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Sunday, October 28, 2007

Berkeley Hills Ride

Joining Matt Blain and I at the start was David Reiss and Greg Merritt. Matt went to use the restroom, and we got started because I wanted to go use a porta-portee instead. Matt and Sandor met us at the park with the porta-portees and we rode up together to Tunnel road.

Sandor set a blistering pace up Tunnel road and soon we had dropped David and Matt. The weather was clear and beautiful, but the haze (probably from the SD fires) restricted visibility. Nevertheless, it was a big improvement from the fog that greeted us on this ride.

At the intersection with Alhambra Valley Road, we opted for the longer ride, and Greg pulled us for a bit before taking off to do some shopping with his daughter. We then made our way over to Pinole and Richmond, riding by the ugly refineries before coming over along the Carquinez Straits to climb McEwen road.

It had been 2 years since I last climbed McEwen Road, and I'd forgotten how pleasantly shaded it was, and we made our way over to Franklin Canyon road. Franklin Canyon road is rough enough to provide a gratituous butt massage, and then we ended up rejoining the "C" route on Reliez Valley road. By this time I was feeling the effort or the ride, and had slowed considerably. Fortunately, Sandor was happy to slow for me.

At Moraga Center, I knew I was in trouble when after sitting down for 3 minutes I tried to get up again and saw stars instead. Fortunately, a bit of food and water and all the endurolytes I could eat cleared my vision. Nevertheless, the climb up Pinehurst was slow, and the climb along Skyline to Tunnel road took all that I had left. The descent down Tunnel road, however, with the gorgeous bay views and the
easy riding re-energized me, and we made it down to the car at 4:30pm. Matt had been waiting for a couple of hours and told me that the "easy 35 miler" had turned out to be closer to 45. Since Matt's the first person to have ever completed that ride, I'll have to fix the route sheet for next time. David had gotten onto the BART at Lafayette after just 24 miles. Of course, those 24 miles had probably clocked in at 4500' of climbing.

Saturday, October 27, 2007

Is it too late to join this hot startup?

I occasionally get questions like: "Is it too late to make a lot of money by joining company X?" This is very silly, because if you've already interviewed with the company, you'll know the situation better than I would, and therefore, you'll know better than I would.

Having said that, there's a very old adage, which is that it's better to have a small piece of a big pie than a big piece of a small pie. Too many people forget that, thinking that they'd rather join a smaller startup (or one that has a smaller valuation) than to join one that's already rather established. Believe it or not, even in early 2004 pre-IPO, I had a hard time persuading engineers that no, it wasn't too late to join Google and still make a lot of money.

And of course, if you do really well at Google, the founder's awards, bonuses, and so on will make you wealthy, so if you're really really smart, joining a big company like Google even at a very late stage makes a lot of sense. You'll work hard and climb the ladder, and Google has the resources to reward you at levels most startups can only dream of.

I joined Google in 2003. When I joined, I was told the company was valued at $X. I called up one of my VC friends and asked if he thought Google was worth that much. He said, "No matter how much the valuation, trust me, it is far below what the market will actually pay." That VC friend, by the way, is now at a certain hot Silicon Valley startup with what many would consider insane valuations. And that's typical of most Silicon Valley startups. So no, if the company you're talking about is a pre-IPO company, no matter how lofty the valuation you might have been told or talked about, if the company is successful, it is not too late. The key, of course, is whether the company will be successful (which is in the long term more important than anything else). And if I could predict that, I probably would have had a career doing things other than writing software.

There is another secret about startup stock options that not many know, and I won't say much about it because then it'll become common knowledge, but suffice to say, it's one of the few games where the game is actually rigged in your favor, if only you had the courage to take advantage of it.

Review: Acacia Book One: The War Against the Mein

I was first turned onto Acacia through John Scalzi's blog. In it, he mentioned he had an interview with David Anthony Durham in which the following caught my eye:
...I’m quite confident that if readers think about it for a while – or remember to think about it as they read in the future – it won’t be long before they’ll come across numerous examples of white-only fantasy worlds, or white-mainly future worlds, or note current prejudices appearing in different guises…

Consider if that would ever happen in the work of a black writer. The prejudice part might, but the one race only world likely wouldn’t. As a person of color he/she would have spent a lifetime being aware of race on a day by day, hour by hour basis. If this black writer did create an all-black future or fantasy world white readers (if there were any) would likely find it improbable, limited, some sort of minority wish-fulfillment, or think it suggestive of some deep-seated racial animus – perhaps called racism...

And gosh darn it he is absolutely absolutely right. Lord of The Rings was 100% lily-white in its heroes, down to the Elves and Dwarves, as is a lot of even pretty modern fantasy. So I put Acacia down on my to-read list, to see if a black author would do better.

Acacia starts with an perhaps archetypal plot: the old King is assassinated, the foreigners have invaded the land, and the children have been scattered to the winds, only to return later to take revenge for their now dead parent. The twists, however, are very very entertaining. First, Durham makes the villains of the tales white people with fair skins, blond hair, and blue eyes. It's one thing to think about it in abstract, but the first time you realize it you're thrown a bit for a loop, because it is so infrequently done in fantasy literature.

Then, as the plot unfolds, the barbarians at the gate turn out to have an old score to settle for themselves. The children do turn out as you might expect, each of them developing into very strong adults and characters, with Alivier, the oldest of them all becoming as much a prophet as he is a warrior, seeking to not only return his family to power, but to rebuild the empire to redeem the ills of Acacia's past: an empire support by drugs, slavery, and not a little bit of oppression. The ending of the book is also altogether unexpected, and one should not expect the typical hero's quest.

All this would be for naught if Durham was not a writer of exceptional skill. His prose is a dream to read. Here's an action sequence:

Thasren drew his dagger from hiding. He sliced it diagonally away from his body, a movement so fast it drew many eyes. The blade reflected shards of lamplight, a sharp thing in a hand that should bear no sharp thing. He dashed the last few steps forward. The king's eyes turned towards him, puzzled, mouth puckered as if about to pronounce the ambassador's name.

This rhythm and the clarity of phrasing runs throughout the entire novel. It is a very seductive voice, and it carries you in, page after page.

The world building is also excellent, with a creation myth that echoes of Ursula Le Guin's Earthsea quartet. And of course, there's a lot of diversity in the characters. Brown people, olive people, black people are all there in the book, something not often seen in fantasy literature. Whatever else you can say, Durham has definitely achieved his goals.

Highly recommended, and worth buying at full price if your local library does not carry this book.

Friday, October 26, 2007

Interview with Paul Krugman

This is a great interview with Paul Krugman. I think he is one of the best thinkers/political columnists of our generation. He has been right about so many things --- inequality, George Bush, the Iraq war, and now his latest book, about the recent success of the Republicans (mainly due to racism) will probably be vindicated in a few years. It must have been tough being the only guy in popular media to be constantly writing about what a shambles Bush's policies were back in 2001 at the height of Bush's popularity, but once again, being right trumps everything else.

Monday, October 22, 2007

James Lovelock thinks global warming is irreversible

Lovelock's pessimism mirrors my own. Again and again, we see humans take the easy, convenient solution over the tougher ones. It's easier to drive the car than to walk or ride your bike. It's easier to drive your kids to school than to teach them to walk to school. Lovelock might be right, but it's not going to stop me from doing what I can, and ultimately, what else can we do?

Articles like this remind me why I decided years ago that the proper recipient of any charitable donations from me should to environmentalism rather than humanitarian aid. Without an environment that can support human life, no amount of developmental aid will help the human condition. Environmentalism isn't about saving the planet --- it's about saving the human race, which I think is the ultimate humanitarian aid.

Lovelock knows that predicting the end of civilization is not an exact science. "I could be wrong about all this," he admits as we stroll around the park in Norway. "The trouble is, all those well-intentioned scientists who are arguing that we're not in any imminent danger are basing their arguments on computer models. I'm basing mine on what’s actually happening."

Sailing on the Bay (again)

An absolutely gorgeous day on the bay yesterday. Stunning visibility. Not too much wind at first, but it picked up at the end. What a lovely weekend it's been! So warm and lovely.

Sunday, October 21, 2007

Fall Ride

Pardo, Brian Wickman, Zoran and I met at 9:15 at my place, and rode up McClellan, Stevens Canyon, and then Redwood Gulch. Fall was in full swing as trees were shedding leaves all around us. A gentle wind would swirl them around us as we climbed the slightly damp pavement. Highway 9 was a cinch after that, and we started down the cold side of Saratoga gap. I was quickly passed by both Brian and Zoran, both spinning hard to stay warm, but soon enough, we started climbing Hwy 236. It was cool enough that I kept my shell and knee warmers on for the climb, and soon we were in Big Basin where after a brief discussion we decided to eat lunch in Boulder Creek. The climb out of Big Basin was lovely as usual, with the smell of redwoods in the air, and a few open camp fires granting us that rustic feel. The drop into Boulder Creek was fast and fun, and there we bought lunch and ate at the usual city park around the corner.

Bear Creek road had unusually light traffic during the initial bumps and swoops before crossing over the bridge for the start of the real climb. Past the first winery, however, the road levels out and you start getting clear glimpses of the coast. On Saturday, the visibility was so high that we could see all the way to Monterey Bay and Big Sur from the summit of Bear Creek road. At the junction of Skyline we made a left and went up the rolling climb to Black Road, where we eschewed
the descent to the Los Gatos Creek trail and kept going back towards Saratoga Gap, stopping only at the view point for another inspection of Monterey Bay from a distance. We then descended to Saratoga Gap where Brian left us to descend Page Mill and the rest of us descended Highway 9, Pierce, and back to my place. Zoran had a flat just 2 miles from the end, but it was fixed and we had Mexican dinner at the
Burrito factory.

70 miles, approximately 7000' of climb.

Friday, October 19, 2007

How to be lucky

This is a great article, and I think it really demystifies the connection between luck, success, and ability. I'll provide a few anecdotes:

  • When I first joined Google, I spoke to many people about the smartest thing they could have done right away when they joined: exercise their stock options. Many folks, despite my explanation of why it made sense, chose not to do so. They just couldn't grasp the idea that they could be financially sophisticated and be successful.
  • I will discuss my trips with some people. Many of them would tell me, "What a wonderful trip!" Yet the next time I invited them along on a trip, they would say, "No. Too busy."
  • I called a friend of mine several years ago hoping to recruit him for Google. His first words were, "Darn it! I should have called you once I decided to start interviewing. I've already accepted an offer at Amazon."
  • A few years ago, I started up a D&D game and met a bunch of folks at random to play. Three of them turned out to work at Google, and after a year or so of gaming with these folks, I ended up working there as well.

My social network of friends and people I know have been priceless to me over the last years. Opening yourself up to these opportunities and leaving your comfort zone is essential to both becoming lucky and successful. Even Scott Adams agrees, so it must be true.

Review: Take a Nap! Change your life.

Sleep is critically important, and Americans are frequently sleep deprived. I know this not just from the scientific studies that are frequently published, but from personal experience --- I started college as a "normally smart" student, but at the end of four years, I was doing far better than I expected --- most of my cohorts regularly pulled all nighters to study for exams while I got myself a good night's sleep and ended up doing better (there's an argument that maybe they were all drunk on alcohol, but since I was studying computer science the number of party animals I could compare myself with was limited). My long term memory was better, and hence I did better.

Sara Mednick's thesis in this book is that humans naturally have bi-phasic sleep. In other words, left to ourselves, we'll get in two sleep cycles in a day, one long one at night, and one shorter one at mid-day. The evidence she marshals to convince us that napping is natural and good for us is considerable: the studies basically show that the increased alertness, memory, and learning are considerable after the nap, quite possibly more than making up for the lost time spent napping. These studies are convincing, but in her presentation at Google, she reminded us that sleep is a very young science --- there is also some evidence that exercise can also result in the same increase in productivity, so we don't know if it's the state change in your head that causes the increase in mental alertness, or whether sleep itself does something.

There are a few gimmicks in this book, one of which is the sleep wheel on the cover. You turn it to when you woke up this morning, and it tells you when to sleep for an optimum mix of stage 1 sleep, stage 2, sleep, and deep, slow wave sleep, with a reminer of what each stage does. Scattered throughout the book are also a bunch of case studies of how people use napping (and what kind of napping is used) to change their lives for the better.

I did ask a question when Sara visited, which was whether napping was recommended for people with sleep apnea. Apparently, no studies of napping for people with apnea have been done, so it might even be dangerous for people with apneas. Such a young science that even I can ask unanswered questions! Clearly, more funding is needed for this.

Obviously, the ultimate test of this book is whether or not it works. And unfortunately, I can't tell you. I work in a fantastic environment by most standards, but privacy and enough time to sleep is definitely not one of them. This would be a worthwhile experiment for those who are self-employed, or who have offices with doors they can close. Hm... Maybe Microsoft engineers can make this experiment. But seriously though, for athletes, the benefits of napping are not in doubt whatsoever.

Recommended with the above caveats.

Tax Planning and other financial matters

I do occasionally help people out with financial planning. A surprising number of folks at work seem to already have one (I can't imagine justifying the expenditure on one, given that by the time you're knowledgeable enough to interview one you know enough to do it yourself), and I only do it for friends (liability reasons), but once in a while a topic will come out that I think is worth repeating.

The most important principle is that the tax tail should not wag the income dog. There is no such thing as a 100% tax rate in industrial world, so you'll always keep quite a bit of what you make. The best advise I was given by a tax accountant was: "Sell high. No matter what you do with your taxes, you can never beat selling high." I paid the guy $250 in 1995 to explain the AMT, and capital gains taxes to me and it's been worth every penny and saved me and some of my friends gobs of money. In fact, one day I ran into Niniane and one of her beaus and she introduced me as "the guy who saved her lots of money in taxes."

That said, it's surprisingly how little you can actually do to save on taxes:
  • Join a pre-IPO company and exercise all your stock options. This usually involves substantial risk --- I've written off thousands of dollars in bad stock. But a college professor in Computer Science and I were comparing compensation and it turned out that he got paid about the same as I did, and the big difference was that I was able to convert most of my income into capital gains through this maneuver while he couldn't do so through his consulting business.
  • Move to a low state tax. For me to give up California weather, that would be silly. I have friends who have done so, but if I wouldn't consider myself wealthy if I couldn't live some place with good weather. The folks I know who've done this don't consider an outdoor life important to them. If you're not a US citizen you can even move somewhere with zero capital gains taxes (like Singapore) and pay no capital gains on US stock. Pretty nice, huh? Except I've lived in Singapore and I moved away for very good reasons that are still valid.
  • Use tax managed funds and indexed funds whenever possible for your taxable portfolio when investing
  • Max out your 401(k) plans
  • Buy a house (but not too much house that it destroys your finances). But frankly, buying a house is a consumption decision, not a tax decision. Do not let people talk you into owning a house because of tax savings! Someone I know had this happen to her and deeply regrets it. Fortunately, she won't be affected financially by this, if at all, but many others will not be as lucky!
And that's it! There are a few other minor things you can do (such as playing around with when you pay state taxes if you have a year that's going to be huge on AMT due to one time gains), but those are very minor and don't actually save that much money compared to the above.

Tuesday, October 16, 2007

You cannot outsource financial work

One of my favorite financial bloggers, PFBlog writes about spending 10 hours a year on his taxes despite his employer, Microsoft, paying for KPMG to file his taxes for him (what a great perk!). I have lots of friends who pay accountants despite not having taxes as complicated as his.

Like him, I always do my taxes (I also do a few other people's), and I find that it is essential in order to understand the overall picture behind taxes, how they work, and what changes year after year. On top of that, by doing taxes yourself in TurboTax, you also gain access to the wonderful tax audit protection service provided by Tax Resources, Inc at an amazing price.

My aunt is an accountant, and despite her years spent preparing taxes for corporations, TurboTax outperforms her in terms of getting money back. Outsourcing your taxes is a lot like outsourcing your financial planning: without a clear understanding of what you are doing, you will not get satisfactory results.

Monday, October 15, 2007

US Productivity Slowing

People like Paul Graham are big fans of inequality. Reading his essays, one feels like if we could only return to the levels of inequality found in the gilded age (or in India or Argentina or Brazil of today), productivity would improve dramatically and we'll generate more wealth than ever before.

Modern economics research, however, gives the lie to this sort of right wing propaganda. (Modern happiness studies too, show that countries where the Gini coefficient is low are happier societies)

Even worse: The productivity numbers are likely even worse than they look. The most important reason is that the official productivity figures don't handle the rapid depreciation of new technology very well.

As Paul Krugman writes in his latest blog entry, you have to squint to spot the so-called lagging of the European socialist economies with respect to U.S. productivity.

Sunday, October 14, 2007

Review: Order of the Stick Print Comics

D&D players have always been insecure. My favorite example is that over in the Enworld Forums, every so often there'll be a thread about how D&D or Role Playing Games (RPGs) are losing players and becoming an extinct species.

The evidence, however, is that D&D is going strong, and the number one exhibit for that case has to be the Order of the Stick web-comics, which make so many D&D references (right down to edition changes) that most geeks wouldn't even bother reading it unless they were D&D players.

The Order of the Stick has become so popular that it has spawned two print-only books:

On the Origin of the PCs introduces the player characters, or rather, the protagonists. In black and white (to lower costs, and to reflect the flash-back nature of the story), it provides the back story behind each of the protagonists and their coming together. Along the way, it makes fun of the usual D&D tropes (dark strangers in taverns anyone?), as well as the usual jabs at the D&D rules. While I think it falls short of being as funny as the web-comic, it is still very funny.

Start of Darkness details the villains, and surprisingly enough, was more interesting than the protagonists. Though as any DM who has spent gobs of time detailing the backstory of his villains who rarely survive more than one encounter with the PCs will tell you, this is all too common. In particular, the goblin known as "Redcloak" has a tragic story and this makes the web comic even more entertaining.

As you might have guessed, you can read most of these on-line, but you're not going to enjoy these comics unless you like D&D, and if you are not a current player, you will miss many jokes and references. But yes, Scarlet, I expect you are current enough to get most of the jokes.

1:57:26 for 13.1 miles

Wow. Its been one year since I started on this journey of "lets see how many events I can do in a year" spree, and this is pretty much the last event I wanted to do. It started from last year's Rock n Roll San Jose and ended with this year's Rock n Roll San Jose. In between, I did a full marathon, a Europe bike trip, and was supposed to do a tri, but got sick the weekend of, so I skipped that.

But still, 3 events, and 1 long bike ride later, I can say I'm quite satisfied with my physical achievements this year. I believe I ran a slightly faster time last year, but this time I had a running partner, and that made a huge difference in the amount of fun I had.

This year's event was quite packed, and it'll be interesting to see exactly how many registered runners there are...I estimate around 12,000, but could be slightly more.

We started with the 2:00 pace group, who did not start at a 2:00 pace, I believe they were going at a closer to 1:50 pace, but around mile 6 or so, they slowed down while we sped up. Had a gel at the mile 6 water station and felt buzzed enough that mile 7 through 10 felt like a breeze. Mile 10 through 13 was a bit more painful and I started to feel a slight pain in my left feet while my partner's calves were starting to lock up a little.

In the end, we finished within 20 seconds of one another! And for her very first 1/2 marathon its an incredible achivement! Props to her!

Next up....I don't know whats next up, but I plan to keep on running 1/2s for a while to come.....Fulls, not so much. They're not as fun, and although more than twice the achivement, I think I might just be satisified with running a single full in this lifetime. =)

Until I convince myself otherwise of course. =)

The contrast between this year and last years is mostly in the matter of training. Last year I overtrained, and this year, I trained just right. Last year at the end, I felt like I could run another 6 miles, this year, around mile 13, I was very glad I only had one tenth of a mile to go...

I'm not sure if its a great thing or not, but I'm very very happy I finished under 2:00 still....

Monday, October 08, 2007

Feeling wealthy

I've never felt wealthy. Not when I paid cash for my first car back in 1999 (near the height of the internet bubble). The benefit of that was that when the bubble burst in 2001, I didn't feel poor either.

I didn't feel wealthy when I wrote Google a check to exercise my stock options, a month after I started at the company, wiping out a couple of years worth of savings. (Yes, some loved ones did raise an eyebrow, but it was a safe investment, as safe as any such investment can be)

I didn't feel wealthy at Google's IPO. I did write a check to pay off my mom's mortgage, which was a rather smart move I was making the monthly payments anyway, and the mortgage was at 8% or so and refinancing was impossible since nobody wanted to refinance for so little money.

I didn't even feel wealthy when I started shopping for a custom frame. For someone who rides much more than he drives, even a new custom bike every year doesn't come close to the cost of a car.

But a few weeks ago Lisa and I decided to engage a cleaning service --- we were just overwhelmed by all the housework that we had to do that we just didn't enjoy doing. We weren't good at it, and we weren't good about it. And I looked at my assets and thought: "Ok, let's find out how much a cleaning service is, and throw money at the problem to make it go away." We asked the concierge at work for a recommendation, called him up, and he showed up to give us a quote last week, and they came by today and cleaned up the house.

Lisa's reaction at the results when she came home was one of amazement. She got on the phone with the housecleaning service and raved at the owner with praise for a good 20 minutes. I was pretty impressed. It felt like coming to a B&B, everything all laid out, the sinks polished, etc. So for the first time in our lives, at least, we felt wealthy.

The thing is, we live in a small Silicon Valley apartment. The quote for the service was embarrassingly small. We could have afforded it ages ago, but it always felt like a luxury, and indeed it is one. This little luxury, more than any object we've ever purchased, wasn't just an object, it was time away from doing things we didn't enjoy doing, yet done with amazing professionalism. So if you want to feel wealthy, treat yourself to a really good cleaning service.

Sunday, October 07, 2007

Review: The Other Boleyn Girl

This is a story of sibling rivalry and ambition, told through the lens of Mary Boleyn, the sister of the historical Anne Boleyn, the second wife of Henry VIII, and the first to be beheaded.

The story portrays Mary Boleyn as the heroine of the story, whom at the age of fourteen was the King's mistress. Unlike the historical Mary Boleyn, the fictional one is portrayed as the pawn of her family's ambition, to be bedded and wedded as the family needs and as the men design.

When Mary's sister Anne shows up in court, she demonstrates her ambition, first by seducing Henry Percy, getting exiled from court for her troubles, and then upon her return, upending her sister's claim on the King by displaying a shrewd manipulation of Henry VIII. The book portrays Mary Boleyn's maternal instincts as opposed to Anne Boleyn's intelligence, temper, and ability to manipulate others. It is quite obvious what values Phillipa Gregory (the author) holds dear.

The novel succeeds in manipulating us to feel that the downfall of Queen Anne was deserved and that the place of a woman is in the home and in bringing up children, not in working on her ambitions. Being a period piece, obviously I cannot fault Gregory for bringing in all the homophobia, the feeling of scandal when the King divorces his former Queen, etc., but I suspect those of us who live in the modern age will read it and be thankful that we were born quite a bit later.

Friday, October 05, 2007

Building a custom bike, Part III

This is the final revision. What happened was that my fork builder, Black Sheep Bikes gave Carl different dimensions than the actual fork itself, so when the fork itself showed up, Carl measured it and revised the drawing. Everything looks good (now the head tube is longer), and it's almost time for me to start buying parts for the new bike. Since the parts are mostly coming off the Fuji Team SL, I'll really only need a new stem and some spacers. (Carl's also selling me a silver Chris King headset to go along with the frame)

If this is a replacement for my touring bike, why am I putting the Fuji's parts on it? The theory is that this will really be my do-everything bike. The Fuji's parts are lighter, and I'm not looking at any major bike tours in the near future, so I might as well make this the light day riding bike first. For daily commuting, STIs work just fine, and I can swap in the seat post, wheels and lights from the Heron. On weekends, lighter wheels on the bike, the lights come off, and I put on the carbon seat post instead of the B-17. The entire transformation should take 10 minutes.

For touring, I'll swap in a triple chainring crank, a bottom bracket to go along with it, bar-end shifters (a whole new handlebar set, actually, with carbon brake levers, etc), and the bike will be ready to go! If I have to do this a lot I'll work out some cable splitters and find a way to switch between double and triple cranks easily (this can be accomplished with the external bearing integrated cranksets, but unfortunately a move like that will cost a lot!). Either that, or learn to live with a 27" gear, which might be feasible if the bike is light enough. I will have to run a light tour in February or March to figure that out.
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Monday, October 01, 2007

Review: The Birth of Plenty

This is William Bernstein's book analyzing the development of economies in nations and regions, the pre-requisites, and the implications for modern economies. Why did the industrial revolution happen? What are the pre-requisites? Why do modern economies appear to have a flat 2% growth rate? Is this sustainable? What about the Bottom Billion?

Bernstein's thesis is that there are four requirements for a modern, industrial economy:
  1. Property Rights (including intellectual property rights such as patents and copyrights)
  2. A Rational Worldview (access to the scientific method)
  3. A large and efficient capital market
  4. Communications and transportation infrastructure
The first part of the book describes the rise of these properties in Western civilization, and why they are important. The second part describes the history of the industrial revolution and explains why it happened in England and Holland but not in Spain and France. The last part explores the consequences of this idea in relation to aid, development, and how economies should be managed.

I think anyone would find it difficult to argue with the first 2 requirements of prosperity. The experiments with Communism have found that without property rights, human nature just does not have the intrinsic motivation to work to produce what others want. An examination of modern contributions to well being also demonstrates that without the scientific world view, it is difficult to come up with new theories or technologies that truly improve the human condition (when was the last invention to come out of a fundamentalist mindset?).

The last 2, however, seem to me to be natural consequence of the first two. Once you've set up a good incentive system, human ingenuity will come up with good capital markets and transportation system. I am not a historian, so I won't say much about part 2 of the book, but I found it to be good reading and an illustrations of the principles involved.

The last part of the book will be more controversial, and is part of the argument between William Easterly and Jeff Sachs about development and aid. If Bernstein's thesis is right, then not only is aid in the form of food and medical improvements not helpful for developing countries, but they are harmful. A nation caught in the Malthusian trap with an increasing population just increases the number of miserable people without improving prospects for growth. This is something very important to understand: without economic development, all you get when you improve mortality rates and health is a lot more miserable people. Instead, what Bernstein prescribes is first establishing the rule of law so that incentives for people are directed towards improving productivity rather than attempting to undermine the system or corrupting it by becoming rent-seekers (gate keepers, or government bureaucrats living off bribes). Only after the rule of law has been established, with independent judiciaries can more education (providing the modern mindset), more AID (money to prime the capital markets), or more infrastructure help.

This is an extraordinary claim, and of course would be difficult to prove, but Bernstein provides two examples, both dictatorships that imposed a rule of law first, and the resulting economic prosperity eventually led to the overthrowing of the dictators themselves. (Hint to future dictators: keep your people miserable --- happy and prosperous people apparently demand democracy!) Bernstein demonstrates with statistics that democracy is not a precondition for economic success, and its correlation with prosperity is because the latter causes the former. (So observing free elections isn't all that useful if what you want to do is to eliminate poverty) What this means is that any attempt for us to reform the Middle-East is doomed to failure. None of the four properties Bernstein proposes should exist before prosperity exist in the Arab countries, and there's no sign that we're successful at imposing them on Iraq. Lawrence Wright also noted that the country of Norway created more exports than all of the Arabic countries combined, so at least with this regards, Bernstein is right.

I think it would be interesting to see what happens if we actually tried to apply this model for helping the "bottom billion." It definitely runs against what everyone else I've read recently says (except William Easterly), and is great food for thought.

Finally, Bernstein explores happiness and economic development. It seems quite clear that economic development by itself does not make people happy. All the studies show that people compare themselves relative to others for happiness, so countries like the Scandanavian countries with a low Gini Coefficient are happier than possibly wealthier countries like the United States. (A visit to the relevant countries will demonstrate this to be true)

When Bernstein visited Google, I asked him this question (not addressed in the book): "There is an argument to be made that our prosperity for the last 200 years has been due to the abundant supply of fossil fuels, which when they run out will make an end to our prosperity. What do you think?" His response was that he believed that this prosperity is largely dependent on human ingenuity, and that while fossil fuels might have helped a lot, he thinks that once on this treadmill, we'll managed to make ourselves wealthier even without fossil fuels, albeit at a slower rate.

In any case, this book is thought provoking, intelligently written, and well worth your time, especially if your first reaction when you see an article about third world poverty is to reach for your checkbook. The possibility not frequently considered is that your financial assistance may not help, but would make the very people you are trying to help even more miserable. You might not agree with Bernstein's assessment, but at the very least you should consider his very cogent arguments. As one of my colleagues said, "It is extremely pleasant when somebody whose books are so intelligent comes across as even smarter in person." I agree.

Note: Bernstein's talk that he gave at Google is now up on youtube.