Transaction costs

Transaction costs seem to be poorly understood by the general public. For example, it costs money to buy a house. It costs money to sell a house. People often don’t take these costs into consideration when they imagine their house investment. If you buy/sell a house every few years, that’s a major hit to your bottom line. It might even destroy your investment. (Houses should not be investments, but that’s a rant for another time.)

The common 1% financial advisor fee is another example. It is deceptively large and in general you should avoid it.

Big, sophisticated companies should know all about transaction fees. Maybe?

The Japanese tech conglomerate, run by billionaire Masayoshi Son, spent a staggering $894 million on investment-banking fees in 2018, according to financial-data company Refinitiv, securing financial advice on deals and procuring an array of bonds, loans, and equity investments. 

That’s not the highest total for any company just last year but the highest in at least the past decade. 

The next highest fee payer in 2018, German pharmaceutical giant Bayer, is leagues behind at $384 million — 57% less than SoftBank

SoftBank spent $900 million on investment-banking fees in 2018

You have to make a lot of money on your investments to make up for a one-year $894M investment fee. That’s not just $894M now. That’s more than $1B in three years at 3% returns. That’s well over $2B in 10 years at 10% returns. Take whatever you were going to make on those investments and lop off a few billion immediately.

Maybe Softbank knows what it’s doing? Maybe?

Does science excellence require freedom?

This will be a central tension for China and – as a result – for most of the rest of us heading into the middle of the 21st century.

Worth quoting at length:

Mr Xi talks of science and technology as a national project. However, in most scientific research, chauvinism is a handicap. Expertise, good ideas and creativity do not respect national frontiers. Research takes place in teams, which may involve dozens of scientists. Published papers get you only so far: conferences and face-to-face encounters are essential to grasp the subtleties of what everyone else is up to. There is competition, to be sure; military and commercial research must remain secret. But pure science thrives on collaboration and exchange.

. . . . .

Although many researchers will be satisfied with just their academic freedom, only a small number need seek broader self-expression to cause problems for the Communist Party. Think of Andrei Sakharov, who developed the Russian hydrogen bomb, and later became a chief Soviet dissident; or Fang Lizhi, an astrophysicist who inspired the students leading the Tiananmen Square protests in 1989. When the official version of reality was tired and stilted, both stood out as seekers of the truth. That gave them immense moral authority.

Some in the West may feel threatened by China’s advances in science, and therefore aim to keep its researchers at arm’s length. That would be wise for weapons science and commercial research, where elaborate mechanisms to preserve secrecy already exist and could be strengthened. But to extend an arm’s-length approach to ordinary research would be self-defeating. Collaboration is the best way of ensuring that Chinese science is responsible and transparent. It might even foster the next Fang.

Hard as it is to imagine, Mr Xi could end up facing a much tougher choice: to be content with lagging behind, or to give his scientists the freedom they need and risk the consequences. In that sense, he is running the biggest experiment of all.

How China could dominate science

Dash buttons ruled too risky and unfair

It’s amazing we’re all still alive given the risks today.

A German court ruled on Thursday that Amazon’s thumb-sized ordering devices known as “Dash” buttons do not give sufficient information about the product ordered or its price, breaking consumer protection legislation.

. . . . .

“We are always open to innovation. But if innovation means that the consumer is put at a disadvantage and price comparisons are made difficult then we fight that,” Wolfgang Schuldzinski, head of the consumer body, said in a statement.

Court says Amazon ‘Dash’ buttons violate German law

Bad Nature News

It seems like there is an uptick in terrible environmental news.

For roughly a decade, the land snail species Achatinella apexfulva, which used to be plentiful on the Hawaiian island of Oahu, was believed to be down to a single survivor. His name was George, and he lived his last days alone in a terrarium in Kailua, Hawaii, alongside an ample supply of fungi (a food his ancestors liked to scrape off leaves in the wild).

But on Jan. 1, George died, according to Hawaii’s Department of Land and Natural Resources. He lived to about age 14 — a good, long life for a snail of his kind, experts say.

George the Snail, Believed to Be the Last of His Species, Dies at 14 in Hawaii


The Xerces Society for Invertebrate Conservation, a nonprofit group that conducts a yearly census of the western monarch, said the population reached historic lows in 2018, an estimated 86 percent decline from the previous year.

That in itself would be troubling news. But, combined with a 97 percent decline in the total population since the 1980s, this year’s count is “potentially catastrophic,” according to the biologist Emma Pelton.

With 86% Drop, California’s Monarch Butterfly Population Hits Record Low


Scientists say the world’s oceans are warming far more quickly than previously thought, a finding with dire implications for climate change because almost all the excess heat absorbed by the planet ends up stored in their waters.

Ocean Warming Is Accelerating Faster Than Thought, New Research Finds

Sure, in the long run we are all dead, but this is not ok. We are immorally depriving future generations of the bounty of life that four billion years of evolution has provided.

Why do CA lawyers have to get fingerprinted again?

I’m a CA licensed attorney and had to go through a Live Scan fingerprint process today. It took about two hours of my time including understanding the requirements, filling out the form, and actually doing the fingerprinting. It cost money and seemed fragile. The attorney who went before me couldn’t get good prints and now has to do some other process. I was fingerprinted when I applied for admission to the CA bar. Why did I have to do this again?

Basically this is about fixing a broken process with the CA Department of Justice (DOJ). The DOJ is supposed to notify the State Bar of attorney arrests or convictions. But that hasn’t been happening for, it seems, 30 years?

Sigh. Part of my job is to fix broken processes so I can imagine how this went:

State Bar: Hey you were supposed to be notifying us of all attorney arrests and convictions for the last 30 years.
DOJ: Ummmmmmmmmm… sorry. Do you just want a list of literally everyone?
State Bar: Just tell us when an attorney gets nailed.
DOJ: How do we know who the attorneys are? We’re going to need all their fingerprints.
State Bar: But we threw them all away.

Anyway, the State Bar says it’s sorry but we all have to get fingerprinted again.

I’m all for catching bad lawyers. But I’m also for basic table-stakes competency. So I can’t say I was super happy to be doing this.

We’ll see what happens when the DOJ starts reporting arrests and convictions. Some estimates are that up to 10% of California’s licensed attorneys may have unreported criminal activity. As a lawyer, you are supposed to self-report this kind of event to the State Bar, but that rarely happens. And, I don’t know, maybe you can understand that. I’m a very good rule follower but god-forbid if my life got upended by some arrest and conviction I’m not sure reporting the already-pretty-public event to the State Bar would be the first thing on my mind.

A prediction and solving for the equilibium

This is as good a summary and prediction as any.

House Democrats have reason on their side. Even knowledgeable immigration hawks think spending $5.7bn on a wall would be a waste of money. The number of people crossing the southern border illegally is at a 45-year low. Vastly more people fly into the country legally and then overstay their visas. If illegal immigration is the problem, Mr Trump should be focusing on that.

Yet it is also true that $5.7bn is peanuts in budgetary terms. The federal government spends that every 12 hours. And, despite what Nancy Pelosi, the House Speaker says, there is nothing inherently “immoral” about a wall. A lot of wall and fencing was built on the southern border long before Mr Trump became president, and with plenty of Democratic support.

If this were just a fight about policy, it is clear what a deal would look like. Congress would pass a bill giving citizenship to those who arrived in the country illegally as children, amounting to about 700,000 people, and fund the wall in exchange. The president gets something he wants; Democrats get something they want; America gets back its government.

How the shutdown in Washington ends

Health care is a simple market failure

Oakland’s Highland Hospital lists its price for a single chest X-ray at $131, while over the Bay at the University of California San Francisco Medical Center, they say it’ll set you back $2,618.

An aspirin tablet? Highland wants $7 for that, but it’s $1.02 at Santa Clara Valley Medical Center and just 30 cents at Walnut Creek’s John Muir Medical Center. If that seems like a bargain, consider that Rite Aid sells a bottle with 100 of those same pills for $5.49, less than 5 and a half cents each. UCSF suggests they don’t charge for an aspirin pill at all.

Hoping to empower consumers who are shouldering more and more of their health care costs each year, the federal government this year is requiring hospitals across the country to post their standard price lists on their websites.

Hospitals must now post their prices online: $7 for 5-cent aspirin?

You can explain away these deltas, but you cannot rationally defend them. Our health care system is a knot of confusion and the lowest hanging fruit is transparency. We don’t need to walk away from the market economy for health care; we need to embrace it.

Best reporting I’ve run across on health insurance: Someone Else’s Money.

TV’s are also computers

Samsung’s 2018 and 2019 range of televisions will be able to access and play your iTunes movie and TV show library, the company has announced. You’ll also be able to buy and rent content from iTunes directly from the TV. The content will be available through a dedicated app which will debut exclusively on Samsung’s TVs. The TVs will also include support for AirPlay 2, Apple’s wireless streaming standard.

Apple is putting iTunes on Samsung TVs

Every so often news is announced that makes you realize, oh that is a trend that was obvious and that I should have noted before: TV’s are becoming computers just like everything else.

So long set-top boxes, Roku’s, AppleTV’s and all that. You were a hassle anyway.

All your big data are belong to us

Maybe China hacked Marriot. Maybe not.

What made the Starwood attack different was the presence of passport numbers, which could make it far easier for an intelligence service to track people who cross borders. That is particularly important in this case: In December, The New York Times reported that the attack was part of a Chinese intelligence gathering effort that, reaching back to 2014, also hacked American health insurers and the Office of Personnel Management, which keeps security clearance files on millions of Americans.

Marriott Concedes 5 Million Passport Numbers Lost to Hackers Were Not Encrypted

But in a world where there are massive repositories of data on massive numbers of people (cue “IN A WORLD…” dramatic narration), that data is going to be used by governments. That’s just how this is going to work.

(The use of the post title meme probably dates me.)

Machine learning how to nudge

Humu wants to bring similar data-driven insights to other companies. It digs through employee surveys using artificial intelligence to identify one or two behavioral changes that are likely to make the biggest impact on elevating a work force’s happiness. Then it uses emails and text messages to “nudge” individual employees into small actions that advance the larger goal.

. . . . .

But after receiving nudges for a few months himself in emails from Mr. Crosby, whose email address is used to send the messages, Mr. Razdan said the bite-size reminders made it easy to take action right away. In one instance, he said, he was prompted to ask members of his team for their opinions on decisions he was facing.

“The team doesn’t know I was nudged,” he said. “But I’m not ashamed to tell everyone that I heard from Wayne today.”

Firm Led by Google Veterans Uses A.I. to ‘Nudge’ Workers Toward Happiness

Not sure machine learning is really critical to this endeavor, but how could a startup do this and not insist it was using machine learning? AI is the new electricity.

Of course even with the low-stakes nudges, there are critics:

“The companies are the only ones who know what the purpose of the nudge is,” Professor Haugh said. “The individual who is designing the nudge is the one whose interests are going to be put in the forefront.”

Really? We can’t even nudge?