Archive for June, 2004

Is Social Networking a Snore?

Friday, June 25th, 2004

  • David Hornik (Venture Blog): All Social Networking Panels Are the Same. So in an effort to save you a bunch of time and aggravation, here’s a transcription of this evening’s event. I believe that it is essentially a transcription of all past and all future social software panels, so read it and free yourself of the need to ever attend such an event yourself.

  • Really, read it for yourself…

    Comments

    Supernova

    Friday, June 25th, 2004

    The Supernova conference has been fascinating, as expected. Lots of other folks are blogging this (more here). Smart folks, smart discussions.

    Comments

    Sports World’s ‘Anti-Doping’ Kangaroo Court

    Thursday, June 24th, 2004

  • AP: Lifetime bans sought: USADA notifies Montgomery, Collins of plans for doping punishment. It’s the first time the agency has filed charges against an athlete who has not failed or refused to take a drug test. USADA has built its cases on evidence from the federal probe of the Bay Area Laboratory Co-Operative.

  • The sports bosses, stooges in the War on (Some) Drugs, have created a grossly unfair process to “clean up” Olympic competition. The athletes — innocent or not — can’t possibly win, which appears to be the idea.

    The “anti-doping” agency doesn’t have to obey the rules of law or evidence. All this hypocritical body has to do is make vague charges and defy the people charged to prove a negative.

    I don’t care if athletes take performance-enhancing drugs, mind you. As far as I’m concerned what adults put into their bodies is their own business.

    But even if the sports authorities should have the right to ban people they call abusers, they should have to prove their case beyond any reasonable doubt. The process they’ve created is a caricature, a kangaroo court of the worst kind.

    Comments


    Posted by: ijsbrand on June 24, 2004 08:27 AM

    Actually, doping cases work from the same basic assumption as drugs cases do under American law; everyone’s guilty until proven innocent. Though normally it’s enough to pee on command and let a lab test the results for residues of banned substances.

    That the end results of these test are ignored this time is not really a change of the basic rules set out.


    Posted by: on June 24, 2004 11:22 AM

    What Dan’s missing because he’s uninformed is the fact that Tim Montgomery, the most high profile and i’m sure inspiration behind this piece (since Montgomery complained of facing a ban without ever having tested positive), is that Montgomery admitted to a grand jury of taking steroids and human growth hormone, even though he never tested positive. Maybe Dan will say he was perjuring himself and could never have taken those drugs


    Posted by: on June 24, 2004 11:22 AM

    What Dan’s missing because he’s uninformed is the fact that Tim Montgomery, the most high profile and i’m sure inspiration behind this piece (since Montgomery complained of facing a ban without ever having tested positive), is that Montgomery admitted to a grand jury of taking steroids and human growth hormone, even though he never tested positive. Maybe Dan will say he was perjuring himself and could never have taken those drugs


    Posted by: on June 24, 2004 11:49 AM

    If Tim Montgomery has confessed to a violation, then banning him is proper. If others are suspected of violations but contest those violations, they should be presumed innocent; certainly the tests can be made more rigorous to prevent any future cheating.


    Posted by: on June 24, 2004 12:09 PM

    I don’t think that proof beyond a reasonable doubt is a relaistic standard – these are all private organizations after all.

    But, these sporting authorities are in effect employers (or the agents of employers), and so should be governed by the same rules and regulations. There should be a “reasonableness” standard, there should be due process (including appeals), and there should be proportional reaction to the offense.

    Lots of hypocrisy on all sides of this issue . . .


    Posted by: Dan Gillmor on June 24, 2004 12:50 PM

    A newspaper report quoting what he may have said to a grand jury isn’t enough evidence for me.

    I doubt they’re going to be able to police this stuff in the future, when it’ll be possible to create designer drugs that are fundamentally undetectable. Anyway, the entire sports world is awash in hypocrisy.


    Posted by: on June 24, 2004 08:47 PM

    Oh there’s plenty of hypocrisy about – I’ve never heard of a British athlete yet that was really guilty, or of a foriegn one that was innocent.

    But what adult puts into their bodies is not their own business if they wan’t to compete in international competetitions.

    All games have rules. Athletes and their trainers know them inside out. If an athlete tests positive the onus is rightly on him to prove why he should not be banned.


    Posted by: Kenny on July 5, 2004 02:04 PM

    I agree with Wez

    http://www.links4you.biz

    More on SCO’s War on Linux

    Wednesday, June 23rd, 2004

  • Brad Stone (Wired): The Linux Killer. If SCO loses, the company is likely toast. But winning will be a tall order. SCO must show that the old, murky contracts between AT&T (which developed Unix), Novell (which bought the operating system from AT&T in 1993), and the old Santa Cruz Operation deliberately transferred the Unix copyrights to the new SCO Group; it also must show that it owns the rights to derivative flavors of Unix, like IBM’s AIX. Finally, and perhaps most difficult, SCO must prove IBM and other Linux programmers around the world got sloppy and ported proprietary code into Linux. Legal experts tracking the case think each hurdle – let alone all three – is difficult to clear. The odds are clearly against SCO.

  • Comments


    Posted by: on June 23, 2004 11:57 AM

    When will the SEC investigate this farce as a potential stock manipulation scheme? It seems increasingly likely that no one at SCO ever seriously thought that their legal case had any merit, and that the only reason for pursuing it (and dragging it out so long) was to give insiders a chance to dump a good part of their shares while the stock price was inflated based on their hype.


    Posted by: Alice Marshall on June 23, 2004 12:03 PM

    If dumping their stock was their purpose they seem to have succeeded:

    http://finance.yahoo.com/q/it?s=scox

    Attention investment relations professionals, this information is public and online.


    Posted by: TFBW on June 23, 2004 07:07 PM

    See further related information at Groklaw.

    http://www.groklaw.net/article.php?story=20040623153937941


    Posted by: on June 23, 2004 08:21 PM

    “When will the SEC investigate this farce as a potential stock manipulation scheme?”

    Probably never: it’s a tough case to make, and Boies’ involvement makes me inclined to believe that it wasn’t a true “pump-and-dump”.

    I think it’s more likely that they believed that the lawsuit, while dicey, had enough of a chance of some success that IBM would buy them out (at a nice profit to them) to shut them up. That’s certainly debatable, as a moral issue, but it’s not _illegal_, and it’s not “investor fraud”.

    I could be completely wrong about this, since it’s all guesswork. But my opinion is that, if there were a big enough smoking gun around for the SEC to nail SCO, Boies wouldn’t have taken the risk of going down with them. So, even if it really was a pump-and-dump scam, the chances of any enforcement action are extremely small.


    Posted by: on June 23, 2004 09:24 PM

    I’ve been mentioning the dumpiing angle for some time now, and it really started right when they started putting out the FUD. Making the case legally may be a tough thing — I don’t know, but it’s pretty clear that’s that is what was going on.


    Posted by: on June 24, 2004 10:30 AM

    “Legal experts tracking the case think each hurdle – let alone all three – is difficult to clear.”

    They may not be accounting for the abject lack of tech smarts in the courts, though.


    Posted by: on June 24, 2004 10:30 AM

    “Legal experts tracking the case think each hurdle – let alone all three – is difficult to clear.”

    They may not be accounting for the abject lack of tech smarts in the courts, though.


    Posted by: on June 24, 2004 10:48 AM

    Jim –

    The pump-and-dump is hard to prove, though doing a month-by-month analysis of the volume of insider sales shows that it looks awfully coordinated. Maybe that’s not illegal. A better way to convict the SCOX insiders is to look at all the related companies and “charities”–Canopy Group, Vultus, Altiris, Angel Partners, and so on.

    Headline of the Day

    Tuesday, June 22nd, 2004

    WNEP TV: Smokers Die Early, Study Finds.

    Thanks for clearing that up.

    Comments


    Posted by: Ted Feuerbach on June 23, 2004 12:22 AM

    “WNEP TV: Smokers Die Early, Study Finds.”
    Dan: “Thanks for clearing that up.”

    The connections between Lung Cancer, Emphysema aka. COPD (Chronic Obstructive Pulmonary Disorder) and Heart Disease with smoking were demonstrated by retrospective studies in the 1950’s. I.e. look back at a random group of smokers and non-smokers and see what happened to them over time. Uncontrolled retrospective studies are only valid if you have an extremely large study cohort. They did. It may be the first time that such a study had this kind of impact. To this day people still challenge that report.

    Epidemiologists and Public Health Officials (as do I), correctly, accept those findings as scientific fact.

    However, don’t despair, there is a way to convince the doubters. The Gold Standard in Clinical Research is the double-blind controlled clinical study. We may have to conduct one of these studies. Here’s how it works:

    We take a few thousand teenagers and randomly assign them to smoke or not to smoke. The participants cannot, of course, be aware if they are smoking or not. We then follow them for 50 years and check the clinical outcome.

    Volunteers anyone?


    Posted by: on June 23, 2004 08:58 AM

    That should read “cigarette smokers”. According to the Surgeon General’s report, cigar smokers showed only a very slight increase in death rates. Pipe smokers actually lived longer than non smokers.


    Posted by: on June 23, 2004 09:59 AM

    This is a bit of a digression, but anyway . . .

    As Dan’s comment pointed out, it is axiomatic to rational people that smoking kills people. They called cigarettes coffin nails back in the 40’s. My mother knew it was dangerous when she started smoking in the 1950’s; and she was proven right when she died at 60.

    The idea that the Big, Bad Tobacco companies have been pulling the wool over our eyes (even if they were trying to do so) is nonsense. That is like blaming Johnny Cochran for the acquittal of OJ Simpson. The idiot teenagers who start smoking today are doing it with their eyes wide open.

    Barbarians

    Tuesday, June 22nd, 2004

    It’s the only adequate word for people who murder civilians to make political points.

    Comments


    Posted by: Russ Abbott on June 22, 2004 01:22 PM

    Without arguing that this or the other beheadings are in any way excusable or justified, I don’t think that name-calling is useful. See my comments on Bush’s reaction to the Johnson beheading http://russabbott.blogspot.com/2004/06/bushs-reaction-to-johnson-beheading.html and http://russabbott.blogspot.com/2004/06/enemies-in-heat-of-battle-friends-for.html


    Posted by: on June 22, 2004 01:27 PM

    More like they have nothing else to lose….

    We point our guns in too many places around the world. We’ve made way too many enemies for silly reasons…..

    http://www.sumeria.net/politics/usa.html

    http://www.zmag.org/CrisesCurEvts/interventions.htm


    Posted by: on June 22, 2004 01:54 PM

    But at the same time most Iraqi’s want to do business with the US, Asia, and Europe. A US business associate of mine and his French partners just came back from Baghdad and have local Iraqi businessmen begging him to invest. In fact in a golf course on the Tigris River of all things. Some sort of resort targeted to rich Europeans and Arabs. Like everything in life there are opportunities to build bridges and make a lot of money for both the US, Iraq and others.


    Posted by: Wayne Hastings on June 22, 2004 02:21 PM

    OK, so who’s going to complain that these Iraqis aren’t abiding by the Geneva Convention? The coin has two sides in that regard. These radicals are a small, vocal, brutal minority. They may be trying to hold onto Friedman’s proverbial Olive Tree, but their ends do not justify their means. It’s time for the UN to roll out the big guns.


    Posted by: Cog on June 22, 2004 02:26 PM

    Actually, I think it was a religous point they were trying to make.


    Posted by: on June 22, 2004 04:49 PM

    The article says: “He was an Arabic speaker and evangelical Christian who had worked in Iraq for a year as a translator for a South Korean firm supplying goods to the U.S. military.” I think that’s the clue: he was murdered for being a non-Muslim in an Arab country.


    Posted by: on June 22, 2004 07:04 PM

    Dan, your concise, accurate statement speaks volumes. Not one extra or missing word. The poor Russ Abbotts of the world still don’t get it. There do exist bad people on this earth; sorry about the “demonization”. Of course they’re still human, but evil they are. They would gladly annihilate Russ and all us other infidels in a heartbeat. To sit back and ponder their justfications or rage misses the point. Terror means the intentional attack on civilian targets for political effect. My only suggestion to Russ is that when (evil) people threaten your life or those of your loved ones, please take them seriously.


    Posted by: on June 22, 2004 08:06 PM

    The thing that terrorists have in common is anger and a willingness to commit acts forbidden by every modern religion and every civilized government. The evil committed by the Moslem terrorists of Al Queda is anathema to their religion, just as Catholic and Protestant killings in Northern Ireland and Jewish crimes in the Near East.

    Thus, the abominable beheadings can’t be associated with the religion of the perpetrators any more than German Lutheranism or Catholicism was responsible as a religion for the Holocaust.

    Unfortunately, the knee-jerk reaction to what Dan aptly termed barbarism is to associate it with the extremes of Moslem belief, not the mainstream. “Moslem”, like “Arab” is far too broad a concept to be hung with responsibility for the terrorism.


    Posted by: Jacky on June 22, 2004 09:16 PM

    Yes, dan, I totally agree with you.

    Iraq militants behead S. Korean hostage

    http://story.news.yahoo.com/news?tmpl=story&u=/ap/20040623/ap_on_re_mi_ea/iraq&cid=540&ncid=716


    Posted by: John on June 23, 2004 04:54 AM

    Sure thing


    Posted by: on June 23, 2004 11:10 AM

    So, not to belabor the Chomsky view of things. But, say a trader on Wall Street calls in a debt on a developing nation’s government, or maybe forgives a portion but increases the interest rate by .25%

    The government of this country wants to meet its international obligations, and so pays back its loan. It obtains the extra .25% on the interest rate by not subsidizing the purchase of seeds for the next year’s crops, which will feed its population.

    The next year, a bit of starvation occurs in the population. Iterate this over 5 years, as hungry people are not as productive, and can’t produce as much output to pay back the government’s obligation.

    Eventually, the people at the bottom with the least amount of support die. Say 50,000 children who did not get adequate nutrition in their first years of life. These were civilians, as they had no say in what their government did in the international arena, but must live with the consequences of these agreements.

    Is it any less barbaric to kill these children through economics at a far distant remove than to kill a few people operating in a war zone directly with a sword?


    Posted by: on June 23, 2004 03:38 PM

    “Is it any less barbaric to kill these children through economics at a far distant remove than to kill a few people operating in a war zone directly with a sword?”

    I’ll never understand this flavor of moral equivocation. Do you really see yourself as enlightened with this viewpoint? How many Wall St. traders blow up busloads of children, detonate roadside bombs without caring who the victims are, and murder people because of their nationality?

    Sorry, you are not enlightened and you don’t get something that the rest of us are missing. The thing that you are missing is that these thugs, crimminals, and terrorists will murder you because you are not subscribing to their brand of Islam, not because you didn’t help feed their children. The value of human life in the middle east is appallingly low, only when people get a chance to exercise freedom will their outlook change. Unfortunately, there is an ent
    ire spectrum of groups and people who don’t want anything resembling freedom in these countries, which is why they have embarked on this campaign of terror to drive out anyone who attempts to instill freedom.

    Yes, it’s barbaric and savage. Not only should people not attempt to justify their actions, collectively we should recommit to hunting down and killing these terrorists one by one if that’s what it takes.


    Posted by: on June 23, 2004 04:07 PM

    I don’t think I was justifying their actions, nor was I saying that killing innocents is not barbaric.

    You ask, “How many Wall St. traders blow up busloads of children, detonate roadside bombs without caring who the victims are, and murder people because of their nationality?”

    I am suggesting, that while they do not use dynamite or swords, they do kill without caring about the victims, and they murder people because of their nationality, being citizens of indebted nations. And they can’t see that it’s murder, because all they think they’re doing is adjusting numbers in a spreadsheet, because they want another Lexus, or the guy in the next office made better numbers and you have to show him up.

    And I am suggesting that this is also barbaric. And I might even suggest that we tend to our own barbarism before noting the log in someone else’s eye.

    Our valuation of human life in our inner cities, amongst the working poor and permanently unemployed is appallingly low. Our exercise of freedom has only made class striations worse over the last 30 years. Unfortunately, there is a small group of of very rich men who don’t want anything resembling freedom in this country, which is why they have embarked on this campaign of terror to drive out anyone who attempts to instill freedom.

    I actually have no idea what to do with barbarism overseas. Our business interests are too entagled to just go away, and we are too dependent on foreign energy to just walk away. But I do think we need to clean out our own fratboy jerks before we have the moral standing to call others barbarians.


    Posted by: on June 23, 2004 07:14 PM

    Today’s Juan Cole blog: has this thought on the issue:

    I don’t think a lot of press attention should be given to the capture and killing of a single hostage, since the whole point of the captors is to generate such attention. I think the big stories on Tuesday were the killing of 2 more US troops near Balad and the airstrike on Fallujah. The beheading creates a lurid interest, but it doesn’t matter to a dead person how he was killed. And, no, beheading has nothing special to do with Islam, it is just grisly and a good tool for terrorists.


    Posted by: on June 23, 2004 07:19 PM

    Russ, I agree with you that Bush’s broad-brush characterization is “not useful”. I’d go even further, and call it “immoral”, because it’s false (we’re “up against” many “kinds of people”, ranging from “evil” to “deluded” to “corrupt” to “patriotic”), and because it encourages people on “our side” to act immorally when dealing with people on “their side” by fostering a view of all of them as “in-/sub-human”.

    But I also think it’s entirely appropriate to get out the Pilot Razor Point and write “evil” (or, in some cases, “insane”) on the _individuals_ who freely chose to commit those acts.

    It’s not sufficient to label the acts as “immoral”: there are many things that people do, often as a result of basic human weakness, that are “immoral”. Like, say, driving drunk. But the drunk driver who kills a pedestrian through drug-induced incompetence is very different from a sober driver who deliberately runs over a random stranger. Both acts are “immoral”, but the latter is probably also “evil”, and the distinction between the two _is_ “useful”.


    Posted by: on June 23, 2004 07:21 PM

    “But I do think we need to clean out our own fratboy jerks before we have the moral standing to call others barbarians.”

    Your reasoning is ludicrously flawed. The moral distinction is easy to grasp — it’s not one of mechanics, as the other poster may have suggested, but rather one of intent. Wall Street traders may act with indifference, perhaps callousness, regarding the many-degrees-removed consequences of their daily business dealings, but they do not set out to intentionally maim, torture, rape or murder people each day.

    You are equating negligence (at most) on the one hand with intentional and immediate brutality on the other. Any first-year student of philosophy or law could easily grasp this distinction and describe why virtually every society in existence since the dawn of civilization has chosen to punish intentional wrongdoing far more harshly than mere negligence or indifference.


    Posted by: on June 23, 2004 08:41 PM

    “Is it any less barbaric to kill these children through economics at a far distant remove than to kill a few people operating in a war zone directly with a sword?”

    Most of the time, yes, because the bankers are not making the choices that are the proximate cause of the children dying. It’s more likely that a corrupt dictator or ruling oligarchy has chosen to line their own pockets, or buy new cattle prods and prison cells for the secret police, instead of seed corn.

    Was it “immoral” for the bankers to get involved with the borrowers in the first place? Or to impose the conditions that led to the hard choices? Sometimes yes, sometimes no: each case needs to be examined on its own merits.

    But “barbaric” rarely, if ever, describes the situation well.


    Posted by: on June 23, 2004 11:46 PM

    well, perhaps the bankers are not doing it intentionally, but it seems more civilized to me to be aware of the consequences of your actions, and first ‘do no harm,’ and to always strive to understand the consequences. And, our actions overseas, especially when in the name of business, do cause consequences, and rarely do we see the impact of our economic choices overseas. And once someone tells you that you are causing suffering, if you choose not to look at the problem, then it begins to be gross negligence and intention.

    Back to the war on terrorism, if we ally ourselves with people who we know are committing war crimes, are we morally culpable? If we stand by as hundreds of people who had surrendered were packed into cargo containers without oxygen, transported many miles with few survivors, is that okay? Is that negligence or intention?

    http://bitterfact.tripod.com/afghan/massacre_at_mazar.html

    It certainly is a lot easier to just get rid of all those people than to bring them all before a court of law and determine whether they were willing illegal combatants.

    If you cultivate a culture of ‘not knowing’ so you don’t know what you’re feet are doing and therefore can’t take responsibility for them, is that intentional, or is it still negligence?

    I would agree though that the Queda methods are engineered to cause us the greatest distress. We see American soldier’s faces. These are shrouded, a mystery, unknowble, the unknown, Other and therefore not human. And I think that Al Jazeera is just as bad as Fox in terms of politicizing news coverage. And one person’s suffering is awfu
    l. Can we imagine 3,000? When do we ever see the suffering we have caused, but for the brave soldier who leaked the prison photos?

    What if, hypothetically speaking, one of the shrouded folk you see in the Queda beheading were the son of someone who we suffocated through negligence in a cargo cart? And he committed to hunting us down and killing us one by one? An eye for an eye will make us all blind.

    I knew a flight attendant on one of the WTC flights. The actions taken in her name by the us government disgust me. That she was cruelly murdered disgusts me. I met her at church camp, where we were ostensibly taught to turn the other cheek.

    As a superpower, our country that engenders admiration also becomes an easy target, even if we never wanted to be one. There is nobody to contain our behavior but ourselves.

    Phone Companies Join Digital Rights Lobby

    Tuesday, June 22nd, 2004

  • CNet: Tech heavies support challenge to copyright law. But members of the nascent coalition, including Intel, Sun Microsystems, Verizon Communications, SBC, Qwest, Gateway and BellSouth, are lending their support to a proposal by Rep. Rick Boucher, D-Va., to rewrite that part of the DMCA. Boucher’s bill says that descrambling utilities can be distributed, and copy protection can be circumvented as long as no copyright infringement is taking place.

  • The headline is a little misleading, because Intel, Microsoft, Hewlett-Packard and Apple are among the notably missing companies from this list. Then again, they’ve mostly signed on with Hollywood and the music industry to help control what customers of electronic gear are allowed to do with what they’ve purchased.

    But the presence of the big regional phone companies is a welcome one. They still have a lot of clout, and they could be a huge boost for legislation that might begin to restore some balance in the copyright debate.

    Boucher’s bill (H.R. 107) deserves your support, too. Please call your member of Congress.

    Comments


    Posted by: on June 22, 2004 08:07 AM

    If Disney, et. al., can kill all media downloads, and A**croft can kill all er0t1c downloads, how will the phone and cable companies continue to interest their customers in broadband internet connectivity? If all that are left are low-bandwidth applications, the carriers will be forced to drop prices, and dividends. I expect they’re catching on.

    California Prison Guards on Defensive

    Tuesday, June 22nd, 2004

  • Mercury News (reg req): Guard union in showdown. For more than a decade, California’s prison guards have had it their way. Hefty salary increases that outpaced most state workers have made them among the highest-paid prison guards in the country. Favorable overtime rules last year brought the paychecks of 362 officers over $100,000. The guards’ union, a generous campaign donor, has been allowed a strong hand in running prisons. But the union’s currency, literally and figuratively, has suddenly been devalued. Gov. Arnold Schwarzenegger, the state’s wealthy, increasingly popular leader, neither wants nor needs the group’s contributions. The very strength of the prison guards’ union has become a weakness.

  • About time, too. California’s prison-industrial complex is one of the reasons the state has gotten into such trouble, fiscal and otherwise.

    Our prison population grows, in large part due to the idiocy of the War on (Some) Drugs, which treats a medical problem as a criminal one and creates entire new classes of criminals. Meanwhile, our schools continue to wither. Some public policy that is.

    The guards have a tough job. But they’ve created a monster of their own, and now they’re being held to account. Let’s hope the legislative reformers stick to their guns on this one.

    Comments


    Posted by: on June 22, 2004 09:18 AM

    Democrats must stop kowtowing to unionized public employees.

    There is no significant public interest in government employees having a right to bargain collectively, as they face no private employer subject to a profit motive at the negotiating table.

    It is often said by Democrats that we should have ‘public financing’ of political campaigns.

    In fact, we **already do**. Unions have the power by government fiat to compel union members to pay dues, a portion of which is used for financing campaign contributions “hard” and “soft”. *Every* worker in a union shop (outside a handful of “right to work” states) is, in this manner, “taxed” by law to finance political campaigns.

    However, well-nigh 100% of the funds go to Democrats.

    It’s even worse in the case of public sector unions. Aside from a general taste for Democrat policies favoring labor unions and big government, public sector unions use their “tax base” of government mandated contributions to finance campaign to influence *their employer* and its policies toward specific workers.

    It is this morass of public financing of campaigns benefiting only the Left that has produced all the horrors of public sector union of the past 25 years, including the multiple debacles of the California Prison Guards’ union.

    Thankfully, as a rich man willing to expend personal capital on his beliefs, Arnold is immune to these shenanigans. The Democrat majority in the legislature (and former Governor Davis) have been, unfortunately, in their pockets for years.

    Expensing’s Seven Lives

    Wednesday, June 16th, 2004

  • Mercury News (reg req): Panel OKs measure to block expensing. A congressional committee overwhelmingly approved legislation Tuesday that would block a proposal to force companies to deduct the cost of stock options.

  • This is a cheap vote by committee members for legislation they surely suspect will never become law. It shouldn’t become law.

    The system has worked to the vast benefit of Silicon Valley companies, which understandably want to keep the gravy train rolling, but now they should do the right thing. The time has long since passed when companies should honestly reflect the value — the cost to shareholders — of stock options in their income statements.

    Shareholders will understand, if reported earnings drop due to expensing of options, that nothing fundamental in the company has changed. Today, profits are overstated, and shareholders seem to grasp that without much trouble. They aren’t as stupid as the tech industry seems to think.

    Comments


    Posted by: on June 16, 2004 11:36 AM

    Sorry, Dan, but it’s not possible to “honestly reflect the value — the cost to shareholders– of stock options”. To do so requires a prediction about the future, together with a prediction about human behavior (that is, how many optionees will cash in their options, for what price, and when).

    With options that are traded on the open market, it is possible to determine that option’s value, based on what someone will pay for it. With employee stock options, it’s guesswork.

    Nevertheless, Black and Scholes came up with a formula. The problem is, their formula was for options openly traded on the futures market. Their assumptions are violated since options can’t be sold; they have to be exercised by isolated, emotionally involved individuals that don’t behave like the economically rational automatons in the textbooks.

    The Black-Scholes formula makes a lot of assumptions, like interest rates remaining constant and known, efficient markets, no dividends paid, and the like. So in the end, we’re talking about replacing one fake number with another fake number.

    Given this, I wouldn’t worry too much about it, except that it’s helping to bring historic Silicon Valley practice of widely dispersing stock options to an end. If options become a more expensive perk to hand out, the execs will reserve the perk for themselves. A lot of engineers in the valley managed to make the down payment on their houses from stock options; this will no longer happen.


    Posted by: on June 16, 2004 10:57 PM

    A lot of accounting methods are artifical. Anything other than “cash” accounting, for the most part, is artifical. Accounting works because everyone applies rules and methods consistently.

    The formulas for valuing options may be flawed, but it will work as long they are in the ballpark and all companies follow them consistently. If shareholders can understand how tech company inflate their numbers without expensing options, surely they can understand the formulas’ flaws?

    GM is expensing options. Why can’t tech companies do the same?

    If “it isn’t fair” because tech companies enrich more rank-and-file employees than old-economy companies, perhaps we should consider whether it is fair this Valley’s engineers priced everyone else out of the housing market.

    If stock options truly cannot be valued accurately, then it should change into something that can be correctly valued. (Such as real freely-tradable options on a real stock market) Otherwise it is giving companies the right to manipulate their books. Do we want *that*?


    Posted by: MiC on June 25, 2004 03:02 AM

    Nice article, keep up!

    Buying the Disability Lobby, and More

    Friday, June 11th, 2004

  • NY Times: The Disability Lobby and Voting. Some supporters of voter-verifiable paper trails question whether disability-rights groups have gotten too close to voting machine manufacturers. Besides the donation by Diebold to the National Federation of the Blind, there have been other gifts. According to Mr. Dickson, the American Association of People with Disabilities has received $26,000 from voting machine companies this year. The real issue, though, is that disability-rights groups have been clouding the voting machine debate by suggesting that the nation must choose between accessible voting and verifiable voting.

  • The voting-machine scandal just grows and grows. When the National Federation of the Blind accepts $1 million from Diebold, maker of the scandalously lousy machines that California recently banned, you have to shake your head in amazement at how putrid this entire situation is getting.

    The League of Women Voters’ support of unverifiable voting machines is another astounding situation. Barbara Simons, a California woman who’s an expert in computer technology, is running for president (AP) of the organization in a protest vote. I hope she wins and, with others who can’t fathom the league’s refusal to recognize reality, gets the organization to change its odd stance.

    The fact remains simple. There is no way anyone should trust to verify the validity of votes cast with some of these electronic voting machines unless we create a voter-verifiable paper trail and have frequent, random audits of precincts.

    Disabled people deserve a way to cast a fair vote, honestly counted. Some of the groups representing them — taking money from the voting machine lobby — would rather risk entire elections than make sure we do this right. It’s a shame.

    Comments


    Posted by: K.G. Schneider on June 11, 2004 03:04 PM

    Thank you for saying this!


    Posted by: on June 11, 2004 03:18 PM

    Since this issue usually provokes a reaction of “But a paper trail will let people sell their vote!” let me debunk that. Using public-private key encryption one can both encrypt the data on the receipt, and sign it with a different key to prove it is an authentic receipt. You encrypt the data on the receipt with one public key, sign it with another. You give one copy of the receipt to the voter, the other goes in a lock-box at the polling place.

    These receipts are useless unless you have the private keys to decrypt the receipt and check the signature. The private keys are tightly controlled, available only to an election official and a representative of each party. They are also generated anew for every election. You then use the lock-box full of receipts to audit the electronic counting of results. Any voter can also demand proof that his vote was counted by matching his encrypted receipt with the list of ones on record. But no one besides the voter knows which voter generated which receipt.

    This stuff isn’t magic, rocket-science, or even hard to use. You use it every time you visit a “Secure” website to perform a financial transaction.


    Posted by: on June 11, 2004 03:25 PM

    The more companies like Diebold deny problems and try to buy their way out, the more Americans and their representatives should fear unverified voting. As the old business adage says, “the likelihood that customer concerns are justified is directly proportion to the vigor with with the company rejects their validity.”


    Posted by: Dave Kearns on June 11, 2004 03:46 PM

    Its not the League of Women Voters, or the associations of the disabled, that are wrong but those who persist in the untenable argument that electronic voting somehow has to be more secure – by geometric proportions – than any other voting method currently or recently in use. Electronic voting machines are safer, more accurate and more accessible than any other method we are currently using. That’s the bottom line.


    Posted by: on June 11, 2004 04:21 PM

    Dave, if you have two systems and one allows you to verify that the count is accurate or not, and the other doesn’t allow you to do so, one is obviously not as safe. The electronic voting machines that are being most widely promoted and used fall into the latter category, although there’s no reason why they inherently should. Correcting that grave error in these machines is hardly trying to make them more secure than other voting methods — it’s trying to make them AS secure and accurate and verfiable, which can only be seen as good for democracy.


    Posted by: on June 11, 2004 04:32 PM

    “Electronic voting machines are safer, more accurate and more accessible than any other method we are currently using. That’s the bottom line.”

    This is an out and out lie. Period.


    Posted by: on June 11, 2004 04:41 PM

    Dave,

    Current US electronic voting systems have no audit capability. That means ONE LINE OF CODE can move 10% of the votes, or however many needed to throw the outcome. This may have already happened in Georgia and Nevada. We just can’t know. The manufacturers refuse to allow the code to be reviewed (protecting their “trade secrets”), even if reviewers are the government officials purchasing the systems and are bound by confidentiality agreements. The system smells rotten. Their “code signature” checks are worthless because there are too many ways to hide easter eggs in black-box code. I mean, if the Australians can do a decent open electronic voting system, why can’t we?

    With mechanical voting systems you at least have to hack each polling place; there’s no single black box where one person can throw the whole outcome.


    Posted by: on June 11, 2004 05:02 PM

    Anyone who knows anything about goo goos [that's good government groups], knows that they are always more corrupt than any crooked politician.


    Posted by: on June 11, 2004 05:25 PM

    There does exist an open source electronic voting system, used in Australia for parliamentary elections since 2001:

    http://www.elections.act.gov.au/Elecvote.html

    Interestingly, they do not support a paper trail since their code is open to audit:

    There is no need to print a copy of any votes. The Electoral Act 1992 does not provide for a “paper trail” of electronic votes cast. This is not required as the software for the voting and counting systems has been rigorously tested, independently audited, and published for anyone to see on the internet. In addition, audit trails and security systems will be in place to verify that the software used in production is identical to the tested and a
    udited software, and to verify that the data actually counted is the data cast by voters in polling places. This approach is intended to ensure that there will be no way in which electronic votes can be tampered with. The system is intended to be more transparent and secure than the existing paper ballot method.


    Posted by: on June 13, 2004 04:01 PM

    Our most infamous voting state is having difficulty with its unaditable post-chad election systems:

    Voting Machine Software is Flawed (Florida)
    http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20040613/NEWS/406130355/1006/SPORTS

    (sorry, I’d have linked to a K-R article if I could find one not requiring registration)