How Not To Rear Pigs (And Receive Money For Not Doing So)

I have only so much contempt to go around, and my job calls me to expend most of it on U.S. government policies. But I have of late been so immersed in criticizing U.S. farm programs (and rightly so) that I have to remind myself of the insanity across the pond.

Or my friends remind me. My mate Ken sent me this letter from a would-be non-pig-farmer from the U.K., anxious to feed at the European Union’s trough.

My favorite excerpt:

“In your opinion what is the best kind of farm not to rear pigs on, and which is the best breed of pigs not to rear? I want to be sure I approach this endeavour in keeping with all government policies, as dictated by the EU under the Common Agricultural Policy. I would prefer not to rear bacon pigs. But if this is not the type you want not rearing, I will just as gladly not rear porkers.”

Read the rest, though. It’s worth the time.

Google Gets Sucked into the Parasite Economy

The Washington Post reports that Google “does not intend to repeat the mistake that its rival Microsoft made a decade ago.”

Microsoft was so disdainful of the federal government back then that it had almost no presence in Washington. Largely because of that neglect, the company was blindsided by a government antitrust lawsuit that cost it dearly.

Mindful of that history, Google is rapidly building a substantial presence in Washington and using that firepower against Microsoft, among others.

This story just keeps repeating itself. People build companies, and then activists, competitors, and politicians notice that they have deep pockets. It happened to Microsoft, then to Wal-Mart.  When the parasite economy first started lapping at Google last year, I wrote this:

Founders Larry Page and Sergey Brin and many other wealthy officers of the company got rich the only way you can in a free market: by producing something other people want. A lot of brilliant people worked long hours producing computer software that hundreds of millions of people chose to use, in the midst of a highly competitive market that offered lots of other options.

But in our modern politicized economy – which National Journal columnist Jonathan Rauch called the “parasite economy” – no good deed goes unpunished for long. Some people want to declare Google a public utility that must be regulated in the public interest, perhaps by a federal Office of Search Engines. The Bush administration wants Google to turn over a million random Web addresses and records of all Google searches from a one-week period. Congress is investigating how the company deals with the Chinese government’s demands for censorship of search results by Chinese users.

So, like Microsoft and other companies before it, Google has decided it will have to start playing the Washington game. It has opened a Washington office and hired well-connected lobbyists. One of the country’s top executive search firms is looking for a political director for the company.

What should concern us here is how the government lured Google into the political sector of the economy. For most of a decade the company went about its business, developing software, creating a search engine better than any of us could have dreamed, and innocently making money. Then, as its size and wealth drew the attention of competitors, anti-business activists, and politicians, it was forced to start spending some of its money and brainpower fending off political attacks. It’s the same process Microsoft went through a few years earlier, when it faced the same sorts of attacks. Now Microsoft is part of the Washington establishment, with more than $9 million in lobbying expenditures last year.

Google has become a brilliantly useful company. We can’t imagine how we got along without it. I can’t even imagine how I got along without Google Desktop. Some of us appreciate that; others believe that becoming indispensable imposes obligations on a company. Google has started to find out how it feels to be the most flagrantly successful company in America.

Alas, Google seems to have taken to Washington all too enthusiastically. As the Post notes,

In its first major policy assault on a competitor, Google’s Washington office helped write an antitrust complaint to the Justice Department and other government authorities asserting that Microsoft’s new Vista operating system discriminates against Google software. Last night, under a compromise with federal and state regulators, Microsoft agreed to make changes to Vista’s operations.

So Google’s brilliant staff are now spending some of their intellect thinking up ways to sic the government on Microsoft, which is once again forced to give consumers a less useful product in order to stave off further regulation. The Post’s previous story on Google’s complaint called it ”allegations by Google that Microsoft’s new operating system unfairly disadvantages competitors.”

Bingo! That’s what antitrust law is really about–not protecting consumers, or protecting competition, but protecting competitors. Competitors should go produce a better product in the marketplace, but antitrust law sometimes gives them an easier option–asking the government to hobble their more successful competitor.

Recall the famous decision of Judge Learned Hand in the 1945 Alcoa antitrust decision. Alcoa, he wrote, “insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connection and the elite of personnel.” In other words, Alcoa’s very skill at meeting consumers’ needs was the rope with which it was hanged.

I look forward to more competition between Microsoft and Google–and the next innovative company–to bring more useful products to market. But I’m saddened to realize that the most important factor in America’s economic future – in raising everyone’s standard of living – is not land, or money, or computers; it’s human talent. And some part of the human talent at another of America’s most dynamic companies is now being diverted from productive activity to protecting the company from political predation and even to engaging in a little predation of its own. The parasite economy has sucked in another productive enterprise, and we’ll all be poorer for it.

The Folly of Mann

Colleen Wilcox, Superintendent of Schools for Santa Clara County, has an op-ed in today’s San Jose Mercury News critiquing vouchers. There is a great deal wrong with what she has to say. Referring to Horace Mann, the godfather of American state schooling, she writes:

It’s true that the history of our public schools has seen its share of disappointments. At certain times, in certain places, the system undeniably failed the students. But on the whole, Horace Mann’s model has served us well.

At certain times? In certain places? American students perform worse relative to their international peers the longer they stay in school (see the “Global Context” section of that .pdf). When compared across subjects and grades to other industrialized countries by the Third International Mathematics and Science Study, the Program on International Student Assessment, and the International Adult Literacy Survey, our performance is about average at the 4th grade, below average by the 8th grade, and at or near the bottom among high-school seniors and recent graduates.

And these patterns hold not only for the overall averages, but for our top-scorers as well. Not just at certain times. Not just in certain places. 

Wilcox objects to vouchers on two grounds. First, that they are ostensibly “contrary to our fundamental belief in the separation of church and state.” Not so. As the U.S. Supreme Court ruled in Zelman v. Simmons-Harris, a universally available school voucher that treats parents’ religious and non-religious school choices neutrally is entirely consistent with the First Amendment and the principle it is meant to uphold. Anyone worried about compelled support issues under vouchers can simply opt for tax credits instead, as I recommend here.

Her second objection is that allowing families to chose “private schools would drain precious dollars away from public schools.” But, the thing is, if the children aren’t in the public schools anymore, there is no point in paying them for those children is there? Then we’d be paying them, literally, for doing nothing.

Now, you might counter that, given the number of functionally illiterate and unprepared students graduated by public schools every year, we are already paying public schools for nothing. But this, please note, is entirely by accident. A system of deliberately paying public schools for nothing would not be an improvement.

Educational freedom, and market competition, beat government monopoly provision. The sooner we realize that, the better off our children and our nation will be.

And as for Horace Mann, he predicted 160 years ago that if we “let the Common [a.k.a. “public”] School be expanded to its capabilities, let it be worked with the efficiency of which it is susceptible, and nine tenths of the crimes in the penal code would become obsolete; the long catalogue of human ills would be abridged.”

Eight generations and trillions of dollars later, color me a little skeptical about the merits of state schooling.

If You Like Goodness, You Should Love NCLB!

Yesterday, the Educational Testing Service (ETS) – which brings you the GRE, SAT, AP, and numerous other dreaded exams – released results of a survey supposedly showing that “Americans say ‘yes’” to reauthorizing the No Child Left Behind Act (NCLB). The ETS pollsters reached this conclusion despite finding that more respondents opposed NCLB than supported it. How’s that possible? It takes a little prodding.

The survey’s first major finding is actually that most people – more than half – report knowing very little about the massive No Child Left Behind Act. It also finds that a plurality dislikes the law, with 43 percent opposing it and only 41 percent backing NCLB. But an accurate snapshot of public knowledge and opinion apparently wasn’t what ETS was after. No, what they wanted to know was what people thought about the law after they were offered a brief – and very positive – description of NCLB:

The No Child Left Behind Act provides federal funds for school districts with poor children in order to close achievement gaps. It also requires states to set standards for education and to test students each year to determine whether the standards are being met by all students. In addition, No Child Left Behind provides funding to help teachers become highly qualified. It also provides additional funding and prescribes consequences to schools that fail to achieve academic targets set by their state.

What a shock! After respondents got that description, support for the law rose to 56 percent. Sort of like if the description were “NCLB fulfills champagne wishes and caviar dreams for every student in America.” I mean, who is going to oppose “highly qualified” teachers, closing achievement gaps, and helping poor children? If anything, it’s a testament to how disliked NCLB truly is that the description only boosted support by 15 points. And imagine how low support might have dropped had ETS offered a little balance by, say, noting that NCLB has caused many states to lower their standards, and has produced no discernable increase in academic achievement despite boosting federal education spending by billions of dollars. Yet one more example of why you should never trust public opinion polls.

Antigua and Barbuda Raises the Stakes

$3.4 billion. That’s the price tag Antigua and Barbuda, the island nation which successfully argued that the United States was violating its obligations to open its market to foreign online gambling providers, puts on its lost revenues as a result of the U.S. ban on some internet gambling. (More here and here.)

They are seeking to recover the money by withdrawing the protection they provide for American intellectual property (see here). The idea behind this sort of action is to harness the power of a powerful lobby group (in this case, Hollywood and the software industry) to counteract the influence of anti-internet gambling groups: If intellectual property owners are caught in the cross-fire of the dispute, maybe the United States government would feel more pressure to comply with the series of rulings against current U.S. regulations.

The push to seek compensation through the World Trade Organization comes just one day after the European Union has indicated it wants compensation for the loss of market access, but through further opening of other sectors in lieu of lifting the ban. When the United States announced last month that it was responding to their loss at the WTO by seeking to “clarify” its commitments, they indicated that they would not provide compensation to Members harmed by the ban, as is called for by WTO rules. The USTR had reasoned that since they never intended to allow internet gambling in the first place (suggesting that their commitment to do just that was an “oversight”), then Members could not expect to receive any sort of compensation in return for solidifying the ban.

We’re planning to hold a forum on this topic on 25th July. Stay tuned for details.