June 2002 Archives

Stewart Alsop says, despite Loudcloud changing names and changing models, don't write off the ASP business model yet.

There are a couple of ASP-style companies now doing good business. Their secret is that they don't rent services that are core to corporate IT; they don't try to get companies to trust the heart of their computing to someone else. Instead, they have shown IT managers that they can do a terrific job running discrete applications. In such cases companies may well prefer to rent rather than license software. ...

There aren't many other ASPs doing well, but hey, that's why this is a contrarian bet! The concept here--that renting software may be a smart idea when applications are good but not critical to the tech workings of corporations--isn't widely accepted. But it makes sense to me, and I'm betting it will take hold.

NPR has recanted on their silly deep linking policy.

If you don't want to come and meet the author of "What's So Great About America" then come and meet the man who got Bill Maher off the air (though they are one in the same.) It was Dinesh D'Souza, after all, who prompted Maher's unfortunate remark ("We have been the cowards, lobbing cruise missiles from 2,000 miles away") on the September 17th episode of "Politically Incorrect." Maher was bashed too heavily for his remark--which was taken somewhat out of context--and Ari Fleischer was out of line with his remark about Maher's remark. If you want to dwell on it and worry about squelching of healthy discourse, read this Daily Howler. But it wasn't persecution that bumped Maher off the air: the bottom line is people weren't buying what he was selling--and his sales pitch needed work.

The Russians have lost some nuclear material that can be used for a dirty bomb. That's just great.

From yesterday's Washington Post: "Unsettling signs of al Qaeda's aims and skills in cyberspace have led some government experts to conclude that terrorists are at the threshold of using the Internet as a direct instrument of bloodshed."

But this piece in the Register claims is all a bunch of FUD.

This piece in Reason prepares us for a rash of "end is near" talk surrounding the United Nations Summit on Sustainable Development, and provides some sorely needed pre-emptive debunking. Worth reading--and interesting on why environmentalists are so often so wrong:

"Biologists and ecologists tend to overlook the power of technical progress compounded over the years," says Ausubel. "If you’re trained in ecology and botany, you think of technology as a bulldozer, but what it really is, is efficiency, using less to do more."

Technological progress has already dramatically expanded the carrying capacity of the earth. In the 21st century it will so outpace the increasing demands of a growing and wealthier population that more and more land will revert to nature.

"It looks like over the next 100 years, for most environmental concerns, we will do better," concludes Ausubel. "You get smarter as you get richer."

Thanks to Chip Mellor of the Institute for Justice for forwarding this analysis of the Supreme Court's Cleveland school choice decision by IFJ's senior attorney.

The following is a brief summary of the significance of today's Zelman decision, the rationale applied by the Court, and our view of what this decision means for the near future of school choice:

1. How the Justices voted. Although the decision went 5-4, the most important thing to note is that all five justices voting to uphold the program joined in all of Chief Justice Rehnquist's majority opinion. This is important because it means that the rationale set forth in Rehnquist's majority opinion constitutes binding Court precedent. By contrast, Justice O'Connor refused to join in several parts of the plurality decision in the Mitchell case two years ago (upholding the use of federal Title I funds to purchase and then lend various education materials to religious private schools), which meant that much of the Court's reasoning in that case was simply dicta -- not binding case law. Again, because all five justices joined the majority opinion in Zelman, not only does the Court's ruling (i.e., that the Cleveland voucher program is constitutional) have the force of law, but so does the reasoning it used in arriving at that conclusion. The justices voting to uphold Cleveland's voucher program were: Rehnquist, O'Connor, Scalia, Kennedy, and Thomas. Those voting to strike down the program were: Stevens, Souter, Ginsburg, and Breyer.

Try as I may, I just can't get hot and bothered by the 9th U.S. Circuit Court of Appeals in San Francisco decision that the Pledge of Allegiance is unconstitutional. Sure, I think it was a bit silly, but it will be overturned (by courts or legislation.) If you really want to complain, the Republicans make it really easy to complain to your local paper in this creative web page. But what does bother me is that politicians are tripping over themselves to gain political advantage by condemning this action and have already passed a resolution condemning the decision. Don't these folks have better things to do right now? After all, there is a war on.

Check out this exchange at Redherring.com: Jason Pontin blames Newt Gingrich for Enron, Worldcom, et. al. and I think he's out to lunch.

Nerdy but fun site that spots physics errors in movies (example from Star Wars Episode I below.) And if you want to be an uber-nerd, read this excellent book critiquing the physics of Star Trek.

Not only are the physics in this movie not from around here, they're not even logical. For instance, we have a force field around an underwater city which keeps water out but which a human who is over 80% water can walk through. This same highly advanced force field technology is later used on the battle field by an otherwise primitive race of beings who use beasts of burden for transportation and catapults and spears for weapons. The catapults throw giant blue marbles which explode on contact. However, even though the primitive beings have the technology for explosives they can't seem to come up with gunpowder.

A long piece on John Ashcroft--his personal history, what motivates him, and a libertarian critique. Excerpts:

A great primer on the sematic web.

The Semantic Web is a vision of a next-generation network that lets content publishers provide notations designed to express a crude "meaning" of the page, instead of merely dumping arbitrary text onto a page. Autonomous agent software can then use this information to organize and filter data to meet the user's needs.

An interesting critique by of a "new and possibly influential strain in American political discourse" from the left by Michael Tomasky in the American Prospect as he explores who is Roger Hertog, the man "starting up a long-shot New York daily and funding The New Republic. But Hertog doesn't see himself as the vanguard of a new conservative movement -- yet." Excerpts:

Red Herring, over my objections, took this stand in support of the Ending the Double Standard for Stock Options Act, sponsored by Senators Levin and McCain. The "double standard" ostensibly is that while options are expensed for tax purposes, they do not appear on the income statement.

In the words of the Red Herring editorial, "The act would force CFOs to make a choice: either take the tax benefit and the hit against reported income or forgo the tax benefit and avoid any charge against earnings." Yet this doesn't create "transparency in corporate accounting," it creates confusion. Either options should be treated as an expense or they shouldn't and either they should be taxed or they shouldn't--leaving it up to the companies would just create more perplexity when comparing corporations.

A fascinating article by Dinesh D'Souza challenging many of our commonly held assumptions. I view it as essential reading and encourage readers to buy his latest book, "What's So Great About America." If you would like to meet Dinesh, for a reception for him starting at 6pm on July 16th at the Stanford Park Hotel. Excerpt from the article:

My conclusion is that against their intentions the colonialists brought things to India that have immeasurably enriched the lives of the descendants of colonialism. It is doubtful that non-Western countries would have acquired these good things by themselves. It was the British who, applying a universal notion of human rights, in the early nineteenth century abolished the ancient Indian institution of sati-the custom of tossing widows on the funeral pyre of their dead husbands. There is no reason to believe that the Indians, who had practiced sati for centuries, would have reached such a conclusion on their own. Imagine an African or Indian king encountering the works of Locke or Madison and saying, "You know, I think those fellows have a good point. I should relinquish my power and let my people decide whether they want me or someone else to rule." Somehow, I don't see this as likely.

Colonialism was the transmission belt that brought to Asia, Africa, and South America the blessings of Western civilization. Many of those cultures continue to have serious problems of tyranny, tribal and religious conflict, poverty, and underdevelopment, but this is not due to an excess of Western influence but due to the fact that those countries are insufficiently Westernized. Sub-Saharan Africa, which is probably in the worst position, has been described by U.N. Secretary General Kofi Annan as "a cocktail of disasters." But this is not because colonialism in Africa lasted so long but because it lasted a mere half-century. It was too short to permit Western institutions to take firm root. Consequently after their independence most African nations have retreated into a kind of tribal barbarism that can only be remedied with more Western influence, not less. Africa needs more Western capital, more technology, more rule-of-law, and more individual freedom.

Good news on charter schools from NCPA:

PROGRESS OF TEXAS CHARTER SCHOOL STUDENTS

During the 2001-2002 school year, more than 50,000 students were enrolled in state-approved charter schools in Texas. Charter schools are independent public schools that are freed from many of the bureaucratic rules and regulations of traditional public schools.

Overall, 57.6 percent of students enrolled in Texas charter schools are economically disadvantaged to the degree that they qualify for federally subsidized lunches, a somewhat higher proportion than the 50.4 percent who qualify in traditional public schools.

Students who remain in charter schools for consecutive years have strong academic gains. Passing rates on the Texas Assessment of Academic Skills (TAAS), a minimum skills test, have improved for children enrolled in charter schools in each of the years charter schools have been open in Texas.

My cousin is a direct descendant of Thomas Jefferson and remarked to me over dinner tonight that whenever he tells people this, the first thing people ask about is Sally Hemings, the slave that Jefferson allegedly fathered a child with. In this age of Jerry Springer and pack reporting, this myth has been accepted as fact--bolstered by the DNA "proof" released in 1998. However, the truth is that there was a rush to judgment about this "proof" during the Clinton impeachment trial, as Clinton supporters hurried to justify his actions with historic precedent. We all heard about this proof, but how many of you heard the rest of the story? Turns out, the evidence suggests that is it highly unlikely that Jefferson in fact fathered a child with Sally Hemings. Please, if you care about truth and American history, read this piece from a year ago in the WSJ. (Click on “MORE…” for the story.)

Where's a good spot to recruit angry and bored young men? The answer, it seems, is in prison where radical Islamic representatives have been very busy. Here's the story from the WSJ.

A while back, Bill Gates directed Microsoft to come up with better computer security solutions. Steven Levy now reports that Microsoft engineers have taken a stab at Bill's demand with a new plan called Palladium. Not everyone is thrilled about it, however, and Richard Forno has posted his criticisms here.

From The Federalist, this multiple choice quiz on terrorism (one question has no correct answer, can you find which one it is?):

To ensure we Americans never offend anyone -- particularly fanatics intent on killing us --police and airport screeners are not allowed to "profile" people. In the name of airport security, however, they will continue to perform random searches of 80-year-old women, little kids, airline pilots with proper identification, Secret Service agents who are members of the President's security detail, and 85-year-old congressmen with metal hips.

Let's pause a moment and review....

See this paper "A Globalist Manifesto for Public Policy: The Tenth Annual IEA Hayek Memorial Lecture" by Charles W. Calomiris. The exec summary follows:

Robert J. Samuelson points out that while recriminations have a role, pack journalism may be more harmful than helpful.

It’s open season on anyone who might have illicitly caused the stock bubble or profited from it—Martha Stewart, Enron executives, dishonest stock analysts, wimpy accountants, greedy investment bankers. The press is enthusiastically beating up on these people, many of whom deserve it. But what the press isn’t doing is reflecting on its own role in creating, and now popping, the speculative bubble....

From George Will: "Welcome to the brave new world of speech regulation in Year One, A.M.F.--anno McCain-Feingold."

Traffic is getting worse. Here's analysis of the problem and suggestions on solutions.

A fascinating that dispels the myth that wicked rich countries exploit poor ones with asymmetrical trade protection. In fact, the asymmetry goes the other way--with poor countries enacting more trade barriers than rich ones. Bhagwati also makes the case, for both rich and poor countries, for unilaterally lowering trade barriers and suggests that the shaming wealthy nations about their trade strategies may be counter-productive. Excerpts:

Of course, proponents of trade have always considered that trade is the policy and development the objective. The experience of the post-war years only proves them right. The objections advanced by a handful of dissenting economists, claiming that free-traders exaggerate the gains from trade or forget that good trade policy is best embedded within a package of reforms, are mostly setting up and knocking down straw men.

But if trade is indeed good for the poor countries, what can be done to enhance its value for them? A great deal. But not until we confront and discard several misconceptions. Among them:

The weekly summary of R21. As always, you can subscribe or unsubscribe to R21 by sending an email to or respectively.

THE CORPULENT CLASS
First, in case you missed it on the McLaughlin Group this weekend, Southwest has a shocking new business strategy: “We sell seats, and if you consume more than one seat, you have to buy more than one seat,” according to Southwest Spokeswoman Beth Harbin. Sounds devilishly clever, but is it discriminatory against people of size? “If the person takes up more than one seat, that’s not the problem of the person, that’s the problem of the seat,” counters Miriam Berg, President, Council on Size & Weight Discrimination. Seats are getting narrower, plump protestors pronounce, in a brazen, calculated attempt by greedy airlines to squeeze, financially and otherwise, their clientele. Will personal responsibility ever come back into fashion in this country? Fat chance.

An interesting look at the right from the left in this piece by Robert Kuttner in The American Prospect. I think Kuttner is correct that today it is the right, more than the left, that is "movement" oriented and that rightward leaning institutions may be more strategically political than leftward ones. It may be true that the conservative "investment in ideas and ideological marketing changed the course of politics," but Kuttner fails to point out that while the left's think tanks may have been less successful politically, the left has something to shape public opinion that the right doesn't have: universities. As pointed out in this R21 post, the academic monolith is decisively liberal and influential on national opinion and policy. Conservative think tanks are perhaps less of a response to liberal think tanks, but to the education establishment where liberal thinking flourishes and conservative thought is stifled.

My own belief is that while the right has made significant progress on the idea front, Kuttner is exaggerating its success on the political front. The core economic idea of the right--limited government--while alive as rhetoric is virtually dead as policy as dependence on government is expanding rapidly, not contracting.

Edward Asner, Noam Chomsky and others (mostly artists, writers, entertainers, and professors) are trying to start a new anti-war movement by publishing this letter in the UK's Guardian. They make some important points--about the need for vigilance on civil liberties issues--and some silly ones--comparing this struggle to the anti-slavery movement. It also has some plain old errors in judgment: "We believe that peoples and nations have the right to determine their own destiny, free from military coercion by great powers." This suggests that what the people in Afghanistan were doing were merrily determining their destiny until the naughty USA liberated them against their will. Absurd.

Yet after wading through the righteous indignation and hyperbole, my first thought was: thank goodness we live in a country where the government will do nothing to silence these voices. For, of course, in many of the countries that these people wish to leave to “determine their own destiny,” such as Iraq, this form of opposition is punishable by death.

And my second thought was a sense of pity for these folks. Anti-war activism these days is just not what it used to be. It’s just not that trendy or hip. It's so 1969. And these folks seem to miss it. I mean, these aren’t students manning the barricades, fighting the good fight. These are old farts trying to win back some lost glory. Some lost nobility. Some lost dignity. Sorry Ed and Noam--it's not the cowardly media or the manipulative Bush administration obscuring your cause of truth and light: people just don't want to buy what you are selling.

The fight for trade-promotion authority is looking tough. Remember, Silicon Valley, that although trade is so important to our industries, not a single Democratic congressman in the region voted in favor of TPA.

Anti-trust and chips:

The Justice Department must be worried about having time on its hands after the Microsoft case winds down: It has cooked up a big new grand-jury investigation of the chip industry. One problem, though, is that no one can figure out what the beef is: Are chip prices too high or too low? Both conditions have prevailed lately in the volatile, commodity-like business of cranking out dynamic random access memory chips, the french fries of the computer economy. As someone quipped, if the companies are fixing prices, you'd think they'd do a better job of it.

Oh well, there will be plenty of time to find a crime later. Let's get the investigation rolling. Meanwhile, the FTC can't afford to let its cousin get all the headlines. It has inserted itself in what had been a purely private dispute between Rambus, a U.S. chip designer, and several of its customers, large overseas chipmakers who complain that Rambus patented technology they had developed jointly.

And chickens:

Just because a contract is unusual or exclusive doesn't mean it hampers competition. The important question is whether competition existed before the contract. The unusual terms may provide a way to avoid enforcement problems.

Consider Chicken Delight, a franchise operation that was the subject of a 1971 antitrust case. Instead of collecting a percentage of store revenue, Chicken Delight required franchisees to buy all supplies from the parent company. From a transaction-cost perspective, this was an elegant solution to a basic problem: in a cash business, it is easy to lie about sales.

For anyone who thinks evolution is in doubt, read this thorough piece in Scientific American.

Embarrassingly, in the 21st century, in the most scientifically advanced nation the world has ever known, creationists can still persuade politicians, judges and ordinary citizens that evolution is a flawed, poorly supported fantasy. They lobby for creationist ideas such as "intelligent design" to be taught as alternatives to evolution in science classrooms. As this article goes to press, the Ohio Board of Education is debating whether to mandate such a change. Some antievolutionists, such as Philip E. Johnson, a law professor at the University of California at Berkeley and author of Darwin on Trial, admit that they intend for intelligent-design theory to serve as a "wedge" for reopening science classrooms to discussions of God.

Paul Krugman does us the favor of pointing out that 1 plus 1, in fact, equals 2, but ignores the entire idea behind privatizing social security, in this column in the NYT. In classic Krugman fashion, he points to the shortcomings of the people and the tactics used to support the ideas of limited government and personal responsibility, while he ignores the substance of those ideas.

Compare this quote:

"All I know is that, at least in my time, more of these things were prevented than occurred. And we tried to stay on top of them and did the best we could. ...[W]hen I was president, far more terrorist incidents were prevented than actually occurred." --Former President Bill Clinton

To this:

"Some of the president's staff and his consultants pressed the case for aggressive action to contain terror at home and attack it abroad. But at the center of the storm, Bill Clinton sat with an unusual imperturbability. Even as he fretted about whether to sign the welfare reform act and brooded about the FBI file, Paula Jones and Whitewater scandals, he seemed curiously uninvolved in the battle against terror.

"Advised that his place in history rested on eliminating the deficit, making welfare reform work, and smashing the international network of terrorists militarily and economically, he remained unusually passive. Around him, his foreign-policy advisers--particularly former trade lawyer Sandy Berger, then serving as deputy national security adviser--seemed to work overtime at opposing tough measures against terror." --Former Clinton advisor, Dick Morris

Whom do you believe?

The Economist examines 4 new wireless technologies: smart antennas, mesh networks, ad hoc architectures, and ultra-wideband transmission, and claims that "the parlous state of the wireless-telecoms industry, and the difficulties surrounding the deployment of “third generation” (3G) networks in particular, could be taken as evidence that existing ways of doing things are reaching their limits, and that some radical new ideas are needed."

Thanks to Henry Miller for forwarding this piece from the National Post (Canada), dated Friday, June 21, 2002.

Don't fear 'rogue genes'
Agricultural biotechnology has been carried on safely for centuries, without a single mishap or injury to any person or ecosystem

Henry I. Miller

Foes of agricultural biotechnology lambast it as unproven, untested, unnatural and uncontrollable, and worry that "rogue genes" in the modified crop may contaminate wild (or domesticated) relatives. These fears are unfounded.

Those opposed to plants crafted with the newest gene-splicing techniques (and food derived from them) gloss over two fundamental points: Neither biotechnology nor genetic engineering is new, and consumers, government and industry all have extensive--and positive--experience with both of them.

From NCPA a summary of David Littmann's piece in IBD. This comment is especially interesting in describing the how government continues to ratchet up: "Too many politicians have adopted a policy of throwing monkey-wrenches into our capitalistic system -- and then rushing forward with policies which further destabilize markets in an attempt to correct the imbalances their earlier policies created, critics charge."

AMERICANS INCREASINGLY DEPENDENT ON GOVERNMENT

A recent study by the Heritage Foundation found that Americans are 117 percent more reliant on the federal government than they were 40 years ago. Dependency grew by 38 percent over the past 20 years and has increased 9 percent just since George W. Bush took office.

Thomas Sowell feels the courts stray from the Constitution when it comes to free speech. Read today's column.

No part of the Constitution has been more corrupted by judges than the right of free speech. The obvious intent of this right was to prevent the government from silencing its critics or censoring the content of political discussions in general. But the past two generations of judges have stretched people's right to speak their mind to the point where it is a right to override other people's right to be left alone if they don't want to be pestered.

It was close, but the heavily favored Germans beat America's best soccer team in 72 years. USA leaves the World Cup with a record of 2-2-1. Read this piece on ESPN.

This was the best the States played all tournament, and with a call or two going their way, the States would be in the semifinals.

For the first time in its five matches, the team dominated possession, and it just wasn't near the end when it was pushing for the equalizer. Claudio Reyna, saved his best for last. A commanding performance on both sides of the ball. ...

This was a tournament-long performance that American soccer historians will reflect back on years down the road. This will be when they say that America turned the corner on and off the field. The media took notice. The opposition took notice. The world took notice.

Congratulations on a miraculous run gentlemen, you have helped pave the way for the bright future of American soccer.

Dennis Miller on Tuesday’s Tonight Show:

We have got to get it together and understand that this country, people say it’s not the American way to infringe on civil liberties. Well it’s not the American way to rollover for punks either. We’re got to start kicking ass on these people because they don’t care about us. They live for one reason and one reason alone and that is to kill you and I. There’s no half way in the al Qaeda. There’s no al-Kindas, okay. These people just care about our demise. ...

And you know something, the American Civil Liberties Union, when they come out and say you never profile anybody who gets on an airplane. I say we create a new airline, called the ACLA, the American Civil Liberties Airline where you don’t check anybody, you don’t ask any questions, and let those morons fly on that one, okay? The rest of us want to be protected. ...

Guantanamo Bay, are these people being treated fairly? ... No, you know, it’s no joy ride, but, you know, that being said, if you put the Guantanamo Bay terrorist prison outside of Kabul it would be their Epcot.

Thanks to The Onion for this.

Probably not of profound importance to the non-blogging world, but every blogger in the world, almost, has commented on this so here's my take. NPR has joined the ranks of those trying to prohibit unapproved deep-linking (where links go to pages within a web site, as opposed to the home page. So, for example, I am violating their policy by doing this before filling out this.) What's strange is that most opposition to deep-linking comes from sites who fear that they will lose revenue if visitors don't trudge through ad-heavy front pages to get to their deeper articles. Yet NPR doesn't make money from its website, so what's the deal? Their explanation, as reported in Wired News, is revealing:

Still, NPR will continue to require that every site -- whether it's commercial or not, advocates a position or doesn't -- still ask permission. Why? "Because we want to keep track of who's doing it -- so says our law department."

In other words, there really isn't a good reason but the lawyers are found a way to bill hours and CYA at the same time. From my POV, a link is simply a statement about how to download a particular document over the Internet, and should be protected as speech. By making pages available over the Internet, organizations are putting these pages in public view and therefore surrender the right to prohibit others from speaking about, or referring to, them. Making money off of them is another issue, but let's not let the lawyers curb free speech so easily.

"Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first."
--Ronald Reagan

"It is impossible to travel faster than the speed of light, and certainly not desirable, as one's hat keeps blowing off."
--Woody Allen (1935 - )

"Science has proof without any certainty. Creationists have certainty without any proof."
--Ashley Montague

From The Quotations Page.

A brilliant computer scientist named Stephen Wolfram has just emerged from 10 years of reclusion to make the bold claim that he has discovered "A New Kind of Science" in a book by that name. I haven't read the book yet, but have read this review in The Economist. The crux of the argument seems to be that the world is best described by computational models, rather than the mathematical formulas that we grew up learning about in physics class. While there may be something in this, The Economist contends that Wolfram's weakness is his insistence that this new model explains and applies to absolutely everything. Wolfram's argument is appealing at a certain level because it would explain how the complexity of the universe can be explained through simple rules--and not unknowable intelligent design.

But I wonder why Wolfram's rule-based view of the universe is incompatible with the equation based view. Many equations (such as that for gravity) explain behavior, but not necessarily the mechanics of that behavior (we are not quote sure how gravity works, but we know how it behaves.) Is it possible both approaches are simply two ways of analyzing the same phenomena? I guess I'll have to read the book. If you've read it, please comment on it. Anyone want to champion this for the book club? if so, I'll do my best to get Wolfram out here to speak to us.

Excerpts from The Economist's review:

At its heart is the notion of modelling physical phenomena in terms of simple computer programs, rather than complicated mathematical equations. Mr Wolfram unashamedly compares the potential impact of his work to that of Sir Isaac Newton's “Principia Mathematica”, and suggests that his discoveries can answer long-standing puzzles in mathematics, physics, biology and philosophy, from the fundamental laws of nature to the question of free will....

WSJ's editorial today accuses the Democrats of being in the pockets of the trial lawyer lobby, and it's hard to disagree with them. Their recommendation at the end that Bush needs to give a tort reform speech is right on--since it is America's number one domestic problem. Excerpts:

Either he's a good actor or Mitch McConnell was genuinely amazed by the way the trial-lawyer lobby dictated terms to Senate Democrats on this week's terrorism insurance vote.

"I've been here 18 years and I can say with total confidence that there's no special interest that completely owns, lock stock, the Republican conference," the GOP Senator told us yesterday. "But, by golly, I think the Democrats in the Senate are a wholly owned subsidiary of ATLA [the Association of Trial Lawyers of America]. They ought to be embarrassed."

Two interesting columns on supply-side economics and some of the history and politics behind it. Not what you might think...
Jude Wanniski reminds us that JFK was more of a supply-sider than Barry Goldwater! And Larry Kudlow looks back at Smith, Schumpeter and Say.

Walter Williams' column today is a good refresher on how "Self-interest is the human motivation that is most trustworthy and predictable, and gets the most wonderful things done." Worth reading for the famous quotes from Adam Smith.

In 1776, Adam Smith -- the acknowledged father of economics -- published "An Inquiry into the Nature and Causes of the Wealth of Nations." In it, he eloquently captures the essence of this wonderfulness, saying: "He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. .. . He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain."

Smith continues: "He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. ... It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest."

Thanks to for noting this piece in the SJ Merc on how Bill Simon is trying to flank Gray Davis on environmental issues--specifically by calling for an end to off-shore drilling and proposing a $1 billion bond for urban playgrounds and parks. Can Simon pick up some swing votes? I doubt he'll convert many environmentalists but may successfully defuse this issue for many fence-sitters.

By the way, check out Auren's latest Summation Push.

Some herbal dietary supplements, such as those containing ephedra, have been killing people and leaving many others with severe disabilities from stroke. Yet botanicals are virtually exempt from FDA oversight. Henry Miller, a Hoover Institution senior research fellow and former official with the Food and Drug Administration, makes the case in USA Today that it would be a disaster for the industry to wait until political and public outrage compels the FDA to step in. Rather, the industry should move to a voluntary system of oversight and private certification. This would inform and protect consumers and avoid the hugely expensive and time-consuming FDA approval process.

And for more from Henry Miller on how FDA regulations costs lives, read this piece in the Washington Times. Its conclusion:

The bottom line is that regulators make decisions defensively — in other words, to avoid approvals of harmful products at any cost — so they tend to delay or reject new products of all sorts, from fat substitutes to vaccines and painkillers. That's bad for public health and for consumers' freedom to choose. Americans are, literally, dying for better regulation.

A public health disaster seems inevitable. Historically, society overreacts to such occurrences. Congress would likely reclassify botanicals as drugs in response to the ensuing public outcry.

That would be calamitous for supplement manufacturers: Development, testing and FDA marketing approval of the average new drug takes 12 to 15 years and costs upward of $800 million. Reclassifying botanicals as drugs would effectively spell the demise of the goose that is laying multibillion-dollar eggs, and the end of consumers' access to a wide array of non-traditional medicines.

The news from the telecom sector just gets worse and worse. Is it time for the Darwinian approach? Let's get it over with. Read this piece in today's NY Times. Excerpts:

News over the weekend that Joseph P. Nacchio was leaving the beleaguered telecommunications company Qwest Communications International and that the fiber optic carrier XO Communications would file for bankruptcy protection came in the wake of more bad news from two more established players. Lucent Technologies, the large maker of communications equipment, said last week that its sales would decline much more than expected, about 15 percent this quarter, as its main corporate customers reduce spending. Sprint, meanwhile, had its debt rating lowered to a notch above junk status as it said it would sign up fewer wireless customers.

This confluence of negative news, combined with the languishing bankruptcy proceedings of Global Crossing and persistent concern over giants like WorldCom, have prompted some analysts to forecast a more severe crisis in the industry, which has already endured the erasing of an estimated $2 trillion in the market value of its constituent companies since the telecommunications slump began about two years ago. ...

Some analysts are now calling for a Darwinian approach, letting many companies fail as quickly as possible without buyers' bailing them out at fire-sale prices. Such an outcome might improve the prospects for the companies still standing.

"Let the ailing networks rot, let them mothball," said Gabriel Lowy, an analyst at Crédit Lyonnais Securities. "We now know that the Internet and data traffic were overhyped. It's now time to sort out the survivors so the recovery takes a few years instead of many years."

North Dakota has voted to require financial institutions seek affirmative permission from customers (opt-in) before sharing their personal information, which can include details such as their bank balances, withdrawals and deposits, and who they have written checks to (see this press release from the ACLU congratulating the voters of North Dakota). Sounds good, but the question is whose information is it? It is not clear why a piece of information created as the result of a transaction freely entered into between two parties should be the sole property of only one party. It is also not clear that, despite this vote, consumers universally want an opt-in policy. The income from selling data may translate into lower banking fees, and some consumers might prefer that trade off. With a forced opt-in policy, that choice may not be available to North Dakotans. Also, I wonder what this will do to other banks doing business in the state and what other states, and industries, might be targeted next.

While I tend to soften a bit when it comes to privacy laws regarding financial and medical information (because the information is so sensitive and the choice is not whether or not to provide the information, but to whom), I still think that it is a mistake for the state to dictate such a policy. But let North Dakota be the experiment!

Can anyone give me a moral justification for the death tax? The idea that after paying substantial taxes on your earnings to the government for your entire life you have to surrender potentially more than half of what is left over when you die to the government, instead of to your children, has always been appalling to me. I view this double taxation (or triple taxation if my income came from corporate profits, which are taxed) as simply immoral.

Lady Margeret Thatcher urges us to rise to the challenge and Robert Bartley, editor of WSJ, holds that we have the moral authority to do so. From Thatcher's piece:

Proliferation of WMD offers far more menacing risks when those weapons are in the hands of the West's sworn enemies. We have to assume that if those who hate us are confident that they can threaten us or our allies by this means they will do so. The threat alone could transform the West's ability to intervene in order to protect its interests or to undertake humanitarian missions. In some cases we must expect the rogue states to try to go beyond mere threat.

An important column by David Horowitz that shows that universities celebrate diversity in everything but thought. The liberal monolith in higher education is shocking and shameful--and showing no signs of changing. Consider these stats on the party affiliations of professors whose affiliation could be determined:

• University of Colorado, 94% are Democrats
• Brown University, 94.7% are Democrats
• University of New Mexico, 89% are Democrats
• University of California, Santa Barbara, 97% are Democrats
• University of California, Berkeley, 85% are Democrats
• University of California, Los Angeles, 93% are Democrats
• University of North Carolina, 91% are Democrats

And often the non-Democratic professors are Greens, not Republicans. This may understate the amount of Republicans since many conservatives are probably in the closet, but when you look at the departments it is striking that very few, if any, Republican professors can be found in the history and political science departments. Worse, there is clear intellectual discrimination against conservatives. Excerpts from Horowitz's piece:

Diggins’ observation provides the template for what has happened to American universities in the last thirty years. The liberal academy of the 1950s and 1960s, whose ideals were shaped by Charles Eliot and Matthew Arnold and whose mission was "the disinterested pursuit of knowledge" is no more. Leftists tenured after the 1960s first transformed these institutions into political battlegrounds and then redefined them as "agencies of social change." In the process, they first defeated and then excluded peers whom they perceived as obstacles to their politicized academic agendas. ...

UCLA law professor Eugene Volokh wrote an interesting piece on the Fourth Amendment and terrorism. He argues that although the courts have ruled that infrared thermal imagers cannot be used to scan a person's home without a warrant (i.e., to find Marijuana lamps), police should be allowed to use Geiger counters to find hidden nuclear weapons inside a home.

A State Department official accues the media of treason--or at least of lacking common sense. The first amendment problems with his solution, cited below, are clear but there is another issue. Government can't be the only entity to protect us from terrorism. Individual (and corporate) responsibility should play a role as well. Prohibiting the press from stories that reveal our weaknesses would damage the ability of informed citizens to take actions that could protect themselves and others. Loopholes in airport security? I want to know that when I make a decision to fly or not.

The president and Congress should pass laws temporarily restricting the media from publishing any security information that can be used by our enemies.This was necessary during World War II, it is necessary now. These restrictions were backed by the American public during World War II, and I believe the public would support them now.

A column by Pat Buchanan today on the 30th anniversary of Watergate. Interesting both in its spin and because there are those that think Buchanan was Deep Throat. Excerpts:

Instead of throwing his old friend John Mitchell to the wolves when Mitchell's aides got caught filching papers from the Democratic National Committee, Nixon let White House aides attempt to contain the scandal.

Like FDR, JFK and LBJ, he crossed the line. But where they had been protected by Democratic Congresses and their media allies, Congress and the media seized on Watergate and colluded to destroy a president who had defeated them and taken the country completely away from them.

Praise for Jerry Brown from George Will, and well deserved. Excerpts:

Brown has disdain for "the resistance to change'' on the part of people and factions that fancy themselves "change elements.'' So he is encouraging parents to prod the public education bureaucracy by organizing charter schools. That is, he thinks, one way to improve the abysmal performance of Oakland's public schools, where only about 1,600 of 4,000 ninth-graders will graduate from high school, and only 400 of the 4,000 will even take the courses required for applying to the University of California system. "If I could make it residential, I would,'' says Brown, whose next project, coming in September, is a similarly elite school for the arts. ...

Ronald Reagan once said that an economist is someone who sees something working in practice and wonders if it will work in theory. Brown, who entered California's governorship when Reagan left it, has shed a lot of theory en route to his current happy immersion in urban practicalities.

Not a good week for names: Loudcloud abandons the service model and becomes a boring enterprise software company with a boring name: Opsware. Press release.

New research from Ipsos-Reid suggests that that music file sharing actually helps boost CD sales and reinforces the notion that the music cartel's refusal to accept the Napsters of the world as anything but pirates will only hurt them in the end. Sure cartels work to protect the status quo and fear technologically inspired-innovation, but the music industry's lame attempts to do it themselves with MusicNet and Pressplay are only wasting their time and delaying a business opportunity. Wired News reports.

I never thought I'd be referencing the SF Bay Guardian, but this piece actually gets the wireless network issue half-right (and half wrong.) While it's full of a bunch of nonsense about how the Internet was once free (there's no such thing as a free lunch!), broadband providers are "robber barons" and monopolies (how many "monopolies" do there need to be in an industry before they stop being “monopolies”?) and if only the city could regulate broadband our problems will be solved, etc., it is right to point out that wireless community networks are important developments.

Right now, if I were to share my 802.11b network with my neighbor it would probably be theft according to my contract with my DSL provider. I believe Covad is the only provider that lets customers share bandwidth this way. While I believe the companies ought to be able to sell me broadband services under whatever terms they choose (and I choose, as a customer), I think it is a mistake to ban this type of bandwidth sharing. Instead of looking at this as piracy, as the music cartel did with Napster, broadband providers should look at this as a great way to hook customers onto broadband service. Broadband needs customers, and any way they can get them will probably be good business in the end. These wireless community networks are what people want, can grow organically, and will help create a critical mass for the development of the sorely needed "killer apps." Rather than discouraging these networks, providers should be encouraging them and figuring out pricing mechanisms (such as per bit) that will pay off for them in the long run.

Moving Social Security from an inherently flawed system of entitlements to sustainable personal assets is a big idea. Certainly there are issues getting us from here to there, but let's get to figuring out how to manage this transition which must, in the end, take place.

According to June O'Neill, former Congressional Budget Office director, public discussion about Social Security that centers on "lock boxes" or whether the Social Security trust fund is being "raided" is irrelevant. Worrying about the size of the trust fund is misguided. Social Security's real problem is that it is a pay-as-you-go program, which draws on the taxes of current workers to pay benefits for current retirees.

An argument IN FAVOR of railroad subsidies and Sen. Fritz Hollings' "National Defense Rail Act" from... none other than William F. Buckley, Jr.! The railroads are heavily subsidized--but then again so is most major transportation. Excerpt:

The plan of Sen. Hollings is significantly to improve and to increase the availability of railroads, and he needs to justify doing this, at a cost of more than $5 billion per year, by persuading Congress and the public that however uneven the usufructs of rail travel to different parts of America, a national endowment is economically defensible, culturally desirable, and tangentially useful to the common defense.

Bugs gets politically correct: the bunny lobby is growing more powerful as it topples a shockingly insensitive Suburu ad campaign. Guess it's duck season.

Looks like the Democrats are trying to take the war on terrorism issue off the table this November by being as hawkish on Iraq as the Republicans. Too bad for Saddam it's an election year. Read this piece in the Washington Post. Excerpt:

WASHINGTON –– Prominent Democrats in Congress called Sunday for removing Saddam Hussein from power, endorsing a classified Bush administration plan that gives the CIA broader power to take action against the Iraqi leader.

The administration "is trying to bring about a change in regime. ... I think it is an appropriate action to take," said House Minority Leader Dick Gephardt, D-Mo., appearing on ABC's "This Week."

Talk about creative accounting, PriceWaterhouseCoopers has changed its name to "Monday." No this isn't a joke. Just what an accounting firm needs to do to spice things up: name themselves after the least appealing day of the week. But wait--their ad campaign will fix it. Check out the slogan: "Monday is a fresh start, a positive attitude, part of everyone's life." Gee, now I LOVE Mondays! And I love accountants too! Thanks PWC!

In another "biggest win in U.S. men's soccer history" the US World Cup team beat Mexico 2-0--catapulting them into the quarterfinals. Powerhouses Argentina, Portugal and defending champion France already have been eliminated, while upstarts such as the United States, Senegal and co-hosts South Korea and Japan are alive. Next up: Germany. Bring it on!

ESPN has the details.

Latest posts from R21:

Conventional wisdom says the CA governor's race is Grey Davis' to lose, but conventional wisdom said it was Richard Riordon's to lose too. Newsweek points out that this dark horse is galloping--and gaining ground, not losing it as many expected. Can Bill Simon, who's never held political office and trails Davis in fundraising, do it again and upset the countries first "coin-operated" governor? “There are times it’s good to have an outsider,” Simon told NEWSWEEK. “I’ve had the kind of experience where you sign the front of the check instead of the back.”

By voting against school choice, politicians are only denying privileges to the poor--for the rich can afford to "choose" schools by paying for private schools or moving to better public school districts--and are being hypocritical as well:

SCHOOL-CHOICE DOUBLE STANDARD ON CAPITOL HILL

Many senators and representatives who oppose school-choice for other people send their own children to private schools, a new study by the Heritage Foundation points out.

Jonah Goldberg argues that indeed the "dirty bomber" Jose Padilla's rights are being violated--and yet that is still legal. But Slate's Dahlia Lithwick argues that while the national security issues are real, we need some consistency on how we treat potential terrorists--perhaps a bureau of pre-crime? Excerpt from Goldberg (Lithwick excerpted below):

Remember, your rights are "unalienable," according to the Declaration of Independence, which means the government cannot take them away from you. Ever. The sound-bite cliché that criminals "forfeit" their rights frames the issue improperly. Criminals don't "give up" their rights. The State determines that their rights can be ignored.

Forget criminals. Every single day the government decides when and where it is appropriate to infringe on the rights of law-abiding citizens. We're searched at airports, court houses and high schools without probable cause all the time. We can't shout "fire" in movie theaters and we can't hold rallies inside high-security installations.

Three examples of what I feel is America's biggest domestic problem: tort law abuses.

First, fat from asbestos and tobacco, will the trial lawyers target "big food" next? After all, obesity kills. Lawsuits may have less success with food than tobacco, but the costs of the industry defending itself will surely show up in food prices.
Second, how skyrocketing malpractice insurance costs have created a statewide healthcare crises in West Virginia.
Third, 401(k)s have been poor performers because employers can't risk the liablity associated with giving their employees good financial advice. How many Enron employees wouldn't have lost their life savings if the company had been able to give rudimentary investment guidance?

Read summaries of these issues from NCPA:

More boring but true stories about new technologies (see the post on used books). This time from Sf Gate:

...the budding nanotech industry is making important progress in several other seemingly prosaic but nonetheless useful areas, such as perfecting new cosmetics, smaller batteries, better lightbulbs and more effective pharmaceuticals. The first of these products are expected to hit the market over the next few years.

The Economist discourses on the issue of trust and the three key issues of: "the role of the research that is published by investment banks; ... the way in which shares in IPOs are allocated; and ... the use of accounting rules to mislead investors."

The issue of integrity to the system is a vital one and the question of what new rules and regulations should be added must be addressed. But it is important that, just as we need to consider the civil liberties issues when addressing national security, we consider the unintended consequences from regulation, the long-term impact on business, investors, and consumers, and avoid a "slippery slope." As well, business and finance have not been lightly regulated industries--the problem has been in many cases the credulity of the investors and the absence of critical thinking. No matter what laws and regulations are put in place, there will always be fraud--just as there will always be bank robbers, despite laws against it--and the effort to create a flawless system (an impossibility) can become counter-productive by creating a moral hazard. Excerpts from The Economist:

As for better corporate governance, the NYSE's new rules are a step in the right direction. Much will depend on how committed the exchange is to ensuring that the rules are honoured in the spirit as well as by the letter. Greater independence of non-executive board directors is certainly desirable. Too many American bosses fill their boardrooms with yes-men who have neither the character nor the financial incentive to challenge the boss's grandiloquence. Ultimately, however, governance is unlikely to improve much until the institutions that own large chunks of corporate America start acting as real owners, by keeping a sharper eye on their boards and their management.

The Bush Doctrine of preemptive strikes may be the most dramatic shift in US foreign policy since WWII. Loren Thompson opines:

...now the real Bush Doctrine has begun to emerge, and it looks like the biggest shift in strategic thinking in two generations. The dominant military concept of the Cold War years -- deterrence -- is being demoted as the administration searches for more dependable ways of dealing with new dangers. And the durable doctrine of containment is being abandoned almost entirely, because it is ill-suited to a world of borderless economies and stateless aggressors.

I'm a "deep linker," so am I a thief? Or is linking protected speech? SiliconValley.Com raises an issue that I thought was settled but apparently is raising its ugly head again.

Nicolai Lassen considers linking such a fundamental element of the World Wide Web that he sees nothing wrong with creating a service around linking to news articles at more than 3,000 other sites.

Danish publishers, however, equate such linking with stealing -- and have gone to court to stop it.

BusinessWeek takes an in-depth look at Linux. We are entering the market phase--a bit brutal, a bit boring and overall: businesslike.

A lot has changed for Linux in the past two years. True, the basic tenets of the rebellious open-source software-development movement popularized by coder Linus Torvalds remain largely intact. Loosely organized collectives, often from competing companies, collaborate to build software products that no one owns, with source code that anyone can view and alter. Any changes in the code are held by the community at large.

While such idealism worked fine in academia and among uber-geeks, it wasn't immune to market economics as the movement matured. A slew of Linux startups have disappeared in the past two years during the crushing information-technology spending crunch. They were either bought out by bigger Linux companies or shuttered when venture capitalists lost interest in open-source and customers failed to appear quickly enough in sufficient numbers.

What's emerging now is an operating system -- the software that runs a computer's basic functions -- that's more reliable, consistent, and businesslike, approaching older and more robust forms of Unix in scalability and stability. Steady improvements to the code have come as big tech players such as IBM and Hewlett-Packard have thrown signficant research dollars at improving open-source software. In short, the Linux movement is not only growing up but it's also going mainstream.

An interesting example of the extremes uniting against the middle. Brent Bozell, a conservative, gives caveated praise for the premise of liberal professor James Steyer's book "The Other Parent." The problem: TV corrupts young minds. While the liberal blames the politics of the right (specifically de-regulation) and the conservative blames the culture of the left (specifically permissiveness) they are unified by the same feelings of indignation. While the conservative laments the lacking of a moral code, the liberal bemoans the absence of a regulatory code. Even though their proposed remedies are opposite--the liberal is stridently anti-free market and the conservative is pro-free market--they are closer together than one might think. Excerpts:

As a conservative, I can applaud much of what this liberal writes. For example, I wholeheartedly agree with Steyer when he states, "The loss of innocence at too early an age is perhaps the highest price that American kids pay in [the current] media environment ... Our kids are bombarded with language, messages and images that far exceed the most outrageous forms of pop culture we experienced ... Innocence is priceless. It's an essential element of childhood and growing up. But today, [preserving it] is virtually impossible."

From the NY Times, The Internet has revolutionized the used books business:

It seems curious that with the pricking of the dot-com bubble, with the demise of the vast majority of all the weird and wonderful things that were explored in digital commerce, such a seemingly unsexy business as used books should survive and flourish. But this is what the Internet does best: bringing a disparate and disorganized group of people together into a community, and an economic unit.

Professor Eugene Volokh posts some "highly tentative thoughts about the dirty bomber and military jurisdiction" on his blog. Excerpt:

...the risk of the slippery slope is serious, but American history cuts against it, at least as to military tribunals and military detention. As someone pointed out to me, less than ten years after Ex parte Quirin, we were not just in a Cold War but in a hot one (the Korean War), and had serious concerns about domestic spies and saboteurs who were working for the enemy. But even though there were some excesses (relatively mild by world standards) in our attempt to root out these spies and saboteurs, there was no resort to military justice. Even during the McCarthy Era, American traditions were robust enough to resist any slippage to greater use of military justice against civilians.

From the NY Review of Books Christopher de Bellaigue discusses the political climate in Iran and notes the impact of Bush's "axis of evil" speech. Sorry to give away the ending put it concludes:

In this poisonous atmosphere, it is hard to imagine that the reformers can persuade the conservatives voluntarily to give up power. A popular explosion remains a distant prospect; most people do not want another revolution, and the police and revolutionary guard are disciplined and loyal. Unless the reformers can muster allies in the conservative establishment, or find new ways to bring public pressure on it, Iran seems fated to an unyielding form of Islamic rule.

A fascinating example of "unintended consequences" at work. NCPA summarizes:

BUDGET GAMES DRAMATICALLY DECREASE PRODUCTIVITY

The alleged purpose of budgeting is to encourage managers to work harder by rewarding them for reaching certain targets. But according to recent research, budgeting can have the unintended consequence of decreasing short-term productivity by 50 percent to 100 percent.

Thanks to Auren Hoffman for pointing out this piece in the WSJ. Excerpt:

'Jewish Republican' Isn't an Oxymoron By RONALD S. LAUDER

Somewhere between the presidential elections of 1928 and 1932, Jewish voters switched parties.

Jews were historically Republicans, and they came, in the 19th century, for the most part from Germany. But the massive waves of Eastern European immigrants around 1900 swamped the German Jewish population, and the big city political machines brought them into the Democratic Party. In 1932, FDR sealed the deal.

Most people I know describe themselves as “socially liberal and economically conservative,” which essentially means they view themselves as socially bohemian and economically bourgeois (David Brooks calls us "Bobos"). I’ve found this is true for many Republicans and Democrats who feel alienated by the extremes of their respective parties. So what divides these two camps? While there are some key litmus test social issues (like abortion), a substantial difference is the way they view economics and government. Specifically, the Democrats tend to put the federal budget at the center of their thinking—they are terribly concerned about “funding” the government, worried about deficits, apprehensive about the viability of programs such as social security and concerned about “fiscal responsibility”—which means not granting tax cuts unless they are “paid for.” The mentality is: it’s the government’s money and should only be distributed to the citizens if it is financially prudent to do so. Health of government is virtually synonymous with health of the national economy.

Some relatively comforting analysis from Elizabeth Whelan, president of the American Council on Science and Health. Excerpt:

If such a device [a radiological dispersion device, or "dirty bomb"] were detonated, it could cause substantial damage in the immediate area. As with any conventional explosive, the degree of damage would depend on the size of the device and the concentration of the population. Some contend that such a device could render an entire urban area uninhabitable by spewing radiation far and wide. In fact, the radiation release would likely be minimal; it would not result in the type of "plume" associated with a Chernobyl-style nuclear accident, or the explosion of a nuclear bomb. According to Andrew Karam, a radiation safety officer at the University of Rochester, a dirty bomb "would probably not lead to many, if any, cancer deaths." The worst impact would probably be from panic, which could lead to traffic accidents and heart attacks; it might even deter emergency workers from assisting victims of the explosion. There would also be a big economic impact from shutting down and evacuating a target area such as Wall Street.

It took Nixon to go to China, will it take Bush to oversee the largest expansion of government since the 1960s? It Bush were a Demorcrat, he'd be hammered for the kind of spending that has gone on over the past two years, but when it's a conservative spending, there are few people to ring the alarm bells. One of those people, however, is Stephen Moore, Presdient of the Club for Growth, who has been doing his best to save us from ourselves. Read these excerpts from his recent article in the Wall Street Journal and a summary of his piece in the Investor's Business Daily. I am hosting Mr. Moore at my house on the morning of June 26th. If you'd like to join us,

From the WSJ:

...the nation is now in the midst of the biggest government spending spree since LBJ. Incredibly, the domestic social welfare budget has expanded more in just two years ($96 billion) under George W. Bush than in Bill Clinton's first six years in office ($51 billion).

Although many economists portray this surge in spending as a stimulus to growth, the opposite is true. The runaway federal budget, which is up nearly $300 billion in just the last two years, and the parallel hike in taxes and debt needed to finance this spending binge, is America's single most ominous domestic economic danger sign.

Imagine if your brain--all your thoughts, feelings, emotions, memories, and senses--could be "uploaded" into a computer. Certainly science fiction for now but we could develop this capability in your lifetime. And there have been a lot of people working on it--or at least thinking about it. Here is a fun piece in Wired on the subject.

As if the tech industry doesn't have enough problems, the IRS now wants to tax stock options. See this release from the HTTF:

High Tech Task Force Urges President Bush To Reverse Payroll Tax on Stock Options, ESPPs

WASHINGTON, DC - The Senate Republican High Tech Task Force today urged President Bush to reverse an IRS ruling that would force employees to pay payroll taxes on the purchase of stock options through qualified incentive stock options and employee stock purchase plans (ESPPs).

See this piece from the NCPA. (Note that the Bush tax cut INCREASED the progressivity of our tax code--read to the end to see a chart on who pays what in this country. Can you guess what % of the federal personal income tax is paid by the top 5%? What should it be? Read on to find out what it is.)

A study by the Institute for Policy Innovation reports that the Progressive Income Tax (PIT) does not redistribute income. In fact, it has an overall negative effect on income. While the top 10 percent of reported incomes accounts for an increasingly large percentage of total revenue, the incomes of the other 90 percent have declined.

US loses the lead in the last moments but comes away with a draw. Read this piece on ESPN.

"I'm going to take it and get out of town quick," U.S. coach Bruce Arena said. "If you'd asked most people months ago if the U.S. would get four points in first two matches, 100 percent of the people would have said no. To be standing with four points after two matches is a good feeling."

And from Rob Stone on the same page:

Not exactly a statement game to the rest of the soccer world out there, but hey, the U.S. has more points than Argentina, France, and Italy -- not too shabby.

Latest posts from R21:

In the latest installment of the war between Silicon Valley and Hollywood, 5 ReplayTV users have sued to defend their right to use their digital video recorders. Hollywood doesn't want us to skip commercials. Next thing you know the media companies will want to outlaw trips to the bathroom. Press release on EFF.

One of the most important issues facing the technology industry is how broadband networks should (or should not) be regulated. The two primary camps are those that believe the phone and cable networks should be "open access"—that is forced to allow competitors to use their networks—and those that believe companies ought to be able to own and control their networks. This piece in Salon does an admirable job describing the issue and the various sides, though clearly has a bias for “open access.”

The fear, of course, is that if the phone and cable companies could prohibit competitors from using their networks, they will be entrenched monopolies that will raise prices, stop innovating, and regulate the content that goes over their networks. Currently there is an asymmetry because the RBOCs are forced to open their DSL networks to competitors while cable companies are not. Both sides, and the FCC, want an even playing field, but one side would lift the regulations on DSL and the other would impose them on cable.

A recent report from the Cato Institute discusses the steady increase in legislative and regulatory activity surrounding technology—noting that nearly 350 tech-related pieces of bills were proposed in the 107th Congress—a large increase. While some of these are promotional in character, alarmingly most are more regulatory in nature. Cato is right to worry that politicizing this dynamic industry and imposing a traditional command and control regulatory paradigm subject to the whims of the bureaucratic elites under the canard of "public interest" would be an unmitigated disaster.

The Economist is right to point out that much of this has been brought on by the technology community itself and that government programs and investment have contributed to tech development, though they are wrong to brush off Valley libertarianism and to suggest that “Without money from the Pentagon, Silicon Valley might still be covered with fruit orchards” in this fairly snooty article.

While the tech community occasionally gets rankled when politicians mess with options accounting or do Hollywood’s dirty work for them, by-and-large it has stood by or even lent a hand as Pandora’s box has been opening. Are we prepared for technology to wallow in the regulatory morass that the telecom and biotech industries endure? I can’t think of a greater danger to the dynamism and growth of the tech industry.

Cato’s list follows:

Ed Crane, founder and president of the Cato Institute and a man who has done more for the libertarian cause than nearly anyone, spoke yesterday in Palo Alto. Here’s some of what he had to say:

Cato’s values are: individual liberty, limited government, free markets, the rule of law, and a civil society.

Think tanks are a market response to the political correctness at America’s universities—which are supposed to be open to intellectual inquiry, but alas are not.

America embodies the idea of human liberty and respect for the dignity of human life.

The US Constitution strictly limits the power of the federal government. The enumerated powers doctrine holds that those powers not granted to the federal government by the Constitution ought to be left to the states. Competition among states will keep them from abuse.

For un-partisan, non-ideological interpretations of the current state of scientific thinking about climate change, I recommend this (slightly old article) from The New York Review of Books.

More controversially, Scientific American rebutted the science of the statistician Bjorn Lomborg (who has criticized the case for global warming) very effectively here. He replied to Scientific American here.

And I myself wrote about the subject for The Red Herring.

The LA Times reports that China's state-run newspaper, the Beijing Evening News, told its readers that the US Congress was moving its headquarters. Based on a story from the onion, the Chinese newspaper quoted House Speaker J. Dennis Hastert (R-Ill.) saying, "Don't get us wrong. We actually love the dilapidated [old] building...But the cruel reality is, it's no longer suitable for use by a world-class legislature. Its contours are ugly, there's no room to maneuver, there aren't enough bathrooms, and let's not even talk about the parking." Hah -- only in a state where government bureaucrats actually act like this could they believe such a story.

I only watched the promos but apparently Peter Jennings did a hatchet job on the issue of prescription drugs in this country—a story rich with villains and victims I’m sure. Not sure if this says more about Jenning's poor understanding of economics or good understanding of what generates ratings. But it is certainly too broadly felt that drug companies making profits off of people's illnesses is a bad thing when precisely the opposite is true: drug companies make money from helping people get well and this is a good thing (to quote Martha Stewart.) Holman Jenkins, always a great source of a colorful put-down, lets Jennings have it in his latest column.

Excerpts:

Whether Americans are getting their money's worth from their sizeable spending on prescription drugs is a good and fateful question. But Mr. Jennings's attempt to indict the pharmaceutical industry by way of pretending to answer it suffers from not a little intellectual incontinence of its own.

Here's an interesting piece on TechCentralStation.com about intellectuals and presidents.

Jeffrey Sachs argues for aid, and against some of the points noted earlier in R21. It's important to note that aid may often create more serious long term problems while attempting to solve short term problems--it can simply strengthen the totalitarian regimes that are the problem in the first place. Note that many struggling countries have tremendous amounts of natural resources but lack liberal political and economic systems to share the wealth--and aid can similarly get sucked up by the ruling classes. But there is a good case to be made that targeted aid, tied to certain guidelines to prevent abuse and encourage liberalization, may in fact be a net positive. While I continue to believe that trade is the ultimate answer there is a good point: we need to walk the walk, not just talk the talk. Excerpt:

Mr. O'Neill had his own lyrics of course -- that "It's trade, not aid" that will help Africa. Sadly, the real U.S. position is "It's trade not aid . . . and by the way, we won't trade." We preach free trade, but we destroy potential African exports through quotas on textiles and apparel, as well as $180 billion in newly passed subsidies for our farmers. A tiny fraction of that sum, $2.5 billion per year, would save millions of lives by controlling AIDS, TB and malaria. The real answer, of course, is that Africa needs both trade and aid -- trade to promote private investment, and aid to fight disease, provide clean water, and ensure universal education, all of which are necessary for growth, as Mr. O'Neill himself has stressed.

Two columns today about the problems and politics around long term climate models. It is near impossible for lay people to speak definitively about the science, but what is certain is that there is uncertainty. First Thomas Sowell takes on what he calls "global lying" in this column. Excerpt:

The problem is that all this hysteria was based on a computer model which had been shown to be incompatible with factual data. Patrick Michaels, a professor of environmental sciences at the University of Virginia, had already exposed the inability of that computer model to account for existing temperature changes before its release to the public was allowed to suggest that it was able to predict future temperature changes.

This is by no means the first time that a supposedly "scientific" report turned out to be a political report wrapping itself in the mantle of science. Last year, the National Academy of Sciences issued a report, garnished with the names of numerous eminent scientists, which was widely hailed in the media as proving the dangers of global warming. The problem with that particular report was that the scientists whose names were put on display had not written the report nor even seen it before it was released.

US Coach Bruce Arena says "It is probably the biggest win in the modern era.'' Read all about it on ESPN.

A good, short summary of what caused and prolonged California's energy crisis:

ELECTRIC POWER REFORMS IN CALIFORNIA

California's electric industry restructuring and competition program encountered numerous setbacks and difficulties. The problems were not inherent with deregulation, but rather with the way California implemented its reforms, plus "a good deal of bad luck and ineffective government responses."

The state seriously underestimated the challenges associated with creating well functioning competitive electricity markets. And both state and federal regulators failed to respond quickly or effectively to market problems when they emerged. There are a number of lessons to be learned from this experience:

I've written about the widespread rejection of evolution in the US, but of course it doesn't stop there. Among many, Carl Sagan in "The Demon-Haunted World," Richard Dawkins in "Unweaving the Rainbow," and Michael Shermer & Stephen Jay Gould in "Why People Believe Weired Things," have tried to explain our cultural penchant for pseudoscience, superstition, and myth--even in the face of contradictory scientific evidence.

Here are some excerpts from the latter book, found in this piece published on Skeptic.com.

First, look at this:

A 1990 Gallup poll of 1,236 adult Americans show percentages of belief in the paranormal that are alarming (pp. 137-146):
Astrology: 52%
ESP: 46%
Witches: 19%
Aliens have landed on Earth: 22%
The lost continent of Atlantis: 33%
Dinosaurs and Humans Lived Simultaneously: 41%
Noah’s flood: 65%
Communication with the dead: 42%
Ghosts: 35%
Actually Had a Psychic Experience: 67%

Hank Paulson, the chairman and CEO of Goldman Sachs, spoke recently at the National Press Club in Washington. His remarks, which were broadcast on NPR, were interesting--both in their candour and their gloom. In brief, he said:

• that in his lifetime business in America had never been held in such low repute
• that this low repute was hurting investor confidence
• and that low investor confidence inevitably had an economic effect far beyond the financial markets: mainly because it reduced the amount of capital available to entrepreneurs.

Has the Bush administration capitulated on Kyoto, as many vested interests are hoping for following the EPA's report to the UN last week? No. An op-ed from today's WSJ tackles the issue again and refers to Bjorn Lomborg's arguments on global warming.

Let's review: many scientists believe that global temperatures will in fact increase over the next century, that this will on balance be a bad thing for the world, and that humans will be at least partly to blame for this warming. Yet each of these predictions are far from a certainty--and really amount to our best guess at this time. Climate models, especially over this time frame, are hugely complex with a myriad of data points, a change in any number of which could reverse the findings.

Kyoto's solution to this potential problem: impose a massively expensive ($350 billion/year starting in 2010!!) burden today so that you can push back warming that would occur in 2094 to 2100. This is absolute insanity and shows that the Kyoto crowd has no sense of economics or even basic skills in prioritization. If global warming does happen as our imperfect models suggest, does it make sense to invest this massive amount of money in delaying it by 6%, or in using those resources to build a world that will be able to cope with the inevitable (should it in fact be inevitable)?

Stephen Moore, president of the Club for Growth, writes in the National Review that the Laffer curve, which suggests that as taxes increase, government revenues will decrease, has been in full effect when you look at various states' tax practices in the recent past. The record is particularly worrisome for we Californians. (I am hosting an event with Stephen Moore and Art Laffer this month. Please if you would like to attend.)

Here is NCPA's summary of Moore's article:

STATES FACE LAFFER CURVE, AS HIGH TAXES REDUCE REVENUE

Faced with revenue shortfalls, many of the nation's governors are turning to tax increases. But when they tried this during the economic downturn of the early 1990s, the states that raised taxes to balance their budgets dug deeper financial holes.

Tax hiking states lost businesses and taxpayers, prolonging the recession in those states.

Art Laffer argues to keep the dollar strong, while this piece from Barron's suggests there are benefits to a weakening dollar, and this piece in the WSJ suggests a weak dollar could be good, bad, or both! Milton Friedman, as noted in R21, says: it doesn't matter as long as there isn't government interference in the exchange rate.

I think the talk about a strong/weak dollar is a little cart before the horse. Exchange rates are market phenomena, and should reflect, more than dictate, economic reality. A strong dollar is a sign of a healthy US economy but to prop it up artificially would hurt exporters. The best way to maintain a strong dollar is to adopt pro-growth strategies. As Laffer writes in his piece:

If the U.S. wishes to maintain our leadership role in the world economy, we've got to proceed undaunted in our pro-growth agenda. Just talking about a strong dollar won't cut it. In the words of Nobel Prize-winning economist Robert Mundell, we need tight money and tax cuts -- and then we'll have prosperity, asset appreciation, employment growth, and a strong dollar.

If you'd like to meet Art Laffer,

L. Gordon Crovitz writes in the WSJ today that in order to connect the dots, the FBI needs to collect the dots. The FBI guidelines were anachronistic and particularly bizarre to the folks at Dow Jones during the kidnapping and murder of Daniel Pearl.

Back when they were written, the guidelines were a reaction to complaints that the FBI had unfairly targeted civil rights leaders and antiwar protestors. But instead of simply controlling how information was used, the rules banned access to the information, period. Before files could be gathered on suspects, including potential terrorists, there had to be hard evidence of a crime. Even news clippings could not be kept, but a few waivers were granted.

Meanwhile, David Limbaugh argues in his column today that civil liberties remain unaffected by the new FBI rule changes and the sky isn't falling. And he thinks he's figured out the liberal chicken littles. [But what to say about William Safire's objections, as we point out in R21?] Excerpt:

Let’s get a grip. The FBI is changing no laws, but is merely lifting self-imposed restrictions it implemented following its illegal wiretaps and other questionable activities against Martin Luther King Jr. and other civil rights leaders, mostly during the '60s.

Since there is nothing specific in the critics’ objections and not a shred of legitimacy to their panic-ridden assertions that the sky is falling on the Constitution, what is behind their hysteria? Well, I think I’ve figured it out.

I had the pleasure of attending a discussion with Nobel Prize winning economist Milton Friedman at the Hoover Institution yesterday. Here are some notes from the conversation:

Some general points he made that apply to many of the areas he discussed:

• Undesirable to use the tax system in other ways than raising money
  
• The problem of “vested interests” and their ability to preserve power by lobbying government to enact regulations protecting their interests
  
• Important to align incentives with actions

An excellent piece in this week's Weekly Standard lauds Eliot Cohen's new book Supreme Command. The article's author Michael Barone argues that civilian control of generals during a time of War is essential to the proper prosecution of conflicts. Cohen says that Churchill is the best example of this kind of civilian leadership in the last century and lauds the current administration for its oversight over the sclerotic, tradition-bound Pentagon.

But the man Barone admires as a civilian leader? It's not the simple-minded George W. Bush. It's Donald Rumsfeld. As has been stated elsewhere, Rumsfeld was too abrasive to be a very good Secretary of Defense. But he is a becoming one of our greatest Secretaries of War.

David Brooks made an interesting point on last Friday's Newshour. Asked whether FBI director Robert Mueller should resign, as the Wall Street Journal advocated last week, Brooks said that focusing on the individual missed the point. The real question is what should the FBI look like--and indeed should we have an FBI in its current form at all? Should we have the same institution that chases down heroine dealers also chasing down Al Queda? Should we merge the CIA & FBI? I don't know (and neither does Brooks) but it it important that our institutions reflect the changing realities of our time. These agencies were built for the Cold War and when the war is over we need to reassess. After WWII we created the UN, Nato, and the Bretton Woods institutions (IMF and World Bank) among others. It's time to take a hard look at organization building.

George Melloan opines on this in today's WSJ:

The best way for George Bush to deal with this puerile management-by-legislation approach is to do his own governmental reorganization. As Harry Truman notably averred, the buck stops in the Oval Office.

Fareed Zakaria, one of the more insightful international observers around, writes that we are not on the brink of nuclear war between India and Pakistan--and in fact nukes may have sparred us a war--in this piece from Newsweek. But the US must play an active role, and, with no clear solution in sight, the future may only be more dangerous. Worth the read. Here's how it begins:

Frustrated though it is, India will be deterred from launching a military offensive by two things—nuclear weapons and American soldiers. Contrary to much of the media hysteria, nuclear weapons have actually had a sobering effect on both India and Pakistan. In the first 30 years of their independence (pre-nukes) they fought three wars; in the second 30 (post-nukes) they have fought none. To put it another way, if neither side had nuclear weapons, they would be at war right now. Nuclear deterrence is not pretty—remember the Cuban missile crisis—but it usually works.

I wanted to draw attention to response posted by Jason Pontin to my piece on the "Canadization of Europe."

Do you agree with Jason or with George Will who writes "Europe’s nations—more precisely, their elites—have been trying to turn 'Europe' into more than a geographical expression, into a political entity, so the elites can be elite in something consequential. The result is a metastasizing European Union bureaucracy—and military impotence. Hence geopolitical irrelevance." Let us know what you think...

Pontin writes:

Americans--even those who raise an eyebrow when our president speaks about the "evil ones" or other Bushian gaucheries--find it difficult to imagine the degree of disdain, alarm, and repulsion that George W. Bush evokes in Europeans.

William Safire's NY Times piece takes aim at the FBI's new powers. He says the expansion of power will not help to stop terrorists, but it will harm America's democracy. I don't always agree with Safire on privacy issues, but I think he's hit the nail on the head with this one.

And if you agree that the legal system is America's #1 domestic problem, then the fact that the trial lawyers have such influence over the political system should keep you up at night. WSJ spells it out in today's op-ed. Watch out for John Edwards...

And check out these statistics from The Center for Responsive Politics. Lawyers are not only the biggest contributors to politicians, they heavily favor Democrats.

More on the war between Silicon Valley & Hollywood (background). This time concerning digital TV, as covered in this piece in the Washington Post.

Education? Environment? Health care? My vote: our legal system--for it is the flaws in this system that has cripled many of the other institutions of our society. As George Will put it in his column today "Americans are not losing their minds, but they are afraid of using their minds. They are afraid to exercise judgment--afraid of being sued." As former senators George McGovern and Alan Simpson--two prominent politicians from opposite sides of the political spectrum--wrote recently in the WSJ:

Up and down the levels of responsibility in schools, hospitals and courts, "can do" has been replaced with "can't do." Talk to teachers and doctors, and their frustration erupts. Teachers feel crushed by bureaucracy and no longer have authority to maintain order in classrooms. With doctors, the situation is worse. A new poll suggests that doctors, instead of focusing on the best medical judgment, worry more about protecting themselves from potential lawsuits. Legal fear drives them to prescribe medicines and order tests, even invasive procedures, that they feel are unnecessary. Reputable studies estimate that this "defensive medicine" squanders $50 billion a year, enough to provide medical care to millions of uninsured Americans.

McGovern and Simpson place the blame squarely on the law:

Rick Perlstein's new book about Barry Goldwater, "Before the Storm," is "delicious," according to columnist Paul Greenberg. In his review, Greenberg points out that while Goldwater the man was defeated politically, his ideas have taken root and framed the debate for the nearly 40 years that follow--he lost the battle but won the war. The conventional wisdom was that Goldwater and his ideas were relics--what other bits of "conventional wisdom" were misguided? Read Greenberg's piece and these excerpts:

Yet the conservative revolution that began with Barry Goldwater's campaign, or maybe with Ronald Reagan's election-eve broadcast for him, now seems the defining movement of American political history during the latter part of the 20th century....

In the 40 years since the Goldwater campaign, the free market has gone from fading relic to the centerpiece of American economic and political thought. At one point Bill Clinton was willing to consider privatizing Social Security, at least in part -- like Barry Goldwater in 1964....

Have you watched "Crossing Over" with John Edwards on the SciFi Network (or read his book or seen his other TV appearances)? Edwards is a medium who speaks to the dead. Of course he is a complete fraud--and his method is wonderfully deconstructed in this piece by Michael Shermer. And for even more on how psychics and mediums work, read Shermer's case study of James Van Praagh.

Shermer contends that this isn't just harmless TV fun, but unethical and dangerous. I agree--fooling people into believing that you are talking to their dead loved-one to garner TV ratings crosses the line. Shame on SciFi (and shame on Edwards, though he's must be immune to that particular emotion). Shermer concludes with the following:

The reason John Edward, James Van Praagh, and the other so-called mediums are unethical and dangerous is that they are not helping anyone in what they are doing. They are simply preying on the emotions of grieving people. As all loss, death, and grief counselors know, the best way to deal with death is to face it head on. Death is a part of life, and pretending that the dead are gathering in a television studio in New York to talk twaddle with a former ballroom-dance instructor is an insult to the intelligence and humanity of the living.

Following a theme I wrote about last week on the relationship between science and religion, note this piece by Michael Shermer in Scientific American. An excerpt:

Scientism is a scientific worldview that encompasses natural explanations for all phenomena, eschews supernatural and paranormal speculations, and embraces empiricism and reason as the twin pillars of a philosophy of life appropriate for an Age of Science.

Scientism's voice can best be heard through a literary genre for both lay readers and professionals that includes the works of such scientists as Carl Sagan, E. O. Wilson, Stephen Jay Gould, Richard Dawkins and Jared Diamond.

How close are India and Pakistan to nuclear war? Will the cold war idea of mutually assured destruction keep the nukes on the shelf in this conflict? Only if both sides adhere to reason. Jonah Goldberg opines.

Amen, and hallelujah! At long last a self-described liberal journalist writes a candid column about racial profiling. News flash: racial profiling is not intrinsically bad, and when done correctly, it can actually prevent crime and save lives. The tide is beginning to turn and sanity may soon be restored at our nation's airports. See also the comments of American Airlines CEO Donald Carty who basically called the excess security measures just plain silly. For a recent example, check out the ridiculous episode at San Francisco's airport. I'm all for security. But let's not sacrifice common sense along the way.

--Price Roe

Latest posts from R21:

Did any of you really think that McCain-Feingold would actually take money OUT of politics? As this article in the Washington Post discusses the money that went to the parties will now just flow to PACs and other groups instead.

Is that a good thing or a bad thing? Depends on your perspective. Many of us feel like we are the "disenfranchised center," with the Republican Party too radical on the socially conservative side and the Democratic Party too radical on the special interest side. However, I don’t believe that weakening the parties will improve this situation—I think it will make it worse. The parties, as this Post article points out, tend to be moderating influences. The PACs tend to be more radical (on either left or right)—for that is the nature of grass roots organizing. Countries that have several parties (think Italy, think France—where a fascist just beat out a socialist in round one of the presidential election) often have to create implicit or explicit coalition governments where the radical elements get appeased in greater proportion to their footprint because of their leverage.