Archives: April, 2008

Looking for Advice in the Wrong Place

Venezuela’s food programs

Five Central American presidents have asked Hugo Chávez for advice in supplying food to their populations. According to Honduras’ president Manuel Zelaya, “Venezuela has many [food] programs that are worth taking a look at.”

Tell that to the thousands of Venezuelans who every day wait in line at supermarkets and stores for hours in order to get simple items such as milk or meat. Hugo Chávez’s policies (such as price controls) have caused serious shortages in a country that is awash with oil money.

I’m sure Central Americans are better off without Chávez’s advice.

Howley on E-Verify

Kerry Howley has a great article on the supposedly common-sense proposal to create a massive federal database of eligible workers as a disincentive to illegal immigration:

While undocumented workers probably contribute more in federal taxes than they consume in federal services, no one doubts that they pose some fiscal burden to border communities where they arrive. Still, you’d have to take an improbably extreme view of these costs to deem the SAVE Act fiscally rational. According to the Congressional Budget Office (pdf), the act would decrease federal revenues by $17.3 billion between 2009 and 2018 as formerly tax-paying workers go underground. The costs of expanding E-verify and a bunch of other goodies stuffed into SAVE (thousands more border agents, a program to recruit former members of the armed forces to join the border patrol, more SUVs and unmanned aerial vehicles, hundreds of full time immigration investigators, expanded immigration detention centers) come to $23.4 billion in discretionary spending during the same period. And that doesn’t touch the cost to individual employers, who are being slapped with a huge regulatory burden in the midst of impending recession.

No presidential candidate has come out in favor of Schuler’s bill, most likely because the bill includes no avenue for undocumented workers who wish to become legal. Herein lies the ambitious stupidity of SAVE: If the bill works as intended, it will instantly turn the population of 12 million undocumented workers with no way of becoming legal into 12 million unemployed undocumented workers with no way of becoming legal. For a political constituency constantly worried about “anarchy,” this does not appear to be an ideal situation.

The SAVE Act may or may not come to a vote this session, but employment verification will almost certainly be a part of future compromise legislation on immigration reform. That’s worrying. Walls offend us aesthetically and symbolically; they’re clumsy and primitive and cruel. But they’re also easy to tear down; far easier than a slowly metastasizing system of total employment surveillance, of growing databases and expanding bureaucracies.

Our own Jim Harper has justifiably called the e-verify program Franz Kafka’s solution to illegal immigration. According to the Social Security Administration’s own estimates, almost 18 million Social Security records contain errors, many of them pertaining to US citizens. If even a small fraction of those problems find their way into the e-verify program, we’d be looking at millions of American citizens suddenly forced to “prove” to federal bureaucrats that they’re “eligible” to have a job. Giving the federal government the power to decide which US citizens are allowed to work for a living seems to me like a much bigger threat to our freedoms than anything illegal immigrants have done.

NCSL Calls for Repeal of REAL ID

The National Conference of State Legislatures wants the REAL ID Act gone. It supports S. 717, the Identification Security Enhancement Act of 2007, which would repeal the REAL ID Act and reinstitute a negotiated rulemaking process on identity security that was established in the 9/11-Commission-inspired Intelligence Reform and Terrorism Prevention Act.

It’s not a foregone conclusion that an organization like this would reject a behemoth of a project like building a national ID and surveillance system. The NCSL isn’t a small-government organization, and it could just as well have lobbied for billions of dollars in funding.

Microsoft Volunteers to Be the Poster Child for DMCA Reform

One of the big challenges of writing about tech policy is the difficulty of explaining the subjects I write about for a general audience. This was a particular challenge a couple of years ago when I wrote a Cato Policy Analysis about the anti-circumvention provisions of the Digital Millennium Copyright Act—just typing that out is a chore. I wish I could have pointed to this story as an example, because it brilliantly illustrates my argument.

A few years back, Microsoft developed a copy-protection scheme called PlaysForSure (it will become clear shortly how ironic that name was) that was supposed to prevent music customers from engaging in Internet piracy with music they bought from online music stores. Microsoft licensed the format to a variety of different companies and aggressively promoted it as an alternative to Apple’s iTunes-iPod ecosystem. Unfortunately, Microsoft failed to close the gap with Apple, so in 2006 Microsoft unveiled a new product line called Zune, effectively discontinuing development of PlaysForSure. Zunes are incompatible with PlaysForSure music. If you built up a music library in the PlaysForSure format, it would, um, not play for sure (or at all) on a Zune music player.

Up to this point this is just an ordinary business story, and nothing for libertarians to be concerned about. Companies drop old product lines all the time, and sometimes that means customers are stuck with compatibility headaches. But there’s just one problem: not only will Microsoft not help you play your PlaysForSure music on a Zune, but it’s illegal under the DMCA for anyone else to develop software to convert PlaysForSure music to a format that could play on Zunes, iPods, or any other format. Such software would be considered a “circumvention device”—ostensibly a piracy tool—and could bring civil and criminal penalties. If you were stupid enough to buy music in PlaysForSure format, you’re stuck with the dwindling number of PlaysForSure-compatible music programs still left on the market. You can burn your music to CDs, and then re-rip them to an open format, but this is a time-consuming process if you have a large music library, and it will lead to some degradation in the quality of the music.

As if all that weren’t enough, Microsoft yesterday announced the next step in its campaign to make the DMCA look ridiculous: this fall, it will be switching off the license servers that allow customers to “authorize” new computers and operating systems to play music from customers that bought music from its now-defunct MSN Music store. This means that if you have a library of music from the MSN Music store, and you buy a new computer or upgrade your operating system, there will be no legal way to take your music library with you.

If Congress hadn’t enacted the DMCA, this wouldn’t be a big deal. Third parties could develop software utilities that would automatically convert peoples’ PlaysForSure-formatted music collections into an open format like MP3, which would allow it be played on almost any computer or music player. Customers wouldn’t have to worry about whether their computer had been “authorized,” or whether the company they’d purchased the music from was running the necessary “license server.”

The most frustrating thing about this is that forcing consumers to jump through these hoops hasn’t made a dent in illicit file sharing. To this day, the music industry sells most of its music in the copy-protection-free CD format. Anyone can buy a CD, rip it to MP3 format, and upload it to the Internet. And music downloaded from peer-to-peer networks comes free of copy protection. Which means that the hassles imposed on consumers by the DMCA and copy protection formats like PlaysForSure haven’t slowed down piracy at all. All they’ve done is created unnecessary headaches for customers who were foolish enough to obey the law and pay for the music they downloaded.

Happy Tax Freedom Day!

Taxpayers can breathe a sign of relief. According to the Tax Foundation, April 23 is Tax Freedom Day. That means that the average American has finally earned enough to pay estimated federal, state, and local taxes for 2008. One of the most depressing finding in the Tax Foundation’s report is that Americans pay more in tax than they do for food, clothing, and shelter combined. To compensate for being the bearer of bad fiscal news, the Tax Foundation released an amusing video. It doesn’t quite equal this classic tax video, but it’s worth watching.

Money Meddling

Are you an entrepreneur who deposits a regular amount of your business revenues in the bank? Watch out, the government might come after you for illegal “structuring.”

Are you a high earner who regularly pulls out a substantial amount of cash from your bank account? Watch out, your bank could be sending ”suspicious activity reports” about you to the government, as former senator Bob Dole’s bank did.

Have you ever deposited or withdrawn more than $10,000 from your bank? Watch out, because your activities were recorded on a government database of “currency transaction reports,” which is growing by 16 million new reports each year.

Did you overstate your income on a loan form when you bought your house? Watch out, the government could nail you for both ”bank fraud” and “money laundering.”

Forbes focuses on government encroachments on our civil liberties in a series of articles this month. See here, here and here

As a tax wonk, the IRS angle in these articles caught my eye. But like many people, I find it very disturbing that continual expansions in federal power are shrinking the realm of privacy and individual automony in modern society.