Tuesday, March 31, 2009

Calling the Shot - Halfway there

Yesterday I posted about the Wagoner firing being a smokescreen--a bit of PR to throw a scapegoat before an angry mob weary of bailouts.
Here are the options:

Option 1) GM can build more inexpensive fuel-efficient green cars
Option 2) GM can preserve UAW jobs, contracts, and legacy commitments
Option 3) GM can be profitable

Pick two.

The math doesn't work out any other way. It is an impossibility.

Analysis:

Option #1 is pretty much a given under the current administration and Congress. CAFE standards and a near religious-like zealousness amongst the Democratic party base has pretty much settled this issue.

I failed to state that, even though wildly improbable, my preferred method of dealing with this is that we back off the environmental jihad, and let American car companies make cars Americans want and turn a profit. However, GM building more fuel-efficient cars is a federal mandate, because anthropogenic climate change is for all intents and purposes a secular religion, and not to be questioned.

The American auto companies, saddled with higher labor costs and legacy costs compared to overseas competitors, were only staying afloat because of the higher profit margins on vans, full-size trucks, and SUVs--exactly the kinds of things that ever more stringent federal environmental controls make it harder and more costly to produce. In turn, this eats away the profit margins on those vehicles, leaving U.S. auto manufacturers no choice but to cut labor rates to be competitive in the small-car market (sacrificing option #2, above). Caught between a rock (CAFE standards) and a hard place (the UAW), they can sacrifice neither option #1 or #2, both deemed sacred by the current administration and congress.

Alas, GM has to surrender any hope for option #3 (turning a profit).

Michael G. Franc points out that the smokescreen obscured even more than I originally thought. On the same day that Wagoner was fired by the President stepped down from GM, a DOT press release stated:
U.S. Secretary of Transportation Ray LaHood announced today that the Department of Transportation has posted the new fuel economy standards for cars and light trucks for the 2011 model year…
Yep. Looks like a pretty safe bet that the government won't ease up fuel efficiency standards. The Detroit News goes on to report:
Stricter fuel economy standards… for the 2011 model year will cost struggling auto companies nearly $1.5 billion and boost the cost of passenger vehicles an average of $64 for cars and $126 for light trucks.
Will you recoup those costs in fuel savings over time? See my next post.

#UPDATE#
Ok, see "a future post". Not my "next post". I'm still hammering this one out. -ER

Monday, March 30, 2009

Calling the Shot...

Today the newspapers were free in Detroit. Not on the web, I mean free. Paper.

They picked a helluva day to give away papers. Everyone had one in their hand today. The big red letters jumped off the page:
U.S. SHREDS AUTO PLANS
I have to agree with James Lileks who sent this out on Twitter today:
Maybe I’m old-school, but “President fires CEO” looks as wrong as “Pope fires Missile.” Does not compute.
The President has warned that filing bankruptcy may be necessary for GM and Chrysler, but I think this is just hot air, at least as far as GM is concerned. I mentioned that a Green American auto market is a pipe dream back in 2008 before the first bailouts, but I'll sum it up here.

Here are the options:

Option 1) GM can build more inexpensive fuel-efficient green cars
Option 2) GM can preserve UAW jobs, contracts, and legacy commitments
Option 3) GM can be profitable

Pick two.

The math doesn't work out any other way. It is an impossibility.

Analysis:

Option #1 is pretty much a given under the current administration and Congress. CAFE standards and a near religious-like zealousness amongst the Democratic party base has pretty much settled this issue. So it largely comes down to a choice between Option #2 and Option #3. That choice is between continued bailouts of GM, or GM filing bankruptcy and shredding its union and dealer contracts (mostly union).

Anyone here think that given the choice between 1) destroying one of the nation's largest unions or 2) shelling out taxpayer money to prop up a failing business, President Obama will choose to let the UAW go down? I didn't think so.

The dismissal of Rick Wagoner is just a distraction. The Obama Administration needed a head on a pike to show to the bailout-weary masses. They had to talk tough with threats of bankruptcy to sound credible. What they did was shovel $6 billion more dollars into GM, and throw a sacrificial lamb to the angry mob. This bought them another 60 days, during which time they hope that some of the bailout/stimulus/TARP/TALF/TARPII/Geithner-printing-a-trillion-dollars-quantitative-easing fatigue dissipates, and the mob gets tired of toting those pitchforks and torches around.

At which time, they will trot out a restructuring plan that looks a whole lot like the one they have on hand, tell us all that it's a lot better now, and fork over more taxpayer money to GM. All without having done anything that will allow GM to emerge from this as a competent, competitive corporation.

I don't like the options any more than you do. I *live* in this town. I know a lot of UAW workers. Just about everybody I know is bound to the auto companies in some way. Dear friends are out of work. Many more have moved away. To say that these people are "hurting" right now is a shameful understatement. But in the long run, setting up GM as a permanent ward of the state is not a viable option. I'd like to believe that Chapter 13 restructuring is really on the table, and that *some* of the American auto industry and its jobs may be preserved, but I can't really believe it.

The current administration will instead put GM on life support, injecting wasted bailout after wasted bailout, until the voters demand that they pull the plug. Who knows how many billions of dollars on down the road that will be, and what kind of irreversible damage will be done by then to the American auto industry.

Thursday, March 26, 2009

Smash the Collective!

It's one thing for Daniel Hannan to have done it.

It's another thing for him to realize that he had done it.

It's yet another thing for him to realize what it means that he had done it.

And it is icing on the cake that he did it with an assault on state-controlled economies.



He managed hurl a single well placed stone, and put a crack in collectivist notions of media, politics, and economy with just one shot. A British libertarian hurling well-pointed words at the Prime Minister may not be common, but it's not earth-shattering either. What's amazing is that it ginned up enough interest on the Internet that I've seen it on just about every news program tonight all the way over here on the other side of the Atlantic. Left to their own devices, the European press would never have covered it, let alone the American press. But, as Hannan writes in his blog today:
When I woke up this morning, my phone was clogged with texts, my email inbox with messages. Overnight, the YouTube clip of my remarks had attracted over 36,000 hits. By today, it was the most watched video in Britain.

How did it happen, in the absence of any media coverage? The answer is that political reporters no longer get to decide what's news. The days when a minister gave briefings to a dozen lobby correspondents, and thereby dictated the next day's headlines, are over. Now, a thousand bloggers decide for themselves what is interesting.
As I said in one of my first posts to this blog, almost a year ago:
When someone talks about the sweeping changes that the Internet is going to bring to politics, they are usually talking about recent or near-term trends like Online voting, scandal scoops from the Blogosphere, or tapping into internet-based campaign contributions. These symptoms are certainly novel, but they are just that... symptoms. The real sea change is occurring in the populace now. We expect to have a voice, not just in the "strongly agree/somewhat disagree" opinion polls, but in shaping and driving opinion and dialogue, and in oversight of a truly transparent government.
I'm getting pretty tired of hearing of this phenomenon as being "viral". With the professional opining class becoming ever more irrelevant, and traditional media lagging behind instead of leading the public discourse, I think we can start calling the old model "stagnant" media, and stop attaching the foul connotations of the epithet "viral" to the emerging media reality. Now that our natural desire to share, produce, comment, and converse has an avenue on the Internet, the time is coming soon when social media waves like this one are no longer the exception, but the norm.

The Difference Between Consumerism and Capitalism

Listen to every word.



I couldn't have agreed more when I posted this last year.

Tuesday, March 24, 2009

All The News That's Too Big To Fail...

Sen. Banjamin Cardin introduces the newspaper bailout bill.

I said it about the banks, I said it about the car companies, and it goes double for newspapers: Capitalism without failure is like Christianity without Hell.

I have heard for the past year that capitalism has failed. What has failed is our understanding of capitalism. Investment banks shouldn't leverage themselves 40-to-1. No government oversight caught this problem. But the market did. And when it was revealed that the emperor had no clothes, the investment banks failed for their hubris and stupidity, only to be put on life support by the even greater hubris and stupidity of our government.

Every time I hear a politician talking about how there was insufficient oversight of the banking industry, I hear it as an admission that planned economies can not work. Because there can never be enough oversight in a free and dynamic market. There is too much to oversee.

The housing market was an artificial bubble for much of the past decade. So what happened? It burst. In the face of everything that the government (Republicans and Democrats alike) tried to do to continue to prop it up and inflate it, it burst. It was a lie and thanks to the market, Truth prevailed. The markets could no longer withstand the pile of lies that the bubble was built on. Once the first domino was tipped, everything built on that shaky ground came collapsing down.

When a business fails, it is the market telling it that its services are no longer necessary. Is it painful? Yes. Does it effect us in ways we do not like? Absolutely. But that doesn't mean we can continue to build on shifting sand, just because we liked the view. We must learn from failures, and build on higher ground. Businesses fail for a reason. Find the mistakes that caused that failure and correct for them. Build a better business. When your immune system kills off an infection, don't try and save the virus.

So Senator Cardin wants to save newspapers. Not journalism. Not news media. Papers.
Because newspaper profits have been falling in recent years, "no substantial loss of federal revenue" was expected under the legislation, Cardin's office said in a statement.

Anyone believe that? Does that statement even make sense?
"We are losing our newspaper industry," Cardin said. "The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy.

Newspaper subscriptions and advertising have shrunk dramatically in the past few years as Americans have turned more and more to the Internet or television for information.

The business model is broken. News is important to America, and many organizations like Politico and Slate are finding ways to support themselves with online ad revenue. As a blogger, I have a deeper vested interest in protecting good journalism more than most. But I won't take your money to do it.

More importantly, I take exception to the idea that our democracy needs a protected delivery medium to thrive. Good journalism isn't only to be found on paper. We need to realize that "news" and "paper" are separate words. A free people, making free decisions, have decided that paper is no longer the preferred delivery method for their news. So Senator Cardin proposes that we tax them to build a mandatory market, just because newspapers have become accustomed to a certain profit level that can no longer be sustained when exposed to direct competition from far more efficient online advertising.

If Cardin were in office 100 years ago, he'd probably support a tax exemption for buggy whips.

h/t K-Lo, a phrase that William never though he'd see at the tail end of one of my posts.

Rockefeller. Moron.



Jim Harper over at Cato lays out just how ridiculous Senator Jay Rockefeller's argument is. Even when the worlds best hackers take out some website like the DOJ or the CIA, it's their websites. That's like taking out their radio commercials. It's not critical infrastructure. Rest easy, the important stuff is locked safely away from the Internet freaky-freakies.

I love me my Internets, but folks, we don't build critical infrastructure onto it, nor should we. To quote Harper, quoting Tim Lee:
[S]ome mission-critical activities, including voting and banking, are carried out via the Internet in some places. But to the extent that that’s true, the lesson of the Estonian attacks isn’t that the Internet is “critical infrastructure” on par with electricity and water, but that it’s stupid to build “critical infrastructure” on top of the public Internet. There’s a reason that banks maintain dedicated infrastructure for financial transactions, that the power grid has a dedicated communications infrastructure, and that computer security experts are all but unanimous that Internet voting is a bad idea.

The internet is made for easy access to worldwide data. In all data security, there is a trade-off between sharing data, and protecting data. It is a sliding scale, and it is absolutely impossible to have it both ways. The internet is reasonably secure, but not secure enough to start risking real critical infrastructure to it. So of course, we don't. And I don't foresee us doing so at any time in the near future.

H/T James Effing Madison

Fed 44:
Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted. Very properly, therefore, have the convention added this constitutional bulwark in favor of personal security and private rights; and I am much deceived if they have not, in so doing, as faithfully consulted the genuine sentiments as the undoubted interests of their constituents. The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less informed part of the community. They have seen, too, that one legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding.


Damn. I'm not done rereading Tocqueville yet and Skanderbeg sends me scrambling for one of my 3 copies of _The Federalist Papers_. (I know that Professor Rosano is responsible for me having two of them, based on the cramped notes I have scribbled in the margins. I'm baffled by the third.)

Hat tip, Skanderbeg, and uh, yeah, 18th century blogger James Madison.

Monday, March 23, 2009

Tax the Rich!!

Tasty segment on Morning Joe today.



Believe me, if you think that a highly progressive tax on individuals or businesses is soaking the rich, you are mistaken. It's only soaking the upper-middle class and small business owners. (You know, 3/4 of the job creation in this country.)

Sure it's looks real good to the unaware electorate when they're told that the rich are being taxed more, but the truth is, they are not. The more complicated and progressive the tax code, the more loopholes the really rich can slide through.

Meanwhile, small business, now "rich" by the current administration's definition, gets lit up, because they're too busy creating jobs, wealth, product, and services to devise creative ways to avoid taxation, yet aren't big enough to lobby for a loophole or an earmark.

(More) Singing the Strong, Light Works of Engineers

Huzzah, Engineers!

I've been crudely paraphrasing Samuel C. Florman for about a decade now when it comes to mitigating man's impact on the environment: It won't be the neo-Luddites turning out lights and hugging trees that protect our environment, it will be scientists and engineers who devise the technology, and innovators who perfect it and make it affordable and desirable.

Hopefully they will grow fat and rich on the gifts that their minds make to mankind. Provided that they're not compelled to Go Galt before then.

Sunday, March 22, 2009

Cramer v. Stewart and Influence Peddling

Over on Big Hollywood, Dan Gifford puts together a nice piece about the now-fading flop between Jim Cramer and Jon Stewart. I've been a fan of both "Mad Money" and "The Daily Show" for some time now, and saw much of the brouhaha as it developed.

I couldn't figure out why Stewart would go after Santelli, when he's didn't just tee off on mortgage bailouts, but corporate bailouts as well. It's fine for Jon Stewart to call Santelli wrong, but Stewart made him out to be a hypocrite, which is patently unfair.

Then Cramer got in on the action, because Stewart's assault on Santelli had enough splash damage for all of CNBC. Like usual, Stewart's writers cherry-picked some segments from all across CNBC, and set them up out of context to look damning. It's funny, but it's not journalism. (Something Stewart will ardently agree with, when it works to his defense.) Cramer took exception, because he's been watchdogging Wall Street pretty loudly.

So Cramer goes on Stewart's show, and pretty much ties himself to the post and allows the public flogging. He's got an arsenal of evidence on his side, and he offers no defense whatsoever. I couldn't for the life of me figure out why he'd do that, and I still can't.

Gifford's piece lays out some of that evidence nicely, and so much more about the position that news organizations like CNBC are in when they have to trade influence for access (a problem facing all news organizations, not just financial ones).

Give a read.

Sunday Smackdown

I love my DVR. It lets me hit a party on Friday night, and still not miss the finale of Battlestar Galactica.

More importantly (marginally) is that my DVR solves one of the greatest problems of my life: Watching both Meet the Press, and This Week without David Brinkley.

Nonetheless, I am compelled to keep score and see which show shows up on top at the end of the year.

You can see the running tally here. Enjoy!

Saturday, March 21, 2009

The Gormogons: Followers à Gogo!

The Gormogons: Followers à Gogo!

What a kind welcome from the Gormogons! They haven't taught me the secret handshake, yet, but here's the "About Us" section of their page:
A secret society dedicated to the restoration of the Kingdom of Poland-Lithuania, the imprisonment of Esperanto speakers, and furthering the eschatological doctrine of the Return from Occultation of the Thirteenth Imam, Val Kilmer.


They're having a good time with a tournament bracket of their posts. My final four picks? Already screwed up in the first round:

Ghettoputer Region: "Canuckistan"
Ecumenical Volgi Region: "Nuclear Effing Power"
GorTechie Region: "Battlestar Galactica, New"
then, ironically, in the Czar of Muscovy Region:
"Dirk Benedict's Gonads"

Sadly, Canuckistan was struck down in the first round. :-(

Go enjoy the site. It smacks of ancient pre-HTML USENET irreverence.

Thursday, March 19, 2009

What We Need Is a Diversion...

The TV news couldn't talk about anything today aside from AIG bonuses. I could rant and rave about this, but my betters have shown themselves as such. If you want to read about why taxing the bonuses at 90% is irrational, stupid, tyrannical, and most likely unconstitutional, click here. My short answer? You'd have to give me a helluva bonus to get me to work at AIG or Fannie or Freddie. Either you want the bailout to succeed for these companies, or you don't. You can't have it both ways. (Of course, if you didn't have a government propping up failing institutions, you wouldn't have to worry about this, would you?)

Far more important, however, is this. The Fed is firing up the printing presses to the tune of 1.2 Trillion Dollars.

$1,200,000,000,000.00

We're gonna re-inflate this bubble with, well, inflation. Here's hoping that the monetary folks are right, and that it's much easier to halt inflation than it is to halt deflation.

The point is, we're not even talking about it. Congress and the mainstream media are busy handing out pitchforks and torches to go after AIG employees, instead.

Best quote of the day, from Chris Edwards over at Cato:
Aside from the dangers to liberty from overzealous members of Congress, there are issues of priorities here. While Congress has been busy with this particular inquisition, the Federal Reserve is moving ahead with a new plan to shower the economy with a massive $1.2 trillion cash infusion–an amount 7,200 times greater than the $165 million of AIG retention bonuses.

Keep your eye on the ball, people.

The Smoking Gun

This can be posted pretty much without comment, but I can't help myself:

Fannie Mae Eases Credit To Aid Mortgage Lending

Context is everything isn't it? 10 years ago in the New York Times, this is a liberal highlight of a progressive government policy serving the minority community.

Today, you could reprint it verbatim in the NRO, and it would be a damning indictment of a meddlesome government who doesn't understand the term "unintended consequences"

EPIC = Privacy Advocates, Now With Tinfoil Hats

Ryan Radia has a great post up over on the Technology Liberation Front (which is an all-around excellent site) about EPIC lobbing shots at Google.

Now, I like EPIC as much as the next libertarian-leaning privacy advocate, but this is just over-the-top:
EPIC has formally asked the Federal Trade Commission to open an investigation into Google's Cloud Computing Services -- including Gmail, Google Docs, and Picasa -- to determine "the adequacy of the privacy and security safeguards."

Google copped to the mistake, corrected it, and published the details on their official blog. EPIC's first reaction is to call for FTC regulation? *headdesk*

It's the Internet. We want reasonable control over our information, we don't want privacy to the point that we're all locked in caves, people. If the breach was so severe as to cause actual distress, then Google would face the wrath of its customers, which it isn't. Radia puts it best:
There’s no reason for the FTC to intervene every time there’s a security flub when existing liability laws combined with market pressures already give the Googles of the world a strong incentive to guard against breaches.


Security is a tremendous concern for everyone involved in cloud computing, but in the end, the only way to 100% guarantee security is to unplug a machine from the Internet. This is a bit like stopping drunk driving by getting rid of automobiles and making everyone walk.

Wednesday, March 18, 2009

Media in Crisis Reports on the Media in Crisis

RSM tipped me off to this. Go put a nickle in his tip jar.

In Sunday's Washington Post, Kathleen Parker tosses in her two cents into the echo chamber that is The Media in Crisis talking about The Media in Crisis. I could simply tee off on her, but quite frankly, my anger reserves are running low, and pity is kicking in for traditional media folks. Instead, I'll try to share the good parts, and use the bad to illustrate the common errors that Traditional Media types are making. I'm sick of generating more heat than light.

She starts with this line:
The biggest challenge facing America's struggling newspaper industry may not be the high cost of newsprint or lost ad revenue, but ignorance stoked by drive-by punditry.

No. The biggest challenge facing newspapers is two-fold:

First, one problem that their industry solved and profited from--distributing information--is no longer a problem to be solved. Paper can not compete with the Internet as a distribution medium. This part of the issue is settled and done with.

Second, in the 20th century, traditional media became trusted voices in the only media that existed. Organizations, be they broadcast news or newspapers, that violated the trust of their customers got left behind. This is why (most) journalists take the ethical responsibility of their profession so seriously. Trust matters, regardless of the method of distribution.

Parker goes on to say:
There is surely room for media criticism, and a few bad actors in recent years have badly frayed public trust. And, yes, some newspapers are more liberal than their readership and do a lousy job of concealing it.

But it isn't that trust has been violated by newspapers, so much as newspapers now must compete on nearly even footing with non-traditional media types as trsuted voices. It's not just the bloggers like me, it's everyone. We share links and videos with our friends and families on Facebook. We collectively rate content on sites like Digg and Delicious. The voices I trust are carried to me in the same RSS feed whether they are CNN, the New York Times, or the blogs of my friends. And, forgive me, but I trust some of my friends more than I trust CNN.

Christie Hefner touches on the idea of trust in media on Morning Joe:


Traditional media has to compete with everybody we know as a trusted voice. They are not ready for this competition. It's only new beginning to creep up on them like a nagging feeling. It bubbles to surface in off-handed quips about bloggers by traditional media figures, rants against "drive-by punditry" like Parker's, or the generally clueless dismissal of technologies like Facebook or Twitter. (How many times have you heard some media type on TV poke fun at this stuff, and then promptly admit that they "just don't get it".)

Parker continues:
But the greater truth is that newspaper reporters, editors and institutions are responsible for the boots-on-the-ground grub work that produces the news stories and performs the government watchdog role so crucial to a democratic republic. Unfortunately, the chorus of media bashing from certain quarters has succeeded in convincing many Americans that they don't need newspapers.

She's absolutely correct on this point. Professional journalists are the front line of defense watching over governments and corporations that may much prefer to work well away from the public eye. But it isn't "media bashing" that's convinced Americans that they don't need newspapers. We need journalists. We need real news. We need the exact kind of boots-on-the-ground reporting that she's extolling. You can keep your paper, the printing presses, the delivery trucks, and your fluff pieces. We can do all that for ourselves now.
A younger generation, meanwhile, has little understanding or appreciation of the relationship between a free press and a free society. Pew found that just 27 percent of Americans born since 1977 read a newspaper the previous day.

Parker mistakes not reading a newspaper for not reading news. Steve Boriss wrote in 2008:
Thomas Jefferson had no interest in empowering a special class, "the press," who today present themselves as superior in their abilities to ferret out, understand, and communicate the single, correct way to look at things. Instead, he wanted our news to be filled with a multitude of alternative voices and opinions competing in a freewheeling marketplace of ideas.

Sounds to me like that's what we're headed for, both a freer press and freer society, not the opposite.

For certain, we need to find a way to keep "boots-on-the-ground" journalism alive and thriving in the face of this new media, but even meager ad-supported monetization strategies could work for real journalism if they were freed from the bonds of supporting an archaic print distribution system. As for the "drive-by punditry?" We'll make, share, and link our own, thanks. Maybe this is why Kathleen Parker, and so many traditional media types, feel so threatened?

Sunday, March 15, 2009

My Econ Professor Never Prepared Me For This...

Russell Roberts posts a bit of a followup to a great bloggingheads.tv appearance with Arnold Kling.
I have argued that economists generally came down on one side or the other of the stimulus package based not on their economic understanding but on their political and philosophical biases. I still believe that. I think we're in macroeconomically uncharted territory.

Give the bloggingheads video a viewing, if you're into macroeconomics.

The real reason I'm posting this here is, at one point, Kling is questioning the ability of econometrics to realistically measure real value. His claim is that much of the growth in the economy in the last 15 years isn't really growth. We have nothing to show for it. Most of that growth came from a rise in home values that weren't really there, and financial market shenanigans that also turned out to be a ponzi scheme. Then, when touting what we *do* have to show for the last 15 years--the very technology that he and Roberts were using to build, share, and host the video dialog (in short, The Internet)--that econometrics largely misses that value entirely.

This hit dangerously close to a train of thought I've been working on (and will continue to work on), largely in relation to Media's failing business model. What if it is difficult to measure the economic value of something like the Internet for the same reason that it's so hard monetize and form a business model around?

Sure, there are business that benefit greatly from the internet, and wouldn't exist without it. Dell and Amazon come to mind. To a large extent, many businesses have gained efficiencies from the Internet in ways large and small. But there are some markets that are going to be broken entirely by it.

The newspaper and recording industries, for starters.

Imagine for a moment, that you own a car. A friend of yours expresses their desire to own one just like it. Further imagine that there is some mechanism in your garage that lets you to, with nothing more than a press of a button, pop out an exact duplicate that your friend could take home. To further extend this analogy, what if there were some mechanism by which you could press a button, and let thousands of friends and strangers alike create a duplicate of your car whenever they felt like it? How long would traditional car companies remain in business?

(A brief aside on the idea of Ford hypothetically copyrighting cars, in the event that such a mechanism is ever built: Copyright is a magnificent creation that introduces market-like forces into the realm of information, where they do not natively exist. Copyright may provide market incentives for the creation of intellectual property, but it must be noted that it is an artificial convention, not a real material one. Furthermore, we can see the problems that this artificial construct has when it rubs up against the real world, as it is doing right now with the Media in all it's forms.)

I'm a strong advocate of free markets, obviously. Markets are the mechanism by which society directs the usage of scarce resources to its best advantage. This works great for material goods, but what happens when resources aren't scarce? What happens when they are near-free, such as the duplication and distribution of music and journalism?

Let's face it, until we get the replicators online, nobody's downloading any cars to their garage. But in a sense, the problem facing the Media is a very special case of the problem facing much of America's economy as a whole (and I mean the kind of economy requiring resources to actually make material goods). In a global market, the resources, particularly labor, are not scarce...they're bountiful. Labor can be had cheaply through automation and foreign markets. What kind of a state does that leave American Labor in in the coming years? Moreover, if we can assume that American manufacturing is dead or dying, and American Labor with it, how do we move America into a post-manufacturing economy?

Lastly, to bring the circle of this train of thought to a close, what happens if a large portion of an American post-manufacturing economy is built to survive only in an environment where the only artificial and difficult to enforce constructs like copyright, going head-to-head with the real world, are its last gatekeeper?

I am strongly encouraging comments on this post, folks. My brain is spinning with this stuff. I need more input.

(Hat tips to Russel Roberts, Arnold Kling, and Clay Shirky today.)

Saturday, March 7, 2009

To Tweet or Not to Tweet....

I love watching the usual crest-and-fall cycles of traditional media when it comes to technology. My favorite news show, Morning Joe, did a segment on Twitter, highlighting how everyone else in traditional media has done a segment on Twitter (talk about the Echo Chamber!). I know, it's on MSNBC, but before you conservatives flog me, read RSM's post here.



Willie Geist and Dennis Kneale riff on what Twitter is and isn't. They, like most folks in news media ask the same three questions that, while important to those who make their living in the news industry, don't really matter to the non-news folks who use these tools to such personal advantage.

1) Is it just a fad?

2) How can we make money off of it like it was traditional media?

3) Where do people find the time to play with this stuff?

Then today, Mika Brzezinski tweeted:
Says twittering is thew epitome of narcissism. I think he may be right. Thinking of stopping...

Except that I noticed that 90% of her tweets are short links to great opinion pieces or news stories, and very little referencing herself. Like most of us on twitter, Ms. Brzezinski's first instinct is to share, and occasionally offer comment for context. I can't see how, when she freely promotes the worthy works of others, it can be considered "narcissism".

Traditional media has two major functions. The main function is to distribute news. This model has been under assault since the early days of the Web. Printing presses, spitting out yesterday's news, stacked into trucks, and spit onto our doorsteps, can't compete with the immediacy of the Internet. But the other function of traditional media is only just now coming under assault from the frequently referenced "Web 2.0" technologies like Twitter (and Digg, and Delicious, and Facebook, etc.). The second function of traditional media isn't the distribution of news, but the selection of news and commentary by trusted sources. Traditionally, these trusted sources have been newspaper editors, evening news anchors, and reporters on the street who focused on the lowest common denominator to reach the widest possible audience in a broadcast media. In the age of Social Media on the Internet, however, these trusted sources are now Legion. We select them for ourselves. Some of us still trust the New York Times and broadcast TV's evening news. Some of us only trust our friends. Thanks to the Internet, these voices we trust can come to us through the same channels.

But even in traditional media, there has been an explosion of voices that we may decide to trust thanks to cable news channels and talk radio. Anderson Cooper or Lou Dobbs? Glenn Beck or Rachel Maddow? Joe Scarborough or Keith Olbermann? (okay, that last one is rhetorical.)

One of those many voices I have chosen to rely on to direct me to relevant and compelling news and opinion (even when I fervently disagree with it!) is Mika Brzezinksi. While I catch a good amount of Morning Joe each weekday, nothing compares to the ability to sit down in the evening and review the articles and commentary that the sources I have chosen to trust, Ms. Brzezinski amongst them, have willingly and freely shared with me.

For many, Twitter is about narcissism. The same can be said about all social media. But these people will find few followers. As of this posting, there are 3,972 followers of Ms. Brzezinski on Twitter. 3,972 people who have decided that her opinion matters to them. 3,927 people who ask her to help them navigate the sea of information. Helping those people may be personally gratifying to her, but I don't see it as "narcissistic". I see it as philanthropic.

Monday, March 2, 2009

Cato on the Press

In June of 2008, Steve Boriss wrote an article for Cato's TechKnowledge entitled "The Future of News: A Golden Age for Free Speech". It's a great read, reminding us that "The Press" once simply referred to a technology, not a profession.
Thomas Jefferson had no interest in empowering a special class, "the press," who today present themselves as superior in their abilities to ferret out, understand, and communicate the single, correct way to look at things. Instead, he wanted our news to be filled with a multitude of alternative voices and opinions competing in a freewheeling marketplace of ideas.
Now, I'm not going to jump on the bandwagon of bloggers who trash the press out of hand. Like Jeff Jarvis, I think we need more reporters, more editors, more generation of news. We bloggers need primary sources for news. How often can we write without linking to some other source? We simply want to (re-)join the public conversation that was so key to our thriving democracy in its infancy.

Boriss reminds us that historically, the current business model of the press is an exception, not the norm. One of the things that allowed the press to become what it is today (that is to say, an industry) was the advent of technology that could lower the cost of printing, allowing for papers that could afford the overhead of high-speed presses to drastically reduce the price-per-copy. Economies of scale pushed more expensive papers (with only niche markets) out of business on this price drop. This process has been repeated over and over again, especially throughout the 20th century, when the idea of mass markets and mass production truly emerged.

The mass-production of papers allowed for a competitive advantage for papers that could afford the up-front costs of expensive high-speed printing, as well as garner the wide-market appeal to move that volume. But that advantage was first really brought to bear with the flowering of the Associated Press. To quote Boriss:
Competition was first stifled when AP papers signed an agreement giving Western Union exclusive rights to the AP's telegraph business in exchange for higher telegraph fees for other news providers.
You see, they realized that their advantage was in controlling the medium of delivery. Their content had to be "good enough" to appeal to large market, for certain, but their business relied more on the method of delivery, controlling not only the distribution of papers, but on the access costs competitors had to telegraph service for the same news. Compare that to the Associated Press of today. Now that the press has been steeped in that tradition so long, they can't separate the content from the delivery mechanism in their own minds, and are suffering greatly for it.

The press is losing their grip on the means of distribution, and building their business model on that platform is proving to be an ultimately unhealthy choice in the face of the Internet:
The Internet is now poised to undo all the "advances" that set news back. Having a voice in the marketplace of ideas no longer requires capital investments in printing presses and broadcast equipment, just an Internet connection and a free blogging service.
The ultimate collusion (or confusion) of the press with the medium is still going on today. This is where I suddenly veer away from Boriss's take on Net Neutrality, though my assumption is that Mr. Boriss and I are really talking about two different things. (See my critical definition of Net Neutrality here, and know that there are many who would confuse this idea with a version of Net Neutrality far more akin to the Fairness Doctrine than to one that would prevent the exact kind of stifling of speech that the Associated Press engaged in by controlling telegraph access). I am assuming that the what Boriss is referring to here, is that shared fear of a government-hedged "Fairness Doctrine" for the Internet:
We now have an opportunity to achieve historically unprecedented levels of free speech if we are vigilant in preventing government from regulating the Internet. So far, we seem far too eager to let government in, for example on issues as small and theoretical as "Net Neutrality" regulation — a command-and-control regime for the Internet so much like the one still weighing down the broadcast spectrum.
I promote Net Neutrality as a means to prevent ISPs and media (largely the same thing at this point) from working to approve only their preferred content, putting us squarely back into the grips of approved mass-market media. I'm fairly certain that Boriss is using the phrase with a greatly different meaning. Net Neutrality is both a niche issue, and a poorly defined one at present. We should work to clarify the terms we are using, and make sure that we're all really fighting about the same things.

(Hat tip to Jim Harper over at Cato, who tossed the link to Boriss today, in light of recent newspaper woes.)