innovation

mobile payments and loyalty

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Communications Service Providers, mobile device vendors, and operating system vendors are all formulating their own strategies to capture the payment market. The introduction of Near Field Communications (NFC) technology broadly into mobile devices is the key enabler for users to execute payment transactions by touching devices together. These players all see an opportunity to grab a slice of the huge payments business that credit card companies now dominate. Mobile payments using NFC is potentially very disruptive to the status quo.

From a user perspective, mobile payment seems like a small improvement in convenience. Digital technology may provide improved security and fraud protection over the extremely vulnerable scheme of authenticating a credit card number on a physical card with a matching customer name, security code, expiration date, billing address, PIN, or signature. Improved security and fraud protection would be a compelling motivator for users to adopt this technology.

While users will use mobile payments to replace some of their credit card transactions, it is unlikely that credit cards will disappear any time soon. Mobile devices with NFC are still not common enough. Even the Apple iPhone 5 does not support NFC yet, although it would be extremely surprising if the next major iPhone release did not include NFC support.

Where NFC can provide an even greater convenience is to track loyalty points and rewards. Users carry around a huge stack of loyalty cards in their wallets and on their key chains today. Every vendor has their own loyalty card. It is not uncommon to carry dozens of these. We have cards for grocery stores, pharmacies, coffee shops, retailers of every kind, airlines, hotels, car rentals… the list is endless. What I would like to see is a popular app become the de facto standard in tracking loyalty points universally, so that users can finally shed themselves of all those physical loyalty cards.

A universal loyalty app makes many other side benefits possible. The most important is personalization. A patron of a restaurant can be identified when they check in with their mobile device. They will be credited points at the end of the meal. The customer’s identity can be used to retrieve their food and service preferences, so that without needing to ask the server already knows the customer’s dietary restrictions, allergies, and favorite foods and drinks. The overall experience would be improved for both the server and the customer as communications are streamlined.

A universal loyalty app can also become the means by which coupons and promotional offerings are distributed by vendors and carried by users. This would be far more convenient than carrying around paper coupons. The app can perform important functions like reminding the user to use a valuable coupon before it expires. It benefits users to redeem more savings, and it benefits vendors by promoting more business.

A universal loyalty app can also become the means by which users may track purchases (keeping a copy of every bill) and their associated warranties and protection plans. An app could easily record purchase dates and vendor information, so that users no longer need to keep paper warranty agreements in a physical filing system.

Having loyalty points, coupons, and purchases tracked by a single app will also enable other innovations, such as dynamically calculated coupon values or promotional pricing to reward users proportional to the value of their past purchases. It also enables vendors with cross-selling opportunities to target users based on recent purchasing decisions. It opens up many avenues for innovation that we cannot even think of today.

politics

Taxmageddon – effects of tax increases

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In this article, I am going to attempt a praxeological (science of human action) explanation of the economic effects of the tax increases on high earners. I am doing this as an exercise to apply what I have been learning in my self-directed studies of the Austrian school of economics. I hope, as a baby Austrian, I do not embarrass myself too badly in this amateur attempt.

Obama is demanding that Bush era tax cuts end for high earners. This will raise the top tax rate from 35% to 39.6%. Dividend tax rates will go from 15% to 39.6%; actually to 43.4% to include the Medicare contribution tax added by Obamacare. Capital gains taxes go from 15% to 20% (actually 23.8% including Medicare contribution tax) or from 15% to 18% (actually 21.8%) if held for 5 years or more.

The immediate effect will be massive stock sales during the remainder of 2012 to take advantage of the significantly lower capital gains rate. Expect investors to favor holding their stocks and avoid profit-taking over the next 4 years in anticipation of a future reversal in tax policy.

Low (15%) capital gains tax rates and bad memories from the bursting of the dot com bubble resulted in corporate mergers and acquisitions being conducted in cash instead of stock. With high capital gains tax rates, expect that trend to reverse, as a conversion of stock does not incur any tax immediately. All of these responses mean that tax revenues from capital gains will fall significantly, as investors apply these tax avoidance strategies.

Low (15%) dividend tax rates resulted in corporations distributing profits to shareholders increasingly through dividends. Many corporations that never distributed dividends before began doing so to satisfy investor preferences due to this favorable tax treatment. With a return to high dividend tax rates, expect a return to much lower or zero dividend yields, as corporations respond to investor preferences to favor keeping retained earnings (already taxed at the corporate tax rate of 35% which is among the highest in the world) in the corporations’ coffers to hold those earnings as capital gains, which do not incur any taxes until shares are sold. Those who rely on high yielding stocks for income will shift to bonds or other forms of fixed income. In addition to Fed Quantitative Easing, which lowers interest rates while raising inflation rates, higher dividend tax rates will further hammer those who rely on fixed incomes like retirees. These responses mean that tax revenues from dividends will significantly decrease, returning to the historical trend prior to the 15% era.

Finally, there is the increase in tax rates on ordinary income in the upper bracket(s). Those who earn at these levels include business owners, corporate executives, and professionals like doctors and lawyers. Many of these high earners have some degree of control to adjust their compensation packages. Expect a greater proportion of compensation to be in the form of incentive stock options, so that tax on that income is deferred until the stock is sold. The modest marginal tax rate increase will have little effect. Those who have less control over their compensation will pay more, while those with greater control will pay less. This may end up being a wash or even a net reduction in tax revenues, if small business owners and professions work less and forego expansion due to reduced incentive. Reduction in the growth of businesses will result in a long period of economic stagnation and lack of new employment opportunities for workers.

Taking all of these effects together, it is pretty obvious that tax revenues from higher tax rates will significantly decrease. Investors avoid taxes by deferring stock sales. Investors avoid dividend taxes by influencing corporations to reduce dividends. High earners adjust compensation to defer taxes until they choose to sell stocks. Business owners and professionals forego growing due to reduced incentives. The economy will surely experience a 4 year period of slow or stagnant growth and persistently high unemployment.

Furthermore, continuing Fed QE and trillion dollar annual federal deficits funded >60% by Fed bond buying will stoke higher inflation. This adds insult to injury as real rates of return will be reduced, but capital gains taxes will be paid on fake gains from inflation. Inflated gains are fake because of the loss in purchasing power due to generally higher prices throughout the economy.

Fun times ahead.

software

what is wrong with TM Forum SID?

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What is TM Forum?

The TM Forum is a standards organization for the communications industry. Rather than defining standards for particular network technologies, TM Forum is most interested in how to manage the processes across the entire service provider’s business. Their approach to modeling the communications problem domain divides the space into processes (eTOM), data (SID), applications (TAM), and integration. TM Forum has gained wide acceptance in the industry, and it has become the only game in town at the size and scale of its membership and audience.

What are eTOM and SID?

The business process framework and information framework together serve as an analysis model. They provide a common vocabulary and model for conceptualizing the communications problem space. As with any standards organization, the specifications are an amalgam of contributions from its diverse membership, and the result is formed by consensus.

The business process framework (eTOM) decomposes the business starting at the macro level and explores the parts at more granular levels of activities. Processes are described in terms of the actors, roles, responsibilities, goals, and the types of relevant information involved. There is no presumption of whether activities are performed by humans or automated systems.

The information framework (SID) decomposes the data into the product, service, and resource domains. Each domain is a model of entities and relationships presented as an object model using UML as the notation. The product domain is concerned with customer-facing and commercial interests. The service domain is concerned with abstracting the network resources into capabilities that can be parameterized for commercialization and that are of value to deliver to subscribers. The resource domain is concerned with the networks that enable services to be delivered.

What is wrong with TM Forum SID

As an analysis model, the eTOM and SID do a decent job to help people understand the problem space. However, these standards are problematic, because proponents promote them as being detailed and precise enough to be considered design models that can be translated directly into a software implementation. More accurately the framework is promoted as a starting point, which implies the ability to extend in a robust manner, and it is this position that I challenge. This position is stated in principle and demonstrated in practice through code generation tools. The separation of behavioral and structural modeling seems like a natural approach to organizing concepts, but at the level of detail to design software behavior and data need to come together cohesively as transactions. Object-oriented or service-oriented techniques would normally do this.

By representing SID in UML, it has the appearance of being an object model, but what it omits is behavior in the form of operations and their signatures. This is explained away by delegating the responsibility for interface specifications to the integration framework. That certainly contradicts the position that SID is a design model which translates into implementation.

Missing detailed transactional behavior

The integration framework tries to define software interfaces that directly use the SID entities. The result is a collection of interfaces that only superficially represents the behavior of the system. Because of the methodology of separating process modeling from data modeling, the interfaces are very CRUD-like, and the majority of behavior is assumed to continue residing in process integration (i.e., BPEL). This would work well for service provider specific business processes, but it is the wrong approach for defining transactional behavior that is intrinsic to the domain. These behaviors include life cycle management, capacity management, utilization and availability, compatibility and eligibility, and topology (rules and constraints for designing services and networks).

Because eTOM does not describe the behavior to this level of detail, SID does not define the entities and relationships to a level of detail that supports these essential behaviors. Consequently, neither do the interfaces defined by the integration framework. The problem is that many in the community view the model as robust with rich and unambiguous semantics, when this is far from true. If the very generic-sounding elements of the SID are used to model some of the behaviorally rich capabilities like resource utilization, we quickly discover missing attributes, missing relationships, and missing entities. Even worse, we may even find that the existing elements conflict with how the model needs to be defined to support the behavior. Sometimes a simple attribute needs to become an entity (or a pattern of entities) with a richer set of attributes and relationships. Sometimes relationships on a generalized entity are repeated in a specialized way on a specialized entity, and this is ambiguous for implementation. These issues undermine the robust extensibility of the framework, making the idea that the framework is easily usable as a starting point (extend by adding) very suspect, because extensions require radical destabilizing redesign.

Software design is a complex set of trade-offs to balance many opposing forces, including performance, scalability, availability, and maintainability alongside the functional requirements. SID cannot possibly be a design model, because none of these forces are considered. I strongly believe it would be an error to accept SID as a design model for direct implementation in software. I believe that any reasonable software implementation will have a data model that looks radically different than SID, but elements of the software interface will have a conceptual linkage to SID as its intellectual ancestry. If we think of SID in this capacity, we have some hope for a viable implementation.

innovation

a champion is a winner – are you one?

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You’re not a champion of the free market if you oppose low priced goods from China and off-shoring to low cost labor. You’re just another protectionist, who favors the interests of a few domestic corporations over the interests of millions of consumers. It is a failure to understand the economics of comparative advantage.

You’re not a champion of smaller government if you want higher military spending on foreign interventions and ‘humanitarian’ missions. You’re just another big government crony in the pocket of the defense industry to promote the military industrial complex. National security in reality puts our focus on the defense of our actual national interests.

You’re not a champion of liberty if you support drug prohibition and the war on drugs. You’re just another nanny statist, who does not believe in individual rights. It is also a failure to understand the economics that create black markets, promote lawlessness, escalate violence, and increases drug potency that endanger users.

You’re not a champion of the US Constitution if you believe the Supremacy Clause gives federal powers over States beyond those powers expressly enumerated. You’re just another supporter of a living Constitution that comports with whatever powers politicians want and in whatever directions populist opinions lobby for. You talk about federal programs in education, energy, housing, and “job creation”, conceding the most important limiting principle—that the Constitution does not authorize the federal government to interfere in these ways, no matter what the present day politicians, constitutional “experts”, and the US Supreme Court (itself a branch of the federal government) has to say about it.

You’re not a champion of transparency if you support unchecked government discretion to classify information for secrecy and “national security”. You’re just another political class elitist who does not believe in accountability.

You’re not a champion against Ponzi schemes if you want to save the Social Security program as we know it. You’re just another delusional politician who thinks that kicking the can down the road to win votes today does not matter, because the inevitable crisis will not occur until someone else’s watch.

You lost, because you were not a champion.

science

dark matter – skepticism

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I remain skeptical of both dark matter and dark energy. I don’t believe that either are valid concepts. They are hypothesized as explanations for observations that defy the current theories of how ordinary matter and energy ought to behave. I don’t have an argument to disprove either concept, but I do believe the burden of proof is on those who assert the existence of dark matter and dark energy. In this article, I would like to present an alternative theory to explain the anomalous behavior that proponents of dark matter use to support their hypothesis.

We must begin with an introduction to the topic of dark matter. One of the reasons that dark matter is hypothesized is to explain the unexpected rotational speeds of galaxies. In spiral galaxies like our own, the stars orbiting closer to the central super-massive black hole should appear to orbit very quickly, while the stars orbiting farther away should move much more slowly. The stars should behave as the planets do in our solar system. But they don’t. The galaxy rotates more like a wheel.

A wheel rotates the way it does because it is solid. The molecules that make up the solid are far apart, and the spaces between them are enormous. It is the electrostatic forces forming the bonds between molecules that are so strong that the molecules maintain a rigid structure.

Perhaps the stars within a galaxy travel together like a solid. Could the mutual gravitation between neighboring stars be strong enough to hold them together in a somewhat rigid configuration? That seems more plausible than to view the stars as orbiting the central super-massive black hole.

The Milky Way has a mass of ~1,250 billion solar masses. Its super-massive black hole, Sagittarius A*, has a mass of 4.1 million solar masses. Compare these proportions to the Solar System, where the Sun at 2 * 10^30 kg is more than 1000 times larger than the planets at less than 2 x 10^27 kg combined. The Sun’s dominant mass explains why the planets orbit the Sun. Sgr A* is puny relative to the stars in the galaxy. Perhaps this is why the mutual gravitation of neighboring stars would hold them in a nearly rigid configuration, and these influences would dominate over the gravitational force of the central super-massive black hole.

I don’t have the math skills to test that hypothesis. But it’s fun to wonder about such things in the hopes that someone with skills might think of the same idea and publish a legitimate version of the theory.

science

the shape of a galaxy and its black hole

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I was reading this article: Stirred, Not Shaken. Black Hole Antics Puff Up Whopper of a Galaxy.

Articles like this make me wonder whether the shape of a galaxy reflects the influences (gravity, spin, active/inactive) of the central black hole or lack thereof. Maybe a black hole with a mass and spin (moment of inertia) above a certain threshold causes a galaxy to become more spiral. Maybe if it spins with a wobble, the spiral develops a central bar. Maybe if the black hole has a moment of inertia that is below a certain threshold in proportion to the rest if the galaxy’s mass, the galaxy becomes elliptical.

Thoughts return to the weird relationship between the surface area of the black hole’s event horizon (not an existent, since “it” has no energy) to its entropy. Since entropy is a measure of information, the black hole behaves like a hologram. It again leads one to wonder whether the shape of the galaxy is a reflection of the information that is contained in the black hole.

politics

checks and balances – US Constitution

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The US Constitution established a Federal government with powers divided to provide checks and balances. Clearly this system of checks and balances has been largely eroded.

The laws passed by Congress have delegated its legislative responsibilities to the Executive branch. Laws are written that grant regulation writing power to the Executive. Laws are written that delegate the power to start offensive wars.

The Executive branch routinely issues executive orders and waivers that either nullify the enforcement of existing laws or rewrite them. Executive orders are often used to initiate the enforcement of rules that are in effect new laws that have not been passed by Congress.

The Supreme Court has been toothless in defending the Constitution by limiting the Federal government to the powers expressly granted. This raises the question, why would we even have an expectation that the Supreme Court should have jurisdiction to rule on matters of law for which the Federal government has not been granted any power. When all powers not expressly granted to the Federal government are reserved to the States and the People, it should be clear that the US Supreme Court should be similarly limited. Would it not make sense for State Supreme Courts to retain ultimate authority for all such matters instead of deferring to the US Supreme Court?

When the Executive branch oversteps its authority, what possible remedy is possible, when it requires a super-majority of Congress to impeach, and the US Supreme Court is largely deferential to Congress and the Executive?

We are left to resort to State nullification by the sovereign states and jury nullification by sovereign individuals. Through these means we can safeguard the powers that are reserved to the States and the People, when the Federal government has betrayed us and the Constitution to which they pledged to defend.

politics

how to vote – US Constitution

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To decide which candidate to vote for, we have to determine the criteria we use for evaluating candidates. From how candidates campaign and how the media reports on these campaigns, we are led to believe that we are choosing our representative of ideal human. This is a faulty premise.

Voting for a political candidate is expressing a preference for that candidate to fill a position. The candidate is applying to fill a job opening, and we are evaluating candidates to hire the one most qualified. We should apply criteria that are relevant and appropriate for this evaluation, and refrain from misapplying criteria that are irrelevant or inappropriate. Is it appropriate to hire or disqualify a candidate based on gender, religion, race, or sexual preference? Of course not.

The US Constitution defines precisely the role of the federal government and its elected officials. Defending the Constitution entails the recognition of the limited authority that is granted to the federal government, while liberty is protected by recognizing the rights of the individual. The powers that sovereign individuals grant to the federal government are enumerated, while the rights of the individual are unlimited. Therefore, the proper way to evaluate a political candidate is to consider first and foremost how faithfully they understand and defend the Constitution. Then, evaluate how qualified that candidate is capable of performing the limited responsibilities of that office, while never overstepping the authority granted to the office by the Constitution.

When a Presidential candidate talks about how to be a responsible civilian leader of the military in the role of Commander-in-Chief, that candidate is expressing qualifications.

If a Presidential candidate talks about faithfully enforcing the laws passed by Congress, when those laws are pursuant to the Constitution, that candidate is expressing qualifications.

When a candidate talks about expanding public education and green energy initiatives, that candidate is disqualified.

If a candidate talks about increasing healthcare and retirement benefits through a government-run Ponzi scheme, that candidate is disqualified.

When a candidate talks about using taxpayer funds or debt to stimulate the economy or to improve your community, your family, or your life, that candidate is disqualified. Bribery is corrupt, and doing so during a job interview should be astonishing. Not only is the candidate disqualified, the candidate should be charged with criminal behavior.

If a candidate talks about being a likable, generous, and charitable member of the community, that candidate is lobbying for the job of celebrity but offering no substantial qualifications for the office.

We should not be seeking an admirable model citizen, who exemplifies our moral principles and projects our image of an ideal American. Doing so betrays our obligation to defend the Constitution. A candidate who asks for our trust in all things is asking for license to act with unlimited power. We don’t need someone who demands that degree of trust. A personality and appearance that we find likable is also unnecessary. We only need someone to perform a very limited job function for a fixed term.

The Constitution tells us exactly how we must vote. Now, if only voters would recognize that fact, they would then be equipped to fulfill their own pledge of allegiance, which implies a commitment to defend the Constitution.

politics

on the rights of a fetus

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Living cells do not per se have a right (protected freedom) to life for the same reason a virus or a mouse has no right to life.

Rights are a recognition of requirements for a person to live as a human which means freedom to think and act toward sustaining that life. Non-humans do not have rights, because they are incapable of recognizing rights. Without that recognition, there can be no rights, as their abrogation would immediately ensue through force, coercion, and other manners of violation.

A fetus is not yet capable of living in any way as a thinking, acting person in that sense. Therefore, it has no rights to do so.

As litmus test, can a fetus given rights (freedom without mom) perform the most basic biological acts of sustaining its own life? No. The fetus cannot oxygenate its blood, eliminate its toxins, convert food into a form that can power its cells, and any number of other biological functions that mom is performing on its behalf. If given the freedom to live as a person per se, the fetus cannot perform the most basic actions to sustain its life, it does not have rights, because no recognition of such requirements for it to live and no protection of its freedom will make any difference. The fetus does not need freedom at this stage in its life; it is entirely dependent on its mother.

To artificially bestow a “right” to life on the fetus is merely granting an entitlement to enslave the life of its mother, if the mother does not consent to participate in the pregnancy. This would not be protecting anyone’s freedom—only taking freedom away from the mother.

I am anti-abortion and pro-rights. Therefore, I am for a woman’s right to choose, no matter how much I dislike abortion. My opposition or dislike for something does not automatically mean support for government action to outlaw it. Because the law must exist to protect individual rights, any law that would abrogate rights must never be passed.

My position on abortion is consistent with other similar positions. I am an anti-smoking non-smoker, but I oppose legislation that would ban smoking. I am anti-drug and I do not use drugs, but I oppose the war on drugs. These positions consistently recognize that the law must exist to protect individual rights, not to trample on individual liberties.

When does a fetus become a person with rights? I believe the earliest that can happen is when a fetus becomes viable. That is, when it is medically possible for the fetus to survive when physically separated from its mother. This may involve the assistance of medical devices, medication, and extraordinary measures. The key criterion is the ability for the baby to live without being tied to the mother’s life. At that point, the baby’s life can be sustained by other means, and adoption becomes an option. As medical technology improves, this may happen at earlier stages of gestation. This would be the reasoning behind objecting to late term abortion.

innovation

Broken Link Resolver – idea for Google

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I originally posted this on Monday, October 4, 2010 at 4:27pm on Google’s Facebook page. Since I have not seen any progress in this area, I am posting this again as a reminder to Google. If they are not going to pursue it, maybe Marissa Mayer might be interested in doing this at Yahoo!

Broken Link Resolver

Since Google Product Ideas does not feature Search, I’ll submit my idea here. One of the biggest unsolved problems on the World Wide Web is broken links. As the Google bot crawls the Web, it can detect whether the URLs of previously seen significant content have become stale (failure to connect or 404), and based on a heuristic content search determine where that page has moved.

Google could offer a new service that could answer the question: given this broken URL, tell me where the page has moved. Then, provide features in Google Chrome and a plug-in for Firefox that can make use of this service upon encountering a failure to connect or a 404. You could also provide an Apache httpd module that can use this service for handling 404s by automatically redirecting.

Insights into innovation