Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Thursday, March 31, 2011

Only a minority of talented computer programmers are also talented corporate strategists, a potentially ongoing series

Bloomberg News reports:
Times Co.’s effort to turn online readers into paying subscribers is being watched by other newspaper companies struggling with a decline in traditional print advertising. The New York-based company is spending $40 million to $50 million on the project and has said it plans to debut it by March.

Picked up and quoted as:
my biggest question right now is how the NY Times spent a reported $40-50 million writing the code (Bloomberg; other sources are consistent). Google was financed with $25 million. The New York Times already had a credit card processing system for selling home delivery. It already had a database management system for keeping track of Web site registrants. What did they spend the $40-50 million on? A monster database server to keep track of which readers downloaded how many articles? They should already have been tracking some of that for ad targeting. In any case, a rack of database servers shouldn’t cost $40 million.

"The project" is unlikely to equal "writing the code", even on a very expansive definition of "writing the code" to include all the project spec and design work. I would very strongly guess that a significant part of that $40m (if it's a hard figure; as far as I can tell the other sources are consistent because they're quoting Bloomberg, which doesn't attribute the number), was market research.

Market research can be very, very expensive, although as with education it's not so expensive when you compare it to the alternative of remaining ignorant. The lion's share of that budget would most likely have been spent on answering the question "Should we have a paywall?". Then "What kind of paywall?". I am not sure I agree with the answer they came up with, but for a largeish company making an unbelievably important decision about its flagship product, large spends on research would seem appropriate.

I am still having a hard time getting to $40m though. A very, very big market research project would be one with a budget of $5m; this would be an account that the entire industry competed for. You could then probably spend quite a bit more on strategy consulting - it's not difficult to run up a bill of $1m a month with McKinsey, and if we say they did twice that for six months, round the whole lot up ... I can see $20m for groundwork. Another c$5-10m for internal cost allocation of senior management time still leaves the actual coding to cost $10m, which is still about an order of magnitude more than it could reasonably cost to do the job. Update Alex thinks could indeed cost that order of magnitude to do the job, making the good point that Greenspun's cheep'n'cheerful paywall for MIT didn't exactly have to handle the volume of the New York Times (and nor did Google back in the days when it was doing things on a budget of $25m, which these days of course it is not). Tying in to the nuclear post above, making things bigger often makes them more complicated too.

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14 comments this item posted by the management 3/31/2011 06:13:00 AM

Tuesday, March 29, 2011

In which I disagree with Paul Krugman, about something that was once very important

America’s other great moral war, World War II, was similar. The war movies I watched when I was a kid always had plucky, individualistic American heroes beating superbly equipped Nazis, but the reality was mostly the other way around. We had many heroes, but the truth is that Americans were never as good at the art of war as the Germans. What we were good at was the art of production, of supply. Honor the heroes who stormed Omaha Beach — but it was the floating harbors, the trans-Channel fuel pipeline, and the air superiority achieved through production miracles that really did it.

True but false. In the European theatre, maybe so, but then in the European theatre there weren't really all that many face-to-face, head-to-head, like-for-like scraps between the US Army and the Germans. In the Pacific, on the other hand ... it was indeed US industrial power that got them to Guadalcanal, Tarawa, Iwo Jima and Okinawa, but once they were there, it was nothing more nor less than exactly the kind of man to man combat that we were talking about. And the USA won. As I've noted elsewhere, it's surprising that the US Army has pockets of the "Warrior Ethic", because their finest hour was also the destruction-testing of "imperial martial culture versus citizen-soldiers of a democracy", and the right side won.

Bottom line is that it's a common and romantic notion (with roots in Ruskin, Nietszche and other Romantic types many of whom had a "complicated" relationship with sexuality) that industrial societies, for all their worldly wealth and productive capacity, somehow produce a slightly less worthy figure of human being; the triumph of the Last Man. Not true; actually they're better people as well.
57 comments this item posted by the management 3/29/2011 08:42:00 AM
From the department of "are you absolutely sure about that"

The New York Times, via Yglesias:

"If you don’t recognize [Miranda Cosgrove, star of a sitcom called "iCarly"]’s name, you must not be between ages 2 and 14, the parent of such a child or, possibly, British (nearly 8 percent of England’s population tunes into "iCarly").

That would be four and a half million viewers taken at face value, which would be not bad ratings for an evening programme. In the amazingly Balkanised world of kids TV and for something only shown on cable, it's impossible.

In fact, the show gets around 100,000 viewers. I can just about believe that this is 8% of the cable television audience at 1630 on a weekday, but it's not 8% of the population of England, let alone Britain. The entire channel Nickelodeon has a monthly reach of 7.7%.

So let's step on this one; dear Americans, the subjects of her majesty are not in fact mad for Miranda Cosgrove, or at least not yet in any way that shows up in BARB ratings.
17 comments this item posted by the management 3/29/2011 01:40:00 AM

Monday, March 28, 2011

Friday Music Link, here on a Monday

The interesting thing to me about this fiasco is not so much the sight of Charlie Brooker desperately trying to get the broomsticks to stop marching, but the actual video itself. In particular, the gentleman who pokes his head in at about the half way and starts rapping.

This guy is clearly not a schoolfriend or musical acquaintance of Rebecca Black. He's someone who has been hired to appear in the video along with the rest of the audiovisual production team, on the basis of a presumed wage paid - he is quite literally a journeyman rapper[1]. The music industry fascinates me; have a look at that bloke driving a car along talking in verse about his pretend friend the thirteen-year-old and consider that somebody booked him. Somebody in all probability confirmed his availability on the day. He then sent an invoice which somebody had to process, pay and then file. Somebody does his tax return.

When you consider that the whole number apparently cost Ms Black's parents no more than $2000 plus sales tax, which has to pay for the opportunity cost of the recording studio, the person who wrote the backing track, the recording engineer, cameras and video edit suites plus someone to run them, and obviously a fairly substantial profit, it really suggests that there's been a revolution in these things. About ten years ago I managed to rent my car out to a video production company (to represent the car of a character who was portrayed as a halfwit; I was not too offended) and got £500 a day for it - this absurd sum was regarded as reasonable back in the days when video production was such an amazingly expensive business that anyone doing it was literally awash with money. Productivity miracles, how are ya, and I suspect that compared to the video production industry, print journalists don't know they're born.

In general though, it's an occasional theme of this blog that the media industry is an industry (something regularly forgotten by government departments of trade and of education, who really seem to think that only science graduates make products that can be exported) and this is a good example. Next time you're watching a music video, remember that this is a manufactured object. The people bouncing up and down are not having a party; they are hourly-paid workers employed to simulate having a party. The beer cans they are rhythmically waving have been sourced, procured and brought to the production facility and it will be someone's job to clear them up once the shoot is over. The open-topped sports car has been hired by the hour in order to drive back and forth in front of a camera, as the man at the wheel pretends to sing. All of this stuff produces an item that thousands of consumers are prepared to pay hard cash for, and although it frankly seems a little ridiculous, future generations may find it harder to understand that we used to dig coal.

Envoi, and footnote [1]: I find myself wanting to write a country and western ballad about this uniquely American character, wandering from town to town with dust on his sneakers, living off his wits and rapping for his room and board. Someone with a little more talent and empathy, like Johnny Cash perhaps, could really have moved you to your soul with his evocation of the life of Pato Wilson, scraping his way through a hard MidWestern life, extemporising couplets about someone's mother and asking what's up for ten bucks, room and board. Until one day, he could rap no more, but his ghost still haunts the road, moaning "One time, yo", to the stars and telegraph wires ... (actually, of course he turns out to be the local studio owner who ran the show, but go with me here).

Update: thanks very much Alex, comments now fixed I hope.
22 comments this item posted by the management 3/28/2011 09:19:00 AM

Monday, March 21, 2011

The "ist" of science and the "ist" of ideology

Bits and pieces of talk around the way about "is economics a science and if so why to economists disagree so much and so loudly?".

This confusion disappears if you make sure to remember that the "ist" at the end of the word "economist" should be taken not as analogous to "scientist", but rather to "Trotskyist". Robert Conquest was an expert on socialism, but not a socialist; seemingly someone like Tim Worstall (who has no economics degree and, frankly, no realistic prospect of getting one from any university of better-than-sickening quality) is perfectly right to call himself an "economist", while someone like me (who has two economics degrees and makes a living doing a form of economics) probably isn't.

Update: Worstall writes in, in comments, to say that he does have a degree in economics, from the LSE! Well I'll be a monkey's uncle. While this doesn't actually change my view of his knowledge of economics (how could it, he posts the evidence every day on his blog), I am clearly in the wrong here and apologise. Tim also says that he has never claimed to be an economist, although my whole point here is that he should do. The term "economist" has lost all meaning in terms of technical ability these days and simply refers to a party affiliation. Words drift and this one doesn't mean the same thing it used to. Tim, Megan McArdle and Richard Posner are all economists. I'm not one. Paul Krugman isn't any more. Brad DeLong is only just one.

Further update: By way of clarifying my earlier apology, which some commenters have deemed inadequate, I genuinely do apologise for any insinuation (which was honestly unintended) that Tim might have been trading under false credentials as an economist. I can see how it kind of reads that way, and obviously that would be a really serious accusation of the sort which shouldn't be made on the basis of the amount research I did, ie none whatsoever. So sorry Tim.

By way of clarifying my earlier non-apology, I still think the standard of his economics is dreadful, and TW has handed out enough "Economic Idiot" awards to people who know more than himself that I think he can wear that one.
28 comments this item posted by the management 3/21/2011 02:53:00 AM

Friday, March 18, 2011

Further Updates To My Foreign Policy

I wrote this a couple of weeks ago in response to a question. I am quite happy with the way it stacks up.

Q: [in what circumstances would you ever support an intervention or similar littlebitpregnant intervention like a no fly zone]?

I’ve always been clear about this. The set of circumstances in which I’d support intervention are 1) when there is a specific and credible plan to do so that can be reasonably expected to make things better rather than worse and 2) when doing so does not weaken the norms of international law on which we all depend.

I’m even prepared to spell this out in practical terms; since the UN Security Council, with a veto by permanent members, is the decision making body with regard to 2), I am prepared to cede authority to their judgement on 1) as well, even though they screwed up badly by going along with French unilateralism in Rwanda. Like at least half the two million protestors in Hyde Park in 2003, I would even have allowed Blair to have the Iraq War if he could just have got the damn resolution. It is not an impractical or unrealistic position, and the fact that it rules out most actual candidate interventions is a simple and practical consequence of the fact that military intervention is nearly always a bad idea.

Basically, the Nuremberg Conventions with respect to the war crime of aggression. Not just the law, they're a good idea.
14 comments this item posted by the management 3/18/2011 04:25:00 PM

Thursday, March 10, 2011

Libyan no-fly zones, a dialogue

JIM-BOB: I think you should get a little bit pregnant.

CHUCKLES: It is impossible to get "a little bit pregnant".

JIM-BOB: But babies are wonderful! If we don't have a baby, our lives will be empty!

CHUCKLES: We do not have the room or money to bring up a child.

JIM-BOB: whoa whoa whoa! I didn't say we should have a baby! That would be a terrible idea! I just said you should get a little bit pregnant.

CHUCKLES: Well, it frankly did sound to me like that was what you were arguing but anyway my original point stands; you cannot be a little bit pregnant.

JIM-BOB: You're just dismissing the idea out of hand! How about our friend Jellica? She got a little bit pregnant and it was fine!

CHUCKLES: No, Jellica got pregnant, accidentally, and then had an abortion. And it wasn't fine, it was pretty awful for her.

JIM-BOB: But I really want a baby! And because I want a baby so much, and I know that it would be an awful decision for us to have a baby, I think the best solution is for you to get a little bit pregnant.

CHUCKLES: It is not possible to be "a little bit pregnant".

JIM-BOB: Why do you keep misinterpreting me?!!!!

(Peter Galbraith is excused this one, as he has made an attempt, albeit one that didn't convince me, to explain why he thinks that there is some possibility to have some of the benefits of an armed occupation without any of the costs. But the general run of debate has been that classic schema of argument that you hear over and over again in politics and never in economics: Q: "this is not possible", A: "but not having it would be really bad", Q: "Okay it's possible then".)
14 comments this item posted by the management 3/10/2011 09:45:00 AM

Monday, March 07, 2011

Prior Planning Prevents ...

Not turning into a bestselling paperback franchise any time soon, I think. And one can't help worrying that some brand damage is gradually accruing; the Iranian embassy siege is now thirty years in the past, and since the whole point of special operations is that they don't get much publicity, the only other major public appearance of the SAS was Bravo Two Zero. Two data points make a trend, and one really doesn't want to get a reputation for being "the guys who show up without any clear idea of what they're doing, then wander round a bit and get captured".

As far as I can tell, the problem appeared to be that they were caught on the back foot, because they were pretending to be an unarmed diplomatic mission (the transition from "we come in peace" to "shoot to kill" is apparently a lot more awkward than Captain Kirk made it look). Presumably if they had gone in as a combat squad with guns out from the get-go, they would not have been rolled by a small detachment of recently-mobilised rebels anything like as easily. Which brings one onto an all too frequently observed problem:

Here's a lesson from economics - you can't maximise a non-existent objective function. If you don't really know what you want, you're likely to get what you deserve. Special forces are surprisingly frequently involved in some of the greatest military fuckups and fiascoes, and the reason for this is that special forces units are the first port of call for people who are either trying to do something that they shouldn't, or not really sure what they are doing at all. If you look at the purpose of that SAS unit in Libya, they weren't trying to rescue UK citizens or disable airfields or anything - other people were doing that. What appeared to have happened is that an MI6 spook wanted to "make contact with the rebels", to no very specific purpose other than "linking up", and somebody thought that a seven-man special forces detail was the sort of thing that might have come in handy. Nice one fella, not.

Everyone in full-time employment has spent at least some time in a meeting, or even a standing committee, that has no specific purpose and just sits around kicking ideas back and forth, or talking about abstract goals without ever having any indication of the authority or budget to do anything about them. They're annoying but unavoidable; they even have some low level purpose in promoting communication and informal contacts. On the other hand, when you're not talking about tea, biscuits and Powerpoint slides, but rather about sending vulnerable human bodies into places where this sort of thing happens, you have a real obligation to be very clear about what you want to do, and how you are going to tell when you've done it.

The fallacy of the non-existent objective function happens at all levels - special forces are, AFAICT, more vulnerable to it because they have more connections to the daydreamers and schemers in the world of secret service covert ops, and because they are commonly perceived to be something approaching supermen, they are often brought into the service of plans that ought to be couched in the Superman Conditional tense. But large deployments of other people's time and health are also regularly made without a plan - one of my biggest objections to the ongoing Afghanistan campaign is not that failure is likely, but rather than nobody can explain to me what success would consist of.
28 comments this item posted by the management 3/07/2011 02:46:00 AM

Thursday, March 03, 2011

Adventures in false modesty

I think that there comes a time in a man's life, somewhere between the John Bates Clark Medal and the Nobel Prize, perhaps upon the beginning of one's New York Times column, perhaps on one's first million-dollar professorship, after which it is no longer seemly to pretend to be surprised that one is considered by others to be influential.
15 comments this item posted by the management 3/03/2011 04:27:00 PM

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