The Deficit Is Worse Than We Think

In a WSJ op-ed, Lawrence Lindsey, a former Federal Reserve governor and assistant to President George W. Bush for economic policy, gives three reasons why The Deficit Is Worse Than We Think

• Interest expense
• Anemic growth
• Health care costs

At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020. Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal. [...] The Fed will increasingly have to factor in the effects of any rate hike on the fiscal position of the Treasury.

The PROTECT IP Act

The Protect IP Act (full text) enables the government and copyright holders to compel DNS providers, ISPs, search engines and advertisers to censor sites hosting copyright or trademark infringements. They're going to make linking to pirated material a crime.

Media companies want this because it's easier to go after the intermediaries, rather than the infringers, especially those outside the US. It's not that different from the Great Firewall of China.

This is the second attempt, the previous incarnation COICA having been introduced in September of last year. Senator Ron Wyden (D-Oregon), held up that legislation and is trying to do the same again. Cheers to Ron Wyden.

Larry Downes provides an excellent summary of the "full-scale war between content distributors and everyone else" in his Law of Disruption blog, including the property seizure tactics of the Department of Homeland Security's Immigration and Customers Enforcement division, a name straight out of Orwell.

The media industries, everyone agrees, are in the fight of their lives. These businesses rely for profitability on the controlled distribution of information goods whose individual copies have a marginal cost that keeps getting closer to zero.

The EFF has a couple articles on the PROTECT IP act and a petition.

One commenter asked, "Why is the attorney general wasting precious tax dollars enforcing corporate plutocracy?"

The real question

A lot changes when the costs of production and distribution are approaching zero. The question we should be asking is this: What still has value?

• The creation itself - the skill, insight and artistic judgement necessary to make movies, music, or writing that doesn't suck.
• The ability to sift through mountains of dreck to find the good stuff. The value of the filter goes way up in the new environment.
• The community? A viable place to discuss. I'm pretty sure that the difference between Quora and You-Tube comments has value.

Legislating without a clear idea of what's valuable in the new environment will lead to useless and harmful laws that burden legitimate service providers while only slightly inconveniencing pirates - something like requiring every new car to come with a trunk full of horseshoes to protect the blacksmiths.

Humans are a tribal animal

It's amazing how much of human nature can be explained by the fact that we're a tribal animal. I'm not sure if we're more like a herd or a pack, or exactly what's the difference anyway. Street gangs, nationalism, sports fan mania, racism, cults, even religion to some extent can be all be explained by a group membership instinct. How supportive people are towards the welfare state is proportional to racial homogeneity. Tribal identity shows up everywhere from music and fashion to the followers of certain programming languages. The structure of governments and corporations mimic the alpha male social dynamic of the apes.

The countervailing force is individualism. And, somehow, technology plays a role in freeing us from our local community, separating us from those directly around us, even while connecting us to those farther away.

The bubbles of the elite

In Fighting to Shut Out the Real India, Manu Joseph writes:

The pursuit of India’s elite is to protect themselves from India — from its crowds, dust, heat, poverty, politics, governance and everything else that is in plain sight. To achieve this, they embed themselves in their private islands that the forces and the odors of the republic cannot easily penetrate.

...

The bubbles of the elite have strong walls, but the realities of India are so potent that they very often break in. There is a limit to the isolation that the back seat of a Mercedes can provide. The odors of the driver; the crippled urchins knocking at the windows; the million honking horns; the smog of unmoving traffic, these are the relentless forces of the nation seeking to breach the walls of the elite.

Why the West Rules--for Now

Ian Morris draws on 50,000 years of history, archeology, and the methods of social science, to make sense of when, how, and why the paths of development differed in the East and West—and what this portends for the 21st century.

Stanford history professor Ian Morris put out a book this past October called Why the West Rules--for Now: The Patterns of History, and What They Reveal About the Future.

His answer to that question is not unlike Jared Diamond's excellent Guns Germs and Steel. The general trajectory of human societies is dictated by biology and sociology. The differences in their success is a matter of geography. But, the development of societies and technology periodically changes our relationship with geography.

Agriculture started in about 6 places around the world with favorable geography and climate. The invention of irrigation suddenly meant that you could grow crops in places where they formerly wouldn't grow. This theme repeats itself through the growth and decline of empires up to the invention of oceangoing ships and guns. Geography drives the development of societies and the development of societies then changes the meaning of geography.

Put together oceangoing ships and working guns and this is a very powerful package. The ships allow you to cross the oceans. The guns allow you to shoot the people you meet on the other side. This is great for everybody who's got them. ...it changes the meaning of geography once again.

The same process is still at work bringing about a shift of wealth and power from west to east. Whether that happens smoothly or not or whether it even matters by the time it's complete... those are open questions.

Morris sees the near future as "a giant race between, on the one hand, something like the singularity that Ray Kurzweil talks about, and on the other hand, some kind of nightfall scenario, where we trigger a set of changes that we simply can't control, and we are looking at a collapse of civilization on a scale that has never been seen before in history."

His factors of collapse are all too familiar:

• migration
• state failure
• famine
• epidemic
• climate change

Bruce Sterling: Network Society Isn’t Compatible With Democracy

The darkly euphoric Bruce Sterling at SXSW talking about his new book Gothic High Tech and Favella Chic, on why “hactivism” isn’t democracy and why he finds Sarah Palin “super interesting.”

Why the Dollar's Reign Is Near an End

For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

"The greenback [...] is not just America's currency. It's the world's." The dollar's three pillars are:

1. depth of markets
2. safety, stability, liquidity
3. lack of alternatives

Three things that are changing are:

1. technology eases the problems of multiple currencies
2. rivals: the Euro and the Chinese Yuan
3. loss of confidence

The U.S. government has a history of honoring its obligations, and it has always had the fiscal capacity to do so. But now, mainly as a result of the financial crisis, [...] questions will be asked about whether the U.S. intends to maintain the value of its debts or might resort to inflating them away.