Topic: Telecom, Internet & Information Policy

The Antitrust Religion in Action

This summer, David Boaz noted how sad it was that Google’s top executives have apparently diverted their attention away from developing the next hot new technology toward building their Washington presence. Declan McCullagh notes that Google’s generosity, which has flowed primarily to Democrats, may be coming back to bite them, as disgruntled Republicans have suddenly gotten religion when it comes to antitrust and are demanding that Google’s acquisition of Doubleclick receive close scrutiny. Strangely, those same Republicans weren’t so worried about a spate of mergers that involved large telecom firms like SBC and Verizon. I’m sure the disparity has nothing to do with the telecom industry’s generous contributions to their campaigns.

As I point out at Techdirt, these sorts of shenanigans shouldn’t surprise us. Modern antitrust law gives government bureaucrats seemingly unlimited discretion to second-guess corporate mergers based on the flimsiest of pretexts, or to attach arbitrary conditions to merger approvals. Last winter, for example, as a condition of the BellSouth merger, two FCC commissioners coerced AT&T into accepting “network neutrality” rules that Congress had earlier failed to adopt, rules that apply to no one else in their industry. And don’t forget the XM/Sirius debate, in which terrestrial broadcasters—their principal competitors—trotted out the ludicrous argument that the merged company would have no competition. XM and Sirius’s fundamental sin seems to be that they hadn’t invested as much money on Washington lobbyists as the NAB had.

The rule of law demands that government decision-making proceed according to objective, clearly-defined, and predictable rules. Antitrust law as it’s currently enforced doesn’t qualify, and as a result it’s ripe for abuse. And if you believe Edwin Rockefeller, this isn’t new. He argues that antitrust law has always been primarily a weapon for politically-connected companies to use against their rivals.

Identity Systems Aren’t Good Security, and Other Lessons From the Chicago Airport Fake ID Story

AFP is reporting that more than a hundred people with false identification documents were given employee security passes to Chicago’s O’Hare airport.

This is a good opportunity to compare conventional wisdom to actual security wisdom.

CW: This was a breach of the airport’s security system.
W: This was definitely a breach of the airport’s identity system, but identity systems provide very little security. The airport’s security, already weak if it relied on workers’ identities, was little changed.

CW: “ ‘If we are to ensure public safety, we must know who has access to the secure areas of airports,’ said Patrick Fitzgerald, US attorney for the northern district of Illinois.”
W: Public safety can’t be ensured by knowing who has access to the secure areas of airports. Knowing who has access may protect against ordinary threats like theft, but not against the threats to aviation that we care about.

CW: “A fundamental component of airport safety is preventing the use of false identification badges and punishing those who commit or enable such violations.”
W: Preventing the use of false identification is a trivial component of airport safety. It’s a fundamental component of airport safety programs, which are mostly for show. Security expert Bruce Schneier calls them “security theater.”

CW: “Unauthorized workers employed at sensitive facilities such as airports, nuclear power plants, chemical plants, military bases, defense facilities and seaports pose a vulnerability which compromises the integrity of those key assets,’ US Immigration and Customs Enforcement said in a statement.”
W: Authorized workers employed at sensitive facilities pose a vulnerability which compromises the integrity of those very same assets. If you want to prevent some kind of harm, you must make that harm difficult to cause, regardless of who may try.

Security is not easy.

What You Need to Know About Driver Licensing and Illegal Aliens

After 700 words of Sturm und Drang about lawsuits and partisan machinations over whether illegal aliens should be able to get drivers’ licenses, CNSNews.com reporter Fred Lucas quoted me briefly:

“Identification systems aren’t a good security tool,” Harper told Cybercast News Service. “Driver licensing isn’t a good tool for immigration control. It will just result in illegal immigrants driving without a license.”

That sums it up nicely. Just thought I’d share it.

(The story says that unlicensed driving dropped by a third when New Mexico de-linked driver licensing and immigration status. Actually, unlicensed driving dropped by two thirds, from 33% to 11%, lower than the national average.)

Anti-Immigrant Opinions are Weakly Held

I didn’t watch Tuesday’s Democratic debate – watching politicians from either party outbid each other on faux outrage and how much of my money they would spend is too annoying – but I did get the after-action report on the Newshour. And it seems Senator Clinton was drawn into the vortex New York Governor Eliot Spitzer (D) created with his recent flip-flop on driver licensing and public safety.

His original decision to de-link driver licensing and immigration status for public safety reasons was right, but it was pounced on and demagogued by anti-immigrant groups. Spitzer backed down, and pledged his state to implement the REAL ID Act, pleasing nobody. (When the costs of this national ID law to New York are discovered, he’ll flip-flop again, earning quiet, broad-based appreciation.)

Watching the excerpts of the candidates bumbling around this issue, it appeared to me that they knew giving licenses to illegal immigrants is the right and practical thing to do, but also that they would get demagogued if they said so.

Well, here’s my advice: Go ahead and say it.

Having watched this issue, and having heard from lots of angry people, I know that anti-immigrant views are a classic weakly held opinion. Angry as people are about the rule of law and “coming to this country the right way,” that anger melts when they learn more. Stuff like this:

“We haven’t permitted anywhere near enough legal immigration for decades. You can sit back and talk about legal channels, but the law has only allowed a smidgen of workers into the country compared to our huge demand. Getting people through legal channels at the INS has been hell.

“America, you’re going to have to get over what amounts to paperwork violations by otherwise law-abiding, honest, hard-working people. And that’s what we’re talking about - 98% honest, hard-working people who want to follow the same path our forefathers did, and who would be a credit to this country if we made it legal for them to come. Our current immigration policies are a greater threat to the rule of law than any of the people crossing the border to come here and work.”

This kind of argumentation will be met with vicious demagoguery, which will weaken, and weaken, and fade and fade and fade. The people I hear from – and I regularly do because of the educating I’ve been doing nationwide on the REAL ID Act – immediately soften when I pull them from their echo chambers. The “rule of law” hand is a low pair compared to this full house: “honest, hard-worker from impoverished circumstances, denied legal channels other than a narrow chance of navigating an incompetent bureaucracy.”

There’s one Democratic candidate who is well suited to make this kind of argument. It’s a way to draw attention, look principled, do the right thing, and vanquish a loud but weak pressure group. New Mexico’s uninsured driver rate dropped by two-thirds – from 33% to 11% – when that state delinked immigration status and driving in 2003.

Spitzer’s Speedy Flip-Flop

Wow. A brief 36 days is all it took New York Governor Eliot Spitzer (D) to abandon his stance on driver licensing and New Yorkers’ public safety. As I wrote at the time, Spitzer got it right when he announced that he would de-link driver licensing and immigration status because of the safety benefits to the state’s drivers.

But shrill attacks from anti-immigrant groups came fast and furious. A small group of 9/11 victims’ family members, grief curdled into hatred of immigrants, regularly bandy fear and their loved ones’ memories for political purposes. And they did so with relish when Spitzer announced his plan. It’s crassness that one would expect a New York pol to stare down.

But Spitzer, unable to withstand the heat, seems to have gone scrambling for an out. The New York Times reports that Spitzer will team up with DHS officials today to announce New York’s planned compliance with the REAL ID Act. It requires proof of legal presence to get a compliant license.

This a flat out reversal of the position Spitzer took just over a month ago. The justification he gave - correctly - for de-linking licensing and immigration status was New Yorkers’ safety. With driver licensing treated as an immigration enforcement tool, illegals don’t get licensed, don’t learn the rules of the road or basic driving skills, and don’t carry insurance. When they cause accidents, they flee the scene, leaving injured and dead New Yorkers and causing higher auto insurance rates. As I noted a few weeks ago during his brief flirtation with principle and fortitude, “Spitzer is not willing to shed the blood of New Yorkers to ‘take a stand’ on immigration, which is not a problem state governments are supposed to solve anyway.”

He may try, but Spitzer can’t honestly claim that he’s been consistent. New York’s compliance with REAL ID, were it actually to materialize, would put REAL ID compliant cards in the hands of citizens and make New York driver data available to the federal government. Thus, possession of a non-REAL-ID-compliant license would be tantamount to a confession of illegal status. Thanks to Spitzer’s flip-flop, illegal aliens will now recognize that getting a license merely provides federal authorities the address at which to later round them up for deportation.

Needless to say, they’re not going to get licenses, and the safety benefits Spitzer correctly sought for New Yorkers just 36 days ago will not materialize. The result is what’s known in regulatory circles as risk transfer. There will be more injuries on New York’s roadways so that the U.S. can have a national ID system. Alas, the security benefits of that system, as I showed in testimony to the Senate Judiciary Committee, are negative.

I was impressed and surprised by how right Spitzer had gotten it when he de-linked driver licensing and immigration status in New York. I’m once again impressed, but in a much different way, by how quickly he went scampering away from this good policy. The reactionary critics of his policy obviously really got to him.

Low Taxes Aren’t a Subsidy

Economist Dean Baker thinks that Amazon owes its profits to the fact that it doesn’t have to collect sales taxes for customers in states where it doesn’t have a physical presence. The absence of sales taxes on Internet purchases, he says, is a “subsidy that Amazon gets from taxpayers.” As I point out over at Techdirt, this is silly. Some states don’t have sales taxes at all, but no one would consider that a taxpayer subsidy. My local Wal-Mart benefits from a variety of state and local government services here in the St. Louis area, such as police and fire protection, and roads and other infrastructure. At least in part, sales taxes go to cover the costs of providing those services. Amazon uses few if any services from state or local governments in Missouri, so it’s hard to see anything unfair about the fact that it doesn’t have to collect sales taxes here.

On the other side of the ledger, sales tax collection would be far more burdensome to Internet-based businesses than to their brick-and-mortar competitors. A mom-and-pop retail store only has to learn about the tax rules in one jurisdiction. Most likely, there’s just one tax rate, one set of rules about which goods are taxable at that rate, and one set of reporting requirements. In contrast, a small e-commerce site would have to familiarize itself with the rules in thousands of different jurisdictions. The state of Missouri, for example, allows municipal governments to tack a variety of local taxes onto the state sales tax. As a result, the tax rate varies from city to city. Even worse, different states have different rules about which goods and services are taxable. Missouri, for example, exempts custom software (but not boxed software), farm equipment, and medical grade oxygen, among other things. Colorado has exemptions for bingo equipment, cigarettes, food, fuel and oil, machinery and machine tools, newsprint, precious metal bullion and coins, and more. Each of the other 40-some states with sales taxes have their own lists of what’s taxable. Many states exempt food and clothing from taxes, but the precise definitions of “food” and “clothing” varies from state to state. For example, in Wyoming, bagels are considered tax-exempt food unless they’re sold with cream cheese and a knife, in which case they become taxable “prepared foods.”

Not surprisingly, small online retailers are worried about the administrative burden of complying with so many different requirements. Some states have banded together to create a unified, “streamlined” sales tax system, but e-tailers are skeptical about how much the system can be simplified. Unless states first radically simplify and harmonize their sales tax rules (which might be a good idea anyway), I don’t think it’s going to be feasible to “streamline” the system enough to make it affordable for small e-tailers.

Brito on E-Government Transparency

One of the most important tools for limited government is transparency. Transparency keeps government accountable by giving citizens the ability to monitor what government officials are doing and publicize instances where government officials abuse their authority.

Of course, government officials dislike transparency for precisely that reason, and they have often worked hard to limit the amount of information they make available. The Freedom of Information Act, which was passed in 1966 and given teeth in 1974, required government agencies to disclose information upon request from voters.

Some government officials have taken the opposite tack: instead of withholding information, they’ve released enormous quantities of poorly organized information, making it difficult for voters to sift through the material and find what they’re looking for.

Former Catoite Jerry Brito, now at the Mercatus Center, has written a fantastic paper describing the remedy for this tactic of government obfuscation. Jerry argues that government agencies should be required to release their data in structured formats suitable for easy manipulation by software tools. That would allow computer geeks to use software tools to organize the information and make it easily searchable. And that, in turn, would make it much easier for citizen-activists to sift through the available information and unearth relevant information about government activities.

Jerry points to several excellent examples of how structured data can improve government accountability. One is Washington Watch, a side project of our own Jim Harper, which gives voters a user-friendly way to keep track of what Congress is doing and discuss pending legislation with other voters. Another is opensecrets.org, a project of the Center for Responsive Politics, that provides well-organized, searchable access to the FEC’s campaign contributions database. Creating opensecrets.org would have been prohibitively expensive if the FEC hadn’t made the raw information available in a reasonable electronic format.

Many more projects like this would be possible if government agencies made more public data available. I encourage you to check out Jerry’s paper to learn how it can be done.