Scott Adams's Blog, page 355

Anti-corruption App

Warning: This blog is written for a rational audience that likes to have fun wrestling with unique or controversial points of view. It is written in a style that can easily be confused as advocacy or opinion. It is not intended to change anyone's beliefs or actions. If you quote from this post or link to it, which you are welcome to do, please take responsibility for whatever happens if you mismatch the audience and the content.

Anti-corruption App

Corruption is a huge problem in developing countries. No one wants to invest in a place where all the civil servants, contractors, and vendors are crooks.  And without economic investment, you can't solve most other problems. So I wonder if an app can fix all of that.

I'm assuming that even undeveloped regions have, or someday will have, enough smartphones and Internet access to make this plan work. You don't need full Internet penetration for this idea to work, so long as most people in the local business class have access to someone who has access to the Internet.

The idea is to develop an app for tracking and identifying corruption anywhere in society. It would be sort of like Yelp for corruption. If you get screwed by someone, you record it in your app, it registers on the Internet, and the rest of the world can see. In time, this would drive out the worst offenders and create transparency for the rest. And transparency might be almost as good as getting rid of a corrupt official. For example, if you can't get rid of an official who demands bribes for issuing building permits, it still helps to know how much the bribe will cost and if it will get the result you need. Whenever you remove uncertainty, business is better off.

There are many problems with my plan. At the top of the list is the risk that people will game the system the way small businesses try to game Yelp, by leaving fake reviews. People could use the anti-corruption app to settle scores and to defame competitors. But I think the system still comes out way ahead even if you allow for a healthy dollop of abuse. If there's only one civil servant handling a specific function in a town, and he has a thousand bad reviews but also 100 glowing reviews, people will realize the glowing reviews are fakes.

In time, an observer could get a good sense of which regions are sufficiently corruption-free for investment. That creates more incentive for the corrupt regions to police themselves. Once you have a clear correlation between corruption trends and investment, citizens will tolerate far less corruption in their midst.

Would it work?

[Update: The websites mentioned in the comments as being similar to this idea aren't organized in a way that can make a difference. They are mostly ramdom anecdotes about unnamed people. -- Scott]
 

Windows Phone Challenge Results

Background: In a recent post I complained about both my old iPhone 3GS and my new Android phone. Brandon Watson, Senior Director of Windows Phone Apps challenged me to test a Windows phone. If I didn't like it better than the iPhone and the Android, he would donate $1,000 to the charity of my choice. I agreed. My evaluation follows.

Keep in mind that I'm just a casual user, not a phone tester. I didn't test every feature of every phone, and I didn't measure anything. I simply used the new phone and kept track of my reactions compared to my Android and iPhone experiences.

As it turned out, the Android phone I originally complained about was a lemon. I exchanged the phone at the Sprint store for the same model, and the new hardware doesn't crash. Apparently the crashing wasn't an Android problem.

I'm not always able to discern which problems are caused by the hardware versus the operating system versus the carrier. That warning is most relevant for the iPhone because my understanding is that AT&T doesn't work well with the iPhone 3GS in my corner of the San Francisco Bay Area.

Here are the three phone configurations I compared:

    iPhone 3GS/AT&T network

    HTC EVO 3D/Android/Sprint network

    Samsung Focus/Windows 7.5 (Mango)/AT&T network

CALL QUALITY

    Samsung/Windows/AT&T: GOOD

    iPhone/AT&T: FAIL (dropped almost every call over a minute)

    HTC EVO 3D/Android/Sprint: FAIL (no dropped calls, but always garbled)

USER INTERFACE

    Samsung/Windows: GREAT

    iPhone: GOOD

    HTC EVO 3D/Android: POOR

ONSCREEN KEYBOARD

    Samsung/Windows: FAIL

     iPhone: FAIL

    HTC EVO 3D/Android: FAIL

(I found all three phones frustrating. If you plan to do much typing, get a phone with a real keyboard.)

BATTERY LIFE

    Samsung/Windows: GOOD

    iPhone: GOOD

    HTC EVO 3D/Android: FAIL

APPS

    Samsung/Windows: OKAY-ISH

    iPhone: GREAT

    HTC EVO 3D/Android: GOOD

(I don't use many apps, but I'm assuming the Windows phone has most of the popular games and utilities but lacks some vendor-specific offerings one might like.)

INTANGIBLE COOLNESS FACTOR

    Samsung/Windows: NONE

    iPhone: GOOD

    HTC EVO 3D/Android: GOOD

Summary: I hated my call-dropping iPhone. I'm told that the call-dropping had a lot to do with the AT&T network where I live. But I rarely had an acceptable voice call when I travelled either. Maybe it's just me.

My Android phone is nearly useless unless I'm near a power outlet. The battery drains so quickly that I avoid using it if I'm out of the house for more than a few hours. And I don't use it for voice calls unless I have to. I also find the user interface to be a think-about-it-every-time experience, which is a fail. I can't seem to commit the most basic functions to reflex no matter how many times I use the thing.

The Windows phone has the best user interface experience, although the onscreen keyboard is problematic just as it is with the other phones I used. The Windows interface is intuitive, simple, and has a liveliness that I find appealing. Voice call quality was good, and battery life seemed good too. I declare it the winner compared to my iPhone 3GS with AT&T and my HTC EVO 3D with Android on the Sprint network.

However, the intangible coolness factor is impossible to ignore. Even the names Microsoft and Windows feel dated. And the home screen of the Windows phone is great from a usability standpoint, but lacks sizzle. I'd be lying if I said that didn't matter to me.

So what phone is right for you?

If you're an image-conscious hipster/rebel/brand-monkey, and you don't use the AT&T network in the SF Bay Area, the iPhone is a great choice, especially if you need obscure apps.

An Android phone is great if you enjoy its gadgety nature, which I confess has some appeal. And the larger screen on the HTC EVO 3D is a huge plus compared to the iPhone 3GS. I assume Windows can match screen size on some phone models. The downside for Android is a frustrating interface and, in my situation, with my particular phone, an inexcusably bad battery life. Other Android users I have spoken to don't complain about the battery issue although they do notice it seems short. My suspicion is that I live in a weak signal area and the phone is using extra power to compensate. Or perhaps my particular phone is a power hog; I can't tell.

If you want a smartphone that is easy to use, performs well, has a good battery life, and doesn't frustrate you, the Windows phone is the best choice of the three options I tested. All you give up is some hipster credibility and access to lesser-used apps.

For legal reasons, allow me to state that my opinions on any of the software, hardware, or networks mentioned are purely subjective and potentially misleading. My situation is not typical. Your experience with any of the software, hardware or networks mentioned will differ.

I don't have a financial interest in any of the companies mentioned except for their inclusion in diversified stock ETFs.

And a Barista Will Lead Them

President Obama's job approval rating is under 40%. Congress has a job approval rating of 13%. Our economy is circling the drain and all we have is a plan to make a plan - one that we know in advance will either be ridiculous or, if sensible, rejected by Congress. 

Our dynamic political system offers alternatives when we get in this sort of a fix. At the moment, the two most credible challengers to replace President Obama believe that if we pray hard enough we can fix things with magic.

I've predicted for some time that the citizens of the U.S. will stage a bloodless coup, in effect, as soon as we realize that our broken government isn't going to fix itself. The Internet gives us the option of forming a meta-government that simply tells the government-in-name what to do. We would still need politicians to press the buttons, but someone needs to tell them which buttons to press. And it looks as if that's about to happen.

The CEO of Starbucks, Howard Schultz, just went public asking other CEOs to stop donating to political parties until the government comes up with a reasonable budget. That's a step short of telling the government which specific button to push. But the idea that citizens can organize outside of traditional political parties and effectively steer the government is radical, and likely to evolve. We've always had activism on particular issues, but this feels different. Issue activism is like a teenager begging his parents to stay up late. Schultz' idea to stop contributing to politicians is more like a parent telling a toddler to go stand in the corner. It's the difference between asking and telling.

As for Schultz' idea to not donate to politicians, count me in. And someday, if a credible economist comes up with a sensible budget plan that most other economists like, I'll join my fellow citizens in jamming that budget down the throats of our useless government. The days of waiting for the government to fix itself are behind us.

I would go so far as to say that donating to a politician or political party in this environment is as close as an ordinary citizen can come to treason. Political contributions broke the government, and a government that stays broken will doom the country. Political donations made perfect sense when the system was working. That time has passed. It's time to try something different. We can start with Howard Schultz idea to stop donating to politicians.

Solemn Duty of Engineers

It is the solemn duty of engineers to stamp out ignorance.


[The purpose of this post will become clear on October 14. Please ignore it until then.]

Botched Interface Market

In the old days it was a pain to find the right flight at the right price and the right time. Then Orbitz.com and other travel websites came along and put (almost) all of that information in one place. But they botched the interface so badly it allowed Hipmunk.com to enter the market simply by being easier to use.

Likewise, it used to be a pain to find the right movie at the right theater at the right time. If you had three theaters within driving distance, three friends with different movie preferences, and some timing issues, it was hard to narrow down the choices. Then Fandango.com and other movie websites came along to put all of that information on one website. But they botched the interface so badly it allowed Wigglehop to make a space for themselves simply by being easier to use. (It's both a website and an app for iPhone and iPad.)

I wonder how many more botched interface markets are waiting to be exploited. TiVo does a great job for television shows but I think there's still another level of Interface improvement out there waiting to happen in that field.

GPS is wonderful technology, but I haven't yet seen a wonderful GPS user interface. They all seem tedious and wordy to me. That's a botched interface in my opinion.

I'm also annoyed that I have to first open a browser on my computer before I enter a URL or search term. I want to press one button, enter the search term, and have the browser open at its own pace after the fact. Google used to let me tap the CTRL key twice to open a search window before the browser opened, but I think that function went away with Windows 7. Correct me if I'm wrong.

Finding a contact on my computer or smartphone seems like a tedious bother. I want to click once on my contacts icon and see a screen of photos of my most-contacted people. I can recognize a face quicker than a name in text. That's another market opportunity. Or maybe some app already solved it.

Do you have any more examples of recent user interface breakthroughs? I like those.

My Bias against Certainty

Advocates - for anything - generally present their arguments as absolutes, in the form of "This is 100% right and the alternative is 100% wrong." That might make sense for some topics, but does it ever make sense for a complicated issue, such as economics?

Economist Paul Krugman is a good example. He's smarter than I am, about economics in particular and probably most other things as well. But I get suspicious of his certainty when, for example, he advocates for increasing government spending in the short term as a way to boost employment now and reign in the deficit later.

I understand the argument, but is it 100% likely to be the best approach, or is it more of a 75% situation? He presents his case with a certainty that feels like 100%. And perhaps it is. I'm not qualified to judge it.

Whether he believes his proposed economic path to be 100% better than the practical alternatives, or 75%, our culture somewhat demands that it be presented as 100%. That's what advocacy is all about. If you believe one path has the best odds, you're somewhat ethically required to make the strongest argument you can.

Full stop: I don't want to discuss the best economic policy here. No one reading this blog will change his or her opinion on that topic. I'm more interested in what sort of argument is most persuasive. Would you be more persuaded by an argument that said one economic approach is 100% likely to be better or an argument that the odds are more like 75%?

Personally, I find lower odds more credible and therefore more persuasive. When I see economic plans presented as certainties, it feels like a political position as opposed to something closer to common sense or science.

I have a personal bias that only idiots have certainty about complicated issues. (The exception would be skeptics who don't believe in magic, religious or otherwise. I give them a pass for being 100% certain.) So when Krugman, who is brilliant, displays certainty on the economy - with his Nobel Prize and all - my brain automatically conflates him with idiots, and it weakens his argument.

So I wonder if it's just me. When you hear an argument about a complex issue presented as a certainty, do you reflexively downgrade its value? Or does the certainty mixed with a credible source make it more persuasive to you?

Today's Life and Death Question

If I ask you to tell me the likelihood of a particular major league batter getting a hit in a particular at-bat next week, against a pitcher who has yet to be named, you'd probably say the odds are 25-35%. And you would be about right.

If I asked you how well a particular investor is likely to perform compared to the market averages, long term, if he actively manages his own money, you'd say "worse than the average," and you'd probably be right.

It's important to know the odds for things. We make most of our major decisions based on probability. And that's why I find it so interesting that we (the general public) don't know the odds for science. Put another way, how often is a peer-reviewed scientific study later discovered to be wrong? How often is a hypothesis by a credible scientist proved right? And how often does a major theory get revised or even discarded? If the general public doesn't know the answers to those questions, how screwed are we?

I started thinking about this when I saw a news story (that is now behind a pay wall) about the scary number of peer-reviewed articles in scientific journals that turned out to be fraudulent or simply wrong. I say "scary" because the news left out the probability. Was it 1% of the studies that were bad or 50%? I don't know. And that makes a big difference for how much trust I put in the next peer-reviewed study. If scientists someday claim they have studies showing that eating carrots will double my life expectancy, do I buy a bushel and start gnawing on them or do I shrug?

What about a typical hypothesis? I assume a typical hypothesis formulated by a credible scientist is shown to be wrong most of the time. But are we talking about 55% of the time or 99%? Or am I wrong that it's wrong most of the time? It matters to me because I might want to start eating carrots before the studies are done, based on the hypothesis alone, just in case.

And how about a typical theory? How often are theories wrong, or at least wrongish?

I pause here to remind readers that the word "theory" is often used in casual conversation to mean something like an educated guess. But in the scientific context, it means something closer to "proven true by experiments." The technical definition is unwieldy (sorry, bearded taint who is angrily reading this) and would be a distraction from my point today.

The great thing about science is that it allows today's truth to be revised to a new and better truth if new information says so. But how often does that happen for something as well-tested as a major theory? Not often, I assume. But does not often mean 1% of theories, or does it mean 20% if you wait a few generations? Beats me.

Judging scientific probability is a question of life and death. Consider climate change science. If a reasonable person judged the likelihood of climate change science being correct, using nothing but a lifetime of observing science stories in the media, he would probably conclude that the claimed risk is overblown or non-existent. The media concentrates on new and speculative stories about science, and stories about frauds and mistakes, so one can easily get the impression that science has a batting average on par with astrology. You don't see many stories about theories that are rock solid. That isn't news, so our sense of the track record for science is skewed.

I use climate change as my example because it fits the question so well. Personally, I'm spring-loaded to agree with the vast majority of scientists who say it's a huge problem and that humans are a big part of it. On the other hand, the climate models remind me of economic models because of the many variables, and we know how accurate those are. For me, the tie-breaker would be some useful information about the track record of scientists when a complicated model is involved.

So my questions for today are these:

1.      How often is a peer reviewed study wrong?

2.      How often is a credible scientist's hypothesis wrong?

3.      How often is a scientific theory later proven wrong?

4.      How often does a complicated scientific model make correct predictions?

If you don't know the answers to those questions, your opinions on our most important science questions are worthless at best, and deadly at worst. And I'm right there with you.

Engineer's Stock Fund

The tough part about investing in stocks is that public information is often inaccurate or worthless, and professional fund managers generally won't perform better than the proverbial monkey with the dartboard.

But suppose you started an investment group comprised of engineers who evaluate vendor proposals for their day jobs. That group normally has insight that the public doesn't yet have. If not, why bother evaluating anything? And yet the opinions the engineers generate would not be insider information because the products they evaluate belong to other companies. [Someone please correct me if I'm wrong about that.]

My hypothesis is that the technology folks who are routinely reviewing vendor proposals have better and more current knowledge about other technology companies than even the CEOs of the companies being evaluated. A CEO only knows what his staff tells him. And we all know how weasel-skewed that can be.

Technology magazine/website reviews of products are generally worthless too, in part because magazines accept ads from the companies they review, and partly because products change faster than the magazine/website can keep up.

In my old corporate life I worked in a technology lab at the local phone company. The engineers were continuously evaluating the products of other companies to see what worked best with the network. I remember asking one of the top engineers which company he would recommend if I wanted to buy stock. He said there was just one: Cisco. It was the early nineties and the first time I ever heard the name of the company. Had I taken his advice, I would have made a 500% gain on my money, assuming I got out at the top of the bubble.

So I wonder if you could form a sort of secret investment society of engineers whose work brings them near the gears of civilization.  The idea would be to capture the ever-changing opinions of perhaps a thousand engineers, software professionals and other tech experts working in the trenches and funnel that knowledge into an investment fund. Let's say the engineers get to participate in the fund without a management fee that other investors pay, typically in the 1% per year range, which is probably enough incentive. The fund's management would work to find patterns in the opinions of its pool of technology experts, sort out the good predictors from the bad, avoid insider trading, and translate the knowledge into stock purchases.

[Update: To clarify, the engineers would only provide information on which companies have the best products at any given moment. They wouldn't be picking stocks or evaluating cash flow or anything else.]

Would the fund beat the monkey with a dartboard?

Folksy Economic Wisdom

Warren Buffett has a humorous way of cutting through all the economic clutter with his folksy summaries of events. He said this recently about the U.S. debt: "Think about it. The U.S., to my knowledge owes no money in currency other than the U.S. dollar, which it can print at will. Now if you're talking about inflation, that's a different question."

I know just enough about economics to be stupid at a slightly more dangerous level than the general public. But Buffett's summary sounds right. In other words, we never had a default risk, just an inflation risk.

Now if you want to hedge against inflation, what do you invest in? Answer: Anything that inflates. That's real estate and stocks. Ouch, ouch. And don't forget gold, canned goods, and ammunition. (And also don't forget to ignore the financial advice of cartoonists.)

On a related topic, some of your comments to my blog yesterday had me worried. A number of you pointed out that our economy can never go anywhere but down so long as we buy more foreign goods than we sell. Hmm. Is that true?

It sounds true on the surface. If you imagine an island nation where everyone is a lawyer and all they do is sue each other for a living, the system won't last. Someone has to make something.

On the other hand, is it really that simple? If I ask Warren Buffett, would he say, "We're doomed unless we sell more than we buy, and that will never happen"?

On the plus side, I recently had a conversation with a small business owner who was buying some robots to compete with Chinese manufacturers. His observation is that the Chinese pay the same amount for robots, and have higher shipping costs, so American companies can actually beat the prices of Chinese goods for stuff made mostly by robots.

And robots are the future. Suck that, China.

Two-Step Plan to Fix the Economy

What if the biggest problem with the U.S. budget fiasco is a failure of imagination?

Sometimes I wonder if we're like an audience at a magic show. The magicians in Washington D.C. are making us focus on budget cuts and tax hikes as if those are the only alternatives. Hypothetically, if a creative budget alternative exists, it would be effectively invisible because no one is looking for it. You wouldn't bother looking for something that you can't imagine.

I'm going to describe a third alternative just to help you imagine that such a thing might be possible. It's a simple, two-step plan that costs nothing and doesn't involve the government in any way. I think you'll agree that's a big advantage. The plan starts with a question:

1.      How much would the rich need to voluntarily increase spending on products and services in the United States, including business spending and investment, to stimulate the economy enough to balance the budget over time without a tax increase or crippling budget cuts? I'm looking for a simple and dirty percentage. Is it 10%? 30%?

2.      Once we have that estimate from a credible source, such as a respected economist, I'll blog about it in a way that is interesting enough for the media to pick up on the idea. That part is easy because the media is running out of newsworthy angles for the budget story. A creative idea that isn't ridiculous would spread quickly.

That's the whole plan. It's deceptively simple to describe. The complicated part is explaining why a plan that is so simple would work. You probably see a dozen potential problems with it. Let's discuss the obvious ones.

First, why would the rich volunteer to spend more? The quick answer is that it's in their self-interest to keep the economy humming along. But there are two good reasons why the rich don't jump in right now and save the economy with extra spending:

1.      The target is unclear. The rich don't know how much they would need to increase spending in order to stimulate the economy enough to balance the budget.

2.      Each rich individual knows that one person's spending can't influence the entire economy, and there's no reason to think other rich people would join the cause.

Our hypothetical economist could solve the first problem by giving the rich a clear spending target. Let's say the number is something like 10% extra spending per rich person. One problem is that rich wouldn't know with any precision whether or not they were reaching their personal spending target. There would be a lot of guessing involved. We can deal with that imprecision by revising the target up or down after a quarter or two to get the right approximate effect.

A related problem is that an economist's estimate of how much the rich have to spend to stimulate the economy and balance the budget is likely to be very wrong. That's exactly the sort of thing no one can accurately predict. But in some cases - and this is probably one of them - you don't need accurate information to influence the change you want. You just need a target that moves people in the right general direction. Economies need direction, not precision.

The next problem is the Prisoner's Dilemma. Any individual rich person is best served by choosing not to spend any more than he normally would. That way, if no one else spends extra, he is no worse off. And if everyone else does spend more, he still gains from the rising economy. He's a free rider.

But here's where the media and peer pressure comes in. By analogy, I don't know a single household that doesn't bother to recycle, even though it's a pain in the ass, and even though one household's effort makes no real difference to the planet. The secret is that people WANT to help the planet. It's in our nature. We enjoy feeling as if we are making a difference in something important. It literally feels good.

The media could encourage the rich to get with the plan just by doing lots of human interest stories about millionaires patriotically spending extra money in unexpected ways. And I would expect lots of peer pressure on millionaires to boost spending. Psychology matters. At the moment, being rich feels like being an unscrupulous douche bag. I think most rich people would happily pay extra to instead feel like patriot engines of the economy.

Another incentive for the rich to voluntarily increase spending is that it might ease the helpless feeling they get from watching Congress furiously working on a plan to destroy civilization. Personally, I'd pay a lot to make that feeling go away. And if the side benefit is a healthier economy, I'd stand a good chance of making back my money and more.

Another problem with the plan is that not all spending is equal in terms of economic stimulus. How can we be sure the rich will spend the right way? We can't. But we also can't predict the long term impact of tax increases or budget cuts. No plan has the luxury of being predictable.

The key to making this voluntary spending plan work is keeping government out of it. The last thing you want is President Obama encouraging rich people to spend more. That makes it a Democrat plan and dead on arrival. The same is true if the Republicans back it. The idea only works if no notable politician embraces it. Luckily, I think we can depend on our elected officials to ignore any plan that has a chance of working.

You'd also have the problem of pundits conflating this plan with President Bush's suggestion after 9/11 that people should keep shopping so the terrorists don't win. (You'll probably see that snarky comparison in the comments to this blog.) But I don't see that as a deal-breaker.

Part of the reason this idea has been hiding in plain sight is that, as I mentioned, our so-called leaders are making us focus on the binary choice of higher taxes or draconian budget cuts. And the ability to organize something of this nature without government involvement is fairly new, thanks to the Internet. It caught Egypt by surprise earlier this year.

Keep in mind that economies turn on expectations. All we need is a plan that looks somewhat credible. Once we have that, even the non-rich will start spending more. We wouldn't necessarily need a high voluntary participation rate by rich people as long as the rest of the country believes the effort is going to build some momentum in the right direction. Optimism would do the rest. 

I think the United States has an imagination problem, not a spending or tax problem. Let's start by imagining citizens can solve the budget problem without the help of our government. If someone credible can tell the rich how much more they need to spend on their own families and their own businesses to save civilization, I can imagine people rising to the challenge. I've lost all hope in government, but citizens are still reasonably awesome.