The U.S. is a rich country judging by its massive economy as measured by GDP, standard of living and availability of goods and services. Yet, the U.S. has one of the highest poverty rates in the world. Among OECD (Organization for Economic Co-operation and Development) member countries, mostly developed countries, the U.S. ranks third highest in poverty.
When viewed as percentage of a population, poverty rates usually understate the misery. The OECD’s as well as many other measures of poverty count individuals living below a certain poverty income line. Therefore, individuals need to be countable and receiving some form of income, which leaves out people participating in underground economies and other invisible endeavors.
Income is defined as household disposable income in a particular year. It consists of earnings, self employment and capital income and public cash transfers; income taxes and social security contributions paid by households are deducted. OECD: Household Income and Wealth
The Smaller Picture: U.S. States
The big picture shows the U.S. as having a significant GDP in relation to other countries, as well as a noteworthy poverty level. What drives such unfortunate poverty numbers? For example, what U.S. states contribute the most to the bleak figures?
The above figures show the number and percentage of people living in poverty by state, using a 3-year average over 2015, 2016, and 2017. Additionally, these figures, provided by the U.S. Census Bureau on September 2018, are the Supplemental Poverty Measure, which factor in cost of living in each state. One state stands out: California.
The Golden State, Not So Golden
California has 7.5 million people living in poverty, the nation’s highest rate. The next worse is Florida with 3.7 million — a little less than half of California’s numbers. And remember these are the people that are counted, not living in invisible settings.
State legislators throw up their hands, blame the “housing crisis” in the state for the lamentable poverty numbers, and return to their business as usual: creating more poverty by insisting on restrictive land use, irresponsible fiscal policies, curbing mobility of residents (think rent control; think high property taxes and Proposition 13), and just plain brain washing folks against the idea of striking out in search of better opportunities. In California everybody is supposed to stay put, stay progressive, stay PC, and stay either very poor or very rich. The strategy may not be working all that well considering the state’s net out migration, but California has mighty persistent politicians.
Were California less effusive in bragging about its economy – never mentioning its poverty rate as a self-inflicted wound, and seldom mentioning its unsustainable unfunded pension liabilities; and were California more focused on making efficient use of its enormous tax revenues instead of “resisting” change, it would have been mean spirited to pick on California as the lead contributor to the regrettable U.S. poverty rate. But, given the circumstances, it is not wrong to randomly throw the blame on the Golden State.
Liberty-leaning folks will not even need to read the 23 pages of proposals; they will only need to read the word “regulation” on the title of a paper dealing with platforms on which people express their thoughts, political leanings, religious beliefs, or business strategies.
Were Senator Warner’s white paper an isolated case of regulating free expression, there would be less cause for concern that is warranted in the wake of other legislation curbing the actions of websites, social media, bloggers, and others who express themselves on-line. This Just Vote No Blog recently wrote about California Senate Bill 1424 which aims to establish a Social Media Advisory Group “to study the problem of the spread of false information through Internet-based social media platforms, and draft a model strategic plan for Internet-based social media platforms to use to mitigate this problem.” Will your blog or post be declared “false information” because the powers that be did not like what you said?
The words “regulation” and “Internet” should not even be in the same sentence, since proposals such as these can only bring unfortunate consequences to our freedoms, as well as to our economic well being.
Find a Crisis and Exploit It
Kaiser Industries built a lot of roads and homes in California. Its pink cement-mixing trucks painted with the slogan “Find a Need and Fill It” were part of the state’s lore. Those were the 1950s, when industrialist/innovator Henry Kaiser found a need for homes, roads and factories, and filled that need by building them – with government’s blessings.
Today, it seems the dominant slogan is not the entrepreneurs’ find a need and fill it, but government’s find a crisis and exploit it. Instead of letting industrialists and innovators like Henry Kaiser produce the goods and services consumers want, government focuses on finding crises (or manufacturing them) and using these crises to tie the hands of producers and expand its reach.
Senator Warner’s 20 proposals to regulate the Internet serve as examples. Here is an excerpt from his white paper:
In the course of investigating Russia’s unprecedented interference in the 2016 election, the extent to which many technologies have been exploited – and their providers caught repeatedly flat-footed – has been unmistakable. More than illuminating the capacity of these technologies to be exploited by bad actors, the revelations of the last year have revealed the dark underbelly of the entire ecosystem. The speed with which these products have grown and come to dominated nearly every aspect of our social, political and economic lives has in many ways obscured the shortcomings of their creators in anticipating the harmful effects of their use. Government has failed to adapt and has been incapable or unwilling to adequately address the impacts of these trends on privacy, competition, and public discourse.
Before we even examine the 20 proposals, we might note the arrogance contained in the paragraph above:
* “Unprecedented interference in the 2016 election?” Hardly. Interference in the form of influence, spying and other strategies has happened several times in the past. A famous example of interference is Britain’s campaign to discredit Charles Lindbergh, leader of the “America First” movement of the 1940s, in an attempt to obtain military help from the U.S. in WWII.
* “Dark underbelly?” Perhaps Senator Warner could consider focusing on draining some swamps in Washington DC, rather than worry about Amazon, Apple, Google and Facebook having a dark underbelly.
* “Anticipating harmful effects?” How good has been government in anticipating the harmful effects of its policies? How is the good old War on Drugs working for you and your family, especially if you happen to live in a poor neighborhood?
* “Government has failed to adapt” is always Newspeak for not yet passing more and more laws.
As noted in Senator Warner’s introduction to his proposals quoted above, the proposals purport to protect consumers and defend “our Democratic Institutions.” However, all “protection,” whether from government, the Mafia, or from zealous family members comes at a price. The price consumers must pay if they accept the “security” offered by proposals such as that of Senator Warner is loss of liberty. To protect one’s liberty one must make the effort to remain informed and exercise critical thinking. We must understand the products and services we use, and choose them wisely. We must not depend on “protectors” who most likely have their own agenda. This Just Vote No Blog wrote about that on our post Smart Cities – Your Life in a Fish Bowl.
Highlights of the 20 Proposals
These are what this Just Vote No Blog considers highlights of the 20 Proposals:
* Determine origins of posts and/or accounts to prevent bad actors from assuming false identities and influencing political debate.
* Identify inauthentic accounts to prevent spread of disinformation that pose a threat to our democratic process and undermine the integrity of digital markets.
* Make platforms liable for state-law torts (defamation, false light, public disclosure of private facts) for failure to take down deep fake or other manipulated audio/video content.
* Propose legislation that guarantees that platforms above a certain size provide independent, public interest researchers with access to anonymized activity data in order to measure and audit social trends on platforms that could help inform action by regulators in Congress.
* Require disclosures for online political advertisements in order to prevent targeted political ads sponsored by foreign advertisers. Require that platforms make all reasonable efforts to ensure that foreign individuals and entities are not purchasing political ads.
* Establish a Public Initiative for Media Literacy funded by the federal government and primarily administered by state and local educational institutions. Building media literacy from an early age would help build long-term resilience to foreign manipulation of our democracy.
* Deem as information fiduciaries certain types of online service providers – including search engines, social networks, ISPs, and cloud computing providers – because of the extent of user dependence on them, as well as the extent to which they are entrusted with sensitive information.
* Endow the FTC with privacy rule making authority, so as to enable it to respond to changes in technology and business practices, as well as increase its funding.
* Adopt GDPR-like legislation. One major tenant of the GDPR (that the US could or could not adopt) is the potential of high penalties for non-compliance in which a company or organization can be fined.
* Determine that dark patters — user interfaces that have been intentionally designed to sway users towards taking actions they would otherwise not take under effective, informed consent — are unfair and deceptive trade practices. To address this, FTC could be given rule-making authority to ensure that the law keeps pace with business practices.
* Set mandatory federal standards for platform algorithms to be auditable, so that outputs of algorithms are evaluated for efficacy/fairness and potential hidden bias.
* Pass a bill requiring data transparency, such that free platforms provide users with an annual estimate of what their data was worth to the platform, which would provide significant price transparency, educate consumers on the true value of their data, and potentially attracting new competitors. Data transparency would also assist antitrust enforcement agencies like the FTC and DOJ.
* Pass legislation that could define thresholds such as user base size, market share, or level of dependence of wider ecosystems, beyond which certain core functions/platforms/apps would constitute essential facilities, requiring a platform to provide third party access on fair, reasonable and non-discriminatory terms and prevent platforms from engaging in self-dealing or preferential conduct.
Senator Warner’s 20 Proposals to Regulate the Internet might bring to mind prescription drug ads and their interminable laundry list of side effects. Have all the regulations imposed on drug companies prompted patients to consume less drugs or become more aware of side effects such as addictions? Have all the regulations lowered drug prices? Senator Warner’s 20 Proposals would most likely have the same result as the required listing of side effects.
However, more serious than ineffectiveness are the consequences. The proposals listed above lean towards the following outcomes:
* On-line social media platforms that host content, such as Facebook or Google Plus, will become liable for what is posted. This liability will transform social media’s function, increase the costs of operating a platform, discourage new entrants due to high costs and the threat of liability, subject platforms to the whims of powers that be bent on surpresing opposition, and is open ended. Will liability apply to content management systems such as WordPress or Joomla? Will e-mail clients such as Thunderbird or Apple Mail be liable for the content of e-newsletters, meeting announcements, or communication between group members?
* One of the proposals is the establishment of a Public Initiative for Media Literacy, funded by the federal government and primarily administered by state and local educational institutions, to build media literacy from an early age that would “help build long-term resilience to foreign manipulation of our democracy.” Perhaps the real concern here should be the manipulation of our children’s minds? How about just teaching our kids to think critically instead?
* Mandatory standards for auditable platform algorithms sounds more like killing the golden goose of innovative proprietary code than protecting consumers or defending our Democratic institutions. How far will “auditable” go? How can proprietary code be proprietary when it in essence becomes open source?
* One of the 20 Proposals is to declare the Internet an essential facility. We as a People need to decide what we want the Internet to be: 1) a host for information of all types, ideas, random thoughts, beliefs, as well as a leveler of playing fields where a user with little financial wherewithal can start a future multi-billion dollar company from his/her dorm room; or 2) do we want the Internet to be just another regulated utility.
* Lastly, Senator Warner seems to think his 20 Proposals will improve competition by tying the hands of the big social media companies and supposedly facilitating new entrants. Here are three points to consider:
Successful people make it big by aspiring to be big. They do not enter a market that highly regulates bigness just because they are little, since they do not intend to remain little.
Successful people do not need government legislation, rather they avail themselves of government policies. For example, when government (because of its gargantuan national debt) keeps interest rates ridiculously low, smart people borrow loads of money, offer stockholders of competitors good prices, and sail into near-monopoly positions.
Remember WordPerfect and Quatro Pro, or MySpace? These guys dominated the word processing, spreadsheet, and social media markets respectively. But then came Word Office Suite and Facebook. So, big companies can be replaced by smarter and nimbler ones.
As the Wall Street Journal says in its article Warner’s Plan to Ruin the Internet,
“Mr. Warner has flexed his congressional muscles and made a point. Now he can go away.” We concur.
The law of unintended consequences is as merciless as the law of gravity. This article lists three instances where the law of unintended consequences caused supposedly well-intentioned laws to turn into nightmares, especially for those of modest income.
The book recounts the story about the federal Small Business Administration setting up a program to help residents of inner cities become entrepreneurs. The SBA would guarantee loans to start business franchises. Dunkin’ Donuts stepped right up to help promote the program, followed by McDonald’s and Burger King. Once fast food companies realized inner cities had become a gold mine, they leveraged their prospects with advertising, and inner cities residents became faithful consumers of fast foods.
The unfortunate unintended consequence is unhealthy obesity.
The War on Terror and the Rise of Terrorism
9/11 was a tragedy where we experienced in real time, in U.S. soil, the death of almost 3,000 civilians. Therefore, the hurt and anger that resulted in the war in Afghanistan, and later Iraq, could be understood. George Bush sent troops to Afghanistan to clean out terrorist camps, and to Iraq to eradicate supposed weapons of mass destruction.
The unfortunate unintended consequence is well described by this paragraph,
What the US tends to forget, or intentionally ignores, is that armed reactionary groups like ISIS are born out of the destabilization created by Western military intervention … [H]ostile anti-American resistance groups gain momentum, sympathy and legitimacy from the actions carried out by Western forces. Foreign Policy Journal, 2015
Fighting Climate Change
Everybody wants clean air, clean water, and the absence of extreme climate. Therefore, to ensure these graces, legislators have done what legislators tend to do – pass laws. The laws of preference favor transit-oriented development (TOD) intended to reduce automobile miles traveled and greenhouse gas emissions.
TOD policies set strict urban-growth boundaries, establish vast conservation areas where development is not allowed, and encourage development only along transit corridors. Under such plans, density is promoted as desirable not only as means of reducing greenhouse gas emissions, but also as an engine of growth and, therefore, tax generation.
The unsurprising unintended consequence of transit-oriented policies is unaffordability of real estate. As places to build shrink and neighborhoods resist high density, supply of housing decreases and prices for renting or buying a roof over one’s head go up.
California, a state that boasts its leadership in controlling climate change and forcefully promotes transit-oriented policies has chased away its working poor and its middle class, who cannot afford astronomically housing costs.
The problem is that high-density housing–that is, mid-rise and high-rise housing–costs 50 to 68 percent more, per square foot, to build than low-density housing. If California really wants to build housing that is affordable to low-income people, it needs to build more low-density housing. To build that, it needs to open up land that has been off-limits to development because it is outside of urban-growth boundaries. Will Density Make Housing Affordable? New Geography, March 2018.
Government policies apparently implemented in good faith can easily turn sour and result in unanticipated harm. Who can forget the mass displacement of residents in the 1950s -1960s in the name of urban development? Who can ignore the cost of health insurance after the Affordable Care Act? How many families have been torn apart and how many children have been caught in the cross fire of the war on drugs? But these are all subject for future articles on the Just Vote No Blog.
Therefore, regardless of your party affiliation or political leanings, proceed with caution in supporting sweeping legislation, regulation, or executive orders at all levels of government.
Whose job is to determine what is fake news, entertainment, or new ideas worthy of consideration?
California Senator Richard Pan seems to believe it is government’s job to do so. His recently introduced Senate Bill 1424 has gone through several amendments, resulting in what is now in committee process. The current version of the bill is simply a proposal to form an advisory group within the California Attorney General’s office to study fake news to purportedly prevent its spread. Really? Read more.
… require the Attorney General, not later than April 1, 2019, to establish an advisory group consisting of at least one member of the Department of Justice, as well as Internet-based social media providers, civil liberties advocates, and First Amendment scholars to study the problem of the spread of false information through Internet-based social media platforms, and draft a model strategic plan for Internet-based social media platforms to use to mitigate this problem.
The bill in its present form, after amendments, mentions only “Internet-based social media platforms,” bringing to mind Internet giants such as Facebook and Google. However, an earlier version of the bill reveals what Senator Pan may have had in mind,
As used in this section, “social media” means an electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations.
The bill as amended simply requires a study. However, earlier versions of the bill specify requirements via legislation, giving a hint of what might eventually arise from the proposed “advisory group.” Here are a few requirements of the bill prior to amendments: How, and on what basis, the social media Internet website determines what content to display to the user; whether the social media Internet website enables other parties to influence, through payment or the use of automated accounts, what content is displayed to a user; whether the social media Internet website utilizes factcheckers.
Small businesses, startups, as well as bloggers of every type with a presence on the Internet should consider themselves in the crosshairs of Senate Bill 1424. Senator Pan seems to be seizing an opportunity offered by a crisis du jour, fake news, to regulate what is said on the Internet.
Small businesses and startups often depend on an Internet presence to acquaint the public with their products or services. What they say about their products or services is already covered by several rules to prevent false claims. The Federal Trade Commission summarizes responsibilities of businesses as follows: “Under the law, claims in advertisements must be truthful, cannot be deceptive or unfair, and must be evidence-based. For some specialized products or services, additional rules may apply.” Additional rules include claims that target children, involve endorsements, pertain to environmental or health products, indicate a product was made in the U.S.A., entail telemarketing or online advertising.
Assuming that fake news is described by the proposed “advisory group” as not evidence-based (although who knows what the group might come up with by way of description), what would be the purpose of Senator Pan’s idea of adding to what is already in the FTC’s books?
While for the most part businesses offer products or services for a price or a fee, non-profits, columnists, bloggers, activists, candidates running for office, political observers offer arguments and ideas. Determining whether such arguments and ideas are patently false, i.e. whether they are fake news, seems to be skating on thin ice. At what point Senator Pan’s proposal crosses the line from attempting to keep untruths from spreading to regulating arguments and ideas. At what point does Senator Pan’s proposal become a violation of the U.S. Constitution First Amendment?
Invent a Crisis Then Milk It
Never let a crisis go to waste seems to be in every legislator’s catechism. We have lived with all types of snake oil since the beginning of time. Caveat emptor – buyer beware – used to be the rule of the marketplace. However, little by little, consumers of products, ideas, and news have been increasingly deemed incapable of determining what is snake oil and what is not. Some rules can be beneficial, such as requiring evidence-based label information on products. But what is an evidence-based idea?
When our Declaration of Independence stated that all men are created equal and endowed with certain unalienable rights, would Senator Pan object to this phrase as fake news, since all men at that time were not being really deemed to be created equally? Would Senator Pan understand the magnitude of that phrase as a new idea upon which the Founding Fathers intended to build a new nation? Or would Senator Pan try to pass a law preventing the spread of those words?
Alexis de Tocqueville, of Democracy in America fame, offered the following image,
… the sovereign power extends its arms over the entire society; it covers the surface of society with a network of small, complicated, minute, and uniform rules, which the most original minds and the most vigorous souls cannot break through to go beyond the crowd; it does not break wills, but it softens them, bends them and directs them; it rarely forces action, but it constantly opposes your acting; it does not destroy, it prevents birth; it does not tyrannize, it hinders, it represses, it enervates, it extinguishes, it stupefies, and finally it reduces each nation to being nothing more than a flock of timid and industrious animals, of which the government is the shepherd.
Are we experiencing such pall draping our nation, or have we even gone beyond it?