Technocrats & Policy

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.

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.

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.

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.

Yesterday President Obama said we need to reduce our dependence on fossil fuels and produce more "clean energy." That may be so, but what are the chances that the federal government can cause a major shift to renewable energy by the end of the President’s second term—assuming he is reelected?

Consider these facts. The federal government has been pushing energy conservation and a shift to renewable energy since the OPEC oil embargo in 1973. There has been some progress, but it doesn’t amount to much. According to Wikipedia, renewable sources account for just 3.4% of electricity generated worldwide.

It gets worse. The vast majority of today’s renewable energy comes from hydroelectric plants—a technology that wreaks havoc with the environment—and biomass—a scientific euphemism for wood-burning stoves. Solar, wind, and geothermal energy barely register a blip on the global energy radar screen.

Having done some work in the solar energy field in the early 1990s, I am baffled by those who think we can switch to solar energy by decree. Today, solar energy is simply too inefficient, unreliable and expensive to meet our energy needs. People have been working on solutions to these problems for decades with only meager results. And contrary to reports in some science magazines, there’s little evidence that we are on the verge of a breakthrough. Today’s research could bear fruit in five years or fifty years. Or something unexpected might intervene, causing us to change course entirely.

I did some consulting work for a solar energy company called Midway Labs. The company’s founder, the late Paul Collard, wisely focused on developing a solution for small villages in Africa and Asia. Collard’s unique solution employed light concentrating optics and solar cells designed to withstand high temperatures. The system could generate enough electricity to meet a small village’s basic requirements, but it required a mechanical system for tracking the sun as it traveled across the sky. It also required a large bank of storage batteries to take over at night and on cloudy days. The cold, hard fact is that a gasoline-fueled generator is more efficient, more reliable, and less expensive.

What’s almost completely missing from the public debate about renewable energy is informed discussion about the manufacturing, distribution and maintenance challenges. We can build wind farms all across the U.S., but what’s the cost to build and maintain enough of them? How much energy will be lost transporting electricity from rural areas to population centers? What's the environmental impact of large-scale deployment? Similarly tough questions apply to solar electricity and rechargeable batteries.

As one skeptic observed, renewable energy sources must be subsidized to create demand, while the fossil fuel industry is profitable despite being heavily taxed.

Like the fiber-to-the-home technology in telecom, expect several impressive showcase deployments. But the mass market evolves according to its own timetable and logic.


UPDATE June 17, 2010: Today's IEEE Spectrum Tech Alert was dominated by bad news about renewable energy and CO2 emissions reduction. Both stories (California's Geothermal Plans in Trouble and Why Carbon Capture Won't Work) concern projects that depend on access to scarce water supplies.

All politicians believe they know what to do about the high cost of health care. There's just one problem: most of them are not qualified to solve the problem.

During the 1990s, we had the failed Health Security Act. The key elements of this plan were to increase government regulation and decrease the number of doctors--particularly specialists.

Now we have the Patient Protection and Affordable Care Act. The crux of this plan is to increase both government regulation and the number of doctors. However, there's strong evidence that the Obama Administration believes we should shift the emphasis of health care from aggressive, high-tech treatment to lifestyle management and hospice.

I admit that these plans have the potential to reduce costs. But I fear it will be by returning medicine (as experienced by the average consumer) to the 19th century.

Steve Jobs expressed something that many of us have felt for a long time when he proclaimed that Google’s “Don’t be evil” mantra is BS. Google’s corporate motto makes us uneasy, but it’s hard to say exactly why. Even Jobs only managed to lash out—missing an opportunity to clarify an important issue.

“Don’t be evil” sets the bar way too low. Some deeply religious individuals may consider all unethical behavior evil, but most people reserve the word “evil” for extreme acts—the kind that inflict pain or involve violence. “Don’t be evil” leaves the door open to things you know are wrong but somehow manage to rationalize.

“Don’t be evil” is way too vague. People have debated what types of behavior are and are not ethical since the beginning of recorded history. Most organizations that care about what’s right go to much greater pains to stipulate what’s wrong. Often that means establishing and promulgating a code of ethics. Life, including business life, presents us with many ethical dilemmas and it helps to have guidelines to remind us of what’s expected in different situations.

“Don’t be evil” is way too subjective. People may disagree about whether a specific act is evil or just in bad taste—particularly if one happens to be the offender and the other happens to be the offended. It also leaves it entirely up to individuals to decide whether it’s OK to do something bad as a means of accomplishing something good.

They say the road to Hell is paved with good intentions. Socrates taught that doing the right thing is not a matter of intention but a matter of knowledge. With its “Don’t be evil” motto, Google does more to sidestep ethical issues than to set a worthy standard.

Science Daily reports that a new study by Wolfgang Knorr of the Department of Earth Sciences at the University of Bristol "reanalyzed available atmospheric carbon dioxide and emissions data since 1850 and considers the uncertainties in the data" and finds that there has been no increase in the fraction of airborne carbon dioxide in the past 160 years.

Knorr's research was published November 7, 2009 in Geophysical Research Letters.

I have no reason to conclude that Knorr is trying to debunk global warming. But it's nice to know that there are still scientists who revisit the data and challenge aspects of prevailing theories. (I suspect more and more that it's journalists and politicians who are pushing the notion that these issues are settled.)

A couple of interesting resources readers may want to check out: World Climate Report and Roger Pielke Jr.'s Blog.

A popular argument for supporting climate change legislation is that the risk of doing nothing is too high. According to Greg Craven, a high school science teacher who produced the wildly popular "The Most Terrifying Video You’ll Ever See,” the global climate is a non-linear system “capable of sudden, unexpected lurches set off by seemingly small bumps.”

So Craven asks: What’s the worst that can happen if we don’t do something about global warming right away? Answer: A worldwide economic, political, social, environmental, and health catastrophe.

OK, I’ll bite. I agree the risk of doing nothing is greater than the risk of acting unnecessarily.

Now, in the same spirit of open mindedness, I’d like to ask climate change activists to consider an alternative solution. According to conventional climate change thinking, the proper response is to reduce industrial greenhouse gas emissions; convert to cleaner cars; and encourage citizens to rely more on mass transportation, bicycles, and walking.

I propose, instead, that we use biotechnology to reabsorb atmospheric carbon dioxide. According to Freeman Dyson, the United States alone could accumulate enough CO2 absorbing topsoil to more than compensate for the growth of CO2 emissions (which is largely due to the burning of coal by China). This approach has several major advantages over conventional proposals.

The conventional proposals bet the future of the planet on our ability to reduce greenhouse gas emissions fast enough. But what if we can’t? It may be easier to scale up the biotechnology to compensate for CO2 emissions than to scale down industry.

The conventional proposals rely on compliance by all major industrial countries. There will probably be some cheating. China may not even go along. If we use biotech to compensate for CO2 emissions, then it may not matter who cheats or doesn't go along.

The conventional proposals risk a reversal in worldwide development. After all, that may be the price of reducing CO2 emissions. A decline in living standards is possible, and that could lead to food shortages, disease epidemics, and other problems.

The conventional proposals put the main burden on developed countries. Given that most of the world sees economics as a zero-sum game, the real motivation may be redistribution of wealth. Using biotech to compensate for CO2 emissions subverts demands to redistribute wealth. (In fact, if the U.S. undertakes the bulk of the effort, then we should demand reimbursement from the United Nations.)

The conventional proposals call for switching from proven fossil fuels to unproven "green" technologies. For example, we don’t even know the cost (whether in dollars or environmental impact) of converting tens of millions of automobiles from gasoline to electric batteries. Using biotech to compensate for CO2 emissions delays the need to switch to alternative energy sources.

The conventional proposals call for research in a set of favored technologies, but ignore other routes to the same destination. For example, why not pour research funds into making nuclear energy production and waste disposal safer and developing new ways to scrub automobile exhaust? If that works, then we should invest in developing more cost-effective ways of extracting oil from shale.

In contrast, the development of biotechnology to compensate for greenhouse gasses could empower us to better control our environment over the long-haul. We could dial up when we need more compensation and dial down when we need less. By keeping existing pollution controls in place, we might be able to compensate for any increase in greenhouse gasses without further damping industrial activity.

Biotechnology is already delivering benefits in other areas and promises much more. Developing biotechnology for absorbing CO2 will surely lead to other discoveries and inventions. We may even learn along the way how to use biotech to produce clean fuel.

If we really need to act on climate change, then it would be much wiser to focus on proactive solutions like growing more topsoil than reactive solutions like scaling down industrial activity and switching back to more primitive sources of energy such as wind.


UPDATE December 21, 2009:

Nathan Myhrvold, former Chief Technology Officer for Microsoft, has proposed another alternative that may not require downsizing industry and marching backwards. (Though his company presents it as a "backup plan" in case reducing emissions doesn't work fast enough.) Myhrvold's scheme is to pump sulfur particles into the stratosphere, increasing the percentage of sulfur particles by just 1%. Doing so would reduce the amount of the sun's heat that reaches the ground and lower atmosphere. Because volcanoes do the same thing naturally, we know that it's safe.

We are inundated with doublespeak. "The Fairness Doctrine," "The Campaign to Put Patients First," and "Net Neutrality" are just three examples. The people interested in reviving the "The Fairness Doctrine" are trying to curb free speech--not protect it. The goal of "The Campaign to Put Patients First" (by an advocacy group that calls itself "The National Health Council"--yet another example of doublespeak) is to further empower politicians and government bureaucrats--not patients. Likewise, "Net Neutrality" is a government power grab based on false accusations and scare tactics.

Advocates of Net Neutrality say that government regulation is desperately needed in order to preserve the Internet. Never mind that the commercial Internet has been evolving without the benefit of such regulations for over 20 years. Never mind that the Internet is a classic example of a self-organizing system. If Net Neutrality advocates were truly committed to preserving the Internet, they would seek first and foremost to preserve its unregulated and self-organizing nature.

An excellent White Paper by Barbara Esbin of the Progress & Freedom Foundation was brought to our attention by Scott Cleland's Precursor Blog.

As Esbin details, the arguments for Net Neutrality depend heavily on assertions about what broadband ISPs will supposedly do in the future. There's no evidence that broadband ISPs are slowing or blocking content today in the ways alleged, and there's no viable business model for them to start doing it tomorrow.

Why would some companies support Net Neutrality? Because lobbying government officials is competition by other means. Companies tend to look at government regulations purely in terms of how the regulations affect their business model. If you look closely, you'll see that companies supporting government regulations often have reservations. To wit, they want the regulations applied to competitors, while they claim special exemptions.