The Hill Profiles Gigi Sohn

Julian Hattem has a profile of Gigi Sohn, charting her influence over the network neutrality debate. The former head of an advocacy organization now leads from the inside:

While no official can rival the president in terms of political influence, Sohn’s early work to engage the public helped nudge Wheeler toward considering the possibility of reclassification.

“Before the direct intervention of the president, it is clear that Wheeler was willing to think of Title II as part of a hybrid solution, but wasn’t willing to go all the way,” said Feld, of Public Knowledge. “I do think that Gigi was very important in the education process at the FCC to get them up to the hybrid point.”

While she maintained, “you don’t have to stop being an advocate when you join the government,” Sohn also described her evolution toward seeing seemingly “no-brainer” concepts as “thorny, multi-faceted problems without easy solutions.”

“It’s safe to say that whatever her agenda might’ve been before she got the job, her agenda in the job has been to push what the chairman wants to do,” echoed Craig Aaron, the president of Free Press, another advocacy group that has often called for tough regulations.

 

The Basics of Euvoluntary Exchange

Samuel Wilson’s prodigious and interesting output at Euvoluntary Exchange lead me to two articles by Michael Munger, the source of the blog’s name and focus. The first article “Euvoluntary or Not, Exchange is Just” is fascinating. Here is the main thesis:

All objections to the morality and justice of the uses of voluntary market exchange are mistaken. In fact, they are really objections to imbalances in the distribution of power and wealth. Euvoluntary exchanges always justified, and are always just. Further, even exchanges that are not euvoluntary are generally welfare improving, and they improve most of all the welfare of those least well off. Restrictions on exchange harm the poor and the weak.

For Munger, euvoluntary exchange is the name given to any any truly voluntary exchange that leaves both parties better off than before. To be truly voluntary or euvoluntary, the exchange requires Continue reading

Information wants to be expensive as well as free

Famously, Stewart Brand noted that “information wants to be free.” But, that statement leaves off the other half of the phrase, thus burying the complexity of his thinking. In an email, he explained,

In fall 1984, at the first Hackers’ Conference, I said in one discussion session: “On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

He continues in his book, “The MIT Media Lab”:

Information wants to be free because it has become so cheap to distribute, copy, and recombine—too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.

 

FAA Device Rules and the Continuing Problem of Spectrum Interference

This was bound to happen: the proliferation of mobile devices is beginning to cause the “incidents” involving airline passengers to rack up. From Nick Bilton:

In September, a passenger was arrested in El Paso after refusing to turn off his cellphone as the plane was landing. In October, a man in Chicago was arrested because he used his iPad during takeoff. In November, half a dozen police cars raced across the tarmac at La Guardia Airport in New York, surrounding a plane as if there were a terrorist on board. They arrested a 30-year-old man who had also refused to turn off his phone while on the runway… In 2010, a 68-year-old man punched a teenager because he didn’t turn off his phone. Lt. Kent Lipple of the Boise Police Department in Idaho, who arrested the puncher, said the man “felt he was protecting the entire plane and its occupants.” And let’s not forget Alec Baldwin, who was kicked off an American Airlines plane in 2011 for playing Words With Friends online while parked at the gate.

At issue is the largely unproven idea that tablets and phones interfere with a plane’s computers and communication devices. But, the asymmetry in rules for flight and takeoff is especially peculiar. When electromagnetic interference does happen with mobile devices, it is usually limited to a narrowband of the spectrum, due to inadequate filtering, tuning, or poor frequency control. The bands dedicated to aeronautical communication and telemetry are largely devoid of adjacent mobile ones, which does reduce the potential risk. Moreover, if there were interference problems of this sort, one would assume that they would happen during takeoff, landing and in-flight. Admittedly I am no aeronautical engineer, but I am not sure what kind of case for interference would make just takeoff and landing more risky.

Adjacent band interference was at the center of another debate in early 2012: LightSquared’s troubles with GPS devices. Ultimately, the company could not deploy their 4G network because of the interference problems it created for GPS devices, but these were known problems that LightSquared tried to innovate around. As the piece explains, the FAA announced in October that it would review its policies on the use of electronic devices during all stages of flight due partially to Chairman Genachowski’s instance. Being chastised by the FCC that you need to review your rules is bad, especially considering that it still had a number of outdated telegraph laws on the books until the late 1990s. Perhaps others might be able to comment, but I am at a loss to describe the harm imposed by the rules. Sure these rules are inconvenient, but they are actually better at showing the regulatory inertia whenever any rule is adopted, which should make us all a little more wary.

 

Amazon & Their Taxes

Reuters is reporting on the history and legal problems of Amazon’s taxes. Apparently, last year the IRS demanded $1.5 billion in back-taxes from “transfer pricing [of their] our foreign subsidiaries,” amounting to just under a tenth of their gross annual profit.

The article doesn’t take much knowledge of tax law to understand, but for the  tl:dr crowd, here is the gist:

In 1999, Amazon began to bring foreign profits home from their French and British operations to balance the losses in the US, which at the time amounted to over $1 billion. As the domestic business got into the black, a new problem appeared: the American corporate tax rate, which is the highest in the world, was beginning to increase the total tax bill. The solution was to set up a number of companies in Luxembourg, which has comparatively low corporate rates. However this arrangement is not particularly tax efficient. So, in 2005 an inter-company deal began license fee transfers among the Amazon affiliated companies the the small European country. The technology, for which the license fee was being paid, has never been formally revealed, but it has allowed the company to transfer profits from high tax areas to a low tax regime. At the same time, one of the companies began  payments to the domestic office in Nevada. The difference has since stayed in Luxembourg as cash and has allowed them to have a reserve in $ 2 billion.

In total,

Amazon’s Luxembourg arrangements have helped it pay an average tax rate of 5.3 percent on overseas income over the past five years, less than a quarter of the average rate across its major foreign markets.

After the deal was struck, Amazon began to relocate a number of their European staff to Luxembourg and has since beefed up the entire operation, but now the IRS wants their pound of flesh. And $1.5 billion.

Some might think their strategy is dishonest, but I would say otherwise. It is within US tax law to engage in transfers pricing tax-free, a feature of the code that allows the structure to work. And moreover, the corporate tax rate in American is obscene. We should think carefully, as Adam Thierer notes, on whether we want “tax competition or tax collusion.” I would think that tax competition is the better route, because it demands fiscal  responsibility of governments. It adds, as governments need in these times of ballooning budgets, a huge competitive pressure. It is akin to an entrant in the tax collection “industry.”

Herbert Spencer on the Right to Ignore the State

From Social Statics:

Government being simply an agent employed in common by a number of individuals to secure to them certain advantages, the very nature of the connection implies that it is for each to say whether he will employ such an agent or not. If any one of them determines to ignore this mutual-safety confederation, nothing can be said except that he loses all claim to its good offices, and exposes himself to the danger of maltreatment—a thing he is quite at liberty to do if he likes. He cannot be coerced into political combination without a breach of the law of equal freedom; he can withdraw from it without committing any such breach; and he has therefore a right so to withdraw.

The Inseparability of Rights and Duties

On rights and duties by James Otteson:

The test of whether one has a “right” to something is whether someone else has a duty to provide it. The two—a right and its correlative duty—are logically inseparable; like mountain and valley or ebb and flow, one exists only with the other. Hence if no one has a duty to provide you something, you have no right to it; and you can claim a right to something only if it is someone else’s duty to provide it for you.

The Multistakeholder Meeting Illuminates Various Problems of Objectivity

At the NTIA Multistakeholder Meeting this week, it was suggested that all those studies submitted and funded by an outside source be disclosed. Later, when the issue of objectivity came up again, it was suggested that the group should rely on professors to provide objective views.  While I am for disclosure in practice and not necessarily against the academy, both of the suggestions belie a flawed, but pervasive, vision on the connection between objectivity and research.

Sure, corporate funded research has lead to foibles in the past, but there is nothing to suggest the mere connection to a company delegitimizes it; nor are researchers swayed by the intentions of the companies they work with, despite what some of the most vociferous commenters might say. The reason why an individual would engage in research or advocacy of this sort is because their interests are aligned beforehand. Furthermore, companies are able to give researchers the kinds of technical and financial resources that cannot be found in the academy. Corporate labs like Bells Labs, PARC, and from an even earlier time, Thomas Edison’s Menlo Park helped to invent and bring to market the carbon microphone, the lightbulb, the transistor, the laser, the personal computer, the laser printer, Ethernet, and the graphical user interface, just to name a few. Each of these were hugely expensive inventions that might not have been pursued had it not been for the freedom of their arrangement.

Moreover, scientific work is not value-free. As the Nobel Prize winning economist Gunnar Myrdal pointed out,

There is an inescapable a priori element in all scientific work. Questions must be asked before answers can be given. The questions are an expression of our interest in the world, they are at bottom valuations.

The values of a person will affect the range of problems that they are willing to analyze, as well as the choice of variables to be included, which in turn determines the grounds on which a study will be judged. This helps to explain why objectivity in research of society and business is more complex than physics or biology. These features, however, are not magically down away with when you get funded by the National Science Foundation.

Even the NSF funded work is not foolproof. Just last week, the blog Neurobonkers posted a lecture by Prof. Dorothy Bishop, a highly respect professor of developmental neuropsychology, who detailed how brain scans and other typical neuroscientific methods attaches gavitas to hypotheses that are just wrong. As she went on to explain, studies like this are rife in her field. In other words, people love to believe a wrong conclusion back up by “neuroscience,” especially when graphs and charts seem scientific but can hardly be deciphered.

All of this is to say that funding sources do not necessarily separate out the objective from the subjective.

Privacy policy is especially troublesome, but for other reasons related to objectivity. Most of the research that is trotted out in favor of stricter privacy regulations comes from polling data. However, a poll does not actually express risk, but the public’s perception of it. There is a fundamental disconnect then between actual harm and the perception of harm.

In a classic study on the concept of risk, participants were first asked to consider two causes of death and then estimate the rate of each and ratios between the two. When compared against recent statistics, the estimations were off by factors. Participants said that both disease and accidents were about as likely to cause death even though death by disease is 18 times more frequent. Strokes cause almost twice as many deaths as all accidents combined, but 80% of respondents judged accidental death to be more likely. Tornados were seen as more likely to kill than asthma, even though the latter causes 20 times more deaths.

Daniel Kahneman, winner of the Nobel prize for his work on the subject, later said,

The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.

This is why during the Multistakeholder Meeting my colleague Berin Szoka asked that we rely upon experimental data and not polling data. He is correct in wanting a level headed approach because there is a lot of hyperbole effectively swaying the range of debate. He hopes, as well as I do, that calmer voices will prevail in the debate because there are tradeoffs inherent in restricting the use of personal data in the name of privacy.

The Conflict of Visions Does Not Align Well With Parties

Charles Murray’s review of Thomas Sowell’s “A Conflict of Visions: Ideological Origins of Political Struggles” begins:

One mark of a great book is a thesis so powerful that after a few years people take it for granted. Thomas Sowell’s A Conflict of Visions (1987) is such a book. Its thesis: The policy arguments between liberals and conservatives, socialists and libertarians, do not arise just from differences in priorities regarding freedom, equality, and security. At root, they draw from different conceptions of the nature of man. The Left holds an unconstrained vision: Given the right political and economic arrangements, human beings can be improved, even perfected. Success is defined by what people have the potential of becoming, not by people as they are. The Right holds a constrained vision: People come to society with innate characteristics that cannot be reshaped and must instead be accommodated. Success in political and economic policy must be defined in light of those innate characteristics.

While I tend to think Sowell’s thesis explains a lot for the libertarian/non-libertarian divide, it is not so clear that the left/right divide aligns as well. Both parties use the government to enact their preferred area of concern. It just happens that the traditional Right tends to concern itself with social issues while the Left does so with economic ones.