Current events for Beth’s class

Beth Chalecki asked me to give a talk on cyber security for her course at Boston College. While I won’t post the slide deck here, I will compile a reading list on the blog. I’d like to note that the blogroll at right includes several of the big names in the field: Bruce Schneier, C. Warren Axelrod, Ross Anderson, David Rice, Alessandro Acquisti, and others.

Documents

• National Strategy to Secure Cyberspace (US-CERT)
• Cyberspace Policy Review (White House Office of Cybersecurity)
• Presidential Decision Directive 63 (Clinton via FAS)
• US Cyber Command fact sheet and website

News items

• Stuxnet
• Ghostnet
• Estonia
• Georgia
• Rod Beckstrom
• Howard Schmidt
• William Lynn discusses the cyber domain in Foreign Affairs

Academic works

• Technology, Policy, Law and Ethics Regarding US Acquisition of Cyberattack Capabilities (Owens, Dam and Lin, eds.), full text at Macarthur Foundation
• Proceedings of a Workshop on Deterring Cyber Attacks (National Research Council Committee on Deterring Cyberattacks, Steinbruner, chair) *
• Building Security In (Gary McGraw and US-CERT)
• Cyber Warfare and Cyber Terrorism (Janczewski and Colarik, eds.)
• Cyberpower and National Security (Kramer, Starr and Wentz, eds.)
• Cyberpower (Nye)
• Cybersecurity Agenda (EastWest Institute)
• Commission on Cybersecurity for the 44th Presidency and their final report
• International Guide to Cyber Security (Westby)

* Beth: if you’d like to tackle cyber deterrence, Lukasik’s conference paper in these Proceedings (eds. Steinbruner et al., 2010, pp 99-111) is an interesting departure point for debate.

My blog doesn’t depress wages

I’m going to go out on a limb here and say Paul Bradshaw is wrong. The argument goes like this: drive up the supply of journalists, drive down the unit price of a story. Sounds fine, until you think through the argument more carefully. It only matters that hacks bloggers are giving away drivel content for free if their competition drives wages down.

What reduces the value of something economically? Increased supply or reduced demand are two key factors. And indeed, journalism as a profession has been consistently devalued economically as a result of one of those factors: increasing numbers of people who want to be journalists and who will work for free, or for low wages. The result is that the wages of journalists are very low – a pattern which predates the internet and the rise of blogging, etc.

This is rife with the same fallacies that convinced Lou Dobbs that unskilled immigrant labor drives down middle class American wages. Bradshaw’s pseudo-economic analysis treats journalists like fungible, undifferentiated commodities, just about the same as feed corn.

There are lots of markets where giving some stuff away doesn’t make the other stuff worthless. In fact, free-beer software creates entire business ecosystems for software, hardware, and services. Strategic giveaways are good business strategy. For more on that, read Tapscott and Williams or Chris Anderson.

Then there’s the question of whether blogs and papers are in the same market. They’re not. Newspapers do the hard job of editing: screening, curating, and fact-checking stories. The whole reason that you’ll pay to read the Financial Times but not my blog is because of their hard-won reputation for excellence.

If your newspaper is printing roundups of the “Here’s what the blogs are saying about…” variety, it’s time to switch your subscription.

Full hearing: US Senate on Cyber War Readiness

Highlights from the US Senate panel on cybersecurity 23 February 2010.

Mary Ann Davidson, CSO (Oracle). Required reading! Ms. Davidson masters the subject in bright prose. This is an excellent indictment of the rush deploy smart grid technologies before we’ve had time to harden them from the types of attacks that routinely take computers off line. Thought experiment: what level of unplanned downtime would you be comfortable with for your house’s electrical power? water? energy? Would you try to save 10% on your electric bill if for a system that you couldn’t be sure would work more than 99.9% of the time?

Even better, Ms. Davidson points out a crucial flaw in education. Computer science is applied mathematics, and few departments teach young programmers how to write secure software. If university departments don’t teach secure programming, we will need professional certifications to substitute, as with medical residencies, CFA exams for financial analysts, and professional societies for engineers and architects.

Vice Admiral Mike McConnell (Booz Allen Hamilton). Sound byte: “If there were a cyber war today, the United States would lose.” Some excellent recommendations for training a new class of software engineers, security professionals, and managers. Don’t be distracted by the salacious and unwarranted assertion at the outset. The rest of the testimony is good, and nobody is better informed than the Admiral.

Dr. James A. Lewis (CSIS). A couple of interesting metaphors. He compares cyberspace to a condominium and to a shopping mall, meaning that the space is all privately owned, and that neighbors have a compelling interest in one another’s behavior. Therefore all should be willing to submit to greater regulation. I’m inclined to agree with Borg’s statement (below) that government regulations are unlikely to keep pace with the rate of innovation. Rather  than ask the government to certify that buildings are safe, wouldn’t we be better off with private certification of a standard of risk, as we currently do with automobiles, houses, and financial management? Computers and especially software are endlessly complicated, and don’t lend themselves well to the same type of governance as broadcast media and airplane safety.

Lewis also makes a crucial overstatement when he says that there are no rules on the Internet or that the Internet is a wild west. Actually many national and state authorities have control over Internet commerce, fraud, and even transborder crimes. At a more fundamental level, Lewis’ lawless vision of the Internet is fundamentally at odds with Internet governance over every layer of the Internet, from the development of hardware standards and Internet protocol, to the assignment of names and numbers, to the software that runs servers and home desktops. Re-read Lessig, and see if you can imagine the Internet truly without rules.

Scott Borg (US-CCU). Focuses on 3 central problems: (1) the conflict is already here; (2) cyber conflict threatens future American prosperity; (3) fixing markets is the key to improving cyber security. I agree with Borg, but then I’m biased.

Rear Admiral James Arden Barnett, Jr., Ret. (FCC). An interesting point of view. I don’t have any problem with DHS assisting the country with situational awareness, but the philosophy of defense is extremely centralized. The greatest specific policy errors of homeland security in the last ten years have been efforts to provide one-size-fits-all information and requirements from a central national office: the national threat level scale, vastly increased expenditures on passenger screening at airports, and advice on creating a safe room for chemical gas attacks inside your home. There are too many computers, and too many businesses to expect that federal marshals can secure their IT infrastructure for them. Effective homeland defense will require businesses and individuals to have cheap, effective, and secure choices to accomplish the things they already know how to do: run their businesses and their households.

Export Trade Clusters

This post, as with the prior ones on trade clusters, aims to help visualize patterns of trade in the OECD from 50 years of partner trade statistics. The data is rich, meaning we should be able to develop rich intuition by exploring it visually.

These slides follow the method laid out in Jong-Eun Lee, “Two Maps for the World’s Trade Integration,” Applied Economics Letters, 11:4 (2004). All computations were performed in R.

Visualizing Dyadic Trade Flows

I gave a talk at the Fletcher School today on my work on dyadic trade flows (slides).

In a nutshell, the talk argues that cartograms and dendrograms can give students and practitioners a better understanding of the patterns of trade among partner contries, both for teaching and for research. We have thousands of observations of dyadic relationships in panel datasets. Most often these datasets are presented as aggregates: total annual world trade, top exporters in world trade, top exporters, top exporters in an industry sector, top exporters to a political union (such as the EU), top exporters within a geographic area, etc. What these statistics ignore is the information in the dyadic trade flows: who trades with whom?

What I offer is a way to crunch down the total number of country dyads into manageable graphics that can appear on a single slide. We can look directly at the dyadic patterns of trade using hierarchic clustering (dendrograms). We can compare partner trade flows across countries and time periods using cartograms. The techniques are not new; what is new is the presentation of rich international trade datasets in relatively complete format that can be digested by inspection, rather than with complex and poorly understood statistical techniques. Complete annual sets of cartograms and dendrograms give scholars the power to explore the distribution of dyadic trade and discover hypotheses that are worth testing more carefully, either with quantitative or qualitative methods.

One of the reasons trade courses have focused so much on models, theorems, and policy of international trade is that it is hard to describe trade patterns in any meaningful and comparable terms. My slides suggest how to do exactly that: present changes to global trade patterns in a succinct, visual format that enables rich comparisons across time and space.

Unilateral trade clusters using raw import flows

This set of dendrograms, again, is based on raw partner import flows from OECD. The dendrograms show complete linkages (all countries in a cluster exceed the threshold value for mutual trade flows), but the dyad is measured by the greater of the two trade flows.

This gallery shows an annual series of dendrograms using that dataset back to 1993.

Bilateral import clusters using raw trade flows

As promised, here are a new round of dendrograms using OECD trade data as a reciprocal distance measure among countries reporting. In trade, relationships matter, and these dendrograms show which relationships matter the most. Clusters are drawn by complete linkages, using the lesser of the two pairwise trade flows (greater notional distance).

The important thing about these dendrograms, relative to the ones posted the last few days, is that they take the raw trade flows themselves–not normalized for population, or total imports, or GDP–as the unit of analysis. This is actually a much more useful picture of trade than the normalized flows, because is suggests which relationships ought to draw the most water in trade politics.

The cluster algorithm isn’t a perfect way to capture the data; a few outliers can skew the presentation of the data somewhat. But it is the only good way I have seen to present cross sections of country-dyad data at a glance. It’s a very useful tool for presentation of descriptive statistics on international trade.

Unilateral import clusters in international trade

As with yesterday, these graphics depict complete clusterings in international trade, treating the partner country’s share of total home country imports as a raw distance measure. The greater the share, the closer the two countries are. For visual clarity, I have used logarithmic scales; so the scale at left doesn’t have any concrete meaning.

The clusters in this dendrogram indicate complete linkages, meaning that all of the country dyads in each cluster share a unilateral import concentration greater than the threshold value for the cluster. At 100% concentration, no country has a partner providing 100% of imports; so all the countries are separate at the bottom of the scale. At 0% concentration, countries all have at least some trade with one another; so one giant supercluster exists at the top of the scale.

Bilateral import clusters in international trade: insights

Major insights from the dendrograms in the previous post:

1. Among OECD countries, New Zealand and Australia cleave closest to the Pacific alliance: NAFTA, Japan and Korea.
2. Scandinavian countries have undergone a durable shift in trade patterns, away from France and the Iberian peninsula, and toward the British Isles.
3. Greece, Italy, and Turkey constitute a durable trade cluster over many years. In the early 1990s this group traded heavily with the UK and Ireland; now more so with central Europe and Switzerland.
4. Dutch trade patterns oscillate more than other countries; suggesting durable, close ties to some member(s) of both the Scandinavian and Mediterranean clusters.

Bilateral import clusters in international trade

One big problem in the visualization of bilateral statistics is that maps don’t work very well.

Dendrograms give a very attractive and intuitive solution to the problem by dispensing with geographic information altogether. The dendrogram shows how clusters of countries form along a continuum of closeness. For international trade, I’ve presented below a cluster analysis of the OECD by share of total imports sourced from the partner country. Here, the linkages are bilateral, meaning that if countries A and B source 10% and 20% of their total imports from one another (respectively), the A-B partnership would join the same cluster at a threshold of 10% of imports.

At the top of the screen (0% of imports), all countries belong to a single supercluster. At the bottom of the screen (100%), no country sources 100% of its imports from any trade partner. Moving up the screen from the bottom, countries join the same cluster when the lesser of their mutual import shares falls above the threshold value. Technical notes below.

Tomorrow, I will post dendrograms for unilateral linkages (essentially the same as above, but using the greater of the two numbers). The following day, I will post dendrograms using the raw import flows, rather than the share of total imports. Following that, expect images depicting GDP weighted import flows. Next week, I will post the same series of images for imports.