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Delayed Gratification

Some say the only difference between rich and poor people is when they spend their money. I think it’s more complicated than that (the amount you make matters a lot, too), but there is an important lesson in waiting to spend your money until after you’ve invested first. This principle is even reflected in common sayings, such as “first work then play”. The principle is bigger than that though and goes beyond money: having the self-discipline to delay some joyful activity isn’t something babies are born with on day one. It’s a skill that has to be learned and for most of us it takes years to master. It is conditioned behavior that has helped us to build more advanced societies. It’s planning for a rainy day.

When our son was younger he visibly struggled with the concept. “Why should I wait if I can have it right now? ” he asked many times. I explained that it was important to first finish the tasks that were expected of him before he could reward himself with the activity he wanted to do or the toy he wanted to have.

Last week-end I took him grocery shopping and promised him to buy him a small toy as a reward. We had a great time working the list of groceries together and when we were almost done we strolled over to the toys aisle. Ro browsed the many toys they had, but couldn’t really get excited about a single one. After walking up and down the aisle, inspecting a toy, then putting it back on the shelf he declared: “I don’t want to buy a toy here today, daddy. I rather wait and buy the little drone I wanted for so long online.” While that decision was bad news for the brick and mortar store, I was extremely proud that he was able to overcome his impulse and rationalize about which toy he really wanted. Even if it meant to wait another two days until it arrived. Instant gratification was defeated. I immediately agreed to order that toy together at home (paid for from his money – as he offered) and praised him for the good choice he made.

He’s definitely growing up.

The big test for Germany’s social capitalism is looming

Germany has prided itself in striving for social consensus, while following a capitalist economic system. This has led to a high degree of social responsibility for companies operating out of Germany. They try to protect their employees from lay-offs, even when market conditions require adjustments in the work force. This protection of the social contract is backed by generous labor laws, high social security cost for both employers and employees (essentially taxes) and affects the bottom line of German companies, when compared with their international competition. In return it provides stable teams of long term employees, low turn over and predictable output. But the cracks in the system are starting to show. Much of the stability for the more senior part of the work force (with sometimes outdated skill sets) is paid by the younger generation. New college graduates are rarely offered a permanent position, and are frequently offered low paying internships, or time limited employment contracts. Frequently they are only able to enter the permanent work force after multiple years of lower paying employment arrangements.

So far the system has mostly worked, in large part thanks to the continuous productivity gains in the industry through automation, innovative technologies and dedicated work at reasonable pay by a large and highly educated work force.

When structural changes occurred in the past, such as the rotation out of coal mining into higher paying jobs such as production line workers, the government has heavily subsidized programs to retrain the work force. The results were mixed. It became clear that the workers that lost their jobs in the mines wouldn’t be the same workers that the booming automotive industry would hire for higher paying assembly line jobs. So there was a mismatch. The industrial transition was softened by state-financed early retirement programs, and retraining initiatives. Money that was ultimately lost to steer research activities into new technology sectors. (I remember a 65 billion subsidies program for the coal industry in the 90ies , when biotech startups needed money to get off the ground).

Now fast forward to 2020, where AI threatens to automate a vast number of high paying jobs in our societies: Sales clerks, cab drivers, truck drivers, assembly line workers, even lawyers and some say doctors will be largely replaced by AI in the medium term. This transition will have a brutal effect on western societies. Companies associated with BIG DATA will be the winners, everybody else pretty much a loser. If we’re not careful, highly functional societies run the risk of ending up in civil unrest and maybe civil war. A war across socio-economic classes. The socio economic shifts will be massive.

This is where social capitalism could shine. As companies in less protected capitalist countries such as the USA will shift fast and release large numbers of previously highly compensated workers and employees, countries like Germany will soften the blow by slowing the transition. It might help that Europe’s desire for privacy will help to slow the AI transition (which requires the free movement and access to all information).

So maybe Germany will be one of the big winners in this transition. In another scenario it will be left behind as the loser, which couldn’t adapt fast enough. AI will have outsized productivity advantages over any human being (think 24/7 operation). China is on its way to try. With lacking privacy laws and the centralized willingness to become the world leader in AI, there’s a good chance they might ultimately succeed. As of 2018 they’re graduating more engineers in China every year, than the rest of the world combined. IP protection is non existent, so the best western technologies are deployed rapidly in a country where IP rights cannot be enforced. Incremental innovation on top of novel technology – achieved locally with massive work forces will do the rest.

I would like for Germany to be successful in this scenario and be the role model of human capitalism as a way going forward. But based on the trends I see I’m unfortunately not very hopeful that this will be the reality we’ll experience.

Only time will tell.

Spectre and Meltdown Attacks Against Microprocessors

A pretty good summary on Meltdown and Spectre, how we got here and what to expect going forward, from my beloved Crypto expert Bruce Schneier (published on his free Cryptogram newsletter and website: https://www.schneier.com/crypto-gram.html


 

The security of pretty much every computer on the planet has just gotten a lot worse, and the only real solution — which of course is not a solution — is to throw them all away and buy new ones.

 

On January 3, researchers announced a series of major security vulnerabilities in the microprocessors at the heart of the world’s computers for the past 15-20 years. They’ve been named Spectre and Meltdown, and they have to do with manipulating different ways processors optimize performance by rearranging the order of instructions or performing different instructions in parallel. An attacker who controls one process on a system can use the vulnerabilities to steal secrets elsewhere on the computer.

 

This means that a malicious app on your phone could steal data from your other apps. Or a malicious program on your computer — maybe one running in a browser window from that sketchy site you’re visiting, or as a result of a phishing attack — can steal data elsewhere on your machine.

Cloud services, which often share machines amongst several customers, are especially vulnerable. This affects corporate applications running on cloud infrastructure, and end-user cloud applications like Google Drive. Someone can run a process in the cloud and steal data from every other user on the same hardware.

 

Information about these flaws has been secretly circulating amongst the major IT companies for months as they researched the ramifications and coordinated updates. The details were supposed to be released next week, but the story broke early and everyone is scrambling. By now all the major cloud vendors have patched their systems against the vulnerabilities that can be patched against.

 

“Throw it away and buy a new one” is ridiculous security advice, but it’s what US-CERT recommends. It is also unworkable. The problem is that there isn’t anything to buy that isn’t vulnerable. Pretty much every major processor made in the past 20 years is vulnerable to some flavor of these vulnerabilities. Patching against Meltdown can degrade performance by almost a third. And there’s no patch for Spectre; the microprocessors have to be redesigned to prevent the attack, and that will take years.

 

This is bad, but expect it more and more. Several trends are converging in a way that makes our current system of patching security vulnerabilities harder to implement.

 

The first is that these vulnerabilities affect embedded computers in consumer devices. Unlike our computers and phones, these systems are designed and produced at a lower profit margin with less engineering expertise. There aren’t security teams on call to write patches, and there often aren’t mechanisms to push patches onto the devices. We’re already seeing this with home routers, digital video recorders, and webcams. The vulnerability that allowed them to be taken over by the Mirai botnet last August simply can’t be fixed.

 

The second is that some of the patches require updating the computer’s firmware. This is much harder to walk consumers through, and is more likely to permanently brick the device if something goes wrong. It also requires more coordination. In November, Intel released a firmware update to fix a vulnerability in its Management Engine (ME): another flaw in its microprocessors. But it couldn’t get that update directly to users; it had to work with the individual hardware companies, and some of them just weren’t capable of getting the update to their customers.

 

We’re already seeing this. Some patches require users to disable the computer’s password, which means organizations can’t automate the patch.

Some antivirus software blocks the patch, or — worse — crashes the computer. This results in a three-step process: patch your antivirus software, patch your operating system, and *then* patch the computer’s firmware.

 

The final reason is the nature of these vulnerabilities themselves.

These aren’t normal software vulnerabilities, where a patch fixes the problem and everyone can move on. These vulnerabilities are in the fundamentals of how the microprocessor operates.

 

It shouldn’t be surprising that microprocessor designers have been building insecure hardware for 20 years. What’s surprising is that it took 20 years to discover it. In their rush to make computers faster, they weren’t thinking about security. They didn’t have the expertise to find these vulnerabilities. And those who did were too busy finding normal software vulnerabilities to examine microprocessors. Security researchers are starting to look more closely at these systems, so expect to hear about more vulnerabilities along these lines.

 

Spectre and Meltdown are pretty catastrophic vulnerabilities, but they only affect the confidentiality of data. Now that they — and the research into the Intel ME vulnerability — have shown researchers where to look, more is coming — and what they’ll find will be worse than either Spectre or Meltdown. There will be vulnerabilities that will allow attackers to manipulate or delete data across processes, potentially fatal in the computers controlling our cars or implanted medical devices. These will be similarly impossible to fix, and the only strategy will be to throw our devices away and buy new ones.

 

This isn’t to say you should immediately turn your computers and phones off and not use them for a few years. For the average user, this is just another attack method amongst many. All the major vendors are working on patches and workarounds for the attacks they can mitigate. All the normal security advice still applies: watch for phishing attacks, don’t click on strange e-mail attachments, don’t visit sketchy websites that might run malware on your browser, patch your systems regularly, and generally be careful on the Internet.

 

You probably won’t notice that performance hit once Meltdown is patched, except maybe in backup programs and networking applications. Embedded systems that do only one task, like your programmable thermostat or the computer in your refrigerator, are unaffected. Small microprocessors that don’t do all of the vulnerable fancy performance tricks are unaffected. Browsers will figure out how to mitigate this in software.

Overall, the security of the average Internet-of-Things device is so bad that this attack is in the noise compared to the previously known risks.

 

It’s a much bigger problem for cloud vendors; the performance hit will be expensive, but I expect that they’ll figure out some clever way of detecting and blocking the attacks. All in all, as bad as Spectre and Meltdown are, I think we got lucky.

 

But more are coming, and they’ll be worse. 2018 will be the year of microprocessor vulnerabilities, and it’s going to be a wild ride.