History Lesson

The newspapers shout a new style is growing,
but it don’t know if it’s coming or going,
there is fashion, there is fad
some is good, some is bad
and the joke is rather sad,
that it’s all just a little bit of history repeating

— the Propellerheads “History Repeating

This week’s featured articles are “More Than Just Affirmative Action” and “Cliven Bundy and the Klan Komplex“. Both topics sent me back to study the 19th century.

This week everybody was talking about affirmative action

The Court upheld an amendment to the Michigan Constitution that banned all forms of affirmative action. What I find more disturbing than the outcome is the basis on which it was decided: The Court has made the Political Process doctrine virtually unusable, which consigns the rights of minorities to the tender mercies of the majority.

and a 700-page economics book

Who knew that a tome like Thomas Piketty’s Capital in the 21st Century could become such a popular phenomenon. (Amazon is said to have temporarily run out of copies.) That doesn’t necessarily translate into people reading it — I haven’t finished my copy yet — but it does point to a popular hunger for a liberal economics that can make sense out of the growing inequality we’re seeing.

Conservatives are freaking and saying the words “Marxist” and “Soviet” a lot. But you have to wonder whether Red Scare techniques are still effective at a time when 20-somethings have no memories of the Soviet Union and China is more worrisome as a capitalist competitor than it was during the Cultural Revolution.

Paul Krugman sees “The Piketty Panic” as evidence that the Right is out of ideas. They could try to point out what Piketty has gotten wrong about the increasing significance of inherited capital, but “so far, I’ve seen no sign of that happening. Instead, as I said, it has been all about name-calling.”

and net neutrality

The FCC seems to be ready to surrender the net neutrality principle to Comcast, Verizon, and the other big internet providers. The ISPs will be able to leverage more revenue out of their networks by charging some content providers more to get their content delivered faster and more reliably. Reportedly, the new rules won’t allow an ISP to block a site completely or use its new power in an “anti-competitive” way (say, by giving Comcast’s own movie-download service preferred access). But even if the most obvious forms of hostage-taking aren’t allowed, the internet-as-we-know-it will be drastically changed. The Electronic Frontier Foundation commented:

This kind of “pay to play” model would be profoundly dangerous for competition.  New innovators often cannot afford to pay to reach consumers at the same speeds as well-established web companies. That means ISPs could effectively become gatekeepers to their subscribers.

Again, the new rules reportedly won’t allow an ISP to slow down the internet for a company that it doesn’t like. But in a technological environment where constant improvement is the norm, they don’t have to. They can put a content company at a relative disadvantage just by offering improved service to its competitors. In a competitive technological environment, constant improvement is just part of the competition. But the ISPs seek an environment in which someone will have to pay for every advance.

The overall problem here is the one I talked about in my review of Barry Lynn’s “Cornered”.

The purest form of market is what you can see at any big farmer’s market: Lots of consumers dealing directly with lots of producers. … But markets can also be structured to give middlemen as much freedom as possible. The most profitable way to use that freedom is to create choke-points where a toll can be extracted or one producer can be played off against another. In an opaque market, the way to get rich is not to produce things, but to build middleman power that allows you to dictate terms up and down the supply chain. (I don’t have space to go into it here, but keeping the internet transparent is what net neutrality is about, and why Comcast doesn’t like it.)

Comcast (even more so if its merger with Time Warner Cable goes through) has been creating an artificial choke point between consumers and content creators. Getting rid of net neutrality lets it set up a toll booth there. The plan is for the toll to be paid by producers rather than consumers, but in the bigger picture that doesn’t matter. Nothing is being produced at that toll booth; it’s just a parasite sucking blood out of the economy.

and old white guys behaving badly

So Cliven Bundy turns out to be a racist. I discuss why this should have surprised no one in “Cliven Bundy and the Klan Komplex“.

Matt Yglesias made a point about Bundy that extends what I said last week:

From day one, I’ve tried to imagine the reaction if a young black man living in my gentrifying neighborhood reacted to some adverse change in government policy — perhaps funding cuts led a bus line in the neighborhood to get shut down — by stealing a bus. Then when the cops come to take the bus back, he brings out fifty friends, some of them armed, and starts talking about putting the women out front so they’ll be shot first. My overwhelming presupposition is that he’d end up shot dead, along with his armed buddies, and that would about be the end of it. There would be no partisan political controversy about whether or not it is appropriate to react to changes in WMATA’s route planning with violence.

You may want the government to provide excellent bus service to where you live, but in life you can’t always get what you want.

Bundy’s supporters have tried to make the Bureau of Land Management the issue: They’re out of control, unresponsive; the political process has failed, etc. But as far as I can see, Bundy’s problem isn’t that the political process failed, it’s just that he lost (until his buddies with guns showed up).

One of the background assumptions of the militia movement that has come to Bundy’s aid is that there are “real Americans”, i.e. white Christian conservatives, who deserve to win the political process. When they lose, the process has failed and they are justified in resorting to violence.

Jonathan Korman explains that such a process has a name:

There is a name for a “populist” movement by an armed minority which attacks the legitimacy of liberal democratic institutions in the name of the nation’s “true spirit” which must be rescued from the corrupting influence of lesser races through acts of redemptive violence. It is not “civil disobedience”. It is something else.

Conservatives have tried to abuse the word fascism to the point that it stops meaning anything. But this is a meaning that Hitler, Mussolini, Franco, and their followers would all recognize.

In other white-guys-behaving-badly news, an argument L. A. Clippers owner Donald Sterling had with his mixed-race girl friend (he’s separated from his wife) was caught on tape and published by TMZ. He tells her not to bring Magic Johnson — or any other black people — to Clippers games or post pictures of them on Istagram.

This is a huge problem for Sterling and the NBA, where black players are the majority. It also raises the issues I covered a few weeks ago in “Who Should Be Beyond the Pale?” My rules of thumb are split. On the one hand, Sterling was ferreted out as a racist rather than promoting his views to the public. On the other, it’s hard to imagine a good person saying what he said.

It looks to me like he’s going to have to sell the team. I can’t imagine a black free agent choosing to come to the Clippers while he’s the owner, so he’s putting the team at a competitive disadvantage.

and you also might be interested in …

If you’ve ever used Verizon Wireless’ “My Verizon” web site, you should read this. They’re tracking not just what you do on their network, but everything you do on every computer or device that has visited “My Verizon”.

Remember how (when it was trying to restore its public image) BP was going to compensate the people hurt by the Deep Horizon oil spill and help restore the Gulf Coast to its former condition? Well, that was then.

I try not to give Sarah Palin the attention she begs for so desperately, but sometimes I just can’t help myself. Saturday at an NRA rally, Palin said “If I were in charge, [America’s enemies] would know that waterboarding is how we baptize terrorists.” Imagine how she’d react if a liberal blasphemed against a sacred Christian ritual like that.

and let’s end with something amazing

A Calgary guy lies on top of a beaver lodge and films the beavers repairing the lodge. The adults ignore him, but the baby gets scared.

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  • John McClain  On May 3, 2014 at 2:38 pm

    “The plan is for the toll to be paid by producers rather than consumers, but in the bigger picture that doesn’t matter. Nothing is being produced at that toll booth; it’s just a parasite sucking blood out of the economy.” To be fair to Comcast, they are providing value. Building, maintaining, and operating the cable plant costs real money and takes real expertise. We can argue about how much and how they should be compensated for it, and wether putting key infrastructure in private hands makes sense, but to cast Comcast as pure a parasite isn’t fair.

    Extending the highway analogy…lets say UPS (read Netflix) builds a distribution center next to the highway, but 5 miles from the nearest on-ramp, and as a result has trouble getting its trucks out on time each morning. Building a new on-ramp would solve their problem, but who should pay for it? A lot of us might decide that UPS should pay for (at least) part of it. I view “peering” arraignments (like the one Netflix made with Comcast a few weeks ago) in a similar light.

    Now lets say the road outside my house really bad, bad enough that only one devilry truck can come down my street a day. If both FedEx and UPS want to delver a package the same day one of them loses (or worse they both try, they both lose, and (quite possibly) I can’t get to work that morning either). There are four ways things could play out.

    1] Everyone on the street decides to live with it
    2] We pass a tax override and improve the street to support the offered traffic
    3] UPS cuts a deal with the town giving it priority access, town use the money
    to improve the roads, UPS pass on the fees it pays to the town to me.
    4] UPS cuts a deal with the town giving it priority access, town pockets the money,
    UPS passes on the fees it pays to the town to me, FedEx ends up cutting
    same deal, the upstart “Bob Quick Delivery” never gets started, and the
    completely new services that want to use the road outside my house are
    also stopped before they start.

    In my mind net neutrally is about limiting the possible solutions to 1] and 2]. I am willing to give up the possibility of 3] in order to avoid 4].

    Of course all of this would matter a lot less if there was either real competition for the “last mile” or the last mile was actually owned by its users (e.g. municipal ownership or co-ops).

    • weeklysift  On May 4, 2014 at 8:22 am

      My argument isn’t that Comcast is a parasite, but that the toll booth is a parasite. Comcast already makes money by selling internet access. There’s no reason to believe that the increased money it makes from collecting tolls on Netflix will go anywhere other than to executive salaries and stockholder dividends. Why would it?

      In a competitive market for technology — personal computers, for example — improvements happen without increased revenue. In a non-competitive market, every improvement must be paid for with higher prices.

      The clearest example of the latter is the conversion from vinyl records to CDs. CDs were actually cheaper to make, so in a competitive market consumers would have gotten both better sound and lower prices. But because the music business was an oligopoly, CDs were priced higher than vinyl.

      • John McClain  On May 4, 2014 at 1:26 pm

        Ok, I understand better what you are getting at now. Do we want to let Comcast setup a new toil both on a road that is already paid for (by the existing toils)? What’s worse is that a likely outcome is the ‘value’ associated with the new tolls will likely be ‘created’ by making the existing road work less well for its current users (it doesn’t have to be that way, but…).

        I am not sure the records -> CD analogy works for me. There are lots of reasons to hate the big record companies and I am sure part of the lack of price drop is due to a lack of competition, however, CDs delivered a lot more value than records and (as I understand it) the manufacturing costs of the disks themselves is not the dominate determent of album price (for both good and bad reasons). More generally, cost, price, and value are not particularly strongly linked. Assuming that cheaper costs *should* lead to a lower price for a higher value good is a bit like assuming that higher minimum wage should result in fewer jobs. The price of a worker is only loosely constrained by their value to the employer.

      • weeklysift  On May 5, 2014 at 7:18 am

        I think we’re getting close to agreement. The point I’m trying to make with the CD example is that a viable price for something can be anywhere between its cost to the producer and its value to the consumer. As long as the producer can charge more than his costs, and the consumer will pay it, you have a viable market.

        In a competitive market, the producer cost will be the more important driver of price, while in a non-competitive market consumer value will be. CDs and computer memory chips were both examples where consumer value went up while producer cost was going down. In the competitive computer market, producer cost drove the market, while in the oligopoly of recorded music, consumer value did.

        As the ISPs’ ability to stand between content-producers and content-consumers grows, both sides of the market will increasingly work to their advantage. They’ll be able to raise their prices as consumer value increases, while sticking content-creators with prices close to the cost of production. So any technological improvement will go straight to the ISPs’ bottom line, with minimal advantage to producers and consumers.

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