2011 — Page 13

On the Hyphenation & Capitalization of Various Internet Terms

by Adam Thierer on August 10, 2011 · 15 comments

I’m no grammar Nazi. In fact, I’m closer to being a grammar anarchist. I’ve been fighting teachers and editors for years about split infinitives (they rock!), contractions (fine in small doses), and run-on sentence (OK, they are probably right about that one, but I just can’t control myself). Nonetheless, it makes sense to have some basic ground rules for grammar and good writing. Sometimes, however, those rules just can’t be found.

I raise this issue because I’m finishing up my next book and I find myself struggling with the proper hyphenation and capitalization of various Internet terms. After much consultation with the Mercatus Center’s grammar czar Jennifer Zambone, I think I have finally grown comfortable with two rules I have long ignored (or just been horribly schizophrenic about using consistently) in my past writing. They are: Continue reading →

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Right Now, the Law’s on Amazon’s Side

by Steven Titch on August 9, 2011 · 2 comments

States are ratcheting up legislation in order to capture sales taxes from on-line retailers, even as companies like Amazon.com aggressively push back.

A closely-watched bill in the Texas legislature that defines Amazon’s distribution center in Ft. Worth as a physical nexus, thereby obligating the on-line retailing giant to collect taxes on sales to residents of the Lone Star State, passed on a second go-through of this year’s session, overcoming an initial veto by Gov. Rick Perry.

The next move is up to Amazon. Its distribution center is essentially a warehouse that fulfills online orders and employs 200. Amazon previously said it would close the center if the bill passed, but has yet to make good on the threat. However, it is dangerous to dismiss it as a bluff. When South Carolina passed a similar bill, the company closed a distribution center there; only to return once the legislation was reversed.

The collection of taxes from on-line sales has become touchy among even the free-market-minded. Brick-and-mortar store owners have become increasingly vocal as to what they see as a purposeful scheme of “tax avoidance” that puts them at an unfair disadvantage against on-line retailers. Research, such as an April paper from the University of Tennessee’s Center for Business and E-Commerce Research, stoke the flames by calling the current sales tax rules a tax subsidy for online merchants.

The heart of the Texas dispute is whether a distribution center counts as a nexus. The case law is Quill Corp. v. North Dakota and National Bellas Hess v. Illinois Department of Revenue, which, as broadly understood, stipulate that a business must have a nexus, that is, brick-and-mortar store, in the state in order to be liable for tax collection. If there is a viable court test to either or both of these decisions, the contention that a distribution center constitutes a nexus may have the most potential.

Continue reading →

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David Brin on transparency and accountability

by Jerry Brito on August 9, 2011

On the podcast this week, David Brin, a physicist and Hugo and Nebula award-winning science fiction writer, wrote the prescient 1997 nonfiction book, The Transparent Society, which won the Freedom of Speech Award of the American Library Association. He’s written a new essay revisiting the themes of that book and discusses how the ideas presented in The Transparent Society relate to his new essay and to the world today. The government continues to increase its ability to look in on citizens, creating an Orwellian-like society that people may find alarming. According to Brin, reciprocal accountability, which is the ability for people to look back at the government and hold it accountable, is key to minimizing undesirable effects and behaviors. Brin goes on to discuss the benefits of a more pragmatic approach to transparency as opposed to immediate and radical transparency like WikiLeaks.

Prophecies of Doom & the Politics of Fear in Cybersecurity Debates

by Adam Thierer on August 8, 2011 · 0 comments

Mark Thompson has a new essay up over at Time on “Cyber War Worrywarts” in which he argues that in debates about cybersecurity, “the ratio of scaremongers to calm logic [is] currently about a 2-to-1 edge in favor of the Jules Verne crowd.” He’s right. In fact, I used my latest Forbes essay to document some of the panicky rhetoric and examples of “threat inflation” we currently see at work in debates over cybersecurity policy. “Threat inflation” refers to the artificial escalation of dangers or harms to society or the economy and doom-and-gloom rhetoric is certainly on the rise in this arena.

I begin my essay by noting how “It has become virtually impossible to read an article about cybersecurity policy, or sit through any congressional hearing on the issue, without hearing prophecies of doom about an impending “Digital Pearl Harbor,” a “cyber Katrina,” or even a “cyber 9/11.”” Meanwhile, Gen. Michael Hayden, who led the National Security Administration and Central Intelligence Agency under president George W. Bush, recently argued that a “digital Blackwater” may be needed to combat the threat of cyberterrorism.

These rhetorical claims are troubling to me for several reasons. I build on the concerns raised originally in an important Mercatus Center paper by my colleagues Jerry Brito and Tate Watkins, which warns of the dangers of threat inflation in policy debates and the corresponding rise of the “cybersecurity industrial complex.” In my Forbes essay, I note that: Continue reading →

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More Cost Data and Better Debt Insight

by Jim Harper on August 4, 2011 · 0 comments

Data-transparent government is still a ways off, but some small steps forward are underway. To wit, my project WashingtonWatch.com, which is adding new data going to the costs of bills in Congress.

As detailed in an announcement that went up this morning, many more bills on the site will have cost estimates associated with them, the product of research being done at the National Taxpayers Union Foundation. Some bills spend pennies or less per U.S. family. Some spend $5,000 per family and more. Wouldn’t you like to know which are which?

The site has also begun displaying national debt information on a per-family, per-person, and per-couple basis. (Your debt—just for being an American—is about $45,000 dollars.)

I’ll have much more to say on government transparency in the coming months. In the meantime, you might do your part to avoid the next calamitous debt ceiling debate by following the day-to-day, month-to-month, and year-to-year in Congress using things like the WashingtonWatch.com weekly email newsletter.

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Kembrew McLeod on copyright and hip-hop sampling

by Jerry Brito on August 2, 2011

Kembrew McLeod, independent filmmaker and Associate Professor of Communication Studies at the University of Iowa, discusses his new documentary with Benjamin Franzen called Copyright Criminals. Digital music sampling is used throughout several genres of music but it is probably most prominent in hip-hop music. Hip-hop artists like Run-DMC began using snippets of other artists’ songs to create sounds of their own. This process, according to McLeod, helped facilitate creativity, but it also brought a flurry of lawsuits within the music industry. Now, as McLeod demonstrates in his documentary, artists are hesitant to use samples of music in their songs because they fear potential legal consequences, and as a result, a lot of musical creations that use sampling may never reach our ears.

Internet Taxes, “Main Street Fairness” & the Origin-Based Alternative

by Adam Thierer on August 2, 2011 · 4 comments

The debate over the imposition of sales tax collection obligations on interstate vendors is heating up again at the federal level with the introduction of S. 1452, “The Main Street Fairness Act.” [pdf] The measure would give congressional blessing to a multistate compact that would let states impose sales taxes on interstate commerce, something usually blocked by the Commerce Clause of the U.S. Constitution. Senator Dick Durbin (D-IL) introduced the bill in the Senate along with Tim Johnson (D-SD) and Jack Reed (D-RI). The measure is being sponsored in the House of Representatives by John Conyers (D-MI) and Peter Welch (D-VT). At this time, there are no Republican co-sponsors even though Sen. Mike Enzi was rumored to be a considered co-sponsoring the measure before introduction.

Without any Republicans on board the effort, the measure may not advance very far in Congress. Nonetheless, to the extent the measure gets any traction, it is worth itemizing a few of the problems with this approach. My Mercatus Center colleague Veronique de Rugy and I have done some work on this issue together in the past and we are planning a short new paper on the topic. It will build on this lengthy Cato Institute paper we authored together in 2003, “The Internet Tax Solution: Tax Competition, Not Tax Collusion.” The key principle we set forth was this: “Congress must.. take an affirmative stand against efforts by state and local governments to create a collusive multistate tax compact to tax interstate sales.” “It would be wrong,” we argued, “for members of Congress to abdicate their responsibility to safeguard the national marketplace by giving the states carte blanche to tax interstate commercial activities through a tax compact. The guiding ethic of this debate must remain tax competition, not tax collusion.” Continue reading →

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Google+ Stumbles Over Identity

by Jim Harper on August 1, 2011 · 18 comments

I started to see hints of it last week, but I now believe Google+ is in full stumble-mode over user identity and naming. It looks as though they’ve taken common sense—everyone has one name—and woven it into their terms of service. You can’t use a non-traditional name on Google+. But naming and identity are more complex than that.

In my book, Identity Crisis, I wrote that an identity is a collection of information other people and institutions have about a person. Others use identity information they have to distinguish you from other people (or to group you) in their minds or records. This makes identity a gating mechanism: you can allow people into a part of your life by making them privy to the relevant set of identifiers, or keep them out by denying them that information.

Commonly, people use varied identities to exclude others, for social or professional reasons, such as when they open a social network account in a false name to keep their parents or their students from accessing parts of social life that are not meant for them to see. Sometimes identity is varied for political reasons, such as when an account opens in a pseudonym for the purpose of avoiding reprisal. This is an area where Facebook’s “real names” policy has stepped in it. The further one lives from conventional life in a given society, or the more contrarily to power, the more important it is to control identity.

Identity Woman—who tells her story at the first link above—uses her non-traditional identity in a non-traditional, but completely reasonable, way. It’s just the name that identifies her better to the community she plans to reach on Google+. But Google+ thinks that the name she is supposed to use is the same one her parents gave her, is the same one on her tax return, is the same one on her college degree, is the same one on her driver’s license.

Google+ has smartly replicated the real-world concept of social circles in its “circles” function. But they haven’t replicated real-world practice in terms of naming and identity. Why? Among other reasons, because doing so would allow users to decide which “circle” Google itself is in. Google doesn’t want that. Like Facebook wants to be your super-friend, Google wants to be your super-circle.

Google+ is seeing like a state, vastly simplifying the use of identity on its platform to serve its purposes. That will be a continuing discomfort and an impediment to its fullest success. But the fullest success of social networking will probably not be on an owned platform anyway.

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Latest Industry USF Proposal

by Jerry Ellig on August 1, 2011 · 10 comments

A couple days before Congress announced a debt deal, half a dozen telecommunications companies filed a plan on July 29 with the Federal Communications Commission that attempts to resolve a much longer-running set of negotiations over big bucks. The “America’s Broadband Connectivity” Plan seeks to replace Universal Service Fund subsidies for telephone service in rural areas with subsidies for broadband in rural areas.

Like the federal budget negotiations, the never-ending negotiations over USF get bogged down in arguments over distribution: who gets what. Indeed, it’s almost exclusively an argument over which companies get what. But federal telecommunications policy is supposed to advance the overall public interest, not just haggle over what corporate interest gets what piece of my pie. Here is a quick take on the biggest strengths and weaknesses of the plan in terms of advancing overall consumer welfare. By “consumer welfare,” I mean not just the welfare of the folks receiving subsidized services, but also the welfare of the majority who are paying a 15 percent charge on interstate phone services to fund the USF.

BIGGEST STRENGTHS

Fixed-term commitment: Rural phone subsidies have become a perpetual entitlement with no definition of when the subsidies can end because the problem is considered solved. The ABC plan proposes a 10-year commitment to rural broadband subsidies. By 2022 the FCC should assess whether any further high-cost universal service program is needed. This idea remedies a significant deficiency in the current high-cost subsidy program, which doesn’t even have outcome goals or measures. (That’s why I like to sing the final verse from “And the Money Kept Rolling In” from Evita when I talk about universal service. Free State Foundation President Randy May asked me for an encore of this at the end of the foundation’s July 13 program on universal service, available here.)

Intercarrier compensation: “Intercarrier compensation” refers to the per-minute charges communications companies pay when they hand off phone traffic to each other. The plan proposes to ramp down all intercarrier charges to a uniform rate of $0.0007/minute. Economists who study telecommunications have pointed out for decades that high per-minute charges reduce consumer welfare by discouraging consumers from communicating as much as they otherwise would. MIT economist Jerry Hausman, in a paper prepared for the filing, estimates that low, uniform intercarrier charges would increase consumer welfare by about $9 billion annually.

Legacy obligations: Public utility regulation traditionally forced regulated companies to offer certain services or serve certain markets at a loss, then charge profitable customers higher prices to cover the losses. Judge Richard Posner referred to this opaque practice as “Taxation by Regulation“: the customers paying inflated prices get “taxed” to accomplish a public purpose, but they don’t know it. Some of these obligations continue today as federal requirements applied to “Eligible Telecommunications Carriers” or state “Carrier of Last Resort” obligations. The plan would remove these obligations for companies that are not receiving USF subsidies.

BIGGEST WEAKNESSES

Definition of broadband: The plan would continue to inflate the cost of rural broadband subsidies by defining “broadband” as 4 megabytes per second download and 768 kilobytes per second upload. This means 3G wireless, satellite, and some wireless Internet service providers do not count as “broadband.” This decision more than doubles the number of households considered “unserved” and rules out some lower-cost technologies. Jerry Brito and I have written extensively about both the economics and the legality of this. Interestingly, the ABC coalition’s legal white paper arguing that the commission has legal authority to adopt the plan makes no effort to show that the commission has authority to subsidize 4 mbps broadband; it only shows the commission has authority to subsidize some form of broadband.

Alternative cost technology threshold: The plan includes an “alternative cost technology” threshold that allows substitution of satellite broadband for customers who would cost more than $256/month to serve. Inclusion of a threshold is actually a strength. But the $256/month figure is way too high. Satellite broadband with speeds of 1-2 mbps is now available for $60 – $110 per month. Consumers who pay a 15 percent surcharge on their local phone bills to fund USF should not be expected to provide a subsidy of more than $200 per month.

Mobility: The plan appears to advocate subsidies for mobile broadband service in places where it is not currently available. So now the rural entitlement expands to include not just basic broadband service in the home to stay connected, but also a mobile service that a lot of Americans don’t even buy unless their employers pay for it! I question whether mobile broadband satisfies the 1996 Telecommunications Act’s criteria for universal service subsidies, such as “essential” (not just nice) for education or public safety, or subscribed to by a “substantial majority” of households. These questions should be thoroughly examined before anyone receives subsidies for mobile broadband. At a minimum, households should be eligible for only one broadband subsidy — wireline or mobile — but not both.

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Net neutrality: the disaster that keeps on giving

by Larry Downes on July 29, 2011 · 7 comments

On CNET this morning, I argue that delay in approving FCC authority for voluntary incentive auctions is largely the fault of last year’s embarrassing net neutrality rulemaking.

While most of the public advocates and many of the industry participants have moved on to other proxy battles (which for most was all net neutrality ever was), Congress has remained steadfast in expressing its great displeasure with the Commission and how it conducted itself for most of 2010.

In the teeth of strong and often bi-partisan opposition, the Commission granted itself new jurisdiction over broadband Internet on Christmas Eve last year. Understandably, many in Congress are outraged by Chairman Julius Genachowski’s chutzpah.

So now the equation is simple: while the Open Internet rules remain on the books, Congress is unlikely to give the Chairman any new powers.

House Oversight Committee Chairman Darrell Issa has made the connection explicit, telling reporters in April that incentive auction authority will not come while net neutrality hangs in the air. There’s plenty of indirect evidence as well.

Continue reading →

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