August 2002 Archives

Clark Judge, from the White House Writers Group, on why the Sarbanes bill paves the way for the country's first tax on capital, as determined by an unelected bureaucracy.

There's an interesting piece in the Aug 24th issue of the economist that considers the growing differences in demographics between the US and Europe. America is staying young as Europe is getting older. This will mean each county will face different policy challenges: education will be key in the US and health care will be a focus for Europeans. Europe may get wiser, but we'll be more entrepreneurial, and so on. Demographics aren’t everything, but it will have some impact.

Even though Reserve and National Guard special operations soldiers from California have to endure the high cost of living in this area, they don't get paid more than those from more affordable parts of the country. Operation Enduring Support is a fundraiser to help with the living expenses of Californian soldiers. Here is the informaiton:

Operation Enduring Support: A Charitable Fundraiser for the families of California's Reserve and National Guard Special Forces on active duty overseas

USS Hornet
Sunday, October 6th
from Noon to 5PM
Tickets: $25 per Adult, $10 per Child (12 and under)

San Francisco Design Center Atrium
Saturday, October 5th
Black Tie Sponsor Dinner
Tickets: $1,000 per Adult
$10,000 per Table

Contact, Volunteer, Ticket and Sponsor Information:
Website: http://www.OperationEnduringSupport.com
Email: or

Mail: Operation Enduring Support
P.O.Box 590143
San Francisco, CA 94159

An interesting speech on spectrum flexibility from earlier this year by Harold Furchtgott-Roth. Among other things, it briefly addresses the common feeling that “Government needs to work with business to find a solution for spectrum.”

That’s nice, if you are one of the businesses invited to discuss the issue. Conversations can only accommodate a finite number of speakers, and most businesses can never be accommodated in such a manner, to say nothing of private individuals. Government selection of winners and friends is not part of the necessary conditions for a Coasian world.

Jason Pontin, former editor of Red Herring and a frequent R21 contributor, likes to accuse me of being reflexively pro-business and anti-government. The reflexive charge is mildly irritating since it implies a lack of thought, though reflexes are useful when they are based on principles. So what about the principles? I’m not sure the first charge is really an insult—if the choice is between pro- or anti-business then guilty as charged. But of course the charge is really that I favor business interests to the extreme over other societal interests. The anti-government charge is also on the face of it absurd—I am not an anarchist. But again, the real charge is that I oppose government regulation in nearly all of its manifestations.

I raise this issue because, in fact, the pro-business/anti-government separation is a false dichotomy. In fact, one of the biggest problems, in my view, is how business—usually big business—uses government to its advantage.

Two important articles on how industry colludes with government to forestall innovation and create barriers to innovation. Read this essential piece by Thomas Hazlett on "the baffling irrelevance of U.S. regulatory efforts to protect obsolete technologies (broadcast TV), while blocking intensely needed new systems (wireless networks). Exhibit A in this retro scheme is the government's plan to introduce "Digital TV."

The second piece, from TidBits, shows how the entertainment industry, as well as some big players in tech, are playing the game of who can control the government for their advantage more adeptly. Consider this passage:

In November of 2001, at the request of Representative Billy Tauzin (R-LA), the MPAA's Copy Protection Technical Working Group spun off a sub-group, called the Broadcast Protection Discussion Group (BPDG). It's an inter-industry group with representatives from the movie studios, consumer electronics companies, computer companies, broadcasters, and cable and satellite operators. The BPDG's job was to consult with all these industries and draft a proposal that would set out what kinds of technologies would be legal for use in conjunction with digital television.

I have nothing against setting industry standards, but notice the word "legal" which means, of course, that other technologies would be illegal. If industries--and big companies--agree to what technologies can be used, why must those standards be codified in law? The short answer: to create a barrier to innovation--i.e. new technologies. Notice as well who are NOT on included in the BPDG: entrepreneurs.

This from Dr. Henry Miller, an FDA official from 1979 to 1994, and currently a fellow at the Hoover Institution:

THE WALL STREET JOURNAL
August 19, 2002

COMMENTARY

An Indefensible Epidemic

By HENRY I. MILLER

The acceleration of a three-year-old outbreak of an exotic, mosquito-borne infection is worrying public health experts across the country. Louisiana has been hardest-hit this year by the West Nile virus, with at least 85 cases and eight deaths, but since infections were first found in the U.S. three years ago, cases have been discovered in 35 states and the District of Columbia. By next year, the virus is expected to cross the Rockies and spread to the Western states.

There are two ways to combat such an outbreak definitively. In the short run, eliminate the vector, which in this case is the mosquito. Longer term, develop a vaccine to prevent infection even if a mosquito does inject the virus. The technology is available to accomplish both objectives, but fundamental, long-standing mistakes in public policy have put them out of reach.

"There has grown up in the minds of certain groups in this country the notion that because a man or a corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back, for their private benefit." -- Robert A. Heinlein

Thanks to Alex Lloyd for spotting this one.

A fascinating in-depth look in USA Today at what was going on in airplanes across the country on 9/11.

WHY A JEWISH NEW-YORKER WHO GRADUATED FROM BERKELEY AND LIVES IN SAN FRANCISCO ENDED UP A REPUBLICAN

By

People often ask me, "Why are you a Republican?"

I usually answer with something slick like "Because I'm a Jewish New Yorker that went to college at Berkeley who now lives in San Francisco."

To which, the response is often, "Say what?" So I thought I'd go over the real reason why I'm a Republican.

What really compels me to be a Republican isn't lower taxes, smaller government, personal responsibility, or anything like that. I don't wake up in the morning thinking "I wish my tax rate was 28% instead of 33%" -- though I do support those things.

Submitted by :

Andrew Sullivan is the sage of our generation, and may his HIV stay at bay forever. Whenever I start to feel squishy and multilateral, I read a brilliant piece about why Europe is irrelevant. Such petulant, peevish, pernicious, preposterous jaded jesters they are. Still, it *does* bother me because I actually love Europe as the cradle of Western civilization. I wish they would indeed "grow up," as Sullivan pines. Salient passage:

But added to this is a relatively new and unanswerable factor: why on earth, apart from good manners, should Americans care about what Europe thinks? Yes, diplomacy demands courtesy and "listening." But it's not at all clear what else it requires. Militarily, Europe is a dud, ... becoming a complete irrelevance. With the sole exception of Britain, the Europeans have contributed a minuscule amount of the money and manpower to defang ... al Qaeda. They couldn't even muster enough initiative and coordination to prevent another genocide in their own continent in the 1990s. They have cut their defense spending to such an extent that, with the exception of Britain, they are virtually useless as military allies.

No doubt young American men and women, courtesy of U.S. taxpayers, will be bailing out the Euro continent by decade's end in some dramatic, unforseen fashion. For a while after 9/11, I was moved to think Europe was actually on our side (note well I don't include Britain in this screed). The half-life of their sympathy turned out to be about 6 months. So sad, and I feel foolish for having expected anything different.

The Hollywood/Valley battles continue. Excerpt:

Broadcasters are scheduled to begin delivering digital TV signals in 2006, giving consumers better picture and sound quality in their homes. However, Hollywood is threatening to withhold its movies unless cable companies are given the right to prohibit taping of shows. Since the new signals will deliver perfect copies to the home, the entertainment companies want to protect their content.

Electronics manufacturers believe this is an attempt to hijack their products, putting them at the mercy of movie studios while taking away the rights consumers have come to expect when using their VCRs, according to Michael Petricone, a member of the Home Recording Rights Coalition.

From , Director of Telecommunications Studies at the Cato Institute. A clear example of why government simply should nbot be in the business of picking technologies:

The HDTV Fiasco Gets Worse:
TV Set and Cable Mandates On the Way
Issue #39
August 5, 2002

by Adam Thierer

America's 15-year high-definition television (HDTV) industrial policy experiment has been a failure by almost any standard. Although this long and miserable history is too long to recall here, suffice it to say, the grand vision of the broadcast industry and public policymakers has become an expensive joke. And just when you think things can't get worse, Congress and the Federal Communications Commission (FCC) are now readying new rules to roll the burden of rolling out a service nobody wants onto the backs of television set manufacturers and cable network providers.

Paul Krugman continues to play Democratic shill in the NYT's. Nowhere is it more obvious then in this latest editorial where he mixes up economics and politics. His piece starts out making the case for a double dip recession but quickly slides into a rant against those, such as Alan Greenspan, who are optimistic:

Bear in mind also that government officials have a stake in accentuating the positive. The administration needs a recovery because, with deficits exploding, the only way it can justify that tax cut is by pretending that it was just what the economy needed. Mr. Greenspan needs one to avoid awkward questions about his own role in creating the stock market bubble.

He chides Wall Street, the Fed, and the administration for wishful thinking, but it's pretty obvious that Krugman is the one engaging in wishful thinking. Krugman consistently, unrelentingly writes anti-Bush editorials, and his zeal is unmistakeable: even though he mentions no Bush official, or indeed Bush himself, nor explains how any Bush policy will contribute to he "double dip" note the title of his column: "Dubya's Double Dip?" This isn't economics, this is a Democratic economist's version of a pre-emptive strike--trying to pin something that hasn't happened on a President through guilt by association. I'd take his economics more seriously if they weren't so obviously motivated by hostility to anything Bush--including the economy itself during his administration. Give us a break, Paul.

Our "friends" the Saudis continue to snub US efforts to fight terrorism. Excerpt from Jane's Intelligence Review:

Saudi officials are on record as saying that no bank accounts related to terrorist finance schemes have been frozen, and investigators believe there is little sign that the flow of funds to terrorist groups from charities in Saudi Arabia has ceased.

The Economist makes the case for why we should go to war with Iraq. Excerpt:

The danger Mr Hussein poses cannot be overstated. He is no tinpot despot, singled out for arbitrary American punishment. Nor is Iraq a banana republic. With the possible exception of North Korea, but perhaps not even then, Mr Hussein is the world's most monstrous dictator, who by the promiscuous use of violence has seized unfettered control of a technologically advanced country with vast oil reserves. He has murdered all his political opponents, sometimes squeezing the trigger in person. He has subdued his Kurdish minority by razing their villages and spraying them with poison gas. In 1979 he invaded Iran, thus setting off an eight-year war that squandered more than 1m lives. In 1990 he invaded and annexed Kuwait, pronouncing it his “19th province”. When an American-led coalition started to push him out, and though knowing Israel to be a nuclear power, he fired ballistic missiles into Tel Aviv, in the hope of provoking a general Arab-Israeli conflagration. Next time you hear someone ask why, in a world full of bad men, it is Mr Hussein who is being picked on, please bear all of the above in mind. He may very well be the worst.

And yet it is not simply in his record of aggression, cruelty and recklessness that the peril to the wider world resides. If that were all the story, the danger might be easily contained. The unique danger in Iraq is that this country's advanced technology and potential oil wealth could very soon give this aggressive, cruel and reckless man an atomic bomb.

How dangerous would that be? To judge by the reaction of Mr Bush's foreign critics, the magnitude of the threat is in the eye of the beholder. But it is not difficult to see why, after September 11th, Americans in particular find it hard to be sanguine about the prospect of a sworn enemy equipping himself with weapons of mass destruction (WMD). In the worst case, these might one day be used against the United States, either directly by Iraq itself or by some non-state group to whom Mr Hussein had transferred his lethal technology. At a minimum, a nuclear-armed Mr Hussein could be counted on to revive his earlier ambitions to intimidate his neighbours and dominate the Gulf. Prophesying is difficult, especially about the past. But if Mr Hussein had already had nuclear weapons when he invaded Kuwait 11 years ago, he might still be there.

The music industry continues to believe that the Napster trend, carried on now by the likes of Kazaa, Grokster, and Morpheus, is fundamentally about piracy and that litigation and regulation are the best responses (see this piece in Fortune.) To the extent they acknowledge a massive shift in consumer behavior and interest, their strategy is to forestall competition and trickle out their own offerings. They are perhaps right to fear change and perhaps it is in their self-interest to focus on preserving the status quo rather than taking chances, but MusicNet and Pressplay won't cut it and it is time the industry really got to thinking about new business models.