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.