economics

Big iron endures

A lot of the big, complicated systems that undergird our economy—banks, airlines, stuff like Social Security—still run on old-fashioned mainframes. There’s still a lot of COBOL code out here. Florian Mueller writes:

At the recent launch of its new mainframe generation — the biggest event of its kind in 20 years — Tom Rosamilia, IBM’s general manager for System z, was so exuberant that he forgot about antitrust and told a group of UK journalists the truth: “Western civilization runs on this system.”

What are some of the key population-scale government computing applications? Other than, e.g., NSA signal processing stuff, I mean. That’s sort of the obvious candidate, and it’s gotten plenty of press. What’s not obvious?

 

The capitalist critique

Big ups to the Banksy documentary Exit Through the Gift Shop, which feels very Snarkmarketian to me. The movie unfolds in three distinct chapters, slowly developing an aesthetic and an argument, and finally posing a provocative question, or a few. 

The first third of the film uses the lens of aspiring documentarian Thierry Guerra to give us a tour d’horizon of the universe of street art. We hear from a diverse cross-section of street artists from Shepard Fairey to a mosaic artist known as Space Invader to Banksy himself, while we’re watching footage of people taking to rooftops and subway stations to decorate the urban landscape. 

Then we delve into the story of Guerra himself – this dude who channels his obsessive impulse to film everything in his life into a thorough record of the street art movement, compiling thousands of hours of footage of artists on the make. For such an ephemeral art form, this archiving is invaluable. Prominent artists cheerfully accommodate Guerra and his omnipresent camera, despite the heightened visibility it brings to activities that might not be entirely licit.

Guerra’s profile rises as the world he’s documenting starts to become more and more celebrated by the mainstream art community, which introduces tension: Street art is almost by definition a critique of mainstream consumer values. The movement rests on this fundamentally anti-consumerist premise of reclaiming private property for public expression. A mural on the side of a building defies our notions of commerce; the canvas can’t easily be carted off and sold, right? So what happens when the art does become property, bought and sold like any other commodity, auctioned off for tens of thousands of dollars at Sotheby’s, pursued by collectors? 

The answer: Mr. Brainwash. 

Guerra, realizing that his payday is not going to come in the form of a smash hit documentary, decides he’s going to cash in on his work a different way. By now, of course, he’s become a devoted observer of the process by which street artists accrue mountains of hype, use industrial production techniques to replicate their work on a massive scale, and make their subversive and ubiquitous art a sort of viral marketing campaign for their brand. So he takes the logical next step of turning this fundamentally anti-capitalist movement into the ultimate post-industrial capitalist phenom: developing an alter ego he calls “Mr. Brainwash,” who slickly deploys the street art system in a scheme to mint millions overnight.

(Side note: I say “slickly deploys,” but one of the facts the documentary makes hilariously clear is that Guerra is anything but slick. He’s this endearingly inarticulate, possibly kind of dimwitted, organization-challenged geek, basically. In other words, there’s no Evil Genius at work here. Or is there? This is one of the more fun implicit questions the film poses.)

Reviewing the film, a lot of critics have raised the question of whether this is all a monstrous hoax engineered by Banksy. The events in the film – including Mr. Brainwash’s LA art opening – are of course genuine, documented occurrences. But to what extent might Banksy have set up the rules of the game and forced the outcome? Lots of fun speculation to be had there.

If the documentary ended up simply asking “What is art?” it would have been a let-down. (Don’t get me wrong. It gets asked. Warhol comes up more than once.) A more interesting question is, “What is Thierry Guerra’s / Mr. Brainwash’s artistic masterwork?” Is it the footage? The anti-anti-capitalist art opening? The documentary itself, and the worlds it contains?

By the way, Mr. Brainwash lives.

 

The psychohistorian on the op-ed page

I cite Isaac Asimov’s influence on Paul Krugman a lot, but this is the most complete articulation of it I’ve yet seen—from the New Yorker profile:

Krugman explained that he’d become an economist because of science fiction. When he was a boy, he’d read Isaac Asimov’s “Foundation” trilogy and become obsessed with the central character, Hari Seldon. Seldon was a “psychohistorian”—a scientist with such a precise understanding of the mechanics of society that he could predict the course of events thousands of years into the future and save mankind from centuries of barbarism. He couldn’t predict individual behavior—that was too hard—but it didn’t matter, because history was determined not by individuals but by laws and hidden forces. “If you read other genres of fiction, you can learn about the way people are and the way society is,” Krugman said to the audience, “but you don’t get very much thinking about why are things the way they are, or what might make them different. What would happen if?”

Yes!

 

Stock and flow

I was an economics major in college, and I’ve been grateful ever since for the few key concepts it drilled into me: things like opportunity cost, sunk cost (that’s a big one), and marginal cost. I think about this stuff all the time. Sometimes I consider the marginal cost of, like, making myself another sandwich.

But one of the biggest takeaways was the concept of stock and flow.

Do you know about this? Couldn’t be simpler, and really, it’s not even that much of an a-ha. There are two kinds of quantities in the world. Stock is a static value: money in the bank, or trees in the forest. Flow is a rate of change: fifteen dollars an hour, or three-thousand toothpicks a day. Easy. Too easy.

But I actually think stock and flow is the master metaphor for media today. Here’s what I mean:

  • Flow is the feed. It’s the posts and the tweets. It’s the stream of daily and sub-daily updates that remind people that you exist.
  • Stock is the durable stuff. It’s the content you produce that’s as interesting in two months (or two years) as it is today. It’s what people discover via search. It’s what spreads slowly but surely, building fans over time.

I feel like flow is ascendant these days, for obvious reasons—but we neglect stock at our own peril. I mean that both in terms of the health of an audience and, like, the health of a soul. Flow is a treadmill, and you can’t spend all of your time running on the treadmill. Well, you can. But then one day you’ll get off and look around and go: Oh man. I’ve got nothing here.

But I’m not saying you should ignore flow! No: this is no time to hole up and work in isolation, emerging after long months or years with your perfectly-polished opus. Everybody will go: huh? Who are you? And even if they don’t—even if your exquisitely-carved marble statue of Boba Fett is the talk of the tumblrs for two whole days—if you don’t have flow to plug your new fans into, you’re suffering a huge (here it is!) opportunity cost. You’ll have to find them all again next time you emerge from your cave.

Here’s a case study: my pal Alexis Madrigal here in SF has got the stock/flow balance down. On one end of the spectrum, he’s a Twitter natural and a Tumblr adept. Madrigal’s got mad flow; you plug in, and you get a steady stream of interesting stuff every day. But on the other end of the spectrum—and man, this is just so important—he’s working on a deep, nuanced history of green tech in America. He’s working on a book intended to stand the test of time.

You can tell that I want you to stop and think about stock here. I feel like we all got really good at flow, really fast. But flow is ephemeral. Stock sticks around. Stock is capital. Stock is protein.

And the real magic trick in 2010 is to put them both together. To keep the ball bouncing with your flow—to maintain that open channel of communication—while you work on some kick-ass stock in the background. Sacrifice neither. It’s the hybrid strategy.

So, okay, I was thinking about stock and flow while I was doing the dishes just a second ago, and wondered: Wait. There are all these super-successful artists and media people today who don’t really think about flow. Like, Wes Anderson? Come on. He’s all stock. And he seems to do okay.

But I think the secret is that somebody else does his flow for him. I mean, what are PR and advertising? Flow, bought and paid for. Messages metered out over time. Rewind history and put Wes Anderson on his own—alone in the world—and I don’t think you get the same result. His stock is strong stuff: hugely compelling, utterly unique. But how does he tell people about it?

So if you are in the position to have somebody else handle your flow while you tend to your stock: awesome. But that’s true for almost no one, and will (I think?) be true for even fewer over time, so you need to have your own plan for this stuff.

Anyway: this is not a huge insight, I know. Mostly I just wanted to share the lingo, because it’s been echoing in my head since my first microeconomics course. Today I’m still always asking myself: Is this stock? Is this flow? How’s my mix? Do I have enough of both?

 

The five texts

Economics has, during its entire history, from the mid-18th century until today, been dominated by only five textbooks. David Warsh lists them and explains:

[F]or the entire history of modern economics, all 250 years of it, from its beginnings during the Enlightenment of the eighteenth century to the present day, the discipline has been dominated by five canonical textbooks — and only five (though, of course, each had many imitators). Those who found compelling the authority of these texts became economists. Those who didn’t became something else — sociologists, political theorists, anthropologists, psychologists, historians, lawyers, reformers, businessmen, religious leaders.

Isn’t that an interesting way of framing it? “Those who found compelling the authority of these texts became economists.” Wonderful phrasing; neat idea, too. The five texts were written by Adam Smith, David Ricardo, John Stuart Mill, Alfred Marshall… and Paul Samuelson, who died recently, and who is the subject of Warsh’s piece.

The piece also includes this fun anecdote, new to me. Samuelson’s epochal text opens with an epigram from Willard Gibbs, a scientist and mathematician: “Mathematics is a language.” The story behind those words, from Muriel Rukeyser:

[Gibbs] would come to meetings — these faculty gatherings so full of campus politics, scarcely veiled maneuvers, and academic obstacle races — and leave without a word, staying politely enough, but never speaking. Just this once he spoke. It was during a long and tiring debate on elective courses, on whether there should be more or less English, more or less classics, more or less mathematics. And suddenly everything he had been doing stood up — and the past behind him, his [philologist] father’s life, and behind that, the long effort and voyage that had been made in many lifetimes — and he stood up, looking down on the upturned faces, astonished to see the silent man talk at last, and he said, with emphasis, once and for all: “Mathematics is a language.”

“And suddenly everything he had been doing stood up.” Jeez. More wonderful language. What an image. “Everything he had been doing stood up.”

 

Bangladesh Rural Advancement Committee

I second Nick Kristof’s recommendation of BRAC—the Bangladesh Rural Advancement Committee—as an organization worth giving to. With a name that unsexy, they’ve got to be good, right? In Bangladesh, BRAC is pretty much the government; it provides the support and investment that a good government is supposed to provide, while the “real” government squabbles with itself. Now BRAC is branching out to other countries as well. It’s an amazing organization—and, for good or for ill, I think it’s a peek into the future.

 

Nine Chinas

This is terrific: a colorful little map that breaks China down into nine distinct regions. Probably a bit too concise for real China experts, but I found the shorthand revelatory and useful.

And here, the map’s creator slots the regions one-by-one into a list of the world’s most populous countries. Man that is a lot of people.

Here’s the North American analogue for all of Snarkmarket’s Chinese readers! “Ecotopia”—talk about shorthand—but I love it.

 

Time, space, and warehouse robots

Alexis Madrigal has a great piece about warehouse robots over at Wired Science. Here’s a nuance I would not have predicted:

The system adjusts to the nature of the products and workers, too. In a typical [robot warehouse], the humans are placed around the edges of the room. As the robots pick up loads of products and put them back, they adjust the warehouse for greater efficiency. More popular products end up around the edges of the warehouse while more obscure products, like those acid-washed bell bottoms, end up buried deep in the stacks. The self-tuning nature of the system creates big efficiencies.

How cool is that? The warehouse adapts. The physical space becomes a map of the underlying cost of time—which isn’t just about raw distance in this case, but about repetition, too.

I realize this sort of mapping exists elsewhere; I just can’t think of anywhere else where it’s so flexible. For instance, I’m thinking about this view of London that paints both housing cost (in dollars) and travel cost (in minutes) onto the map. Now if only bits of the city could scoot around on robot wheels and rearrange themselves for maximum efficiency…

See also: Matt Jones’ recent talk on time as a material that can be manipulated and designed.

 

Pick your POV carefully

Paul Graham, whose writing I always enjoy, just posted a new piece about publishing and, to a degree, the structure of markets for content. I want to zoom in on one point:

What about iTunes? Doesn’t that show people will pay for content? Well, not really. iTunes is more of a tollbooth than a store. Apple controls the default path onto the iPod. They offer a convenient list of songs, and whenever you choose one they ding your credit card for a small amount, just below the threshold of attention. Basically, iTunes makes money by taxing people, not selling them stuff. You can only do that if you own the channel, and even then you don’t make much from it, because a toll has to be ignorable to work. Once a toll becomes painful, people start to find ways around it, and that’s pretty easy with digital content.

I think this is a cheat—aren’t all stores just tollbooths, then? You never buy goods at cost. There’s a markup, a tax, associated with the aggregation, the curation, the experience. This is as true for a grocery store as it is for iTunes and the App Store. And you can see Graham’s anti-iTunes argument sort of fuzz out as the paragraph proceeds: It starts very specific, then breaks down into a restatement of that old information-wants-to-be-free digital determinism.

But that’s not the point I want to make. Rather, it’s that almost all of this discussion—not just Graham’s, but the broader conversation it’s part of—tends to operate from one of two extreme points of view: either that of the consumer (who wants convenience and economy) or that of the company (which wants big profits, or at least a business model). I find myself wanting—sort of desperately wanting—to hear from a different group: the creators.

And, this is as much of a surprise to me as anybody else, but finding myself more and more in that position—the position of somebody who wants to make content, and make money from that content—I see the Kindle Store and the App Store and I say: thank you.

Now listen, I understand all of the problems. I just got into another round of the iPhone: Is It Evil? conversation last night. (Our conclusion, same as always: yes, a little bit.) But if it’s not yet what we want it to be, at least it moves us in the right direction. In iTunes and the App Store, an individual creator can make something and offer it to the world for a small sum, and people will actually take her up on it. I wish that wasn’t so revolutionary… but it is!

Trust me, I get the argument for free. I love Kevin Kelly’s strategies for selling stuff in the age of command-D. Ransom model, hello?

But at the same time, I don’t want to give up on selling stuff quite yet. I don’t think the central lesson of the App Store is that people will suffer a tax if it’s small enough. Rather, I think it’s that people are happy to pay for things if it’s easy enough. And that’s especially true when those things aren’t the products of Super Amalgamated Content LLC, but rather of Indie Content Haus, or better yet, of your friend Matt.

If that’s true, then Paul Graham’s argument about iTunes leads us in the wrong direction. Digital determinism says it’s a tax, a toll booth, a tortured construct that denies the essential nature of digital content. Pragmatism says—without denying that there’s room for improvement—that it’s a joy, a gift, an opportunity engine.

Now, a question you could ask is this: Why isn’t iTunes proper—the music and video part—more like the App Store? The former is open to indies, but still dominated by big corporate media. The latter is open to big corporations, but dominated (so far) by indies. What’s different? How might you splice some of the App Store’s indie vigor into iTunes proper?

I think one strategy—which doesn’t really answer my question above—is to start thinking hard about how to blur the lines between software and content, and get some “content experience apps” (I promise never to type that again) into the App Store. (Paul Graham ends up saying something similar.) For whatever reason, as a market, it’s working for creators. So maybe it’s simply where creators—of many kinds—ought to go.