Tag: Facebook

Keep Government Away From Twitter

Twitter recently re-activated Jesse Kelly’s account after telling him that he was permanently banned from the platform. The social media giant informed Kelly, a conservative commentator, that his account was permanently suspended “due to multiple or repeat violations of the Twitter rules.” Conservative pundits, journalists, and politicians criticized Twitter’s decision to ban Kelly, with some alleging that Kelly’s ban was the latest example of perceived anti-conservative bias in Silicon Valley. While some might be infuriated with what happened to Kelly’s Twitter account, we should be wary of calls for government regulation of social media and related investigations in the name of free speech or the First Amendment. Companies such as Twitter and Facebook will sometimes make content moderation decisions that seem hypocritical, inconsistent, and confusing. But private failure is better than government failure, not least because unlike government agencies, Twitter has to worry about competition and profits.

It’s not immediately clear why Twitter banned Kelly. A fleeting glance of Kelly’s Twitter feed reveals plenty of eye roll-worthy content, including his calls for the peaceful breakup of the United States and his assertion that only an existential threat to the United States can save the country. His writings at the conservative website The Federalist include bizarre and unfounded declarations such as, “barring some unforeseen awakening, America is heading for an eventual socialist abyss.” In the same article he called for his readers to “Be the Lakota” after a brief discussion about how Sitting Bull and his warriors took scalps at the Battle of Little Bighorn. In another article Kelly made the argument that a belief in limited government is a necessary condition for being a patriot.

I must confess that I didn’t know Kelly existed until I learned the news of his Twitter ban, so it’s possible that those backing his ban from Twitter might be able to point to other content that they consider more offensive that what I just highlighted. But, from what I can tell Kelly’s content hardly qualifies as suspension-worthy.

Some opponents of Kelly’s ban (and indeed Kelly himself) were quick to point out that Nation of Islam leader Louis Farrakhan still has a Twitter account despite making anti-semitic remarks. Richard Spencer, the white supremacist president of the innocuously-named National Policy Institute who pondered taking my boss’ office, remains on Twitter, although his account is no longer verified.

All of the of the debates about social media content moderation have produced some strange proposals. Earlier this year I attended the Lincoln Network’s Reboot conference and heard Dr. Jerry A. Johnson, the President and Chief Executive Officer of the National Religious Broadcasters, propose that social media companies embrace the First Amendment as a standard. Needless to say, I was surprised to hear a conservative Christian urge private companies to embrace a content moderation standard that would require them to allow animal abuse videos, footage of beheadings, and pornography on their platforms. Facebook, Twitter, and other social media companies have sensible reasons for not using the First Amendment as their content moderation lodestar.

Rather than turning to First Amendment law for guidance, social media companies have developed their own standards for speech. These standards are enforced by human beings (and the algorithms human beings create) who make mistakes and can unintentionally or intentionally import their biases into content moderation decisions. Another Twitter controversy from earlier this year illustrates how difficult it can be to develop content moderation policies.

Shortly after Sen. John McCain’s death a Twitter user posted a tweet that included a doctored photo of Sen. McCain’s daughter, Meghan McCain, crying over her father’s casket. The tweet included the words “America, this ones (sic) for you” and the doctored photo, which showed a handgun being aimed at the grieving McCain. McCain’s husband, Federalist publisher Ben Domenech, criticized Twitter CEO Jack Dorsey for keeping the tweet on the platform. Twitter later took the offensive tweet down, and Dorsey apologized for not taking action sooner.

The tweet aimed at Meghan McCain clearly violated Twitter’s rules, which state: “You may not make specific threats of violence or wish for the serious physical harm, death, or disease of an individual or group of people.”

Twitter’s rules also prohibit hateful conduct or imagery, as outlined in its “Hateful Conduct Policy.” The policy seems clear enough, but a look at Kelly’s tweets reveal content that someone could interpret as hateful, even if some of the tweets are attempts at humor. Is portraying Confederate soldiers as “poor Southerners defending their land from an invading Northern army” hateful? What about a tweet bemoaning women’s right to vote? Or tweets that describe our ham-loving neighbors to the North as “garbage people” and violence as “underrated”? None of these tweets seem to violate Twitter’s current content policy, but someone could write a content policy that would prohibit such content.

Imagine developing a content policy for a social media site and your job is to consider whether content identical to the tweet targeting McCain and content identical to Kelly’s tweet concerning violence should be allowed or deleted. You have four policy options:

     
  Delete Tweet Targeting McCain Allow Tweet Targeting McCain
Delete Kelly’s Tweet

1

2

Allow Kelly’s Tweet

3

4

 

Many commentators seem to back option 3, believing that the tweet targeting McCain should’ve been deleted while Kelly’ tweet should be allowed. That’s a reasonable position. But it’s not hard to see how someone could come to the conclusion that 1 and 4 are also acceptable options. Of all four options only option 2, which would lead to the deletion of Kelly’s tweet but also allow the tweet targeting McCain, seems incoherent on its face.

Social media companies can come up with sensible-sounding policies, but there will always be tough calls. Having a policy that prohibits images of nude children sounds sensible, but there was an outcry after Facebook removed an Anne Frank Center article, which had as its feature image a photo of nude children who were victims of the Holocaust. Facebook didn’t disclose whether an algorithm or a human being had flagged the post for deletion.

In a similar case, Facebook initially defended its decision to remove Nick Ut’s Pulitzer Prize-winning photo “The Terror of War,” which shows a burned, naked nine year old Vietnamese girl fleeing the aftermath of an South Viernamese napalm attack in 1972. Despite the photo’s fame and historical significance Facebook told The Guardian, “While we recognize that this photo is iconic, it’s difficult to create a distinction between allowing a photograph of a nude child in one instance and not others.” Facebook eventually changed course, allowing users to post the photo, citing the photo’s historical significance:

Because of its status as an iconic image of historical importance, the value of permitting sharing outweighs the value of protecting the community by removal, so we have decided to reinstate the image on Facebook where we are aware it has been removed.

What about graphic images of contemporary and past battles? On the one hand, there is clear historic value to images from the American Civil War, the Second World War, and the Vietnam War, some of which include graphic violent content. A social media company implementing a policy prohibiting graphic depictions of violence sounds sensible, but like a policy banning images of nude children it will not eliminate difficult choices or the possibility that such a policy will yield results many users will find inconsistent and confusing.

Given that whoever is developing content moderation policies will be put in the position of making tough choices it’s far better to leave these choices in the hands of private actors rather than government regulators. Unlike the government, Twitter has a profit motive and competition. As such, it is subject to far more accountability than the government. We may not always like the decisions social media companies make, but private failure is better than government failure. An America where unnamed bureaucrats, not private employees, determine what can be posted on social media is one where free speech is stifled.

To be clear, calls for increased government intervention and regulation of social media platforms is a bipartisan phenomenon. Sen. Mark Warner (D-VA) has discussed a range of possible social media policies, including a crackdown on anonymous accounts and regulations modeled on the European so-called “right to be forgotten.” If such policies were implemented (the First Amendment issues notwithstanding), they would inevitably lead to valuable speech being stifled. Sen. Ron Wyden (D-OR) has said that he’s open to carve-outs of Section 230 of the Communications Decency Act, which protects online intermediaries such as Facebook and Twitter from liability for what users post on their platforms.

When it comes to possibly amending Section 230 Sen. Wyden has some Republican allies. Never mind that some of these Republicans don’t seem to fully understand the relevant parts of Section 230.

That social media giants are under attack from the left and the right is not an argument for government intervention. Calls for Section 230 amendment or “anti-censorship” legislation are a serious risk to free speech. If Section 230 is amended to increase social media companies’ risk of liability suits we should expect these companies to suppress more speech. Twitter users may not always like what Twitter does, but calls for government intervention are not the remedy.

Will Regulations Create Big Marijuana?

I wrote last month that new regulations and taxes in California’s legalized marijuana regime are likely to result in a situation in which

a few people are going to get rich in the California marijuana industry, and fewer small growers are going to earn a modest but comfortable income. Just one of the many ways that regulation contributes to inequality.

Now the East Bay Express in Oakland offers a further look at the problem:

East Bay ExpressAsk the people who grow, manufacture, and sell cannabis about the end of prohibition and you’ll hear two stories. One is that legalization is ushering a multibillion-dollar industry into the light. Opportunities are boundless and green-friendly cities like Oakland are going to benefit enormously. There will be thousands of new jobs, millions in new tax revenue, and a drop in crime and incarceration.

But increasingly you’ll hear another story. The state of California and the city of Oakland blew it. The new state and city cannabis regulations are too complicated, permits are too difficult and time consuming to obtain, taxes are too high, and commercial real estate is scarce and expensive. As a result, many longtime cannabis entrepreneurs are either giving up or they’re burrowing back into the underground economy, out of the taxman’s reach, and unfortunately, further away from the social benefits legal pot was supposed to deliver….

Some longtime farmers, daunted by the regulated market’s heavy expenses, taxes, and low-profit predictions, have shrugged and gone back to the black market where they can continue to grow as they always have: illegally but free of hassle from the state’s new pot bureaucrats armed with pocket protectors and clipboards.

Not all the complaints in the two-part investigation are about taxes and overregulation. Some, especially in part 1, are about “loopholes” in the regulations that allow large corporations to get into the marijuana business and about “dramatic changes to Humboldt County’s cannabis culture, which had an almost pagan worship of a plant that created an alternative lifestyle in the misty hills north of the ‘Redwood Curtain.’”

WSJ on RegulationBut there’s plenty of evidence that regulations are more burdensome on newer and smaller companies than on large, established companies. Indeed, regulatory processes are oftencaptured” by the affected interest groups. The Wall Street Journal confirmed this just yesterday, reporting that “some of the restrictions [in Europe’s GDPR online privacy regulations] are having an unintended consequence: reinforcing the duopoly of Facebook Inc. and Alphabet Inc.’s Google.”

The Foot in the Door on Internet Speech Regulation

Campaign finance has captured Congress’s attention once again, which rarely bodes well for democracy. Senators Amy Klobuchar, Mark Warner, and (of course) John McCain have introduced the Honest Ads Act. The bill requires “those who purchase and publish [online political advertisements]to disclose information about the advertisements to the public…”

Specifically, the bill requires those who paid for an online ad to disclose their name and additional information in the ad itself or in another fashion that can be easily accessed. The bill takes several pages to specify exactly how these disclosures should look or sound. The bill also requires those who purchase $500 or more of ads to disclose substantial information about themselves; what must be disclosed takes up a page and a half of the bill.

The Federal Election Commission makes disclosed campaign contributions public. With this bill, large Internet companies (that is, platforms with 50 million unique visitors from the United States monthly) are given that task. They are supposed to maintain records about ads that concern “any political matter of national importance.” This category goes well beyond speech seeking to elect or defeat a candidate for office.

Why does the nation need this new law? The bill discusses Russian efforts to affect the 2016 election. It mentions the $100,000 spent by “Russian entities” to purchase 3,000 ads. The bill does not mention that Mark Penn, a former campaign advisor to Bill and Hillary Clinton, has estimated that only $6,500 of the $100,000 actually sought to elect or defeat a candidate for office. It also omits Penn’s sense of perspective:

Hillary Clinton’s total campaign budget, including associated committees, was $1.4 billion. Mr. Trump and his allies had about $1 billion. Even a full $100,000 of Russian ads would have erased just 0.025% of Hillary’s financial advantage. In the last week of the campaign alone, Mrs. Clinton’s super PAC dumped $6 million in ads into Florida, Pennsylvania and Wisconsin.

California’s ObamaCare Exchange Costs 56 Times More to Launch than Facebook

Robert Laszewski notes that launching California’s ObamaCare “Exchange” is so far costing taxpayers 56 times as much as it cost to launch Facebook, while its marketing budget is 8 times what Sen. Barbara Boxer (D-CA) spent on her reelection bid (adjusted for inflation):

So far California has received $910 million in federal grants to launch its new health insurance exchange under the Affordable Care Act (“Obamacare”).

The California exchange, “Covered California,” has so far awarded a $183 million contract to Accenture to build the website, enrollment, and eligibility system and another $174 million to operate the exchange for four years.

The state will also spend $250 million on a two-year marketing campaign. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million…

Privately funded Esurance began its multi-product national web business in 1998 with an initial $5.5 million round of venture fund investment in 1999 and a second round of $34 million a few months later.

The start-up experience of other major web companies is also instructive. Facebook received $13.7 million to launch in 2005. eBay was founded in 1995 and received its first venture money in 1997––$6.7 million in 1997.

Even doubling these investments for inflation still leaves quite a gap.

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 millionagain just to set up an enrollment and eligibility process.

I thought it was notable that the Obama Administration has issued grants totaling $174 million to a non-profit group––Freelancers––for the purpose of setting up a new full service health plan in New York under the Affordable Care Act’s health insurance co-op program.

So, the Obama administration thinks it costs $174 million to set up a full service health insurance company in New York (including the significant cost of premium reserves) compared to $340 million to set up just a statewide insurance exchange to do eligibility and enrollment?

As many as 17 states are going to be setting up their own health insurance exchanges under the new law and the feds have so far released $3.4 billion to the states to build them. Little Vermont has received $124 million so far, Kentucky $253 million, and Oregon $242 million, for example. I wonder what the per person cost of exchange enrollment in Vermont will be?

Read the whole thing.

Yes, Nationalizing Facebook Is a Nonstarter

The other day, I was asked to review a draft slate of pro-innovation proposals that might be put before the next presidential administration (regardless of who heads it). I went down the list, typing again and again, “Education policy is not a federal role.”

The rather amateurish list was packed with ideas for injecting book-learnin’ into our economy. It betrayed little awareness of how our constitutional republic is structured, including the absence of federal authority over education. I guess some books are better than others

It occurred to me as I typed that people coming after me to look over the innovation proposals might think I was an idiot.

“Look right there! There is a federal Education Department. Don’t deny it!” they might say.

When I say education policy is not a federal role, I am saying something normative, about how things should be. As a present-day literal matter, there is rather obviously a federal role in education. And the sooner we restore authority to localities and especially parents, the better.

That how-things-could-be lens, though, is how to look at a self-described “thought experiment” on Slate called “Let’s Nationalize Facebook.”

It would be better to have a national privacy commissioner with real authority, some stringent privacy standards set at the federal level, and programs for making good use of some of the socially valuable data mining that firms like Facebook do. … Facebook would have to rise to First Amendment standards rather than their own terms of service. The company could be regulated the way public utilities often are.

It’s thinking far more magical than my statements about education policy.

Were Facebook nationalized, its privacy problems would not evaporate. They would double. The obscure (and, for some, concerning) uses Facebook makes of data in commerce would be joined by secret uses of data and equivocal denials by military spymasters.

Would Facebook be prevented from “serving authoritarian interests”? Tell that to the activist/whistleblower who has been driven into the arms of Ecuador, of all countries, because he fears extradition to the United States.

Public utility regulation of social media has already been made mincemeat. Nationalizing Facebook is indeed a nonstarter.

“If only we elected the right people,” our friends on the left seem to think, “things would be better. If only our elected officials dedicated their lives to careful balancing of our precious American values, if we got a real regulator in there, if only they didn’t come under outside pressure…” If only, if only, if only.

It is quite conceivable to have some wise and neutral authority make better decisions about how every organ of society might operate. I think this dream is what brings our friends on the left to believe so strongly in increasing government control over society.

The thing is, it is quite impossible for that wise and neutral authority ever to exist.

We can go to the aphorisms—“Power tends to corrupt, and absolute power corrupts absolutely”; we can go to school: the public choice school of economics, specifically; or we can go to the lessons of history to show that there is not a beneficent government in the kitchen, lovingly brewing coffee for you, when you wake from your ‘democratic’ dream.

My dream of having education policy restored to its rightful place with localities and families is more likely—well, I’ll put it this way—less unlikely than a powerful, all-seeing, yet benign central government.

Joe Barton, Meet Alessandro Acquisti

We were all very excited about the Facebook IPO last week (I guess), and Washington, D.C. wants to have its part in the action. This Politico article, “Facebook IPO Pits Privacy vs. Profits,” is a good illustration. It is the organs of government saying we are relevant, you know.

I was particularly intrigued by the comment of Rep. Joe Barton (R-TX). He’s playing against type—if we’re still to believe that Republicans stand for limited government—where he’s quoted saying: “I believe in free market principles, but there are some things the market can’t put a price on because they lack a monetary value. Privacy is one of those things.”

Aha! Washington does have a role the market can’t provide.

Except that the observation isn’t valid. There are lots of things in markets that “lack a monetary value.” You don’t think that every dimension of every good and service has a price tag on it, do you? Markets still deliver these things through the decision-making of their participants.

Alessandro Acquisti at Carnegie Mellon University has been studying how consumers value privacy for years. Crucially, he’s been studying how they value privacy when confronted with real and simulated trade-offs. (What consumers and politicians say isn’t very informative.) He sometimes puts a price tag on privacy in his studies.

It’s often a low price. Consumers don’t value privacy as much as many of us would like. But markets do implicitly price privacy. You make a little bit more—not a lot—if you deliver privacy. You stand to lose—sometimes a lot—if you don’t protect privacy.

Stand down, Mr. Barton. Stand down, Washington, D.C. You are not relevant to the Facebook IPO. Free market principles suggest leaving markets free to serve consumers’ actual preferences as determined by market processes. This is the case whether you think of privacy as having a “monetary value” or not.

Facebook Billionaire Gives Up Citizenship to Escape Bad American Tax Policy

It is very sad that America’s tax system is so onerous that some rich people feel they have no choice but to give up U.S. citizenship in order to protect their family finances.

I’ve written about this issue before, particularly in the context of Obama’s class-warfare policies leading to an increase in the number of Americans “voting with their feet” for places with less punitive tax regimes.

We now have a very high-profile tax expatriate. One of the founders of Facebook is escaping to Singapore. Here are some relevant passages from a Bloomberg article.

Eduardo Saverin, the billionaire co-founder of Facebook Inc. (FB), renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill. …Saverin’s stake is about 4 percent, according to the website Who Owns Facebook. At the high end of the IPO valuation, that would be worth about $3.84 billion. …Saverin, 30, joins a growing number of people giving up U.S. citizenship, a move that can trim their tax liabilities in that country. …“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Tom Goodman, a spokesman for Saverin, in an e-mailed statement. …Singapore doesn’t have a capital gains tax. It does tax income earned in that nation, as well as “certain foreign-sourced income,” according to a government website on tax policies there. …Renouncing your citizenship well in advance of an IPO is “a very smart idea” from a tax standpoint, said Avi-Yonah. “Once it’s public you can’t fool around with the value.” …Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records. …“It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice,” said Richard Weisman, an attorney at Baker & McKenzie in Hong Kong. “The tax cost, complexity and the traps for the unwary are among the considerations.”

What makes this story amusing, from a personal perspective, is that Saverin’s expatriation takes place just a couple of days after my wayward friend Bruce Bartlett wrote a piece for the New York Times in which he said that people like me are exaggerating the impact of taxes on migration. Here are some key excerpts from Bruce’s column:

In recent years, the number of Americans renouncing their citizenship has increased. …This led William McGurn of The Wall Street Journal to warn that the tax code is turning American citizens living abroad into “economic lepers.” The sharply rising numbers of Americans renouncing their citizenship “are canaries in the coal mine,” he wrote. The economist Dan Mitchell of the libertarian Cato Institute was more explicit in a 2010 column in Forbes, “Rich Americans Voting With Their Feet to Escape Obama Tax Oppression.” …[T]he sharp rise in Americans renouncing their citizenship since 2008 is less pronounced than it appears if one looks at the full range of data available since 1997, when it first was collected. As one can see in the chart, the highest number of Americans renouncing their citizenship came in 1997. …The reality is that taxes are just one factor among many that determine where people choose to live. Factors including climate, proximity to those in similar businesses and the availability of amenities like the arts and cuisine play a much larger role. That’s why places like New York and California are still magnets for the wealthy despite high taxes. And although a few Americans may renounce their citizenship to avoid American taxes, it is obvious that many, many more people continually seek American residency and citizenship.

I actually agree with Bruce. Taxes are just one factor when people make decisions on where to live, work, save, and invest.

But I also think Bruce is drinking too much of the Kool-Aid being served by his new friends on the left. There is a wealth of data on successful people leaving jurisdictions such as California and New York that have confiscatory tax systems.

And there’s also a lot of evidence of taxpayers escaping countries controlled by politicians who get too greedy. Mr. Saverin is just the latest example. And I suspect, based on the overseas Americans I meet, that there are several people who quietly go “off the grid” for every person who officially expatriates.

The statists say these people are “tax traitors” and “economic Benedict Arnolds,” but those views are based on a quasi-totalitarian ideology that assumes government has some sort of permanent claim on people’s economic output.

If people are leaving America because our tax law is onerous, that’s a signal we should reform the tax code. Attacking those who expatriate is the fiscal version of blaming the victim.

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