Pitch Count

Baseball is a game that changes only slowly. It has been years since I followed the sport, but I am assured it hasn’t changed much. The biggest change, everyone seems to agree, is pitch count. Coaches and leagues count every ball every pitcher throws. Starting pitchers at every level of play are regularly taken out of games, and on occasion may be rested for the rest of the season, just because of the statistical probability that the pitcher might do permanent damage to the joints of the arm and shoulder by throwing more pitches.

Fans grumble, but this change makes good sense if you look at it as a question of labor economics. You can easily find athletes qualified to play a valid game of baseball, so the ultimate impact of resting one athlete is minimal. Compare that to the predicament of a person whose arm stops working. That’s a long-term problem with no easy solution. This reluctance to take risks with workers’ health is part of a larger cultural shift that goes well beyond baseball. It is happening in baseball now because it reflects the consensus view of spectators. They are no longer so eager to see disproportionate risks taken for the sake of sport. As the saying goes, it is only a game.

Thinking Like Spies

The Snowden case has people thinking like spies — thinking, that is, about keeping their thoughts, actions, and documents from being tracked and analyzed. Real spies might have to travel in a roundabout fashion to avoid being followed, but ordinary people are finding out they can lower their profile considerably at almost no cost.

One measure of this is how many people are using DuckDuckGo, a search engine that promises a higher level of security. As Google, Microsoft, and others have been implicated in turning people’s search terms over to spy agencies, not to mention commercial interests, DuckDuckGo has seen traffic levels jump. DuckDuckGo still keeps a record of searches and analyzes what the public is paying attention to, but it does so without trying to tie searches to people and places.  http://www.computerworld.com.sg/resource/internet/meet-the-search-engine-that-vows-not-to-track-you/

China’s Drug Money Bust

The investigation into pharmaceutical marketing in China led to a series of arrests today. Officials spoke of half a billion dollars in bribes paid to doctors and others to promote specific drugs. The scale of the illicit marketing effort suggests that the industry is not as successful as it appears and that the drugs are not as effective as their manufacturers told regulators. Some products take off on their own, others with a normal marketing effort. When a product needs a big push, it is a sign that the product has limited intrinsic merit — or sometimes that the manufacturer is in a hurry to sell as much as possible before the product’s shortcomings and limitations are well understood.

This Week in Bank Failures

The 1999 repeal of the Glass-Steagall Act, which had set up a wall between Wall Street and banking, was supposed to breathe new life into a dying banking industry. Instead, the new regime ushered in by the repeal sliced profit margins at the larger banks so thin that every one of them was at the edge of financial collapse even in a good year. The same changes also weakened Wall Street, paving the way for its 2008 collapse. There has been talk all along about reinstating Glass-Steagall, but now there is real momentum, with a new Senate bill that has four prominent sponsors and a credible five-year transition plan.

The Glass-Steagall repeal was supposed to set up fruitful combinations of banking and insurance, but that idea was a disaster. The guinea pigs in this experiment were Citibank and Travelers, which combined to form Citigroup — indeed, it was the prospect of this deal that persuaded Congress to act on the Glass-Steagall repeal. But the bank and the insurance company barely survived their marriage and subsequent divorce.

What we are left with, then, is a highly dysfunctional arrangement of banks owned by Wall Street. The high-stakes gambling mentality of Wall Street has filtered down into the banks to the point where even having a checking account is like a roll of the dice. Most banking customers don’t know what fees their banks will charge them from one month to the next because the fee schedules have become that complex — and because the banks themselves often don’t quite know what their own rules are. Account holders in the giant banks don’t know in advance when they will gain and when they will lose, but they continue to hope that this is will be one of the months when they get lucky.

This approach to banking has become so unpopular that I believe there is a real chance that Glass-Steagall could be reinstated next year. Along with it, there could be real reforms that take away big pieces of the shadow banking system — and people will start to remember what a real bank looks like. It was less than a generation ago that banks prided themselves on reliability, stability, and integrity — on handling transactions simply and correctly. That is the kind of banking that could come back with the new Glass-Steagall Act.

Waiting for the Mighty Morphin Personal Computers

The computer industry has been offering excuses for the weakness in PC sales for a long time. Five years ago, the finger of blame was pointed at recession-based cost-cutting by the big corporate customers. By last year, the story was that they were holding off, waiting for Microsoft to release Windows 8. When Windows 8 functioned awkwardly on release, it was that buyers were waiting for a patch to fix the worst flaws in Windows 8. Now the story is that when the Mighty Morphin Power Rangers become Windows 8-compatible that will turn the slide around. I exaggerate, but sales at Dell and Hewlett-Packard have slid so much that Lenovo has passed them in unit sales, so it is time for the most colorful excuse we can come up with.

The significant thing about Lenovo is that it is not particularly strong in corporate sales. That looked like a problem five years ago but now looks like a strategy. Having not invested so much in the corporate bubble, Lenovo now does not have to face the painful slide on the other side.

PCs are declining not just because corporations are declining, not just because of the new flaws introduced in Windows 8, but mainly because the capabilities of the PC are less than they were, or at least seemed, a decade ago. The current corporate PC is so locked down for security reasons that it can barely do anything anymore. Users can type and click buttons, but for security reasons have limited access to the Internet where documents can be typed and buttons can be clicked to actual effect. What this implies is that the corporate PC is at risk of being replaced by a suite of HTML 5 apps. And if this sounds like another joke, consider that Microsoft and Adobe have both already taken the precaution of moving their flagship applications online.

Some of the more forward-looking corporations are doing their part by replacing PCs with thin clients, modem-sized computers that do virtually everything a PC can do on a corporate network, but without adding in a lot of expensive extra capabilities that are only going to be locked down anyway. At the same time, about 20 of the bigger computer companies are angling to be in position to provide corporate cloud services, basically just NSA-compatible remote servers, as soon as the firewall problems can be worked out. Everyone is moving in the same direction, but these parts don’t go together to create a cart that can roll. We can’t be surprised if there is a crashing sound when we get to the end of the tunnel.