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{June 5, 2012} Magical Thinking

You probably haven’t noticed that I’ve been away for awhile. But I have. In fact, this is my first post of 2012. I have no excuse other than to say that being the chair of an academic department is a time sink. Despite my absence, there have been a number of things over the last five months that have caught my attention and that I thought, “I should write a blog entry about that.” I’m sure I’ll get to many of those topics as I renew my resolve to write this blog regularly. But today, I encountered a topic so important, so unbelievable, so ludicrous, that I have to write about it.

One of my friends posted a link to Stephen Colbert’s The Word segment from last night. Go watch it. It’s smart and funny but incredibly scary for its implications. For those of you who don’t watch it, I’ll summarize for you. The word is “Sink or Swim” (and yes, I’m sure Colbert knows that isn’t a word–he’s ironic). Colbert is commenting in this segment on the fact that North Carolina legislators want to write a law that scientists can only compute predicted sea level rises based on historical data and historical rates of change rather than using all data available. In other words, scientists are not allowed to predict future rates of change in sea levels, only future sea levels. They cannot use the data that they have available that show that the rate of change itself is increasing dramatically. Instead, they can only predict the sea level based on how fast it has risen in the past. Colbert has a great analogy for this. He suggests that his life insurance company should only be able to use historical data in predicting when he will die. Historical evidence shows that he has never died. Therefore, his life insurance company can only use that evidence in setting his life insurance rates. Never mind the fact that there is strong evidence from elsewhere that suggest it is highly likely that he will die at some point in the future. The analogy is not perfect but I think it illustrates the idea.

Using all evidence, scientists are predicting sea levels will rise by about a meter (Colbert makes a funny comment that no one understands what this means because it’s in metric–that’s the subject of another post) before the end of the 21st century. If this is true, anyone who develops property along the coast will see their property underwater in a relatively short amount of time. Insurance rates for such properties will probably be astronomical and it might even be impossible for such development to occur because without insurance, loans may not be able to be secured. That’s not good for business. In what can only be called “magical thinking,” the North Carolina legislature is putting it into law that climate change models can only use historical sea level rising rates to make predictions about future sea levels. Such models ignore the data that suggests that the rate of rise in sea levels is increasing. This will make the historical rates of increase look incredibly slow. In fact, the bill actually says, “These rates shall only be determined using historical data, and these data shall be limited to the time period following the year 1900. Rates of seas-level rise may be extrapolated linearly … .” So despite evidence that sea levels are rising in a non-linear manner (because the rates of increase are actually increasing), predictions cannot use this fact. When scientists use a linear rate of increase, the models predict that sea levels will rise by “only” 8 inches by the end of the century. I think even these rates are scary, especially for coastal development projects, but scientists are pretty sure they vastly underestimate the extent of the danger. It’s as though these legislators think they can simply wish away climate change.

We live in a society where saying something is so is often as good as it being so. Is Barack Obama a citizen of the US? Evidence indicates that he actually is but critics persist in saying that he isn’t. As recently as 2010, 25% of survey respondents believed that he was born in another country and so isn’t eligible to be president. Were the 9/11 attackers from Iraq? Despite the objective evidence, 44% of the American public believe that several of them were Iraqis, which would then presumably be justification for the war in Iraq. Is global warming caused by humans? Despite overwhelming scientific opinion that it is, only 47% of the American public believe it is. Why do people believe these erroneous claims? Because the media (or at least parts of the media) advocate such positions. And because we are guilty of magical thinking. Say something is true and it will be true.

Scott Huler of Scientific American says it better than I can: “North Carolina legislators are now tossing around bills that not only protect themselves from concepts that make them uncomfortable, they’re DETERMINING HOW WE MEASURE REALITY.” Meanwhile, sea levels rise non-linearly, no matter what the North Carolina legislature legislates. And because we refuse to accept reality, we lose valuable time for an effort to reverse or at least to slow down this scary trend. So I have a tip for you: don’t buy any coastal property.

{September 19, 2011} Quikster

Like all Netflix subscribers, I received an email from Netflix founder Reed Hastings this morning. I will post my comments on their blog but I also decided to post the my response here. I’ll follow it with the original email so those of you who have already left the company can see what prompted my response. The upshot? Netflix is screwing up again.

First, my response:

Dear Reed,

Although I know that you personally didn’t write this email, I’m going to respond as though you did. You are making another big mistake. You are giving the impression with this email that you expect Quikster will go bankrupt and out of business (did you deliberately choose Borders as your example so soon after it’s going out of business?). I believe the separation of the two websites and therefore, the two queues will simply hasten the demise of your DVD business. It’s probably too late to stop the forward motion of this separation but just in case it isn’t, I’m writing to you to suggest that you not move forward with that part of your plan. It has nothing to do with improving customer experiences which is what you should be focusing on right now, especially in the wake of your previous “mistake.” You seem now to be focused on issues other than your customers and their experience of your company. If you put customers first, we will stay with you. If you put the “very different cost structures, that need to be marketed differently” first, you will lose us. I just hope it isn’t already too late.

Cathie LeBlanc

Now, the email from Reed Hastings:

Dear Cathie,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

{March 7, 2011} Northern Pass–Weeding Through the Hype

There is a huge controversy raging in NH this year involving the Northern Pass Project. According to the project’s web site, the Northern Pass is “a transmission project designed to deliver up to 1,200 megawatts of low-carbon, renewable energy (predominantly hydropower) from Québec to New England’s power grid.” Despite the apparent “greenness” of this project, many people in the state (including many environmentalists) are fighting this project.

I’ve been having some difficulty separating hype from truth when talking to people and reading articles in the newspaper about this topic. So I decided to do some additional research about it to see what I think in advance of voting on a resolution about it tomorrow on election day.

Here is the proposed path of the power line. You can see that it goes right through Groveton, Lancaster, Lincoln, Campton, Plymouth, Ashland and Bristol. These are towns that depend heavily on tourist dollars for their economic vitality. And much of the argument against the project focuses on the impact of the project on tourism. According to the project’s own web site, the towers along the project’s path will stand between 80 and 135 feet in the air. The web site compares these towers to a typical cell phone tower, which stands 180 feet tall. This seems to me to be an irrelevant comparison since cell phone towers are typically singular whereas the criticism of the project’s towers is that there will 140 miles of them. These towers will run through some of the most scenic areas of the state and the fear is that this will detract from the beauty of the state, meaning that tourists will not want to vacation here anymore.

Another criticism of the project is that the electricity originates in Quebec, which means that we will be purchasing this power from Canada. I was in a local business recently where the owner was expressing his discontent about the project with an official of the project. I overheard him say that this project represents a “wholesale invasion of New Hampshire by Canada.” This seems a bit overblown to me but the answer to the question of why we should buy power from Canada on the FAQ of the project seems to be a non-answer. They say that the New England states must buy renewable energy in as cost-effective a manner as possible. There is nothing in the answer that explains why this is the most cost-effective manner possible. The answers in the FAQ do, however, make it very clear that we are indeed buying this electricity from Hydro-Quebec. We are still relying on foreign energy. This is not necessarily bad but I don’t really see how it helps New Hampshire to do so.

Another of the arguments in favor of the project is that it will create jobs in the North Country of New Hampshire. But if you read between the lines, it’s clear that these jobs are construction jobs. Once the transmission lines are built, those jobs disappear. So this is a very short-term benefit with a long-term negative impact.

I have just relied on the information provided by the people involved in the Northern Pass project and they really have not convinced me that this is good for the people of New Hampshire. I haven’t even spent any time reading the web pages of the critics of the project. They are planning to deliver this electricity to the southern part of New Hampshire and south of that (Massachusetts, Connecticut and Rhode Island), where the largest population base is. And yet, it seems that the largest negative impact will be on the people of northern and central New Hampshire. How is that fair? Unless someone comments with a compelling argument, I am going to have to vote in favor of the resolution against this project. What do you think?

{October 17, 2010} News Media Not Doing Its Job

As I drove to the airport in late September, I listened, as usual, to New Hampshire Public Radio in my car. Election season is upon us so much of the coverage that morning was about state politics. Two candidates are running for governor in NH, the incumbent John Lynch, a Democrat, and the Republican challenger, John Stephen. They had debated the issues the day before and the reporter, Dan Gorenstein, was covering that debate.

Early in the report, Gorenstein quoted a voter who said, “They probably don’t agree on what day it is.” That’s not a surprise for two politicians from opposite ends of the political spectrum. Gorenstein goes on to say that the two candidates presented very different numbers during the debate concerning the budget. Lynch claims that, under his leadership, General Fund spending has gone down 7%. Stephen claims that under Lynch’s leadership, budget appropriations have gone up 24%. Gorenstein then told us that both numbers are accurate “as long as you cut the numbers the right way.”

I’m writing about this report because of what happened next. I expected Gorenstein to explain to us the differences in the way the two candidates “cut the numbers.” But that’s not what this report was about. Gorenstein simply told us that the numbers are confusing, that voters are right to be confused by the numbers, and that most voters will probably not take the time to figure out the differences. How is that news? How is that helpful to anyone listening to the report?

I spent the rest of my drive south thinking about this report, about how NHPR (my news source of choice) failed me and the other voters of New Hampshire in this report. Why hadn’t they delved into the numbers for me? Why didn’t they explain to me how both sets of numbers could be accurate (and, as Gorenstein also said, “arguably misleading”)? What was the point of “covering” the debate in this manner? I was (and continue to be) significantly disappointed in NHPR. And so I planned this blog entry in my head.

As I began to write this entry, I became even MORE disappointed in NHPR. If you check out the link that I provided to Gorenstein’s report, you’ll see that within the transcript there is a link to an earlier, related story, also reported by Gorenstein. On August 12, 2010, Gorenstein reported on the widely different budget numbers that were being touted by the two candidates. And he explained why they are different and how they can both be considered accurate! WHAT? He had already done the research and yet made NO mention of it in his coverage of the debate. The really surprising thing to me is that the explanation is not even very hard to understand. Very disappointing. And a lesson to aspiring journalists about how NOT to report the news.

So I don’t commit the same error for which I’m criticizing Gorenstein (even though it isn’t my JOB to inform the public), here’s the explanation for why the numbers are so different and can both be considered accurate. John Lynch is correct when he says that spending from the General Fund has gone down 7% in the last two years. But notice the words “General Fund.” Many items have been moved to their own, separate budgets. For example, the Liquor Commission (which runs all of the state liquor stores and deals with liquor licenses) budget is no longer part of the General Fund. I tried to determine whether the Liquor Commission is self-sustaining, that is, takes in the amount of money (or more) in sales and fees to cover the amount that it spends. I was unable to find that information, however. So it isn’t clear to me what it means to these numbers to say that we’ve taken these items out of the General Fund. John Stephen’s numbers take into account ALL of the money in the state budget, not just the General Fund. If you do that, you’ll see that our state budget increased 24% in large part because of federal stimulus funds, money that the state received from the federal government to undertake specific projects such as bridge repair. It isn’t clear to me that it’s helpful to include these funds when looking at whether John Lynch is a good fiscal manager. Passing up these funds would be problematic (in my opinion). In addition, Stephen’s number is about appropriations, rather than money actually spent. In other words, he’s looking at how much has been budgeted to be spent, rather than how much was actually spent. In 2009, the state budgeted 12% more in spending than it actually spent. Lynch, on the other hand, is talking about the amount of money actually spent. In other words, the two candidates are talking about apples and oranges.

That wasn’t so difficult to understand, was it? I think Gorenstein could have explained this in his report. Or, if he didn’t have time, he could have simply said that interested voters could go online and find his report about this to understand the differences between the numbers. Then he’d be doing his job.

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