Title 24

We are about to start a house remodel in California - and California has this incredibly complex set of rules and regulations called Title 24. They relate to lighting, heating, energy efficiency primarily. The intent was good but there are some really ugly underlying issues:

• Because it specifies specific makes and models as qualifying the ability to use new technology is constrained
• It also assumes specific construction practices which often collide with other issues you might care about - like seismic construction

 It would have been better if the energy efficiency had been driven by a tax on the fuel source - like a carbon tax but that was probably undoable but my biggest complaint is that Title 24's key driving metric is "energy use per square foot".


So instead of trying to minimize energy use per person living in the house we are forced to focus on energy use per square foot. So really big houses are better because you can have more internal volume (inside rooms, closets etc.) than a tiny house with relatively more windows.

The other problem of course is that the rules are complex enough that you have to hire 3rd parties to run the software to tell the permit people what your score is, which means of course that now we have a new special interest group that will lobby to insure that the rules never become simple.

Problems - what makes the cut

Happy New Year - okay a bit early

I just spent a bit of time on Fast Company's CoDesign site which has some very cool gadgets - some of it high tech and expensive - some it it less "cool" but probably more important - "A Simple Solar Oven Makes Salt Water Drinkable", a foot powered washing machine, a respirator mask for babies and on the tech side a cardboard bicycle, and a gadget called Twine that allows you to easily connect the physical parts of your world to the internet.  All well and good, cool, potentially life changing technology for the developing world, and higher tech, more consumer technology for the developed world.

So, what was the problem. Short answer - a big missing piece - no technology (cool or otherwise) for the 47%. 

If I think about the bottom half of the USA - I see problems that are not being addressed by the "designers". I do not see technologies to:

• Improve living conditions for those living in abject poverty
• or technology to improve schools
• or technology to repair infrastructure
• or that offers training for careers
• or safer streets
• or cleaner water, reduced pollution
• lower cost but great education

More on this later - and Yes I understand - these sorts of problems are more than technological,they  require greater investment, are subject to regulation and involve ("OHMIGOD") politics, nevertheless it does seem to be an interesting gap in the framework of a world increasingly focused on design solutions.

Endowments, pension funds and other perspectives

I find myself puzzled, by markets that seem to be, after a brief trip through rational pricing, reverting to their bipolar ways and I am puzzled by the investing infrastructure, the social and political networks that make investment decisions.

I expect to be puzzled by markets, they are, after all, strange voting networks that only haphazardly measure value. No, what puzzles me more are institutions, like public pension funds.

I met with the CIO of one last week, and he seemed perfectly nice, and absolutely clueless. To be fair, he's probably not clueless, it's just that his perfectly normal priorities "keep my job", "don't get fired", etc. force him into an asset allocation that is clearly suboptimal for his members. He is invested in public and private equities, plugged into a few funds that charge him "2 and 20" and absolutely unable to pick something different from the current mix of his peers. Because if he picks something "different" and underperforms he gets fired, if he "picks" an allocation that performs poorly but just like his peers, then not.

Which all makes sense and at the same time makes no sense.

I was at the gym this AM and someone had left a copy of Middlebury magazine (for alums I presume), I didn't get the date but it included a report from the poor guy who is responsible for managing (or at least directing) Middlebury's endowment and in a lovely graphic, off to one side it said (I paraphrase) expected average annual returns 9%.

I'm sure Middleburyians are well connected and well advised. They are probably well spoken and have all learned gravitas at their mother's knee, but I find it astonishing that they can throw out such a number with so little compunction. Maybe if they added the footnote ( ± 12%) it would help their graduates understand the roller coaster ride to which they are strapped. Maybe it could look like the calorie disclosure on a package of cereal, "Contents: Fees (FAT) 4% - Note: portfolios containing fees greater than 1% are likely to suffer poor portfolio health"

In the absence of further discussion I find the combination of career biased portfolios and mean value return estimation (biased) to be confusing. But , on futher reflection maybe it's not. Maybe the real message is terribly clear, in a world of too much leverage where expenditures have been based on spending the present value of future earnings (long before they have actually been earned) maybe in that world the real story has been well written, assume a sunny disposition and don't ring the alarm bell, it scares the horses.

Zopa and "The Wisdom of Crowds"

I've been looking at two websites much too often lately:
The first
is ZOPA, the first P2P borrowing/lending network, brought to you by the folks who brought you EGG, the UK's first online bank.

The important thing is that this network replaces a bank with what a bank would be if it was invented today, i.e. a network that brings together borrowers and lenders and allows borrowers to seek capital in a marketplace and it allows lenders to seek an investment. All with minimal regulation (they devote a fair amount of time to identity and security).

The second
is Google's first disclosure of their interest in predictive networks. They entitle their post "Wisdom of crowds" after Surowiecki's book of he same name.

The point is that maybe collective predictive markets are more powerful than we think ...