June 2002 Archives

Stewart Alsop says, despite Loudcloud changing names and changing models, don't write off the ASP business model yet.

There are a couple of ASP-style companies now doing good business. Their secret is that they don't rent services that are core to corporate IT; they don't try to get companies to trust the heart of their computing to someone else. Instead, they have shown IT managers that they can do a terrific job running discrete applications. In such cases companies may well prefer to rent rather than license software. ...

There aren't many other ASPs doing well, but hey, that's why this is a contrarian bet! The concept here--that renting software may be a smart idea when applications are good but not critical to the tech workings of corporations--isn't widely accepted. But it makes sense to me, and I'm betting it will take hold.

NPR has recanted on their silly deep linking policy.

If you don't want to come and meet the author of "What's So Great About America" then come and meet the man who got Bill Maher off the air (though they are one in the same.) It was Dinesh D'Souza, after all, who prompted Maher's unfortunate remark ("We have been the cowards, lobbing cruise missiles from 2,000 miles away") on the September 17th episode of "Politically Incorrect." Maher was bashed too heavily for his remark--which was taken somewhat out of context--and Ari Fleischer was out of line with his remark about Maher's remark. If you want to dwell on it and worry about squelching of healthy discourse, read this Daily Howler. But it wasn't persecution that bumped Maher off the air: the bottom line is people weren't buying what he was selling--and his sales pitch needed work.

The Russians have lost some nuclear material that can be used for a dirty bomb. That's just great.

From yesterday's Washington Post: "Unsettling signs of al Qaeda's aims and skills in cyberspace have led some government experts to conclude that terrorists are at the threshold of using the Internet as a direct instrument of bloodshed."

But this piece in the Register claims is all a bunch of FUD.

This piece in Reason prepares us for a rash of "end is near" talk surrounding the United Nations Summit on Sustainable Development, and provides some sorely needed pre-emptive debunking. Worth reading--and interesting on why environmentalists are so often so wrong:

"Biologists and ecologists tend to overlook the power of technical progress compounded over the years," says Ausubel. "If you’re trained in ecology and botany, you think of technology as a bulldozer, but what it really is, is efficiency, using less to do more."

Technological progress has already dramatically expanded the carrying capacity of the earth. In the 21st century it will so outpace the increasing demands of a growing and wealthier population that more and more land will revert to nature.

"It looks like over the next 100 years, for most environmental concerns, we will do better," concludes Ausubel. "You get smarter as you get richer."

Thanks to Chip Mellor of the Institute for Justice for forwarding this analysis of the Supreme Court's Cleveland school choice decision by IFJ's senior attorney.

The following is a brief summary of the significance of today's Zelman decision, the rationale applied by the Court, and our view of what this decision means for the near future of school choice:

1. How the Justices voted. Although the decision went 5-4, the most important thing to note is that all five justices voting to uphold the program joined in all of Chief Justice Rehnquist's majority opinion. This is important because it means that the rationale set forth in Rehnquist's majority opinion constitutes binding Court precedent. By contrast, Justice O'Connor refused to join in several parts of the plurality decision in the Mitchell case two years ago (upholding the use of federal Title I funds to purchase and then lend various education materials to religious private schools), which meant that much of the Court's reasoning in that case was simply dicta -- not binding case law. Again, because all five justices joined the majority opinion in Zelman, not only does the Court's ruling (i.e., that the Cleveland voucher program is constitutional) have the force of law, but so does the reasoning it used in arriving at that conclusion. The justices voting to uphold Cleveland's voucher program were: Rehnquist, O'Connor, Scalia, Kennedy, and Thomas. Those voting to strike down the program were: Stevens, Souter, Ginsburg, and Breyer.

Try as I may, I just can't get hot and bothered by the 9th U.S. Circuit Court of Appeals in San Francisco decision that the Pledge of Allegiance is unconstitutional. Sure, I think it was a bit silly, but it will be overturned (by courts or legislation.) If you really want to complain, the Republicans make it really easy to complain to your local paper in this creative web page. But what does bother me is that politicians are tripping over themselves to gain political advantage by condemning this action and have already passed a resolution condemning the decision. Don't these folks have better things to do right now? After all, there is a war on.

Check out this exchange at Redherring.com: Jason Pontin blames Newt Gingrich for Enron, Worldcom, et. al. and I think he's out to lunch.

Nerdy but fun site that spots physics errors in movies (example from Star Wars Episode I below.) And if you want to be an uber-nerd, read this excellent book critiquing the physics of Star Trek.

Not only are the physics in this movie not from around here, they're not even logical. For instance, we have a force field around an underwater city which keeps water out but which a human who is over 80% water can walk through. This same highly advanced force field technology is later used on the battle field by an otherwise primitive race of beings who use beasts of burden for transportation and catapults and spears for weapons. The catapults throw giant blue marbles which explode on contact. However, even though the primitive beings have the technology for explosives they can't seem to come up with gunpowder.

A long piece on John Ashcroft--his personal history, what motivates him, and a libertarian critique. Excerpts:

A great primer on the sematic web.

The Semantic Web is a vision of a next-generation network that lets content publishers provide notations designed to express a crude "meaning" of the page, instead of merely dumping arbitrary text onto a page. Autonomous agent software can then use this information to organize and filter data to meet the user's needs.

An interesting critique by of a "new and possibly influential strain in American political discourse" from the left by Michael Tomasky in the American Prospect as he explores who is Roger Hertog, the man "starting up a long-shot New York daily and funding The New Republic. But Hertog doesn't see himself as the vanguard of a new conservative movement -- yet." Excerpts:

Red Herring, over my objections, took this stand in support of the Ending the Double Standard for Stock Options Act, sponsored by Senators Levin and McCain. The "double standard" ostensibly is that while options are expensed for tax purposes, they do not appear on the income statement.

In the words of the Red Herring editorial, "The act would force CFOs to make a choice: either take the tax benefit and the hit against reported income or forgo the tax benefit and avoid any charge against earnings." Yet this doesn't create "transparency in corporate accounting," it creates confusion. Either options should be treated as an expense or they shouldn't and either they should be taxed or they shouldn't--leaving it up to the companies would just create more perplexity when comparing corporations.

A fascinating article by Dinesh D'Souza challenging many of our commonly held assumptions. I view it as essential reading and encourage readers to buy his latest book, "What's So Great About America." If you would like to meet Dinesh, RSVP for a reception for him starting at 6pm on July 16th at the Stanford Park Hotel. Excerpt from the article:

My conclusion is that against their intentions the colonialists brought things to India that have immeasurably enriched the lives of the descendants of colonialism. It is doubtful that non-Western countries would have acquired these good things by themselves. It was the British who, applying a universal notion of human rights, in the early nineteenth century abolished the ancient Indian institution of sati-the custom of tossing widows on the funeral pyre of their dead husbands. There is no reason to believe that the Indians, who had practiced sati for centuries, would have reached such a conclusion on their own. Imagine an African or Indian king encountering the works of Locke or Madison and saying, "You know, I think those fellows have a good point. I should relinquish my power and let my people decide whether they want me or someone else to rule." Somehow, I don't see this as likely.

Colonialism was the transmission belt that brought to Asia, Africa, and South America the blessings of Western civilization. Many of those cultures continue to have serious problems of tyranny, tribal and religious conflict, poverty, and underdevelopment, but this is not due to an excess of Western influence but due to the fact that those countries are insufficiently Westernized. Sub-Saharan Africa, which is probably in the worst position, has been described by U.N. Secretary General Kofi Annan as "a cocktail of disasters." But this is not because colonialism in Africa lasted so long but because it lasted a mere half-century. It was too short to permit Western institutions to take firm root. Consequently after their independence most African nations have retreated into a kind of tribal barbarism that can only be remedied with more Western influence, not less. Africa needs more Western capital, more technology, more rule-of-law, and more individual freedom.

Good news on charter schools from NCPA:

PROGRESS OF TEXAS CHARTER SCHOOL STUDENTS

During the 2001-2002 school year, more than 50,000 students were enrolled in state-approved charter schools in Texas. Charter schools are independent public schools that are freed from many of the bureaucratic rules and regulations of traditional public schools.

Overall, 57.6 percent of students enrolled in Texas charter schools are economically disadvantaged to the degree that they qualify for federally subsidized lunches, a somewhat higher proportion than the 50.4 percent who qualify in traditional public schools.

Students who remain in charter schools for consecutive years have strong academic gains. Passing rates on the Texas Assessment of Academic Skills (TAAS), a minimum skills test, have improved for children enrolled in charter schools in each of the years charter schools have been open in Texas.

My cousin is a direct descendant of Thomas Jefferson and remarked to me over dinner tonight that whenever he tells people this, the first thing people ask about is Sally Hemings, the slave that Jefferson allegedly fathered a child with. In this age of Jerry Springer and pack reporting, this myth has been accepted as fact--bolstered by the DNA "proof" released in 1998. However, the truth is that there was a rush to judgment about this "proof" during the Clinton impeachment trial, as Clinton supporters hurried to justify his actions with historic precedent. We all heard about this proof, but how many of you heard the rest of the story? Turns out, the evidence suggests that is it highly unlikely that Jefferson in fact fathered a child with Sally Hemings. Please, if you care about truth and American history, read this piece from a year ago in the WSJ. (Click on “MORE…” for the story.)

Where's a good spot to recruit angry and bored young men? The answer, it seems, is in prison where radical Islamic representatives have been very busy. Here's the story from the WSJ.

A while back, Bill Gates directed Microsoft to come up with better computer security solutions. Steven Levy now reports that Microsoft engineers have taken a stab at Bill's demand with a new plan called Palladium. Not everyone is thrilled about it, however, and Richard Forno has posted his criticisms here.

From The Federalist, this multiple choice quiz on terrorism (one question has no correct answer, can you find which one it is?):

To ensure we Americans never offend anyone -- particularly fanatics intent on killing us --police and airport screeners are not allowed to "profile" people. In the name of airport security, however, they will continue to perform random searches of 80-year-old women, little kids, airline pilots with proper identification, Secret Service agents who are members of the President's security detail, and 85-year-old congressmen with metal hips.

Let's pause a moment and review....

See this paper "A Globalist Manifesto for Public Policy: The Tenth Annual IEA Hayek Memorial Lecture" by Charles W. Calomiris. The exec summary follows:

Robert J. Samuelson points out that while recriminations have a role, pack journalism may be more harmful than helpful.

It’s open season on anyone who might have illicitly caused the stock bubble or profited from it—Martha Stewart, Enron executives, dishonest stock analysts, wimpy accountants, greedy investment bankers. The press is enthusiastically beating up on these people, many of whom deserve it. But what the press isn’t doing is reflecting on its own role in creating, and now popping, the speculative bubble....

From George Will: "Welcome to the brave new world of speech regulation in Year One, A.M.F.--anno McCain-Feingold."

Traffic is getting worse. Here's analysis of the problem and suggestions on solutions.

A fascinating piece on tariffs and trade by Jagdish Bhagwati in The Economist that dispels the myth that wicked rich countries exploit poor ones with asymmetrical trade protection. In fact, the asymmetry goes the other way--with poor countries enacting more trade barriers than rich ones. Bhagwati also makes the case, for both rich and poor countries, for unilaterally lowering trade barriers and suggests that the shaming wealthy nations about their trade strategies may be counter-productive. Excerpts:

Of course, proponents of trade have always considered that trade is the policy and development the objective. The experience of the post-war years only proves them right. The objections advanced by a handful of dissenting economists, claiming that free-traders exaggerate the gains from trade or forget that good trade policy is best embedded within a package of reforms, are mostly setting up and knocking down straw men.

But if trade is indeed good for the poor countries, what can be done to enhance its value for them? A great deal. But not until we confront and discard several misconceptions. Among them:

The weekly summary of R21. As always, you can subscribe or unsubscribe to R21 by sending an email to subscribe@r21online.com or unsubscribe@r21online.com respectively.

THE CORPULENT CLASS
First, in case you missed it on the McLaughlin Group this weekend, Southwest has a shocking new business strategy: “We sell seats, and if you consume more than one seat, you have to buy more than one seat,” according to Southwest Spokeswoman Beth Harbin. Sounds devilishly clever, but is it discriminatory against people of size? “If the person takes up more than one seat, that’s not the problem of the person, that’s the problem of the seat,” counters Miriam Berg, President, Council on Size & Weight Discrimination. Seats are getting narrower, plump protestors pronounce, in a brazen, calculated attempt by greedy airlines to squeeze, financially and otherwise, their clientele. Will personal responsibility ever come back into fashion in this country? Fat chance.

An interesting look at the right from the left in this piece by Robert Kuttner in The American Prospect. I think Kuttner is correct that today it is the right, more than the left, that is "movement" oriented and that rightward leaning institutions may be more strategically political than leftward ones. It may be true that the conservative "investment in ideas and ideological marketing changed the course of politics," but Kuttner fails to point out that while the left's think tanks may have been less successful politically, the left has something to shape public opinion that the right doesn't have: universities. As pointed out in this R21 post, the academic monolith is decisively liberal and influential on national opinion and policy. Conservative think tanks are perhaps less of a response to liberal think tanks, but to the education establishment where liberal thinking flourishes and conservative thought is stifled.

My own belief is that while the right has made significant progress on the idea front, Kuttner is exaggerating its success on the political front. The core economic idea of the right--limited government--while alive as rhetoric is virtually dead as policy as dependence on government is expanding rapidly, not contracting.

Edward Asner, Noam Chomsky and others (mostly artists, writers, entertainers, and professors) are trying to start a new anti-war movement by publishing this letter in the UK's Guardian. They make some important points--about the need for vigilance on civil liberties issues--and some silly ones--comparing this struggle to the anti-slavery movement. It also has some plain old errors in judgment: "We believe that peoples and nations have the right to determine their own destiny, free from military coercion by great powers." This suggests that what the people in Afghanistan were doing were merrily determining their destiny until the naughty USA liberated them against their will. Absurd.

Yet after wading through the righteous indignation and hyperbole, my first thought was: thank goodness we live in a country where the government will do nothing to silence these voices. For, of course, in many of the countries that these people wish to leave to “determine their own destiny,” such as Iraq, this form of opposition is punishable by death.

And my second thought was a sense of pity for these folks. Anti-war activism these days is just not what it used to be. It’s just not that trendy or hip. It's so 1969. And these folks seem to miss it. I mean, these aren’t students manning the barricades, fighting the good fight. These are old farts trying to win back some lost glory. Some lost nobility. Some lost dignity. Sorry Ed and Noam--it's not the cowardly media or the manipulative Bush administration obscuring your cause of truth and light: people just don't want to buy what you are selling.

The fight for trade-promotion authority is looking tough. Remember, Silicon Valley, that although trade is so important to our industries, not a single Democratic congressman in the region voted in favor of TPA.

Anti-trust and chips:

The Justice Department must be worried about having time on its hands after the Microsoft case winds down: It has cooked up a big new grand-jury investigation of the chip industry. One problem, though, is that no one can figure out what the beef is: Are chip prices too high or too low? Both conditions have prevailed lately in the volatile, commodity-like business of cranking out dynamic random access memory chips, the french fries of the computer economy. As someone quipped, if the companies are fixing prices, you'd think they'd do a better job of it.

Oh well, there will be plenty of time to find a crime later. Let's get the investigation rolling. Meanwhile, the FTC can't afford to let its cousin get all the headlines. It has inserted itself in what had been a purely private dispute between Rambus, a U.S. chip designer, and several of its customers, large overseas chipmakers who complain that Rambus patented technology they had developed jointly.

And chickens:

Just because a contract is unusual or exclusive doesn't mean it hampers competition. The important question is whether competition existed before the contract. The unusual terms may provide a way to avoid enforcement problems.

Consider Chicken Delight, a franchise operation that was the subject of a 1971 antitrust case. Instead of collecting a percentage of store revenue, Chicken Delight required franchisees to buy all supplies from the parent company. From a transaction-cost perspective, this was an elegant solution to a basic problem: in a cash business, it is easy to lie about sales.

For anyone who thinks evolution is in doubt, read this thorough piece in Scientific American.

Embarrassingly, in the 21st century, in the most scientifically advanced nation the world has ever known, creationists can still persuade politicians, judges and ordinary citizens that evolution is a flawed, poorly supported fantasy. They lobby for creationist ideas such as "intelligent design" to be taught as alternatives to evolution in science classrooms. As this article goes to press, the Ohio Board of Education is debating whether to mandate such a change. Some antievolutionists, such as Philip E. Johnson, a law professor at the University of California at Berkeley and author of Darwin on Trial, admit that they intend for intelligent-design theory to serve as a "wedge" for reopening science classrooms to discussions of God.

Paul Krugman does us the favor of pointing out that 1 plus 1, in fact, equals 2, but ignores the entire idea behind privatizing social security, in this column in the NYT. In classic Krugman fashion, he points to the shortcomings of the people and the tactics used to support the ideas of limited government and personal responsibility, while he ignores the substance of those ideas.

Compare this quote:

"All I know is that, at least in my time, more of these things were prevented than occurred. And we tried to stay on top of them and did the best we could. ...[W]hen I was president, far more terrorist incidents were prevented than actually occurred." --Former President Bill Clinton

To this:

"Some of the president's staff and his consultants pressed the case for aggressive action to contain terror at home and attack it abroad. But at the center of the storm, Bill Clinton sat with an unusual imperturbability. Even as he fretted about whether to sign the welfare reform act and brooded about the FBI file, Paula Jones and Whitewater scandals, he seemed curiously uninvolved in the battle against terror.

"Advised that his place in history rested on eliminating the deficit, making welfare reform work, and smashing the international network of terrorists militarily and economically, he remained unusually passive. Around him, his foreign-policy advisers--particularly former trade lawyer Sandy Berger, then serving as deputy national security adviser--seemed to work overtime at opposing tough measures against terror." --Former Clinton advisor, Dick Morris

Whom do you believe?

The Economist examines 4 new wireless technologies: smart antennas, mesh networks, ad hoc architectures, and ultra-wideband transmission, and claims that "the parlous state of the wireless-telecoms industry, and the difficulties surrounding the deployment of “third generation” (3G) networks in particular, could be taken as evidence that existing ways of doing things are reaching their limits, and that some radical new ideas are needed."

Thanks to Henry Miller for forwarding this piece from the National Post (Canada), dated Friday, June 21, 2002.

Don't fear 'rogue genes'
Agricultural biotechnology has been carried on safely for centuries, without a single mishap or injury to any person or ecosystem

Henry I. Miller

Foes of agricultural biotechnology lambast it as unproven, untested, unnatural and uncontrollable, and worry that "rogue genes" in the modified crop may contaminate wild (or domesticated) relatives. These fears are unfounded.

Those opposed to plants crafted with the newest gene-splicing techniques (and food derived from them) gloss over two fundamental points: Neither biotechnology nor genetic engineering is new, and consumers, government and industry all have extensive--and positive--experience with both of them.

From NCPA a summary of David Littmann's piece in IBD. This comment is especially interesting in describing the how government continues to ratchet up: "Too many politicians have adopted a policy of throwing monkey-wrenches into our capitalistic system -- and then rushing forward with policies which further destabilize markets in an attempt to correct the imbalances their earlier policies created, critics charge."

AMERICANS INCREASINGLY DEPENDENT ON GOVERNMENT

A recent study by the Heritage Foundation found that Americans are 117 percent more reliant on the federal government than they were 40 years ago. Dependency grew by 38 percent over the past 20 years and has increased 9 percent just since George W. Bush took office.

Thomas Sowell feels the courts stray from the Constitution when it comes to free speech. Read today's column.

No part of the Constitution has been more corrupted by judges than the right of free speech. The obvious intent of this right was to prevent the government from silencing its critics or censoring the content of political discussions in general. But the past two generations of judges have stretched people's right to speak their mind to the point where it is a right to override other people's right to be left alone if they don't want to be pestered.

It was close, but the heavily favored Germans beat America's best soccer team in 72 years. USA leaves the World Cup with a record of 2-2-1. Read this piece on ESPN.

This was the best the States played all tournament, and with a call or two going their way, the States would be in the semifinals.

For the first time in its five matches, the team dominated possession, and it just wasn't near the end when it was pushing for the equalizer. Claudio Reyna, saved his best for last. A commanding performance on both sides of the ball. ...

This was a tournament-long performance that American soccer historians will reflect back on years down the road. This will be when they say that America turned the corner on and off the field. The media took notice. The opposition took notice. The world took notice.

Congratulations on a miraculous run gentlemen, you have helped pave the way for the bright future of American soccer.

Dennis Miller on Tuesday’s Tonight Show:

We have got to get it together and understand that this country, people say it’s not the American way to infringe on civil liberties. Well it’s not the American way to rollover for punks either. We’re got to start kicking ass on these people because they don’t care about us. They live for one reason and one reason alone and that is to kill you and I. There’s no half way in the al Qaeda. There’s no al-Kindas, okay. These people just care about our demise. ...

And you know something, the American Civil Liberties Union, when they come out and say you never profile anybody who gets on an airplane. I say we create a new airline, called the ACLA, the American Civil Liberties Airline where you don’t check anybody, you don’t ask any questions, and let those morons fly on that one, okay? The rest of us want to be protected. ...

Guantanamo Bay, are these people being treated fairly? ... No, you know, it’s no joy ride, but, you know, that being said, if you put the Guantanamo Bay terrorist prison outside of Kabul it would be their Epcot.

Thanks to The Onion for this.

Probably not of profound importance to the non-blogging world, but every blogger in the world, almost, has commented on this so here's my take. NPR has joined the ranks of those trying to prohibit unapproved deep-linking (where links go to pages within a web site, as opposed to the home page. So, for example, I am violating their policy by doing this before filling out this.) What's strange is that most opposition to deep-linking comes from sites who fear that they will lose revenue if visitors don't trudge through ad-heavy front pages to get to their deeper articles. Yet NPR doesn't make money from its website, so what's the deal? Their explanation, as reported in Wired News, is revealing:

Still, NPR will continue to require that every site -- whether it's commercial or not, advocates a position or doesn't -- still ask permission. Why? "Because we want to keep track of who's doing it -- so says our law department."

In other words, there really isn't a good reason but the lawyers are found a way to bill hours and CYA at the same time. From my POV, a link is simply a statement about how to download a particular document over the Internet, and should be protected as speech. By making pages available over the Internet, organizations are putting these pages in public view and therefore surrender the right to prohibit others from speaking about, or referring to, them. Making money off of them is another issue, but let's not let the lawyers curb free speech so easily.

"Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first."
--Ronald Reagan

"It is impossible to travel faster than the speed of light, and certainly not desirable, as one's hat keeps blowing off."
--Woody Allen (1935 - )

"Science has proof without any certainty. Creationists have certainty without any proof."
--Ashley Montague

From The Quotations Page.

A brilliant computer scientist named Stephen Wolfram has just emerged from 10 years of reclusion to make the bold claim that he has discovered "A New Kind of Science" in a book by that name. I haven't read the book yet, but have read this review in The Economist. The crux of the argument seems to be that the world is best described by computational models, rather than the mathematical formulas that we grew up learning about in physics class. While there may be something in this, The Economist contends that Wolfram's weakness is his insistence that this new model explains and applies to absolutely everything. Wolfram's argument is appealing at a certain level because it would explain how the complexity of the universe can be explained through simple rules--and not unknowable intelligent design.

But I wonder why Wolfram's rule-based view of the universe is incompatible with the equation based view. Many equations (such as that for gravity) explain behavior, but not necessarily the mechanics of that behavior (we are not quote sure how gravity works, but we know how it behaves.) Is it possible both approaches are simply two ways of analyzing the same phenomena? I guess I'll have to read the book. If you've read it, please comment on it. Anyone want to champion this for the book club? if so, I'll do my best to get Wolfram out here to speak to us.

Excerpts from The Economist's review:

At its heart is the notion of modelling physical phenomena in terms of simple computer programs, rather than complicated mathematical equations. Mr Wolfram unashamedly compares the potential impact of his work to that of Sir Isaac Newton's “Principia Mathematica”, and suggests that his discoveries can answer long-standing puzzles in mathematics, physics, biology and philosophy, from the fundamental laws of nature to the question of free will....

WSJ's editorial today accuses the Democrats of being in the pockets of the trial lawyer lobby, and it's hard to disagree with them. Their recommendation at the end that Bush needs to give a tort reform speech is right on--since it is America's number one domestic problem. Excerpts:

Either he's a good actor or Mitch McConnell was genuinely amazed by the way the trial-lawyer lobby dictated terms to Senate Democrats on this week's terrorism insurance vote.

"I've been here 18 years and I can say with total confidence that there's no special interest that completely owns, lock stock, the Republican conference," the GOP Senator told us yesterday. "But, by golly, I think the Democrats in the Senate are a wholly owned subsidiary of ATLA [the Association of Trial Lawyers of America]. They ought to be embarrassed."

Two interesting columns on supply-side economics and some of the history and politics behind it. Not what you might think...
Jude Wanniski reminds us that JFK was more of a supply-sider than Barry Goldwater! And Larry Kudlow looks back at Smith, Schumpeter and Say.

Walter Williams' column today is a good refresher on how "Self-interest is the human motivation that is most trustworthy and predictable, and gets the most wonderful things done." Worth reading for the famous quotes from Adam Smith.

In 1776, Adam Smith -- the acknowledged father of economics -- published "An Inquiry into the Nature and Causes of the Wealth of Nations." In it, he eloquently captures the essence of this wonderfulness, saying: "He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. .. . He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain."

Smith continues: "He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. ... It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest."

Thanks to Auren Hoffman for noting this piece in the SJ Merc on how Bill Simon is trying to flank Gray Davis on environmental issues--specifically by calling for an end to off-shore drilling and proposing a $1 billion bond for urban playgrounds and parks. Can Simon pick up some swing votes? I doubt he'll convert many environmentalists but may successfully defuse this issue for many fence-sitters.

By the way, check out Auren's latest Summation Push.

Some herbal dietary supplements, such as those containing ephedra, have been killing people and leaving many others with severe disabilities from stroke. Yet botanicals are virtually exempt from FDA oversight. Henry Miller, a Hoover Institution senior research fellow and former official with the Food and Drug Administration, makes the case in USA Today that it would be a disaster for the industry to wait until political and public outrage compels the FDA to step in. Rather, the industry should move to a voluntary system of oversight and private certification. This would inform and protect consumers and avoid the hugely expensive and time-consuming FDA approval process.

And for more from Henry Miller on how FDA regulations costs lives, read this piece in the Washington Times. Its conclusion:

The bottom line is that regulators make decisions defensively — in other words, to avoid approvals of harmful products at any cost — so they tend to delay or reject new products of all sorts, from fat substitutes to vaccines and painkillers. That's bad for public health and for consumers' freedom to choose. Americans are, literally, dying for better regulation.

A public health disaster seems inevitable. Historically, society overreacts to such occurrences. Congress would likely reclassify botanicals as drugs in response to the ensuing public outcry.

That would be calamitous for supplement manufacturers: Development, testing and FDA marketing approval of the average new drug takes 12 to 15 years and costs upward of $800 million. Reclassifying botanicals as drugs would effectively spell the demise of the goose that is laying multibillion-dollar eggs, and the end of consumers' access to a wide array of non-traditional medicines.

The news from the telecom sector just gets worse and worse. Is it time for the Darwinian approach? Let's get it over with. Read this piece in today's NY Times. Excerpts:

News over the weekend that Joseph P. Nacchio was leaving the beleaguered telecommunications company Qwest Communications International and that the fiber optic carrier XO Communications would file for bankruptcy protection came in the wake of more bad news from two more established players. Lucent Technologies, the large maker of communications equipment, said last week that its sales would decline much more than expected, about 15 percent this quarter, as its main corporate customers reduce spending. Sprint, meanwhile, had its debt rating lowered to a notch above junk status as it said it would sign up fewer wireless customers.

This confluence of negative news, combined with the languishing bankruptcy proceedings of Global Crossing and persistent concern over giants like WorldCom, have prompted some analysts to forecast a more severe crisis in the industry, which has already endured the erasing of an estimated $2 trillion in the market value of its constituent companies since the telecommunications slump began about two years ago. ...

Some analysts are now calling for a Darwinian approach, letting many companies fail as quickly as possible without buyers' bailing them out at fire-sale prices. Such an outcome might improve the prospects for the companies still standing.

"Let the ailing networks rot, let them mothball," said Gabriel Lowy, an analyst at Crédit Lyonnais Securities. "We now know that the Internet and data traffic were overhyped. It's now time to sort out the survivors so the recovery takes a few years instead of many years."

North Dakota has voted to require financial institutions seek affirmative permission from customers (opt-in) before sharing their personal information, which can include details such as their bank balances, withdrawals and deposits, and who they have written checks to (see this press release from the ACLU congratulating the voters of North Dakota). Sounds good, but the question is whose information is it? It is not clear why a piece of information created as the result of a transaction freely entered into between two parties should be the sole property of only one party. It is also not clear that, despite this vote, consumers universally want an opt-in policy. The income from selling data may translate into lower banking fees, and some consumers might prefer that trade off. With a forced opt-in policy, that choice may not be available to North Dakotans. Also, I wonder what this will do to other banks doing business in the state and what other states, and industries, might be targeted next.

While I tend to soften a bit when it comes to privacy laws regarding financial and medical information (because the information is so sensitive and the choice is not whether or not to provide the information, but to whom), I still think that it is a mistake for the state to dictate such a policy. But let North Dakota be the experiment!

Can anyone give me a moral justification for the death tax? The idea that after paying substantial taxes on your earnings to the government for your entire life you have to surrender potentially more than half of what is left over when you die to the government, instead of to your children, has always been appalling to me. I view this double taxation (or triple taxation if my income came from corporate profits, which are taxed) as simply immoral.

Lady Margeret Thatcher urges us to rise to the challenge and Robert Bartley, editor of WSJ, holds that we have the moral authority to do so. From Thatcher's piece:

Proliferation of WMD offers far more menacing risks when those weapons are in the hands of the West's sworn enemies. We have to assume that if those who hate us are confident that they can threaten us or our allies by this means they will do so. The threat alone could transform the West's ability to intervene in order to protect its interests or to undertake humanitarian missions. In some cases we must expect the rogue states to try to go beyond mere threat.

An important column by David Horowitz that shows that universities celebrate diversity in everything but thought. The liberal monolith in higher education is shocking and shameful--and showing no signs of changing. Consider these stats on the party affiliations of professors whose affiliation could be determined:

• University of Colorado, 94% are Democrats
• Brown University, 94.7% are Democrats
• University of New Mexico, 89% are Democrats
• University of California, Santa Barbara, 97% are Democrats
• University of California, Berkeley, 85% are Democrats
• University of California, Los Angeles, 93% are Democrats
• University of North Carolina, 91% are Democrats

And often the non-Democratic professors are Greens, not Republicans. This may understate the amount of Republicans since many conservatives are probably in the closet, but when you look at the departments it is striking that very few, if any, Republican professors can be found in the history and political science departments. Worse, there is clear intellectual discrimination against conservatives. Excerpts from Horowitz's piece:

Diggins’ observation provides the template for what has happened to American universities in the last thirty years. The liberal academy of the 1950s and 1960s, whose ideals were shaped by Charles Eliot and Matthew Arnold and whose mission was "the disinterested pursuit of knowledge" is no more. Leftists tenured after the 1960s first transformed these institutions into political battlegrounds and then redefined them as "agencies of social change." In the process, they first defeated and then excluded peers whom they perceived as obstacles to their politicized academic agendas. ...

UCLA law professor Eugene Volokh wrote an interesting piece on the Fourth Amendment and terrorism. He argues that although the courts have ruled that infrared thermal imagers cannot be used to scan a person's home without a warrant (i.e., to find Marijuana lamps), police should be allowed to use Geiger counters to find hidden nuclear weapons inside a home.

A State Department official accues the media of treason--or at least of lacking common sense. The first amendment problems with his solution, cited below, are clear but there is another issue. Government can't be the only entity to protect us from terrorism. Individual (and corporate) responsibility should play a role as well. Prohibiting the press from stories that reveal our weaknesses would damage the ability of informed citizens to take actions that could protect themselves and others. Loopholes in airport security? I want to know that when I make a decision to fly or not.

The president and Congress should pass laws temporarily restricting the media from publishing any security information that can be used by our enemies.This was necessary during World War II, it is necessary now. These restrictions were backed by the American public during World War II, and I believe the public would support them now.

A column by Pat Buchanan today on the 30th anniversary of Watergate. Interesting both in its spin and because there are those that think Buchanan was Deep Throat. Excerpts:

Instead of throwing his old friend John Mitchell to the wolves when Mitchell's aides got caught filching papers from the Democratic National Committee, Nixon let White House aides attempt to contain the scandal.

Like FDR, JFK and LBJ, he crossed the line. But where they had been protected by Democratic Congresses and their media allies, Congress and the media seized on Watergate and colluded to destroy a president who had defeated them and taken the country completely away from them.

Praise for Jerry Brown from George Will, and well deserved. Excerpts:

Brown has disdain for "the resistance to change'' on the part of people and factions that fancy themselves "change elements.'' So he is encouraging parents to prod the public education bureaucracy by organizing charter schools. That is, he thinks, one way to improve the abysmal performance of Oakland's public schools, where only about 1,600 of 4,000 ninth-graders will graduate from high school, and only 400 of the 4,000 will even take the courses required for applying to the University of California system. "If I could make it residential, I would,'' says Brown, whose next project, coming in September, is a similarly elite school for the arts. ...

Ronald Reagan once said that an economist is someone who sees something working in practice and wonders if it will work in theory. Brown, who entered California's governorship when Reagan left it, has shed a lot of theory en route to his current happy immersion in urban practicalities.

Not a good week for names: Loudcloud abandons the service model and becomes a boring enterprise software company with a boring name: Opsware. Press release.

New research from Ipsos-Reid suggests that that music file sharing actually helps boost CD sales and reinforces the notion that the music cartel's refusal to accept the Napsters of the world as anything but pirates will only hurt them in the end. Sure cartels work to protect the status quo and fear technologically inspired-innovation, but the music industry's lame attempts to do it themselves with MusicNet and Pressplay are only wasting their time and delaying a business opportunity. Wired News reports.

I never thought I'd be referencing the SF Bay Guardian, but this piece actually gets the wireless network issue half-right (and half wrong.) While it's full of a bunch of nonsense about how the Internet was once free (there's no such thing as a free lunch!), broadband providers are "robber barons" and monopolies (how many "monopolies" do there need to be in an industry before they stop being “monopolies”?) and if only the city could regulate broadband our problems will be solved, etc., it is right to point out that wireless community networks are important developments.

Right now, if I were to share my 802.11b network with my neighbor it would probably be theft according to my contract with my DSL provider. I believe Covad is the only provider that lets customers share bandwidth this way. While I believe the companies ought to be able to sell me broadband services under whatever terms they choose (and I choose, as a customer), I think it is a mistake to ban this type of bandwidth sharing. Instead of looking at this as piracy, as the music cartel did with Napster, broadband providers should look at this as a great way to hook customers onto broadband service. Broadband needs customers, and any way they can get them will probably be good business in the end. These wireless community networks are what people want, can grow organically, and will help create a critical mass for the development of the sorely needed "killer apps." Rather than discouraging these networks, providers should be encouraging them and figuring out pricing mechanisms (such as per bit) that will pay off for them in the long run.

Moving Social Security from an inherently flawed system of entitlements to sustainable personal assets is a big idea. Certainly there are issues getting us from here to there, but let's get to figuring out how to manage this transition which must, in the end, take place.

According to June O'Neill, former Congressional Budget Office director, public discussion about Social Security that centers on "lock boxes" or whether the Social Security trust fund is being "raided" is irrelevant. Worrying about the size of the trust fund is misguided. Social Security's real problem is that it is a pay-as-you-go program, which draws on the taxes of current workers to pay benefits for current retirees.

An argument IN FAVOR of railroad subsidies and Sen. Fritz Hollings' "National Defense Rail Act" from... none other than William F. Buckley, Jr.! The railroads are heavily subsidized--but then again so is most major transportation. Excerpt:

The plan of Sen. Hollings is significantly to improve and to increase the availability of railroads, and he needs to justify doing this, at a cost of more than $5 billion per year, by persuading Congress and the public that however uneven the usufructs of rail travel to different parts of America, a national endowment is economically defensible, culturally desirable, and tangentially useful to the common defense.

Bugs gets politically correct: the bunny lobby is growing more powerful as it topples a shockingly insensitive Suburu ad campaign. Guess it's duck season.

Looks like the Democrats are trying to take the war on terrorism issue off the table this November by being as hawkish on Iraq as the Republicans. Too bad for Saddam it's an election year. Read this piece in the Washington Post. Excerpt:

WASHINGTON –– Prominent Democrats in Congress called Sunday for removing Saddam Hussein from power, endorsing a classified Bush administration plan that gives the CIA broader power to take action against the Iraqi leader.

The administration "is trying to bring about a change in regime. ... I think it is an appropriate action to take," said House Minority Leader Dick Gephardt, D-Mo., appearing on ABC's "This Week."

Talk about creative accounting, PriceWaterhouseCoopers has changed its name to "Monday." No this isn't a joke. Just what an accounting firm needs to do to spice things up: name themselves after the least appealing day of the week. But wait--their ad campaign will fix it. Check out the slogan: "Monday is a fresh start, a positive attitude, part of everyone's life." Gee, now I LOVE Mondays! And I love accountants too! Thanks PWC!

In another "biggest win in U.S. men's soccer history" the US World Cup team beat Mexico 2-0--catapulting them into the quarterfinals. Powerhouses Argentina, Portugal and defending champion France already have been eliminated, while upstarts such as the United States, Senegal and co-hosts South Korea and Japan are alive. Next up: Germany. Bring it on!

ESPN has the details.

Latest posts from R21:

Conventional wisdom says the CA governor's race is Grey Davis' to lose, but conventional wisdom said it was Richard Riordon's to lose too. Newsweek points out that this dark horse is galloping--and gaining ground, not losing it as many expected. Can Bill Simon, who's never held political office and trails Davis in fundraising, do it again and upset the countries first "coin-operated" governor? “There are times it’s good to have an outsider,” Simon told NEWSWEEK. “I’ve had the kind of experience where you sign the front of the check instead of the back.”

By voting against school choice, politicians are only denying privileges to the poor--for the rich can afford to "choose" schools by paying for private schools or moving to better public school districts--and are being hypocritical as well:

SCHOOL-CHOICE DOUBLE STANDARD ON CAPITOL HILL

Many senators and representatives who oppose school-choice for other people send their own children to private schools, a new study by the Heritage Foundation points out.

Jonah Goldberg argues that indeed the "dirty bomber" Jose Padilla's rights are being violated--and yet that is still legal. But Slate's Dahlia Lithwick argues that while the national security issues are real, we need some consistency on how we treat potential terrorists--perhaps a bureau of pre-crime? Excerpt from Goldberg (Lithwick excerpted below):

Remember, your rights are "unalienable," according to the Declaration of Independence, which means the government cannot take them away from you. Ever. The sound-bite cliché that criminals "forfeit" their rights frames the issue improperly. Criminals don't "give up" their rights. The State determines that their rights can be ignored.

Forget criminals. Every single day the government decides when and where it is appropriate to infringe on the rights of law-abiding citizens. We're searched at airports, court houses and high schools without probable cause all the time. We can't shout "fire" in movie theaters and we can't hold rallies inside high-security installations.

Three examples of what I feel is America's biggest domestic problem: tort law abuses.

First, fat from asbestos and tobacco, will the trial lawyers target "big food" next? After all, obesity kills. Lawsuits may have less success with food than tobacco, but the costs of the industry defending itself will surely show up in food prices.
Second, how skyrocketing malpractice insurance costs have created a statewide healthcare crises in West Virginia.
Third, 401(k)s have been poor performers because employers can't risk the liablity associated with giving their employees good financial advice. How many Enron employees wouldn't have lost their life savings if the company had been able to give rudimentary investment guidance?

Read summaries of these issues from NCPA:

More boring but true stories about new technologies (see the post on used books). This time from Sf Gate:

...the budding nanotech industry is making important progress in several other seemingly prosaic but nonetheless useful areas, such as perfecting new cosmetics, smaller batteries, better lightbulbs and more effective pharmaceuticals. The first of these products are expected to hit the market over the next few years.

The Economist discourses on the issue of trust and the three key issues of: "the role of the research that is published by investment banks; ... the way in which shares in IPOs are allocated; and ... the use of accounting rules to mislead investors."

The issue of integrity to the system is a vital one and the question of what new rules and regulations should be added must be addressed. But it is important that, just as we need to consider the civil liberties issues when addressing national security, we consider the unintended consequences from regulation, the long-term impact on business, investors, and consumers, and avoid a "slippery slope." As well, business and finance have not been lightly regulated industries--the problem has been in many cases the credulity of the investors and the absence of critical thinking. No matter what laws and regulations are put in place, there will always be fraud--just as there will always be bank robbers, despite laws against it--and the effort to create a flawless system (an impossibility) can become counter-productive by creating a moral hazard. Excerpts from The Economist:

As for better corporate governance, the NYSE's new rules are a step in the right direction. Much will depend on how committed the exchange is to ensuring that the rules are honoured in the spirit as well as by the letter. Greater independence of non-executive board directors is certainly desirable. Too many American bosses fill their boardrooms with yes-men who have neither the character nor the financial incentive to challenge the boss's grandiloquence. Ultimately, however, governance is unlikely to improve much until the institutions that own large chunks of corporate America start acting as real owners, by keeping a sharper eye on their boards and their management.

The Bush Doctrine of preemptive strikes may be the most dramatic shift in US foreign policy since WWII. Loren Thompson opines:

...now the real Bush Doctrine has begun to emerge, and it looks like the biggest shift in strategic thinking in two generations. The dominant military concept of the Cold War years -- deterrence -- is being demoted as the administration searches for more dependable ways of dealing with new dangers. And the durable doctrine of containment is being abandoned almost entirely, because it is ill-suited to a world of borderless economies and stateless aggressors.

I'm a "deep linker," so am I a thief? Or is linking protected speech? SiliconValley.Com raises an issue that I thought was settled but apparently is raising its ugly head again.

Nicolai Lassen considers linking such a fundamental element of the World Wide Web that he sees nothing wrong with creating a service around linking to news articles at more than 3,000 other sites.

Danish publishers, however, equate such linking with stealing -- and have gone to court to stop it.

BusinessWeek takes an in-depth look at Linux. We are entering the market phase--a bit brutal, a bit boring and overall: businesslike.

A lot has changed for Linux in the past two years. True, the basic tenets of the rebellious open-source software-development movement popularized by coder Linus Torvalds remain largely intact. Loosely organized collectives, often from competing companies, collaborate to build software products that no one owns, with source code that anyone can view and alter. Any changes in the code are held by the community at larg