Quotulatiousness

May 4, 2013

Ron Paul on the so-called “Marketplace Fairness Act”

Filed under: Business, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 09:28

As you probably guessed, he’s against it:

David French, Senior Vice President of the National Retail Federation, the major industry group lobbying for the so-called “Marketplace Fairness Act,” (more aptly named the “National Internet Tax Mandate”) recently commented that “…the law [governing Internet sales] today is a 20th-century interpretation of an 18th-century document…” Mr. French’s comments are typical of those wishing to expand government power beyond the limits established by the United States Constitution.

[. . .]

The National Internet Tax Mandate overturns the Supreme Court’s 1992 Quill v. North Dakota decision that states can only force businesses to collect sales tax if the business has a “physical presence” in the state. Quill represented a rare instance where the Supreme Court properly interpreted the Commerce Clause. Thanks to the Quill decision, the Internet has remained a tax-free zone, though some states require consumers to later pay taxes on products they purchased online. This freedom has helped turn the Internet into a thriving and dynamic sector of the economy, to the benefit of entrepreneurs and consumers.

Now that status is threatened by an alliance of big business and tax-hungry state governments seeking new powers to force out-of-state business to collect state sales taxes. Far from updating the Constitution to fit the needs of the 21st century, the National Internet Tax Mandate is a throwback to 18th century mercantilism.

The National Internet Tax Mandate will raise the costs of doing business over the Internet. Large, established Internet companies, such as Amazon, can absorb these costs, whereas their smaller competitors cannot. More importantly, the Mandate’s increased costs and regulations could prevent the creation and growth of the next Amazon.

This is why cash-rich Apple is borrowing money on the bond market

Filed under: Business, Economics, USA — Tags: , , — Nicholas @ 09:20

In one word, taxes:

What a crazy world. Apple, a company with $145 billion of cash, is issuing some $17 billion of debt to buy back its own shares. Why doesn’t it just use its cash to do the same thing? First, because a lot of that cash is overseas, and bringing it back to America would incur a tax charge. Second, because interest rates are low and debt interest is tax-deductible, making this look a great arbitrage.

But think of it from the point of view of the hard-working American taxpayer. Apple’s money will still sit overseas and not be invested at home to create jobs. Apple’s tax bill will fall, as it offsets the interest payments against its profits. The buy-back will probably push up the share price in the short term, boosting the value of executive options; profits from those options will probably be taxed at the long-term capital gains tax rate of 15%, lower than the rate many workers pay. Organising a bond issue, rather than using a company’s own cash, incurs costs in the form of fees to bankers on Wall Street; the same bankers taxpayers helped support five years ago.

Why the terror-through-shipping-container threat has not materialized (yet)

Filed under: Business, Military, USA — Tags: , , , — Nicholas @ 09:11

Strategy Page explains why the much-discussed threat of terrorists smuggling in weapons of mass destruction using the ubiquitous shipping container has not actually happened:

A decade ago there was much talk about how vulnerable the United States was to a terror attack via shipping container. It never happened. It’s also unlikely because of the large number of variables the terrorists face. The problems associated with using cargo containers to move a nuclear or conventional bomb are manifold. The big problem is that these containers often don’t arrive right on schedule. Sometimes the ship breaks down or encounters bad weather. This last event leads to thousands of containers a year falling off cargo ships and going to the bottom with their cargo. Sometimes containers get lost “in the system.” More frequently containers get robbed or opened by mistake. Customs officials open a small percentage (this varies by port) for inspection. Another problem, whether the bomb goes off or not, is the fact that containers have to have documentation like bills of lading and such. These can be faked, but the problem is that a paper trail is being created and that can lead to terrorists getting arrested. All containers must officially belong to someone, they are tracked and any that aren’t being tracked tend to get noticed. Many countries do scrutinize containers coming from certain countries in an attempt to catch people smuggling drugs or arms. Large bombs, be they nuclear or conventional, are relatively fragile and may not survive (in working condition) the punishment received during a long sea voyage. If all that weren’t enough to make terrorists nervous, container ships can be delayed when trying to enter a port because of congestion. This can delay arrival by days, or even weeks.

May 1, 2013

A quick primer on crony capitalism

Filed under: Business, Government, Politics, USA — Tags: , , , , , — Nicholas @ 09:58

In The Atlantic, Timothy P. Carney gives us a thumbnail sketch of the rise and rise of crony capitalism in the United States since 2004:

The 2005 and 2007 energy bills required drivers to buy ethanol, created a government loan-guarantee program for private sector green-energy projects, and effectively outlawed the traditional incandescent light bulb. Ethanol and the green-energy finance programs are pretty naked corporate welfare. General Electric and the light-bulb industry lobby supported the light-bulb law, which forces consumers to buy higher-profit-margin high-tech bulbs.

Then, 2008 saw an avalanche of corporate bailouts: Bear Stearns, AIG, Fannie Mae and Freddie Mac. Then the TARP bailed out all of Wall Street, and later General Motors and Chrysler.

Obama came to power in 2009 and signed an $800 billion stimulus bill supported by the Chamber of Commerce and loaded with goodies for the likes of Google and Solyndra. Obama pushed cap-and-trade with the support of the U.S. Climate Action Partnership, a corporate coalition led by GE, which had set up a business to create and trade greenhouse-gas credits.

In June 2009, Obama signed the Family Smoking Prevention and Tobacco Control Act, a regulatory measure that Philip Morris supported and reportedly helped write — smaller competitors called it the “Marlboro Monopoly Act.” That same month, Wal-Mart, the country’s largest private-sector employer, publicly endorsed the employer mandate in health insurance that became part of Obamacare. The drug lobby wrote significant parts of Obamacare, and the hospital lobby liked the bill enough to file an amicus curiae brief with the Court defending the law from its challenge by states and the small business lobby.

Boeing and the Chamber of Commerce launched a full-court lobbying push in 2011 to save and expand the Export-Import Bank, the government agency Obama loves using to subsidize U.S. Exports — including lots of Boeing jets. In a lesser-known case of regulatory profiteering, Obama hired H&R Block’s CEO to a top position at the IRS, where he crafted new regulations on tax preparers — rules which H&R Block supported and small tax preparers sued to overturn.

April 30, 2013

Barnes & Noble files a great argument for reforming the patent system

Filed under: Business, Law, USA — Tags: , , , — Nicholas @ 15:22

At Techdirt, Mike Masnick has to restrain himself from just quoting the whole B&N submission to the Federal Trade Commission and the Department of Justice:

As Groklaw notes, the B&N filing is clear, concise and highly readable. It outlines the problem directly:

    The patent system is broken. Barnes & Noble alone has been sued by “non practicing entities” — a/k/a patent trolls — well over twenty-five times and received an additional twenty-plus patent claims in the last five years. The claimants do not have products and are not competitors. They assert claims for the sole purpose of extorting money. Companies like Barnes & Noble have to choose between paying extortionate ransoms and settling the claim, or fighting in a judicial system ill equipped to handle baseless patent claims at costs that frequently reach millions of dollars.

As they point out clearly, even when they have a very strong case — either when they don’t infringe and/or when the patent is bogus, a lawsuit is incredibly costly in terms of time, money and effort.

    In the current system, patent trolls overwhelm operating companies with baseless litigation that is extremely costly to defend. Patent cases generally cost at least $2M to take through trial, and frequently much more. Litigating, even to victory, also entails massive business disruption. Companies are forced to disclose their most sensitive and top-secret technical and financial information and must divert key personnel from critical business tasks to provide information and testimony. The process is exceptionally burdensome, especially on technical staff. Document discovery and depositions seem endless.

    Patent trolls know this and as a result, they sue companies in droves and make settlement demands designed to maximize their financial take while making it cheaper and less painful to settle than to devote the resources necessary to defeat their claims. The current system lets them do so even with claims that are unlikely to prevail on the merits. That is because, whether win lose or draw, the rules effectively insulate trolls from negative consequences except perhaps a lower return than expected from any given company in any given case. They can sue on tenuous claims and still come out ahead. And so the broken system with its attendant leverage allows trolls to extract billions in blackmail from U.S. companies and, in the final analysis, consumers.

One of the great things about the filing is that it reminds the FTC and the DOJ of the constitutional underpinnings of patent law — not that patents are required or guaranteed, but that their purpose is to promote the progress of the useful arts. If that is not happening, then the use of patents in such a manner should be seen as unconstitutional.

April 29, 2013

US domestic firearms sales continue to grow

Filed under: Business, USA — Tags: , , , , — Nicholas @ 12:38

In the Wall Street Journal, Tom Gara shows us the booming market for firearms since 2008:

Gun buyers have long demonstrated a tendency to stock up on weapons and ammunition ahead of possible changes to gun laws, and a so-called “Obama surge” in gun sales kicked off in the lead-up to Barack Obama’s first election victory in 2008.

There was a similar pick up in 2012 as a second Obama victory looked likely, and another rush on stores when it became clear the Obama administration would push for tighter gun control laws in the wake of the Sandy Hook school shooting last December.

In fact, the rush beginning in December has been high even by historic standards: the FBI conducted just under 2.8 million background checks on prospective gun buyers in December 2012, the highest number in any single month since records begin in November 1998. That’s more than triple the number it was running in in December 2002.

And the rush has continued through 2013 so far. Here’s the number of monthly background checks in the first three months of each year since 1998. This year looks set to be the busiest ever.

Jan-Mar gun sales 1998-2013

April 27, 2013

The misplaced outrage over Amazon’s tiny tax bill in the UK

Filed under: Books, Britain, Business, Economics, Europe, Media — Tags: , , , , — Nicholas @ 08:40

Tim Worstall explains that the current efforts by various campaigners including Stephen Fry are not only a waste of time and effort, but betray a fundamental misunderstanding of how the EU is set up:

There are several points that could be made. One being that selling to Brits from Luxembourg is not tax dodging, it’s exactly what the EU intends the Single Market should be. A, umm, single market across 27 countries. A second might be that even if we start to whine about UK warehouses, tax is still not due here. Our double taxation treaty with Luxembourg means that such warehouses do not lead to tax being due. And that’s from 1968 or so when Wilson ruled: it’s also a standard part of all double taxation treaties and for good reason.

(For example, the metals trade uses warehouses in Rotterdam as the point at which a contract is concluded. The cut flowers business warehouses in a small village near Schipol. Should Holland get all the tax from the world’s metals and flower businesses? Or should everyone be taxed where they really are, not the warehouses?)

But there’s much worse than this. We’ve had the Margaret Hodges screeching that we’re talking about immoral, not illegal. The TJN and other fools similarly scream about how awful it is that people can do business without paying tax. And it is precisely all of this activism that leads these gentle booksellers to spend their year collecting signatures. To absolutely no avail whatsoever.

For in the year they are complaining about, last year, 2012, Amazon did not make a profit. A $39 million loss in fact according to their accounts. It’s simply not true that “tax dodging” by Amazon is leading to the crucifixtion of the independent book shop. That’s a lie that’s been foisted upon people by the obfuscations of the campaigners.

April 25, 2013

What we “know” as opposed to what is actually true

Filed under: Business, Football, Health, Law — Tags: , , , , — Nicholas @ 13:36

We all know the NFL is in serious trouble as more evidence comes out about the relationship between playing professional football and brain damage in later life. But what we know may not be true:

Dr. Everett Lehman, part of a team of government scientists who studied mortality rates for NFL retirees at the behest of the players’ union, discovered that the pros live longer than their male counterparts outside of the NFL. The scientists looked at more than 3,000 pension-vested NFL retirees and expected 625 deaths. They found only 334. “There has been this perception over a number of years of people dying at 55 on the average,” Dr. Lehman told me. “It’s just based on a faulty understanding of statistics.”

The scientists also learned that, contrary to conventional wisdom, NFL players commit suicide at a dramatically lower rate than the general male population. The suicides of Junior Seau, Dave Duerson, and Andre Waters don’t represent a trend but outliers that attract massive attention, and thereby massively distort the public’s perception. More typical was the death of Pat Summerall, who passed away quietly last week at 82 after a productive post-career career.

Indeed, a 2009 study by University of Michigan researchers reported that NFL retirees are far more likely to own a home, possess a college degree, and enjoy health insurance than their peers who never played in the league. The myth of the broke and broken-down athlete is just that: a myth. A few surely struggle after competition ceases; most apply their competitive natures to new endeavors.

It’s true that skill-position players on rosters for five or more years in the NFL faced elevated levels of Alzheimer’s, Lou Gehrig’s, and Parkinson’s disease deaths. But some perspective is in order. Of the 3,439 retired athletes studied by Lehman’s group, less than a dozen succumbed to deaths directly attributable to these neurodegenerative killers. Had Parkinson’s killed one rather than the two retirees it did kill, for example, its rate would have been lower among players than among the general population.

It’s quite possible the NFL is concerned (and ensuring that it is seen to be concerned) primarily because of the need to address public perceptions, rather than as a defensive move against future or ongoing legal challenges.

Interpreting what NFL coaches and general managers say leading up to the draft

Filed under: Business, Football, Humour — Tags: , , — Nicholas @ 00:02

It’s a time of the year when pretty much nothing coming out of the mouths of team officials can be taken at face value … GMs and coaches don’t want to tip their hands in advance of making their selections on draft day, so lots of misinformation is spread. For example, the Daily Norseman‘s Ted Glover goes through yesterday’s press conference by Vikings general manager Rick Spielman and tries to give us an interpretation of what was said (and not said):

Vikings GM Rick Spielman has become known for his amazing ability to fill up a notebook saying anything…unless one is willing to read between the lines.

Here at DN, I got drunk one night and started posting, I was tasked with deciphering what we’ve come to know as Rick Speak, and take his paragraphs of nothing, non- denials, and unequivocal statements that really are equivocal, and turn them into some useful information.

[. . .]

    Rick Says: I think this is going to be one of most intriguing drafts I’ve been associated with because of the depth of the draft.

What that means: There’s not a lot of top shelf talent, and GM’s across the league would cut their grandma’s achilles tendons if they could get a good deal. We’re moving up to get an impact player, because he’s got two draft picks and and they’re BURNIN’ A HOLE IN MAH POCKET WOOOOOOOOOO!

    Rick Says: And to be honest with you (Ed note: LOLWUT), where we’re picking at 23 and 25, we’re looking at all our needs, from the whole defensive side of the ball to needs on the offensive side of the ball, trying to distinguish what makes this potential receiver better than this corner, better than this linebacker, better than this defensive end, better than this defensive tackle.

What that means: None of our scouts agree on anyone, and that means no matter who we draft, a sizeable portion of our fanbase is going to be disappointed and call for my head on a platter. If we stay where we are many of you will IMMEDIATELY draw comparisons to 2005. But hey…new uniforms WOOO!

[. . .]

Rick also talked about a couple positions and position players, and how that might relate to the upcoming draft.

    Tom P says Rick says: Asked if Erin Henderson was strictly considered a weak-side linebacker at this point, Spielman said, “No, that’s flexible. That depends on what happens in the draft. If we go outside, Erin can slide inside or if we go inside Erin can play outside. That’s what is great about this linebacker thing. We have the flexibility to go either way.”

What that means: We’re so gooned at linebacker right now. There’s nothing great about not having a starting MLB on the roster, and we have to be so flexible because we’re currently gooned. Did I mention we’re gooned at the linebacker position right now?

April 24, 2013

Copyright terms are almost certainly too long already

Filed under: Books, Business, Economics, Law, Media — Tags: , , , — Nicholas @ 11:59

At Techdirt, Mike Masnick makes the case for reducing the swollen length of time current copyrights are protected:

We’ve pointed a few times in the past to a chart from William Patry’s book, looking at how frequently copyright was renewed at the 28 year mark back when copyright (a) required registration and (b) required a “renewal” at 28 years to keep it another 28 years. The data is somewhat amazing:

Copyright renewal rates 1958-59

As you can see, very few works are renewed after 28 years. Only movies, at 74% are over the 50% mark. Only 35% of music and only 7% of books tells quite a story. It makes it quite clear that even the copyright holders see almost no value in their copyrights after a short period of time. It appears that the Bureau of Economic Analysis is coming to the same conclusion from a different angle. As Matthew Yglesias notes, as part of its effort to recalibrate how it calculates GDP, the BEA is considering money spent on the creation of content an “investment” in a capital good, which needs to be depreciated over the time period in which it is valuable. Frankly, I’m not convinced this is the smartest way to account for money spent on the creation of content, but either way, the BEA’s analysis provides some insight into the standard “economic life” of various pieces of content, which match up with the chart above in many ways.

A call to abolish the draft … the NFL draft, that is

Filed under: Business, Football, Law, Media — Tags: , , , — Nicholas @ 00:02

S.M Oliva calls for the abolition of the NFL’s annual offseason TV mega-event in Reason:

The sports draft is an anomaly of the American labor market. In most industries new hires are free to seek employment wherever there’s an opening. Even promising high school athletes may accept a scholarship offer from any college. But the NFL shield has stood resolutely against labor freedom since 1935 when Bert Bell, then the struggling owner of the last-place Philadelphia Eagles, convinced the rest of the nine-team league that poorly performing clubs should be rewarded with first choice of promising college talent. Under this new system, a “drafted” player could only negotiate a contract with a single team.

[. . .]

Regardless of how players come into the league, they are all subject to a salary cap that fixes total compensation as a percentage of football-related revenues. The present collective bargaining agreement further constrains rookie salaries, and roster limits prevent a team from simply stockpiling players. All the draft does is increase the likelihood that the most promising new talent — the players taken at the top of the first round — will go to teams with a demonstrated history of mismanagement.

This should concern the league as it faces a rising tide of concussion-related lawsuits brought by former players. While the NFL tinkers with playing rules in an effort to make the game “safer,” there’s been no effort to question the role of the draft system in promoting unsafe working conditions. Let’s say Player X is a highly touted quarterback prospect drafted by Team A. What if Team A has a poor offensive line and a coach prone to recklessness with his quarterbacks? Player X can’t turn around and negotiate with Team B, which offers a better line and a coach with a stronger record of developing young quarterbacks. Player X is stuck with Team A, and if that means he’s out of football after four years, a record number of sacks and a half-dozen concussions, then so be it.

April 22, 2013

Not news: nearly 90% of all spreadsheets have errors

Filed under: Business, Economics, Technology — Tags: , , — Nicholas @ 08:02

I’ve said it before, spreadsheets are great organizing tools and provide opportunities for both financial whizzes and ordinary folks to make splashy, expensive errors:

Microsoft Excel makes it easy for anyone to do the kind of number crunching once reserved for accountants and statisticians. But the world’s best-selling spreadsheet software has also contributed to the proliferation of bad math.

Close to 90% of spreadsheet documents contain errors, a 2008 analysis of multiple studies suggests. “Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells,” writes Ray Panko, a professor of IT management at the University of Hawaii and an authority on bad spreadsheet practices. “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.”

Given that Microsoft says there are close to 1 billion Office users worldwide, “errors in spreadsheets are pandemic,” Panko says.

Such mistakes not only can lead to miscalculations in family budgets and distorted balance sheets at small businesses, but also might result in questionable rationales for global fiscal policy, as indicated by the case of a math error in a Harvard economics study. By failing to include certain spreadsheet cells in its calculations, the study by Harvard economists Carmen Reinhart and Kenneth Rogoff may have overstated the impact that debt burdens have on a nation’s economic growth.

There’s a reason I nominated Microsoft Excel as “The Most Dangerous Software on Earth“.

April 17, 2013

New frontier in crony capitalism – public-policy profiteering

Filed under: Business, Economics, Government, Technology — Tags: , , , , — Nicholas @ 08:47

Timothy Carney explains why the big companies that made ordinary incandescent lightbulbs were among the groups pushing to make those lightbulbs effectively illegal. It’s a classic case of using government power to reduce competition and increase profit margins for certain companies:

Absent barriers to entry, light-bulb profit margins had to stay low. GE could make superior bulbs — soft white, etc. — but people are only willing to pay so much of a premium for those. After all, we’re dealing with light here, which is kind of a commodity.

So, where to find barriers to entry? Maybe higher-tech bulbs? LEDs, CFLs, or other bulbs that offer longer life and greater efficiency. GE, Osram, and Sylvania jumped into those high-tech bulbs, got some patents. R&D expenses, higher manufacturing costs, proprietary information — these created barriers to entry and allowed heftier profit margins.

But what if you made a super-efficient long-life bulb — and nobody wanted it? What if you couldn’t convince consumers that these bulbs were good for them? Well, that’s when you thank your lucky stars that you are GE, with the largest lobbying budget of any company in America.

You “heavily back” legislation that will “effectively outlaw … the traditional incandescent light bulb.” Now all consumers are forced to play in the world where you have greater barriers to entry, and thus bigger profit margins.

The negative consequences here aren’t mere Tea Party concerns about “crony capitalism” or, say, freedom of choice. One cost is the erosion of competition. GE in this case has found a way to divorce profit from the delivery of value – and I call it public-policy profiteering.

Sure, these high-tech bulbs have value. But I think consumers, rather than politicians, should be the ones who determine what value they assign to energy efficiency and longevity. So, through government intervention, capitalism starts to resemble the Marxist caricature of capitalism — Big Businesses making profits while denying consumers what they want.

April 16, 2013

Andy Baio: Copyright is the new Prohibition

Filed under: Business, Law, Media, Technology — Tags: , , , , — Nicholas @ 13:58

Techdirt‘s Mike Masnick explains:

Andy Baio has an absolutely fantastic video presentation that he did recently for Creative Mornings/Portland on what he’s calling The New Prohibition. It’s half an hour long, but absolutely worth watching.

[. . .]

This video lets him talk a bit about the aftermath — to explain the true chilling effects of the threat and the eventual settlement. Baio is a creator. It’s in his blood. It’s what he’s always done, but after this he was afraid to create. Being threatened with a lawsuit, even if you believe you’re right, is a scary and possibly life-altering moment. Lots of people who have not been in those shoes think it’s nothing and that they could handle it. You don’t know.

As he notes in the talk, copyright law is probably the most violated law in the US after speeding and jaywalking (and I’m not even sure copyright infringement is really in third place in that list). But getting rung up for one of those gives you a “bad day” situation, not a ruined life. Copyright, on the other hand, can ruin your life. And chill your speech and creativity.

And this is the worst part: so many people, especially kids, are at risk. Baio also famously highlighted the prevalence of the phrase “no copyright intended” on YouTube. Tons of kids uploading videos use clips of music and videos with a phrase like that. Or with statements about fair use. Or with copyright law quotes. All, as he notes, to try to find that magic voodoo that wards off a possible lawsuit. Most of those people aren’t being sued.

But they could be.

April 14, 2013

Competition and co-operation in a free market

Filed under: Business, Economics, Liberty — Tags: , , , , — Nicholas @ 10:15

Sheldon Richman suggests that some people’s objections to free trade and free markets isn’t so much ethical as aesthetic:

Market advocates tend to respect the intellect of their fellow human beings. You can tell by their reliance on philosophical, moral, economic, and historical arguments when trying to persuade others. But what if most people’s aversion to the market isn’t founded in philosophy, morality, economics, or history? What if their objection is aesthetic?

More and more I’ve come to think this is the case, and I believe I witnessed an example recently at a lecture I gave at St. Lawrence University. During the Q&A a woman asked, in all sincerity, why society couldn’t do without money, since so many bad things are associated with it. She also suggested that cooperation is better than market competition. I replied that since money facilitates exchange and exchange is cooperation, it follows that money facilitates cooperation — a lovely thing, indeed. Government, I added, corrupts money.

I also said that competition is what happens when we are free to decide with whom we will cooperate. I don’t know if my response prompted her to rethink her objections to the market, but I am confident her objection was aesthetic. For her, money and competition are ugly. Perhaps I didn’t respond on an aesthetic level; it’s something I have to work on. But I tried, and so must we all when we encounter these sorts of objections.

Like that nice woman, many decent people dislike markets because they find them unattractive. And they associate markets with other things they find unattractive besides money and competition: (rugged, atomistic) individualism, selfishness, and profit. F.A. Hayek noticed this, writing in “Individualism: True and False”, “the belief that individualism approves and encourages human selfishness is one of the main reasons why so many people dislike it.” If that’s the case, philosophical, moral, economic, and historical arguments may fall on deaf ears. The objections must be met on an aesthetic level.

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