Wednesday, December 24, 2008

Lessig Says Dump the FCC, I Say Don't Stop There

Stanford Law School Professor and founder of Stanford's Center for Internet and Society had a article in Newsweek this week (see also). Some of his observations are profound and, in my opinion, right on target: "Economic growth requires innovation....Washington is practically designed to resist it."

In other ways he stops short of identifying the full problem. He wants to abolish the FCC, but he would replace it with another bureaucracy. It would only be a matter of time before the new bureaucracy was bogged down with the same problems the FCC faces. In addition, there are numerous other governmental bureaucracies that are fully as stifling in their spheres as the FCC is in its sphere.

Innovation is stifled by bureaucracy and regulations. Most regulation does not fulfill its intended result. Further, when elected officials and bureaucrats are given so much power it goes to their heads and they think they can actually protect us and the economy. Lessig says, "commissioners are meant to be "expert" and "independent," but they've never really been expert, and are now openly embracing the political role they play. Commissioners issue press releases touting their own personal policies."

Who in the economy is most capable of stroking and schmoozing politicians? Big business. Competition is tough and the outcome is never certain, even for established corporations with long histories. In fact, established corporations with their own bureaucracies can be a disadvantage. That is why big business seeks favors and favoritism from big government. Because government has the power to control and has already taken billions of dollars from us it is really the only entity in a position to grant favors. Again, Lessig says, bureaucrats develop "an almost irresistible urge to protect the most powerful."

The combination of big business and big government scratching each others' backs is reprehensible and destructive to competition.

I understand that competition means there will be winners and loosers. We are watching some big loosers, the American car makers, grovelling before congress even now. If these entities end up on the bone pile there will be many innocent employees who will be out of work and a few big wigs that will walk away with great post-employment packages. This is more the doing of government favoritism than a failure of the free enterprise system. Adam Smith's invisible hand will never be able to quickly sort through these problems and we will always move forward haltingly, because hundreds of different solutions will be tried and not all of them will work, but this is also the greatest benefit of free enterprise. The solutions that work will be better and stronger.

Many say that people are greedy and will not help their fellow man, but I say that is patently untrue. People are uncommonly good and generous. It's only when they feel they have already been bled dry through taxes that people tend to hold back and even then when the need is real people still give generously.

John Lennon said, "All we are saying is give peace a chance." All I am saying is give people and freedom a chance.

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Monday, December 22, 2008

We're Going the Wrong Way

This past year we bought a Wii for the family. We've had so much fun playing the games. It took a while, but finally we were able to snatch a Wii Fit board before a new shipment vanished from the store shelves. Exercising with the board has been fun and healthful. We are all much more active now.

Our most recent game purchase was MarioKart, which lets you race against others on a bunch of different race courses. It's been a lot of fun, but a little frustrating too since I'm not very good at it and I somehow frequently end up turned around a going the wrong way.

Which brings me to the point of this blog entry.

How has the United States moved so far from the principles of morality and personal freedom which were so insturmental in the development of the country in the first place? How have we gotten so turned around and not only going the wrong way, but wanting more of it?

More government control, more government protection from anything that might be painful. As I pointed out in my post Free to Fail these things might not always be pleasant, but they are absolutely essential to our development of character and ability to make choices that will keep us strong as individuals, as families and as a country.

Government can never supplant personal growth and integrity with government programs and regulations.

Here are two other observations on this problem. Douglas French and Star Parker

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Monday, December 15, 2008

A Creative Environment: Seven steps to getting it right

Ed Catmull is the president of Walt Disney and Pixar Animation Studios. He is a graduate

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of the University of Utah with BS degrees in computer science and physics and a Ph.D. in computer science. He was also a co-founder of Pixar Animation Studios.

Ed was the guest lecturer for the Organick Lecture Series at the University of Utah on December 8, 2008. His lecture was on what he has learned about the creative process as it relates to creating animated movies and shorts, and risk.

The following points from his lecture stood out to me as essential to any creative process. It’s interesting that, with the exception of the first point, they all center on dealing with people.

1. In a creative environment nothing stays the same; there is no safe place. Our measure is taken by how we respond to things when they go wrong.
2. Gather people around you that can do things you cannot do. Don’t be intimidated by people that are better than you are at what they do. Let people work and solve the problems that arise. Trust people; they will make mistakes, but the mistakes can be fixed. Mistakes are part of the creative process. Trust takes time; putting together a group of talented people is not the same as having a group that can work together, be honest about the work with each other, and become cohesive.
3. Ideas are very complex. It may start with a high concept, but eventually there are thousands of decisions that must be made and things that must be done, and most of what is generated won’t get used.
4. As a creative brain trust you must be self-aware and be able to self-assess. Every contributor’s work must be in the open and subject to review by the group at all times. You learn with each other.
5. Talent isn’t fair. You must employ the talent that you have.
6. Push responsibility out to the lowest level possible. Let people work through the difficulties.
7. Make other people look good.

Like so many things in life there is no single way to be creative and what works changes over time. No matter how things change these steps help refine the process. As Ed Catmull pointed out: Our measure is taken by how we respond to things when they go wrong.

Review in Deseret News

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Wednesday, December 10, 2008

Federal Bailouts Hurt the Long-term Strength of Our Economy

Government bailouts only prolong the time inefficient management teams can keep control of a business. Inefficient management always hinders the health of a company and its progress. The sooner the ineffective are out the sooner the assets can be put to more productive use.

Lawrence Lessig's rant: the mistake in bailouts

Walter Williams - Bailouts and bankruptcy

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Tuesday, December 9, 2008

I've Grown Acustomed to the Sound of Silence

What is it with music? So much of it is annoying. I was driving in my car today and I scanned through the entire radio frequency twice searching for a song I wanted to listen to. Nothing, I turned the radio off. This is not the first time I've gone through this routine. It happens all the time.

OK, I'm not really moved by mainstream pop music and today's country music, for the most part, is pop music with a twang. The old time country music is nothing but twang and all the lyrics make me have to pull over and... Well, let's just leave it at that.

So given my musical preferences, I'm not expecting dozens of radio stations to be playing something that's intriguing to me, but am I so odd that nobody is creating music that appeals to me or, if they are, no station is willing to play it because there's not enough of an audience? Some of the things I hear while scanning are so annoying I have to wonder who could possibly be listening to it; how could there be a large enough market for that stuff and no market for something I would like?

Some people believe they were born at the wrong time, that they might have functioned better in a different era. Me, sometimes I wonder if I was born in the wrong world.

With the vast number of people inhabiting the planet and the many and varied cultures somewhere someone has to be creating sounds that will communicate to me.

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Tuesday, December 2, 2008

Inflation/Deflation vs The Free Market Pricing Mechanism

There are many factors that economists and pundits bring up in describing inflation and deflation. Unfortunately most of these factors are symptoms rather than causes. Recently in the news headlines decry the threat of deflation.

The so called "pundits" are confused. Deflation and its opposite inflation are ultimately and always a function of the money supply. If too much money is injected into an economy--defined as the money supply increasing more than the supply of goods and services available--inflation is the end result. Conversely if the money supply does not keep pace with the supply of goods and services deflation occurs.

Government's responsibility is to keep a stable currency. That can be accomplished by tying the money supply to something like gold (the U.S. used to be on the gold standard) or increasing the money supply by the amount of growth in the gross domestic product of the country (not as good as the gold standard, but better than what we have now).

When the money supply is controlled by government, inflation or deflation is the sole product of its meddling. Even if those in government act with the very best of intentions, injecting too much money into the system leads to inflation; not keeping enough money in the system leads to deflation. Government meddling over a period of many years can destroy a currency. That is why the U.S. dollar's purchasing power today is only a fraction of what it was in the 1940s. Extreme actions by government can trash a currency in a very short period of time. Many examples of this abound (humanity doesn't seem capable of learning from others mistakes), but one of the best known examples is the Weimar Republic in 1923.

In our day, the rush by the U.S. government to "bail out" the financial industry and possibly other industries by injecting billions of dollars into the system can only lead to inflation. Let us hope it will not be hyperinflation.

The free market pricing mechanism is simply everybody reacting to market forces of supply and demand. If too much money is being supplied then prices go up, the opposite happens if there is not enough money in circulation.

The most important point about pricing in a free market is that prices still fluctuate even with a stable supply of money. If a particular product is not able to be supplied in amounts to meet demand the product's price will rise. If demand for a product declines and the supply becomes too great then the product's price will decline. The market is constantly adjusting prices.

This phenomenon is merely the natural functioning of a free market and has nothing to do with inflation or deflation provided the money supply is not being overly manipulated by government.

Sadly the U.S. government has injected billions of dollars into the economy and has intentions of injecting much more.

How can housing prices be in a tailspin if the government is injecting too much money into the economy and fueling inflation? The government has been pumping too much money into the economy for most of the 2000s and keeping interest rates artificially low. These two factors created an overblown demand for housing over the last many years pushing prices higher and higher. Now with the change in economic conditions the demand for housing has declined; many speculative markets have almost completely dried up. Demand is off and prices are adjusting accordingly.

Four other perspectives: Robert Higgs , Rich Karlgaard , D.W. MacKenzie , Steve Hanke, and WalterWilliams

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