Posts Tagged ‘Corporate Influence’

SOPA on a Rope

November 11th, 2011

SOPA-on-a-ropeThe current bill in Congress known as SOPA (Stop Online Piracy Act) or as it’s known in the Senate, PROTECT IP (Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property) is just beginning to get coverage in the non-technical press.  In draft, this was called the E-PARASITE Act (Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act). Seriously, who names these things?

From the names, it all sounds like goodness right? Theft, exploitation, piracy, who wants that?  If only it were that simple.

The intent of the bill is to crack down on illegal online file sharing.  There’s ample room for debate about how damaging online piracy truly is, and whether or not it makes business sense for content providers to aggressively attack their customers, but that’s a topic for another day.  Even if we accept that online piracy threatens to destroy the music and movie industry (just like VHS tapes and writable CDs did), the proposed bill is absolutely not the way to go about preventing it.

There are lots of articles out there on why this is so.  You can read the bill yourself, or read others’ analyses here, here, or here.  However, let me try and boil down the basics for you.

The Great Firewall of the USA: Enforcement of SOPA will require the creation of a Internet filters by all domestic ISPs to control what sites you are allowed to visit. This may be well intentioned censorship, but it’s still censorship, and it puts the mechanisms in place for less benign intentions. Do we really want to head down that slippery slope?

Online Security: Let’s face it, once the firewall goes up, many of us will find ways around it. This will involve a combination of foreign or rogue DNS servers, proxies, or VPN services. It doesn’t take a lot of imagination to believe that once you start getting your Internet delivered through black market servers that your online security will be at greater risk.

No More Safe Harbors:  The current law allows web site owners some protection under the “safe harbor” clause.  That means that if you were to post a comment on this article containing some illegal content, the owner of the content could demand I take it down, and I would be obliged to do so. But if the owner wanted to sue for damages, he couldn’t sue me as the website owner.  Rather, he’d have to come after you as the one who posted it.  Under SOPA, that protection is gone.  If you upload a funny Big Bang Theory clip to Facebook, CBS can sue Mark Zuckerberg for damages. SOPA will undoubtedly result in far fewer sites taking on the risk of letting you post things on them. The web will become a lot less participatory.

Loss of Due Process:  This is perhaps the most egregious implication. Under SOPA, website owners are guilty until proven innocent.  Based only on an accusation of having illegal content on your site, anyone can demand that the ISPs block access to your site, and may further demand that all banks stop doing business with you.  Sure, you can appeal to the court, but that could take months or years to settle. In the meantime, you’re out of business.

As the major backer of SOPA, the entertainment industry is making lots of assurances that the provisions of SOPA would never be used for anything but the most noble of causes.  They are full of it.  These same people have already collaborated with the Department of Homeland Security and Immigration and Customs Enforcement to stretch the In Rem Forfeiture clause (allowing for the immediate seizure of property used in the commission of a crime) to include domain name seizures of websites with no warning or due process.  They are wielding this with a broad brush and have repeatedly seized domains eventually found legal by the courts, but by then put out of business.  Oops.

This whole SOPA mess has also created some strange bedfellows.  The tech community and most high tech companies have come out against it.  Along side them are Michele Bachmann and her Tea Party Coalition.  Ironically, the Tea Party and the Techies were on staunchly opposite sides of the Net Neutrality debate, so this is a somewhat uneasy alliance.

On the other side we find the Hollywood studios, music companies, and the organizations like RIAA and the MPAA that lobby for them.  We also find VP Joe Biden and several key Democratic legislators who have historically been supportive of anything Hollywood wants.  To her credit, Hillary Clinton has expressed some concerns about SOPA, and Obama claims to be on the fence.

To that end, Obama is currently taking input on the issue.  If you want to oppose the bill, go to the White House website and sign the online petition.  As of this writing, we are still a few thousand signatures short of the “pay attention to me” threshold.  Yes, you have to create a White House account to sign the thing, but it only takes a minute.

On the other hand, if you think SOPA sounds like a great idea and want to know how to support it, please write a long letter and mail it to your local animal shelter. They are always looking for material to line the bird cages with.

 

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Printing money is not as crazy as it may sound

August 21st, 2011

MacroeconomicsI am not an economist.  However, for reasons I dare not delve into too deeply, my lady finds discussions of economics a turn-on.  The downside is that now I not only have to compete with George Clooney and Toby Keith, but also with the likes of Ezra Klein and Brad DeLong.  If one of them ever develops tech skills, I’m toast.  In the meantime, “Get in line boys.”

As I’ve written in this space before, one of the damnable things about macroeconomics is that it is so blastedly non-intuitive.  Most of us are schooled or experienced in microeconomics (open systems), whether that be managing a household budget or running a business.  Macro, or closed systems like the U.S. economy, work on a very different set of rules and have a very different set of control levers to work with.  It’s abstruse stuff, and my hope is that maybe I can do a bit of the heavy lifting here, so some elements of macroeconomics make a little more sense.

Presidential hopeful Rick Perry made headlines this week for his statement that if the Fed decides to print more money, it should be seen as a treasonous act. Perry’s not alone here.  While most politicians are distancing themselves from claiming it’s treasonous, many are advocating that the Fed should not take further actions like “Quantitative Easing” to increase the money supply.

So what does all that mean?  Printing money out of thin air sure sounds like a dumb solution.  Doesn’t that just make my hard-earned money worth less? How would that help the economy?  These are all reasonable questions.  Questions which I’ve been struggling to get my own non-economist head around by reading what actual economists are saying.  The trouble is, folks like Matt Yglesias and Scott Sumner often write for an audience of fellow economic geeks.  And it’s often damn hard to wade through the jargon to figure out the underlying principles at work.  But I think I have a handle on it, and want to share my translation and understanding.

First, “printing money” is a euphemism.  No actual currency gets produced.  Rather, the Federal Reserve has a number of levers by which it can alter the supply of money.  Think of the U.S economy as the proverbial pie.  Each slice of pie represents a unit of money, like a dollar.  Increasing the money supply doesn’t change the size of the pie, but it does change the size of the dollar (slice).  If you carve the pie into more slices, then each slice has less in it.  “Quantitative Easing” is one of the levers the Fed can use to increase the size of the money supply.  And yes, the effect of this is to lessen the value of the dollar.

A weaker dollar seems like a bad thing.  It offends the American sensibilities to think of anything about us as weak.  But in cold economic terms, there are pluses and minuses to a devalued dollar.  A weak dollar doesn’t translate to a weak economy.  In fact, in our present situation, it could translate to a stronger one.  But first, a word about… inflation.

Another term for devaluation is inflation, a word that also sounds bad.  Inflation is especially troubling to those of us that lived through the 70′s and early 80′s where double-digit inflation was rampant.  We also saw the economic collapse of Argentina, Zimbabwe, and other countries because of hyperinflation.   But we need to remember that inflation is a lot like oxygen.  Too little can be just as deadly as too much.  Japan’s “lost decade” of the 1990′s was a period marked by very low inflation, economic recession, low productivity, and high unemployment.  Sound familiar?

Inflation in America has been at historic lows for the last couple of years.  The key is to find the sweet spot of around 3% and hold that.  In many respects, this is what the Fed’s job is.  It tries to maintain that small positive healthy inflation rate.  It’s a balancing act.  And an over-correction could send inflation spiraling in either direction.  This is primarily what conservative fear at the moment.  That an attempt to nudge inflation up will start a cascade reaction that will send us back to the 70′s.  No one wants that.  (Unless you’re invested long in polyester and hairspray commodities.)

But why is some inflation good, and why would a little extra be good right now?

In terms of the flow of money in an economy, the net effects of inflation in absolute dollars are a rise in the cost of goods, a rise in the cost of labor (wages), and a rise in value of assets (homes, stocks).  Granted, these don’t always rise uniformly.  Prices tend to rise ahead of wages, causing short term pain.  But wages do follow suit, eventually making the inflation kind of a wash.  Remember back in the early 80′s when getting a 10-15% annual raise was common?

What doesn’t change in a good way with inflation is cash.  In other words, if you’re sitting on a lot of liquid assets, those assets become worth less.   Who’s sitting on cash?  Well, big corporations are sitting on over a $1 trillion, and of course banks have a lot of fixed cash assets, not the least of which are all the mortgages out there.  If you’ve loaned out $100k at 4% for 30 years and inflation suddenly hits 5%, you’re losing money.

On the flip side, inflation would be great for consumers who are currently sitting on near record household debt.  As an example, many people are currently underwater on their mortgages.  Let’s say you owe $200k on a $175k house.  Inflation doesn’t change the amount you owe, but it does increase the value of the property.  So now you’re not underwater anymore.  Further, if you have a low-interest home loan, a higher inflation rate suddenly makes that nearly free money.  It doesn’t decrease your absolute debt, but it does decrease your relative debt, especially as your wages start to rise.

Finally, inflation also punishes people who are sitting on cash.  As almost everyone has said since the economy went south in 2008, we need cash to flow to stimulate the economy.  Think of money like the blood of the economy.  To the body as a whole, it’s less important exactly how much blood you have, than that the blood you have is circulating vigorously through your system.  The U.S. has an ample blood supply, but it’s currently pooled.  We need to get it pumping, and inflation helps that.

There are also advantages to America relative to the world.  A weaker dollar makes our goods cheaper to sell to other countries, and imported goods more expensive here.  This is an immediate boon to exporting companies.  However, given that we import a ridiculous portion of the goods bought in this country, it will drive the cost of those goods higher.  The good news is that there will be less incentive to design, manufacture, and service goods overseas, and that would mean more jobs for Americans as jobs start to come back onshore.  But again, that’s a short term pain for long term gain bargain.

Hopefully by now, you’re starting to think that maybe this whole printing money thing doesn’t sound quite so treasonous. Maybe you’re thinking it’s even worth a shot, or at least that it’s a perfectly reasonable tool to use.  Ironically, Rick Perry himself believes it will have a positive effect on the economy.

Perry said the central bank’s leader would be committing a “treasonous” act if he decided to “print more money to boost the economy.” Such action, the governor told a crowd in Iowa, would amount to a political maneuver aimed at helping Obama win re-election.

Perry is explicitly saying that increasing the money supply would boost the economy.  What he finds treasonous is only that he knows a better economy would help re-elect Obama.  All of which brings us to why increasing the money supply is politically unpopular.

  • It aids Obama’s re-election, so Republicans are opposed
  • It hurts banks so they are opposed
  • It hurts companies who have moved all their operations offshore, so they are opposed.
  • It raises prices ahead of wages and new jobs, so in the short term, voters will be opposed.
  • Voter anger and the resultant news cycles and Gallup polls will crucify incumbents, so they are opposed.

None of these reasons make increasing the money supply bad policy.  They simply mean that this is a situation where the needs of the many outweigh the needs of the few.  Unfortunately, the few are largely in charge of the policy.  However, the beauty of the money supply is that changing it does not require Congressional approval.  The Fed has the authority to act on its own.  Although the Fed is largely populated with people from the financial industries who appear to be way more scared of large inflation than lack of it.  But still, there is less of a barrier to action here than almost any other plan available.

Anything we do to fix the economy is going to cause some pain somewhere.  Increasing the money supply is perhaps the most actionable thing we can try.  It may be insufficient, and there are some risks involved.  But dammit, let’s at least do something.  I’m tired of our strategy being all hope and no change.

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Forward to the Past

August 9th, 2011

Current Conservative dogma is that Doc & MartyFederal government is bad.   The belief is rooted in the premise that it is the wrong level at which to govern.  Policy should be made at the state level, or better yet, at the county or town.

There is a visceral appeal to this position.  If government is about me, I want it close to me so I can be heard.  I don’t wish to be one of millions of voices, but rather one of hundreds or thousands.  That way, what’s important to me and my neighbors will get done.  Someone will care about me.

The result of this view is Conservative opposition to federal meddling in education, roads, health care, commerce, environmental conservation, banking, and almost anything else excepting the military.

And a century and change ago, this view made perfect sense.  But the world has changed since then, and policy needs to change with it.  In fact, decentralization is decidedly the wrong trend in today’s world.

Back in the day (circa 1900), you could spend the better part of a day searching your hometown for something made more than a few hundred miles away.  When someone left town, they moved to the next county.  Living your life in that time involved a largely local dependence.  Events happening half a continent or half a world away were interesting news items, but bore no real consequence on your life.

Look around your town or workplace today.  Try to find something of local origin.  Hell, try to find something strictly made in the USA.  Your dependence is easily national, and rapidly becoming global.  You may live in New York, but you care that roads are maintained in Kansas so that a truck can bring you a new Samsung TV.  Your car runs on imported oil.  Your new boss telecommutes from a different state.  And your Internet tech support comes from Mumbai.  Whether you like it or not, and even whether you realize it or not, you are dependent on a national and international infrastructure.  An infrastructure encompassing transportation, safety, education, economy, and much more.

Yes, local control is dwindling, but not because larger governments are usurping power.  Rather, it’s because where local governments used to contain all the dependent pieces, now larger governments do.  And effective management and control is only achieved if all the dependent pieces are under the umbrella.  The inevitable trend is toward consolidation.

Interestingly, this globalization trend has been recognized and embraced on the business side for decades.  No one is arguing that Microsoft should be broken up and managed as a loose confederation of state-specific companies. (“I’m sorry, you’re running Windows 7-Virginia, so I can’t read those files.”)  That the scale and scope of business and government should trend in opposite directions is nonsensical, and ultimately bad for both.

That said, there are still monumental dysfunctions in the way the federal government operates.  Early attempts at inter-country governments like the European Union or even the United Nations demonstrate that we are a long way from knowing how to govern effectively at scale.  The key point being that we have to set our collective mind to finding a way to make this scope of government work, and give up on the foolish notion that we can live in a 21st-century capitalist world, ruled by a 19th-century political system.

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The budget problems are all healthcare related

July 29th, 2011

Fix ItHealthcare spending in the U.S. accounts for 17.6% of the economy, and is projected to be 20% by the end of this decade.  These are not federal budget numbers, this is the whole economy.  $1 out of every $6 that’s spent in this country is spent on healthcare.

For context, that’s double the percentage spent in the average OCED country.  In absolute dollars, we spend 2.5 times more per capita than average, at $8,650/person.  And for all that money, we rank just under the average for life expectancy and infant mortality.

This is a pointless drag on the entire economy.  Not only for the government and private employers, but for workers as well.  One of the reasons wages have been so flat for the last decade is that money available for employee raises has gone into preserving medical coverage rather than increasing take home pay.

Yet this is also a big issue, perhaps the only issue, for the current budget problems faced by the federal government.  Government spending on healthcare (including employee plans, veterans benefits, as well as Medicare and Medicaid) is $1.17 trillion each year.  And this is projected to double over the decade.  Granted, these numbers are inclusive of state and local government spending as well, but this is still paid for with our tax dollars.

In other words, considering our 2.5x cost premium, there’s $700 billion/year sitting on the table if we manage to get our healthcare costs in line with our global peers.  Even assuming the federal portion is only half of that, the numbers dwarf any of the cost savings currently proposed by either party’s budget plans.  Couple this with the already planned savings for drawing down the wars, and our deficit goes away by 2020.

This is the only budget problem we need to be addressing.  It saves Medicare, Medicaid, Social Security, NASA, Pell Grants, and everyone else currently on the chopping block.  Do the math.

So why aren’t we focused on fixing this?  Primarily because the proven method of achieving the healthcare cost goals, the one used by pretty much every other OCED country we are benchmarking against, is some form of single-payer model.  And for reasons known mostly to powerful corporate lobbies for insurance, pharmaceutical, and medical device  companies, single-payer health plans are socialist Nazi plots to kill Grandma. Instead, we are committed to responsible prudent austerity founded on shared sacrifice… because Grandma prefers be bankrupt such that she is forced to choose between food and medicine.  After all, it is about having a choice.

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The GOP may be running out of feet to shoot

June 4th, 2011

National Lampoon Cover

Don't make us resort to drowning kittens!

Senate Minority Leader Mitch McConnell continues to stand by his claim that Job 1 for Congressional Republicans is to defeat Obama in 2012.  Yet the question looms, how far are they willing to go to make that happen?  Recent history suggests, pretty damn far.

To understand what’s going on, you have to first recognize that the GOP is beholden to two major groups.  On the one hand they are funded by big business and the wealthy businessmen created therein.  The interests of this group define the overall agenda and goals for the party.

On the other hand, the foot soldiers at the polls are largely made up of blue-collars, religious fundamentalists, and seniors.  This group is necessary because, come November, you have to have lots of bodies show up to vote for you.  But they are ultimately fodder as far as the policy agenda goes.  They get tossed a rousing speech, a few sound bites, and an occasional red meat issue and it keeps them fired up and loyal. I’m somewhat reminded of Dennis Hooper’s line from Waterworld where he launches into a motivational tirade for his crew and they all storm off below decks to row their hearts out.  He’s asked, “So which way we rowin’?” And he replies, “I don’t have a goddamn clue. Don’t worry, they’ll row for a month before they figure out I’m fakin’ it.”

Now consider, the GOP won handily in 2012 on their promise of jobs, jobs, jobs.  Then, once in office, immediately focused on Obamacare and abortion.  Why?  For starters, creating jobs is hard. Especially when the economy is in a demand slump and the interest rates are bumping the zero-bound. The only solution is federal deficit spending, and they sure as hell weren’t going there.  After all, deficits are bad.  Not for the reasons often touted, but because ultimately deficits have to get repaid through taxes—something their corporate benefactors are not fond of—especially when corporate profits and CEO salaries are soaring.  Which brings us to the second point.  Among their fodder constituents, abortion and Obamacare are both reviled.  So the strategy was essentially to distract one group while appeasing the other.

Next up is the Paul Ryan budget.  No one in the GOP thought the plan had a snowflake’s chances in hell of passing, yet they lined up behind it in droves.  Why?  Two reasons.  First, the plan was a message to the corporate benefactors.  This was a wish list for the privatization of government programs and tax cuts that all serve to line the pockets of the folks who in turn fund the Republicans.  By standing behind it, they were assuring the benefactors they had their backs.  Secondly, the plan was political.  Actually passing a plan means you can be evaluated down the road for its efficacy.  Proposing a plan that can’t pass puts you in a position down the road to say that things suck because nobody listened to your ideas.  Politically this was a much more powerful position to be in.

However, the GOP underestimated their fodder constituents.  You’d think they’d have learned from Bush’s crash and burn on Social Security privatization, but not so much. They tried to couch the language, but the public saw through that.  The result being that Ryan’s budget is now enormously unpopular because it is recognized to fundamentally change Medicare.  It turns out that when fodder folks talk about support for smaller government and less spending, they don’t mean to include programs from which they benefit directly.  The message sent to Republicans in NY’s 26th District special election was overwhelmingly, mess with Medicare and we will vote your ass out.  This was the GOP’s first shot to its own foot.  It’s limping, and looking for a path back to hale and healthy. (Gee, I hope they can afford medical insurance.)

Still, the scary specter on the horizon is the debt ceiling.  If the Ryan budget was a pistol shot to the left foot, the debt ceiling is a hacksaw poised above the right knee.  All the sane people (which is not all of the people) on both sides of the aisle agree the ceiling must be raised.  To not do so would be economically disastrous with long-term consequences.  Even Wall Street is saying this has to happen. Both sides also recognize the Republicans are simply taking an opportunistic hostage to gain political advantage.  This is a dog they clearly don’t want to shoot, but if you think they just might be crazyenough, maybe you’ll buy the magazine anyway.

Again, why are they playing it this way?  And again, there are a couple of forces at work here.  On the one hand, the debt ceiling is enormously unpopular.  In fairness, understanding the nuances of the impact of the debt ceiling on the macroeconomic health of the U.S. economy is hard to capture in a sound bite, and most people lack the interest or the time to delve into the details.  Besides, the GOP has already established with the fodder constituents that deficits are bad. So selling a refusal to move on the debt ceiling is duck soup.  Besides, if they can get major concessions from Democrats, they will be in the politically favorable position of being able to crow about their accomplishments.  But there are more subtle and insidious forces at work here.

Everyone acknowledges that Obama’s reelection hopes hinge on the economy.  The last thing the GOP wants is for the economy to make any demonstrable progress, especially in the area of jobs, wages, or anything felt directly by their fodder constituents, prior to 2012.  Obama’s demise (Job 1) is directly contingent on the majority of Americans feeling substantive economic pain going in to the election booth.  The GOP is talking about needing $2 trillion dollars in cuts as ransom to get them to release the debt ceiling.  Those cuts cannot be achieved without significant job losses (both government and downstream private sector jobs as well) in addition to major entitlement programs like Social Security and Medicare.  This exacerbates the demand slump the economy is in, and pretty much guarantees pain for middle America, and what will border on inhumanity to the poor, disabled, and unemployed.

The gambit here is that Republicans can successfully hang the 2012 economic conditions on Obama—that their fodder constituents will blame their plight on “Obama’s wild spending spree” rather than on Republicans draconian budget cuts.  And you can bet there will be additional tax cuts for corporations and the rich included in any debt ceiling as well, which will seal the love of the GOP benefactors.  This is arguably the sweet spot for the GOP going in to the elections.

However, the downside is they are playing chicken with investors by holding the debt ceiling hostage.  Wall Street and foreign investors alike certainly recognize individually that raising the U.S. debt ceiling is a matter of when, not if.  But what the investors realize is that the market behaves like a herd of buffalo rather than as a single rational actor.  Everyone may realize that long term there’s no danger, but if one animal spooks and heads out, the herd will react and follow, trampling all of us in its wake.  This means the benefactor constituents are justifiably nervous about this brinksmanship.  They can’t control all the buffalo, so everyone is tip-toeing about hoping to keep everyone else calm.  Should someone spook, the results will be disastrous.  But the devastation will not be just to our economy.  The benefactors will doubtless bail on the GOP, who’s political ploy just cost them billions.  If this happens, the Republicans will have effectively lopped off their right leg.

This is high stakes poker.  The GOP may win at the polls.  The corporate benefactors may win, lose, or break even.  The rest of us will lose.  The only path here on which we win would be if Democrats refused to bargain, called the Republicans bluff, and got them to fold.  It’s pretty clear that won’t happen.

Is this view overly cynical?  Perhaps.  Maybe the GOP is not behaving with this much premeditation.  Perhaps they are instead just ignorant and reckless or opportunistically sociopathic.  But any way you slice it, unless you’re in the GOP’s corporate benefactor class, you voting for a Republican is like a chicken voting for Col. Sanders.

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Zediva tweaks the nose of Hollywood studios

March 18th, 2011

DVD Monkey

A peek behind the curtain at Zediva's operations center.

A new video on-demand service called Zediva was introduced this week.  It’s kind of like if Netflix and Redbox got together and turned Slingbox inside out.  The key feature of the new service is that you can rent new movie releases without ever leaving home. They are employing a delivery method that appears completely legal, but is sure to get the movie studio executives running hair-on-fire to their legal departments looking to find some means to stifle them using copyright law..

The consumer advantage is access to a movie selection similar to Redbox or Blockbuster, including the latest DVD releases.  That’s something neither cable or satellite video on-demand services, nor streaming services like Netflix are able to offer.  You see, Hollywood studios impose a release window around new DVDs such that streaming services are not allowed to play them for a period of time.  The theory being that this allows the studios to get people to buy DVDs, on which they make a tidy sum.  Studios correctly assume that if you could watch the movie without getting off of the couch, you would opt for that instead.  Meaning, if you’re in a rush to watch a new release, you either buy or rent a physical disc, or (heaven forbid) download a pirated torrent.

Zediva gets around that release window by actually buying DVDs and renting them to you.  However, rather than having to wait by the mailbox or run to the store for the disc, Zediva helpfully pops the disc in one of their networked DVD drives and streams it to your house over the Internet. The key being that during the playing of the movie, that DVD and player are only playing to you, the renter.

Thanks to legal precedents established when Slingboxes were introduced years ago, place-shifting is perfectly legal.  In the case of Slingbox, it was ruled that copyrights couldn’t prevent you from sending video content to your phone or remote computer from a box located in your house.  You were paying for the content, and studios couldn’t restrict you to watching it locally, as long as you weren’t sharing or reselling it.  It’s hard to see how this is different.  Zediva is a DVD rental store, nothing more. They just provide Slingbox-like capability (also legal) to allow you to watch the movie remotely.

The initial popularity of Zediva is huge.  They have already cut off new registrations as the demand for the service has far exceeded their capacity.  Thus it seems enormously likely we’ll soon hear the screams and howls from the studios of how they will go bankrupt if this sort of thing is allowed to continue.  (For reference, they screamed that when writable DVDs were introduced… and VHS tapes… and color television… Hollywood?  Still solvent.)

Yet, there is a larger message here that should not be lost.  The Zediva model is clever, but technologically stupid and inefficient.  It exists only to do an end-around to existing copyright rules put in place to prop up dying business models.  These are business models designed to create artificial scarcity and inflate prices.  Zediva also illustrates a pent up market demand for access to this sort of content.  People want the convenience and are willing to pay for it.

The theory of capitalism is that some new business will come along and leverage the consumer demand, thereby driving the dinosaurs to extinction.  But Hollywood studios are an effective monopoly.  The barrier to entrance in that business is huge. So the reality is that as long as they stick together, they can continue to abuse consumers in defiance of capitalist principles.

Kudos to Zediva for finding a way to give consumers what they want, but they may want to open up that legal defense fund now, just to get a head start.

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It’s the health care costs, stupid

March 11th, 2011

Doctor

Health care costs are the elephant in the room (Photo by Lauren Nelson on Flickr)

As Democrats and Republicans continue their budget dance over non-military discretionary spending, the elephant in the room remains the rising cost of health care.  The Congressional Budget Office estimates that over the next 25 years, the percent of GDP spent on Medicare and Medicaid will double.  And these cost increases will not be limited to government programs.  Private and employer based costs will rise at the same rate—costs that will be reflected in higher prices and lower wages. Simply put, if you’re serious about the economy, then you are serious about long term containment of medical costs. Clearly, Congress is not serious about the economy.

According to Kaiser Health News, Republicans mocked proposals to improve the use of Medicare and Medicaid funds. They declared spending money on prevention was just a “slush fund,” and research on innovation was “an oxymoron.”  Further, there was no cause to pay for “so-called effectiveness research.”

Meanwhile, two House Democrats have signed onto a Republican bill to repeal a health reform provision for the Medicare payment board, which fast-tracks cuts to Medicare payments when spending reaches a pre-determined target. The CBO estimated the board would save $28 billion through 2019.

GOP 2012 hopeful Mike Huckabee attacked the Obama stimulus because it included funds for comparative effectiveness research saying, “The stimulus didn’t just waste your money; it planted the seeds from which the poisonous tree of death panels will grow.”

The proposals opposing efforts to reign in escalating health care costs may be partly political opportunism run amok, but likely also reflect a broad ignorance about the state of medicine as currently practiced. A panel of experts convened in 2007 by the prestigious Institute of Medicine estimated that “well below half” of the procedures doctors perform and the decisions they make about surgeries, drugs, and tests have been adequately investigated and shown to be effective. The rest are based on a combination of guesswork, theory, and tradition, with a strong dose of marketing by drug and device companies. (reference—subscription required)

In fact, the reliance of doctors on companies marketing treatments is downright frightening. In many cases, physicians perform surgeries, prescribe drugs, and give patients tests that are not backed by sound evidence because most doctors are not trained to analyze scientific data, says Michael Wilkes, vice dean of education at U.C. Davis. “Most medical students don’t learn how to think critically.”  The reality is that doctors are human. They trust what they are told, especially by their peers. Yet, a 2002 study in the Journal of the American Medical Association (JAMA) found that 87 percent of guideline authors received industry funding and 59 percent were paid by the manufacturer of a drug affected by the guidelines they wrote. Their peers, it seems, are largely bought and paid for by companies trying to sell something.

The holes in medical knowledge can have life-threatening implications, according to an Agency for Healthcare Research and Quality report published in 2001: More than 770,000 Americans are injured or die each year from drug complications, including unexpected side effects, some of which might have been avoided if somebody had conducted the proper research. Meaningless or inaccurate tests can lead to medical interventions that are unnecessary or harmful. And risky surgical techniques can be performed for years before studies are launched to test whether the surgery is actually effective.

Getting health care costs under control requires government sponsored comparative effectiveness research.  This is research aimed at determining what treatments actually work, and educating doctors.  Doctors and hospitals do not have the resources to self-fund this research.  And private companies are incented to sell drugs, devices, and treatments rather than cure patients.

Doctors are smart people. But they are only as good as the information they have available to them. Comparative effectiveness research will allow doctors to make better choices, reduce costs, and have healthier patients.  That’s money well spent. Money that is an investment in not only our health, but our economic future.

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Former Senator Chris Dodd breaks promise not to become a lobbyist

March 2nd, 2011

Chris Dodd Bobblehead

Chris Dodd's ethics bobble with the breeze (Photo by DonkeyHotey on Flickr)

Recently retired Senator from Connecticut Christopher Dodd said upon leaving office he would not seek to become a corporate lobbyist.   But that was two months ago, and times change.  The former five-term Democratic senator announced yesterday he accepted a job as head of the Motion Picture Association of America.

Technically, Dodd is legally barred from becoming a lobbyist for two years after leaving the Senate. However, like so many retired legislators before him, he skirts that rule by not officially being hired as a lobbyist.  Still, as the head of one of the most high profile lobbying groups in the country, it’s a distinction without a difference.

Interim MPAA CEO and president Bob Pisano told Hillicon Valley last month that his organization’s unwavering focus was on increasing the federal government’s efforts to stop online film piracy. Pisano also talks up the importance of COICA and how happy he is that Homeland Security has been seizing domains in violation of the First Amendment and basic due process, even taking down tens of thousands of perfectly innocent sites.

It remains to be seen how or if Dodd’s new million dollar job will change his previously professed positions on related issues. He was on record as a big supporter of Net Neutrality. However, the MPAA has come out against net neutrality, claiming it would hamper its efforts to “fight piracy.” He was also against ISP data retention, which the MPAA has supported (again as a way to fight piracy). On copyright he was somewhat non-committal, but did talk about how fair use rights are important. A position likely to disappear once he takes the role formerly filled by Jack Valenti—the man who once declared that fair use doesn’t exist.

Dodd co-authored the Wall Street Reform and Consumer Protection Act. This legislation was targeted at improving the accountability and ethics of the banking system.  Too bad Dodd’s own ethics now seem to be bobbling in the breeze.

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Boehner says Net Neutrality is reinstating the Fairness Doctrine

March 1st, 2011

Speaker John Boehner

Boehner ties Net Neutrality to a political agenda

Speaker Boehner addressed several tech points in his speech to the National Association of Religious Broadcasters on Sunday. He railed against Net Neutrality and new FCC regulations that he characterized as a government takeover of the Internet.  He went on to say:

“Now, you know the old saying: ‘If you can’t beat ’em, join ’em.’ Well in Washington, it’s more like, ‘If you can’t beat ’em, tax ’em and regulate ’em,” Boehner said in his speech. “So, some members of Congress and the federal bureaucracy are still trying to reinstate – and even expand – the Fairness Doctrine. To them, it’s fair to silence ideas and voices they don’t agree with, and use the tools of government to do it. “

Opposing Net Neutrality has been pretty standard Republican boilerplate.  Much like with the healthcare debate, the GOP prefers that corporations make decisions for consumers rather than the government. The new twist here is the conflation of Net Neutrality with the Fairness Doctrine.

The Fairness Doctrine was introduced in 1949 and required that broadcasters present controversial issues of public importance in a manner that was honest, equitable and balanced.  Reagan overturned the policy by executive order in 1987.

Republicans are apparently afraid the Internet might become a place of fair and balanced treatment of controversial issues.  This is a confounding stance, not to mention that the distributed nature of content creators on the Internet would make such a rule impossible to enforce.  Yet the larger issue is that Net Neutrality has absolutely nothing to do with editorial content.

Net Neutrality simply guarantees that the ISPs who provide the backbone for and access to the Internet cannot preferentially treat one content type over another.  This assures that you have equally speedy access to Fox Nation and the Huffington Post.  It means your access to Netflix won’t be throttled by Time Warner, or that Comcast will cut a deal with Microsoft to make Bing twice as fast as Google.

There is nothing about any proposed or existing Net Neutrality rules that in any way attempts to legislate editorial content on the web.  Nothing.  Tying Net Neutrality to the Fairness Doctrine is either an act of colossal ignorance or a blatant attempt to mislead and confuse voters.

We report, you decide.

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A plan to take the government back from the corporations

November 27th, 2010

Corporate American Flag

Corporate American Flag (by Yire Shalom 3000 on Flickr)

The country is awash in the political rhetoric of taking our country back.  The problem is, the cries are to take it back from the Democrats, and previous to that, to take it back from the Republicans.  All of which would be fine, but neither party is the one holding it hostage.  The vilification of the respective political parties is all just theatrical misdirection.

Backroom corporate influence in politics has always been with us, but in recent times it has emerged from the dark and smokey recesses of the halls of government and sits proudly center stage.  The rich have never been richer.  Corporate profits have never been higher.  Meanwhile, unemployment remains high, health care and college tuition costs continue to spiral out of reach.  And the plans to remedy these ills?  Cut Social Security and Medicare, lower taxes on the wealthy, eliminate the estate tax, and cut long term unemployment benefits.  Reduce or stall regulatory actions curtailing corporate freedoms to game the financial system or pollute the environment, while pushing the government to create or enforce laws designed to shore up existing business models.  Reduce the size of government forcing it to sell off assets like prisons, parks, and government buildings as well as outsource operations such that private companies are now able to make a profit from government programs and services.

These are all corporate friendly policies designed to pad the pockets of big business at the expense of ordinary citizens.  The policies are not unique to any one party, and arguing over which party is more at fault is simply wasted breath.  The solution is not as simple as voting in one party or the other, or creating the optimal balance between them.  The corporations via the lobbies and PACs they fund and the media they control  are playing both sides.  Picking between Democrats and Republicans is a false choice.

None of this is groundbreaking news.  The recognition of the emerging corporatocracy that is America’s future underlies much of the anger, frustration, and helplessness felt by voters.  The Tea Party channeled much of that emotion, but it was masterfully bent into a movement advocating for the shrinking or dismantling of the government.  An outcome that plays directly into the plan of the corporate lobbyists, because government inaction or inability to act is a boon to corporate America.

It’s important to recognize that corporations are not evil, they are merely self-interested.  They operate to maximize short term profits.  Period.  They are unconcerned with the well being of citizens.  They are not troubled by unemployment rates.  They don’t lose any sleep over how America can rebuild a strong vibrant middle class with the potential for children to be better off than their parents.  And they shouldn’t be.  That is the job of the government.  The government of, by, and for the people, not the corporations.  This is the government we’ve let slip away.  This is the government we need to take back.  We need the government to once again play the balance to the corporate interests.  Not to oppose or destroy corporations, but simply to be a yin to their yang.  To make the coin whole again, in the interest of both sides.  Mindful that the whole is greater than the sum of its parts.

Accomplishing this will not be something we can simply elect politicians to do under the current system.  Rather, it will only come about with the emergence of a large scale highly focused bipartisan grassroots movement that manages to not be co-opted by corporate influences along the way.  It can only achieve that by maintaining a laser-like focus and clarity on its goal.  To that end, that movement needs to aim for two objectives, and two objectives only.

  • All campaigns are financed by the government—a fixed amount of money available only 3 months prior to election day.
  • All elected officials must sign a contract stating they will not accept money, jobs, or any other material benefit from any private company for a period of 5 years after leaving office.  They will have the option to retire or to enter public service in the interim.

These two objectives significantly reduce the ability of corporations or wealthy individuals to buy elections and thereby politicians.  They also curtail the incentive to enter public office as way to be financially set for life, and return it more to the notion of contributing a public service.  And finally, they stop the never-ending campaign cycle that dominates the lives of politicians today such that they have little time or incentive to do any real work.

A movement focused on implementing these two objectives alone would have an opportunity to make a significant sea change in the process by which government occurs.  It could and should rise above being concerned about specific policies, and as such, could be a truly bipartisan movement.  The issue is not whether a government led by people elected in such a manner would support gay marriage, carbon taxes, abortion, or bank bailouts.  The issue is simply to get people back in office who truly represent the citizenry of this great nation.  And having achieved that, let the policy cards fall where they may.  The only goal of this movement being that America shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the Earth.

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Congress should be like NASCAR

November 6th, 2010

NASCAR-Boehner

John Boehner being honest about Corporate Sponsors (created by Tim)

One of the refreshing aspects of NASCAR is its open honesty about its corporate sponsorships.  Without corporate money the sport wouldn’t exist, a point the drivers, crews, and cars unabashedly acknowledge by being emblazoned with the corporate logos that make their jobs possible.

It’s high time Congress showed the honesty and integrity of NASCAR.  Congressmen should be required to wear jackets at all public appearances with corporate logos on them proportionate in size to the donations they have made.

Presumptive Speaker John Boehner is hardly the only Congressman sponsored by industry, but he is among the worst offenders.  He was most famously caught in 1996 handing out checks for tobacco companies on the floor of the House, but his ties to industry lobbyists are much broader and deeper than that.

In addition to cigarette companies like Altria and RJ Reynolds, Boehner is supported by Citigroup, Goldman Sachs, Google, MillerCoors and UPS, just to name the large donors.  Together they have contributed hundreds of thousands of dollars to his campaign.  Lobbyists for those companies also are known to have provided him with rides on corporate jets, and to have socialized with him at luxury golf and waterfront resorts.

Boehner’s close circle of corporately connected friends and staff have ready access to to the man who is likely to be the the most powerful Republican on the Hill and third in line to the Presidency.  One lobbyist listed recent issues for which he had sought the lawmaker’s backing: combating fee increases for the oil industry, fighting a proposed cap on debit card fees, protecting tax breaks for hedge fund executives, and opposing a cap on greenhouse gas emissions.  Boehner says these were issues he agreed with anyway, but given that he has known for years where his bread is buttered, that hardly means more than he already knows what his sponsors want.

Granted, politicians on both sides of the aisle are complicit in this corporate buy-out of legislators, and efforts at true campaign finance reform have repeatedly failed.  Still, if there’s no way to get corporate money out of the process, minimally those sponsorships should be out in the open, displayed as proudly on the politician’s jacket as the requisite flag pin.

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