Okay, watching this thing is just painful. Not only are sites like mine going to suffer, if you want a decent internet speed so you can watch movies, you’re going to have to pay more for it.
It highlights once again, the President’s ability to take a solemn pledge on an issue, break it, and then declare victory.
Today, the White House hales a victory on Net Neutrality. Maybe they can sell that to the rubes but I can read law.
James Pilant
From Steven Axelrod on Salon –
The internet as we know it is officially doomed, as of today, and I’m already feeling nostalgic. Funny that a technology could move so fast across the landscape of my life – from a geeks-only fluke to a curiosity, to a useful tool, to a powerful engine of procrastination and finally a central venue for all my communications, research, entertainment and shopping, only to be reduced to the closed down, controlled, censored corporate cash cow it’s about to become, with the Obama administration’s blessing.
Internet, we barely knew ye.
But of course the Proprietors of our Nation couldn’t allow this internet business to go on the way it was heading. What a frightening thought – free, unobstructed communications, with no control and no profit … people just saying whatever they want, whenever they want, leaking documents, downloading YouTube videos that make Proprietor-controlled media outlets look like liars. You knew there’d be repercussions after the “Colbert bombed at the Press Association Dinner” narrative was reduced to one more punchline, a million downloads later.
He’s right. It will take a while but these things you’re reading like my blog, the sites you surf will probably go the way of the dodo bird and the passenger pigeon.
You might be curious as to why I’m not outraged myself.
In fact, my most fire breathing, screaming fits of anger were over this issue some months ago.
I simply realized that the Obama administration will sell out the internet in a total reversal of the President’s stated position. As far as the President is concerned, words have no meaning. He says whatever is necessary to get whatever he wants at the time.
You want to argue with me.
If so much as one person objects, I will happily put up the You Tube videos where the President declares that he absolutely supports net neutrality and will not compromise. I put them up on a previous post. It took me about a minute to find four separate events where he said these things.
So, it was inevitable.
The best guide to this President’s actions are to go on You Tube, run the issue and see what the President said during the campaign. Expect him to do the opposite and you will only rarely be wrong.
The independence of the internet was critical to the kind of support and networking, the Obama campaign used to win election in 2008. You see, the President isn’t even smart.
It was unwise politically, damaging his own campaign infrastructure and limiting the influence of the blogosphere which did so much for him during the campaign. It also alienates the aforementioned bloggers, who if they are anything like me, will never forget this latest outrage.
I’m not going to forget it.
What happens to me and this blog. Well, I’m going to keep going and I have a monitor that tells me the loading speed for the web site, when it gets longer than say five seconds, I’ll start considering shutting down.
I am stubborn though, maybe I’ll hang on until it’s just me and some close friends who tell me that they log on when don’t or can’t.
And it gets better. Our President is planning on fixing the tax code next year.
Of course, he’s going to cut up Social Security like a butchered steer, George W. Bush’s dream come true.
I’d like someone to tell me what the hell happened?
I want to know.
I can get being betrayed.
I can get changes of allegiance.
I definitely understant political expediency.
But this President makes decisions that don’t even make sense from an election point of view.
Earlier, I said that you could take the opposite of what the President said as a guide, but there is another one. If there are two options and one is the more politically foolish, the White House chooses that one.
Net neutrality is dead. Happy Christmas.
James Pilant
The Economist magazine asks this intriguing question.
It posts a comparison of economic growth between the two countries and points out that at the current rate of economic growth, China will overtake the United States in 2019. They then suggest you plug-in your estimates of growth for the Chinese and Americans and arrive at your own figure.
Okay, here’s my prediction of when the Chinese are going to overtake the United States.
Never.
It’s all nonsense. Chinese corruption is endemic. Their real estate market crashed two years ago. They had to do an economic stimulus of 400 billion dollars two and a half years ago. They have foreign policy disputes with almost every bordering country and a large number of those that are not. They are building a fleet to challenge the American Seventh fleet in the South China Sea. The difference in economic development between the coastal and interior provinces borders on the incredible. There are rumors (probably true) of gathering Muslim unrest in the far West. I could go on.
It seems likely to me that the estimates of economic growth put out by the Chinese government bear a strange similarity to East Germany’s constant high economic growth before the country disintegrated in 1989.
And watching the Chinese lurch from one foreign police misstep after another hardly gives one any confidence in the nation’s future. If you’re willing to force the Philippines to take your lead painted toy imports by threatening economic retaliation, you have only the vaguest concept of a) right and wrong and b) how you appear to the rest of the world. If one of your ship captains decides to deliberately ram a Japanese naval vessel and you get him out of it by threats, that might not have long term positive results. If a dissident gets a Nobel Peace Prize and you demonize the award rather than keeping a discrete silence and resort to every measure short of blackmail to discourage other countries from attending, you’re not demonstrating balanced judgment. If when faced with a dissident receiving a Nobel Peace Prize, you create, fairly instantly,a bogus “Confucius” prize which you then present to the former President of Taiwan who admits he doesn’t know what it is and fails to appear for the ceremony, you don’t impress anybody.
Never.
This is all just part of the policy narrative from the media beltway. As always, they only ask hard questions of ideas they oppose. This isn’t one of them. The terror of Chinese competition, of their eventual success, is a reproach to criticism of free trade and authortarianism. It calls the very importance of democracy for economic success into question. It makes the idea of open society with rights of privacy seem unnecesary to a nation’s future.
When China has failed to become number one, it will have outlived its usefulness, their will be a new narrative of America losing out. Will it be India, Islamic nations, South Asia or even a resurgent Japan? Who knows? But its’ necessary. It’s a club against policies you don’t like and it works.
James Pilant
The Economist says that many of the charges of socialism directed at financial regulation are misplaced. Such regulation has been a normal part of the American economy for more than fifty years and was in effect during the height of the cold war.
Apparently all over the United States, charges of socialism and communism are bandied about as if Soviet style governing committees has sprung up all over the United States. Ironically, many of these same individuals are worried by the specter of Sharia law, not a likely possibility and fully contradictory to a anti religious Marxism. The latest and quite possibly strangest concept of all is liberal facism. Liberals were opposed to both Italian and German fascism early on and paid for it in blood. Yet the example of their courage to the point of sacrificing everything has no effect on the current dialogue. It is okay to affiliate one of the opposing belief systems that brought down Nazism because the phrase, National Socialist, has the word, socialist, in it? Is that academic analysis? Does that bespeak intelligence? Or judgment?
Read what the Economist has to say.
The Economist is in favour of free markets, but both words are important. If banks are too big to fail, then their cost of capital is implicitly subsidised. This creates barriers to entry and encourages risk-taking at the taxpayers’ expense; the market is thus not truly free. In an ideal world, we ought to be able to let banks fail in the same way that we let widget manufacturers fail. But since bank failures have a devastating economic impact, we need to have some approach to regulating them. Markets also have externalities, a concept long established in academia; a chemical company cannot be free to pollute a river, for example.
To say that any further regulation is socialism, or that any consideration of inequality is misguided, seems wilfully blind. If banks earn huge profits, and their traders huge bonuses, only because of an implicit state subsidy, that seems a legitimate matter of public concern. For those who believe this is the road to Cuba, one might easily respond that the other camp is on the road to 18th century France, where wealth was concentrated in the hands of a tiny, hereditary elite. A gross caricature? No more than the Cuba example. After all, the evidence suggests that social mobility is falling in America and Britain, probably because the wealthy can gain advantages for their offspring via private education.
The issues of education, a level playing field and “too big to fail” are not going away. The issue of whether to regulate or not to regulate is a legitimate one. There is no religious imperative to not regulate. The same people who say that Marxism failed and would have failed no matter how it was practiced are unwilling to believe the same thing about unregulated markets, but the evidence is clear. Unregulated markets are inherently predatory. There is no historical example that can be pointed to where this was not the case.
Market choice and regulation are choices of policy. They require intelligence to apply. They are not matters of faith.
James Pilant
Can allowing the market to solve all problems really work? Why does accounting fraud work so well? What makes it profitable? Read the following from William K. Black’s column from the Huffington Post.
The “market” also does not deal effectively with externalities (and they can be lethal) and with market power. The neoclassical claim that cartels cannot persist and that potential entry solves prevents all serious ills proved false in the real world. Here, however, I will discuss only why control fraud turns “markets” perverse. Accounting control frauds are guaranteed to report high profits in the early years. This is why Akerlof & Romer (1993) agreed with white-collar criminologists that such frauds were a “sure thing.” I’ve explained why the four-part recipe for optimizing fictional accounting income maximizes executive bonuses — and real losses. In the interest of brevity I will merely mention four ways in which accounting control frauds make markets, and “private market discipline” perverse.
1. The fictional profits fool creditors and shareholders — they are eager to lend to and invest in firms reporting record profits. Rather than discipline accounting control frauds, creditors and shareholders fund their massive growth.
2. The fictional profits and the large bonuses they drive create a “Gresham’s” dynamic in which bad ethics tends to drive good ethics out of the marketplace. The CFO that fails to emulate the fraud recipe will report far lower profits in the near term and will fear losing his job. More junior executives whose compensation is based on the firm’s reported income have perverse incentives to engage in accounting fraud to ensure that the firm “hits the number” and have reduced incentives to blow the whistle on frauds.
3. Lenders engaged in accounting control fraud create “echo” epidemics of fraud. They use their powers to hire and fire and create compensation systems to create perverse incentives in other fields: among their employees, “independent” professionals, and agents (e.g., loan brokers).
4. When several large lenders follow similar fraud strategies they can hyper-inflate financial bubbles.
Accounting fraud is very effective in turning enormours profits for the fraudsters.
This kind of fraud can only be detected by other accountants. Generally speaking an examination of the books is going to take place only after there is suspicion that this is an accounting problem. In these kinds of schemes, that suspicion usually becomes significant at the very end of the fraud.
That’s why it’s important to discourage financial fraud by rigorous ethics training while accountants are in school, legal and corporate protection for accountants acting professonally, and serious penalties for abuse.
James Pilant
The ongoing Wikileaks controversy has a large number of ethical elements. The best commentator on this is Chris MacDonald. I subscribe to his site and I’ve watched as he hit one ethical aspect after another. I firmly believe that the Wikileaks controversy will be an ethics textbook staple for the next twenty years and that MacDonald will probably write the quoted article.
Here’s his lineup –
December 9th, 2010 Wikileaks, Credit Card Companies and Complicity
December 11, 2010 Should Companies Judge the Ethics of Those with whom They Do Business?
December 13, 2010 Wikileaks & Mastercard: Should Companies Do Government’s Bidding?
December 20, 2010 Wikileaks and NGO Legitimacy
If you are are a teacher, these articles provided excellent teaching opportunities. If you are one of my readers, this is a business ethical analysis of complicated set of moral problems.
Whoever you are, I recommend the articles.
James Pilant
Update – Professor MacDonald has added another post on this subject. This one is called Corporate Citizenship, Apple and Wikileaks. This one was posted on his web site on December 22, 2010.
A Christmas Dire Economic Post!
Well, I was in the holiday mood, if only for a moment.
This is a really interesting web site. It has a lot of wonderful pictures, cartoon and good number of scary economic graphs. Did I mention the good writing? You might hit the link and explore further.
James Pilant
So, how about you? I teach business law and every year I try to explain the value of prenuptial agreements. It’s a wasted effort. You can look out over the students and see that everyone of them is going to fall in love forever. It’s depressing. No one, it seems, expects to be left at the alter, but it happens.
Thus, wedding insurance exists. You could argue that I am mistaken and since this kind of insurance exists, people do have a genuine and intelligent skepticism about their relationships. It would be great if that were true, but the fact is, wedding insurance is more aimed at the mundane, illness and weather among other things. So, maybe you are planning nuptials and would like to consider the idea of wedding insurance.
Maybe you are absolutely, positively, completely sure you won’t get jilted but you could get the flu.
James Pilant
From CBS Money Watch –
A handful of insurance companies offer wedding insurance policies, including Traveler’s, Aon, and Fireman’s Fund. The Fireman’s wedding insurance policy, offered through the National Alliance of Special Event Planners, includes the “change of heart” coverage. A few caveats on that coverage for the jilted: the policy must be purchased by someone other than the bride and groom, and it must have been purchased at least four months before the planned wedding date. (Each of the three sites linked above have online calculators that will quickly spit out an estimated premium cost based on the particular level of coverage you want.)
Rortybomb has it right here. The Federal Reserve is rushing into to save the banks from their forclosure fiasco. I have blogged on this. I was expecting Congress to rush to the banks’ aid but apparently the Federal Reserve is going to beat them to it.
The banks, the forclosure industry, they never seem to lack for friends in all the right places. Have you noticed that? Where are the homeonwners’ friends? Where are our friends? Is the only value in this society cold hard cash?
Read this. It’s good writing.
James Pilant
via Rortybomb
The past thirty years have taken us a great distance away from the social ideal represented by Rawls’s Theory of Justice. The acceleration of inequalities of income and wealth in the US economy is flatly unjust, by Rawls’s standards. The increasing — and now by Supreme Court decision, almost unconstrained — ability of corporations to exert influence within political affairs has severely undermined the fundamental political equality of all citizens. And the extreme forms of inequality of opportunity and outcome that exist in our society — and the widening of these gaps in recent decades — violate the basic principles of justice, requiring the full and fair equality of political lives of all citizens. This suggests that Rawls’s theory provides the basis for a very sweeping critique of existing economic and political institutions. In effect, the liberal theorist offers radical criticism of the existing order.
This post takes John Rawls, quotes his writing in the context of what he considers a just society and then compares that with our current situation. The author is not pleased. Many of the objections that Rawls would have made according to this author are the same or similar objections that I would make myself.
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