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The center cannot hold














Economist blogger E.G.
wonders why Democrats/liberals are more apologetic and defensive about their beliefs than conservatives:
In broad strokes, Republicans, especially of the tea-party stripe, are typically proud, at least unapologetic, and sometimes belligerent about their beliefs. Democrats, in contrast, seem to adopt the defensive position by default...

Why are Democrats more anemic? One thought comes from the liberal journalist Thomas Frank. Writing in Harper's, Mr Frank argues that while Republicans respond to their base, Democrats have a misbegotten faith in a "Magic Middle" of centrist ideas that are tolerable, at least, to most Americans:

Democrats, for their part, tend to do the opposite, dreaming of bipartisanship and states neither red nor blue and of some reasonably-arrived-at consensus future in which the culture wars cease and everyone plays nicely forevermore under the smiling, benificent sun of free trade and the knowledge industries.

A couple of other theories: Democrats are constrained by their insecurities, a holdover from being made fun of by George W Bush and Fox News. Democrats are undermined by deeper, historical anxieties; with the Republicans having co-opted the rhetoric of being the "real America", Democrats feel that they have to explain themselves before they can proceed. Or, there's something cultural going on: there are temperamental traits that draw a person to the Democratic or Republican parties, and those same traits, aggregated, are manifested by the parties themselves.
To me, the phenomenon in question seems very real, and the explanation seems rather obvious. I'm not sure why E.G. didn't think of it.

Conservatives are less apologetic about their beliefs because conservative beliefs have a stronger base of support. Whereas 40% of Americans identify as conservatives, only 20% identify as liberals, with the rest identifying as moderates. These numbers have been very stable over the past two decades. That means that if you are a Republican, hoping to win in a Republican primary, you are appealing to a much more ideological median voter than your Democratic counterpart. And in the general election, trumpeting conservative beliefs will probably alienate fewer of those moderates than trumpeting liberal ones. Case closed.

The more interesting question, and the one E.G. should really be asking, is: why are more Americans conservative in the first place? Since people tend to define their ideology relative to the national average, you'd expect a symmetric distribution of ideology; instead, we have a rightward skewed distribution, with a "long tail" of right-wing conservatives and a short fat tail of liberal-leaning moderates.

My guess as to the reason for the skew is: tribalism. Politics is generally an exercise in coalition-building between tribal blocs who vote for their "team". The "team" can be determined in many ways - race, language, religion, region, or socioeconomic class - and people can identify more strongly or less strongly with any given team. Teams can also overlap. It is these divided loyalties, and the shifting and changing of the coalitions, that make politics so complex.

Who are the "teams" in America? Well, the Republicans are composed of the "white" team (not whites, but rather, people who think of whiteness as their key characteristic), the "Christian" team (again, not all Christians), the "Southern" team, and the "business class". The first three of these overlap a great deal, and those three are very strong affiliations with lots of members. Democrats, on the other hand, are a hodgepodge of disparate little groups and blocs - blacks, gays, union workers, Hispanics, intellectuals, Asians, Jews, schoolteachers, etc. While some of these factions are very strongly unified (blacks most of all), the interests of the various Democratic support groups diverge wildly.

Hence, while the Republican Party is basically a simple deal - deregulate the economy and lower taxes, in exchange for excluding and disenfranchising nonwhites and non-Christians - the Democratic Party has to strike a much more careful (and much more changeable) balance. This accounts for the "defensive" and apologetic tone that E.G. wondered about. The fact is, Democrats' hopes for victory rest on their ability to convince everyone-who's-not-a-Republican that together they form some sort of political "center", while Republicans' hopes for victory rest on their higher voter turnout and on the fragility of the Dems' coalition.

(Note that this entire dynamic can be understood by watching the movie "Revenge of the Nerds". The white jock fraternity loses out when they find they are outnumbered by the combined mass of nerds, blacks, gays, Asians, Jews, and traditionally excluded folks in general.)

The really interesting moment in American politics will come if and when the Republican base shrinks in relative size such that it is no longer big enough to win just by turning out in greater numbers. This will happen if/when immigration outpaces Republican efforts to convince Midwestern whites to act like Southern whites. On that day, the Republicans will have to either forge a new coalition - which will be hard, since they'll be so out of the habit - or try for a military coup. I wonder what they'll do.
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Self-guarding guardians















Plato (inventor of the plate!) suggested that society's safety and virtue be preserved by a class of powerful "guardians," enlightened souls entrusted with a monopoly on violence. "But," someone asks, "
Who will guard the guardians?" Plato's answer was that the guardians will guard themselves, being persons of superior moral fiber. This, incidentally, was Confucius' answer to the same question.

James Madison begged to differ. In
The Federalist #51, he argued that self-interest was too powerful a force for virtue to overcome. This may be because power corrupts, or because power attracts the already-corrupt, or simply because the corrupt are more aggressive about pursuing their self-interest. Madison suggests a new solution: checks and balances. Through good institutional design, different self-interested individuals could be pitted against each other; these individuals, working within the system, would balance each other out to approximately represent the will of the nation at large. Thus, we have democratic elections; we have a division of powers between levels of government; we have the three branches of the federal government; etc.

Modern political theorists have offered many similar takes on the problem. Bruce Bueno de Mesquita's models of political power struggles conclude that institutional design is very important; democracy and separation of powers increase the degree to which competing political factions are forced to provide for the public good in order to maintain power. Many others believe that it is no accident that the rich countries of the world are almost all democracies.

Some American libertarians, however, take issue with Madison's solution to the guardian-guarding problem. One of these skeptics is Will Wilkinson:
We are constantly exploited by the tools meant to foil our exploitation...So it's no surprise that progressives would rather worry over trivialities such as campaign finance reform than dwell on the paradoxes of political power. But it really isn't the Citizens United decision [that allows government officials to get cushy jobs in the finance industry]...Well-connected wonks can get rich on Wall Street only because Washington power is now so unconstrained...So, what is to be done? Summon a self-bottling genie-bottling genie?

The [libertarian] answer is to make government less powerful. The monstrous offspring of entangled markets and states can be defeated only by the most thorough possible separation.
For Will, checks and balances are not enough. Institutional design cannot create a self-bottling genie-bottler (or a self-guarding guardian); the government must be shrunk as much as possible without destabilizing markets to the point of ruin.

I find this notion highly objectionable. In a way, it is a cop-out worthy of Plato and Confucius; libertarians throw up their hands and say "Just get rid of the damn guardians!" But this begs the question of who will toss out the guardians, and who will guard against the guardians' return. Presumably, the guardians will be ejected by a wave of individuals inculcated with strong personal libertarian values...and hey, we're back to calling for personal virtue.

So much for the American experiment.


James Madison, and most or all of our Founding Fathers - the libertarians of their day - would almost certainly disagree with the modern variety. They had just seen 3000 years of attempts to elevate virtuous individuals to positions of power. It was called the "dynastic cycle," and it was decidedly suboptimal. They knew that if they played the part of the Virtuous Men of their day, and overthrew government in the name of liberty, a new government would simply rise in the future and undo all their efforts. And so they saw only one way out of this trap: the design of self-sustaining political institutions that would maximize effective liberty. Only government can guard against government power, they realized; to let the perfect be the enemy of the good would simply mean the return of the despots.

So, tweaks like campaign finance reform might be small potatoes compared to the vast amount of corruption that still exists in the system, but they represent progress toward greater liberty, which libertarian admonishments to "just shrink the government" do not.


This is just one more instance of modern libertarianism's fatal flaw. When they come to a Gordian Knot of a problem (optimal public good provision, for example, or optimal institutional design), they reach for a sword. They want to hack through thorny engineering questions with the pure, clean, steel of unwavering ideology. That their solutions are unworkable is hardly a deterrent; ideological self-consistency takes precedence over real-world consequences. Hard problems, it seems, are just too hard.
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Why we run deficits













Writing in Mother Jones, Kevin Drum notes that liberals have been
far more willing to cut the deficit than conservatives over the past 30 years:
At the federal level, center-left types fought an entire national election in 2000 based largely on the idea that times were good and the federal government should be accumulating surpluses. It was a pretty big deal, and as you'll recall, we center-lefties lost that election and George Bush proceeded to piss away the surplus and run up more debt than any president in history. On the spending side, center lefties recently passed a big healthcare overhaul that was largely funded by cuts in Medicare spending, and instead of applause for their fiscal sobriety they got hammered for it by Republicans during the 2010 midterms. In other words, on the federal level center-left types have proven over and over that they are willing to be pretty responsible on spending and budgetary issues despite getting clobbered for it. But the opposite isn't true of conservatives and taxes. One need look no further than the national-level dogfight going on right now over the expiration of the deficit-busting tax cuts that originally got George Bush into the White House. No conservative who wants to win reelection even dares consider taking a responsible position on this.

But how are things at the state level? What happens when center-lefties try to restrain spending and build up surpluses during good times? They very quickly learn a harsh lesson: if you accumulate money in a rainy-day fund, conservatives will promptly demand that it be "returned to the taxpayers." That happened here in California as far back as 1978 and was a big reason for the passage of Proposition 13. And if you allow a temporary tax cut to expire, your career might be over. This happened here in California as recently as 2003, when Gray Davis got tossed out on his ear for allowing the car license fee to automatically revert to its old level when the state budget got out of balance.

Nobody is an angel in this fight, and certainly liberals could do a better job of speaking out for spending restraint during boom times. But conservatives have made it largely pointless to build up federal surpluses or state rainy day funds even when lefties are feeling in a responsible mood. At the same time, conservatives have also made it career-threateningly dangerous to allow even temporary tax cuts to expire. It's true that there's always a steady hum of background pressure from interest groups to maintain spending levels, much of it from the left, but for the most part the really pointed incentives come from the conservative side and simply aren't symmetrical: they always run in favor of tax cuts and against spending restraint.

The whole idea of trying to balance budgets over the business cycle is practically a center-left platitude. The fact that it doesn't happen very often is attributable in small part to basic human nature (nobody likes to restrain spending when money is available) and in very large part to the fact that conservatives flatly won't let it happen.

This is very true. But Drum ignores the question of why. Do conservatives support big deficits because the conservative philosophy of government says deficits are good? Is it because naturally irresponsible human beings are drawn to the Republican party? Or is it because the outcome of some political bargaining game (the "two Santas" theory) forces Republicans to promise more goodies than Democrats?

I'm not sure, but here is an important point that many Americans fail to realize: All rich countries have run huge deficits in the past 30 years, from socialist France to conservative Japan. The U.S. is in no way unique. There appear to be no fiscal hawks in power anywhere in the developed world.

To me, this is a signal that the root cause of rich-world deficits goes far deeper than the vagaries of a single nation's politics or the ideology of any one faction. Something happened to the world that made it impossible for rich-world governments to balance their budgets. That something, I am guessing, is capital mobility.

In the branch of economics called "public choice theory," a well-known result is that there are only two ways to pay for public services (i.e. public goods whose costs depend on the number of people using the good): 1) make the rich people pay more than they'd offer to pay, or 2) run a big deficit. This is called the "Groves-Clarke" result. When a government pays for its services by holding a gun to rich people's heads, it's called an "AGV mechanism," and when it runs a deficit, it's called a "Groves-Clarke mechanism". See here for the math if you're interested.

Before 1980, we basically held a gun to our rich people's heads and said "Pay up." Top marginal tax rates were over 90%. Corporate taxes were high. This situation was essentially the same in Europe and Japan. But around 1980, something big changed: capital mobility. Global rules changed, and financial markets opened, allowing rich people to move their money wherever they saw fit. This basically gave rich folks an outside option; if taxes were too high, they could move their money elsewhere.

If the rich people have an outside option, AGV doesn't work - the only way to pay for government is to run deficits (Groves-Clarke). Thus, when world capital markets opened, deficits appeared in all rich countries and have persisted ever since. Naturally, this is a problem, since it logically ends in all rich countries defaulting on their debts, after which they will either drastically slash government services ("austerity") or close their capital markets and go back to forcing the rich people to fork over the loot.

This is a rather depressing explanation for why rich countries run big deficits, but I think it is the right one. Republicans have been more willing to run deficits, but that is probably just because they represent the rich people who will move their money out of the country if taxes are raised to balance the budget. We probably confront a devil's choice between closing our capital markets (and thus hurting international trade) or deeply cutting public services like roads and schools - things that are a net positive for the country, but that aren't worth the price to the rich.

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The red badge of bad economics














Though Brad DeLong is, far and away, my favorite econ blogger out there today, there are times when I disagree with him. In
an article in Foreign Policy, Brad reminds us of the origins of many of the bad economics ideas making the rounds among the political right today:
There was silence in the seminar room. Richard Kahn broke it. "Do you mean to say," he asked, "that if I were to go out tomorrow and buy a new overcoat, that it would increase unemployment?"

"Yes," said the man in the front of the room, Friedrich von Hayek, "but it would take a long and complicated mathematical argument to explain why."...

In [Hayek's] thinking, [depressions] were righteous karmic payback for past sins against the gods of monetary orthodoxy. Any attempts to cut them short or make them shallower would produce only temporary palliation, at the cost of a fiercer, deeper, and nastier further depression in the future.

Hayek's fellow countryman, Joseph Schumpeter, went further: "Gentlemen!" he announced to his students at Harvard University (there were no ladies). "A depression is healthy! Like a good ice-cold douche!" If depressions did not exist, Schumpeter thought, we would have to invent them. They were "the respiration of the economic mechanism."

Agreeing with Schumpeter was Herbert Hoover's Treasury secretary, Andrew Mellon...Hoover quotes Mellon: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
Anyone who has been following the economics press over the past two years will find these ideas very familiar - they are the ideas advanced by conservative-leaning economists and other conservative intellectuals. From Glenn Beck (who hawks Hayek's books on his show) to well-respected economists like Robert Lucas, Robert Barro, and Greg Mankiw, the Right has embraced the idea that depressions like our current one cannot be mitigated by government policy.

But why? Why, in particular, have so many eminent macroeconomists rushed to embrace the notion that their discipline has produced no new useful policy recommendations in the last 75 years? Here is where DeLong and I differ. He believes that the culprit is resentment - the Nietszchean idea that people in a bad situation will come to believe that their suffering is noble, and will try to force their plight on others. DeLong writes:

Nothing has changed in the past few years to make Hayek's, Schumpeter's, and Mellon's arguments stronger intellectually against the critiques of Keynes and Friedman than they were 60 years ago. On substance, their current victory is inexplicable. But their triumph, epitomized by the Tea Party movement and its hostility to government action, can be explained by our fourth horseman: Friedrich Nietzsche...

Nietzsche talked about the losers -- or rather, about those who thought they were the losers. He looked at those who saw themselves as weak and poor -- rather than strong and rich -- and saw trouble. "[N]othing on earth consumes a man more quickly than the passion of resentment," he wrote. It drives us to madness.

Think of that when you consider this: The U.S. unemployment rate is stubbornly high, yet aid from a federal government that can borrow at unbelievably good terms could allow states to maintain their levels of public employment, and those public workers would then spend their incomes and so boost the number of private-sector jobs as well. But the voters are against that. No, they say. We have lost our jobs. It is only fair that those who work for the government lose their jobs as well -- never mind that each public-sector job lost triggers the destruction of yet another private-sector job. It's the underlying logic that has led to a wave of austerity across Europe that is now headed for America's shores. And it's the same logic that says, "It is only fair that homeowners lose their money" -- never mind that everyone's home prices will suffer...

Because some are unemployed, unemployment is good -- we need more of it. Because some have lost their wealth, wealth destruction is good -- we need more of it.
Although I am, in general, a big fan of Nietzsche's psychological insight, I just don't think it applies here. After all, none of the eminent economists who have railed first against stimulus spending and then against quantitative easing have lost their jobs - or even seen their wages cut! - as a result of the depression. They cannot possibly envy the good fortune of the construction workers who were employed by the stimulus. Additionally, studies have shown that Tea Parties, on the whole, are better off than most Americans; they are less, not more likely to be experiencing resentment over losing their jobs.

My guess is that the culprit behind Zombie Economics (as John Quiggin calls it) is simply the same devil that is currently plaguing every other aspect of American public life: identity politics.

American politics right now is all about identity. At the grassroots level, it's about race, with the Tea Party trying to convince poor whites that their interests lie with people of the same skin color - that the tribal threats of immigration and welfare are more dire than macroeconomic mismanagement. At the elite level, it's about the clash between the Business Class on one hand, and academics and lawyers on the other.

As both grassroots and elite America have separated themselves more and more (the so-called "Big Sort"), they have become ever more eager for markers to distinguish their two tribes - cultural flags around which to rally. In other countries, and in times past, identity markers included what church you went to and what accent you spoke with. Nowadays, there are the obvious material symbols, like whether you drive an SUV or a Prius. But in addition, people declare their allegiance by the ideas they accept and promulgate.

If you are a conservative, how do you communicate to fellow conservatives that you are on their side? Being white is not enough, since plenty of whites (about 45%) vote Democratic. Having an SUV and talking with a Southern accent might do it, but that's expensive and difficult. But denying global warming is easy, costless, and instantly and effectively communicates that you are part of the conservative movement/identity/army.

It's the same thing with Zombie Economics. If you are an economist or public intellectual, saying "stimulus doesn't work" or "we're in danger of inflation" or "the economy is being held back by uncertainty over Obama's policies" is just an easy way of saying "I stand with the Business Class against the forces of academics and lawyers." Never mind that the Business Class doesn't really believe we're in danger of inflation - otherwise, the TIPS spread, which is a market measure of inflation expectations among the investor class, would be much higher than it is. Never mind that policy uncertainty is not cited by businesses as a major concern. The purpose of these theories is not to guide policy, but to assert allegiance.

For Nobel laureates and other distinguished economists, it is important job-wise and prestige-wise to stand with the Business Class, who provide demand for the services of the econ profession. For grassroots Tea Partiers, mouthing support for Hayek is either a way of saying "don't give my money to nonwhite people", or simply a way to make conservatism seem like more of a coherent ideology than it is. Resentment need not have anything to do with it.

And if policy is paralyzed by the bad ideas that are used as ideological markers? Well, that's just collateral damage, but if you think about it, it's mild compared to the absolute political paralysis that America's identity rift has already brought about. Americans are more focused right now on dividing the pie than preventing the pie from shrinking. So shrink it shall continue to do.
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Why Microsoft Wants Novell's Patents

On Monday, Novell let it be known that it would be acquired by Attachmate Corporation in a deal worth $2.2 billion. Meanwhile, in a Form 8-K filing with the SEC, Novell stated that it "will sell to CPTN all of Novell's right, title and interest in 882 patents ... for $450 million in cash." CPTN Holdings LLC is a consortium of technology companies organized by Microsoft.

Immediately, people began to speculate that the reason Microsoft would bid such an enormous amount of money to obtain Novell's patent portfolio (which, by the way, comes to only 462 issued U.S. Patents; the 882 figure represents applied-for patents as well as issued patents) is to get its hands on the intellectual property around UNIX. (Novell acquired UNIX from AT&T in the 1990s.)

But it now appears that Novell will not be selling UNIX patents as part of the CPTN deal. So the $450 million question is: What, exactly, is Microsoft (via CPTN) paying all that money for?

I'll offer my own speculation. (Disclosure: In 2006 and 2007, I was a member of Novell's Inventions Committee -- the company's internal patent-oversight board. I don't maintain "special connections" with the Committee, however, nor do I pretend to speak for Novell.) If you look at Novell's patent portfolio as a whole -- and in particular, if you look at the bulk of the work done in the past five years -- you can't help but notice that the single largest category of inventions has to do with security.

If you go to the USPTO website and so a search on patents with "security," "trust," or "authentication" in the Abstract, where Novell is the Assignee, you'll come up with 60 hits. The search query I used was:

(((ABST/security OR ABST/authentication) OR ABST/trust) AND AN/Novell)

If you do a search on ABST/encryption, you'll get another 12 hits. That's 72 hits out of 462 granted patents (roughly 16% of the total) having to do with encryption or security.

Microsoft is well aware of its lagging reputation in matters involving security. And the company well knows that the success of its initiatives in cloud computing, collaboration, and social networking will depend, in large measure, on whether it can present a credible security story to customers. There's a lot at stake (to put it mildly). Compared to the size of the cloud computing, collab, and social markets, $450 million is a pittance.

How good are Novell's security patents? That's another question. Many (not all) of them are genuinely clever. Exactly which ones Microsoft has its eye on, though, is a secret probably only a few people in Redmond know.
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Thoughts on the rise of Asia














David Pilling has a
long, rambling, but good column in the Financial Times about the rise of Asia. It's all over the place, but basically it says:

1) Asia is growing much faster than anywhere else.

2) Since Asia is really just a silly European word for "everything on the Big Continent to the east of us," Asia is enormous, and hence it's not particularly unusual for them to be a big share of world GDP.

3) There are still dangers that could stop the rise of China and India, e.g. environmental or political problems.

4) Asia's increasing economy will give Asian countries increased political importance.

All of these are good points. However, let me make a few points that, I think are less commonly made.

First of all, the rise of China may be a return to historical norms, but the rise of India is not. China, historically, was usually one single political unit, while India was always divided between north and south. And while China was the world's technological leader for about 700 years, India has never led in technology. Also, though China often dominated its neighborhood, India rarely did. India had a huge GDP, true, but this was back in the days when everyone's GDP came from farming, and India simply had more farmers and richer farmland. The fact is, India is poised to become a technological, military, and economic superpower for the first time ever. This, it seems to me, is a more momentous shift even than China's rise.

Second, "Asia" will probably never return to its historic share of world GDP, for the simple reason that lots of people live in the Western Hemisphere now. The rise of the U.S., and now Brazil, Mexico, etc. permanently shrinks the relative weight of every other region. And, even more than the rise of India, the rise of the Western Hemisphere is historically unprecedented.

Third, a region's "rise" no longer means what it used to. Namely, powerful countries used to go out and conquer weaker ones (think: Europe in the 1700s, Mongols in the 1200s), but that is no longer an economically advantageous thing to do. The rise of the U.S. led to a smattering invasions and occupations (Philippines, Vietnam, Iraq), but few real conquests or colonizations. We can expect the rise of Asia to entail even fewer.

And finally, the big danger from Asia's rise (besides wholesale exhaustion of the planet's resources) is that Asian countries will fight each other. I humbly submit that Noah's Law of Competition states that competition is more common among things that are similar than things that are different. Or, in this case: Neighbors fight. Europe's rise was accompanied by centuries of internecine warfare; no less than 8 continent-wide wars raged from 1618 through 1945. Asia has already been through a period of war in the 20th Century, so we know that Asians are no more peaceful than Europeans. And Asian states are arming themselves at a furious pace.

Like Pilling's column, this blog post is a collection of tangentially related observations. But the main thrust is this: The possibility of internecine Asian warfare is the scariest political threat facing the world in the next 50 years. And the rise of the Global South, not China, will be the most significant historical event in the next 100.
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Getting Started with Adobe AIR

It seems I'm always late to a good party. Yesterday, I finally did something I've been meaning to do for, oh, at least two years: I compiled and ran my first Adobe AIR application. And in typical masochistic fashion, I decided to do it with Notepad as my code editor and command-line tools for compilation. It's not that I can't afford Dreamweaver or Flash Builder, mind you (I have both products and recommend them highly); it was more a matter of wanting to get dirt under my fingernails, so to speak. That's just how I am.

The whole process of downloading the AIR SDK, reading online code examples, and getting my first example up and running took a little less than an hour from start to finish. There were only a couple of rough spots (both easily resolved). The first was creating my own self-signed security certificate. I did this with the ADT tool that comes with the AIR SDK. The magic command-line incantation that worked for me was:

adt -certificate -cn SelfSign -ou KT -o "Kas Thomas" -c US 2048-RSA cert.p12 password1234

Naturally, you'll want to change some of the parameters (e.g., the ones with my name and initials, and the password) when you do this yourself. But running this command should produce a certificate named cert.p12 on your local drive, assuming adt.bat (Windows) is in your path.

For example code, I turned to the text editor example described here. I compiled the code with:

..\bin\adt -package -storetype pkcs12 -keystore ..\cert.p12 TextEditorHTML.air application.xml .

(running a command console from a location of C:\AIR\TextEditorHTML, with my certificate stored under C:\AIR). The first time I did this, I got an error of "File C:\AIR\TextEditorHTML\application.xml is not a valid AIRI or AIR file." If you get the "is not a valid AIRI or AIR file" error, it means you left the trailing period off the foregoing command line. (Note carefully the period after "application.xml" at the very end.)

And that was basically it. My first AIR app: done in under an hour. Now, as Shantanu Narayen says, "let the games begin!"
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