Bitcoin Users Reveal More Private Information Than They Realize - <AUTHOR> https://medium.com/bitaccess-inc/bitcoin-users-reveal-more-private-information-than-they-realize-d783f0cd57f3 <comment><USER2> This is a nice write-up.

That said, I hope this is less of a surprise to people now: I coauthored one of the first pieces of working pointing out basically these same issues back in 2011 - almost 5 years ago:

[http://anonymity-in-bitcoin.blogspot.ie/2011/07/bitcoin- is-n...](http://anonymity-in-bitcoin.blogspot.ie/2011/07/bitcoin-is-not- anonymous.html)

It's interesting to see what perceptions have changed. That there's still confusion shows how hard it is to disseminate information about encryption and privacy; maybe this the same reason e2e email encryption seems so difficult to get adopted, even decades after PGP: it's just hard to communicate about the bounds of privacy.

One point: the 'clusterisation' mentioned in the linked article isn't 'magic': most of the techniques people are using are actually very simple heuristics, based on properties of the Bitcoin protocol (transaction input linking, which we demonstrated), or assumptions about transaction 'change' (prone to false positives).

It's worth noting that there are more sophisticated tools that could be applied: machine learning or stats methods - but I've not seen them yet. Possibly because its hard to come up with good training datasets (unless you are a retainer or wallet?) and not worth investing in when simple methods show so much. But its worth bearing in mind that more complex analysis is possible.

The overall conclusion being, IMO, that if you want privacy, it's probably usually easier to design it in from the start, rather than retrofit by progressively patching holes in a leaky system, against progressively better attacks: the latter is so hard to get to the point where it works solidly: for human reasons as much as technical ones; I think Bitcoin privacy seems destined to be an example of this.

<comment><USER3> "It's worth noting that there are more sophisticated tools that could be applied: machine learning or stats methods - but I've not seen them yet. Possibly because its hard to come up with good training datasets"

I think it has more to do with those methods not being 'deterministic' for a broad interpretation of that word. By that I mean, if you're doing de- anonymizing for regulatory purposes, it's a hard sell to convince people 'these transactions are correlated because my neural net, which is a complete black box, says so'.

</comment></comment><comment><USER4> Money is a claim on value, and fungibility forces everyone to honor all claims on value. An incorruptible record of the flow of trade through an economy allows you to eliminate fungibility. You can withdraw your consent for people to trade claims on your production. This ability requires no one's permission and makes you more powerful as an individual.

ISIS, for instance, can only hold territory because everyone accepts the claims on value that they give their foot soldiers. I want to stop honoring those claims to reduce their power. Manufacturers shift their carbon emissions to friendly jurisdictions instead of, you know, not risking our only home for cheap consumer goods. They do this to acquire more claims on value, and I don't want to honor those claims because I like Earth.

Fungibility is literally killing people and destroying our planet. I think we'll be better off without it, though as with all significant social shifts, it probably needs more study to avoid unforeseen consequences like genocides and stuff. Blockchains are not anonymous—their incorruptible histories give us the tools to reshape our society. Use them.

<comment><USER5> >Fungibility is literally killing people and destroying our planet. (...) Blockchains are not anonymous—their incorruptible histories give us the tools to reshape our society. Use them.

That's a slippery slope and you probably don't want to go down that road. Think of the power that would confer to a totalitarian state.

<comment><USER4> Totalitarian states do just fine as it is. They use money to maintain their power. This might make totalitarian states impossible.

</comment></comment></comment><comment><USER6> Shameless plug for Monero [https://eprint.iacr.org/2015/1098.pdf](https://eprint.iacr.org/2015/1098.pdf) (ring ct author here)

edit: See also [https://github.com/shennoether/ringct](https://github.com/shennoether/ringct) and [https://github.com/monero-project/bitmonero](https://github.com/monero- project/bitmonero)

<comment><USER7> Thank you for your contributions, NobleSir. I think out of all the cryptocurrencies, if there's one that will take real market share away from Bitcoin, it'll be Monero.

<comment><USER6> no problem - these things are quite interesting to me.

</comment></comment></comment><comment><USER8> I'm weirdly ambivalent about Bitcoin privacy/anonymity. On the one hand I deeply value my privacy, and would personally love it if Bitcoin were fully anonymous.

Yet - I also deeply felt intuitively that the Panama Papers exposed bad behavior. The bad behavior it exposed were people aiming to archive financial privacy.

I can't really reconcile the two beliefs.

<comment><USER9> Yes. Fully anonymous digital currency and and widespread, legal usage is hard to imagine together. There's simply no way governments would allow that, so regulations of digital currencies is only a matter of time. Yes, I know that argument that "physical money is anonymous too", but that's not the same, _physical_ money has _physical_ constraint and you can't transfer huge amount of them around the world in a matter of seconds. Furthermore, a crackdown on real money has already started(1, 2 etc)..

1\. [http://www.euronews.com/2015/12/16/cash-losing-its- currency-...](http://www.euronews.com/2015/12/16/cash-losing-its-currency- sweden-prepares-to-bid-farewell-to-physical-money/)

2\. [http://www.theguardian.com/world/2016/feb/08/german-plan- pro...](http://www.theguardian.com/world/2016/feb/08/german-plan-prohibit- large-5000-cash-transactions-fierce-resistance)

<comment><USER10> I think Monero fits in nicely in such a scenario with its view key. They call it private, but optionally transparent. The regulators can ask to "view" a transaction.

</comment></comment></comment><comment><USER11> What's next?

Well, true anonymity via zero knowledge proofs of course.

[https://z.cash/](https://z.cash/)

<comment><USER12> Isn't 10% of mined zcash coins being skimmed by the founder?

<comment><USER13> Yes. z.cash centralizes control under a corporation, which makes it vulnerable to legal process and political risk, and it is what is known in the crypto world as a "pre-mine scam".

<comment><USER14> How is it a scam if the founders are honest about it? Everyone knows the name of the game.

<comment><USER11> It's a scam in the sense that it's basically a pump and dump game for the founders. Sure, many people will know it, but those who do will probably avoid it, it's those who don't who will buy it on markets and lose out when the founders dump.

<comment> zooko-zcash Pump-and-dump is a major threat. Almost every cryptocurrency or related asset, including Bitcoin and Ethereum, has been vulnerable to pump-and-dump, and it is impossible to prevent.

One way to try to deter pump-and-dump is to make it so that the founders don't have any sort of privileged position, but then how could you afford to do all of the work to create a solid, usable protocol? The Zcash team ([https://z.cash/team.html](https://z.cash/team.html)) is a world-class team of experts, and we all have mouths to feed during the years of our lives that we're devoting to this project.

Our solution is to trickle the Founders Reward out to the founders incrementally over the first four years, integrated with the rhythm of mining.

This militates against pump-and-dump in two ways:

1\. Neither the Founders nor anybody else has a giant stash of Zcash at the beginning with which they can manipulate the market price.

2\. The Founders are locked into receiving more and more Zcash over the first four years, so their incentive is for the price of Zcash to go up during that time.

In my opinion, this hack is awesome.

It affords us the opportunity to focus several years our lives on solving this important problem, which otherwise would probably go unsolved, and it offers a transparent and simple financial setup that users can evaluate for themselves if they think it is a good deal.

So I categorically reject the word "scam". There is no reasonable interpretation of the word "scam" which applies to the Zcash Founders Reward.

[https://z.cash/blog/funding.html](https://z.cash/blog/funding.html)

<comment><USER15> There's no incentive not to sell (by the contrary), meaning there's no long term ownership, which means that the system just temporarily avoids the financial incentives to pump-and-dump, doesn't remove them.

<comment> zooko-zcash If the Founders who get the 10% Founders Reward sell their Zcash (or some of it) before the four years of the Founders Reward has run its course, then that is _not_ pump-and-dump. In fact, that is the opposite of pump-and-dump. That means that the market price of Zcash will be set by a multitude of buyers and sellers, none of whom have a privileged position, and it means that the Founders will have an incentive for the price to go up after they sell. That's the opposite of pump-and-dump.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER16> Google Cache, if anyone else is having trouble accessing Medium right now: [https://webcache.googleusercontent.com/search?q=cache:rU5Ohf...](https://webcache.googleusercontent.com/search?q=cache:rU5Ohf8AKUUJ:https://medium.com/bitaccess- inc/bitcoin-users-reveal-more-private-information-than-they- realize-d783f0cd57f3+&cd=1&hl=en&ct=clnk&gl=us)

</comment><comment><USER17> True privacy is (probably) coming to Bitcoin in the form of Confidential Transactions [1], a new construction of Pedersen Commitments and Range Proofs, as combined with some number of other mechanisms (such as CoinJoin).

[1]: [https://www.elementsproject.org/elements/confidential- transa...](https://www.elementsproject.org/elements/confidential-transactions)

</comment><comment><USER18> I have no illusions about my privacy when using bitcoin, and privacy is not the reason why I would use it in the first place.

From what I gather the key to bitcoin always was that it was decentralized, not that it was private. And over time even the decentralized has been hollowed out quite a bit.

</comment><comment><USER13> Bitcoin is a panopticon tool. That is why I use Monero instead.

</comment><comment><USER19> Bitcoin has full anonymity only when you know what you're doing. And it is hard for an average joe to maintain that. There are many other coins to choose from - Ethereum, Dash, Monero [https://www.coingecko.com/en](https://www.coingecko.com/en)

</comment><comment><USER20> When SegWit is released in a few months, confidential transactions will be right around the corner

<comment><USER21> That only keeps the amount transferred private, not the addresses. Also, it has nothing to do with segwit, it was proposed well before segwit was a thing.

<comment><USER20> Doesn't segwit allow for softforks?

<comment><USER21> Segwit is a softfork, but it's far from the first. See [https://www.reddit.com/r/Bitcoin/comments/2y4mq2/list_of_sof...](https://www.reddit.com/r/Bitcoin/comments/2y4mq2/list_of_soft_and_hard_forks/)

</comment></comment></comment></comment><comment><USER22> "This also means whenever a transaction has multiple input addresses, we can safely assume those addresses belong to the same wallet."

This is not true.

You can sign partial parts of a transaction and have M of N signatures. This is what mixing services are designed to do.

<comment><USER23> Not to mention a great many transactions come from cloud wallets / exchanges with shared pools of addresses.

However, if you are using a QT wallet it is probably generally true.

</comment></comment><comment><USER24> For privacy, this is one of those pesky places where having judicial law and oversight is useful. With laws you can control who can and can not use personal data.

With fiat currency you get the good and the bad. With digital currency you get the good and the bad.

</comment><comment><USER25> I hope everybody here knows about BitcoinFog, Shared Send, and other mixers. And uses them for random transactions now and then to give the rest of us plausible deniability.

<comment><USER26> > Mixers

A PC name for money launderers. If you need a money launderer, you should rethink what you're doing.

<comment><USER27> Noun, 1. money laundering: Concealing the source of illegally gotten money.

Do you have any evidence that suggests that all users of mixers obtained their Bitcoin illegally?

This HN post is a criticism of the privacy of Bitcoin transactions. Mixers can improve the privacy of Bitcoin transactions. I don't see how your comment adds to this discussion, unless you think financial privacy is a crime - in which case your statement applies equally to cash transactions.

<comment><USER26> > Do you have any evidence that suggests that all users of mixers obtained > their Bitcoin illegally?

And why would I require that? I haven't accused all bitcoin users of anything.

> This HN post is a criticism of the privacy of Bitcoin transactions. Mixers > can improve the privacy of Bitcoin transactions. I don't see how your > comment adds to this discussion, unless you think financial privacy is a > crime - in which case your statement applies equally to cash transactions.

The law thinks financial privacy is a crime, thus KYC laws, and as such it's on topic for any discussion of bitcoin privacy since said discussion should include the issue that you fix social problems with engineering. You can't break the law "because the protocol just works that way".

<comment><USER28> You accused them of money laundering, which is a crime by itself most first world nations. Except that phrase doesn't apply unless another crime has been committed, because it only applies to funds gotten illegally.

Make more sense?

<comment><USER26> Anonymous financial transactions are themselves crimes, they violate KYC laws.

<comment><USER29> KYC = Know Your Customer

As the name implies, this law only applies to (financial) businesses and their customers. Most Bitcoin transactions are P2P and hence there is no business/customer relationship and hence there is no KYC law applicable.

<comment><USER26> > Most Bitcoin transactions are P2P and hence there is no business/customer > relationship and hence there is no KYC law applicable.

That's a bit of a nonsense statement. It's a P2P payment network so you have no way of knowing if most of the transactions going across it are between businesses and customers or person to person. Quite simply that's a claim you can't back up.</comment></comment></comment></comment></comment></comment></comment></comment>


Ask HN: What's the difference between science and technology? - <AUTHOR> Open ended question... but I would say that science is occupied solely with conceptual mechanism, while technology is occupied with production of goods. <comment><USER2> There's a very good passage from John Stuart Mill in his _Essays on some unsettled Questions of Political Economy_ :

Science: causes.

Technology: effects. (Alternatively: means.)

 _One of the strongest reasons for drawing the line of separation clearly and broadly between science and art is the following:—That the principle of classification in science most conveniently follows the classification of causes, while arts must necessarily be classified according to the classification of the effects, the production of which is their appropriate end. Now an effect, whether in physics or morals, commonly depends upon a concurrence of causes, and it frequently happens that several of these causes belong to different sciences. Thus in the construction of engines upon the principles of the science of mechanics, it is necessary to bear in mind the chemical properties of the material, such as its liability to oxydize; its electrical and magnetic properties, and so forth. From this it follows that although the necessary foundation of all art is science, that is, the knowledge of the properties or laws of the objects upon which, and with which, the art dons its work; it is not equally true that every art corresponds to one particular science. Each art presupposes, not one science, but science in general; or, at least, many distinct sciences._

[http://www.gutenberg.org/files/12004/12004-h/12004-h.htm#FNa...](http://www.gutenberg.org/files/12004/12004-h/12004-h.htm#FNanchor11)</comment>


Does local news have to be of low quality? - <AUTHOR> http://www.bakadesuyo.com/does-local-news-have-to-be-so-low-quality

<comment><USER2> This is about TV news which tends to be more mass market than print news. Local news gets delivered by many vehicles. I get most of my local news from the web and from a free local newspaper since TV does not provide significant hyperlocal news for the Bay Area.</comment>


You're a developer, so why do you work for someone else? - <AUTHOR> http://intermittentintelligence.com/2010/08/youre-a-developer-so-why-do-you-work-for-someone-else/ <comment><USER6> I'm happy for the author and wish him success. But the assumption that being a good developer can make you rich is misleading.

Reading PG may create the impression that building a successful company is an engineering-like process, deterministic and repeatable. It is not. It's a chaotic process that cannot be reliably planned. Thinking "Zuckerberg coded a PHP app, I can code a PHP app" is like thinking "That old lady bought a lottery ticket. I can buy a lottery ticket.."

Building a smaller business that supports a few people is a different story (and a worthy goal unto itself). But that's not "sitting on a goldmine".

EDIT: Just wanted to add I have huge respect for this guy, building a business while supporting a family. My beef, such as it is, is with simplistic picture of startups often painted in HN. The actual people giving it a go, you have to respect.

<comment><USER7> Well, actually, I think startup founders actually _need_ this kind of slight delusion. In my more rational moments, I think my ideas suck, my plans are hollow and I'm going to be a wage slave for the rest of my life because of my obligations. I look at the mountain of obstacles ahead and think, "No way that can ever be moved. Learn to be content. Life is such." But the other voice inside me always chimes in later with, "But you're different. You _can_ move mountains. That isn't even a mountain anyway. Put your will to it, and it _will_ shatter. KEEP GOING."

I am sure that there are people out there who can look at a mountain, see a molehill, and stomp it flat. I'm just not sure I am one of them. But I do think that if you want to start a business, you need the arrogance to at least act like you believe you are, because conventional wisdom says, to borrow your analogy, that you will lose at that lottery. So I think it does take some arrogance and self-delusion to believe that somehow you will beat that lottery and emerge a winner. If you don't, why the hell are you playing?

<comment><USER8> > why the hell are you playing?

If you build something that solves a problem that people have (ie. is useful), and you arrange for people get to know about it somehow, then I think you can't help but be successful. But "successful" might not be a goldmine/lottery; it just might be making an adequate living, in a lifestyle business - like a fish n chip shop (as DHH denigrates). I think it's actually quite hard to fail at this, if you are aiming at creating something useful + communicating it.

You might see this as being an independent software vendor where the total value you produce is comparable to an ordinary employee - except that you are free to formulate your own projects etc (which has +'s and -'s.)

Another aspect is that if you _create_ something _useful_... that's amazingly cool and valuable in itself. As for the lottery, win or lose, doesn't matter.

<comment><USER9> "If you build something that solves a problem that people have (ie. is useful), and you arrange for people get to know about it somehow, then I think you can't help but be successful. But "successful" might not be a goldmine/lottery; it just might be making an adequate living, in a lifestyle business - like a fish n chip shop (as DHH denigrates). I think it's actually quite hard to fail at this, if you are aiming at creating something useful + communicating it."

This is what I'm doing, with some success. Now, if you don't count the net worth growth implicit in how the company is growing, I'm not making what I would be working for other people, but I think I'm a success. I set my own hours, my baseline expenses are covered, and when I hustle, I can make a lot of money. when I don't, like the last few months, well, like I said, my baseline expenses are covered. Also, eh, I've probably grown my reputation enough that my credentials now look better than they would had I spent this effort on college.

I don't know if I agree with the "can't help but be successful" part, though. I poured most of my income and spare time into projects like this for many years before I hit upon a project that actually worked. Now, part of that might be because I'm no superman... my IQ barely makes it into the 98th percentile, which really is kinda dumb. I never went to college, and, uh, I'm pretty lazy. I got a 2.16GPA in one of the worst high schools in the state. I mean, yeah. no two ways about it, I'm lazy.

So yeah, uh, if you are a Paul Graham, maybe starting a lifestyle business is easy. Maybe. but for me, it was a lot of work. Now, it was work that I liked doing; I think I enjoyed building my company more than I would have enjoyed taking the money and buying a porsche (and I'd be able to buy one with the cash I dumped in before it became profitable... two or three if I got a reasonable rate for the time I spent before the company became profitable.)

On the other hand, maybe what you mean is that you can choose to run a lifestyle business in such a way that you don't really fail until you choose to fail. This is what I did. When I ran out of money, I'd do more contracting, or get a full time job. When I was flush, I'd work more on my business. Really, I could have continued spending 3/4th of my income and time on the business for the rest of my life; unlike a startup with investors, there isn't anyone around to say "give it up" - it's just me. as long as I'm willing to work, there will be money.

<comment><USER8> I didn't mean that definition of "fail", but I guess I was cheating a bit with the "creating something useful", in that I was assuming that you already know what would be useful - whereas that is often the difficult part.

In my defence, I say that finding something to create that is useful enough to give a modest one-man income, is a lot easier than finding one giving a multi- billion dollar payout. The main way to make it easier is to specialize: a niche that is complex enough to require a lot of work, yet small enough to not be worth >1 person's time to serve. From there, you can grow to other segments if you want, or just enjoy your little place in the world. The key is to know about those specific problems, so it's invaluable to have worked/studied/played in a field. Hence the saying _a problem is an opportunity_.

Of course, we all have different motivations/passions and abilities, and that influences what niche will be doable and satisfying for each individual. Currently, I have a technical/academic idea about data integration and evolution that I really want to make work, which isn't specific to any industry (except the data integration and evolution industry, I guess). My last idea was about a specific problem I encountered in industry, and that was _much_ easier to create and sell. Much easier.

<comment><USER9> >in that I was assuming that you already know what would be useful - <USER2> that is often the difficult part.

Me, I focused on "what can I do" and "what would I buy" - I think a reasonable, though very limiting, starting point.

My first problem was that amazon radically changed the market for storage (I started by selling storage) - my second problem was that sharing pagecache? bad idea. My third problem was that I thought using obsolete hardware was somehow a good idea.

So, uh, yeah. of my major problems, only one, really, was external. the rest were me being stupid. I guess that could fall into the "finding something useful" category. But then, I am mostly filling unserved price niches in existing markets. When I started there were already VPS providers out there; linode was one. I do believe I was the first to switch to xen.

>I say that finding something to create that is useful enough to give a modest one-man income, is a lot easier than finding one giving a multi-billion dollar payout.

I assume it's harder to make the 'big exit' companies... not that I would know. It's certainly a very different game, one that would be /much/ harder for my particular skillset. most 'big exit' companies seem to be more focused on selling to investors than on day to day cashflow. In my industry, if I sold out tomorrow, I'd get the value of my servers, plus about a years revenue. Now, there's no way I'd sell at that price, but that's market for a ISP or hosting company. Compare that to the valuation MySpace got. They got a valuation that assumed myspace would be the dominant social networking site for a long time. The valuations for friendster and facebook both reflected that same assumption. To me, that assumption seems ridiculously irrational.

Now, if you are going for a 'big exit' usually you have more than one founder, and some startup cash from someone else. Certainly, more work is put in, but is any one person's contribution more than what they'd have to contribute to get their own lifestyle business off the ground? I don't know. Once you involve investors, though, and people depending on investor money, you are much more likely to get yourself in a situation where you have no choice but to close the company.

Of course, my negative tone is entirely sour grapes, because my skilset means that I'd be a very minor player in any "swing for the fences" venture, while I can handle my lifestyle business just fine.

<comment><USER8> I think the hard thing about the multi-billion dollar exit isn't the extra work needed, but the probability of it working out. Maybe one estimate of the odds is how many projects are started, verses how many cash out (this should include projects that are abandoned even after only a few weeks, if they would have continued had they got a little traction.) Massive survivorship bias, when only the huge payouts are publicized.

I don't think the initial founder/s necessarily must have the right skillset, but someone, sometime must come on board with that skillset. Rather tragically, these people seem to quite often eject the founders. One book ("Crossing the Chasm") even claims that the initial founders don't deserve the big pay-out _because_ they don't have the skillset (and they're more interested in making cool stuff and being their own boss than in making money). Ugh.

To be captain of your soul, master of your destiny is worth more than all the riches and fame in the world - they merely tighten the shackles of the worldly and the opinions of others, not freedom of any kind, only dominance (says me, sans riches and fame. actually, I think it would be great fun).

BTW your 98th percentile puts you squarely in the "smarter than average, but not a genius" camp, which is where I am, and where I think most entrepreneurs are. In business, extremely high intelligence seems to be liability. I think what really counts is something like boldness + quick recovery. I could certainly do with some more of that.

I agree with you about MySpace etc, it's too unpredictable; too easy to switch (mind you, I said that about Google too; I thought their massive PR efforts was one of their few competitive advantages, I wonder if they've become complacent recently.)

> MySpace employs 1,000 employees, after laying off 30 percent of its > workforce in June 2009

> By late 2007 into 2008, Myspace was considered the leading social networking > site, and consistently beat out main competitor Facebook in traffic. When > Facebook launched new features in an effort to attract a variety of users, > Myspace found itself in a continuing decline of membership. As of July 2010, > the site was ranked 25th in Internet traffic,[3] opposed to the 2nd position > held by Facebook. <http://en.wikipedia.org/wiki/MySpace>

Kids love cool stuff, which means they switch all the time. Maybe the sustainable business model is a business that generates (or promotes) social sites? (analogous to music publishers always touting the next cool band - <USER3> bands have limited lifespan, but the publishers live on)

</comment></comment></comment></comment></comment></comment></comment><comment><USER10> It's interesting, when Hacker News first started (and was called "Startup News"), I used to make ra-ra comments like this all the time. Like the author, I had little practical experience in actually succeeding at entrepreneurship. And yet they'd be voted up _really high_. Once in a while, some old salt like, say, the guy who founded Digg or the guy who founded Symbolics would reply and say "You're naive and ignorant. You won't think so poorly of jobs once you've run your own company for a while" (in nicer terms, of course). But by and large, Startup News loved wild-eyed optimism.

Now, the vast majority of comments hold that same sort of "Well, it's more complicated than that, and I'm quite happy with my 9-5" view. Sometimes even my own.

I wonder if that's representative of the economy changing, or if it's representative of the site's audience changing. If it's the former, maybe it means that now is a good time to found a startup.

<comment><USER11> It's just a reflection of the changing demographics here.

People tend to justify whatever it is they're doing at the moment. So you and me will talk up the entrepreneurial side of things and snoot down our noses at the "wage slaves". It's not that we actually know any better, but if we do this enough it'll seem like we're not so far out on a limb.

Back in the day, that was the only crowd here, so this sort of article (or comment) would get nothing but love. Now, HN is more or less evenly split between entrepreneurs and people who actually read those articles about programming languages. Those are guys with jobs. Good jobs, thank you very much, that pull in more each and every day than our little "startups" gross in a month. They have their own world view to justify, so now we get to listen to their story.

</comment></comment><comment><USER12> I have an excellent job where I get to work with lovely people and solve interesting problems. I'll leave the admin, business development & marketing to folks who are better skilled at such things for now, thank you very much.

<comment><USER13> To shorten: I want to code, not do the other crap. :)

</comment></comment><comment><USER14> For me, the answer is that the large organization I'm working for actually lets me have a larger impact than I could likely have working on my own.

So long as my debit card keeps working and I keep building up savings, the quantity of compensation doesn't matter too much to me. What matters to me is how much I positively impact the world, and on that front improving a mature product with a ton of users has a much bigger bang for the buck than scratching small itches in small niches, no matter how profitable they might end up being.

<comment><USER15> You'd be surprised how much impact you can have even in a small niche. I've got a pretty small product in elementary education and, depending on your assumptions about how many teachers convert to classroom use after using the site, I've taught between 100,000 and 1 million student-hours in the last year.

<comment><USER16> And god help you if you write games. At some point in my career I'll pass the billion hours of time wasted, at which point I won't know whether to celebrate or cry. Thankfully that day is still 5-10 years off.

<comment><USER15> You entertain people. It is an honest occupation. (Paraphrased from Tom Clancy, in response to the question "Do you write literature?")

<comment><USER17> And one day it will be the only viable occupation for us Humans, its the ultimate profession in my book.

</comment></comment></comment></comment></comment><comment><USER18> "No, seriously, a @#$% goldmine! Never in modern history has it been so easy to create something from scratch, with little or no capital and a marketing model that is limited only by your imagination."

ie, high supply. Lots of competition.

It's getting to be like writing novels. Lots of people do it. The barriers to entry are low. But few can make a living at it.

<comment><USER19> But that's _everything_ worth doing, and isn't that how it's always been? For every Jimi Hendrix there were a zillion teenagers sitting in their poster- filled room with desires to melt faces and change the world with the power of Rock. Or for every Steel Magnate, there were guys running a 10-man shops hoping to roll enough steel this quarter to buy the coke smelter down the road a ways.

It all starts somewhere, and almost everything with any market visibility has hundreds if not thousands of everyone from Mom and Pops to multinationals gunning for the big ring.

This is why the corporations dominate: They know the "little guys" like us don't think it's worth it to disrupt their industries.

I'd say the only technology company that really takes alot of capital to start is product manufacturing business, and even then, aren't there whole industries catering to garage businesses like thomasnet or rapid prototyping firms? Or just bootstrap it like DODOCase.

<comment><USER20> 'This is why the corporations dominate: They know the "little guys" like us don't think it's worth it to disrupt their industries.'

Also, huge advantages in terms of economies of scale, financing, lawyers, patent portfolios... and if you are successful, they buy you or you become a big corporation...

<comment><USER21> Not to mention meeting your local politician for a cup of coffee to "discuss things".

</comment></comment></comment></comment><comment><USER22> For me, the answer is: I like programming. If I did my own thing, I'd have to do all that other non-programming crap, too. Suddenly I wouldn't be a programmer anymore. Meh.

<comment><AUTHOR> But wouldn't it be more fun programming on YOUR terms, not your employer/boss' terms? Even if that meant you had to spend a bit more time managing your business?

<comment><USER23> Is it actually just "a bit more time"? I can only go by what I hear from others, but the stories I read in HN comments make it sound like that "bit more" is at least half-time work.

<comment><USER24> When I was freelancing, 35-40 hours per week, it was quite often that I only got to spend 10 hours a week doing actually programing. Anything over 20 was amazing.

<comment><USER25> You are forgetting, that if you spend 20 hours/week on your own business, then you would spend most of these 20 hours thinking and only ~5 hours/week coding. Which would probably move your business forward very slowly.

</comment></comment></comment></comment></comment><comment><USER26> If I really wanted to, sure I could scrounge up the extra free time to pursue my ideas. But then my entire life would be my day job and my side project, at the expense of absolutely everything else.

There is nothing wrong with that if that is what is important to you. But I also value friendships, exercise, reading, relaxing, cooking, etc. A nice balanced life is crucial for good health and well being. I would argue for most people, the cost of completely throwing away all balance in your life would not match the reward that your product would bring once launched.

<comment><AUTHOR> "Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast." - Paul Graham

<http://www.paulgraham.com/wealth.html>

<comment><USER27> It stops making sense economically if you consider the high risk of failure though.

<comment><USER28> It's really only failure if you learn nothing and never try again.

<comment><USER26> It's failure if the energy spent on the project is more than the return. Sure you may learn something, but if all you learned was to become a better web developer at the expense of relationships, physical health, your bank account, etc, then perhaps it would have been better to just create a casual, hobby webapp for fun.

<comment><USER28> We're probably thinking of very different things.

By learning I meant learning every aspect of launching a startup, including customer development, sales, marketing, SEO, etc. If your role in the startup was limited to programming, then I'd take a very jaundiced view of the state of affairs.

And by no means would sacrificing relationships and health compensate for even this.

</comment></comment></comment></comment></comment></comment><comment><USER29> Protip: if you're a founder or aspiring to start a company that may one day employ others, try not to write blog posts that question why anyone would ever work for you.

<comment><USER30> The headline is a little sensationalist but the writer himself works fulltime, so I think its clear that he's not saying that you should never work for anyone.

</comment></comment><comment><USER31> I find that these really strong "screw employment!" kind of opinions like this tend to come from people who haven't really been successful following the path they espouse — it's always "aspiring" entrepreneurs, as this writer puts it. Either this kind of attitude is unhelpful or reality tends to temper it.

<comment><AUTHOR> Why can't it be from someone who genuinely wants to encourage others like him?

If you read it again, it isn't necessarily all about "screw employment". It deals with the reality of trying to build something while necessarily employed in several places.

<comment><USER31> Well, sure, but I just don't feel all that encouraged by somebody making grandiose claims that are based on neither experience nor hard data. I don't mean to imply that anyone's heart is in a bad place, but it just reads to me like somebody selling himself on a get rich quick scheme. I know people who have bankrupted themselves on that sort of thing, so this kind of baseless exuberance makes me feel concerned.

<comment><AUTHOR> Yeah, optimism is for babies, right? :)

<comment><USER31> Optimism is fine. The phrase "a @#$% goldmine!" is a flashing red warning sign.

</comment></comment></comment></comment></comment><comment><USER32> It is interesting how much this blog post is not relevant to my status. I always wanted to create my own startup, and nearly always had pet projects for this purpose on the side. It is no news to me that starting a startup is a cool thing. I dont' watch TV, and I don't need a Palsma TV. But I have a family to care about, I live in a quite poor country and I need a day job. I think I am a good developer, but I don't think my knowledge is a goldmine. They pay approximately $2000 per month for even very very good developers in my country. This is not a goldmine. I made 3 projects to the sellable product phase in my life, and all failed. The first was too ambitious and I could not keep up with competitors like google. (natural language translation from english to my mother language) The second was an Indie game: The critics said it was done professionally, but it was not especially playable, it was not fun enough. The third was not ambitious enough: This was a small software for the consumer market (language learning), It got lost amongst the thousands of small shareware tools on download.com and also there were free products which were partially competitors.

I start to lose my energy. (Having a boring day job for years is not fun.) Of course I build something again on the side. I think it is a better idea than the previous ones. I cannot stop. But I will never ever will have the optimism like the OP.

<comment><USER33> i don't understand why #3 was not ambitious enough, could you explain?

There are a host of language learning tools, but a lot of them are simplistic, or very poor, or very expensive and only support a few languages (e.g. as you're hungarian, I've yet to find a good one supporting your language).

Language learning is not a solved problem, afaict :)

<comment><USER32> My product/approach was too simplistic. It was just a word learner tool, basically a 'flash card' program, which tracked and modeled the user's knowledge, and 'annoyed' the user time to time with questions. My main mistake was that I did not research the market enough before building the tool: the problem exists, but there are too much competitors, and there a free ones amongst them. Otherwise this was my smallest 'fail', because this did not involve that much work from me. My other 2 'fails' especially the first was a more severe one. (Google translate did not exist when I started my first project. I already had some paying customers when google translate had been made available in my language. Then I realized that I have no chance to keep up with them.)

</comment></comment></comment><comment><USER34> Because I don't have to work very hard and they pay well.

<comment><USER35> Upvoted because I understand that not everyone has this desire to produce something. I'd wager that the default mental state for most people is idleness.

</comment></comment><comment><USER36> Wow, 20 hours? Personally I don't think I can realistically create much on the side with a full time job. I tend to be extremely tired at the end of the work day. So I think my only option is to quit my job again :-(

Maybe it is also my sleeping patterns just don't align with jobs. Today I simply had to sleep around 9pm (home from the job at 8). Slept till perhaps 11pm. Now I feel reasonably fit, but to be at the office in time, it is time to go to bed.

I experience this kind of pattern frequently.

In fact I sometimes wonder if the biggest mistake of my life was trying to adapt to other people's schedules (also girl-friends who want to go to bed "early" etc). Thereby I wasted most of my productive hours.

My typical work day at the office is painful because I tend to be tired...

<comment><USER18> Maybe get checked for sleep apnea? If you have it, you repeatedly stop breathing during the night. It isn't long enough to kill you, but it's long enough to lift you out of deep sleep into shallower sleep, or keep you from entering the deep sleep states.

<comment><USER36> Thanks, I have been to a lab before and they said my snoring is not too bad. They wanted to give me medication against restless legs, but I didn't want to take it.

</comment></comment></comment><comment><USER37> I was a full-time programmer. The job I was in was draining my energy and programming became really boring. While I had the job, I worked on the side developing websites. I also had a bunch of pet-projects for fun - <USER4> people will use them and I can earn more money. But fast forward a few years, programming wasn't fun anymore. I was too tired to finish my projects.

So, I quit my job and moved to a non-programming job. The pay as of now, is not that high, but I am happier. The job is fairly easy on the brain. That means less stress and I have more time to think while I am at home coding my personal project.

Maybe my programming job sucked or it was something else. I could go on like this until I finish my personal project.

</comment><comment><USER38> I do contracting to pay the bills while I build my own web app. It is difficult but by working 80 hours a week I'm making progress. Hopefully the sacrifices I have made are worth it in the end.

<comment><USER39> I personally work three days a week as a consultant and I work on my startup the rest of the week. I don't have to sacrifice anything, the journey is very pleasant and I have the confidence that one day I won't need any consulting work anymore.

</comment></comment><comment><USER40> "Myth #1: I don't have any time"

If you think this is a myth, you need to re-examine what you want from life. Everyone needs time to relax. Playing games, surfing the web, going to the gym... Everyone does it differently, but everyone needs it.

You can give up your 'free time' for a while and work on something, but it will eventually crash in on you and you will start hating your life.

I have too many hobbies. Every once in a while, my hobbies will start to run my life and I'll start getting depressed. When that happens, I stop and decide which of them are things I really want to do, and which aren't. I prioritize my hobbies. That relieves the stress again and I can relax.

If you can really relax while working on a programming project, then go ahead. But when it starts to stress you out due to a deadline or other outside influence, it stops being fun and starts stressing you out.

Being stressed out will affect everything you do and it will all go down in flames.

I have a few programming projects that I'm working on in my spare time. Nobody knows about them, so there's no pressure to finish them. I just have fun with them and work on them at my leisure. As soon as I release them to the world, they are going to get very stressful. Yes, someone else might think of the same ideas first and beat me to it, but I'm taking my time, doing it right, and I'll release when it's convenient for me. If that turns into something big, I can quit my day job. If not, not.

</comment><comment><USER41> Colleagues. I get to meet and work with a bunch of interesting and talented people, without asking them to marry me (which is what many here likens the co-founder experience to).

Also, my employer has a quite significant sales and client management staff. I don't enjoy sales or client management much, and consequently I'm not good at it (or maybe it's the other way around), so I'm happier when other people do that for me.

I might do a start-up one day. But until then, this is a pretty sweet deal.

</comment><comment><USER42> Reminds me of C.S. Forester's memoirs about writers. Forester found it easy to create plot ideas but hadn't enough time to write all of them. He had (later successful) friends who, once given a plot, could quickly flesh out a full story. They, on the other hand, had little ability to conceive plots! So he passed ideas to them and they did the rest.

We're all different. Some can see all aspects of a project, others can beautifully manage the startup, some can hone a roughly-hewn project to perfection, and still others can document a project beautifully. They're all useful.

Not everyone can do everything well, nor is it necessary. Man is a social animal for a reason: groups can do things that no single man could do.

</comment><comment><USER43> I'm starting to get sick with this kind of posts. Please stop.

<comment><USER25> What kind of posts would you like to read instead?

<comment><USER23> While I wouldn't go so far as to say this type of post is problematic, what really drew me into this site were things like <http://news.ycombinator.com/item?id=1156628>

</comment></comment></comment><comment><USER44> Just cos you can write code doesn't mean you can start a business:

1) You need a decent idea. This is the "cheapest" bit, and actually even this is quite hard. what businesses or consumers want (and how they want it) is usually quite different to what you'd naively think.

2) Can you really execute it well? Most ideas will require more than the skill set of one developer.

3) Do you have a route to market? This is the hardest. You can have the best executed product in the world, if you've got no way of selling it it's worthless. And this doesn't just mean oh I'm going to sell it to telcos - <USER5> means which telcos, and WHO at these telcos? Are you going to be cold-calling a massive company trying to find the right person to speak to about your product? (if so, good luck!)

4) Are you prepared to work ridiculous hours for sod-all pay, and go through all the stresses, uncertainties and ups-and-downs that starting a business involves? There's a lot to be said for a regular, essentially risk-free check every month.

Yes: you can start a software-based business with little more than a PC and an internet connection. But so can everyone else: there's no advantage here.

</comment><comment><USER45> Suggested Title:

"You're an entrepreneurial developer, so why do you work for someone else?"

<comment><USER46> "You're a chef, so why don't you start your own restaurant?"

"You're a mechanic, so why don't you start your own garage?"

"You're a retail manager, so why don't you start your own store?"

Ad absurdum. But yes, add "entrepreneurial" to any of those and they become perfectly valid questions.

But then it really just comes down to "You're entrepreneurially inclined, so why don't you start your own business?"

<comment><USER47> Each of those questions can quite simply be answered "Lack of Capital"....This is what is unique about being a software developer. As mentioned in the article you don't need funding to get something up and running.

<comment><USER48> what about funding to keep self and family up and running?

<comment><USER47> This was addressed in the first part of the article. It doesn't need to be a full time endeavor to start.

</comment></comment></comment></comment></comment><comment><USER49> At the beginning of the learning curve, there's little better for grasping topics than hearing someone else explain them. I've learned more (almost entirely by virtue of genius co-workers) in the first 6 months of my current, first, developer job than I did in ~2 years of self learning and freelancing.

</comment><comment><USER50> The thing that struck me in this post is: "it's all about money". (the goldmine aspect)

I think money is an especially a bad motivation for starting your own product.

So if its about being creative, doing lots of different projects, having an influence on what your working on and where the product is going: you can do this working for the right company as well.

Of course the level of control is higher when you're running your own company, but so are the risks.

Isn't the important question: is the process important, i.e programming & working on interesting ideas, or is it the end result that counts, i.e having a successful product that is generating an income for you and where you have total control over?

</comment><comment><USER51> Posts like this that advocate working on your start up by squeezing hours out of your day ignore the switching costs involved. Even when I do decide to turn my hour TV-time into an hour of project-time, it takes a while to get back into the flow and remember what it is I was working on. With start up and shut down, I end up exchanging an hour of TV-time for 20 mins of productive work.

</comment><comment><USER52> 1\. Just because you build it, doesn't mean they will come. There's something called marketing, promotion and luck.

and

2\. Development and business/marketing skills are very very different.

</comment><comment><USER53> I'm working for someone else precisely because I'm a developer. I like developing. I don't like running a startup.

Is it really that hard to understand?

</comment><comment><USER54> I need to support my visa =(

<comment><USER55> Focus on what you can do. I was in the same boat and I used to think like you. It was a wrong way to think and wasted a lot of my time.

<comment><USER54> i am keeping work on my own projects. but still, there is no easier way to get legally permanently to usa without work visa and following greencard. dv lottery is not a way (but i keep trying) and i am already married =) and do not have 500k-1m to invest into something too =)

<comment><USER55> Reread your comment. What are you again focussing on? Send me an email via hackernewsers.com . I wrote up an article that I sent to others wu had contacted me and I think it might help you.

</comment></comment></comment></comment><comment><USER56> Two words: student loans.

</comment><comment><USER57> It is better to be lucky than good.

<comment><USER58> You'll notice that, as you get better, your luck seems to be strangely increasing.

<comment><USER59> "I find that the harder I work, the more luck I seem to have." \- Thomas Jefferson.

or

"Diligence is the mother of good luck." - Benjamin Franklin

</comment></comment></comment><comment><USER60> All this naysaying and negative, defeatist thinking: this is exactly why you will not succeed in a startup. Positivity is a necessary -- albeit not sufficient -- factor in creating something new.

<comment><USER11> Ah, but the naysaying is not coming from people trying to start startups. It's coming from people happy in their jobs who don't want us trying to convince them they're doing it wrong. Why should it matter if they're negative about entrepreneurial stuff?

To the startup side of HN, this article is just another "me too" piled on top of dozens of copies of itself every month. There's nothing particularly insightful about it, so there's no need to jump into the comments and dump a ton of praise onto it. A simple upvote will suffice, which explains why it has 120 of them.

<comment><USER60> You're right, of course. I was just surprised to see naysaying on a site that has such a strong startup vibe.

 _To the startup side of HN, this article is just another "me too" piled on top of dozens of copies of itself every month_

True. I liked it, though. I thought it was well-worded and somewhat inspiring. Certainly I'd thought of a lot of this stuff before, and seen it here. With the current economic tornado, though, some of us were unconsciously beginning to lose hope and faith -- myself, at least. Reading about how this guy keeps at it after his kids had gone to bed: that was encouraging and inspiring. I have one kid. If he can do it ...</comment></comment></comment>


Examples of software forcing to ignore laws or rules - <AUTHOR> Are there any other examples of computer programs getting groups or nations to adopt non conformant behaviour because of a tiny inconvenience or a bug?
For example, in Latvia we have a grammar rule, which requires a dot after ordinal numerals. For example, "1. vieta" (meaning "1st place") should be written with a dot and a space before next word (ignoring the fact that it should be non-breaking space).
Since Microsoft Word could not spell check Latvian at the time, by default it automatically capitalized first letter of following word, recognizing it as the start of a new sentence.
Quick workaround obviously was omitting space after a dot, which went into documents, laws, legal papers then and even now. It became a recommendation without explanation, so it became standard even being against grammar rules.
Though Word has long learned checking Latvian and not autocapitalizing in these cases, many people still are writing ordinals without space after the dot. <comment><USER2> I'm aware of one somewhat similar case.

When I learned French (as a non native speaker) I was told that capital letters are not accented.

Later when I lived in France I found out that while this is common practice, it is neither universal nor normative and came about because typewriters typically couldn't produce accented capital letters.</comment>


Linux Attack Surface Analysis Tool - <AUTHOR> https://anvilventures.com/blog/linux-attack-surface-analysis.html <comment><AUTHOR> OP / author of the tool here too. Feel free to come up with any questions or suggestions regarding this. The tool has already proved its worth for me personally but I'm always open to reasoned input why I'm an idiot because I missed x or y or implementation z.</comment>


VisualSearch.js: A Rich Search Box for Real Data - <AUTHOR> http://blog.documentcloud.org/blog/2011/06/code-drop-visualsearch-js/

<comment><USER2> Another impressive release from the DocumentCloud team. Thanks for your excellent contributions to the open source community, they are always useful and appreciated.

<comment><AUTHOR> All credit for this one goes to @samuelclay -- He's been smoothing the rough corners and stomping on IE bugs for weeks now.

</comment></comment><comment><USER3> Wow. That's awesome guys!

The place I work for uses crazy stuff like Microsoft Reporting Services, and old old legacy ASP Classic for all their reporting and stats stuff.

I'm slowly moving it forward (when they're not looking) by making everything using nice Javascript libraries out there, and this is definitely one that would be _perfect_ for a solution where lots of data needs to be put into a nice and easy way for a user to find the particular stuff they want.

Again: Nice job! And thank you!!

</comment><comment><USER4> It's cool, but I can't imagine normal people being able to use this. I struggled with it myself a bit.

<comment><USER5> Luckily, there are lots of use cases where a 5 minute learning curve is entirely reasonable.

</comment></comment><comment><USER6> super sexy. i want to use it even though my app doesn't even need it!

</comment><comment><USER7> Very nice control, but all those dependencies make it pretty hard for me to implement this in any project that isn't already using those libs.

<comment><AUTHOR> Agreed -- I'd love to see a version that didn't depend on anything more than jQuery, and perhaps not even that. It would make for a great branch.

But I'm afraid this was extracted from our existing app, so we were able to rely on the dependencies being there.

</comment></comment><comment><USER8> The demo crashes Safari on my iPad :( too heavy for lightweight hardware?

</comment><comment><USER9> that is very slick. simple enough to ajax/json the facets in as well. might try my hand at a backbone-friendly fork. Thanks for the cool tool!

<comment><AUTHOR> It's actually built on top of Backbone.js -- each facet is a Backbone.Model. So, no need to fork.

</comment></comment><comment><USER10> Thank you. Can't wait to implement.</comment>


The World's First Home Robotic Chef Can Cook Over 100 Meals - <AUTHOR> http://www.forbes.com/sites/eustaciahuen/2016/10/31/the-worlds-first-home-robotic-chef-can-cook-over-100-meals <comment><USER2> >>choose your recipe, place the individual pre-packaged containers of measured, washed and cut ingredients (that you could order through Moley) on designated spots, and press "start"

When cooking, preparing the ingredients is the boring bit. I want my robot chef to be able to peel spuds and slice onions for me and then wash up afterwards. I can do the 'shoving the results in a frying pan' bit myself!

</comment><comment><USER3> [https://www.seedrs.com/moley](https://www.seedrs.com/moley)

</comment><comment><USER4> Robot kitchens are a great idea but I suspect motion capture isn't going to be how it happens.</comment>


A Live-Coding Environment for VR - <AUTHOR> http://store.steampowered.com/app/458200/ <comment><AUTHOR> Also open-source: [https://github.com/lukexi/rumpus](https://github.com/lukexi/rumpus) and yes, written in Haskell : )</comment>


Is poverty self-perpetuating? - <AUTHOR> http://www.boston.com/bostonglobe/ideas/articles/2008/03/30/the_sting_of_poverty/?page=full <comment><USER2> The article is mainly about the psychological reasons why people in poverty act the way they do. I'll add my 2 cents: The fact is people's brains are wired to not keep doing something when it seems hopeless. Although from an outside perspective it seems illogical to work less when you have less money, from the perspective of the person living in poverty they know that no matter how hard they work, at minimum wage they're never going to have an easy life, and that's a very powerful psychological force. For instance, as a student, I borrow money at the beginning of the semester, and I have some big expenses. I work part time, but my fixed expenses exceed the income I make from working. So I go to work knowing that no matter how hard I work, or how much I try to save, it's physically, mathematically impossible for me to ever come out ahead. By working hard, all I can do is sink into debt more slowly. At least I have solace in the fact that I will soon be graduating. What if I didn't have that hope? What if that were all there were to life? I see people every day, in rural Oklahoma, who live like that, without hope. They go through cycles where they work for a while, realize they aren't getting ahead for all their work, and give up. Wouldn't you?

<comment><USER3> What gets me is that few people seem to consider "find a job with better pay" as an option. It just doesn't even occur to them. On the contrary, I often hear stories where people might actually pay more for their job than they earn, for example if they drive 50 miles every day to work a minimum wage job (petrol+car maintenance might cost more than what they earn). Either they really don't get the maths straight, or they see it as a temporary thing (need one job to get another), or else I don't know...

What about you, what do you study? Are you sure you could not get a better job, for example by building on the things you study? I must admit I was stupid as a student - I studied maths, but instead of taking on some programming job and earning shitloads of money on the side, I just worked standard student jobs with average (low) pay.

My point: maybe many people just are not aware of the options. I suppose it is infeasible to assign personal life managers to every poor person, but perhaps information technology could be some help? For example better job boards.

</comment></comment><comment><USER4> IMO, it is fair that the book was ignored.

The guy completely ignores the time and risk factors, namely being short-term- payoff-oriented and long-term-payoff-oriented. This is a subject of microeconomics (not 101, of course - it's a lot of maths, integrals and derivative functions).

Poor people do not save extra money exactly because of being short-term oriented. Drugs, entertainment and having early sex also deal with short-term payoff. Short-term payoff orientation also makes a person more risk-tolerant, which is a common attribute of criminals.

All the given examples are easily explainable with a utility function that takes into account risk perception and time discounting (long- or short-term orientation) and current posessions.

Committing a crime or not is a choice between risky and not risky opportunities. This deals with risk perception. Few posessions make the low- risk choice even less valuable. Fixing or not fixing dents on a car fit into choice between long-term and short-term payoff.

Writing this I suspected that the author hasn't worked with advanced microeconomics' maths. Indeed, Karelis is a philosopher. I haven't seen the book, but by his words ("Econ 101 is to blame") suspect that he doesn't know any more complicated economics. That's the reason he finds it wrong.

<comment><USER5> I will upfront admit only a limited knowledge of economics, but hopefully my math knowledge will save me enough to sound reasonably collected.

I think you make two assumptions here that are either fallacious, or require additional evidence.

The first is that the poor are short-term oriented by choice, not by mandate. Allow me to propose the following Gedankenexperiment. You are a person who is given sufficiently low pay that your net asset change is $0, or nearly so. You are presented with an opportunity for a long-term payoff with a reasonably attractive expected gain, excepting that if the payoff doesn't occur, you no longer have the wherewithal to pay for food and shelter. If you don't take the risk, you are given a near certain probability to maintain your current status. Which would you chose? Keep in mind, these people will place maximum utility on the basic needs of life before venturing into more discretionary purchases, as any one else would.

The second is that they are somehow inclined to take greater risks because of their being in poverty. I'm not convinced by an assertion that even a majority of poor people end up in a life of crime, or any other high-risk behavior. It would seem to me there's far more reason behind staying as low-risk as possible, especially when the few possessions you refer to are the difference between staying warm and dry, and not. A person with several thousand dollars in the bank can afford to play high-risk. A person who is in poverty may be one case of pneumonia away from homelessness.

</comment></comment><comment><USER6> Does anyone here know about the economics of gambling? It seems like the argument Karelis is making would have strong similarities there. I'd be interested to see if this suggestion is at all valid.

To explain, in gambling (think lottery tickets, not poker) you trade $1 for something that actually has less than $1 worth of economic value. There is obviously another component at work (behavioral, not economic), call it hope. If economists have found a way to quantify hope in this context it seems that they could try the same thing with poverty, the results would certainly be interesting.

<comment><USER7> I know a little bit. The relationship isn't very close.

Gamblers tend to derive utility from gambling, i.e. the act of gambling gives them a rush. The extreme case of this is video games. I'll never win any money by purchasing a Wii (like the lottery, I lose with probability close/equal to 1). But I will derive more happiness from playing Wii sports than I will from the money I spent on it. Similarly, gamblers enjoy playing the game, and this gives gambling positive utility (for them).

However, the argument Karelis seems to be making is that the marginal utility of increased income is zero (for some income range which constitutes poverty). People don't tend to do actions with zero marginal utility, so they don't try to increase their income. Basically, earning $15k/year doesn't make you any happier than $10k/year, so why bother to increase your income?

(Note: he actually claims that "economics doesn't apply to the poor", which is either stupidity or hyperbole. )

One interesting policy implication of his model (if it is true, which I doubt): _taxing the poor is good policy_. If a poor person is no happier at 15k/year than at 10k/year, then we should tax all poor people making $15k/year at 33%. It won't make them any more unhappy, whereas taxing a richer person will. It also suggests that any wealth transfers to the poor that _dont solve all their problems_ are wasted (welfare is "all or nothing").

<comment><USER4> I'm wondering what kind of utility function is needed to make such a strange MU function...

As far as dents on the car are concerned, let me write what conventional microeconomy says. Here is the function to estimate the choices.

U = sum(F(x(t))/(1+r)^t) by t from 1 to infinity (or life expectation), where F(x) is a momentary utility function, r is "perceptual" discounting rate (sorry, don't know the English term), which means that F(x) next year is 1+r times less nice than having it now.

If you don't repair the car, x(t) will be constant, let's say X. If you do, first period it is x(0) = Y < X, but since t=1 x(t) = Z > X.

The problem is that F(Y) has more weight than F(Z)'s. The more r is, the greater the difference and more probable the first choice will win. The problem of poor people is that (1) their r is much more than that of middle class, and they don't value the future, (2) their F(x) (perception of what is good) is different.

<comment><USER7> I think the authors ideas are less about time discounting, and more about non- linear relations in quantity of problems.

The authors example is a man who's car has many dents. Utility might behave like U(0 dents) = 1, U(1 dent) = 1/2, U(n >= 2 dents)=0. If a car has 5 dents, the marginal utility of repairing one dent is 0 (U(5)=U(4)), so the owner does nothing.

Of course, in real life, most utility functions behave in the opposite way. Going from homeless to a studio apt? Major gains in utility. Going from a studio to 1 bdrm? Nice, but not as fantastic.

</comment></comment></comment></comment><comment><USER8> It's interesting that this article is at the top of the front page -- unexpected topic to fit the category of hacker news.

My theory: problem solving and unconventional solutions are of interest to hackers and this article presents poverty as a puzzle and hints at an intriguing fix.

<comment><USER9> My theory is that a lot of us are rather broke ;-)

</comment></comment><comment><USER10> "In challenging decades of poverty research, Karelis draws on some economic data and some sociological research. But, more than that, he makes his case as a philosopher, arguing by analogy and induction."

This, for me, is the biggest problem with the article.

<comment><USER11> I agree, it would be nice with some empirical data instead of just opinion (not that most other opinions are better supported).

<comment><USER7> The article does have a little empirical data (towards the end):

>In the early 1970s, a large-scale study gave poor people in four cities a so- called "negative income tax," a no-strings-attached payment based on how little money they made. The conclusion: the aid tended to discourage work.

<comment><USER12> when you subsidize something you get more of it.

we need to stop all aid to third world countries. not only is the vast majority of the money absorbed by corruption and armed conflict, even the money that gets through doesn't help.

of course, this fails to account for the fact that we want those countries in armed conflict and hanging on our every welfare check because it means we can take their resources for way below market value. can you imagine how expensive things would be if the african nations were organized enough to have business infrastructure?

<comment><USER13> Cheaper?

</comment></comment></comment></comment></comment><comment><USER14> I agree with this article. The current thinking on poverty is from the rich man's POV. And consequently, the solutions provided from that POV will do nothing to eradicate poverty.

One such solution is the "One Laptop Per Child" program. And this article explains why the OLPC will never work in the impoverished countries. The child is not hungry for education. The child is hungry for parental care from her indifferent parents who have given up on getting their bee stings looked at...

<comment><USER15> We inherit a great deal of wealth opportunity (or lack thereof) from our local economy. Credit is a social phenomenon, so wealth and poverty can become infectious. If you're able to easily work and pay for necessities (because of opportunities largely provided by market climate), then you have the money to get every bee sting looked at. It becomes a matter of generating sustainable wealth production, which boosts the pool of potential solutions avilable.

I think the communication potential of OLPC-style laptops is a much bigger draw than the educational one. Could be the infrastructure needed to leapfrog over major industrialization in regions seemingly rich in natural resources and workforce potential, which are squandered by maligned markets. What happens if children in poor markets have laptops? It could provide a means of overcoming parental (and perhaps governmental) problems bottom-up.

</comment></comment><comment><USER16> I can always tell who's actually been poor for any extended period of time, versus who hasn't, by the way they talk about the poor.

I've been in and out of poverty a few times. There is some truth to all of what everybody says, and yet none of what anybody says is the whole truth to it.

There are individual factors: if you're uneducated, or have a lower than average intelligence, or lack self discipline, or would just tend to prefer not to work, then you're more likely to be poor. But, not all poor people fit any of those categories.

If you're used to receiving hand-outs without having to work much for them, then you're more likely to keep accepting hand-outs. But, not everybody fits that, either.

There are a bunch of people that made one or two bad decisions at some point. They don't have to be stupid decisions, they could just be points where the person took a risk and the risk cost them dearly. Those people can then find themselves in one of the most challenging downward spirals that we have in Western society.

The poorer you are, the more effort it takes to become less poor. Think about that for a minute. For example, if you're living in an area with good public transportation -- so that you don't need your own car -- then your rents are likely higher than they would be in more rural areas, where you'd need a car. So, if you're poor enough that you can't afford to maintain a car, and you can't afford high rent, then what do you do? You have to spend even more resources just staying afloat, making it back and forth to work every day.

Inevitably, people who are trying to work their way out of poverty will begin to skim from one of two precious resources: their food, or their sleep. Either they'll take on extra jobs, and work 60 hours a week (or more), or they'll try to save money on their groceries.

It's possible to save money on groceries and still eat well, but that requires more time and attention. Those working their way out of poverty don't tend to have lots of time and attention to spread around.

As you continue to trim down your food budget, and/or cut back on sleep, you'll develop higher and higher levels of stress and exhaustion, which make it harder to deal with new problems as they arise. One of the things the article does get right is the mindset of some of those in poverty: each new thing is a problem, not an opportunity. Each thing that comes along is something that has to be dealt with, allocated resources to, worked around.

So, you end up in this vicious cycle, where you start falling behind because you're too overwhelmed and exhausted to deal with new problems as they arise.

Make no mistake about it, these people are fraught with problems. They can't afford a good, reliable car, so they have to deal with cars that break down, that require maintenance, or -- in California's case -- can't make it through the hairy mess of smog legislation.

There's no magic, easy solution for a person in that situation. They have to work their ass off, and it's pretty even odds that the average person in the same situation doesn't have the fortitude to do it.

In a society where over half of the population lives in poverty, the problem of poverty can reach this incredible runaway condition, where there aren't enough people left that can help others out of poverty, by providing well-paid jobs, training, and education.

</comment><comment><USER12> I don't think that you can eradicate poverty (handouts don't count) because there simply isn't enough non-subsistence related work for 6 billion people.

for our purposes poverty = subsistence or close to it

once energy is cheap (distributed solar) humanity can turn to the problem of food distribution and education. Once we start getting more people educated more einstein's and other people who add disproportionate value to humanity should pop up and we'll get accelerating returns.

the point of all this is to solve the population problem before the population problem solves us, so to speak.

</comment><comment><USER17> No.

Longer answer: My great-grandfather Reginald Braithwaite was one of nine children (that we know survived) growing up in a one-room shack in Barbados. His son Leonard was the first Black Member of Provincial Parliament in Ontario. His grand-daughter Gwen was the first woman AND the first person of colour to work in Systems analysis with Empire Life.

Sadly, the (possibly apocryphal) Chinese Proverb about returning to poverty in four generations may hold: her son is chiefly known for blogging.

</comment><comment><USER18> The article makes a very good point. I like the dents-in-the-car metaphor. I don't, however, agree with how he interpreted it. If I have a car with, say, ten dents in it, and I get one more, no, I am not inclined to try to fix it. And let us follow his story, and say that someone comes along and fixes all but two of those dents for me.

The question is, does the fact that I have fewer dents in my car make me more likely to fix the others? If someone comes along and does almost all of my dishes for me, am I more likely to wash the last few myself?

I believe the answer to that is not, as Bennett suggests, "Yes."

If someone comes along and fixes most of my car for me, or cleans most of my dishes, when I had no inclination of doing it myself, why would I stop them? If someone is going to come and fix my problems for me, why do it myself? All you have to do is wait long enough, and, like _magic_ it's done for you!

So while it is an interesting theory, the problem is, people become set in their habits fairly quickly. If I do not wash my dishes one day, I am not really more inclined to wash them the next. Indeed, why should I? There is suddenly an almost empty sink in which to store the dirty ones.

<comment><USER19> You could try it: go to a friend's home that has his sink full of dishes all the time.

Wash them all but two.

Go there a couple hours later and see what happened.

That would only be a sample of one though. The experiment may be worth just to make you realize how powerful the mixture of gratitude, self-hate, the willingness to help oneself, greediness and generosity is.

<comment><USER18> Haha, I already know the result. I live in a house with four other girls, and the sink is usually filled with any number of dishes. Once it becomes completely piled up (as we don't eat together, and most of us cook real meals, this usually happens about every other day), one of us will become disgusted with the others and empty the dishwasher, fill it with dirty dishes, and clean most of the dishes left in the sink.

Do the remaining two pans and glass get cleaned by anyone else?

Of course not; they are the base dishes that we pile everything else on top of that day.

Why clean the remaining two dishes, there was originally an entire sink full of them! Comparatively, it's almost spotless!

</comment></comment></comment><comment><USER20> A negative income tax seems to me like a generally good, if naive, solution.

Of course the problem is that a straight forward negative income tax creates a resistance level where each additional dollar earned is worth less and less. The simple negative income tax leads to the situation in the 1970's study mentioned in the article (people are discouraged from working).

I think the solutions lies in creating support levels, or income targets. I.e. $15k or less is taxed at 0%, $15k - 20k at -5%. This would establish a support level at $15k.

I can even imagine a system where meeting an "income goal" (support level) one year triggers a higher one for the next year. I.e. if you make $16k in 2008 and are taxed at -5%, you must make $20k in 2009 to receive the -5% rate again, otherwise you'll be taxed at 0%.

Eventually, if the person keeps meeting income targets, they'll no longer be poor (by definition).

<comment><USER13> How about just handing out a certain amount with no strings attached at all? To everyone.

<comment><USER13> And finance by a tax, obviously. So you still get a positive net outflow from better off people.

</comment></comment></comment><comment><USER21> A response: <http://wirkman.net/wordpress/?p=295>

"By the way, vice in any form is self-reinforcing, as he suggests. Ancient moralists realized it; modern "mental health" professionals do, too. The behavior of poor people is often that of simple vice. It is not new, nor are the traps involved.

Example? Think of becoming fat: the fatter you get, the harder it is to exercise, the less incentive you have to exercise; the less you exercise, the fatter you get. You get caught in a feedback loop that spirals into imbalance and self-destruction. Sloth and gluttony (the old terms for two major causes of being overweight) are not new nor are they hard to understand."

(Please note that I am not agreeing with or endorsing this opinion, merely providing a link)

<comment><USER22> Classifying poverty as vice is worthwhile to a point, but works well only in very general ways (I know it wasn't your opinion, it's just worth discussing). The main problem that I see with that view, however, is this:

Take a 12-year-old kid in middle school. Let's assume he is bright enough to do well, if he did the homework, etc. He goes home every day to a dirty house, where he spends hours by himself playing video games. His mother is at work earning an hourly wage, and when she gets home, she is bitter and sarcastic. His father is gone. There isn't enough money to pay the bills, so the phone, tv, etc. are constantly being turned on and off (i.e., general chaos).

At his suburban middle school, he has to endure the humiliation of being pushed toward lower-status "vocational" programs despite his (at least average) ability, because of his poor attitude, laziness and the fact that his family is known in his hometown as being somewhat "troubled."

It is only natural that a young person in such a situation might become disinclined to work hard, because he doesn't know what the point of "working hard" is. In his world, and the world of his family, "working hard" just means putting in more hours that enrich someone else. He hasn't been exposed to any other ways of life, and the well-to-do telling him that he's "lazy" probably won't serve to motivate.

Having said all that, there is nothing stopping this person from realizing the error of his ways as an adult and acting accordingly. Luckily, we have many examples of successful "late bloomers" available to us these days, but I think for many kids the damage will have been permanent.

<comment><USER21> And, furthermore, being stereotyped as a poor person will (in a statistical sense) make him act more as a poor person is stereotyped to act: [http://www.sciam.com/article.cfm?id=how-stereotyping- yoursel...](http://www.sciam.com/article.cfm?id=how-stereotyping-yourself- contributes-to-success&print=true) .

(No worries about discussing it, I was hoping to discuss it. I just get paranoid that everyone assumes that I believe every word of every link I post)

</comment></comment></comment><comment> daniel-cussen It would be interesting to see what the path dependence of poverty is.

</comment><comment><USER23> this article is much more accurate than the ones i've seen on HN about poverty in the past. still doesn't hit the nail on the head, but its a lot closer.

</comment><comment><USER24> Poverty as it exists in America today is mostly a matter of breeding and culture. A thousand words on poverty and no mention of heritability? Drake either has his head up his ass or his PC blinders on too tight.

<comment><USER25> Ok, why don't you enlighten us all on how "breeding" causes poverty.

You might want to check out something like "Guns, Germs, and Steel", which is one of the latest works to effectively debunk your assertion, pointing out, as the article does, how poverty leads to poverty.

<comment><USER26> Guns, germs, and steel actually points out how centuries of being bred in the presence of prevalent disease due to living in close quarters with domesticated animals was a huge key in keeping Europe out of poverty and helping them ruthlessly dominate the Americas.

</comment></comment></comment><comment><USER27> Offhand, it doesn't smell like hacker news to me. Here's why: it's already touched off a thread on politics. I'm not convinced that these things don't degrade with time. And I am certain that in any case, as hackers, our "comparative advantage" is not in discussing politics.

<comment><USER11> Another view would be that it is everyones responsibility in a democratic society to vigourously (but respectfully) debate how that society should be structured.

<comment><USER22> Yet another view would be that to remove one's self from political discussions with one's peers based upon other, unrelated criteria, such as one's perception of one's self as a hacker, only serves to underestimate the broad capabilities of the human mind.

<comment><USER27> I like to talk politics too, actually. However, I think it's an argument that is poisonous for sites like this. I don't want to see a bunch of links from mises.org, and the equivalent from the other side - I can get that stuff elsewhere.

</comment></comment></comment></comment><comment><USER28> The whole article could have been shortened to this one paragraph:

 _In the early 1970s, a large-scale study gave poor people in four cities a so-called "negative income tax," a no-strings-attached payment based on how little money they made. The conclusion: the aid tended to discourage work._

Yeah, that's right. The obvious occurred, as usual. All such theories, and all such fawning articles, rely upon one unalterable precondition: Nobody involved has actually lived among the destitute, while destitute.

<comment><USER29> Actually, that's the opposite of what the article is arguing (or to be more accurate, what the guy who the article is about is arguing).

Direct quote:

 _Reducing the number of economic hardships that the poor have to deal with actually make them more, not less, likely to work, just as repairing most of the dents on a car makes the owner more likely to fix the last couple on his own. Simply giving the poor money with no strings attached, rather than using it, as federal and state governments do now, to try to encourage specific behaviors - food stamps to make sure money doesn't get spent on drugs or non- necessities, education grants to encourage schooling, time limits on benefits to encourage recipients to look for work - would be just as effective, and with far less bureaucracy._

What you quoted was a common rebuttal to the argument above, which the guy in the article counters with:

 _Karelis responds that the data from that experiment is in fact quite ambiguous, and there has been debate among economists over how to interpret the results. But ultimately, he believes, the strength of his arguments is less in how they fit with the economic work that's been done to date on poverty - much of which he is suspicious of anyway - but in how familiar they feel to all of us, rich or poor._

* Edit: Formatted quotes, thought I could use Markdown.

<comment><USER28> _that's the opposite of what the article is arguing_

Exactly. If I wanted to summarize the argument of the article I would translate from newspeak to English:

 _We want to pay right-thinking, liberal arts majors middle class salaries for them to administer money distributions from functional people to dysfunctional people. We have no data to suggest this will help anyone, but we are pretty sure it will help ourselves._

<comment><USER30> Right-o, to read between the lines here:

"Dysfunctional" people are poor because they deserve it, because they are dysfunctional and have not earned anything. "Functional" people are wealthy because they are functional and have earned their wealth.

Let's take a look at a time in one's life before anything can be earned or deserved: At birth, does one newborn somehow deserve better education, improved nutrition, and a life that will offer far more opportunities and fewer hardships than some other child?

No, of course not: By your own ethos, you only deserve what you have earned. There is no way to make a moral argument that newborns deserve anything other than equal circumstances to begin to create a life for themselves. (Unless you are the sort who believes you chose your parents well and deserve the just rewards of that choice....)

Even for the Ayn-Rand libertarian there's a pretty compelling case to be made for widespread welfare efforts: not for the poor, who may have earned their own hardships, but for their children who will suffer without having done a thing to deserve it.

<comment><USER28> Strawman. Sufficiently so that I won't comment further than to say that I was translating what I perceive _them_ to believe--"them" being the class of people who thrive on dysfunctional populations.

<comment><USER31> crux_ makes a very strong argument that deserves to be addressed rather than dismissed without comment.

<comment><USER28> Well, crux_ misrepresented my views, and that's that.

But fine:

 _At birth, does one newborn somehow deserve better education, improved nutrition, and a life that will offer far more opportunities and fewer hardships than some other child?_

In fact, parents are responsible for their own children. I am not responsible for other people's children. That is a hard, cold fact. The only way to force equality is just that: To force it. People who are careful with their finances, with their vocations, with their reproductive activity inevitably wind up supporting other people's children. Think what you will about that. To me, it is disgustingly criminal.

<comment><USER32> _In fact, parents are responsible for their own children. I am not responsible for other people's children. That is a hard, cold fact._

That doesn't sound like a "cold, hard fact" to me. It sounds like an _opinion_ on the best way to structure responsibility within a society.

Do you believe you have any responsibilities at all, to society at large? If so, why do you specifically exclude children?

<comment><USER28> _Do you believe you have any responsibilities at all, to society at large?_

Yes: To not force others to raise my children.

<comment><USER33> That's not a responsibility to society. That's a rejection of society. Which is to say, in your eagerness to repeat your previous point again, you're deliberately avoiding the question asked of you. If the answer is "no", you shouldn't be afraid to say so.</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment>