Nostradoofus

Assertion:  the degree of cultural survival in shocks (e.g. colonization) is directly proportional to the degree of sophistication in the pre-existing writing system.

As a result, Europe’s North American colonizations were like a cultural neutron bomb:  even where the population survived, little remained of the original culture.  Yet in India, after 300 years of British rule, people generally still spoke Hindi, wrote in Sanskrit, liked Buddha, etc.  Similar case with China.  India and China both had well-developed independent writing systems, which accounts for the difference.

Similarly, Korea maintained a separate language and writing system (though not religion) despite hundreds of years of domination by China and Japan.  Why?  unique writing system.

But the Philippines was another neutron bomb situation, with nothing left but Tagalog (pidgin Spanish overlaid on a pre-existing language) and several geographically isolated regional dialects. Again, no pre-existing writing system.

Perhaps the most extreme case might be the Israelites, who maintained an independent language, religion and culture for over a thousand years despite having no country.  The reason is seemingly Hebrew.

In conclusion, your mom was right:  if you want to remember something, write it down.

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The US invented, and has largely succeeded with, quantitative management techniques.  Rightly so:  measurement is the basis of reasoned discovery.  But as a result, we have a tendency, when faced with a complex problem, to focus on the parts that are easiest to measure, rather than the parts that are obviously most important.

It appears the financial crisis is such a problem, whose root causes are essentially non-quantitative.

Let’s back up a few months, to summer 2007, before demand had collapsed.  What was the problem then?  The cost of borrowing was exploding, putting firms at risk, and financial firms in particular.  Why did that happen?  Two reasons.  First, the credibility of bond rating agencies was destroyed by the mortgage crisis.  No one trusted a triple-A bond to stay triple-A, so no one wanted to buy bonds.  Second, investors began to realize that various firms had vast exposure off the balance sheet, and there was no way to estimate risk.

Both of these problems, it would seem, can be traced to what governance expert Daniel Kaufmann calls “legal corruption,” which basically means blatant conflicts of interest that are not explicitly illegal.  These are rife in the US financial system, too many examples to list — refer to Kaufmann’s recent Forbes article for more.  Perhaps because they cannot easily be measured, these activities are getting almost no attention.

This is, one hopes, what the current administration means by the pursuit of “transparency,” which could be construed to mean the following:

1. Force big auditing firms and banking regulators to require clear disclosure of off-balance-sheet exposure by public firms.
2. Regulate the bond rating agencies, which have demonstrated they cannot regulate themselves.

These two things alone would go far to restore investor trust, which would by itself stabilize markets.  I suspect these would accomplish more than any fiscal stimulus.

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The laptop.  That indispensable ergonomic train wreck.  

The heaviest laptop users, like pro football players, suffer chonic pain before the age of 30.  Unlike pro football players, they are usually not paid millions.  How to salve the agony?  One solution is the inelegantly named “Laptop in a Drawer.”

22" Samsung monitor with extra high stand, wireless keyboard/mouse, Aeron chair (craigslist, $300), 30x60 cherry desk (free from previous tenant). Laptop is in the desk drawer, lid closed but turned on, driving the whole setup.

WHAT DIDN’T WORK FOR ME

1. Docking stations:  cumbersome, unwieldy, expensive, ugly, and tied to one laptop brand.
2. Two computers:  cost more money than one, yet make you less efficient.

WHAT HAS WORKED FOR ME SINCE 2006

1. Laptop in desk drawer, turned on, lid closed.
2. Bluetooth keyboard and mouse on desk.
3. Large ergonomic monitor wired through desk to laptop in drawer.

The result is cheap (if bought used), yet optimizes for function, aesthetics and ergonomics simultaneously.  Bring the laptop into the office each day like a wallet (please don’t say purse).  Set it in the drawer, lid closed, connect power and monitor, tap the wireless keyboard, laptop wakes up, and you’re on.  Takes 10 seconds, and gives you all the advantages of both laptops and desktops.

At the end of the day, just pick up the laptop and go.  It’s now charged and backed up (if you use Time Capsule or similar), so you can work elsewhere, yet face zero risk of data loss from theft or damage.  Most importantly, these benefits cost you zero time.

More photos of my setup.

13" MacBook Core 2 Duo in desk drawer. Wakes when in range of paired Bluetooth keyboard. Just start typing. At the end of the day, just grab and go.

View out the window from Aeron chair.

Monitor cables threaded through desktop. So that's what those little inserts are for.

I don’t claim this will work for everyone.  For example, I have no idea if Windows supports the auto-wake part of this, as Mac does.  What I can say is this is cheap — especially if you value your time — and appears to solve all tradeoffs of high-intensity laptop use, with no compromises.

Cooling issue:  keep the drawer open a few inches, so you don’t cook your laptop.  I have run this way for 2.5 years with no breakdowns, so this may be excessive caution, but in an area that costs me nothing.

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The hardest part of going paperless is getting everyone to stop mailing you stuff.  Even when you tell American Express Merchant Services that you want everything by email, they still send a paper annual report.  There are still a few service providers that don’t even offer e-billing.  And you still have to fax signed contracts, right?

Wrong.

Take a snapshot of a document, upload it to Evernote.  They store it forever, for cheap, and they scan images for text, which you can then search from your computer or iPhone.

This is the end of physical files.  After 3 months of use, I have found Evernote’s text recognition to be almost perfect.  I type in “American Express,” it finds all the related images I’ve uploaded, and I can look at images of original documents.

Contracts?  Counterparties email them to me, I print, sign, photograph, and email back.  Evernote keeps a permanent searchable archive of the original signed document.  Again, no physical files.

At first, I used a Canon Digital Elph camera to capture the documents.  Would have preferred to use the camera on my iPhone — Evernote offers iPhone software — but the iPhone cam cannot focus closer than 3 feet or so, so it seemed useless.

Until today.  I put ordinary reading glasses in front of the iPhone camera.  Physics is physics:  reading glasses correct farsighted cameras just as well as farsighted humans.  I tried it, and it worked beyond expectations.  Now it’s a one-step process:  photograph a document with iPhone, and it’s stored and searchable at Evernote, forever.  Done.

Of course, it is cumbersome and un-hip to hold grandpa’s reading glasses in front of my phone.  Turns out that accessories maker Griffin has solved this problem with the Clarifi — an iPhone shell with built-in macro lens.

This, together with more obvious things like e-billing and Skype, permit true total business mobility.  For all you know, I’m writing this from Barcelona…

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Despite the debt, the profligacy, the failing basic institutions, America retains one unshakable core principle that constitutes a hard-to-copy competitive advantage:  the nation is defined by ideology, not ethnicity.

To see how big this advantage can be, consider the following solution to our industrial hollowing.  

For 20 years, we have received an unceremonious manufacturing beat-down from China.  But in the consumer-led recession, China is in perhaps worse shape than we.  they risk social instability unless 10% of GDP is generated from exports.  Sooner or later (probably sooner), central banks or no, the dollar will decline, and that trade imbalance will close.

At that point, assuming a dollar crash, it will suddenly be economically feasible to manufacture in the US, but because of the long-term hollowing, we lack the skill base.  

What if, at that point, America simply offered permanent residency to any person in China with a degree in mechanical engineering and 5 years experience designing manufacturing lines?

Instant result:  massive skills drain into the US.  Why?  For most people, it remains easier to start a business here, and easier to live an unfettered life here.

Could China do the reverse?  Not in a million years.  The nation is defined by ethnicity, so it cannot import talent.  That’s a weakness.

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The Last Viridian Note has it exactly right, but is ironically wordy for a minimalist treatise.

Massively paraphrasing:  ”fewer, nicer things.”  

I chose Evernote and GrandCentral precisely because they radically simplify. One phone number for life, one searchable repository for all documents.  Both detached from any particular hardware.  Also 1Password, which automates password storage and data entry. Another 100 fewer things to remember.

The specific experiment is to refit the business to run simply and securely from anywhere.  Nearly there. Slicehost is the last piece of the puzzle.

Simplification is relaxing.  Example:  gave away 80% of my wardrobe this spring.  The rest –  less than I had in high school — is high quality, aesthetic and unusual.  I like it, spouse gently horrified.

Office now little more than a laptop, California plein-air watercolors, and a cellphone.  The emotional barrier is with books.  I could and should eliminate hundreds, but there is irrational attachment. 

Investing does require a competitive edge, but the “information edge” set forth by rational-agent economists is not the only kind of edge that emerges in the real world. Other kinds of edges:

1. Temporal — willingness to hold one type of instrument, such as stocks or cash, for a very long time, i.e. years, until conditions are right to switch.
2. Emotional — ability to sleep at night while holding a highly volatile instruments.

These sound trivial on paper, but are actually rare and valuable enough to confer a big advantage. Illustrative example:

Since the 1870s, a simple rule to outperform the market has been to buy 100% into the index when its P/E ratio falls below 9, then sell 100% (go all cash) whenever the index P/E ratio is above 22. This rule outperformed the index by a factor of 7.

But this is so simple. What critical edge could be involved? The discipline of inaction. The temporal and emotional wherewithal to make only 9 trades in 125 years. This rule would have had you sitting on the sidelines since May 1995. It might require making no investment moves for most of your adult life. It would be impossible to be an investment adviser, or to hire one: who would pay a fee to a manager who did nothing for 15 years?

This strategy is impossible to execute unless you are currently very young, and prove to be exceptionally long-lived. Thus almost no one has the necessary edge to pursue it.

In a way the investing edge is like marketing strategy: there are many different paths to advantage, but they all involve being unique in a significant and sustainable way.

Today’s little earthquake reminded me of a really big one. In 1989, I was on the same floor in the same building as this guy.

Previous posts have asked why obesity would appear in America only in the past 15 years, when we’ve had the gustatory trappings of success for many decades. A related question is why slim parents would have fat kids. What changed 20 years ago?

Here is a theory.

It turns out the insulin response is part of fetal development. The LA Times reported today that babies are twice as likely to be obese adolescents if the mother was diabetic during pregnancy. In effect, the unborn baby is at the tail of the insulin whip, responding much more strongly than the mother to overexposure to blood sugar.

But the medical definition of diabetes is a rather arbitrary numerical cutoff. Instead, consider the more basic conclusion, that routinely elevated blood sugar in a pregnant mother creates a magnified effect in the unborn child, as the baby’s insulin response is desensitized.

Now consider three changes that occurred in the past 30 years. First, the federal government began to advocate that carbohydrates be consumed at much higher levels relative to fat and protein, compared to the prevailing American diet. Second, corn syrup was widely substituted for cane sugar (corn syrup hits the bloodstream faster than sugar, placing greater strain on the insulin system). Third, snack foods, largely sweetened with corn syrup, were consumed in much larger quantity as mother stopped cooking and Big Gulps proliferated.

The effects might not immediately be visible, since the adult has a functioning insulin response that predates the dietary change; the problem might emerge only in the children.
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