Tag Archives: economics

But Apple is evil! Some thoughts on how economies work

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I’m still in the process of writing about my experiences with my Android phone, which will see at least two more sections (on the OS itself and on T-Mobile). The short version is I started with an iPhone, got rid of it for a 4G Android phone, decided that Android just doesn’t have it going on, and am switching back to the iPhone.

Now, one thing I’ve seen repeated many times since I’ve started talking here and elsewhere about my Android experiences is a common refrain: It’s not about the phone. It’s not about the operating system, or user experience, or call quality, or ease of use. An iPhone is a bad choice because Apple is an evil company.

With no disrespect intended for any of the dozen or so people who’ve said this to me: I find that to be a remarkably silly thing to say, but not for the reasons you might expect. I’ll get back to that in a minute.

First, before I get into that, let me start by destroying a childhood myth that we all learn in school.

When you make a product for sale, you do not determine the price of your product in the marketplace by taking the total cost of making it, adding some percentage to the cost of making it that represents your profit, and then selling it at that price.

An astonishing number of people seem to believe that this is how the price of goods is arrived at, and I am constantly surprised by how many folks believe it’s true. That isn’t the way it works at all.

When you sell a product in the marketplace, you price it at the absolute tippy-top highest price the market can bear. Then, you drive the cost of making it as low as is humanly possible, using whatever means you can. The difference between the highest price the market will bear and the lowest cost you can make them for is your profit.

Everything is priced this way: cell phones, computers, cars, winter jackets, tea, pencils, small remote-controlled toy helicopters, batteries, electric razors, suitcases, light bulbs, plywood, sofas, dishwashers (and the dishes and detergent you put into them), stereo systems, ice cream, gasoline, you name it.

“But Franklin!” I hear you cry. “What about competition? If I can get my cell phone or my ice cream from many different places, they will compete with each other on price until they have arrived at the lowest profit margin they can accept!”

Which is true, in the same world where unicorns cavort with dragon whelps over fields of cotton candy.

Yes, businesses will sometimes compete with one another on price, to a limited extent, in order to create market share. But let me let you in on a secret: It is better for me to capture only 40% of the market and make a profit of $50 a widget than to capture 90% of the market and make only $3 a widget.

Companies know this. Industries develop a sense of what their expected profit margin ought to be, and then compete on price only so long as it doesn’t erode that. The supply-demand curve they taught you in grade school? It’s rubbish. It doesn’t account for the fact that when consumers expect to pay a certain amount for something, they’ll keep paying that amount even if the cost of production falls. It doesn’t account for the fact that consumers will often rate a product as more desirable if it carries a higher price, even if the quality is exactly the same as a lower-priced item. It doesn’t account for the fact that supply and demand do not exist in a vacuum, nor for the fact that demand is not infinitely elastic, nor for the fact that demand depends on many factors, quite a few of which have nothing to do with supply.

It also doesn’t account for the fact that supply is not always responsive to demand, for reasons that may range from capitalization costs to the fact that low availability can create that air of increased desirability I just mentioned.

Even supposedly “commodity” goods like oil and wheat are not priced according to the strict laws of supply and demand; things like futures and derivatives can change their price even when supply remains exactly the same. (If there is a sudden increase in trading for oil futures, for instance, the price of oil may rise even though the production of oil is completely unchanged and the demand for oil hasn’t budged one bit.)

So when people say things like “You’re stupid to buy an iPhone; if you get a high-end model, you’re paying $100 for $20 worth of additional flash memory,” they’re speaking from a profound ignorance of how any market system works. Sorry, Mr. Savvy Consumer, but you do that same sort of thing all the time, when you buy anything from tennis shoes to lumber.

So back to Apple’s supposed “evil.”

It is deeply silly to say “I’m not going to buy an iPhone because Apple is an evil company.” Not because it’s false, but because it’s trivially true. Well, duh. Of course Apple is an evil company. Apple is ruthless, anticompetitive, and sociopathic. This is not a terribly profound insight. Yes, Apple is an evil company; in other news, the sky is up and water is wet.

Apple is an evil company because every successful multinational corporation is evil.

They have to be. The laws governing and regulating corporations pretty much guarantee that any publicly-traded corporation must be sociopathic in nature. Any company, large or small, doesn’t succeed by leaving money on the table if it doesn’t have to; public corporations are legally obligated to seek maximum return for their shareholders, by whatever means are available to them. A corporation that has the opportunity to increase revenue or lower costs and fails to do so can be sued by its shareholders.

Let’s look at Google, the company whose motto is “Don’t Be Evil.” They make an operating system that is touted as being “open,” that is supposedly “open source,” and that anyone can use to make a smartphone, right?

Right. And those unicorns in cotton candy land just love it.

The reality is rather different; Android is not really “open” in any meaningful sense of the word, and Google is as big a bully as Apple, but less public about it. Google, for example, recently forced Acer to cancel a smartphone built around a rival operating system, threatening to cut Acer off from source code and revoking Acer’s right to use Android if it didn’t comply.

You know how anyone is free to download and build the Android source code? Well, err, that applies only to older versions, and even then only to some parts of the Android code base, excluding Google’s apps that run atop it. You know how anyone can use Android on their mobile phone? Well, err, the name “Android” is trademarked, so you have to license the use fo the name from Google…and how many consumers going to buy an Android phone that’s advertised as running an “Android-like operating system”?

That gives Google considerable leverage. So much that they can tell a hardware maker “We demand you cancel your phone that uses a rival operating system” and the handset maker will comply so fast that journalists will still show up for the product launch and end up milling around an empty hall.

Yes, Apple is an evil company. Google is an evil company. Microsoft is a company of such breathtakingly creative evil that even the Department of Justice is effectively powerless to reign it in, no matter how egregiously it has broken the law. If you find yourself with warm, fuzzy feelings about any globocorp, it is only because that globocorp has paid good PR money to program you with those feelings. To believe anything else is naivety in the face of overwhelming evidence.

Those underpaid workers making iPads in Foxconn factories? They’re making gizmos for Dell and Cisco and Microsoft and HP and Motorola and Nokia and Samsung and Intel, too…and under working conditions that the folks making sneakers for Nike would give their right arm to enjoy.

Of course, not all evil is created equal. The evil of Google and Apple might reach farther than the evil of Nike, but the evil of Nike is probably a lot more serious for those on the pointy end of it. As evil as Nike is, it’s a whole lot less evil than the Wall Street companies that crashed the economy (and then blamed the wreckage on “poor people buying homes that were too expensive”), or the company you likely bank with if you use a large bank.

Me? I use a small, local credit union. And I’m still buying an iPhone.

Apple v. Samsung: Nickelgeddon and Number Illiteracy

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In case you haven’t seen the news that’s been lighting up the tech sector these days, Apple recently sued Samsung for multiple patent violations concerning Samsung’s cell phones allegedly knocking off iPhone design and technology, and won, to the tune of $1 billion in fines.

There’s a rumor going around the Internet that Samsung is planning to pay the fine in nickels, shipping, or so it’s said, 30 trucks to Apple’s headquarters stuffed full of small change.

Now, that sounds wildly implausible to me, on a number of levels. First, it seems like getting one’s hands on a billion dollars’ worth of nickels would be an extraordinarily difficult thing to do. Second, it seems to me that a billion dollars’ worth of nickels would occupy one hell of a lot more than 30 trucks.

One of the things I often complain to zaiah about is something I call ‘number illiteracy’. As soon as anyone starts talking about numbers higher than a thousand or so, people’s eyes glaze over and that little drop of drool forms on the corners of their lips. A million, a hundred million, a billion…these all seem like synonyms for “really big” to a lot of folks. Hence folks complaining about the money spent on the Mars Curiosity rover without realizing that we Americans spend about the same amount on Halloween candy every October…but I digress.

Just for giggles, I did a rough, back-of-the-envelope estimate of what it would take to pay a billion dollar fine in nickels.

A billion dollars in nickels is 20 billion nickels, or roughly 64 nickels for every man, woman, and child in the entire United States. That is almost the entire number of nickels in circulation; the total number of nickels that exists is estimated by the Treasury Department to be around 25 billion or so.

A nickel weighs a sixth of an ounce, so 20 billion nickels weighs in at 208,333,333 pounds, or 104,167 tons, give or take a few hundred pounds. In the United States, a tractor trailer rig traveling on public roads is permitted to weigh no more than 80,000 pounds (gross) by law. A typical tractor trailer rig weighs in at roughly 20,000 pounds, leaving no more than 60,000 pounds for cargo. (From a quick Google search, it seems most commercial truckers won’t haul more than 50,000 pounds, but since I know fuck-all about shipping I’ll be generous and go with the 60,000 pound limit.)

At 60,000 pounds per truck, a billion dollars in nickels would require 3,473 trucks. Since a semi trailer is 53 feet long (not including the cab), the trailers, lined up end to end with no cabs, would make a row roughly 35 miles long.

I did a quick Web search to see what the shipping cost would be. From Samsung’s US headquarters to Cupertino, home of Apple, the cheapest rate I could find on my quick-and-dirty search was $503 per half ton, or $104,792,002 for the whole shebang. That’s about $105 million in shipping charges, though I bet a job this size might qualify for a bulk discount.

So now you know.

Edited to add: When zaiah and I first talked about the problem of sending a billion dollars in nickels, we were driving and didn’t have easy access to Google, so we made an even rougher back-of-the-envelope calculation, using guesswork, imagination, and the XKCD “if I can throw it, it weighs about a pound” rule. I can throw four rolls of nickels, so I guessed that four rolls would be about a pound.

The first approximation of an answer we came up with, which we figured might be within half an order of magnitude or so of the right answer, was 4,000 trucks. Later, with Google and a calculator and a lot of legwork, we came up with what you see above. So, go us!

“But why aren’t we spending it on CHILDREN? Think of the CHILDREN!”

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So for those of you who’ve been living under a rock for the last couple of days: Yesterday, something amazing happened.

No, I don’t mean the US soccer Olympic team beating Canada by one point in a dramatic overtime goal. I mean something really amazing. Something mind-blowing.

We took a one-ton nuclear-powered robot rover and threw it 350,000,000 miles, then landed it on the surface of another planet using cables from a flying rocket-powered robot crane.

And it worked. That’s the cool thing about science: It works whether you “believe” in it or not.

However, as always happens whenever NASA does something amazing, a bunch of people have trotted out all sorts of nonsense about how we shouldn’t be spending money on space exploration when there are so many problems back here on earth. I went to a Curiosity landing party at the local museum of science and industry, and sure enough, someone posted something on the Facebook page for the event something to the extent of “I wonder how many children will die from lack of clean water while we land a probe on Mars” or something.

Now, I have been told that it’s technically illegal to beat these folks. And I’m sure their hearts are in the right place; they’re not trying to be anti-intellectual, they just have little sense of the size and scope of the economy, nor how much money gets spent on space exploration, nor how much money we spend every year on things that we really could do without. And they seem to have an either/or mindset as well, as if to say that every dollar that goes to space exploration is a dollar that is taken away from needy children as opposed to being taken from, say, the Pentagon’s budget for paper clips.

Now, I think that doing things like, oh, finding out if there is life on other planets in our solar system represents a better investment of money than, for instance, buying T-shirts with pictures of NFL logos on them–something we typically spend about four times more per year on than we do on trying to learn about the universe.

So I spent some time doing a bit of research, and I’ve put together a handy-dandy chart that shows the cost of the Mars Curiosity mission, compared to the cost of some other things we might be acquainted with. The chart is a little lopsided, in that it shows how much we spend per year on other things, and the cost of the Curiosity mission so far represents seven years’ investment; to make things more representative, the bar for the Curiosity mission should be 1/7th as long as it is here.

Since we aren’t technically allowed to beat folks who complain about the cost of space exploration, hitting them over the head with this chart will have to do instead. (Figuratively! Figuratively! You can’t literally hit folks with it unless you, I don’t know, print it out and wrap it around something first. Which, as I mentioned, is technically illegal.)

So now when someone says “Why are we wasting money on space exploration instead of fixing problems here at home?” you can say “Why are we wasting even more money on Halloween candy, Christmas trees, or perfume, or football games?” I don’t think I’ve ever heard anyone say “We shouldn’t spend money on perfume when there are so many problems here at home.”

Because, you know, spending money on perfume is way more important than finding out whether or not there is life not on this world.

From iPhone to Android

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A few weeks back, I decided I needed to replace my aging iPhone 3G.

I got the 3G when it first came out. My roommate at the time and I spent quite a while waiting in line in front of the Apple store, only to be told when we were two places from the door that the stock for the day had been sold out. t took several more days of waiting in line before we were able to get our hands on one.

The iPhone 3G was the first smartphone I’d ever owned. I’ve been a cell phone user for quite some time, since the days of giant handsets with one-line LED displays, but I’d never owned anything even remotely approaching a smartphone before. For me, the iPhone was a game-changer. I have a notoriously bad sense of direction–it is not impossible for me to get lost just a few blocks from my home–and the GPS feature alone in the iPhone was a huge improvement in my quality of life.

Having real Web access was also a big deal. I do a lot of IT work, and the ability to get a call from a client and check the client’s Web site right there on the spot even if I’m not in front of a computer is huge.

But over the past few months, the 3G hasn’t been cutting it for me. The GPS is getting a little wonky, and the battery isn’t holding a very good charge any more, and the iOS 4.2 update made the phone feel a bit sluggish. On top of that, the amount that AT&T was charging me every month was enough to give me a nosebleed.

I spent a few weeks looking at several options: upgrading to an iPhone 4 and staying with AT&T, upgrading to an iPhone 4 and jumping to Verizon, and getting an Android phone.

Then Google announced the open hardware development kit for Android, and that significantly tilted the balance toward Android. The Google hardware kit for Android phones is based on the Arduino prototyping board, which I already have experience developing and programming for.

I went into T-Mobile and found that I could save quite a lot of money every month with a contract from them if I went to Android, so that’s what I did.

The phone I got and will be talking about here is the HTC Sensation 4G, running Android 2.3. It’s been an interesting, and at times rough, transition. I’ve been surprised by a number of things about Android, both pleasantly and unpleasantly.

But before I get into that, let me talk about what Android isn’t.

OPEN: IT’S THE NEW CLOSED

Android isn’t a religion. To hear many folks talk about it online, you’d think that the choice of cell phone operating systems was a religious or philosophical choice. Android, we’re told gravely, is “open.” The iPhone operating system is “closed.” To use Android is to celebrate freedom and democracy and other wonderful things; to use an iPhone is to toil under tyranny and totalitarian rule.

It’s hooey, of course. Android isn’t open, at least not in the way the religious folks say it is.

Oh, it’s open in the sense that the source code is available, kind of, eventually, when Google says it is. This sort of freedom isn’t really equal, though; Google decides who gets it when, and which partners get to have it first.

But the thing to remember is that from the perspective of the folks who make cell phone software, you aren’t the customer. The handset makers are the customer. Android is open–for them. You, as the person who buys the cell phone, get exactly as much freedom and openness as the handset maker lets you have.

On my HTC Sensation, for instance, the cell phone bootloader is locked down tighter than a nun’s–ahem. It was possible, if I wanted to, for me to jailbreak my iPhone. My Sensation? Nope, no can do. Not even the Cyanogen team has figured out how to root it yet.

The same is true for some other Android phones as well. Supposedly, HTC has had a change of heart and will be unlocking its phones in the future. It’s not clear whether this will apply to me; I’ve read one article online that says all HTC phones will be unlocked, and another that says only HTC phones not tied to a particular network or under contract with a particular carrier will be unlocked.

On the iPhone, the fact that I could, if I chose, jailbreak my phone never mattered to me; I never saw any good reason to. With Android, the fact that I can’t jailbreak it is kind of a bother, and that brings me to the second issue with Android.

SON OF THE REVENGE OF CRAPWARE: IT CAME FROM BEYOND THE GRAVE

With Android, we’re told, there is more openness in software, too. Android programmers do not have to go through any particular approval process to get their apps on your phone. The iPhone App Store is tightly regulated; apps that Apple doesn’t like aren’t available. The Android app store is an open bazaar; anyone can make any sort of app at all.

That’s not 100% true. The carriers have coerced Google into removing apps they didn’t like from the Google app store.

More to the point, though, the openness is really more for the handset maker’s benefit than for yours. With Android, we are back to the bad old days of Windows XP and Windows Vista, where each computer maker tended to stuff their computers so full of demos and third-party software and their own support applications that the term Craplets (crap applets) was devised to describe them.

Most computer manufacturers came to their senses, eventually, and cut it out. It didn’t help that some of this crapware, like HP’s support application that they bundled onto their computers, contained security vulnerabilities that let hackers pwn HP computers.

But Android phones often come so stuffed with pre-bundled crapware that, in my case at least, nearly half the available application memory is occupied right off the bat. Worse, unlike desktop crapware, the Android crapware can’t be removed without jailbreaking the phone. I’ll talk about some of that crapware in a bit.

So my experience with Android has been interesting. In the rest of this post, I’ll run down the differences I’ve found between using an Android phone and using an iOS phone, and rate the quality of everything from the handset design to the apps to the user interface. If that sounds like your thing, click here to read more!

Some thoughts on socialism and capitalism

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This post has been rattling around in my head for a while, and was finally prompted by a post left in sterno‘s journal.

Now, before we get started, let me make one thing abundantly clear. I am a capitalist. I am probably the biggest capitalist you will likely ever meet. For more than a decade, I have made money directly from the work that I do, without relying on an outside business for my full support. Even now, as a salaried employee, I am a minority partner in the company which employees me, and I have at least two other business ventures running at any given time, one of which typically pays my rent.

I am not a socialist, nor do I believe socialism is anything but a broken and inherently unworkable economic system which does little besides deprive those citizens who live under it from benefitting from their own labor.

However, I am also a fan of government oversight of business, and of environmental and social restrictions on the actions of business.

“But Franklin,” you say, “how can that be? Isn’t that a form of socialism? Isn’t the whole point of capitalism the notion that market efficiencies work best when unencumbered by government intrusion?”

And the answer is “no,” because without such oversight, businesses tend to adopt a weird sort of pancake socialism–an inverted socialist system where profit is concentrated, but the costs of doing business and the risks associated with business practices are socialized.

There are tangible risks associated with environmentally or socially negligent behavior. Take, for example, a hypothetical chemical business that produces acetic acid, and as a byproduct produces methylmercury. Methylmercury is difficult and expensive to contain and to get rid of safely, so let us assume that the business disposes of it by dumping it into a lake. (This is not entirely hypothetical; a company doing just that in the Japanese city of Minamata in 1956 caused the largest case of mass mercury poisoning on record.)

The business that pumps methyl mercury into a lake is increasing the risk of serious health consequences for the people living round that lake. Those risks come with a significant dollar value attached; in this hypothetical case, the dollar value may be the cost associated with medical treatment, the cost incurred by lost productivity, and the cost inflicted on the local fishing industry as the industry collapses.

These costs are not borne by the business that did the dumping. The business is not really a capitalistic enterprise; it keeps the profits from its various activities, sure, but it does not pay the costs associated with the risks incurred by its business methods. Those risks are socialized–spread across the population.

In a conventional socialist arrangement, the one everyone thinks of when they think “socialism,” a worker works but does not keep the profits from his work. The profits–the results of his labor–are distributed across the population.

In the inverted socialism that comes along with lax regulation of environmental and social practices, a business keeps the profits from its work, but the costs associated with doing business are distributed across the population. This artificially increases the business’ profit; the socialization of risk means that some of what would otherwise be the business’ expense are paid by the community–even those who do not work for that business–and by other businesses impacted by the first business’ practice. Profit is not distributed, but cost and risk are.

This socialization of risk amounts to a subsidy paid by the people surrounding the business which inflates the business’ worth and increases its profits without increasing production or efficiency. Because the risks are subsidized and the costs associated with those risks are socialized, businesses which operate in a manner that socializes risk end up at a competitive advantage over businesses which shoulder the full costs of doing business.

It need not even be something as blatant as dumping toxic byproducts into the environment, and thereby socializing the risk and forcing others to assume the costs associated with that risk. This kind of “pancake socialism,” or inverted socialization of risk, may happen even in the service sector. For example, when an independent mortgage writer writes a mortgage, he is paid a percentage of the value of that mortgage, and at that point he’s done. The company who underwrites the mortgage, which may or may not own the mortgage throughout its entire life, shoulders the risk associated with the mortgage, but the guy who initially sold it has a different set of motivations. He is paid for every mortgage he writes, regardless of whether or not the underwriter profits from it or it goes into default. Therefore, his incentive rests only with writing the maximum number of mortgages possible, for the highest dollar value possible. He has very powerful incentive to issue risky mortgages, to artificially inflate the ability of the person buying the mortgage to pay, and to minimize the apparent costs associated with the mortgage. In fact, absent any kind of oversight, he may even have incentive to intentionally mislead his clients about the cost, and even to write mortgages which he knows damn well his clients can not afford. He does not bear the costs associated with the risk incurred by the mortgage underwriter.

The mortgage underwriter is in a similar position. It profits from writing mortgages; obviously, if the number of mortgages which go into default reaches a certain threshold, the underwriter will fail, but the more mortgages it underwrites in the short term, the more profit it generates, Particularly when it socializes its own risk by then turning around and selling those mortgages to others.

The total amount of money available to finance mortgages is finite. If a large number of mortgages go into default, this can diminish the pool of money available, which ends up dragging down much of the rest of the economy. A society which permits mortgage lenders to operate with little oversight is a socialist society; it encourages the socialization of risk by separating the risk from the profits. If the housing industry fails…well, the mortgage agents and the owners of mortgage issuing companies still made their millions; they’re set. The costs of the failure are not born by those individuals; the costs are socialized, and end up being paid by everyone, regardless of whether or not they benefitted from the mortgages.

“Socialism” is something of a dirty word in American culture. The best way to defeat any policy is to label it “socialist.” Yet we are a highly socialist society; it’s just that we socialize risk, and we socialize cost, but we don’t socialize profit. Businesses that work without oversight are socialized businesses; they expect everyone else to pay for their operational costs, while still concentrating profits internally.

This imposes significant barriers to entry into many industries; the socialization of risk benefits large businesses over small businesses. It makes up a hidden cost subsidy for businesses in areas where oversight is poor when they compete with businesses in areas where those businesses must pay the full cost of doing business, including the cost of waste management and risk management.

And you know what? As a capitalist, I think that’s fucked up.

Some late night thoughts about the nature of money

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Gah. It’s late, and I can’t sleep ’cause I’m waiting for Shelly to get home from work, so let’s talk money.

Exhibit A: One of my clients, a large, publicly-traded corporation that makes custom uniforms and apparel, primarily for the hospital and tech industries. They make those weird-looking bunny suits that chip manufacturers use in cleanrooms, that sort of thing. They have manufacturing and warehousing facilities in five states, thousands of employees, and brought in a tad over $130 million dollars in 2003, with net profits after expenses and tax of approximately $5 million. A huge, successful business.

Exhibit B: A tiny, privately held company occupying one office not far from my client’s corporate headquarters, employing less than twenty people, running an online Internet dating Web site. They bring in, oh, around $66 million a month, give or take. Roughly five times what my client makes, in other words. And almost all of it’s profit.

Wall Street doesn’t like the “adult” industry, of course. I don’t believeany porn or sex-toy companies arepublicly traded, and I have to wonder what the Fortune 500 might look like if it listed sex-related businesses. Wal-Mart would probably still top the list,ofcourse, butI suspect after that things might get interesting.

Money doesn’t work the way people think it does. Take lawyers who work on commission, for example. (Please!) Now, if you’re injured in a car wreck and you’re suing someone’s insurance company, you might think that the lawyer who works on commission will get you the best possible settlement, because his financial interests are tied to yours. After all, the more money he winds for you in the settlement, the more money he gets, right?

Wrong. You’re not his only client. He has thousands of other clients, in an unending stream. That changes the equation.

Suppose he can put in an hour working on your case, and get the insurance company to offer you an $8,000 settlement. Or, he can work 15 hours on your case, and win an $80,000 settlement for you. What’s he gonna do? He’s gonna try to talk you into settling for $8,000. Why?

Well, let’s say he works 45 hours a week. If all his clients take the paltry $8,000 settlement, he’s brought in a grand total of $320,000 in settlements in a week. If all his clients get $80,000 settlements, he’s only brought in $240,000 in that week. Which would you rather have–a percentage of $320,000 or the same percentage of $240,000? It’s a no-brainer. He wants maximum income per hour worked, which means…you get the chump change, chump.

On a more personal front, the Chinese government is still doing everything in its collective power to make my life complicated. Certain old-guard factions in the Communist Party in China still oppose with all the spirit they can muster from their feeble and ancient bodies any attempt to drag China into the seedy, dirty world of capitalism and free enterprise, and are continuing to block the Chinese venture capital firm that wants to invest in another client of mine, even though the rest of the Chinese government has given the deal the official go-ahead. As a result, my client can’t pay me (or indeed anyone else), and as a result of that, my client and I are still in limbo with regards to the move to Atlanta. So we’re here in Tampa for at least the next six months or so, while my client’s representative flies back and forth between here and Beijing on an almost weekly basis, trying to discover whatever voodoo black magic is going to be necessary to get the money out of China. In other words, it’s just business as usual for my life.

Follow the Money; or, why does my computer keep getting infested with spyware?

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[EDIT] This particular post has generated a very large amount of email, and apparently is being read by a large number of people infected with VX2. As a result, I’ve edited it, to clean up typos and to add additional information about the exploits used, the way VX2 works, and the sources of the spyware scourge. New information is identified with [EDIT].

If you’re reading this post and you’re on a Windows computer, the odds are overwhelming–between 80% and 90%–that you are infected with at least one virus or spyware program, and the odds are very high that you’re infected with dozens or hundreds.

Yes, you. Even if you are technically literate, you have a firewall, and you never download suspicious attachments, you are almost certainly infected. There is lots and lots and lots of money in computer viruses and spyware, especially the variety that makes popup ads appear on your machine. The question I’ve always had, though, is who’s making all this money by infecting your computer?

A couple nights ago, Shelly’s computer became infected. Shelly’s technically savvy, the apartment we live in is on a closed private network with a hardware firewall between us and the Internet, and she also runs a software firewall on her computer, and she still became infected nonetheless.

I spent about six hours removing the infection, and also tracking down the source of the infection, and painstakingly backtracking all the popup ads that the adware displayed on her computer. My goal: Follow the money. Discover where the infection came from, and who was making money from it. The results were, to say the least, interesting.

If you don’t care about stuff like this, you can skip the rest of this message. If you’re curious about the mechanisms by which spyware and viruses work, who is responsible for them, why they’re so common, how they spread, and most important, who makes money by creating and releasing them: read on!

War, war, waaaaar in Iraq…and daddy wants a new computer!

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So far, the United States has spent a grand total of approximately $139,744,240,000 on the war in Iraq, not counting indirect costs or human lives.

*blink*

That’s roughly $474 for every man, woman, and child in the United States. You know, I could kind of use that money right now.

Or, put another way, that is:

– Enough money to build 69 space stations, with sufficient money left over to double the size of the Space Shuttle fleet;
– Enough money to give full college scholarships to 3,493,606 college students;
– Enough money to multiply the Federally-funded programs on AIDS and cancer research by 46 times, with enough left over to double the amount of health insurance subsidies available to low-income citizens;
– Enough to multiply Federal law enforcement and anti-terrorism budgets by a factor of five, with enough left over to double the number of guaranteed student loans;
– Enough money to increase the budget for national parks and wildlife preserves by two hundred and sixteen times;
– Enough money to rebuild every single interstate and US highway in the entire country, with enough left over to pay the salaries of 305,690 new police officers (at salaries two percent higher than the national average);
– Enough money to give every single schoolteacher in the country a $22,000 a year raise;
– Enough money to multiply the total national budget for education by two times, with enough money left over to double the budget for the EPA and double the budget for the National Science Foundation and pay for another Space Shuttle and triple the senior citizen prescription drug benefit;
– Enough money to clean up every single Superfund environmental site, with enough left over to double the Veteran’s Administration fund and wire every public school and library to the Internet.

I wonder if the war on Iraq represents the best value for that money.