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OpenMarket: September 2007

  • Indulgences for the Rich and Famous?

    September 30, 2007 5:35 PM

    In an appendix titled “What You Can Do” found in their latest book — This Moment on Earth — Senator John Kerry and wife Theresa Heinz Kerry call on their readers to make sacrifices that will reduce mankind's “environmental footprint.”  Like Al Gore, however, they take a pass.  After all, the rich can afford to buy what amounts to indulgences: “Those of us in politics, traveling at times in motorcades, flying on private planes on occasion, you name it…now buy carbon offsets by making a donation to an organization that specializes in carbon neutrality,” they explain.

    The idea that somehow the lifestyles of the rich and famous can buy their morality is really absurd. In fact, the entire concept of offsetting one's personal moral precepts is offensive, especially when those people taking the offsets want to regulate away other people's freedoms. An article in yesterday's USA Today by Peter Schweizer, helps put the Kerry-Gore “logic” in perspective:

    Why not expand offsets to erase our other sins? After all, why should environmentalists have all the fun?…People who are caught in compromising positions could purchase an offset from a pro-marriage organization such as Focus on the Family. By buying the Adultery Offset, the guilty party would counterbalance their adultery footprint with a monogamous couple trained by this organization. Like the carbon-emitter absolved of carbon sin, this would allow an individual to be declared "adultery neutral" instantly. As with carbon offsets, the guilty parties would not actually have to stop engaging in adultery; he or she would simply need to write a check after every occurrence. Two enterprising Britons have even set up a satirical website called demonstrating how this could be done.

  • At FCC, Internet Connect to You!

    September 28, 2007 2:49 PM

    Yakov Smirnoff's short lived fame died off with the Soviet Union. Little did he know, his unique style of comedy could have lived on indefinitely by mocking the Federal Communications Commission (FCC). In a real-life example of Mises' theory of interventionism, where the effects of one bad regulation is the catalyst for more bad regulation, the FCC is advocating additional price controls for dedicated line services. Of course, dedicated line services are only supplied by FCC backed Baby Bells, which have regional monopolies of these services.

    Hmmmm, I seem to remember from Microeconomics 101 that monopolies tend to raise price...

    Instead of more price controls and regulations, why doesn't the FCC just let any firm compete? Proponents of regulation claim that Baby Bells are natural monopolies. If that is true, their positions of dominance are unchallengeable and they won't need regulations to protect them. William Melody's argument, which led to MCI's challenge of the AT&T monopoly, was successful in busting that “natural monopoly.”

    The only way to tell that an industry is a natural monopoly is to allow competition. If you don't allow competition, what's so natural about the monopoly?

  • A Tragic Loss to Our Friends at NTU and to All of Us

    September 28, 2007 1:26 PM

    John Berthoud died -- suddenly and unexpectedly. Our span is always too short but John's was far shorter than all of us had hoped. John was a blend of movement leader, creative advocate of economic liberty, and friend.

    Under his leadership, NTU had become one of the consistent and effective allies of the movement and his death weakens us all. But he was also a friend and wonderful adocate to all seeking allies in the multiple battles that must be fought against those seeking to expand the power of the state. He insisted and readily understood the reasons why NTU support would be both consistent with those of taxpayers and all the peoples of the world and quickly put his organization in support.

    The oft quoted refrain of John Donne is fully applicable to his death.

    No man is an island,
    Entire of itself.
    Each is a piece of the continent,
    A part of the main.
    If a clod be washed away by the sea,
    Europe is the less.
    As well as if a promontory were.
    As well as if a manner of thine own
    Or of thine friend's were.
    Each man's death diminishes me,
    For I am involved in mankind.
    Therefore, send not to know
    For whom the bell tolls,
    It tolls for thee.

    John was far more than a promotory or a mountain and certainly no island -- he was and still is, through the organization he led, a link to all of us. We should and do mourn his passing.

  • FDA Tobacco Regulation Bill Enriches Lobbyists

    September 28, 2007 1:02 PM

    A lobbying firm has been paid hundreds of thousands of dollars, including $160,000 in the first half of 2007, to lobby for the FDA tobacco regulation bill, by Altria (Philip Morris), the nation's largest tobacco company.

    The bill supposedly seeks to protect the public health, but a news story notes that the true motivation behind the FDA tobacco regulation bill may be a big company's desire to kill off its smaller competitors. "Altria, the largest U.S. tobacco company, is better positioned to operate under regulation than competitors," it observes.

    An editorial in a campus newspaper describes how the FDA tobacco regulation bill was gerrymandered to suit Altria's interests, rather than the public interest.

    The bill has also drawn criticism on health grounds, and charges that it would violate international trade treaties.

  • SCHIP Program: Taxes, Deficits Increase

    September 28, 2007 12:48 PM

    The Wall Street Journal has an editorial today on the SCHIP health-care bill, which would expand health care coverage for children, and even some childless adults, in households making up to $82,600 per year. The phony accounting by the bill's sponsors makes it sound like it can be funded with an increase in federal cigarette taxes, but in fact, those increased taxes won't be sufficient to pay for the program's increased costs.

    (If you can't access the editorial, a few of its highlights are summarized here).

    The bill has passed by a veto-proof margin in the Senate, but passed by a smaller majority in the House.

    The bill's perverse incentives and the strange bedfellows behind it are described by the Cato Institute.

    The National Center for Policy Analysis describes the SCHIP program's odd evolution and regressive and counterproductive effects here.

    Its likely negative effects on employment in the cigar industry are described here and here.

  • Should Amazon be able to patent 1-Click ordering?

    September 28, 2007 12:46 PM

    The United States Patent and Trademark Office, after finally having done something right for a change, recently reversed a which rejected Amazon's patent on One-Click ordering. The USPTO it seems wasn't able to figure out why One-Click ordering isn't an innovation that deserves a patent.

    That the patent application was approved in the first place is yet another example of the frivolity of so many tech patents being issued nowadays. One-click ordering was described by the Examiner as “obvious”, and clearly it is a natural evolution of the marketplace. U.S. patent law requires patents to be sufficiently . The Amazon patent is about as obvious and non-inventive as it gets. The purpose of patents is to encourage innovation, and rejecting patents like this will certainly not have a detrimental effect on the incentive to invent.

  • Can We Trust James Woolsey?

    September 28, 2007 10:51 AM

    Ex-CIA Director James Woolsey is a proponent of ethanol because he believes it can help make the United States more energy independent. Never mind that the ethanol mandate that the Senate passed last summer would have decreased oil imports by only 7%, at a cost to the taxpayer of $74/barrel “saved.”

    And for the purpose of this conversation, I will make only passing mention of fact that global demand for ethanol has the potential to destabilize developing countries. Suffice to say, there is a small pro againt many big cons with respect to the argument that ethanol is good for national security.

    No, what I want to discuss is James Woolsey's response to a question from Lawrence Kudlow, at a National Review-sponsored energy panel last Wednesday. Kudlow addressed Woolsey, and noted that the production of ethanol represents a tremendous new source of demand for corn, which has caused the price of that staple to increase.

    Woolsey waived off Kudlow with assertions of increasing yields, and further claimed that the price of corn had fallen to normal levels (that is, before we started making fuel from food)—just above two dollars.

    Yesterday, on the floor of the Chicago Board of Trade, corn hit $3.82. Woolsey was only 91% off, which, for a CIA man, is probably pretty good.

    [N.B. My colleague Iain Murray today wrote a great piece on the national security dynamics of climate policy. It's here]

  • Things the First Amendment Doesn't Say

    September 28, 2007 7:10 AM

    The Washington Post carries a story about a minor dust-up between Naral Pro-Choice America and Verizon. Naral wanted to use Verizon's mobile network to distribute a series of pro-choice text messages and Verizon said no to the group's request before reversing itself. Personally, I think that Verizon was awfully silly to deny any group the use of its network: more users equal more money. (And, of course, given how controversial abortion is, I can't imagine that any large private company does well to take a strong position on it either way.) So, on the initial dispute, I tend to think that Naral was right and Verizon wrong. What I find interesting is what Naral president Nancy Keenan said about the whole issue: "This is where you have a corporation that is censoring free speech. That is the issue here that is pretty frightening in a democracy."

    So, in other words, Keenan appears to believe that the first amendment gives her the right to use a private network to distribute her ideas. She believes that any denial is an affront to Democracy. By her standards, I was the victim of censorship last week when a newspaper rejected an op-ed I wrote. HBO, likewise, engages in censorship when it runs Big Love rather than, say, the 700 Club. For that matter, her logic suggests that Naral (which is, of course, itself a corporation) should allow National Right to Life to post its briefing papers on the Naral web page.

  • Double Jeopardy for Google DoubleClick Deal

    September 27, 2007 4:07 PM

    Google's bid to purchase the Internet advertising firm DoubleClick was scrutinized today in hearings by Rep. Bobby Rush (D-Ill), Chairman of the Congressional Subcommittee on Commerce, Trade, and Consumer Protection and by Sen. Herb Kohl (D-Wi), Chairman of the Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Rush & Kohl have been critical of the proposed $3.1 billion acquisition which is still subject to FTC approval.

    Part of what makes this deal complicated is the somewhat sketchy history of DoubleClick itself. Its ill fated “intelligent” targeting service for advertisers raised concerns about online privacy. DoubleClick's new service was controversial because it supposedly used online and offline data to construct profiles of consumers to target advertising. DoubleClick was forced to scrap its controversial targeting system and settled all of its Federal and state lawsuits by 2002. The acquisition of a firm which was temporarily branded as a violator of privacy rights has exacerbated fears of potential future privacy abuses.

  • Time to Reform the FCC

    September 27, 2007 1:40 PM

    Minor abuses at the FCC, such as the one mentioned in my last post, warrant at least investigating how the FCC assesses fines, if not looking for ways to reform the FCC's governance of broadcasting. But when we look at the incredible distortion created by the central planning of broadcast spectrum the case of dramatic and rapid reform becomes very clear.

    More specifically, the FCC is now placing caveats on the 700Mhz auction--perverting the one reform, auctions, that have worked to replace bureaucratic preference with market forces. The XM/Sirius Satellite radio merger is also a symptom of the disease of FCC regulation. Satellite spacing requirements, spectrum allocation, and the inability for terrestrial firms to sell their spectrum assets and move skyward are all standing in the way of more competition in satellite markets.


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