Elizabeth Warren Introduces Bill To Make Tax Season Return-Free

from the intuit-ive-thinking dept

Yay, it's tax season again! As our American readers will know, this is the wonderful time of year when we scramble to get all of our taxes and deductions paperwork in order, take them to some storefront that looks like a military recruitment center, push all of those papers in front of someone that looks like they just graduated from college, and scream, "You figure it out!" For our foreign readers, I should explain that we do this because our tax code is more complicated than the plot of Game of Thrones, our tax authorities are every bit as ruthless as that same series, and we've collectively allowed our citizens' payment of due obligations to become a for-profit industry. But seriously, though, come to America. It's great. I swear.

Several times in the past, some members of our government have attempted to lessen the burden we bear to pay our taxes. It never seems to work because the industry that makes money off of this tax system -- the tax preparation people and software makers -- lobbies to keep filing free taxes a pain in the ass, directly scaring the public into thinking the government will over-charge them, and then indirectly and unethically having sockpuppets do the same. It's in this way that you have a free-to-file federal tax program that roughly two-thirds of the public would be perfectly qualified to use, instead only being used by 3% of the population. 'Merica!

Well, Elizabeth Warren and seven co-sponsors would like to change that by simply eliminating the need for returns entirely for a significant number of people.

On Wednesday, the Democratic senator introduced a bill with seven cosponsors, including Democratic presidential candidate Bernie Sanders, seeking to make significant reforms to the Internal Revenue Service (IRS). Under the bill, Americans with simple tax obligations would have the option not to complete a tax return at all, but to instead receive a pre-prepared return from the IRS with their liability or refund already calculated for them. The IRS already gets most employer and bank information on taxpayers’ obligations — such as W2s and interest earned — so all it would have to do is calculate what they would owe for them.

For others with more complex situations — those who want to itemize their deductions or with many dependents who have to provide more information — the bill would direct the IRS to develop a free, online preparation and filing service that would allow everyone to file directly with the government, rather than relying on third party filing services like TurboTax or H&R Block. And taxpayers would be able to download the tax information the IRS already has.

In other words, have the IRS, which will be evaluating these people's returns anyway, simply do all the math for most of the simple tax returns. We're not talking about returns that would legitimately make use of deductions; we're talking about very simple tax returns, which is what most people have filled out by tax preparers or tax software anyway. Now, this is usually where someone will make the obvious point: the government doesn't deserve to be entrusted with this math. And, hey, I take that point seriously. The government has certainly shown its capacity to lie and deceive. But so has the tax-prep industry. Intuit has been guilty of all kinds of underhanded attempts to keep people from being able to file for free. They are proven deceivers, too.

In addition to that, this bill is directly setting its sights on the cozy relationship the IRS has with the tax-prep industry, so anti-governmenters should really think about getting on board with this.

The bill would also prohibit the IRS from entering into agreements that would restrict its ability to provide such free, online services directly to taxpayers. The IRS has signed a number of binding agreements with the tax preparation industry over the years that blocks it from offering free services directly to taxpayers itself, saying that it will “not enter the tax preparation software and e-filing services marketplace” and “not compete” with private service providers. The IRS’ declarations that it won’t enter the tax preparation space fly in the face of what it’s been mandated to do. In 1998, Congress passed a bill requiring the Treasury Department to develop a “return-free” tax system by 2008 for those with simple obligations, computing what those people owe with information the IRS already has. Yet Warren’s office argues that the IRS has instead turned control of the process over to private tax preparation companies.

When a government institution rebukes its public duties in favor of corporate wishes, there's a word for that. And it's that corporate control that will be pushing back on Warren's bill. The tax-prep industry, after all, has spent nearly $30 million in lobbying Congress since the late nineties. We're all about to get a very real lesson on the effect of corporate lobbying on a Congress that is ostensibly designed to serve the public need. I suspect the results will be as instructive as they are ugly.

Part of the solution to this is, of course, a simplified tax code. But it's somewhat strange to see some in favor massive tax reform, including simplifying the tax code, come out against simplifying filing tax returns or eliminating returns entirely.

Yet some anti-tax groups that say they want a simpler tax code have fought against these efforts. Grover Norquist, founder of Americans for Tax Reform, has testified and advocated against a return-free system. Republican presidential candidate Ted Cruz has consistently called to abolish the IRS, rather than get on board with plans to direct the agency to make things easier for taxpayers.

Some of that sentiment is likely coming from a worry that a simplified filing system would lead many people to be less angered by the overall tax system, and thus less interested in more radical reform. And some is likely born of a deep-seeded mistrust of government in general and the IRS in particular. Which, again, I completely understand. But it would be wise for the listeners of those mouthpieces to truly understand what this legislation would accomplish, because it's largely built around eliminating returns for filers with returns so simple that charging to file them is downright silly.

Filed Under: elizabeth warren, irs, regulatory capture, tax returns, taxes
Companies: intuit

How The Federal Reserve's Own Culture Lets Wall Street Get Away With Anything

from the this-american-life-indeed dept

The idea that there's so-called "regulatory capture" of the Federal Reserve by the very Wall Street bankers they're supposed to regulate isn't one that's particularly surprising to anyone. It's been obvious for quite some time, but everyone in power has generally looked the other way about it. ProPublica and This American Life teamed up this week to reveal the the secret recordings of Carmen Segarra, a bank examiner of the Fed, who was supposed to be watching over Goldman Sachs. When she realized what was truly going on (basically, her bosses keep suggesting she tone down her criticism and concerns of Goldman), she bought a hidden recorder and started recording. The resulting story is astounding and incredibly revealing -- even if you already assumed much of it was true. Michael Lewis -- who's been reporting on Wall Street for decades -- describes the recordings as the "Ray Rice video for the financial sector", which may be a slight exaggeration, but the story is still quite telling.

The report starts off by detailing how the Fed conducted a (for internal use only) study on how it totally missed the financial meltdown of 2008. And the answer won't surprise you, even if those close to the system claim they were surprised:

The most daunting obstacle the New York Fed faced in overseeing the nation's biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.

From there, the story moves on to Segarra, who had been hired to be a senior examiner watching over Goldman Sachs. She actually tried to do her job, and for that was fired after just seven months on the job. She had discovered serious conflict of interest problems on certain deals, and then (on top of that) discovered that Goldman Sachs had no official "conflict of interest policy" that conformed with what was required by the Fed. When she wrote up a report on this, her boss insisted that she take out the claim that there was no policy, despite it being true. She was soon fired -- and then sued the Fed (and lost).

However, this desire to whitewash embarrassment seems endemic at the Fed. It happened to the guy who wrote that report detailing the Fed's cultural problems:

One New York Fed employee, a supervisor, described his experience in terms of "regulatory capture," the phrase commonly used to describe a situation where banks co-opt regulators. Beim included the remark in a footnote. "Within three weeks on the job, I saw the capture set in," the manager stated.

Confronted with the quotation, senior officers at the Fed asked the professor to remove it from the report, according to Beim. "They didn't give an argument," Beim said in an interview. "They were embarrassed." He refused to change it.

The report goes on to detail how quickly the Fed seemed to take orders from Goldman Sachs. There was a situation in which a Fed examiner, Michael Silva, expressed concerns about a probably-legal, but still ethically-questionable, deal that Goldman was involved in -- effectively moving around some shares in a Spanish bank to make the bank look fiscally more sound than it really was. But, expressing concern about the deal apparently wasn't allowed:

Shortly after the Santander transaction closed, Segarra notified her own risk-specialist bosses that Silva was concerned. They told her to look into the deal. She met with Silva to tell him the news, but he had some of his own. The general counsel of the New York Fed had "reined me in," he told Segarra. Silva did not refer by name to Tom Baxter, the New York Fed's general counsel, but said: "I was all fired up, and he doesn't want me getting the Fed to assert powers it doesn't have."

This conversation occurred the day before the New York Fed team met with Goldman officials to learn about the inner workings of the deal.

In the audio version on This American Life, you can hear the incredible sequence in which Silva "fires up" his team to go confront Goldman about a specific problem with the deal (the other bank had required to get the Fed to sign off and say there were "no objections" and Goldman hadn't done so). However, then there's the recording of the meeting that happens right after Silva talks about going in and asking this important question -- and Silva doesn't get around to asking it until an hour into the meeting, and does so incredibly meekly, basically backing off the question before he's even finished answering it, handing Goldman an out.

There's also audio of other Fed employees talking about how they should almost apologize to Goldman for all their questions, out of fear that Goldman (1) will think they're being "critical" of the bank and (2) won't share information on future deals (even though they're legally required to do so).

It's classic regulatory capture. The Fed guys -- who literally work in the building with Goldman -- want the Goldman guys to like them.

There's a lot more in the report, leading to a point in which Segarra is basically told to not be so good at doing her examiner job, but to instead build more relationships. The Fed employee doing the scolding, Segarra's supervisor who used to have her job, points out that she's upset some people with her brusque language, her "sharper elbows" and the fact that she was "breaking eggs." Segarra points out that she's doing her job and, furthermore, doing a "good job" as well:

"I'm here to change the definition of what a good job is," Kim said. "There are two parts it: Actually producing the results, which I think you're very capable of producing the results. But also be mindful of enfolding people and defusing situations, making sure that people feel like they're heard and respected."

In other words, don't do your job quite so well, because you're pissing off people at Goldman Sachs. That eventually led to the fight over the conflict of interest policy. After investigating it for a while, having Goldman officials and Michael Silva directly admit that there was no real policy, suddenly Silva tells her she can't actually say that in the report she's writing up. This is because folks at Goldman got upset about it, pointing to a generally vague policy statement on conflicts of interests (which doesn't come close to actually being a policy), and insisted that they had a policy.

"You have to come off the view that Goldman doesn't have any kind of conflict-of- interest policy," are the first words Silva says to her. Fed officials didn't believe her conclusion — that Goldman lacked a policy — was "credible."

Segarra tells him she has been writing bank compliance policies for a living since she graduated from law school in 1998. She has asked Goldman for the bank's policies, and what they provided did not comply with Fed guidance.

"I'm going to lose this entire case," Silva says, "because of your fixation on whether they do or don't have a policy. Why can't we just say they have basic pieces of a policy but they have to dramatically improve it?"

Later in the conversation, Silva says that he "didn't get taken seriously" when he challenged higher-ups in the past over that shady banking deal, and thus Segarra should just give in to the higher-ups demands. A week later, she was fired.

There's also this story, which Lewis summarizes:

In meetings, Fed employees would defer to the Goldman people; if one of the Goldman people said something revealing or even alarming, the other Fed employees in the meeting would either ignore or downplay it. For instance, in one meeting a Goldman employee expressed the view that "once clients are wealthy enough certain consumer laws don't apply to them." After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, "You didn't hear that."

In the actual This American Life episode, the story is even more damning. There were other regulators (not from the Fed) there as well, who all heard it too. And they were all talking about (something that was confirmed by others there) and the other Fed employee insisted that Goldman must have been joking and no one should pay attention to it.

The end result of all this: the banks run the show.

I actually didn't find the full report to be quite as damning as Lewis does. Some of the issues raised by Segarra do appear to be slightly overstated, and there do seem to be reasonable explanations for some of the things she found questionable. But it doesn't change the overall issue, which is that the banks effectively control the regulator, not through direct intimidation (or at least not in ways that are directly evident in this report), but because the Fed itself seems unwilling to ever actually rock the boat and make sure that Goldman is held to account.

Now, I'm among those who are concerned about situations involving over-regulation and government interference where it's not necessary. But we should also be concerned about companies that are simply too powerful, and are able to engage in activities that abuse market power to harm the public -- and to engage regulatory capture to rubber stamp them. This episode shows how that's apparently the norm on Wall Street.

Filed Under: carmen segarra, federal reserve, michael silva, regulations, regulatory capture, wall street
Companies: goldman sachs

Comcast Lobbyist Admits To Holding Internet Service For The Poor Hostage To Get NBC Takeover Approved

from the regulatory-capture dept

The Washington Post has a profile piece about Washington DC power dealmaker David Cohen, who has led Comcast's policy and lobbying efforts for the past decade. It starts out (and ends) with a whopper of a story about Cohen explicitly had Comcast not offer a special internet offering for the poor since he wanted to use it as a bargaining chip in the NBC Universal purchase:

In fall 2009, Comcast planned to launch an Internet service for the poor that was sure to impress federal regulators. But David Cohen, the company's chief of lobbying, told the staff to wait.

At the time, Comcast was planning a controversial $30 billion bid to take over NBC Universal, and Cohen needed a bargaining chip for government negotiations.

"I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman" of the Federal Communications Commission, Cohen said in a recent interview.

At the end of the article, the reporter (Ceclia Kang) notes that the FCC later "took credit" for this program when it was launched:

The initiative may not have sealed the FCC's decision to approve the NBC merger. But it helped, Cohen said.

The proposal clearly captured the fancy of regulators. Late last month, Genachowski, the FCC chairman, touted the program, seemingly claiming some credit for its creation.

"This particular program came from our reviewing of the Comcast NBC-U transaction," Genachowski said in a speech. "Comcast embraced it as good for the country, as well as good for business. And I'm fine with that."

In other words, Cohen delayed a program to help the poor... in order to help make Comcast much, much richer in buying NBC... and then conveniently engineered it so that the FCC takes bogus credit for the program which would have been launched much earlier if Comcast hadn't used it as a bargaining chip. It's hard not to be cynical about politics in general and the FCC in particular when these kinds of stories hit the press. We've long been concerned about the FCC's ability to be played like a fiddle by industry lobbyists, and this only seems to confirm that point.

Filed Under: david cohen, fcc, internet service, poor, regulations, regulatory capture
Companies: comcast, nbc universal

Why It Could Make Sense To Get Rid Of Patents Entirely, Even If They Work In A Few Cases

from the capture-and-expansion dept

Over at The Atlantic, Jordan Weissmann has a great article covering the latest paper from economists Michele Boldrin and David Levine (names that, I hope, are familiar to Techdirt readers), which argues why it might make sense to abolish the patent system entirely, even while admitting that patents may have some benefits in some cases. You can read the full paper here (pdf) where it makes "the case against patents." While this may sound similar to Boldrin and Levine's earlier works, this one goes further, and is definitely worth the read. In effect, they argue that not only do patents rarely help innovation, but, even worse, the existence of patents (even where they help) will only lead to the system being expanded to where they do more harm than good:

The initial eruption of small and large innovations leading to the creation of a new industry -- from chemicals to cars, from radio and TV to personal computers and investment banking -- is seldom, if ever, born out of patent protection and is, instead, the fruits of highly competitive-cooperative environments. It is only after the initial stages of explosive innovation and rampant growth end that mature industries turn toward the legal protection of patents, usually because their internal grow potential diminishes and the industry structure become concentrated.

A closer look at the historical and international evidence suggests that while weak patent systems may mildly increase innovation with limited side-effects, strong patent systems retard innovation with many negative side-effects. Both theoretically and empirically, the political economy of government operated patent systems indicates that weak legislation will generally evolve into a strong protection and that the political demand for stronger patent protection comes from old and stagnant industries and firms, not from new and innovative ones. Hence the best solution is to abolish patents entirely through strong constitutional measures and to find other legislative instruments, less open to lobbying and rent-seeking, to foster innovation whenever there is clear evidence that laissez-faire under-supplies it.

The report does a good job highlighting how innovative firms and innovative industries almost never use patents (or use them sparingly). This should indicate that the basis of the patent system (that it's needed to encourage innovation) is shaky at best. But, they note that what little research there is on this tends to be ignored. They even highlight research that finds that IP strengthening almost always happens during times of "deregulation" where researchers (including Judge Richard Posner) struggle to figure out why that would be. Boldrin and Levine argue that the confusion here is mainly due to thinking of patents as "property" rather than as a monopoly restriction:

In fact, neither Landes and Posner nor, apparently, most industrial organization researchers, seem interested in figuring out why patents are either ignored or scarcely used in new and competitive industries while being highly valued and over-used in mature and highly concentrated ones. The point here seems to be that, being themselves strong advocates of the usefullness of patents in fostering innovations, the authors fail to recognize the intrinsic problem with the design of the institution itself. Being not a “property” right but rather a “monopoly” right, patent possessors will automatically leverage whatever initial rents their monopoly provides them with in order to increase their monopoly power until all potential rents are extracted and, probably, dissipated by the associated lobbying and transaction costs.

Boldrin and Levine also hit back at the charge that abolition of the patent system is too extreme given that it already exists. They note that other bad laws of a similar nature have been ditched as well:

Economists fought for decades – and ultimately with great success – to abolish trade restrictions. It will not escape the careful reader that patents are very much akin to trade restrictions as they prevent the free entry of competitors in national markets, thereby reducing the growth of productive capacity and slowing down economic growth. The same way that trade restrictions were progressively reduced until reaching (almost complete) abolition, a similar (albeit, hopefully less slow) approach should be adopted to “get rid” of patents. Moreover the nature of patents as time-limited makes it relatively easy to phase them out by phasing in ever shorter patent durations. This conservative approach has also the advantage that if reducing patent terms indeed has a catastrophic effect on innovation the process can easily be reversed.

They admit that the poster child for the patent system, the pharma industry, may have to face the biggest changes, but also suggest that there are plenty of ways to still create the necessary incentives, including both lowering the costs of clinical trials and using prizes to award key drug treatment developments.

It's an interesting read. I will admit that I'm not fully convinced that the argument makes sense -- but I find the argument a lot more persuasive than most others I've seen.

Filed Under: abolition, david levine, expansion, michele boldrin, patents, regulatory capture

More People Realize The Obvious: Telco Regulatory Capture Is Why We Have Crappy, Expensive Broadband

from the wake-up dept

This is hardly a new thing, but it's nice to see it getting more attention. There's a new book, The Fine Print: How Big Companies Use 'Plain English' to Rob You Blind, by reporter David Cay Johnston that points out that regulatory capture and a lack of competition are why we have crappy, expensive internet (and mobile phone service). Among the points he raises, summarized over at Yahoo's Daily Ticker, are the following:

• Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.
• The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.
• America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling.
• Bulgaria is among the countries with faster Internet service.
• Americans pay 38 times as much as the Japanese for Internet data.

Of course, we've seen most of this before, and we've heard all the excuses, about how we're more spread out. But, in the long run, the facts remain: we're piss poor at the internet, and that's a pretty big problem when the internet has become so important to so many people's lives and jobs. Johnston highlights the key problems:

"The telecos got the rules changed while we weren't watching," says Johnston in the accompanying interview. Basically, the phone and cable companies lobbied Washington to change laws and regulations to favor their businesses over their customers.

And remember the so-called "Information Superhighway"?

Over the course of the last 20 years, nearly $500 billion has been collected by the telecom companies to (allegedly) bring America into the 21st century with an "Information Superhighway," says Johnston. That works out to $3,000 per household to have access to high-speed Internet.

But America did not get what it was promised and much of the country will never get fiber optic lines...

Indeed, this is nothing new. We've been writing about this for about a decade now. It's also why we're uncomfortable with net neutrality laws, even if we believe the concept of net neutrality is quite important. We've seen how the telcos are very, very, very good at working the system to their advantage.

The only real answer to our problems is to encourage more significant competition. The question that's reasonable to ask is where that competition should be. It's not at all clear that it needs to be at the infrastructure level -- since that can be redundant. However, as Australia is now doing, you could invest heavily in a core fiber network that brings tremendous high speed access everywhere... and then let service providers compete at the service level, rather than the infrastructure level. Yet there appears to be little appetite for such things in the US these days. Rather, you have the big telcos and cable companies creating their own little controlled markets, with crappy service and inflated prices... while the rest of the world does much, much better. We've been able to get away with it in the short term, but over time, the lack of good broadband in the US is going to hurt us economically.

Filed Under: broadband, competition, regulatory capture, subsidies, wireless

Justice Department Wants $5 Million To Bolster Its Efforts As Hollywood's Private Police Force

from the regulatory-capture dept

While the proposed Obama 2013 budget for the federal government is supposed to be about cutting extraneous expenditures, one area where it's seeking more money is to expand the Justice Department's copyright enforcement efforts. You see, this is what happens when you hand the Justice Department over to the RIAA and MPAA. DOJ is seeking an extra $5 million to focus on these kinds of efforts, to hire 14 new employees, including nine lawyers, claiming that it's "had an increase in the number of cases that we're dealing with in IP." Oh really? You mean like the case of Dajaz1? The site that the DOJ illegally held and censored for over a year? Perhaps if they had a few more lawyers on staff, someone would have taken the time to realize that they were supposed to give the domain back within a specified time frame. Or perhaps they could have used those people to realize that the site was posting music sent by the copyright holders. Of course, that's not what would happen. Instead, they'd just focus on seizing more sites and creating more collateral damage. The real question, of course, should be why are we allowing the government to be Hollywood's private police force?

Filed Under: budget, copyright, doj, justice department, regulatory capture
Companies: mpaa, riaa

Why Hollywood's Idea Of 'Innovation' Is SOPA

from the regulatory-capture dept

A ton of folks have been sending over Steve Blank's absolutely awesome detailed analysis of why Hollywood can't innovate... and the result is SOPA. It touches on many points we've raised separately, but puts it all together in such a fantastic and comprehensive package. Seriously: just go read it.

It kicks off by noting a key point that we've raised in the past, but which often gets underplayed: the vast majority of movie industry revenue these days comes from pay-per-view TV, cable, satellite, video rentals, DVD sales and online subscriptions/digital downloads. In fact, this is the part of Hollywood's business that it insists is most under threat from infringement. But, here's the thing: if the MPAA had had its way over the last century, none of those things would have existed. It fought tooth and nail against every innovation that resulted in those new and lucrative markets. Blank puts together a great historical list:

• 1920’s – the record business complained about radio. The argument was because radio is free, you can’t compete with free. No one was ever going to buy music again.
• 1940’s – movie studios had to divest their distribution channel – they owned over 50% of the movie theaters in the U.S. “It’s all over,” complained the studios. In fact, the number of screens went from 17,000 in 1948 to 38,000 today.
• 1950’s – broadcast television was free; the threat was cable television. Studios argued that their free TV content couldn’t compete with paid.
• 1970’s – Video Cassette Recorders (VCRs) were going to be the end of the movie business. The movie business and its lobbying arm, MPAA, fought it with “end of the world” hyperbole. The reality? After the VCR was introduced, studio revenues took off like a rocket.  With a new channel of distribution, home movie rentals surpassed movie theater tickets.
• 1998 – the MPAA got congress to pass the Digital Millennium Copyright Act (DMCA), making it illegal for you to make a digital copy of a DVD that you actually purchased.
• 2000 – Digital Video Recorders (DVR) like TiVo allowing consumers to skip commercials was going to be the end of the TV business. DVRs reignite interest in TV.
• 2006 - broadcasters sued Cablevision (and lost) to prevent the launch of a cloud-based DVR to its customers.
• Today it’s the Internet that’s going to put the studios out of business. Sound familiar?

But that's just the preamble to his piece. From there, he explains how the industry set itself up to be so anti-innovation -- focusing on regulatory capture to help block innovation. The story reminds me of Andy Kessler's distinction between political entrepreneurs and market entrepreneurs. Political entrepreneurs focus on connections in government to create protectionist policies. Market entrepreneurs ignore all that and just build cooler products. In the end, the market entrepreneurs win, but the political entrepreneurs can disrupt their lives for a while and make it difficult.

But the end result is SOPA/PIPA rather than technology or business innovation:

The SOPA bill (and DNS blocking) is what happens when someone with the title of anti-piracy or copyright lawyer has greater clout than your head of new technology. SOPA gives corporations unprecedented power to censor almost any site on the Internet. It’s as if someone shoplifts in your store, SOPA allows the government to shut down your store.

History has shown that time and market forces provide equilibrium in balancing interests, whether the new technology is a video recorder, a personal computer, an MP3 player or now the Net. It’s prudent for courts and congress to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.

What the music and movie industry should be doing in Washington is promoting legislation to adapt copyright law to new technology — and then leading the transition to the new platforms.

I actually think Blank underplays this a bit. The MPAA doesn't just have a "copyright lawyer" with more clout than a technology person... it's that the entire MPAA is designed around anti-piracy, with a whole series of execs and staff whose sole job is "content protection" -- not business model or technology innovation.

Either way, I highly recommend checking out the full article.

Filed Under: copyright, crying wolf, history, hollywood, innovation, pipa, protect ip, regulatory capture, sopa
Companies: mpaa

Mapping Out The Revolving Door Between Gov't And Big Business In Venn Diagrams

from the crony-capitalism-is-corruption dept

Via Larry Lessig we get series of Venn diagrams showing the revolving door between big business and government. When people talk about regulatory capture, this is what they mean. When people talk about corruption and crony capitalism, this is what they mean. If you want a quick visual idea of why so few people trust this government to do the right thing for the people, rather than the big companies, this is why:

Filed Under: corruption, politics, regulatory capture, revolving door

Not To Be Overlooked In SOPA: Massive Expansion Of Copyright Maximalist Diplomatic Corp

from the regulatory-capture dept

Regulatory capture is defined pretty simply as:

In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating.

As is noted, this is a form of economic failure, because it creates (sometimes massive) negative externalities, in terms of inefficiencies and costs to the public. While we've covered the many, many horrific parts of the E-PARASITE Act (since renamed SOPA), there are always more problems lurking. One section that has received almost no attention at all is the final section of the bill, Section 205.

The simplest way to describe this section is that it's the creation of the entertainment industry's own copyright police force within the diplomatic core. It's pure regulatory capture. The entire section is about massively extending US bureaucracy, in the form of a diplomatic force of copyright maximalists, whose sole job it will be to travel the world and push for more and more draconian copyright enforcement in the interest of the US entertainment industry. It's pretty scary just how blatant this kind of regulatory capture is. Nowhere in the bill does it talk about more effective copyright policy. Instead, it requires "aggressive support for enforcement action" throughout the world, in the interest of a few US companies. We already have IP attaches and the USTR going around the globe pushing the interests of Hollywood, against the interests of the public. Do we really want more of that?

This is a problem, especially considering just how much evidence there is that over-aggressive copyright enforcement and ever expansive copyright law has actually been quite harmful for culture. If the role were to support more effective copyright law, that would be sensible. But it's not. Instead, it's just creating a new bureaucratic role to send copyright maximalists around the globe, employed by the US government, but whose sole purpose would be to do the bidding of a few US companies.

Filed Under: copryight, diplomats, protect ip, regulatory capture, sopa

Today's Copyright Laws: For Imbeciles And Lobbyists Only

from the well,-that's-one-way-to-look-at-it dept

We were mostly happy with the thoughtful Hargreaves Report on copyright in the UK, which made a bunch of modest, but intelligent suggestions on copyright law. Our only complaint was that it didn't go far enough, but in today's political climate on copyright issues, it went much further than most. It's been interesting to see the reaction. The industry hasn't reacted quite as negatively as I expected, in part because they're so cluelessly relieved that the report didn't suggest implementing "fair use" rules. And for those who recognize there are problems in the system, the report is seen as a vindication of their views. John Naughton has a nice piece for The Guardian, noting his surprise at the quality of the report, and putting this lovely summary on the state of today's copyright laws:

Hallelujah! At last we are getting somewhere. The notion that laws framed in an era when copying was difficult, imperfect and expensive could work in an era when copying was effortless, perfect and cheap was a proposition that only imbeciles and industry lobbyists could entertain. But up to now, our politicians subscribed to it.

Nice to see that sort of sentiment appearing in mainstream news publications, though I fear that Naughton's celebration may be premature. While the Hargreaves report pointed this out, it's unclear that any politicians will actually subscribe to it. After all, the predecessor report, the Gowers Report, also suggested some similar issues (much more mutedly), and was promptly trashed and ignored, as politicians went back to believing that more copyright is always good. I am hopeful that some politicians may take what's said in the Hargreaves Report to heart, but I'm not holding my breath.

Filed Under: copyright, lobbyists, regulatory capture