Tuesday, March 30, 2010

Patent law sanity

On Monday a Federal judge threw out a patent on human genes. Yes that's right the US patent office has been allowing folks to actually patent bits of the human genome.


The law is pretty clear. One can not patent a law of nature, or otherwise patent something you discover in nature.

The patent office should never have granted such a patent in the first place.

A patent for a method of isolating the gene, YES.
For a gene itself, NO.

More discussion over at Volokh.

Now obviously this ruling will be appealed, but I think it will stand, as the SCOTUS has been (at least lately) somewhat skeptical of patenting everything and anything under the sun.

furthermore the patent office should not be granting software patents, because one can not patent a mathematical algorithm either. One may of course copyright the exact code.

Note that this was a narrow ruling, and only applies to genes already found in nature. This does not apply to Monsanto's use of patented organisms like it's "Roundup Ready" crops. Now that is also an abuse of the patent system, but of a different kind. Congress specifically designated a type of patent called a "plant patent" to grant intellectual property rights over plants. That's fine, the problem is that Monsanto was granted a "mechanical patent".

Under a plant patent, one may buy the plant, but may not propagate it via cuttings. (i.e. no cloning). Under Monsanto's mechanical patent, they are claiming that any plant with their gene in it (even if the gene got there via natural fertilization) is their IP. That's a case for a different day.

Monday, March 29, 2010

For the Randian in your life

Gifts for the Ayn Rand lover,


Come on, you know you want a Taggart Transcontinental T-shirt...

Sunday, March 28, 2010

Water Heaters

The Water heater is the new house has issues. I think it's the thermostat, but it's hard to say. It keeps overheating and tripping the reset.

Since it's 10 years old I have decided to simply swap out the whole thing. Our hard water here is death on appliances.

Got a new GE water heater at Home Depot, installed it yesterday. And...

It doesn't work. Top heating element appears to be cracked.

I'm taking it back. *sigh*

Tuesday, March 23, 2010

Global what?

It raining. Again. In Phoenix. Rain.

Clearly the Global Warming fanatics are way off base.
Also the Global Cooling advocates are dead wrong.

It's not Global Warming
It's not Global Cooling
It's Global Wettening.

I'm telling you, if humanity does not get it's act together really soon and do something about this, the future is going to look awfully damp.

Please people... Stop Global Wettening before it's too late!

Sunday, March 21, 2010

Home repair

My son: Daddy, I hate the invisible fire.
Me: So do I son, so do I.

For the record, I really suck at sweating copper pipes and brass fittings. But the join appears to be holding.

Thursday, March 18, 2010

Disingenuous Value

My friend Kyle and I have coined a new phrase: Disingenuous Value.

Disingenuous value occurs when one, intentionally or otherwise, confuses cost with value.

Cost does not equal value.

Cost is what an item, well "costs". Value is what you receive in return.

Cost does not equal value. This is not only implicit in free market theory, it's required. It's the very basis that establishes the definition of a free market, which has nothing whatsoever to do with Capitalism (that's a different subject). Free markets do not require capitalism, any more than they require democracy, republicanism, or even currency.

A free market exchange is one in which two individuals exchange goods such that for each the value received is greater than the cost. The general rule is that it's an uncoerced exchange, but I'm going to state that that is not really a specific requirement, because as long as the value exceeds the cost one would voluntarily make the exchange. Coercion is only required if the cost exceeds the value. If I value your bushel of corn more than my chicken and you value my chicken more than your corn we make a trade, and each has received value greater than the cost.

I use the chicken/corn example because it shows that free markets function independently of the overall political, economic, or even monetary system being used.

Cost does not equal value.

Where things get complicated is when there is a third party involved. Specifically we were discussing this in the context of healthcare, but fundamentally it happens whenever there is a third party exchange going on.

For example, let's say one has employer provided health care. It's easy to say that it costs the company $X. It is disingenuous to say that the company is providing $X value, or providing $x worth of additional compensation. This is Disingenuous Value.

Tell 10 people that it costs the company X to provide their health insurance and give them the option to take X home instead, and 9 out of 10 will take the cash (the other 1 of 10 probably has a chronic condition and is being subsidized by the other 9). In this case, for 9 or the 10 the value is less than the cost.

Cost does not equal value.

The same thing is true of a retirement account. Say your company matches your 401(k) contribution at 100% up to $4000 per year. The cost to the company is again easy to calculate, it's $4000 plus the amortized cost of running the program. Let us call it $4250 a year in cost.

What is the value to the employee? It's certainly not the $4250 the program cost. And we are talking about funds that are in a retirement account with penalties for accessing it, and future money is always worth less than current money (the time value of money) so the actual
value to the average worker is probably closer to $3000. (i.e. $4k minus taxes and penalties).

Note that for someone in a higher tax bracket and close to retirement, the value is actually greater than for the average worker.

When the employer states that it is providing $4000 worth (i.e. value) of compensation in the form of a 401(k) match, that is a disingenuous value.

Value is what it's worth to the buyer. Cost does not equal value.

When a custom homebuilder offers to include a kitchen cabinet upgrade "a 30,000 value" to close the deal, ask him to keep the cabinets and take $30 grand off the price instead. It's not going to happen. That 30k is a disingenuous value. Actually in this case it's simply made up BS on his line card. Switching out oak cabinets for Walnut or Maple probably only cost the builder 8-10K (remember he's saving the cost of the oak, and he does not have to tear out an old kitchen either). On the other hand, when you go to sell your property, the nicer cabinets are only going to add a couple thousand to the resale value, and only if someone actually likes walnut or maple better than oak.

Value is what it's worth to the buyer. Market value is what you can sell it for. Cost does not equal either one.

As for health care...

The reason health care is so expensive is multifold. Much of it is simply because technology costs. In the 1970's I you had cancer it was basically "go home and die." Modern chemo and radiation therapy is so precise that in most cases you won't even lose your hair anymore, although it's still physically exhausting. That kind of technology costs, though we can all agree that it delivers quite a bit of value.

Another big driver is defensive medicine. Lawyers cost money, and they make the entire system more expensive. They do this for everything though, and Tort Reform is a subject for another day.

The third big driver of cost is 3rd party payers.

Simply put, when a 3rd party pays for XYZ, the cost to the 3rd party exceeds the value to the person receiving the good.

Cost does not equal value.

How much are you (yes you personally) willing to pay for that blood test? Your co-pay is $20. So the cost to the receiver is $20 (plus the opportunity cost of going to the doctor instead of doing something more productive, but let's ignore that for now). The cost to the HMO is probably on the order of $250. What is the value? That's hard to quantify, because value is the perceptible return received. It's obviously greater than $20, or you wouldn't have paid the co-pay. It's also obviously less than $250 because other people's money is always worth less than yours.

Further, there is no way to establish a market value either, since to establish a market value thing need to, well, be traded on the open market.

This is why Libertarians and Fiscal conservatives are really keen on Medical Savings accounts coupled with high deductable insurance for catastrophic events. For 95% of one's health care, the payee and the receiver of the good are the same person. A two party exchange.

This drives down costs, and drives up value. And if it has the side effect of making individuals more responsible for themselves, well, that's what we call a bonus.

Next up, is Social Security an example of a) Disingenuous Value, b) a Ponzi Scheme, c) simply evil, or d) some combination of the above?

[You did pick d) right?]

Friday, March 12, 2010

QOTD - On Liberals

Today's QOTD come from my friend Kyle:

Liberals have a positive view of the nature of government that is slightly past absurd, and close to farcical. - Kyle Aretae

Tuesday, March 9, 2010

Recesionary Thoughts

In response to my friend Aretae, who ponders the cause of the current "recession."

The main cause of the real estate bubble was "easy money" from the Fed. The long term cost of money was essentially free, and we all know what the demand for a free service tends toward.

While it is true that the roots of "community lending" started in the Carter Administration the plain fact of the matter is that is does not really matter where it started, the issue was that any loan that qualified for Freddy or Fanny protection was deemed to be "Risk Free".

In other words, all risk was assumed by the government, not the lending institution, so the lender didn't really care how risky the loan was; if the borrower could scrounge up 3% (or zero in some cases) the loan was good.

As a result, a lot of money was chasing low inventory. This caused inflation in the real estate sector. (note I specifically say inflation, not value gain) Due to rapidly rising prices, some folks started panicking and buying houses "while they still could" while others took advantage of rising "values" and cheap 4% loans to cash out equity.

New vehicle sales were running over 16 minion units during the real estate boom. That's not sustainable long term. The US normally absorbs about 13-14 million units a year. The extra 2-3 million came from people refinancing to buy new cars. (not speculation, it's the only source of free money available on such a scale)

The big auto makers expanded production to meet the new demand, which means they now are capable of building 20% more cars than the nation normally buys, and 40% more than when the crash finally came.

The extra capacity in the system is equivalent to one of the bigger auto makers, either everyone has to take a 20% hit or Chrysler has to go away. No amount of government bailout can change the fundamental calculus that there is simply too much capacity in the system.

The above is uncontestable.

Personally I think the best thing would have been to let Chrysler die an ignominious death. (and sell the Jeep brand name off to Ford)

Mark's theory on why things are still screwed up: (which is obviously contestable)

Currently the drag on the overall economy is the fact that real estate is in neutral, popped the clutch, high centered, or insert your favorite automotive metaphor here.

80% of the market is short sales. Short sales take on average 3-4 months to get an answer back on an offer. Very few people are willing to wait 4 months to hear yes/no/maybe. As a result the handful of foreclosures and traditional sales get multiple competing offers on the first day of listing. Unless listed for vastly more than it's real value, a listing will be bid up over it's asking price. (the current average in AZ is 2-3% above asking)

A friend of mine who is planing on moving to Ohio in several months foolishly listed his house for sale last week, at what I thought was too high of a price. (about $120/sq-ft) he got three offers on the first day, including a full price offer. Guess you are going to move twice Marc.

The best thing for the market would be for the fed to allow the banks to foreclose and clean off the inventory. But that's not happening. In fact, the federal government is exacerbating the problem with programs to prevent the banks from foreclosing.

Now I don't really care if real estate values go up, down, or stagnant. There are good societal reasons to want real estate to generally go up at the rate of inflation and no faster. Rising real sestate values means that your teachers, fire fighters, police etc can't afford to live in your community. That has it's own implications for another post.

Once again, Reagan was right. "In this present crisis, Government is not the solution to our problems. Government IS the problem."

Sunday, March 7, 2010


It has been brought to my attention that some folks couldn't find my RSS feed or otherwise had other issues.

I've just redirected the feed into feedburner. Let's see if that helps. If anyone looses my feed, let me know.

Minor Update

1) The house has been painted "Home Depot White". There is a little overspray to clean up but all in all not too bad.

It took 30 gallons. Yeah, that's a lot of paint. The tan color took two coats, I can only assume the red took more.

2) Garage door has been replaced and now works. The old lifter was actually only 3 years old (and worked) so we kept it.

3) The property has been graded. I think there is a little touch up to do, but the properly no longer looks like Korea (hills and valleys and fought over).

4) Started on the boy's room. Painted one wall blue, and have lain about 80% of the laminate. Probably need to get my table saw moved in order to finish it.

No pics, it's raining and I forgot the camera anyway.

Tuesday, March 2, 2010


Oh dear God what hath Bill Amend wrought -


Libertarian Foreign Policy

The libertarian position of Foreign Policy is basically the same position as for anything else: "Leave me the hell alone and I'll return the courtesy."

Libertarians also generally don't believe in the "measured response". If someone tries to rob you at knifepoint you don't evaluate the proper level of force in responding, you shoot him in the head, pee on his corpse, and if possible set his head on a pike as a warning to others that you don't do that.

So. when it comes to Foreign policy there are basically three options: Democrat-style appeasement, Republican-style nation building, Libertarian-style non-intervention.

Option A means ultimately going gently into that good night, and loosing our position of leadership in the world. But at least people will like us, right?

Option B, put bluntly, means eternal low intensity conflict as we police the world. Because at the end of the day, it's not actually possible to win a "War against Terror". Or Drugs, or Abortion, or ...

Note that most D's and R's are happy to mix the A & B in their own preferred proportions.

Option C probably means decades of peace punctuated by periodic high intensity warfare.

Remember, Libertarians don't want to ignore the world as much as they want it to leave them alone. Take Afganistan as an example:

A) Democrat solution: try to use international courts and diplomacy to bring the perpetrators to "justice".

B) Republican solution: wage an undeclared war, then set up a "friendly" government so they won't do that again. Oh yeah, it might take a while (like 20 years).

C) Libertarian solution: Bomb the place back into the stone age, then drop leaflets that say "y'all are free now, try to set up a better government next time". Don't make us do it again or we'll charge you for the bombs.

We wouldn't really send them a bill for the bombs. Ok, some of us might.

Regardless, the Libertarians really believe that one can't spread democracy at the point of a bayonet. We're willing to kill your dictatorial thugs off for you (especially after they have torqued us off) but setting up a government that respects individual rights, follows the rule of law, etc. is your own bloody responsibility.

Monday, March 1, 2010


Earthquakes, Earthquakes everywhere.

So, what's the over/under that the liberals are blaming "Climate Change" for the earthquakes by this weekend?