Quotulatiousness

January 14, 2015

British PM’s latest technological brain fart

Filed under: Britain, Law, Liberty, Technology — Tags: , , , , — Nicholas @ 07:43

Cory Doctorow explains why David Cameron’s proposals are not just dumb, but doubleplus-dumb:

What David Cameron thinks he’s saying is, “We will command all the software creators we can reach to introduce back-doors into their tools for us.” There are enormous problems with this: there’s no back door that only lets good guys go through it. If your Whatsapp or Google Hangouts has a deliberately introduced flaw in it, then foreign spies, criminals, crooked police (like those who fed sensitive information to the tabloids who were implicated in the hacking scandal — and like the high-level police who secretly worked for organised crime for years), and criminals will eventually discover this vulnerability. They — and not just the security services — will be able to use it to intercept all of our communications. That includes things like the pictures of your kids in your bath that you send to your parents to the trade secrets you send to your co-workers.

But this is just for starters. David Cameron doesn’t understand technology very well, so he doesn’t actually know what he’s asking for.

For David Cameron’s proposal to work, he will need to stop Britons from installing software that comes from software creators who are out of his jurisdiction. The very best in secure communications are already free/open source projects, maintained by thousands of independent programmers around the world. They are widely available, and thanks to things like cryptographic signing, it is possible to download these packages from any server in the world (not just big ones like Github) and verify, with a very high degree of confidence, that the software you’ve downloaded hasn’t been tampered with.

[…]

This, then, is what David Cameron is proposing:

* All Britons’ communications must be easy for criminals, voyeurs and foreign spies to intercept

* Any firms within reach of the UK government must be banned from producing secure software

* All major code repositories, such as Github and Sourceforge, must be blocked

* Search engines must not answer queries about web-pages that carry secure software

* Virtually all academic security work in the UK must cease — security research must only take place in proprietary research environments where there is no onus to publish one’s findings, such as industry R&D and the security services

* All packets in and out of the country, and within the country, must be subject to Chinese-style deep-packet inspection and any packets that appear to originate from secure software must be dropped

* Existing walled gardens (like Ios and games consoles) must be ordered to ban their users from installing secure software

* Anyone visiting the country from abroad must have their smartphones held at the border until they leave

* Proprietary operating system vendors (Microsoft and Apple) must be ordered to redesign their operating systems as walled gardens that only allow users to run software from an app store, which will not sell or give secure software to Britons

* Free/open source operating systems — that power the energy, banking, ecommerce, and infrastructure sectors — must be banned outright

David Cameron will say that he doesn’t want to do any of this. He’ll say that he can implement weaker versions of it — say, only blocking some “notorious” sites that carry secure software. But anything less than the programme above will have no material effect on the ability of criminals to carry on perfectly secret conversations that “we cannot read”. If any commodity PC or jailbroken phone can run any of the world’s most popular communications applications, then “bad guys” will just use them. Jailbreaking an OS isn’t hard. Downloading an app isn’t hard. Stopping people from running code they want to run is — and what’s more, it puts the whole nation — individuals and industry — in terrible jeopardy.

January 13, 2015

The mess over the new copyright rules was avoidable

Filed under: Business, Cancon, Law, Media — Tags: , , , , — Nicholas @ 07:47

Michael Geist says that the fiasco with the new Canadian copyright notice scheme was not necessary and that the minister should have paid closer attention:

Last week I posted on how Rightscorp, a U.S.-based anti-piracy company, was using Canada’s new copyright notice-and-notice system to require Internet providers to send threats and misstatements of Canadian law in an effort to extract payments based on unproven infringement allegations. Many Canadians may be frightened into a settlement payment since they will be unaware that some of the legal information in the notice is inaccurate and that Rightscorp and BMG do not know who they are.

The revelations attracted considerable attention (I covered the issue in my weekly technology law column – Toronto Star version, homepage version), with NDP Industry Critic Peggy Nash calling on the government to close the loophole that permits false threats. Nash noted that “Canadians are receiving notices threatening them with fines thirty times higher than the law allows for allegedly downloading copyrighted material. The Conservatives are letting these companies send false legal information to Canadians in order to scare them into paying settlements for movies or music no one has even proved they’ve actually downloaded.”

With the notices escalating as a political issue, Jake Enright, Industry Minister James Moore’s spokesman, said on Friday the government would take action. Enright said that “these notices are misleading and companies cannot use them to demand money from Canadians”, adding that government officials would be contacting ISPs and rights holders to stop the practice.

The steady militarization of the police

Filed under: Law, Liberty, USA, Weapons — Tags: , , — Nicholas @ 02:00

In the latest Libertarian Enterprise, L. Neil Smith discusses some of the ways the police have changed over the last few decades:

… being a police officer isn’t really all that dangerous — check the statistics, yourself. Being a fireman is more dangerous. Being a miner is more dangerous. Being a deep-sea salvage diver is hell of a lot more dangerous. Nor are these particularly dangerous times. When I was a young reserve officer in the wild and wooly early 1970s, more cops were injured or killed in California alone than in the entire nation now. That fact sparked many changes in policy, including choice of weapons, from revolver to semiautomatic, the design of holsters, and the angle at which the car should be parked during a routine traffic stop.

All that was in the 60s, and, for a while, the police did acquire a more human face. But then, something went wrong. Several things went really wrong, and it left us stuck in the mess we’re in today.

To begin with there were police unions and lawyers who rode along with them like pilot fish. RICO allowed them to loot the countryside freely. There is nothing in a free society that we could have done, or can, directly, about this. But it has come to mean that no officer will ever have to face the music for whatever criminal act he may have committed, unless he has political enemies somewhere inside the structure.

Second, there were matters of accoutrement. Mace and revolver speed-loaders were the big news of my time, rapidly followed by CS gas and semiautomatic pistols, mostly Glocks in .40 caliber, while four-shot pump shotguns evolved into eight-shooters on the dashboard. Wooden nightsticks became nylon PR-24s and engendered a whole new martial art. Finally there was Kevlar body armor, and the Taser. Ammunition changed, as well. The Blue Knight’s equippage was nearly complete.

All the while, the courts were depriving ordinary citizens of more and more rights and protections until the attacks on 9/11 swept what was left from the board. The police could now go anywhere, do anything — including locking people up on suspicion — without punishment for it.

At the same time, the cops have gone insane, shooting people’s dogs, smashing in, beating up, and murdering innocent individuals, including little old ladies, and their pet kittens without even having to apologize about it. I’d cite some typical examples, but they happen every day and you can find them all too easily for yourself. You can’t blame people for hating the police, they have good reason. I’ve deliberately avoided learning much about Ferguson — what little information I have would indicate that the cop behaved properly — but you can’t blame the public, The police have brought this on themselves.

January 12, 2015

If you’ve used the term “Streisand Effect”, you need to pay royalties now…

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

Techdirt‘s Mike Masnick isn’t asking for a lot, he just wants to ensure that his intellectual property is respected … in a way that ensures that his kids won’t starve in the street:

I have to admit that I had no idea that it had been 10 years since I coined the term “The Streisand Effect” until the SkepticHistory Twitter feed called my attention to it earlier this week. I had thought about saving this for the weekend “this week in history” post, but it seems worth delving into today — especially with folks like the thieves at Gawker Media putting up a whole story about it and stealing all the attention and whatnot.

So, yeah, ten years ago this week, I coined “the Streisand Effect,” which was actually on a story about how the Marco Beach Ocean Resort was all offended by the fact that Urinal.net (a site that, yes, still exists and is still being updated) had posted a photo of a urinal from the resort, and the resort insisted that it was illegal to use its name. As we pointed out, this stupid takedown request would only draw more attention, and then we wrote:

    How long is it going to take before lawyers realize that the simple act of trying to repress something they don’t like online is likely to make it so that something that most people would never, ever see (like a photo of a urinal in some random beach resort) is now seen by many more people? Let’s call it the Streisand Effect.

That last link then went back to a 2003 story about how Barbra Streisand had sued photographer Kenneth Adelman for photographing her house from a helicopter. Adelman had been photographing the entire California coastline, hoping to use it to document coastal erosion, and posted all the photographs online. Streisand got upset that her coastal home was shown, and sued. But, of course, before this, no one knew (or cared) that it was Streisand’s home. The image had been viewed six times (including twice by Streisand’s lawyers), but following the news of the lawsuit, hundreds of thousands of people went to see the photo. It was a story that stuck with me, and seemed to be repeated every few months in some form or another. So when I saw that Urinal.net threat, I just jokingly said we should call such things “The Streisand Effect.”

The oldest game … as a video game

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

Elizabeth Nolan Brown on an interesting video game in development:

First, choose your city: Toronto, Vancouver, or Montréal. Next, decide whether avatar Andrea (Andréa, if you chose Montreal) will work on the streets, in a massage parlor, or as an escort. Then try to get screwed literally without being figuratively fucked by the cops—an ultimately no-win situation when it comes to The Oldest Game. Developed by a team of Canadian academics, the project is meant to highlight how the country’s new prostitution law, C-36, makes life more difficult and dangerous for Canadian sex workers.

The law, which took effect in December 2014, “continues to criminalize various aspects of sex work, often removing safeguards and strategies that place sex workers in dangerous situation, placing at risk the very vulnerable people the bill ostensibly exists to protect,” note the game’s creators.

    Through various encounters with clients, colleagues and law enforcement in three difference Canadian cities, players will experience how the legislation changes the way sex workers live and work, and play through the additional challenges sex workers will face when trying to remain safe.

Sandra Gabriele, a Concordia communications professor and one of the project’s co-leads, is interested in using games as a form of journalism.

Published on 10 Dec 2014

On December 6th 2014 (the National Day of Remembrance and Action on Violence Against Women in Canada), Bill C-36 officially came into force. Replacing Canada’s previous laws on sex work, which were struck down as unconstitutional on On December 20th, 2013, the new bill have drawn a great deal of criticism for placing sex workers at even greater risk than they faced under the old legislation. The Oldest Game, a newsgame about sex work developed at Concordia University in Montreal QC, demonstrates how Bill C-36 will impact the lives of sex workers in Canada. Developed by Lisa Lynch, Sandra Gabriele, Amanda Feder, Martin Desrosiers, Stephanie Goddard, Ben Spencer, Esther Splett and Natalie Zina Walschots. Follow is on Twitter at @The OldestGame and visit our website, http://www.theoldestgame.com !

January 8, 2015

Copyright is to culture what salt is to snails

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

Mike Masnick included a fascinating chart in this story:

New books by decade at Amazon

What it shows is that while new books are available for sale, they quickly go out of print and are basically not available — until you get down to 1923, at which point the works are in the public domain. Think of all those works that are no longer available to buy in that major gap in the middle. Heald has since updated that research to show how serious a problem this is — and demonstrating how the arguments against letting these works into the public domain make no sense. He demolishes the arguments made by some that a public domain will be either “under” or “over” exploited (yes, both arguments are made), as neither makes much sense.

It appears that copyright is doing similar damage in Europe. At the latest Chaos Communications Congress in Germany, Julia Reda, the European Parliament member from the Pirate Party gave a talk on the state of copyright law today (you can see the video here and included a similar graphic concerning books available in Europe:

The 20th century black hole

January 7, 2015

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

Britain’s social media police … are really the police

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

James Bloodworth on the attempt by British police forces to extend their role beyond actual crime prevention to virtual crime detection:

At some point saying “offensive” things online stopped being a social faux pas and became a potentially criminal act.

Dare to be rude about the wrong person or group and, in a bad parody of Erich Honecker’s East Germany, you could hear the knock on the door in the middle of the night and be dragged off to some dreary police cell for questioning.

I exaggerate of course, but not much: around 20,000 people in Britain have been investigated in the past three years for comments made online, with around 20 people a day being looked into by the forces of the law, according to figures obtained under the Freedom of Information Act.

The overused Orwellian cliché has finally become the reality: Big Brother in the form of an overzealous and under regulated police force really is watching you. As Police Scotland terrifyingly informed us this week, “Please be aware that we will continue to monitor comments on social media and any offensive comments will be investigated.”

January 4, 2015

The MPAA may have found the super-enforcement tool they think they need

Filed under: Law, Media, USA — Tags: , , , , — Nicholas @ 10:09

Russell Brandom explains why a slight change of wording in a recent court case may have handed the Motion Picture Association of America (MPAA) exactly the kind of power they’ve been demanding to crack down on piracy and “infringement”:

Hollywood’s war on piracy has reached a strange impasse. While the MPAA and others have launched lawsuits against US-based infringers, reaching offshore torrent sites like Isohunt and The Pirate Bay is still a slow process, and whenever a site is taken down, others quickly pop up to fill its place. As a result, the MPAA has consistently pushed for the power to block infringing sites from the internet: first by pushing for new laws like SOPA in 2011, then through a series of novel legal tactics. The fight has pitted them against some of the most powerful companies on the web, and drawn them into a long, secret battle with Google.

But leaked documents show that Hollywood has a new secret weapon in the fight, a little-known legal venue that’s poised to take on new powers over the digital realm. It’s called the International Trade Commission, a quasi-judicial agency that regulates imported goods as they enter the country. Traditionally, that means physical goods — if you want to ship in a boatload of fake iPhones, the ITC is the agency that will stop you — but the ITC recently gave itself the power to rule on data as it crosses US borders, as a result of a complex 3D printing case. If the ruling holds, it could have huge implications for the way data moves across the global web, and give the MPAA the site-blocking powers it’s been grasping at for years.

The heart of the case is a company called ClearCorrect, which 3D prints clear plastic braces custom-designed for each patient’s teeth. Much of the technology involved in the process is already under patent, but ClearCorrect has gotten around those patents by farming out its intricate computer modeling to an office in Pakistan. That modeling violates a number of US patents — and if ClearCorrect were shipping back the resulting braces in a box, it would be a simple case: the goods would be contraband, to be stopped at the border. But instead, ClearCorrect is only transmitting digital models from Pakistan and printing out the braces in local offices in Texas. The only thing coming in from Pakistan is raw modeling data. So what’s a trade commission to do?

In April of last year, the ITC arrived at an answer with huge repercussions: stop the data at the border. The ITC is only supposed to rule on “articles,” which has usually been taken to mean physical goods, but last year’s ruling took it to include data too. That gives the ITC the power to stop ClearCorrect’s contraband braces data at the border, but it could have far greater implications. If a web service like Gmail or Facebook ends up on the wrong side of a patent dispute, the court could potentially forbid the service from transmitting data into the US until the dispute is resolved — making the cost of a losing a court battle astronomically higher. It would also require powerful new tools for monitoring data as it crosses national borders, a fundamental break from the international structure of the web. Aware of the huge issues at stake, the ITC stayed the ruling until the Federal Circuit weighs in later this year — but already, legal groups are reeling from the possible consequences.

January 3, 2015

Last year, “a Kentucky judge did something no federal judge has done since 1932”

Filed under: Business, Law, Liberty, USA — Tags: , , , , , — Nicholas @ 11:44

It’s been a very long time since a federal judge in Kentucky anywhere in the United States has struck down a “certificate of necessity” (CON) regulation:

Mighty oaks from little acorns grow, so last year’s most encouraging development in governance might have occurred in February in a U.S. district court in Frankfort, Ky. There, a judge did something no federal judge has done since 1932. By striking down a “certificate of necessity” (CON) regulation, he struck a blow for liberty and against crony capitalism.

Although Raleigh Bruner’s Wildcat Moving company in Lexington is named in celebration of the local religion — University of Kentucky basketball — this did not immunize him from the opposition of companies with which he wished to compete. In 2012, he formed the company, hoping to operate statewide. Kentucky, however, like some other states, requires movers to obtain a CON. Kentucky’s statute says such certificates shall be issued if the applicant is “fit, willing and able properly to perform” moving services — and if he can demonstrate that existing moving services are “inadequate,” and that the proposed service “is or will be required by the present or future public convenience and necessity.”

Applicants must notify their prospective competitors, who can and often do file protests. This frequently requires applicants to hire lawyers for the hearings. There they bear the burden of proving current inadequacies and future necessities. And they usually lose. From 2007 to 2012, 39 Kentucky applications for CONs drew 114 protests — none from the general public, all from moving companies. Only three of the 39 persevered through the hearing gantlet; all three were denied CONs.

Bruner sued, arguing three things: that the CON process violates the Constitution’s equal protection clause because it is a “competitors’ veto” that favors existing companies over prospective rivals; that the statute’s requirements (“inadequate,” “convenience,” “necessity”) are unconstitutionally vague; and that the process violates the 14th Amendment’s protections of Americans’ “privileges or immunities,” including the right to earn a living.

January 2, 2015

Debunking the “Broken Windows” theory of crime

Filed under: Law, USA — Tags: , , — Nicholas @ 07:51

In Mother Jones, Kevin Drum looks at the frequent claim on the political right that the “Broken Windows” model of policing was pivotal in reducing urban crime:

The “Broken Windows” theory suggests that tolerance of small acts of disorder creates an environment that leads to rising amounts of serious crime. So if police crack down on small offenses—petty vandalism, public lewdness, etc. — crime reductions will follow. George Kelling was one of the originators of the theory, and NYPD police commissioner Bill Bratton is one of its strongest proponents.

It sounds reasonable, but as Drum points out, it takes credit for improvements that it couldn’t have been driving:

Violent crime 1985-2012So here’s the thing: this is almost certainly wrong. Not even controversial. Just wrong: broken windows policing may well have been helpful in reducing New York’s crime rate, but there’s flatly no evidence that it’s been pivotal. It’s true that crime in New York is down more than it is nationally, but that’s just because crime went up more in big cities vs. small cities during the crime wave of the 60s through the 80s, and it then went down more during the crime decline of the 90s and aughts. Kelling and Bratton can dismiss this as ivory tower nonsense, but they should know better. The statistics are plain enough, after all.

Violent crime big vs small cities 1985-2010Take a look at the two charts on the right. The top one shows crime declines in six of America’s biggest cities. As you can see, New York did well, but it did no better than Chicago or Dallas or Los Angeles, none of which implemented broken windows during the 90s. The bottom chart is a summary of the crime decline in big cities vs. small cities. Again, the trend is clear: crime went up more during the 80s in big cities, but then declined more during the 90s and aughts. The fact that New York beat the national average is a matter of its size, not broken windows.

Now, none of this is evidence that broken windows doesn’t work. The evidence is foggy either way, and we simply don’t know. My own personal view is that it’s probably a net positive, but a fairly modest one.

Works that didn’t enter public domain, thanks to copyright extension

Filed under: Books, Law, Media, Science, USA — Tags: , , , — Nicholas @ 02:00

The Center for the Study of the Public Domain (at Duke Law), lists some of the better-known works that should have become public domain in the United States this year, except for the extension of copyright terms:

Works from 1958 that won't enter public domain

Current US law extends copyright for 70 years after the date of the author’s death, and corporate “works-for-hire” are copyrighted for 95 years after publication. But prior to the 1976 Copyright Act (which became effective in 1978), the maximum copyright term was 56 years — an initial term of 28 years, renewable for another 28 years. Under those laws, works published in 1958 would enter the public domain on January 1, 2015, where they would be “free as the air to common use.” Under current copyright law, we’ll have to wait until 2054. And no published works will enter our public domain until 2019. The laws in other countries are different — thousands of works are entering the public domain in Canada and the EU on January 1.

What books and plays would be entering the public domain if we had the pre-1978 copyright laws? You might recognize some of the titles below.

  • Chinua Achebe, Things Fall Apart
  • Hannah Arendt, The Human Condition
  • Isaac Asimov (writing as Paul French), Lucky Starr and the Rings of Saturn
  • Simone de Beauvoir, Mémoires d’une jeune fille rangée (Memoirs of a Dutiful Daughter)
  • Michael Bond, A Bear Called Paddington, with illustrations by Peggy Fortnum
  • Eugene Burdick and William Lederer, The Ugly American
  • Truman Capote, Breakfast at Tiffany’s
  • Agatha Christie, Ordeal by Innocence
  • John Kenneth Galbraith, The Affluent Society
  • Graham Greene, Our Man in Havana
  • Dr. Martin Luther King, Jr., Stride Toward Freedom: The Montgomery Story
  • Claude Lévi-Strauss, Anthropologie Structurale (Structural Anthropology)
  • Mary Renault, The King Must Die
  • Dr. Seuss, Yertle the Turtle and Other Stories
  • T.H. White, The Once and Future King

What a trove of books — imagine these being freely available to students and educators around the world. You would be free to translate these books into other languages, create Braille or audio versions for visually impaired readers (if you think that publishers wouldn’t object to this, you would be wrong), or adapt them for theater or film. You could read them online or buy cheaper print editions, because others were free to republish them. (Empirical studies have shown that public domain books are less expensive, available in more editions and formats, and more likely to be in print — see here, here, and here.) Imagine a digital Library of Alexandria containing all of the world’s books from 1958 and earlier, where, thanks to technology, you can search, link, annotate, copy and paste. (Google Books has brought us closer to this reality, but for copyrighted books where there is no separate agreement with the copyright holder, it only shows three short snippets, not the whole book.) You could use these books in your own stories — The Once and Future King was free to draw upon Sir Thomas Malory’s Le Morte d’Arthur (a compilation of King Arthur legends) because Malory’s work was in the public domain. One tale inspires another. That is how the public domain feeds creativity. Instead of seeing these literary works enter the public domain in 2015, we will have to wait until 2054.

January 1, 2015

It’s. Just. Wrong. Period.

Filed under: Law, Liberty, Military, USA — Tags: , , — Nicholas @ 02:00

Jacob Sullum on the always-hot-button topic of state torture:

In an interview on Sunday, NBC’s Chuck Todd asked former Vice President Dick Cheney if he was “OK” with the fact that a quarter of the suspected terrorists held in secret CIA prisons during the Bush administration “turned out to be innocent.” Todd noted that one of those mistakenly detained men died of hypothermia after being doused with water and left chained to a concrete wall, naked from the waist down, in a cell as cold as a meat locker.

Cheney replied that the end — to “get the guys who did 9/11” and “avoid another attack against the United States” — justified the means. “I have no problem as long as we achieve our objective,” he said.

Charles Fried, a Harvard law professor who served as solicitor general during the Reagan administration, and his son Gregory, a philosophy professor at Suffolk University, offer a bracing alternative to Cheney’s creepy consequentialism in their 2010 book Because It Is Wrong. They argue that torture is wrong not just when it is inflicted on innocents, and not just when it fails to produce lifesaving information, but always and everywhere.

That claim is bolder than it may seem. As the Frieds note, most commentators “make an exception for grave emergencies,” as in “the so-called ticking-bomb scenario,” where torturing a terrorist is the only way to prevent an imminent explosion that will kill many people. “These arguments try to have it both ways,” they write. “Torture is never justified, but then in some cases it might be justified after all.” The contradiction is reconciled “by supposing that the justifying circumstances will never come up.”

December 30, 2014

Tax-splaining a headline

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

The headline that grabs attention says that a vast number of US corporations pay absolutely no corporate taxes. Tim Worstall explains that this is quite true:

Timothy Taylor has a nice piece here on the subject:

    More than 90 percent of businesses, representing more than one-third of all business activity, in the United States are structured as flow-through entities — businesses that do not pay the corporate income tax, but rather pass profits through to owners who pay tax under the individual income tax.

    We have two (actually, more than two, but this is the distinction that matters to us here) forms of business ownership. The first is the C Corporation, what we all normally think of as a corporation. The second is an S corporation (in taxation, very like a partnership). And the important thing is that C corporations are the only ones that pay the corporate income tax. S corporations don’t: their owners pay individual income tax on the profits. So, if we saw a move from C to S corporations as the method of organisation then we’d see a reduction in corporate income tax paid. But not, possibly, a reduction in total tax paid on business profits.

And that is what seems to have happened at least in part:

    Back in 1980, nearly 80% of business income went to “C” corporations–so named after the applicable part of the tax code that governs them–which are what most of us think of when we think of a “corporation.” Back then, the remaining 20% was almost all sole proprietorships, which were just taxed as individual income. …..(…)…But C corporations now account for only about 30% of all business income. The share going to sole proprietorships hasn’t changed much. But much more corporate income is going to partnership and S corporations….(…)…Back in the 1960s, the corporate income tax often collected 4-5% of GDP. Since about 1990, it has more commonly collected 1-2% of GDP. Part of the reason is that a smaller share of business income is flowing through the conventional C corporation form.

That really is a large part of the explanation. It’s not that business profits are not being taxed, it’s that they’re being taxed in a different way. And that explains much of the fall in the corporate income tax revenues: and all too few people are over on the other side looking at the increase in individual income tax payments stemming from corporate profits.

So a legal change has drawn a lot of corporations to change how they are structured, so that profits are taxable in the hands of their individual owners, rather than in the imaginary hands of the corporate person. And another US tax quirk explains even more of the headline:

There is another point to be made here, about how we measure the share of corporate profits in the US economy. This has very definitely risen, this is absolutely true. And the tax bill hasn’t, that’s also true. A goodly part of the explanation is the above, about C and S corporations. But there’s this one more thing. Profits in the US economy includes all profits made in the US, by both Americans and foreigners. But it also includes foreign profits made by US corporations. Those tens of billions being made abroad by Google and Apple, Microsoft, they’re all included in the US profit share. And as we also know, those foreign profits aren’t paying the US corporate income tax because, entirely legally, they’re being used overseas to reinvest in those foreign businesses. My stick my finger in the air estimate of the difference those profits make is about 2% of US GDP. Meaning that if we measure US profits as 10% of GDP, then look at tax payments, we’re only seeing the tax payments from 8% of GDP (before we even look at the C and S corporation thing).

December 28, 2014

Edward Luttwak on Napoleon’s modernization of European law

Filed under: Europe, France, History, Law, Liberty — Tags: , — Nicholas @ 12:19

In the London Review of Books, Edward Luttwak starts his review of Britain against Napoleon: The Organisation of Victory, 1793-1815 by Roger Knight by contrasting British and European views of Napoleon’s legacy:

I can recall few heated arguments with my father, but I remember very well our Napoleon quarrel. After two years at a British boarding school, I had learned a fair amount of English and just about enough history to mention Wellington and Waterloo as we were approaching Brussels on a drive from Milan. To my great surprise, my father burst out with a vehement attack on ‘the English’ for having selfishly destroyed Napoleon’s empire. Wherever it had advanced in Europe, modernity had advanced with it, sweeping away myriad expressions of obscurantism and hereditary privilege, emancipating the Jews and all manner of serfs, allowing freedom of, and from, religion, and offering opportunities for advancement for the talented regardless of their origins. I do not recall his actual words, and he would hardly have put it as I have here, but that was certainly his meaning, and I remember his equal-opportunity quotation: ‘Every French soldier carries a field-marshal’s baton in his knapsack.’ I also remember his explanation of the reason he accused the English of being ‘selfish’: Great Britain was already on its way to liberty and did not need Napoleon, but Europe did, and Britain took him away.

In other words, for Jozef Luttwak of Milano, formerly of Arad, Transylvania, as for many others on the Continent (and not only the French), all the wars of Napoleon, all his victories, counted for little in evaluating the man and his deeds. What counted was the progressive moderniser, the law-giver of the Code Napoléon of 1804, actually the Code civil des Français, which was really a civil code for Europeans, since Napoleon’s empire français extended across the Low Countries to Jutland and into northwest Italy, and took in the ex-Papal States and Dalmatia (as Illyria), adding up to a good part of Western Europe. Nor was Napoleon’s Code as ephemeral as his victories. It endures as the core of civil law not only in France but in its former European possessions, and their former possessions too, encompassing ex-French Africa, all of Latin America and the Philippines by way of Spain, and Indonesia by way of the Netherlands, as well as Quebec and Louisiana.

Even that list understates the influence of the code, and therefore of Napoleon the moderniser. Its text conveyed three powerfully innovative principles whose influence transcended by far its actual legal application, and which no restoration could undo: clarity, so that all could know their rights if they could read, without the recondite expertise of jurists steeped in customary law, with its hundreds of exemptions, privileges and eccentricities; secularism, which inter alia replaced parishes with municipalities, thereby introducing civil marriage, part of an entirely new form of individual and civic existence; and the right to individual ownership of property – which untied the immobilised holders of communal property – and employment free from servile obligations.

It mattered greatly that these revolutionary principles were proclaimed by Napoleon, already a conservative and commanding figure – unlike the revolutionaries of 1789, who could not give an aura of authority to their Declaration of the Rights of Man and of the Citizen, which was itself soon challenged by the more egalitarian 1793 version, with both anyhow rejected by the upholders of privilege. In Napoleon’s vassal states (the Confederation of the Rhine, the Kingdoms of Spain, Italy and Naples, and the Grand Duchy of Warsaw), even where the code was not promulgated it was imitated, as was its drastically new style. Just as the florid convolutions and encrustations of rococo had been replaced by the linear elegance of the empire style, the thickets of customary law that Montesquieu had praised as barriers to despotism – as indeed they were, but only for privileged jurists – were replaced by the utterly systematic code, whose descending hierarchy of books, titles, chapters and sections that devolved into 2281 numbered paragraphs was itself infused with the new spirit of modernity. For Europeans of a liberal disposition, the code was a call to modernise not merely the law but society in its entirety – an impulse that would persist for decades.

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