January 2012

Video: The Open Internet and Lessons from the Ma Bell Era

by Ryan Radia on August 20, 2010

in Tech & Telecom

Earlier this week, The Daily Show’s Jon Stewart summed up the debate over net neutrality by stating, “On one side [are] those who want the marketplace to remain a wide open market of ideas, and on the other side [is] a larger group who have no idea what net neutrality means.”

Stewart may have been joking, but he was right about one thing – many folks are confused about what net neutrality actually is and what it would mean for Internet users.

That’s why I decided to enter the America’s Got Net video contest, sponsored by the Open Internet Coalition, a pro-net neutrality trade association. In a short video entitled, “The Open Internet and Lessons from the Ma Bell Era,” I explain how mandating net neutrality would endanger the networks of tomorrow and insulate entrenched firms from competition. Enjoy!

When TSA Agents Attack

by Ryan Young on August 20, 2010

in Personal Liberty, Precaution & Risk

For most people, the TSA is merely an annoyance. We grudgingly play our part in security theater so we can get where we’re going. But for Kathy Parker, the TSA is something far more serious (via Steve Horwitz):

“Everything in my purse was out, including my wallet and my checkbook. I had two prescriptions in there. One was diet pills. This was embarrassing. A TSA officer said, ‘Hey, I’ve always been curious about these. Do they work?’

“I was just so taken aback, I said, ‘Yeah.’ ”

What happened next, she says, was more than embarrassing. It was infuriating.

That same screener started emptying her wallet. “He was taking out the receipts and looking at them,” she said.

“I understand that TSA is tasked with strengthening national security but [it] surely does not need to know what I purchased at Kohl’s or Wal-Mart,” she wrote in her complaint, which she sent me last week.

She says she asked what he was looking for and he replied, “Razor blades.” She wondered, “Wouldn’t that have shown up on the metal detector?”

In a side pocket she had tucked a deposit slip and seven checks made out to her and her husband, worth about $8,000.

Her thought: “Oh, my God, this is none of his business.”

Two Philadelphia police officers joined at least four TSA officers who had gathered around her. After conferring with the TSA screeners, one of the Philadelphia officers told her he was there because her checks were numbered sequentially, which she says they were not.

“It’s an indication you’ve embezzled these checks,” she says the police officer told her. He also told her she appeared nervous. She hadn’t before that moment, she says.

She protested when the officer started to walk away with the checks. “That’s my money,” she remembers saying. The officer’s reply? “It’s not your money.”

Read the whole thing. If the Fourth Amendment had any force anymore, the TSA would have been abolished years ago. It is well past time for President Obama and Congress to consider that step. It would certainly do wonders for them in the polls.

Privacy Isn’t Dead, It’s Evolving

by Ryan Radia on August 19, 2010 · 1 comment

in Tech & Telecom

Recent revelations about Microsoft’s internal debate over Internet Explorer’s handling of tracking cookies, as chronicled by The Wall Street Journal earlier this month, have prompted harsh criticism from self-described privacy groups, who’ve called on Congress to investigate Microsoft’s actions. But as Jim Harper pointed out in an excellent WSJ essay, Web users stand to lose a great deal if online tracking is squelched by the hand of government. Data gathering on the Internet is largely harmless, and individually targeted advertising coexists with robust privacy safeguards.

Over on AOLNews.com, my colleague Carolyn Homer discusses these privacy tradeoffs, arguing that Microsoft and other Internet firms have a strong incentive to set privacy defaults that align with their users’ preferences. She points out that most consumers are, in practice, quite willing to live with allegedly “pervasive” tracking in exchange for the enormous benefits that targeted advertising makes possible. While many surveys and polls indicate consumers are very worried about their privacy, the actual decisions that consumers make every day tell a very different story (as documented extensively by Berin Szoka). From Carolyn’s piece:

A body of research reveals a sizable disparity between how much people say they value privacy and how willing they are to actually protect it. In a 2003 Duke Law Journal article, Michael Staten and Fred Cate found that fewer than 10 percent of users exercise their right to opt out and share less. Conversely, if given the opposite choice, fewer than 10 percent of users elect to opt in and share more. The vast middle is apparently indifferent.

If consumers were required to affirmatively opt in before sharing data, the Internet’s prevailing advertising-based business model would be decimated. The effectiveness of online advertising in Europe, for example, fell 65 percent after the European Union in 2002 required a blanket opt-in system. For more than a decade, the Internet has thrived on the assumption that most people believe it is a fair trade to receive free content in exchange for viewing ads. Mere advertisements shouldn’t be equated with gross privacy violations.

She goes on to discuss how privacy settings are evolving as consumer preferences adapt to new technologies and firms experiment with new ways to use and collect data. You can read the rest over at the AOL News website.

Republicans Should Favor Privatization of Liquor Sales

by Michelle Minton on August 19, 2010 · 1 comment

in Odds & Ends

Republicans should support increased privatization and oppose the continuation of government-run entities. It should go without saying, but some Republicans in Virginia (and beyond) seem to have forgotten what it means to be a Republican.

Since his election last November, Governor Bob McDonnell has expressed an interest in privatizing  the commonwealth’s alcohol beverage control system. Now as his plans take shape and edge closer to abolishing the state’s hold on alcohol retail sales some Republicans are showing nervousness about McDonnell’s ideas.

Del. Tom Gear (R-Hampton) said he was concerned by suggestions that Costco and Wal-Mart would be able to sell liquor in a new system. He said he’s worried the big companies could make it tough for small retail businesses to successfully compete in the market. “My idea was to create jobs from small operations, mom-and-pop stores,” he said. “Costco can put in liquor and never have to hire a single person.” Gear also said he was concerned about replacing the $248 million ABC now deposits in the general fund annual in liquor profits, excise and sales taxes.

Sen. Emmett Hanger (R-Augusta) is concerned about the potential loss of tax revenue and increased consumption: “The money is already flowing into the general fund and being spent, every last penny. There is not a bonanza to have there.” “The experts I’ve talked to think privatization would be the absolutely wrong direction to go.”

Del. Bob Marshall (R-Prince William) is also concerned about increased consumption and revenue. “We have to make a decision not just about what’s going for today, but 10 years from now,” he said.

Republican politicians should NOT support policy simply to fall in line with the party or support a proposal simply because its author is a Republican — especially if the proposal only pays lip service to individual liberty, private property, or personal responsibility. However, many of the concerns expressed by McDonnell’s conservative opponents show an utter lack of concern for the principles their party is supposedly based on.

More than that — their concerns are entirely unfounded:

No new money

It’s understandable that lawmakers are concerned about losing a practically guaranteed annual revenue stream of $248 million, all of which is already allocated to pay for goods and services around the state. But according to an article published in the Washington Examiner this week those fears are unfounded when considering how much VA spends on the business of controlling liquor sales:

The Department of Alcoholic Beverage Control has a budget of $514 million. Through the third quarter of 2010, the Agency had spent more than $237 million on “supplies and materials.” Of that, $232 million was spent on alcoholic beverages…. meaning the commonwealth, in the interest of restocking the shelves at its ABC stores, was cutting checks to distilleries, wineries and importers across the country.

Higher rates of crime and abuse

Again it’s understandable that lawmakers and other interested parties are concerned that  “loosening” the state’s grip on alcohol sales will result in minor abuse, increased alcoholism, crime, and traffic accidents due to increased availability and affordability. If we look at other localities that have switched from control to private systems, we can see that these fears seem to be unfounded.

For example, Iowa privatized state stores in the 1980s without such an increase in social ills. The number of liquor stores nearly doubled, tax revenue from sales increased by $125 million, (according to the state’s division of alcoholic beverage control) yet, underage drinking and alcohol-related fatalities “remained steady.”

…even though Iowa’s number of liquor stores roughly doubled, its incidence of underage drinking and alcohol-related fatalities remained steady. “Privatization didn’t really have any effect” on such problems, said Keith Bailey of the Iowa chapter of MADD.

Similarly in Alberta, Canada, which privatized alcohol sales in 1993 has seen cheaper prices, increased numbers of retail operations, and higher amounts of government revenue.

Of the four western provinces along with Ontario and Quebec, Alberta is tied for the highest in terms of dollars raised from alcohol per capita, ahead of those with retail and distribution monopolies.

In addition to the fiscal benefits, privatization in Alberta did not result in a spike in crime, death, and abuse. In fact, despite increased availability in Alberta, consumption declined following privatization along with traffic accidents related to alcohol.

In the decade following privatization, Alberta’s impaired driving rate declined by a higher percentage than any other province — 73%. That compares to a 47% decline for Saskatchewan and an average 50% for Canada. In addition, citizens of Saskatchewan report higher rates of alcohol-related harm than nearly all other provinces, including Alberta.

All lawmakers, not simply Republicans, should seriously consider the merits of privatizing liquor sales. In particular, Republicans should temper their fear of change with a commitment to their espoused ideals. Infinite numbers of studies could be conducted, statistics could be collected from now until kingdom come: we will never know without a doubt what the results will be of privatizing liquor sales in Virginia. But by supporting the policies that best preserve free enterprise and personal liberty, Republicans can at least be certain that they are protecting their ideals and the rights of their citizens.

A Full-Court Press on Trade? Not Likely

by Fran Smith on August 19, 2010

in International, Politics as Usual, Trade

Today’s Washington Times has a lengthy article on the Obama Administration’s trade agenda vis-à-vis the stalled free trade agreements with South Korea, Colombia, and Panama.  The article explores the likelihood of President Obama being able to resolve issues with the South Korea FTA before the November summit in that country – a deadline he had earlier announced.  The South Korea FTA has some tough opposition from some automakers and labor unions — and little support among Congressional Democrats.

While the U.S. dithers on this agreement, the article notes, the European Union, Canada, and Australia are going full-speed ahead to finalize their own trade pacts with South Korea, which will leave the U.S. in a weakened position regarding some important exports to that country.

The two other languishing deals also face some fierce opposition, especially from labor unions.

To get some movement on these trade pacts, the president will have to do more than make a few public pronouncements  expressing his support.  He’s going to have to take on the union opposition, get House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid in line, rally his troops by touting the benefits of these agreements, bring together those spurned business groups, and reach out to some Republican supporters of free trade.  A likely scenario?  Not hardly.

Check out CEI’s publications on the South Korea, and the Colombia and Panama FTAs.

Regulation of the Day 148: Cutting Grass in Cemeteries

by Ryan Young on August 19, 2010

in International, Nanny State, Personal Liberty, Regulation, Regulation of the Day

In the world of regulation, no good deed goes unpunished. In the UK, an ex-soldier named Derek Evans decided to mow the lawn at the cemetery where his mother is buried. At first, he had intended to tidy up only her grave. But out of kindness, he ended up mowing the entire cemetery.

Regulators quickly put a stop to Mr. Evans’ good deeds. British blog Big Brother Watch reports:

The jobsworths at the Council have told him that as he was without public liability insurance he was banned from carrying on – despite the fact, as Mr Evans points out in stark terms, “the only people I was mowing near are six feet under.”

… There’s just no common sense to decisions like this: they’re so stupid you have to be an “expert” to reach them.

(Via Iain Murray)

Political Pessimism, Human Optimism

by Ryan Young on August 19, 2010

in Economy, International, Personal Liberty, Zeitgeist

Despite my pessimism (realism?) about politics, ever since reading Julian Simon, I have been an optimist when it comes to progress and the human condition. Since the industrial revolution, each generation has lived longer and better than the last. By that measure, the last decade was the best in human history.

This despite the last decade being an unmitigated political disaster, at least in America. President Bush grew government faster than any president since Lyndon Johnson. Between new health care entitlements, massive energy and farm bills, two wars, and more than 30,000 new regulations, the Bush administration was no friend of limited government.

President Obama has so far been no better. If anything, his policies are George W. Bush’s on steroids.

Fortunately, the institutional foundations of the market economy are stronger than any bumbling politician. Wherever there is peace, stability, tolerably low corruption, and secure property rights, people will make their lives better over time, despite meddlesome regulators getting in the way. The pattern is global.

Via Ronald Bailey, a brilliant article in Foreign Policy reinforces that point. Things really are getting better. The last decade was the best in human history. Read the whole thing. If you’re despairing over the state of the world, the data are a wonderful cure for pessimism. Here’s a taste:

Consider that in 1990, roughly half the global population lived on less than $1 a day; by 2007, the proportion had shrunk to 28 percent — and it will be lower still by the close of 2010. That’s because, though the financial crisis briefly stalled progress on income growth, it was just a hiccup in the decade’s relentless GDP climb.

The Ethanol Industry and Competition

by Brian McGraw on August 19, 2010

in Energy, Ethanol

Growth Energy, an ethanol trade group, released a blog post yesterday titled “In An Open Market, All Fuels Can Compete.”

The blogger writes:

Velasco is right when he says that “competition works.” But we can only compete in a fair and open market where consumers have access to all fuels. Redirecting current U.S. government supports to the build out of blender pumps and flex fuel vehicles will enable consumers to choose an alternative fuel at the pump. With the infrastructure is in place, government supports for ethanol become less necessary.

These are curious definitions of “competition,” and “open market.”

Imagine I were to bake some bread that consumers didn’t enjoy as much as I had hoped.

(1) Then I took advantage of a government law which required consumers to include my bread in about 10-15 percent of their total bread consumption per year.

(2) Then I convinced the government to shell out money for each loaf of bread I produced to encourage grocers to stock my bread.

(3) And I convinced the government to forbid imports from foreign companies who bake bread similar to mine at a lower cost.

(4) Now I want the government to spend money making it easier for me to get my bread to its final sale point.

After all of this, finally my bread can compete fairly with other breads on the market. See how that works? Now replace bread with ethanol and grocers with gasoline stations. This is the ethanol industry.

The ethanol industry benefits from the Renewable Fuel Standard, which requires approximately 10 billion gallons of renewable fuels to be blended into our gasoline each year. They benefit from a tax credit received by the gasoline blenders for each gallon of ethanol blended into our fuel supply. They also benefit from a tariff on foreign ethanol.

And now, in the name of competition they have asked for continued support to pay for infrastructure to encourage the sale of ethanol in gasoline stations. They have suggested mandating, in their Fueling Freedom Plan, that all new cars be made flex-fuel compatible so they can run on E85 (85 percent ethanol, 15 percent gasoline). They then make the bold claim that the increased cost from installing E85 compatible engines will fall entirely on car manufacturers and not at all on consumers. All while sticking their hands in their ears and yelling loudly about supporting competition.

Now, the blogger is right (in one sense) to say that the ethanol industry is being restricted by the E10 blend cap. They are hoping that the EPA will lift this cap to E15 this fall. And it is a curious paradox because the government is mandating that we use all these renewable fuels but the EPA might not allow enough ethanol to be blended into our fuel supply to meet this mandate.

However, asserting that Growth Energy supports any form of competition or market forces is laughable. And implying that government is holding back their industry whileignoring the fact that other government laws support a huge percentage of their industry is dishonest. If the Energy Act of 2007 didn’t require billions of gallons of ethanol to be blended into our fuel supply, consumers wouldn’t be choosing high percentage blends of ethanol. Ethanol would likely remain as an octane booster and in low percentages (under 10 percent) per each gallon of gasoline.

A “Chickening Out” Lesson

by Fran Smith on August 18, 2010

in Odds & Ends, Sanctimony

Today, I hankered for fried chicken for a take-out lunch but discovered there wasn’t a fried chicken place within 10 blocks of CEI’s 19th and L Sts. offices.  So I grumpily settled for the less appetizing but ubiquitous broiled chicken.

After lunch, I found out that there is justice in the world – and the dearth of fried chicken has economic consequences.  John Hood, writing in NRO’s The Corner this afternoon, skewered KFC (formerly Kentucky Fried Chicken) for listening to politically correct execs rather than to its customers  and thus experiencing a 7 percent drop in 2nd quarter revenues and a suit from its franchisees. And it seems to be the result of KFC’s de-emphasis of fried chicken and its national ad campaigns that focus on healthy broiled chicken without a nod to Colonel Sanders’ Original Recipe.

What’s the lesson from this?  Well, Hood explains:

What’s the larger significance of KFC’s internal battles? In both the public and private sectors, far too many decisions are made on the basis of silly fads, partial glimpses of nebulous trends, a temptation to placate powerful interest groups, or a pathetic desire to be seen as enlightened. In the private sector, companies sometimes waste time and money on pointless public-relations exercises, senseless recycling programs, and the like. But subjected to the rigors of competition, these firms tend to pay the price over time and adjust their behavior accordingly. In the public sector, however, politicians don’t have to worry as much about losing ground to competitors. Their absurdities persist. Their pretensions multiply.

Amen to that.  And, next time I get the urge, I’ll just fry my chicken at home.

Regulation of the Day 147: Breathing Fire

by Ryan Young on August 18, 2010

in Nanny State, Personal Liberty, Regulation, Regulation of the Day

Jimmy’s Old Town Tavern in Herndon, Virginia, has an unusual attraction: fire-breathing bartenders. That tradition may be coming to an end, according to the Washington Examiner:

Fairfax County fire investigators charged Tegee Rogers, 33, of Herndon, and Justin Fedorchak, 39, of Manassas, with manufacturing an explosive device, setting a fire capable of spreading, and burning or destroying a meeting house. They also were charged with several state fire code misdemeanors.

Both men are looking at as much as 45 years in prison. Fire marshals gave them no warning before pressing criminal charges. They have been breathing fire at Jimmy’s for over a decade without previous incident. Both men were surprised; given that Jimmy’s openly advertises its fire-breathing tradition, fire marshals have had plenty of chances to tell them to stop.

Owner Jimmy Cirrito is sticking up for his employees. He told the Examiner:

“But I don’t think we’ve done anything wrong,” he said. “There’s a lot of fire in restaurants. I’ve been served flaming desserts, I’ve roasted marshmallows on tables, I’ve seen 75 candles and sparklers on cakes, and I’ve seen bartenders perform the tricks coast-to-coast and no one’s been arrested.”

(Via Tim Carney)

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