Here’s a chart of housing prices from the NY Times. I’m not entirely sure why it’s so extreme compared to the charts I put up in a previous posting. I suspect part of it is not using a log scale, part is having a much longer time horizon, part is that it’s showing a different index, and finally I suspect that it’s selective about what cities are included; but I still don’t really get it.
Chris Anderson’s new book on the Long Tail is finally out. I got a review copy and sooner or later I’ll get around to picking apart my thoughts in some organized manner.
The idea in the book is simple; that there are bottlenecks in traditional supply chains, e.g. shelf space in the record store or movie theaters in your town this friday night. These bottlenecks shape what gets sold. I like his provocative idea that if you eliminated these bottlenecks then something he referes to as the true shape of demand would be revealed.
So this is a book about the shape of markets, where by shape we mean the distribution of market share across the set of products moving thru the market. It is refreshing to see that kind of thinking about markets appearing in a book targeted at the air plane business class reading demographic. And further more it’s delightful to see the discussion focus immediately on the issue of where the bottlenecks are; and how they shape the slope and edges of the power-law curves.
It drives me crazy that he appears to be willfully blind to how market players strive continously to create, own, and defend these bottlenecks. While he is enthusiastic in celebrate the freedom created when older bottlenecks are swept away he is entirely silent about the concern that the new bottlenecks might be more or less troublesome than the old ones.
Here, just to take one example, is a nice article in Fortune about how Google holds the fate of so many businesses carelessly in it’s hands now. The elephant doesn’t even notice when it steps on the ants. But actually it’s worse than that. In these Long Tail markets the giants aren’t elephants, they are ant eaters.
Here’s some more chart porn of house prices. This chart shows the HPI for five major US cities for aproximately the last 30 years. It shows, for example, that I bought my house at the peak of a price bubble back in the 1980s. Part of the problem here is I don’t really have any idea what to compare this index to, cpi?, gdp?, interest rates?, demographics?, politics?
LA is currently the one with the highest index, it’s also the one who’s bubbling lagged the during the 1980s. Note how housing was a lousy investment during the 90s and to a limited degree the recent run up in prices looks at if it might be compensating for that. You’d see a much wider range of in the recent price runs if you had data for more areas. If you want to play with this data it’s available on this page in various formats for lots and lots of metropolitain regions, they aren’t very picky about what counts as metropolitain.
In this day and age you really can’t hope to achieve scale with deep relationships, you need broad light relationships that create vast probablistic oportunities for sucess. I’m glad to see that Neil Gaiman and Terry Pratchett know this:
Fourteenth-century minds, the lot of them. Spending years picking away at one soul. Admittedly it was craftsmanship, but you had to think differently these days. Not big, but wide. With five billion people in the world you couldn’t pick the buggers off one by one anymore; you had to spread your effort. But demons like Ligur and Hastur wouldn’t understand. They’d never have thought up Welsh-language television, for example. Or value-added tax. Or Manchester.
He’d been particularly proud of Manchester.
The chart below shows the five year rise a housing price index for the top handful of metro regions.
Presumably some of the varation from one region to another is grounded in fundamentals while some is irrational exuberance.
Meanwhile one of the future’s markets has a thinly traded product you can buy. In a perfectly functional market that would be your best estimate of what the future holds. This chart shows the price as of yesterday for a contract on a somewhat different housing index for various dates in the future. You can see that they are all falling, but also that there is little variation from one region to another; at least nothing to compare to the variation in historical price rises.
This was all triggered by reading a story this morning of a seller in Washington who entered the market asking 1.1 million and sold after an auction for half that.
One of the standard problems in all system design is what to call the root of your class hierarchy. I worked for a company once that started with the name “object,” and then in a later version they wanted something yet more general so the inserted “entity” above object. Later yet they inserted “item” above entity.
This pretty well sums it up:
In days past, these professional courtesies were almost necessary in building a strong agent/client relationship. Those days are long gone. At one time, it was a loving and trusting relationship built on mutual respect. But as with most modern relationships, the agent/client, once sacred bond, has been destroyed by the Internet.
I like to say that the intermediary must love both sides; that gets harder to sustain in a hurricane of disintermediation. Craig’s list and eBay don’t sport much relationship. Amazon’s model of your buying habits is the best you’re likely to get along those lines.
Another solution to the challenge of coordinating collective action.
June 1984:
The Lisp Machine is a product of the efforts of many people too numerous to list here and of the former unique unbureaucratic, free-wheeling and cooperative environment of the M.I.T. Artificial Intelligence Laboratory. I believe that the commercialization of computer software has harmed the spirit which enabled such systems to be developed. Now I am attempting to build a software-sharing movement to revive that spirit from near oblivion.
Since January 1984 I have been working primarily on the development of GNU, a complete Unix-compatible software system for standard hardware architectures, to be shared freely with everyone just like EMACS. This will enable people to use computers and be good neighbors legally (a good neighbor allows his neighbors to copy any generally useful software he has a copy of). This project has inspired a growing movement of enthusiastic supporters. Just recently the first free portable C compiler compiled itself. If you would like to contribute to GNU, write to me at the address above. Restrain social decay–help get programmers sharing again
From the preface of the Lisp Machine Manual.
