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Category: Political Economy

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Interview with Marvin Kalb: The Road to War, Presidential Commitments Honored and Betrayed

I could not have timed my chat with Marvin Kalb220px-Marvin_Kalb better. On Sunday, before talking about cyber hate for the U.S. Holocaust Museum’s 20th Anniversary Tour in Chicago, Kalb and I discussed his most recent book, The Road to War: Presidential Commitments Honored and Betrayed (Brookings Institution Press 2013). The timing was auspicious not just because the book had come out days before but because at least 40% of the nation was reeling from learning about the most recent abuse of Executive power:  the NSA’s PRISM program and leaked FISA court Verizon order.

Before I recount some of the highlights of our conversation, I wanted to begin with a wonderful and incredibly apt description of Kalb written by a UPI reporter:

[Kalb] is the senior statesman of U.S. media. Tall, handsome, brilliant, unfailingly courteous, Marvin Kalb looks and acts more like a senior statesman than the chief diplomatic correspondent he was for CBS News and NBC over 30 years when these networks cared about world news. Now these media organizations still bill themselves as world news networks but, most nights, forget about the rest of the world.

Following his prize-studded reportorial career, Kalb became the first director of journalism’s school of higher learning at Harvard — the Joan Shorenstein Center on the Press, Politics and Public Policy. Now, still the profession’s senior statesman, he runs the center’s Washington office and hosts “The Kalb Report.” The author of two best-selling novels and a book titled, “One Scandalous Story: Clinton, Lewinsky and 13 days That Transformed American Journalism,” Kalb’s 13th book — his best — excoriates Congress for relinquishing its constitutional obligation to declare war.

The U.S. News and World Report’s Jamie Stiehm describes Kalb’s new book as “an elegantseg3_ssa_3 synthesis of how easy, too easy, it has become for an American president, any American president, to go to war” with Congress “ceding its rightful role in declaring war and tends to go along with the man in the White House.” Kalb’s book argues that so much power should not be concentrated in the President.

Here are some highlights from our conversation:

DC: Why has it been so easy for the Executive Branch to ignore the core constitutional guarantee that Congress declare war?

MK: We have a system of law undergirding Presidential authority to go to war — Congressional declaration of War and the power of the purse — yet it has been consistently ceded to the President. When I covered Vietnam in 1968, we had 500,000 troops on the ground. Who gave the President the authority to do so? I am a great believer of law, but if it is ignored with impunity, to whom do we turn?

DC: How did we get to that state of affairs–the President doing what he wants without check? Are things much different in light of recent revelations of our unsanctioned domestic intelligence apparatus?

MK: What we are witnessing this week stands as a confirmation of what we have ben seeing–unchecked Presidential power in the name of war time. In the Korea and Vietnam wars, one President after another made unchecked decisions and no one blew the whistle, most significantly Congress. Congress was successfully pressured to cede its power to the Executive Branch. For instance, only two Senators voted “no” for the Gulf of Tonkin resolution. When one of those senators, Senator Morse, saw President Johnson, the President put his arm around the Senator and said “Wayne, you are a good American. We do not want to hurt the troops.” Johnson wielded his power through persuasion and it worked–Congressional resistance was vanishingly small.

DC: What do you think of this week’s revelations about PRISM and the Verizon order?

MK: In important ways, I thought that we beat Big Brother when we prevailed in the Cold War. With the indiscriminate collection and analysis of all Verizon users’ telephony metadata (including who we called, where we were, and the inevitable revelation of sensitive information given the answer to the “who” question), we have become what we most fear–executive branch conducting surveillance over ordinary citizens in increasingly intrusive ways. Read More

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Defending Citizens United?

My thanks to Danielle and her co-bloggers for inviting me to share some of my thoughts.  This is my first foray into blogging, and I’m thrilled to join you for awhile.  I’d like to start by discussing a current project, which examines the internal governance of corporate political activity.  Comments, suggestions and critiques are most welcome.

Corporate political activity has long been an exceptionally contentious matter of public policy.  It also raises a hard and important question of corporate law:  assuming corporations can and will engage in political activity, who decides when they will speak and what they will say?  In several cases, the Supreme Court has provided a relatively clear, albeit under-developed, answer:  “[u]ltimately, shareholders may decide, through the procedures of corporate democracy, whether their corporation should engage in debate on public issues.”  (First Nat’l Bank of Boston v. Bellotti, cited with approval in Citizens United v. FEC).

This corporate law aspect of the decision has attracted substantial criticism alongside widespread calls for major reforms to corporate and securities laws.  Some argue that the Supreme Court misunderstands the reality of modern corporate law, insofar as shareholders have little practical ability to constrain managerial conduct.  Others question why political decisions should be made by either shareholders or managers, rather than some broader group of corporate stakeholders.  A third group claims that political activity is just another corporate decision protected by the business judgment rule.  Thus, empowering shareholders in this regard would improperly encroach on the board’s plenary decision-making authority.

Yet, despite these concerns, there may be pragmatic and normative merit to the Supreme Court’s approach.  In a current paper – “Democratizing Corporate Political Activity” – I present a case for shareholder regulation of corporate political activity through their power to enact bylaws.  I’ll describe the argument in more detail in subsequent posts, but, briefly, I present three normative justifications for this governance structure.  First, it may mitigate the unusual and potentially substantial agency costs arising from manager-directed corporate political activity.  Second, it may increase social welfare by: (i) reducing deadweight losses and transaction costs associated with rent-seeking; and (ii) making corporations less vulnerable to political extortion.  Third, if corporate speech can shape our society’s distributional rules, corporate law should not interpose an additional representative filter in the democratic process.  That is, we should not assume that investors – merely by purchasing stock in a public company, often through an intermediary such as a mutual fund – grant managers the unilateral authority to engage in political activity on their behalf.

With that said, I should be clear upfront that there are important challenges and objections to each of these arguments.  I will describe the main concerns as I proceed.

The next post will lay out the Supreme Court’s vision of corporate political activity, and explain why the shareholder bylaw power best fits the Court’s description of shareholder democracy in this context.

Do Corporations Enjoy a 2nd Amendment Right to Drones?

An emerging, “solutionist” narrative about drones goes something like this:

Yes, we should be very worried about government misuse of drones at home and abroad. But the answer is not to ban, or even blame, the technology itself. Rather, we need to spread the technology among more people. Worried that the government will spy on you? Get your own drones to watch the watchers. Fearful of malevolent drones? Develop your own protective force. The answer is more technology, not regulation of particular technologies.

I’d like to believe that’s true, if only because technology develops so quickly, and government seems paralyzed by comparison. But I think it’s a naive position. It manages to understate both the threats posed by drones, and the governance challenges they precipitate.
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“Kicking the Tires” is not “Looking Under the Hood”

Celebrated in the tech press only a week ago, the FTC inaction (and non-explanation of its inaction) with respect to search bias concerns is already starting to curdle. The FT ran a front page headline titled “Europe Takes Tough Stance on Google.” Another story included this striking comment from the EU’s competition chief:

Almunia insists that the Federal Trade Commission decision will be “neither an obstacle [for the European Commission] nor an advantage [for Google]. You can also think, well, this European authority, the commission, has received a gift from the American authorities, given that now every result they will get will be much better than the conclusions of the FTC,” he said with playful confidence. “Google people know very well that they need to provide results and real remedies, not arguments or comparisons with what happened on the other side [of the Atlantic].”

In response to allegations of search bias, Google has essentially said, “Trust us.” And at the end of its investigation into the potential bias, the FTC has essentially said the same. One public interest group has already put in a FOIA request for communications between Google and the FTC. Consumer Watchdog has requested a staff report that was reported to have recommended more robust action. Will Google, an advocate of openness in government and the internet generally, hold firm to its professed principles and commend those requests?
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Schneier Calls Out Papers on How Terroristist Groups End

Bruce Schneier noted some research by Rand about How Terrorist Groups End. The abstract

Abstract: How do terrorist groups end? The evidence since 1968 indicates that terrorist groups rarely cease to exist as a result of winning or losing a military campaign. Rather, most groups end because of operations carried out by local police or intelligence agencies or because they join the political process. This suggests that the United States should pursue a counterterrorism strategy against al Qa’ida that emphasizes policing and intelligence gathering rather than a “war on terrorism” approach that relies heavily on military force.

likely rings true to many who question the use of drones etc. (The comments on Bruce’s page get into some of this point).

To me the fact that RAND put the paper out is interesting. I can never tell whether RAND or what RAND is about. It would seem that claims that RAND is only going to support the government’s goals might be challenged here. Also Bruce calls out the work of Max Abrahms who in 2008 and 2011 addressed these ideas as well. I urge you read the 2008 post and here is the 2011 abstract

The basic narrative of bargaining theory predicts that, all else equal, anarchy favors concessions to challengers who demonstrate the will and ability to escalate against defenders. For this reason, post-9/11 political science research explained terrorism as rational strategic behavior for non-state challengers to induce government compliance given their constraints. Over the past decade, however, empirical research has consistently found that neither escalating to terrorism nor with terrorism helps non-state actors to achieve their demands. In fact, escalating to terrorism or with terrorism increases the odds that target countries will dig in their political heels, depriving the nonstate challengers of their given preferences. These empirical findings across disciplines, methodologies, as well as salient global events raise important research questions, with implications for counterterrorism strategy.

Bruce was cool enough to include a link to the paper.

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In case you missed it, ISPs now have a 6 Strikes Plan, A Whiff of ICANN?

Ah yes the ever-vigilant Internet democracy must have been watching, or maybe it agreed to ISP policing for copyright sort of like Google’s decision to take down search results for copyright issues. Who knows? The Shadow? Anyway, ISPs are now going to monitor usage to police copyright scofflaws. According to Wired, it is a six strikes plan

backed by the Obama administration and pushed by Hollywood and the major record labels to disrupt and possibly terminate internet access for online copyright scofflaws. … The plan, now four years in the making, [will trigger with] four offenses, [participating] residential internet providers {including AT&T, Cablevision Systems, Comcast, Time Warner Cable and Verizon] [will] initiate so-called “mitigation measures” (.pdf) that might include reducing internet speeds and redirecting a subscriber’s service to an “educational” landing page about infringement. The internet companies may eliminate service altogether for repeat file-sharing offenders, although the plan does not directly call for such drastic action.

The action reminds me a little of Stanford University policy on file sharing where three strikes means you are shut out of Internet access and must pay $1,000 to reactivate. As more and more of life is online, I wonder about such a broad stroke for copyright violators. Then again some countries take away driver’s licenses for drunk driving. The U.S.A. is more lax on that front, I think. I am surprised to see that the Center for Copyright Information has a mix of members including Gigi Sohn; as Tim Lee put it “The picks suggest that the architects of the “Copyright Alert” system may be making a serious effort to strike a balance between the interests of copyright holders and the rights of users.”

Tim explained, however, that the board “has little direct authority over the Copyright Alerts system. The real power lies in the hands of the CCI’s executive board, which is stocked with content companies and ISPs.” He has some faith that the advisory roles give the noisy exit power to “public interest advocates like Berman and Sohn some leverage” who “can always resign in protest, giving the CCI a black eye in the press.” I am not so sure that anyone will give a damn in a way that can change the system even if such an exit is needed.

I also wonder whther this is a whiff of ICANN. Tim explained (he is rather good isn’t he?) that “The Copyright Alerts system will provide users with an opportunity to appeal “alerts” to an independent entity. That independent review process will be overseen by the American Arbitration Association. The AAA will train independent reviewers who will, in turn, hear appeals by individual users.” Given the numbers needed and the way ICANN and the UDRP has operated, I am again a bit wary of how this will all play out.

Given the folks involved, I hope my concerns do not pan out. But I would say keep an eye on this one before someone has to say “Help me Obi Wan, err Google? You’re my only hope.” They may not be up for the battle either.

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The Correct Word is Desource, Not Outsource.

Everyone thinks jobs are being outsourced; they are, in fact, being desourced. When Mitt Romney claims he will create jobs, when Barak Obama claims the same, when Google, Apple, or Amazon assert they build out the economy, they all overstate. Worse, they ignore the reality that both manufacturing and service jobs are dying. Robots, artificial intelligence, and the new information-at-scale industries all but assure that outcome. The ability to build and sell without humans is already here. I am not saying that these shifts are inherently bad. They may even be inevitable. What we do next is the question. To answer that question, we need to understand the ways humans will be eliminated from manufacturing and service jobs. We need to understand what I call desourcing.

Focus on manufacturing is a distraction, a sideshow; so too is faith in service jobs. A recent New York Times article about Apple, noted that manufacturing accounts for only about eight percent of the U.S. labor force. And, The Atlantic’s Making It in America piece shows how manufacturing is being changed by robots and other automation. According to some, the real engine is service labor “and any recovery with real legs, labor experts say, will be powered and sustained by this segment of the economy.” That is where desourcing comes in. Many talk about the non-career path of service sector jobs. A future of jobs that have low pay and little room to rise is scary and a problem. Amazon explains why that world might be heaven.

The world of low wage, high stress service work is being replaced by automation. Amazon gave up its fight against state taxes, because it is moving to a model of local distribution centers so that it can deliver same-day delivery of goods. According to Slate, Amazon will spend more than $1 billion to build centers all over the U.S. and hire thousands of people for those centers. The real story is that like any company Amazon wants to reduce operation costs; it must automate or perish as Technology Review put it. It will do that, in part, by using robots to handle the goods. Self-driving cars and autonomous stocking clerks are the logical steps after ATMs and self-serve kiosks at movie theaters and grocery stores. I am always amazed at the folks who line up at movie theater ticket windows rather than use the kiosks. A friend said to me that we should walk up to the window to keep those jobs. It is a nice idea, but I think untenable. We all want to move faster and pay less. Welcome to desourcing.

Desourcing means reducing or eliminating humans from the production or service equation. Humans are friction points. More and more we can reduce those points of contact. We no longer need to send work to other humans.

There are many economic questions that are beyond what can be addressed in a short piece. But here are some ideas on which to chew. The returns from this approach are tremendous for the companies that desource. For example, by one account, Apple makes $473,000 per employee; yet “About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year.” So we may satisfy our need for instant gratification as companies reduce their costs, but that money will go to corporate bottom lines. Whether it will really reach the rest of the economy is not so clear precisely because a smart company will invest in desourcing. I suppose at some point companies will have to realize that they need masses who can buy stuff. Yet I think some studies indicate that serving the upper end of the economy works better than serving the masses. In theory, a company may offer goods at lower prices but to do that, it will need lower production costs. And less workers means lower costs.

I am not saying I know what will solve this riddle. I offer desourcing, because I have not seen a satisfying answer to the issue. There may not be one; for we may be stil sorting what to do as the digital age takes full hold. As the computer science folks say in early training, “Hello world.”

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Symposium on Madhavi Sunder’s From Goods to a Good Life, September 11-13

This week Concurring Opinions is hosting a symposium on Madhavi Sunder’s From Goods to a Good Life (Amazon) published by Yale Press which offers a preview. Madhavi’s work has pushed how many colleagues and I think about intellectual property. I am honored to organize this discussion.

I have more to say about the book, but to whet your appetites, I offer this quote:

The full cultural and economic consequences of intellectual property policies are hidden. We focus instead on the fruits of innovation—more iPods, more bestsellers, more blockbuster drugs—without concern for what is being produced, by whom, and for whose benefit. But make no mistake: intellectual property laws have profound effects on human capabilities…

The symposium will include contributions from Mike Carroll, Laura DeNardis, Brett Frischmann, Mike Madison, Mark McKenna, Frank Pasquale, Zahr Said, Lea Bishop Shaver, Jessica Silbey, and Molly Van Houweling.

Jobless Futures

The US economy’s long stall has confounded establishment economists. Many jobs aren’t coming back. Median wealth has declined by 39% over four years, even as GDP continues to grow (and that growth primarily benefits those at the top.) The “quantitative easers” seem content to print money for the same lords of finance and industry that got us into the current crisis. Some Keynesians have good ideas about infrastructure spending, but are blocked by political gridlock. Meanwhile, a golden remnant discerns salvation in a hard money-driven debt deflation.

On a personal level, the advice gets even more confusing. First, economists told workers to get more skills and education. A “skills gap” left much of America’s workforce unable to compete globally in information age economies. But then it turned out that college graduates were suffering in the current downturn, too. The solution: more education. But what about unemployed grad students? Finally, the economists had an answer: more of the right type of education. Science was the golden ticket. As Thomas Friedman never tires of opining, the geeks will inherit the earth.

Except, it seems, for the chemists and biologists. It turns out they might not be doing as well as even the despised lawyers. Here are some impressions from the Washington Post story “U.S. pushes for more scientists, but the jobs aren’t there:”

“There have been many predictions of [science] labor shortages and . . .robust job growth,” said Jim Austin, editor of the online magazine ScienceCareers. “And yet, it seems awfully hard for people to find a job. Anyone who goes into science expecting employers to clamor for their services will be deeply disappointed.” . . . Since 2000, U.S. drug firms have slashed 300,000 jobs. . . . [According to one laid-off drug developer,] “Very good chemists with PhDs from Stanford can’t find jobs.”

Perhaps labor economists like Claudia Goldin and Lawrence Katz will reassure us that Stanford chemists simply need to learn another skill, like end-to-end supply chain management or ventriloquism. Who knows what the magical market will need tomorrow?
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Amazon’s Pawns

I sometimes speculate at the end of my copyright class that, years hence, we’ll stop using a statutory supplement and just refer to the Amazon, YouTube, Facebook, etc. service agreements to find sources of legal authority. The cultural power of Google & Facebook gets a lot of media attention, and now Amazon is under renewed scrutiny. Wired highlights the business acumen of Jeff Bezos; Mac McClelland has told the story of the sweat it’s based on. Now The Nation is featuring an intriguing series on the company, with pieces by Robert Darnton, Michael Naumann, and Steve Wasserman (along with the slide show on 10 reasons to avoid Amazon). A few reflections on the series below:

1) Wasserman compiles an array of stats: according to the revised 2012 edition of Merchants of Culture, “in 2011 e-book sales for most publishers were “between 18 and 22 percent.” “Two decades ago, there were about 4,000 independent bookstores in the United States; only about 1,900 remain.” Publishers stand to be disintermediated, since too many have been “complacent, allergic to new ideas, even incompetent.” Amazon stands triumphant:

[By 2011], it had $48 billion in revenue, more than all six of the major American publishing conglomerates combined, with a cash reserve of $5 billion. The company is valued at nearly $100 billion and employs more than 65,000 workers (all nonunion); Bezos, according to Forbes, is the thirtieth wealthiest man in America

The aggregator has triumphed over the aggregated, and its own workers. As exposes revealed, “in one of Amazon’s main fulfillment warehouses in Allentown, Pennsylvania . . . employees risked stroke and heat exhaustion while running themselves ragged [and] [a]mbulances were routinely stationed in the facility’s giant parking lot to rush stricken workers to nearby hospitals.”
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