TSA's Failure Based On The Myth Of Perfect Security

from the it's-not-happening dept

As the complaints against the TSA ratchet up, various people are finally starting to point out why the whole concept of security theater is a farce. The entire setup is based on the idea that you can have "perfect security." But, if you wanted perfect security, the only way to do that is to not let anyone fly, ever. As James Fallows notes it doesn't make much sense to "spend limitlessly toward the impossible end of reducing the risk to zero." As he notes:

Every society accepts some risks as part of its overall social contract. People die when they drive cars, they die when they drink, they die from crime, they die when planes go down, they die on bikes. The only way to eliminate the risks would be to eliminate the activities -- no driving, no drinking, no weapons of any kind, no planes or bikes. While risk/reward tradeoffs vary between, say, Sweden and China, no nation accepts the total social controls that would be necessary to eliminate risk altogether.

Yet when it comes to dealing with terrorism, politicians know that they will not be judged on the basis of an "acceptable level of risk." They know that they can't even use that term when discussing the issue. ("Senator Flaccid thinks it's 'acceptable' for terrorists to blow up planes. On Election Day, show him that politicians who give in to terror are 'unacceptable' to us.") And they know for certain that if -- when -- a plane blows up with Americans aboard, then cable news, their political opponents, Congressional investigators, and everyone else will hunt down any person who ever said that any security measure should be relaxed.

This is the political tragedy of "security theater."

Along those lines, the Unqualified Offerings blog (via Julian Sanchez) does a nice job explaining how the incentives line up to create this ridiculous situation. Basically, he notes that a terrorist attack on an airplane will happen. Some day. No matter what we do to try to prevent it. But once that happens, the response is going to be obvious: those who pushed hard for more ridiculous security theater that wasn't implemented will keep their jobs and retain power. Those who pushed for more reasonable solutions will be vilified.

100% success is usually impossible in the real world. Given that eventually, one way or another, a terrorist will almost certainly take down a plane, the only question that management has to ask itself is what position they want to be in when that happens. And that answer is simple: Safe in their jobs, and poised to inherit a bigger budget.

And that's why we get security theater.

The goal isn't so much actual safety. After all, as Jim Harper notes, if you look at the actual "risk" of a terrorist attack on an airplane today, it's pretty close to zero. But the whole process is built around trying to bring it all the way to zero, which is an impossibility, but leads to ridiculous extremes. And, he notes, this is exactly how the terrorists planned it:

This is apostasy in Washington -- where the political imperative is zero risk. But risk is a reality of life. We take risks when we drive, when we walk across a street and when we go to the fridge for that two-day-old slice of pizza.

This illusory quest for zero risk helps terrorism achieve its goals. As news of "Operation Hemorrhage" -- smaller, low-cost attacks aimed to disrupt commerce and stoke fears -- demonstrates clearly, terrorism works by inducing target states to overreact. That's the only mode terrorists have for affecting major powers like the United States.

We've been nothing if not a patsy to their strategy. The element of surprise, central to terrorism, forces us to defend everything against every mode of attack -- a logic that naturally bleeds us.

Filed Under: incentives, myths, privacy, security, terrorism, tsa
Companies: tsa

Patents Create Incentives For More Patents, Not Innovation

from the the-two-are-not-the-same dept

While many people (especially politicians and the press) like to equate patents and innovation (often falsely suggesting that fewer patents means less innovation), studies have shown that patents are actually a really bad proxy for innovation, in that there's simply no direct link between the two. And that's a problem, considering that the patent system is supposed to be about creating more incentives for innovation. In fact, however, it often appears that the patent system is actually creating incentives to get more patents.

If you want a clear example of this, just look to China. Just recently, we noted that patenting was on the rise by Chinese companies, but a closer look at what's happening in China suggests that it's very much about incentives to increase patents, rather than incentives for greater innovation. In fact, it's quite direct:

The Chinese government has created an ecosystem of incentives for its people to file patents.

Professors who do so are more likely to win tenure. Workers and students who file patents are more likely to earn a hukou (residence permit) to live in a desirable city. For some patents the government pays cash bonuses; for others it covers the substantial cost of filing. Corporate income tax can be cut from 25% to 15% for firms that file many patents. They are also more likely to win lucrative government contracts. Many companies therefore offer incentives to their employees to come up with patentable ideas.

And, as in the US at times, the incentives for the patent examiners is also skewed towards simply approving more patents (which has a snowball effect, in encouraging more people to file weaker and weaker patents):

The bureaucrats in Chinese patent offices are paid more if they approve more patents, say local lawyers. That must tempt them to say yes to ideas of dubious originality.

Incentives are funny things. If you actually believe that patents are correlated to innovation, then such strategies make sense. But if the reality is that patents are simply correlated to patents, then it's a huge dead weight loss to focus so much on patenting, rather than actual innovation.

Filed Under: china, incentives, innovation, patents

Vodo Sets Up Currency To Encourage More Promotion

from the alternative-economies dept

In the debate over business models that embrace file sharing networks, one of the more interesting projects to watch has been Vodo, which is a platform for filmmakers who wish to release their works via file sharing setups, and to enjoy a promotional boost for doing so. Movies released via Vodo have done quite well, both in getting attention and in getting monetary support. The company has now updated its system and has added an interesting element: an internal currency, called "Do," to encourage people to promote the works.

That is, if you point people to a download -- you can earn some "Do" every time someone visits an artist's website or downloads the work or even agrees to give money to a content creator. This could be interesting to watch, though I do wonder how well it will work. On the positive side, as we were just discussing in our Dark Helmet case study, one of the most important things in getting modern business models to work is to get your biggest fans to help promote you. However, at the same time, we've also warned about the risks of artificial incentives to promote some content, you run the risk of people questioning the motives for the promotion. If Vodo can balance this, it could be quite nice, but that balance is very much an open question. I agree that it's important to make people comfortable promoting you, but I worry that creating such incentives leaves it very much open to gaming, rather than legitimate advocacy.

Filed Under: currency, file sharing, incentives, movies, promotions, rewards
Companies: vodo

Why Must Patent Supporters Rewrite History In Attempt To Have The Feds Subsidize Patents

from the history-lessons dept

Hank Northhaft is the CEO of a patent licensing firm. He likes to claim that he's the CEO of a technology miniaturization firm, but the majority of the company's actual revenue comes from patent licensing, not actual product sales. He's got a book coming out next year that's all about making it even easier and cheaper to get patents, which he insists will create hundreds of thousands, if not millions, of new jobs, and has been making the rounds writing opinion pieces for various publications pitching this plan. Unfortunately, each of his opinion pieces seems to rewrite history or misinterpret studies to make his argument. Frankly, that's pretty sad.

Earlier this year, for example, he (along with his co-author for the book, David Kline), wrote a piece for the Harvard Business Review, claiming that patent system delays are costing millions of jobs. To support the claim that patents do create jobs, there's the following:

In contrast, we know that patents create jobs -- sometimes many thousands of them. Just consider the job-creating effects of Steve Wozniak's 1979 patent for a microcomputer, for example, or Larry Page's 1998 patent for Google's search engine. Then there's Jack Kilby's 1959 patent on the semiconductor integrated circuit, which gave birth to a semiconductor industry that directly employs 185,000 people just in the U.S. today, as well as contributing to jobs throughout the larger $1.1 trillion global electronics industry.

Note the implicit (totally false) assumption made there: that these products and jobs were entirely a result of these patents. This is false. In all three areas, there was tremendous work being done among competitors in the same fields, and the innovation that happened was not because of the patents (in fact, all of the patents discussed had almost nothing to do with the later success of the technologies in question). If you look at the history of the semiconductor industry, the PC industry and the search business -- all were built on widespread sharing of ideas among different researchers, rather than hoarding it and using patents to keep others from the market.

Larry Page's search engine work was really based on Jon Kleinberg's research at MIT & Cornell which was openly shared, and which Page built on. When others copied Google's ranking mechanism, Google never sued or, as far as I can tell, even threatened to sue. And most of the "jobs" created by Google came about not because of the patented search ranking mechanism, but because of Google's execution in the marketplace, and its creative decisions on how to implement more "user-friendly" advertising. It appears as if Google barely valued the patent at all.

As for the the PC industry, Wozniak's "microcomputer," was very much based on a sharing culture around the Homebrew Computing Club in Silicon Valley, where plenty of development was going on entirely outside of what was happening in the patent world. What made Apple a success wasn't its patents, but the incredible focus and salesmanship of Steve Jobs. And, of course, it's notable that it wasn't long before the big jump Apple made was due to Steve Jobs directly copying the graphical user interface that was first invented at SRI and then redone at Xerox PARC (by folks who had seen it/worked on it at SRI). Jobs saw it at PARC and copied it. Note what was important here: the real revolution and job growth came from the open sharing of info, and better execution, not from patents or patent licensing.

Finally, as for the example of Jack Kilby, that may be the worst of them all. After all, while Kilby patented the integrated circuit in 1959, his integrated circuit, was based on germanium. Just a couple months later, Robert Noyce came out with his patent application for the integrated circuit... based on silicon. The fact that I live in Silicon Valley rather than Germanium Valley should suggest how much the world actually valued Kilby's original patent. Separately, the fact that multiple inventors (and there were more) were reaching the same conclusion shows that it wasn't patents that drove this innovation and the corresponding job growth, but the natural progression of the needs of the market.

We see this all the time. Patent system supporters want to credit patents for things that had nothing to do with patents. Just because a company that innovates gets a patent, it doesn't mean that it was only because of the patent that the innovation occurred. Quite frequently, the patent has absolutely nothing to do with it. Northhaft quotes some company execs who claim that they can't move forward with a product without a patent, but that's entirely self-serving. Who doesn't want a gov't granted artificial monopoly on their product? But the idea that they can't move forward? Hogwash. Separately, the main guy that Northhaft quotes to support this claim, talks about the need to get money to bring a drug to market, claiming that "It can cost a billion dollars to bring a new drug to market." First of all, this myth of how much it really costs to bring a drug to market has been debunked multiple times -- and the biggest reason for the specific cost is a separate regulatory issue, which has nothing to do with patents.

More recently, Northhaft, along with former CAFC (the appeals court that tends to love patents) judge Paul Michel wrote an equally ridiculous op-ed piece for the NY Times where they suggested not just having the USPTO hire a bunch more workers, but also a plan to federally subsidize all patents for "small companies", such as patent trolls. I'm not joking:

To encourage still more entrepreneurship, Congress should also offer small businesses a tax credit of up to $19,000 for every patent they receive, enabling them to recoup half of the average $38,000 in patent office and lawyers' fees spent to obtain a patent.

They also claim that hiring more patent examiners to approve more bad patents would "create, over the next three years, at least 675,000 and as many as 2.25 million jobs." What's this based on? "Our guess." Uh huh. Notice that they don't bother to point out the massive amount of research showing that patents have been a net negative on the economy and jobs for quite some time now.

In both articles, Northhaft relies heavily on the Berkeley Patent Survey, which asked a bunch of companies about the importance of patents. We wrote about this study a few months ago, highlighting how it showed that most tech companies don't find patents all that valuable at all. Northhaft twists the study around, claiming that it shows that patents are necessary. That's based on a subtle misreading of the study, where many entrepreneurs did claim that they believed their patents were important in securing funding. Not in their success, mind you. Not in the actual innovation. But just in securing funding. Thankfully, Brad Feld, Jason Mendelson and Paul Kedrosky -- who are actually involved in the venture capital industry -- wrote a response in the Wall Street Journal, where they pointed out that Northhaft was quoting the study out of context, and even quoted Pam Samuelson, who was the co-principal investigator of the study, and said:

"Two-thirds of the approximately 700 software entrepreneurs who participated in the 2008 Berkeley Patent Survey report that they neither have nor are seeking patents for innovations embodied in their products and services. These entrepreneurs rate patents as the least important mechanism among seven options for attaining competitive advantage in the marketplace. Even software startups that hold patents regard them as providing only a slight incentive to invest in innovation."

Separately, they point out that Northhaft carefully quotes the study only showing what entrepreneurs think investors want, rather than looking at what investors actually value or what was actually instrumental to companies' successes.

So yet again, it appears that Northhaft is claiming things that don't match up with reality. There's no doubt that patents have helped Northhaft make money. But getting a gov't granted monopoly is a market-limiting function, not a market enhancing one. Competition is what drives innovation, and patents only serve to drive out competition. Of course, that's good for patent holders, but bad for everyone else. If we want to encourage the economy to grow, the last thing we should be doing is subsidizing even more bad patents and monopolies on the building blocks of innovation.

Filed Under: hank northhaft, incentives, jobs, patents

Judge Says The First Amendment Protects You If You Lie About Receiving A Purple Heart

from the of-course,-it-only-protects-you-against-lawsuits dept

Does the First Amendment protect your ability to lie? Apparently, to some extent, it does. A court has ruled that a law that makes it a crime (with the potential for a year in prison) for falsely claiming to have been awarded military medals such as the Purple Heart, is an unconstitutional violation of free speech rights. Of course, this doesn't mean it's okay to lie about getting a Purple Heart. It just means that the government can't charge you with a crime for that specific act.

While lying about receiving military medals is pretty sleazy, that doesn't mean that it should automatically be illegal. The government (who is thinking about appealing) makes this bizarre argument:

"By allowing anyone to claim to possess such decorations, could impact the motivation of soldiers to engage in valorous, and extremely dangerous, behavior on the battlefield."

Really? Because some jackass back home pretends to have won a Purple Heart, real soldiers will be less motivated to perform on the battlefield? If so, that seems to say more about the soldier's existing motivation. Besides, it seems like even without this law, social mores already limit this kind of activity. If you're found out lying about military medals, it seems like your reputation would already take a pretty big hit.

Thankfully, the judge in the case found the statement above equally as preposterous:

"This wholly unsubstantiated assertion is, frankly, shocking, and indeed, unintentionally insulting to the profound sacrifices of military personnel the Stolen Valor Act purports to honor," the judge ruled. "To suggest that the battlefield heroism of our servicemen and women is motivated in any way, let alone in a compelling way, by considerations of whether a medal may be awarded simply defies my comprehension."

Filed Under: free speech, incentives, military medals, purple heart

Woman Sues Theater For Pressing Charges Over Filming Twilight Snippets At Birthday Party

from the keep-the-dream-alive dept

You may recall the story from late last year of the young woman whose sister had a birthday party, where part of the festivities was going to see the Twilight: New Moon movie. Since it's pretty common for people to record part of events such as birthday parties, this woman, Samantha Tumpach, kept filming part of the party, and that included some snippets from the movie. Because of that, the theater had her arrested under the MPAA's favorite anti-camcording laws. She ended up spending two nights in jail, and and even the movie's director claimed the whole thing was "terribly unfair." The theater and prosecutors stood by the arrest for a while... until finally dropping the charges.

At the time, Tumpach suggested she might sue the theater, but it looks like it took seven months to get everything in order to do just that. Tumpach is now suing the theater company, Muvico, over the arrest, saying that she wasn't warned, and that even the MPAA had told the theater to just delete the content and file a report. But, the lawsuit claims, the theater went further in pressing charges because of the possibility of collecting a monetary reward that was promised to theaters that provide info on bootleggers:

"Buckus signed the criminal complaint in hopes of collecting a reward for providing information that leads to the arrest and conviction of a person engaged in video piracy when he very well knew that she was guilty of no such act."

When rumors of her planned lawsuit first came out, we pointed out that the Illinois law in quesiton appears to make the theater's actions perfectly legal, so there's probably not much chance of the lawsuit succeeding. However, it does highlight the perverse incentives created by the MPAA in its mad rush to both pass anti-camcording laws like this one, and then to incentivize theaters to press charges against anyone, no matter what the circumstances.

Filed Under: incentives, lawsuit, movie theater, twilight
Companies: muvico

Instead Of Bad Drivers, What If Speed Cameras 'Caught' Good Drivers Instead?

from the carrot-or-the-stick dept

We've written at length here about the multitude of problems with speed cameras. What if, instead of focusing on punishing speeders, the speed cameras were used to reward good behavior? Drivers who obey the speed limit are automatically entered into a lottery and then notified by mail if they've won. So, you might pick up your mail one day with a letter from local law enforcement and a check for good driving behavior, rather than a fine for bad driving behavior. This is somewhat reminiscent of the idea from a few years ago where police would pull over good drivers and "reward" them with free coffee coupons -- but avoids the whole "pull over" part, which certainly upset some drivers.

The idea is that the jackpot could come from the fines that were paid from speeders -- so not only do you get rewarded, you get rewarded from the pockets of worse drivers. This method may also serve to make a speeding ticket feel even more painful than just a fine alone. After all, a $500 ticket definitely stings, but a $500 ticket PLUS a little note that had you not been speeding, you could have won $10,000 instead? Ouch, that hurts a lot more.

The idea was the winning entry to VW's "The Fun Theory" competition, where applicants were tasked to design ways to change people's behavior through fun. This is a brilliantly viral campaign that showcases the fact that advertising is content, and if you make engaging content, people will beat a path to your door to watch it. The "piano stairs" entry alone has amassed over 12 million views.

Of course, rewarding good drivers with cash awards does not help governments rake in quite as much in revenue, but speed cameras are supposed to be about safety and not money, right?

Filed Under: driving, gaming, good driving, incentives, lottery, rewards, speed cameras

Big Time Patent Attorney Jumps Into The Patent Trolling Game By Buying 4,500 Patents From Micron

from the abusing-the-system dept

I recently had a conversation with a patent litigator for a big name law firm. He tends to work on the "defense" side of things -- defending tech companies against lawsuits from patent hoarders, who he felt were causing serious problems for innovation. That said... he admitted that watching how much money folks make by hoarding patents and suing big companies for actually innovating, it's really tempting to get into the game. At some point, your resolve wares down, and you realize there's just so much money to be made abusing the system, that it's difficult to resist. We've seen that a lot. In fact, two years ago, we wrote about how many of the new generation of "patent trolls" were former patent lawyers themselves, who felt it was better to make money abusing the system directly, rather than being a hired gun for some other patent hoarder.

In our recent post about Erich Spangenberg, he admitted that was part of his reasoning. After working for a big law firm for a bit, he decided it was more lucrative to own the patents and sue everyone himself, rather than just being a lawyer working for others. In that article, Spangenberg also mentioned that Micron had recently sold a bunch of patents to a well-known patent attorney, John Desmarais. That story is now getting more attention, as Bloomberg has an entire article about Desmarais jumping ship from his big law firm to buy 4,500 patents from Micron and put them into a new firm that will be used to demand money from lots of tech companies.

It's hard to read the article and not be depressed. Here's someone who clearly knows how the system is being abused, and rather than fight for a better system, he decides to abuse the system himself. Such is the state of our broken patent system.

Filed Under: incentives, john desmarais, patents, trolling

No, Copyright Has Never Been About Protecting Labor

from the let's-get-rid-of-this-myth dept

Ugh. So, we recently wrote about Matthew Yglesias' quite accurate economic explanation for why the price of music was going to get pushed to zero, no matter what the industry said or what happened with copyright law. Andrew Sullivan spotted it, and also a response from a guy named Sonny Bunch who apparently has decided to totally reinterpret the history of copyright law in a post he entitled Piracy. Is. Stealing.:

No! False! The purpose of intellectual property law has very little to do with Matt Yglesias being able to enjoy a wide variety of new music. The purpose of intellectual property law is to protect the intellectual property created by artists so they are rewarded for their efforts. The purpose of intellectual property law is to punish people who steal that which isn't theirs.

Yes, copyright was created in part because there were concerns that authors wouldn't bother creating new work if they were consistently stolen from, leading to Yglesias's oddly solipsistic reading of intellectual property law. But, more importantly, copyright law evolved because we think that artists, writers, musicians, and others have a right to profit from their labors. It's a crazy idea, I know.

Also, Yglesias's cute little bit about the marginal distribution cost being zero ignores the fact that the production cost of music is far from zero -- leaving aside the artists (who Yglesias clearly doesn't care about being paid for their work), there are studio technicians who mix the music, producers who craft the songs, and all sorts of other people involved with the creation of music. I suppose they shouldn't be paid either? That we should just rob them of their labor too?

First, on the title, let's get serious. Every time someone claims "piracy is stealing" it suddenly becomes that much more difficult to take them seriously, because it shows they've put no thought into their argument and are parroting specious arguments that have nothing to do with reality. Stealing means taking something away. Making a copy of something means there's two such things, not one, and nothing is missing. It's not stealing, and even the Supreme Court knows this:

Since the statutorily defined property rights of a copyright holder have a character distinct from the possessory interest of the owner of simple "goods, wares, [or] merchandise," interference with copyright does not easily equate with theft, conversion, or fraud. The infringer of a copyright does not assume physical control over the copyright nor wholly deprive its owner of its use. Infringement implicates a more complex set of property interests than does run-of-the-mill theft, conversion, or fraud.

But that's old hat. What's really problematic is the claim that copyright law was designed to "protect" the creator. False. Copyright law has one purpose and one purpose only: and it's to promote the progress of science and the useful arts. Yes, the method for doing that included some limited protection but only for the sake of promoting the progress. If it is not promoting the progress, then the protection should not be allowed.

But Bunch goes on and makes a "sweat of the brow" argument or the "labor theory" of copyright that has been rejected over and over and over again. Not only has it been rejected, but it has been soundly rejected in clear language -- again, by the Supreme Court:

It may seem unfair that much of the fruit of the compiler's labor may be used by others without compensation. As Justice Brennan has correctly observed, however, this is not "some unforeseen byproduct of a statutory scheme."... It is, rather, "the essence of copyright," ... and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but "to promote the Progress of Science and useful Arts."

And if the Supreme Court isn't enough for Bunch, how's about Congress:

"The enactment of copyright legislation by Congress under the terms of the Constitution is not based on any natural right that the author has in his writings... but on the grounds that the welfare of the public will be served and progress of science and useful arts will be promoted.... Not primarily for the benefit of the author, but primarily for the benefit of the public such rights are given."

Everyone is allowed to have their own opinion on copyright law. But not their own facts.

The next paragraph by Bunch is also wrong and misleading. In talking about basic economics, no one is saying that they don't want people to get paid. If you explained why telephone switching technology was going to make the everyday phone operator obsolete did that mean you didn't want operators to get paid? Of course not. You're just explaining the basic functioning of the market, and what it means. It's got nothing to do with what anyone wants. It's about what's happening.

Furthermore, the claim that any of this means people don't get paid is also pure folly. As we've described in great detail, plenty of business models that don't require copyright are working quite well in the industry.

I'm always quite amazed at people who clearly have no experience with copyright law or the history of copyright law insisting they know all about what it's about.

Filed Under: copyright, incentives, labor theory, promote the progress, sweat of the brow