Sunday, December 1, 2013

Sustainable Growth and a Synthetic Economy

Unlimited  population growth is unsustainable.  We cannot sustain an infinite population on a planet with finite resources.  Some countries are already facing a population decline as the birthrate drops.  People are manifesting an instinct to dampen population growth, but governments are trying to counter this natural decline in population growth.  Governments either provide incentives like the French to make child rearing less expensive for parents, or use immigration like the USA and England to boost population growth.  Our economies at present depend on a growing population to fuel economic growth.  Based on current economic understanding, a stable, sustainable population would lead to economic stagnation.

When you hear about sustainability, usually it is in the context of reducing consumption to compensate for a growing population  What we need instead of conservation is to let population growth flatten and then stop, but we do not know how to run national economies with zero population growth.  I started thinking about economic growth without population growth back in 2008.  In 2012 I suggested a simulated economy consisting of simulated consumers and producers, simulated goods and currency could grow without the constraints of limited population and resources.  I suggested in 2012 that it would be tricky to transfer simulated (synthetic) money into the real world.  I also suggested that financial derivatives were actually instruments of a simulated economy, with the wealth from derivatives being treated as though it is real wealth instead of synthetic wealth, potentially debasing our currency.

In 2013 we can see more confusion between real and simulated economies as virtual currencies like Bitcoin receive increased attention. There are newspaper articles asking if you should have some Bitcoins in your investment portfolio.  Let us remember auction rate securities.  They were used for decades by investors, then failed in the 2008 banking crisis.  Auction rate securities were more real than virtual currencies like Bitcoin, but eventually fell apart as investments.  There will probably be a speculative bubble for Bitcoin, but it will turn to tears.

If we developed synthetic, simulated economies rationally we could debate the transition of synthetic wealth into real currency and plan the move of simulated money into the real world.  Instead, some players in the economy are going straight to the fabrication of simulated wealth and are attempting to move this simulated wealth into our economy behind our backs.

I had envisioned algorithms that created music through artificial intelligence.  I envisioned simulated musicians selling algorithmically developed music to simulated consumers.  We would own crowds of simulated consumers that would vote on the music they liked.  Real people would sample the outputs occasionally and select algorithmically developed music to move into the real world to sell to real people.  A synthetic economy can be created rationally.  I have heard that marketing firms will provide an artist with a crowd of artificial followers on Twitter.  Elements of a simulated economy are forming.

However, instead of a rationally developed new economy of simulated or synthetic growth, we have clever people manipulating our economic system to fabricate money out of thin air.  Besides Bitcoin and derivatives, consider the Quantitative Easing program.  Here is a brief explanation of quantitative easing (QE) from the Financial Times:  "...the most important step in QE is that the central bank creates new money for use in an economy. Only a central bank can do this because its money is accepted as payment by everybody.  Sometimes dubbed incorrectly "printing money" a central bank simply creates new money at the stroke of a computer key, in effect increasing the credit in its own bank account."

If we are not careful, the mixing of synthetic wealth with real wealth can dilute the value of the dollar and diminish our savings and investments. The pressures of a simulated economy are building and wanting to spring into creation, but the best parts are being over-looked while the most dangerous parts of synthetic wealth creation are being introduced into our economy without adequate public debate.  You might think a simulated economy is science fiction.  I think that synthetic wealth creation is a Frankenstein's monster.

We need to pay attention before it is too late.


Wednesday, March 13, 2013

Government's Role in Innovation

A website called SFGate ran a story recently on innovation:  The hypocrisy in Silicon Valley's big talk on innovation by James Temple (Sunday, March 10, 2013). 

The article by Mr. Temple included this quote:
"None of this argues for government keeping its nose out of the business of innovation, it makes the case for it taking a leading role - for leveraging its unique position to address these obvious market failures. Only governments had the long view and available cash to fund things like supercolliders, deep space programs and - oh yeah - the development of the Internet."

As I mentioned in an earlier post [1], the best scientific innovation from the government is done by the U.S. military.  Generally speaking, the U.S. government should stay out of game of funding innovation for economic growth because the tendency is to provide pork-barrel funding.  Give the U.S. military adequate funding and leave it alone with regard to innovation and it will create what it needs and the result is technology with civilian uses that really drive economic growth, like computers and the internet.


[1]  Military Research Drives Economic Growth  Sunday, May 13, 2012

Saturday, February 23, 2013

Video Games are Big Business

Computer games and video games are big business.  The Wall Street Journal published "Minecraft Hits Mother Lode for a Small Swedish Company" by Matthew Lynley on Monday February 4, 2013 (p.B1).  The computer game Minecraft, created by Markus Persson in 2010 when he was in his 30's, has sold 20 million copies.  His company, Mojang A.B. in Stockholm, earned $90 million on revenue of $235 million last year.  His company employs only 29 people.  That is a lot of profit from a few people.

Video games and computer games are created by programmers.  I said in an earlier post, "Without domain knowledge, programmers either learn more programming minutia, or learn new languages, or write computer games."  There are successful software game companies in the DFW metroplex.

One of the creators of the game Words With Friends is Paul Bettner, a McKinney resident, who started a company, Newtoy Inc., in McKinney with his brother Dave after working at Microsoft.  Id Software, the creator of the game Doom, is headquartered in Richardson, Texas.

If people are going to create video games, I'd rather they do it in the Dallas metroplex than in Stockholm.  The Texas Young Programmers Project can contribute to creating the pool of skilled computer programmers necessary to grow DFW into a center for game development.

The money from successful software companies can spill over into other business enterprises.  Armadillo Aerospace was started by John Carmack from Id Software.  Mark Cuban sold his software company,, and invested in the Dallas Mavericks, among other things.  In 2011 the Mavs won the NBA championship.  Software entrepreneurs can be a source of synergistic economic growth to a community, so we should encourage and support software entrepreneurhip.


This post is part of the
The Texas Software Initiative  Thursday, January 3, 2013

The Texas Entrepreneurship Project

America needs more businesses to be created and nurtured to success.  Businesses are the vital organs in the body of capitalism.  There are not enough businesses in America putting people and capital to work.  The Wall Street Journal, on Tuesday July 17, 2012 (p. C3), ran this article:  "Lending Proves Both Boon and Bane for Banks," by Matthias Rieker.  The article contained this sentence:  "KeyCorp stock has lost half its value since the financial crisis, amid persistent questions about whether the company can find customers to lend to—and then turn those loans into profits." This is just one piece of evidence among many that our economy is starving for lack of business growth.

Banks are hoarding cash in part because they do not know what to do with it.  There is too much money and not enough investment opportunities.  One of the reasons collateralized debt obligations (CDOs) were created was because there are not enough business to absorb the vast amounts of capital available for investment.  (See Global Surplus Capital.)  We need more businesses.  People who start businesses are called entrepreneurs.  We need to educate and empower people  to start and grow businesses.  The initiative to educate and empower people in Texas to start and grow businesses I call the Texas Entrepreneurship Project

The Texas Software Initiative is intended to support business growth through software companies and products.

It is not enough for  people to start small business.  If we have a ten percent increase in independent contractors doing plumbing or air conditioning then we do not have the sizable investment opportunities that are sought by the truly wealthy who have billions of dollars to invest.  We need to understand what it takes to grow a business to billions of dollars of revenue, then we need to spread that information and develop the economic and financial infrastructure necessary to support large business growth. 

The Texas Entrepreneurship Project to educate and empower people to start and grow businesses begins with understanding and education.


I have in the past proposed a New Business Project:
The Cause of the Crash of 2008 and the New Business Project  Sunday, August 5, 2012
But I believe people interested in this topic are looking for the word "entrepreneurship," so I am re-naming this project.
The August 5 post includes links to related blog posts.

Thursday, February 14, 2013

Fed Policy is a Drag on the Economy

The Texas Ascendant Economics Project is a plan to develop the best thinking about economics.  We must understand the affect of the Federal Reserve upon the American and the Texas economies.  An op-ed essay in the January 29, 2013 Wall Street Journal is important to read and understand.  The article is "Fed Policy is a Drag on the Economy" by John B. Taylor.  Dr. Taylor is an economics professor at Stanford.  Here is his web page ( and his blog (

This post is part of the Texas Ascendant Economics Project.


Saturday, January 5, 2013

The Texas Software Product Development Project

The Texas Software Product Development Project focuses attention on those aspects of software development that are necessary for creating useful products.  Software reliability is a topic with enough complexity to warrant its own project, The Texas Software Reliability Project .

Developing a quality software product requires some understanding of quality code.  My blog post entitled Big Ball of Mud discusses code quality.

In addition to software reliability and software quality, other key aspects of software product development include:  (1) product definition, which can depend on creativity, innovation, and market research; (2) design, which has many aspects and many levels of design; (3) planning, which includes schedule, budget, and staffing; (4) execution, which includes many aspects of coding and project management; (5) testing and integration, and (5) deployment, which includes customer delivery and acceptance.

Developing software products that work, that customers want, that please customers is difficult.  The more complex the product, the harder the task becomes.  It is not enough to throw a lot of smart people at a problem.  Every time a software project fails to deliver a successful software product, money is lost and our economy is hurt.

There is a lot of money being made with successful software products.  The purpose of the Texas Software Product Development Project is to increase wealth in Texas by bringing attention to those aspects of software development that can make or break a product.

This post is part of the The Texas Software Initiative.


Friday, January 4, 2013

The Texas Young Programmers Project

Computer programming is not for everyone.  I know engineers who were required to take a computer programming course in college, did not like it, and never programmed at work.  Still, programming is an activity that some young people can do very well.  Because young people in their late teens and early twenties can create significant software products and impact the national economy, we should provide assistance to young programmers.  The Texas Young Programmers Project is an effort to help young people with their efforts to learn programming, and to encourage them in their endeavors.

Indie Game: The Movie is a documentary that shares the experiences of young adults developing independent computer games.  This documentary is available for streaming on Netflix.  It is a fascinating show, but cannot be thought of as representative of how young programmers develop.  Still, computer games are an application that can appeal to young programmers.

If you lack "domain knowledge," you cannot as a programmer solve problems with software.  The Achilles heal of software development is that programmers need problems presented to them that can be solved with computer programming.  Without domain knowledge, programmers either learn more programming minutia, or learn new languages, or write computer games.  Young people need help in for form of challenging problems for their coding skills.

The University of Texas, Pan American, held a computer programming contest for high school students in February 2012.  The students had a choice of coding in C/C++ or Java in this contest.  The University of Texas, Austin, is holding a programming contest in February 2013.  The contest is by invitation only and the coding is required to be in Java.  Trinity University in San Antonio hosted a programming contest in Java for San Antonio high schools in April 2012.  Java appears to be the language of choice for high school programming.  The University Interscholastic League (UIL) also hosts computer programming contests.  Google hosts a contest for students aged 13 to 17 called Google Code-In.  The grand prize is a trip to Google headquarters in Mountain View, California.  Google Code Jam is for older students.

The Association for Computing Machinery (ACM) hosts the ACM International Collegiate Programming Contest for college students.  Here is a link to a PowerPoint presentation from Dr. Ivor Page, UT Dallas, on participation in this contest:

There are programming challenges available for our young people.  They just need to get connected to the programming contests and to get advice on how to learn programming.  I have started a blog, Canright on Software and Programming, to help.  If you choose to help young people learn programming, then you too are participating in the The Texas Young Programmers Project.

This post is part of the The Texas Software Initiative.


Thursday, January 3, 2013

The Texas Software Reliability Project

The Texas Institute for Software Reliability

It is difficult to complete complex software products on schedule and within budget.  Having the software product also perform flawlessly is almost beyond imagination.  The performance goal for new software is usually to achieve adequate performance, so it takes time for users to discover the flaws in the software.  It is common in the software industry to ship a product with a known list of bugs.  This leads to a cavalier attitude towards software reliability, which is beginning to wreak havoc in the financial industry.

On August 1, 2012, a glitch in new software at Knight Capital led to $440 million in trading losses, pushing the company to the brink of bankruptcy, and forcing it to sell itself in order to stay open for business.  On March 23, 2012, the new stock exchange operator BATS Global Markets tried to list its own IPO on its new stock exchange, but a software glitch crashed the exchange.  The BATS IPO stock price sunk from $16 per share to 4 cents per share and the IPO was cancelled.  The IPO did not happen during the remainder of 2012 and terms like "epic failure" and "worst IPO nightmare of all time" were used to describe the failure.  Software reliability can have a major impact on economic development.

Software reliability is a huge, multifaceted topic.  Software reliability is intimately related to software quality, software requirements, software design, software testing, and software correctness.  All facets of software development that contribute to reliable software, including accurate design of concurrent and distributed systems, should be of interest to businesses, schools, and professionals working in software in Texas.

The Kestrel Institute in Palo Alto, California is a research center working on provably correct code.  We should have a center in Texas dedicated to issues related to software reliability. A Texas Institute for Software Reliability could be a virtual institution, comprised of researchers at many universities and companies, linked together by a website and servers.

We are in a competitive world.  A Texas Institute for Software Reliability could help us compete.  The Texas Software Reliability Project encompasses all efforts in Texas to promote reliable software.

This post is part of The Texas Software Initiative.


The Texas Software Initiative

The Texas Software Initiative

Software is big business.  The people of Texas should have a goal to promote software development and software education in Texas as part of economic development in the state of Texas.  To that end I am suggesting a number of projects that can contribute to software development and economic growth.

Here is a list of projects that can be a part of the Texas Software Initiative:
  1. The Bank in a Box Project
  2. The Business in a Box Project
  3. The Texas Young Programmers Project
  4. The Texas Software Product Development Project
  5. The Texas Software Reliability Project
  6. The Texas Open Source Software Project
  7. The Special Methods Software Project
I will add details to these projects as time permits.


Additionally, these posts are part of the Texas Software Initiative
Video Games are Big Business  Saturday, February 23, 2013