Customer value meter

When you call Cingular customer service, the customer representative you talk to learns your value to the company via this handy meter. You may or may not be eligible for various discount offers, depending on how much business you've done with the company in the past (life time value) and whether they expect you to stay with them in the future (churn potential). Churn potential is perhaps based on how hard it would be for you to switch to a competitor. Many companies track data related to these two variables, but this widget distills it all down for the operator you talk to.




Hat tip to Marginal Revolution.

Security and the origins of agriculture

Climate-based explanations for the birth of agriculture are nonsense (like this one, via Marginal Revolution, which adds further nonsense about agriculture having originated around rivers). Their popularity stems from little more than the climate being an easily measured variable. There was plenty of good land quite suitable for agriculture in temperate climates (and, more importantly, in thousands of temperate microclimates) during the last Ice Age. There were many areas even during the coldest part of the Ice Age that satisfied the climate, soil, ecology, and other environmental requirements of early agriculture. They were just closer to the equator.

More likely explanations for the agricultural revolution are probably far less observable:

The crucial role of security for the history of farming may also shed light on the birth of agricultural in the first place. Hunter-gatherers were very knowledgeable about plants and animals, far more than the typical modern. It would not have taken a genius -- and there were many, as their brains were as large as ours -- to figure out that you can plant a seed into the ground and it will grow. There must have been, rather, some severe institutional constraints that prevented agriculture from arising in the first place. The basic problem is that somebody has to protect that seedling for several months from enemies, and then has to harvest it before the enemy (or simply a envious neighbor) does. Security and allocation of property rights between providers of security and providers of farm labor were the intractable problems that took vast amounts of trial and error as well as genius to solve in order for agriculture to take root.

This would also explain how agriculture could spread from a single innovation yet look like independent inventions in the archaeological record. There were at least eight centers of secondary innovations (e.g. crop and livestock domestications and agricultural tools) that look independent: the Middle East, China, India, sub-Saharan Africa, Peru, central America, eastern North America, and New Guinea. But they all occured within a few thousand years of each other, after at least 100,000 years of anatomically modern humans. During these millenia humans were without agriculture despite large numbers of microclimates and microecologies suitable for agriculture during that entire period.

This indicates the slow spread (with many failed attempts and, quite likely, many reversals) of a primary innovation necessary for the use of these secondary innovations. The primary innovation had to be primarily cultural rather than genetic because it came long after the out-migration from Africa c. 80K-40K BP and was taken up by many of the genetically diverse results of that out-migration. Given what we know about the importance of cooperation, institutions, and security to the productivity of human economies, that innovation which slowly spread and made agriculture possible was almost surely an innovation in the culture of cooperation. Alas, the spread of such an innovation in oral culture can be observed at best indirectly in the archaeological record.

This would put the origins of agricultural into the more general large patterns of history, the most important of which are based on the interaction between security and wealth.

Constitution Society

John Roland's constitution.org is an exceptional resource on United States constitutional law.

Prion evolution

Prions are alternatively folded proteins that catalyze the same alternative foldings in other (usually otherwise identical) proteins. Like DNA, prions can be replicators that undergo Darwinian selection:

...although the prion “option” [analogous to a gene with two alleles] is clearly subject to conventional Darwinian evolution, in the case of [the prion's] natural selection [the prion] is acting on a non-mendelian, non-genetically encoded trait.

Prions are a protein analog of disappearing polymorphs in crystals. With two "options" the prion as replicator only contains one bit of information, but that's enough to make a difference.

One of the most interesting questions raised is when prions will act more like genes (and thus be largely beneficial to the organism) and when will they act more like harmful diseases. Prion diseases include Creutzfeld-Jacob and "mad cow" disease. According to the replicator/vehicle theory described by Richard Dawkins, if the prion passes through a similar reproductive route as a gene it will tend to be selected like a gene and thus evolve to behave more like a gene (in terms of whether its effect on the organism is helpful or harmful, not in terms of its mechanics, where a prion is very unlike a gene). But if the prion passes from one organism to another through some other route (as in the cannibalism route of mad cow disease and kuru) it will be selected more like a disease and thus behave more like a disease.

Democracy as regular rebellion

It's the eve of Independence Day here in the United States, celebrating the American insurgents who broke from England. We did have some good inspiration from the Old Countries, as described by this excerpt from a paper of mine:

In the 1560s, an “intermittent civil war” started between Protestants and Catholics in France. On St. Bartholomew’s Day, 1572, encouraged by the government authority, mobs murdered “as many as 10,000” Protestants, targeting their leaders. The same year, the Dutch Protestants began their rebellion against the Hapsburg monarchy. Soon thereafter, Theodore Beza, the successor to Calvin, wrote about the right of rebellion and the need to control government so that such rebellion would not be necessary. Beza’s ideas were expanded by an anonymous author, probably the Huguenot Philippe due Plessis-Mornay, in Vindicae Contra Tyrannos. (1579). “If kings commit injustices…they become the enemy,” Plessis-Mornay wrote. But if individuals determined for themselves when to revolt, the result would be violent anarchy. It was, therefore, the role of the Estates and lesser magistrates to guard individual rights against tyrants. According to constitutional historian Scott Gordon, the Huguenots “extended their argumentation to encompass less extreme conflicts between a prince and his subjects. Rebellion is exercised in extremis, but more important are the constraints that operate in ordinary times and bear upon a government that might feel quite secure against insurrection.” The Huguenots and their successors stressed two ways of controlling tyranny that remain crucial to understanding the non-delegation doctrine today: first, control by distributing and checking power; second, control by representation of interests. According to Beza, institutional organs that represent the people “are established to check and bridle the magistrate.”

John Locke elaborated on many of these ideas in his Second Treatise On Government. Since humans are unjust towards each other without government, we must form such a government through a compact with each other. We agree to surrender some of our natural rights so that government can function to preserve the remainder. “Absolute arbitrary power, or governing without settled standing laws, can neither of them consist with the ends of society and government, which men would not quit the freedom of the state of nature for, nor tie themselves up under, were it not to preserve their lives, liberties, and fortunes; and by stated rules of right and property to secure their peace and quiet.” Power is also more dangerous if concentrated: “He being in a much worse condition who is exposed to the arbitrary power of one man who has the command of 100,000, than he that is exposed to the arbitrary power of 100,000 single men.”

When judicial or executive officers distort the law, with the result that injuries go without remedy, the result is nothing less than a state of war. “Where an appeal to the law and constituted judges lies open, but the remedy is denied by a manifest perverting of justice and barefaced wrestling of the laws, to protect or indemnify the violence or injuries of some men or party of men, there it is hard to imagine anything but a state of war. For whenever violence is used and injury done, though by hands appointed to administer justice, it is still violence and injury, however colored with the name, pretences, or forms of law," Locke wrote.

References:

Scott Gordon,Controlling the State: Constitutionalism from Ancient Athens to Today (Harvard University Press 1999)

John Locke, The Second Treatise On Government (1691)

Selling seashells by the seashore

Richard Parker lives in a small Philippine fishing village. He has extensively studied contemporary seashore foraging, fishing, and bead-making, and has thought and written quite a bit about prehistoric versions of same. Parker riffs on my theory of the origins of money, adding many interesting observations he's made about shells and bead-making along the way. He has some good comments about the debate over whether the older finds were actually beads or the puncture holes were just a result of the way they ate snails. Although he questions the rush of archaeologists to conclude that they were beads rather than worked prey, he concludes that Nassarius, at least, was too small for eating. Piercing them and sucking out the contents would presumably have been more trouble than it was worth.

Archaeologists recently discovered similar punctured Nassarius shells in Algeria and Israel that date back to 90,000 to 100,000 or more B.P.

U.S. Supreme Court decides to hear global warming case

The U.S. Supreme Court has decided to hear Massachusetts v. EPA, a challenge by some states in federal court to force the EPA to regulate carbon dioxide even absent specific instructions to do so from Congress. This case is related to the non-delegation doctrine, the origins of which I have written about in a paper. However, the non-delegation doctrine will probably not be reached since the EPA (which like other regulatatory agencies and the Justice Department hates the doctrine, as it enforces democratic oversight) is defending the case. Thus the EPA and its opponents are staking out their arguments around the issue of whether EPA must regulate carbon dioxide, not around the issue of whether it can. Under the non-delegation doctrine as Madison and most other Founders understood it, and as it was understood by the Supreme Court until the late 1930s, the EPA should not be able to regulate carbon dioxide even if it wanted to, absent specific instructions from Congress to do so.

Despite the EPA not having properly raised the non-delegation issue, it is highly likely that several court conservatives wish the EPA would raise it, and possibly might raise it themselves, although normally they are loathe to raise issues that the parties have not properly raised. Indeed, the Court (with the concurrence of all the conservative justices) recently dismissed a case because the party based its Supreme Court appeal around an issue that it had not properly raised in the lower courts. However it's possible that an argument of the auto industry intervenors could be construed as properly raising the non-delegation issue, although their argument is fairly narrow: that Congress has already delegated authority over carbon dioxide to a different agency.

The state challenge to the EPA was rejected at the circuit court level and has very little chance of succeeding at the Supreme Court, but it will be interesting to hear the various reasons the justices will give for rejecting it.

Monetary origins pushed back

Archaeologists report in this week's Science that they have found shell beads in Algeria and Israel dating back to about 90,000 and 100,000 BP respectively. Humans drilled holes in the mollusc shells which would have allowed them to be strung as beads on bracelets or necklaces. This pushes back the previously known earliest date from 75,00 BP. The shells are from the same marine species as the 75,000 BP shells found in South Africa, suggesting a very conservative or stereotyped tradition (as is also the case for stone work dating this far back). The wide geographical spread suggests origins much earlier than even 100,000 BP. Furthermore, the Algerian shells were found in a cave about 200 km from the ancient shoreline, indicating long distance distribution (whether via trade or other transactions or just transport) of either the unworked shells, the beads, or both.

As I have previously explained, while these objects undoubtedly may have served some symbolic purposes, they were neither merely nor primarily symbolic. These necklaces were objects whose monetary properties, such as unforgeable costliness, divisibility, and security, were optimized given the available technologies (i.e. no metal working). These objects, which I have called "collectibles," differ from modern views of money only in two basic ways:

* They differ from many modern legal definitions of "money" (e.g. that of the U.S. Uniform Commercial Code) insofar as they were not minted or authorized by sovereign governments, hunter-gatherer societies having no such entities.

* Their primary uses were not for market exchange. Rather, by solving the double (or more) coincidence of wants problem, they solved more basic cooperation problems of kin altruism, reciprocal altruism, and the mitigation of aggression, and thus gained homo sapiens -- perhaps we should be called homo monetarius -- an important evolutionary advantage over homo neanderthalensis and other animals. This is probably also reflected in the human instinct to collect shells and other bright objects, an instinct not found in other primates and an instinct which would have allowed us to gain these advantages in cooperation over other animals.

Again my thanks to Ian Grigg for the pointer to this latest news.

Metabolite dismissed, but no justice argues "law of nature" claim is valid

We are going to have to wait longer for the U.S. Supreme Court's opinion on the section 101 patentable subject matter jurisprudence of the last two decades, in which the Federal Circuit sharply diverged from Supreme Court precedent. That's because the Court dismissed LabCorp. v. Metabolite on a procedural "technical issue," namely LabCorp's failure to properly raise the section 101 issue at the original trial. Justice Breyer, joined by Stevens and Souter, wrote a strong dissent arguing that the case should be decided and the patent's claim to a "law of nature" held invalid. This dissent looks like a passing of the torch of section 101 enforcement from Stevens, the author of Parker v. Flook, to a new generation of justices. Breyer's opinion suggests that he at least vaguely recognizes the Neilson/Morse/Funk/Flook methodology, which the Federal Circuit has long rejected despite the many Supreme Court precedents, including Flook, that upheld it. I'll probably analyze Breyer's dissent in a subsequent post.

It is unknown where the other justices stand on section 101, although it's probable that at least Ginsburg joined by some of the conservative justices would have agreed with the Federal Circuit's jurisprudence and argued based on dicta in Diamond v. Chakrabarty that "anything under the sun" can be patented. Instead, however, these justices agreed with the procedural dismissal and thus avoided making an argument that Metabolite's claim to (as the dissent accurately described it) "any test" combined with a "law of nature" was valid.

I find that, although I agree with the substance of the dissent (claim 13 is invalid under section 101 as an attempt to patent a "law of nature," and it's not even a close call), I agree with the majority that this case should be dismissed for failure to properly raise the issue at trial level. Rather than specifically raise section 101, LabCorp engaged in vague hand-waving at the trial level. At the Federal Circuit level it made a 101-type argument and cited some 101 cases, but inexplicably still failed to directly cite section 101! It's grossly unfair and very costly to require already overburdened attorneys to respond to arguments that are poorly researched or amount to vague hand-waving, which is what LabCorp's implied section 101 arguments were here at the trial level and even to some extent at the Federal Circuit. LabCorp's failure to properly raise the issue allowed the Federal Circuit to completely ignore it, so that the Supreme Court was actually analyzing the 101 issue in this case for the first time, without proper fact-finding under section 101 below: something that it should be extremely loathe to do.

Menger on money: right and wrong

The classic economic account of the origins of money is that of Carl Menger. Menger described money as emerging out of markets where commodoties were bartered. Barter markets were inefficient, Menger explained, because a double coincidence of wants was required before a trade could be consumated. One way to solve this would be credit, but credit is a very imperfect institution for a variety of reasons. Another way to solve the problem is the intermediate commodity -- a commodity that everybody is willing to take or give in trade. This would start by being an otherwise useful commodity, but eventually it would be come to be valued more, or even entirely, for its monetary attributes (i.e. its attributes as an intermediate commodity, such as durability, divisability, the ability to be securely stored, etc.) Thus would money naturally emerge from the operations of a barter market.

Menger's theory is valuable in a number of ways. The coincidence of wants problem is a crucial idea as well as illustrating the Austrian economic ideas of time and subjective preferences. Menger's theory provides a good example of how economic institutions can emerge, it demonstrates that (contrary to modern legal definitions) money need not be created by any sort of government, and it suggests that the emergence of money long predated the invention of coinage. And Menger's theory is true insofar as a barter market would evolve in the way Menger describes. However, as an actual description of the origins of money it is almost surely wrong -- or alternatively, it is even more right than he could have known. This is because money, in the form of collectibles such as shells, predated low transaction cost commodity markets by tens of thousands of years.

Money (or, if you prefer to stick to modern legal definitions of money, proto-money which I call "collectibles") emerged far sooner than barter markets because the double coincidence of wants problem occurs not only in barter exchanges, but in other transactions that were as or more important than barter to hunter-gatherer societies: paying tribute, paying legal fines, bride price, and mortuary distribution (inheritance). Furthermore, barter exchanges in these societies usually resembled far more a bilateral monopoly than an efficient market exchange. Use of shell jewelry or similar objects in hunter-gatherer and neolithic societies for these purposes is nearly universal. Nevertheless, in all these kinds of transactions a double (or more) coincidence of wants and events (such as death, marriage, or legal judgment) is required if they are done in-kind rather than with objects with good monetary properties; the best such objects available were usually shells, often strung on necklaces providing secure storage and divisibility.

Furthermore, these appeared long enough ago (mature shell jewelry is found now back to 75,000 B.P.) that the (begging) explanation "people collected shells and made jewelry for pleasure" may be backwards -- humans may well have evolved the pleasure of collection because of the evolutionary benefits of greater cooperation. Lowered transaction costs for all these kinds of transactions meant greater familial, political, legal, and economic cooperation -- i.e. the enhancement of kin altruism as well as reciprocal altruism and the mitigation of aggression.

This is spelled out in detail in my Shelling Out: The Origins of Money

Security and the institutions of medieval republics

I have written about how the productivity of property, and the institutions associated with that property, have tended to be greatly improved when that property was more secure from military and poor quality political intervention (and how these two interventions were often related). Societies dominated by different kinds of property thus have formed different kinds of political and legal structures. For example, modern states whose economies are dominated by the extraction of oil and other minerals tend to have strong governments, and correspondingly less freedom and democracy, especially when (as now) the prices of those mineral deposits are high, probably because mineral extraction tends to be dominated by up-front rather than operational costs, making it easy for governments to expropriate the bulk of the surplus.



Although farming dominated most economies until modern times, medieval city republics produced a large number of crucial innovations and had a profound influence on the modern world. Examples included Venice, Genoa, and the Hanseatic League. These republics were focused on cities and their economies were dominated by goods (primarily their storage and transport, but also manufacturing) rather than by farming. As a result, they evolved a set of unique institutions and a unique form of government, the corporate republic. These republics were generally focused on cities that secured their goods, markets, and persons on islands or behind steep mountains. These medieval republics developed a wide variety of institutional innovations, such as insurance and the corporate republican form of government, which are crucial to our modern era.

Illustrations: Genoa (top) and Venice (above), foci of the two most extensive, powerful, and innovative city republics of medieval Europe.