moneyFYI
Financial Freedom Is Merely Organized Common Sense
Another Dimension To Problems
Problems are not independent of the tools that solve them.
When I was at university in the mid 60s, a byte of RAM or a byte of disk storage cost roughly $1.00. Something around $8.00 in today’s money. A 4k RAM card would cover half a desk. According to an IBM service rep, they had reached maximum speed because to go faster would require the electricity in the circuits to exceed the speed of light. There was less than a gigabyte of RAM in the entire world.
In 1965, the IBM 2311 disk drive was 7.5 megabytes and about the size of a top loading washing machine. Five terrabytes would use more electric power than you could provide and would occupy a large warehouse. Any large database was unusable in real time.
Today a gigabyte of hard drive memory costs about $0.04. A 5-terrabyte drive will fit in a jacket pocket. Large databases are readily accessible and the tools to analyze them exist. Retailers know more about your shopping preferences than you do. Both a blessing and a curse. Privacy issues and security being the curses. Efficiency and convenience the blessing.
The processors are almost infinitely faster and more reliable. A computer to day is not comparable to one 50 years ago. That matters.
Nothing is free. Thomas Sowell has pointed out that there are no solutions, only tradeoffs. We must recognize that and find ways that make tradeoffs palatable.
Someday important problems will be readily solved because the means to solve them become available or because the answers appear quickly.
Complex problems like weather, social conditions, stock markets and health are collections of problems. Solve each piece, select the ones that matter, put the pieces in the right order and you have a useful answer. Very time consuming if there are many data points.
For example if the order matters choosing three things from a group of six can be done in 120 ways. Adding data creates a near boundless set of possibilities. Selecting six items, in order, from a group of fifteen can be done in more than 3.6 million ways. Here in the real world no complex problem has so few as fifteen factors. We find that even if you have all the data, finding the one answer among the many choices is still a formidable problem.
Stay up with technology. Even some simple problems, are not solvable exactly. Like your financial plan. How do working income, investment yield, taxation, spending, time to work, time to retire, needs of children, health and mistakes work collectively. Even if you knew the possibilities for each factor by month or quarter you would be dead before you get test all the outcomes with today’s technology. Given more speed, better software, and lower prices it will happen.
World peace, poverty, hunger, health and many other large and intractable problems may be solvable someday.
I am curious to know what we will talk about when the weather is no longer a mystery.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com
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