Category: Technology and Regulation

Acton’s director of research Samuel Gregg has a piece over at The American Spectator that may surprise big government liberals. (We know you read this blog.) In “Free Market Sweden, Social Democratic America,” he lays out the history of Sweden’s social democracy — its nature and its effects on the country’s economy — and then draws lessons for the United States. The Scandinavian country isn’t quite the pinko nanny state Americans like to look down upon, and we’ve missed their reforms of the last two decades.

Gregg explains that Sweden’s dramatic mid-century expansions of government were portrayed as rooted in the traditional values of the homeland, so Social Democrat governments escaped the soft-Marxism tag, and were able to do pretty much as they pleased. Social programs were also characterized as coverage of universal rights, to be imposed by general taxation. Then came

the decision of governments in the 1970s to hasten Sweden’s long march towards the Social Democratic nirvana. This included expanding welfare programs, nationalizing many industries, expanding and deepening regulation, and — of course — increasing taxation to punitive levels to pay for it all.

Over the next twenty years, the Swedish dream turned decidedly nightmarish. The Swedish parliamentarian Johnny Munkhammar points out that “In 1970, Sweden had the world’s fourth-highest GDP per capita. By 1990, it had fallen 13 positions. In those 20 years, real wages inSweden increased by only one percentage point.” So much for helping “the workers.”

Economic reality was painful, but Sweden responded, and began to unravel some of its “progress,” reducing the public sector and even allowing private retirement savings. Unemployment was still high though — about 20 percent — in large part because the country’s tax structure encouraged joblessness.

But with a non-Social Democrat coalition government’s election in 2006, Sweden’s reform agenda resumed. On the revenue side, property taxes were scaled back. Income-tax credits allowing larger numbers of middle and lower-income people to keep more of their incomes were introduced.

To be fair, the path to tax reform was paved here by the Social Democrats. In 2005, they simply abolished — yes, that’s right, abolished — inheritance taxes.

But liberalization wasn’t limited to taxation. Sweden’s new government accelerated privatizations of once-state owned businesses. It also permitted private providers to enter the healthcare market, thereby introducing competition into what had been one of the world’s most socialized medical systems. Industries such as taxis and trains were deregulated. State education and electricity monopolies were ended by the introduction of private competition. Even Swedish agricultural prices are now determined by the market. Finally, unemployment benefits were reformed so that the longer most people stayed on benefits, the less they received.

By 2010, Sweden’s public debt had fallen dramatically and its rate of economic growth was 5.5 percent. Compare that with America’s 2.7 percent growth in 2010, and just try to restrain your jealous impulses.

Gregg cautions that Sweden’s economy is still hampered the Social Democrats’ legacy. High minimum wages keep a full quarter of the country’s youth unemployed, and a carbon tithe to the religion of environmentalism retards growth, but

It’s surely paradoxical — and tragic — that a small Nordic country which remains a byword for its (at times obsessive) commitment to egalitarianism has proved far more willing than America to give economic liberty a chance.

Full article here.

Billionaire Democrat Ted Leonsis wrote a posting titled “Class Warfare – Yuck!” on his blog yesterday, in which he implored the president, to whose campaign he donated the maximum amount: “Hit a reset button ASAP. Rethink how to talk to businesses and sell business leaders on your plan to make America great! Many of us want to be a part of the solution. We aren’t the problem.”

Today, Charles Schwab published an opinion piece in the Wall Street Journal, and again the title says it all: “Every Job Requires an Entrepreneur.” If there is to be an economic recovery, he says,

The leaders of both parties, Republicans and Democrats alike, must lend their voices to encourage and support private enterprise, both for what it can do to turn our economy around and for the spirit of opportunity it represents.

These two men are individually responsible for the creation of hundreds of thousands of jobs because of the innovations they brought to the internet (AOL) and to stock brokerage (Charles Schwab Corp.). And their businesses have done more than employ lots of people; they have lowered the cost of internet access and financial services for millions of Americans. These men have done immense good for “less fortunate Americans,” and Ted Leonsis feels insulted by corporate jet demagoguery,

I own 50 hours on NetJets for the rare occasion I do travel by private plane. Does Air Force One charter out? Stop making private planes an issue. This is a tiny issue for us to deal with for our country.

Trying to shackle investment and entrepreneurial activity does the unemployed no good (nor our national debt). And no rhetorical strategy could be more opposed to the Christian principle of solidarity than the vilifying of successful entrepreneurs — the effects of such a strategy on public morality should be immediately obvious.

The corporate jet talking point is meant to stir envy in the hearts of listeners — it’s a trifling proposal that packs maximum rhetorical punch — and government by envy will get you nowhere.

The Manhattan Institute’s Proxy Monitor project is aimed at “shedding light on the influence of shareholder proposals on corporations.” It provides a thorough analysis of proposals made from 2008 – 2011 by activist investors — and believe it or not, only 35 percent of those proposals were related to corporate governance. Most of the shareholder proposals that these companies deal with are attempts to direct the company in a more green or pacific or fair direction, and they come from small shareholders who do this to dozens of companies.

A new report from Manhattan summarizes the trends — the growing social proposals, and how Dodd-Frank has playing into activists’ activities — and the proxy monitor website allows you to look at any shareholder proposal from the last few years. The proposals are enlightening. The Sisters of Mercy of the Americas have submitted proposals to the stockholders of Lockheed Martin and General Dynamics stating,

WHEREAS: Space has served as a sanctuary where, over the years, nations cooperate rather than confront one another. Satellites save lives…

RESOLVED: Shareholders request that, within six months of the annual meeting, the Board of Directors provide a comprehensive report on Lockheed Martin’s involvement in the space-based weapons program, at reasonable cost and omitting proprietary and classified information.

The well-meaning Sisters of St. Francis of Philadelphia, in a proposal to McDonald’s shareholders that made the news earlier this year, requested that,

WHEREAS,

The Affordable Care Act, signed into law on March 23, 2010, included federal menu-labeling legislation requiring the posting of calories on fast food menu boards….

RESOLVED: Shareholders ask the Board of Directors to issue a report, at reasonable expense and excluding proprietary information, within six months of the 2011 annual meeting, assessing the company’s policy responses to public concerns regarding linkages of fast food to childhood obesity, diet-related diseases and other impacts on children’s health.

Many other equally well-intentioned proposals have been filed, including repeated requests by the Sisters of Charity of St. Elizabeth that various pharmaceutical companies restrain their prices to “reasonable levels.” The Unitarian Universalists have requested that Pepsi Co. “create a comprehensive policy articulating our company’s respect for and commitment to the Human Right to Water.”

This is not to mention the numerous environmental proposals made by religious groups, requesting that the Rights of Humanity and of Mother Earth not be violated by carbon emissions and by the use of genetically engineered plants. Take, for instance, this statement from a proposal to Du Pont’s shareholders, concerning genetically engineered crops:

The right to food requires that we place the needs of the most marginalized groups, including in particular smallholders in developing countries, at the centre of our efforts

One might think the Sisters of Charity of St. Elizabeth were unaware that it has been the genetic improvement of crops that has saved millions of the world’s poor from starvation.

We’ll keep you posted on further developments, and the effects these proposals may have on companies’ performance.

As citizens await state decisions on new state EPA “fracking” regulations, many are worried radical environmentalist may compromise a promising opportunity in the development of gas reserves.

Natural gas advocates say radical environmentalists have long demonized the oil industry in their fight against free enterprise. Environmental groups claim fracking techniques to extract natural gas threatens the cleanliness of ground water, but their attacks contradict EPA studies that report there are no proven cases where fracking has contaminated water.

Extreme environmental groups have teamed up with some in the media to push their anti-growth agenda. A Heritage Foundation blog reports,

Environmentalists [...] have hijacked media outlets like The New York Times to run biased reports against fracking’s key contributions to America’s current and future energy supplies that would be a tremendous catalyst for the country’s economic recovery.

Though more EPA fracking studies are currently underway, environmentalist accusations contradict solid facts and studies. With almost any human activity, there will be some sort of environmental effect, but the benefits of shale drilling blows the costs out of the water. According to experts, a typical Marcellus Shale well can generate up to $4 million in economic benefits while only creating $14,000 in environmental damage.

If given the chance, the Independent Petroleum Association of America suggests the oil industry has the potential to lift our economy back on its feet again:

Petroleum powers the economy of this nation overall, evidenced by [a] strong correlation between states that have high petroleum use and high output. Petroleum is integral in our daily lives, not just as a fuel, but because it is present in common objects that are crucial to living a high-quality life.

But radical environmental groups often stand in the way. Some of these groups insist on “biological egalitarianism” in which all life forms are considered equal. An Acton publication titled A Biblical Perspective on Environmental Stewardship explains the dangerous connotation of this faulty environmental philosophy:

Instead, this philosophy negates the biblical affirmation of the human person’s unique role as steward and eliminates the very rationale for human care for creation. The quest for the humane treatment of beasts by lowering people to the level of animals leads only to the beastly treatment of humans.

Extreme environmental groups should remember the oil industry is not evil. They fail to see that their radical ideology is hurting the nation’s poor. Increasing oil production can fuel economic growth and provide jobs for the unemployed. To attack the oil industry in such a way is indirectly attacking human development. Cited in Ray Nothstine’s commentary on high gas prices and its impact on the poor are these words from John Paul II,

Besides the earth, man’s principle resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied.

Of course, any human action has some effect on the environment; and so we have the responsibility to exercise environmental stewardship rather than prioritizing the fish in the Chesapeake Bay over the welfare of the human person.

News broke yesterday of an audacious violation of Apple Computer’s intellectual property rights (IPR) in China. This expat blogger posted photos of three sham Apple Stores she discovered in the city of Kunming—the stores have been set up by some entrepreneurial chap hoping to capitalize on the company’s Chinese popularity.

The story was slightly amusing, especially in light of Apple’s recent earnings announcement. (“They totally did it again,” said one analyst. It was also revealed that Apple now sits on enough cash in hand to buy 100% of Goldman Sachs at its current market value.) It seems that the Apple brand is now so valuable that the Chinese are counterfeiting the company’s retail outlets to sell Apple’s own products at full price. As one employee of the fake store said when reached by the Wall Street Journal,

It doesn’t make much of a difference for us whether we’re authorized or not. I just care that what I sell every day are authentic Apple products, and that our customers don’t come back to me to complain about the quality of the products.

But that’s precisely why Apple’s IPR must be protected. The company is one of the most innovative ever—their graphical user interface, popularization of the computer mouse, iPod music player, and touch-screen devices have dragged the technology sector forward, to say nothing of their design contributions—and that innovation would not have been supported without protections for the company’s intellectual property.

The U.S. Constitution justifies the establishment of IPR in giving Congress the power

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

As David H. Carey explains in his Acton monograph The Social Mortgage of Intellectual Property,

If allowing some techonology to be patented benefits society in the long run more than it costs society temporarily to forego unrestricted use of that technology, then such patents are morally defensible.

The Apple Store “experience” is tightly bound up with the company’s products (remember how miserably Dell stores failed?), and part of allowing Apple temporary exclusive use of its inventions is allowing it to sell them as it sees fit.

There is also the question of trademark, which exists primarily for the protection of consumers, so that when I buy a tube of Crest toothpaste from a CVS I know that I’m not getting a Chinese imitation accidentally laced with cyanide, stocked by a shyster posing as a reputable franchisee.

Whatever employees of these fake Apple Stores may say—and according to the blogger who broke the story, none of the stores’ sales force realized at the time that they weren’t working for Apple—it’s China! Would you buy an iPhone from one of the fake stores? The Chinese government has a responsibility to its citizens to enforce Apple’s trademarks and protect its citizens from fraud.

By pure coincidence, I can illustrate the importance of protecting IPR in China: Yesterday, about the time this story was hitting the internet, my father went to the Apple Store in Dallas (an authentic one) and purchased an iPad. While he is away for a week on a theology course, Apple’s device will give him access to email and other business tools, so that he can grow in virtue and keep his business running at the same time (and once they debut the iSpankings app, he’ll be able to keep his kids in line, too). He chose an iPad over any number of other devices because his IT guy—who doesn’t like Macs, as IT guys never do—told him it would do the job best.

Except for the U.S.’s protection of IPR, that market solution wouldn’t have been possible.

I usually feel sorry when I see the latest news about data compromise, hacks, or identity theft.  Though I feel for the victims, I also think about the individuals carrying out the act.  Society rightly looks down on such behavior, especially if the victims are everyday people.

What about when a high profile organization or government is hacked?  What if an organization of questionable reputation is targeted?  The online group Anonymous often aims at high profile targets with their hacks, DDoS attacks and other planned invasions.  By making the decision to compromise organizations, even questionable ones, Anonymous assumes responsibility for its actions.  Individuals that are a part of this online group hide their real identity to commit acts that are illegal.

Growing up, I believe most young people interested in computing are aware that there is a “wrong path.”  As in, property damage and theft are wrong.  This path includes learning how to break into different types of computer systems to seek information or modify a system’s behavior, typically for reasons advantageous to the hacker.  Anyone that is involved with technology knows this path exists.  Luckily, most of us are taught to respect others’ property, even if that property is digital.  What’s more, this activity undermines the rule of law and the ability of people to freely create wealth (see Acton’s Core Principles).

Computer programming is an important craft.  It’s simple to learn a little programming, but as you advance in skill the tasks become easier to perform.  Whether it is building a website, desktop computer application, or a small game, many people obtain enjoyment out of building unique and useful tools and products.  However, the same skills can be used to make an application that tricks people, steals their information or prevents their computer from functioning properly.  Individuals who make these keyloggers, trojans and worms typically do so out of greed or hate.

People break into computer networks or systems with malicious intent are called black hat hackers.  As you might expect, there are also white hat hackers.  White hats break into computer networks and systems too, but instead of taking advantage of the system’s weakness, they notify the owner of the system about the vulnerability so they may fix the problem.  Computer security is a classic case of good versus evil.  You might even call it one of those moral issues that are clearly black and white.

What stops black hats from becoming white hats?  Unfortunately, if there were no black hats there would also be no need for white hats.  Most white hats start out as black hats since learning the craft requires knowledge of breaking into systems.  White hats make a legitimate living through consulting and by working in organizations to ensure systems are secure.  They (hopefully) have a strong sense of right, especially if they start out as a white hat.

Even if you don’t know someone who works in computer security, it’s likely that your favorite IT person deals with security on a daily basis.  The IT professional that the white hat informs must secure their system against compromise, which requires knowledge of how hackers break in.  System owners are stewards of activity and information they manage.  They have the same access that hackers have to information stored in computers they work with.  Their job is to protect that information as well as ensuring its proper use within the system.

If the system administrator fails at their job, unsuspecting individuals using the system lose something.  It might be privacy, financial information, their own computer’s security or even their identity.  Black hats and hackers like the ones from Anonymous abuse gaps in security for their own amusement, personal reasons and notoriety.  They lack basic concepts of morality and are especially void of respect for any IT professional or individuals on the receiving end of their attack.

We’ve launched a redesigned Acton PowerBlog but there’s more to it than just a visual update.  You’ll find the following enhancements:

  • A simpler look that seeks to better emphasize important features of the blog
  • Convenient tab navigation on the right for frequently used items
  • Increased real estate for blog posts like the one you’re reading
  • Increased emphasis on social media including:
    • New links near the top right and bottom of the page to Acton’s key social pages
    • A live Facebook page stream on the right so you can see what’s happening without leaving the blog
    • More “Like” and send buttons on front page blog posts (not just the first one)
  • A new comment system that preserves all old comments while adding increased functionality
  • A better subscribe page with more feed links and information

The new comment system is probably the largest change after the redesign itself.  With this system (called Disqus) you no longer have to type your name and email every time you want to comment.  Now you can login with an account from a number of websites including Facebook, Twitter, and Disqus itself in order to comment here.  You can also give feedback on comments by liking and replying to them.  If you have a Disqus account you can build a “commenter reputation” and your comments will carry more social weight with people seeking higher quality insights.

We welcome your feedback in the comments for this post.

 

The traditional Drupal logo

Last week I attended Drupalcon Chicago 2011.  Acton Institute’s website runs the Content Management System called Drupal.  It is a highly customizable website publishing tool that powers around 1.7% of the Internet.  Drupal scales: you can use it for a personal  website, but very large outfits use Drupal including the White House and Grammy.

As you may know, open source software is free.  Anyone can download the package and begin using it or view the internal code.  Open source also means the software is coded by programmers who are not paid for their work.

How can such a model exist?  It exists because customers hire developers to support and implement their websites using the platform.  At this point, the “free” software can require a substantial investment of money and staff time to tailor or customize the open source software to an organization’s specific needs. Still, the model promotes learning for aspiring developers because they can dig into the system early on without paying to see if it is something they’d like to pursue.  If it is something they like they can program, design, or provide consulting using the platform for clients willing to pay for it.  If the developer doesn’t want to continue working with the platform they are free to stop without having sacrificed money figuring out they don’t want to work with it.

The (potential) Drupal 8 logo, introduced at Drupalcon

While attending Drupalcon I didn’t expect to find much related to Acton’s message.  However, I was surprised to find a lot of what you might call ethical questions discussed throughout the conference.  Web developers attended sessions seeking the right way to approach problems people have building websites.  One session included a panel consisting of the Lullabot team speaking openly about what standard Drupal development rates are.  All of the sessions at Drupalcon were aimed at empowering developers to do things the right way and to improve the way the web is presented.

There is a healthy competitive market in the Drupal community.  Many vendors promoted their web hosting and development services on the exhibit floor.  The biggest sponsors had session rooms named after them and their logos were posted everywhere around the conference.   Because Drupal is open source, there are few barriers for new development shops to use it which increases competition.  Seasoned firms compete for the business of high profile clients that receive millions of web visits a month.

There is a competitive ecosystem in not only the Drupal community, but in the open source web development community overall.  By making the tools used to create the web free, more technical people are created who can fulfill the needs of organizations willing to pay for services.  And a lot of thriving for-profit businesses are formed within this ecosystem.

If you’re interested in the Drupalcon keynotes they are available online.

After hearing about an established Christian publisher recently launching an official blog for their products, I did some thinking about the relationship between the traditional publication outlets and social media.

I’m sure that traditional publishers have a relatively large budget for print advertising, but it seems that they are very slow to hire professionals to do serious social media work, blogging, and online advertising. This seems true at least in the academic markets and relative to their print marketing outreach. And the blogs that publishers do have are usually not very good, although there are exceptions.

All this is true even though there are a number of reasons why digital advertising is better than traditional print. With digital advertising and outreach you can get real numbers in terms of reactions in real-time, seeing almost immediately what is effective and what isn’t. But you are also engaging people in a place where they are much more likely to buy and doing so is far easier.

If someone sees an ad in a magazine, they have to either stop what they are doing and go to a computer or pick up the phone, or remember to do so later after they’re done reading the magazine. When you reach someone on a website, Twitter feed, or a blog, they already poised to buy in that they are always one click away from Amazon, where they already have an account set up, and so on.

And despite many of the rumors of the death of blogging, I liken the relationship of blogging to social media to the relationship of journalism to blogging. Without blogs and the kinds of content generated on blogs, there’s far less to drive social media, just as without journalistic content there’s far less to drive blogging. So I don’t see blogging going away any time soon, but the turnover rate of blogs will continue to be high because of the variety of competitive voices and sources for news, commentary, and promotion. The kinds of transition over at First Things in recent years, which has really become a full-service complement to the print publication, seems to me to be a good model for established publications looking to broaden their digital footprint.

So even though it may seem odd that an established publisher is just now forming an institutional blog, there are some good reasons why starting a blog now is a good idea.

To keep abreast of some of the things going on with Christians and new media, keep an eye on the Christian Web Conference.

Blog author: jballor
Wednesday, December 15, 2010
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Steve Connor in The Independent (HT: RealClearReligion) speculates about some happenings at the Vatican with regard to genetically-modified (GM) food. It’s important to note, as is the case in this article, that things that happen in various committees and study groups at the Vatican do not by default have some kind of papal endorsement.

To wit:

A leaked document from a group of scientists linked to Rome has set a hare running about the possible endorsement of GM technology by the Pope. The document, from scientists linked to the Pontifical Academy of Sciences, suggested that there is a moral duty to adopt GM technology in order to combat hunger.

Connor’s larger point is more chastened and more accurate, however. “Intriguingly, although the debate over GM crops has died down in Britain for the moment, something tells me it is set once more to become one of the most contentious scientific issues of our time – and one where both sides will invoke morality to justify their position,” he concludes.

I’m generally in favor of allowing GM food, with the caveat that animals have a different moral status than do plants. I sketch out a case in “A Theological Framework for Evaluating Genetically Modified Food.” More recently you can see an Acton Commentary from earlier this year, “The Science of Stewardship: Sin, Sustainability, and GM Foods.”

I also should note that the use of GM foods to patent certain seeds, which then naturally circulate to non GM cropland, raises a whole host of issues related to property rights that are quite complex and can’t be dealt with here. I will say, though, that it’s not obvious to me why farmers shouldn’t have the rights to keep their crops from being exposed to GM seeds if they don’t want them to be and further how in the case of such involuntary exposure the responsibility to mitigate lies with the non GM crop farmer.