Economies Of Scale

Steve Randy Waldman is a very interesting writer. He has a fascinating short post entitled Economies of scale in which he distinguishes four different types of "economies of scale". In reverse order, they are:

1. Insurance
2. Market power
3. Network effects
4. Technical economies

The effects of economies of scale in technology markets, such as storage media, digital preservation and cryptocurrencies, is a topic on which I have written many times, drawing heavily on W. Brian Arthur's 1994 book Increasing Returns and Path Dependence in the Economy. Below the fold I discuss Waldman's classification of them.

Autonowashing

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On the 16^th Tom Krisher reported that US Opens Formal Probe Into Tesla Autopilot System:

The U.S. government has opened a formal investigation into Tesla’s Autopilot partially automated driving system after a series of collisions with parked emergency vehicles.

The investigation covers 765,000 vehicles, almost everything that Tesla has sold in the U.S. since the start of the 2014 model year. Of the crashes identified by the National Highway Traffic Safety Administration as part of the investigation, 17 people were injured and one was killed.

NHTSA says it has identified 11 crashes since 2018 in which Teslas on Autopilot or Traffic Aware Cruise Control have hit vehicles at scenes where first responders have used flashing lights, flares, an illuminated arrow board or cones warning of hazards.
...
The agency has sent investigative teams to 31 crashes involving partially automated driver assist systems since June of 2016. Such systems can keep a vehicle centered in its lane and a safe distance from vehicles in front of it. Of those crashes, 25 involved Tesla Autopilot in which 10 deaths were reported, according to data released by the agency.

On the 19^th Katyanna Quach reported that Senators urge US trade watchdog to look into whether Tesla may just be over-egging its Autopilot, FSD pudding:

Sens. Edward Markey (D-MA) and Richard Blumenthal (D-CT) put out a public letter [PDF] addressed to FTC boss Lina Khan on Wednesday. In it, the lawmakers claimed "Tesla’s marketing has repeatedly overstated the capabilities of its vehicles, and these statements increasingly pose a threat to motorists and other users of the road."

These are ridiculously late. Back in April, after reading Mack Hogan's Tesla's "Full Self Driving" Beta Is Just Laughably Bad and Potentially Dangerous, I wrote Elon Musk: Threat or Menace?:

I'm a pedestrian, cyclist and driver in an area infested with Teslas owned, but potentially not actually being driven, by fanatical early adopters and members of the cult of Musk. I'm personally at risk from these people believing that what they paid good money for was "Full Self Driving". When SpaceX tests Starship at their Boca Chica site they take precautions, including road closures, to ensure innocent bystanders aren't at risk from the rain of debris when things go wrong. Tesla, not so much.

I'm returning to this topic because an excellent video and two new papers have shown that I greatly underestimated the depths of irresponsibility involved in Tesla's marketing.

Optical Media Durability Update

Three years ago I posted Optical Media Durability and discovered:

Surprisingly, I'm getting good data from CD-Rs more than 14 years old, and from DVD-Rs nearly 12 years old. Your mileage may vary.

Two years ago I repeated the mind-numbing process of feeding 45 disks through the reader and verifying their checksums. A year ago I did it again.

It is time again for this annual chore, and yet again this year I failed to find any errors. Below the fold, the details.

Zittrain On Internet Rot

I spent two decades working on the problem of preserving digital documents, especially those published on the Web, in the LOCKSS Program. So I'm in agreement with the overall argument of Jonathan Zittrain's The Internet Is Rotting, that digital information is evanescent and mutable, and that libraries are no longer fulfilling their mission to be society's memory institutions. He writes:

People tend to overlook the decay of the modern web, when in fact these numbers are extraordinary—they represent a comprehensive breakdown in the chain of custody for facts. Libraries exist, and they still have books in them, but they aren’t stewarding a huge percentage of the information that people are linking to, including within formal, legal documents. No one is. The flexibility of the web—the very feature that makes it work, that had it eclipse CompuServe and other centrally organized networks—diffuses responsibility for this core societal function.

And concludes:

Society can’t understand itself if it can’t be honest with itself, and it can’t be honest with itself if it can only live in the present moment. It’s long overdue to affirm and enact the policies and technologies that will let us see where we’ve been, including and especially where we’ve erred, so we might have a coherent sense of where we are and where we want to go.

In our first paper about LOCKSS, Vicky Reich and I wrote:

Librarians have a well-founded confidence in their ability to provide their readers with access to material published on paper, even if it is centuries old. Preservation is a by-product of the need to scatter copies around to provide access. Librarians have an equally well-founded skepticism about their ability to do the same for material published in electronic form. Preservation is totally at the whim of the publisher.

A subscription to a paper journal provides the library with an archival copy of the content. Subscribing to a Web journal rents access to the publisher’s copy. The publisher may promise "perpetual access", but there is no business model to support the promise. Recent events have demonstrated that major journals may vanish from the Web at a few months notice.

Although I agree with Zittrain's big picture, I have some problems with his details. Below the fold I explain the issues I have with them.

The Economist On Cryptocurrencies

The Economist edition dated August 7^th has a leader (Unstablecoins) and two articles (in the Finance section (The disaster scenario and Here comes the sheriff).

Source

The leader argues that:

Regulators must act quickly to subject stablecoins to bank-like rules for transparency, liquidity and capital. Those failing to comply should be cut off from the financial system, to stop people drifting into an unregulated crypto-ecosystem. Policymakers are right to sound the alarm, but if stablecoins continue to grow, governments will need to move faster to contain the risks.

But even The Economist gets taken in by the typical cryptocurrency hype, balancing current actual risks against future possible benefits:

Yet it is possible that regulated private-sector stablecoins will eventually bring benefits, such as making cross-border payments easier, or allowing self-executing “smart contracts”. Regulators should allow experiments whose goal is not merely to evade financial rules.

They don't seem to understand that, just as the whole point of Uber is to evade the rules for taxis, the whole point of cryptocurrency is to "evade financial rules".

Below the fold I comment on the two articles.

Stablecoins Part 2

I wrote Stablecoins about Tether and its "magic money pump" seven months ago. A lot has happened and a lot has been written about it since, and some of it explores aspects I didn't understand at the time, so below the fold at some length I try to catch up.