Just two more New York Times articles that point out what’s obvious around here: the Internet’s dramatic and unpredictable disruption of the whole “media” space. Isn’t Washington’s assumption that it can sort all this out and impose particular business models on the media space through prescriptive Net Neutrality regulation, a case of supreme hubris?
Quote of the Day
“My attitude is this: if you are getting attacked by Krugman, you must be doing something right.”
— Eugene Fama, University of Chicago professor, in The New Yorker
Reading 15,000 documents so you don’t have to
For those of you not wishing to sift through 15,000 comments submitted to the FCC for its Net Neutrality proposed rule making, let me recommend what — so far — is the best technical filing I’ve read. It comes from Richard Bennett and Rob Atkinson of the Information Technology Innovation Foundation.
Also very useful is a new post by George Ou on content delivery and paid peering, with important policy implications.
These are among the least discussed — but most important — items in the whole Net Neutrality debate.
Separately, from the FCC’s “Open Internet” meeting at MIT last week, see summaries of each panelist’s remarks: Opening Presentations, Panel 1, Panel 2.
Quote of the Day
“Here’s one problem with digital collectivism: We shouldn’t want the whole world to take on the quality of having been designed by a committee. When you have everyone collaborate on everything, you generate a dull, average outcome in all things. You don’t get innovation.
“If you want to foster creativity and excellence, you have to introduce some boundaries. Teams need some privacy from one another to develop unique approaches to any kind of competition. Scientists need some time in private before publication to get their results in order. Making everything open all the time creates what I call a global mush.
“There’s a dominant dogma in the online culture of the moment that collectives make the best stuff, but it hasn’t proven to be true. The most sophisticated, influential and lucrative examples of computer code — like the page-rank algorithms in the top search engines or Adobe’s Flash — always turn out to be the results of proprietary development. Indeed, the adored iPhone came out of what many regard as the most closed, tyrannically managed software-development shop on Earth.”
— Jaron Lanier, author of the new book You Are Not a Gadget.
The Digital Decade
A bunch of good metrics on the decade that was from Oliver Chiang. Here are a few:
–Number of e-mails sent per day in 2000: 12 billion
–Number of e-mails sent per day in 2009: 247 billion
–Revenues from mobile data services in the first half of 2000: $105 million
–Revenues from mobile data services in the first half of 2009: $19.5 billion
–Number of text messages sent in the U.S. per day in June 2000: 400,000
–Number of text messages sent in the U.S. per day in June 2009: 4.5 billion
–Number of pages indexed by Google in 2000: 1 billion
–Number of pages indexed by Google in 2008: 1 trillion
–Amount of hard-disk space $300 could buy in 2000: 20 to 30 gigabytes
–Amount of hard-disk space $300 could buy in 2009: 2,000 gigabytes (2 terabytes)
“The Henry Ford of Heart Surgery”
Completely missing from the health care debate is a conversation about health care innovation and productivity. But not only are these legitimate factors — they are the most important factors.
Look around the world, however, and see the crucial advances being made.
“Japanese companies reinvented the process of making cars. That’s what we’re doing in health care,” Dr. Shetty says. “What health care needs is process innovation, not product innovation.”
At his flagship, 1,000-bed Narayana Hrudayalaya Hospital, surgeons operate at a capacity virtually unheard of in the U.S., where the average hospital has 160 beds, according to the American Hospital Association.
Narayana’s 42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Children’s Hospital Boston.
Before we turn the whole U.S. system into a larger, more rigid and stagnant, less entrepreneurial, more costly version of Medicare, one that “bends the cost curve” up instead of down, shouldn’t we give at least a few minutes consideration to the real solution to our health care problem: technological, process, and business model innovation?
The Real Deal
We Hoosiers are lucky:
Perhaps most appreciated was the governor’s overhaul of the Bureau of Motor Vehicles. It’s gone from one of the worst in the country—a place, he says, “where people would take a copy of ‘Crime and Punishment'”—to one of the best, with an “average visit time of seven minutes and 36 seconds.”
I had my own experience about four years ago, before the BMV was overhauled, where I made some seven trips to the license branch and various other government offices over a period of weeks just to renew my driver’s license.
But as Kim Strassel tells us in her interview with Mitch Daniels, this is only the very tip of the iceberg. In a state challenged by our reliance on the automobile industry in particular and manufacturing in general, instead of imploding like Michigan or profligate California, we had a governor whose common sense, hard work, business savvy, and courageous budgeting has left Indiana in a much better spot than many other states. Especially given our special old-economy obstacles.
Does Google Voice violate neutrality?
This is the ironic but very legitimate question AT&T is asking.
As Adam Thierer writes,
Whatever you think about this messy dispute between AT&T and Google about how to classify web-based telephony apps for regulatory purposes — in this case, Google Voice — the key issue not to lose site of here is that we are inching ever closer to FCC regulation of web-based apps! Again, this is the point we have stressed here again and again and again and again when opposing Net neutrality mandates: If you open the door to regulation on one layer of the Net, you open up the door to the eventual regulation of all layers of the Net.
George Gilder and I made this point in Senate testimony five and a half years ago. Advocates of big new regulations on the Internet should be careful for what they wish.
Happy birthday, TLF!
The Technology Liberation Front is five today. Go check out these courageous defenders of Internet freedom, of which I am a too-infrequent yet proud comrade-in-arms.
How the Web unleashes unknown intelligences
Watch Tyler Cowen talk about his new book to Will Wilkinson. The book’s title, Create Your Own Economy, sounds like just another self-help business pamphlet. But you’ll see Cowen isn’t talking about business or money at all — at least not directly. His subjects are autism, “neurodiversity,” Adam Smith’s division of labor, and the Internet’s ability to match more people with their highly specific talents and passions. Far from the latest trope that “Google [or the Web] is making us stupid,” Cowen argues the the Web helps a vast variety of previously undiscovered intelligences, or “neuro profiles,” flourish.
“New norm” warning
Tough stuff from the always-insightful David Malpass, who warns that slow growth from a lower economic base could yield an historic downgrade of the U.S. experiment:
With the crisis taking a deep toll on our economy, the expectation is for a “new norm” once recovery kicks in. It’s a dismal prospect: slower growth from a lower base, with higher unemployment and bigger government.
Rather than a healthy frugality, the new norm implies an outright decline in median living standards, a disaster for both prosperity and fairness. For President Obama such economic mediocrity spells extended deficits, a “jobless” recovery and, at best, a stiff reelection fight instead of the cakewalk that his perfect timing–inaugurated at the exact bottom of the crisis–deserves.
The U.S. decline isn’t inevitable. Game changers exist. The Fed could improve dollar policy to make the tens of trillions of dollars in new U.S. Treasury debt more salable. It should stop buying Treasurys to make it utterly clear that it will not monetize debt. Buying Treasurys is the monetary equivalent of government workers digging a hole, filling it back up and calling it GDP.
To underscore the new commitment to price stability and creditors the Fed has to stop using core inflation for its report card. It’s a loud signal to the world, proclaiming: “The Fed is not serious. Money should flow to Asia. Sell the dollar.”
Europe says, “Jump.” Intel says, “How high?”
In the wake of EC antitrust chief Neelie Kroes’s charge that Intel’s microchips are too tiny, too fast, and too inexpensive, the company has quickly unveiled a new line of huge, power-hungry, slow, overpriced, out-dated products.
Intel unveils new huge, expensive, power-hungry, slow "EuroChip"
Kessler may be crazy. But mark-to-market’s absurd.
Of the Treasury’s long-awaited non-plan bank plan, Andy Kessler writes, “Mr. Geithner should instead use his ‘stress test’ and nationalize the dead banks via the FDIC — but only for a day or so.”
Then,
strip out all the toxic assets and put them into a holding tank inside the Treasury. . . . inject $300 billion in fresh equity for both Citi and Bank of America. Create 10 billion new shares of each of the companies to replace the old ones. The book value of each share could be $30. Very quickly, a new board of directors should be created and a new management team hired. Here’s the tricky part: Who owns the shares? Politics will kill a nationalized bank. So spin them out immediately.
Some $6 trillion in income taxes were paid by individuals in 2006, 2007 and 2008. On a pro-forma basis, send out those 10 billion shares of each bank to taxpayers. They paid for the recapitalization.
Each taxpayer would get about $100 worth of stock for each $1,000 of taxes paid. Of course, each taxpayer has the ability to sell these shares on the open market, maybe at $40, maybe $20, maybe $80. It depends on management, their vision, how much additional capital they are willing to raise, the dividend they declare, etc. Meanwhile, the toxic assets sitting inside the Treasury will have residual value and the proceeds from their eventual sale, I believe, will more than offset the capital injected. That would benefit all citizens, not the managements and shareholders who blew up the banking system in the first place.
Is Kessler crazy? Well, maybe. In his own creative and boisterous way. But not nearly so crazy as Washington’s fumble-bumble these last few months. I’d much prefer Kessler’s out-of-the-box plan to D.C.’s muddle.
What becomes clearer every day is that all the government’s efforts, from the AIG “bailout” to TARP 1.0 and TARP 2.0 onward, have essentially been efforts to get around the terribly destructive interaction of “mark-to-market” accounting and regulatory capital requirements. A few keen observers — David Malpass (I), Brian Wesbury (I, II, III, IV), Steve Forbes (I, II) — have made this point from the start. But the government and most economists clung stubbornly to “fair value” in an apparent attempt not to “let the banks off the hook.”
But what a time for an attack of conscience, a principled stand for supposed accounting purity! We’ll spend trillions and totally alter the nation’s financial landscape, but a minor (though powerful and free!) accounting change — relaxing mark-to-market — is a bridge too far? Explain that one. (more…)
From the land of good government
Dateline, Illinois. Tim Carney exposes history’s largest earmark.
Good idea
Futurist and The Singularity Is Near author Ray Kurzweil and the very impressive X-Prize Foundation chief Peter Diamandis launch Singularity University with the goal of “preparing humanity for accelerating technological change.”
The Coming War on Hedge Funds
Susan Lee on the post-crash, post-Madoff universe.
New Year’s Wishes
May your 2009 be less “interesting” than 2008.
A Wet Christmas
‘Twas the night before Christmas
And all through the house
Not a thing was dry
Not even my spouse
The icy rain fell
The water pipe froze
Slipping and sliding
There was no time to doze
We vacuumed and pumped
The whole night through
Yet when we awoke
Santa’s dream had come true
Merry Christmas.
New Venture Firm: Potomac Capital
Thank goodness Nancy Pelosi and Harry Reid are reviewing the Big Three’s business plans before “investing” a couple hundred bil’ of taxpayer money. I’m so relieved. Silicon Valley could learn a few things from these bleeding edge venture capitalists…and the CEOs groveling for our money.
