Month: October 2008

On Knowledge and Power

Knowledge was always hand in hand with power. Still is, but recently there seems to be an unusually high value, higher than most concrete things, like land. The last 10 years of the financial market shows us a bit of this shift.

In the beginning…

… there was land. The old empires, from Sumer to Mongols, had a big fixation on land. The more the better. It was quite obvious, more land always means more food, slaves and tax payers. During that period, though, much was achieved on science. Astronomy, mathematics and philosophy were the biggest advances from that age, and they had a lot to do with power, as all good kings had their own good scientists around.

But there was something missing on that connection… The scientist had the power to give advices but the kings had the power to ignore them. Astronomy was entangled with astrology, chemistry with alchemy, biology with religion… The true scientist didn’t have any power whatsoever, as kings always liked best those that would say everything would be all right.

Land is not enough (aka. knowledge goes dead)

After the first period of land-setting, when all kings and landlords had their share, it was obvious that they needed a new coin to get richer. With the collapse of the trade network during the (so called) dark ages, new forms of power came to surface. Faith was by far the greatest. The catholic church (and lots of sub-divisions of it) became the most powerful entity world has known so far. This power comes from the opposite of knowledge, unfortunately, and many scientists lost their lives fighting against it.

Other things were also highly valuable, like gold and gems, vassals and slaves, soldiers and castles. And they had lots of them. With the discovery of the new world, there was a new boost for land, but the old emperors were smart already and knew that it was only a matter of time to consume all that land.

It was actually easier to work it around, when the Spanish found an unbelievable amount of gold on Central America. Most colonialists started to ripping off their colonies of whatever they could find, and knowledge, science or wisdom is hardly ever associated with power in that period.

People have brains, after all

Renaissance fighting bravely the dark ages (for science, at least), came the age of enlightenment, when science had, once again, its role on power. Descartes, Newton and many others were not only digressing, but defining the intrinsic mechanisms of the universe. Later on, Darwin would set the final course for life, and Adam Smith and Karl Marx would define the next centuries in politics and economy.

Those thinkers had a huge power in their hands, they were shaping how we understand life, the universe and everything, but yet concrete values were still concrete. Money was more valuable than ever, fact, but land was still a stable market. Trade routes, consumers and the food market was still at the top of most governments.

Image is everything…

When we get to the 20th century that things start to get fuzzy. The consumer market turned into the most important thing in the world. More than land, trade routes and food, consumers would buy anything. If they don’t need it, you can advertise as fundamental to their existence and they will buy it. Advertisement surpassed even faith in matters of power. It doesn’t matter your religion, skin colour, place of birth, as long as you keep buying. See the fantastic Story of Stuff to know more about it.

Nevertheless, science didn’t stop being important to power. The atomic bomb and the impressive developments on computing is a clear outcome of that. It was so important that the image of the scientist changed from the weird guy in the dark room to the visionary guy on wheelchairs. The computer nerd image changed from the long-bearded-large-glasses weirdo to the charming multi-billionaire on his private cruiser.

People are now trying to become smarter for some time in order to reach this grail, a clear demonstration of this power.

But with this power also comes corruption. Like in the old days, pure science is a rare myth. Governments will always prefer to invest in science that has a solid return in money.

The last 10 years and the image of knowledge

Even though Wall Street assured the world that the crisis of 1929 would never happen again, banks lending more than they should made a new crisis this year. Other crisis happened in the late 90’s and early 2000. The problem this time is the image of knowledge.

In the late 90’s, the trust on the power of the internet (a technological and scientific concept) was so great that many old investors got greedy enough to spend millions on crap or non-existent projects. The usual risk is invest in 10 to get 1 good return, but in this case the return was close to nothing. The image was everything.

A Harvard PhD’s paper was enough to release half-million investments. Closer to the dot-com bubble‘s climax, even smart kids would get their funding anyway, leading to the collapse of the whole internet and technological market.

Speaking of image, what better case than Enron’s? They sold the image of electricity, gas and even broadband! Today we call this vapour-ware, and they managed to make billions only on that. Fooling the government, all major banks in the world and consumers.

Short selling was again the cause of the new financial crisis. Blamed also for the 1929 crisis, it consist in selling something you will have in the near future, as in, selling before you buy. Two things can happen wrong with that:

  1. Chain of short-selling: when you sell to someone who will sell to another person (again and again) before you even bought it in the first place. It’s not hard to see that this is a recipe to disaster. This was responsible for the 1929 and the current crisis.
  2. Not buying at all: As soon as you get the money you don’t actually have to buy the thing anyway. You just pretend to have it and delay the delivery. You can also borrow from someone else and give it to the other, in a circular dependency and never (ever) having to actually buy anything at all. Enron and the internet bubble were cases like this.

What’s the knowledge’s role on that?

Simple: Knowledge is difficult to acquire and accumulate. It’s also quite often difficult to test and assure consistency throughout all the scientific domain. As with every single program written, it’s impossible not to have bugs. There is no such thing as a perfectly safe system.

Nobel prizes were won defining “the rules” of short-selling. When such beautiful differential equations are demonstrated by famous professors and the whole economic community laureates this very idea with a Nobel prize, it’s quite difficult to be sceptical about it.

The pen is mightier than the sword, knowledge is mightier than land. Houses lost their real value and began spiralling to imaginary prices. Banks hoping for increasing prices forgot that it was all a dream and lent more money than they had, and it all ended in this.

Quants, locked in their hedge-funds offices, with pens and computers, dictates the future of the market. They change the way we, non-investors, buy houses to live and raise families.

In turn, computer nerds define the way people buy clothes and books, search for knowledge and talk to their granny and grand-children. All this technology and science is shaping the world of tomorrow. It’s defining how we think, who we are and how our children will be.

Do your part!

If you have this power, do your part. If you’re a quant, do it with responsibility. If you’re a programmer, think about the future. Think about the world tomorrow, not just your pocket today. Freedom is more important than money. Education, health and security is more important than the financial market. Think on the planet, think green!

Above all, please be sensible. There is no win-win situations, someone (or ultimately Earth) will always loose. And the more you gain, the more they (or it) will loose.

Cloud fuss and computing life

Lot is being said about cloud computing recently that culminated on the heated rant from Richard Stallman. As always, I agree in parts, but sometimes RMS can be a bit too reactionary.

I do completely agree that giving away your personal data to companies like Google, Yahoo!, Amazon and Microsoft is not desirable. That this puts too much power on their hands, that they own your data, your history. Problematic ownership grants such as in Second Life proved to be even worse. So, what’s the catch?

Cloud computing

In essence, cloud computing is doing to the internet what IBM did to big companies in the 60’s. They had a big server and hundreds of dumb terminals from where you could access the system, your data and history. Today’s dumb terminals are a bit smarter, though, but the cost of keeping consistent data and history on your own home desktop, work desktop, laptop, mobile phone, pda and whatever else you have that access or deals with your data is still unbearable.

Not only that, but it’s virtually impossible to build a collection of systems that works with any kind of data on any type of device running any operating system and window manager etc etc. Lots of big companies (such as Microsoft and Apple) are trying hard at it for decades and they are failing miserably, over and over.

Agreeing over standards (HTTP, XML, RDF) is one way to go but the intrinsic details of every single application and this Intellectual Property paranoia the world is facing nowadays makes it impossible for two different companies to agree with standards. That, of course, when they don’t start their own standards just for the sake of having one of their own.

On the other hand, on-line software companies like Yahoo! (at its time) and Google (today) grew bigger than those two giants doing on the internet exactly what they couldn’t do on the desktop. Cloud computing is just a beautiful name for “we keep your data safe and sound and pay us with the right to do whatever we want with it“.

Desktop era

Where I don’t agree with RMS, though, is that we should keep our desktops. No matter where you store your data, on Amazon’s S3 or on your desktop, if you don’t protect your data, it’s not yours anymore.

It’s not just easy to break into any machine or network with the required amount of work (NASA and NSA constantly owned is the ultimate proof of that), but if everyone stores data on their desktops it’ll also be worthwhile. Today, if you break into my desktop you’ll see a bunch of pictures of my family and my (already public and GPL) programs.

What’s the point? No point, my desktop today is just a cache of the internet, a fast access to data that is already public on the internet. My personal banking information is on my bank’s website (which I don’t trust, by the way) but that’s life. My emails are on my mail servers, my personal history and chats on my blog, my friends list on social websites, etc. If I was to store all that information on my desktop, that’d be a huge security breach.

Not only is easier to safeguard a bunch of servers than millions of desktops, but it’s spread out. If you break into GMail to get someone’s emails you won’t (hopefully) get his banking details. If you click on scam and loose your financial data, you won’t loose your family pictures, emails from your dead granny, and so on.

Safe cloud computing

What we need to assure is that companies like Google and Amazon not only promise to “not use your data for their own profit”, we need to make sure they will never be able to, even when they change the EULA. How? Simple, use encryption!

We need to make sure that the email service uses GPG (or any encryption/authentication scheme) not only for sending and receiving, but also for storing your emails. Google says it spoils their fantastic advertising engine and you’ll get random ads instead of targeted ads for your email. Thing is, I’m not looking for answers or searching the internet, I’m just talking to my mum! I don’t need to buy “mums on eBay at unbeatable prices“!

On-line storage is easier to work around, just be sure to encrypt the files before you send it back and forth. A simple program could do that using the API they provide to access your data.

Social networks is far more complicated, though. But the way I see is simple: it’s public data, live with it. My blog and web-pages have lots of information about me. If you google my name you’ll see lots of other sites with lots of informations about me, and I can’t do absolutely anything about it. What would be good, though, is to be able to own this data, but it’s not storing on my desktop that will help anyway.

Would be cool, though, if one could download their own information in RDF format and import it to a local tool on their desktops or to another social network. Different websites could do it automatically (some do) to exchange information about you, but again we fall into the value of data ownership, and when money is at stake, people (and companies) can get very naughty.


As I see, cloud computing is inevitable, either because it’s really cool or because those companies will make you believe it’s really cool. It’s not a matter of liking or not, it’s a matter of accepting it, but enforcing your rules to your own data.

I will never, ever, buy anything that has DRM, Root-kits, feedback-systems, usability limitation or anything that takes away my own freedom to own what I’ve paid for, or created myself. A song, a picture of my son, my friends list, this post or my ideas, are all owned by me, no matter where I store them.

Storing copies of my data on another server should not bestow them ownership, but they do reserve the rights to do something with it (like targeted ads). They own a copy of your data. But if you regain control of it, by encrypting everything, you take this last right away from them.

So, if you’re really concerned that Google will take profit of your start-up idea described on your email, don’t use GMail for those things, or at least encrypt what’s sensitive. If you’re concerned that Yahoo! will use your personal photos for advertising, don’t store there sensitive images.

But please, don’t go crazy, blaming a new technology, just because it’ll take away the ownership of your own data. The internet already did that, a looong time ago.

If you’re still paranoid… keep your computer safe, unplug it from the mains. Don’t take pictures, don’t blog, store all that information on your brain. Don’t talk to other people, they might use your ideas for their own benefit, or for the greater good. It’s a choice you have to make, and be consistent with it… Good luck!