Also possible that this could be related to his sale of Ars Technica. Massachusetts imposes its own capital gains tax, and he may have been liable for a significant portion of that, especially given that it sounds like it was MA domiciled. Or maybe not, but there's lots of ways that he could be legitimately liable for MA taxes while living in a different state.
Sounds to me like his beef could be with the Chicago CPA. CPAs are not created equal, and even the big 4 accounting firms make serious mistakes when things get complicated - has happened to me. Usually, when that happens, the CPA is responsible for fixing the problem (paying late fees, filings, etc.), but you're still liable for the underlying tax burden that they may have missed.
In any case, would be nice to know what the resolution was!
For what it's worth, I have a pilot's license and also fly a quadcopter.
A big part of the issue is the separation of powers and who exactly has the right to regulate model aircraft. Congress explicitly and deliberately precluded the FAA from regulating model aircraft. A separate question is whether or not, given their proliferation, the new breed of model aircraft should be regulated. Given existing laws, that's a job for congress to decide.
As an aside: People wanting to do dumb things, will do dumb things. You don't need to create new sweeping regulation to punish people from doing dumb things either. Most cities and states have laws preventing people from deliberately invading others' privacy, or acting recklessly. Many of the concerns levied against drones are either already addressed or are impossible to regulate against. I'm often reminded of a news reporter on 9/11 that was asking the aviation expert on air with her how the planes were able to get into restricted airspace.
Not only that, but ads pay for the otherwise free content. We used to have to trudge to the library, in the snow, uphill both ways, to pour over out of date books to try to find information. Or pay very high prices to have a librarian type searches into things like lexus nexus. Now we do this from home, for free. Not to mention stream film, download books, get college degrees, and so on.
Internet ads have transformed life as we know it, in a good way.
Reaching consumers is hard, even if you have the superior product. Facilitating such a transaction should make one proud.
The 'psychological exploits' are a marginal component, but again, why is it inherently bad for someone to feel good about using product x over product y, even if they're exactly the same?
Advertisements are more manipulative than informative. But the bigger point was that they are far less of a benefit to humanity than other things, yet they get far more resources allocated to them.
While I have some sympathy for your point of view (after all the guy is free to say what he wants) I still think the argument is facile. A few thoughts:
- As others have pointed out, talent is not fungible. Just because you can program Yo, doesn't mean to can solve other issues.
- If everyone is so convinced that Yo is such a dumb idea, do you really want the founder who's "capable" of doing something so stupid working on serious issues?
- What is worthwhile? If you view Yo as art (in the modern sense) it's pretty effective! Seems to have made the entire tech community collectively think. That's a hard thing to do. We don't mock the choices made by Banksy (who on the surface is a vandal)... Perhaps Yo will be a godsend to folks with severe disabilities, allowing them to simply communicate with others nearby easily and effectively. Or perhaps it's just fun. Why is that bad?
- Or maybe the whole thing fails and that's OK. Far more 'worthwhile' companies have failed.
Re: fungible talent, I disagree, talent is not non-fungible, it's semi-fungible within certain subfields. If you know how to hammer a nail you can apply that to different applications. Beyond that, I'd argue that if you are a smart individual who is generally well educated and adept at learning, your labor is fairly fungible given enough ramp-up time to acquire new skills.
The entire article (and this viewpoint in general) is predicated on the idea that if you are capable enough to learn what is necessary to build and launch a mobile app you are capable enough to solve similar technical problems that apply to what the author considers more worthwhile to society. I don't think this is far fetched.
As far as determining what is worthwhile, I think this is less about what others think and more about what you think about what you are working on and its worth. Just because you have built something doesn't mean you actually have reflected on if it was the best use of your time. It's easy to be drawn in (due to flow, endorphins, cash, etc) and then suddenly you realize you've spent half of your life working on something you're not exactly proud of. It's easy to throw out moral relativism as an excuse to never be able to say something is objectively stupid, but some things are dumber than others, and at the end of the day this is about what you decide to spend your limited time on Earth doing. These little reminders I think provide a good nudge for people to think about what they are working on and consciously decide they want to continue on that path, regardless of what others think.
Skills are not fungible - just because I can make a web app doesn't necessarily mean I can learn how to perform surgery - but most people with certain skillsets certainly are.
How else would people build products by hiring more developers?
So, in so far that there are more socially useful problems that iOS developers can help resolve it remains a valid critique to say that those developers could have worked on something else.
>> And, by the way, who appointed Christoph McCann arbiter of what it good and valuable in this world?
This is such an important point, and why free markets work best. If people derive value out of Yo, then terrific. If they don't, it goes away. Don't need a moral crusader to decide what is worthy.
> This is such an important point, and why free markets work best.
Free markets don't work best, popularity is not best; free markets cater to what people want, not what they need and certainly not what's best. Absolute belief in the free market is a religion, not a fact supported by history.
Market driven economies are wonderful for producing loads of crap and me too-ware and woefully inadequate for solving really hard and necessary yet not immediately profitable problems. Quite simply, market driven economies optimize the making of money, not the solving of problems in the best way.
There's also a "market" of ideas and opinions. The OP expressed one.
The OP isn't a jack-booted right-thinking enforcer. The OP isn't even a "moral crusader", as you put it. In a free society, it is perfectly reasonable to gently mock people you believe are engaging in stupid and/or pointless pursuits. As the OP did. Of course the people doing the dumb stuff are free to scoff and ignore them. As you are.
Anyway, I think the OP has a perfectly valid point. Just because there is some market demand for an app like Yo, doesn't mean that we are predestined to make building it our life's mission. Some of us, if we slow down and reflect, might opt to be remembered for doing something other than: "Invented an app that no consumer was willing to pay for, and which solved no meaningful problems for anyone, but which some investment bankers managed to persuade some big company had strategory value. RIP".
That's fine if all y'all want that on your tombstone (the other kind of tombstone), but it's also fine to at least reflect on whether that's really what you want.
Of course. However in the marketplace of ideas, it's important that as a society we don't embrace the trappings of a command&control economy. I am merely reacting to the OPs (albeit extremely benign in this case) view that an individual or group of individuals can decide what is OK for others.
>This is such an important point, and why free markets work best.
Well, there's a subtlety there.
It's not that "free markets work best". It's that the efficient market hypothesis claims that a market with perfect information dissemination consisting of uniformly rational agents will deliver Pareto-optimal resource allocations.
There's a lot to disagree with in that sentence; market agents collude, people are demonstrably irrational/rely on cognitive heuristics and just because something is Pareto efficient doesn't mean it's fair or equitable.
All three are valid critiques, and the case in point in TFA - the market allocated money to Yo, but that doesn't mean a priori that funding Yo is a worthy and moral choice.
So, if we have markets that routinely deliver inequitable outcomes it's perfectly reasonable to ask - why is this happening?
Having studied with the originators of the efficient market hypothesis (Fama), I regret to inform you that what you describe is not a feature of EMH but is rather frequently attributed to it in an attempt to discredit it. There is nothing that rationally follows EMH that leads to Pareto-optimal outcomes in society.
EMH means that well informed markets make sound decisions on the pricing of assets. This means that based on the current information available, markets are excellent at understanding the probability-weighted value of an asset. It doesn't mean that the outcome ends up being right, it means that it's fairly priced based on the information at hand. Nothing guaranteeing Pareto-optimal outcomes from that.
Furthermore, an investor giving 1.2M to a company is not an efficient market under any circumstance.
The efficient markets hypothesis (EMH) requires neither "perfect information dissemination" or "uniformly rational agents".
Here is one well stated version of the EMH:
"The Efficient Market Hypothesis (EMH) essentially says that all known information about investment securities, such as stocks, is already factored into the prices of those securities. Therefore no amount of analysis can give an investor an edge over other investors. EMH does not require that investors be rational; it says that individual investors will act randomly but, as a whole, the market is always "right." In simple terms, "efficient" implies "normal." For example, an unusual reaction to unusual information is normal."[1]
Also, I'd venture a guess that if you sum up the total cost that has gone into Facebook's Poke feature (development, maintenance, deciding whether or not to turn it off), it would dramatically eclipse the 1.2M that everyone is so up in arms about. No one is losing their marbles over that stuff.
Look, I agree it's a ridiculous app.. but if people use it and derive value from it, good! Utility created!
I think you could just stop at "people use it". What kind of value they derive from it (if any) is another inquiry, and can't be discerned from merely observing the fact that they use it. At least, not without some really strong assumptions to the effect that people always correctly make positive-utility choices. It's possible people use it, but derive negative utility from it, and mistakenly use it nonetheless.
There are some very popular things (tobacco, say) that in most reasonable analyses produce negative utility over the long run! The problem is that people are not very good at utility-maximization, especially when the analysis involves more than one factor, some uncertainty, different time scales, etc. People are generally not good at almost any vaguely arithmetically complex operation (e.g. correctly using conditional-probability information in their decision-making, even when known).
That's one reason neoclassical economics prefers to talk about simply "price", rather than the classical discussion of both "price" and "value". Modern economics is the empirical study of pricing and economic behavior, and is agnostic about value.
Your points are all very valid of course. While utility theory has largely been superseded by prospect theory, like Newtonian physics, it can still be useful for back-of-the-envelop thought.
Furthermore I'll be a devil's advocate however and just make the point that one could rationally defend tobacco use as utility deriving. Just because a (in my view) sane person would see all the horrible effects of tobacco as trumping any positive attributes, someone else may disagree. Depending on one's own discount rate, tobacco use at any point in time in fact be net positive in enriching their life. Even if you argue that some of the positives are created by advertising cigarettes as cool (Joe Camel, etc.), so what? Someone spending $50,000 on a fancy watch is also making the same sort of determination. If the user derives the benefit, regardless of whether it's endogenous or exogenous to the product itself, that isn't obviously inherently bad.
Now, of course, smoking has it's own set of problems because it negatively affects others... but again, it's not so clear that one can't attribute rational decision making to even a smoker.
If you told someone a top 10 app with over 300,000 users raised $1.2 million they probably wouldn't bat much of an eye. That's what Yo is now. It probably wont last, but that doesn't mean its creator can't take advantage of its success right now.
Well, except there's all kinds of economic theories about how this isn't true: the tragedy of the commons, negative externalities. There's also a lot of evidence that rational actor theory isn't as true as pure economics would suggest. And of course market inefficiencies will distort price signals. And truly free markets have a hard time remaining such in face of large incentives for rational actors to instead engage in rent seeking or other anti-competitive behavior.
But yes, if you ignore all the problems both theoretical and practical with free markets, free markets work best.
Go back and read again. He's not saying anything that free markets are an imperfect way of delivering what people want, but they're better than anything else we've come up with. He's saying that free markets tell us what people want, and if you disagree with the "free market" (which is an abstraction, I don't think most things people refer to as free markets actually are the "free markets" of economic textbooks), you're disagreeing with what people actually want. That makes free markets right by tautology; the best is what people want, and what people want is what they buy on free markets. Which is fine if you want to short-circuit debate, but it doesn't actually let us ask the important questions.
> He's saying that free markets tell us what people want, and if you disagree with the "free market" (which is an abstraction, I don't think most things people refer to as free markets actually are the "free markets" of economic textbooks), you're disagreeing with what people actually want.
And while that's a common argument, the obvious problem with it is that free markets weight preferences by existing wealth. $ as a proxy for utils isn't really a valid assumption when people don't have the same quantity of $.
And yet we still have successful socialism-based projects in the US. The reality is that capitalism isn't a one-size-fits-all solution to solving all problems. We can stand outside of economic systems as moral beings and decide what ends we want to accomplish as a society, and find the best means to get to those ends.
To sacrifice the role of morals and ethics in forming societies at the altar of capitalism denies us one of the things that makes us human. If capitalism gives us "Yo's", then we may want to question why, not defer the morality of "Yo's" to capitalism and shut our brains off.
(And no, I am not making a moral statement about economic systems. I'm capitalist as fuck, but even I think if the Yo story is what it seems to be on the surface, something seems wrong.)
> If people derive value out of Yo, then terrific. If they don't, it goes away. Don't need a moral crusader to decide what is worthy.
Then you wind up with things like Fox "News" (actually Entertainment, NOT news) being popular, because they found that entertainment is much better at making money than actual news. If you let "making money" be the decider, lots of valuable things fade away.
The answer is that those things are not valuable. People don't want news. This is not a bad thing. This means that people aren't like the elitist ideal of what you want in your socialist utopia.
Real people happen to like Facebook and Fox News and Snapchat and Yo. And that's fine. To say that those desires are somehow immoral because they aren't lofty enough is elitist, condescending, and anti-humanist.
I'm not sure it's entirely correct to claim that the set of "things that people want" is equivalent to the set of "things that add value to people's lives".
I'm also unsure as to how arguing that such a distinction might exist could be construed as elitist, condescending, or anti-humanist. And I've no idea at all how you got the idea that it might imply that the desires, of people, for things which do not add value to their lives, are immoral.
(That is, that the desires are immoral, not the people. Crikey that last sentence is hard to parse. Sorry.)
>If you let "making money" be the decider, lots of valuable things fade away.
20th century was spent exploring the alternatives to such a decider. As the result we do know that "making money" is the most efficient and effective decider that humanity has so far been able to come up with. Basically the humanity is just too stupid to use anything else at the moment.
I find it so strange when people make this argument, that a century was "spent" exploring these alternatives. I don't disagree that "making money" is our best heuristic so far, but it's not like the entire 20th century was devoted solely to exploring these options. There are various other concerns intertwined with the economic strategies that competed. Fascism could have won, Stalinist communism could have won, and it would not be accurate to say that any one economic strategy is the "best we've got" just because they came out, geopolitically/militarily, on top.
There are things like Public Goods[1] that can have very high value to society but no individual has any incentive to invest in pay for them. E.g. most of the "big problems" the author is talking about. Free markets severely misallocate resources because of this. There are also things like normal wealth inequality. A poor person can't pay for the drug that will save his life. Then there are things that are very long term.
Kind of a blanket statement, free market works best. It works adequately in many cases, at best. Completely ignores non-transaction, external participants, like the environment.
Attempting moral persuasion ("moral crusading" seems an extreme interpretation) is essential for society to progress. Not much of a future if value is only determined by some business-genius decision maker deciding that, "Hey, I can make a million bucks off this. Must be worthwhile!"
That's a facile argument. There's money to be made in a wide variety of pointless or even deleterious services. You can get rich hydrofracking or producing TV shows about how aliens built the pyramids. You woukd get paid relatively little and certainly get no ownership stake working for a government program like the NHS or Medicare. Doesn't mean people don't need them.
You confuse Pareto efficient with beneficial. Indeed, markets could just as easily result in a planet wide Easter Island while still being pareto efficient at every step.
I went to a conference* in 1994 in which Kip Thorne gave a talk on time travel. He made an offhand comment about evidence that backwards time-travel does not occur that was along similar lines. 2 points: 1) Not inconsistent for 'real' physicists to think about these issues. 2) I don't think this work is as novel in concept as the author thinks.
* Was for Carl Sagan's 60th birthday... was intended for serious audience of big time scientists but was intended to entertain.
This is an important point. Further to that, Uber should be a company with very clearly understood ROI. They put X number of dollars into a new city and get Y number of users and make Z number of dollars over a few years. Because they've done this in dozens of cities, they've got these numbers down. From Uber's perspective, any money they raise should look as much like debt as possible. Why? Debt means existing shareholders won't be diluted. If a growth company can safely issue debt, it always will. Probably not realistic for Uber to issue 1.2B in straight debt today (interest on that would amount to roughly 20-40% of their current revenue), so they would seek as much of the economics of the raise to resemble debt as possible. The more it resembles debt, the less we learn from the headline numbers about implied valuation.
I haven't read the paper, just the article. It's possible some of these are directly addressed, but I would want to know more before any credibility is given to the conclusions.
Some alternative explanations:
- The 'lowest paid CEOs', per their definition, are typically the ones who have the most skin in the game. When you have many CEOs out there with only $1 compensation, and just stock (and not stock grants as the author mention), they will inevitably be on the bottom. Think Zuckerberg, Google, Apple w/ Jobs, etc. One would expect this highly underpaid group to outperform.
- The highest paid CEOs are often times the ones dealing with the most troubled companies. If you were a shareholder of Kodak in 2000 and saw that digital cameras were coming, would you want to pay for the best CEO possible to ensure you could harvest the most out of the company? Kodak would still underperform the market, but maybe they would have underperformed the market more with inferior management.
- This is a little technical, but with an experienced manager pulling in big dollars, it's more likely that this is a well established company and manager that are well understood by the market. This means that the risk premium demanded by investors would be smaller resulting in a higher stock price. This means that the stock has less to move. And on the other hand, more unproven companies with cheaper managers will have higher risk premia demanded by investors, resulting in lower stock price and therefore have more room to go up over time as some of the unknowns are answered.
Ideally we'd need include other variables such as market size and expected growth (P/E Ratio), CEO share ownership, ex-ante company distress, etc. into the analysis. Based on the described methodology, it doesn't sound like that was done.. but again, didn't read the paper itself.
