Oil Speculation

Everybody is complaining about oil prices. Congress, of course, feels it is their job to do something about it (why leads to inane proposals such as the gas tax holiday that I have written about before).

Republicans, predictably, are demanding more drilling, which doesn't really do anything about prices in the near term, and almost certainly won't do anything in the long term: by the time that oil reaches the market in 8-10 years, demand will have grown to the point where that capacity won't affect the supply/demand balance, it will simply help meet the overall appetite. It's also not really a solution to the extent that it only extends our dependency on oil overall. (My personal opinion is that we should use all of the oil from the Middle East and Africa and save our own oil for last. But I digress...) But at least the Republican proposal is somewhat rational in that it recognizes that prices are basically set by supply/demand and attempts to affect the supply side.

The Democrats, on the other hand, are blaming rampant speculation for the run-up in oil prices. They're almost certainly right about this. But the problem is that they want to do something about it, to "solve" the problem. And on this point, they miss the point altogether.

Speculation is not a "problem to solve." It is healthy, and necessary to the functioning of markets. Yes, it leads to bubbles (and I believe oil prices are in a bubble right now), but when the bubble pops it is the speculators who get punished. "Speculation" is nothing more than investment with a dirty-sounding name. But without risk takers who are betting on the price, the markets would be less liquid and less likely to arrive at the "right" price over time. Speculation is fundamental to almost all investments - holding any share of stock for the long term is a form of speculation, and we never refer to that as being a bad thing.

I have no problem with keeping oil commodity trading open and appropriately regulated, but I haven't heard of any true problems with these markets in this regard. But the Democrat's response here seems to be that because a (basically) functioning market is producing prices that we don't like, that something must be wrong with it and done to "fix" it. Remember how well price controls worked for the problem of inflation? The idea of reigning in bogeyman "speculators" has me more scared than the price of oil itself.

China

I've posted previously on my thoughts about the Chinese government. Watching their conduct recently with respect to Zimbabwe and the indictment of Sudan's president just confirms for me: the Chinese regime operates on its own short-term interests alone; ethics and morality simply are not a factor in their behavior.

Their desire for the principle of absolute unquestioned sovereignty (so that they themselves do not get questioned) is such that I firmly believe that if the Nazis were to come to power today and had a supply of a vital commodity such as oil or iron ore or similar, that the Chinese would happily manufacture and trade Zyklon-B in exchange.

Supreme Court ruling on Gitmo Detainees

A few days ago the Supreme Court ruled that detainees in Guantanamo Bay have the right to challenge their detentions in US civilian courts.

I am not wild about this decision because I believe that it will result in some frivolous legal proceedings, and could result in the release of true terrorists. Nevertheless, I believe it is the correct decision for a variety of reasons (all with the usual caveats that I'm not a lawyer):

• We have two legal frameworks under which our government operates: criminal and military. We’ve survived 230 years with these two, and have never had any real problem with putting people under one jurisdiction or the other. I do not see why this system suddenly needs to break down. The detainees are either prisoners of war (whether they are subject to Geneva convention protection is debatable), or they are criminals. Bush is trying to have it both ways: treating this as a military war in every single respect but for one, namely what we call the enemies that we capture. If it walks like a duck and quacks like a duck…
• Many people have made the argument that because the detainees are not US citizens that they do not have constitutional rights. This is a bad argument: the rights guaranteed in the constitution have never been limited to citizens. Rather, those rights are limitations on what our government can do, how it can treat people, so it applies to official acts of the government even extra-territorially. Again, that’s a criminal statement which is probably void if in a military context, but Bush seems to be arguing against the latter despite all evidence to the contrary. The fact that terrorists don’t wear uniforms and target civilians may exempt them from Geneva conventions, but it doesn’t make their actions any less “military,” especially if that’s what we respond with.
• Consider the case if the decision had gone the other way. Suppose I firebomb a house. I’m guilty of arson (and probably a few other crimes), but I’m afforded various legal protections before I can be sent to jail for that. If the decision had gone the other way, then if Bush decided that my act was not mere arson but “terrorism”, then according to their logic, they could declare me an unlawful combatant or terrorist and lock me up indefinitely. And there’s nothing I could do about it. This isn't just a hypothetical, this is exactly what they did with Jose Padilla, who was a US citizen detained on American soil. The fact that the president is an honorable person who wouldn’t frivolously do this is immaterial – it’s not a power that our constitution grants, and the framers of our constitution were deliberately (and justifiably) wary of granting unchecked powers to any position and simply trusting that it wouldn't be abused.
• Another argument in favor of holding the detainees is the historical precedent of holding prisoners of war without any rights to challenge their holding until the end of hostilities. The problem here is that while it is a war in just about every sense of the word, it also is not at all a war because there is no central unified enemy: we’re fighting a bunch of independent ideologues. Yes, some band together to form one group or another (Al Queda, the Taliban, Hamas, Hizbullah, Al Queda in Iraq), but that’s the point: even if you get rid of Bin Laden, Al Queda doesn’t go away or cease hostilities. To the degree that individuals or small autonomous groups are acting on their own, there is no peace treaty, the very notion of “end of hostilities” makes no sense. So we should admit what this is: we're holding people that we suspect are dangerous. This may seem to contradict my earlier assertion that this is truly military, but it actually supports the idea that these guys are either prisoners of war or criminals, or even some blend of the two, but just because they don't fall neatly into one or the other doesn't mean that they fall in some in-between world that is neither.
• One of the core principles of America is that we do not punish innocent people. While we can be sure that many Gitmo inmates are in fact bad, bad, bad, we also know of quite a number of people who were basically innocent of terrorism, who were in the wrong place at the wrong time or who committed the “terrorism” of driving a car for Bin Laden (for example). As a nation we should find the idea of delaying indefinitely a determination of guilt or innocence abhorrent and reprehensible.
• I’m sure the detainees are dangerous. So are murderers. And we occasionally have to release a murderer because they’ve served their time or because we couldn’t prove their guilt. And our society has accepted this imperfection as the price of being a just society. But most of the time, if we’re worried about that criminal, we’re able to demonstrate to the court that they are indeed a continued threat and are able to keep them detained. Why do we think we wouldn’t be able to do that if someone challenged their detention? In other words, if we think that giving them Habeas Corpus somehow will lead to a lot of them being freed, then it seems to me that we’re holding them on far flimsier evidence than we should be. Conversely, if we really have good reason to think they’re as dangerous as we’ve been saying they are, then heck – “bring it on.” Let them challenge their detentions, show the judge (secretly, if necessary) why we think they’re baddies, and watch how quickly the courts affirm that they are indeed a threat and can remain locked up. Frankly, I don't have a problem with military commissions (including the less protective rules of evidence) as opposed to civilian courts because I don't think these are ordinary criminals, nor do I think that ordinary jurisdiction applies. But we do need to have some sort of legal process here.
  

In short, I think that the biggest problem with the way that we are holding these detainees is that we are making it up as we go along. (Indeed, the Seattle Times had a story on just this topic today.) Our nation is built upon a framework of laws and checks and balances precisely to avoid this sort of legal improvisation. There have indeed been times when we have had to work outside of that framework, but in the past presidents have explicitly suspended habeas corpus; our current president has decided not to do this, and this to me means that he is trying to have it both ways.

A self-fulfilling prophecy in reverse?

So Hillary Clinton has finally conceded (sort of) that Obama won the nomination. And in doing so, she has proven that her failure to be nominated was the right decision.

Allow me to explain, and to first disclaim that I didn't particularly care which of these candidates won the nomination.

It's been obvious to most observers for a while now that Obama's lead was mathematically insurmountable. And yet she stayed in the race well past that point, and despite it's essentially irrefutable logic. I think this showed a disturbing inability to recognize reality and deal with it, instead clinging to an alternate reality despite any inconvenient (yet obvious) evidence to the contrary.

Pretty much all Democrats/liberals (and even most conservatives at this point) point out that Bush's single biggest flaw as a president has been that he has wrapped himself in a bubble and has refused to acknowledge even the most obvious data that is contrary to his world view.

So regardless of whether or not her winning or losing was the right decision by the Democratic primary process, in delaying her recognition of the obvious she has demonstrated quite convincingly (to me, anyway) that she suffers from precisely the same character flaw that Democrats have been railing against (directly or indirectly) in Bush for his entire term.

And thus she has proven that if she were to be elected, she would likely be just like him, only with a different political lens. I.e., she's campaigning on the message that we need to replace Bush, yet she has proven herself to suffer his worst flaw! And thus, in selecting someone else, the Democratic party has created a reverse self-fulfilling prophecy!

More on Airline fees and a-la-carte pricing.

I've posted in the past about airline fees and my recommendations, and lo and behold American Airlines is now taking my advice...sort of.

I think I simply forgot about the fact that *how* you go about this matters as much as going about it. And American Airlines is doing it all wrong, and in the process showing that they hate their customers.

The problem is not that American is charging for checking the first bag. The problem is that they are treating this as a penalty, as a surcharge, as punishment.

Consider two scenarios:

Scenario A: American (or any other airline) announces that they are going "A la carte." Their message to their customers is simple: we're going to keep your cost as low as possible by only charging your for what you need. Our fares (which include fuel, for crying out loud!), are as low as we can make them; you can add to that the services that you want. Each service that you add, whether it is meal service, baggage service, or a cancel/change waiver, is a separate service that we will stand behind independently. Don't like the food you bought? Get your money back. Paid for your golf clubs but they were delayed? We'll rent you a set until we get your clubs to you. If you pay for it, we'll make sure it's right.

Scenario B: American says that you can buy a "low fare" for your flight, but at every turn, whenever you try to do something that a reasonable person might want to do or expect to be included, you have to pay a fee, about which you likely did not know in advance. And even if you pay the fee (for example to check a bag), you get no additional service guarantees with it, you simply take your chances (and you won't get a refund). In fact, you may suffer fees even if you do everything to avoid it, for example if you find that there is insufficient overhead space for your legitimate carry-on bag and are forced to check it. You probably would have been willing to pay more for a ticket that could be changed, but you were never offered any such option because you were simply shown "lowest fares" on the airline website or on travel agency sites such as Expedia or Travelocity, all of which are oriented towards the lowest sticker price possible.

Now I admit that my scenarios are hardly unbiased portraits, but that's because I am biased. Scenario A is McDonalds, where nobody complains about the fact that adding fries to a burger costs more than the burger alone. (And, of course, "value meals" are hardly precluded in this scenario.) Scenario B, which nickels-and-dimes customers is...well, the airlines.

Any legitimate company that seeks to provide value to their customers and make money in the process would naturally implement scenario A; companies that are out to make money however possible but don't give a damn about their customers in the process gravitate towards B as a "revenue optimization" model.

Airlines today are in a really tough spot, and I sympathize with them for that, but unfortunately most of them today are viewing their solution through a Scenario B lens. This is shortsighted on their part, and demonstrates that they simply do not understand their business and what it means to make money by providing value to customers.

Southwest Airlines comes the closest to implementing Scenario A. Southwest Airlines is the only US airline that has consistently made money over the nearly 100 year history of commercial aviation. Am I the only one who thinks that this might not be a coincidence?

Gas Tax Holiday

Hillary Clinton, among a few others, has been proposing the idea of a "gas tax holiday" for the summer due to the high price of gasoline. I will add my voice to the chorus that believes that this is a gimmick at best and a bad idea at worst.

First of all, it won't meaningfully lower the price of gas; the amount of tax on a gasoline is less than the amount prices have been varying of their own accord in the matter of weeks.

More fundamentally, it is a gimmick because the entire premise of the proposal is that governments are responsible for the price of gas and that the price of gas is somehow broken.

While it is of course true that in many countries government has a strong hand in the price of gas, that is only minimally true here. The gas tax is pretty low, and prices are largely determined by the markets. (Verifying that these markets are functioning properly is of course a valid responsibility of the government, but inevitably investigations into manipulation of these markets fails to find anything askew.)

And I'd argue that there is nothing inappropriate about the price of gas. I don't like it, but that doesn't mean that it's inappropriate. It's a commodity with finite supplies, diminishing new finds, and exponentially growing demand. So why should any rational person expect the long term trend on these prices to be anything but up? The price of a barrel of oil is up more than fourfold over the past few years, yet gas is only up 2-3x; that suggests to me that the price of gas is actually pretty reasonable.

I'm thinking that oil is above its "intrinsic" price right now because of speculation, fears of supply disruption, and (of course) the falling dollar; I'm not a sophisticated enough investor to know what the "right" price should be, but it's not $20 a barrel any more, and it will trend upward over time. But markets are far more efficient at finding the right price than any government attempts to guide it.

The market adjusts for the high price of gas in other ways as well: SUV sales are plummeting, hybrid sales are soaring, and alternative energy investments that do not make sense when oil is at $60 a barrel make a lot of sense at $90, $100, or higher. So the economy will almost certainly do exactly what it did during the energy crisis of the 1970s: it will get a heckuva lot more efficient, and the amount of energy required per unit of GDP produced will fall. And this helps keep us competitive and insulates us from the inevitable subsequent increases down the road.

Even if we were to ignore all of this and take for granted that high gas prices are a problem to solve, I also suspect that this "gas tax holiday" would actually exacerbate prices. After all, if it actually were to achieve its stated goal of lowering prices in a meaningful way, the law of supply and demand implies that consumption would go up. If consumption goes up, the price - especially given continued tight supplies and refining bottlenecks - will go right back up. So to be effective, the tax holiday must not lower prices by a meaningful amount. Which means that the tax holiday can only be meaningful if it fails to be meaningful. Brilliant.

So we have a solution proposed that would actually fail to solve our problem, but it turns out that the problem is not actually a problem. "Bad solutions to problems that don't exist" is probably the most distinctive hallmark of bad ideas.

As a postscript, I think it's particularly amusing that Hillary is using the term "elite" as a dismissive insult in reference to the fact that economists are nearly unanimous that the gas tax holiday idea is silly. I understand that politics is politics, but I'd at least hope politicians wouldn't be so naked about their political positioning.

Intellectual property and dumb business models

My wife and I attended a charity auction a few weeks ago, and they had a photographer there capturing the well-dressed couples. We posed for a picture, and a few days ago went online to view them. Liking them, we decided to order some, and we requested to purchase the images electronically, since we mostly view images on the computer these days rather than on a wall.

No dice. The photographer will sell us low resolution digital images for the price of a print, or a print, but will not part with the high resolution images that we want. His reasoning is that if he sells us the high-resolution images, we can go to Costco (or use our own photo printer) to make our own prints.

While he's absolutely correct about this, he is showing the same short-sightedness that the recording industry has displayed with regard to copyright protection. In the same way that the recording industry incorrectly views its business as selling CDs rather than as selling music, this photographer views his business as selling prints, not selling images. So instead of selling to customers what they want to buy, he restricts them from that very thing.

If he were smart, he would offer two options: sell the print or low-resolution digital image for the $20 or so he would charge. Or, for something more - say, $25 or $30 - sell the high-resolution image, including a license to reproduce for personal use.

In other words, his copyright has value. He's currently using the copyright in a restrictive capacity, when he could instead be monetizing the value he holds in it. If he sold a version of the digital images with a license to reproduce, he'd continue to hold his copyright to the work, but he'd be making money from the value of the copyright. And most importantly, he'd be selling to his customers what they want to buy.

A few short years ago, this was not practical - photographers were in fact in the print business. Besides the fact that digital images were not possible or desired, photographers typically had high expenses as they had to print out every picture even though they would only sell a fraction of those prints. Today, however, these costs have dropped to zero as the only images they need to print are the ones that they sell. This particular photographer is using an antiquated model; he is using 21st technology to take the pictures, he should bring his business into the 21st century as well.

Bush's greenhouse gas proposal

A friend pointed me to this Wall Street Journal opinion that defends Bush's recent proposal to stop the growth in greenhouse gas (GHG) emissions by 2025. The gist of the article is that anything more is unrealistic, that all of the goals being touted by environmentalists are unachievable.

While the Journal is absolutely right, something about this opinion bothered me, and after thinking about it overnight, I've realized what it is.

There are 3 key questions, I think, about global warming:
a) Is it real? (The main scientific question, best answered by scientists from data, not politicians or pundits)
b) IF it’s real, is it bad? (Combination of scientific/policy question)
c) IF it’s real AND it’s bad, what can or should we do about it? (Strictly policy)

There’s all sorts of room for debate on all of these questions - more on c than b, more on b than a, but room indeed on all 3. But I think the debate on these questions is actually somewhat beside the point.

The fact that Bush is putting out any sort of greenhouse gas goal means that he must be saying “yes” to (a) and (b); otherwise the only explanation is that it’s completely cynical ploy on his part to try to appear to be doing something without actually doing anything. After all, if he says “no” to either (a) or (b) then there’s no point in making any proposal to limit GHGs at all.

So if we give him the benefit of the doubt on this, then his proposal must logically be his answer for (c). In which case he is rightfully assailed for not doing anything meaningful. I.e., it’s doing something that we know will be pointless rather than doing something that we know will be difficult.

He didn’t claim that more aggressive cuts are unnecessary or futile, or that other approaches (e.g., GHG sequestration) make more sense, either of which could potentially be valid scientifically justifiable arguments. He simply said it would be too hard (and the WSJ agrees). He is almost certainly correct on this, but to me it’s akin to Kennedy challenging the nation to have a design for an unmanned ship that could go into lunar orbit by 2020. Maybe we can’t hit something more aggressive, but we won’t know if we don’t try.

We have a president who for 7 years has steadfastly refused to do anything about global warming. For reasons that are inexplicable to me, he has decided with less than a year left in office to put forth a proposal that global warming activists hate, and that global warming deniers hate as well (because it's sheer existence is an acknowledgment that global warming is real).

My friend (a self-described conservative) who pointed me to the WSJ article, thinks that my "cynical ploy" explanation above is accurate. I don't know if it is or isn't, but I can't see what he hopes to gain with this proposal, but I think it would have actually been far more honest for him to simply say “whether or not it's real, there’s nothing we can do about it so why bother.”

One more reason to hate Digital Rights Management (DRM)

This news from Microsoft yesterday: they're shutting down their PlaysForSure servers. What does this mean? It means that if you bought music from the MSN Music store, then whatever machines are currently authorized to play those songs are the only machines that will ever be able to play those songs. Of course, computers become obsolete approximately 3 hours after you purchase them, so this means that in the near future when you've replaced your computers, you will no longer be able to play the songs you spent good money to purchase.

So let's see: you try to do the right thing by buying music, and the industry screws you over for it.

I'm an honest consumer. I try to do the right thing. I buy my music (all of it, these days, from Amazon, where it has no DRM). But enforcement of anti-piracy technology like DRM is an injustice to the very people that the industry should be wooing.

Further erosion of freedom in the name of "security"

A few years ago I flew a small airplane into Avey airport in Washington state, which has the interesting property of straddling the US-Canadian border. I flew in from the south, landing to the north, and thus crossed the border halfway through my landing roll. There is a street adjacent to the airfield, with a border station on it. I taxied back to the midpoint of the runway where there is an area to park, shut down the airplane and climbed out. A border patrol agent was crossing the street from the crossing, so I waved him down and asked him what formalities were needed.

Border Patrol Agent: Did you fly from the US?
Me: Yes
BPA: Are you landing anywhere outside of the US?
Me: Other than rolling down the runway, no.
BPA: When you take off, are you going back to the US?
Me: Yes
BPA: Then I can't even talk to you. [I presume he meant in an official capacity, rather than on a personal level]

And off I went. What a great experience, and it reminded me of one of the great freedoms we enjoy in the United States: the right to be left alone. Absent a warrant or reasonable suspicion of wrongdoing, the government cannot stop you, question you, ask for papers, or otherwise make you justify anything you are doing. It's something we largely take for granted. In many other countries, one must endure random roadblocks, identity paper checks, and other arbitrary intrusions at the whim of the government, but not here.

Then this morning I saw a story in the newspaper about checks that the border patrol is now conducting spot checks on ferries in the San Juan Islands. The San Juans are up near the Canadian border, and conduct international runs from Canada to the US, so on those runs it is entirely appropriate for the border patrol to do more or less whatever border enforcement it deems necessary.

But what is insidious about the new spot checks is that they are being conducted on routes which are entirely domestic - in other words, where there is no border being crossed and where the Border Patrol has no jurisdiction. The CBP even acknowledges as much: they acknowledge that they cannot do anything when a person refuses to answer their questions, but I suppose that enough people are either not aware of their rights or too timid to stand up to people in uniform, and as a result the net effect is that they get cooperation. Nevertheless, these people are detained for a period of time, and license plate numbers are run, which amounts in my opinion to illegal domestic surveillance and illegal detention.

This is, of course, being done in the name of "national security" and "anti-terrorism." Ahh, the evils that can be justified by those words. We should never let our fears lead us into abdicating our rights, for if we do then we have proven that we don't deserve those rights. It is a slippery slope.

Adding insult to injury, this program is leading not to the arrest of terrorists, which would at least mitigate (although not excuse!) this encroachment on our freedom, but rather to the arrest of illegal aliens. I have no problem with arresting illegal aliens, they are breaking the law and do not deserve sanctuary for having done so. But to trample our civil rights in the name of security as a ruse for over aggressive enforcement of immigration rules should shock every American.

Cuba

While I have no love for the Cuban regime, I have also long thought that the US policy towards the island has been, well, stupid. It was an absolutely reasonable strategy to try after the revolution, and perhaps for another 10 years, but after 20, 30, 40 years, it should have been clear that it simply wasn't working. It seems to me that we've dogmatically held on to our policy of isolating Cuba not because it achieves our objectives (it hasn't met any that I can tell), but because it gives the illusion of doing something useful. In other words, I think it's more about satisfying Miami voters and feeling good about not supporting the regime than it is about actually making life better for the Cuban people.

But an interesting thing is happening in Cuba right now: the government is opening up a bit, removing many of the arbitrary and cruel restrictions it has kept on its people with regard to consumer electronics.

So now that ordinary Cubans who happen to have enough money to buy a DVD player (which, I suppose, includes no "ordinary" Cubans), all is well with Cuba, right? Well, no, of course not, not even close. Cuba is still ruled by an oppressive abusive dictatorship, and there is still no political freedom and the economy is still a disaster.

But the opening up on consumer electronics - however minor - is highly significant for two reasons. The first reason is that I have never seen a government open up just a little; small freedoms inevitably are followed by bigger freedoms - trickles become floods. Two examples I offer here are China and East Germany.

The second reason I think it is significant is that after 50 years of an ineffectual policy towards Cuba, the ball is suddenly in our court - there is suddenly a change on the island. It's not due to our policies, but it's a change nevertheless. How will our policy towards Cuba change in response? Will it change, to encourage further liberalization? Or will we continue to cling to the blind dogmatic policies of the past?

Paper or Plastic?

Seattle is proposing the first-in-the-nation attack on bags at grocery stores: a $0.20 fee for using paper OR plastic rather than bringing your own bag to the store.

I'm normally quite a skeptic of government trying to mandate well-intentioned outcomes, and question whether government (rather than the market) should be the arbiter of the best way to determine things like this. But I also believe that sometimes it is only the government can make a negative externality explicit, and I think that this sort of policy is the right way to achieve it. The fee is optional (you don't have to pay it if you just bring your own bag), and they're providing bags for the poor to avoid the unintended consequence of taxing the people who can least afford it.

Governments should not mandate free-choice behavior like this. But setting up incentives that make doing the "right" thing a natural choice? Bring it on!

Why $100+/Barrel Oil is Good

A lot of people are complaining about the high price of oil lately. Frankly, I don't have a ton of sympathy. Oil has been quite cheap - artificially so, in my opinion - for a long time; for once it feels like it is finally priced at something that captures it's true cost. It shouldn't surprise anybody that oil is expensive. After all, it is a finite resource in a world of increasing demand and all the "easy" sources have been drained so each incremental barrel is more difficult to find and extract. I can't say whether or not $102 (today's closing price) per barrel is the "right" price (although markets tend to be pretty good at finding the"right" price), but it's probably in the right ballpark and I don't see it going down anytime soon.

Our entire economy is dependent on oil, so how can expensive oil possibly be a good thing? As a country, we've been moaning for a long time about our "addiction to foreign oil" and talking about things like "energy independence." And usually when politicians say it, they are frustrated about their inability to do anything about it. Well, of course they're frustrated: economies respond to market forces, not government dictates. We haven't weaned ourself from foreign oil because it's been so cheap compared to other energy sources. The only way a government can alter our course is to alter that dynamic, typically through things like tax policy, which is often quite dangerous to political careers (even if it is the right thing to do). And besides, no rational government wants to harm it's domestic industries by raising its costs above that of its rivals.

But the great thing about $100 oil is that it is a market-imposed price, and it affects all players equally. This results in two very good things. First, America gets more efficient with its energy use. This is why energy per dollar of GDP has dropped rather dramatically in the late 70's/80's. (This obviously has benefits for greenhouse gas emissions as well). The second good thing is that it makes alternative sources of energy far more economically viable. Entrepreneurs are naturally reluctant to enter a market that is artificially sustained by government policies, since such policies are subject to change on short notice. But a market that is defined more organically - as the current one is - and which is not poised to change (as a finite resource with increasing demand, it is hard to see oil prices dropping dramatically for any sustained period of time) will attract entrepreneurs and innovators who see a more sustainable positive environment.

In other words, $100 oil could be the best thing that ever happened to our dependence on foreign oil: it could be the very thing that helps us to kick the habit.

Another great post about the death of the traditional music biz.

Jeff Price mirrors other blogs in writing about how the old model for the music business is dead. It's too bad that the major labels haven't figured this out yet.

Predictably Irrational

On a friend's recommendation, I just read Predictably Irrational. I know that this is intended to be a political blog and this is not a political book, but I think it's still a fascinating exploration into why we do things that we do - especially since so much of what we humans do is fundamentally not rational.

It's a quick read, I highly recommend it.

Tibet, China, and the Olympics

The Chinese government isn't entirely bad. After all, over the past two decades they've orchestrated what is perhaps the greatest economic rise in history, lifting more people out of poverty more quickly than ever before. And it has certainly opened up quite a bit over this period as well. Both of these trends should be applauded and supported.

But unfortunately, not only do the ends not justify the means, but I believe that the overall tally of evils that the Chinese government commits greatly outweighs the benefits it provides. The environment in China is toxic. The government is corrupt, authoritarian, abusive of the peoples' basic freedoms, utterly indifferent to the evils of other countries when it suits their needs (more on this below), and it behaves like an immature paranoid petulant child on the world stage whenever there is any issue that affects its pride.

The upcoming Beijing Olympics I think epitomize this latter point. The Chinese government has made the Olympics a centerpiece of national pride more than any other host nation that I can recall. Good for them, and I actually wish them well for a great event.

But it is in this context that I watch what has been going on in Tibet. I think the government has exposed its Achilles heel. It is determined to show a new, open face to the world for the Olympics. And it is determined to orchestrate the Olympics to go flawlessly - and without a whiff of anything embarrassing.

Therein, I believe, lies the dilemma for the Chinese government, which I believe activists for the myriad causes that have complaints about the Chinese government would be wise to exploit. If they protest in any sort of visible way, China must either respond or not. If it responds with openness (as it has promised), then it "suffers" the embarrassment of the world seeing the protest. (Of course, any legitimate government should have no fear of visible dissent, but this is one reason why I believe that the government behaves like an immature child.) And if it responds with a clampdown - as it has done in Tibet over the past few weeks - it reveals its true colors as a brutal regime whose claim to legitimacy is so tenuous that it cannot suffer dissent. Either case would be a PR nightmare for the government, and thus a win for the activists. All they need to do is lie low and avoid being rounded up until the event.

One more thing about why I think the Chinese government needs to "grow up." The Chinese government demands to be treated with the respect on the world stage that is given to other major powers and is exceptionally thin skinned when it feels that respect is not forthcoming. But among other things, maturity means understanding that respect is something that must be earned. For example, China has had ample opportunity with North Korea and Sudan to demonstrate that it is worthy of great-nation status, and has all but abrogated any responsibility - despite it's unique position to do so - to help to reduce the unmitigated evil that these two countries inflict upon their populations; quite the contrary, it has been the primary support propping them up. In another example, China tries to have it both ways on the environment: demanding to be treated as a developing nation with regard to carbon emissions, even after surpassing the US. Mark Twain once said "Patriotism is supporting your country all the time, and your government when it deserves it." The same is true for respect. I cannot respect a government that fails to earn that respect.

I've been to China. It is a wonderful country, it has tremendous potential to be a true leader on the world stage. And the government does deserve a lot of credit for the progress the country has made. But it is not enough - more change is needed if it is to truly become the great nation it aspires to be. The Chinese government has made the Olympics a defining moment for the country. I wonder if it will be all for show, or if it will truly become a defining moment.

Fee for your thought?

I've got fees on my mind lately. The news that United Airlines is going to start charging $50 to check two bags certainly struck me as indicative of the whole problem.

It's really this: calling something a "fee" is only legitimate in two circumstances. The first is when it is passing through a charge from a 3rd party. The Sept. 11 security fees on airline tickets, or the service charge to buy a ticket from Expedia or Travelocity would fall in this category. The second is when the fee is charged for a discrete or incremental (and presumably optional) service. Examples here include a corkage fee for bringing your own bottle of wine to a restaurant, or a surcharge for 2nd-day delivery of a package.

Sadly, though, we're seeing a proliferation of all sorts of "fees" that meet neither of these criteria and which are, in my opinion, downright fraudulent and deceptive.

My favorite example of abusive "fees" charged to customers is the "fuel surcharge" that we're seeing applied not only to airline tickets, but also to many other everyday services. Don't get me wrong - with the high cost of fuel, businesses that are fuel dependent need to recover their costs, and there is absolutely nothing wrong with raising prices to do so. But companies are simply t insulting their customers by pretending that this is some "fee". It isn't - it's simply raising prices, but it's fraudulent because it let's the company pretend that they're not actually raising prices (after all, the advertised airfare is unchanged) when, of course, they are. Fuel is critical to the act of flying an airplane. It isn't as though passengers can opt out of using the fuel to get to their destination. The fuel for a flight is part and parcel of the cost of operating the flight. When you are spending $500 on an airline ticket, $200 (or probably more) is going to fuel costs anyhow; what is it about the $20 covered by the "fuel surcharge" that makes it different? Why not simply call this a $300 fare with a $200 fuel surcharge? Calling out a fuel surcharge is like buying bread with a separate "wheat surcharge." If it's an integral part of the cost of the product or service, then there is no excuse for arbitrarily excluding parts of that cost because they make the resulting price inconveniently high. It is an act of deception.

My other favorite example in this vein is the increasing number of hotels that tack on exorbitant "resort fees" for each night of a stay. I would have no problem with this if the fee were tied to usage of "resort facilities" (however defined), but I have yet to see a hotel that actually let you opt out of services as a way to bypass the fee. Wheat in bread.

Which brings me back to the United Airlines baggage policy. As a customer, I'm not wild about the policy, but I can see why they do it, and at least it's honest: you don't have to pay the fee if you don't use the incremental service to which it's tied. Interestingly, United justified the fee by saying that all passengers pay for baggage service in their ticket prices today, but only one in four passengers check two bags, so now they can pay for the incremental cost. This justification would work if they were actually going to call out baggage services as a discrete fee, separate from ticket prices altogether, but they aren't actually doing that.

I actually think that airlines, hotels, and others would be very well served by doing two things: first, break everything out into true a-la-carte pricing. For an airline, this would mean publishing a base fare. Want a better seat? $20 more. Refundable or changeable? $100. Want to check a bag? $25 per bag. Want early boarding? $5. Peanuts and soda? $5. Lobster? $100. Let people create the right options for what they want.

And then create simple packages (discounted, of course, relative to the a-la carte sum total) to provide an incentive for these upgrades. "First class" means you get all of the above options, but anybody who doesn't want all of "first class" could pick and choose what they did want. Maybe there aren't any more first class seats on the airplane, but how hard would it be to load a few more first class meals and extra wine for the folks in coach that are willing to pay for it? This turns a cost-center into a profit center.

Hotels could do the same thing, and for many hotels that have a mix of business customers (who may not make much use of the "resort amenities") and leisure customers that may make sense. But I 'd suggest that hotels would have more luck going entirely in the packaged model: eliminate the damned resort fee and internet access fees and all of that, raise the base room rates by the right amount to cover these costs (and then some), and make it all inclusive, straightforward pricing. Personally, I hate splurging for a hotel that charges $450 a night and find that they want another $16/day for Internet access. As irrational as it sounds, I'd rather spend $500 a night and have it all included, with no nickel and diming. But at least the Internet access is legitimate to break out if the hotel decides to do so - if I don't like the cost, I can choose to forego it (and often do). It's the "resort fee", which I have no way of avoiding, that I find so insulting and disrespectful.

Successful businesses show their customers they care. Hmmm....I guess I shouldn't be surprised to see airlines embracing bogus "fees", should I?

An open letter for the recording industry

A friend of mine pointed me to this blog post, talking about how the music biz has changed and what the industry should do to address it. Very well said, in my opinion.

Bill Gates on Immigration, Education

Yesterday Bill Gates testified to Congress about the need to both improve our nation's math and science education, and to increase the number of workers who can come here on H1-B visas. I wholeheartedly agree with this position. Improving our math and science education is not a particularly controversial point, so I won't belabor it. But I think it is worth reiterating the need to increase the H1-B visa cap.

For a long time, our nation enjoyed a near monopoly on producing qualified engineers and scientists, but this lead is rapidly eroding as other countries (especially China and India) have started producing world-class technically trained people. The laughably small 65,000 cap on the H1-B visas means that the US is effectively cut off from this pool of talent. While this may appear to help US workers compete with foreigners who supposedly are willing to work for lower wages, the actual result is that American companies have to work with the best homegrown talent (often leaving many roles unfilled), as opposed to being able to work with the best talent period. So we end up deliberately weighing our companies down with two handicaps: insufficient staffing, and sub-optimal staffing (sub-optimal not because the American talent isn't good, but rather sub-optimal because the pool of talent is artificially restricted).

This is not to say that we don't have top-notch homegrown talent; we absolutely do. And despite its many documented problems, our educational system does still produce some of the best and brightest. But it doesn't produce nearly enough for what our industry needs. Gates pointed out - quite correctly, IMO - that allowing more H1-B visas would not throw Americans out of work, and would not depress wages. For one thing, even if the cap were doubled, the number of visas would still be far too small to impact the market. And since the tech job market is still seeing labor shortages and wage inflation, increasing supply to meet that demand will help these companies achieve more, which will lead to more growth.

Companies faced with H1-B restrictions do the only logical thing: they outsource. So instead of hiring a talented engineer from, say, India, to work in California at California wages, we are instead paying that engineer Indian wages to work in India, thus helping to build up the competitiveness of the Indian economy and of Indian companies. While I applaud growth of foreign economies and companies (even though they're competitive, it's in our interests for other countries to be prosperous!), it is pretty clear to me that these arbitrary restrictions on the movement of the best labor is a US-taxpayer subsidy for these foreign corporations at the expense of domestic corporations. This hardly seems to be in our best interests to do.

I'll add one more point from a social perspective, since immigration is a hot topic these days. Many of the most active voices favoring greater restrictions on immigration claim that immigrants are a drain on society, live on welfare, increase crime, etc. They're largely talking about poor and illegal immigrants, and these claims may or may not be true, but we should be very clear about the kinds of people that come in on H1-B visas: these are people we WANT in this country. They are highly educated, highly skilled, highly paid workers. They will educate their kids here (producing the next generation of skilled American workers), they pay taxes and in general are a huge net positive to the economy and to society as a whole.

Personally, I think we should remove numerical caps on H1-B visas altogether and instead restrict them only to the candidate's meeting a bar of likely economic potential. Let the our companies have access to the best talent in the world, wherever that may come from, and have them bring those people here. We're the United States, why should we be afraid of competition?

I'm ditching iTunes

I've complained here several times in the past about DRM on purchased downloaded music. When Apple release iTunes Plus several months ago, which offered higher-quality recordings of songs and no DRM, I applauded the move and bought a number of songs to show my support. While I'm still happy with iTunes Plus, the selection is too weak, there's no way to specifically browse iTunes Plus songs, and the songs are still in the Apple proprietary AAC format.

Since then, Amazon launched it's MP3 download service, and I have to say I love it. Most songs are $0.89, the rest $0.99 (and albums can bring the per-song cost below that). All songs are MP3, with no DRM, so I don't have to worry about accidentally downloading something that won't play. Amazon automatically inserts the files into my iTunes library, so it seamlessly makes its way onto my iPod. And it is a far better experience to use than iTunes. I find myself buying several songs a week, as I hear them on the radio or remember a song I like - at less than a dollar a track, it's a perfect impulse purchase. And since it doesn't have DRM, I'm not locked in to anybody's proprietary platform - not Apple's, not Microsoft's, not Amazon's. I actually am comfortable that I'll still be able to play these tracks in 20 years.

So I decided to make a clean break. I burned all of my DRM-protected AAC songs to a CD, and then re-ripped them back into my iTunes library as un-protected MP3. (This appears to be kosher to do, since burning to a CD is allowed, and ripping CDs is allowed). I've also converted my iTunes Plus AAC songs to MP3 as well. My entire library is now 100% un-protected MP3. I can listen to songs on my iPod, or any computer in the house, or through my XBox.

I've paid for the songs and don't share them - isn't that precisely what the record companies want their customers to do? So why should I suffer the strait-jacket of DRM? I will never again willingly or knowingly buy a DRM-protected song.

A goofy law

I assume that I'm no different from many people in that I maintain both a savings account and a checking account. Both pay pitiful interest right now, but the savings account is a bit less pitiful than the checking account, so we keep the bulk of our cash in the savings account and transfer money to checking to cover the checks we write. This obviously maximizes what little interest we get.

Last night, I discovered, that my bank had assessed a $10 "excess activity fee" for too many transfers over the past month. Huh? Upon a bit more research, I discovered that the bank is not just trying to hit me with a gotcha fee (although it sure feels like a gotcha because there was no warning when I did the transfers that I might incur this fee) - they're actually required to do this by the government! Yep, it's something called "Regulation D" that requires that they limit the number of electronic transfers I perform each month to 6. In fact, if I ever exceed the monthly limit a 3rd time, they have to close my account! So I now have one strike against me for the "crime" of trying to cover my checks.

The rationale for this actually does make a bit of sense. A bank needs to keep cash on hand to cover checks in a checking account, but they get a break on the reserves required for savings accounts because of these limits. I think the theory is that if the money is not fully accessible to customers, then the bank doesn't need to keep it on hand - i.e., they can lend it out and make money with it. Hence the need to actually draw a formal distinction between checking and savings accounts: it lets the bank more optimally figure out its required reserves, and maximize the amount of money available for lending.

While this may have made sense in the 1930s (when I believe these regulations were adopted), it has become a silly fiction today. There are two huge loopholes here. The first is that the limit only applies to telephone or internet exchanges. If I were to drag myself to an ATM or to a bank office, I can do a thousand transfers a day with no penalty. The second loophole, of course, is that there is no limit on the amount I can transfer at a time, so I can still write checks for a lot more than is in my checking account and do a big transfer to cover them, meaning that the checking account balance is actually a poor proxy for the amount of cash they need to keep in reserve.

It's the first loophole, though, that annoys me. The only difference I can see between an in-person or ATM transfer and an Internet or telephone transfer is convenience, so it seems to me that the regulations have the net effect of simply punishing convenience. What possible reason is there for that?

These regulations should be re-evaluated and reworked to address the risks and issues in the modern world. I'm not proposing looser regulations around monetary reserves, but it isn't the 1930s anymore, and the 1930s style solutions appear to be showing their age.

Parker the chef

Tonight I made a chicken pot pie out of chicken leftovers. Parker asked if he could help and I let him. He put on his apron, I my chef's coat. I did all the chopping of vegetables, but I let him stir them while they sauteed: he pulled up his little step stool to the stove and did a great job stirring, being very careful not to touch the pot. He also helped me roll out the dough for the crust.

It turned out delicious.

Primary season

Just a quick rant: why on earth do we need to be doing this so early? We still have 9 months to the general election, heck 6 months before the conventions. Why don't the states all make a deal: Iowa and New Hampshire can keep their "first" status (as illogical as it is to do so, but it seems to give them a sense of purpose that they otherwise lack) but everybody shift their primaries/caucuses to May or June.

A common mistake

There is an initiative that will likely be on the ballot here in Washington State in November to provide "death with dignity" (if you support the measure, "assisted suicide" if you don't) rights to terminally ill patients.

While I personally support the idea that government should not prevent anybody of sound mind from deciding to end their life, my purpose in this post is not to discuss the initiative specifically but rather to observe what I believe is a very common error in how people think about such issues, particularly when one is against a particular practice.

In particular, when dealing with something that we find repugnant, our inclination is to support things that ban it. After all, if it's bad we want people to do less of it, and banning it will reduce that. I think that this is a non-sequitur. We should not confuse the desire for a behavior to diminish with a justification for it being illegal. There may be justification for banning the practice, but it must come from other sources.

I happen to support the right to assisted suicide, so I will pick an example of things that I oppose to illustrate my point. Smoking comes to mind. Ideally, nobody would smoke. But banning smoking is probably the least effective - and most freedom-reducing - mechanism for achieving this result. And frankly, it's not government's business to ban smoking just for being a bad idea. Alas, the legitimate reasons to ban smoking all derive from other principles, such as protecting one person from harming another (hence the bans in public places). But smoking is still legal in private locations - as it should be - because there is no legitimate reason for banning people from making decisions like this when they are not hurting others in the process, even if the decision is demonstrably stupid. (Heck, if "demonstrably stupid decisions" were sufficient to justify a ban, then Britney Spears should be locked up for life).

I do not believe that it is a goal of government to protect us from ourselves.

When checks and balances fail

Here's a disturbing piece highlighted by Slashdot yesterday. Basically says that our intelligence agencies would like the ability and authorization to more or less snoop on anything electronic anytime.

This (fortunately) appears to still be proposal rather than policy, but it's chilling. What I find particularly disturbing about this is the slippery-slope aspect. I am generally not a subscriber to slippery-slope theories (which usually involve conspiracy theories and border on the paranoid - just ask any gun owner about new firearm regulations), but I think there is a systemic reason why slippery-slope applies here.

The problem here is that there is no check on the degree to which the agencies charged with our safety may go, other than their own good judgment and budget. They are tasked with preventing another terrorist attack (among other jobs), and given the choice between doing anything and everything (whether constructive or merely cosmetic), or trying to be "reasonable" and thus failing to cover any potential security hole, they will go for former. After all, if a terrorist attacks and there was something - however minor or obscure - that they didn't do, they will have failed, but if they do more than is necessary or even reasonable and there is no attack, then they are perceived to have done their jobs.

Of course, they humans who are just responding to the incentives that we have placed before them, but the net result is that we are taking away basic freedoms and economic growth in exchange for "security" that is quite often strictly cosmetic. My favorite example here is the billions of dollars we are spending to have people remove their shoes at airports. This may well weed out the amateurs, but it is far too effort on the 99.9% of the people who pose no threat, and as such it is diverting money and attention from less visible but more productive approaches like better intelligence. And traveling to the US has become so inconvenient for foreigners that tourism is down dramatically - so we're hurting our own economy in the pursuit of the illusion of security.

Which brings me to the story mentioned above. I'm all for giving our government more ability to protect us, and I believe that better intelligence is key to that. But I have two conditions on this. First, per my rant above, it must actually be effective, which all too often it is not. But secondly, it must not destroy the very freedom that we strive to protect. As awful as terrorism is, I think it would be far better to have a free, open, and vibrant society that suffers the periodic tragedy of a terrorist attack, than to have a suspicious, burdened, invasive society even if that society did not have to suffer terrorism (though I doubt such a trade off truly exists).

Somehow we treat terrorism as "different" and have a zero-tolerance for it where we have a non-zero tolerance for other evils in our midst. Don't get me wrong, I'm not saying we should tolerate terrorism, or in any way excusing it. But if we reacted to terrorism the way we react to other crimes, we'd have roadblocks and strip searches and x-rays of every car entering Manhattan because - shocking! - there are murders committed there. We don't "tolerate" murder, but we don't let the existence of it drive every aspect of our lives either - we take reasonable precautions and reasonable risks, and do what we can to drive the murder rate as low as we can.

But with terrorism, it seems there is no rationality about limits on what we will do to drive it to absolute zero, even though I believe (regrettably) that zero is an unattainable goal.

I wonder how long it will be before they decide that in the interest of aviation safety that they ban all people from travelling by air.

Zimbabwe

One of the things I was particularly struck by while traveling in South Africa a few weeks ago was the contrast between it and its neighbor Zimbabwe. OK, I admit that it's hard not to see the contrast. And I admit that observing that Zimbabwe is an unmitigated tragedy (or that it didn't have to be) makes "stating the obvious" a rather startling demonstration of understatement. And I think the blame for all of Zimbabwe's many problems rests squarely upon Mugabe.

It's interesting that even in South Africa people I met shake their heads when speaking of Zimbabwe and Mugabe. I think they see what could have happened in their country. I think that Rhodesia (I'm using that name deliberately) and South Africa represent a rarity in political systems: a controlled experiment. Here were two countries with very similar initial conditions - white rule, strong self-reliant/self-sustaining economies (at least by African standards), and the potential for great wealth. Yet they had dramatically different outcomes for what can only be attributed to political strategies. South Africa sought reconciliation; Zimbabwe, retribution.

I can understand the desire for wealth redistribution, and how that can lead to a desire for land transfer. (I don't believe that forced redistribution is in fact morally justifiable; I am just saying that I can see why people might believe it to be so.) But sadly, people often confuse what is morally justifiable with what actually will achieve the desired ends. In the case of Zimbabwe, while chasing the goal of wealth redistribution (putting aside the fact that it was far more about cronyism than righting past wrongs), they ended up merely performing wealth destruction. Giving a productive farm to people who have no experience farming simply results in an un-productive farm; the moral arguments behind the action simply are not relevant.

If only Mugabe's motives were pure then perhaps he could be forgiven for the tactical missteps, but he has only compounded the tragedy because he has not demonstrated that he has the people's interests at heart.

He is quite simply and evil man, and he has singlehandedly destroyed a jewel of a country.

A quick rant about smokers in cars

Want to lose money quickly? Next time you are driving behind a car with a driver that is smoking, bet your passenger that the ashes from cigarette as it burns, and the resulting butt, will stay in the car. You'll lose every time.

It's still a (mostly) free country (despite the best attempts of the security-obsessed among our "leaders", but that's another rant), so I'm not advocating a ban on smoking while driving or other various stupid activities in which you wish to behave that don't directly impact my safety.

But I would ask my fellow citizens who choose to smoke and drive the following questions:

1. I notice that you inevitably have the window down to let the smoke out, even on rainy or cold days. If you can't stand the smoke in your car, isn't that a clue that you should quit?
2. Why do you think that the world is your ashtray? You have one in your car, why can't you use it?
   
3. You're generally a law-abiding citizen. Why do you think it's OK to toss your butt out the window? At best, it's littering, but it's not unusual for forest fires to start this way either.

No irony here

The EPA denied California's request for a waiver that would allow it (and several other states, including Washington, which follow California's lead) to set its own emissions standards. This despite the EPAs own lawyers advising that if California sued, it would likely win.

President Bush defended the EPA saying that this is a matter of federal jurisdiction, while governors such as Washington's Gregoire (a Democrat) made a state's rights argument in favor of California's waiver application.

So we have a staunchly conservative president asserting federal rights and a bunch of Democratic (and centrist Republican) governors asserting state's rights. Did I miss something or hasn't it always been a conservative hallmark to favor state's rights and a liberal hallmark to favor strong federal power?

TSA: I can't say I'm surprised.

There's a news report out today about a study that says that there is no evidence that the TSA's screening procedures actually provide any additional security. My favorite quote from this is the fact that the TSA defended itself by citing the number of prohibited items that they've confiscated - completely ignoring the question of whether or not prohibiting the item enhances safety.

My biggest complaint with the TSA isn't the annoyance of it all (although I do complain about that.) My biggest complaint is that the illusion of providing security can be more dangerous than no security, and can distract resources from providing actual security, and I think that the airport security process provides nothing more than that illusion of security.

Not surprisingly, the public is not a big fan of the TSA.

Telecommunication immunity

I have to say that I can't find anything other than a completely cynical explanation for why congress would even consider granting immunity to the telephone companies who cooperated with the NSA on warrantless wiretaps (for which they are getting sued).

To me, it is really quite simple. What the cooperating companies did was either illegal or it wasn't. I'm not a lawyer so I don't know for sure which side of the line what they did fell on. But it doesn't matter. If it wasn't illegal, then they don't need immunity. If it was illegal, then they shouldn't be granted immunity.

I suppose there's also a middle ground, whereby what they did wasn't illegal but was a violation of their policies with their customers (i.e., not a criminal offense but a potential civil liability). Even here, if they promise something and then break that promise - even if its for good reasons - they should not have immunity; those reasons - if in fact "good" - can and should mitigate any penalties, but they shouldn't prevent any attempt to claim damage.

I'm unfortunately left to conclude that there are only cynical explanations for the attempt to grant immunity here. For shame.

Death penalty

The death penalty has been in the news again lately, focused largely around the question of whether or not lethal injection is unconstitutionally "cruel and unusual" punishment.

On that particular question, I'd say "hardly." Folks get shots every day, it's not that big a deal. It has a bit of pain, sure, and I suppose there's certainly some mental anguish on the part of the condemned that the moment or two from injection to death are one's last. If either of these, though, meet the "cruel and unusual punishment" bar, then I can't imagine of any sort of punishment that doesn't.

Of course, this sideshow discussion ignores the larger moral/constitutional question of whether the death penalty itself meets that bar. I'd have to say that no, I don't think it does, when correctly applied. (Ahh, but there's the rub.) Mass murderer who has confessed? Seems perfectly reasonable. Parking violator? Seems a tad excessive. Good, so that's clean, but what about the 98.3% of all other criminals on death row fall somewhere in between those two extremes? That's, of course, a judgment call and what juries/judges are for.

Even though I have no a-priori opposition to the death penalty from a moral point of view, I've found that it's problematic from a pragmatic point of view. It all boils down to the basic question of whether or not the death penalty is doing what it is supposed to do, which is to (a) deter the most abhorrent crimes, (b) punish those who commit them, and (c) never ever punish an innocent person. The evidence for (b) is pretty strong; the evidence for (a) is weaker, and (c) is getting weaker every day. And given other claims that it's more expensive (due to appeals and so forth) to execute someone than to lock them up forever, the pragmatic qualities of the death penalty as applied today (a key qualifier!) look weaker.

A common argument in favor of the death penalty is that nobody has ever been proved to have been incorrectly executed. I think that's a bit of a false argument: once someone is dead, few people have the means or the standing to pursue post-mortem appeals, useful evidence is rare, and survivors generally want to move on.

But over the past few years, we have seen quite a few death-row inmates freed using DNA evidence, something that wasn't even available 20 years ago. If a measurable percentage of all current death-row inmates today are guilty-beyond-a-reasonable-doubt until DNA proves otherwise, then one must assume that similar convicts 20+ years ago would have been executed. And there's no reason to think that the percentage of convicts who are actually innocent would vary much over time. Therefore, the overwhelming likelihood is that we have, in fact, executed innocent people.

I think the proscription against executing the innocent is so strong that we should certainly halt any execution where there is a possibility that DNA or other new techniques have a possibility of proving innocence.

But other than beefing up safeguards to ensure that the guilty truly are guilty - not just beyond a reasonable doubt, but beyond a shadow of a doubt - I don't have a moral issue with the death penalty. If we can fix the system to where there is no risk of innocents being executed, then the decision of whether or not to keep the death penalty really should be dictated by whether it is cost effective (vs. life in prison) and actually achieves its deterrent goals.

Is a hate crime a distinct crime?

News today that congress is trying to tie hate crime legislation to the must-pass defense spending bill. Bush is threatening an unprecedented veto, it will be interesting to see if he actually does it.

What intrigued me about this story was not the surface story about the relevance of hate-crime legislation in a defense bill, or the political fight or model for passing this. Rather, it was this nugget in the story:

But Republican Sen. John Cornyn of Texas maintained the measure has nothing to do with the defense authorization bill. He argued that crimes should not be considered more or less despicable because of the victim's identity.

"All crimes of violence are crimes of hate," said Cornyn, a strong ally of the White House. "All ought to be judged according to the same criteria. All ought to be subject to the same range of punishments, given to juries able to convict people based on evidence produced in court (and) not based on (the) politically correct notion that some crimes are more heinous than others."

What is interesting about this statement is that it essentially argues that there is no such thing as "terrorism," that Sept. 11 was nothing more or less than a mass murder, a sort of Green River Killer on steroids.

The fact is that we do distinguish motive (pre-meditated crimes are considered more serious than heat-of-the-moment crimes) and, yes, victim as well. Fortunately, nobody is arguing that genocide is somehow distinct from - and more evil than - simply killing random people.

I've seen the argument before that "hate crimes" are problematic because, by weighing the intent/motivation, or the identity of the victim, they essentially criminalize thought. This is a pretty strong and compelling argument, but it doesn't quite pass muster for me for a pretty simple reason. Terrorism or hate crimes are distinct from the crime of the underlying act precisely because they carry a chilling message beyond the basic act. Burning a shed in a random person's yard is arson; burning a cross is clearly something more menacing to society, yet by Cornyn's argument, it is also simply arson.

Maybe I'm actually making Cornyn's point. Burning the cross is actually two distinct crimes: it's the underlying crime of arson, with an additional crime of harassment/intimidation (or whatever is the technical legal issue). But Cornyn seems to ignore the latter point.

When Matthew Shepard was beaten to death in Wyoming 9 years ago (the inspiration for the bill), it wasn't a random petty crime; it sent an intimidating message of fear among a population of people simply for being who they were. Whether you treat it as a distinct crime or as an attribute of the crime - is to miss the big picture entirely.

Good commentary on piracy and digital media

Good blog today on CNet about NBC/Universal's recent cut-off-your-nose-to-spite-your-face move in cutting off their contract with Apple's iTunes. If people want your product and you're not making it available to them in a way that they can use and at a reasonable price, you shouldn't be surprised that you suffer piracy. That's not a justification for piracy at all - merely an explanation. Big media wants high prices and stringent controls; the market says "nope, not gonna happen." Big media needs to become much more customer-centric.

The Elephant and the Dragon

Late blog post, but a few weeks back I read The Elephant and The Dragon, a book about the rise of China and India and their differences by Robyn Meredith. I had seen her speak in Los Angeles in April; she plugged her book and it sounded quite interesting. Indeed it was - if you like Thomas Friedman's "The World is Flat" then this book is definitely in the same vein, providing more historical/cultural context for Friedman's thesis with a little less focus on the "what's happening now."

The book is a quick read and perhaps a bit superficial (especially if you've read Friedman's works), but - partly due to its currency - nevertheless an enlightening comparison and contrasting of the quite different tracks that these two Asian Giants have taken.

Bush is finally comparing Iraq to Vietnam

But I think he's missing the point. He frames Vietnam as a war that we abandoned too early - and points to a lot of badness that happened subsequently (Khmer Rouge, re-education camps, etc.) as the result of our withdrawal.

What this misses is the exact same lesson that I believe he is missing in Iraq today: that you can have all the military success in the world, but having great success on a military mission that is fundamentally a political/social problem is like trying to keep your house dry by building the most incredible concrete foundation while ignoring the leaky roof above. You need the dry foundation for sure, but without the roof you're kinda wasting your time.

As far as I can tell, our military is doing a very good job of providing security, given the job we're asking them to do. The problem, however, is that our floundering on healing of ethnic divisions is counterproductive to the job we're asking the military to do. Every day that the divisions are not addressed leads to more people growing frustrated and taking up extremist roles. This is not "blaming America", but merely pointing out that we haven't fixed the leaky roof so we should hardly be surprised that the watertight basement is nevertheless filling with water.

Scary potential overreaching power grab

I've posted here a number of times about how the recording industry just doesn't get it with regard to DRM (Digital Rights Management) and copyright. While in no way condoning copyright violation or abuse, I feel quite strongly that the industry is usually its own worst enemy.

Today I saw news that the industry may consider sharing of music on one's home network to be a violation of their rights. Fortunately, this is still in the "novel theory" category, but it is a chilling point of view to advocate.

I personally have a rather large (5000+) collection of songs ripped from CDs (perfectly legal - for now, at least!) to my hard drives throughout my house. How often do I listen to a CD? Never anymore. How often do I listen to music from whichever hard drive is closest to me? Quite frequently. It's not worth the inconvenience of searching for the disc and moving it to the nearest player in order to play it.

Yet somehow, the (potential) argument being made by copyright holders is that somehow it is perfectly legal for me to listen to music in any room of my house if I go through a bunch of hassle-inducing steps to move the CD from room to room. But if I don't go through the physical motions, somehow that provides the basis for a copyright violation. How does the physical medium possibly change the copyright status of my listening to music? I've legally purchased the CD, which means I've legally purchased the right to listen to the music therein. I could certainly run speakers throughout my house, so why is playing it through arbitrary speakers in my house OK while playing it through a network to another computer which then puts it on speakers in my house somehow crossing the line? (To clarify above: I play from one of two sources; I keep two sources so that one is a backup of the other).

Here I am, playing by the industry's rules (i.e., actually BUYING the CDs!), and now they're saying they'd like to criminalize my behavior. If that isn't hating one's customers, I don't know what is.

Heck, now I'm seeing news stories of ASCAP demanding that restaurants and others pay royalties for playing copyrighted songs. This makes sense to me when the restaurant plays a CD (that's a public performance, not a personal use) or hires a band that plays covers (although in that case, shouldn't the musicians pay?), but they're also going after restaurants that have a TV or Radio playing. Maybe I'm missing something, but didn't the TV/Radio station already pay for the right to broadcast to an unlimited # of people? And if so, isn't making the restaurant pay "double dipping"?

Executive Privilege out of control

Congress wants Harriet Miers and others to testify about the firings last year of US attorneys that may have been politically motivated. Bush has claimed executive privilege and directed Ms. Miers not to testify, and she herself has declined to so much as show up for the hearings. And if Congress holds her in criminal contempt for doing so, they can only enforce that by going through the US attorneys, who work for Bush, who clearly will not pursue the matter. Check-mate.

Wow.

A few things have become painfully clear to me here:

• Ms. Miers should indeed be held in contempt. The claim of executive privilege may or may not apply here, but either way that's no excuse for ignoring a congressional subpoena. If you get a subpoena, you show up, even if all you do is repeat "I'm sorry, I cannot answer that due to (fifth amendment, executive privilege, I'm washing my hair, etc.)" all day. If your claim of executive privilege is valid, then you've fulfilled your duty.
• As for the application of executive privilege: I am too much of an amateur to judge that, but if there is a suspicion of illegal activity (and political considerations in hiring/firing of career attorneys or political pressure that has the effect of interfering with day-to-day duties of attorneys would be illegal if true), my understanding is that privilege does not in fact apply.
  
• If she is held in contempt and Bush sits on the contempt charge, then he should be impeached for obstruction of justice. This is a serious statement I'm making, but he's doing an end-run around the careful system of checks and balances. At this point, it is not about executive privilege, it's about responding to congressional subpoenas, and nobody should be above the law on this point, even if they are a friend of the president.
• President Bush is clearly making a strong statement that he believes that executive privilege applies to anything to which he declares that it applies, and that such declarations are not subject to any sort of challenge or review by anyone but himself. This a remarkable statement - privilege may or may not be as broad as he claims, but the notion that it is essentially unquestionable is quite disturbing and I have a strong hunch that the judiciary might take a different view of this. Normally, I'd think that such an accusation against the president is overly harsh and cynical, but after the leaking of Valerie Plame's identity and the commutation of Lewis Libby's sentence, there is a pretty strong pattern of not accepting oversight within this White House.
  

I am going to be writing a bigger check to the ACLU than I wrote last year.

UAW/Detroit labor negotiations

So it seems that the UAW is beginning its bargaining with the Big 3, hoping to walk the fine line between acknowledging that they have to help a troubled industry, and avoiding the face-loss of giving up any benefits.

Seems to me that this is rooted in an unfortunately too-typical short-sighted/self-defeating tactic of winning the battle at the expense of losing the war. If the unions preserve benefits packages that are uncompetitive, they may keep benefits or jobs in the short term, but they will ultimately find themselves with fewer members overall as the industry downsizes.

I suppose I should be up-front here about my general anti-union bias: while I support unionization and the right to collective bargaining, I feel that the vast majority of unions are net-negatives for their workers and for the unionized industries. They all-to-frequently foster an us-vs-them attitude within a company (as opposed to "our company vs. our competitors", which it should be), or a highly inefficient and unhealthy bureaucracy (the NEA and UAW are classic cases of this), or general impediments to innovation and nimbleness.

This time the UAW professes to understand the trouble that the Big-3 are facing. I would propose that the negotiators try to call this bluff. If in fact the union recognizes this, then they should be part of the solution. Instead of negotiating a contract that enshrines certain benefits or jobs, they should negotiate a performance-based contract. If the union improves productivity, provides more flexibility/nimbleness/innovation/quality, and otherwise meets lower costs-per-car or increase efficiency targets, then the automakers should actually promise them a net INCREASE in benefits than they currently receive. But if things remain the same or net efficiency decreases, then the union should see their benefits shrink accordingly.

The same should go for executive pay, frankly: although their performance is, in theory, already tied to performance by being so heavily weighted towards stock/stock-options, it is far too common for them to preserve compensation through other means even when the stock does poorly. If they're going to ask the UAW to have more skin in the game, then the executives should do likewise and truly and unambiguously tie their compensation to specific performance targets.

It's funny what can happen when people's interests become aligned.

Ahh, justice.

In case it got overshadowed by the Paris Hilton circus, I thought I'd highlight an example of our judicial system showing common sense, albeit far too late. Trouser guy lost.

The bad news: how did this ever make it to a trial?
The even scarier news: this guy (the plaintiff) is a judge in our legal system? Yikes!
The scarier still news: Paris is out of jail, which I fear means she'll be even more in the news.

When religion and career collide.

I came across this story a few days ago about doctors who are unwilling to provide medical services for which they have a moral objection. This is similar to other cases in the news lately about pharmacists who are unwilling to provide RU486 or even less broadly controversial things like birth control pills, or Muslim cab drivers who refuse to carry passengers who are carrying alcohol, or checkout clerks at Target who refuse to handle pork.

The common thread, of course, is the imperative of one's religion vs. the needs of one's employer or one's customer. My view, however, is that if your religion and the duties of the job collide, you should take another job.

This position is easiest to defend in the case of employees serving customer demands. Let's use McDonald's as an analogy. You don't hear cases of kosher Jews seeking employment at McDonalds but demanding to be exempted from handling non-kosher food. And I suspect that if such a case were to arise and a lawsuit ensue, it would be laughed out of court. Employers are required to make reasonable accommodations for their employees, but changing the fundamental business that they're in cannot be considered "reasonable."

Similarly, employees who patronize McDonalds would be aghast to order a cheeseburger and be dissuaded from doing so by a kosher or vegetarian server. This is essentially no different from the Target, taxi, or even pharmacy examples above.

Of course, one might note that a vegetarian or Jew is obviously free to leave McDonalds and open a vegetarian or Kosher restaurant, but there are two key differences that differentiate this from the examples above: (a) doing so is no longer contradictory to the stated goals of their employer, and (b) customers can clearly see the focus of the new offering and make an informed judgment whether to eat at the new restaurant or elsewhere.

This is where things get a bit tricky for the MD example with which I started this post. A doctor takes an oath to do no harm, and if one's view is that abortion is murder, then this is a judgment about crossing a medical line (doing harm) and hence it seems to me perfectly appropriate for the doctor refuse treatment or to refuse to make a referral. However, just as I wouldn't want a vegetarian to lecture me when I patronize a McDonalds, I think that the decision by a doctor to exercise this conscientious objection imposes on them a responsibility to inform patients up front of this fact so that the patient can make a decision whether or not to see that doctor, in much the same way that the kosher person can discover and patronize kosher restaurants.

Heck, faith healers and witch doctors are free to offer their services to anybody that chooses to utilize them, but obviously would label their services as such (and in fact, legally must not put forth as being licensed physicians).

Here's the rub, though: fast food is a pretty efficient free-market system. Customers weigh choices according to a variety of factors and make a decision, and providers compete for their business. Medicine, however, often does not operate according to these principles - especially emergency medicine. Insurance takes cost out of the equation for many, and when one is dealing with one's health much of the normal tradeoffs go out the window: you want the best treatment you can have. In an emergency, of course, such as the rape example cited above, there's no time to make a decision, and the doctor therefore is in quite a powerful position to not only treat the patient, but to also inappropriately impose their particular world view upon them, whether wittingly or not. After all, you wouldn't want to go to an emergency room after a car crash and be refused a much needed transfusion by a physician on religious grounds if you did not in fact share that religion. As a result, I have a very hard time supporting emergency room physicians who are unwilling to provide legal services requested by their patients.

If you're not willing to make the cheeseburger, don't work at McDonalds. If you're not willing to treat your patients or fill valid prescriptions, then you should clear your moral conscience by not working in emergency situations or in a pharmacy.

New Blokus Champion?

Tonight Parker saw our Blokus game and asked me to play it with him. At first I said no, it's a grown-up game, thinking that the rules were too hard, but he persisted and I relented and taught him how. The rules are actually pretty simple: you take turns putting down your color's tiles, your tiles have to touch corner-to-corner but cannot touch side-to-side; whoever has the fewest leftover tiles at the end wins. He picked up on the rules immediately, and even though we were both basically playing random pieces (there's a fair amount of strategy that you can/should employ), he almost beat me: I had 40 pieces left over, he had 41. Wow, Not bad.

Another great Fareed article

I've long been a fan of Fareed Zakaria's approach to world events, but I thought that this week's Newsweek cover story was exceptional.

Two quotes in particular, I think, are worth highlighting:

If one day bombs do go off, we must ensure that they cause as little disruption—economic, social, political—as possible. This would deprive the terrorist of his main objective. If we are not terrorized, then in a crucial sense we have defeated terrorism.

I've been railing for a while about the stupidity and futility of our approach to security, particularly at the TSA line at airports. Our approach is reactive and focuses on the symptoms, and in a quest for perfect safety against terrorism has imposed incredible costs for a gain in perceived rather than actual security. Banning liquids on airplanes simply does nothing serious for security - it presumes that the bad guys are not clever enough to think up ways around it, or other ways to attack. (For this reason, I've taken to declaring that I'm traveling with 6-8 pints of blood and asking if I need to drain it into 3oz bottles in a clear plastic bag.)

Such overreactions are precisely what Osama bin Laden has been hoping for. In a videotaped message in 2004, bin Laden explained his strategy with astonishing frankness. He termed it "provoke and bait": "All we have to do is send two mujahedin ... [and] raise a piece of cloth on which is written 'Al Qaeda' in order to make the generals race there, to cause America to suffer human, economic and political losses." His point has been well understood by ragtag terror groups across the world. With no apparent communication, collaboration or further guidance from bin Laden, small outfits from Southeast Asia to North Africa to Europe now announce that they are part of Al Qaeda, and so inflate their own importance, bring global attention to their cause and—of course—get America to come racing out to fight them.

More successful manipulation of us by the bad guys. Why can't we recognize that we're being played?

Hate crimes and terrorism

The recent sentencing of an ELF member for acts of arson that were legally found to be "terrorism" raised an interesting question in my head. Namely: how can people who frown upon laws against so-called hate crimes support laws that ban terrorism?

Many conservatives such as George Will and make a quite valid point in arguing against hate crime laws that it is a dangerous precedent to punish the same crime differently because of the motivation in someone's head. This amounts to punishing thoughts, which should make any lover of freedom shudder, even if the thoughts being punished are abhorrent. It is acceptable to pass a law that you cannot lynch black people, but it is not acceptable to pass a law that says you cannot be a bigot against black people; even the ACLU would agree with this.

And this brings me to terrorism. What distinguishes terrorism from mere destruction and mayhem? Is it not entirely about motivation and intent? Yet it would be hard to find a conservative (or liberal for that matter) who would argue that we shouldn't have laws against terrorism.

In fact, I have thought about this and have come to the conclusion that I cannot come up with a definition that distinguishes terrorism from hate crimes. It's a pornography thing - we know it when we see it. When a Sunni insurgent blows up a car in a Shiite market in Baghdad, we would call it terrorism. Yet if someone attacks a Muslim in America in (perceived) retaliation, say, for 9/11, we'd call it a "hate crime." Yet what really distinguishes these two heinous crimes? Both target innocent non-combatants for being who they are, not for anything they have done or any role that they play. I have scratched my head and I simply cannot identify any meaningful facet that distinguishes these two acts.

It seems to me, therefore, that logical consistency requires that you either support (in principle) the idea of anti-hate-crime legislation AND anti-terrorism legislation (assuming, of course, that the laws promise to actually be effective and otherwise reasonable), or that you support NEITHER of the two. I simply cannot see how one can be for anti-terrorism legislation, but opposed to the idea of hate crime laws.

So which position should one take? I think the George Will crowd is right on the one point - you cannot and should not outlaw abhorrent thoughts or points of view - but miss the critical larger point: "hate crimes" are crimes (arson, murder, etc.) that are made worse not because of the motivation or thoughts of the perpetrator, but because they are committed in order to intimidate a larger group. A mugger attacking a random person differs from a skinhead attacking a minority in that the first consists of a single crime, while the latter actually consists of two: the attack itself, and the intimidation of the minority group. Terrorism is, of course, exactly the same - the car bomb in the Baghdad market is not mere murder, but murder that intimidates a specific group beyond those actually killed.

Bush's disingenuous veto

Bush issued the second veto of his presidency yesterday, killing a war funding bill because it has a timetable for withdrawal of troops. I happen to agree with the president that arbitrary timetables are a bad idea (and hence think the veto was probably the right decision), but I think his rationale for the veto was disingenuous for two reasons.

The first reason was that he said that it substituted the judgment of politicians for that of commanders on the ground. That simply doesn't wash for me. For one thing, of course that's what it's doing; that's precisely the point of congressional oversight, of the power of the purse. Secondly, the bill doesn't dictate any tactics or strategy or anything affecting the commanders on the ground. Why? Because none of them have the authority to initiate a withdrawal. That decision lies with...the commander-in-chief, overseen by congress. As such, it is absolutely the sort of decision that we elect politicians to make.

The second reason I think Bush's rationale was disingenuous is that he stated that any funding request for our soldiers should be given and given cleanly. I don't buy this argument, though, because it is equivalent to saying that the only acceptable check is a blank one. Blank checks are obviously a bad idea for many reasons, but they are especially in appropriate when it is so clear to everyone (except Bush himself, it seems) that something needs to change.
The timetable may be a bad idea, but putting it in the bill has a very redeeming aspect: it makes it clear that things cannot continue as they have been, that Bush must be held accountable for making progress.

I've made this suggestion before, I'll make it again: Bush should get serious about wrapping up the war so that our troops can come home for the right reasons (i.e,. stability achieved in Iraq rather than a particular date arriving). This requires political and diplomatic progress, not military, and Bush has simply not shown any progress here over the past 4 years. It may have been our fault that we messed up their country, but the situation is what it is and the Iraqis need to take control of it, and Bush needs to drive that progress.