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OpenMarket: November 2007

  • Celebrate the Repeal of Prohibition, YouTube Style

    November 30, 2007 5:42 PM

    Raise a glass to 21st Amendment!

  • Pruning Walled Gardens with the Shears of the Free Market

    November 30, 2007 5:11 PM

    In an unexpected announcement on Tuesday, Verizon Wireless announced that it will allow any device or application to access its network starting in mid-2008. This decision marks a water-shed moment in the history of wireless communications, as never before has a national network allowed such a wide range of devices to communicate on a shared medium.

    Whether Verizon Wireless can live up to its bold claims remains to be seen, but at the very minimum we'll witness a proliferation of original wireless devices ranging from cameras to appliances.

    Liberal supporters of government intervention will no doubt argue we should thank the FCC for Verizon's decision. But in truth, market pressures are to thank for giving private companies incentives to relax proprietary platforms.

  • Rewarding Short-Sightedness: The Grasshopper Exploits The Thrifty Ant

    November 30, 2007 4:01 PM

    The federal government is rewarding irresponsible people who chose to live for the moment, on borrowed time. It is planning to bail out people who used adjustable-rate mortgages to buy homes bigger than they needed or could afford, in the myopic belief that interest rates would never rise.

    When I obtained a home mortgage in March 2004, I had a choice between a fixed interest-rate mortgage with a 5 percent interest rate that would never rise, and an adjustable-rate mortgage that would start at well under 5 percent but might rise considerably if interest rates rose in the future. I knew interest rates would rise, so I got the fixed-rate mortgage. I was planning for the long term, and was willing to pay more in the short-run to ensure lower payments in the long run. To afford those payments, I bought a little two-bedroom house that I could afford even on a fixed-interest rate.

  • LOST: Let's Regulate Warp Drive While We're at It.

    November 30, 2007 1:48 PM

    In recent years, conservatives and libertarians have gone up in arms over the United Nations Law of the Sea Treaty (LOST). CEI's own take on it, from Doug Bandow, is found here. I am a bit torn over the treaty because a number of Navy friends, all of whom I like and respect, tell me that LOST really will make the seas a lot safer.

    But, whatever the case, I've always had the most interest in the treaty provisions related to seabed mining operations. They're silly and collectivist in any number of ways but, for me, that isn't really even the point.

    The real point, I think, is that we're trying to write regulations for something we have no idea how to do. Regulations for warp drives, indeed, have about as much relevance as those on deep sea mining.

    Getting up ANYTHING from the deep seabed is really, really hard. Let's take the most successful treasure hunt of modern times, the recovery of the gold-laden Central America that Gary Kidner discusses in his excellent Ship of Gold in a Deep Blue Sea.

  • Bond Rating Meltdown

    November 30, 2007 1:40 PM

    Yesterday, I wrote about the "Massive Bond Rating Scam," and how irresponsible bond-rating agencies, shielded by regulation against competition, have contributed to the mortgage meltdown by giving high credit ratings to risky mortgage-backed securities and reckless bond-insurance companies, even while giving poorer credit ratings to reliable borrowers who pose no risk of defaulting.

    Here's an additional perspective on how bond-rating agencies like Moody's and Standard & Poor's have failed their task. I don't agree with everything in it (for example, the bond-rating agency practices it likens to "payola" imply that payola is always a bad thing, when in fact it can be economically sensible in the music business), but much of it is right on the money, and quite damning. It is ridiculous that borrowers with good credit pay money to have their bonds "insured" by bond-insurance companies (like MBIA and Ambac Financial) many of which are themselves in bad shape.

  • More on Indictment of Dickie Scruggs, Tobacco Settlement Lawyer

    November 30, 2007 1:40 PM

    Overlawyered has more coverage of the indictment of Dickie Scruggs, the rich trial lawyer who helped bring about the tobacco Master Settlement Agreement that settled lawsuits by 46 states. I earlier discussed how the settlement made undeserving trial lawyers obscenely wealthy, and how it ripped off consumers -- in whose name many of the lawsuits leading to the tobacco settlement were brought -- here. Even the American Bar Association's publication has taken a dim view of the settlement, as you can see here.

  • Cyber Cold War? Probably Not

    November 30, 2007 11:01 AM

    McAffee, a company that makes cyber security software, has released a report warning of a new "cyber cold war."

    I'm skeptical of how big a deal this is from a national security standpoint. Many businesses that have neglected security may face real problems. But I think most have done a decent job. On the whole, however, things that are really important (say, the electric grid, nuclear missile launches) are probably less vulnerable to outside attack than they were before computer systems. Although traditional espionage could always do in these systems (infiltrate the agency, steal codes, bribe employees), nearly everything really critical simply can't be accessed from outside of certain secure facilities. Particularly post-9/11, even systems that probably aren't truly mission critical have been physically firewalled in just this way. For example one well-known security related government agency I've worked for requires biometric identification of its own supervisors to manage its scheduling systems. The systems, furthermore, simply can't be accessed over the public Internet.

    I also don't see a physical way to bring it down without physically destroying each node. Sure, cyber-attack is possible. But I don't believe it's a major national security threat.

  • Hilariously Hypocritical Claim of Judicial Activism

    November 30, 2007 10:17 AM

    The Brady Campaign has spent years trying to convince the courts to strike down a federal law, passed with bipartisan support, that bans suits against gun makers for acts committed by criminals. It has spent great effort to get judges to override a popular law, under a novel "separation of powers" argument.

    But yesterday, its head, Paul Helmke, wailed about "judicial activism" that supposedly overrides "the will of the people" in an editorial in the Atlanta Journal. His complaint is like the pot calling the kettle black.

    The reason for his wailing is that the D.C. Circuit Court of Appeals struck down Washington, D.C.'s handgun ban, citing the Second Amendment "right to keep and bear arms."

    Whatever you may think of the D.C. Circuit's decision, it is based on a plausible interpretation of the Constitution's text.

    The same can't be said for the Brady Campaign's bogus claim that the federal law that protects gun-makers violates the "separation of powers" -- an erroneous interpretation of an amorphous concept that isn't even mentioned in the Constitution's text, but whose existence is reflected in specific constitutional provisions, like the Appointments Clause, that prevent conflict between branches of government, and limit the diffusion of government power.

  • Radiating Fear

    November 29, 2007 5:21 PM

    A new report today warns that increased use of CT scans and subsequent increased exposure to radiation could account for nearly 2 percent of cancer (a figure some say is an exaggeration). The usage of CT scans has increased dramatically over the last couple of decades, and the authors of the study are apparently concerned about the public health risk that the scans pose. I doubt however that they've quantified the number of lives that CT scans have saved by accurately diagnosing conditions early.

    These same scientists released an early study in 2001 which led to government recommendations on how to limit scans on children. This latest report may revive discussion about ways to curb the use of CT scans. But increased regulation of medical diagnostic tools is not the way to save lives. Restricting the use of CT scans will simply drive up the cost and ensure that fewer people get the right diagnosis in time.

    A better solution, in response to radiation concerns, is advancing technology, which is already in process. Scientists have developed new scanners and new methods of CT scanning that retain the picture quality while reducing radiation. Because legislation moves at a much slower pace than scientific advancement, any regulation on CT scans will impede science's progress toward more effective and safer scanners.

  • Tobacco Settlement Lawyer Dickie Scruggs Indicted

    November 29, 2007 5:21 PM

    Dickie Scruggs, one of the lawyers who helped bring about the 1998 tobacco Master Settlement Agreement, has just been indicted on bribery charges.

    Under the Master Settlement Agreement (MSA), trial lawyers received $15 billion (not million, billion) from the big tobacco companies, in a deal which also provided the tobacco companies who joined the deal with protection against competition from little tobacco companies that refused to join the deal and pay off the trial lawyers. 46 States and 6 territories entered into the deal, which gave state governments billions of dollars. CEI is challenging the deal in court.

    As I noted in the Wall Street Journal, lawyers in New York State received $625 million under the deal, just for working on a copycat lawsuit.

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