Entries by Ira Brodsky

I grew up in the Chicago area and know something about how the Daley family has dominated Chicago politics for 42 of the past 55 years. Chicago Democrat Party machine corruption takes many forms, but patronage is its lynchpin. In a nutshell, the Daleys perfected the art of handing out jobs to people who understood they were expected to work hardest during election campaign season.

Now, President Obama wants to scale up Chicago-style patronage to nationwide.

Obama calling for more infrastructure spending

WASHINGTON (AP) - Vowing to find new ways to stimulate the sputtering economy, President Barack Obama will call for long-term investments in the nation's roads, railways and runways that would cost at least $50 billion.

The infrastructure investments are one part of a package of targeted proposals the White House is expected to announce in hopes of jump-starting the economy ahead of the November election. Obama will outline the infrastructure proposal Monday at a Labor Day event in Milwaukee.

While the proposal calls for investments over six years, the White House said spending would be front-loaded with an initial $50 billion to help create jobs in the near future.

The goals of the infrastructure plan include: rebuilding 150,000 miles of roads; constructing and maintaining 4,000 miles of railways, enough to go coast-to-coast; and rehabilitating or reconstructing 150 miles of airport runways, while also installing a new air navigation system designed to reduce travel times and delays.

Obama will also call for the creation of a permanent infrastructure bank that would focus on funding national and regional infrastructure projects. [My emphasis.]

Happy Labor Day.

I remember when people were responsible for their own actions. If you committed a violent crime, people weren't as willing as they are today to accept explanations, such as past traumatic experiences, designed to diminish your culpability. And you certainly couldn't get away with saying that a debate about the location of a mosque caused you to embrace violent extremism.

Something has gone very wrong.

In an Associated Press article by Rachel Zoll, NYC mosque debate will shape American Islam, graduate student Adnan Zulfiqar suggests that the debate over a proposed mosque at the site where nearly 3,000 Americans were massacred could "make" some American Muslims turn radical:

"They're already struggling to balance, 'I'm American, I'm Muslim,' and their ethnic heritage. It's very disconcerting," said Zulfiqar, 32, who worked for former U.S. Sen. Max Cleland, a Georgia Democrat, and now serves Penn's campus ministry. "A controversy like this can make them radical or become more conservative in how they look at things or how they fit into the American picture."

Is this a plea for fairness or a threat?

Consider the facts. There are thousands of mosques in the U.S. Almost immediately after the 9/11 attacks, our leaders declared that "Islam is a religion of peace" and that the attackers represented a perversion of that religion. There have been very few attacks against Muslims in the U.S. since then. The American people are fair-minded and tend to judge people, as Martin Luther King implored, by the content of their character.

Opposition to the proposed Ground Zero mosque is perfectly legitimate. There are well over 100 mosques in New York City. Opponents urge the developers to build anywhere but the site of the World Trade Center attack. A number of Muslims have spoken out against the proposed mosque at Ground Zero.

Part of the problem is that radical Muslims do not accept individual rights as enshrined in the US Constitution. We adhere to the principle expressed in the saying "I disapprove of what you say, but I will defend to the death your right to say it." Radical Muslims have responded violently to books and even cartoons that disparage Islam. When Adnan Zulfiqar suggests the controversy surrounding the proposed Ground Zero mosque could "make" some Muslims embrace extremism, he is simply demonstrating that he is not comfortable living in a free society.

The US Constitution protects every citizen's right to practice his or her religion. But it's important to understand that the Founders believed that religion and the proper functions of the state are two distinct spheres. The US Constitution does not guarantee the right of Muslims—or anyone else—to impose their values on others or to threaten violence when they don't get their way.

An article in today's Wall Street Journal, The Case Against Corporate Social Responsibility, expands on some of what I said last week. Unfortunately, in an effort to soothe and persuade proponents of what was once called a "mixed economy," the article ends in confusion.

Aneel Karnani argues that private profits and public interests are sometimes compatible. When they are, corporate social responsibility is irrelevant. When they aren't, corporate social responsibility is ineffective. Either way, he says, corporate social responsibility delays development of better solutions.

Karnani claims that consumers are more likely to have choices when companies pursue profits. He points out that social responsibility adds cost: "Managers who sacrifice profit for the common good also are in effect imposing a tax on their shareholders..." Karnani suggests that by adding cost and inefficiency, government regulations may do more harm than good.

In the end, however, he suggests that industry should pursue government-defined goals through self-regulation, and concedes that when industry fails to police itself government should step in and impose regulations.

However, that's exactly where most statists say we are today. Namely, they claim that our biggest industries were built by robber barons, and that government was forced to act. Deregulation, they insist, brings back the injustices of the past.

Karnani should have taken a bolder position. A legitimate capitalist (i.e., someone not engaged in fraud) must serve genuine interests to be successful. To wit, the only way to grow a business is to deliver real value. Government regulation always reduces choices. Managers who sacrifice profit for the "common good" impose a tax on customers to the detriment of employees and investors. Government regulations should be used sparingly and only to prevent immediate harm (for example, polluting a source of drinking water).

Karnani ignores the elephant in the living room. Who decides which goals are socially responsible? Who decides the best way to achieve those goals? We can appoint a blue ribbon committee, but who decides its members? There is no escaping the fact that corporate social responsibility is all about politics.

History shows that the best way to meet not-for-profit goals is through philanthropy and volunteerism. If you force people to drive electric cars, then we will end up with fewer cars. If you persuade them to drive electric cars, then more people will drive electric cars, and entrepreneurs will work on developing better electric cars.

I've known for some time that America's early industrialists were not "robber barons" but brilliant entrepreneurs and noble philanthropists. For example, John D. Rockefeller created the mass market for kerosene home lighting by driving down prices, and he gave back to society by funding hugely successful efforts in education and medical research.

I was pleased to see that Burton W. Folsom, Jr. provides a nice framework for understanding the early industrialists in his book The Myth of the Robber Barons. Folsom sorts them into two groups: the political entrepreneurs and the market entrepreneurs.

The political entrepreneurs were people like Robert Fulton (steamships) and Thomas C. Durant (railroads). Their reliance on government assistance led to high prices, technological stagnation, and corruption. Market entrepreneurs such as Cornelius Vanderbilt and James J. Hill were innovators who drove down prices and improved service.

I have seen both types of entrepreneurs throughout my career. Today, the political entrepreneurs (better known as "crony capitalists" on the right and "socially responsible entrepreneurs" on the left) are clearly on the ascent. Legitimate entrepreneurs don't need to add "socially responsible" to their job descriptions because they already provide products and services that people want and value. "Socially responsible" is simply another way of saying "political" and it means seeking public money distributed by government officials--often to people with the right connections.

It's sad to see our country repeating this mistake. Our education system, media, and political elite share the blame. The way to turn things around is to once again honor individual initiative and achievement, the source of most generous and effective giving.

A fascinating presentation.

The report's goal is to promote more cost-effective solutions for remote areas in emerging economies. However, I'm concerned that this could become another endless quest for funding. In my experience, it's better to focus on solutions that succeed in the marketplace. That does a better job of driving costs down and identifying business models that work on their own. Once you have a market-tested solution, creative financing and limited subsidies can be used to greater effect.

One of the report's best ideas is "provide good enough analysis." Too many entrepreneurs get distracted by the notion that the best performance wins. History shows that it's the right balance of performance, cost and convenience that wins. Again, I think the marketplace is much better at finding the right balance than grant-driven projects. Grants tend to mask issues that are crucial to long term success.

The best way to serve remote areas in emerging economies is to create winning solutions for developed countries and just keep growing the market. This is precisely why the mobile phone market is growing so rapidly today in countries such as India.

These are evil times. The US economy is in critical condition. The consensus is that North Korea torpedoed a South Korean warship and Iran is developing nuclear weapons. Confidence in Congress has hit a record low of 11 percent, and thanks to Charles Rangel and Maxine Waters it will probably sink even lower.

Many years ago, I had a revelation. It’s simple, obvious, and common sense. People have made fortunes just by repackaging it. Most important, it works.

The revelation may have been said best by Walt Kelly in his Pogo comic strip: “We are confronted with insurmountable opportunities.”

The problem for most of us is not our lack of opportunities, it’s our inability to spot and seize them. And the most frustrating part is that the solution requires just 1% talent and 99% attitude.

Life presents most people with a constant stream of opportunities. But it takes a positive attitude to see and exploit them. Maintaining a positive attitude day in and day out requires a great deal of mental energy. To paraphrase one of the guys who made a fortune selling this bit of common sense, people create videos in their minds of blown opportunities that they keep replaying. The trick is to ignore or stop playing those video memories.

Admittedly, life presents some people with more opportunities than others. And a severe disability can put opportunities out of reach. But I’m convinced that most people get enough opportunities; it’s their attitude that is the biggest obstacle.

The History of Wireless and The History & Future of Medical Technology contain many examples of people who used the power of positive thinking to overcome hardship—including economic adversity. Here are four:

Michael Faraday – Whenever anyone suggests that we are cheating our children by not spending enough on education, I think of Michael Faraday. The son of a blacksmith plagued by poor health, Faraday received only the most rudimentary education. As an apprentice bookbinder, he educated himself by reading the books in his spare time. Faraday was also the victim of discrimination: rarely in that era did anyone rise above the class into which they were born.

(The education complaint also reminds me of one of my favorite cartoons. Bill Gates is standing at a podium delivering a speech. A guy in the audience whispers to a colleague "Imagine how far he could have gone had he not dropped out of Harvard.")

Faraday landed a job at the Royal Institution by sending Humphry Davy a bound copy of notes from his public lectures. Still, Davy’s wife treated Faraday like a servant. Michael Faraday didn’t let lack of formal education, lack of money, or lack of social status deter him from becoming one of the greatest experimentalists in the history of science.

Paul Galvin – Paul Galvin established Motorola as a major force in the wireless industry and he did it during the Great Depression. His original ambition was simply to become a successful small businessman. He learned along the way that a business needs to keep growing just to survive. After a string of failed businesses, Galvin succeeded by manufacturing and selling a luxury accessory (car radios) for a luxury item (automobiles). Though Motorola enjoyed its greatest growth under his son Robert, Paul Galvin proved it is possible to grow a business even in a stagnant economy.

John Gibbon – John Gibbon invented the heart-lung bypass machine, enabling surgeons to stop the human heart and operate on and even inside it. When he started his research (also during the Great Depression), almost no one believed it was possible to build a machine to temporarily carry out the functions of the heart and lungs. Plus, it took nearly 20 years of research before Gibbon performed the first successful “open heart” surgery. Gibbon is a shining example of how faith and perseverance can make the seemingly impossible possible.

Svyatoslav Fyodorov – Born in the Soviet Union, Fyodorov’s father was imprisoned during Stalin’s purges, and then the young Fyodorov lost a leg in an accident. He managed to become an eye surgeon and discovered that it is possible to correct vision by carefully cutting the cornea. More spectacular, Fyodorov cut through the USSR's bureaucracy and red tape to establish a nationwide system of clinics and even acquired personal wealth. Where there is a will, there is a way. Fyodorov’s technique, which relied on microscopes and an assembly line approach to surgery, was eventually eclipsed by laser surgery.

In a presentation to the annual meeting of the Property and Freedom Society, UK biochemist Dr. Terence Kealey asserted that government science is wasteful. He based that conclusion on data showing that private R&D contributes more to economic growth and his theory that science is not a "public good." He attempts to prove the latter by showing that most scientific research is inaccessible to those who don't have the appropriate specialized knowledge. (As if its value to the public hinges on the public's ability to understand it.)

I agree that government science is generally inefficient and, when it becomes too big, crowds out private research. However, there are historical examples of government and government-funded research yielding big returns. Plus, the argument I hear most often isn't that science is a public good--a rather abstract notion--but that most "pure research" would never get private funding. The problem with that claim is that there are also many historical examples of companies and private universities funding successful pure research.

It turns out that Kealey and Stephan Kinsella (who posted the video at the Ludwig von Mises Institute website) don't believe in intellectual property. They apparently feel that trademarks, copyrights, and patents serve mainly as an excuse for state intervention in the free market. To me, this makes about as much sense as anarchism, and at the end of the day there's little difference between this view and the Marxist dream of abolishing all private property. Presumably, Kealey and Kinsella accept state intervention to protect material private property. The real problem, I suspect, is that they are philosophical materialists who can't conceive of anything other than physical items being property.

A more common sense view is that government science is not always a bad thing, but government science and government in general should be carefully limited. If we stuck to that view it would prevent government from crowding out private research. In fact, the people would be better served if government focused more on encouraging private research and protecting intellectual property.

Colleges and universities are supposed to be centers for the free exchange of ideas. In the U.S., many have become centers for sorting ideas into two bins. The approved ideas are inculcated; the disapproved ideas are censored.

I found the story Students, Alumni Rally Behind Illinois Professor Fired for Expressing Catholic Beliefs oddly inspiring. According to the report, Assistant Professor Kenneth Howell was fired after a student accused him of “hate speech” for saying he agreed with the Catholic Church’s view that homosexual sex is immoral.

There’s no indication that Howell did anything other than express an opinion. According to the Facebook page Save Dr. Ken, “His teaching what the Catholic Church teaches in a course on Catholicism was deemed to violate University rules of inclusivity…”

I can't say whether I agree or disagree with Howell, because it's not something I've given much thought. But I don't know how a university can have "rules of inclusivity" concerning opinions. (Actually, I do know how: by applying them selectively.)

It turns out that Howell is popular among students—and not just Catholic students. Even the student group Atheists, Agnostics & Freethinkers has rallied to his side. (I think it’s a safe bet that they aren’t defending his opinion—just his right to express it.) Howell apparently has a reputation for promoting open, honest, and civil debate. And that’s exactly the sort of thing that’s supposed to take place at universities.

Esther Dyson always brings a unique and nuanced perspective to issues. Speaking at the Health 2.0 Goes to DC conference, Esther proposed that the health ecosystem consists of three markets: Health Care 1.0, Bad Health, and Health Care 2.0. I'm glad she emphasized some of the challenges faced by the nascent Health 2.0 market. But lumping drug abuse, processed foods, and lack of exercise together and calling it the "Market for Bad Health" is a bad idea.



Whether she intended it or not, Esther implies that to varying extents the tobacco, processed foods, automobile, alcoholic beverage, and television industries all make at least some of their money by damaging people's health. I don't think that's true. For example, some processed foods contain added vitamins; others remove natural ingredients that are harmful to people with specific allergies or medical conditions. There is also a legitimate place for foods offering benefits such as convenience or long shelf life.

You could certainly argue that the tobacco industry makes money by damaging people's health--though some smokers live long lives. But there is nothing inherently wrong with food processing (or automobiles and even alcoholic beverages). Some processed foods contain potentially harmful ingredients, just as some natural foods may be improperly handled or stored. For most people, it's probably fine to eat foods containing additives or preservatives once or twice a week. Can the same be said about eating contaminated natural foods?

But what worries me most is that calling a range of products and services the "Market for Bad Health" is an invitation for excessive government intervention and perhaps even social regimentation. We have to accept that some people will choose unhealthy lifestyles regardless of how many educational programs and regulations are created. Plus, many government programs and regulations have unintended consequences. Some things are harmful in ways that are obvious, but beneficial in ways that are not well recognized.

Because if we want to empower individuals to manage their own health and health care--and that to me is the primary virtue of Health Care 2.0--we need to let them make real choices.

New York federal judge Louis Stanton ruled that Google's YouTube did not violate Viacom's copyrights. It was a technical decision based on the Digital Millenium Copyright Act's safe harbor provision for service providers. To wit, service providers such as YouTube are not liable for the actions of their users as long as they follow certain rules, such as promptly removing copyright-infringing material in response to complaints filed by the copyright holders.

I'm not a legal expert, so I don't claim to know whether the problem is with the Digital Millenium Copyright Act or the judge's interpretation. But there is a problem here, because the ruling clearly favors those who provide a platform for displaying copyrighted videos without permission over those who produce video content for compensation.

I strongly suspect that Google's ultimate goal is to profit from others' copyrighted material by selling more advertising, and the way they are pursuing that goal is extremely clever. By slowly enlarging the scope of permissible copyright violations, Google is putting tremendous pressure on content publishers to cut a deal. It's revealing that judge Stanton said in his decision that YouTube and Google "not only were generally aware of, but welcomed, copyright-infringing material being placed on their website."

Here is the dilemma: digital technology and the Web make it easy to copy and redistribute content. Some activists argue that traditional copyright rules are obsolete and threaten the Web's ongoing success. Copyright holders fear that they will not receive fair compensation for their creative works because they will no longer be able to maintain exclusive control over those works.

The problem with the ruling is that it places too much of the enforcement burden on copyright holders in a game they can't possibly win over the long term. Should everyone who produces videos and films be forced to hire full-time people to monitor the Web and file complaints every time one of their copyright-protected videos is posted? Even if the service provider promptly removes the material, considerable damage can be done in a short period, and the material can always be reposted. And if it's OK to host copyrighted material without permission for 2 days, on what principle would it be wrong to extend that to 2 weeks?

The other extreme would be to place too great of a burden on service providers. For example, asking Internet service providers (ISPs) to inspect all of their traffic and block uploads before they are completed is clearly unworkable. It also wouldn't make sense to treat a Website that hosts user-uploaded videos the same as a site that knowingly distributes pirated material--as long as the user-uploaded video Website takes reasonable precautions to block and remove pirated material.

My understanding is that Viacom wants YouTube to make a reasonable effort to detect and block copyrighted material before it is posted. That makes sense to me, because it says that a Website that hosts user-uploaded videos should at least share the burden of identifying copyright-infringing videos. To say YouTube only has to remove copyright infringing material after it has been posted is tantamount to saying that it's perfectly OK to ignore copyrights until the owner complains.

Gazing into my crystal ball, I see weekends filled with stolen content uploaded on Fridays.


UPDATE: Scott Cleland explains why Judge Stanton's ruling is likely to be overturned.