Quit calling it a "tax"

The Waxman-Markey bill, which would establish a cap-and-trade system for carbon emissions, is making its way through congress. While I do favor the establishment of a cap-and-trade system, my purpose in this post is not to debate the merits of such a system in general or of Waxman-Markey in particular, but rather to focus on one part of the debate over the bill which I think is disingenuous: calling it a tax.

Cap-and-trade is fundamentally different from a tax in just about every sense of the word, especially so if the carbon emission credits are initially given away (and in Waxman-Markey as it currently stands, 85% are given away).

So why is this different from a tax? I see at least 4 reasons:

• Other than the initial auctioned permits, the government is not receiving revenue from the cost of carbon permits. Taxes are levies where the money goes to the government. In a cap and trade system, most of the money is going into the secondary markets. And the initial auction permits are no more a tax any more than the government selling radio spectrum could be called a "radio tax." If the government has a valuable resource owned by the people (such as radio spectrum or the right to pollute), it is quite reasonable to get compensation for letting individual people or companies use that shared resource; this is a permit, not a tax. Any amount that individuals pay on the energy bills is not going to the government, which makes it difficult to call it a tax.
  
• Tax rates are set by governments, not by markets. In a cap and trade system, markets set the price for carbon emissions. If the price goes up, the government does not make any more money. If the price goes down, the government does not lose any more money (again, excluding any initial sales of auctions).
• Taxes cannot go to zero by the behavior of the people being taxed. But under cap and trade, if the economy produces less total carbon than the cap allows, then the price of carbon can go to $0. This would actually be a good thing (though I don't expect it will actually happen).
• You're not allowed to offset your taxes, but you can in cap and trade. If I go into a high tax bracket, I can't average my salary with a homeless person's salary to get a lower tax rate. If I buy a house, I have to pay taxes on the land even if I give land away somewhere else. True carbon taxes have also been proposed, where the emitter would pay a price (probably set by the government) for each ton of emissions, regardless of how many trees they plant or how much they reduce carbon elsewhere. But with cap and trade, if I raise my carbon here and lower it there, I have no need for more permits and thus pay no more.

I'm not trying to argue that cap-and-trade systems have no cost (they certainly do), or that this particular bill is either a good implementation of cap-and-trade or effective at fighting climate change (I actually don't know enough to answer that, although my inclination is "yes" if only because it establishes a price for carbon, which currently has a rather arbitrary - and almost certainly incorrect - price of $0.) I'm sure there are lots of valid arguments against this bill, or against the timing (although I'm getting somewhat tired of the weak arguments that we shouldn't do anything at all, especially the arguments that climate change is a "hoax" or has no manmade cause).

Rather, I just want to make sure that we're calling this for what it is: it is an attempt to put a price on carbon, which is currently unaccounted for in our economic activity. This is a fundamentally different thing than a "tax."

The US position on the Iran elections

There's been a bunch of consternation over the past week over whether or not Obama has taken a tough enough stand on Iran's elections. He resisted for a while and finally gave in to the pressure, condemning the violence and repression of the demonstrations, while not directly saying that the election was a fraud. This I think was an appropriately tough stance.

Last week, Congress voted overwhelmingly to condemn Iran. I think this was a mistake.

Shouldn't we be supporting democracy and human rights around the world? Of course we can. The problem with the congressional vote and with a stronger statement from Obama is simply that it is counterproductive.

Look, everyone knows that the Iranian election was stolen. Saying so only gives the regime an excuse to say that the opposition is a puppet of the Americans, and as such actually hurts the cause of democracy. (Never mind that Mousavi isn't exactly our dream candidate). Pointing out that the election was a sham won't get them to change it and simply gives them an excuse for a crackdown. We should just be quiet on this point.

Focusing on the repression of demonstrators (rather than the election itself) makes much more sense, for the simple reason that it is not a direct commentary on a political process, and that beating up civilians is a much less tenable position than claiming that a rigged election is legitimate.

Dumb application of copyright law

Once again we have various content organizations misapplying copyright law. First, the usual caveat that I am not a lawyer, I'm approaching this from a layman's point of view regarding what the purpose of the law is, and what constitutes reasonable application thereof. Now we have ASCAP claiming that ringtones should be subject to a royalty each time they are played, claiming that it amounts to a "public performance."

An analysis based on the law is here, which reaches the conclusion that this is an untenable position to take, but I'll provide my own reductionist reasoning to prove that ASCAP is being ridiculous.

In fact, I have created my own ringtones out of music that I have legally purchased. The copyright holders for that music would probably believe that I need a separate license to use the music as a ringtone, but I believe that this is an unsupportable position.

I'll do this step by step. Please stop me (especially if there are any lawyers reading this!) at the point that I cross a legal or ethical line.

1. I purchase a song from Amazon. Technically, I have purchased a license to play a song and the MP3 file representing that song, but I do not have rights to "public performance," I do not have rights to resell it or sublicense it, etc. Since Amazon has not been sued for the MP3 business, I will assume that this is entirely kosher.
   
2. I put the music on my iPhone. It's an MP3 player, it seems hare to argue that putting MP3 files on an MP3 player is problematic.
3. I put my iPhone into a docking station with speakers to listen to it. This is where ASCAP is making the dubious claim that a "public performance" is taking place because others could walk by and hear the music. But that claim is ridiculous because people have been able to listen to music on boom boxes in public for decades and nobody has ever claimed that this crosses some "public performance" line unless the music is clearly there with a purpose of entertaining other people. I.e., if I own a bar, then I may need to pay royalties for playing music for my customers. But a private party is OK because it's private, and if I go to the park and listen to the music while I lie in the sun but other people passing by can hear it that's also OK because I'm not doing it for their benefit - I'm still enjoying music that I have every right to listen to.
4. Now I decide I like this song so much I'm going to play it over and over again. No violation here - that's something I'm allowed to do. I could do it with records, with tapes, with CDs, an MP3 is just a different medium.
5. In fact, it's actually just the first 30 seconds of the song that I really like, so every time the song gets 30 seconds in, I rewind it and start over. Again, something I could do with all previous media, and nobody ever claimed that I am somehow legally or ethically required to listen to the full song.
   
6. I get so tired of selecting the song, playing it for 30 seconds, and rewinding it to play it again that I program my iPhone to play that song whenever I press a button, wait 30 seconds, and then stop it. I haven't changed anything here but the means of activation, which clearly is not covered by copyright law. I.e., copyright law covers the rights to the music, not the user interface for the player of that music.
   
7. I decide that a physical button is too much work and instead decide to hook up the button to an electronic signal that is triggered whenever somebody calls me. Again, I have simply changed the activation method.

Presto, in seven perfectly acceptable steps I have a ringtone. Of course, the copyright holders and/or Apple would far prefer that I purchase a ringtone from them, and that's fine. (In fact, on my iPhone, I have to go through a few contortions to do the above process - they've deliberately made it obscure how to do this precisely to support purchase of ringtones rather than do-it-your-self.) But they cross the line when they demand that I do so or claim that somehow I am unethical or breaking a law when I do so. As long as I have purchased the MP3 and did not explicitly agree to additional contract terms (i.e., beyond simple copyright), I am entirely within my rights to do so (and even then, if I violate the contract then I have not broken copyright law but rather have broken a contract - a civil matter). And if the phone rings where other people can hear it, oh well. It's simply not a public performance anymore than playing a legally purchased CD on my boom box where others can hear it is.

This seems to be a specific application of a more troubling broader trend by content holders. The purpose of copyright is to protect content owners from the stealing of their intellectual property; this is a perfectly reasonable goal. When you buy an album or a movie you are really not buying the content per-se, but rather buying a license to consume it. (This is why you cannot legally make copies and redistribute it; that is beyond your licensed right.) But over the past ten years or so, we are seeing more and more attempts to control the exercise of that right, not just the granting thereof. The DMCA, for example, makes it illegal to copy a DVD to your computer's hard drive (because doing so requires bypassing the anti-piracy encryption on the DVD), even though the specific medium (DVD or hard drive) is immaterial to one's right to watch a movie. The ASCAP claims are another example of not only controlling whether you can consume their content (which is reasonable) but to also control the where/when/how of that consumption, which is a disturbing trend and which should not be enshrined in law.

More homegrown terrorism

The shooting at the Holocaust museum in Washington DC earlier this week reminds us that the threat of terrorism is not confined to foreigners or to followers of any particular religion. And yes, it is terrorism: the shooter targeted innocent, non-combatant civilians in order to make a broader political point. If that isn't terrorism than I don't know what is.

This is why we must go beyond basic profiling or bureaucratic mechanical charades that value appearance over actual provision of security. Terrorists can be hard to identify (although it seems that in this case, von Brunn, the accused shooter, had a long and public history of indications that he could do something like this), and neither removal of shoes at airports or the closing off of public areas do anything meaningful to help identify them. It takes intelligence and behavioral observations - tasks which are less easy to farm out to $10/hr unionized rent-a-mall cops, but which ultimately yield much greater bang for the buck in terms of actual security.

Why China doesn't deserve the respect it craves

Two words: "North Korea."

Despite all of the good it's done economically for China, the Beijing government recognizes that it would likely not remain elected were it freely chosen by its population. This is why it bristles so strongly at any notion of "interference in internal affairs." It values stability (translation: status quo, with it in power) above all else, and thus it is unacceptable for other nations to so much as comment on how the Chinese regime runs its affairs.

Alas, China also wishes to be respected as a first rate power on the world stage, and this desire, unfortunately, runs headlong into their first goal to be left alone in their authoritarian ways. Nothing exemplifies this more than North Korea. Here is an outlaw nation, which flouts every standard of civilized behavior both within and beyond its borders, which abuses its population mercilessly and threatens other nations recklessly. It is a problem which must be dealt with. And it has one clear Achilles heel: it is utterly dependent upon China.

China thus has a dilemma. It can do the right thing on the world stage and show that it is a responsible member of the world community, not a threat to others, a nation whose power others should welcome rather than fear. In other words, it can wield its influence over North Korea - by carrot and by stick - to get that petulant brat of a nation to behave or face consequences.

Or China can take the cowardly and self-serving approach of "stability" and consistency with its own mantra of not meddling in any other country's internal affairs. After all, if it is OK to influence a country from the outside (no matter what manner of evil is happening within that country's borders), that opens China up to similar inspection from the outside. It's pretty obvious that if Hitler were to come to power today that China might make some weak statement of protest, but would utterly refuse to stop trade in Zyklon B. After all, cutting off trade would be meddling in the internal affairs of another country. If you think this is a harsh statement, consider that genocide is occuring in Sudan, and China is doing a brisk business there.

True leadership and maturity come when one does things that are not necessarily in one's own direct interest, when one puts the broader good ahead of one's own personal good.

China is being tested, and it's obvious which approach it is choosing. And as long as it does so, it proves that it has not matured to the point where it deserves respect in world affairs. It simply is not yet a constructive member of the world community.