a handout of money, insurance or some other cooperative put together by the financial industry, one thing remains clear: control of the process is not in the hands of the people who are paying for it.

Money for nothing

Anyone remember that song, Money for Nothing? Seems like for the last few years, a lot of people wanted that. Anyone reading the news is aware that the financial markets are tanking primarily as a result of really bad real estate investing. Investors got really greedy with their adjustable rate mortgages (ARM). Homeowners got in with the false hope that their house would increase in value enough to allow them to refinance their loan with a safe and sane 30-year fixed loan before the interest rates started to adjust with the market. But that hope was really a fantasy.

Between 2003-2006, we saw housing prices double in Southern California. Much of the rest of country saw something similar, or a serious spike in prices. During this time, people were buying houses to flip them for a tidy profit. Real estate agents were telling people that if they didn't buy now, they'd be frozen out of the market. Many people with bad credit wanted in, fearing they wouldn't be able to later. So they turned to the ARM.

Now they're wishing they hadn't. Or at least wishing their homes had increased in value. But they just couldn't go up forever, at that rate, anyway.

The Adjustable Rate Mortgage was probably the single biggest factor driving up home prices. Initially they were intended to give those who didn't have a home, a way to buy into a home.

Many economists knew this day was coming. But we really didn't see that much in the press about it. Sure Greenspan said something about it, and I'm sure people were listening intently, nodding when everyone else nodded. Unfortunately, it takes months of hard work by highly skilled technicians to parse his language into common English.

I remember reading about it in 2006 in the OC Weekly, in an article called "Welcome to Stanton!", by Rebecca Schoenkopf, aka, the Commie Girl (sorry, dead link - but I wrote to the paper to ask them to put it back). She had pointed out that even in the bad parts of Garden Grove and Santa Ana, where the doors have iron gates, and police helicopters fly nightly, houses were selling for more then $400,000. Why? ARMs. And she boldy predicted the mess we're in today.

Anyone reviewing housing prices on Zillow.com will see that housing took a wild ride during 2003-6. They have a pretty cool feature that lets you see the value history of the house over time. During that time, municipalities were basking in the glow of higher property taxes. Remember, municipalities have accountants who work for them. Surely they must've smelled the problem miles away. But strangely, they were silent. Everyone was happy as long as the housing prices continued to rise. Except for the people who wanted to buy a house.

I grew up in Manhattan Beach, California. When my parents bought a house there, they paid $50,000 for it, mumble-mumble years ago. That same house at the height of the boom in 2006 was worth nearly $2 million. In fact, most of the houses on my street where I grew up were worth close to $2 million. I talked to my sister, and she says "I wouldn't want to live there. Go down one of those streets at night, around 6-7pm. There's nobody home because they're working! Go to Sand Dune park and look at the people there: Nanny's and their kids!" It takes a lot of work to pay off a $2 million mortgage.

Now that we've watched the biggest investment banks fall, Bear Stearns and Lehman Brothers, and AIG get a nice helping hand of $85 Billion, and Fannie Mae and Freddie Mac get nationalized, where are we? We have a Republican administration pushing a bill that would give omnipotent authority to the Treasury Secretary to buy bad mortgages. Oh, and don't forget, we don't want the courts to get involved. We can't have pesky judges get in the way while we help our friends and allies in Wall Street.

So are we willing to spend $800 Billion to help the investment industry save their posteriors? I see that the Democrats are speaking up about the golden parachutes of the people who ran these firms into the ground. So how about it, CEO of Fannie Mae? Now that you've decimated your company's stock, are you going to give back? Oh, wait. You still need to be able to send your kids to a private school, live in a gated community, take the family on vacation in Europe twice a year and make payments on 3 cars? No can do, my friend. You have to come down here, with the rest of us if you want to get back up again. Oh no! He flew to Barbados! Sigh. Easy come, easy go.

A recession is what happens when the middle class cannot afford, or is unwilling to work for what the upper class is willing to pay. That is what we have here. The lower classes couldn't afford to get a home on what the upper classes were willing to pay. Notice that upper class is still not willing to pay. They're really worried that they won't have enough money for when Jesus returns.

Howcome I don't hear anyone talking about "infrastructure"? Well, I heard Obama talking about it, but only briefly. The point is this: we could spend $800 Billion to save the people who got us here, or we could do a Roosevelt and start building roads. Remember the bridge collapse in Minnesota? Michael Heller says that we could eliminate delays at airports if we built 25 new runways at our busiest airports. But that would be too expensive (there are easement issues, too, but that's another article).

How about communications? Check out this website by the Communications Workers of America. Seems they have noticed that Japan has internet access we could only dream of. They get 61 Mbs on average. That kind of money could light up all the dark fiber laying around in this country, too.

Infrastructure is what made this coutnry great. Without all the freeways, airports, plumbing, wiring and communications, we couldn't live the way we live now. But all of that takes maintenance. Maintenance that the billionaires in Dana Point and Beverly Hills weren't willing to pay for with taxes. Perhaps they'd rather go to war.

I moved from California to Utah. Life is pretty nice here. But one thing I've noticed is that they're really busy with the infrastructure. It's hard to drive down a major road without seeing some sort of construction going on. They may be paving the road, laying pipe, or just fixing it up. But the're always working on something. They get it that infrastructure is important.

That might explain their low unemployment rate of 3.8%, relative to the rest of the country, which now stands around 6.1%. I'm sure there are other factors at work here, no pun intended. But the bottom line shows up in the infrastructure.

Building infrastructure would add more value to homes, a lasting value I might add, than bailing out executives who wanted to fleece people who wanted a home to live in. Talk to your friends and politicians about it. Get the message out.

I rest my fingers.

The Veil of Palin

Over the last week or so, I've become more and more alarmed about Governor Palin. Yes, I say Governor, and I will not refer to her as "Sarah Palin". That would be sexist. And, as Willie Brown points out, it lends a familiarity with her that Democrats do not really enjoy. He's a little bit pompous, but he does make a good point here.

The New York Times is running an article (you'll get 4 1/2 pages, and then you must subscribe) that describes in detail a history of Palin that shows an extreme concern for secrecy. Like intending to use private emails on private devices to conduct government business so that the records of the email cannot be reviewed under open government laws, as an example. We've already seen this in the Bush Administration, too. Remember the lost emails?

Very scary. The Democrats have their own issues to be sure, and many of us can remember secrecy in the Clinton administration. But this, and potentially the next administration have taken secrecy to new extremes. And Palin seems intent on continuing that philosophy.

To illustrate the difference, let me give you an example. A number of sources have noticed a change in the way the Freedom of Information Act and the Privacy Act have been enforced and administered. During the Clinton years, the executive branch agencies erred on the side of disclosure. But during the Bush II years, they erred on the far side of withholding documents.

I can remember when I was a young man, how the Republicans proudly stood for freedom. But now, as an older man, I see that they live in constant fear of being exposed. The war on terrorism is a convenient cover for the need for secrecy and it will only be more so under Palin. I don't think the Republicans stand for freedom anymore. In fact, I'm not really sure what they stand for. It's a secret.

Silence of the lambs

Today's post is about the Brattleboro Petition to charge Bush and Cheney with war crimes. Setting aside the legality of the petition, lets look at the behavior.

Some of you might remember how the Republicans were seeking to impeach Clinton. Do any of you remember any death threats against the people who filed the charge of impeachment? Or even against people who were in favor of it? Or even threats like, "I'll never visit your state again!"?

I don't remember anything like that. From the left there was civilized discussion about their defense of then President Clinton.

Fast forward to Brattleboro and we see the sheer vitriol and rage from Republicans who must be at least somewhat embarrassed to be caught in war they cannot win by their own hand. I use the word embarrassment to point out the fact that there are many Republicans who voted for Bush for his second term. Many now regret that vote.

After $370 billion (and still counting) spent, what have we to show for it? A country full of Iraqis who wish us to leave so that they can settle their own disputes. We've left more than a million dead (by some estimates).

The main thing I want to point out is this: when people speak out against Bush, conservative voters are quick to defend him with rage and harsh words. But when a liberal is attacked, there seems to be much more civilized defense from liberals.

I realize that those who attack the town of Brattleboro have the right to speak their mind. But they seem to forget that their attempts to quiet that town, get them to shut up, could very well impair their own ability to speak their minds, too.

Why you need ID Theft Protection

Today, I read the news and here’s what I found:

Analysis: Metcalfe's Law + Real ID = more crime, less safety

This article describes the problems inherent with multiple databases, across multiple agencies, all linked together. The common thread and threat is that the more useful government databases become to white hats (the good guys), the more useful it becomes to black hats (the bad guys).

The US government is collecting data from every source imaginable to track criminals, true enough. But they are also collecting data on innocent people who have committed no crimes at all. As stated in the article:

This is, of course, a fundamental problem inherent in the very nature of any massive, centralized government data-sharing plan that spans multiple agencies and connects untold numbers of state and federal law enforcement officers: the usefulness of such a system to any one individual (a white hat or a black hat) grows roughly with the square of the number of participants who are using it to share data (Metcalfe's law). So the more white hats that any of these programs manage to connect to each other, the more useful the network as a whole will be to the small handful of black hats who gain access to it at any point.

The governments around the world are working on creating an indestructible, impossible to duplicate identification card that will be tied into multiple databases across many if not all agencies and shared between governments and agencies.

Now there are some who might say, “No problem, I’ve got nothing to hide. And if you have nothing to hide, there’s nothing to worry about.”

But consider what happens if one person makes an unauthorized use of this collection of databases. For him, it’s like shooting fish in a barrel. It would be easy to create a profile or dossier to use for Identity Theft. Such a database can be used to find a suitable victim for a crime, white collar or violent. Or, as the story linked above shows, it can be used by criminals to determine how law enforcement is planning to act in order to evade law enforcement.

Alternatively, it can be used by political incumbents to circumvent or dilute the will of the people. Imagine that such action is what is happening now. Consider the possibility that your votes could be thwarted by people with access to the right databases.

It is in this age that ID Theft protection is no longer a luxury, but a necessity. I've found some very interesting tools for protection. If you're interested, please contact me.

Good day, and good luck.

Externalizing costs

I currently work for a niche retail store of a large retailing corporation as a sales person. I started there as an experiment to see if I could do sales. In the few weeks that I've been there, I've been learning a lot about retail sales. So here is a little bit of my experience.

I decided upon a sales job when I did some research and learned that in my industry - IT - more than half a million jobs will be outsourced to fun and far away places like India, China and Vietnam. And then there's automation. But that's yet another article.

So I'm into sales. I figure that no matter what you make or the service you provide, someone has got to sell it. That's me.

As my first stint in sales, I have an opportunity to see first hand what goes on behind the counter. For example, I have to say to everyone, "Would you like to put that on your company issued credit card, sir?" I know how irritating that is. And then I have to say, "Would you like to open a new revolving credit card at 23% interest, sir?" Get the picture?

So anyway, you may have noticed that I am leaving the name of the company out. That's because I still work there and, I don't like to burn bridges.

I'm learning that I do a lot of standing around and pacing the floor. It's really good exercise. I think I walk several miles in a day of sales.

I also hand out lots of cards to people who are just browsing. They want prices on everything and think that somehow, when they actually make the purchase, they will be making a rational decision. Now I work in the "home entertainment" department. I don't know about you, but buying a TV, a really big one for 1-4 large, is not a logical decision. A big screen TV is right up there with the huge pipe organ at the church for "wow". It stirs the heart.

This particular organization doesn't even know it's inventory. They do have a computer system, and I can use it to see if we have an item in stock. But if I want to sell one, I must go to the "cage" and check to see if the box is actually there. There goes 5-10 minutes that I could be selling on the floor. I've now decided that the first thing I will do when I arrive is go to the cage and make a count.

They have a tiny little computer screen running windows, too. And of course, the computer is so locked down, I can't even change the screen resolution. At this computer, I can check on whether or not we carry an item, what the current status of the item is (i.e., "Discontinued"), check on past transactions and place special orders.

It's an older machine running Windows 2000, with a 17" monitor set for 1024x768 resolution. Not too bad if you're under 40. Now I want reading glasses. This machine takes about 5-10 minutes to boot and to load a user profile after I've logged in. It's ridiculous.

After a week of training and a week of no sales, I learn that they've chopped all the commissions for TVs to 6% instead of the range of 6-12%.

Now on top of doing sales, running back and forth to confirm stock, I also have to do customer service when a customer wants to return an item. Sheesh! Oh, and the manager says that most people who work there just sit around and wait for people to come in. He says "Don't just be an order taker. Prospect!" Aha, so for 6% I get to prospect, hunt for merchandise, provide customer service for returns and exchanges, and do sales. Cute.

So I talk to my sales mentor and learn that most organizations seem to hobble their salespeople. They are trying to cut costs but in reality they are hurting their sales team. This organization seems to be doing everything they can to encourage people to work for ten bucks an hour. See the problem with commission sales for most companies is that the commission keeps pace with inflation.

Huh? Well think about it. The primary advantage of owning a business is that you can raise prices when your costs increase. Employees can't do that. They have to wait for a raise. But commission salespeople see their commissions go up when the price goes up. And the only limitation on their earnings are the physical limitations of making a sale. They can sell all they can every hour. So their earnings keep up with inflation.

But that cuts into the bottom line for the company because as long as employee compensation is set at a fixed cost, they can maintain an advantage over the employee. Not so with commission salespeople. Even if they have to increase compensation for employees here and there, they do it at their convenience not when the employee asks. And most times, the employee will wait for their review.

This is just one of the many examples of how companies externalize their costs onto the general public. Most employees don't see this part of the picture, all they really see is their costs going up while they wait for a raise.

That's why we're going to be full swing into a paradigm shift about sales and work in a matter of 5-10 years. The typical employee will no longer trust employers enough to settle for just an hourly rate. We already see that profit sharing has been adopted by a few companies (though not well publicized). And there is employee ownership. For example, Southwest Airlines is employee owned and has been stable as an airline stock, despite 9/11 and other interruptions to the airline business. They are regarded as a company with a healthy and fun working environment primarily because the employees have a say in how the company functions. And when the company issues a dividend, all employees benefit.

A negative example of externalizing costs is Wal-Mart. Websites about their business practices abound, but the best example is here: http://www.walmartmovie.com/.

So whenever you look at any business, notice how they externalize costs. And then ask how that affects you.

India and the middle class

I know, they're disparate subjects, but if you follow along with me, you will see their connection. First, consider this: the US stock markets are trading at all time high prices. Most economists will tell you that this is because interest rates are low and people are borrowing money to hop onto the stock market. There is also the fact that more capital is in the stock market than at any other time in history. This is due to retirement account investing.

In fact, assets from 401(k) plans have increased annually at double-digit rates since 1990. In 1990, 401(k) investing amounted to about $380 billion. Now, they amount to $2.7 trillion. That's a lot of money, honey.

These investments create tremendous pressure on publicly owned corporations to do everything in their power to increase profits. Failure to do this can result in lawsuits by shareholders. The lawsuits are directed against the board of directors for failure to maintain their stock value. Here's just one example. Unfortunately, the typical approach to stock value is short term and thus, short-lived.

In order to maintain stock value at high levels, corporations do everything they can to manipulate their stock value. This manipulation can translate into very high rates of compensation for executives. It can also lead to wild fluctuations in the stock market and trouble for regular folks who just want to put their money in the right place for retirement.

Most corporations try to lower costs. So they outsource to China, Vietnam, Nepal, wherever low wages can be found. The rate of outsourcing is huge and astounding. Now here's the rub:

As corporations outsource, American jobs are lost and wages are depressed, despite inflation. To put it differently, we are literally eating themselves with investment in the stock market. This financial system, I think, will prove to be the bane of the middle class. As we can see from previous examples of executive looting like Enron, the upper class has no intention of allowing any room for the middle class to continue it's existence.

"We used to have customers but they all moved to India for better living conditions."

The Great Carbon Sink

A lot of people are talking about greenhouse gases and global warming as if reducing our production of carbon dioxide is the only thing we could do to save our planet. They talk about reducing the length of our trips, gasoline consumption and reducing the amount of power we use in our homes and the like. But there has been no discussion about food.

Think about it: by 2048, the fish in the ocean will be gone. Humans eat a lot of fish supplied by their industrialized fishing machines. We have scoured every ocean for every fish we could find. And as the fish become more scarce, they become more valuable, driving up the incentive to find more. If you don't believe me about the fish, read this. I found 159,000 articles on the subject for you to consider.

But then you ask, why would this matter? Well, the fish, they produce poop and carcasses that float to the bottom of the sea where plants grow. Plants need food, fertilizer, to grow. And we all know how good fish remains are for fertilizer. So if we eat the fish, the plants, which are so good at scrubbing CO2 from the ocean and the air, will slowly die off for lack of fertilizer.

It's akin to how they are wiping out the Amazon rain forest just to graze cattle. No matter how we slice it, eating meat is a big cause of global warming. Cooking meat takes more energy than cooking vegetables. And most veggies can be prepared for consumption in their raw state.

So the next time you go to Gladstone's for fish in Malibu, think about the ocean floor. You might just consider a salad instead.

What's wrong with this picture?

Okay, short post. I went to Dell's website to price two versions of the same product, the Latitude D520 laptop. I just wanted a low-end laptop that will work as a Linux test station.

If I price a base configuration laptop with Windows, it's $599.

If I price the same laptop with Free-DOS, it's $699.

Why exactly am I paying $100 more for a computer *without* Windows?

Free Software

For the last 15 years, Linux has slowly been on the uptake, building and refining, filling the gap where Microsoft left off. You know, in places like security and reliability. It started with just one man, Linus Torvalds. I won't bore you with the details, but suffice it to say it is now a world class operating system for computers. Linux supports more hardware than any other operating system in the world. Linux runs in all manner of devices from cell phones to supercomputers. And adoption has been growing at double-digit rates for several years now.

The thing I like about Linux is that it is built by enthusiasm and competence. The men and women who contribute to Linux are essentially show-offs. I say this because their programming code is there for all to see. That is one of the requirements for software licensed under the GNU General Public License (GPL). The 4 basic rights of the license are: 1) you can use the software for any purpose you desire; 2) You are free to copy the software; 3) You are free to modify the software and; 4) You may redistribute the software as long as you include the source code you contributed with the binaries.

Source code is human readable code that programmers write. When the programmer is finished writing, he uses a compiler to process the code, and the result of that process is a binary file that computers can understand. When a programmer writes software, he creates source code with comments, little notes that tell him and others what that part of the software is doing. It can also contain copyright attribution, too. When the source code is compiled, the comments are stripped out leaving a clean binary executable file for the computer. Hence the power of free software: everyone can share, reproduce and improve your work if you share it with others under the GPL.

There are a number of reasons why the GPL is so popular. Evidence of it's popularity can be seen at Sourceforge.net, where more than 60% of the projects hosted there are licensed under the GPL. Programmers like it because the source code can stay public for all to see. Many programmers have had the experience of watching a great idea get shuttered by the corporation they were working for. The GPL keeps their project alive. And it prevents the project from being subsumed by a corporation for it's private use within a proprietary product. But I think the most impressive thing about it is the resume. A programmer can point to the project and the change log of the project and say, see? I'm there. That's called credibility. But wait, there's more.

Remember, people who love Linux are show-offs. It's a badge of honor to find a bug in Linux and report it. Credibility comes when you report a bug, and offer a solution, *and* the solution is accepted for inclusion in the source code. For a programmer, he'll be floating for weeks on that good feeling of making the computer world a slightly better place and knowing that he will get credit for it. That looks mighty good on a resume, too.

For at least the last 10 years, Linux has been competing with Microsoft in one way or another. People wanted an alternative and they got one. But lately, things haven't been so good. A few years ago, The SCO Group initiated a baseless lawsuit against IBM claiming breach of contract for contributing intellectual property to Linux. IBM had a software license with AT&T, the creator of UNIX. That agreement was eventually sold to several other companies, and eventually to SCO. For more than 20 years, things were fine until SCO decided that it couldn't make money at the UNIX game anymore. So they began to sue, and sue big. IBM wouldn't settle. SCO has been dragging out the lawsuit now for 3 years with hardly any evidence to support their claims. The full story can be found at www.groklaw.net.

There have been a couple of big hits lately against Linux distributors. First, there's Oracle. Oracle has decided to use Red Hat's source code to create their own version of Linux. Sure, this is always a danger. But supporting someone else's code is a lot different than taking their code and changing it and redistributing it and supporting *that*. I sense that Oracle may have bitten more than it can chew. Red Hat has been working with and refining their source code for years and they really know their product. Oracle will have to catch up to Red Hat. I think eventually, Red Hat will prevail, but for now life hasn't been easy.

The biggest hit against Linux is the deal between Microsoft and Novell. Microsoft says that it will work with Novell to improve interoperability between Windows and Linux. Yeah, right. Like Microsoft has ever been a big fan of interoperability. When Microsoft was a little company, interoperability was a big deal. But once they established their dominance, they differentiated their products to prevent interoperability. That's called "vendor lock-in".

Take for example, the Word document format. Open Office is a program created by reverse engineering the Word document format. People who work on the Open Office program have spent years looking at every detail of the Word document format so that they can recreate it. And open Word documents with something other than Word.

The other part of the agreement is a patent covenant between Microsoft and SUSE customers - NOT Novell, the owner of SUSE. All this means is that if SUSE Linux infringes on any Microsoft software patents, Microsoft will not sue Novell's customers. What they are trying to do is flout the spirit of the GPL. The GPL requires that when you distribute GPL software, everyone downstream gets all the rights you have. The problem with this deal is that only the people who purchase and receive software directly from Novell are protected. But if you're a Red Hat customer, well, , don't hold your breath.

Most people are confused about Novell's action to enter into this agreement. Novell is a party to a lawsuit with SCO over the copyrights to UNIX, which SCO claims to be the source of Linux. SCO is claiming that Linux is an unauthorized derivative work of UNIX, and that they own the copyrights. Novell has been in the fight against SCO for a long time. And they were arch enemies of Microsoft. So why the deal?

We don't really know enough yet to know why. But we do know that everyone who has ever gotten into bed with Microsoft, came away with a VD (Venomous Deal). There is a trail of corpses and scarred partners that goes back 20 years. Most if not all partners with Microsoft either died in litigation or went away feeling a lot lighter in the wallet and shut out of the market. The Groklaw website has a page devoted to litigation with Microsoft. It's a long, long page.

Red Hat is the top distributor of Linux by any measure. They compete directly against Microsoft and Novell. Hence, the enemy of the enemy is my friend. But they have some interesting things to say about the deal. And they quote and link to some very knowledgeable and influential people who can comment with some authority on it.

The questions that arise concern mostly whether the deal can work within the framework of the GPL. Most are cautious about that. Many see the divide and conquer tactics being employed by Microsoft and call foul. But here, I think that Microsoft has underestimated the size and power of their opponent. We're not talking about a single company. Or just one country. We're talking about people all over the world who want Linux to succeed. And they're determined to do it. And it's all based on an idea. Funny thing. During the revolution here, in America, the king of England noticed the danger of ideas and noticed that people were willing to fight for them.

Microsoft, likes to think of themselves as the Let Us Innovate people. Yet, they want to use patents to shut Linux down. They are so bent on driving down or eliminating competition, that they are willing to win at any cost. They are doing everything they can to influence governments and large corporations to use their products, exclusively. Here's an example, if you're looking for one. They are using Fear, Uncertainty and Doubt (FUD) to prevent Linux adoption.

So, here's what I don't understand. Microsoft is the world's largest software company. They could do anything they wanted, really. They have the resources to make a superior product. They've had those resources for at least 5 years, very likely for 10 years. Yet, for at least the last 10 years, they've been using FUD to drive their business. They disparage the competition while talking with the customers of the competition. Remember that litigation page? Try reading some of the testimony from those pages. You'll read page after page of how Microsoft sales execs lied about the competition to their customers.


Why didn't they simply *make* a better product? Why do they need software patents to protect their product when they could just make a better product that people would be willing to buy?

The reason why is that money is the rule that Microsoft uses to measure prosperity. When I think of Microsoft sales practices, I think of Karl Rove, you know, Bush's brain. Karl Rove has been accused of using every dirty trick he could think of to get Bush to be president. Hey, it worked. But look at Bush now. Defeated. Laughed at. Lame duck. But that is another article.

The point is that MS lost sight of the goal: make better software. Instead, they used the government and the media to slow down or kill their competition, through contracts, lawsuits, or spin.

This latest deal with Novell is really about Novell and MS trying to establish an unfair advantage over the Linux competition. We already know what MS wants. But try thinking of Linux as a flowing river. When you try to put a river into a bucket, it's no longer flowing. They want to capture all that creativity and put a tax on it for their own benefit. How fair is that?

44% of the SUSE Linux distribution is owned by the Free Software Foundation. They are planning on taking all that software to GPL v.3. And in the new version of the license, they are going to write it so that any benefit from a patent covenant that is intended for just one group will automatically be extended to anyone who receives the software. And if you can't comply, you can't distribute under this license.

I like the way Pamela Jones has been covering this debacle. She is making a very good case for conversion of property in this deal. People seem to think that the GPL does not respect copyrights or property rights. Quite the contrary. The people who wrote the code still hold the copyrights to their own code. They have licensed it under the GPL for distribution. Microsoft seems to have forgotten that minor point. I guess Microsoft is really upset that so many people disregard their licenses, too.

As the majority of the software in Linux distributions moves to GPL v.3, so will the majority of the developers, leaving poor Novell to fend for themselves with software that takes time and effort to maintain, distribute and support.


So there. Those are my latest thoughts on the state of free software. You know, Richard Stallman has been quoted to have said, "To understand free software, think of free as in freedom, not free as in beer."

Scott Dunn

Vietnam and the WTO

Last summer I visited the country of Vietnam. I found it to be a fascinating place. There are many things to like about that country. Food grows everywhere, so if you're one of the lower primates, you're going to have an easy time finding something to eat. The climate is beautiful (yeah, I made my peace with hot and sweaty days). And the people are beautiful (Okay, I love Asian women).

But I think that country needs a lesson in international civics before they can join the World Trade Organization (WTO). They are currently a member of the United Nations, and have been since 1977, but they don't seem to think much of the Declaration of Human Rights of the United Nations.

For example, lets look at Article 13 (2):

Everyone has the right to leave any country, including his own, and to return to his country.

Clearly, this is a no-brainer for human rights. But in practice, Vietnam is very strict about who can leave and who can go. It's easy for me to go there since they have a pretty good idea that I have no immediate plans to move there. In fact, they'd really like me to go there to spend my money there. They may even want me to teach English there, you know, the language of commerce.

On the other hand, if someone from Vietnam wants to visit another country, it had better be somewhere like The Philippines, Thailand, Korea or some other developing country. They seem to have a real problem with granting visas to people who just want to visit the United States. Of course, if you have a business, a fat bank account, or you own property in Vietnam, they feel better about letting you leave because you have a compelling interest in returning soon.

Absent those things, you're going to be hard pressed to get a simple travel visa to travel for pleasure. I know after talking with people from that country. It's very hard to bring a friend from Vietnam to the US. Of course, they don't state this explicitly in their rules governing visa applications, but there is some helpful if not interesting language here.

"Any information helpful in showing your ties to Vietnam, such as information about your employment, education, social or family relationships, and possessions, that you wish the consular officer to consider."

Ok, call me stupid if you want, but I don't see how possessions should have any bearing on a visa application. We're talking traveling for pleasure, right? All of the items above relate to status. Wait. Vietnam is a communist country. And communists just love the idea of a classless society. Yet, right here, they are making status a condition of travel. That means someone else couldn't buy a Vietnamese citizen a ticket to fly here unless she's loaded at a bank somewhere in Ho Chi Minh City.

I don't know. I'd have to say that based on the evidence I see, Vietnam is clearly in violation of Article 13, subsection 2. Lets have a look at another section:

Article 7.

All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.

Hmmm. So unless you're rich, you can't leave the country. But that would be in violation of Article 7 to deprive the right of travel based on status, right?

With me so far?

With admission to the WTO, Vietnam is bracing itself for a nice surge in tourism. Oh, wait. That's only if you want to visit Vietnam. If you want to leave, forget it. They're really worried you might not want to come back. It must have something to do with the 5,000+ political prisoners there. Ooops. They were released in September of this year. How nice. Or maybe they just don't treat their people fairly and quite a few of them would like to leave. It's nice to see Bush actually trying to help here.

So if you think I'm wrong, I'd really love to hear from you. I want to hear good news that says it's easy to get a travel visa for someone I might know.

Scott Dunn

All the news that's fit to print

By now, you might have heard that Google is being sued by an association of newspapers in Europe known as Copiepresse. The reason? The plaintiffs think its great that Google has indexed their news stories in the regular search engine. But as soon as they created a news portal out of several thousand newspapers that publish their work on the web, Copiepresse decided to take action. Here are a few links to get you going:

Greed is Suicide for Belgian Press

Copiepresse Upset Ruling On Google Wasn't Visible Enough

Here they go after Microsoft, too.

And then, there's the Register for their pointed commentary.

One thing that really bothers me about this suit: they want to be paid for indexing. To paraphrase, "we don't mind being in their search engines, but when they present themselves as a news portal with our news, we have a problem." I guess they're upset that Google doesn't show any advertising on their news portal. It seems schizophrenic. They want it but they don't. They can't really decide. Google has already stated flat out that they don't pay for news. Perhaps they're in a better position to bargain than Copiepresse. You think?

My fear is that news organizations will use this to force search engines to only show news stories that are politically acceptable. Yes, that's right. I think it is yet another veiled form of censorship. They just can't wait for us to accept their own custom utopia (you know, the Road to Serfdom). Better that we don't get any countervailing news. Never mind that the purpose of journalism is to question the prevailing wisdom.

Of course, the article in the Register, like many others, have pointed to a standard that is more than a decade old: robots.txt. This is just a tiny little text file letting robots (and people) know if they can index the article and/or cache it (store it locally on disk at the server where the robot returns the information it collects). Copiepresse refuses to use this tool. They believe that if they choose to exclude robots from their website, they will be excluded from the search results. But if they don't use this tool, then they will be included in the search results and in news portals such as Google's. They believe there is a better solution than choosing between death and life. There must be a middle ground.

Well, I don't know. They want to be in search engines but they don't want to be in a news portal that drives traffic to their sites. Lithium anyone?

My hope is that if news associations decide that they're the final arbiters of what search engines can show and be included in search indexes, that this will give rise to a large wave of people who want to get the news out - independently. Bloggers will fill the void like never before. I don't think bloggers will mind showing up on the news portals.

Copiepresse is being irrational. Copiepress got what they wanted - Google stopped indexing. But now they are upset because they've been shut out. Oh, you can still find them if you already know their website address. And then maybe you can search their website locally with their own search engine. But they have already noticed a significant decrease in traffic to their sites. Get ready for their screams of bloody murder when Yahoo and Microsoft avoid them like the plague, too.

A lawsuit was already tried here in the US. The plaintiff was found to have not used the robots.txt tool intentionally so that search engines would crawl his site with their robots. Then he had planned to sue for copyright infringement all along. The court found in favor of the defendant with the reasoning that he could have used the robots tool but refused to do so. Something about the clean hands doctrine.

One other thing they don't seem to anticipate: the search organizations could get together and start de-listing Copiepresse as a whole. Perhaps then, Copiepresse may see reason. When that happens there will be another lawsuit forcing the search engines to give them equal time. Not.

Censorship is already a problem as it is. Why can't these nuts just be happy with the way things are?

Scott Dunn

The Price of Liberty

It was Ben Franklin who said, "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." We are "they", aren't we? How many liberties have we given up to the terrorists and to our government? Who *asked* us to do this? Who said that the security we enjoy now is permanent? The people who were screaming for the security the most - those who have the most to lose.

I point you now to the Bush Administration. I see that Bush thinks the Constitution is just a goddamn piece of paper. He's really hot on the trail of terrorists and though there are a billion Muslims, he's determined to find every last Muslim terrorist (and no, not all Muslims are terrorists). And he'll do that much better if we'd just give up a little more freedom this year. And next year. Remember, it's for your own good.

I find it interesting how politicians love to talk about their grand ideas in general terms. Like, when they talk about terrorists. They talk about apprehending terrorists and treating them as if they don't have any rights as a good thing. Sure, they're terrorists and we already know that, they say. So don't give them access to lawyers, charge them with a crime, or show them the evidence against them.

This sounds like it's a great idea doesn't it? So now lets drill down a little. Imagine for a moment, that it's your son. You haven't seen or heard from him for a few days. Then weeks. Two months go by and your family is in a panic. He's Latin and he has brown skin. And he's in Guantanamo with a lot of other men. Men who've been there for a year or more. Your son has disappeared. He has no access to a phone. He can't access a lawyer. No charges have ever been leveled against him. He'll be late for Christmas.

Is that what you call security? Maybe in East Germany. You know, that fallen communist country that no ever one really liked?

Now, lets say you're an activist politician. Then you're declared a terrorist. Your political career comes to a quick, if temporary end, once you're detained. Who knows, maybe when you get out, you can write a book about your experience, and then run for president. Okay, scratch that. Try for a talk show. Even Martha has one now.

Who is watching the watchers? How do we know we'll be treated fairly? How do we know if the action is motivated by politics, budgets or real safety?

Oh, and don't forget their religious agenda. You know, the one that says they are on a mission from god to impose, er... promote... the Christian Worldview. Hmmm. That's funny. Didn't they just spend the last 8 years emasculating the Environmental Protection Agency? This is an agency that was created under the Nixon Administration to protect the environment. And now they want to take it down, you know, for the economy. Never mind the fact that their god says that we are caretakers of the earth. What will their god say to them when they have to answer questions like, "So what did you do to your beautiful earth?" Well, we sold a hell of a lot of SUVs.

The funny thing about religious agendas is that they are operating on what they call the truth: a message from god to take action. Unfortunately, there's no scientifically objective way to verify the message. It could be anything. Say, remember how the 9/11 terrorists believed that they were on a mission from god, too? The similarities are eerie, aren't they?

How many people can still remember the press mocking President Bush for his terrible speaking skills? How many remember him as unable to pass a bill prior to 9/11? That was what he was afraid of. He's afraid of not being remembered. Oh, we'll remember him alright. We'll be looking out for others like him, too.

Now there was a man whom the press laughed at. And then, after 9/11, everyone shut up. Suddenly, it was time to be nice to Mr. President. Better to be with him than against him, eh?

Too bad Bush didn't listen to Winston Churchill:

"Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realize that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events."

Mission accomplished, right?

Given that we're not very good at picking political leaders, perhaps it's time to enlist the Psychopathy Checklist. This is a diagnostic checklist for subclinical psychopathy. I think it would be very handy to screen our potential politicians. For some reason, psychopaths from both dominant parties seem to rise to the top in our country. We could stop that rather quickly with this checklist. The best part about this list is that it is nearly impossible to fool since the impulses of psychopaths are hard for them to hide under the intense scrutiny of this checklist.

So I watched the news today. And as I did so, I recalled how we never heard a dissenting voice for 5 years on who, what, how and why of 9/11. At least, not if you read any papers, or watch TV.

But if you look at the internet, you will find a Google of dissent from people warning of the impending disaster and the other people trying to calm their collective nerves. Go ahead, do a search and see what you find for "9/11 conspiracy theories". It's interesting how network news doesn't talk about them.

It took nearly 5 years for Bush to admit there was not a single tie between Al-Quaeda (there seems to be a million ways to spell and pronounce that) and the dictator of the century, Saddam Hussein. Why did it take him five years? What else is he omitting from his press conferences?

Look around and you will see blogs and articles about why the World Trade Center towers fell straight down instead of falling over like a tree. That is one I want to know. Or how about explaining why President Bush sat in a classroom reading a story to children instead of excusing himself politely and handling the situation?

Whatever your feelings about Bush, consider this: why is it that the disbelievers are shut out of the press and being told to shut up? Why do they wind up unemployed, demoted, on paid leave, or transferred to Siberia? Why isn't there an honest, public debate on the subject on network television? No one would pay for the commercial time? Puh-lease!

It is dangerous to be right when the government is wrong. That's why. So consider what we are doing here and why we are motivated to do it. If you support the president, have you questioned his motives, reasoning or accounting of the facts? Why can't we have an open discussion on the air, with the people who were there?

There is an interesting show on KPFK here in LA. It's called Uprising. They are uncompromising liberals, and at least they are not afraid to say it. I don't agree with everything they say, but at least they are upfront about where they stand. They introduce the show by saying this: The purpose of journalism is to question the prevailing wisdom.

When was the last time you heard Tom Brokhaw, Dan Rather, 60 Minutes or perky Catie Couric question the prevailing wisdom?

People worry about the way Bush and his administration violate the Constitution on a daily basis. That is because most of us are asleep with our various addictions: work, sex, tv, coffee, gambling, debt...you name it. We've got it here. Those addicts sure know how to keep the economy going. Until we wake up from our collective sleep, a small minority will seek to impose their will upon the rest of us. The irony? They want us to believe as they do so that we'll be saved. Heh.

"I often wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it. While it lies there it needs no constitution, no law, no court to save it." --- Judge Learned Hand.

So when I think of my desire for security, I think of Alan Watts. In his book, The Wisdom of Insecurity, he shows that the more security a man has, the more he wants. And then there is never enough. So what does he do? He unplugs his computer, locks his door and curls up with a nice book in bed, hoping for the best. Bush appeals to the insecure among us. That's George W. (Wuss) Bush.

There are more books on the subject, but that book says more about the spirit of liberty to me than just about any other. Once we can have faith in our existence and the universal power, then security becomes a second thought. We rely upon the universe for what we need and nothing more. For our putative brains and our unaided will can be flicked from the earth at any time.

Remember to breathe and everything else will follow.

Mr. Scott
(sorry, transporter is out of order today)