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Archive for December 2006

More Caltech bragging rights: patents and PhDs

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Guess which university completely dominates all others in patents issued, when normalized to the size of institution? My graduating class was 186 — compare to MIT (about 1000) and Stanford (about 1600).

2005 USPTO university patent rankings:

1) 10 campuses of the University of California System, 390 patents
2) Massachusetts Institute of Technology, 136 patents
3) California Institute of Technology, 101 patents
4) Stanford University and the University of Texas, each with 90 patents each.

For Nobel prize domination, see here.

For ranking by percentage of undergraduates going on to complete a PhD, see here and here. (I think I saw this on Dave Bacon’s blog a while ago.) Caltech leads with about 50% of all undergrads going on to earn a doctorate. Reed College, MIT, Harvey Mudd, Swarthmore, etc. all do pretty well. Interestingly, Yale does well in the humanities, but Harvard is not to be found on any of the lists. That makes their kids the smartest of all, as they probably go directly to Goldman Sachs or hedge funds with no wasted time 🙂

To be honest, graduate school seemed a lot easier than undergrad for me. A typical load at Caltech might be 5 technical courses and 1 humanities-social science course – for example, 3 physics classes, a math class, a CS class, and, for relaxation, something like history or economics 😉 In grad school 3 physics classes at the same time was a typical load.

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Written by infoproc

December 27, 2006 at 12:54 am

Posted in universities

On the benevolence of financiers

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An interesting comment on a previous post:

[Me:] “I guess the other thing to add is that not all financial games that make money for a hedge fund necessarily lead to more efficient resource allocation in the overall economy.”

[Commenter:] Well, “all” is a high benchmark. But at least as high a percentage of the “financial games” that hedge funds use drives efficiency gains as whatever it is that start-ups do. In fact, because the winnowing process is more efficient (better measurement), I’d bet that the net increase in efficiency from hedge fund activities is greater than that generated by tech start-ups.

But, as always, specifics help. I can’t think of a single major hedge fund strategy which does not improve efficiency for the economy as a whole.

I suspect the commenter, although anonymous, is a hedge fund manager, so we should take his opinion seriously :^)

Let me give a simple example of a case where financial activities that made hedge funds a lot of money did not in any way increase economic efficiency. At the end of the tech bubble, a lot of traders strongly believed that internet stocks were ridiculously overvalued. You might imagine that hedgies, with their ability to short, might play an important role in popping an obvious speculative bubble. But, the reality turned out to be the opposite: as long as they felt they could make a short term gain on riding the bubble, they were happy to do so, despite their strong belief that it was a bubble, with significant distortionary effects on the economy. I know from personal contacts that hedge funds actually behaved this way, and it is supported by subsequent academic studies. (See related discussion here; indeed, according to the famous Keynes observation about beauty contests, it matters not whether you think it’s a bubble, but rather what you think others in the market believe!)

Of course, and this is the main point, a trader’s job is not to “allocate resources most efficiently in the economy” but rather to make as much money for their investors as possible. Only an extreme interpretation of “efficient markets” would imply that these two goals are one and the same!

From the viewpoint of the old Adam Smith quip:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest

we might conclude that there is no reason to differentiate between forms of economic activity. However, some people are genuinely altruistic and take part of their compensation in satisfaction that their work helps others. For example, many people in startups are idealistic, and part of the attraction of their work is that they are changing the world for the better. The same goes for academic scientists.

Although financial activities play an important role in the economy, as I have emphasized, I suspect the prime motivation for finance as a career choice is maximization of remuneration, not altruism 🙂

Written by infoproc

December 25, 2006 at 1:30 am

Posted in finance

Frank Gehry: the lion in winter

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A poignant interview with architect Frank Gehry. You might imagine him as an egocentric genius, but instead he comes across as a thoughtful leader and manager. The interview reinforces how important people and management skills are to the completion of any complex project. Mad geniuses have their place, but it takes another set of skills to get big things done.

Iconic figures in the modern world seem to incorporate two sides: the flamboyant outward persona that gets investors, backers and the press excited, and the internal face that actually runs the organization. Confidence in the individual leader may get the project going, but ultimately that leader has to be effective on the inside.

WSJ: Frank Gehry is 77, white haired, paunchy, and when we talked one afternoon in late autumn the topics of age and death never seemed far off. Mr. Gehry is, of course, one of the world’s great architects, creator of the Guggenheim museum in Bilbao and enough of an icon to have been among the personalities featured in Apple’s “Think Different” campaign.

Describing what it takes for him to accept a commission, Mr. Gehry says, “The determining factor is: Can I get it done while I am still alive?” Explaining why he doesn’t build houses any more, Mr. Gehry says, “They involve a lot of personal hand holding. I guess at my age I don’t have the patience.”

Probably more than most architects, one sees Mr. Gehry’s buildings — buildings that have been described as resembling ruffling sails or looking like they are melting — and has a sense that there is a single personality behind them.

…Because Mr. Gehry’s buildings are as much feats of engineering as they are of architecture, it is strange to walk into his office and notice that there are no computers. Mr. Gehry’s office is surprisingly spartan. There is a desk and there is a conference table and on one wall are photographs of friends. Sitting at his conference table and speaking of technology, Mr. Gehry volunteers, “I don’t know how to turn on the DVD. I barely can use the technology in my car. It’s a wonder I don’t get into an accident.”

The actual physics and engineering of Mr. Gehry’s buildings are managed by teams of employees. Some 150 people work for him, and when Mr. Gehry talks about what exactly he does that leads to a building, it seems that he is almost more a manager of personalities and processes than he is someone who sits down with pencil and paper. “The building process is complicated. You have an idea, an image, a dream. You start to fantasize. You’ve got to get that feeling through thousands of hands to build a thing. Meetings, bureaucracy, accounting.”

Considering that Mr. Gehry’s buildings appear almost completely indifferent to conventions, I expected Mr. Gehry to be something of an egomaniac. Instead he turned out to be surprisingly modest. Describing a hotel in Spain that he just completed, Mr. Gehry said, “the rooms are comfortable,” and when talking about the Guggenheim in Bilbao, he said that he was relieved that the people of the city liked it. The only time Mr. Gehry showed strong pride was when he was discussing being a good employer.

Most architects of Mr. Gehry’s stature can staff the lower rungs of their office with volunteers and interns. “I am very proud,” he says and sits up at the conference table. “Everybody gets paid. Everybody here is paid. There’s no freebie interns. I’ve never done that. A lot of my colleagues do that, but that offends me so I’ve never done that.” Like only one or two other topics in our conversation, this issue of how he cares for the people who work for him is something that seems to get him excited. “I am very proud,” he says, again referring to his employees, “that they always get cost of living index raises and bonuses and more.”

Another aspect of Mr. Gehry’s old-fashioned virtue is his concern for what will happen to his employees once he dies. When I ask him if his age adds greater urgency to picking projects and finishing projects, Mr. Gehry says, “No. I am not that megalomaniac. No, I think the day will come and . . .”

Then apropos of very little in particular, he says, “What I am interested in is, since it’s 150 people here and a lot of people’s lives and futures depend on it, how do you create a succession?” Again Mr. Gehry sounds passionate. “There’s a way to leave it and pull the plug and I am fine and they” — referring to his employees — “lose.” As part of managing for his own death, Mr. Gehry has been trying to build the public personae of the people who work for him, trying to direct some of the limelight that seems always oriented towards him in their direction. In the catalogs and exhibits devoted to his work, he makes sure to mention the people who worked with him on his various projects.

As the interview wound down and the theme of age began to seem a more and more dominant part of our conversation, Mr. Gehry started to talk about some of the problems of getting older. Because he cannot program and has to work through others in order to engineer a building, he said that he is in some ways obsolete. Referring to these computer skills, he asked, “If I knew all that, could I be a better architect?”

…Asked how he handled these limits he saw for himself, he said, “I keep going. Keeping going is important to me and not to get sidetracked and to get caught up in self-pity.”

Written by infoproc

December 23, 2006 at 5:35 pm

Posted in Uncategorized

In defense of hedge funds

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The article below gives a well-reasoned defense of hedge funds. The money line is, for me, the following:

As any newspaper reader knows, technology firms are the leading edge of the U.S. knowledge economy; they made possible the productivity revolution of the past decade. But the same could just as well be said of hedge funds, which allocate the world’s capital to the companies, industries, and countries that can use it most productively.

The argument is similar to the (correct) observation that you need venture capitalists and entrepreneurs to have a startup ecosystem. My only problem with the current situation is that I suspect a lot of managers are getting paid without generating much alpha. As the industry matures, and replication of vanilla strategies better developed, I imagine we’ll see the fees come down.

I guess the other thing to add is that not all financial games that make money for a hedge fund necessarily lead to more efficient resource allocation in the overall economy. It’s much more obvious to the average person or journalist that a technology company (even if it fails) is trying to do something which advances society.

Foreign Affairs: Imagine two successful companies. Both are staffed by very smart people; both are innovative; both have an impact far beyond their industry, improving the productivity of the capitalist system as a whole. But the first, based near San Francisco, is the subject of adoring newspaper profiles, whereas the second, based in the New York area, is usually vilified.

Actually, you do not have to imagine any of this, because it describes a double standard that already exists. The first company in the story is a technology firm; the second is a hedge fund. As any newspaper reader knows, technology firms are the leading edge of the U.S. knowledge economy; they made possible the productivity revolution of the past decade. But the same could just as well be said of hedge funds, which allocate the world’s capital to the companies, industries, and countries that can use it most productively.

Of course, that is not how hedge funds are viewed most of the time. The recent implosion of Amaranth Advisors — a hedge fund that lost $6 billion in a matter of days thanks to one Ferrari-driving 32-year-old trader (and his greedy bosses’ abandonment of proper risk management) — has rekindled the fears that attended the collapse of Long-Term Capital Management in 1998, an event that even then Federal Reserve Chair Alan Greenspan believed “could have potentially impaired the economies of many nations, including our own.”

…In the end, the critics of hedge funds would do well to remember why this sector has emerged as such a force. Until the late 1960s, the financial world was quaintly stable: exchange rates were inflexible, interest rates were regulated, and the whole system was anchored by a fixed gold price. But that world collapsed when inflation drove the dollar off the gold standard and currencies and interest rates began to float; from then on, it became impossible to amass savings without facing financial uncertainty. Tools for coping with that uncertainty — deep markets in futures, options, and other derivative instruments — sprang up in response to the newly volatile environment. And hedge funds emerged as the masters of these tools, providing quasi insurance to investors and firms and introducing a healthy dose of contrariness into financial markets. For this, they are accused of generating risk. But their real systemic function is to manage it — and it is their very success in doing so that has generated both their profits and their phenomenal growth.

Written by infoproc

December 22, 2006 at 9:55 pm

Posted in finance

Machine Dreams

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We’re on break right now, so I have time to do some deeper reading. I’d like to recommend the book Machine Dreams by the economist and intellectual historian Philip Mirowski. Mirowski ruffled quite a few feathers in economics with his earlier book More Heat than Light: Economics as Social Physics, Physics as Nature’s Economics, in which he argued that much of the mathematical and conceptual framework of neoclassical economics was lifted from 19th century physics. In particular, he argued that maximization of utility was inspired by ideas about energy, and that market equilibrium was inspired by thermodynamics. Origins aside, whether these ideas are useful for the description of complex, nonlinear systems comprised of thinking participants is another question, addressed directly in this book.

Machine Dreams is, if anything, more ambitious than the earlier work. In it, Mirowski traces the influence of ideas concerning information and computation, largely developed by figures like von Neumann, Turing, Shannon, Szilard, on the field of economics since the 1930’s. Mirowski refers to these individuals as cyborgs, and their area of interest as the cyborg sciences. He adopts an amusing tone throughout the 600 pages of his book, even as he delivers devastating blows to sacred cows of the economics orthodoxy.

This is a controversial book because it demolishes not just the conventional history of the discipline, but its foundational assumptions. For example, once you start thinking about the information processing requirements that each agent (or even the entire system) must satisfy to find the optimal neoclassical equilibrium points, you realize the task is impossible. In fact, in some cases it has been rigorously shown to be beyond the capability of any universal Turing machine. Certainly, it seems beyond the plausible capabilities of a primitive species like homo sapiens. Once this bounded rationality (see also here) is taken into account, the whole notion of market equilibrium becomes far-fetched and speculative. It cannot be justified in any formal sense, and therefore cries out for experimental justification (which is not to be found).

But there is more. Mirowski reveals that tenets of rationality and utility maximization were already at odds with game theory experiments conducted at RAND as early as the 1950s. He traces von Neumann’s (vN’s) influence on the discipline, which he claims has been deliberatedly ignored and obfuscated in the official histories. In his summary, he writes

This scientific titan [vN], who could only spare a vanishing faction of his intellectual efforts upon a science he regarded as pitifully weak and underdeveloped has somehow ended up as the single most important figure in the history of 20th century economics. This mathematician who held neoclassical theory in utter contempt throught his own lifetime has nonetheless so bewitched the neoclassical economists that they find themselves dreaming many of his formal models, and imperiously claiming them for their own. This polymath who prognosticated that “science and technology would shift from a past emphasis on subjects of motion, force and energy to a future emphasis on subjects of communications, organization, programming and control,” was spot on the money.

Mirowski’s book has drawn significant attention within the economics community. I suggest the following review by E. Roy Weintraub, a mathematical economist at Duke (Journal of Economic Behavior & Organization Vol. 53 (2004) 419–434):

Philip Mirowski is a singular historian of economics. Every one of his works has made a difference in our understanding of the development of economics. He is brash, uncompromising, and dedicated to producing magnificent historical studies. Nevertheless he raises his colleagues’ blood pressures because his work has both transcended and transformed the subdiscipline, and few are intellectually flexible enough to enjoy rethinking accepted ideas.

…In his new work, Machine Dreams: Economics Becomes a Cyborg Science, Mirowski (2002) reconstructs the history of neoclassical economics to the modern period, writing that history against and intertwined with the emergence of the cyborg sciences concerned with information—computer science, cybernetics, statistics, operations research, game theory, gaming and simulation, etc.—in the World War II and subsequent Cold War period. His major historiographic point, continuous with his past writing, is that one cannot construct a coherent narrative of the emergence of modern neoclassical economics in the postwar period without looking outside economics proper for both the dramatis personae, and the punch lines. His use of methods from history, sociology, and anthropology frames the best that Science Studies has to offer to help one construct a compelling narrative.

…Overall, this is the single most important totalizing narrative of the history of economics that we have had in the last twenty years. Important does not however mean that it will be loved. Mirowski’s writing is vivid and forceful. He enjoys the sound of words and the rhythm of the sentences he constructs. He writes with a musical fluidity. Yet to say that Mirowski is verbally facile, sharp-tongued, and acerbic hardly does justice to the blood he draws from rapier slashes, and cleaver smashes, to the august and famous. It is, given the author’s critical program, an angry book.

Withal, Mirowski is a scholarly treasure. There are few of us who make an immense difference, who see things differently and can maintain that vision through a sustained scholarly life, and who can show others how to make that vision their own. We need to take this book seriously.

For a meta-review of reviews, see Boland, and for a response by Mirowski to several critics, see here (contribution to a symposium on Machine Dreams published by the Journal of Economic Methodology).

Written by infoproc

December 18, 2006 at 6:07 pm

Indexing for Googlers

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How the Googlers prepared their new millionaires for the investment world: mass education on the merits of indexing.

SF Magazine: As Google’s historic August 2004 IPO approached, the company’s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes. Scores of them from firms like J.P. Morgan Chase, UBS, Morgan Stanley, and Presidio Financial Partners were already circling company headquarters in Mountain View with hopes of presenting their wares to some soon-to-be-very-wealthy new clients.

Rosenberg didn’t turn the suitors away; he simply placed them in a holding pattern. Then, to protect Google’s staff, he proposed a series of in-house investment teach-ins, to be held before the investment counselors were given a green light to land. Company founders Sergey Brin and Larry Page and CEO Eric Schmidt were excited by the idea and gave it the go-ahead.

One by one, some of the most revered names in investment theory were brought in to school a class of brilliant engineers, programmers, and cybergeeks on the fine art of personal investing, something few of them had thought much about. First to arrive was Stanford University’s William (Bill) Sharpe, 1990 Nobel Laureate economist and professor emeritus of finance at the Graduate School of Business. Sharpe drew a large and enthusiastic audience, which he could have wowed with a PowerPoint presentation on his “gradient method for asset allocation optimization” or his “returns-based style analysis for evaluating the performance of investment funds.” But he spared the young geniuses all that complexity and offered a simple formula instead. “Don’t try to beat the market,” he said. Put your savings into some indexed mutual funds, which will make you just as much money (if not more) at much less cost by following the market’s natural ebb and flow, and get on with building Google.

The following week it was Burton Malkiel, formerly dean of the Yale School of Management and now a professor of economics at Princeton and author of the classic A Random Walk Down Wall Street. The book, which you’d be unlikely to find on any broker’s bookshelf, suggests that a “blindfolded monkey” will, in the long run, have as much luck picking a winning investment portfolio as a professional money manager. Malkiel’s advice to the Google folks was in lockstep with Sharpe’s. Don’t try to beat the market, he said, and don’t believe anyone who tells you they can—not a stock broker, a friend with a hot stock tip, or a financial magazine article touting the latest mutual fund. Seasoned investment professionals have been hearing this anti-industry advice, and the praises of indexing, for years. But to a class of 20-something quants who’d grown up listening to stories of tech stocks going through the roof and were eager to test their own ability to outpace the averages, the discouraging message came as a surprise. Still, they listened and pondered as they waited for the following week’s lesson from John Bogle.

“Saint Jack” is the living scourge of Wall Street. Though a self-described archcapitalist and lifelong Republican, on the subject of brokers and financial advisers he sounds more like a seasoned Marxist. “The modern American financial system,” Bogle says in his book The Battle for the Soul of Capitalism, “is undermining our highest social ideals, damaging investors’ trust in the markets, and robbing them of trillions.” But most of his animus in Mountain View was reserved for mutual funds, his own field of business, which he described as an industry organized around “salesmanship rather than stewardship,” which “places the interests of managers ahead of the interests of shareholders,” and is “the consummate example of capitalism gone awry.”

Bogle’s closing advice was as simple and direct as that of his predecessors: those brokers and financial advisers hovering at the door are there for one reason and one reason only—to take your money through exorbitant fees and transaction costs, many of which will be hidden from your view. They are, as New York attorney general Eliot Spitzer described them, nothing more than “a giant fleecing machine.” Ignore them all and invest in an index fund. And it doesn’t have to be the Vanguard 500 Index, the indexed mutual fund that Bogle himself built into the largest in the world. Any passively managed index fund will do, because they’re all basically the same.

When the industry sharks were finally allowed to enter the inner sanctum of Google, they were barraged with questions about their commissions, fees, and hidden costs, and about indexing, the almost cost-free investment strategy the Google employees had been told delivers higher net returns than all other mutual fund strategies. The assembled Wall Streeters were surprised by their reception—and a bit discouraged. Brokers and financial planners don’t like indexed mutual funds for two basic reasons. For one thing, the funds are an affront to their ego because they discount their ability to assemble a winning portfolio, the very talent they’re trained and paid to offer. Also, index funds don’t make brokers and planners much money. If you have your money in an account that’s following the natural movements of the market—also called passive investing—you don’t need fancy managers to watch it for you and charge big bucks to do so.

Brin and Page were proud of the decision to prepare their staff for the Wall Street predation. And they were glad to have launched their company where and when they did. What took place in Mountain View that spring might have never happened had Google been born in Boston, Chicago, or New York, where much of the financial community remains at war with insurgency forces that first started gathering in San Francisco 35 years ago.

The article goes on to trace the origin of indexing to a group at Wells Fargo in San Francisco in the 1970s.

“San Francisco was the only place in the country where this could have happened,” says Bill Fouse, a jazz clarinetist in Marin County who was present when the first shots were fired in the investment rebellion. It was 1970, and revolution was in the air.

While hippies, dopesters, and antiwar radicals were filling the streets of America’s most tolerant city with rage, sweet smoke, and resistance, a quieter protest was brewing in the lofty, paneled offices of Wells Fargo. There, a young engineer named John Andrew “Mac” McQuown, Fouse (who like many musicians also happens to be a brilliant mathematician), and their self-described “skeptical, suspicious, careful, cautious, and slow-to-change” boss, James Vertin, were taking a hard look at the conventional wisdom that for a century had driven American portfolio management.

Bank trust departments across the country were staffed by portfolio managers who, as I did at the time, believed that they alone possessed the investment formula that would enrich and protect the security of their customers. “No one argued with that premise,” Fouse recalls.

But McQuown suspected they were pretty much all wrong. He had met Wells Fargo chairman Ransom Cook at an investment forum in San Jose, and at a later meeting at company headquarters, persuaded him that traditional portfolio management was merely an investment variation of the Great Man theory. “A great man picks stocks that go up. You keep him until his picks don’t work anymore and you search for another great man,” he told Cook. “The whole thing is a chance-driven process. It’s not systematic, and there’s lots we still don’t know about it and that needs study.” Cook offered McQuown a job at Wells and a generous budget to conduct research into the Great Man Theory and other schemes to beat the averages. McQuown accepted, and a few years later Fouse came on as well.

They couldn’t have been more different: Fouse, a diminutive, mild-mannered musician, and McQuown, a burly, boisterous Scot. The two were like oil and water—McQuown even tried to have Fouse fired at one point—but their boss, Vertin, was the one who really was in the hot seat.

“You have to understand, Vertin’s career was on the line,” Fouse recalls. “He was, after all, running a department full of portfolio managers and securities analysts whose mission was to outperform the market. Our thesis was that it couldn’t be done.” Proof of McQuown’s theory could lead to the end of an empire, in fact many empires. “The poor guy was under siege,” says Fouse. “It was a nerve-racking time.”

Vertin’s memory of those times is no less vivid. “Mac the knife was going to own this thing,” he once told a reporter. “I could just see the fin of the shark cutting through the water.” Eventually, the research McQuown and Fouse produced became so strong that Vertin could not ignore it. “In effect it said that almost everything that every trust department in America was doing was wrong,” says Fouse. “But Jim eventually accepted it, even knowing the consequences.”

In July 1971, the first index fund was created by McQuown and Fouse with a $6 million contribution from the Samsonite Luggage pension fund, which had been referred to Fouse by Bill Sharpe, who was already teaching at Stanford. It was Sharpe’s academic work in the 1960s that formed the theoretical underpinning of indexing and would later earn him the Nobel Prize. The small initial fund performed well, and institutional managers and their trustees took note.

By the end of the decade, Wells had completely renounced active management, had relieved most of its portfolio managers, and was offering only passive products to its trust department clients. And it had signed up the College Retirement Equities Fund (CREF), the largest pool of equity money in the world, and Harvard University, the largest educational endowment. By 1980 $10 billion had been invested nationwide in index funds; by 1990 that figure had risen to $270 billion, a third of which was held at Wells Fargo bank.

Eventually the department at Wells that handled index ing merged with Nikko Securities and was later bought by Barclays Bank, which created the San Francisco subsidiary Barclays Global Investors. Its CEO, Patricia Dunn, the scandal-tinged former chairman of Hewlett-Packard who had worked for 20 years at Wells Fargo, had been heavily influenced by indexing. Running Barclays, she became the world’s largest manager of index funds.

Fouse, now retired in San Rafael, explains why all this could have happened only in San Francisco. “When we started our research, almost all the trust clients out here were individuals with small accounts. Anywhere else, particularly on the East Coast, trust departments handled very large institutions—pension funds, university endowments, that sort of thing. If Mellon, Chase, or Citibank had done this research and come to the same conclusion, they would have in effect been saying to their large, sophisticated, and very lucrative clientele: ‘We’ve been doing things wrong for a century or more.’ And thousands of very comfortable investment managers would have been out of work.”

Written by infoproc

December 18, 2006 at 5:06 pm

Posted in finance

Climate change: the straight dope

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From an email exchange with a colleague who has spent significant time studying climate change:

> What is your confidence level in the following statements?

> 1) we know the sign of anthropogenic effects on global temperature

–> high

> 2) current models get the size of the temperature change in the next
> 50 years to within a factor of 2

–> medium

> 3) there are nearby nonlinear tipping points in the climate system
> (i.e., that anthropogenic effects can push us to within 50 years)

–> low (except for the methane channel which I am seriously concerned with)

> 4) climate modelers are clear-headed scientists with a mature grasp of
> the uncertainties in data analysis and modeling complex nonlinear
> systems, and NOT ideologically motivated people whose main skill is
> writing simple computer programs and press releases

–> highly variable – the real problem is “how do you know you have produced the best model “- there recently has been a lot of Markov chain analysis associated with trying to determine this.

And, an account of the “200 year” storm that hit Seattle December 14-15, at one point dropping 1 inch of rain in 45 minutes, and knocking out the entire power grid!

The Storm that Killed Starbucks:

Part I: The Deluge

For me, in Eugene, Oregon, the morning of December 14, 2006 started off perfectly normal. I woke up to my usual idiot snoring dog alarm clock and realized that,

oh yeah, today I drive up to Seattle for my annual celebration of consumer fetishism

by contributing capital to the Bellevue Square shopping center. Every since it got upgraded, I enjoy my one, over-the-top capitalistic moment of the year in that environment – plus the Parlor has nice pool tables and good beer. Moreover, by driving up alone, I could maximize my carbon footprint on the planet and also send foreign governments more money – seems consistent with the Christmas spirit to me.

I knew the weather would, well, suck, since this has been a fairly wet winter so far (even though its not even winter – this global climate change stuff sure is confusing). I was prepared. I have a decent vehicle (it has windshield wipers) and my cell phone is able to receive Doppler radar imaging maps. Going through Portland in moderate rain during the morning commute, I thought it might be a good idea to avert my eyes away from the crowded road and to my tiny, tiny cell phone maps. I noticed a big red area off the Olympic peninsula. Hmm, I said to myself, “that must be Santa because you never see red on the TV radar”. I would later discover, the red area was not Santa.

…I was headed toward the UW to, ironically enough, visit some colleagues in the Atmospheric Sciences department. I parked down near University Village (later to become Lake University Village) and, at about 3 pm, walked towards campus. The rain steadily was increasing. When I got to my colleagues office, there was a big sign on the door that read “Sorry, the end of the world is near, I have to find a Starbucks before it is too late”. I figured this was just a Christmas joke and trudged back to my vehicle (the one with the windshield wipers), which was now rapidly becoming a lone metallic island in a newly formed pool. I snorkeled my way into the drivers seat and extricated the metal from the pool and, in my infinite wisdom, headed towards Capital hill to change out of my wet clothes (well isn’t that what you do on Capital hill ?). Perfect timing – the deluge was upon me – one inch of rain in 45 minutes (that’s equivalent to 32 inches in a 24 hour period for you math geeks). In my true Seattle native spirit I remarked “Hey, what’s a little rain, it ain’t gonna kill me…”. But then (and where the hell is a Hummer when you really need one), I found myself going uphill (do you know how fast water runs downhill? – real fast) on 23rd ave through cascading muddy torrents. However, as I was not observing any cars in front of me actually disappearing, I figured it was okay – plus my windshield wipers were still working. And then came the Red Light at 23rd and Interlaken. At that moment, the red radar spot announced its arrival and it wasn’t saying “Ho Ho Ho”.

I have always wondered why that street was named Interlaken. And for those of you that don’t know – Interlaken is this really cool windy street through lots of dense trees and you don’t even realize your in the middle of the city – it’s a particularly good road for convertibles, but not on this particular day. As I was stopped, brakes tenaciously clinging to more water than road – I suddenly notice the reason for the name of the street as I was now between two lakes! In addition, there was no longer any traffic ahead of me on 23rd to interrupt the ever building cascade rushing downhill at relativistic speeds towards me. Quickly doing a physics calculation in my head (without even consulting my cell phone) I realize that I am better off taking the impending impact broadside, so I quickly took a right on Interlaken, applied some horsepower, made a really big rooster tail, and managed to get through this debris flow (I would later pay for this with a damaged electrical system and 2 new tires but my windshield wipers were still working).

The next few minutes were a blur of water water everywhere. It was surreal, roads were rivers, intersections were lakes, yards were temporary reservoirs, all routes looked equally bad. Fortunately, the rush hour deluge ended (do you suppose Nature did that timing on purpose?) and eventually I did manage to change my clothes on Capital hill,

But after donning dry clothes, I heard the ominous words “those #$%## Seahawks lost again” only to be followed by the more ominous words (although I am not sure that it is technically possible for something to be more ominous) “ha, ha, ha, the real Storm isn’t even here yet”.

Part II: The Aftermath

Ah yes – December 15th, the planned Bellevue Square expedition day – and the day all of Seattle will remember. I woke up, even without the aid of the snoring idiot dog, and tried to use something electrical. Then I tried to use something else, electrical. Then I went to turn on the TV to find out why my electricity didn’t work (I am real slow in the morning). Well then, if there is no power at home, the inconvenienced will just go shopping. I knew that the 520 bridge was closed and then everyone would be on I-90 enjoying a prolonged view of Lake Washington. I also surmised that driving North around the lake through Lake Forest Park and Bothell would not be wise as that area is prone to blow down. So I headed north on I-5 to go south on I-405 (yeah, I know it only makes sense in my head). As it turned out, it would have been faster to just drive around the hemisphere to get to Bellevue Square (well that destination was my mission!).

After I hit my fifth stop-and-go traffic incident on northbound I-5 I decided to turn on KIRO news. It took me some time to figure out how to get AM in my microprocessor controlled vehicle, but eventually I got some news and traffic. Basically the news said:

“No one has any power –Starbucks is down, I repeat Starbucks is down:” Basically the traffic said: “traffic is a mess” (presumably from all the confused individuals looking for a working Starbucks). But, what of Bellevue I wondered, did it survive? I had to find out – it was my mission. As I inched along, I continually wondered what the hell everyone was doing out here? Did we all have a collective brain fart and think we could just cruise around when all the infrastructure was down? Of course, being in your vehicle did provide a means of staying warm and getting the news. After all, who has a battery powered AM radio in their house anymore?

Eventually I did get to Bellevue Square, one dark intersection at a time, only to find out that the square had no power. One would have hoped that KIRO would have informed me that Bellevue had no power but no, instead I just heard stories of the guy that turned his hybrid Toyota into a coffee pot and all his neighbors lined up for hot coffee. In the true holiday spirit, I hope that guy made a hefty profit. In the past, when it was possible for people to do arithmetic by hand, one still might have been able to sell goods to customers with flashlights (I never go anywhere without my flashlight). But no, although the Square was open, none of the shops were. There were just hordes of ghostly figures wandering aimlessly in the semi-dark for no apparent reason as if they were all suddenly waiting for the moment The Power Came Back, and they could get on with their regular lives. “Damn”, I said, “my capitalistic Christmas spirit moment has been crushed by a failure of technology. Now where am I going to buy frivolous material goods for friends and family so they can resell them on e-bay a month later?” My spirit was crushed with my personal lamentations being interrupted by frantic souls screaming “do you know where there is an open Starbucks?”.

With my mission failed, I decided to head back to Eugene, via Capital hill, of course. As I got back in my vehicle I noticed that I was running low on gas. Noticing also that there was a high correlation between darkened traffic lights and vehicles parked in gas stations I realized that if the traffic lights ain’t working, the gas ain’t pumping. Fortunately, during this dire time I instinctively remembered my late 50’s early 60’s cold war childhood in Seattle where I was taught that “In the event of a Nuclear Strike, Aurora avenue will still be open for business”. Even though it was, at the moment, on the other side of the World from me, this seemed like the best strategy. Head to Aurora – that living testimony to the 1950s suburban culture – must be functional. Not even Mother Nature could bring Aurora down. Re-tracing my sensible route (at ½ the speed of the original journey), I eventually got to 175th and Aurora. Wow. Heaven. An oasis of technological life -working traffic lights, working gas pumps, and even a working donut store (but alas no Starbucks in that area – which is odd as I though it was a rule that each traffic light in Seattle had to be located next to a Starbucks). With a full tank of gas, my body rejuvenated with donuts, and nothing but time ahead of me, I figured I would now be able to escape.

As I began to breathe easier I lapsed into deep reflection and regarded this as yet another incident of Nature’s rapid fury that can fully paralyze a large scale urban area. It also became clear to me that, as we become increasingly reliant on technology, we are becoming increasingly unprepared to deal with its loss. Our numbers are big, our consumption rates are great and the whole scale of the system has become unmanageable. Events like this should educate and inform us – they should make us more prepared – not less. But, as the major of Seattle said, this storm was a once in 200 years event. And so, I suppose that one could tolerate Starbucks being down once every 200 years, but, strangely, it seems to me that these once every 200 year events are now coming to Seattle at the rate of one per month.- must be that confusing global climate change thing.

Written by infoproc

December 16, 2006 at 11:47 pm

Posted in Uncategorized