The Law of Unintended Consequences

All of us had already heard about the Murphy’s Law, the one that says that anything that can go wrong, will. What few people know is that Murphy’s Law is part of the Law of Unintended Consequences.

What does this Law say? It holds that “almost all human actions have at least one unintended consequence”. In other words, it states that each cause has more than one consequence, including unexpected results.

This Law came to my mind when I read the recent news, in particular two reports. The first, published last week, had the quarterly results announced by several Brazilian banks. Banks such as Bradesco and Itaú reported profits over 700 million dollars, while Banco do Brasil recorded a net profit of 1 billion dollars. One billion dollars! US$ 1,000,000,000.00.

These are astonishing results, as they refer to profit, not revenue, to one quarter and not the whole year, and are expressed in American dollars, not Brazilian reais. Besides that, we are talking about Brazilian banks and not Swiss.

The second report, published this week, described the serious events in São Paulo, where gangs decided to rebel against the state government’s decision to relocate some of the jailed gang leaders. After many days of a war-like situation, there was a balance of over one hundred deaths, a frightened population, and the confirmation, once more, of the total lack of readiness of the public safety system.

What does the Law of Unintended Consequences have to do with these two reports, apparently unrelated? In my opinion, everything. To prove my thesis, lets travel through time.

During the military dictatorship years, the government invested significantly on the security system, while at the same time it created the foundation of the modern Brazilian bank system.

The security area was obviously a priority for a regime that seized the power and kept it based on force. It grew and it was equipped, but with a distorted focus given the fact that its main mission was to protect the regime, instead of the population. The intelligence activities, crucial to prevent and fight crime, aimed at the identification of “communists” and did not notice the gradual evolution of the crime. The organized crime, until then, had as main leaders the “jogo do bicho” (a sort of illegal lottery) bookmakers, but new characters emerged as the drug trafficking grew and structured itself.

With the end of the military dictatorship there as an outburst of freedom and the newly elected officials wrongly took crime fighting for civil liberties violation. Demagogic political platforms avoided the establishment of a law abiding environment at the slums and poor neighborhoods, creating the conditions that led to drug dealers acting as government in those areas.

In parallel, the bank system grew significantly during the military government, as the country’s development model was based on large investments in infrastructure works funded by loans, assuming that at some point they would generate revenue and pay off. However, the corruption and bad management caused the expenses to largely offset the revenues, leading to successive increase of the internal and external debt. Besides that, during the ‘80s and ‘90s, due to the several international market crisis, the money that until then was cheap became more expensive and hard to get, forcing the government to roll the debts in conditions progressively less advantageous.

The Brazilian banks, brokers or direct suppliers of the product the government needed the most – the money, went through a surge of growth, fed by a policy of extremely high interest rates.

The government, as the largest borrower, became the main client of the banks, that no longer performed their original role as business fomenters. So, the non-productive market (capital funding capital) strangled the productive market (capital funding production), causing inflation, recession, unemployment, impoverishment, and a total lack of investment capacity by the government.

Even though some progress has been made in the last few years in the control of the public finances, with the reduction of the inflation, improvement of the national debt profile and more transparency in the use of public money, there is still a lot yet to be done. The social side, totally relegated in the last decades, continues to need serious long term initiatives, without demagogic or politic objectives.

At this point, the two disconnected facts combine: on one side, rich banks flourishing in a broken country unable to provide to its citizens minimum conditions of work, health, education and security. On the other side, gags well armed, firmly established, with effective control of whole areas within the cities, taking advantage of people’s misery and of the state’s absence.

Therefore, what happened in São Paulo should not be a surprise. I am afraid this is just the beginning of a clash between the organized crime and the (not so) organized society. For many years Brazil closed its eyes or looked the other way to avoid seeing the growth of the slums, the impoverishment of the population, the total inversion of values that should be the basis of a civilized society. Now, the reality bursts in front of us and we can’t pretend we are not seeing it.

Unfortunately, there is no simple short term solution. Serious and effective crime repression should be performed immediately, with the local, state and federal governments putting aside partisanship and prioritizing the well being of the population. Apparently, this opportunity was wasted in São Paulo, where allegedly it was chosen to negotiate with the gangsters instead of doing so within the various government layers.

At medium and long term, the solutions are well known and are not adopted just for the lack of political will and citizenship. They are solutions that although would not give votes in November, they could change the country. Basic solutions such as turn the state more efficient and less corrupt. Implement professional management practices, invest in education, health and security, and stimulate the labor, and production, instead of the unproductive capital.

It is not an easy task, but it is not impossible. There are plenty of examples of countries that were in a worse situation than Brazil’s and today they play at the international scene as competitive countries and generate opportunities to improve the well being of their peoples.

Brazil has the resources, talent, and a orderly and a hard working population. It only lacks the leadership. Until it rises, we will continue to see the country’s laws being broken and the Law of Unintended Consequences increasingly in evidence.

Fishing the Phishing

I was reading an article about the explosion of the practice of phishing.

But before you close this page and I lose my audience, let me explain what is phishing.

Phishing are e-mails that you receive as if they were from your bank or from some place you have an account (it could be ebay, Amazon, school, work, etc.). The e-mail seems legitimate – in general they have the same layout, colors, graphic elements and style of the e-mails you are used to get from that company.

The e-mail asks you to confirm your data, or check if your account is ok, or uses any other excuse to make you access your account with the bank, store, etc. The e-mail provides a link to the site (or a button such as “click here”) and the link looks correct.

Once you click on the link, you are taken to a site that looks exactly the same as the original and, believing you are there, you log in providing your user id and password.

What really happened? Several things:

1- The e-mail that you received, even though it looks legitimate, probably isn’t. The majority of the companies avoid such kind of communication, as they know the risks of fraud.

2- The link that you clicked on, although looks correct, isn’t. Even though it may be written, for example, http://www.amazon.com, in reality it may take you to another site, a fake one that looks like exactly as Amazon’s. What is written on the link has nothing to do with the actual address of the link. The same applies to buttons such as “click here to access your account”.

3- When you logged in to the site, you user name and password were sent to the criminal that now can the steal your identity (act as if they were you) and party at your expense. Frequently they shop using your account and providing a PO box as shipping address, often in countries with lax control over cybernetic crimes. Many times they access personal data and use them to issue documents such as social security cards, credit cards, passports, or driver’s licenses.

This is one of those situations VERY easy to avoid, just following these basic rules:

1- If the e-mail that you received is not well written (with typos or grammatical errors), delete it immediately. It is fake. It is hard to believe, but a great number of the phishing e-mails are not well written and nevertheless people believe in them…

2- If the e-mail that you receive seems legitimate, still DO NOT click on the link or button it provided. Instead, open a new window of your browser, type the address that you normally use to access the bank or store (frequently it is on your list of “favorites”) and then log in and check if what is being told on the e-mail is true.

This also applies to e-mails that you receive at work or school, or from people you know, as someone’s computer could be infected by a virus and the person could not know that it is generating fake e-mails.

In a nutshell, DO NOT click on links that you receive by e-mail. Type the address you are used to, instead.With that, phishing would no longer be effective and the criminals would have to look for another way to explore people’s naiveté.

PS: This blog has no link asking you to login to your account. If it has, it was hacked! :-)

Bolivia 1 x 0 Lula

Does anybody out there remember when the United States “dared” to make mandatory the fingerprinting of foreigners entering the country, including on the list Brazilians visiting the US?

Raise your hand who remembers the wrathful reaction of the president Luiz Inácio Lula da Silva? The objections made by politicians, newspapers, students and Brazilians who took offense in the name of the beloved violated homeland? The prompt reactions and retaliations?

Because I remember. And I remembered it today again when I read on the news that Bolivia’s president, Evo Morales, accuses Brazil and Petrobrás of operating against the law, of having practiced illegal contracts and smuggling. I also remembered the picture of the same Lula (I will no longer call him “president”, as he does not deserve the title), taken in the beginning of this week, smiling next to the same Morales, stating that there was no crisis and that Bolivia’s actions, nationalizing the natural gas exploration, were right.

Where is the resentment displayed towards the US, when we see the country and its largest company being called of outlaws by a country which is one of the major cocaine producers? Where are the homeland vindicators who become silent when billions of dollars invested by Petrobrás in Bolivia, for the extraction and transportation of the Bolivian natural gas, are being taken by force, including the invasion of Petrobrás’ facilities in Bolivia by Bolivian soldiers?

To the benefit of the ones who don’t know, some data about Bolivia: Country with a little less than 9 million inhabitants, the poorest in Latin America, mainly due to the high level of corruption and politic instability. However, it has many natural riches such as gas, silver, iron and magnesium, being know as "donkey sitting on a gold mine".

Petrobrás initiated its activities in Bolivia in 1995, through its affiliate Petrobrás Bolívia S.A., due to energy integration agreements between Bolivia and Brazil. Its creation was strategically linked to the exploration of the natural gas reserves to ensure the supply to the Bolivia-Brazil Gas Pipeline (GASBOL), completed in December of 1998, with 1,960 miles in length and total investments of US$ 8 billions.

Brazil turned feasible the exploration and sale of Bolivian gas, building the pipeline that takes it to São Paulo, ensuring to Bolivia a price level that by then generated many internal criticisms in Brazil, for being much higher than the market price. Without Petrobrás, the Bolivian gas would probably be still underground, part of it not even discovered yet. The contracts that Evo Morales claims to be illegal determined that Petrobrás Bolivia would perform high-risk prospection in areas where no gas had been found yet: 100% of the costs would be paid by Petrobrás. If it found gas, 50% of the costs would then be absorbed by Petrobrás and 50% by the Bolivian state-owned company YPFB. As result, Petrobrás’ findings amount to almost 40% of Bolivia’s current certified reserves.

Therefore, Brazil helped Bolivia to find and explore the riches that Bolivia was never able to benefit from by itself. Brazil offered it a captive market (the industries in São Paulo), with minimum price and demand guaranteed and, instead of being treated as a preferential partner, it is driven away and treated as a criminal and an exploiter.

Petrobrás would do the right thing if it decides to halt the investments that were being made in Bolivia and direct them towards the utilization of the natural gas generated at the oil rigs on Brazil’s coast (mainly in the Campos Basin), gas that today is burned or injected back into the wells, due to the lack of infrastructure to enable its use. It is not a short term solution, but it is a strategic one.

It is time for lula to wake up and to stop wanting to be like the morales, castros and chavez (all in small letters, for being small indeed). It is time for lula to adopt a statesman attitude, even if it would be just make believe, and not allow the names of the country and of its companies to be humiliated like that.

There is no point in fly in a state-of-the-art plane, issue bravados against the Americans, or apply for a seat at the United Nations Security Council, if we can’t even gain respect in our own backyard. Given that the (un) government lula is incapable of helping Petrobrás, than it should shut up and not make ludicrous statements like the ones of the beginning of last week.

Orkut or not?

During my 30 years of work in Information Technology, several times I got questions from friends and relatives, such as: “which computer should I buy?”, “what is the best software to do this or that”, “how do I remove virus?”, etc. However, recently the most common question is: “Should I allow my son (or daughter) use Orkut?”.

The Orkut “explosion” in Brazil made the problem even more evident, as now adults and children can quickly and easily, without major technical skills, create their own pages on the internet and share them with other people online.

The question is no longer limited to using or not Orkut – it became much broader, and should be addressed in parts:

(I) Orkut: Personally, I don’t like it. The idea of meeting friends is good, but it resulted in extreme exposure, people seeking their 15 seconds of fame.

The big question is: should we stimulate this over-exposure? Should we live in an online version of the Big Brother? I don’t believe that it is positive for a child or teenager to join the exposure bandwagon. On the other hand, I acknowledge that it is very difficult to totally avoid it, as they will claim that “everybody uses and has it” (and if they would not use it at home, they would do it at a friend’s house).

There is also the question of safety. Even with so much paranoia, and false alarms and hoaxes running around, it is not worthy it to risk too much. Imagine a lawyer that wins a divorce dispute and the client’s husband, defeated and upset, decides to take revenge? Or an employee who was fired, thinks that the boss was unfair and decides to pay back? The detailed information about their foe’s families is all there in Orkut: names, pictures of the children, of the homes, school’s name, friends, and much more.

Unlikely, but not impossible.

(II) The internet in general (including instant communication tools such as AIM and MSN): The internet mirrors the world we live in. There are many good things, and lots of garbage too. The same way there are neighborhoods with safe streets and places and others not quite the same, the internet has good sites, and bad sites. Good people, and bad people.

Could you lock your son or daughter at home and prevent them from going out? When they would be 16 or 18 years old would you be able to avoid (or even to know) that they go to a dangerous place with a friend, even if just for curiosity? There is no way. The same way, you won’t be able to prevent them from surfing the web and end up reaching a bad site, even accidentally.

So far, I the main question was not answered yet: “Should I allow my son (or daughter) use Orkut?”.

As an IT professional, but most importantly as a father of two teenagers who “survived” the internet, I believe it is not possible to go against the flow. It is unthinkable to put the children inside of a glass dome to protect them against getting in trouble, getting hurt, suffering, or making mistakes. How could we help? By explaining, alerting, teaching, and monitoring. I suggest talking to your children to explain the risks the internet poses. Be very clear and specific, otherwise they will not understand, thinking that you are exaggerating, pretending to listen but in reality not internalizing the idea.

People (and specially children) tend to trust and believe everything they see on the computer, after all it is with it we obtain a lot of information. It is essential to motivate them to question, to be alert. Recommend that they: 1) NEVER post personal data that would allow identification, such as full name, address, and phone number; 2) NEVER communicate by e-mail or instant messenger with strangers, no matter if the person claims being 10 years old, or being friends to someone they know; 3) NEVER click on links sent in e-mails from strangers (as a matter of fact, it is better not even to open such e-mails).

Explain to them that using the internet is not their RIGHT, but a PRIVILEGE that could be revoked at any time (the same way that spending the weekend at a friend’s home is not a right but a concession made by the parents, generally revoked if they do something wrong).

Make it very clear that you will monitor the sites they visit, their pages on Orkut, the e-mails and instant messages, not because you want to snoop their communication, but to be sure they are safe and to be able to correct their direction in case something isn’t right. Explain that as they learn to use the tools and the procedures in a safe way, without exposing themselves, you will have peace of mind and progressively reduce the monitoring.

You should keep an attitude of who wants to help and not police. This way, they will seek your support, and won’t act behind your back. You could even help them to build their pages in Orkut, or create one for you and show it to them, acting as a role model.

Remember: children observe and mirror their parents’ behavior. There is no point in telling one thing and doing another.

Try to make them understand that this is for their own good. Use the bicycle analogy: when they were learning to ride a bike you used to hold them and not let them go by themselves, not because you did not want to free them, but because you did not want them to fall down and get hurt. As they developed balance, you started to let them go. Of course sometimes they fell down, but falling is also part of the learning.

I know this is not easy because we have to pass to a child the distrust of an adult. I don’t see any other way. Nowadays the children are much more exposed to the grownup world through the TV and the internet and, unfortunately, we have to “kill” a little bit of their naiveté so that they develop enough antibodies and be able to grow healthy, making the right choices.

I finish wishing good luck – it always helps…