Tuesday, January 31, 2012
Friday, January 20, 2012
By JONATHAN WEISMAN
WASHINGTON — When the powerful world of old media mobilized to win passage of an online antipiracy bill, it marshaled the reliable giants of K Street — the United States Chamber of Commerce, the Recording Industry Association of America and, of course, the motion picture lobby, with its new chairman, former Senator Christopher J. Dodd, the Connecticut Democrat and an insider’s insider.
Yet on Wednesday this formidable old guard was forced to make way for the new as Web powerhouses backed by Internet activists rallied opposition to the legislation through Internet blackouts and cascading criticism, sending an unmistakable message to lawmakers grappling with new media issues: Don’t mess with the Internet.
As a result, the legislative battle over two once-obscure bills to combat the piracy of American movies, music, books and writing on the World Wide Web may prove to be a turning point for the way business is done in Washington. It represented a moment when the new economy rose up against the old.
“I think it is an important moment in the Capitol,” said Representative Zoe Lofgren, Democrat of California and an important opponent of the legislation. “Too often, legislation is about competing business interests. This is way beyond that. This is individual citizens rising up.”
It appeared by Wednesday evening that Congress would follow Bank of America, Netflix and Verizon as the latest institution to change course in the face of a netizen revolt.
Legislation that just weeks ago had overwhelming bipartisan support and had provoked little scrutiny generated a grass-roots coalition on the left and the right. Wikipedia made its English-language content unavailable, replaced with a warning: “Right now, the U.S. Congress is considering legislation that could fatally damage the free and open Internet.” Visitors to Reddit found the site offline in protest. Google’s home page was scarred by a black swatch that covered the search engine’s label.
Phone calls and e-mail messages poured in to Congressional offices against the Stop Online Piracy Act in the House and the Protect I.P. Act in the Senate. One by one, prominent backers of the bills dropped off.
First, Senator Marco Rubio of Florida, a rising Republican star, took to Facebook, one of the vehicles for promoting opposition, to renounce a bill he had co-sponsored. Senator John Cornyn of Texas, who leads the G.O.P.’s Senate campaign efforts, used Facebook to urge his colleagues to slow the bill down. Senator Jim DeMint, Republican of South Carolina and a Tea Party favorite, announced his opposition on Twitter, which was already boiling over with anti-#SOPA and #PIPA fever.
Then trickle turned to flood — adding Senators Mark Kirk of Illinois and Roy Blunt of Missouri, and Representatives Lee Terry of Nebraska and Ben Quayle of Arizona. At least 10 senators and nearly twice that many House members announced their opposition.
“Thanks for all the calls, e-mails, and tweets. I will be opposing #SOPA and #PIPA,” Senator Jeff Merkley, Democrat of Oregon, wrote in a Twitter message. Late Wednesday, Senator Charles E. Grassley of Iowa, the senior Republican on the Senate Judiciary Committee, withdrew his support for a bill he helped write.
The existing bill “needs more due diligence, analysis and substantial changes,” he said in a statement.
Few lawmakers even now question the need to combat pirates at Web sites in China, Russia and elsewhere who have offered free American movies, television shows, music and books almost as soon as they are released. Heavyweights like the Walt Disney Company secured the support of senators and representatives before the Web companies were even aware the legislation existed.
“A lot of people are pitching this as Hollywood versus Google. It’s so much more than that,” said Maura Corbett, spokeswoman for NetCoalition, which represents Google, Amazon.com, Yahoo, eBay and other Web companies. “I would love to say we’re so fabulous, we’re just that good, but we’re not. The Internet responded the way only the Internet could.”
For the more traditional media industry, the moment was menacing. Supporters of the legislation accused the Web companies of willfully lying about the legislation’s flaws, stirring fear to protect ill-gotten profits from illegal Web sites.
Mr. Dodd said Internet companies might well change Washington, but not necessarily for the better with their ability to spread their message globally, without regulation or fact-checking.
“It’s a new day,” he added. “Brace yourselves.”
Citing two longtime liberal champions of the First Amendment, Senator Patrick Leahy and Representative John Conyers Jr. of Michigan, Mr. Dodd fumed, “No one can seriously believe Pat Leahy and John Conyers can be backing legislation to block free speech or break the Internet.”
For at least four years, Hollywood studios, recording industry and major publishing houses have pressed Congress to act against offshore Web sites that have been giving away U.S. movies, music and books as fast as the artists can make them. Few lawmakers would deny the threat posed by piracy to industries that have long been powerful symbols of American culture and have become engines of the export economy. The Motion Picture Association of America says its industry brings back more export income than aerospace, automobiles or agriculture, and that piracy costs the country as many as 100,000 jobs.
The House response, SOPA, was drafted by a conservative Republican, Representative Lamar Smith of Texas, with the backing of 30 co-sponsors, from Representative Debbie Wasserman Schultz of Florida, the chairwoman of the Democratic National Committee, to mainline Republican Peter King of New York. The Senate’s version, written by Mr. Leahy, the Vermont Democrat who is chairman of the Senate Judiciary Committee chairman, attracted 40 co-sponsors from across the political spectrum and cleared his committee unanimously.
Then the Web rose up. Activists said the legislation would censor the Web, force search engines to play policemen for a law they hate and cripple innovation in one of the most vibrant sectors of the American economy.
Mr. Smith, the House Republican author, said opposition Web sites were spreading “fear rather than fact.”
“When the opposition is based upon misinformation, I have confidence in the facts and confidence that the facts will ultimately prevail,” Mr. Smith said.
Google, Facebook and Twitter have political muscle of their own, with in-house lobbying shops and trade associations just like traditional media’s. Facebook has hired the former Clinton White House press secretary Joe Lockhart. Google’s Washington operations are headed by Pablo Chavez, a former counsel to Senator John McCain, Republican of Arizona, and a veteran of the Senate Commerce Committee.
And for all the campaign contributions, Washington parties and high-priced lobbyists the old economy could muster, nothing could compare to the tentacles the new economy can reach into Americans’ everyday lives through sites like Wikipedia. Aides to Senator Harry Reid, the majority leader, say he will press forward with a vote Tuesday to open debate on the Protect I.P. bill. Negotiators from both parties are scrambling for new language that could assuage the concerns of the Internet community, but expectations are that the bill will now fail to get the 60 votes to move forward — a significant setback.
“The problem for the content industry is they just don’t know how to mobilize people,” said John P. Feehery, a former House Republican leadership aide who previously worked at the motion picture association. “They have a small group of content makers, a few unions, whereas the Internet world, the social media world especially, can reach people in ways we never dreamed of before.”
Thursday, January 19, 2012
So today I was running a relatively fresh install of Slackware in using virtualbox on Linux Mint and I wanted to change the background colour of my xterm from white to black, making it easier on the eyes to read. So I Googled configure xterm background colour. One of the first links was this site. Here was the solution:
For all [xa]term, put something like the following in your
~/.Xdefaults or ~/.Xresources:
! Defaults for all xterm clients
"man xrdb" and "man X" and search for "Resources" for more
Saturday, January 14, 2012
Why I’m feeling strangely Austrian
By Gideon Rachman
The old is dying and the new cannot be born: in the interregnum a great variety of morbid symptoms will appear.” That statement from the Prison Notebooks of the Italian communist Antonio Gramsci was a favourite of student Marxists when I was at university in the 1980s. Back then it struck me as portentous nonsense. But Gramsci’s observation does resonate now – in an age of ideological confusion.
Old certainties about the onward march of the markets are collapsing. But no new theory has established ideological “hegemony”, to use the concept that Gramsci made famous. Some ideas are, however, gathering new strength. The four strongest emerging trends that I can spot are, in very broad terms: rightwing populist, social democratic-Keynesian, libertarian-Hayekian and anti-capitalist/socialist.
Each of these new trends is a reaction against the dominant ideas of 1978-2008. Back then, for all the nominal differences between communists in China, capitalists in New York and the soft left in Europe, their agreements were more striking than their arguments. Political leaders from all over the world talked the same language about encouraging free trade and globalisation. Increasing inequality was embraced as a price worth paying for faster growth. Deng Xiaoping set the tone when he declared: “To get rich is glorious.” Ronald Reagan or Margaret Thatcher could not have put it better.
In post-crisis Europe, however, rightwing populism is on the rise – from the Freedom party in the Netherlands to the National Front in France and the Northern League in Italy. The populists are anti-globalisation, anti-EU and anti-immigration – the common thread being that all these forces are felt to be hostile to the interests of the nation. Hostility to Islam links Europe’s populist right to parts of the Tea Party movement in the US.
There is some overlap between the populists and the libertarian Hayekians – but the two movements have different obsessions. In the US, Ron Paul, the maverick Republican, carries the banner for libertarianism. He fondly recalls dining with Friedrich Hayek himself and watching an inspiring denunciation of socialism by Ludwig von Mises, another economist of the Austrian school. That explains Mr Paul’s otherwise baffling remark, after last week’s Iowa caucus, in which he said: “I’m waiting for the day when we can say we’re all Austrians now.”
The libertarians are unusual because they argue that the current crisis is caused not by an excess of capitalism, but by too much state intervention. As far as the Austrian school is concerned, the Keynesian “cure” for the crisis of capitalism is worse than the disease.
Mr Paul is the purest advocate of a powerful conviction on the American right that the US is afflicted by an over-mighty state. The urge to slash the government back into the 18th century is not a common one in Europe. But Paulite suspicion of central banks that threaten to debase the currency is powerfully echoed in Germany – where the Hayekian right is horrified by the operations of the European Central Bank, and by bail-outs for bankrupt nations. This ideological trend is not confined to the west. In a recent article, Simon Cox of The Economist argued that policy debates in China about the state’s role in reflating the economy also pit Hayekians against Keynesians.
In the west, the fiercest opponents of the Hayekians are the Keynesian-social democrats. Their belief in deficit spending as the key to stimulating the economy often goes hand in hand with a call for a more active and expansive state. In Europe, where there is little scope for more state spending, the social democrats are arguing for much tougher regulation of high finance, a revival of industrial policy – and a renewed stress on tackling inequality. While efforts to label Barack Obama a “socialist” are silly, it is fair to label him a social democrat. The US president does not reject capitalism, but he does seek to soften its edges through a more active state that promises universal healthcare and redistributive taxation. The fact that inequality has become a global concern from China to Chile, and from India to Egypt, suggests that this is another trend that has gone global.
The failure of the hard left to capitalise on the economic crisis testifies to how profoundly communism was discredited by the collapse of the Soviet system. But mass unemployment in Europe might yet produce the conditions for the revival of an anti-capitalist movement. Greece’s two far-left parties are currently at about 18 per cent in the polls. The diverse groups that campaign under the banner of Occupy Wall Street contain some genuine socialists. And China has a powerful “new left” movement that pays lip-service to Maoism.
Events will determine which of these ideological trends sets the tone for the new age. Most people will be buffeted by personal circumstances, and by the news.
Under normal conditions I would probably sign up with the social democratic tendency. The Tea Party is not my cup of tea. But I spent the weekend reading newspaper accounts of the ever more incredible figures that may have to be poured into the bail-outs for banks and countries in Europe. Then I turned the page to read of demands for more protectionism and regulation in the EU. For light relief, I then went to see The Iron Lady – the new film about Margaret Thatcher. The whole experience has left me feeling strangely Austrian.
Tuesday, January 10, 2012
The enrichment of bankers, corporate chiefs, flash traders and their cronies is testing tolerance of inequality, argues John Plender in the first part of an FT series
January 8, 2012 9:15 pm
Greedy bankers, overpaid executives, anaemic growth, stubbornly high unemployment – these are just a few of the things that have lately driven protesters on to the streets and caused the wider public in the developed world to become disgruntled about capitalism. The system, in all its different varieties, is widely perceived to be failing to deliver.
Business in the leading English-speaking countries attracts misgivings. Fewer than half of the American and British people sampled in the 2011 Edelman Trust Barometer have faith in business to do what is right. The survey rates the US and the UK only marginally ahead of Russia on this score. So there is talk of a crisis of legitimacy and an erosion of business’s “licence to operate”
This article, the first in a series on rethinking capitalism after the financial crisis that began in 2007, argues that popular acceptance – which is a basic condition for business success – has waned in the Anglosphere for good reason. At the heart of the problem is widening inequality. In a recent study, the Paris-based Organisation for Economic Co-operation and Development, the club of developed nations, declared that the wealthiest Americans “have collected the bulk of the past three decades’ income gains”. Much the same is true of the UK. In both cases, most of the spoils have gone to finance professionals and top executives.
As Stewart Lansley, author of a recent book on inequality*, puts it, the modern economy appears to consist of two tracks: a fast one for the super-rich and a stalled one for everyone else. Those in the slow lane enjoyed rising living standards before 2007, despite stagnant real incomes, thanks to increased borrowing on the security of their homes. Since the crisis, however, American and British homeowners have faced a long and deep squeeze on real living standards, while struggling to service an unprecedented level of indebtedness. At the same time, says Mr Lansley, finance has come to play a new role as “a cash cow for a global super-rich elite”.
In continental Europe, the increase in inequality is less pronounced and the legitimacy problem has more to do with the way imbalances in the eurozone are being addressed. Northern Europeans resent a monetary union that has permitted southern Europe to engage in what they see as fiscally profligate behaviour, while southern Europeans and the Irish are required to submit to extreme austerity programmes that exacerbate their sovereign debt problems.
As the German-led policy elite inches towards “more Europe” as a solution to the fissures in the eurozone, it is far from clear that more Europe is what the citizens of Europe want. Democratic legitimacy has been largely lacking from the outset of this gigantic monetary experiment. On both sides of the Atlantic there is now a risk that reasonable aspirations to equality of opportunity are being undermined, accompanied by a growing threat of political instability. Support for open trade and free markets is also being adversely affected.
Misery and money motive
The problem of consent in relation to capitalism is nothing new. In fact, it returns with nagging frequency. In the early years of the industrial revolution, average per capita incomes were slow to rise and the contrast between the plight of the working population and the lifestyle of rich manufacturers prompted savage diatribes such as that of Charles Dickens in Hard Times. Even when living standards did rise, David Ricardo and Karl Marx worried whether the free markets trumpeted by Adam Smith could produce an income distribution that was politically tolerable.
By the late 19th century the debate turned more heavily on the moral question posed by the unedifying behaviour of the American robber barons at a time of spectacular economic growth. The centrality of the money motive in wealth creation appeared to detract from capitalism’s legitimacy unless there was an implicit social contract between the rich and the rest of society, whereby the wealthy tempered ostentation and engaged in philanthropy.
Then, in the unstable 1920s and the Depression of the 1930s, the efficacy as well as the moral basis of capitalism was once again called into question. While F. Scott Fitzgerald chronicled the moral vacuity of jazz age capitalism in The Great Gatsby, John Maynard Keynes, who provided a theoretical basis for the mixed economy and a more humane form of capitalism, was notably acerbic on what he called “individualist capitalism” and the money motive. Such questioning was sharpened by the existence for the first time of a seemingly successful alternative to capitalism in the Soviet Union; also of competing models, such as the corporatist approaches developed in Germany and Italy.
What, then, is different about today’s outbreak of disaffection? Perhaps the most important difference is that it is not the product of despair. The people in Manhattan’s Zuccotti Park and on the steps of St Paul’s Cathedral in London had no need of soup kitchens and took to their tents out of choice, unlike many in the 1930s US who slept in cardboard box colonies – Hoovervilles – out of necessity.
If there is no proliferation of soup queues, it is because in all the economies of the developed world capitalism has been humanised to a greater or lesser degree by forms of social democracy and by bank bail-outs. Unemployment in the US has gone nowhere near the 25 per cent rate that prevailed in 1933. While there are exceptionally high rates of youth unemployment, especially in southern Europe, there is more of a safety net for the victims than in the Depression. And if today’s protesters articulate no coherent programme, it seems clear that underlying frustrations are to do with perceptions of unfairness, not immiseration.
Much of that frustration relates to the banks. In contrast to the 1930s, when banking was about deposit-taking and lending, modern bankers engage in complex trading that they themselves do not always understand and whose social utility is not apparent to ordinary mortals – or even to the likes of Lord Turner, head of the UK Financial Services Authority, who famously declared that many parts of the banking business had “grown beyond a socially reasonable size”. Many have shown a disregard for their customers, while fiduciary obligation has become a casualty of deregulation and the shareholder value revolution. There is a widespread conviction that these bankers constitute a protected class who enjoy bonuses regardless of performance, while relying on the taxpayer to socialise their losses when they have taken excessive risks. At the same time, the public is aware that top executive rewards more generally are poorly related to performance and tend to go up even when profits fall.
Human capital or ‘hand’
Such resentment is not completely new. It bears some resemblance to the hostility towards profiteers after the first world war, which prompted Keynes to remark: “To convert the business man into the profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards. The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”** On that basis, no one can be surprised that the legitimacy of capitalism is currently in question. And it would be wrong to call it a “winner takes all” form of capitalism, because privileged losers appear to be making off with the prizes too.
What is unquestionably novel is the ferocity with which US business sheds labour now that executive pay and incentive schemes are more closely linked to short-term performance targets. In effect, the American worker has gone from being regarded as human capital to a mere cost, or what was known in the 19th century as a “hand”. Yet this pursuit of a narrowly financial conception of shareholder value may destroy value for the ultimate pension beneficiaries – because of the disruption that slashing and burning causes, and the cost and time involved in hiring and retraining when conditions improve.
That underlines the “agency problem” at the heart of the banking and boardroom pay sagas. The accountability of management – the agent acting on behalf of the highly dispersed beneficiaries of equity ownership – is fundamentally flawed. While the public may not be aware of the details of the weak chain of accountability, or the growing number of investors such as high-frequency traders or hedge funds that have no interest in playing a stewardship role, it sees the outcome, which contributes to the wider inequality story.
So what to do? It is not as if there are attractive alternative models. While the west is chastened by the rise of Asia, few would wish to adopt the communist Chinese mixture of state ownership, red-in-tooth-and-claw private markets, wholesale corruption and even greater inequality than the US. As for the cleaner authoritarian approach of Singapore, despite delivering high economic growth, it has started to lose its appeal with the island’s electorate. Nor would many in the west find free-market Hong Kong a comfortable environment.
The real question, as Keynes argued in the 1930s, is therefore how to improve the existing model of capitalism. The snag is that there is minimal flexibility in macro policy after the crisis, especially in the US where broadly centrist politics have been replaced by a polarised, stalemated debate. And in both the US and UK there is a greater mistrust of big government, according to the Edelman Trust Barometer, than of business. Efforts to re-regulate the banking system, meantime, have failed to convince many experts that an even larger financial crisis can be avoided.
From distribution to decline
If Hyman Minsky, the expert on financial market fragility, provided the best route map for understanding events before the crisis, and Keynes offered the best guide to crisis management, Mancur Olson, a theorist on institutional economics, could now be a posthumous beacon on how to manage the aftermath. Olson argued that nations decline because of the lobbying power of distributional coalitions, or special-interest groups, whose growing influence fosters economic inefficiency and inequality.***
When he was writing, the main interest groups were trade unions and business cartels. Today, the pre-eminent interest group consists of finance professionals on Wall Street and in London. Through campaign finance and political donations, they have bought themselves protection from proper societal accountability. And they pose a continuing obstacle to the de-risking of banking of the kind recommended by the Vickers commission in the UK.
Tackling such interest groups both in the US and Europe is one of the biggest post-crisis tasks for policymakers and a key to addressing concerns about systemic legitimacy. The inchoate nature of the public’s complaints is another. Not the least of the difficulties, to reformulate Winston Churchill’s famous remark on democracy, is that capitalism is the worst form of economic management except for all those other forms that have been tried from time to time. The public relations problem implicit in that pale endorsement is an underlying reason why legitimacy crises recur.
* The Cost of Inequality, Gibson Square, 2011
** Quoted in Keynes and Capitalism, Roger E. Backhouse and Bradley W. Bateman, History of Political Economy, 2009
*** The Rise and Decline of Nations, Yale University Press, 1982