Thursday, October 13, 2005

Why Monopolies are by their Nature Government Controlled Economies

I constantly find myself in debates in which the words "free markets" are thrown at me like holy water at a vampire. The conception of many seems to be that 1) free market capitalism means captialism without serous interference from government, and 2) that monopolies are some sort of fluke of the market that only occurs when something goes wrong.

First, let me define a free market. I conceive a market to be free when it meets the following characteristsics:

1) The market is accessible to all who wish to participate.
2)The market is not under positive control of a political entity.
3)There are no negative controls placed on entry into the market.

Thus, by my definition, the USSR was not a free market (criterion 2), nor is the NYSE (criterion 3).

Secondly let me define a monopoly. I believe that an industry has become monopolized when:

1)One company controls enough of the market in a region, a particular industry, an infrastructure as to generate a collapse in competitiveness between companies. This begins to occur at around 30% of the market.
2)One company controls physical infrastructure that relates to products it sells that use that infrastructure, such as an airline that owns airports or a telephone company that owns an ISP.
3) One company controls a means of production from raw material to retail, giving it a huge advantage in terms of pricing, such as an oil company that pumps oil, refines it, wholesales it, and owns gas stations.

These are rough and working definitions that are somewhat open to revision, but what I would like to focus on is how monopolies meeting these criterea cause markets to become unfree. The monopolization of an industry, infrastructure, or region is an inherently political act. Markets can be thought of as a form of territory, and in fact most companies view market share as turf. Every company's aim is to control as much market share as possible, but at a certain point their control ceases to be economic and becomes political in nature. For example, when a Telco finds that it is losing revenue because Vonage and Skype are taking away traditional telephone consumers using infrastructure that they control (whether they actually paid for it or not is another question) their first response is to infringe on the use of VoIP. The infrastructure has become territory, and the traditional proprieter of the territory has become a political actor seeking to manipulate the market in conflict with all three criteria for market freedom. Simply being an economic entity does not prevent one from becoming a political entity as well.

It is in these situations that it is the responsibility of the duly elected government to consider that there are non-democratic political entities operating inside of its borders and dispense of them appropriately. The most viable method seems to be trustbusting, de-politicizing the industry by removing the monopoly. With regard to infrastructural monopolies this becomes more complex, because breaking the companies up does not ensure competion as they simply become regional monopolies. The answer in that situation could be as extreme as repatriation/annexation of the territory/infrastructure in question as government administered, or to ensure that the infrastructural monopoly remains entirely neutral through regulation of its activites outside of building, selling, and administering the infrastructure.

Hmm... I'm sounding Sweedish again.

Redefining Freedom

I've been reading the work of Dr. Amartya Sen, Nobel Prize winner for Economics, as of late, and his work has enabled me to verbalize something that I've been trying to put my finger on for some time now. My problem with traditional libertarians and neo-liberals has been a constant focus on the economic sphere when that always seemed to me a focus on a means rather than an end. Beyond that, I've always found that while using traditional economic indicators makes measuring progress and development very easy, it doesn't really define what it is measuring in substantive terms. What does a per captia income of $20,000 in an area with a median income of $40,000 mean? In some places, places like Sweeden, it means that your house is smaller and you drive a VW Beetle rather than a Saab, but in most parts of the U.S. it means that you are unable to raise a family in a manner consistent with good childrearing methods, that you can't get good healthcare, and that you are probably in debt simply to pay the bills.

What I have discovered is that we Americans have traditionally defined our freedoms neagtively. That is to say that we deal in terms of what we are free from rather than what we are free to do. We are free from government interference in our speech, but we are not free to communicate by the most common and widely accepted means unless we posess the wealth to purchase the needed communications technology.

It seems that in the begining of our country's life we did not define freedom this way. We wrote our definitions this way as a group of people who remembered being interfered with by a foreign government, but we also sought to expand the real freedoms of people by establishing public libraries and a postal system with standardized postage. As time passes, though, private systems have far outstripped the public ones. There are obvious market related reasons for this, but in certain areas, especially health care, communications and utility infrastructure, and security and emergency response it seems to me that we must begin to reconceive of these freedoms positively. The right to life should mean a right to health. The right to liberty should mean the right to have access to all of the same markets and information available to anyone else, and the right to the pursuit of happiness should mean that the opportunity to gain an education free of economic burden should be present for any member of society.

Many will argue, I'm sure, that this is leftist, bleeding-heart nonsense. It is, but it's leftist, bleeding-heart nonsense that will generate a more productive (not to mention meaningful) economy worldwide, raising the standard of living of all human beings and lowering crime rates and violence worldwide.

Sunday, September 25, 2005

Been Away too Long (And We Got the Bombs!)

I've been away from this far too long. I doubt anyone has actually noticed, but I blog more for myself than as a means of editorial journalism.

What could bring me back? What nightmare of policy faux pas could make me vent my rage on the unsuspecting surfers who skim over my blog? How about the increased threat of nuclear war? That one might just do it.

Under the stormy cloudcover of Katrina the Joint Chiefs decided to release the revised US Doctrine for Joint Nuclear Operations. In short: it sucks. Why on earth would anyone want to ensure that it was clearly stated that pre-emption was a pillar of our nuclear arms policy. Whose idea was this? Next thing you're going to tell me is that they've already undertaken a study with regard to the possibility of a "mine shaft gap" resultant from the loss of a "doomsday" event brought on by the use of the pre-emption strategy.

Technically, this document makes it clear that if Iran (What other state does this really have anything to do with?) gets the bomb before or after we begin some form of open hostilities we can go ahead and engage in the most destructive game of rock/paper/scissors in history. God I hope Rummy approves of this one, and I can't wait until W is actually asked for permission to use them. I'm always curious when Tom Barnett compares W to Truman. Perhaps there's to be an analogy for the history books after all.

Give peace (and life unmutated by nuclear radiation) a chance.

Thursday, March 24, 2005

Michael Jackson to Keep America Safe

From an official DHS press release:

“I congratulate Michael Jackson for being confirmed with unanimous consent by the U.S. Senate as Deputy Secretary of the Department of Homeland Security. His management experience in public and private service will be extremely valuable to the Department and its vital mission. I thank Congress for acting quickly during the confirmation process and look forward to working closely with Deputy Secretary Jackson in the months ahead as the Department strives to enhance our capabilities and strengthen our nation’s security.” -Sec. Michael Chertoff

Let the jokes begin....

Thursday, March 10, 2005

Connectivity is a Right

Currently pending a hearing in both chambers of the Tennessee congress is a bill (HB 1403 in the house and SB 1760 in the Senate) which will make it unlawful for municipal governments to provide broadband internet access to their citizens. The goal here is to prevent municipalites from becoming potential competition for Verizon, Comcast, Time Warner, and the like, and though one could make an excellent case for major cities providing this service, I'm not even going to touch that one. Instead I'm going to tell you the story of the tiny town of Scottsburg, Indiana.

Just like numerous small towns all over Tennessee, Scottsburg hadn't had (or really needed) broadband Internet access until recently. It was a town that survived without email. If you needed to buy something you went to the local store, and if you wanted to talk to the mayor about a potholed road you just asked him about it when he said hello to you at the local cafe. The librarian would get books for you, and business agreements were transacted the old fashioned way, through the mail. Life in Scottsburg moved along just fine without Wi-Fi, Broadband, or anything of the sort, until life outside Scottsburg moved right along past it. Suddenly, businesses in Scottsburg were unable to compete with similar businesses in areas served by broadband. Mailing contracts and blueprints was simply too time consuming in a world where everyone is digital, and so, as is the case in this modern world, where there is demand, supply would arrive, right? Wrong. The town was simply too small, too far away from the primary broadband grids of Verizon and Comcast to be profitable. The town was in a catch 22. Without broadband the town couldn't grow, and would probably shrink as it lost jobs to connected areas, but until the town was larger broadband providers considered it a sinkhole for investment.

In steps the town's mayor, Bill Graham. Bill and the city council put together a plan to provide broadband Wi-Fi access to the entire community, beaming it right into the homes of every citizen with a computer. Businesses stayed, and things were looking up when suddenly, those very companies who'd showed no interest in Scottsburg before were up in arms. It wasn't long before lobbyists for the telecom industry were spouting all kinds of nonsense about unfair competition and misapropriation of tax dollars. How do I know that it's not unfair? Well, because these very companies are subsidized heavily by the federal government to expand access to communities just like Scottsburg. Hmm, that sounds like a misapropriation of federal tax dollars in itself. The bill they drafted to kill Scottsburg's municipal broadband project died in the Indiana legislature after Bill Graham told this same story in their house chamber.

Our own bill of this nature is even more subversive because it places a moratorium on services explicitly described as legal under Tennessee law. This bill is nothing but an attempt to protect the interests of massive, federally subsidized corporations from the horrible risk of people pulling together to serve themselves. Connectivity is the mortar between the bricks of society. The Roman empire was held together by a road network unlike any ever seen. The British fielded a navy that was unmatched by any in the world, and the United States has become this nation through various forms of connectivity from the railroad to the telegraph, the telephone to the Internet. To deny the right to provide this service to themselves to a city is to tell them the modern equivalent of no roads, no rail, no telephones.

Tuesday, February 15, 2005

Why Guest Worker Visas are Unethical

President Bush has been gearing up for the campaign to create a guest worker visa. For those of you who aren't aware, this is entirely different from a green card or citizenship. The idea is that the visa would have a number of months for which it is valid (open to extension of course), and at the end of that period the "guest worker" goes back to his/her country of origin. This program is a clear response to population pressure from Latin America. Everyone is aware of the huge numbers of illegal immigrants that come to work in the U.S. every year, and any reasonable person is aware of the huge amounts of manpower wasted on trying to prevent it, manpower better devoted to stopping terrorists and drug trafficking. The administration seeks to relieve that pressure through means of the guest worker visa. Here's the catch: Guest worker visas are an old European scheme to allow cheap labor to flow in while still preventing it from integrating culturally and economically into the society. And the real kicker is that you can simply stop visa extensions when you need to pull an Ebeneezer Scrooge and "decrease the surplus population." Problem: Preventing integration with the society creates a socio-economic underclass (usually hostile to their hosts), deports GDP by means of remittances (cash immigrants send home), and (by means of the slums that these immigrants live in) creates areas prone to crime. The other nasty problem is that you can't deport this problem any more effectively than you can stop illegal immigrants from entering the country. In fact, it's harder because they're already here, living in urban slums with offline economies and surrounded by people in a similar plight. The trend in these cases has never been for families and friends to reunite back in their country of origin, but to reunite in the host nation. The creation of a disenfranchised sub-citizenry might relieve population pressure to some extent, but in the end it will only import a new set of problems. Given the choice between waging a futile border war now, a futile internal war later, or allowing working men and women living in America to be part of our multi-cultural fabric I choose the latter option.

Thursday, February 10, 2005

Joke of the Day

Earlier today, Donald Rumsfeld found a good use for the Powell Doctrine as applied to relations within NATO. After what was generally smooth going at a press conference in Nice, France, the Secretary looked to top aide Lawrence di Rita saying, "Are we getting close to the end, Larry? I'd like to get out of here before I make a mistake."

Maybe he should teach Condi this tactic before her next hardline chat about Iran.

Tuesday, February 01, 2005

The Moral High Ground

After commenting on our own social welfare situation, this just makes my day. Apparently Germany, by legalizing prostitution, has created a situation in which brothels must be treated in the same manner as any other employer, meaning that if a person recieving unemployment benefits turns down a job as a prostitute, they risk having their benefits terminated. Oh, feel free to take all the moral high ground on Iraq you'd like, Gerhardt. Or, should I say, O.G. Pimp Daddy Schroder. I'm going to get SOOOO much mileage out of that at parties.

Monday, January 31, 2005

When Idealism is in our Self-Interest

William Saffire put the president's inauguration speech in the top ten second term inaugural in history. I haven't read all the second term speeches, but I might've been inclined to give it even more prominence than that on the grounds of the singular statement:

We are led, by events and common sense, to one conclusion: The survival of liberty in our land increasingly depends on the success of liberty in other lands. The best hope for peace in our world is the expansion of freedom in all the world.

It would seem that the Bush administration has grasped that policy is most successful when idealism and self-interest intersect, or, rather, that they have grasped this with regard to foreign policy. While this rather subtle nuance of politics (frequently lost on academics) seems to have become the core idea of Bush's foreign policy, the president seems to have failed to comprehend that old adage: "What's good for the goose is good for the gander."

Over the past weeks innumerable editorials have been published regarding the budgetary evisceration of social welfare programs, and, clearly, this is in keeping with ideas popular among Republicans since Reagan, but it is in direct opposition to both our ideals and our interests. As we pour money and manpower into the Iraqi reconstruction, even going so far as to daily sacrifice America's sons and daughters on the altar of freedom and global community, the administration would have us believe that our own disconnected areas are somehow fundamentally different from Sadr City, that our freedom and security are connected to slums in Baghdad, but not to slums in Detroit.

Allow me to put this into perspective. If the Bush doctrine, or some revised form of it, is successful, by 2020 there will be a functioning economy, a middle class, and prosperity in the Middle East. Iraq, Afghanistan, and Palestine will no longer be fruitful recruiting ground for Jihadists. Indigenous populations, focused on building a future, riding steadily forward on a sense of possibility and increased expectations will shun Jihad in favor of moderate forms of Political Islam, geared toward building a better future for the Islamic world. However, as can already be seen in Western Europe, Islamic communities abroad will face discrimination, finding themselves in squalor amid the prosperous. Imagine the Black Panthers emboldened with Jihadist ideology and a lot of Simtex.

The very social programs that are designed to prevent indigenous Americans from sliding into crushing poverty are America's first line of defense against the Jihadists of tomorrow. While most Americans don't realize it, America's Islamic population is surging. In Dearborne, Michigan 30% of the population is of Arab ancestry, more than 60,000 people, most of them living in disconnected and impoverished communities. Already anti-American demonstrations have had a chilling effect.

In the coming years the survival of liberty in our land will depend increasingly on the survival of our commitment to opportunity for all Americans. Social welfare is our first line of defense against the Jihadists of tomorrow. Isn't it in our interests then, to ensure it's survival?

Saturday, January 29, 2005

Rule Set Reset

The first issue of Rule Set Reset: A Journal of News and What's Next will be available free of charge, and, given the wonderful articles by Thomas P. M. Barnett, TM Lutas, Mark Safranski, and yours truly I highly recomend that you all download it.




Monday, January 24, 2005

How Little We Understand Ourselves

- 'Land grab' fears for Jerusalem, BBC World News, Jan. 24, 2005

It has been broadly accepted that the root cause of terrorism is "a sense of diminished expectations," and economist Hernando de Soto, President of the Institute for Liberty and Democracy, has done extensive work connecting that feeling to what he refers to as property "meta-rights," or the right to have property rights. With Ariel Sharon molting his hawk's feathers it seems strange that his new government should be assaulting these rights shown to be most connected to that sense of diminished expectations. That's exactly what they're doing, however, when Palestinians, living in the West Bank who can actually prove their ownership of property in East Jerusalem, are losing property to the government under an absentee landlord law not in active use for fifty years. Sharon's political life has been bet on one hand of poker with the Palestinians. Is he really stupid enough to trade in a pair of jacks in hopes of a flush? For the peace process to succeed the Palestinians have to have hope. This marks two serious strikes against him (the first being the early shut down of communications with the Abbas government). Let's hope that he and his new government can get their act together and comprehend that a mutually beneficial agreement doesn't mean that they get all the land, power, and prosperity alongside the peace.

Friday, January 21, 2005

A Citizen Of Mosul

A Citizen Of Mosul has decided to give us some perspective on Iraqi history. I rarely blog links to other blogs, but this one's worth it.

Tuesday, January 18, 2005

Jazz and Policy

The fundamental difference between be-bop jazz and most forms of music that preceded it is that be-bop leaves room for dissonance and improvisation. In be-bop a trumpet player can go off melody and beat, creating wildly dissonant patterns. I love be-bop... as a form of music. Be-bop, however, is not a bureaucratic or political style that goes over too terribly well. That, according to an article in The Nation, hasn't stopped it from being tried as we struggle to create a future for Iraq.

I'll spare you the particulars of the article. Andrew Ackerman already wrote them, so I'll simply give you the necessary bits. According to Ackerman the Pentagon has awarded a nearly $3M contract for the protection of diplomats in Iraq to Aegis Defence Services, a London-based mercenary firm headed by the notorious Tim Spicer. Spicer is widely known in military circles as one of the most scandalous and disreputable men in a field that is hardly overburdened by ethics. The reason he is "widely known" is that he has, historically, been less than discreet while engaging in very questionable activities. He has previously violated international and British law by trafficking arms into Sierra Leone, accidentally triggered a coup in Paupa New Guinea, and, while commanding a Scots Guard unit in Belfast, allowed men guilty of murder to return to duty.

Five senators, led by Ted Kennedy, have lodged a protest with the Department of Defense to no avail. Protests raised by competitors to the GAO have had similar results. Simply put, Spicer's company meets all the bureaucratic requirements to be awarded the contract, and, frankly, were this a traditional war zone, I would think this a perfectly reasonable situation. War zones, however, are no longer traditional. The United States is, for better or worse, trying to build a free and modern state where once there was a despotism. This task must be taken personally. Every leader involved must share, or at least comprehend, the vision of a free Iraq. For the Department of Defense to outsource security duties to conflict-prone mercenaries is tantamount to the conductor of an orchestra allowing a trumpet player to go off melody during an Aaron Copeland symphony. Be-bop, it turns out, simply doesn't sound good as policy.

Sunday, January 09, 2005

Sorry for the Absence

My apologies for the long absence. I'd like to blame it on the holidays, and I suppose I can to an extent. I get terribly depressed around this time of year, and (combined with a nasty case of the flu) that kept me down for a couple of weeks. It was all I could manage to finish my article for Rule Set Reset (the monthly journal of the New Rule Sets Project). I'm quite happy about that. I consider having a 1000 word article next to articles by Thomas P.M. Barnett, TM Lutas, and Mark Safranski (Zenpundit) to be an honor. I'm still trying to figure out exactly why Tom asked me to write for them, but, hey, I'll take the exposure without asking too many questions.

Tom and Critt, thanks for asking me to be involved. Bob Jacobson, thanks for the outstanding coaching and editing. I'm proud to have worked with you.

If it's quite all right with the NRSP kids I'll post the article here when the Feb. issue of RSR comes out. Assuming that I keep getting a soap box in RSR, I'll try to publish the articles here as the following issues come out.

Esther Dyson and Jeff Jarvis on NPR

I hope at least some of you managed to listen to Esther Dyson and Jeff Jarvis on NPR this morning. There was some really serious insight into how the Internet (and blogs in particular) are changing everything from disaster relief to the media. It was all the guff that bloggers already know, but it demonstrated that NPR has really begun to get globalization. I also particularly like that a major media outlet is giving play to serious blogs, and that Wonkette's flirtation with a certain Capitol Hill hussy will no longer be the way that outsiders remember blogs.

The New Year

The calender insists that this is a new year, but I view time as a series of events rather than just a series of dates. So, by my reckoning it's New Year's Eve. About three hours ago the Palestinians started voting. Since I count the Tsunami (and the initial flow of aid) as the final event of 2004, I'm counting the Palestinian elections, or rather their completion, as the first major event of 2005. When the votes are in and a successor to Yassir Arafat has been declared, I'll call it '05. Get ready for a high bit rate for the next few weeks. The Tsunami pulled the vast majority of media and policy attention for a couple of weeks, but this election and the begining of this session of Congress are going to start a massive flow of pent up political energy. I'll save my immediate predictions as they're all fairly obvious, but I suppose I'll make a few big ones for '05.

1) Sharon's shaky government will collapse and the Palestinian peace process will require the intervention of an outside negotiator. Sharon will survive politically, but he probably won't be the PM. This will all happen after the settlement pullouts are largely complete, and the trigger will be budgetary in nature.

2) The attention that the Tsunami has brought to the Tamil Tigers will draw a third party negotiator to help bring about an end to that conflict. The Tigers will gain enough legitimacy in international eyes to become more of a political party and less of an insurgency.

3) Costal areas hit by the Tsunami will rebuild rapidly. By 2006 they will contribute at least double their previous percentages of their respective GDPs on average. These regions will attract massive investment due to the restructuring of local property laws and the creation of new physical infrastructure.

4) Iraq will be headed for trifurcation, though it will remain Iraq. The national government will exist, but it will serve as little more than a political battleground for the three regions to argue over oil rights. While the Shiites continue to stabilize and prosper the Sunnis will wage an undeclared civil war. We will, in response, train a largely Shiite military which will further alienate the Sunnis. The end result will be a bloody conflict management which will not improve until the peacekeeping force is made significantly more multi-lateral. The violent conflict in Iraq will only improve when continental Europe gets off its high horse and helps. That in turn will only happen when the Bush and Blair administrations ask politely. We might be waiting until 2007 for that. Another possibility is that the Islamic world, led by Turkey and Iran, will stage a serious effort to bring about peace in Iraq, but that sort of help will be linked (indirectly) to Turkey's EU ambitions and Iran's bomb.

5) The European Union will deal with more homegrown Islamic terrorism than ever before, prompting leaders to involve Europe more deeply in the Global War on Terror. This could prompt reconcilliation between the US and Europe over Iraq if Bush plays his cards right. As Europe will find itself the new home of massive terror networks, the epicenter of this reconcilliation will likely be interagency cooperation between US and European intel agencies. This one's an outside bet, but I'll still throw some cash on it.

6) This will be a weak year for national domestic policy due to massive partisan debate in Congress. The Hill will be full of sound and fury signifying nothing, but state governments will use the chance to seize the limelight, starting a decentralization of power. The rising stars of both parties will come from state governments, dashing the hopes of more than a few members of the House for political advancement.

That's all I'll predict for'05. This is going to be a tedious year in a lot of ways. Very little will come to fruition, but we'll see the emergence of quite a few patterns. Oh, one last one, North Korea will implode with less fanfare than expected. China will deal with that handily enough that the US barely gets involved until after the dice for the future of the country are already thrown.
Well, we'll just put that on to simmer for a year, and we'll see how well my crystal ball works later. Time for me to crawl back into my bottle of NyQuil. See you all after the votes are counted in Palestine.