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 with 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.

Posted on June 20, 2007  Posted to Cato@Liberty,Economics & Economic Philosophy,General,Tech, Telecom & Internet

The “Public Health” Myth

A headline in the Washington Post blares:

Japan’s New Public Health Problem Is Getting Big

Obesity Has Grown, Along With Appetite For Western Foods

But no. Obesity is not a public health problem. It is apparently becoming more widespread in Japan, though still much less so than in the United States, but it remains an individual and non-contagious problem.

The meaning of “public health” has sprawled out lazily over the decades. Once, it referred to the project of securing health benefits that were public: clean water, improved sanitation, and the control of epidemics through treatment, quarantine, and immunization. Public health officials worked to drain swamps that might breed mosquitoes and thus spread malaria. They strove to ensure that water supplies were not contaminated with cholera, typhoid, or other diseases. The U.S. Public Health Service began as the Marine Hospital Service, and one of its primary functions was ensuring that sailors didn’t expose domestic populations to new and virulent illnesses from overseas.

Those were legitimate public health issues because they involved consumption of a collective good (air or water) and/or the communication of disease to parties who had not consented to put themselves at risk. It is difficult for individuals to protect themselves against illnesses found in air, water, or food. A breeding ground for disease-carrying insects poses a risk to entire communities.

The recent concern over a tuberculosis patient on an airplane raises public-health issues. You might unknowingly find yourself in an enclosed space with a TB carrier. But nobody accidentally ingests a Big Mac. And your Big Mac doesn’t make me fat. That’s why obesity is not a public health issue, even if it’s a widespread health problem. As I wrote before,

Language matters. Calling something a “public health problem” suggests that it is different from a personal health problem in ways that demand collective action. And while it doesn’t strictly follow, either in principle or historically, that “collective action” must be state action, that distinction is easily elided in the face of a “public health crisis.” If smoking and obesity are called public health problems, then it seems that we need a public health bureaucracy to solve them — and the Public Health Service and all its sister agencies don’t get to close up shop with the satisfaction of a job well done. So let’s start using honest language: Smoking and obesity are health problems. In fact, they are widespread health problems. But they are not public health problems.

Posted on June 19, 2007  Posted to Cato@Liberty,General,Health Care

The Suburban Spending Machine

A few weeks ago I noted that the $3.3 billion county budget in one of Washington’s wealthy suburbs, Fairfax County, had a bit of fat in it, such as manners classes for kids. This weekend the Washington Post reported that ”a $2 million [swimming pool] renovation [in neighboring Arlington County], dedicated yesterday, is part of the Northern Virginia Regional Park Authority’s effort to woo residents from the increasing number of pools run by homeowners associations, officials said.”

Maybe if the private sector is providing a service, taxpayers could be relieved of that burden. If the argument is that government-run pools are intended to serve poor children who don’t have access to private pools, we could debate that policy. But the Post article makes clear that Northern Virginia government officials see themselves as competing in a “market” to attract customers from the pools provided by homeowners associations. And that seems a strikingly inappropriate mission for government.

Posted on June 18, 2007  Posted to Budget & Tax Policy,Cato@Liberty,General,Government & Politics

Bush’s Budget Chutzpah

In his weekly radio address, President Bush said that the Democrats in Congress have “passed a budget that would … pile on hundreds of billions of dollars in new government spending over the next five years.”

Can they beat the record of the past five years

Posted on June 18, 2007  Posted to Budget & Tax Policy,Cato@Liberty

The Mikulski Principle

Politicians are circling around hedge funds like vultures. They want to raise taxes on hedge funds, maybe by treating their capital gains as normal income. Why Because hedge funds are mysterious — do you know what they really do — and they have a lot of money. Make billion-dollar profits, get headlines, attract taxers — it’s as certain as ants at a picnic.

There are whole books on the correct theory of taxation. I’ve always assumed that Democratic members of Congress operate on the theory most clearly enunciated in 1990 by Sen. Barbara Mikulski (D, Md.):

Let’s go and get it from those who’ve got it.

There are many theories of taxation, such as Haig-Simons, the Tiebout model, and the Ramsay Principle. But I’d bet that the Mikulski Principle explains actual taxation best.

Posted on June 15, 2007  Posted to Budget & Tax Policy,Cato@Liberty,Government & Politics

Ron Paul and the NBA

Ron Paul is the San Antonio Spurs of Congress.

Washington Post sports columnist Mike Wise praises the resilience of the Spurs, who keep coming back to win the NBA championship without ever being quite a Bulls-style dynasty. He says the Spurs “had their crown taken away twice since 2003 and got it back both times.”

Similarly, Ron Paul is the only current member of Congress to have been elected three times as a non-incumbent. Given the 98 percent reelection rates for House members, it’s no great shakes to win three terms — or 10 terms — in a row. It’s winning that first one that’s the challenge. And Ron Paul has done that three times.

He first won in a special election for an open seat. He then lost his seat and won it back two years later, defeating the incumbent. After two more terms he left his seat to run unsuccessfully for the U.S. Senate (and thereby did his greatest disservice to the American Republic, as his seat was won by Tom DeLay). Twelve years later, in 1996, after some redistricting, he ran again for Congress, again defeating an incumbent, this time in the Republican primary. Some political scientist should study the political skills it takes to win election to Congress without the benefit of incumbency — three times.

Posted on June 15, 2007  Posted to Cato@Liberty,Government & Politics

Asking too much of DNA

Genes can’t tell us if US president James Madison fathered a child with a slave.

Several years ago newspapers reported that a study of DNA proved that Thomas Jefferson, the author of the Declaration of Independence, had fathered children with his slave Sally Hemings. Now some African-Americans want a genetic history to prove that they are descended from James Madison, the father of the US constitution. But DNA can’t prove what they want.

The Washington Post reports that Bettye Kearse, an African-American physician, wants to confirm her family’s oral tradition that they are direct descendants of Madison. This past weekend she attended the Montpelier slave descendants reunion at the fourth president’s mansion. “Working with Bruce Jackson, co-director of the Roots Project, which helps African Americans trace their genetic histories,” Kearse wants to:

compare the Y chromosomes – which are identical across generations – of male descendants in Madison’s family to the Y chromosomes of some of Kearse’s male cousins. Jackson and Kearse have been searching for Madison relatives in England but recently located a descendant of one of Madison’s brothers in North Carolina.

The Kearse family’s oral history:

begins with a kidnapped African slave, Mandy, who Kearse says was impregnated at Montpelier by Madison’s father. The child, Coreen, later gave birth to Madison’s child, whom she named James Madison.

So there’s your problem. Even if Kearse and her genetic consultants manage to find a match between the DNA of her African-American cousins and that of Madison family descendants, it would only prove a genetic link between the two families. It would not prove that President Madison himself fathered a child with one of the Kearse ancestors. Indeed, since the Kearse family’s oral history claims descent from both Madison and his father, there would be no reason to assume that President James Madison junior, rather than his father, James Madison senior, had provided the Madison DNA to the Kearse family.

The Washington Post reported:

Jackson, speaking to attendees Saturday about how genetic research is conducted, noted that if Kearse’s claim proves correct, it would mean Madison’s only living direct descendants are African American.

But since Jackson is a geneticist, it seems likely that he was not saying that a DNA match would prove that, but only that a DNA match plus some other form of evidence could prove such a claim.

A few facts about Madison’s family point away from President Madison. James Madison had no children with his wife Dolley. His father, on the other hand, fathered 12 children. And some of Madison’s brothers had children, whose descendants are being sought for the DNA testing. Dolley Madison had two sons with her first husband. So we know that Madison’s father, brothers, and wife were fertile, yet he himself fathered no known children. It seems quite possible that he was infertile.

This story is reminiscent of the 1998 bombshell about Thomas Jefferson and Sally Hemings. Apparently confirming two centuries of rumors and accusations, the November 5, 1998 issue of the journal Nature ran an article bearing the headline, “Jefferson fathered slave’s last child.” The article was more cautious: it reported that DNA analysis pointed conclusively to some member of the Jefferson family having fathered at least one of Sally Hemings’s children, and argued that the historical evidence (it cited oral history) pointed to Thomas Jefferson.

As the Jefferson historian David Mayer wrote in a critique of the research and the media coverage of it:

A more accurate headline, of course, would have been “A Jefferson – not necessarily Thomas Jefferson – fathered” Sally Hemings’ youngest child.) The article on the DNA test results was accompanied by an article “Founding father,” co-authored by Professor [Joseph] Ellis, which proclaimed that the DNA analysis “confirms that Jefferson was indeed the father of at least one of Hemings’ children.”

But in fact all the DNA analysis could confirm was that some of Sally Hemings’s descendants were also descended from a male Jefferson. Sally’s children could well have been fathered by Jefferson’s brother or nephews. There is much debate over whether non-DNA evidence – the Hemings family’s oral history, the accusations in Federalist newspapers, the ages of Jefferson and his relatives, their whereabouts nine months before the births of Sally’s children – tends to point to Jefferson, his brother, or his nephews as the most likely fathers. But DNA can’t prove more than the family connection.

Does any of this matter? It matters to the people who might be descended from Thomas Jefferson or James Madison. It’s a common human trait to take pride in one’s ancestry. It matters because truth always matters. And it seems to matter to some people in that it takes Thomas Jefferson down a peg. (The Madison story is new and much less discussed.) It makes him less the hero of the marble statue, or even the loving and lustful husband of the musical 1776, but rather a man of normal, even salacious, appetites – a man who (allegedly) engaged in sexual relations that were not just outside marriage but possibly outside the bounds of decency. Some have argued for a genuine love affair between the brilliant older man and the beautiful young woman who was the half-sister of his late wife. But most of us cannot escape the feeling that sex between a master and a slave is uncomfortably close to rape. Can a slave withhold her consent? So it matters because it lessens our admiration for Jefferson (or Madison), which is exactly what some critics want.

On the other hand, do we really need this story to point out to us the flaw in Jefferson’s character? The cognitive dissonance endured by the man who declared, “All men are created equal,” yet owned some men as slaves? Jefferson and Madison produced some of the greatest writing on freedom in history. We owe to them the theory and the institutions of American liberty. And yet they owned slaves. What can we say about that? That all men are imperfect, that most of us fall short of our ideals, but that the ideals still matter. We are all – white Americans, black Americans, people in other countries – better off because Jefferson and Madison fought for American freedom and wrote the documents they did.

As Mayer wrote:

Jefferson’s place in American history – his central role in our nation’s founding and the evolution of its system of government – justly derives from his ideas. As I see it, genealogy is irrelevant: the true “children” of Jefferson today are those who understand his ideas and work to keep them alive. His lasting legacy is the body of ideas he has given us, ideas still quite relevant today, to the perennial problems of protecting individual rights and limiting the powers of government.

The same is true of Madison. If we found that – as with the claims about Shakespeare – the Declaration of Independence and the constitution were not really written by Jefferson and Madison but by some tradesman lost to history, it would not change the power and importance of those ideas, though it would of course change our view of Jefferson and Madison as men. So it is with these possible revelations about their personal lives.

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Posted on June 13, 2007  Posted to Comment,Comment is free,Genetics,guardian.co.uk,Human rights,The Guardian

Asking too much of DNA

Genes can’t tell us if US president James Madison fathered a child with a slave.

Posted on June 13, 2007  Posted to The Guardian

Asking too much of DNA

Genes can’t tell us if US president James Madison fathered a child with a slave.

Posted on June 13, 2007  Posted to The Guardian

You’re Not the Boss of Me

A headline in the Los Angeles Times reads,

GOP senators getting visit from boss on immigration

And who is the boss of 49 Republican senators Minority Leader Mitch McConnell 50 million voters No, the Times is referring to President Bush. Thankfully, the suggestion that the president is the “boss” of the Senate appears only in the headline, not in the text of the article. But even headline writers should remember that Congress is created by Article I of the Constitution, and the president by Article II.

The president is not the boss of the Congress. Nor is he the commander-in-chief of the United States, as Sen. John McCain has said. Small-r republicans need to keep reminding people that what Gene Healy calls “the bipartisan romance with the imperial presidency” is not rooted in the American system.

Posted on June 12, 2007  Posted to Cato@Liberty,Constitutional Studies,General,Government & Politics

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