“You want to spend $20 billion of taxpayer money creating jobs?” Mr. Friedman wrote. “Fine. Call up the top 20 venture capital firms in America” and invest the money with them.
But I see three more reasons why those interested in technology policy should pay attention to this encouraging episode.
First, the groundswell of opposition seems to have been driven largely by the Internet, both as a vehicle for disseminating the bailout proposals and for voicing opposition to them:
Venture capitalists certainly agree that innovators and start-up companies, not bailed-out GMs or Chryslers, will create the new jobs. They rightly brag that almost 20% of U.S. gross domestic product is generated by companies built by venture capital, such as Intel, Apple and Google. Still, they almost universally panned the notion of taxpayer support. Their real-time rejection is an excellent example of how social media — here, the venture community dissecting a proposal online — can now quickly take down bad ideas.
Second, it should almost go without saying that venture capital is the fountainhead of innovation, especially the disruptive innovation that is constantly pushing the envelope of technology policy. A healthy VC sector is the bedrock of a dynamic, free and innovative economy. The VCs realize that this requires, more than anything else, avoiding the market distortions caused by government funding: Continue reading →
See my comparison of the state of technology in 2008 versus 1992, during the last Democratic presidential transition.
In mid-2008, the four-gigabyte (or 4,096 megabytes) flash memory chip in an iPod Nano cost $25. Late in 2008, four-gigabyte flash cards and USB drives are selling for $14.99. But back in 1992, four gigabytes of flash memory would have cost $500,000. This means a hypothetical iPod Nano circa 1992 would have set back the teenage Nirvana or Boyz II Men fan around $3 million.
Apart from research scientists and a few early adopters of Compuserve and AOL, the Internet essentially didn’t exist in 1992. Monthly Internet traffic was four terabytes. All the data traversing the global net in 1992 totaled 48 terabytes. Today, YouTube alone streams 48 terabytes of data every 21 seconds. . . .
The dramatic centralization of money, power, information and influence now under way seriously threatens the entrepreneurial revelations and technological revolutions that drive long-term growth. If we quasi-nationalize the energy, finance, auto and health care markets, and possibly bar dynamic new business models on the Internet, as with possible network neutrality regulation, we will close off many of the most promising paths to needed efficiencies and, more important, new wealth.
See the whole article at Forbes.com: “How Techno-Creativity Will Save Us.”
I’m fond of quoting Diane Mermigas, editor-at-large at MediaPost, who is one of the finest media market watchers in the journalism business today. Her latest MediaPost column offers another sobering look at the radical changing sweeping through the media marketplace today. In that article, she notes that even though we are in an era of Big Government bailouts for financial institutions and (possibly) auto makers, old media operators will be left to to fend for themselves, and many will likely die off as a result:
What we do know is there will be no federally funded bail for media, Internet, entertainment and advertising. Big media by definition is not nimble and innovative enough to simply dump what’s not working, modify what can be saved, and grow what works. There isn’t much that big media companies can bank on or reliably forecast moving into 2009. They are hamstrung between deteriorating traditional costs and revenues and evolving digital business models that do not offset the losses, generating less than 10% of their overall incomes. Big media isn’t just being ravaged by recession; it is being sacked by a technological transformation of enormous proportions.
I discussed a lot of the forces behind the current media meltdown in my recent PFF special report, “Media Metrics: The True State of America’s Marketplace.” As I noted there, this Schumpeterian “creative destruction” we are witnessing today is a normal (but gut-wrenching) part of any major technological transformation, and it need not be addressed with government subsides or interference. However, the problem for many traditional media providers is, as I noted in my special report: Continue reading →
Just two weeks after the passage of the bailout bill, and one day after a Treasury Department official declared, “we are committed to transparency and oversight in all aspects of the program,” the Treasury Department began covering up the amount it would pay to New York Mellon Bank to act as a financial agent in the bailout.
Spending $700,000,000,000.00 in taxpayer money is not business as usual. And hiding the terms of government contracts shouldn’t be business as usual anyway.
Friend of TLF and chief political correspondent for CNET Declan McCullagh has a new column on CBSNews.com called “Other People’s Money.”
Nice name, but we’ll have to see whether his status as a fully decorated part of the mainstream media draws him from principled writing to constant applause for self-appointed experts who want to spend our taxed-away dollars for us.
His freshman effort looks pretty good. “Will U.S. Taxpayers Need a Bailout?” points out the perils of politically directed investments in the banking sector.
The New York Times, that dinosaur of old media, is currently live-blogging the most important Congressional debate since that epochal, thoughtful discussion back in October 2002 as to whether Iraq posed a clear and present danger to the United States justifying a declaration of war—I mean, total non-debate that preceded Congress’s decision to issue President a blank checkthat has proved nearly as expensive as the blank check currently before the Congress.
The highlight of the debate thus far:
11:39 a.m. | No socialism!: After Jeb Hensarling, a Republican representative from Texas, affirmed that he was voting against the bill because it smacks of socialism and might represent limits on liberty, Barney Frank, a Democratic representative from Massachusetts, said that he is “ever mindful” that George Bush might “lead us down the road to socialism,” and so Congress would monitor the bailout closely.
Wow. When Barney Frank, just about the closest thing to an avowed socialist in Congress after Bernie Sanders, warns about the dangers of a Republican president and supposed ”free market” champion leading us down the “Road to (socialist) Serfdom,” we should all feel a terrible chill. To paraphrase the over-paraphrased Yeats:
Surely some revelation is at hand
Surely the Second Coming is at hand!
… what rough beast, its hour come round at last,
Slouches towards [Washington] to be born?
I received the most fascinating email from a group called ASTRA just now. I don’t think I ever even heard of them before, but apparently I’m on their mailing list. ASTRA is the Alliance for Science and Technology Research in America, a nonprofit, tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code.
Most people know that non-profits are not allowed to lobby for passage or failure of legislation. So let me now share with you ASTRA’s email to me. It may not be orginated by ASTRA and there could be several innocent explanations, but on the surface this looks like a clear violation of non-profit rules by an over-excited Washington, D.C. supplicant group.
[Update: Cooler heads have it right. Non-profits are allowed to spend some percentage of their funds on lobbying. What I've noted here is an unclear violation of non-profit rules. What's clear is that ASTRA is a big-government supplicant group not to be trusted by proponents of liberty and limited government.]
I recorded a video interview about the financial services bailout with Mark “Rzzn” Hopkins and Sean P. Aune of Mashable recently, focused particularly on the tech sector. We focused on making sense of things, something that hasn’t happened in Congress yet.
I think it’s pretty informative, and somewhat calming, as it should be. I’m less and less convinced that there’s a “crisis” that taxpayers ought to take pay for taking care of.
I’ve posted a copy of the proposed bailout legislation online in html format, which is easier to read, copy, and paste. Considering its size and significance, I urge you to review it and share it with others.
There are a couple of elements of the legislation where I might add some insight, so here goes.
Congressional Oversight? Nope. $700 Billion Spent
The bill made available Sunday devotes a good deal of verbiage to oversight of the proposed $700 billion bailout. But it doesn’t do anything to prevent that money being spent. Continue reading →
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
