Canada Considers Massive 'Internet Tax'

Google actively lobbying against it.
Michael Geist describes the situation in detail.

Basically, a few policy groups are asking the legislature for some laws that have applied to media content before the Internet, to be applied to Internet content. It makes intuitive sense to me until I realize that the government should have no right to regulate media content in the first place.

Capitalism 2.0?

I've heard a great deal of talk about this in the wake of this 'crisis,' and it troubles me. I commented on the linked article, my thoughts also available here.

One of the basic tenents of philosophy is that while one cannot prove the existence of others, the act of proof is sufficient evidence to assume one’s own existence (I think, therefore I am). The only person, object or force in all of reality that must exist is you yourself.

Given that, freedom is not a luxury, or a benefit we receive from benevolent governments. Freedom is a fact of nature. 

Capitalism recognizes that nature and attempts to harness it for the best possible outcome. To deny freedom is to reverse the basics of philosophy, holding each person more accountable for the well being of others than that of those they directly care about.

Please don’t misunderstand me. There must be discussion about the proper law society uses to hold people accountable. Peaceful coexistence requires standards of behavior. If those standards are called ‘regulation,’ then fine. But if you deny the basic reality that Freedom is natural and required for life, then expect disaster.

Competitive Alternatives

I'm really bothered that in all debate around the topic centers on the concept that if one is against this bailout, then one is in favor of 'doing nothing.' I have not heard a single serious alternative even floated about how to fix this problem.

I want to hear more about capital requirements. The Chinese have lowered theirs while theEuropeans have raised theirs. Here is my proposition.

Complicated Proposition

The fed should decrease the reserve ratio from 10% to 8%.  That would change the liquidity multiplier from 10 to 12.5. There are 6.3 trillion in time deposits, which probably means there's 630 Billion in base deposits. Reducing the reserve ratio by 2 points would instantly create 1.58 Trillion in liquidity. The danger here is that doing this could inflate the dollar by a lot. To limit that, announce that the reserve ratio will rise by 1 tenth of a percent each quarter until the ratio is back at 10%.

Simple Proposition

The same thing just explained in more detail for the many who  don't follow all the terms  in the complicated version. Follow the link.

Bankruptcy, Not Bailout

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

I have been sent this link by 2 friends that do not know each other, but know me very well. Jeffrey Miron makes some amazing points.

• The implicit backing of the federal government for Freddie and Fannie encouraged them to take on far more risk than a free market would have allowed.
• "Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending."
• "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
• "If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen."
• "Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents."

Read the article. He makes many more points that fill in the blanks, but I figured 5 was a good synopsis.

Bring On the Shorts

Bloomberg is reporting that 2 companies, Diamond Hill Investment Group and JMP Group Inc. have opted to let their shares be short sold. I know very little about these companies, but I do know that what they've done takes guts and is the truly moral thing for any company in their position to do.

The regulators are giving the financial companies unfair exemptions instead of letting the market run its course and are protecting the weak at the expense of the good. 

Congratulations to the leadership of these 2 firms in standing up for what capitalism is all about, free and fair competition with transparency and justice for all.

Obama's Technology policy

http://www.barackobama.com/issues/technology/

It reminds me of the proverbial candidate for class president who promises CocaCola in the water fountains.

The list of expensive stuff he wants to do is only offset by his increases in taxes that will shrink the economy. He hasn't mentioned a single program that he wants to stop, just programs he wants to start and expand.

Philosophy of Liberty

This was posted 2 years ago, and I just now found it. I have now seen it 3 times, examining it closely for any idea that I even in part disagree with. The only point I have found is a minor one that can wait until you've seen the clip.



Back to that point, When the author says that people should stop asking their governments to initiate force on their behalf, it assumes democratic governments. Dictators pursue ownership of the life and liberty of their subjects as an objective for their own life. And may cause global atrocities without the deliberate consent of their people.

Information Overload: A Blessed Curse

What is so bad about information overload?
How the Google generation thinks differently.

The first article specifically talks about the advent of email deluge. How the flood of email from colleagues and clients can get far too powerful to feasibly answer or even read.

The second article is by a mom who doesn't understand why her son does 5 entertaining things while researching a report for his science class. The author distills these characteristics in regards to Google infopath adoption.

NATIVES v IMMIGRANTS

Digital natives
Like receiving information quickly from multiple media sources.
Like parallel processing and multi-tasking.
Like processing pictures, sounds and video before text.
Like random access to hyperlinked multimedia information.
Like to network with others.
Like to learn “just in time”.

Digital immigrants
Like slow and controlled release of information from limited sources.
Like singular processing and single or limited tasking.
Like processing text before pictures, sounds and video.
Like to receive information linearly, logically and sequentially.
Like to work independently.
Like to learn “just in case”.

Food Crisis

I found some great commentaries here on the recent rise in food prices.
American Thinker | Financial Times: Economists Forum | New York Times: A Global Need...

Things to think about while listening to the news on the Food Crisis:

Since Gasoline and Biofuels are well on their way to becoming true substitutes, and biofuels are made from food, high oil prices will become directly related to higher food prices. Not only can food substitute for oil, but it apparently works the other way too. I should make a whole blog post just on that.
Wired

India, China, and South America are developing far wealthier populations who consume more of both food and fuel. Driving the demand of both, raising the prices of both.

Those same three regions are also using that wealth to increase their productive capacities. The US utilizes only 0.27% of the world's crop land, but produced 16.8% of all the world's grain in 2007. Which means the US produces grain 80 times more effeciently than the rest of the world, so there's room for 7978% improvement in global grain production without any new technologies. That's about 80 new earths to put that in terms Daniel W. Basse can understand.

I don't have many links to back this up, but it seems that as wealth passes some level, quality begins to take precedence over quantity to the average consumer. High class restaurants serve smaller portions than low class restaurants. Areas with higher average population have more Chipotle's and fewer Taco Bell's. If this is true, then as the West gets still wealthier, it will begin to consume fewer pounds of grain while expending far more in terms of other wealth to get it. That might relax demand for low priced grains for poorer areas.

'Not for Resale' free stuff

Universal Studios sent out a bunch of free promo CD's with a 'promotional use only' label to selected listeners. These CD's arrived completely free through the mail.
Troy Augusto, who decided to disregard that label and sell the disc on Ebay, is now fighting a lawsuit from Universal. The record company claims that the promotion use label identified the product as in part their property, and that they retained all rights of sale. Augusto claims that since the discs arrived in the mail with no action on his part, they were gifts and therefore his property.

The major significance is the challenges this case could pose for the 'first sale doctrine.' Universal wins, could a car manufacturer place a limit on the number of resales for the car? I could do a whole new post on that idea.

EFF has counter sued Universal on Augusto's behalf.

The Advent of Generation Why

Quite a bit of research has been done on the workplace integration of Gen-Y.

There are those who say that Gen Y will be good for the workplace:
Five Ways Generation Y May Reinvent IT
Generation Y: They've Arrived at the Workplace with a New Attitude
Gen Y Myths Debunked

There are others who say that Gen Y poses new risks:
Beware a Generation of Risk Takers
Has Generation Y overdosed on self-esteem?
Generation Y: Too Demanding at Work?

I was born in 1983, which puts me squarely in Generation Y. While I won't speak for others close to my age, I do value entrepreneurship and flexibility in my career. I'm always confused by companies that expect to retain me indefinitely, unless they offer unlimited growth within their ranks in the form of easily expanded higher positions to make room for quality people. A 5% raise with a fancier title in my current position is not a promotion, it is a retainer.

Clean Energy Gets Cheaper

Business Week: Clean Energy: It's Getting Affordable
Wikipedia: Electricity Market
CBO: Prospects for Distributed Electricity Generation

For the last decades or so, activists and technologists have hoped and worked for a world where cheap clean power improved living conditions all over the world. Not to be melodramatic, Most technological innovation improves living conditions everywhere they're used, freeing resources to improve standards of living everywhere else.

There have been many breakthroughs in the past few years in the forms of 'more efficient' solar cells, that cost more per watt. A power generating floor, and other nifty gadgets that just don't take off. But the real test is in terms of $$$ per Watt. Because it's not really the cleanness that we want, or even the security of knowing that we will have resources for generations to come, but the raw power that keeps us from working in the dark. The environment is important, but it's not how we base our decisions.

One thing I would love our government to actually tackle however, is the legal mess it's already created preventing home owners from selling their own power back to the grid. A good power market should allow this and be transparent enough to permit real time power pricing. So that homeowners can reduce their power consumption when the price gets real high, or feel free to crank up the AC when the price gets real low. If families could MAKE money by selling the power from their solar cell when the price gets high, we might see a much higher adoption rate.

Idle chit chat with Ryan G

Ryan is a friend of mine from Mason who is currently studying graduate Econ at Oxford. This is a conversation we had a few minutes ago.

Ryan: I am writing a paper on market failure, government intervention, Coase Theorem, etc...
Now I need to do an applied section where I walk through a real case any good ideas? I would do the obvious, environemnt, or education, but I will be doing seperate papers on those two topics next.
me: tragedy of the commons is the most frequent real market failure. so overfishing?
Ryan: yeah, thought of that
me: logging on public lands?
Ryan: hmmm, ok, that would be interesting
me: information assymetry is also good. You could do healthcare.
Ryan: That is a whole nother paper. I am already at 10 pages, I had to leave out dynamic incapacities, and asymentric info otherwise it would have taken me 15 -20 pages just to define the different problems
I think I may do a paper on Health care later, so hopefully I can deal with those problems then.
me: dynamic incapacities, is that like, how electricty gets overconsumed because it's so hard to have live pricing? Google isn't turning up much.
Ryan: i think so, i dunno. He defined it, but we didn't really spend much time on it
and I didn't know where to research for it My other thought were to do big game animals again
I wrote a paper on that a while ago.
Or public financing of sports stadiums which I also did a couple years ago

me: I thought public financing of sports was more of a public choice problem instead of a market failure. It's actually a market success that stadiums don't get built

Ryan: public choice deals with market failures. lol, true.

The usualy arguments for government intervention in markets is market failure

me: so the pub choice argument is that the lack of stadiums is a market failure, so spend public funds on them?

Ryan: Yes, becasue they give positive externalities to the city

such as increased jobs, city pride etc....

things the private world won't take into account

public choice would say rent seeking and government inefficiency would result so the stadium should be financed privately

me: I wonder how you would monetize city pride as a variable

Ryan: hard to

We still don't know too much about dynamic incapacities, so if you know anything, please leave a comment.

Reagan on the role of Government

Hat tip to Brian Hollar @ Thinking on the Margin
Who gave "(HT Stephen Bainbridge via Instapundit)"

Project Lifeline, Legislating Reality After The Fact

I recently stumbled a wonderful new project by our wonderful government called Project Lifeline.

Thanks to this wonderfully brilliant contribution by our governing officials, banks will actually spend 30 days negotiating with borrowers to resolve their loans before foreclosing on them. This is such a great idea in fact, that banks have been doing this voluntarily for years with no government involvement at all!

This is basically the banks borrowing the governments credibility (imagine!) because for some reason people trust banks less than they trust our 'fiscally responsible' government. When the banks call the homeowners asking them to refinance, people avoid the calls like the plague.

Smurf Healthcare vs. US Healthcare

The Smurfs on Healthcare

My favorite part is how Jokey gets worse and worse as he gets more 'health care' from the other smurfs who 'just want to help.'
Here's Robin Hanson's take on health care at EconTalk. He talks a lot about the psychological effect about the act of providing health care. There's also a lot of research on information asymmetry, like donating a funny bone because the docter says your friend will need one.
Dr. Hanson talked about the RAND health experiment, where people who got free health care were compared to people who paid for all of their own health care. The comparison said that even though the free health care folks used 30% more health care, they got essentially zero health benefit. So all that extra money spent bought zero additional health. I recall Dr. Hanson asking class when I took his class at Mason,

"If you assume that some treatments are helpful, and on average, extra treatment buys no health, then doesn't that mean that some of that treatment hurts?"

Light Bulbs galore

I bought light bulbs today.
I bought 6, 2 energy smart 26 watt bulbs, and 4 soft white 100 watt bulbs.
I did this because I wanted to have the packages so I could make this blog post.

I came up with formula to figure the total cost of light to me. The energy bulb is 18% cheaper at my energy price. But most of that discount is raw bulb cost if I reduce the price of electricity to $.001, the Energy bulb is still 17.7% cheaper.



Here's the formula:

cost per bulb X number of bulbs used in year
+ Watts X Price of Electricy X Hours of usage
-----------------------------------------------------------
Total cost of light for the year

Results may vary based on prices in your area, but feel free to use my spreadsheet to lower your cost of light, these prices don't change much, so you could do it once and not ahve to do it again for a while.

Tim Hartford Talks Stock Picking

Tim Hartford as the Undercover Economist explains the absurdity of predicting the stock market by telling people he can predict which que will move the fastest. Hartford also apparently has no Wikipedia article, that needs to be fixed.

It seems to me that a key difference might be the perceived simplicity of a que vs. the perceived complexities of picking a stock. Most people who are in que have lots of experience being in ques, and know that nobody can predict which one will move fastest. They see the complex stock market, though, and see a few people doing extremely well and figure that it must be predicable.

Video Game Tax in New Mexico

New Mexico Proposes Video Game Tax to Punish Staying Indoors

But a coalition of groups, led by the Rio Grande chapter of the Sierra Club, is sold on the idea that outdoor education programs can inspire children in a way that video games and television cannot.

The coalition wants state lawmakers to create a No Child Left Inside Fund with a 1 percent tax on TVs, video games and video game equipment. The fund would help pay for outdoor education throughout the state.

Joseph Henchman says:

The fundamental purpose of taxes is to raise revenue necessary for programs, not micromanage people's decisions with subsidies and penalties. If a tax targeting video games is justified, it should be on the basis of actual negative externalities, not the whims of social engineers picking things they don't like at random.

For myself, I can say without ambiguity that I vastly prefer this type of policy to efforts to ban certain types of video game content. One advantage is that a direct tax creates a disincentive to hurt the industry.
More ambiguously though, I agree with the philosophy of government given by Mr. Henchman. While it's appealing to think that Parks'n Rec would be paid for by Gamestop, as a service, parks and rec should be paid for by people that use it, not by people that don't. People should want more outdoor activities, government should try to 'make them want' more outdoor activities.

Hat Tip to Joseph Henchman @ Tax Policy Blog

Tim Hartford on Colbert