Thursday, October 25, 2007

The Battle for the Bottleneck

Since Peter and Henry each independently forwarded this Wall Street Journal article on cell phones to me, I thought I should respond here. First off, it is a truly excellent article, and I agree completely with Walter Mossberg, the author. He does a fine job laying out the key issues in an easy-to-understand manner. With respect to the upcoming wireless spectrum auction there, the odds of open handset rule going through went up this week when Verizon bailed on its attempt to sue the Commission over it.

Since Mossberg did such a good job discussing the state of the market, I thought I might discuss why I think the market is like this. The short version is this: while the Internet revolution has created a profusion of telecommunications that a short time ago would have been unimaginable, at the same time it has threatened to make telecom providers more irrelevant than they have been since their inception and so they fight it tooth and nail. And now for the (really) long version:

The problem with the Internet viewed from the perspective of the telecoms is that it is an end-to-end network, meaning everything interesting happens at the endpoints and they're stuck in the middle. The stuff in the middle is designed to be transparent and fungible (particularly in the case that some of it is vaporized by a nuclear bomb). This is very different from what we had before the Internet. Previously any goods or services traveling down the phone line into someone's home or office were controlled by the phone company, be it phone service, long distance service, voice mail, video, advanced data services, etc. Even if you just wanted to communicate data between you two office sites, the phone company would set this up then charge you out the wazoo. It was a good business, and they made a profit for each additional application they could develop and provide to consumers over their lines.

But when the Internet comes along, even though the number of applications now skyrockets and the benefits people gain from their telecommunications links grow immeasurably, the telecom companies are no longer in control, and are therefore no longer profiting directly from the provision of services. Whatever the telecom companies were charging people an arm and a leg for can now be done on the Internet for peanuts. So to the extent that telecom providers did provide unique services, now anyone who can pipe in an Internet connection over any medium can eat their lunch. You don't have to rely on the phone company for voice communications or cable for video anymore. And many applications the phone companies hadn't implemented yet or hadn't even dreamed of are now out there being heavily used for free. It seems like it should be their shining hour, but it's really more of a let-down. Sure they are still selling and making money on the basic connectivity that underlies all of the Internet, and in record volume, but they'll be selling that in any case. It's the add-ons, the profits coming from provision of actual commercial services to end-users they want. So while openness is what has made the Internet great for us users, there has been a very consistent effort on the part of telecom companies to maintain control where they haven't yet lost it, or to regain control where it has been lost.

At the start of this thing the big telecom companies didn't even want to deal with home consumers; for them data services were things to be sold to corporate customers at outrageous prices that no home user would contemplate paying. So when PC ownership took off and it became apparent that there was a market for online services, other companies got involved. The initial generations of modems were built to work over the phone lines by converting their digital signals into analog beeping and squawking (converted back to a digital signal by the modem at the other end of the line) so that they only needed a normal voice line to operate. Phone company participation was not required. The initial big corporate providers of dial-up online services (Microsoft, America Online, Prodigy) ignored the Internet and each built their own walled garden, each providing their own proprietary services to customers. In this sense they adopted the same model as the telecoms. Everything that passed down that line was to be provided by them, and they'd get paid for it. Of course, the fact that dial-up modems require no significant physical infrastructure (all you need is an office with a bunch of voice lines and some computers) meant that the barrier to entry to the online services business was very low. So small shops opened all over the place. They, of course, didn't have the infrastructure to create a bunch of proprietary content and services the way the big guys did, but there was this Internet thing they could hook people up to for pretty low costs that had a lot of content on it. It didn't take consumers long to figure out that there was a whole hell of a lot more interesting stuff outside the walled gardens than inside them (in large part because the users went out and created it themselves). So the walled garden model was soundly defeated (although it took AOL the better part of a decade to admit it).

So we all got onto the Internet and the phone companies had lost control over content and services and so had the ISP's. Everything was free and open and we went crazy with entrepreneurship and had the dot-com bubble. But while that was happening, we were also developing technologically. The networks were trying to keep up with our demand for faster connections to get all the cool new stuff on the Internet (which is to say mostly online gaming, pirated MP3's, and porn). So we moved from dial-up to DSL and cable modems. This is an important transition, because, unlike dial-up modems, DSL and cable modems require physical infrastructure in the telecom networks. There needs to be actual equipment sitting in the local office of the phone or cable company for them to work. All of the sudden the phone companies had a way to take back control over everything. But wait, luckily for us Congress was out ahead of the game and had made arrangements for this in the 1996 Telecom Act. That sounds sarcastic, but isn't; Congress had achieved a remarkably balanced and well-designed compromise. The Act required, among other things, that the regional phone companies play nice with competitors and rent out the equipment needed to make a DSL network function, so that competitors could get at the same customers the regional phone companies served. Problem solved, competitive pressure will prevent the phone companies from reestablishing control over the Internet and abusing their market power.

Sadly it didn't work out that way. The phone companies didn't like this part of the '96 Act (big shock), so they launched an intense campaign of lobbying, foot-dragging, and lawsuits that lasted until a few years ago when Bush's FCC appointees decided to use the Telecom Act for toilet paper and the Supreme Court cheered them on. Internet access is no longer considered a common carrier service and is not subject to open access requirements. Now instead of thousands of ISP's in direct competition with each other, Verizon and AT&T and Comcast and Time Warner basically own the consumer side of the Internet in the US. And, to varying degrees, they may be able to start rebuilding their walled gardens and capitalizing off of all the wonderful services people enjoy on the Internet, and turning our wonderful network into something a little less wonderful. This is what the fight over net neutrality is about.

One of the interesting battles in net neutrality is just how far it reaches into a provider's infrastructure. The case for net neutrality is most clear when it comes of an ISP's actual Internet service, where they're blocking a service or web site they don't want you to access. But there are other ways for an ISP to go about this. Consider cable. The cable companies set up their networks so that only a small part of their pipe is allocated for Internet service. The vast majority of it is carrying video. If they wanted they could scrap a few cable TV channels and expand the datastream to their cable modem subscribers. Now let's say that on-demand TV becomes a very popular service. Comcast has two ways to go about this. They could provide on-demand video pretty easily over the Internet, except they probably don't have enough bandwidth on their Internet service to handle it. So they would need to eliminate some video channels and expand their bandwidth first. But if they did that, anyone could sell on-demand video to their customers over the Internet, and Comcast would get nothing for it. They would have to compete for every customer, and the wouldn't have any real competitive advantage over other video providers. Alternatively, Comcast could keep their Internet service throttled down, and develop a proprietary on-Demand system that would occupy the same bandwidth but run independently of their Internet service. Now they have no competitors and get to tariff users for every use. Oh, happy day for Comcast.

All of this brings us, finally, to the mobile wireless market. There are three key points to notice. First, for technological reasons data services took quite some time to arrive in the mobile wireless market. So they got to sit by and watch all this other stuff happen. Second, like DSL and cable, wireless Internet service requires special equipment, meaning the wireless service provider is necessarily also the Internet service provider and has total control over the network. Third, the cast of the characters is fairly similar (AT&T and Verizon, again, plus a couple other big national companies). So what you have are companies that have learned that what they want, more than anything, is control and the ability to tariff users for every bloody thing they do on the network, and who technically have the capability in this market to make it happen. They have fought bitterly to maintain this control and will continue to. These are concentrated markets, so the threat of competition isn't that great, and clearly the fear of loss of control their users is much greater than their fear of competitive harm. And the big wireless companies are all moving in lock-step on this anyway, so there is no real competitive impetus to stop fucking with customers and actually give us what we want. This is the sort of thing that happens in concentrated markets…

On some level they know they'll eventually have to let their users onto the Internet for real (the iPhone is a concession to that reality, although AT&T saw to it that they get their pound of flesh from iPhone users anyway). But the longer they can keep customers off the Internet, or only let them on some borked up version of the Internet, the better. I mean if people can download ring-tones for free, who's going to pay their provider $3 a pop for them? If you can buy MP3's for your phone from iTunes for a buck, why would you pay Verizon twice as much for their proprietary music-to-phone system? Now they can sell you GPS-based mapping, sports scores, online games, SMS, emails with pictures from the camera phone, and every other damned thing you'd get for free on the Internet. If they provided good Internet service or allowed phones with WiFi capability onto the network, this would all come crashing down.

In the end, the simple reality is that the communications market is deeply dysfunctional. It's highly concentrated, has many components that are or were natural monopolies, and is littered with regulatory detritus from past battles with abusive monopolists (too many of which didn't come out the right way for the good guys). These are markets that desperately need oversight and consumer protections. Frankly, a lot of the physical infrastructure would probably be better off in the public sector. The Internet is an incredible economic engine and allows for so much innovation and competition, it's sad to let these crotchety bastards be the gatekeepers. The analogy to superhighways isn't that far off. It doesn't have to be like this. In other countries (generally where regulators have forced open access on the phone companies) people regularly pay about the same we do for Internet service that is ten times faster, they have mobile phones that can do WiFi and are interchangeable among providers, and they have no real issue over net neutrality because Internet providers don't have enough market power to abuse it. I'll be very curious to see what happens if the Democrats take over at the FCC in a couple years...

Monday, October 01, 2007

What if the government subsidized the employment of displaced workers?

I was contemplating where I disagreed with the previous post when the following idea occurred to me. It could probably use a more rigorous development, but I think it’s at least interesting.

I'm kind of uncomfortable with the concept of government run retraining programs.

One major problem is figuring out what to train people to do. Do those being retrained get to choose what they are trained for?

If so, what will stop them from seeking training in a field for which they are unsuited, or one in which the demand for workers is little stronger than the field they just left?

If not, then it seems that the government would have to specify what fields show sufficient demand to bear an influx of newly trained workers, and then place workers in training programs that are best suited to their skills and abilities. I dislike this idea both because of its impact on the self determination of the workers, and because it would have a distortionary effect on the economy (as the training programs would act as subsidies for the selected industries by increasing labor supply and hence reducing labor costs).

Another issue is that an artificial training program might be a very ineffective way to train workers.

Even in many fields where formal education is routinely required, I suspect that the majority of learning tends to take place in the field, after placement. I think that this would be even truer of blue collar workers than others. So something along the lines of an internship/apprenticeship might be most efficient.

Yet having the government take industry partners and place workers in artificial internships, again, is not to my taste. It seems too likely to result in inefficient placements.

Instead, think briefly about the relationship between an industry with a growing demand for labor and an unemployed person. It’s likely that the unemployed person would gladly accept a position at a reduced wage in exchange for the opportunity to master the trade. Likewise, the firm would like to obtain another trained employee so long as they could make up the cost of training through the production of the worker. So both parties stand to benefit by working together on this. But there is a problem.

In a way the problem is akin that of intellectual property.

If I develop a new product or manufacturing technique I do so at some cost. If a competitor is allowed to use the fruits of my development and produce the same product or use the same technique they will be able to sell the output profitably at a price such as would require me, with my sunk cost, to take a loss. So, without a patent to protect my innovation, I have little incentive to develop it in the first place.

Similarly if I train an employee, I do so at some cost. If I am to retain that employee at a net benefit to my firm, I must therefore compensate the employee less than one which we had hired fully trained (i.e. with no training cost). But if the employee achieves the status of fully trained before I have recovered the full cost of her training, another firm will be able to entice her away by offering her compensation equal to her productivity, while I could not do so without suffering a loss. So unless I can monopolize her labor, I have little incentive to offer her training.

My desire to monopolize her labor is equivalent to an innovator’s desire to monopolize the use of their innovation through the use of a patent. But employees have rights that innovations do not. I cannot simply apply to the government to secure my right to exclusive use of this employee. Rather I must contract with her in order to ensure that she will stay with my firm. Of course, she would have little incentive to accept the contract after her training is complete, so we would have to agree to it before her training began. But here a couple of problems arise.

There is asymmetrical information.

The employer does not really know how productive the employee will be after training, so they will make an offer that would be appropriate for the average employee. But highly able workers will recognize that the contract would not benefit them as much as it should. So they would tend to refuse the offer. This would bring down the average productivity of the workers accepting the contract. So the employers would have to readjust the contract to account for the new, lower, average productivity. This would begin to push the next tier of most productive workers out of the contract, etc. And the spiral would continue until the market broke down.

Even without asymmetrical information there would still be a moral hazard problem. Provided with long-term contracts the workers would have less incentive to exert themselves in the service of their employers. Again this would lead the employers to make lower offers, in effect pushing the hardest working employees away from the contracts.

Between these two problems it seems unlikely that such arrangements would come about. In some industries, where an intensive amount of expert attention is required during the training process these problems may be fatal to in-job training. If the employer cannot break even over the duration of the training process, even if they provide zero compensation, then there is little to be done. But in some other cases there may be a solution. Now we return to my opening question.

What if the government subsidized the employment of displaced workers?

In the above scenario, it was not true that no training took place. Training could and would take place if the firm could extract sufficient benefit from the worker’s labor during the training process to break even prior to the worker becoming sufficiently trained to be attractive to other employers. By subsidizing the work of untrained workers (e.g. for some fixed period of time paying them some quantity per hour worked in addition to the compensation offered by the firm) and thereby reducing the compensation the firm must offer to retain the services of the employee, the government could increase the quantity of training that a firm could viably provide without loss, and thus give workers the opportunity to overcome larger experience barriers. Of course such a program would require monitoring to ensure that the employees were only being subsidized for skilled labor in which they were inexperienced and that the industry retained a sufficient proportion of the trainees to justify the subsidy. But I think that this monitoring would be much easier than hand picking industries and developing government implemented training programs. And I believe the outcomes would be much better.

Thursday, September 20, 2007

The Role of Work

Andrew Sullivan pointed out this fascinating article on the psychological impacts of employment (and unemployment). I take issue with many of the conclusions the author, Arthur C. Brooks, draws from the data he presents, but the data is worth taking a look at. In particular I'm drawn to the studies on the devastating impact of unemployment, as in the case of the Marienthal villagers or the University of Chicago survey that found that even a brief bout of unemployment drastically increased the tendency of respondents to feel hopeless or worthless.

Brooks concludes his survey of the data by stating that the only thing we need to do is "protect the free market so that people can find and choose the types of employment that suit each of us best." I find this conclusion difficult to reconcile with the data on unemployment. The implications of that data suggest to me that employers have a devastating non-economic advantage to wield over employees, and that normal market churn can have significant psychological externalities that aren't generally considered in economic models.

One need not be a bleeding-heart sympathizer with the poor or the unemployed to be concerned with such issues. Witness the current political dialogue on topics such as economic globalization, outsourcing, and immigration. I would suggest that the rising populist positions on all of these issues share two traits: they are motivated by fear of unemployment and all its consequent harms, and they are deleterious to the overall health of our economy. Note also that these issues tend to span across the usual political divides. You can find vehement opposition to immigration on the right, fierce opponents of globalization on the left, and distaste for outsourcing on every side. People have a tremendous fear of losing their jobs, a fear that viewed in purely economic terms may seem irrational, but taking into account the additional psychological effects perhaps it is not so irrational after all (although I guess you could conclude that the psychological impact is itself irrational).

Brooks points out that remedies such as welfare do little to address the psychological harm of unemployment. He also notes that making jobs more secure comes at a price. Brooks argues that more secure jobs tend to be less meaningful. I don't see the data for that, and I'm not sure it's right although I can see where he's coming from. In any case, certainly there is an economic price to be paid for making it more difficult for employers to adjust their workforce (European economies demonstrate this).

These considerations about welfare and job security seem to drive Brooks's conclusion that nothing should be done other than to support the market. And certainly, the market may provide enough of a remedy for some of the unemployed, particularly the highly skilled and well-educated. However, that does not address the whole of the topic. Particularly where globalization and outsourcing are concerned and where we see massive shifts in the market, people may find that skillsets in which they had invested a great deal of time, effort, and money are no longer needed, not just by their previous employer, but by any domestic employer. There is room here for the government to be involved in retraining and job placement for displaced workers. If we know that job churn is necessary and healthy for the economy, but that the impact on individuals of this churn can be severe, that seems the most sensible route to pursue. Not only can this have direct impacts on the social welfare of those affected, but the existence of such a safety net may also help reduce the fear that drives the dialogue on economic policy in the wrong direction. There is an obvious connection between this suggestion and our past discussions of Rawlsian fairness and political compromise (as seen here), but I'll leave that as an exercise for readers...

Wednesday, September 12, 2007

Islam Isn't the Problem

Well, I haven't been posting as much as I'd like lately. I just haven't crossed that much that sparked my interest lately. But I think this is important (and it ties in to my previous post as well). This global Gallup poll of Muslims is significant, as its title says, in framing the war on terror. Gallup found that Muslims in the Middle East actually have a lower tolerance for attacks on civilian targets than do average (non-Muslim) Americans. The poll found only a weak link between religiosity and political extremism among Muslims. Gallup notes that while those who found the 9/11 attacks to be wrong often seated those beliefs in religious sentiment, those who thought the attacks justified relied on political rather than religious justifications. The summary of poll concludes that "the difference between those who condone terrorist acts and all others is about politics, not piety."

These are important findings, not only in countering the rhetoric of the more jingoistic right wingers, but also in countering certain middle ground positions (i.e. Andrew Sullivan) that reject the more extreme policies that arise from such rhetoric while still embracing the framing of Islam as the root source of our problems. This conflict is and always has been about political differences. The pollsters find that the Muslims who sympathize with extremism tend to be those who believe that the West does not reciprocate their concerns and is unlikely to ever act on them, creating a siege mentality. This is not a new idea, at least on this blog, but solid data is always a welcome addition to the argument. We cannot hope to end this conflict without at the least understanding the motivations of our adversaries.

Sunday, August 12, 2007

Understanding Al Qaeda

One of the key battlegrounds in developing a strategy against Al Qaeda and its affiliates is the matter of defining who Al Qaeda is and what Al Qaeda seeks to achieve. From the early days after 9/11 the Bush administration sought to cast Al Qaeda as part of a epic struggle between cultures. And in order to build a properly ominous threat to justify military adventures and belligerent policies and cultural attitudes the administration's allies have sought to play up Al Qaeda's aspirations of conquest and the creation of a new Caliphate.

The reality, however, is that Al Qaeda has no such aspirations, and the only way Al Qaeda can be a player in an epic clash of civilizations is when we make them one through our own actions and rhetoric. This was one of the key points made by Larry Wright (author of the seminal work on Al Qaeda, The Looming Tower) when he spoke at the Miller Center last year. According to Wright, Al Qaeda has virtually no policy platform or objectives. What drives young men to Al Qaeda is not a desire to accomplish any particular end, but a deeply seated sense of cultural humiliation by the West. This is the same factor that creates rioting and violence in response to perceived Western insults against Islam like the Mohammed comic, or the Koran in the toilet story. Al Qaeda holds out no promises of accomplishment or conquest, it promises recruits one thing: the opportunity to die as martyrs fighting the West.

A review on Slate last week of Raymond Ibrahim's Al Qaeda Reader confirms Wright's account. The reviewer, Reza Aslan writes:
While these writings provide readers with page after page of, for example, arcane legal debates over the moral permissibility of suicide bombing, they do not really get to the heart of what it is that al-Qaida wants, if it wants anything at all. Al-Qaida's nominal aspirations—the creation of a worldwide caliphate, the destruction of Israel, the banishing of foreigners from Islamic lands—are hardly mentioned in the book. It seems the president of the United States talks more about al-Qaida's goals than al-Qaida itself does. Rarely, if ever, do Bin Laden and Zawahiri discuss any specific social or political policy.

What al-Qaida does lay out, however, are grievances—many, many grievances. There is the usual litany of complaints about the suffering of Palestinians, the tyranny of Arab regimes, and the American occupation of Iraq. But again, legitimate as these complaints may be, there is in these writings an almost total lack of interest in providing any specific solution or policy to address them. Indeed, al-Qaida's many grievances against the West are so heterogeneous, so mind-bogglingly unfocused, that they must be recognized less as grievances per se, than as popular causes to rally around. There are protests about the United Nations' rejection of Zimbabwe's elections, the Bush administration's unwillingness to sign up to the International Criminal Court, and America's role in global warming. (To quote Bin Laden: "You have destroyed nature with your industrial waste and gases, more than any other country. Despite this, you refuse to sign the Kyoto agreement so that you can secure the profit of your greedy companies and industries.") Zawahiri's many complaints include the mistreatment of prisoners at Guantanamo and Abu Ghraib, which he calls "a historical embarrassment to America and its values," as well as the United Kingdom's anti-terrorism laws, which "contradict the most basic principles of fair trial." There is even a screed against America's campaign-finance laws, which, according to Bin Laden, currently favor "the rich and wealthy, who hold sway in their political parties, and fund their election campaigns with their gifts."

Most Americans would agree with many of these complaints. And that's precisely the point. These are not real grievances for al-Qaida (it does not bear mentioning that Bin Laden is probably not very concerned with campaign finance reform). They are a means of weaving local and global resentments into a single anti-American narrative, the overarching aim of which is to form a collective identity across borders and nationalities, and to convince the world that it is locked in a cosmic contest between the forces of Truth and Falsehood, Belief and Unbelief, Good and Evil, Us and Them.

In this regard, al-Qaida has been spectacularly successful, thanks in no small part to the assistance of the divisive "Clash of Civilizations" mentality of our own politicians. In fact, far from debunking al-Qaida's twisted vision of a world divided in two, the Bush administration has legitimized it through its own morally reductive "us vs. them" rhetoric.
Ultimately Aslan came to the same conclusion Wright did:
Because, if we are truly locked in an ideological war, as the president keeps reminding us, then our greatest weapons are our words. And thus far, instead of fighting this war on our terms, we have been fighting it on al-Qaida's.
Keep this in mind next time some talking head tries to sell you on Al Qaeda's quest for a new Caliphate. Far from thwarting Al Qaeda, these pundits, through their rhetoric, are giving Al Qaeda exactly what it wants.

Monday, August 06, 2007

I'm Back (with some Comm'r Copps Content)

Sorry for the lengthy absence. Certain other events were occupying my time... Posts here will probably continue to be infrequent for the foreseeable future, but there shouldn't be any more month-long gaps.

Anyway, having helped build his broadband policy arsenal last year, I'm always happy to point out when FCC Commissioner Michael Copps goes on the broadband policy warpath as he did this past week at the YearlyKos convention. Slashdot coverage here. Matthew Yglesias discusses it here (and the happy former Copps intern in the comments section isn't me). I have to disagree with Yglesias's comment that Copps is not a good speaker. He may not be the most captivating speaker, but he writes some very good speeches and delivers them effectively. I won't argue the point about his jokes, however. It is nice to see that media and telecom issues have a big following at YearlyKos. It's important stuff, although, as Yglesias notes, somewhat obscure. Let's hope that after the 2008 election Copps will have the power to do more than climb up on a soapbox about these issues.

As a random aside, I also wanted to link to an interesting column on Slate, co-written by UVA professor Jim Ryan, on Clarence Thomas's sincerity as an originalist. Both Scalia and Thomas have struck me as less principled and more political of late...

Saturday, June 30, 2007

Another Round of Net Neutrality

The Bush administration has fired its latest salvo on net neutrality, with an in-depth report by the FTC (actual report here). Their conclusion: let's wait and see. It's a 170 page report and covers a lot of ground. I can hardly respond to everything in it, but I would like to make a few comments.

First, the FTC does a solid job of covering the arguments in favor of net neutrality (pages 56-64). They didn't make any effort to soft-peddle the substantive arguments or build the strawman positions many net neutrality critics are so fond of. Most significantly they covered the concern that prioritization of ISP-provided content and other specially licensed preferred content would tend to recreate the walled gardens of the pre-Internet America Online and Prodigy days. They discussed the problem that lack of competition in the last mile makes the market an unreliable regulator of ISP behavior. Also they noted the argument that increasing bandwidth (say to 100 Mb/s) could make the issue of congestion largely disappear (and concerns over net neutrality with it).

The report also summarizes arguments against net neutraity (pages 64-69). Most of them are, I think, pretty weak. They raise the usual point about the necessity of non-neutrality to deal with small numbers of users sucking down large amounts of network resources for filesharing and the like. This really has little to do with net neutrality. Net neutrality is about ISP's throttling the content end of the connection, not the user end. Even under most proposed neutrality regimes ISP's would be free to throttle users (within the terms of their service agreements) when users abuse the network. They also raise the point that different types of data (web pages versus VOIP versus streaming video) may need different service levels. This again, as I pointed out in my last net neutrality post, is not prohibited by net neutrality. It's ok to give VOIP traffic higher priority than web traffic, as long as no particular VOIP provider is preferenced over another.

The net neutrality opponents argue that net neutrality is necessary to allow service providers to capture enough revenue to fund the buildout of faster networks needed for advanced services. This seems facially plausible, but breaks down on further analysis. First, if what the ISP's want is a metering system, so that the users of advanced services bear more of the cost, there is nothing to stop them from simply offering those capabilities directly to end users for a price. Already some providers offer multiple tiers of internet service. Additionally, the net neutrality model doesn't appear to be one well suited to driving growth in network capacity. Non-neutrality revenue is built on bandwidth scarcity. If bandwidth isn't scarce, no content provider pays an ISP for preferred service. I find it hard to believe that if ISP's start to have significant new revenue streams coming in predicated on the scarcity of their network resources, they would turn around and invest that income in expanding their network resources and thereby undercut their new revenue model. In a non-neutral market it pays to under-supply bandwidth.

Finally, perhaps the most critical topic of discussion is the state of competition in broadband internet service (starts on page 98). If internet service was truly a competitive market, there would be no need for net neutrality regulation, as consumer demand could sufficiently regulate the market to prevent abuse by ISP's.

The report starts off by noting how much broadband prices have fallen and how much speed has increased in the last six or seven years. Certainly it's true that this has happened, but it needs to be put into perspective. This is, of course, a business built on technology that is improving at remarkable rates. Look at how much PC's have advanced in the past decade, how much faster the processors are, how much more RAM they have, how much more harddrive capacity, how much better video processing, and how much prices have fallen. By comparison, the rate of change in broadband internet service is glacial. Or you could compare cost and speed improvements in broadband service in the US with broadband services in Japan or Korea or France, where, on a price/performance basis, we've been left in the dust. Yes, the market is improving, but it would be an appalling failure if it didn't, and the rate at which it is improving does not bode well for the state of competition in the broadband market.

The other key point on competition is the matter of new entrants to cover the "last mile". Opponents of net neutrality argue that the cable/phone company duopoly is being challenge by other service providers using satellite, broadband over powerlines (BPL), or wireless systems. Each of these technologies, unfortunately, faces crucial barriers. Satellite is cursed with poor latency. As fast as the speed of light is, bouncing a signal off a satellite down to a receiving station, then back up to the satellite and back down to the user takes time, enough time to make satellite unusable for most interactive advanced services. BPL simply doesn't appear to be making the cut in terms of cost of deployment and performance level to entice many power companies to want to try rolling it out. It simply isn't going to have the cost/performance ratio to make it competitive with cable or DSL any time in the near future (if ever). For wireless the challenge is spectrum. Wireless will be highly competitive in the market for internet service at speeds of 10 Mb/s or less. But it does not appear that there is enough spectrum for widespread use at speeds much greater than that. As people become more accustomed to high speed cable/DSL/fiber service they will find wireless insufficient for standard residential use (and for most uses that implicate net neutrality concerns). Cable and DSL can provide speeds in the 30 Mb/s range (although no US providers offer this at present), and fiber will go up to 100 Mb/s. I'm afraid we are going to be stuck with a duopoly for some time. The market is not going to bail us out of this mess (although it could if federal regulators forced the cable and phone companies to open up their last mile networks to other competitors).

Sunday, June 24, 2007

Liberalism, the State, and Free Markets

I promised last week to eventually to get to the discussion of Rorty and Rawls. For various reasons, I've decided I'd rather not. But if anyone wants to read the discussion on their own, it goes something like this: Yglesias, Linker, Yglesias, Linker, Sullivan, Douthat.

Also, before getting to my main topic, and because it tangentially relates to that topic, I'd like to throw this in. Christopher Hayes has a column on the merits of bureaucracy and the fine people who inhabit our federal bureaucracy. If you look into the details of the DoJ scandal, it's hard to be as dismissive as Hayes about the lasting impact of the Bush administration on the bureaucracy, but he makes good points nonetheless. An excerpt:
It's slander with a long pedigree--Cicero called the bureaucrat "the most despicable" of men, "petty, dull, almost witless...a holder of little authority in which he delights, as a boy delights in possessing a vicious dog"--but in the last forty years, conservatives have converted this casual contempt into an ideological fixture. Since as far back as the Goldwater campaign, the American right has generally found that "the government" is too abstract an entity for most people to actively loathe. It's far more effective to demonize the people who execute its daily functions. Bureaucrats are to conservatives what the bourgeoisie was to Marx: an oppressive class of joyless knaves. Milton Friedman quipped that "hell hath no fury like a bureaucrat scorned"; Ronald Reagan said in 1966 that "the best minds are not in government" because if any were, "business would hire them away"; and George Wallace expressed his desire to "take those bearded bureaucrats" in Washington who were in the process of desegregating the South, "and throw them in the Potomac."

But a funny thing has happened over the past six years. At a time when the press failed to check a reactionary Administration, when the opposition party all too often chose timidity, it was the lowly and anonymous bureaucrats, clad in rumpled suits, ID badges dangling from their necks, who, in their own quiet, behind-the-scenes way, took to the ramparts to defend the integrity of the American system of government.


But the moral of the Comey story specifically, and of the failures of the Bush Administration more broadly, is the sublime value of bureaucracy. Not only is governance of any kind impossible without it; so too are the checks and balances of a constitutional republic. Red tape is what binds those in power to the mast of the law, what stands in the way of government by whim. That's why an Administration hostile to any checks and balances has sought to reconstitute the federal civil service as just another lever in its machine.
So, anyway, on to the main course. Harvard economist Dani Rodrik has a blog post excerpting from a lengthy article by Stephen Holmes in the American Prospect (from a few years back) on the views of classic liberals on the role of government. The basic gist of the excerpts is that the liberal ideals of individual rights and free markets are tied inextricably to the existence of a strong state to protect them. It very much reminds me of my previous discussion with Henry on libertarian paternalism and Rawls where I wrote:
This, in fact, has always been my biggest objection to libertarian theory. I simply cannot see how a libertarian state could ever remain so for any appreciable length of time. The initial structure of the government will not bind it in libertarian form, even if you had a constitution without amendment procedures. It was not a constitutional amendment that allowed the development of the administrative state in the US, but judicial interpretation. And it wasn't just uppity judges responsible for that (although I'm not sure it would be significant to my argument even if it were), but intense political pressure placed on them by political branches motivated by quite serious concerns about social stability and unrest (and rising socialist sentiment). Whether it's a Great Depression and populist outrage or rent-seeking businesses and other economically powerful interests, a state will always be subject to pressures (of varying intensities) to do non-libertarian things. The state will always have the power to do those things; it is inherent in being a state. That power cannot be ignored, and there is no structural way to make it go away. It just sits there begging to be used.

I have a strong suspicion that some of the policies necessary to keep those pressures at bay (to the greatest degree possible) are themselves non-libertarian (e.g. some level of redistributive tax policy and regulation of finances and political speech, etc.). In the end, I tend to believe that our rights (which may or may not be limited only to life, liberty, and property) are likely best protected by a state that overtly recognizes the threat of instability and subversion of state power and is structured to best address that threat, even if that structure is not a strictly libertarian one. The state may need to be more powerful and far reaching than a night watchman state in order to be a stable, free-standing system. What good is the night watchman if it ends up being overthrown by communists or turning into a plutocracy?
Tying in to the Hayes column: a robust state can be less prone to abuse and authoritarianism than a more easily captured minimal state.

One of the fundamental premises of Rawls's political liberalism is that the point of a liberal state is to create a platform for social cooperation that is the prerequisite for everyone to share in the benefits of, among other things, free markets. Libertarians suppose that you can rip away the institutions that result from this political compromise while still gaining the benefits they are meant to provide. This seems to miss something fundamental about human nature and social interaction.

Political compromise is necessary to create stable institutions, and stable institutions are necessary to enforce the rules of the market (e.g. to protect property rights, enforce contracts, settle disputes, and police fraud). Institutions that are not broadly considered legitimate will, as Rawls argues, be subject to instability, as each faction that even briefly manages to achieve power will attempt to tear down illegitimate institutions and replace them with institutions of their own preference.

So it becomes important to try to determine how people assess legitimacy. Rawls suggests fairness as a crucial benchmark. That seems to have a lot of merit. We've had Boys Weekend discussions on the topic before, noting psychological studies to the effect that people are willing to sacrifice their own benefit in order to enforce a system of fairness, even when there will be no opportunity for direct reciprocity. (I thought it interesting to see recently that humans are not alone in this behavior.) This suggests that even if a libertarian institution is quantitatively superior to some non-libertarian institution it might still be regarded as less legitimate if it produces outcomes that are perceived to be unfair.

Returning then to Dani Rodrik. Rodrik's main specialty is economic globalization. He argues that globalization promoters have been shooting themselves in the foot by ignoring populist complaints about trade unfairness, countering these arguments only with statements of the quantifiable benefits of more trade. Economists too often ignore procedural fairness in favor of simple economic gain. Regular people tend towards the opposite. Rodrik argues that domestic political perceptions of the globalization process are the key to further progress on trade. In other words, to create the social platform for cooperation necessary for global markets to expand we will require a more robust social safety net to remedy distributional unfairness and create perceived legitimacy for the whole endeavor. Otherwise the social compromise on which economic globalism is built collapses into a morass of protectionism. The market can only go as far as the state can carry it.

UPDATE (6/25): Rodrik posted again today with further evidence for his thesis on globalization. He cites a recent academic paper studying a survey of people from 18 countries that found an inverse relationship between the size of the state (measured by percentage of GDP) and preferences for protectionism. Rodrik quotes from the paper:
Our results provide microeconomic evidence consistent with the long-standing argument that the state and the market are in fact complementary. Openness and globalization can introduce uncertainty into peoples’ lives, and this additional risk can lead some people to oppose trade. Government expenditure can help to reduce this risk, and thus shore up support for open markets. It would seem that the ‘grand bargain’ that was embedded liberalism is politically effective.

Friday, June 22, 2007

Lessig Takes on the Political Process

After spending the past decade redefining the academic landscape on intellectual property rights and driving forward the debate on law and technology, Larry Lessig has decided to move on to something new. His new project: to figure out why our political process doesn't work and try to fix it.

In Lessig's most reknowned case, Eldred v. Ashcroft, he argued to the Supreme Court that it made no sense for Congress to retroactively extend the duration of copyrights for works already in existence. You can't provide incentives, he argued, for someone to do something they've already done. He was, of course, absolutely right, but the Supreme Court decided it was Congress's call to make, not theirs. So now Lessig has turned his attention back to Congress, to figure out why it would create policy so obviously wrong. Lessig writes:
The answer is a kind of corruption of the political process. Or better, a "corruption" of the political process. I don't mean corruption in the simple sense of bribery. I mean "corruption" in the sense that the system is so queered by the influence of money that it can't even get an issue as simple and clear as term extension right. Politicians are starved for the resources concentrated interests can provide. In the US, listening to money is the only way to secure reelection. And so an economy of influence bends public policy away from sense, always to dollars.

More recently Lessig has been one of the key advocates for net neutrality, where much the same forces are at work. He notes that "our government can't understand basic facts when strong interests have an interest in its misunderstanding." So Lessig has decided to dedicate his next decade to trying to crack this problem.

Obviously it's a big problem, and, as Lessig acknowledges, he's hardly the first person to take it on. But I'm excited to see him try. While Lessig has largely won the battle on copyrights and technology as far as the academic debate goes, his work there has had few tangible results in our legal framework. This seems the obvious next step. If he can accomplish half as much in his new endeavor as he did in law and technology, it will be a great win for us all. I wish him the best of luck.

Thursday, June 21, 2007

The Symbiotic Relationship Between Wannabe Terrorists and the Bush Administration

Security guru Bruce Schneier has an exceedingly well-sourced blog post (also a Wired article) on how the Bush administration has trumped up various post-9/11 terrorist plots in service of security programs that had nothing to do with the apprehension of the plotters. He argues, in effect, that the aspiring terrorists and the administration have a shared interest in terrifying Americans. In reality these terrorist threats were not so terribly terrifying, and all were thwarted through old-fashioned police work, the sort that the Bush administration has worked tirelessly to convince us is no longer adequate in the post-9/11 era. Schneier's no nonsense approach to security, as evidenced in this post, illustrates just how vulnerable Republicans should be on security in 2008, if the Democrats have the good sense to call them on it. Anyone who wants to formulate a sensible, reality-based security policy should spend some time on his site. It's full of gems like this one.

Tuesday, June 19, 2007

Another Bad Day for AG Gonzales (Or "The RNC Ate My Homework")

I had been wondering what had happened to the congressional investigation into the RNC email accounts that had begun in the midst of the US. Attorney purge. Yesterday, the House Committee on Oversight and Government Reform released this interim report (pdf). Some of the highlights:
  • The Committee concluded that considerably more White House officials had received RNC email accounts than the White House had previously disclosed. White House spokesperson Dana Perino initially reported that there were only a "handful" of these accounts, and later clarified that there may have been as many as 50. The Oversight Committee found that there were at least 88.
  • Karl Rove made extensive use of his RNC account, sending or receiving 140,216 emails. He and others used these accounts for official purposes, in violation of White House policy--and, more importantly, in violation of the Presidential Records Act, which requires the President to "take all such steps as may be necessary to assure that the activities, deliberations, decisions, and policies that reflect the performance of his constitutional, statutory, or other official or ceremonial duties are adequately documented and that such records are maintained as Presidential records." 44 U.S.C. § 2203(a).
  • Susan Ralston, former special assistant to the President, was deposed on May 10, 2007. She testified (pdf) that the White House Counsel's Office (at that time run by none other than Alberto Gonzales) received RNC emails as part of its investigations into the Energy Task Force in 2001 and the leak of Valerie Plame's identity. According to the Oversight Committee, "if her testimony is accurate, former White House Counsel Gonzales may have been aware in 2001 that Mr. Rove was using RNC e-mail accounts for official communications. Yet is was not until six years later that the White House" instructed the RNC to preserve the emails in accordance with the Presidential Records Act.
Could this be the end for the Attorney General, or another miraculous display of his survival skills? Stay tuned ...

Sunday, June 17, 2007

A Memorial

For my Grandpa Martin.

From Kanakakee's The Daily Journal:

Grandpa's passing was the lead story in the Daily Journal last Monday. They also ran this obituary, and in today's paper the following column by senior editor Phil Angelo:
A life well lived

"Shakey" Martin had been in politics so long that most people in Kankakee County never learned how he got his nickname.

Back in 1939, Martin was a star guard on the Bradley High School basketball team that became the first team from any Kankakee County school to make it to state. He made the buzzer-beater shot, too, that won the sectionals.

Martin's class went 33-2 as juniors and 32-3 as seniors. Martin would dribble the ball up, weaving and bobbing like a penguin scrambling through a jagged ice field, it was said.

So teammates Lavern Hahs, Bob Martin, Harvey Hackley and Joe Dominick took to calling him "Shakey."

The name stuck.

"Shakey," 84, died last Sunday.

He was, by turns, a great athlete, a successful businessman, a community leader, and an elected Democrat who was never afraid to march against the grain -- if he thought he was right.

Shakey was an easy person to cover because he did a couple of things rare in Kankakee County politics. He would stand up and speak his mind. Piles of Journal clips, over and over, quote him on many issues. You never had much doubt where he stood.

And he would call over at The Daily Journal and say he was stopping in. Loaded with documents, he would make his point, communicating with the reporters, and through the reporters, with the public.

Some politicians, sad to say, show up only to complain. Not Shakey. He showed up with ideas.

He represented, too, a viewpoint not often seen in politics these days. He was a conservative Democrat, devoted to making sure that no county dollar was wasted. He always did his research before making up his mind. Once he decided what was fair, he stuck by it. Two decisions, from 1976, tell you a lot about his political philosophy.

In November of that year, he cast the only county board vote, Democrat or Republican, against giving a raise to the county board chairman. One month later, he was one of only four votes to give larger raises to county employees.

"Can you honestly say, without knowing what these people make, that we are paying them fairly?" Shakey said. Yet Shakey, too, would not spend dollars he though the government didn't have. He was on the BBCHS school board at a time when the teachers struck, seeking money Shakey thought the board couldn't afford to spend.

Winning a popularity contest always came second, in his mind, to doing what was right. In 1976, he took an unsuccessful stab at running for state representative. His positions, listed at the time in a Journal story: for gun control; against legalized gambling; for capital punishment; and against the ERA. Try finding a Democrat who would vote that way today.

Funneling tax dollars needlessly was never a Shakey priority. He once praised then coroner Wes Wiseman when Wiseman offered to cut his own pay (the measure failed) and called pay for top administrators in the county health department "ridiculous."

Yet it's a measure of his courage and integrity that when Kankakee County Democrats were in the rare majority for them from 1998 to 2000, Shakey was the county board chairman. In recent years, too, he led the fight on the county board against the giant landfills for Chicago trash.

All told, Martin spent 34 years on the Kankakee County Board. He spent four years as Bourbonnais Township assessor and three terms on the Bradley-Bourbonnais Community High School Board.

For more than 40 years, he was the co-owner of Skelgas. He had returned from World War II as an Army veteran, taking up the family coal delivery business.

The lifetime Bradleyan was a joiner by nature. He helped found the Bradley Lions Club in 1949 and was the club's oldest charter member at a recent celebration. At age 80, he was still chairman of the Lions golf outing. He was the greeter at Bradley St. Joe's Catholic Church and president, at times, of both the St. Joe Holy Name and the St. Joe parish board.

He was a member of the Elks, the Knights of Columbus, the Moose, the American Legion and the VFW. He golfed, played bridge and would dance with his wife at the Moose Lodge. He was always ready with a handshake and a smile, completely unafraid to take his turn when it was time for him to volunteer.

He raised money for the Red Cross, the March of Dimes and the United Way. He was a great father, and excelled at what is a tougher role in today's world, being a great stepfather, too.

It's hard to imagine anyone who lived a fuller life, or anyone who was more tightly wound into the fabric of his community than Shakey was.

Professionally, he'll be missed.

Personally, he'll be missed, too.

It is fashionable these days to attack and degrade politicians, elected officials, and public servants, and more broadly the whole endeavor of politics, as corrupt, dirty, or meaningless. But Grandpa Martin and my dad will always stand as proud examples to me of how ennobling and fulfilling public service should be. America is what it is because all across this nation innumerable men and women of good will see it as worthwhile to do their part. I do not sit by quietly when I see their efforts and their sacrifices demeaned. Grandpa was a man I admired greatly, and I'd like to think that in some respect we're continuing to carry on his tradition here. It would be hard to find a better role model. I'll miss him.

Saturday, June 16, 2007

Political Liberalism

A week ago a philosopher named Richard Rorty passed away. I had never heard of Rorty, but his passing prompted a round of discussion between New Republic writer Damon Linker and Atlantic bloggers Matt Yglesias, Ross Douthat, and Andrew Sullivan. Certainly any discussion that involves 3 of the Atlantic's 5 bloggers is likely to catch my attention, but particularly one that involves John Rawls's concept of political liberalism as heavily as this one did. Hank and I had some discussion of Rawls here last winter, but we focused on his two principles of justice rather than the general concept of political liberalism. I thought this might be a good chance to discuss it a bit. I find it to be highly relevent in contemporary politics. Whether or not Sullivan would admit to being a Rawlsian (probably not), there is a strong strain of Rawlsian political liberalism in comments like this one:
Count me convinced of the case for forgoing moral certainty in politics in favor of a shallower, skeptical formalism of live-and-let-live.

The genius of America, it seems to me, is its capacity to include people of radically different worldviews within a loose, flexible and constantly adjusting constitutional system. Given the huge differences between, say, a born-again evangelical in Georgia and a pot-smoking post-boomer in Seattle, no single cultural strait-jacket can ever hold America together. That's why we mercifully don't have such a strait-jacket, despite the excesses of the cultural left and right. We have a constitution that allows us to live together and even learn from each other in a morass of competing life-choices.
And when Barack Obama made his highly regarded speech on politics and religion last summer (video: part 1, part 2, part 3, part 4, part 5) he went directly to Rawls's playbook for this:
This brings me to my second point. Democracy demands that the religiously motivated translate their concerns into universal, rather than religion-specific, values. It requires that their proposals be subject to argument, and amenable to reason. I may be opposed to abortion for religious reasons, but if I seek to pass a law banning the practice, I cannot simply point to the teachings of my church or evoke God's will. I have to explain why abortion violates some principle that is accessible to people of all faiths, including those with no faith at all.

Now this is going to be difficult for some who believe in the inerrancy of the Bible, as many evangelicals do. But in a pluralistic democracy, we have no choice. Politics depends on our ability to persuade each other of common aims based on a common reality. It involves the compromise, the art of what's possible. At some fundamental level, religion does not allow for compromise. It's the art of the impossible. If God has spoken, then followers are expected to live up to God's edicts, regardless of the consequences. To base one's life on such uncompromising commitments may be sublime, but to base our policy making on such commitments would be a dangerous thing.

Rawls first gained notoriety from his book A Theory of Justice. In it Rawls attempted to develop a comprehensive political philosophy. He developed from first principles a full system of political justice and fairness resulting in a well-ordered society. But this required Rawls to make many philosophical commitments along the way. In defending A Theory of Justice from its critics (and there were many) over the next decade or so Rawls came to the conclusion that it was unrealistic to believe that any such comprehensive theory would capture the public imagination such that everyone would adopt it. This was particularly so when he considered that his theory was in competition with other comprehensive theories, namely religions, to which people tend to be quite attached. People had too many existing philosophical commitments.

So Rawls decided that a comprehensive approach to political philosophy wasn't particularly fruitful. What was needed was a way to reconcile the many existing and competing comprehensive theories already present in our society into a workable political theory. This motivated his second major book: Political Liberalism. The goal was no longer to try to establish his theory of justice as being true, but rather to make it a focal point of social agreement among a pluralistic mish-mash of comprehensive philosophies.

Rawls presents a long and fairly complicated theory in Political Liberalism and I won't attempt to sum it all up here. But there are two points I'd like to pull out:

First, Rawls sets a baseline for the participation of any comprehensive philosophy in a pluralistic democracy. Rawls requires that all must be reasonable. He defines reasonable to mean that they a) be willing to abide by rules of fair cooperation as long as others do the same, and b) that they accept Rawls's concept of "the burdens of judgment". The burdens of judgment reflect the fact that on deep philosophical questions (the focus of comprehensive doctrines) our evidence is complex and conflicting, weighting is difficult, many concepts are vague, there is much reliance on life experience and competing normative considerations. So we should expect different conclusions about what makes life good even from perfectly rational and reasonable people. Any comprehensive philosophy that cannot accept this uncertainty, that insists that only its conclusions can be true, is one that cannot peacefully exist in a pluralistic democracy. This is what Sullivan is talking about in the excerpt above (and in much of his book from what I gather). It's a simple concept, but one that went out of fashion with the rise of the religious political right, and is only now making a comeback.

The next point relates to part (a) above. As one of the rules of fair cooperation that Rawls suggests any comprehensive philosophy compatible with pluralistic democracy needs to accept, Rawls proposes public reason. Public reason is a way of talking about political issues in a language that everyone can understand. Obama's excerpt above pulls directly from Rawls's thoughts on public reason. Political actions must be taken for reasons that everyone (regardless of respective comprehensive beliefs) can see as legitimate, even if not everyone agrees on them. Actions motivated purely by artifacts of one comprehensive doctrine will not be seen as legitimate by supporters of other comprehensive doctrines. So, as Obama says, if you want to take such ideas into the public sphere they need to be reseated in principles more broadly accessible to everyone; simply citing chapter and verse of the Bible isn't good enough. Rawls argues that any argument that assumes that the listener shares the same comprehensive doctrine as the speaker (or should convert to the same doctrine) fails to respect the burdens of judgment and is an argument inappropriate for public politics in a pluralistic democracy.

Next time I hope to discuss the bloggers' discussion of Rawls and Rorty...

Sunday, June 10, 2007

The 99.9 Percent

Bill Clinton's brilliant Harvard commencement speech: Part I, Part II, Part III. He hasn't lost his touch...

Saturday, June 09, 2007

Blocking Innovation

As Vonage and Verizon having been battling in court since early this year over Verizon's claims of having patented some faily obvious elements of VoIP used by Vonage, software patents have again fallen under scrutiny. Tim Berners Lee, the inventor of the World Wide Web, has an OpEd in the New York Times arguing against software patents. He quotes Bill Gates writing in 1991 that if early computer pioneers had understood how to patent their works "the industry would be at a standstill today."

Software has always seemed poorly suited to patents for a number of reasons. Most of what software does is fairly obvious. The really innovative stuff tends to fall into either broad conceptual ideas (like the web) that would be inappropriate for patents or clever algorithms (like quicksort) that are basically mathematical discoveries, abstract intellectual concepts of the sort not traditionally patentable. The rest of it, however complex and difficult, tends to be fairly mundane implementation, requiring little originality (but often a huge effort in coordination).

Existing patent law, in theory, should prevent unoriginal things from being patented. But in reality it does not seem to do a good job of this, particularly in the initial granting of patents. And even if questionable patents can still be challenged and overturned in court, this is a remedy of limited value to small developers and open source projects. Going up against Microsoft or IBM's legal team is often an insurmountable barrier to entry. And both patent examiners and judges appear to struggle with the concepts of computer science in their efforts to determine what is or is not an obvious development. As the OpEd points out, two of Verizon's patents in this case cover the painfully obvious concept of converting between phone numbers and internet addresses.

From the economic analysis side as well, software development is ill-suited to patents. For one, there is, as the OpEd discusses, alternative protection available for software developers in the form of copyrights. Any direct copying already gives rise to a legal claim. And copyright is, as the article notes, considerably less cumbersome and expensive. Also crucial, copyright does not create liability for independent invention, while patent does. So if Verizon has valid patents on basic elements of VoIP they can bar anyone else from offering a VoIP service until those patents expire. With a copyright they could only prevent people from actually copying their system, but they would have no claim against a competitor who developed their own, even if it worked the same way.

It is important to recall the purpose of intellectual property protections: to allow inventors and developers to profit from their investments in new technologies and innovations, thereby promoting more such investments. The need for strong protection is much lower in the software space than for, say, pharmaceuticals. Development costs are relatively low and innovation occurs rapidly enough in software that there is a significant first-mover advantage even without patent protections. As long as competitors cannot rip off a new program wholesale (which copyright prevents) and have to independently develop their own version, the first innovator will be rewarded for her efforts. Look at how YouTube still dominates over other video-sharing systems. Some of its competitors are offering technically superior systems, but YouTube got there first. The software market, before these big companies realized they could patent everything under the sun, was wildly innovative and fiercely competitive. They didn't need patents to achieve that. Patents impose signicant transactional costs and barriers to entry without adding any meaningful beneficial incentives to the software business. This system is a mess, and I hope the Verizon case will help to spark reform.

Wednesday, June 06, 2007

Morning In America?

I'm not sure exactly how to introduce this Newsweek column from Fareed Zakaria, but I know that it is a hugely important commentary. I can't emphasize that enough. I also can say that it very much underscores my support for Barack Obama. If you didn't read Obama's foreign policy speech when I linked it before, read it (or watch the video) after you read Zakaria's piece.

There is a strong tendency on the left right now, not without justification, to want to attack and tear down everything the Bush administration has done on foreign policy, even without necessarily having a vision of what will replace it. And there is an equally strong urge, I think, on both sides of the aisle to pull back from world affairs, having been so badly burned in recent years with our mission in Iraq in shambles, with Afghanistan beset with difficulties, with economic globalism causing domestic turmoil, with public opinion of the US heading south all around the globe. These are understandable instincts, but completely wrong.

The US needs continue to be bold and aggressive on the world stage, but in a very different way than it has been in the Bush era. We need the humility to recognize that the US cannot achieve its goals alone and that the US cannot force its will upon the global community, but we also need to recognize that the world cannot move forward on its major challenges without decisive American leadership. We need to restore the image of American idealism and optimism and hope. We've seen what comes of trying to lead through bullying and stubbornness. It should be apparent at this point that our global leadership will only be effective when people want to follow us. So we must present an image that inspires.

The politics of fear have wounded us badly. Fear debilitates and diminishes us. We need to realize how truly strong America is, and that as big as the challenges facing us are, as long as America holds true to its founding ideals there are no challenges that we cannot face and overcome. As Zakaria argues, this is the message the world needs to hear, but I think it is also the message Americans need to hear. We need to restore our own pride in who and what we are before we can expect anyone else to believe in us. We need to be unafraid to engage the world, to open ourselves and our ideas up to the world, to trust in our inherent strength to overcome criticism and meet challenges even though it may be a long and difficult road.

Too many liberals, seeing how Bush has weakened the Republicans, smell blood in the water and see this as the moment to finally crush the Republicans under their heels. Tempting as that may be, I think we cannot afford to press too far along partisan lines. This is the moment, while there is a pervasive feeling that Bush has taken us in the wrong direction, when we need to build concensus, to capitalize on that sentiment to forge a broad new agreement about who and what we are and what America should represent to the world. I think Barack Obama gets all this (although I hope I'm not just projecting my hopes onto him). I don't think any other candidate in the race does.

Monday, June 04, 2007

It's A Long Time Until the Primaries

But I watched some of the Democratic debate tonight. A few thoughts:

This was not the best venue for Barak Obama. He was pretty good substantively (although he went a bit overboard in his focus on pursuing Al Qaeda in Afghanistan), but his answers, particularly early on, were not as smooth or strong as they should be. It is a bit surprising to me since the first time I saw Obama was in a televised debate for the Illinois senate primary. Obama was not one of the favored candidates in the race (and I had never even heard of him prior to tuning in), but he blew everyone else off the stage. He can do better than he did tonight, although it would be difficult to ever match the eloquence of his speeches in a debate format.

Hillary Clinton did a fine job. Most of what she had to say on Iraq and terrorism was moronic, but that was hardly unexpected. Her answers on everything else were strong, and she did a great job calling out Wolf Blitzer several times for asking unfair questions. Her performance has given me some confidence that she could win the general election, but I still worry about whether she would actually make a good president if she won.

There are moments when I really like John Edwards. At his best he can be the most honest and serious of all the Democratic candidates, but too often he panders directly to the DailyKos brand of hardline liberalism. And on a superficial level he doesn't carry the same level of gravitas that Clinton and Obama do. This is a significant problem in its own right, but especially so for someone whose degree of liberalism will leave him open to attacks on national security and terrorism. He can't afford to come off as a lightweight. But in any case, I was quite happy with what I saw from Obama, Clinton, and Edwards as a group. Any of them would make a much stronger general election candidate than Kerry was in 2004.

As for the rest, while none of them have a snowball's chance in hell, Joe Biden did a nice job and I'm happy to have him up there speaking his part. The others were mostly a waste of airtime. Richardson has gotten some press as being someone who could break into the top tier, but he might have been the weakest of the lot (which is saying something with Gravel and Kucinich out there). Hopefully the pack will start to thin out so that the main contenders can get more time at future events (although I expect Gravel and Kucinich will annoyingly hold out until the bitter end just to enjoy the free airtime).

Thursday, May 31, 2007

Public Relations as Diplomacy

Here's another data point to add to my alternate reality post from the weekend. Price Floyd, a long-time State Department employee has written a column in the Fort Worth Star-Telegram about why he recently resigned from his position as the State Department's director of media affairs. He argues that his job was made impossible by the insistence of the Bush administration that they could do whatever they wanted in international affairs as long as they got the PR right. The State Department's job was no longer to conduct diplomacy, but rather to sell the message. Reality didn't matter, symbolism was the only focus. The only result, Floyd says, was that people now view America's messages as meaningless propaganda. Slate's Fred Kaplan comments here. It reminds me, once again, how completely on the money the Defense Science Board's terrorism report was back in 2004 (blogged on BWJ here) when they wrote:
Policies, diplomacy, military operations, and strategic communication should not be managed separately. Good strategic communication cannot build support for policies viewed unfavorably by large populations. Nor can the most carefully crafted messages, themes, and words persuade when the messenger lacks credibility and underlying message authority.

Information saturation means attention, not information, becomes a scarce resource. Power flows to credible messengers. Asymmetrical credibility matters. What's around information is critical. Reputations count. Brands are important. Editors, filters, and cue givers are influential. Fifty years ago political struggles were about the ability to control and transmit scarce information. Today, political struggles are about the creation and destruction of credibility.
Too bad no one listened to them...

Our First Line of Defense Against Terrorism

An update to my post about James Fallows's Atlantic article, Declaring Victory, from late last summer. There Fallows argued, convincingly, that the primary threat of terrorism today is not international terrorist networks, but disaffected local Muslims like those that bombed London and rioted across Europe last year. Muslims in the US, as opposed to those in Europe, Fallows claimed, were highly assimilated and as such provided the US with a significant security buffer. Today the Christian Science Monitor editorialized on a Pew study of American Muslims that echoed Fallows's point, finding US Muslims to be "highly assimilated". CSM argued that the US must be careful to cultivate this identification of its Muslim population with the US and take care not to allow our public rhetoric to alienate young Muslims. I concur fully and hope that our politicians take note of this warning as the 2008 elections heat up. As it stands our Muslim residents are our greatest asset in the war on terrorism and a resource we cannot afford to squander.

Update: Speak of the devil, Fallows himself blogged a few comments on the Pew study today. And what's that at the bottom?? :)

Sunday, May 27, 2007

Why The Atlantic Kicks Ass

The Senate Select Committee on Intelligence made big news this week by publicizing prewar analysis from US intelligence agencies predicting the difficulties that we would have in Iraq. These reports were buried by the administration in their push for war. For many this was just one more stunning revelation of the recklessness and dishonesty of the Bush administration. For readers of The Atlantic Monthly, however, it was old news. James Fallows reported on this in January of 2004, and I blogged it here in July of that year. Nice to see that the Senate is catching up. I shouldn't be snarky; this is a good thing. Now that Democrats control the agenda in the Senate they can finally drag some of these things out into the light of day, and they should. But in any case, I think kudos are in order to Fallows and The Atlantic.

Update: Apparently Andrew Sullivan is not an Atlantic reader. He was shocked and outraged by this new report. Excerpt:
Just to anger up the blood some more, it's now clear, thanks to the latest Congressional report, that this president was warned starkly about the dangers of "a surge of political Islam and increased funding for terrorist groups" as a result of an invasion of Iraq. He was told that Iraq was "largely bereft of the social underpinnings" for democracy. He was explicitly informed that there was "a significant chance that domestic groups would engage in violent conflict with each other unless an occupying force prevented them from doing so." And yet he still sent a pathetically insufficient occupation force in 2003 - and refused to increase it for three years of growing chaos and mayhem. Even if you excuse the original recklessness, the persistence in it - until our current point of no return - is and was criminal negligence - a callous disregard for your security and mine.

The gravity of the mistake this country made in 2004 by re-electing al Qaeda's best bet is only now sinking in as deep as it should. I fear, however, that we have yet to experience the full and terrifying consequences of that historic mistake.

We All Want Out of Iraq...

...but we can't shirk our responsibilities.

I'm going to stick with Matthew Yglesias (who I've been reading quite a bit of since The Atlantic picked him up as one of their regular bloggers), although many people have expressed similar sentiments about the Iraq funding bill, particularly at the major liberal blog sites. Yglesias was disappointed that Democrats didn't fight on the funding bill to the bitter end. I dissent. I was hugely critical of the Democratic votes in favor of the original Iraq war authorization bill, and my bitterness on that front has not receded a bit these past five years. But I think that Democrats in Congress did what needed to be done with this funding bill. They fought a good fight in the public eye, passing a bill with benchmarks and defending it in the media although it was doomed to be vetoed from the start. They forced Republican congressmen to stand up and publicly support the president's policy in Iraq (a stand many of them will regret next year). They pushed the president to negotiate with them, and were rebuffed. He was not going to negotiate. And if we have learned anything about George Bush, we should know that he would not have backed down, regardless of what the Democrats did. They simply didn't have the votes to overcome a veto, and everyone knew it. That left them with but two options: capitulate or defund the Iraq war.

I want out of Iraq as much as anyone, but I would not have us abandon our responsibilities there. A precipitous and complete withdrawal is just not an option. Extricating ourselves from this mess will be a delicate operation. I believe we need to get our troops out soon, because as far as I can tell all they are accomplishing is to maintain a miserable status quo. Our presence is inhibiting any progress by the Iraqis and preventing the situation from evolving. But I have no confidence with respect to what happens when we leave. Things could move in any direction from there. Some of what might happen (and here I have visions of Rwanda) would be utterly intolerable. If we see things proceeding in that direction I feel that we will be obligated to bring the troops back in to put a lid on things and try again. Even if it costs us, even if we don't have a clear path to success. We have a responsibility, an obligation to the Iraqi people that I hope we do not forsake. We will need to be careful with our withdrawal and keep sufficient force in the region to react to events as needed. We will need to maneuver deftly to retain enough influence in Iraq to nudge things in the right direction without appearing to interfere. Defunding the Iraq war will not accomplish that. What we need is open heart surgery, and the only tool the Democratic Congress had was a sledgehammer.

This means, of course, that we will have to continue to live with Bush's management of the war for the time being. So be it. Elections have consequences, and the American people voted for the war in the 2002 midterm election and ratified that decision when they reelected George Bush in 2004. Last year's midterm doesn't erase all that. Now we're stuck with the president we have. Maybe over the next year enough Republican congressmen will defect to allow Congress to force a responsible withdrawal on Bush. If so, great. If not, then we just have to live with him until we can get a president who can deal with this conflict like an adult. The hardline "bring the troops home now" positions I see on so many liberal blogs these days are no more responsible than the policies Bush is pursuing in Iraq today. It's no cause for celebration, but Democrats in Congress did what needed to be done, and I respect them for it.

Saturday, May 26, 2007

The Alternate Reality of the Right

In considering the "fighting them there so they won't come here" argument, Matthew Yglesias points out the obvious conflict between symbolism (retreating from Iraq makes us look weak) and reality (staying in Iraq causes us to actually be weak). He seems perplexed by the Right's tendency to "view national security policy as something that takes place entirely at the level of symbolism". This is, I think, not so difficult to understand. American conservatives live in an alternate reality, unable to distinguish between symbolism and reality. To them, symbolism is reality. If you listened to enough conservative radio and watched enough Fox News you'd live in that alternate reality too. Never was this more clearly illustrated than in Ron Suskind's famous discussion with an undisclosed White House official (Andrew Card, perhaps?) about how the Bush administration was in a constant process of creating its own reality. This was never a matter of the Bush administration being able to fundamentally alter the state of the world directly through their pronouncements and news releases, but rather an expression of the belief that if they can control news cycles and assert a concept of reality strenuously enough, everyone else would have little choice but to accept it as real, and the world would adjust itself to the White House's vision. It was Wag the Dog transformed from satire into official state policy. They could reshape reality through symbolism by convincing people that what they thought was true actually wasn't.

Obviously this doesn't work. There are too many competing sources of news and reality does eventually trickle in to displace this fictional presentation. The reality-based community inevitably gets the last laugh, as Suskind pointed out. This is why the administration and their supporters were always so furious about the media reporting on bloodshed in Iraq and missing the "good stories"; the media was deconstructing the administration's carefully constructed alternate reality.

But it's not hard to see why conservatives got suckered into this belief, and why they still can't seem to let go of it. Most conservative news sources are mere propaganda outlets. Witness the old Pew study finding that the more people watched Fox News the more likely they were to believe that we had found WMD's in Iraq or that Saddam was behind 9/11. Or this more recent Pew study that shows that while liberals see Republican presidential candidates in exactly the same way conservatives themselves view them, conservatives, by contrast, see all of the Democratic candidates as raving left-wing lunatics. American conservatives have replaced their own reality with symbolism, so why wouldn't it be natural for them to think the same is true for everyone else? Their own echo-chamber media has relegated them to a world that only exists in their own minds.

Wednesday, May 23, 2007

Al Gore and TV Culture

I was deeply impressed with this excerpt from Al Gore's new book The Assault On Reason from Time Magazine. It's heavily Amusing Ourselves to Death influenced. It makes a half-hearted diversion into being an advocacy paper for net neutrality in the closing paragraphs, but that may just be an artifact of reformatting the book into excerpt form, because prior to that turn the excerpt appeared to have a rather grander design. I'll be curious to see reviews of the whole book. I think Gore diagnosed the problem pretty well here, and I surely hope net neutrality is not the entirety of his answer. I have to concur with Andrew Sullivan, I much prefer the new public intellectual version of Al Gore to the old political candidate version. I hope he doesn't let himself be dragged into the 2008 race.

Opening Up Cellular Networks

Some time back we had a discussion here on the insistence of US cellular providers that wifi features on new phones be disabled before the phones were marketed in the US. In a column for Forbes, Tim Wu argues that the FCC should use the upcoming auction of wireless spectrum gained from the digital TV transition to enforce a right to attach rule. He notes that the exact same question was broached with respect to landline phone service in 1968, where the FCC ruled that AT&T must allow the Carterphone to interoperate with its system (a ruling the paved the way for the creation of MCI and the ultimate demise of AT&T's monopoly). The rule would force carriers who purchased spectrum in the auction to allow any device that conforms to basic specs to operate on their network, knocking down an immense barrier to entry for wireless device manufacturers. This is a good example of a pro-market regulation, carving out space for innovation and competition in an anticompetitive marketplace.

Monday, May 14, 2007

More Barack

A great in-depth profile from the New Yorker. Not too surprising to see some quotes from fellow Chicago Law prof (and BWJ favorite) Cass Sunstein, but there's also some stuff in there from Robert Putnam, from whom Obama took a seminar based on Bowling Alone. And Sunstein even throws out a Rawls reference. It's a regular BWJ-fest. Here's some of the meaty stuff:
Obama’s drive to compromise goes beyond the call of political expediency—it’s instinctive, almost a tic. “Barack has an incredible ability to synthesize seemingly contradictory realities and make them coherent,” Cassandra Butts says. “It comes from going from a home where white people are nurturing you, and then you go out into the world and you’re seen as a black person. He had to figure out whether he was going to accept this contradiction and be just one of those things, or find a way to realize that these pieces make up the whole.” In the state senate, this skill served him well—he was unusually dexterous with opponents, and passed bills that at first were judged too liberal to have a chance, such as one that mandated the videotaping of police interviews with suspects arrested for capital crimes. “In our seminar, whether we were arguing about labor or religion or politics, he would sit back like a resource person and then he would say, I hear Jane saying such and such, and Tom seems to disagree on that, but then Tom and Jane both agree on this,” Robert Putnam says. (For a couple of years, Obama participated in a seminar about rebuilding community, inspired by Putnam’s article “Bowling Alone.”) “I don’t mean he makes all conflicts go away—that would be crazy. But his natural instinct is not dividing the baby in half—it’s looking for areas of convergence. This is part of who he is really deep down, and it’s an amazing skill. It’s not always the right skill: the truth doesn’t always lie somewhere in the middle. But I think at this moment America is in a situation where we agree much more than we think we do. I know this from polling data—we feel divided in racial terms, religious terms, class terms, all kinds of terms, but we exaggerate how much we disagree with each other. And that’s why I think he’s right for this time.” Even when he was very young, Obama was scornful of, as he puts it, “people who preferred the dream to the reality, impotence to compromise.”

Sometimes, of course, there is no possibility of convergence—a question must be answered yes or no. In such a case, Obama may stand up for what he believes in, or he may not. “If there’s a deep moral conviction that gay marriage is wrong, if a majority of Americans believe on principle that marriage is an institution for men and women, I’m not at all sure he shares that view, but he’s not an in-your-face type,” Cass Sunstein, a colleague of Obama’s at the University of Chicago, says. “To go in the face of people with religious convictions—that’s something he’d be very reluctant to do.” This is not, Sunstein believes, due only to pragmatism; it also stems from a sense that there is something worthy of respect in a strong and widespread moral feeling, even if it’s wrong. “Rawls talks about civic toleration as a modus vivendi, a way that we can live together, and some liberals think that way,” Sunstein says. “But I think with Obama it’s more like Learned Hand when he said, ‘The spirit of liberty is the spirit which is not too sure that it is right.’ Obama takes that really seriously. I think the reason that conservatives are O.K. with him is both that he might agree with them on some issues and that even if he comes down on a different side, he knows he might be wrong. I can’t think of an American politician who has thought in that way, ever.”