Facebook Discovers That The World is Flat

Good news! Employees of Facebook will soon be able to work from home FOREVER!

Not only will Facebook save money on office space and in-house perks; they can reduce salaries to account for lower cost of living as employees flee to the exurbs.

Facebook’s campus is like Disneyland. It has catered meals, a climbing wall, an arcade, and an ice cream shop full of cupcakes and candy. And the bathrooms have bidets! It’s like IBM’s country clubs, but for millennials.

In the early aughts, tech companies like IBM and Cisco realized they could save hundreds of millions a year by outsourcing their jobs to India. A lot of people complained about this, but three-time Pulitzer Prize winner Thomas Friedman took the initiative and actually visited an IT offshoring firm in Bangalore.

There, he discovered that the Indian IT workers were using computers and software made by Compaq and Microsoft, drinking beverages made by Coca-Cola, and the firm itself was 90% owned by American investors. Contrary to the popular opinion that offshoring was leaving Americans jobless and poor, it was in fact making Americans fabulously rich. Different groups of Americans, but all white people look same.

There was a time when IBM employees were treated like family. Would you dump Grandma on the street once her maintenance costs exceed her productive value? No! That’s why IBM had a no-layoff policy, along with corporate country clubs and family-friendly Christmas parties. Then the internet came along and made offshoring feasible, the end of the Cold War made globalization politically correct, and post-Bretton Woods financialization made foreign investment attractive. IBM laid off workers, sold the country clubs, and, well, it’s hard to have a Christmas party when the majority of your workforce is in India.

Facebook is an H-1B dependent company, meaning over 15% of its employees are on temporary visas. The obvious thing is for Facebook to send all the H-1B workers back home and have them work from overseas. But I’m reminded of this passage from Antonio Garcia Martinez’s Chaos Monkeys:

Large but unexciting tech outfits like Oracle, Intel, Qualcomm, and IBM that have trouble recruiting the best American talent hire foreign engineers by the boatload. Consultancy firms that bill inflated project costs by the man-hour, such as Accenture and Deloitte, shanghai their foreign laborers, who can’t quit without being eventually deported. By paying them relatively slim H-1B-stipulated salaries while eating the fat consultancy fees, such companies get rich off the artificial employment monopoly created by the visa barrier. It’s a shit deal for the immigrant visa holders, but they put up with the five or so years of stultifying, exploitive labor as an admissions ticket to the tech First World. After that, they’re free. Everyone abandons his or her place at the oar inside the Intel war galley immediately, but there’s always someone waiting to take over.

Strictly speaking, H-1B visas are nonimmigrant and temporary, and so this hazing ritual of immigrant initiation is unlawful. Yet everyone’s on the take, including the government, which charges thousands in filing fees. The entire system is so riven with institutionalized lies, political intrigue, and illegal but overlooked manipulation, it’s a wonder the American tech industry exists at all.

Zuckerberg is a smart guy. He’s also the co-founder of FWD.us, a lobbying group that wants MOAR visas for temporary workers. If employees in Bangalore were just as effective as employees in Menlo Park, Zuck would have enabled remote work ages ago. Immigration is part of the compensation package.

It’s the high-maintenance regular employees that will be sent home. You know, the ones that require a living wage and gender diversity, and stage protests if an exec appears to support Trump. The average tenure of a Facebook employee is only 2 years, so it’s a convenient way to shed some cruft from the workforce.

I guess Facebook is going the way of IBM, but with better marketing.


As a lifelong student, I have a keen interest in post-pandemic education. Based on my Twitter feed, homeschooling is the future (and the past). Here’s Bryan Caplan with a rundown of how to do it and why.

Instead of subjecting his offspring to the one-size-fits-all curriculum known as Common Core, Caplan sends them to play group with Robin Hanson, Alex Tabarrok, Tyler Cowen, Garett Jones, and Nathaniel Bechhofer. Here’s Tyler Cowen describing his efforts to help homeschool Caplan’s children, presumably because Cowen has no children of his own.

Most parents probably don’t have a team of world-renowned economists at the ready. Their most talented coworkers are low-level wage serfs slinging code all day. Come to think of it, what does an economist do? I get that they hold high-ranking positions at government agencies and think tanks, but what is it that they do all day?

Ancient Romans believed that chickens had oracular powers, because roosters crow before daybreak to portend the sunrise. Senators and generals consulted with chickens in an elaborate ritual where a sacred hen was placed in a circle sectioned to represent the alphabet, with grain spread around the circle. The hen’s scratching and pecking patterns were then recorded and interpreted by priests to inform public policy decisions.

The chicken’s magic doesn’t come from its ability to randomly scratch and peck; it comes from people’s ability to convince themselves that the bird knows exactly what it’s doing. Maybe the chicken has a PhD, or maybe it holds a faculty position at Harvard, or maybe it’s a Nobel Laureate. That’s why we should trust the chicken, we reason.

Over time, people realized that chickens were far too delicious to use for policy consultation, and thus the profession of Economist was born.

I don’t mean to pick on economists here. I’m sure a chicken could similarly do the job of a journalist, management consultant, or any of the “experts” trotted out by political entities. Yes, including climate scientists and epidemiologists. Here’s an NBER working paper that examines just how wrong the COVID-19 epidemiology models were (very!), and the policy implications of such wrongness. The conclusion is that we should leave the job to economists next time — presumably the health economists from Harvard and MIT who authored the paper. Or maybe just use a chicken.

Bryan Caplan’s scratchings and peckings are likely correct in this case. The future of education will look a lot like the past, where children of big muckety-mucks hang out with other muckety-mucks and continue each generation in their designated caste. We hide the nepotism of higher education under layers of elaborate rituals to convince the plebes it’s a meritocracy.

In the pre-pandemic era, well-to-do families in China would send their children to study at American universities if they couldn’t test into a top Chinese university. China’s college admission is based entirely on the National College Entrance Exam; no preferential admits for big donors or recruited athletes. It’s really embarrassing if you’re Xi Jinping and your daughter ends up somewhere like Shanghai Normal University. That’s the kind of thing that brings great shame to your dynasty.

On the other hand, Harvard would gladly take the unqualified child of a bigwig.

Colleges in the US are suspending standardized tests as an admission requirement and imposing quotas on Asian admits, frustrating Tiger Moms everywhere. Smart, competitive kids will realize the futility of fighting each other for the privilege of paying a six-figure sum to attend a school that values wokeness over substance. They’ll put the time they would have spent studying for the SATs towards studying for 高考 (Gaokao), or Единый государственный экзамен, the Russian equivalent. Brains will drain to elite universities in the unwoke parts of Asia and Eastern Europe, where they might actually learn something. Those who don’t care to learn will keep doing what they’re doing, and be revered as sacred gods.

Disrupting the House and Home

The local stores and gas stations have closed their restrooms to the public. Makes sense; public bathrooms are disgusting petri dishes.

But what if I’m out and about and I gotta go? I have an aviation friend who removed a seat from his Cessna 310 to retrofit a portapotty and sink for passengers. Maybe I can install the same in the back of my Ford Escape.

What makes a house? Four walls and a roof? Electricity and plumbing? A place to sleep, a place to eat, a place to poop? Then I realized they already make cars you can live in. They’re called RVs, and they’re parked all over the Bay Area because that’s the only way service workers can afford to live. Turns out Silicon Valley has been disrupting housing all along.

But that’s not what housing is about. Housing is, first and foremost, a form of wealth. For most Americans, it’s the majority of net worth, a line of credit, and a retirement plan. A house can’t create wealth by itself; you have to build a pyramid scheme around it. Impose scarcity through zoning regulations, then incentivize jobs to create increasing demand for the few homes that exist. Hence the “Twitter tax break” for tech companies in SF.

If Silicon Valley wants to disrupt the housing market, the solution isn’t to build more homes. It’s to create a new source of liquidity.

Here’s a NYTimes column promoting the idea that women should be paid for the work they do as wives and mothers. That got me thinking. Right now, the only path to compensation is to sue for child support and alimony in the event of a divorce. Until then, spousal transactions are untraced, untaxed, and contribute nothing to the GDP. Why are we leaving so much potential wealth locked up in illiquid marriages?

When lockdown ends, divorce rates will skyrocket. We already saw this happen in China. After sheltering in place for three months, children will sue for emancipation. Those who keep their families intact should be able to borrow against that asset. Loans create wealth!

Maybe this is the economic stimulus we need. You might think that familial relationships are too subjective to securitize, but remember — a house used to be a nonconvertible asset too. The Federal Housing Administration was created in 1934 to encourage people to take out mortgages and boost the Depression-era economy. It was only after homes were appraised and collateralized that they became a path to wealth creation.

RVs may be a terrible place to house a family, but as a bachelor or bachelorette pad, they’re downright adequate. If building homes is good for the economy, wrecking homes must be even better. Okay, I’m a Keynesian now.

Fooling the Classifiers (part 2)

When media outlets get called out for misjudging a character, they tend to overcompensate with over-the-top villainization. Just look at the narrative reversals of Weinstein, Epstein, Sheryl Sandberg, Adam Neumann, Corona-chan, and yes, Elizabeth Holmes.

Nope nope nope, we never claimed the coronavirus was no deadlier than the flu, and you certainly won’t find our deleted Tweets stating such!

Maybe some of these people really are cartoon villains, but I’m sympathetic to Theranos. Right idea, wrong execution.

Build: Medical Devices

Here’s people in China taking a round of COVID serology tests before a group dinner, like some sort of aperitif.

Why can’t we have this in the United States? COVID-19 antibody tests currently have a low sensitivity rate, meaning they deliver a lot of false negatives. An inaccurate test result might lead to a false sense of security. The obvious solution is to test more, and more frequently, but public health officials think Americans are stupid. To keep us safe, government health agencies prevent anyone from getting tested at all. And that is why it took 25 years for the FDA to approve an over-the-counter HIV test.

It’s possible to fool the classifiers. Just modify the intended use. For example, absorbable sutures are considered a Class III medical device, on par with pacemakers and defibrillators. To get around clearance requirements, manufacturers call their product a “practice suture”, for training and taxidermy. Now they can sell the sutures for less than twenty bucks on Amazon. The sutures are packaged in sterile alcohol, because animal carcasses care about germs. Wink wink nudge nudge.

Another example is 23andMe, a DNA test that maps your personal genome. The original inception provided information about a person’s risk for diseases like Parkinson’s or cancer, but the FDA shut them down for a few years because any kit that diagnoses disease must first gain clearance as a medical device.

To get around FDA restrictions, 23andMe pivoted from health diagnostics to measuring intersectionality. You could be 1/1024th Cherokee and not even know it — Buy our DNA test kit and claim your minority status now! Hence the series of identity politics commercials featuring customers who discover their genetic victimhood.

So here’s how we get home COVID-19 serology tests out the door: Claim they’re for measuring disparate impact, or some similarly woke purpose. If the FDA complains, tell them to take it up with the SPLC.

(To be continued…)

Fooling the Classifiers

Bernie Madoff: Right strategy, wrong time.

Per Minsky, late-stage credit cycles tend to look like a Ponzi scheme. If asset prices go up for long enough, people stop relying on cash flows to cover liabilities and instead borrow against appreciating assets. Take out a second mortgage, then a third. It’s fine as long as the housing bubble inflates faster than you can draw down your credit.

That’s pretty much where Private Equity’s at these days. The business model consists of borrowing money through the sale of high-yield “junk” bonds, using that money to buy a company, then using the company as collateral to finance the next corporate takeover. Rinse and repeat until the PE firm is the size of BlackRock or Apollo Group, and when an exogenous shock threatens to implode the bond market, get a bailout. (See Also: Is Private Equity Having Its Minsky Moment?)

It helps if public pensions are heavily invested in your funds. It helps even more if Fed Chair Jay Powell has millions invested with you. But the thing that helps most is the ability to convince regulators to classify your Ponzi as “Private Equity”.

We can’t build anything in this country because those with wealth and power use their wealth and power to put up artificial barriers against competition. If Silicon Valley wants to build, it needs to take a page from Wall Street and learn to fool the classifiers.

One thing that Wall Street does particularly well is make illegal stuff look legal. It’s not a bucket shop if you call it “over-the-counter derivatives”! It’s not discriminatory theft if you call it “de-risking”. It’s not bribery if you “hire” presidential candidates as consultants. It’s not price-fixing if you call it LIBOR. It’s not an illegal wash trade if you call it “market making“. It’s not a denial of constitutional rights if you call it “mandatory arbitration”!

Remember that time Elon Musk tried to sell flamethrowers on the internet, but then found out that it’s illegal to own a flamethrower in California, so he renamed the product “Not-a-Flamethrower”? Yeah, we have a lot of work to do.

Build: Healthcare

Why can’t we build hospitals the way China builds hospitals? Because of all these guys:

I am constantly amazed at the level of medical care available for animals. Bring a dog to the vet and you’ll get a treatment schedule, upfront pricing, and an honest prognosis. The more disposable the animal, the less likely a government agency is involved, and the better the service. Look at the huge range of antibiotics you can get for a fish!

Here’s how Silicon Valley can build more healthcare: Open an animal clinic that promotes diversity and inclusion. Like, *real* diversity and inclusion. I mean, take wokeness to the next level: Welcome trans-species patients. We already have dudes identifying as ladies to participate in womens’ sports, it’s only a matter of time before people start identifying as goldfish to score an appointment with the aquatic vet. If the Department of Public Health complains, tell them to take it up with the ACLU.

(to be continued…)