February 2004 Archives

A year ago I wrote that "containment" and "imminence" had become meaningless words post 9/11--outdated concepts. Victor Davis Hanson on National Review Online makes the case to add "preemption" to that list. Excerpt:

In short, preemption is now a politicized, debased word. It is part of the anti-Bush lexicon and has lost any real meaning for the foreseeable future of its usage. The same may be true of "multilateralism" and "unilateralism."

Count on the NYT editorial page to provide us with blinding glimpses of the bleedingly obvious. I found John Battelle's "And Your Point Is?" post very humorous:

So, having done that, I still don't quite get what this editorial adds...in the end, it says that Google is really important and that it won't go away, and summarizes all the things Time readers already know about the company. He concludes that the Internet is, contrary to what he thought some years ago, quite useful, in large part thanks to Google. Well, welcome to the party, Verlyn. Glad you're aboard.

Ha! An Urgent Open Letter to Mexico : The Sneeze - Half zine. Half blog. Half not good with fractions.

Dear Mexico,

I need to make you aware of a situation. I'm not sure the best way to tell you this, so I'm just going to say it...

The United States has stolen your burritos and is now calling them "wraps."

It's been going on for a few years now, and I thought you should know. I would have said something sooner, but I didn't have a website then. (And your number is unlisted.)

For the ultimate in desperation. Too funny:

* Tired of your friends and family telling you to get a girlfriend?
* Want to make that certain someone a little jealous?
* Need a confidence boost? Just feeling lonely sometimes?

With an Imaginary Girlfriend, you can carry on a completely fictitious, yet authentic looking relationship with the girl of your choice.

Poignant.

Five Hundred Dollars - Brand our Company. Excerpt:

For a while now we've been trying to come up with a name for our company. We could go to some .com naming and branding firm but we would rather have the Blogosphere name our company. At a very minimum it's just good publicity!

NewsMonster is a great name and the product is still a major part of our strategy. We just think that what we're working on is bigger than "news" and we don't want to paint ourselves into a corner.

So... here's the offer. We'll give away five hundred dollars to whoever helps name and brand our company!

Yes... seriously... Five hundred dollars!. That's $500 US...

This is just terrible: Justice Department Plans Suit to Block Oracle Bid:

The Justice Department said it would file suit to block Oracle Corp.'s $9.4 billion hostile offer for PeopleSoft Inc. because the proposed takeover would reduce competition in the market for complex software programs used to run corporations and institutions.

Productivity growth often gets the blame for why we are in a "jobless" recovery (a clear exaggeration since jobs are actually growing and unemployment is lower now that the average rate for either the 1980s ot 1990s--but the perceptions persist that jobs aren't coming back as fast as economic growth.) While it is undoubtedly true that job growth will lag economic growth when productivity is on the rise (because companies will grow via increased productivity, rather than increased workforce) it is also true that the fully-loaded cost of a workforce is extraordinarily high, and that "social consumption" costs, such as legal and health care costs, have a dragging effect on job growth. This has the same effect as minimum wage laws--higher costs, fewer jobs. Some may prefer the host of social costs as essential components of modern employment, but none should be ignorant of the impact of these costs. Holmen Jenkins makes the case well in yesterday's editorial. Excerpt:

American workers more than hold their own in global competition with their higher productivity. The same productivity also picks up the tab for, say, a product liability system that has become a random lottery of wealth distribution; a health-care system that subsidizes excessive and inefficient consumption; environmental and workplace regulations unmoored to any reasonable balancing of costs and benefits.

Workers wonder why higher productivity doesn't translate into higher wages -- because it's all being sucked up to pay for such dubious social consumption. Their hard work benefits somebody all right: health-care workers, government employees and tort lawyers are all job categories noticeably immune to downsizing or outsourcing.

Many rightfully wonder how someone who believes in economic freedom and free markets can consistently defend more conservative social policies, such as opposing gay marriage. I used to think that there was no underlying vision that could unite social conservatism and economic libertatianism. And yet I know understand that the coincidence of these views is actually a deep rooted vision that stretches back at least to Edmund Burke. It is what Thomas Sowell calls the "constrained" vision, as opposed to the "unconstrained" vision. Sowell's "A Conflict of Visions: Ideological Origins of Political Struggles," first published in the late 1980s, is perhaps his best book. The sides don't map directly to the familiar left/right spectrum and Sowell is not, in this book at least, making a case for either vision. But understanding these visions, and the impact they have had for centuries on political struggles, is perhaps the best way to understand what is at the root of today's differing political perspectives. You will be amazed at how many of the political debates of today have actually been debated for centuries and how the different "visions" explain much about how we form our beliefs. I believe it is a must read for anyone who wants to be considered literate in political science.

If you want to understand basic economics better, read Thomas Sowell's "Basic Economics." Here's a flavor of it from today's editorial in the Wall Street Journal - Low Taxes Do What?

At the state and local levels, this confusion of tax rates and tax revenues has led some local politicians to see higher tax rates as the answer to budget problems, even though higher tax rates can drive businesses out of the city or state, with adverse effects on the total amount of tax revenues collected.

Price controls are another area where very elementary economics is all that is needed to show what the consequences are: shortages, quality deterioration and black markets. It has happened repeatedly in countries around the world, over a period of centuries. Yet politicians keep selling the idea of price controls and voters keeping buying it.

Many economic issues are complex, but sometimes a single fact will tell you all you need to know. When you know that central planners in the Soviet Union had to set 24 million prices -- and keep adjusting them, relative to one another, as conditions changed -- you realize that central planning did not just happen to fail. It had no chance of succeeding from the outset. It is a wholly different ball game when hundreds of millions of people individually keep track of the relatively few prices they need to know for their own decision-making in a market economy.

Senator John Sununu is sponsoring legislation to protect VOIP. See his editorial today in the Wall Street Journal: VOIP of the People. Excerpts:

Should local governments have an inherent right to regulate and tax any communication between two individuals that utilizes a human voice? Should we discourage the use of broadband networks for fast, reliable and cheap communications simply because a new technology doesn't fit neatly into an existing regulatory slot? Should regulations discriminate between two data files simply because one carries instant messaging and the other someone's voice?
...
The debate has just begun, but the wagons are already being circled by those determined to protect a regulatory scheme based on the copper wire telephone system invented by Alexander Graham Bell. Our goal should be to allow this new technology to evolve, which will dramatically reduce the cost of voice communication to a level commensurate with that of any other bit of data transmitted over the Internet. To ensure that a misguided approach does not develop and to provide certainty to the marketplace, I will introduce VOIP legislation in the coming weeks to establish several key protections for this new technology.

This via Slashdot: FCC: VoIP Providers Must Provide 911 Services. A first step along the slippery slope to regulating VOIP. Shame.

"The Houston Chronicle is reporting that the FCC will require VoIP providers to provide 911 location services. This will mean extra $$$ that the VoIP providers will have to put out, which ultimately means extra $$$ that the consumer will have to put out. This is the first step in regulating an industry that should have been left alone..."

Charles Krauthammer makes a powerful case for "An American Foreign Policy for a Unipolar World." Anyone who wants to understand the Bush foreign policy (and/or what many call "neocon" foreign policy), whether to endorse it or condemn it, should read this tour d' force. I hesitate to summarize or excerpt, since it should be read in its entirety, but here is a snippet:

Hence, the fourth school: democratic globalism. It has, in this decade, rallied the American people to a struggle over values. It seeks to vindicate the American idea by making the spread of democracy, the success of liberty, the ends and means of American foreign policy.

I support that. I applaud that. But I believe it must be tempered in its universalistic aspirations and rhetoric from a democratic globalism to a democratic realism. It must be targeted, focused and limited. We are friends to all, but we come ashore only where it really counts. And where it counts today is that Islamic crescent stretching from North Africa to Afghanistan.

Who's shocked that businesses restricted job growth in one of the most taxed and most regulated states in the union? These trends will be exacerbated in San Francisco which is even more hostile to industry, and if the country chooses protectionism against free trade and outsourcing, businesses will leave the country. From the SF Chronicle: Jobs moving out of state / Cost, complex regulations cited by firms. Excerpts:

Discouraged by high costs and strict regulations, just under 60 percent of California business leaders interviewed for a new study said they have policies to restrict job growth in the state or move jobs to other locations in the United States....

The consulting firm [Bain] interviewed chief executives or senior managers of about 50 small, medium and large companies with extensive operations in the state.

About 40 percent said their companies have an explicit policy to move jobs elsewhere in the United States, with Texas cited as the most frequent destination. Not counting those companies that must stay in California, such as retailers or health care providers, the proportion of businesses that said their policy is to move jobs rose to 55 percent.

Another group of executives, just under 20 percent of those interviewed, said their policy is to avoid adding jobs in California, except when absolutely necessary.

Businesses are clamping down on California job growth because of high costs and a burdensome regulatory environment, Bain concluded.

The cost of doing business in California is about 30 percent higher than in the average Western state, largely because of higher wages and benefits, according to the study.

Bain also attempted to measure the cost, uncertainty and complexity of California's environmental, labor and other regulations. It constructed what it called a regulatory hassle index that took into account such factors as compliance costs, the threat of lawsuits and delays in obtaining permits that hamper operations.

The index showed that "California is far worse than any other state in the union, by a very significant margin," said Jeff Melton, a partner in Bain's San Francisco office.

Much has been written about the impact Dean has had on this election--from his use of the Internet to his engaging younger, disenchanted voters into the political process. But the stunner of the Dean campaign was not its fall but its ascent--and its indelible impact on candidate Kerry. Who deserves credit for Kerry's reversals on the war, the Patriot Act, No Child Left Behind, free trade, tax cuts, etc. than Howard Dean scaring the stuffing out of the New JFK by rallying the Democratic left? The Democrats, still gasping sighs of relief that Dean will not be the candidate is in store for a massive case of buyer's remorse when they realize that their candidate is more than a Bush basher but a New England liberal, a born-again left-winger thanks to Dr. Dean, and perhaps the next in a line that can be traced backwards through Dukakis, Mondale, and McGovern. They've found an anti-Bush but not an antidote. At least not one that the country supports: the country will find it difficult to sign on to a candidate that thinks that protectionism and tax increases are the solutions to economic problems. And while Kerry is now trying to play the anti-war card, he has offered no coherent alternative to what he would have done or what he will do differently.

This election will be in great measure a referendum on Bush, and it seems clear that he is vulnerable on that score--hence the current polls which at times suggest the Democrat could win. But what red state will Kerry win over with his Dean-influenced platform? You can bet that Bush will put the full court press on Florida and Ohio. A moderate, which Kerry could have become, had a chance to create a positive alternative option to Bush, but a radical liberal, which Kerry is now, may squander the Democrat's opportunity at accomplishing their main goal: removing Bush. Nader may cost the Dems some votes, but Dean will cost them some states. Conservatives should be grateful.

In the same vein, conservatives should give a nod to Matt Gonzalez. Many of us were stunned when a savvy "liberal Democrat," Gavin Newsom, found himself challenged so stridently from an even more liberal Green party candidate. Newsom came into office promising the world to everyone: he promised to improve the business climate of the city (which perhaps was what rallied the Gonzos) while pandering to every left-wing (or "progressive") special interest group in the city. If anyone had doubts as to which Newsom would show up at City Hall, they just had to listen to his acceptance speech--packed with pandering--making those of us who supported him hoping he'd make the city less hostile to enterprise feel like chumps.

I haven't made up my mind whether Newsom’s gay marriage srategy was a brilliant political move or a terrible miscalculation. On the one hand Newsom bolstered his progressive street cred in dramatic fashion, effectively muting criticism from the radical left. On the other hand, the spectacle of San Francisco blatantly breaking the law was begging for a reaction. One thing that is lost on many of the progressives who claim that they want true democracy and power to the people is that the people aren't with them on many of their core issues. The people don't favor affirmative action, partial birth abortions, and certainly not gay marriage. Why else have progressive used the courts, not the legislatures, to advance these causes?

In a reversal of fortune, the people will be heard, to the chagrin of the progressives. The images from San Francisco surely played a large part in Bush's decision this morning to support a constitutional amendment defining marriage as heterosexual. And for those social conservatives who support this, they have, at least in some part, Matt Gonzalez to thank.

I think the lesson here is that anger and hyperbole may not be politically effective strategies. Despite my tone above, I have respect for the anti-war and pro-gay marriage positions. While I supported the Iraq war, and the ongoing war on terrorism, I certainly respect those that think this is strategically and/or morally the wrong course. I think these perspectives are vital in a successful deliberative constitutional republic. But too often the anti-war sentiment has been waged not on strategic, moral, or ideological bases but rather on raw ad hominem Bush hatred and on demagoguery from those who would lead us.

Likewise I have huge respect and sympathy for same sex couple who want to make a life long commitment to each other and want the same legal status as heterosexual couples. I support that. But absolutism on the "marriage" score ignores the legitimate perspective of those--far greater in number--who view marriage as a heterosexual institution. The compromise, for this decade at least, seems obvious: legal equality of civil unions while keeping the nominal institution of marriage preserved as it has been for millennia. There are earnest moral arguments against this position from both sides, which is in part why it is probably the best compromise.

I may be wrong, but I think the anger, absolutism and tone of the left--which have recaptured Kerry to the left and thrown down the gauntlet of social conservatives who will fight even civil unions--will bring Bush his second term and put equal legal status for gay couples at risk.

A report card on the Sarbanes-Oxley Reform Act from Pejmanesque. I give it a "D" from imposing huge costs and inefficiencies in the system, thereby favoring large businesses over entrepreneurial ones, and doing little to actually adress the problem. Perhaps it gave investors a sense that the politicians were doing something about the Enron issue, but this was a sop to grandstanding politicos, lawyers, and accountants.

Yippie!

A reader made a comment to my post on outsourcing referring to the human costs of outsourcing. There's no question but that dislocations cause real material and psychological damage--I don’t mean to diminish that. But you are not on the side of the righteous by advocating policies that will cost more jobs in the end than it will save. Economists from the left and right acknowledge the net costs of protectionism. If companies aren't allowed to keep costs competitive then they will face mortal competition from firms outside the US that will--resulting in even more jobs going oversees. Carly Fiorina, despite being perhaps a bit impolitic, is right to fight for outsourcing: if HP is prevented from outsourcing then the entire firm will be at peril from overseas competitors.

Whether we like it or not, in our global economy these services will go to where they can be accomplished most efficiently--the question is do we want to preserve US industry, and the jobs that go with it, in the process? We don't do the struggling families in the rust belt any favors by damaging the competitiveness of US industry and strengthening global competitors.

While I agree that there is a problem, the answer isn't protectionism, it is in fostering new job creation. Every month 8 million jobs are created and lost in this country--when more are created than lost (as has been happening for a while now) we have net job creation. If the state steps in to try and stem the tide of job loss it will have a greater impact on the other side of the equation--job creation. The better solution is to foster job creation--read this blog for my ideas on how.

And see this piece by Virginia Postrel in the NYTimes Magazine about where the jobs will come from.

For those who care, BuzzMachine's Jeff Jarvis has "excerpts from and arguments against Eli Noam's Financial Times article arguing that we are in the midst of a market failure in the information and entertainment ecomies." But I think the best refutation was written by Richard Epstein and posted below Noam's article.

Personally I found Noam's arguments totally unpersuasive and a bit silly. And arrogant: Noam has determined for the rest of us that "the entire information sector - from music to newspapers to telecoms to internet to semiconductors and anything in-between - has become subject to a gigantic market failure...." Thanks Professor Noam. Clearly this academic thinks that this relatively simplistic analysis is enough to warrant "public strategies" to address the doom and gloom coming our way. You know what that means: government intervention to saving the struggling technology, telecom, and entertainment industries. Please.

This time in the WSJ. Excerpt:

Sadly, regulations still block countless opportunities. In wireless, broadband deployment is suffocated by the industrial policy now known as "the Digital TV transition," an official FCC proceeding now in its 17th year. During that time, a vast swath of bandwidth has been wasted, and the emergence of wireless broadband -- by many measures, a potentially dominant competitor -- has been thwarted, bottling up a "third path" for high-speed networks.

In wireline, access regulations continue to discriminate against firms investing billions to build networks. TV broadcasters are bestowed with must-carry rights appropriating bandwidth from cable operators. More happily, cable modem services have thus far escaped "open access" obligations, which would force them to share their networks with rivals, and have sped to a 2-1 lead in broadband subscribership. Runner-up phone companies offer DSL (digital subscriber line) service on "open access" platforms. Investors prefer cable's proprietary model.

So should regulators, because only by inducing the creation of new networks will better alternatives be offered. Phenomenally great alternatives are on the horizon. Instead of defending existing market structures as in the '60s, regulators ought to dare a surprise ending -- and welcome the emerging technologies of tomorrow.

Thomas Hazlett with examples of how FCC regulations are are stacked against entrepreneurs in this column from FT.com. Money quote:

This confuses the rhetoric of capitalism with the reality of bureaucracy. When free markets allow investors to bid for resources, the best service models will appear most profitable and the highest bid is likely to be cast by the most efficient provider. But here the key competitive battle is not for consumers but for government approval, and it has already been waged. To deprive the victor of its fruits sends a clear message to wireless technology markets: entrepreneurs need not apply.

Thanks Susan for inviting me to the blogger dinner at Cafe Bastille. I enjoyed it!

Who was there.

Photos.

Larry Diamond urges us to stick to it in Iraq. Excerpt:

A democracy can be built in Iraq. No one who engages the new panoply of associations and parties can fail to recognize the democratic pulse and possibilities. But these new institutions and ways of thinking will only take root slowly. In the early years, they will be highly vulnerable to sabotage from within and without. The overriding question confronting the U.S. -- as the inevitable leader of a supporting coalition for democracy -- is whether we have the vision and the backbone to see this through.

What's exceptional about America? Jeff Jarvis, and his readers, have some thoughts. (Thanks to Susan for spotting this one for me.)

And here is what Henry Kissinger said on a recent program of Think Tank:

Henry KISSINGER: No. There’s no country that you can come as a fifteen-year-old, speak all your life with an accent, become Secretary of State during a period when the president is under siege, have almost presidential powers, and while I got many nasty letters I never got a letter saying 'who are you to be in this position?'. That couldn’t happen anywhere else. And there’s no other country that, even when it’s naive, that thinks of itself as defined by freeing people from oppression, helping the needy, always available. I mean, you take just recently the earthquake in Iran. Nobody said, 'Why would we help people who have been so hostile? Who have an American flag at the airport tarmac so that people have to walk over it and get into the airplane?' Nobody says that and nobody feels it. So in that sense America is an absolutely unique country.

Ignorance and irrationality can be scientific progress's greatest foe. Henry Miller on fighting the good fight. Excerpt:

Significant advances in the fight against cancer, diabetes, AIDS, Parkinson's and numerous other diseases have relied on biotechnology. If future research were to lead to development of a product that provides significant relief, or even a life-saving cure, Measure H would prohibit its use in Mendocino County. That alone is reason enough to defeat this poorly-worded and confusing measure.

California boasts a strong environmental movement, but by outlawing the cultivation of insect-resistant crops developed with the assistance of biotechnology, Measure H could lead to an increase in the levels of chemical pesticides in the area's ground and surface water (and would certainly cause increased occupational exposures).

Most important of all, Measure H would block sophisticated genetic approaches to the eradication of blights such as sudden oak death, phyloxera, powdery mildew and Pierce's Disease. ...

Like many Californians, I love the state's table grapes and wines, but California's vineyards are being threatened by Pierce's Disease, a bacterial infestation carried by an insect, the glassy-winged sharpshooter. Organic and conventional grape growers especially fear this devastating and lethal disease. Genetic improvement of grapevines may well prove to be the definitive solution to Pierce's Disease _ a solution that should not be denied to Mendocino County. The same applies to sudden oak death, which is destroying many of our glorious oak trees.

But there is a more important reason. I spent more than 15 years responsible for biotechnology regulatory policy at the U.S. Food and Drug Administration. I personally evaluated the first biopharmaceuticals in the early 1980s. During that time, I was a crusader for imposing only the amount of regulation that was necessary and sufficient, and for regulatory approaches that made scientific and common sense. I was on the side of neither the activists nor the industry, and that remains true today. I am convinced that flawed public policy _ especially when it is as nonsensical as Mendocino County's Measure H _ makes a mockery of government and diminishes us all. I have written or edited five books and published more than 500 articles, many in peer-reviewed journals, on various aspects of regulation.

I am as much of an environmentalist as any of the people who have criticized me, but letting ideology and misguided activism trample science and common sense is not the route to sound public policy.

I have a brilliant idea: 6 blades!

Assuming this is authentic, a clear indication that we are winning the war.

As I cite below, Casse makes the argument that Bush is redefining conservatism. In a similar vein, Tony Blankley writes in this review of a Boston Globe review of a new book by John Lewis Gaddis that Bush is indeed more of a grand strategist than the "lying nitwit" that critics paint him to be. Excerpt:

In assessing Mr. Bush's progress to date, the Boston Globe quotes Mr. Gaddis: "So far the military action in Iraq has produced a modest improvement in American and global economic conditions; an intensified dialogue within the Arab world about political reform; a withdrawal of American forces from Saudi Arabia; and an increasing nervousness on the part of the Syrian and Iranian governments as they contemplated the consequences of being surrounded by American clients or surrogates. The United States has emerged as a more powerful and purposeful actor within the international system than it had been on September 11, 2001."

Even Democratic economists side with the free-traders, not with the Democratic presidential candidates.

For those who didn't get enough from my previous rant on the fear-mongering about outsourcing, here is more from Jagdish Bhagwati writing in the New York Times, by way of Daniel Drezner. Makes the argument that the Kerry/Schumer position is not only unsound economically but also bad politics.

Daniel Casse writes an excellent critique in Commentary Magazine of various Bush critics, from both left and right.

Those who critisize him from the left will not like this piece much, but any conservative--especially fiscal conservative, concerned about a lack of spending discipline--would do well to read this essay before they leave the Bush camp.

Casse makes the case that Bush is redefining conservatism, emphasizing choice, accountability, and pro-growth policies rather than spending restraint, and emphasizing strong government and strong foreign policy rather than small government and limited foreign engagement. Some excerpts:

Michael Barone, likewise writing at the end of the year, suggested that Bush has successfully replaced the conservative touchstones of small government and spending cuts with the bolder more inspirational ideas of choice and accountability. That these are also the values most cherished in the world of business, and by today’s consumers, is no accident. As the columnist David Brooks has observed, the “ownership society” is a hallmark of Bush’s politics, appealing to Americans who want to be rewarded for self-reliance and responsibility.

To these two themes of choice and accountability, I would add a third: not big government but strong government. The notion of a strong central government sounds like a bitter pill for conservatives to swallow; but strong government need not be intrusive government, or even all that large. Indeed, the central error of liberalism over the past two decades has been to make government both large and weak—that is, ineffectual and unworthy of public respect. By contrast, a primary goal of conservative governance ought to be to restore to government the power to defend the nation’s interests while providing citizens with the services they want in the most efficient manner possible. Liberalism has failed at that task, and economic libertarianism has little or no interest in it. Hence the opportunity for a new era of conservative leadership.

... the bitter, prolonged battle over Florida ballots in November 2000 still deeply rankles. Never mind the thorough study of the 61,000 disputed ballots by USA Today and the Knight Ridder chain, with its ringing conclusion that “Bush would have won by 1,665 votes—more than triple his official 537-vote margin—if every dimple, hanging chad, and mark on the ballots had been counted as votes.” Despite such findings, Democratic leaders have continued to treat the Florida vote as a monumental act of injustice....

A similar air of unreality, not to say irrationalism, hangs over much of the liberal and left wing case against Bush. ... today’s critics are conspicuous for their lack of sustained argument. Though all of the Democratic contenders want to repeal at least some of Bush’s tax cuts, none has offered a serious economic plan. Alarmed by the growing federal-budget deficit, they present no program to reform domestic spending; indeed, most argue that the country should be spending even more on education, the environment, and health care.

Democrats were divided last year on whether to support the war in Iraq. But, aside from mourning the loss of American life in Iraq, it is not clear what alternative policy Bush’s critics now have in mind. ...

More often, the case against Bush from the Left has degenerated into an exercise in name-calling and fear-mongering. ...

In his new book, Bush Country, John Podhoretz, has collected and carefully analyzed representative statements from the core liberal critique of Bush, maintaining persuasively that they have become so unmoored from the reality of the President’s policies as to take on “the paranoid style of American politics”—the phrase used nearly 40 years ago by the political scientist Richard Hofstader to describe the mentality of the John Birch Society and other fringe elements of the American Right. The result, Podhoretz writes, is an angry opposition that is no longer capable of participating constructively in political debate.

Looked at in this way, Bush's focus on the global expansion of democracy, the ongoing war against terrorism, economic growth (rather than government spending levels), and deconstructing domestic-policy monopolies (Medicare, Social Security, teachers' unions, etc.) does rise to the level of a new conservative approach to government. In his insightful memoir of working inside George W. Bush's White House, David Frum remarks that "Bush was not a lightweight. He was, rather, a very unfamiliar type of heavyweight." The same could be said for his politics: an unfamiliar type of conservatism, but one that will likely define the American political scene for some time to come.

Posed by George Will. Some examples:

Other than denoting your disapproval, what does the adjective mean in the phrase "special interest''? Is the National Education Association a special interest? The AFL-CIO?

You abhor "special tax giveaways for the privileged and special interests.'' When supporting billions in ethanol subsidies, mostly for agribusinesses, did you think about corn-growing, caucus-holding Iowa?

When you denounce "lobbyists'' do you include those for Planned Parenthood and the Sierra Club? Is "liberal lobbyist'' an oxymoron?

All the Americans affected by laws you pass -- that is, all Americans -- refuse to pipe down and mind their own business so that you can mind their business for them. Often they hire lobbyists to exercise their First Amendment right to "petition the government for a redress of grievances." Can you despise lobbyists without disparaging that right?

You say the rich do not pay enough taxes. In 1979 the top 1 percent of earners paid 19.75 percent of income taxes. Today they pay 36.3 percent. How much is enough?

You say the federal government is not spending enough on education. President Bush has increased education spending 48 percent. How much is enough?

On Jan. 11, 1991, you said that going to war was abandoning "the theory of deterrence." Was it not a tad late to deter Iraqi aggression?

The next day you said, "I do not believe our nation is prepared for war." How did unpreparedness subsequently manifest itself?

On Jan. 22, 1991, responding to a constituent opposed to the Gulf War, you wrote "I share your concerns" and would have given sanctions more time. Nine days later, responding to a voter who favored the war, you wrote, "I have strongly and unequivocally supported President Bush's response to the crisis." Did you have a third position?

You say the Bush administration questions "the patriotism" of its critics. You say that as president you will "appoint a U.S. trade representative who is an American patriot." You mean the current representative, Robert Zoellick, is not a patriot?

You strongly praise former Treasury Secretary Bob Rubin, who strongly supports NAFTA and free trade. Have you changed your mind about him or about free trade (as you have changed your mind about No Child Left Behind, the 2002 war resolution, the Patriot Act, etc.)?

You oppose immediate termination of U.S. involvement in Iraq, and you opposed the $87 billion to pay for involvement. Come again?

In 1994, the year after the first attack on the World Trade Center, you voted to cut $1 billion from counterterrorism activities. In 1995 you proposed a $1.5 billion cut in intelligence funding. Are you now glad that both proposals were defeated?

Praising McCain-Feingold restrictions on political contributions, you said: "This bill reduces the power of the checkbook and I will therefore support it." In December you saved your sagging campaign by writing it a $6.4 million check. Why is your checkbook's unfettered freedom wholesome?

Billionaire George Soros says he will spend whatever is necessary -- just a few million so far, but more coming -- to defeat Bush. As one who believes -- well, who says -- there is "too much money" in politics, are you appalled?

From Henry Miller in Tech Central Station - Stopping the Real Pests. Excerpt:

It's great news that most Americans now identify themselves as environmentalists. Unfortunately, a small number have embraced environmentalism with religious fervor, basing their beliefs more on faith and dogma than on science and data.

Not unlike fundamentalists engaged in a jihad against unbelievers, these radical environmentalists pursue an agenda that has less to do with protection of the environment than with antipathy toward business, profits, and certain products and technologies. Ironically, their efforts to achieve their own narrow vision of what constitutes a "good society" often are inimical to protection of the environment -- a variation on the admission by Peanuts cartoon character Linus van Pelt, "I love humanity; it's people I can't stand."

A good start: "The Federal Communications Commission took a baby step forward in Voice over Internet Protocol regulation today, by ruling that the Free World Dialup service was not subject to traditional voice-service regulations." (And a knod to Paul Kapustka, former fish and autor of this piece.)

Also, congrats to Pulver.

Requiem for the V-Chip - A relic of the last battle over indecency on TV. By Thomas Hazlett: Excerpt:

When the millions of families huddling for Super Bowl XXXVIII caught a glimpse of Janet Jackson's nipple shield--not to mention the fervent shimmying that preceded the halftime show's bodice-ripping finale--the ensuing uproar over indecency on television was immediate and loud. But not unprecedented.

Back in 1996, there was a similar hue and cry over the dreck on television. Politicians vowed to help parents protect their kids and proudly touted their solution: the V-chip. ("V" stood for "violence," which makes sense given the chip's Democratic roots. Policy wags like to joke that if prudish Republicans had drafted the original bill, the device would have been called the "S-chip.") At President Clinton's request, Congress mandated that by 2000 all TV sets had to contain a computer program capable of filtering out lurid TV shows at the flick of a switch. With this sweeping legislative triumph, politicians declared victory over indecent television programming. Which leaves just one question: Does anyone actually use the V-chip?

Although I just covered the outsourcing issue, I can't help it again, prompted by Kerry's bombast. Apparently, according to John Kerry, if you are a CEO of an American company and you attempt to lower costs by outsourcing labor overseas you are a "Benedict Arnold CEO." That is a traitor--the penalty for which, I suppose, is to be shot. I suppose the same is true for companies who not only buy services from abroad but materials as well. And of course, the same must go for consumers who don't buy American. Who can be spared from Kerry's inquisition? Personally, I think, as the WSJ put it, the opposite is closer to the truth: a CEO that doesn’t look to lower costs anyway he can is jeopardizing his or her own company.

I don't think Kerry even believes what he's saying. This is very cynical. Surely he understands the rudiments of free trade theory, come on. Yes, there are transition and dislocation costs when labor is outsourced abroad. And they hurt to those affected. But there are also corresponding benefits, and usually the benefits outweigh the costs. One doesn't deserve a spot on the moral high-ground by failing a basic cost/benefit analysis just because he can demogague to those caught in the transition.

I think it is an interesting stance to take, as Dean did by suggesting prices at WalMart would go up under his presidency, to impose costs on all nearly 300 million Americans in order to preserve short term erosion--at the expense of future payroll growth. It's in all of our interest that resources be allocated to their most efficient uses. This does not make for good campaign rhetoric, but no serious economist, left or right, disputes it. The costs of protectionism, and forbidding companies to outsource, would be higher prices on American consumers and businesses and as a result lost jobs.

The solution to lost jobs due to outsourcing is not demagoguery or protectionism but to replace those jobs as fast as possible by encouraging growth. Greenspan made the point well recently when:

Rep. Barbara Lee, a California Democrat, asked what legislators could do to help young people, especially minorities, when they graduate and can't find jobs. Mr. Greenspan answered: "If jobs are not available, you have a hopeless task. The only way that you have possibilities of success is if you have an economy in which jobs are growing and opportunities are growing."

Poor Greg Mankiw, an economist who had the audacity to speak the plain, obvious, undisputed truth in an election year. From the WSJ:

Greg Mankiw, chairman of the President's Council of Economic Advisers, is getting a tiny taste of the inanities of the political season. Mr. Mankiw, a noted economist and author of a best-selling text on macroeconomics, ventured to repeat what all economists and businesspeople know: Trade is good.

Specifically, Mr. Mankiw dared to point out the potential economic benefits of relocating the production of goods or services to lower-wage countries. "Outsourcing is a growing phenomenon," he said this week, "but it's something that we should realize is probably a plus for the economy in the long run."

Wham! Bam! Faster than you can say Bangalore, Senator John Kerry was all over him. The front-runner for the Democratic Presidential nomination is smart enough to understand the law of comparative advantage, but chose to ignore it by declaring that "My economic policy is not to export American jobs. . . . Unlike the Bush Administration, I want to repeal every tax break and loophole that rewards any Benedict Arnold CEO or corporation for shipping American jobs overseas."

But Kerry should be careful casting stones in glass ketchup bottles. From Tech Central Station - Exporting Lou Dobbs and John Kerry:

Sen. John Kerry, in his stump speech inveighs against the "Benedict Arnold CEOs [who] send American jobs overseas."

By the way, the Kerry family business, H.J. Heinz Co. of Pittsburgh, operates 22 factories in the United States and 57 in foreign countries. I don't think that Kerry should shut down The Heinz 57, but he might drop the rhetoric and talk about trade responsibly. He should support, not trade's contraction, but its expansion, like George W. Bush, Bill Clinton and every president since Herbert Hoover.

Carly Fiorina gets it right--Be Creative, Not Protectionist:

Any job losses to foreign countries are particularly painful when the U.S. economy is failing to produce net job gains. Every job is important because each one represents an American's livelihood and ability to raise a family. Yet spending our time building walls around America will do nothing to help us compete for the millions of new jobs being created. Instead, we must focus on developing next-generation industries and next-generation talent -- in fields like biotechnology, nanotechnology and digital media distribution; around issues like IT security, mobility and manageability -- that will create long-term growth and jobs here at home, while raising all of our living standards in the process.

The growing protectionist sentiment, visible both on the left and right these days, is very worrying.

The "new" JFK fooling around with an intern? Has Drudge found his next Monica scoop? Is Dean staying in past Wisconsin in case Kerry implodes? I have to admit that this will be fun to watch. Shame on me.

Many conservatives are sharply critical of the President for "spending like a drunken sailor." While I am unhappy with Bush's failure to constrain spending, I don't think he should bear the blame alone--Congress should certainly bear much of the blame--and it's worth understanding how these spending increases came about. In this piece from the Journal, Martin Feldstein points out that much of the spending increases under Bush were the result of Clinton-era appropriations. Excerpt:

Contrary to the complaints of many who criticize the Bush administration for favoring a continued rapid growth of domestic programs, the administration has actually been quite tough in controlling the budget authority for discretionary spending outside defense and homeland security. These limits on new appropriations will restrain spending growth in the years ahead. But the actual outlays of the past few years increased more rapidly than concurrent appropriations because of the delayed effects of the appropriations passed during the Clinton years.

Here are the facts. The appropriations for discretionary spending outside defense and homeland security rose 16% in the final Clinton budget, propelling future spending on these programs. The Bush administration reduced the growth of these appropriations to 9.2% in 2002 and then to 2.7% in 2003 and 2004. As a result, such appropriations fell from 3.5% of GDP in the first Bush budget to 3.3% in 2004 (including all supplemental appropriations.) The president's latest budget proposes to keep the 2004 dollar amount unchanged in 2005, implying a decline to less than 3.2% of GDP. Despite these tight controls on appropriations, the earlier appropriations caused actual outlays to rise 12.3% in 2002 and kept their growth at 5.8% in 2004. This long-term effect of past appropriations shows that bringing spending under control requires the passage of time as well as tough budget choices.

The tech industry has been a vital engine of growth and prosperity due in great part to Moore's Law--rapid improvements in computing power. But the tech industry will increasingly be driven by the growth of commuinication power, more than computing. It's the proliferation of bandwidth and new communicaitons services that will set the pace going forward. So what will that pace be? Computing was a very lightly regulated realm, and hence a fast grower, while telecommunications has been heavily, and insanely, regulated and hence has been very sluggish by comparison. As these two coverge, which regulatory regime will prevail? If the entrepreneurs had their way, telecom would become as free as computing. But alas the regulators, ever mindful of their source of power, inevitably, I fear, will have their way.

PUC to probe Net phone industry

California's Public Utilities Commission voted on Wednesday to investigate the emerging Internet telephone industry and determine whether it should be regulated like traditional phone companies and pay an array of fees.

History is not encouraging. When the railroads were the only significant form of interstate transporation, the Interstate Commerce Commision regulated the industry in the name of consumers--the argument being that the state needed to prevent the abuse of a monopoly. And yet, when the highways emerged as a viable competitor to the railways did the ICC pack up its bags and go home, saying "Our work is done here"? Hardly, they simply expanded their mandate to regulate trucking too.

This is an analog to what is happening now. Telecom regulation might have made sense when their was one national infrastructure. But now there is competition from the Internet, wireless, sattelite, cable, local, regional, and national wireline. Will the state PUC's and the FCC pack up their bags and go home? Don't count on it. All of this will be done in the name of the consumer, but don't buy a word of it. Innovation, choice, jobs, and prosperity will suffer, while regulators, and whichever special interest is most successful in lining their pockets, will "win." I wish I didn't feel so fatalistic about this.

David Henderson makes the case in the The Stanford Daily that it's time to end the FDA's monopoly. Here, here.

"The Food and Drug Administration's (FDA) recent ban on dietary supplements containing ephedra shows just how dysfunctional government regulation of drugs and dietary supplements is."

I've written before that the media bias to worry about is not left or right but the bias for a juicy story--sensationalism. Just one recent example is how Reuters clearly distorted Joe Trippi's comments at eTech to tell the story Reuters wanted to tell, rather than to objectively relay the truth. Many bloggers came to the rescue, but here is a line from Tim Oren that sums it up. Three cheers for blogger ombudsmanship.

"Howard Rheingold and Mike at Techdirt have Reuters dead to rights: Their story does misrepresent Trippi's speech yesterday, and the spin has now been propagated into other stories."

An excellent piece by Gregory Rosston and Thomas Hazlett: Why airwaves should be deregulated | CNET News.com. Here's an excerpt but it's worth reading the whole thing.

In February 2001, a group of 37 prominent economists, including Nobel Laureate Ronald Coase and many of the top advisers in the elder Bush and Clinton administrations (as well as both authors of this article), urged the Federal Communications Commission to liberalize spectrum policy.

Specifically, they asked the FCC to allow new and existing licensees the right to offer any service, using any technology that does not cause material damage to other spectrum users. Markets would then be empowered to move wireless bandwidth to where consumers, investors and risk-taking technologists want it to be. If heeded, wireless phones would work better at a lower cost, while nationwide networks that provide wireless Internet access would be challenging for supremacy in the broadband race.

Yet, regulators have taken only baby steps toward markets, and--under the current Bush administration--actually retreated from even these tentative initiatives. A spectrum report issued by the FCC in November 2002 cut the bandwidth that a November 1999 FCC report (under Clinton) had proposed, which would allocate 46 percent of bandwidth for flexible use. It also failed to raise the question as to why no targeted frequencies had been made available to the marketplace in the intervening three years.

An excellent preview of what's to come on the Internet from several of the Wall Street Journal's top tech reporters.

Christopher Hitchens, who is increasingly one from the left whom I admire--especially for his intelectual honesty, makes his recommendation on who the Democrats should nominate and in the process, IMO, makes very articulate cases for why one should NOT support Kerry and why one SHOULD support Bush.

First on Kerry:

As with most senior Democrats, Kerry's revolving-door record with lobbyists and donors is one to make Cheney and Bush look like amateurs: As with all Democratic primary seasons there is an agreement to forget this collectively in the interests of "change." That's why Lucy in "Peanuts" has become a great national character.

Then on Bush:

I'm a single-issue person at present, and the single issue in case you are wondering is the tenacious and unapologetic defense of civilized societies against the intensifying menace of clerical barbarism. If in the smallest doubt about this, I would suggest a vote for the re-election of George Bush, precisely because he himself isn't prey to any doubt on the point.

Boardwatch: Analysis of telecom software, services, and strategy

SAN JOSE, Calif. -- PricewaterhouseCoopers today issued The Broadband Future: Interactive, Networked, and Personalized, a new white paper co-written by PwC’s Global Technology Centre and Entertainment and Media practice. In this paper, PwC analyzes the opportunities, threats and challenges associated with selling content in a broadband-connected world, with a focus on the next three years (2004 through 2006).

According to PwC, the interactive, networked and personalized content world of tomorrow will be very different from the passive, standalone and aggregated world of the past. This shift will require new business strategies on the part of content providers and network operators that will take advantage of the unique characteristics of the broadband Internet and of consumers' changing expectations about how they interact with content.

Two pieces on why we should welcome, not fear, the outsourcing trend. First from WSJ.com - The Way We Live Now. Excerpt:

The most critical problem facing the U.S. -- and all developed countries -- is the aging of the population, which impacts not only our trade balance but also the viability of Social Security and Medicare. Aging will also influence the value of all our assets, including stocks, bonds and real estate. A self-sufficient economy needs enough workers to produce goods that will be consumed not only by the workers and their families, but also by all the elderly. Historically this has never been a problem, since the young have always greatly outnumbered the old. But the demographic picture is now different. In 1950 there were seven workers per retiree in the U.S., a number now down to five. Starting in 2010, when baby boomers begin to retire, this ratio will plummet. By 2030, it will fall below three.

It was once necessary to build factories in the U.S. and bring workers here to produce output. Now factories can be built anywhere and products shipped world-wide. As a result of the communications revolution, service industries such as consulting, research and customer service can operate as efficiently abroad as from the U.S. These are major developments. Productivity cannot be increased fast enough in the U.S. to solve the population problem. But productivity can be increased at a rapid rate in China, India and the rest of the developing world.

And from Kevin Maney in USA Today, a basic discussion of the economic theory underlying it all. Excerpt:

India's schools churn out loads of programmers, but the country has little venture capital and other infrastructure to help drive innovation. So even though India can do both for less than we can, inside India, the cost of doing programming is relatively little while the cost of starting companies is relatively high. India is "most best" — to use the language of economists and many 3-year-olds — at programming.

In the USA, we pay programmers very well. We also have a well-oiled, technology-creating innovation machine. Inside our country, it has become relatively expensive to our society to do programming; and relatively cheap to innovate in technology. Our "most best" is innovation.

Now here's where it gets funky: Ricardo would say that the USA should innovate in technology and stop programming, and India should do the programming and stop innovating. If we each concentrate on our "most best" and then trade, more of both get produced for less — the very essence of increased productivity.

Of course, the "most bests" change over time, and that changes the equation. The genius of U.S. capitalism is that it continues to create "most bests" that are of higher value than everybody else's "most bests." Next up will be industries like biotech and nanotech.

Anyway, if productivity goes up, people have more of everything. Standards of living rise in both countries. "This is absolutely not a zero-sum game," says Stanford University economist Paul Romer.

Holman Jenkins makes the case for why the Democrats, sighing relief over dodging the Dean bullet, have a case of buyer's remorse coming their way by backing Kerry, who likes to villify "Big Pharma." Excerpts:

No demagogue, left or right, fails to present himself as champion of the great, victimized majority against some tiny and exploitive elite. This argument is convenient for two reasons. Difficult issues like health-care financing, involving real tensions between hard-to-reconcile goals, can be reduced to utmost simplicity: On one side are the legitimate claims of voters who want cheaper drugs or whatever; on the other are the illegitimate claims of those who "stand in the way."

Populist claptrap serves another purpose, visible on the very persons of the candidates: They swell with confidence and invulnerability when posing as defenders of the "little guy" rather than as champions of the party's own array of special interests and voting blocs (which is what they are).

The force really at work is fear -- fear on the part of Democratic leaders that they have nothing to offer; fear that their party's captivity by groups tied to existing programs forecloses any chance of innovative thinking. Notice that the party did not even wait for eight years of unrivaled Clinton prosperity to expire before Al Gore, in a panic, reverted to what a Washington Post editorial called "primitive business bashing" as a substitute for saying what some Democratic lobby group somewhere wouldn't like. Notice what a miserable disappointment even Howard Dean has been in this regard.

Notice, too, the wonder of John Kerry, an asterisk six weeks ago, who reached his present eminence based on the repetition of meaningless phrases: "I know something about aircraft carriers for real." "Bring it on." "Don't let the door hit you on the way out."

There is, literally, nothing else to the Kerry campaign. He's the default option of Democratic voters after the amazing rise and fall of Howard Dean, with the mother of all buyer's remorse coming down the pike about a minute or two behind. That's too bad but as a party they asked for it -- and will keep doing so until they stop relying on the mindless naming of "villains" in place of dealing honestly with the voters whom they claim to represent.

John Kerry is fond of calling our recent economic troubles "the Bush recession." Anyone who was working in 2000 knows that economic weakness started that year (remember what the stock market did April 14, 2000?) and of course 9/11 made the recession worse than it otherwise would have been. Whether the recession is officially dated back to Nov. 2000 or March 2001, the trends was established earlier in 2000 and... does it really matter? Can anyone name a Bush policy that contributed to the recession? (In fact, here's praise from at least one Democrat that the Bush policies have helped improve the economy.) Bush deserves criticism for his failure to restrain spending but this hasn't slowed the economy down to date.

Worried about the deficit? Here's some perspective from WSJ.com - The Deficit Bugaboo. (Or see this page if you don't subscribe to WSJ.) In it Richard Rahn also makes the case that Clinton & Rubin may deserve some blame for the recession. Here's an excerpt (the whole piece is worth reading):

The failure of the Rubin deficit hawks to understand that high taxes on capital were more damaging to the economy than a modest deficit led them to embrace a budget surplus. While they received almost universal acclaim for this action, in effect, what they were doing was a costly drain on high-value, private-sector capital for the sake of reducing low-cost government debt. If in 2000, instead of running a surplus, the Clinton administration had enacted a tax cut to reduce the highest marginal tax rates, the corporate income tax and the double taxation of dividends, we probably would have avoided the most recent recession and all the misery, unemployment and hardship it caused.

Another reason why history is important, check out It's worth reading his "What Went Wrong" and "Crisis of Islam," at the very least to understand how our political leaders view Middle East history. Excerpt:

Call it the Lewis Doctrine. Though never debated in Congress or sanctified by presidential decree, Mr. Lewis's diagnosis of the Muslim world's malaise, and his call for a U.S. military invasion to seed democracy in the Mideast, have helped define the boldest shift in U.S. foreign policy in 50 years. The occupation of Iraq is putting the doctrine to the test.

Urban Legends Reference Pages: Business (How Taxes Work). Excerpt:

"And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore."

Dirty but funny.

From Thomas Sowell: 'Special interests' - The Washington Times: Commentary. Excerpt:

When Sen. John Kerry, Massachusetts Democrat, proclaimed stridently that no special interests will be allowed in the White House when he becomes president, he was saying something absolutely meaningless. No one welcomes special interests into the White House because those groups presidents welcome are their own supporters, who are never called special interests.

When Mr. Kerry gives examples of special interests, do not look to see the teachers unions included. When Mr. Kerry votes against school vouchers, sacrificing the future of millions of children for the greater glory of the National Education Association, that is not called serving special interests because the NEA supports Democrats.

Still less will the trial lawyers be called special interests. Presidential candidate Sen. John Edwards, North Carolina Democrat, made his fortune as a trial lawyer, winning huge damage awards from doctors and hospitals, thereby contributing to the rising costs of medical care, which he now so much laments.

John Kasich, managing director of the Lehman Brothers Investment Banking Group, who was a Republican representative from Ohio from 1983 to 2000, and who often stands in for Bill O'Reilly on Fox, pens this Op-Ed in the New York Times: Deficits, Fruit Flies and the Beltway. He's right.

So I have a few things I would like to say to both sides. To my Republican friends: please don't argue that deficit spending and big government don't matter. They are a claim on future income either through higher taxes, or inflation and higher interest rates. And to my Democratic friends: deficits are not caused by taxes being too low, but by spending being too high. Your solution of raising taxes will lead only to slower economic growth and even more spending in the future. I also have a few suggestions for my former colleagues on what needs to be done: