I don’t have the answer, but here’s the problem

A common trap we fall into is to assume that if we could only be someone else, we would be happy. I remember as a lonely single person, thinking that it must be so easy for the hot Asian babes of the world. Later, when I got to know a few hot Asian babes, I discovered that they’re just as unhappy as everyone else. (In fact, possibly more so, because of all the sleazy guys fetishizing them.

The exciting world of Credit Default Swaps

I just listened to the This American Life episode Another Frightening Show About the Economy, a followup to their earlier show The Giant Pool of Money. The earlier show explained the mortgage crisis in terms anyone can understand. The new show explains how the problems of the mortgage industry have spread to the rest of the economy. In particular, it explains: What a Credit Default Swap is, and how it turned from something harmless into something disastrous; What the commercial paper market is; Why AIG nearly collapsed and needed to be bailed out, and how the bailout was carried out; How the rest of the financial system nearly collapsed; Why the original $700 billion bailout plan was terrible, and how the new one (the one made into law) is slightly better in that it at least allows the right thing to be done; That the total failure to regulate a risky credit default swap market, bigger than the entire global stock market, was a totally bipartisan fuckup.

“It sucked. Can I have my £1m now?”

A couple of months ago, 15 UK troops were taken hostage in Iraq. They were eventually freed. Then I started seeing news stories about how everyone was furious because the troops were selling their personal stories to the highest bidder. Maybe I’ve been in the US too long, but I didn’t understand what people were upset about. I still don’t. Those troops went through a hideous ordeal. Why shouldn’t they be allowed to get money in return for telling people what it was like?

Interesting research

Scientific American, February: Money is an incentive to work hard, but it also promotes selfish behavior. Those conclusions may not be surprising, but psychologists at the University of Minnesota recently found that merely thinking of money makes people less likely to give help to others. The researchers got people to think about money by showing them words related to money, having them handle play money, or revealing a poster with pictures of money on it.

Free money

Everyone should have a chunk of cash in an instant access savings account; see Dilbert’s guide to financial success. If you’re in the US and have $250 spare to put in a savings account, I’ve got a voucher you can use to open an account with ING Direct, and they’ll give you $25 free. (Plus $10 for me.) I’ve been saving with them for a while, because their rates are so much better than my bank’s savings account rates (4.

The spam problem part 3: Objections to attention bonds

In part 1, I enumerated the approaches to spam eradication I was aware of, and explained my conclusion that the only approach which will work is an economic approach. In part 2 I discussed various options for tackling spam economically, ending with the one I think would actually be acceptable and useful: attention bonds.

Now I’ll run through (and shoot down) a few of the objections commonly brought up when the possibility of involving actual cash in e-mail sending is raised.

The spam problem part 2: The dismal science

In Part 1 I took a “from first principles” look at the spam problem, and concluded that the only way to actually solve the problem was to make people pay to send e-mail.

Now, it’s time to look at what I mean by that—because there are almost as many ways to implement “pay to send” as there are ways to implement filtering.

This is going to be a bit more technical than part 1. I’m going to assume you know basically how SMTP e-mail works. If not, there are tutorials available.

The spam problem part 1: Describing the problem

A great many words have been written on the subject of e-mail spam. Effort has been poured into all kinds of technological measures against it. In my view, many of these efforts have been a waste of time, because they have failed to address the fundamental problem of spam.

To explain my thinking, I’ll start with some basic statements:

  1. Your attention is a valuable resource. If you doubt this, you need only look at the amount of money spent on advertising in an attempt to acquire your attention.

  2. Therefore, your inbox is a valuable resource. Many people, perhaps most people, now check e-mail multiple times a day. In fact, according to some surveys college students spend more time on the Internet than watching TV. They check their e-mail inbox more than they look at ad breaks.

  3. SMTP e-mail allows anyone to send mail. There’s no centralized registration required in SMTP; there’s no control over the growth of the SMTP e-mail network. While some servers restrict which SMTP clients may connect to them, there’s essentially no control over who sends mail, as it’s always possible to open a new web e-mail account, buy a new ISP dial-up account, or whatever.

  4. SMTP e-mail is free for the sender. Sure, many people pay for their Internet access; but once you have an Internet connection, sending e-mail basically doesn’t cost you anything—it has marginal cost.

Now, let me re-cast those four statements:

We have unrestricted access for anyone in the world to use arbitrary amounts of a valuable resource.

Can you think of any case where there has been a system like that, and it has worked? I can’t. The canonical example is the tragedy of the commons, but there are plenty of others, including the Cambridge ‘Green Bike’ scheme and the overfishing of cod.

In order to avoid a “tragedy of the commons” situation, we need to alter the situation so that one of the statements above is no longer true. Let’s go through them again and consider our options.

Where the Bush family got their money

Ever wonder where the Bush family got all that money? In 1923, the Nazi party was given 100,000 gold marks ($25,000) by German industrialist Fritz Thyssen. This generous donation helped the fledgling party through its early financial troubles. After his father August’s death in 1926, Thyssen created the United Steel Works, a German industrial conglomerate. In 1924, the Bank voor Handel en Scheepvaart met with Harriman & Co, represented by the Harriman brothers and George Walker.