June 2011

Deets after the jump. Continue reading →

The Supreme Court yesterday handed down a 6-3 decision in Sorrell v. IMS Health Inc. striking down a Vermont law restricting marketing to doctors based on their past history of writing drug prescriptions. The law required that doctors opt in before drug companies could use data about their prescription patterns to market (generally name-brand) drugs to them.

I’ve been closely following this case, having filed TechFreedom amicus curiae brief with the Supreme Court earlier this year, written by First Amendment expert litigator Richard Ovelmen, and previously joined with other free speech groups in an amicus brief before the Second Circuit.  Our media statement on the Supreme Court brief provides a pretty concise summary of our views and what’s at stake in this case, and Jane Yakowitz’s initial blog reactions are especially worth reading.

The lopsided decision should surprise no one: Vermont’s law was a brazen effort to suppress speech disfavored by the state based on the paternalist assumption that name-brand drug marketing is “too effective.”  In essence, the Court has reaffirmed the core meaning of the First Amendment: government must trust the marketplace of ideas unless fraud or deception occurs.  Anyone who takes the First Amendment seriously should be roused to applaud when Justice Kennedy writes, for the majority, that “fear that speech might persuade provides no lawful basis for quieting it.”  Clearly, this principle is as true for commercial advertising as for any form of speech. I’m particularly glad to see that Justice Sotomayor joined in this decision.

This is just the latest in a line of cases upgrading protection for commercial speech stretching back over 30 years since Central Hudson and including Lorillard (2001) and 44 Liquormart (1996).  But the opinion will also surely be remembered as the beginning another line of cases that attempt to guide lawmakers trying to protect legitimate privacy interests without suppressing speech.  The First Circuit, upholding a similar law, had previously deemed prescriber-identifying information “as a mere ‘commodity’ with no greater entitlement to First Amendment protection than “beef jerky.’” But the Supreme Court rejected this, unequivocally declaring that “information is speech,” including both its creation and dissemination, even while recognizing the privacy problems raised by the “capacity of technology to find and publish personal information.” Continue reading →

This podcast, put together by the high-performance folks at the Performance Marketing Association, is pretty good, though I do use the word “hedonic” at one point, which is a bit much.

You wouldn’t think that policymakers need to be reminded that technological progress raises living standards and creates new (and better) employment opportunities. Alas, some comments President Obama made in a speech last week seemed to link technology to job losses. “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,” he said. “You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

In an essay in today’s Wall Street Journal, one of my Mercatus Center colleagues Russ Roberts, a professor of economics at George Mason University, brilliantly deconstructs this logic and points out why technology doesn’t destroy jobs:

Somehow, new jobs get created to replace the old ones. Despite losing millions of jobs to technology and to trade, even in a recession we have more total jobs than we did when the steel and auto and telephone and food industries had a lot more workers and a lot fewer machines.

Why do new jobs get created? When it gets cheaper to make food and clothing, there are more resources and people available to create new products that didn’t exist before. Fifty years ago, the computer industry was tiny. It was able to expand because we no longer had to have so many workers connecting telephone calls. So many job descriptions exist today that didn’t even exist 15 or 20 years ago. That’s only possible when technology makes workers more productive.

Read the whole thing. Great stuff.

My latest Forbes column notes how “Taxes On Talking Are On the Rise Across the U.S.” with levies on mobile phones and devices skyrocketing.  I build my argument around data and arguments found in Dan Rothschild’s excellent recent Mercatus Center paper, which makes “The Case Against Taxing Cell Phone Subscribers,” as well as an important recent study by Scott Mackey, an economist and partner at KSE Partners LLP, which documents the growing burden of these wireless taxes and fees.

“Wireless users now face a combined federal, state, and local tax and fee burden of 16.3%, a rate two times higher than the average retail sales tax rate and the highest wireless rate since 2005,” Mackey finds. Mobile tax rates range from a high of 23.7% in Nebraska to a low of 6.9% in Oregon.  48 states have an average combined wireless tax rate above 11%.  These burdensome taxes on talking just don’t make any sense, argues Rothschild. “There is no economic justification for these high tax rates: reducing cell phone ownership is not a public policy goal, cell phone use by one customer does not affect other customers or other people, and these taxes fall disproportionately on lower-income households.”

You can read my entire essay here, but also make sure to re-read Dan Rothschild’s guest post here at the TLF on the issue. It’s much better than my own treatment.  For me, the key point is this: If the primary policy goal in this arena is to build out a first-class communications and data infrastructure and make sure all Americans have access to it, discriminatory taxes on wireless services and networks are highly counter-productive. Policymakers should hang up on the Talking Tax.

The European Commission has a new report out today on “Implementation of the Safer Social Networking Principles for the EU.” It’s a status report on the implementation of “Safer Social Networking Principles for the EU“, a “self-regulatory” agreement the EC brokered with 17 social networking sites and other online operators back in 2009. (Co-regulatory would be more accurate here, since the EC is steering, and industry is simply rowing.) The goal was to make the profiles of minors more private and provide other safeguards.

Generally speaking, the EC’s evaluation suggests that great progress has been made, although there’s always room for improvement. For example, the report found that “13 out of the 14 sites tested provide safety information, guidance and/or educational materials specifically targeted at minors;” “Safety information for minors is quite clear and age-appropriate on all sites that provide it, good progress since the first assessment last year; “Reporting mechanisms are more effective now than in 2010;” and most sites have improved Terms of Use that are easy for minors to understand and/or a child-friendly version of the Terms of Use or Code of Conduct; and many “provide safety information for children and parents which is both easy to find and to understand.” Again, there’s always room for improvement, but the general direction is encouraging, especially considering how new many of these sites are.

Unfortunately, Neelie Kroes, Vice President of the European Commission for the Digital Agenda, spun the report in the opposite direction. She issued a statement saying: Continue reading →

On the podcast this week, Ronald Rychlak, Mississippi Defense Lawyers Association Professor of Law and Associate Dean at the University of Mississippi School of Law, discusses his new article in the Mississipi Law Journal entitled, The Legal Answer to Cyber-Gambling. Rychlak briefly comments on the history of gambling in the United States and the reasons usually given to prohibit or regulate gambling activity. He then talks about why it’s so difficult to regulate internet gambling and gives examples of how regulators have tried to enforce online gambling laws, which often involves deputizing middlemen — financial institutions. Rychlak also discusses his legal proposal: create an official framework to endorse, regulate, and tax online gambling entities.

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My expectations of the Electronic Frontier Foundation are high. It’s an organization that does a tremendous amount of good, advocating for rights to freely use new technologies. Alas, a blog post about how good EFF is would be as interesting as a newspaper story about the lack of house fires in Springfield. So I’ll share how I feel EFF has gone wobbly on Bitcoin.

Bitcoin, the very interesting distributed digital currency that is inflation-, surveillance-, and confiscation-resistant, has been getting a lot of attention. EFF announced yesterday, though, that it would reverse course and stop accepting donations denominated in Bitcoin.

Its justifications, laid out in a blessedly brief and well-organized blog post, were three: Continue reading →

I have an op-ed up at Main Justice on FTC Chairman Leibowitz’ recent comment in response the a question about the FTC’s investigation of Google that the FTC is looking for a “pure Section Five case.”  With Main Justice’s permission, the op-ed is re-printed here:

There’s been a lot of chatter around Washington about federal antitrust regulators’ interest in investigating Google, including stories about an apparent tug of war between agencies. But this interest may be motivated by expanding the agencies’ authority, rather than by any legitimate concern about Google’s behavior.

Last month in an interview with Global Competition Review, FTC Chairman Jon Leibowitz was asked whether the agency was “investigating the online search market” and he made this startling revelation:

“What I can say is that one of the commission’s priorities is to find a pure Section Five case under unfair methods of competition. Everyone acknowledges that Congress gave us much more jurisdiction than just antitrust. And I go back to this because at some point if and when, say, a large technology company acknowledges an investigation by the FTC, we can use both our unfair or deceptive acts or practice authority and our unfair methods of competition authority to investigate the same or similar unfair competitive behavior . . . . ”

“Section Five” refers to Section Five of the Federal Trade Commission Act. Exercising its antitrust authority, the FTC can directly enforce the Clayton Act but can enforce the Sherman Act only via the FTC Act, challenging as “unfair methods of competition” conduct that would otherwise violate the Sherman Act. Following Sherman Act jurisprudence, traditionally the FTC has interpreted Section Five to require demonstrable consumer harm to apply.

But more recently the commission—and especially Commissioners Rosch and Leibowitz—has been pursuing an interpretation of Section Five that would give the agency unprecedented and largely-unchecked authority. In particular, the definition of “unfair” competition wouldn’t be confined to the traditional measures–reduction in output or increase in price–but could expand to, well, just about whatever the agency deems improper. Continue reading →

On the podcast this week, Steven Levy, a columnist for Wired and author of the tech classic Hackers, among many other books, discusses his latest book, In The Plex: How Google Thinks, Works, and Shapes Our Lives. Levy talks about Googliness, the attribute of silliness and dedication embodied by Google employees, and whether it’s diminishing. He discusses Google’s privacy council, which discusses and manages the company’s privacy issues, and the evolution of how the company has dealt with issues like scanning Gmail users’ emails, scanning books for the Google Books project, and deciding whether to incorporate facial recognition technology in Google Goggles. Levy also talks about prospects for a Google antitrust suit and the future of Google’s relationship with China.

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To keep the conversation around this episode in one place, we’d like to ask you to comment at the web page for this episode on Surprisingly Free. Also, why not subscribe to the podcast on iTunes?