Broken Symmetry

Updated Blog Roll

I just noticed today that my blog roll was cutting off at ten, and I had gone past that limit a while back. Now fixed. I also added a couple of new blogs to the roll because I find myself going back to them over and over again lately.

Editorial Note: New Categories

For some reason I got it in my head that it would be a good idea to go back and redo my categories on this blog. The categories before yesterday were default plus a handful that I added over time. You can see the new list of categories at left, which are a far better fit. I hope this will be useful to readers interesting in learning more about some of the topics covered -- especially symmetry breaking, synchronization, flow, and systems theory.

Reconfiguration of Feed

I've reconfigured the feed to send only excerpts rather than full posts, and I wanted to explain why.

Over the past few months, I've been unable to overcome the habit of editing and re-editing my posts.  Ideally, one would do all the editing before the post goes up.  But as anybody who has done blogging for a reasonable length of time can tell you, this is very difficult.  Thus, I've switched from a full-length posts to an excerpts only feed to ensure that readers who have subscribed to the feed are getting the most recent version of whatever post they're interested in.

Cultural Norms within the Blogosphere

Cass Sunstein and Eugene Volokh discuss (really not much of a debate) the blogosphere.  Sunstein is worried about the echochamber effect, and what cultural norms would promote better group deliberation and hence functional democracy.

Sunstein is worried that people are going to polarize along ideological lines because so many blogs pander to particular ideological views.  Sunstein's work on incompletely theorized agreements in the past has emphasized how ideological debates can be counterproductive to democracy.  He points to Madison as somebody who was the institutional architect behind the idea of substituting election contests for ideological debates.

Volokh, who has more on the ground experience with the blogosphere, points out that we shouldn't be too worried about ideological polarization so long as we can get lots of people with lots of different views onto the Internet.  The problems would be worse if there were particular ideological groups that did not have access to the Internet.  But that doesn't seem to be the case right now.

My perspective is that the link structure of the web is going to permit more ideological keiretsus.  Polarization is a function of both inability to commit (which might be the result of differences in ideology) and ability to communicate.  The Internet makes communication easier.  It doesn't distort ideological differences, although it does encourage people to express them, which psychologists know will make the person who expresses the ideology to feel more strongly committed to it.

In other words, Sunstein has a valid concern, and it should addressed by focussing on how and when people choose to begin expressing their ideological beliefs to one-another online.  If people start expressing strong ideological beliefs before they've explored a variety of theories, then they may end up stuck in a belief-pattern that doesn't fully represent themselves.

Perhaps government and private entities should work harder to ensure that each person expressing herself online has both enough accountability to avoid the temptation to do the ideological equivalent of a driveby and enough control over her content to ensure that she can take it down or edit it if and when she later changes her mind about any or all of it.  And social norms that permit for people to change their minds should be encouraged.

On Why Improving Dynamic Economic Theory is Important: Schumpeter v. Arrow

Lately I've been exploring dynamic economic theory on this blog, and I'm spending more time than I originally intended fleshing out a dynamic model for market prices.  I wanted to take a brief moment to explain to the readers of this blog why I'm doing that, since it probably won't be obvious for everyone.

As far as most economists are concerned, state of the art mental models for dynamic economic theory revolve around two positions most famously articulated by economists Josef Schumpeter and Kenneth Arrow.  Schumpeter emphasized how innovation required temporary monopolies.  Arrow emphasized how monopolies were counterproductive to innovation because monopolists had costs associated with both their existing market and any new market that emerged through innovation.

A few scholars have already figured out that there was really no argument between Schumpeter and Arrow.  In fact, they were looking at the same economy of innovation, but within different windows of time.  In particular, Schumpeter had in mind R&D and early-stage commercialization.  As Arrow knew when he wrote about what would later be called "the Arrow effect," neither R&D nor early-stage commercialization are likely to take root or grow within the environment of a large-scale corporation focussed on manufacturing, marketing, and distributing consumer products.  Schumpeter, for his part, would have agreed that we don't want large-scale corporations to have monopolies that permit them to ignore innovations that consumers want.

The simple fact is that Arrow and Schumpeter probably don't have as much of a disagreement as some lawyers and economists seem to think.  In fact, both would probably have agreed that were it possible, it would be in the best interests of both inventors and entrepreneurs to have a division of labor between inventing and entrepreneurship, with separate sources of financing and services.  Inventors need entrepreneurs to take their ideas to consumers.  Entrepreneurs need inventors to inspire them with big new ideas, the kind that lead to the waves of creative destruction that Schumpeter described and that we have lived through in the last few decades.

Which brings me back to my explanation for why I've been thinking and writing about dynamic economic theory.  My belief is that most arguments over these issues would be resolved if economists had better mental models for understanding the life cycle of technology markets.  I'm trying in a humble way to chip away at the problem by proposing some fundamental new ways of thinking about supply, demand, and market price.  My hope is that these new mental models will put us back on the right footing for tackling the most complex issues we face in setting policy and designing institutions, both public and private, that will promote innovation and growth.

Editorial Note: Cross-Posts to Patent Prospector

Due to non-overlapping audience interest, I will no longer be consistently cross-posting patent-related posts to Patent Prospector.  For the time being at least, Broken Symmetry is the best venue for finding my commentary, including patent-related commentary.  I will continue to enjoy reading the commentary from Gary and Jordan at Patent Prospector.

I consider blogging a collaborative enterprise.  Please let me know in a comment or email if there are topics that you would like to hear more (or less) about.

Editorial Note: Broken Symmetry and the Lollapalooza Effect

When I was in graduate school at the University of Chicago I took a graduate level physics course on non-equilibrium statistical mechanics.  I struggled in that course.  There were some kids in there that were just off the charts.  I ended up with what one might call a "gentleman's B."  But I did spend quite a bit of time thinking about and visualizing what was happening in the systems we studied in that course.  A few years later, when I started learning about the economic analysis of law, I started thinking about how, with lots of simplifying assumptions, markets could be modeled as physical systems.  And this got me to thinking about how non-equilibrium statistical mechanics might have some interesting applications to the study of economics.

Earlier this year, I started reading Charlie Munger, another ex-physicist who has spent some time thinking about markets.  I read about what he describes as the "lollapalooza effect," which sometimes occurs in markets, and realized that it was basically a description of spontaneous symmetry breaking.

To see the connection, you have to make a lot of simplifying assumptions about how people behave.  Charlie's strength as an investor is probably due to his ability to sense inarticulately when his simplifying assumptions are strong enough to be trusted and when they should be kept under watch.  But here's how one physicist has come to visualize the lollapalooza effect of broken symmetry:

People can be modeled as particles in a potential.  The contours of the potential are determined by the opportunity costs of engaging in various activities (driving, working, playing, everything).  So you have a manifold that includes a variety of local equilibria corresponding to various states of the world.  It gets messy fast determining the shape of these contours because the contours of the manifold (i.e., the opportunity costs of various activities) are themselves a function of the previous activities of the particles.

There's enough energy (capital) in the system to keep the particles bouncing around in one local equilibrium, but not enough for many (or any) of them to bounce out into a new equilibrium.  But every once in a while, there's a perturbation to the system (an exogenous shock), which drives enough of the particles into a particular direction at a high enough energy to move them into a new local equlibrium in which they have different and new local symmetries.  Local symmetry just means what you would see if you were an ant in the particle's position on the manifold.  If the particles can store information and communicate (this is where we completely lose the physicists if we haven't lost them already), they've now got a larger map of their system.

Scale invariance (a tool used by physicists to describe transitions between equilibria) occurs in political or economic revolutions when so much energy gets added to the system that local symmetries are no longer important.  The particles just bounce around so fast that they don't even notice the contours. Once things settle down, they'll tend to settle into new and different local equlibrium.  But it's often difficult to predict with certainty which local equilibria the particles will fall into. Revolutions are messy and difficult to control.  The exception might be for a catalyzed phase transition in which one particle or small group of particles act as "seed crystals," so that everybody ends up moving with them into a new local equilibrium.

Firms and even governments are spontaneously self-assembled organizations of particles that result from the symmetries of particular local equilibria given the amount of energy (capital) available to sustain the organization.  Just like water can take the form of a solid, liquid, or vapor given the amount of energy (measured as a temperature distribution) and its interactions with surrounding molecules (including other water molecules), people will self-assemble into different kinds of private and public institutions in order to minimize the amount of capital required to sustain their assembly.

Incidentally, the concept of allocative efficiency in economics (i.e., the principle of maximizing utility over the manifold for every particle) corresponds pretty closely to the extremization of hamiltonians and lagrangians in physics.  But the transactions costs of engaging in social and economic transactions between particles are dissipative forces (i.e., stickiness to the manifold) that have to be assumed away to do the calculations and find the most efficient equations of motion (i.e., institutional design).  So it's no surprise that the Coase Theorem has to assume away transactions costs in order to say that the default local equilibrium assigned by government doesn't matter.

Updated RSS Feed

I just switched my RSS feed to Feed Burner, and added the ability for readers to subscribe by email.  I don't post very often, so hopefully readers will find this a more convenient way to keep track of what's new on Broken Symmetry.

Editorial Note

Having read and enjoyed others' blogs for about five years, I now leap into the blogosphere.  For those keeping score, two things kept me from starting a blog sooner: First, I note that bloggers tend to systematically underestimate the size and diversity of their audience.  As a person who has been known to put his foot in his mouth, this still scares me.  I have come to believe, however, that the rewards of reaching out to readers, getting feedback, and building community may outweigh the risks of embarrassment.

Second, I find that the most interesting blogs focus on a particular topic.  I get enough of the quotidien without having to read about it.  But the selection of a single topic has posed too difficult a problem for me to solve.  My interests are somewhat diverse.  Whether this makes me a dilettante or a generalist I shall leave for others to say.  Here then is a list of several topics that I expect to cover on this blog:

• Human capital (the development and transfer thereof)
• Patent and copyright law
• Ownership and attribution rules for patents and copyrights
• Venture capital and investing
• How the Internet affects all of the above and more
• Economic analysis of law and public choice theory

Here is the short explanation for the name ("Broken Symmetry") I have chosen for the blog.  Each of the several topics relates to communities, markets, or governments in transition.  (Except for economic analysis of law and public choice theory, which I am interested in primarily as a quantitative framework for understanding social, legal, and political phenomena.)  When a phase transition occurs in matter, the new phase often has different symmetries in interatomic or intermolecular structure.  For example, atoms or molecules in a fluid state have a translational symmetry that is broken by transition to a solid state.  Hence, the observation of broken symmetry at the atomic or molecular level can signal that a phase transition is in progress.  I spend a fair amount of time thinking about whether the characteristics of particular social, financial, or political transactions signify a broken symmetry in the communities, markets, or constitutions in which they occur.