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2018-06-22 10:11 by Karl Denninger
in Small Business , 102 references
[Comments enabled]  

Alright, alright, some of you have 3rd grade reading comprehension.


Or some have simply not bothered to read any of my writing on the sales tax and scam issues over the last 10+ years.  Or you have, and don't care.  And let's face it -- nobody has bothered to raise hell about any of it with politicians, since Spamazon is still seeing sales increases, never mind their adhesion games with Prime.

So, let's talk about the probable impacts of the USSC decision on sales tax, assuming Congress does nothing, which is probably a fair bet (after all, they've only had 20+ years or so to solve this and have failed to do so thus far.)

First, let's disabuse the insanity first: No, Grover, this is not a license for states to screw people across state lines and to enforce jurisdiction without boundary on people with no connection to said state.  Norquist was out with his usual hyperbolic bull**** within minutes of the decision, which means he didn't read it before he commented.  My commentary was an hour or so later -- and I read quickly.  So yes, I read the whole opinion first, including the dissent.

If you're going to offer an informed opinion you must first understand the material, which is impossible if you haven't read it!

The decision was conditioned on a few things in the South Dakota law, and contained a fairly-decent warning to states on any attempt to get crazy.  Specifically, the South Dakota law in question:

  • Required a decent volume -- either in number or dollar value -- of sales before the burden of reporting and collecting tax applied.  200 sales or $100,00 in annual revenue is the boundary condition.

  • The State is obligated to, and does, provide a computer-based tool available at no cost to firms for computing and reporting said taxes.  And, importantly, if you use it you're immune from audit except for willful misconduct (e.g. fraud, concealment, etc.)

There is also a fair jurisdictional question that remains unanswered, and over which there will be quite a bit more litigation.  That's simply this: Can the state compel a firm (or individual) with no tie to the state other than someone who lives within same buying a thing to comply with a subpoena or other process?

This is not a trivial matter; there is no question as to subject-matter jurisdiction where both parties reside within a state, but where that's not the case it's much less clear.  One means to "fix" this is legislation at the state level, much like you have recognition of concealed-weapon permits.  In other words a state may, and some undoubtedly will, simply sign away their jurisdictional rights with an agreement (e.g. an "interstate compact") with other states!

First, however, let's dispel a myth -- that this was some "brand new thing" the other day.  It's not.

Economic Nexus, for example, has existed for quite a long time.  Michigan is one example -- they passed an "economic nexus" law in 2008 with a $350,000 threshold.  Cross it on property and poof!

There are many other states with similar laws -- Tennessee has one, for example, although they claim to be a "low-tax" state.  Nope.  Ohio, Connecticut, Colorado and Alabama also all have these laws; Alabama is often thought of as "low tax" as well.  Uh, nope.  What's worse are those states without "bright line" tests; nearly all states have a general clause of "doing business in", so..... yeah.

As I have previously noted my knowledge of this goes back to my childhood when the City of Detroit was playing games with employment taxes on work performed not in the city nor by residents of same with a company that my father was the Controller for -- in the 1970s!  There was plenty of screaming and litigation over this issue even then, so no, it's not new -- at all.

Reality is that this decision at the USSC is the culmination of over two decades of abuse by Spamazon and their ever-shifting means of playing their get out of prison free card, mostly.  That Wayfair and Newegg were two of the folks who took the case of the USSC belies the fact that it was specifically Amazon's continued tax-dodging using questionably-legal means, including until fairly recently their claim of "no nexus" through setting up captive LLCs to own distribution centers, that prodded states into passing these economic Nexus laws and, ultimately, this decision.

Of course nobody wants to hold the behemoth company that is actually responsible for this crap to account -- by killing them legally through an economic boycott, nor to go after state law enforcement which has steadfastly refused to indict the firm and its officers for what has amounted to 20+ years of tax dodging via legally-infirm schemes -- the fact of which has been essentially universally confirmed by Amazon itself in that despite their cross-ownership games as soon as a state has come after them they have folded rather than tell the state "Go ahead and sue us; we're right and you're full of crap!" and taken them to court.

So what we have now is a step over the line in the other direction, sort of, and a leveling of the playing field, sort of.

Oh, and a means for even more extortion.

You see, there are firms that will "do your sales taxes across state lines" for you.  Typically, however, they want 3% or so of your gross online receipts to do it.  That's an outrageously extortionate percentage that approaches half of your sales tax liability in most states!  So no, it's not 6% sales tax, it's 9% because of that "additional fee" that just got rammed down your throat.

South Dakota resolved that with their free software and audit protection if you use it.  And it is that feature, mostly, that likely led the USSC to rule as they did.

What should a small online retailer do in response?

First, assess each state.  For those states that have a reasonable threshold and compliance system (e.g. South Dakota; one rate, they provide the reporting tools at no cost to you and if you use them you are immune from audit other than for fraud) then I'd say this is a positive, playing-field leveling step.  There's no reason on God's Green Earth that as a seller of goods you should be enlisted by the residents of a state to help them engage in what amounts to tax fraud!

For those states (cough-Florida-cough-cough-cough!) that think sales tax should be multi-jurisdictional, complex, overlaid and with multiple rates making it damn near impossible for you to comply without paying another 50% on top of the actual tax to be collected and remitted (e.g. Spamzon's and others "offerings" to do compliance for you) block purchases from customers in said states and tell the customer why.

The federal constitutional privilege of regulation on Interstate Commerce does not prohibit you from refusing to deal with people in a state where said said state imposes a burden that is unreasonable and discriminatory.  Indeed the Constitution, if anyone gave a crap about that, prohibits enacting structures that amount to interstate tariffs.

That a state does this via indirect means (e.g. essentially forcing you to pay an additional 50% "tax surcharge" to some firm or absorb it in internal expense) to ship to a given state is, effectively, an interstate tariff, no matter who gets the money.

GIVE THEM AND THE RESIDENTS IN THOSE STATES THE FINGER, and by doing so bring pressure for the States to adopt one rate and a reasonable set of constraints on who and how one must collect, report and pay said amounts.

What's reasonable?  South Dakota's law looks reasonable to me.  There is an economic threshold, they provide the software and absolute defense against cross-state audit liability if you use it.  Between these two things for merchants with small volume into the state the obligation is zero and for those with large volume the compliance costs are not materially different than those for in-state sales.

And let's cut the crap, eh?  State tax regimes are in many cases repressive and ridiculous but screaming about this from merchants and individuals amounts to intentional dereliction of one's civic responsibility to take this matter up with their state governments and eject those lawmakers that continue to promote and create said structures.

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2018-06-20 14:36 by Karl Denninger
in Small Business , 94 references
[Comments enabled]  

I got 99 problems but secure control of my house isn't one of them.

In no particular order:

  • Problem: Cameras are great. The let you see inside your home when you're not there, along with the periphery.  The problem is that they're inherently insecure, the most-common protocol to view them has no security on the video whatsoever, all of them "phone home", they have low-powered CPUs in them for cost reasons, and they are made and designed in China with who-knows-what sort of back doors in their software.  Solution: HomeDaemon-MCP secures your cameras, making it possible to completely detach them from outside access.  You can obtain the "latest" (last movement) still or real-time video from them over a completely secure connection on your phone at any moment you desire -- from anywhere in the world, and if desired grab an "on demand" video clip to your mobile device.  In addition unlike the simple "if I see movement or detect sound" upload to an insecure cloud some faceless company owns and may use for marketing or other purposes (or almost-as-bad, on-site SD card storage that is trivially stolen by a burglar) HomeDaemon-MCP can, on any set of conditions you define (no matter how complex) upload a fully-secure video clip of a length you determine to a site you, and only you, control using industry-standard and accepted secure communications for use by yourself or the authorities in prosecuting criminal acts.

  • Problem: Locks and other access control devices (e.g. garage door openers) have AES-encrypted (highly secure) options for control, but the "pairing" process is fraught with risk.  Existing controllers poorly handle this, having intentionally sacrificed security on the altar of "convenience", making possible theft of the network security key after which any and all "encrypted" traffic could be intercepted or modified from more than 100' away -- more than enough to tamper with your house from next door or in the street.  This, theoretically at least, could allow a thief to command your door or garage to open for him!  Solution: HomeDaemon-MCP refuses to answer "S0" keying (the risky event) at high power intentionally, preventing key interception at long range with 100% certainty even if you are tricked into attempting to re-install a device.  Instead for S0 secure Z-wave nodes you remove the stick from the controller and pair it at the device itself, which reduces the potential range of interception to inches from hundreds of feet. 

  • Problem: Existing systems all rely on the "cloud" in some fashion or form.  But "cloud" computing is inherently insecure due to computer design priorities that put performance before security, never mind being fraught with the risk that if a server goes down hundreds of thousands or even millions of consumers lose monitoring and control access at once!  Then there are the "microphones" that are supposedly only listening for specific commands yet have been shown to record and send conversations to others without being told to to do so.  Answer: HomeDaemon-MCP never uses voice commands because voice commands are inherently insecure as a microphone must be on and listening all the time in order to detect the alleged "trigger" word or phrase.  This means a programming error or intentional misconduct by a vendor can trivially record, steal and use the contents of your most-intimate conversations -- those in your home (or even bedroom!)  We all have our phones with us today; unlocking yours and touching a screen requires two actions confirming your intent to do something, while denying interception and exploitation by either error or malice.

  • Problem: "Skills" loaded to a device from some third party inherently rely on trust you place in someone else to not misuse your data or worse, spy on you intentionally.  The incentives to violate your trust or spy on you are great and the penalties for firms caught misusing your data have never resulted in a single criminal prosecution of anyone, ever, in the history of these devices and companies.  There is no incentive for a firm not to do this sort of thing because any "penalty" is always limited to a fine (and then only rarely), which is simply passed on to you in the form of higher prices.  Solution: HomeDaemon-MCP is configured and controlled entirely by you or your chosen installer on a local basis in your home, with its configuration stored on a local SD card.  It relies on no external "skills" or code, ever.  You can always, as an administrator and the owner of your home, look at and verify what it is looking at and what actions it takes because unlike an opaque "skill" the configuration is all in an English-like language that is easily understood.

  • Problem: "Cloud" solutions to notifications and events are touted as "more friendly" yet sacrifice security and privacy on the altar of someone else's convenience, particularly when it comes to your mobile phone.  Answer: HomeDaemon-MCP's Android app has zero reliance on a "cloud" for anything, including real-time monitoring.  It provides notification of events as they occur within 90 seconds, even when your phone is asleep and in "low power" mode, and within one second when it's awake, frequently beating the delivery of a text message when sleeping and always beating it when the device is awake, and yet the app consumes only about 1% of your phone's battery power overnight to do so.

  • Problem: Storing passwords on a mobile device is fraught with risk for all the obvious reasons, yet most apps do exactly that, again for your convenience.  Answer: HomeDaemon-MCP's Android app never stores a password.  It instead obtains an authentication token of which you control the length of validity.  Further, a second, one-time use token is returned to the device which is valid for only one command after which it expires, preventing "injection" attacks launched from malicious web sites you may accidentally visit from working.  With no password stored by the app it's impossible to steal it since it's never stored, but only presented when necessary to obtain the authentication token.  Should you lose your mobile device logging out from any device (e.g. a web browser) instantly invalidates the access (and one-time-use) tokens, rendering the connection immediately secure from further access.

Got a desire to make a lot of money?  Then pay me a reasonable amount, own this wholesale (including source) and make a fortune. 

Email for more info, or look here.

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2018-05-14 14:28 by Karl Denninger
in Small Business , 116 references
[Comments enabled]  

Well, that wasn't all that hard.

I've never previously written a single line of Java, nor developed for Android.  Ported Android itself, yes, but not written apps -- nor used "Android Studio", Google's IDE for it.

A few weeks ago I bought the "Big Nerd Ranch" book on it, and read it.  It's a solid couple inches thick and, if you've never done programming, you'll be lost in the first half-dozen pages.  Figuring out Java at the same time was quite a trick (and one the authors warn against), but being a guy I don't read instructions anyway.


But now Beastie (yes, phk, the beer is on me if we are co-resident somewhere) peeks out the window, and the App lives.


I find some of the admonitions from Google rather amusing.  They really want you to use their cloud message management system rather than exempt your app from their battery sleep/doze stuff, for example.  I understand why, in many cases, but, in this specific case.... nope, nope and nope.  The impact on power consumption?  Nearly unmeasurable over a full night's sleep with the phone unplugged; according to GSAM consumption is about 1% over 8 hours.

A couple of weeks post-sitting down with this monstrosity and there's an app, complete with power management, background networking, preferences and all that.

HomeDaemon-MCP itself (the server/operational piece) has been taught how to do persistent notifications to mobiles as well, which is very nice.  What that means is that if you "miss one" because you're out of range (for example) as soon as you come back into range you'll get the notification.  Ditto if your phone reboots.  This also means that the complexity of said notifications can be infinite, and is subject to user permissions.

Speaking of which that's one of the big deals.  Multiple users with different permission bit masks are fully supported down to an individual device level for both read and write access flags.

I don't know if I prefer the app over the web interface for HomeDaemon-MCP, to be honest.  The app has its advantages on a phone, not the least of which is its persistence and notification capabilities.  That's real nice; what I used to do for notifications was to have the base system send a text message.  That works of course but this is nicer, easier to customize (choose your tone, do you want vibration or just sound, etc) more-granular, and has less risk of getting lost (yes, carriers do lose text messages on a somewhat-regular basis.)

The "about" page can be read here for the app... I think you'll like it.

If you do, and want to pick up the whole package -- including the App -- for marketing and sale of course, the email link is on the right.  No cloud used, security is completely under the owner's control and licensing is done with privately-CA-issued certificates -- which are damn near bomb-proof and enable both buy-once-use-forever models as well as annual or even monthly subscription-type licenses.  You choose.  And yes, the price for the whole shooting match is reasonable.

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2018-04-07 12:26 by Karl Denninger
in Small Business , 113 references
[Comments enabled]  

You might have read this article when I published it originally.

Or, maybe not.

If not, then please do.  It lays out a pretty decent case, I think.

What I've now completed is the majority of the back-end work to make implementing a mobile app a rather trivial piece of coding -- instead of a lot of work.

Let me lay out the how and why for you on this.

The "hard way" to do a mobile app is to have it do all the work.  The easy way, every time, is for the mobile app to be little more than a terminal into something.

But this is a problem in the general sense even when there's a web server included because you then have to parse the web output.  That's somewhat of a pain in the ass.  So what you need to make mobile app development easy is a trivially-parsable reply format, preferably one that updates in real time for you.

HTML5 makes "dynamic updates" pretty easy, which is nice.  You send down a little javascript "listener" and then make a call to a resource that comes back with the MIME type "text/event-stream", and then sends updates.  Each has a tag, which matches that tag in your HTML document.  This connection can be (and should be!) persistent, in that this reduces overhead greatly.

Well, that's nice, but the persistence can be a problem from a resource consumption and management standpoint.  If you're not particularly persistent then the "retry" stanza will reconnect, so many pages and servers do exactly that -- they send the data but then allow the connection to close, relying on the connection cache ("Connection: keep-alive")  to cut down the overhead to something reasonable.  This will give you "every 3-5 seconds" updates -- good enough for most implementations such as social media and messaging.

What you want with an app, however, is an actual dynamic stream that stays open for minutes at a time because otherwise the overhead is a five-alarm pain in the butt.  Implementing true persistence on the server end gives you the ability to push updates as fast as you're willing to burn the CPU to handle.  You can get single-digit millisecond latencies (or better) if you are willing to burn the CPU for it, but getting latencies down into the couple hundred millisecond range, or ten to twenty times faster is an utterly-trivial exercise and actually cuts load since connection renegotiation frequency goes down enormously.

HomeDaemon did the first, until now.  It now has had the web code refactored to implement the second, which means that it is now very easy to add to the web backend a specific calling sequence that will output a table of units with locations, names, types and similar parameters followed by a stream of updates of status with one call that is nothing more than a glorified "GET" instance, and key it all off a given security level to match the user's privilege set.  Since SSL is in play the call (with authentication) and reply, plus the data stream that comes is secure.  And since the lifetime of a connection is now minutes where after the initial burst updates of status take just a few tens of bytes the overhead becomes extremely small -- which is fabulous both for data and power consumption on a handheld.

So there's no app for Android -- yet.  But the predicate for the back-end support for one is now 80% complete with the other 20% in process.  Yeah, implementing that was a five-alarm pain in the ass -- but now it's done.

After the back end is complete, along with the calling sequence, I'm going to teach myself how to write Android apps.

And yeah, somewhere between now and the endpoint of that the asking price is going to go way up for all the obvious reasons, so if you believe in the "MAGA" stuff and want to prove me wrong then get rich at the same time -- read this article again, then contact me.

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2018-01-12 11:35 by Karl Denninger
in Small Business , 95 references
[Comments enabled]  

So what sort of practical applications does a HomeDaemon-MCP installation have -- and why would you, if you're a small business (perhaps in the homebuilder, HVAC, security or renovation space) want to buy the package and monetize it?

For the math on a plausible basis look here.

I want to focus right now, however, on the practical side of it -- the user experience side.

These are all things I'm doing right now in one way or another in my home.  If you've got a serious interest in acquiring the package I'll be more than happy to meet with you and show you -- from afar -- exactly what I'm talking about and how easy it really is.

  • You're at the bar, a half-hour from the house.  You'd like to use the hottub when you get home.  So you open the page (on your phone) and hit "Hottub On." You can see the current temperature of the water and a few minutes later you get a text message that the heater has been confirmed to be working; when you get home you pop right in.  Behind the scenes the system has reset the valves on your combined pool/hottub system, put your VFD-driven pool pump (which you have saved several hundred dollars a year in power by installing) on "high" for the hottub, and monitored the heater's temperature rise to make sure it ignited.

  • You get out of the hottub, having enjoyed several adult beverages, and forget to push the button to shut it off.  30 minutes later, sensing no movement in your Lanai, the system does it for you saving your a scadload of energy you would have otherwise wasted heating the water all through the overnight hours with nobody in it.

  • You have your laundry machines in the utility room.  You stick a load of laundry in the washer.  When the washer finishes the cycle the system notifies you that the load is complete via both announcement on the house's speakers (over which it can also play music) and via text message, just in case you happen to be out working in the yard or relaxing by your pool.  Contrast this with the washing machine down in the basement or in the utility room and it's "weak sauce" end-of-cycle buzzer you cannot hear.  Ever leave a wet load in the washer by accident overnight this way?  Yeah, that's disgusting..... 

  • You leave the house, getting in your car.  An hour later the house automatically adjusts down the A/C, saving your money, it texts you so that you know it went into the "secure" mode and in addition it starts monitoring the occupancy sensors to indicate not that someone is in a room but that someone may have broken in!  If it detects same it takes a picture through your webcams and sends it to your phone via email, and texts you immediately.  Instead of having a contract with a security company and getting fined by your local PD for false alarms if the sensors trigger you get to check it out and, if there really is a problem you can call the sheriff's department directly.  No more false alarm charges and a higher-level of security, plus good photographic evidence to use in prosecuting any actual burglar, is the result.  Oh, did I mention no "monthly fee" games from the security company either?

  • You get home later, and the system detects you coming in through the garage door; it shuts off the security and returns the A/C to its former setting.  The occupancy sensors go back to turning your lights on and off for you automatically, without any user intervention.  Just to make sure it really was you the system also sends you a brief text message so you know the house has turned off it's "secure" mode.

  • You aren't around for a weekend.  The system, being in "away" mode automatically, runs a reasonable simulation of an occupied dwelling, with a pattern of lighting suggesting someone is there -- during the evening hours only, of course.  When someone unexpectedly comes into the driveway the floodlights all around the home come on, perhaps providing a deterrent value should that be a burglar.

  • You have a room with two lighting switches but when one is on you really would like the other to be on or off at the same time -- and at the same brightness.  You declare these as "grouped" in the system; pressing the paddle on one (whether on, off or to change the dim level) causes the other(s) to automatically follow.  You can also "group" a switch (e.g. when you have a light on you want the ceiling fan to be on, and if you shut off the light then the fan should be shut off as well) with a dimmer circuit.

  • You go to bed, and push a button on your nightstand.  All the lights in the house go out and the HVAC system is adjusted to your preference for a more-comfortable sleep.  The outside perimeter motion sensors, should they be triggered during that overnight, will turn on the respective floodlights and, if motion is detected in your lanai, not only will all the lights be turned up fully there but a chime and announcement will sound inside.  Home invaders who think they'll catch you sleeping beware!

  • You wake up a couple of hours earlier than normal and decide you're going to get up, which is unusual for you.  You like to sleep in a cool house, so when you went to bed you had the system turn down the heat -- and it's February.  You reach over to the nightstand and press button "3" briefly (of 4 on the wireless remote you have velcro'd to the side of your nightstand.)  The thermostat on the other side of the house is immediately set to it's normal daytime level plus two degrees and your two-stage furnace comes on, quickly warming up the house.  In a few minutes, instead of getting out of bed in a 65 degree house and walking out to the thermostat to turn it up, you have a nice toasty room in which to work your way to the bathroom and your morning shower.  An hour later the thermostat resets back to the normal daytime temperature setting all on its own; no point in wasting energy keeping the house extra-warm for the rest of the day.

  • You have installed a "push button" deadbolt so your kid can come home from school without having to carry a key.  When you go to bed and everyone is home the keypad on the deadbolt is automatically disabled, so even if your kid is foolish enough to tell someone what the code is it's worthless to use in invading your home in the middle of the night.  In the morning the keypad is automatically re-enabled.

  • Your cleaning lady uses the code to get into the house.  You're reasonably ok with this because you can connect to your security cameras and see what's going on at any point in time, plus motion triggers them to take pictures.  The cleaning lady only comes on Wednesdays between 10:00 and Noon; the system sets that code at 9:45 AM on Wednesday and revokes it at 2:00 PM.  The rest of the time your kid can use his code to get into the house after school, but the cleaning lady's code is worthless.  Being in secure mode when she shows up you get a text, and another when she keys the code to lock the door on the way out.  If she doesn't use the code the second time to lock the door (she forgets when she's leaving) an hour after she leaves you get a text telling you the house has "re-armed" itself automatically and the door is locked -- on its own.

  • Your kid, like most, refuses to shut the lights off when he leaves a room.  The system automatically turns them on and off for him.

  • You want to watch a movie and would like the living room lights on, but at a very low level.  You push a button on your phone and they all change to "nightlight" level illumination, along with modifying the light level in the nearby hallway and kitchen on motion detected in the area so your movie doesn't get interrupted with bright lighting when your kid decides to come into the adjacent kitchen and get a soda from the fridge.
  • You want a very low level for the lights in your bathroom at 2:00 AM if you need to get up to pee, but in the evening you'd like a moderately higher level of lighting - and your wife wants to be able to crank it up when doing her makeup.  All automatic; if you get up to pee at 2:00 AM you get a "nightlight" level of illumination sufficient to make sure you don't try to sit down on an up toilet seat, but during the day and evening hours the level of illumination is altered appropriately.

None of this requires "programming" as you think of it.  The list of what to do and when to do them is controlled by a simple English-like language, similar to this:

[z Front Door Motion] triggered on
[v Night]
cmd zset 50 Front Door Lights

Which says "if the front door motion detector just changed state to on and it's nighttime then set the front door lights to 50% brightness."

The system can handle, and will process, a nearly-unlimited number of conditions like this.

The best part of it is that other than for licensing restrictions (if whoever winds up owning this wishes to sell a time-limited right to use, much like Adobe does with their "Creative Suite") there is no connection required to any sort of "cloud resource" of any kind.  The system runs entirely independently, on the local device and yet maintains a security model that allows you, and only you and those you authorize, to access it via any web browser-capable device from anywhere.  Your phone, your tablet, the computer at your office, your laptop -- literally anywhere, all securely and under your exclusive control.  You can also define a number of access levels for that information so some people (e.g. your kid) can control things in his room but he can't screw with the light levels in your room.

Oh, and it all runs on a $35 computer without even getting it to breathe hard and boots off an SD-card, making it entirely power-fail safe.  Power consumption is roughly 5 (yes, five) watts.  Yank the cord and when you plug it back in it comes right back up as if nothing had happened.

Look to the right if the opportunity sounds juicy to you!

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