Longreads + Open Thread

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Longreads

• Trevor Klee: You live in a world that philosophy built. There's a whole set of beliefs that are 1) obvious enough to most people today that they don't get a second thought, but 2) non-obvious, and possibly abhorrent, to people living in the past (or the future). And many of these are descended in some sense from philosophy—just refracted through many layers of teaching and interpretation. Philosophy gets to cheat a little bit here, since its definition, like that of AI until recently, is a sort of catch-all for ideas that are novel, fun to argue about, and not part of any specific discipline ("natural philosophy" turned into physics; Adam Smith considered himself a moral philosopher rather than an economist). So the field tends to get to big abstractions before those abstractions have practical consequences.
• Claire McNear in The Ringer on the search for some lost Jeopardy tapes. It's always striking how much content simply disappears over time; we have references to many ancient texts for which we have no surviving copies (though this is slowly changing). The absolute cap on our knowledge of history declines over time as memories decay and physical artifacts fall apart, but the percentage of that history that we can conceivably access keeps improving as we get more tools and as historians and hobbyists get better at finding each other.
• Anjeanette Damon, Byard Duncan, and Mollie Simon of ProPublica have an investigation of the "We Buy Ugly Houses" company, HomeVestor. The company does not come out looking good. HomeVestor is in the business of making quick purchases of distressed homes, and in some cases that means finding people who are desperate or unable to negotiate. And since it’s a franchised business, which means there’s an interesting dynamic at play here: franchises match the resources of a national brand to the incentives of a small business, and with a high internal discount rate. One promising thing about this story is that it's peppered with references to HomeVestor telling its franchisees to stop doing what ProPublica is drawing attention to.
• And from a few years ago, Simon Akam in Bloomberg looks at the world of London clerks, (very well-paid) intermediaries in the legal profession who handle the business side for barristers, who are the lawyers who argue in court rather than provide advice and create contracts. There is simply no end to how many intermediaries a sufficiently complicated business can support, and since the entire structure of a profession can evolve around these middlemen, such jobs are surprisingly durable.
  
  It's fun from the first paragraph: "At Fountain Court Chambers in central London, the senior clerk is called Alex Taylor. A trim, bald 54-year-old who favors Italian suiting, Taylor isn’t actually named Alex. Traditionally in English law, should a newly hired clerk have the same Christian name as an existing member of the staff, he’s given a new one, allegedly to avoid confusion on the telephone. During his career, Taylor has been through no fewer than three names. His birth certificate reads “Mark.” When he first got to Fountain Court in 1979, the presence of another Mark saw him renamed John. Taylor remained a John through moves to two other chambers. Upon returning to Fountain Court, in 2008, he became Alex. At home his wife still calls him Mark."
• Michael Fritzell of Asian Century Stocks has a great introduction to value investing as "Long-term front-running.". A value investor, like any other investor, is trying to get in ahead of someone else who will make the same trade. Markets are dynamic; sometimes the best way to do this is to focus entirely on extrapolating behavior and predicting when it will mean-revert, and at other times the edge is from completely ignoring what other people are doing and just focusing on what looks cheap. Fritzell's essay does a great job of showing how there's a meaningful sense in which value investing and momentum-driven day-trading are on the same continuum, even if they're at opposite ends.
• And in this week's Capital Gains: we look at where economic profits come from, with a dash of exposition on how to use Econ 101 even when it makes unrealistic assumptions.

Books

• The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News-and Divided a Country: Hotelling’s Law is the argument that in a competitive market, producers have an incentive to make their products as similar as possible; if you think of the market as a one-dimensional continuum with two competitors, moving closer to your competitor means capturing some of the customers on their side of the continuum without losing any of yours. More broadly, it’s a way to put some rigor around the idea that a straightforward way to improve a product is to look at its closest competitor and add whatever features there are that make that competitor different. The three things that stop this from happening are 1) competition across more dimensions, 2) new entrants outflanking the legacy participants, and 3) the combination of this, when a new entrant defines a new axis of competition. One thing we can conclude from this is that as a market matures, there will be more homogeneity among suppliers—and that as a corollary, when a market changes so it’s easier to enter, there’s more diversity in the offerings. Fox News is an example of this phenomenon. One of the striking things in the book is that early on, Fox actually inverted cable network economics: most cable channels got paid when cable companies carried them, but Fox actually paid for its initial distribution in order to get critical mass before it moved closer to the typical cable business model.

Open Thread

• Drop in any links or comments of interest to Diff readers.
• We're doing some work on understanding the AI/ML stack, particularly hardware and low-level software. If you've worked in this space, please reach out!

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Diff Jobs

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