Hypocrisy?

by on August 13, 2006 · 4 comments

Dan Gillmor calls out libertarian exec TJ Rodgers for his “hypocrisy” in entering the solar power business, a business that’s heavily subsidized by the government. Supposedly it’s “phony libertarianism” to rail against big government while participating in an industry that benefits from government largess. That doesn’t seem right to me. As the article puts it:

The solar-cell industry is reliant upon government subsidies, to the consternation of Mr. Rodgers, an outspoken libertarian.

“The culture that got built is what I call a grant culture,” he said. “They’re all pitching to the U.S. government, looking for funding.”

Such criticism aside, the subsidies are in place, both in the United States and Europe, and Mr. Rodgers is ideally positioned to capitalize on the government support he has long railed against. “I can make a good profit for my shareholders,” he said, “and provide a lot of good eco-stuff to the world as well.”

The paradox is that Mr. Rodgers, 58, who has long been a free-market iconoclast, even by the tough-guy standards of the valley’s chip industry, may end up striking pay dirt by moving from the cutthroat world of computer processing power to the more sensitive realm of solar power.

It doesn’t mention whether his company is getting subsidies directly from the government, or whether the adoption of solar power is merely being driven by subsidies to his customers. If it’s the latter, I don’t really see how that’s hypocrisy. Solar power is a perfectly legitimate business, which would exist (albeit in somewhat smaller form) in the absence of government subsidies. As long as Rodgers isn’t himself actively pursuing government handouts, I don’t see why he should be expected to avoid the sector entirely merely because some of his customers are getting them.

More to the point, the long-run success of the solar power industry will be driven by the underlying economics of the energy market, not government handouts. If the cost of solar panels drop to the point where they become an economical alternative to the grid, (or the price of other energy sources continues to rise), there will suddenly be a huge market for solar panels. The government handouts obviously don’t hurt, but they won’t be what makes or breaks the effort. Libertarians have as much right to compete for that market as anyone else.

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Larry Scantlebury, RIP

by on August 13, 2006

Ars reports that the RIAA has graciously moved to extend the deadline in its lawsuit against one Larry Scantlebury. Because, as the request puts it:

Plaintiffs do not believe it appropriate to discuss a resolution of the case with the family so close to Mr. Scantlebury’s passing. Plaintiffs therefore request a stay of 60 days to allow the family additional time to grieve.

In the event the parties do not reach a resolution with Mr. Scantlebury’s estate or the other family members involved, Plaintiffs anticipate amending the complaint following depositions of members of Mr. Scantlebury’s family.

Maybe they can hold the depositions in conjunction with the funeral to expedite the process.

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Framing the Copyright Debate

by on August 13, 2006 · 10 comments

Luis Villa just pointed me to this excellent review in the Wall Street Journal of Larry Lessig’s Free Culture:

Free Culture, in short, is an insightful, entertaining brief for changing our copyright policy. There is just one problem. Mr. Lessig aims most of his arguments at people like himself­standard-issue Howard Dean liberals. Bad choice. He should be talking to conservatives. Viewed up close, copyright bears little resemblance to the kinds of property that conservatives value. Instead, it looks like a constantly expanding government program run for the benefit of a noisy, well-organized interest group­like Superfund, say, or dairy subsidies, except that the benefits go not to endangered homeowners or hardworking farmers but to the likes of Barbra Streisand and Eminem.

It looks like Superfund in other ways, too. Copyright is a trial lawyer’s dream­a regulatory program enforced by private lawsuits where the plaintiffs have all the advantages, from injury-free damages awards to liability doctrines that extract damages from anyone who was in the neighborhood when an infringement occurred.

Quite so. The advocates of constantly expanding the scope of copyright have managed to cloak their rent-seeking agenda in the mantle of free markets and private property. And unfortunately, most of their critics have made it easy by deploying left-wing rhetoric. The result is that most people on the right-hand side of the political spectrum–the side that’s in power in Washington right now–reflexively line up with the rent seekers, not because they’ve given the issue any real thought, but simply because they perceive them as being on “their side.”

But if “conservative” is understood in the Barry Goldwater/Ronald Reagan mold of limited government and free markets, there’s nothing conservative about the copyright cartel’s agenda. Advocates of sensible copyright laws desperately need to find ways to talk about their agenda that Republicans, conservatives, and libertarians find more appealing.

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Ubuntu

by on August 13, 2006

This post (and the previous one) is being posted from a 6-year-old iMac running the Ubuntu distribution of Linux.

The Ubuntu story is fascinating. It was created by Mark Shuttleworth, a 30-something South African entrepreneur who made his fortune in the 1990s, flew to space in 2002, and then decided to knock Microsoft off its perch as the world’s leading desktop OS. (AKA fixing bug #1) In just two years, Ubuntu has become widely recognized as the desktop version of Linux to beat.

Of course, a big part of its success is the $10 million a year he’s reportedly sinking into Ubuntu’s parent company, canonical. Still, there’s no way you could build a full-featured OS from scratch in two years with $20 million–to say nothing of a desktop OS with hundreds of applications and support for multiple architectures. Ubuntu is a very thin layer of commercially-developed (but free-as-in-speech) enhancements to off-the-shelf free software. Most importantly, Ubuntu is built atop Debian, a Linux distribution that focuses on stability and using exclusively free software.

Below the cut I’ll give some of my initial impressions of the OS, which necessarily will be a little bit more technical than the usual TLF fare. I’ll consider some of the economic implications of Ubuntu in a future post.

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Software Patent of the Week: Where Does a 600-pound Patent Sit?

by on August 12, 2006

Every week, I look at a software patent that’s been in the news. You can see previous installments in the series here. Mike Masnick suggested that I analyze this patent this week. It was granted to a company called Cordance, which is suing Amazon, claiming that their one-click ordering system infringes on it. The patent claims methods for automatically synchronizing contact information between client and server computers.

I wouldn’t want to disappoint Mike, so here we go: this patent is enormous. No, seriously, if the Guinness Book for World Records had an entry for “world’s largest patent,” I bet this patent would be in the running. The thing weighs in at about 85,000 words, about the length of a short novel. But that’s not all! Numerous other works, including “Kris Jamsa and Ken Cope, Internet Programming (1995),” “Marshall T. Rose, The Internet Message: Closing the Book with Electronic Mail (1993),” “John December and Neil Randall, The World Wide Web Unleashed (1996),” and assorted RFCs are also “incorporated herein by reference.” When you include all that supplementary information, this patent probably rivals the Bible for wordiness.

The patent is big in other ways too:

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A Laptop in Every Hut?

by on August 11, 2006 · 14 comments

On Tuesday, government officials in India rejected an offer to participate in a much-hyped project to distribute laptops costing US$100 each to the world’s impoverished children. A closer look reveals this scheme to be little more than open source evangelism in the Third World.

The laptop project is part of the One Laptop per Child initiative, an ambitious nonprofit effort endorsed by the United Nations to “revolutionize” education by providing every child on the planet with access to a computer. OLPC backers assume there is a universal need for every child to have a laptop, which they view as the gateway to a rosy future.

Read more here.

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Security Theater

by on August 11, 2006 · 14 comments

Matt Yglesias offers some level-headed advice to the TSA:

Call me crazy, but I don’t see what kind of sense a ban on liquid travel on airplanes is. To be sure, letting people carry soda or shampoo onto an airplane could (apparently) allow them to conceal an explosive. And a bomb going off on an airplane would be a very bad thing. But by the same token, a bomb going off on a crowded Metro or Armtrak car would be quite bad. Hell, a bomb going off on a crowded airport security line snaking back and forth as everyone waits to have their bags searched for offending liquids woud be really point. At some point, common sense needs to kick in.

Banning firearms on airplanes is an inconvenience that is very effective at halting what could otherwise be a very easy method of hijacking airplanes since guns are pretty easy to obtain. It’s fairly clear, however, that permitting people to carry liquid aboard planes doesn’t necessarily lead to a rash of airplane-bombings. It is, however, a huge inconvenience for travelers.

Worst of all, it’s at best a minor inconvenience for terrorists. If you had a cell with some working liquid explosive devices ready to be set off, you could react to the ban by setting them off someplace other than an airplane. As outlined above, I would suggest a crowded rush hour Metro car.

This is what Jim Harper aptly calls security theater. We’ve given the TSA virtually unlimited powers and instructed them to accomplish an impossible task. As a result, they’ve taken to adopting erratic, reactionary, and comically ineffective anti-terrorism tactics. One terrorist tries to put explosives in his shoe? Make hundreds of millions of Americans take their shoes off when they go through security. Some terrorists try to smuggle liquid explosives on the plane? Ban Americans from carrying on liquids. And while you’re at it, require people to show you their IDs, close parking spaces close to the airport, subject people to random pat-down searches, ban tweezers and toenail clippers from carry-on luggage, etc, etc.

Life involves risks. Every form of transportation is dangerous. Even with the terrorist threat, airplanes remain among the safest of transportation modes. Yet thanks to the bizarre incentives of the political process, and the fact that terrorist attacks on airplanes make better news stories than car crashes, we remain obsessed with the miniscule dangers from terrorist attacks, while we think nothing of getting in our car and driving across country, an activity that, statistically speaking, is far more dangerous.

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Rent Seeking on Wall Street

by on August 11, 2006 · 6 comments

Steve R. points me to this fascinating New York Times article on Wall Street’s patent race:

For now, all the big firms seem to be playing nicely with one another. Many lawyers involved in patenting systems and products on Wall Street label the patents as defensive in nature. They say Wall Street banks are trying to patent products or software systems in an effort to protect themselves from claims or litigation brought by individuals or small companies whose primary business is holding patents–those known to their detractors as patent trolls.

But some warn it is merely a matter of time before the patent activity turns from defensive to offensive. Wall Street firms will eventually look for ways to license the technologies or products they have patented, hoping to earn a high-margin revenue stream, or they will begin to litigate against each other, lawyers say.

“Right now, people are figuring out they need some playing cards so that if someone comes to us and says ‘You’re infringing,’ well, we have some patents and we can do a cross-licensing deal and everyone goes away,” says Raymond Millien, a former patent lawyer for American Express who is now the general counsel with Ocean Tomo, a merchant bank specializing in intellectual property. “But there are going to be some companies on the Street who are going to start licensing their products and enforcing the patents to get a revenue stream from them.”

It’s hard to avoid the conclusion that the patent system has gone badly awry. The standard theory of patents is that inventors get patents to allow them to share information about their inventions with other companies. But it doesn’t sound like anything of the sort is happening here. A few companies are getting patents so they can extract royalties from other companies for “inventions” they discovered independently. And the rest of the industry is getting patents in self-defense, so that they’ll have some ammunition to defend themselves when the more aggressive firms come knocking.

There’s a weird disconnect between academic discussion of patents and what’s going on in the real world. At least in the realm of software and business method patents, companies have long since dropped any pretext that their “inventions” are genuinely novel discoveries. This is very different from the academic conception of patents, in which inventions are always assumed to be clearly defined and non-obvious. Software and busines method patents might promote innovation on academics’ blackboards, but in the real world, it’s hard to see them as anything but a burden.

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Negative and Positive-Sum Pricing

by on August 11, 2006 · 2 comments

I recently discovered Jane Jacobs’s legendary book, The Death and Life of Great American Cities. I think there are a lot of interesting parallels between the arguments she makes about urban planning and the issues we argue about in technology policy. (one example that I’ll save for another post: her prescriptions for healthy cities are almost all oriented toward increasing the power of network effects generated by peoples’ proximity to one another. My previous post about non-money-mediated markets reminded me of the chapter in Jacobs’s book about congestion.

Jacobs lived in New York when she wrote the book in 1961, and she described a political battle over whether to widen a road that ran through a large park in the city. The city planners, citing congestion problems, wanted to widen it and turn it into an expressway. Jacobs, in contrast, says that local activists, after beating back this proposal (which would have split the park in half and generally made life miserable for the locals) succeeded in getting the road closed entirely. The officials predicted mayhem in adjacent streets, as all of those extra cars re-routed into the side streets. Yet, according to Jacobs, nothing of the sort occurred. If anything, traffic on nearby streets actually declined.

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Markets Don’t Need Money

by on August 11, 2006

Last year I linked to this fantastic article by Clay Shirky on the reasons micropayments never took off. Shirky wrote:

A transaction can’t be worth so much as to require a decision but worth so little that that decision is automatic. There is a certain amount of anxiety involved in any decision to buy, no matter how small, and it derives not from the interface used or the time required, but from the very act of deciding.

Micropayments, like all payments, require a comparison: “Is this much of X worth that much of Y?” There is a minimum mental transaction cost created by this fact that cannot be optimized away, because the only transaction a user will be willing to approve with no thought will be one that costs them nothing, which is no transaction at all.

Thus the anxiety of buying is a permanent feature of micropayment systems, since economic decisions are made on the margin – not, “Is a drink worth a dollar?” but, “Is the next drink worth the next dollar?” Anything that requires the user to approve a transaction creates this anxiety, no matter what the mechanism for deciding or paying is.

Shirky’s argument looks as solid today as it did six years ago. He pointed to three payment methods as alternatives: aggregation (bundle the business section with the sports section), subscription (take the paper every day), and subsidy (have advertisers pay for the paper). These have all clearly taken off–subsidy especially. Shirky followed that essay up with another in 2003:

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