W. P. Carey MBA - Executive Program - Arizona State University

Proof of the proof is in the coding

An interesting dilemma has arisen in the past ten years in mathematics and it has to do with the nature of mathematical proofs. The idea of a proof was made explicit by Euclid about 300 BC -- a set of logical steps, each depending on the others and open for review. This has been the standard for mathematical proofs for 2000 years.

But propositions that require so many calculations or comparisons that they could never be completed by hand have lately been attacked using computers. The dilemma is that the soundness of the proof depends on the computer doing all these calculations without mistake -- no bugs, no hidden errors in computation or memory or output -- but this is impossible to "audit" because of its complexity.

A recent example is the proof that the most efficient way to stack oranges or canonballs or any spheres is in a pyramid (or honeycomb -- the same thing). The problem has been around since the late 1500's and the solution was proposed by Kepler. Finally, a mathematical proof has been offered but it uses computing to make the many tedious calculations that are necessary to support the proof. After a year of trying to "audit" the work, the initial reviewers of the proof gave up.

The Annals of Mathematics decided to publish only the mathematical part of the proof -- a computer science journal will publish the computational portion.

The integration of mathematical logic and computational power will continue to be used to attack difficult propositions and the challenge of verifying the results may require ... computers?

BloggerCon April 17 at Harvard

This conference on blogging and the ways in which it is influencing journalism will be available by webcast so those not attending can follow it in real time.

A background essay on who owns journalism and questions guiding a discussion at the conference provides some perspective on the ways in which journalism is changing, its influence is being questioned and the role the internet may be playing in this.

Baseball statistic

Barry Bonds went three for three in the opening game of the season (against the Astros): two doubles, a homerun and a walk. Since he has done just about everything else, maybe he is trying for a perfect season -- on-base every single time at bat. Right now he's sitting at 1.000 batting average, 1.000 on-base average; if he keeps this up, it will be a record.

It's opening day

The baseball season opens today. First Day Impressions are archived here -- readers sending in accounts of their opening-day game experience.

Three short excerpts, the first from Dodger Stadium:

The day started out with a morning mist, but was expected to burn off by game time. Entering the stadium parking lot, my mother and I made our way to the stadium. It is by far the most beautiful stadium I have seen in my brief 22 years of life, every off season, Dodger Stadium is repainted and made to look brand new every season, she's forty years old and still grand. Set in Chavez Ravine, facing northeast, palm trees lining the outfield pavilions, Sierra Madre mountains in the background.

Again at Dodger Stadium:

I was sitting in the upper deck, which I love at Dodger Stadium. We all know the idea that baseball exists outside the clock and in a green place set apart from the world around it. From up high in Dodger Stadium, with the flowered hills and palms trees as a backdrop to the green field, the idea has the most force for me.

The Astro's opener, by Lisa Grey:

The game. Finally. Yessssssssss. Roy Oswalt gets 3 fast outs - 8 pitches. Rueter doesn't look sharp. Lots of balls, few strikes. We leave the bases loaded. I remember that Rueter doesn't throw lots of strikes, doesn't throw over about 87/88 and doesn't strike out many. How can you look lousy, get so many outs and win games? For some reason. My stat geek friends who hate low strikeout pitchers, he gets hitters to swing at the balls. Don’t ask me how.
Barry plays catch with the Astros batboy between innings. Lucky kid. I’ve never seen another outfielder do that.
2nd inning. Barry hits a double down the left field line. So much for Barry shift. Alfonzo flies out to Hidalgo. Barry tags and slides into third. Lousy throw by Hidalgo. Don’t think he expected Barry to go. Hello. The guy stole 500 bases. Heads up, dog. But Roy looks every inch the ace. Dynamite fastball and curve. This little guy (really, about 5'10") throws 95,96 and spots it beautifully. Short guys rule. He is GOOD.

The Marlins started their defense of their title and drew 55,000 to their first game today -- their largest regular-season crowd ever. This is a team that was dismantled in 1997 and is now the world champs and filling the stadium at home.

The CD pricing model

The discussions continue on what most influences CD sales. One answer is piracy, so the music industry has invested heavily in anti-piracy enforcement and lobbying. Others have suggested price may play a role. Best Buy has a special where you can buy 3 DVD's for $20. These DVD's contain 2 hours or more of both audio and visual material. CD's are still at $15 to $20 each with 12 to 14 tracks of just audio; sometimes it's the soundtrack from the DVD that is selling for half the price. No question, say some, the CD pricing model is broken.

There's still little mention of the music itself.

Gas prices on the rise?

Inflation adjusted, they are still flat. Gas is still cheaper than bottled water and Diet Coke. It tastes worse, though, which continues to limit its market to little more than fuel for engines. Some more discussion of energy prices here.

Dow Theory declared officially dead

Here and here and at briefing.com are some interesting links to reporting on the recent reshuffle of the Dow Inustrials.

Dow Jones announced today the first changes to the Dow Jones Industrial Average in five years. While the DJIA is still the most well known market index, these changes render the index less important and it puts the final nail in the coffin of traditional Dow Theory. Inclusion in the index will still be, as it always has been, a kind of "honorary" emblem of significance, but the index as a whole becomes less important because of this change.

Here is a short paper on the history of the Dow indexes for those interested. The original Dow theory was not developed by Charles Dow but by a couple of books published in the 1920's and 30's

* The Stock Market Barometer William Hamilton, 1922
* The Dow Theory Robert Rhea, 1932

According to these books, the indexes provided an insight into the overall health of the economy:

Traditional Dow Theory was based on the idea that the three basic indexes: industrials, transportation, and utilities provided an accurate reading of the core elements of the US economy. Since stock prices presage actual economic growth in a company, analyzing movements in the three basic indexes could provide meaningful clues as the direction of the overall economy.

This theory provided a sound basis for making investment decisions, too:

What Dow Theory all boiled down to is:

* Look for rises in the transportation and utility indexes -- ahead of a rise in the industrial index.
* When it happens: Buy the industrials.

The theory could also be used to forecast coming economic declines.

By following trends in each of the three indexes and looking for the relative movements among them, a reading of the market direction could be developed.

The recent change in the Dow Jones Industrial Index was the final straw, some say, in breaking the link between that index and the industrial sector of the economy. The theory, whatever it's previous value, has no value now.

What is needed?

What we really need is an "information index" that more accurately reflects the direction of the US economy.

[But] Technical analysis of Dow average charts will likely continue .... old traditions take centuries to die.

Guess what -- YOU'RE on the magazine cover

Not YOU, exactly, but an aerial photo of your neighborhood with your home circled.

To provide graphic illustration for their cover story on the power of databases, Reason magazine's current issue did customized printing of their cover so that every one of their 40,000 subscribers will see a satellite photo of their home and surroundings on the magazine's cover.

While everyone knows, in theory, that there is a lot of data available publicly, Reason wanted to make clear the extent to which they believe privacy has been lost.

Accounting for Iraq's "food revenues"

After the Gulf War, the UN imposed sanctions on Iraq: they could not sell oil on the open market until they demonstrated they had no weapons of mass destruction. The lone exception was that they could sell oil so long as the revenues generated by the sales were used for food for the Iraqi population -- it was not the intent of the sanctions to hurt the population.

The accounting system used to see where the oil revenues actually went was thin at best. Since the Iraqi war, there have been many calls for an investigation into the "oil for food" program revenues. Here is a recent comment on some of the information discovered by these investigations:

Today, evidence suggests U.N. officials abused the program, enriching themselves, Saddam and favored foreign companies. The Iraqi Governing Council has hired accountants and lawyers to investigate Iraqi documents it says provide proof of corruption and fraud in the oil-for-food program.

Iraq's media have cited at least 270 suspects, including French and Russian firms, a senior U.N. official and a company linked to the son of U.N. Secretary-General Kofi Annan. Last month, a U.S. congressional investigation estimated that Saddam siphoned $10 billion or more from the program in kickbacks and bribes.

The oil-for-food corruption scandal raises serious questions about how the U.N. would handle that daunting job [of aiding the establishment of democracy in Iraq]. And it focuses attention on the potential for abuse in any massive government reconstruction program. Indeed, charges have surfaced in Iraq that some members of the governing council are profiting from rebuilding contracts.

The investigation identifies several reasons for abuse of the program and large-scale theft from the Iraqi people:

Lax accounting. Proper oversight could have caught abuses in the oil-for-food program. The Iraqi Governing Council's investigation shows the way to prevent future problems: Hire credible auditors to monitor the U.N. as they would private businesses.

Bloated bureaucracy. The oil-for-food program - involving nine separate agencies, projects and funds - was a classic example of the bureaucratic jumble that has been a U.N. hallmark.

Poor policing. Saddam was allowed to choose the companies and countries the oil-for-food program did business with - a clear invitation to pick those open to bribery.

While public discussions often treat business as somehow at odds with humanitarian activities, if not their antithesis, this flagrant thievery of food-funds which is tantamount to statistical murder could have been mitigated at least to some extent by good business practicies: good accountants to set up the accounting processes, good auditors and audit procedures, a contracting process that does not incent dishonesty or allow easy cover-ups of system abuse for personal gain.

It is great to have those who campaign for justice and identify abuse. It is also great, once the abuse has been discovered, to have those with the accounting, auditing, and business-processes skills -- and quality of character -- available to provide fixes to the process that mitigate these abuses in the future. This is as true for humanitarian efforts like the U.N.'s oil-for-food program as it is for Enron.

Business confidence at 20-year high

This from the Financial Times:

Confidence among US business leaders is stronger than it has been for 20 years, according to a long-running measure of boardroom attitudes, as rising profits finally encourage companies to start hiring.

The quarterly survey by the Conference Board confirms last week's official employment data suggesting concerns about a jobless recovery may be waning.

The increased confidence is expected to influence employment numbers:

Overall confidence levels about the economy are the highest since 1983, with more than three quarters of CEOs expecting continued growth over the next six months.

"They now forsee enough growth that despite productivity gains they will need to hire more bodies."

Based on a survey of 16,000 U.S. employers, 28 per cent said they plan to increase hiring activity for the April - June period, while 6 per cent expect a decrease in employment opportunities.

It is also increasing the strength of the dollar, which had been in a nine-month slide:

Expectations that a healthier job market will allow a rise in US interest rates also helped push the dollar to a four-month high against the euro yesterday

There is also an increase in the rate of growth of jobs -- perhaps related. [Link via Glenn Reynolds.]