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I came across this post by Stephanie Mehta on a blog associated with Fortune magazine about how copper may soon almost disappear from telecommunications infrastructure. From what I understand, the backbone of telecommunications uses fiber optics currently, with copper covering the “last mile” to the customer. But soon, fiber or other technologies may claim that last stretch as well. The post draws inspiration from Tom Evslin, a former VoIP entrepreneur.
What bugged me was the anxiety about whether rural residents will get left behind. Nothing wrong with that per se, but predictably Mehta and Evslin move on to support the use of taxpayer money to solve the problem, in particular a Vermont program that subsidizes rural infrastructure investment through government bonds. Read the rest of this entry »
Jeff sends a link to a Von Mises Institute article that puts a positive spin on IP infringement (piracy). It reminds me of arguments from David Levine and Michele Boldrin. The idea is that innovative companies and individuals derive a substantial advantage from being first movers or from being imitated (free advertising) without IP laws, so that these laws should be gotten rid of or at least companies should realize they have more to gain than to fear from imitation.
The argument that positive effects exist from being the inventor or creator of something and from having your idea imitated sounds reasonable, but of course the existence of positive effects doesn’t necessarily mean that they are sufficient to bring us to the socially optimal state of affairs. Based on conversations I had last quarter with Prof. Jaques Lawarree, with whom I had Industrial Organization, I got the sense that the (tenuous) consensus among economists is that the current IP regime in the US is pretty good (for the US) but certainly could be better — a bit too restrictive, especially with copyright.
P.S.: A neat, somewhat recent paper of Lawarree’s.
The reason a lot of libertarians object, in general, to government action, is because they view those actions as fundamentally coercive. The power of governments to tax or otherwise expropriate must always ultimately be backed up by force. I take a somewhat different view: while current governments are non-voluntary (coercive), government very much like many western governments is potentially voluntary. I think that the protection of private property rights can be used as the excludable good used to get people to voluntarily pay taxes for collective goods and generally participate in government. For this argument, I will assume that I believe in private property rights as ‘natural rights.’
A lot of the goods that government provides are collective goods, meaning they can’t really be denied to anyone, and if people have a choice whether to contribute resources to help provide for collective goods, they won’t. This is main argument for the necessity of non-voluntary government. Because collective goods cannot be denied to anyone, every individual has an incentive to mooch off the contributions of others but not contributing themselves and if there are a great number of individuals, without noticeably affecting the total amount of good supplied. Since everyone has this same incentive, without the existence of a good that only goes to those that contribute to producing collective goods, collective goods will be largely under-produced. A separate, private, excludable good is needed to convince people to contribute towards collective goods.
Let’s look at an example. One of the simplest examples is national defense. National defense is a collective good because if someone provides defense services they cannot really deny those services to anyone. In the case of national defense, if individuals have the a choice whether to pay taxes to support an army to defend the nation, they won’t. No person will voluntarily pay those taxes because it is very tempting to simply take advantage of the national defense that already exists without themselves contributing, and since the contributions from one person don’t even buy a single soldier, the effect of one person’s non-contribution is not noticeable. People require another incentive to contribute to national defense in order to achieve a reasonable level of security.
If government largely provides collective goods, and collective goods require other incentives or coercion to get people to contribute to them, why do I think that government can be voluntary? I think voluntary government is plausible because I think the protection of property rights (I use the term broadly here) by the police and the courts is potentially that excludable benefit. The general tranquility provided by those services, is a collective benefit, but the individual protection of those rights is excludable, because a government can declare that it will no longer protect a certain individual’s property. There is no doubt that if the government made such a declaration, that individual would be in a heap of trouble, so there is a large non-collective aspect to private property protection services. The important thing about the protection of property rights is that they are very important to the enjoyment of a lot of other goods, it is hard to enjoy physical goods if there is no one stopping others from taking them from you. I won’t use municipal services, like water and sewer, which are often excludable, in my argument because I think that is an issue for another day. The key to voluntary government is bundling collective goods with the protection of individual property rights, people get and pay for all that the government provides or none of it. People will be willing to pay for the collective goods they enjoy if it is the price they pay to get the protection of the police and the courts.
Google Trends is my new favorite tool for tracking the popularity of political party primary candidates. Here is a comparison of five of bigger Democratic candidate (including Bill Richardson, currently my personal favorite). Here is the same for the Republican party. It is difficult to say exactly what high or low search volume indicates about the popularity or name recognition of a candidate. I would think that search volume would be indicative of some combination of the current popularity of a candidate and rate of new interest in the candidate, while news reference volume is indicative of media support for a candidate.
If I could figure out a way to pull data off of Google Trends, I would compare these results with polls. Also, the data seems only to go up to February.
The Whitehouse has announced that they, Senate Democrats and Republicans have negotiated a comprehensive immigration reform proposal (link). The proposal is considerably better than I expected; it includes a lot of the policy changes that the Cato institute has called for (link). The proposal has four zmain parts: more funding for border security, the creation of a temporary worker program, the creation of a path to legality for illegal immigrants currently in the country, and an increase in the number of several visa types. The proposal has been introduced in the Senate as the STRIVE Act (link to summary).
The temporary worker program is a good idea; first, because it eases restrictions on immigration, putting labor into the set of markets being liberalized, and second because it reflects the nature of immigration from Mexico; the majority of immigrants from Mexico return after some time. Most Mexican immigrants come to work for a relatively short time and then go back to their home country. Harsh border enforcement without a legal avenue for such a work pattern means that immigrants who do make it into the country illegally, tend to stay. Even so, the proposal does include a path to citizenship for temporary workers.
The proposal does not tie temporary work visas to a specific employer which is important because visa tying would give employers leverage over temporary workers and undoubtedly lead to abuses. Guest workers must be free to fully participate in the labor market. The abuses associated with the, guest-worker like, Bracero program which resulted largely from tying visas to employers eventually lead to the demise of the program.
Providing a path to legalization for the 12 million or so of illegal immigrants already in the nited States will also have several positive effects. First, it will stop a lot of resources from being wasted as they are now. U.S. immigration officials will stop using resources to find and deport productive members of society, and currently illegal immigrants will stop using resources to evade those officials. Second, currently illegal immigrants will find it much easier to travel back and forth between Mexico and the U.S. to see their families, which will undoubtedly improve their quality of life. Third, legalization will eliminate the ability of employers to threaten immigrant employees with deportation. Eliminating that threat will improve working conditions and pay for immigrants by improving their bargaining position.
I am somewhat concerned about some of the details of the proposal. President Bush stated that the proposal includes making English the official language of the United States. I don’t think making it official will really change much, but doing so seems unnecessary and makes me very uncomfortable. The proposal will also change the criteria for immigration from family based to skill based; I am not sure how I feel about this.
Overall, this proposal seems to be very good, and would dramatically improve our immigration policy. I have written before (link) about the need to liberalize immigration policy in order to be intellectually honest about pushing for other trade liberalization, and this is a step in that direction; visa cap increases, amnesty for current illegal immigrants and the temporary worker program all reduce migration restrictions. I hope that both the House and Senate enact a plan similar to this.
The United States citizen, Jose Padilla, who was designated an illegal enemy combatant by president Bush in an attempt to deny him habeas corpus protections has finally been brought to trial (link). Padilla’s attorney sums up the case:
Political crises can cause parts of our government to overreach. This is one of those times.
I would go further than that; the government always tries to unduly expand its power; political crises let it get away with it.
Tyler Cowen points to an excellent article by James Surowiecki on why we should not force U.S. IP law on trading partners. I have been thinking about intellectual property lately (IP), though not about how it relates to trade, but I still agree with Surowiecki wholeheartedly. At the very least, new IP protections should only apply to patents and copy rights established after the change in laws. Making IP protections retroactive will only reduce the use of ideas without promoting any future invention.
Even in the U.S. I would guess that IP protections are too high by a wide margin, especially where software is concerned. Intellectual property rights exist to promote investment of resources into the creation and use of ideas. Low intellectual property right protections means that not enough investment will go into creating ideas. High intellectual property right protections means that right holders will attempt to extract all the value created from their idea and so too few ideas will be used. Clearly there should be some optimal level of protection.
In fields such as the software industry, bad patents are common. For example, Amazon.com owns a patent over one click shopping. It is not surprising that the US has higher than optimal IP protections or that the US pushes to force new trading partners to adopt higher IP protections. In developed countries, higher intellectual property right protections generally benefit concentrated and organized interests overdispersed and unorganized interests. The concentrated interests are usually well organized companies who have the resources to patent every patentable idea they have and enforce those patents. The dispersed interests are small and potential companies who want to use those ideas to create new businesses and the public at large. It is a well established result from group theory that concentrated interests have much greater power to lobby for legislative bodies than dispersed interests because the ratio of individual benefit to the cost of lobbying is much higher for concentrated interests. This is why I believe that IP protections are very likely too high in the US.
In the Dallas, TX suburb Farmers Branch, the city council become the first in the nation to pass an ordinance to require renters to prove their legal national status (link). The key phrase from the article:
[City councilman] O’Hare contends the city’s economy and quality of life will improve if illegal immigrants are kept out.
O’Hare means the economy and quality of life of current residents, obviously, not the economy and quality of life of business owners or those immigrants. Farmers Branch residents are trying to use their superior organization to improve their position, in terms of rent and wages, at the expense of business owners and illegal immigrants. By restricting who can live in their area, residents keep housing demand and labor supply in their favor, keeping local rents down and local wages up. Restricting and monitoring immigration might be a national security issue, but small suburbs have no business setting immigration policy, especially no business restricting intra-national immigration.