brought to you and made by socialism

Obsidian Wings: The Regulatory Origins of the Internet:

Patrick Ruffini argues that Obama's alleged regulatory overreaching could (or at least should) move Silicon Valley back into the Republican camp.  I'm not really diving into that, but I wanted to quibble with this statement:

The irony here is that many of the entreprenuers who succeeded in the most unregulated environment possible -- the Internet -- are at once hyper-capitalist and socially-liberal Obama voters. (Good luck creating Twitter or Facebook in any industry as tightly regulated as the auto or banking sectors in the Age of Obama.)

This really can't be repeated enough -- the Internet was regulated.  Regulation is what made it work.  Indeed, the Internet's phenomenal success stemmed directly from the underlying common carrier regulation that made it possible. There was no immaculate conception.  The Internet came about because of sustained federal funding for research and development.  Originally, the data services that ultimately evolved into what we now call "the Internet" depended entirely on access to the underlying phone networks. And so when these data services got going, the federal government faced a choice.  A crossroads, if you will.  The government could ensure that Internet/data services had nondiscriminatory access to the underlying phone networks on which they "rode."  Or, it could have allowed the phone companies (i.e., AT&T) to dictate the terms of access.  (This is basically how most wireless service in America works -- it's the "walled garden" approach.  And don't you loves it?).

Wisely, in the Computer Inquiries proceedings, the FCC opted for open, nondiscriminatory access.  The Twitters of yesteryear didn't need permission from AT&T to start their business.  The nondiscriminatory access that made the Internet successful didn't happen because AT&T was full of benevolent, far-seeing souls.  It was because of government regulation.  (On an aside, that's why the fight over net neutrality is actually a battle to maintain a ridiculously successful status quo).

Given that the Internet is probably the single greatest advance of mankind since the printing press, you could plausibly argue that the Internet is regulation's crown jewel.

Posted via web from jimnichols's posterous

David Harvey, Professor at City University N.Y and Alexander Cockburn of Counterpunch

two new reads and off the computer...

Headed upstairs with Capitalism Beyond the Crisis By Amartya Sen and What You Can Learn from Reinhold Niebuhr By Brian Urquhart.

Okay I'll probably make a short stop to the couch to watch this PBS show on Ireland... in honor of the day I suppose...

Posted via web from jimnichols's posterous

"The most effective way to restrict democracy is to transfer decision-making from the public arena to unaccountable institutions: kings and princes, priestly castes, military juntas, party dictatorships, or modern corporations." --Noam Chomsky

the failure of a self-interested society...

Why Bonuses Are Bad

A lot of outrage has been expressed over the possibility that some of the people who greased the financial slide we're on may still get substantial bonuses. How can anyone at Merrill Lynch, for example, merit a bonus when its losses in the last year exceed its profits for the last forty. We should be outraged by undeserved bonuses. But we ought to be thinking bigger. Why are we paying bonuses at all? Why pay people extra-often a lot extra-just for doing their jobs? Pay them a nice salary. Give them a promotion. But a bonus?

Adam Smith and slavery

Adam Smith's lost legacy

Public comment in Britain and North America, aided by endless television repetitions that ‘slavery’ means the ‘slave trade’ from Africa to the USA, is almost completely blind to the fact that slavery from Africa to the Arab Middle East, classical Europe, and all countries to the East, persisted for thousands of years (note the number of African slaves in ancient Egypt) long before America was ‘discovered’.

The appalling practice of slavery was widespread in Eastern Europe and Russia at the time Smith was writing Wealth Of Nations, and Smith was pessimistic that it would ever be abolished.

The camel-led slave-trading 'trains' that left sub-tropical Africa to cross the Sahara, hardly penetrate public consciousness in the way that the African slave ships, made visual by film and television, which only show of the lesser, and shorter in calendar time (though no less evil), slave trade to America.

Not only were Arab traders active in the overland slave trade, they were often the local slave agents active in supplying slaves to slave trading ships from Europe for the American and Caribbean markets.

When the American market was closed eventually by the self-imposed political action of the governments of the USA, Britain, and other European countries, the Arab slave traders continued their despicable trade north across the Sahara, and by sea along the East African coast.

let the good times... go?

Generation L and its fearful future

Long periods of peace and prosperity, however, are not always terribly interesting. Amid all the economic gloom, I do not think I am alone in feeling an odd excitement at the sense of living in uncertain and historic times. As Philip Larkin, a gloomy British poet, once wrote: “Life is first boredom/Then fear.” We have had the boredom. Now it is time for the fear.

Wall Stree Warriors: Capitalism Rules

Book Review

The Economic Sociology of Capitalism.

Federal Budget

A Balanced Approach to Restoring Fiscal Responsibility

Rather than spending time trying to hammer out complex budget procedures of dubious merit and effectiveness, policymakers should focus on actual steps they can start taking to reduce projected deficits by slowing the growth of health care spending throughout the U.S. health care system while also reforming Medicare, closing the Social Security shortfall, and raising more revenue. While policymakers may not yet be ready to address such matters fully, they can begin by seeking “grand bargains” involving changes in both the big spending programs and taxes, including the changes suggested below. To be sure, some of these changes will be difficult to enact on their own. But, in the spirit of “shared sacrifice” as exemplified by the deficit‐reduction packages of 1990 and 1993, these measures may be achievable as part of overall deficit‐reduction packages. (Note: Not all signatories to this statement favor all of the following measures, but all favor at least a majority of them.)

• Adopting recommendations of Congress’ Medicare Payment Advisory Commission, which could generate substantial savings;
• Increasing the Medicare premiums that affluent beneficiaries pay;
• Instituting vigorous research programs to determine the comparative effectiveness of different health care treatments and procedures as well as what is causing the huge differences in health care costs across the country, and using the results as the basis for new policies to restrain health care costs without compromising health care quality;
• Curbing or eliminating outdated or unproductive tax expenditures;
• Switching to the Bureau of Labor Statistics’ alternative, more accurate Consumer Price Index in computing the annual cost‐of‐living adjustments in Social Security and other entitlement programs (while taking steps to shield low‐income and other vulnerable beneficiaries) and the annual inflation adjustments in the tax code;
• Reforming farm price supports; and
• Adhering to Pay‐As‐You‐Go rules for both increases in mandatory programs and tax cuts.

While, taken together, these proposals would have a substantial effect on future deficits, policymakers will need ultimately to enact more extensive measures to achieve long‐term fiscal sustainability.

The Robert Rubin welfare plan...

More Money for Robert Rubin

It looks like President-elect Obama is picking up President Clinton's promise to end welfare as we know it. Back in those pre-welfare reform days, welfare checks went to poor families. Welfare as we know it now seems to involve giving taxpayer dollars to Citigroup and other banks.

The media seem to have largely overlooked the Citigroup tax credit in their discussion of the latest items in President Obama's stimulus proposal. According to the Washington Post, the proposal will allow companies to write off current losses against taxes paid over the last 4-5 years, not just 2 years, as in current law.

There are relatively few companies that could benefit from this tax break since most companies will not have losses so large that they would need more than two years of tax payments to balance them against. But, really big losers, like Robert Rubin's Citigroup, and other badly failing financial institutions, are losing much more money in 2008 and 2009 than they earned in 2006 and 2007.

Did the political connections of Robert Rubin and others in the financial industry have anything to do with the decision of Obama's economic team to be so generous to them? I don't have an answer to that question, but the media should be asking it.

I dunno...

Must a journalist listen to the true believers in Austrian economics?

Rodrick on development

Self-discovery in practice

entrepreneurship in a developing country consists of discovering the underlying cost structure--what can and cannot be produced profitably. Initial investors in a new line of economic activity face a great amount of uncertainty, since foreign technology always needs some local adaptation. Plus, their cost discovery soon becomes public knowledge--everyone can observe whether their projects are successful or not--so the social value they generate exceeds their private costs. If they succeed, much of the gains are socialized through entry and emulation, whereas if they fail, they bear the full costs.

He includes a great example of "free markets theory" being ignored for the better...

Some of the what I have been seeing in Ethiopia is a picture perfect illustration of this process at work. Most notable in this respect is the flower industry, which was started by some courageous entrepreneurs who had observed the success of the industry in nearby Kenya and wondered if it could be made to work in Ethiopia as well. Even though much of the technology is standard, local soil conditions make a lot of difference to the economics of growing flowers, and a whole range of other services--from daily cargo flights to high-quality cardboard packaging--has to be in place before the operation can succeed. To its credit, the Ethiopian government understood the need to subsidize these pioneer firms, through cheap land and tax holidays, and the industry took off. Exports have reached $100 million from zero in just a few years. There are now around 90 flower farms in the country, with latecomers the beneficiary of the tinkering that early investors have undertaken.

get the history right...

Everybody Calm Down. A Government Hand In the Economy Is as Old as the Republic.

It has become fashionable to fret that the current crisis on Wall Street marks the end of American capitalism as we know it. "This massive bailout is not the solution," Sen. Jim Bunning (R-Ky.) warned Tuesday. "It is financial socialism, and it is un-American." It is neither. The near-collapse of the U.S. financial system and Washington's sudden and massive intervention to try to shore it up certainly mark a major turning point, but a bailout would represent a thoroughly American next step for our economic system -- and one that will probably lead to better times.

Americans may assume that the basics of capitalism have been firmly established here since time immemorial, but historical cataclysms such as the Great Depression strongly suggest otherwise. Simply put, capitalism evolves. And we need to understand its trajectory if we are to bring our economic system into greater accord with the other great source of American strength: the best principles of our democracy.

No, our economy is not a shining example of pure unfettered market forces. It never has been. In his farewell address back in 1796, 20 years after the publication of Adam Smith's "The Wealth of Nations," George Washington defined the new republic's own distinctive national economic sensibility: "Our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing." From the outset, Washington envisioned some government involvement in the commercial system, even as he recognized that commerce should belong to the people.

under the name of reason

From Effcient Markets Theory to Behavioral Finance by Robert J. Shiller

economic crisis

Leader’s tricky challenge of saving US from hell

At the moment, the United States is focused on what’s gone wrong with the private sector. There’s a lot to talk about. From Bernie Madoff’s self-declared Ponzi scheme, to Dick Fuld’s Jonestown-style collective immolation at Lehman Brothers, to the subprime lending fiasco, the US version of the market economy – and many of its leading players – have failed more spectacularly than even the darkest dreams of Noam Chomsky could predict.

Robert Reich, Bill Clinton’s Labor Secretary, says Americans suspend suspicion of the government in tough times: “When the economy is in severe crisis, the public wants government intervention – it distrusts the private sector more than it distrusts the government.”

WWII and the Great Depression

I recently posted on a Reason segment where they use a strawman argument against new New Deal supporters.

Strangely enough, Jason Pye responded by stating that it was World War II that ended the Great Depression.

I wonder if it was the price controls? Or the wage controls? Or the rationing?

As Political Theorist,Sheldon Wolin, noted in his book Democracy inc.

"the economy was controlled by government "planning" directed toward prescribed production goals, prohibited from producing most consumer goods, and subjected to central allocation of vital materials. The labor force, for all practical purposes, was conscripted: its mobility was restricted, wages and prices were fixed, while collective bargaining was put on hold. Food and fuel were rationed... (p. 106)"

I'm not sure how this fits in with any "free market" positions that are out there. But if anyone knows feel free to shoot it my way.

To top it off he states:

Why else would anyone say that we need another New Deal if they recognize that it was a failure?

Umm can anyone say Reagan, Reagan, Bush, Bush... we've had years of economic decline--coming from tax cuts, deregulation, and lax regulation...

Why else do I talk to people who say--what happened to the economy that I grew up with.

To say I don't follow either the logic or the history lesson would be an understatement.

Though I do enjoy the fact the he agree's with Paul Krugman about World War II ending the depression.

The boys in Rancid are buying up houses as we speak...

Calculated Risk Almost 50% of Home Sales are Foreclosure Resales in California Bay Area

To bad no one saw the bubble coming?

Do we need a middle class?

After 30 years of the conservative revolution it is dwindling ya know!

Krugman says no...

There’s no obvious reason why consumer demand can’t be sustained by the spending of the upper class — $200 dinners and luxury hotels create jobs, the same way that fast food dinners and Motel 6s do. In fact, the prosperity of New York City in the last decade — largely supported off of super-salaried Wall Street types — is a demonstration that you can have an economy sustained by the big spending of the few rather than the modest spending of large numbers of people.

But it is a more politically palatable of an argument ey boyo?

Union busting

Pro-Business Group Sinks Over A Million Dollars Into Ad Linking Blago To Senate Dems And "Union Bosses"

The ad makes a bunch of guilt-by-association connections that take you from Blago all the way to the Employee Free Choice Act and are a bit difficult to track. First it hits Blago, the "corrupt Illinois Governor." Then it brings up SEIU, "the union" which discussed the "Senate seat payoff." And then it describes the Employee Free Choice Act as "payback" for "union bosses" who helped elect Dems to the Senate:

The idea, obviously, is to use the alleged Blago dealmaking to tar the Employee Free Choice Act, which is a pretty big leap. This will be one of the biggest fights of the upcoming legislative season, so expect much more like this.

Unions are evil because they allow human beings to use the purchasing power that private companies like Walmart get applauded for. Fact is markets are markets, they work. Private sector likes it when it keeps costs down, but when human beings use it to improve their own quality of life--well... thats another story.