Archive for January, 2008

The Simulated Universe

It’s possible that what we think of as reality is a simulation being run on some powerful computer. Perhaps the entire universe as we think it exists is a simulation. Or perhaps the simulation is much simpler, and merely covers the solar system and space around it in detail, with everything else being only sketched in. Is there any way that we can determine whether or not this is the case?

In Carl Sagan’s novel Cosmos he suggested that there is a message buried deep in the digits of key transcendental numbers like pi. He suggested that this proved that the universe was designed; I think it more likely to prove that the universe is simulated. Finding a message embedded in the universe would be a pretty strong sign.

Another strong sign would be finding parts of reality that aren’t well filled in. For example, perhaps there are places which are unable to support lots of molecules. Perhaps pushing more in would cause the space to run more slowly, or perhaps it simply wouldn’t accept them. Of course there don’t seem to be any such spaces on Earth; the place to look would be interstellar space.

I personally tend to favor the many-worlds interpretation of quantum mechanics. I don’t know if that would be harder or easier to simulate; refusing to collapse the wave function might permit everything to run out of a few equations. Alternatively, perhaps the wave function does collapse, and perhaps that collapse is itself a sign of limitations of the simulation. Note that troubling aspects of quantum mechanics, such as non-local quantum entanglement, are much less troubling if they are being simulated.

Taking the other tack, is there any way to prove that our reality is not being simulated? That seems quite difficult to me. One could perhaps make some sort of argument based on complexity, but in some sense that begs the question, since our knowledge of complexity is based on our knowledge of the universe.

If it is possible to simulate our sort of universe–which has not been proved–then it seems very likely that all of existence contains far more simulations than it does actual universes. Given that, what are the odds that our universe is a real one? Most likely we are simulated. Fortunately, it doesn’t make any real difference to us, until they pull the plug.

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Interest Rates

The Fed made a big cut in interest rates today. These days everybody looks to the Fed to fix all economic problems, but the funny thing is that they don’t really have very much control. Since the dot com collapse, the U.S. economy has been driven largely by the housing market. Homeowners were able to take out equity loans at low rates to get more money to spend. Since the housing market has collapsed, that is no longer possible for many people.

It follows that people are naturally cutting back on their spending. That means that stores are selling less, which means they are buying less, which means that manufacturers are buying less. The general effect is that more people get laid off, fewer people get hired, fewer people get raises and bonuses, and there is less money to spend. This leads to a slow downward spiral. Of course it won’t go down forever or even necessarily all that long. But it will go down for some time.

Now, if mortgage interest rates start to drop, then people will continue to be able to borrow money on their houses, and continue to be able to spend it (only qualified people, of course–no more subprime borrowers). Also business will find it easier to borrow money to invest. That is what the Fed is trying to do by cutting their rates: make it easier for people to borrow and spend and invest, to move the economy from a downward spiral into an upward spiral.

The funny thing is that the Fed has been lowering rates for a few months, but the rates for mortgages and other borrowing haven’t dropped. That’s because the subprime mortgage debacle has made the big lenders nervous about lending money. They are worried about maintaining reserves for the loans they have out, and they’re worried about whether they will be able to sell their debt to others as they have gotten used to doing.

Having the Fed drop their rates isn’t going to make the lenders any less nervous. It’s not that they don’t have the money; it’s that they are scared to lend it. There is a point at which they will happily borrow from the Fed and lend to others at lower rates then we have today; I don’t think we’ve reached that point yet.

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E-mail Encryption

Most e-mail is sent across the net unencrypted. People who run local e-mail clients generally use unencrypted SMTP to send their e-mail and use unencrypted POP to retrieve their e-mail. People who use web-based e-mail have an encrypted session to their provider, but the e-mail is sent from their provider to the provider of their recepient via unencrypted SMTP. When the e-mail is stored at their provided, it is unencrypted. Personal e-mail encryption–messages are sent encrypted, and only decrypted on the recipients computer–is possible, but very few people use it.

Almost nobody cares about e-mail encryption. Why should they? Paper mail and telephone calls are not encrypted. Should e-mail be different?

There are differences, of course. Intercepting paper mail is hard. Intercepting telephone calls is doable but the audio processing is hard and time-consuming. Intercepting e-mail is easier, and processing e-mail is much easier. An ambitious government can learn a great deal by processing all the e-mail sent around the world. This is not only doable, it may actually be being done by the NSA.

Should we care? Benjamin Franklin reportedly said “Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.” This quote is often trotted out in support of things like not permitting e-mail searches. Is that fair? Is e-mail privacy an essential liberty? Does permitting e-mail messages to be read buy us only temporary safety? Some liberties are indeed essential, but some safety is essential too.

Among the essential liberties are free speech and free thought. This means that we should not permit the government to prosecute people on the basis of their e-mail messages. However, there are prohibited actions–free action is not an essential liberty. Is it permissible to use e-mail messages to identify people who should be watched more closely to see if they are doing something illegal? I think there would be many people on both sides of that issue.

I tend to think that government e-mail searching can be OK in principle. There are many dangers. Once government programs exist, they tend to overreach. Once somebody is being investigated, it is natural to try to find them to be guilty. Entrapment by the government is not fair. Is it possible for the government to be trusted in this regard? The actions of the current administration are not encouraging; they clearly violated the wiretapping act. A willingness to break one law implies a willingness to break many more. So while I think that reading e-mail messages can be OK in principle, I’m much less sure about the practice.

If it is OK in principle, then what happens as more e-mail gets encrypted? Over time, it is likely that we will see more encryption between SMTP servers, more encryption of SMTP and POP connections, more encryption of e-mail storage by web-based e-mail providers. We may even see more encryption on the user side, if that becomes the default action. This will decrease the ability of the government to read e-mail, though of course traffic analysis will still be possible. Whether this is a good thing depends on how much safety we will lose.

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Facebook Conspiracy

Here is a Facebook conspiracy theory. I thought it was amusing, even though it makes little sense. The author has forgotten that the first rule of capitalism is to make money. There is no need to appeal to exotic plans for how society should be organized when there is money at stake.

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Ethical Investing

Ethical investing is the practice of not investing in companies which engage in ethically reprehensible behaviour. There are many varieties, but, for example, some people refuse to invest in companies which sell tobacco. Does this make any sense?

There are presumably two goals here. One is to punish companies which act badly, in the hopes of changing their behaviour. To other is to discourage companies which currently behave well from starting to act badly, and similarly to discourage new companies which act badly from being created. Pragmatist that I am, I’ll neglect the “dirty money” issue: you feel better because your income does not come from contaminated sources.

For an existing company, when a pool of people refuses to buy shares in that company, it is possible for the share price to go down. Whether it really will go down depends on a number of factors. As I’ve written elsewhere, share price is largely a hallucination. It is rarely governed by any sort of supply and demand. The share price is a reflection of the perceived value of the company. If we assume that no more than, say, 25% of available investment money refuses to buy shares in the company, I see little reason to assume that the lowered demand would have any effect on the share price. However, it is certainly possible that a well-known share boycott would tend to make the company look bad, and push the share price down for that reason.

What is the effect on the company of having the share price go down? It becomes harder for management to raise money in the public markets, and it becomes harder for them to acquire other companies for stock. Executive management these days is generally paid in stock, so it becomes harder for the company to recruit executives from outside. It has no significant effect on sales or profitability.

These seem to me to be fairly weak long-range effects. Companies do often work hard to prop up their share prices, because it benefits the executives. However, as noted above, increasing demand for shares need not directly lead to an increase in share price, and it takes a long time to change a company’s image. If the undesirable behaviour is profitable, it is unlikely that a company would change it merely to prop up the stock price.

With new companies, the issue is different. Share prices during an IPO do have a lot to do with demand. On the other hand, only wealthy investors participate in IPOs; the behaviour of the average investor is irrelevant.

So it seems to me that if the goal is to change company behaviour, ethical investing is not very useful. It would be better to take steps to make the unethical behaviour unprofitable or illegal. It would be better to get wealthy investors to sign declarations that they will not participate in IPOs of unethical companies. Ethical investing might make you feel better, but I think it will have little practical effect.

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