Category Archives: Politics

Commentary and thoughts on politics, economics, and other social issues – primarily focused domestically or on intrastate issues

Some Cynical Investing in Washington

One of the problems that we have in the United States is policing some of the more self-interest driven actions made by our politicians. The average congressional member arrives in Washington rich, and leaves richer, and the climate in the nations capital and the laws governing politicians help that process. There are several reasons for this – money in campaign politics, lobbying, and others, but a key one is the investments that our representatives are able to make while knowing more about the workings of the world than the rest of us.

I recently read an article that analyzed a few investments of Congressional members in the context of their committee memberships, specifically around telecom. In many of today’s contemporary issues, including net neutrality, telecom mergers, and other major technology induced policy debates raging across the country, there will be clear winners and losers. Whether that is Facebook, Twitter, Google, Verizon, or Comcast, policy decisions made in Washington by Congress and the FCC will be worth big dollars to big companies. It seems incredibly corrupt for politicians to own investments in the areas that they will craft policy in such a direct manner.

In 2012, in the wake of the financial crisis (when it was possible for someone in Congress to sell Lehman Brothers before the rest of the world knew that it was imploding), Congress passed the Stop Trading on Congressional Knowledge (STOCK, how cheeky) Act in order to loudly and publically declare that Congress would no longer be able to insider trade on information that was available to them. An online database of disclosures, as the thinking went, would help citizens to monitor their representatives and prevent abuses and conflicts of interest. Of course, this only works if the information is easily accessible, which a later amendment “fixed” to make it much harder for the public to analyze the transactions of members. Call me cynical, but this is crony politics at its best, built from a bare desire to profit from their positions. Reminds me of some of the contracts-for-free-mansions deals circling around the Mexican Presidency right now…

In the private sector, there are restrictions and rules governing similar behavior. I cannot own a company’s stock, and have them as a client to which I render professional services. In accounting, consulting, and (likely?) law, there are significant barriers in place to stop financial transactions made with non-public information and importantly, effort is made to avoid conflicts of interest or even apparent conflicts of interest. It is important to have no financial asset that impairs objectivity or gives the sense that one has skin in the outcome of a project going a certain way. We have also had the scandals (e.g. Enron, Galleon) that have shown why these rules are important.

Why not the same for Congress, and members of the Executive and Judiciary that implement and adjudicate matters of law and regulation? If members of the FCC and the committees that govern it have stake in the major telecom companies, how can we have any faith that they will act in an unbiased matter for the good of all?

Our government is supposed to act in our collective interest, not for individual sectors or slices of our nation. Let us create a financial climate that incentivises the right actions. If high ranking members of our government were only allowed to own USD and Treasury bills, or some kind of pre-made basket of securities indexing the market as a whole (basically prohibiting picking individual stocks and investments), I’d bet you’d see them acting more in the public interest. Let’s bar them from holding assets with which they have incentives to support policies that enrich themselves.

What other more neutral investment options could we give Congress? Potentially a shared management endowment / money held in escrow and managed like some of our major universities? What could remove their perverse incentives most effectively? Narrowing their investment options so strongly, while probably the most enlightened option, is not likely to get into law anytime soon, so it would help to think of other similar schemes that might be used instead.

Another Example of Inane Regulation

Another Example of Inane Regulation

Governments have regulatory regimes in place for a number of areas of commerce, some more and less important. Recently, some of the more self-serving and corrupt arrangements have been brought more into the public consciousness, primarily due to the efforts of start ups to upend the systems that are currently in place. Uber works city by city against taxi and limousine lobbies, which have immense control in major cities like NY. Why is a Medallion licence worth over $1M? But that is not the point of this post.

Tesla is another example of a company that is challenging the traditional status quo. While they make electric vehicles and have been on a tear recently in the markets, Tesla also has set up a retail model with direct sales to consumers. They argue that without dealers, they are able to more effectively advocate for the concept of the electric vehicle, and it has certainly helped with their publicity. So what’s the problem?

NJ just banned Telsa’s model, mostly at the behest of the New Jersey Coalition of Automotive Retailers, a lobbying organization for car dealerships. They will need to convert their stores to “galleries”, or shutter them completely. All of the arguments I’ve read so far from NJCAR pushing the legislation to ban Tesla’s approach lack strength, and mostly rely on the safety and recall implications of having separate dealers, competition (but its with each other on margin over dealer cost…), and the economic benefits to smaller towns of having dealerships placed there (that wouldn’t be if the legislation and requirements did not exist).

Frankly, having car dealers all over the place is a very poor use of scarce economic goods. What efficiency is gained by having so many resources devoted to selling cars, and inherently non-value adding activity? It’s work and economic activity that sure, generates tax dollars and provides jobs, but its akin to tax preparation – it’s an activity that does not really need to be done. We would all be better off if folks were focused on more productive efforts.

It is sad to see an entrenched business group lobby to protect their economic moat and be so easily successful. The system of dealerships is a hidden cost that anyone that buys a car bears, and is protected by law. If Tesla’s model really added less value, it would not be successful, and would fail of its own accord. The market does not get to decide here.

 

An Uninformed Public

This TED talk from David Puttnum was on the front page this week, and being the inquisitive one I took a look. It is about the media, and potentially how it should be managed to help create a more informed populace. Worth a watch.

I certainly sympathize with some of the problems with the contemporary media. It certainly is prone to focus on the wrong things, the minor problems, or the inflammatory issues. The media exaggerates the truth, picks stories to sell papers (or ads), and in some sense does lead to a more polarized and divided public. There is also doubt that a cornerstone of democracy is an informed and deliberative public, that can evaluate and consider the points of a debate and make educated choices about government. However, one of the comments said it best though (paraphrasing) – “why should we assume that it is wrong for folks to be disenchanted with government, politicians, and the overall political process?” Should we make a change to how we treat reporters and the media because of these problems?

I tend to disagree with his prescription for these ills. “Reasonable” standards always activate my skepticism. Who is a judge to say what “reasonably” might cause harm here? We’ve long had standards for speech that was protected and that which was not because it was harmful – from Oliver Wendell Holmes – “the question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent.” If it does not lead to a clear and present danger, but instead only causes potential disillusionment with government, I see no reason or justification for silencing it. Releasing Ed Snowden’s information could clearly under such a standard be “reasonably” foreseen to cause harm under this type of standard, and something a judge could potentially clearly claim, to our detriment. Who would watch the watchers in this case? To be an effective watchdog, the press needs the freedom that also enables its excess at times.

I tend to think that the freedom of the press is one of the most important freedoms we have (J.S. Mill), and putting another check on it that is adjudicated by government seems more foolish than wise. There are other ways to create a more civically minded public that don’t have the potential to degrade our freedom and enable potential abuses of power.

US Intelligence Budget

US Intelligence Budget

WaPo put together this fantastic infographic several months ago on the national intelligence budget, highlighting the overall split among agencies, missions, and individual expenses of each of those agencies. Really fascinating to be able to break down the spend and learn a little about how we prioritize and how we gather the majority of our intelligence.

Much has been said recently about the intelligence community, but little attention has been paid to the spending that underlies it. This is obviously critical spending and also requires a lot of secrecy, but without transparency we also lack the ability to provide much public oversight of its activities. Most members of Congress are also unaware, and if they are aware cannot share what they have learned (e.g. Ron Wyden). It’s a balancing act, but it illustrates the difficulty that we face in controlling what our government does. Important to learn more about it either way – I think I need to read more about the history of the intelligence apparatus, the Church Committee, etc.

Interesting to note we spend about 3 times as much on our intelligence programs as we do on NASA, although that’s always my selfish benchmark.

Net Neutrality

http://gizmodo.com/what-happens-to-music-after-net-neutrality-1503676551?utm_campaign=socialflow_gizmodo_twitter&utm_source=gizmodo_twitter&utm_medium=socialflow

Wanted to pass along this interesting piece that breaks down what the recent net neutrality decision might mean for music services.

The decision is quite disappointing, and I hope the FCC is able to fight against the headwinds to reassert control over the internet. Categorizing the internet as anything other than common carriage makes no sense.

This article has a number of great points, including that competition doesn’t exist for ISPs (there’s a reason that they are among the !most hated companies…), so the market won’t be able to reflect consumer preferences for an internet that treats content equally. Smaller internet companies will suffer as they cannot compete on tolling arrangements with ISPs, leading to less innovation, worse choices for consumers, and higher prices (if the ISP gets to print a nickel, where do you think it comes from?).

Really disheartening decision. Pretty good example of lobbying dollars used yo increase rents to normal folks on the internet. Hopefully the internet will soon be recategorized as a utility, which it surely is.

Will write more later.

The Case Against Email That Makes Warranted Searches Impossible

http://www.theatlantic.com/politics/archive/2013/11/the-case-against-email-that-makes-warranted-searches-impossible/281277/

Very thought provoking letter from a developer who was producing a privacy ensuring email and communication system, who later backtracked and shut down his project because of what he believed could be unleashed.

While we tend to focus on the lack of transparency available in the electronic mediums of communication we use every day, the opposite is also a potentiality. If I have something hidden in my house and am suspected of a crime, law enforcement can get a warrant and legally and physically gain access to investigate. If encryption was good enough, it is possible that they would never be able to unlock hidden secrets, no matter how dire the situation or clear that there was a legal reason to do so. We (this developer, really) could create a system that ensures that information cannot be decrypted. By creating this, would we be enabling terrorists or others to avoid all of the actions we take to try and stop them?

However, what is right here? Are we to fear what we can create? It gets back to the basic question of whether we value security or privacy more, and how much of one we are willing to trade to get the other. I tend to believe in the Mill-ian let no idea go unsaid as it strengthens our ability to see the truth, either by being the truth, or providing a point of argument to strengthen our own conception of what is right. Stopping free speech inherently dulls this search for truth. And I believe similarly for technological progress – by creating deeper and deeper ways to encrypt information, we also create the incentive to figure out how to break that encryption. If we limit the technological goals that we pursue too dramatically, we risk having the skills to get us there atrophy. (Kind of like when we abandoned the Saturn V…)

On a similar but unrelated note, I’ve often thought about how the internet could fragment due to some of these pressures. As the US and others lose control over the web’s governance (perhaps rightfully so after we have demonstrated our inability to be benevolent guardians of the web), and as it falls more under the dominion of powers looking to add more limits to its inherent functionality, will we see a rise of ‘parallel’ internets with different sets of rules? Imagine small communities networking themselves together to avoid being spied on by others, and rejecting this broader network we have created. It is kind of similar to what could be enabled by this enhanced privacy within the internet itself – just depends if they are separate whole networks or just shielded networks within networks.

We will have to see – there seems to be a lot of pressure to get away from the prying actions of others recently, both for privacy’s sake and otherwise. The internet is such a vehicle for democratization – just look at Bitcoin’s surge in the last few weeks…

Continue reading The Case Against Email That Makes Warranted Searches Impossible

Local Governments Fight for Businesses

http://www.buffalonews.com/business/delaware-north-says-tax-breaks-needed-for-new-headquarters-in-buffalo-20131028

I wanted to quickly post this article from my hometown of Buffalo, as an example of some of the dealings that smaller cities and municipalities are often pushed to make.

It’s somewhat of an arms race – local governments are pressured to make sure that they are doing something for the local economy, so are often in the position of offering incentives to businesses to expand, grow, or relocate into a particular city’s limits. Tax rebates, grants, and other financial incentives have become very common for cities or counties to offer businesses. And why wouldn’t they? Take a rust belt city government such as Buffalo, fighting not only for every marginal job and bit of economic growth but also for an identity and a sense that things are improving. It only makes sense that they do everything they can to encourage expansion.

However, given that cities do this, businesses have their pick. After doing the analysis of what they need, what market is best, and what they can afford, a business can threaten and cajole to get as much out of those governments as possible and sell their expansion to the highest bidder, while pocketing as much as they can along the way.

It’s more than sad that this manifests itself as Delaware North basically threatening to leave Buffalo unless they can get as much money out of the taxpayer as possible. That cannot lead to good or optimal economic decision making or allocation of resources – someone has to lose. “Revenue dollars won’t justify construction of the building” – so don’t build it. A parking ramp won’t bring in enough revenue, then likewise. “Being based in a hub city” or a better talent pool would improve the company – great. Sadly, Boston may be a better home for Delaware North. However, what should we be willing to give up to see them stay?

A city does not build a competitive or sustainable advantage one financing deal at a time. It does nothing to tackle the actual problems that prevent a city such as Buffalo from growing organically.

This phenomenon is also common with sports stadiums, which often “need” gigantic financing packages from governments, despite the fact that sports franchises (and organizations like the NFL) make quite a lot of money themselves.

This is a cursory muse on the topic, but just wanted to cite the very blatant example.

Gerrymandering

http://www.realclearpolitics.com/articles/2013/10/11/gerrymandering_isnt_to_blame_for_dc_impasse_120300.html

I saw this article recently and it definitely gave me pause.

It is now common knowledge that polarization is at some of its highest levels in recent decades. Each party has largely been scrubbed of those that do not tow the overall party line, which has led to more homogenous parties. Naturally, this has also pushed the parties more to the extremes. Primaries do not help – as all candidates have to pass through a trial by fire from a narrower political spectrum compared to the past. (For a great visual of this, see XKCD – GREAT.) There seems to a natural ebb and flow to polarization, but we are at an extreme.

I have to admit that I was surprised. I do not think I had ever really encountered an article that took a data centric view at whether gerrymandering has actually changed elections. It is oddly reassuring to have that point asserted.

Gerrymandering is one of those points that is so infuriating no matter what side of the political spectrum one falls on. Districts such as Louise Slaughters’ “earmuffs” between Buffalo and Rochester are case in point. Who would come to the conclusion that this makes sense to represent a certain population effectively? District lines are arbitrary, and when the power to make them is given to individuals, especially state legislatures, the tendency to use that power for self-benefit is overwhelming. Incumbents love to have their seats manipulated to be more safe.

Without doing enough research to know precisely what options and policies I would support in this area, I do know that I would support a more rules based approach. On what criteria? I am not sure. Some limit on the ratio of the border length to the area of the district (to prevent massively concave and ridiculous geometry) would be one potential idea. We could easily create an automated system of manipulating districts that would be more fair and less under the control of party bosses. Whether or not we could ever agree on what that system should optimize for is another question all together.

TED Talk – Shifts in Global Power

For the past few months, I have been submersed in thinking about global trends in the world and how the world may look over the coming few years and even decades. On that journey, I was lucky enough to come across this fascinating talk from Paddy Ashdown. (Watch it first).

I think the three ways that he identifies are very powerful. The classic lateral shift in power is definitely taking place. However, I do not think anyone knows with any certainty how the world will actually end up. Will we see two powers? Four? When will China become the world’s largest economy? When will India? Will the per capita gaps ever narrow completely? Many questions, few answers, but we can be sure that the world will not continue as it has recently.

On the vertical dimension, I think former Ambassador Ashdown may be missing some of the changes. While I would agree that power is shifting away from the nation state, I think that it is moving in two directions. Global institutions are gaining power in the upward direction, but I think that individuals and subnational organizations are also gaining power. There has been much talk of the rise of the public private partnership to solve challenges facing states, which directly empowers companies, and cities and smaller groups of individuals are often taking a lead on policy (New York has been doing quite a lot). And while we need to have international regulation as so much more happens outside of state boundaries, current global institutions have not had a high success rate at changing behavior so far. The state is getting squeezed from both sides.

The last point around interdependency has been everywhere the last few years post-financial crisis, but it begs repeating. For so long, we operated under the premise of mutually assured destruction – a concept that is frightening but turned out to work pretty well in keeping the powers in check. As we become more interdependent in other ways, including more specialization in who supplies energy, food, manufacturing, and ideas, does a similar concept also occur in trade and economics? That could be a brighter though, as it would suggest stability as an imperative on all fronts. We will see.

However accurate he is in identifying the axes of change, I also like that he is not prescriptive. There is no over promising of what the future might look like, when we would be wrong to say we were anything but uncertain.

On a complete side note, I think that Ashdown’s rhetorical skills are simply superb. He has a command of language, and really makes this talk spellbinding. At some point, I would like to also be able to speak at length in such an eloquent fashion.

Food for thought.

We’re Being Watched

Given the revelations over the past week, it seems clear that our government has overstepped what many of us would consider proper in the realm of surveillance.

Initial reports –
NSA Disclosure in the Guardian – http://www.guardian.co.uk/world/2013/jun/06/nsa-phone-records-verizon-court-order
PRISM in WaPo – http://www.washingtonpost.com/investigations/us-intelligence-mining-data-from-nine-us-internet-companies-in-broad-secret-program/2013/06/06/3a0c0da8-cebf-11e2-8845-d970ccb04497_story.html

While it is perhaps too early to call these reports “the facts”, the administration has not denied that the programs exist, and has defended their usage and effectiveness in combating terrorist threats. However, the power wielded seems to be incredibly massive – all phone records of all calls made in or out of US soil in a multi-year period, ability to sift through the content of internet communications (“accidentally” picking up a lot of intra-US material even when only foreign material is targeted), in addition to all types of surveillance we know is available already, including databases of license plate numbers and warrant-less wiretapping and the like.

The framers knew that power was a corrupting influence, so they attempted to split it up and let power balance power as much as was possible. The “tyranny of the majority” needed the representative process to “cool” its passions. Power was vested in 3 distinct branches, so that any movement would be tempered, and a broad concensus would be needed to move policy in very new directions. The American people are directly responsible for two of those branches, with a third as a derivation and quasi-impartial check on the rest. This balance of the government, along with the influence of the people and public opinion, is responsible for the (relative) success of our system to date.

However, inherent in this process is that the people can be an effective check on the actions that are done in their name; without transparency, there is no way to hold the government accountable for what it does. In this case, with the legislature signing away extremely broad powers of surveilence, the executive interpreting them in an aggressive manner, and all questions adjudicated by a court whose opinions can never be read, how can the public really know or even attempt to police PRISM, cellular metadata, and other types of ridiculous collecting of information?

Our laws have evolved epically slowly in this time of technological transformation. The jurisprudence that allows the government to collect and aggregate this data, read any emails over 180 days old, and tap into other internet communication without a warrant was built in a simpler, less connected time. It is up to us to become educated and push for a modernization of the law. For unreasonable search and seizure should not be limited to the physical world; my old emails and digital footprint are immensely more personal than if police were able to rummage through my pockets as they pleased.

It seems inevitable that this will lead to corruption. Why should I trust the 3 branches to do their duty in isolation, without the check of the people? Why should I be made to trust that they will not use it for other ends? Saying that “if we don’t trust in the 3 branches to do what’s right” (paraphrase) in secret, then “we’re going to have some problems”, does not make me feel particularly at ease. If something is too powerful, no one or group should wield that power over another.

Nearly no one outside of the administration and the few senators that have spoken out on the program have taken stands to defend it. See some of the commentary –
If each of the seemingly small number (200) of court orders on this is as big as the Verizon one… – http://www.wired.com/threatlevel/2013/06/nsa-numbers/
The NYTimes in on the action – http://www.nytimes.com/2013/06/07/opinion/president-obamas-dragnet.html?pagewanted=all&_r=1&
Sad for the country that has done so much to push freedom around the world (disagree if you wish) to not follow its own guidance – http://www.slate.com/blogs/future_tense/2013/06/07/prism_hurts_us_internet_freedom_rankings_freedom_house_to_downgrade_america.html?wpisrc=most_viral

I think that each of us should take a little effort to familiarize ourselves with these programs, and what they might mean for our own information stored online. When I think about the size of my online footprint in the context of this, it surely is disheartening. Something I might test later is https://myshadow.org/, which might be able to help out. Others have written articles to help out – http://www.slate.com/blogs/future_tense/2013/06/07/how_to_secure_and_encrypt_your_email_and_other_communications_from_prism.html.

Peripherally, it will be interesting to see how this effects many of tech’s biggest giants, who inherently now rely on our data as their major business proposition. What if that data dries up because we have no faith that it won’t be used against us? – http://www.slate.com/articles/technology/technology/2013/06/prism_apple_google_microsoft_how_the_nsa_s_surveillance_program_could_ruin.html

Very thought provoking stuff.