Quotulatiousness

January 24, 2015

Problems besetting the British health system

Filed under: Britain, Bureaucracy, Health — Tags: , , — Nicholas @ 04:00

At Samizdata, Natalie Solent shares a post written by “ARC” discussing why the National Health Service seems to be under such pressure lately:

1) Flow-though is crucial to A&E: you must get people out the back-end of the process to maintain your rate of input to the front-end. However ever-increasing regulations mean a patient without family cannot be released until a boat-load of checks have been done. This is clogging up the back end. It may be preventing the release of a few who had better not be sent home yet (not much and not often, is the general suspicion) but it is definitely delaying hugely processing the release of all others who could be. All this admin takes time and effort — delaying release and also using up time of staff in non-health work — and costs money.

This effect needs to be understood in the context of the 15-years-older story of the destruction of many non-NHS nursing homes by galloping regulation. These homes were mostly owned and operated by senior ex-NHS nurses and provided low-grade post-operative care. The NHS relied on them as half-way houses to get patients out of NHS hospitals when they no longer needed intensive care but were not yet recovered enough to go home. These nurses did not want to spend time form-filling instead of caring for patients, and for each home there was always one of the 1000+ rules that was particularly hard for that given home to meet without vast expense or complication. So they died one by one. The ‘waiting times have increased’ story of Tony Blair’s early-2000 years — “If the NHS were a patient, she’d be on the critical list” — was caused by this and the resultant bed-blocking more than any other one cause.

The problem with waving the regulatory wand to “solve” a problem like this is that it tends to create perverse incentives so that the artificial target can be achieved — like this post from a couple of years back where the regulators dictated a maximum time a patient could be kept waiting for admission to A&E. The reaction of the people running the system was to change the definition of “admission” so that now patients’ timers don’t start running until they’re unloaded from the ambulance … so the end result is people are spending more time in the back of ambulances waiting outside the hospital until there’s an open slot. This meets the artificial target, but creates a worse situation because patients are still waiting as long (or longer), but now they’re also tying up ambulances from attending other emergency situations.

Back to ARC’s list of NHS problems:

2) The new 111 service is sending many more patients to A&E.

2.1) The service’s advice is very risk averse. The people who set up the process were afraid of the consequences of the statistical 1-in-a-million time when anything other than mega-risk-averse advice would see some consequence that would become a major news story blaming them.

2.2) Thanks to the post-1997 reforms, GPs work less hours on-call but the doctors are not just slacking off and doing nothing. The huge growth in regulation means they are in effect putting in as many hours as before, but on form-filling and admin to provide all the info the NHS and other government demand, to ensure they tick every box, etc. The out-of-hours on-call time they used to have is now swallowed by this work. So they are not in fact working less; it is the balance of what they are working on that has changed: less on healthcare, more on admin. Thus 111 must send people to A&E, not an on-call GP (and, of course, fewer on-call GPs mean more people phone 111).

From context, I assume the 111 service is a telephone health advisory service like Telehealth Ontario.

January 23, 2015

QotD: Taxicab cartels

Filed under: Government, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

Around the world, the government-charted monopolies and cartels that run the taxi business responded with protests and violence to the emergence of technology-empowered competitors such as Uber, which does not undercut traditional taxis on cost — in New York, its drivers earn about three times what a traditional cabbie makes — but is much more convenient for those who do not live or work in areas that are generally well-served by traditional taxis. As in most cities, New York law imposes price uniformity on taxis and long protected them from most competition, with the entirely predictable result that consumers are the worst-served parties in the taxi business. (It does not help matters that, unlike their London counterparts, famously steeped in “the Knowledge,” the typical New York cabbie cannot find the Brooklyn Bridge without GPS or turn-by-turn instructions from the passenger.) The lack of consumer focus has some perverse consequences here in New York: The taxi fleet schedules its shift change from 4 p.m. to 5 p.m., meaning that taxis all but vanish from the streets during the hours when they are most needed. The New York Times calls this an “apparent violation of the laws of supply and demand,” which, New York Times geniuses, is exactly what happens when you use regulation to take supply and demand effectively out of the equation. A platform that combined Uber’s on-demand service with Google-style driverless cars would probably put the traditional taxi out of business — assuming that the cartels are not able to use government to strangle innovation in its cradle.

Kevin D. Williamson, “Race On, for Driverless Cars: On the beauty of putting the consumer in the driver’s seat”, National Review, 2014-06-01.

January 19, 2015

The Cape Breton & Central Nova Scotia Railway shuts down operations

Filed under: Business, Cancon, Railways — Tags: , , — Nicholas @ 02:00

In the Globe and Mail, Eric Atkins tells the tale of another shortline railway shutting down operations:

The railway, which did not reapply for a $3-million yearly government subsidy, has been granted permission by a Nova Scotia regulator to abandon the 100 miles of track between Port Hawkesbury and Sydney by October.

The move leaves some factories facing soaring shipping costs and scrambling to find new ways to bring in raw materials.

Beverage container maker Trans-Atlantic used to rely on the railway for 70 or 80 railcars a year carrying plastic pellets from Quebec and South Carolina. John MacLean, vice-president of the manufacturer that employs 40 people, said the railway raised the $600-per-car rate by $5,500 in the fall, and last week notified customers each car would cost $18,000.

“They obviously don’t want to do business here,” Mr. MacLean said by phone from Sydney. “They opted not to take the subsidy but they cited a decrease in traffic as the reason they had to increase the rate.”

The loss of rail service means Trans-Atlantic has been saddled with the expense of trucking its raw material from Moncton, and has lost the flexibility and storage the rail cars offered.

“We have to be very vigilant on the way we operate. It has a huge effect on our competitiveness,” he said.

[…]

Railway executives said at December hearings they did not renew the subsidy application because the future costs of maintaining and repairing the line outweighed the scrap and market value of the steel and other materials.

The railroad’s bridges and culverts would need repairs that cost at least $30-million, while the company figures it can get $15-million to $20-million scrapping and selling the rails and other material.

“As a company we feel that’s a much better use of our assets than simply operating on a subsidy that allows us to break even for 500 carloads a year. That’s why we did not renew,” said Josée Danis, assistant vice-president of Cape Breton & Central Nova Scotia Railway.

January 7, 2015

How to create an investment monoculture

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 03:00

At Coyote Blog, Warren Meyer explains how what must have seemed to be a simple, common-sense regulation change led almost inevitably to a housing market melt-down:

… a redefinition by governments in the Basel accords of how capital levels at banks should be calculated when determining capital sufficiency. I will oversimplify here, but basically it categorized some assets as “safe” and some as “risky”. Those that were risky had their value cut in half for purposes of capital calculations, while those that were “safe” had their value counted at 100%. So if a bank invested a million dollars in safe assets, that would count as a million dollar towards its capital requirements, but would count only $500,000 towards those requirements if it were invested in risky assets. As a result, a bank that needed a billion dollars in capital would need a billion of safe assets or two billion of risky assets.

Well, this obviously created a strong incentive for banks to invest in assets deemed by the government as “safe”. Which of course was the whole point — if we are going to have taxpayer-backed deposit insurance and bank bailouts, the prices of that is getting into banks’ shorts about the risks they are taking with their investments. This is the attempted tightening of regulation to which Kling refers. Regulators were trying for tougher, not weaker standards.

[…]

Anyway, what assets did the regulators choose as “safe”? Again, we will simplify, but basically sovereign debt and mortgages (including the least risky tranches of mortgage-backed debt). So you are a bank president in this new regime. You only have enough capital to meet government requirements if you get 100% credit for your investments, so it must be invested in “safe” assets. What do you tell your investment staff? You tell them to go invest the money in the “safe” asset that has the highest return.

And for most banks, this was mortgage-backed securities. So, using the word Brad DeLong applied to deregulation, there was an “orgy” of buying of mortgage-backed securities. There was simply enormous demand. You hear stories about fraud and people cooking up all kinds of crazy mortgage products and trying to shove as many people as possible into mortgages, and here is one reason — banks needed these things. For the average investor, most of us stayed out. In the 1980’s, mortgage-backed securities were a pretty good investment for individuals looking for a bit more yield, but these changing regulations meant that banks needed these things, so the prices got bid up (and thus yields bid down) until they only made sense for the financial institutions that had to have them.

It was like suddenly passing a law saying that the only food people on government assistance could buy with their food stamps was oranges and orange derivatives (e.g. orange juice). Grocery stores would instantly be out of oranges and orange juice. People around the world would be scrambling to find ways to get more oranges to market. Fortunes would be made by clever people who could find more oranges. Fraud would likely occur as people watered down their orange derivatives or slipped in some Tang. Those of us not on government assistance would stay away from oranges and eat other things, since oranges were now incredibly expensive and would only be bought at their current prices by folks forced to do so. Eventually, things would settle down as everyone who could do so started to grow oranges. And all would be fine again, that is until there was a bad freeze and the orange crop failed.

Government regulation — completely well-intentioned — had created a mono-culture. The diversity of investment choices that might be present when every bank was making its own asset risk decisions was replaced by a regime where just a few regulators picked and chose the assets. And like any biological mono-culture, the ecosystem might be stronger for a while if those choices were good ones, but it made the whole system vulnerable to anything that might undermine mortgages. When the housing market got sick (and as Kling says government regulation had some blame there as well), the system was suddenly incredibly vulnerable because it was over-invested in this one type of asset. The US banking industry was a mono-culture through which a new disease ravaged the population.

Cory Doctorow on the dangers of legally restricting technologies

Filed under: Law, Liberty, Media, Technology — Tags: , , , , — Nicholas @ 02:00

In Wired, Cory Doctorow explains why bad legal precedents from more than a decade ago are making us more vulnerable rather than safer:

We live in a world made of computers. Your car is a computer that drives down the freeway at 60 mph with you strapped inside. If you live or work in a modern building, computers regulate its temperature and respiration. And we’re not just putting our bodies inside computers — we’re also putting computers inside our bodies. I recently exchanged words in an airport lounge with a late arrival who wanted to use the sole electrical plug, which I had beat him to, fair and square. “I need to charge my laptop,” I said. “I need to charge my leg,” he said, rolling up his pants to show me his robotic prosthesis. I surrendered the plug.

You and I and everyone who grew up with earbuds? There’s a day in our future when we’ll have hearing aids, and chances are they won’t be retro-hipster beige transistorized analog devices: They’ll be computers in our heads.

And that’s why the current regulatory paradigm for computers, inherited from the 16-year-old stupidity that is the Digital Millennium Copyright Act, needs to change. As things stand, the law requires that computing devices be designed to sometimes disobey their owners, so that their owners won’t do something undesirable. To make this work, we also have to criminalize anything that might help owners change their computers to let the machines do that supposedly undesirable thing.

This approach to controlling digital devices was annoying back in, say, 1995, when we got the DVD player that prevented us from skipping ads or playing an out-of-region disc. But it will be intolerable and deadly dangerous when our 3-D printers, self-driving cars, smart houses, and even parts of our bodies are designed with the same restrictions. Because those restrictions would change the fundamental nature of computers. Speaking in my capacity as a dystopian science fiction writer: This scares the hell out of me.

January 5, 2015

The role of price controls in the decline of the Roman empire

Filed under: Economics, Europe, History — Tags: , , , , — Nicholas @ 06:58

The latest issue of Libertarian Enterprise included this selection from Ludwig von Mises’ Human Action on how government restrictions on prices and trade contributed to the downfall of the western empire:

Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.

It may be left undecided whether or not it is correct to call the economic organization of the Roman Empire capitalism. At any rate it is certain that the Roman Empire in the second century, the age of the Antonines, the “good” emperors, had reached a high stage of the social division of labor and of interregional commerce. Several metropolitan centers, a considerable number of middle-sized towns, and many small towns were the seats of a refined civilization. The inhabitants of these urban agglomerations were supplied with food and raw materials not only from the neighboring rural districts, but also from distant provinces. A part of these provisions flowed into the cities as revenue of their wealthy residents who owned landed property. But a considerable part was bought in exchange for the rural population’s purchases of the products of the city-dwellers’ processing activities. There was an extensive trade between the various regions of the vast empire. Not only in the processing industries, but also in agriculture there was a tendency toward further specialization. The various parts of the empire were no longer economically self-sufficient. They were interdependent.

What brought about the decline of the empire and the decay of its civilization was the disintegration of this economic interconnectedness, not the barbarian invasions. The alien aggressors merely took advantage of an opportunity which the internal weakness of the empire offered to them. From a military point of view the tribes which invaded the empire in the fourth and fifth centuries were not more formidable than the armies which the legions had easily defeated in earlier times. But the empire had changed. Its economic and social structure was already medieval.

The freedom that Rome granted to commerce and trade had always been restricted. With regard to the marketing of cereals and other vital necessities it was even more restricted than with regard to other commodities. It was deemed unfair and immoral to ask for grain, oil, and wine, the staples of these ages, more than the customary prices, and the municipal authorities were quick to check what they considered profiteering. Thus the evolution of an efficient wholesale trade in these commodities was prevented. The policy of the annona, which was tantamount to a nationalization or municipalization of the grain trade, aimed at filling the gaps. But its effects were rather unsatisfactory. Grain was scarce in the urban agglomerations, and the agriculturists complained about the unremunerativeness of grain growing. The interference of the authorities upset the adjustment of supply to the rising demand. The showdown came when in the political troubles of the third and fourth centuries the emperors resorted to currency debasement. With the system of maximum prices the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society’s economic organization. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food. Commerce in grain and other necessities vanished altogether. To avoid starving, people deserted the cities, settled on the countryside, and tried to grow grain, oil, wine, and other necessities for themselves. On the other hand, the owners of the big estates restricted their excess production of cereals and began to produce in their farmhouses — the villae — the products of handicraft which they needed. For their big-scale farming, which was already seriously jeopardized because of the inefficiency of slave labor, lost its rationality completely when the opportunity to sell at remunerative prices disappeared. As the owner of the estate could no longer sell in the cities, he could no longer patronize the urban artisans either. He was forced to look for a substitute to meet his needs by employing handicraftsmen on his own account in his villa. He discontinued big-scale farming and became a landlord receiving rents from tenants or sharecroppers. These coloni were either freed slaves or urban proletarians who settled in the villages and turned to tilling the soil. A tendency toward the establishment of autarky of each landlord’s estate emerged. The economic function of the cities, of commerce, trade, and urban handicrafts, shrank. Italy and the provinces of the empire returned to a less advanced state of the social division of labor. The highly developed economic structure of ancient civilization retrograded to what is now known as the manorial organization of the Middle Ages.

The emperors were alarmed with that outcome which undermined the financial and military power of their government. But their counteraction was futile as it did not affect the root of the evil. The compulsion and coercion to which they resorted could not reverse the trend toward social disintegration which, on the contrary, was caused precisely by too much compulsion and coercion. No Roman was aware of the fact that the process was induced by the government’s interference with prices and by currency debasement. It was vain for the emperors to promulgate laws against the city-dweller who relicta civitate rus habitare maluerit [deserted the cities, preferring to live in the country]. The system of the leiturgia, the public services to be rendered by the wealthy citizens, only accelerated the retrogression of the division of labor. The laws concerning the special obligations of the shipowners, the navicularii, were no more successful in checking the decline of navigation than the laws concerning grain dealing in checking the shrinkage in the cities’ supply of agricultural products.

The marvelous civilization of antiquity perished because it did not adjust its moral code and its legal system to the requirements of the market economy. A social order is doomed if the actions which its normal functioning requires are rejected by the standards of morality, are declared illegal by the laws of the country, and are prosecuted as criminal by the courts and the police. The Roman Empire crumbled to dust because it lacked the spirit of liberalism and free enterprise. The policy of interventionism and its political corollary, the Führer principle, decomposed the mighty empire as they will by necessity always disintegrate and destroy any social entity.

From: Ludwig von Mises, Human Action: A Treatise on Economics, vol. 3 (LF ed.) [1996], Chapter 30. Online at http://oll.libertyfund.org/titles/1895#lf3843-03_head_036, the Online Library of Liberty, A collection of scholarly works about individual liberty and free markets.

January 1, 2015

Unintended consequences – charities suffer due to US anti-terror measures

Filed under: Economics, Government, USA — Tags: , , , , — Nicholas @ 11:31

It’s actually rather amazing how powerful the US government can be … and we’re not talking about military power here. US banking laws are being exported to other nations without their consent or consultation, and there’s nothing non-US governments can do about it:

Now here’s a real surprise. The various anti-terror laws, terrorist financing laws, know your customer, illicit money tracking laws which now festoon the financial system have costs. Really, who would have thought it that bureaucratic regulations have real costs out there in the real world? It’s something of an amusement that it’s a rather lefty think tank, Demos, that brings us this news. For, of course, it tends to be those who are rather lefty who tell us that regulation is the cure for all our ills and no, of course not, regulations never have any costs they only do good things. You know, the Elizabeth Warren approach, piles of regulations on finance will be just wonderful, no one will ever lose out.

It particularly interests me as I’ve a very vague connection with a charity, Interpal, that has been hit by these sorts of regulations. Not, I hasten to add, that I am actually connected with that charity, only that I was once on a TV program with the head of it discussing their difficulties in gaining access to a bank account. The basic problem was that the Americans thought that they were less than kosher (the charity themselves obviously disagree) and that thus they shouldn’t have access to the banking system. This shouldn’t be all that much of a problem as they’re a UK charity and they were looking for access to the UK banking system. But that isn’t how it all works. If the Americans decide that they don’t think someone should have access to the banking system then they tell the bank that, well, you wouldn’t want us to come looking at your American banking licence if you were to offer an account with your UK licence, would you? And thus there is the leverage required to extend US law to other countries.

[…]

It’s not particularly the British government that is causing these problems although they have a part in it, to be sure. It’s the general international rules over who a bank may deal with, what they’ve got to know about them and what they’re doing with the money. Everyone seems quite happy with this as it stops (or hinders at least) drug dealing, money laundering and tax abuse. But it does have costs. Absolutely any set of regulations will affect people who are not the target of said regulations. If you insist that banks make a large effort to understand what their customers are doing then the banks will simply reject some customers as not being worth the candle. If perhaps handling money for some Islamic terrorist means bankers go to jail then bankers won’t handle the money of anyone who might be an Islamic terrorist: nor anyone who wanders around in Huddersfield in Islamic robes and states that they’re raising money to help the poor of Gaza. The manager of, say, Lloyds Bank in Huddersfield doesn’t know what the heck is going on in Gaza, who is linked to Hamas, who is not, who is delivering food and who is doing other less reputable things. And there’s no reason why she should either. So, the laws to prevent the one will lead to the other not gaining access to a bank account. This is really simple, simple, stuff.

This is what happens when people regulate.

December 27, 2014

Regulatory costs don’t scale to smaller businesses

Filed under: Bureaucracy, Business — Tags: , , — Nicholas @ 04:00

Warren Meyer writes a letter to the dean of Harvard Business School after reading the story of a professor at HBS harassing a mom’n’pop restaurant over a $4 overcharge on a meal order:

… I was horrified to see an HBS professor (prof Edelman) in the news harassing a small business over a small mistake on its web site. I don’t typically get worked up about Harvard grads acting out, but in this particular case his actions are absolutely at the core of what is making the operation of a small business increasingly impossible in this country.

Small businesses face huge and growing compliance risks from almost every direction — labor law, safety rules, environmental rules, consumer protection laws, bounty programs like California prop 65, etc. What all these have in common is that they impose huge penalties for tiny mistakes, mistakes that can be avoided only by the application of enormous numbers of labor hours in compliance activities. These compliance costs are relatively easy for large companies to bear, but back-breaking for small companies.

So it is infuriating to see an HBS professor attempting to impose yet another large cost on a small business for a tiny mistake, particularly when the proprietor’s response was handled so well. Seriously, as an aside, I took service management from Ben Shapiro back in the day and I could easily see the restaurateur involved being featured positively in a case study. He does all the same things I learned at HBS — reading every customer comment personally, responding personally to complaints, bending over backwards to offer more than needed in order to save the relationship with the customer.

As for the restaurateur’s web site mistake — even in a larger, multi-site company, I as owner do all my own web work. Just as I do a million other things to keep things running. And it is hard, in fact virtually impossible, to keep all of our web sites up to date. Which is why Professor Edelman’s response just demonstrates to me that for all HBS talks about entrepreneurship, the faculty at HBS is still more attuned to large corporations and how they operate with their enormous staff resources rather than to small businesses.

Large corporations are crushing smaller ones in industry after industry because of the economy of scale they have in managing such compliance issues. If the HBS faculty were truly committed to entrepreneurship, it should be thinking about how technology and process can be harnessed by smaller businesses to reduce the relative costs of these activities. How, for example, can I keep up with 150+ locations that each need a web presence when my sales per site are so much less than that of a larger corporation? This is not impossible — I have learned some tools and techniques over time — and we should be teaching and expanding these, rather than spending time raising the cost of compliance for small business.

December 16, 2014

America’s “terribly warped justice system”

Filed under: Law, Liberty, USA — Tags: , , , , — Nicholas @ 00:03

Conrad Black talks (partly from first-hand experience) of how badly served the United States is by its justice system:

… everyone in the United States, from the president and the wealthiest and most admired citizens down, is, in some measure, a victim of this now terribly warped justice system. No one is safe and everyone pays for it. The legal cartel is riveted on the back of the country like a horse-leech and extracts $1.8 trillion a year from the American economy as the legislators and regulators add 4,000 new measures with weighty sanctions each year, for the delectation of their confrères at the bar. At any time, 1 percent of the entire adult population is incarcerated, at a cost of about $150 billion annually and usually in unconstitutionally inhuman conditions; another 6 or so percent of all adults, male and female, are awaiting conviction (99.5 percent of those tried are convicted, an absurdly implausible number rivaled only by North Korea) or are under supervised release by often pettifogging probation officers at further great cost to the country. There are 48 million convicted felons in the United States, and even if decades-old unstigmatizing offenses such as failing a breathalyzer or being disorderly at a fraternity party are omitted, this means that approximately 15 percent of American adult males are designated felons. This is an absurd and barbarous number achieved by equal-opportunity multi-ethnic injustice, albeit unevenly applied. It presents African Americans a chance to form an invincible coalition in whose victory they would be the principal winners.

Though evidence of police and prosecution abuse pours in through the media every week, the majority of Americans, personally unaffected by the failings of the system, complacently believes that they live in a society of laws envied by the world. Neither supposition is correct. The United States has six to twelve times as many incarcerated people per capita as other prosperous democracies: Australia, Canada, France, Germany, Japan, and the United Kingdom. This appalling state of affairs has developed gradually over the last 40 years, as the percentage of prosecutions resolved by (very often) abusive applications of the plea-bargain system without a trial has risen from about 80 (an unheard of number in other democratic countries) to 97. The percentage of incarcerated people among the population has multiplied by five in that time, so the U.S. today has 5 percent of the world’s people, but 25 percent of its incarcerated people (and 50 percent of its lawyers – counting only those countries in which a serious professional entry course is required to practice that occupation).

The Supreme Court has sat like a shelf of suet puddings while the criminal-justice system has become a conveyor belt to the country’s bloated and corrupt prison system, and lawyers have become an immense industry, hiding its avarice behind a fog of insipid pieties about the rule of law (which, as the phrase was meant by the authors of the Bill of Rights, can scarcely be said to exist in the U.S.). New York federal judge Jed S. Rakoff wrote in the New York Review of Books on November 20 that the traditional American notion of the day in court is “a mirage” because of the corruption of the plea-bargain system, in which inculpatory evidence is extorted from witnesses in exchange for immunity from prosecution, including for perjury. Every week there is some new exposé of horror stories of prosecutorial abuse, yet prosecutors enjoy an absolute immunity, even when it is revealed that they have committed crimes of obstruction of justice, as in the infamous Connick v. Thompson decision of 2011: An innocent man spent 14 years on death row because prosecutors willfully withheld DNA evidence they knew would, and ultimately did, acquit him; the U.S. Supreme Court narrowly overruled the damage award to the wrongfully convicted Mr. Thompson on a spurious technicality.

December 14, 2014

Google to Spain: “Buh-bye!”

Filed under: Business, Europe, Media — Tags: , , , — Nicholas @ 00:04

Spanish legislation imposing a special tax on Google has resulted in Google erasing Spain from their Google News business plan altogether:

Back in October, we noted that Spain had passed a ridiculously bad Google News tax, in which it required any news aggregator to pay for snippets and actually went so far as to make it an “inalienable right” to be paid for snippets — meaning that no one could choose to let any aggregator post snippets for free. Publishers have to charge any aggregator. This is ridiculous and dangerous on many levels. As we noted, it would be deathly for digital commons projects or any sort of open access project, which thrive on making content reusable and encouraging the widespread sharing of such content.

Apparently, it’s also deathly for Google News in Spain. A few hours ago, Google announced that due to this law, it was shutting down Google News in Spain, and further that it would be removing all Spanish publications from the rest of Google News. In short, Google went for the nuclear option in the face of a ridiculously bad law:

    But sadly, as a result of a new Spanish law, we’ll shortly have to close Google News in Spain. Let me explain why. This new legislation requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable. So it’s with real sadness that on 16 December (before the new law comes into effect in January) we’ll remove Spanish publishers from Google News, and close Google News in Spain.

Every time there have been attempts to get Google to cough up some money to publishers in this or that country, people (often in our comments) suggest that Google should just “turn off” Google News in those countries. Google has always resisted such calls. Even in the most extreme circumstances, it’s just done things like removing complaining publications from Google News, or posting the articles without snippets. In both cases, publishers quickly realized how useful Google News was in driving traffic and capitulated. In this case, though, it’s not up to the publishers. It’s entirely up to the law.

December 2, 2014

QotD: Bureaucratic job satisfaction

Filed under: Bureaucracy, Quotations — Tags: , — Nicholas @ 00:01

I realized a long time ago that a very large number of people in a modern economy are paid to do things that not only fail to add to the economic product of the country, but on the contrary reduce it, insofar as they obstruct others from producing as much as they otherwise might.

There is, as every petty official knows, a great deal of pleasure to be had from the obstruction of others, especially if they appear to be more fortunate, better placed, richer, or more intelligent than oneself. There is a pleasure in naysaying, all the greater if the naysayer is able to disguise from the victim the fact that he is not only doing his duty but gratifying himself. Indeed, there are many jobs, meaningless in themselves, in which the power to say no is the only non-monetary reward.

Theodore Dalrymple, “The Gross Domestic Pissants”, Taki’s Magazine, 2014-04-20

December 1, 2014

Baylen Linnekin on the FDA’s latest bad idea

Filed under: Bureaucracy, Business, Health, USA — Tags: , , — Nicholas @ 00:03

In Reason, Baylen Linnekin looks at the FDA’s soon-to-be-implemented rules on menu labelling:

Earlier this week, the FDA released rules that will force food sellers around the country to provide point-of-sale calorie information to consumers. The rules cover chain restaurants, vending machines, “movie theaters, sports stadiums, amusement parks, bowling alleys and miniature golf courses that serve prepared foods.” The rules apply to foods and beverages — including beer, wine, and spirits — sold at these places.

[…]

Farley’s enthusiasm might have been tempered by research showing mandatory menu-labeling doesn’t work — and may even be counterproductive.

Because the new rules will cost more than a billion dollars not to stop the obesity epidemic and maybe make it better, some who have to spend that money aren’t pleased.

For example, that potato salad you buy at your grocery deli counter will fall under the new rules. That doesn’t sit well with grocery store owners.

“Grocery stores are not chain restaurants, which is why Congress did not initially include them in the law,” said National Grocers Association president and CEO, Peter J. Larkin in a statement. “We are disappointed that the FDA’s final rules will capture grocery stores, and impose such a large and costly regulatory burden on our members.”

[…]

As I wrote last year, the NRA, which represents restaurant chains across the country, supported the national menu-labeling rule as a shield against a growing, costly, and unworkable patchwork of different state and local menu-labeling laws.

It’s the same reason that food manufacturers, facing mandatory GMO-labeling pressure in dozens of states, counties, and cities around the country, are pushing for Congress to pass a uniform national GMO-labeling law.

Do I understand why the restaurant industry and food manufacturers are pushing for one bad federal law instead of hundreds or thousands of worse laws at the state and local level? Absolutely. Do I support such laws? Not at all.

November 30, 2014

Bad politics, bad economics and the “great chocolate shortage”

Filed under: Africa, Economics, Government — Tags: , , , — Nicholas @ 00:04

Tim Worstall explains that the fuss and bother in European newspapers about the “market failure” in the chocolate supply is actually a governmental failure (a market sufficiently bothered by legislation and regulation):

The last few days have seen us regaled with a series of stories about how the world is going to run out of chocolate. That would be, I think we can all agree, almost as bad as running out of bacon. So it’s worth thinking through the reasons as to why we might be running out. After all, cocoa, from which chocolate is made, is a plant, it’s obviously renewable in that it grows each season. So how can we be running out of something we farm? The answer is, in part at least, that there’s some bad public policy at the root of this. As there usually is when something that shouldn’t happen does.

Here’s the basic story in a nutshell:

    A recent chocolate shortage has seen cocoa farmers unable to keep up with the public’s insatiable appetite for the treat–and the world’s largest chocolate producers, drought, Ebola and a fungal disease may all be to blame.

Much of the world’s chocolate comes from West Africa so the disruption by the Ebola outbreak is one obvious part of it. But the shortage is not something immediate, it’s something that has been coming for some years. Ebola is right now, not a medium term influence. Drought similarly, that’s a short term thing, and this is a medium term problem. It’s also true that as the world gets richer more people can afford and thus desire that delicious chocolate.

[…]

Ahhh…the government is paying the farmers £1 a kg or so and the market is indicating that supply and demand will balance at £1.88 a kg. So, what we’ve actually got here is some price fixing. And the price to the producers is fixed well below the market clearing price (although the government most certainly gets that market price). So, we’ve a wedge in between the prices that consumers are willing to pay for a certain volume and the price that the farmers get for production. So, therefore, instead of it being the price that balances supply and demand we end up with an imbalance of the supply and demand as a result of the price fixing.

This is how it always goes, of course, whenever anyone tries to fix a price. If that price is fixed above the market clearing one then producers make more than anyone wants to consume (think the EU and agriculture, leading to butter mountains and wine lakes). If the price is fixed below the market clearing one then producers don’t make as much as people want to consume. This is why it’s near impossible to get an apartment anywhere where there is rent control. And if prices are fixed at the market clearing price then why bother in the first place? Quite apart from the fact that we’ve got to use the market itself to calculate the market clearing price.

November 26, 2014

Michael Geist – Uber’s privacy problem

Filed under: Business, Cancon — Tags: , , , — Nicholas @ 07:36

Michael Geist looks at one of the less obvious issues in the Uber dispute with Canadian regulators:

The mounting battle between Uber, the popular app-based car service, and the incumbent taxi industry has featured court dates in Toronto, undercover sting operations in Ottawa, and a marketing campaign designed to stoke fear among potential Uber customers. As Uber enters a growing number of Canadian cities, the ensuing regulatory fight is typically pitched as a contest between a popular, disruptive online service and a staid taxi industry intent on keeping new competitors out of the market.

My weekly technology law column (Toronto Star version, homepage version) notes that if the issue was only a question of choosing between a longstanding regulated industry and a disruptive technology, the outcome would not be in doubt. The popularity of a convenient, well-priced alternative, when contrasted with frustration over a regulated market that artificially limits competition to maintain pricing, is unsurprisingly going to generate enormous public support and will not be regulated out of existence.

While the Uber regulatory battles have focused on whether it constitutes a taxi service subject to local rules, last week a new concern attracted attention: privacy. Regardless of whether it is a taxi service or a technological intermediary, it is clear that Uber collects an enormous amount of sensitive, geo-locational information about its users. In addition to payment data, the company accumulates a record of where its customers travel, how long they stay at their destinations, and even where they are located in real-time when using the Uber service.

Reports indicate that the company has coined the term “God View” for its ability to track user movements. The God View enables it to simultaneously view all Uber cars and all customers waiting for a ride in an entire city. When those mesh – the Uber customer enters an Uber car – they company can track movements along city streets. Uber says that use of the information is strictly limited, yet it would appear that company executives have accessed the data to develop portfolios on some of its users.

November 24, 2014

Allow more competition in the broadband marketplace

Filed under: Bureaucracy, Government, Technology, USA — Tags: , , — Nicholas @ 00:03

At Techdirt, Karl Bode points out the existing problem with lack of competition in the US broadband industry is largely due to various levels of government meddling with the market:

While Title II is the best net neutrality option available in the face of a lumbering broadband duopoly, it still doesn’t fix the fact that the vast majority of customers only have the choice of one or two broadband options. It’s this lack of competition that not only results in net neutrality violations (as customers can’t vote down stupid ISP behavior with their wallet), but the higher prices and abysmal customer service so many of us have come to know and love. Stripping away protectionist state laws can help a little, as can the slow rise of services like Google Fiber. But even these efforts can only go so far in blowing up a broadband duopoly, pampered through regulatory capture and built up over a generation of campaign contributions.

One solution is the return to the country’s barely-tried implementation of unbundling and network open access, or requiring that the nation’s subsidy-slathered monopolists open their networks to allow other competitors to come in and compete. There are many variations of this concept, and it’s something Google Fiber promised in its markets before backing away from it (much like their vocal support of net neutrality). Obviously being forced to compete is an immensely unpopular concept for the nation’s incumbent ISPs. Given that those companies dictate and often literally write the nation’s telecom laws, these requirements were eliminated in a number of policies moves starting in 2001 and culminating in the FCC’s Triennial Review Remand Order of 2004 (pdf).

This was amazingly presented at the time as a way to improve competition and spur investment, but primarily resulted in a bloodbath as dozens of consumer-friendly, smaller independent ISPs and CLECs were killed off, perpetuating and further cementing the noncompetitive duopoly we have today.

[…]

Despite the fact this model clearly works, it’s never considered in policy discussions as a serious possibility. Why? Quite simply because the incumbent providers don’t want it. Through the use of their various PR folk, astroturfers, think tankers, fauxcademics and assorted hired mouthpieces, they’ve successfully managed to utterly vilify the concept, painting it as the very worst sort of government meddling in (not actually) free markets. Instead, we’ve chosen to head down the path of letting the nation’s duopolists dictate telecom policy, and the end result should at this point be painfully obvious to everyone. Well, except the industry lobbyists who still somehow insist we’re all living in a competitive broadband Utopia.

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