Facebook’s Free Basics is Not The Internet

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India’s Telecom Regulatory Authority banned Facebook’s Free Basics, a plan to bring free Internet access to poor people in India.

Let’s be clear though: Facebook’s Free Basics is not Free, and it is definitely not The Internet.

First of all, users pay with their data. Here, we understand that online service providers actively surveil our every click. We grant social control in exchange for a place to share our cat photos. Facebook doesn’t call itself “free social network” and Google doesn’t advertise “free search”: We all know better.

For the same price in India, Free Basics provides limited access to a hundred websites and apps. It’s a walled garden, and Facebook and its telecom partner (Reliance Communications) are the gatekeepers.

Did you know that North Korea also has free Internet? It’s called Kwangmyong, and it’s home to 5,500 websites. North Koreans cannot access anything beyond these sites, but it’s free! via dial-up.

Most of us would not consider Kwangmyong the Internet. In fact we might call it a channel for government propaganda.

One of the few North Korean sites accessible from the outside world. We don't get to look at the other 5,499 websites. Who's the outgroup now?
One of the few North Korean sites accessible from the outside world. We don’t get to see the other 5,499 websites. Who’s the outgroup now?

Ugh, did I just compare Facebook to DPRK?

Fine, what about The Great Firewall of China? China’s 750 million online citizens can access some of the global Internet, but not all. All inbound information is tightly censored through deep packet inspection. Is that the Internet, or another form of mind control?

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In 2010, China released a white paper discussing Chinese Internet policies. The document emphasized the concept of “Internet sovereignty,” where each nation has the power to govern local Internet content.

Even in the US, Federal laws enforce exceptions to online free speech. We have protections against obscenity and copyright infringement. The Office of Foreign Assets Control (OFAC) also maintains our own list of blocked websites under the Trading with the Enemy Act.

How much of your knowledge comes from stuff you read on the Internet? The fact is, he who controls the Internet controls the flow of information. Studies have shown that search engine rankings can shift voting preferences in democratic elections. Why on earth would any government cede this power to Facebook?

Is some Internet better than no Internet at all? If so, how much? I don’t know; that’s not for me to decide. That’s definitely not for Facebook to decide either.

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Trust-Minimized Property Control with Jellybeans and Ethereum

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I have a four-pound tub of jellybeans on my desk because the CEO of my company has poor impulse control.

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Trusted third-parties offer compelling solutions to personal property management, but all we do is introduce a security hole. In fact, anyone who knows me knows that half the tub will be gone by the time this post is finished.

The answer is not to outsource the problem, but to remove trust-based relationships altogether. Even if the trust-based relationship is with ourselves.

Proplets — Devices for Controlling Property

Vending machines were the original smart contracts. They automatically enforce the swap of coins for snack items from the vendor.

However, vending machines require trust: The customer trusts the machine not to eat his quarters; the machine trusts the customer not to break the glass and steal the snacks.

We improve upon the original protocol by building a Jellybean machine modeled after proplets: ownership-aware devices that control tangible assets using digital protocols.

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This Jellybean machine is controlled by an Ethereum client. With dynamic control code, contract terms adjust to market demand to implement surge pricing (or, in the case of my coworkers, rationing measures). The control protocol is publicly viewable on the blockchain, allowing customers to verify the behavior of the machine.

Ownership of the Jellybean machine is secured via entanglement: Deterrence mechanisms make it unfavorable to steal the machine or the jellybeans inside.

Current vending machines discourage theft by falling on their attackers. In the US, the annual risk of dying from a vending machine accident is roughly 1 in 112 million. This makes vending machines twice as deadly as sharks.

This Jellybean machine need not resort to homicide. When Athens faced a Spartan ultimatum, Pericles had his citizens burn their own property to demonstrate that they would rather self-destruct than submit. Similarly, the Jellybean machine has a bridgewire that causes it to self-immolate during attempted tampering*.

Jellybeans are a somewhat silly example of digital protocols for property control. However, it illustrates the impact of removing a simple trust-based relationship that we’ve always taken for granted. My coworkers have stopped bitching at me for picking out all the good flavors, and my blood sugar levels have stabilized because I no longer have a jellybean tub on my desk.

If you would like to buy some jellybeans, go to beans4bits.com and follow the payment instructions.

Implementation details to follow in a future post.

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*Just kidding, the machine in my office is not really going to set itself on fire. I just need my coworkers to think that. Sometimes the threat of disaster is more powerful than the actual disaster (see also: terrorism).

Super Bowl Weekend: The Rental Market is Too Efficient

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A million people are coming to the Bay Area for Super Bowl weekend.

The Bay Area (from San Francisco to San Jose) has a population of 3.3 million and a severe housing shortage. Where are we going to put another million bodies??

I figured the market was ripe for price gouging. Several weeks ago, average listing rates on Airbnb showed that I could recoup a month’s rent by subletting my apartment for just one weekend.

Enterprising individual that I am, I listed my place and waited for the offers to surge in. I told my boss I might have to sleep in the office for the weekend. Maybe even rent out the floor space under my desk.

Not a single rental request came in. Instead of booking rates skyrocketing as the Big Game drew near, it appeared that prices were falling.

Turns out everyone in the Bay Area had the same greedy idea. In Santa Clara, home of Levi Stadium, there were 86% more Airbnb rentals listed this weekend than any other weekend.

Here we are, Friday before the Super Bowl. This is not bad at all:

Airbnb listings: Friday, Feb 5 - Sunday, Feb 7 2016. Snapshot taken Friday afternoon.
Airbnb listings: Friday, Feb 5 – Sunday, Feb 7 2016. Snapshot taken Friday afternoon. My only screening criterion was that you have your own private bedroom.

Just for comparison, here is next weekend’s price map:

Airbnb listings: Friday, Feb 12 - Sunday, Feb 14 2016.
Airbnb listings: Friday, Feb 12 – Sunday, Feb 14 2016. A week away and with no major events.

Short-term rental supply is way more elastic than demand. Demand requires commitment, planning, and airfare. Supply involves going to Airbnb’s website and filling out a form. As a result, this weekend’s rental rates are comparable to any other weekend.

The system works (to my detriment). Opportunistic rent-seekers like myself have totally ruined things for the regular rent-seekers.

Next time there’s a demand surge, I need to find a market with inflexible supply. I hear restaurants are gonna be in the weeds as they try to feed our million visitors this weekend. Maybe I’ll set up a hot dog stand on Castro Street.

See Also:
Hull, B. (2005). The role of elasticity in supply chain performance. International Journal of Production Economics, 98(3), 301-314.

Supply Chain Classification. Go for the one on the lower left.
Supply Chain Classification [Hull 2005]. Go for the one on the lower left.

Investing in Unborn Capital

My coworker is expecting his first baby any day now, and the rest of us have opened bids on Human Capital Contracts to help him finance the upcoming cost center.

The contract buyers make an initial investment, which will be spent on elite nursery schools and baby stuff. In the future, we receive payments as a percentage of the child’s income.

As the offspring of upper-middle-class parents, the child’s earning potential is good. But it’s a difficult asset to price. If the dividend payments are too high, might the child lose the incentive to work? Or would the child be more successful with a team of activist investors propelling him up the corporate ladder?

If he becomes too successful, will he set up a shell company in the Cayman Islands to hide his income?

We can compare this contract to a tax, because that’s kind of what it is. As shareholders, we go to great lengths to protect our investment. Maybe provide education to make sure he knows how to code, health care to ensure that he is able to work. Maybe even defend him from bullies at school.

With appropriately-optimized dividend payments, this could be a mutually beneficial relationship! Unsubstantiated economic theory suggests that taxable income elasticity can be illustrated with a curve:

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To find the top of the curve, I downloaded tax revenue and GDP data for the OECD countries:

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These plots don’t resemble curves so much as noisy lines. Still, let’s be like the Scandinavians and tax the child into prosperity!

How do Scandinavian governments collect so much tax revenue? I’m going to make some baseless guesses.

Norway is an outlier in that it has a lot of oil. It’s harder to hide income from oil production than it is to hide, say, iPhones sold in China. Denmark/Norway/Sweden also top the OECD countries in public sector employment. It’s hard to hide income when the income is paid by a government agency.

So maybe the optimal solution is to hire the child as my own employee, and then seize all of his income.

Oh, wait.

Data Sources:
1. OECD Tax Revenue Data, 2014.
2. The Heritage Foundation Macro-Economic Data
3. List of Countries by Tax Rates

Technical Interview Questions for Equal-Opportunity Employers

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We had an engineering candidate come in for an interview yesterday. My coworker asked the following programming question:

Write a function that calculates the angle between the hour hand and the minute hand on a clock for a given point in time.

It’s a straightforward problem, but the kid didn’t know how an analog clock worked. Half the interview was spent teaching Junior how to tell time.

I’ve been on both sides of a lot of interviews. None of my questions ever involved analog clocks. The experience made me realize that tech company interviewers implicitly bias against qualified older employees when we fail to use relatable references.

Age discrimination is unacceptable. From now on, I’m framing all my technical interview questions in a way that demonstrates equality in employment opportunity:

  • Using a 2400 baud modem, how long will it take to download 2 gigs of porn if your mother picks up the phone to make a call every hour? How long will it take if your mother employs exponential backoff?

  • How many 5.25” floppy disks would you need to distribute a 1.65 MB installation of LotusWorks 1.0?

  • NBC broadcasts at 199.25 MHz. Your TV antenna is a 14-inch dipole and your house is located a quarter-mile east from an overhead power line. Where should you make your baby brother stand to minimize coupled noise during Knight Rider?

  • A rotary phone has a dial diameter of 10cm. Write a function that computes the total distance your finger must travel on the dial to call Jenny’s number.

  • David Bowie’s Ziggy Stardust is 38:37 minutes long. You depart San Francisco in a Chevette, traveling southbound on 101 at a speed of 55 mph. Using a pencil, how long will it take to rewind Ziggy Stardust by hand because your tape deck doesn’t have a Rewind button and Ziggy’s B-side sucks?

  • You have thirteen Sears Two-channel Walkie Talkies, each with a range of a quarter mile. What is the maximum area your army can occupy while maintaining Byzantine fault tolerance?

  • Elaine’s Chevy Nova has a battery capacity of 45 Amp-Hours. After leaving her 50-Watt headlights on overnight, how fast does Elaine need to run to push start the car on a 60-degree morning?

  • Write a function that computes the subset sum of an array in polynomial time. Present your solution in Hollerith Card Code.

If you excel at these questions, please consider applying for a job at Abra, an equal-opportunity employer.

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