Banks don't make losses. They can only collapse and so do governments.
With Variable or Adjustable Home Loan or Mortgage, banks can always keep interest rates high enough for the consumer. Hence the only way for banks to loose money is when consumers are unable to pay the loans i.e defaults. This is not the norm, but under extreme circumstances that is the only choice left for the consumer.
This smells like the old kingdoms where a stupid King will continue to raise taxes on the people without bothering to help them, resulting in either a take over or a revolution. All systems are created by people, for the people and when they start being unfair and unjust, people break the system. It is the responsibility of the government to create regulations and laws to create systems which are fair and just, so that people don't break the systems. Breaking systems is costly, but sometime systems don't leave enough choice.
Money is a system. It is a system of trust. Economic depression happens when people don't trust money anymore. In other words economy works when people trust money. And it is the responsibility of the government to make sure they do. It is hard to factor in how much people trust money into equations and hence it is left out, but that is the most important factor for the economy to work. The God Father and Hindi remake Sarkar show a glimpse of that other kind of economy.
Any business that cannot make losses can only collapse. Government, banks, corruption, Windows, Apple, Google Search, Facebook, Ebay, etc. When their is no choice, people invent something new.
Tuesday, October 19, 2010
Thursday, October 14, 2010
The not so virtue of selfishness
Ayn Rand talked a lot about selfishness and how that is good for everybody. Corruption is a direct consequence of selfishness. See Corruption and Capitalism.
How do you define selfishness? As much as I think about it, it sort of boils down to being logical or making the best possible choice for yourself, both of which are incomplete definitions.
Example: Say, I am a doctor. I need to catch a flight. The only taxi ready to go to the airport is charging me 10X the regular price.
By conventional thinking the taxi driver is selfish. But so am I, because that is the logical and best possible choice I have. Once I pay 10X the price and I understand the virtue of selfishness, I will also start charging my patients 10X the price when I know they don't have a choice. Yet again, patients are selfish as they are being logical and making the best possible choice and so am I.
What we have done here is that by being selfish, people start screwing each other when they know the other person doesn't have a choice. Banks do it, Oil companies do it, Facebook, Apple, Google, Microsoft, IBM, Cisco, Oracle do it. Someday the pharmacy will do it, airlines will do it, your maid will do it, your wife will do it, your children will do it..everyone will do it.
So what we get is a screwed up society to live in by being selfish. But if I did think this through and felt that if I start screwing people, eventually I will end up in a screwed up society which I don't want, I might stop screwing people when they don't have choice. Now this again is a selfish choice to make.
This is my problem with selfishness. What you do by being selfish could be anything and is just limited by your own ability to think and decide for yourself. Being selfish is good if and only if everyone has same IQ.
Tuesday, October 05, 2010
On Reality, Truth & levels of Abstractions
Much of the philosophy literature is full of the notion of identity, consciousness and perception. Table is a table and not a chair kind of stuff. What actually exists and what is just our perception.
Chair is a chair. It is made of wood. But no chair is also made of plastic and metals. Even wooden chair has metal nails and may be some glue and polish. Sofa is also a chair. It could have leather or cloth. The wood itself is made of molecules and molecules are made of atoms and then atoms are made of electrons and protons and neutrons, which themselves are made of sub atomic particles.
Technically the reality is based on sub-atomic particles which we can't see.
This brings us to the core conjecture of this post: the Reality & Truth is just a comfortable level of abstraction.
It will be useless to talk about recipe of fried chicken at the level of sub atomic particles or molecules. Or discussing the design of a building in terms of atoms. If you are making a atomic reactor, yes that is the level at which you need to think. May be sub atomic particles are made of further small units and if someone making a atomic reactor cannot explain his truths on current theory, he will further invent a better level of abstraction to deal with those things.
Things are grey, but it is efficient/simple to talk using black and white. Company distinguishes between the people based on their roles - manager, developer, QA, architect, etc. Political parties distinguish between people based on voting units or religion or caste or gender or education etc. Banks distinguish the same set of people based on their net worth or ability to repay loan etc. Police looks at them as criminals or non criminals. Doctors would have a different way of people classification. If we don't do such kind of classification to abstract out what is important and what is not, it will be impossible to get anything done in the world. For every one, this is the reality and at the same time it is a comfortable level of abstraction.
Every calculation in the world which uses pi is incomplete and yet we use it because it simplifies life. You can choose as many digits as you like, whatever you are comfortable with. Reality & Truth is just a comfortable level of abstraction, as long as they work, all abstractions are good enough substitute for reality. The only problem is we get so comfortable with these abstractions that we cease to think beyond them which by the way was the very reason for creating them in the first place. All we need to do is to be aware of these abstractions, so that instead of beating our head on why things are not making sense, just think beyond the abstractions and invent new ones which make sense, until they also break. The bigger problem is that we share these abstractions with other people in the world and unless they too feel the need, it is very hard to make them adjust/agree to a new "uncomfortable" abstractions (They are comfortable with the current setup).
Newton did a great job at describing motion and then Einstein questioned how do you measure it. Both theories are currently in use depending upon which suites the given problem. Before google all search engines looked at each page as a collection of words and then google defined each page using the link structure around it. When Zynga copied from other games on facebook, they had figured out that it was not about the quality of the game, but about how do you use the facebook platform to grow the user base. When IBM was thinking PC is the business, Microsoft figured out that OS is what makes the difference and is the strategic point of control.
Well the point is that many innovations in business or science are simply the result of looking at the problem differently, using different level of abstraction. The same is true for any form of knowledge we have ever encountered. Yet the world continues to struggle with what is reality, this is reality and this is not, fighting wars, writing blogs, doing marketing and propaganda. I guess if we could knock off the word reality/truth and simply use abstraction, world would be much much peaceful.
Chair is a chair. It is made of wood. But no chair is also made of plastic and metals. Even wooden chair has metal nails and may be some glue and polish. Sofa is also a chair. It could have leather or cloth. The wood itself is made of molecules and molecules are made of atoms and then atoms are made of electrons and protons and neutrons, which themselves are made of sub atomic particles.
Technically the reality is based on sub-atomic particles which we can't see.
This brings us to the core conjecture of this post: the Reality & Truth is just a comfortable level of abstraction.
It will be useless to talk about recipe of fried chicken at the level of sub atomic particles or molecules. Or discussing the design of a building in terms of atoms. If you are making a atomic reactor, yes that is the level at which you need to think. May be sub atomic particles are made of further small units and if someone making a atomic reactor cannot explain his truths on current theory, he will further invent a better level of abstraction to deal with those things.
Things are grey, but it is efficient/simple to talk using black and white. Company distinguishes between the people based on their roles - manager, developer, QA, architect, etc. Political parties distinguish between people based on voting units or religion or caste or gender or education etc. Banks distinguish the same set of people based on their net worth or ability to repay loan etc. Police looks at them as criminals or non criminals. Doctors would have a different way of people classification. If we don't do such kind of classification to abstract out what is important and what is not, it will be impossible to get anything done in the world. For every one, this is the reality and at the same time it is a comfortable level of abstraction.
Every calculation in the world which uses pi is incomplete and yet we use it because it simplifies life. You can choose as many digits as you like, whatever you are comfortable with. Reality & Truth is just a comfortable level of abstraction, as long as they work, all abstractions are good enough substitute for reality. The only problem is we get so comfortable with these abstractions that we cease to think beyond them which by the way was the very reason for creating them in the first place. All we need to do is to be aware of these abstractions, so that instead of beating our head on why things are not making sense, just think beyond the abstractions and invent new ones which make sense, until they also break. The bigger problem is that we share these abstractions with other people in the world and unless they too feel the need, it is very hard to make them adjust/agree to a new "uncomfortable" abstractions (They are comfortable with the current setup).
Newton did a great job at describing motion and then Einstein questioned how do you measure it. Both theories are currently in use depending upon which suites the given problem. Before google all search engines looked at each page as a collection of words and then google defined each page using the link structure around it. When Zynga copied from other games on facebook, they had figured out that it was not about the quality of the game, but about how do you use the facebook platform to grow the user base. When IBM was thinking PC is the business, Microsoft figured out that OS is what makes the difference and is the strategic point of control.
Well the point is that many innovations in business or science are simply the result of looking at the problem differently, using different level of abstraction. The same is true for any form of knowledge we have ever encountered. Yet the world continues to struggle with what is reality, this is reality and this is not, fighting wars, writing blogs, doing marketing and propaganda. I guess if we could knock off the word reality/truth and simply use abstraction, world would be much much peaceful.
Sunday, October 03, 2010
Developers Out There - API 101
Developers out there:
- are building their own companies to make money
- are writing open source software, because they enjoy the respect they get from the community and can make money later by consulting or writing books about their software
- are making iphone & android apps because people pay for them
- are making facebook apps, because they get this huge user base of 500 million users. If successful their app can bring huge amount of money from adds, or if they are making games then from virtual goods.
It was and it is about the money honey.
Zynga for all practical purposes is a developer for facebook. If Zynga makes a billion dollars out of virtual goods using facebook, they do bring 300 millions to facebook. Facebook gets a huge screen real estate they can use for advertisements which is exclusively created by Zynga. May be facebook makes more money from Zynga than what Zynga makes from facebook. This is called partnership.
The most stupid thing companies do after opening up their API's is to wait for developers to build applications and give no meaningful monetization model to developers. That leaves no other choice except advertisements for developers. Companies like twitter are even worse, who copy the innovation of their API developers and kill them.
Developers are out their to make money.
1) First figure out how you will make money.
2) Second figure out how you will make money if developers use your API.
3) Third share your profits with the developers based on how much business developer brings to you.
Let developers make the choice if they want $10 per booking vs $0.001 per add view and how do they optimize their app for their choice. Developers are not super excited by Facebook, Iphone, Android or Google. They are excited by the opportunity to make it big. 500 million * $ 0. 001 is a big number. But so is $10 * 50K or $100 * 5K or $1K * 500 or $10K * 50.
Ayn Rand
I liked Ayn Rand when I first read her in 1999 but something about her writing kept disturbing me for a long time. Their was something inhuman about the characters.
I believe Ayn Rand characters are automata, finite state machines. They don't wonder, or get surprised, or grow or evolve. Every decision they need to take in their life is decidable without an iota of doubt. They are able to model every situation, are dead sure about their model and can find their optimal response.
This, I believe is not quite true for humans.
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