Out of Control

Dave Monson and Wayne Hauge, two farmers who sought to add industrial hemp into their crop rotation alongside wheat, barley, canola, soybeans, peas, lentils, and chickpeas in northern North Dakota are out several thousand dollars in filing fees this season, a sad harvest after a year of petitioning the federal government to recognize their state-issued licenses to grow the crop. Their federal suit against the DEA was dismissed Wednesday, but United States District Court Judge, Hon. Daniel L. Hovland, was fair (if not encouraging) in his remarks:

Industrial hemp may not be the terrible menace the DEA makes it out to be, but industrial hemp is still considered to be a Schedule I controlled substance under the current state of the law in this circuit and throughout the country. Marijuana and industrial hemp are members of the Cannabis sativa L. plant species for which the Controlled Substances Act presently makes no distinction. The Court recognizes that at some stage in the process the plant may contain such low levels of THC that it would be impractical to use as a recreational street drug. However, perceived problems relating to detection and enforcement seem to remain as does the current ban imposed by Congress and the Drug Enforcement Administration. The policy arguments raised by the plaintiffs are best suited for Congress rather than a federal courtroom in North Dakota.

Just one look at what appears to be sleet falling from the sky out in front of the Bismarck, N.D., federal building would be enough to win my sympathy for these farmers.

FCC Chairman Kevin Martin’s plan to impose greater regulation on the cable industry may have hit a snag as members of Congress, along with Martin’s fellow commissioners, have questioned the chairman’s rationale and methodology for the new regulatory proposals, the Wall Street Journal reports.

The FCC is scheduled to meet today (11/27) to vote on a number of proposals aimed at greater FCC regulation, but as of this morning, it had become questionable whether the commission would indeed take up the issue.

The Wall Street Journal reports that four Republican Senators and 23 Republican House members have expressed “deep concern” about the new regulatory plans in a letter to Martin. A particular point of dispute is a new data in a report from Martin’s staff that found that 71.4 percent of households with access to cable subscribe. Under a 23-year-old law, the FCC has the right to impose greater regulations if cable adoption goes above 70 percent. Martin is using the findings in the staff report as justification to exert broader authority over the cable industry.

Trouble is, this 71 percent finding by Martin’s staff runs counter to all other current market research. The new FCC report says cable TV is available to 94.2 million U.S. homes, of which 67.2 million subscribe. These numbers are risible. To find anything close you have go back almost eight years to 2000, when Cable World magazine reported that cable TV passed 101.1 million homes, of which 67.3 million subscribed, Even then, this was still less than the 70 percent threshold.

Expect the contrived controversy over cable carriage of the NFL Network to intensify this week as the FCC meets to push for greater regulation of cable.

As pro football fans know, the Dallas Cowboys and the Green Bay Packers, who share National Football Conference-best records of 10-1, will play Thursday night. The game will be nationally televised over the fledgling NFL Network, a cable channel owned by the National Football League itself, and ratings of which the NFL is trying to boost by using it to air a slate of eight Thursday and Saturday night games this season. (Games will be available on free TV in their local markets.)

Trouble is, the major cable companies, including Comcast and Time Warner, have elected to make the NFL Network available only as part of a higher priced sports tier, not part of the “expanded basic” packages that generally include CNN, ESPN, TNT, Nickelodeon and dozens of other cable channels.

In a case that could only happen because of the legacy of telecommunications as a regulated industry, the NFL has complained about this choice to the FCC. Worse, FCC Chairman Kevin Martin seems willing to give the league a hearing.

Timothy Wu, the Columbia University law professor who is one of the leading voices for network neutrality, has crafted an interesting piece in Slate on what he sees as a coming competitive clash between Google on one side and AT&T and Verizon on the other.

Wu’s article is a sound analysis of the two business models each group seeks to employ. Google is pursuing a network neutral approach of which its Android operating system for mobile devices is the cornerstone. Among its many allies, Google has attracted incumbents T-Mobile and Sprint to the Android concept, showing that the current wireless industry is not as monolithic as Wu’s editors’ use of the inclusive “Ma Bell” in the subhead suggests.

But Wu has a problem. As speculation intensifies as to whether Google will bid several billion dollars for a chunk of the 700 MHz spectrum the FCC plans to auction in January, he must answer the question that network neutrality proponents are finding more difficult to dodge each day – will network neutrality do little more than just give Google, which is, despite its perception as an underdog among some lawmakers, a huge, deep-pocketed company, a government-provided advantage in the market for Internet access and applications.

Shifting through the cultural tea-leaves, the Washington Times wonders in this story whether libertarians are the new "IT" factor in American politics.

Of course, the ever-excitable Michael Kinsley is horrified this may actually be the case. Reason Mag's Nick Gillespie responds: "We're the Sith Lords of American Politics. We can show up in any group. We're both terrifying and devilishly attractive."

Surprise, surprise! Another report just released today shows that the TSA is yet again incapable of catching explosives that terrorists could try to get through airport security.

And how is this different from another report on TSA incompetence released in October?

Look behind the headlines, and you will see that there needs to be a serious re-evaluation of how airport security is to be done, either by putting private security guards on the lines who keep their jobs if they do well or by moving towards a more risk-based approach that doesn’t treat all passengers like criminals. Some will decry this as profiling, but the simple fact is that grandma with her knitting needles is not a major threat to security.

At a town hall meeting scheduled for today (Nov. 14), Democratic presidential contender Barack Obama was to touch on the standard set of network neutrality talking points, no doubt missing the irony that he was going to make his remarks at the headquarters of Google, the one company that stands to gain the biggest sort-term windfall if network neutrality becomes law.

Prepared statements were released in advance and they add up to the standard campaign pabulum. After all, everyone’s for an “open network” just like everyone’s for “quality health care” and a “sound energy policy.” Yet aside from being a friendly host to the Obama camp, the more Google talks about their so-called neutrality model for wireless, the less I see them supporting the broad language of Snowe-Dorgan in the end. Simply because it applies to wireless devices, Google's so-called "open" Android operating system is going to need some network management capabilities to work. And its no secret that when pressed about the operation efficiency of a totally neutral Internet, Google has been hedging all year.

Nonetheless, by getting all gushy about Google, Obama risks the same danger as many of his colleagues – equating Google’s interest with the public interest.

“The Google story is about what can be achieved when we cultivate new ideas and keep the playing field level for new businesses,” his script reads. Of course, Google hardly has a level playing field. First of all, although it designs to compete in the provision of services (local WiFi and 700 MHz wireless) it is completely unregulated. No carrier of last resort obligations, no universal service mandate, and no need to incur the extra cost to collect taxes, surcharges and franchise fees state and local governments assess on its prospective competitors.

Then there’s the enormous break from the FCC with the auction rules, which probably did more than anything to spearhead interest in Android. Google's stock price is about $640 and its market cap is $200 billion. By comparison, AT&T’s is $237 billion, Verizon’s is $126 billion and IBM’s is $143 billion.

Google’s big advantage in Washington has been its ability to hoodwink Congress that its still a small company—("a smaller voice" being "squeezed out," in Obama's words) hence appealing to the Democrats’ instinct to protect small players from large.

The principled position however stems from respect for private property and curtailing the power of big government to regulate business models. In the end, even Google’s going to finesse its way out of supporting net neutrality. Posturing for "open networks" suits the company today, but not in the long run. That’s why Obama, and others, should be careful. Politicians who buy into the idea that network neutrality as political issue will find themselves out on a limb.

Efforts to resuscitate network neutrality legislation seem to be gaining some momentum on Capitol Hill. Reports from inside the Beltway say that Rep. Ed Markey (D-MA), chairman of the House Subcommittee on Telecommunications and Finance, is close to reintroducing his net neutrality bill. Readers may recall Markey’s bill was voted down last year when offered as an amendment to the House’s sweeping telecom reform bill. Hearings may begin as early as this month.

Meanwhile, over in the Senate, the Snowe-Dorgan net neutrality bill, another 2006 loser that was re-introduced and tabled in January, may be coming up for debate in the Senate Commerce Committee.

The latest moves come after some rather sensationalized reports of Internet blocking by Comcast and AT&T.

First, AP accused Comcast of blocking traffic headed for certain peer-to-peer sites. The truth turned out to be that Comcast merely was slowing down isolated P2P uploads by reducing the number of simultaneous connections the user could have to the file-sharing site. As George Ou, an IT blogger for ZDNet explained Nov. 6, “We can think of it as a freeway onramp that has lights on it to rate limit the number of cars that may enter a freeway… If you didn’t have the lights and everyone tries to pile on to the freeway at the same time, everyone ends up with worse traffic.”

(The facts did not stop Free Press.org from going into full blather about discrimination, demanding the FCC impose up to $2.3 billion in fines on Comcast.)

If my training in economics taught me anything, it’s to think on the margins. How much extra do you get for a little bit more?

The revamping of the Eurostar, the high-speed train that links the UK with the continent, is a good example of not thinking marginally.

For about $12 billion, they built a new station and new tracks in the UK, to save 25 to 30 minutes. That’s $480 million for each minute saved, is that a good investment?

For any investment like this, one has to think on the margins. How much will it improve travel time versus what is already available, is the marginal improvement worth the money?

Applied to the US context, does an investment in high-speed rail make sense if it only marginally improves travel time when the alternative (air) is already very viable?

A few weeks ago, I had the good fortune to attend the annual Rural Telecom Conference, or Rural TeleCon, where I debated Christopher Mitchell of the Institute for Local Self-Reliance on the issue of municipal broadband. It was a lively discussion, and Mitchell came well-prepared. Much of the debate stayed where it should: what role, if any, the government should have in the build-out of infrastructure and provision of service.

I mention this not to rehash the argument, but to introduce some further thinking on the topic. Right now it appears that big cities are stepping back from municipal wireless, at least until a new business model can be formulated. Muni broadband is not going to go away, however. And from what I could tell from my day at Rural TeleCon, stands every chance of being subsumed into the wider issue of funding universal service in rural areas.

I emerged from Rural TeleCon somewhat disappointed. The 2007 conference, held Oct 15-17 in Springfield, Ill., brought together lawmakers, regulators, executives, and technicians from rural phone companies around the country, many of whom seem ready to accept, unquestioned, that market forces have somehow failed and large scale government intervention is required to ensure universal broadband, especially in rural markets.

Oregon voters defeated a tobacco tax proposal billed as an expansion of children's health coverage in yesterday's election. The relevant question for similar plans at the national and state level is, what motivated voters? (We'll assume not all of them read our analysis of the measure.) Generally speaking, tobacco taxes poll well despite the (perhaps grudging) sympathy that Americans still have for smokers. A few polls, including one last August, showed a majority of voters favoring the Oregon tax proposal. Gov. Ted Kulongoski, who championed the measure (though, with his own approval ratings relatively low, he might not have been much help) blames the fact that his campaign was outspent by tobacco companies. From the Bend Bulletin:

“The governor is saying that this is not a vote about whether Oregonians want health care for kids,” said Kulongoski spokeswoman Patty Wentz. “It’s a vote you get when the tobacco industry puts in $12 million, and it will not change the fact that health care for kids is his top priority.”

“It was unprecedented,” said Cathy Kaufmann, manager for the Healthy Kids Oregon campaign. “That $12 million was twice as much as you need to confuse Oregon voters.”

Setting aside the low blow from the campaign in favor of the tax--that it only takes $3 each to confuse Oregon's registered voters--I'd like to think Kulongoski has it right on at least one point. The vote wasn't "against the children" but against a funding mechanism that sidestepped taxpayer protections in the Oregon Constitution and seemed otherwise contrived and unfair at a basic level.

Did the TV ads, accounting for the bulk of campaign spending, help "confuse" or educate Oregon voters? Some of the ads on both sides didn't even mention that the measure was a tobacco tax. See samples for and against and judge for yourself.

A radio ad aired by Rudy Giuliani in New Hampshire has unleashed a firestorm of protest by the media. In it, Giuliani, a prostate cancer survivor, thanks God that he was treated in the United State’s (semi-socialized) medical system where survival rates for this type of cancer are 82 percent – as opposed to the (fully) socialized medical system in Britain where survival rates are allegedly only 44 percent.

But a number of reporters and pundits have pounced on the stat like a jackal on a bunny (actually, make that an ant). Rick Klein of ABC News accuses Rudy of “fuzzy healthcare math.” Ezra Klein of CBS denounces the stat as a “straight lie resulting from a basic mathematical error.” Washington Post’s Eugene Robinson intones that this is precisely the kind of “cherry-picking” of data that has caused 160,000 US soldiers to be bogged down in Iraq.

My, my! So what exactly is the truth, according to these oracles?

Well, WaPo’s Michael Dobbs claims that mortality rates for prostate cancer in the United States and UK are the same: About 25 men out of 100,000 die of prostate cancer each year in the two countries. But that comparison hides more than it reveals.

Rudy’s claim was taken from an article in a 2007 issue of the City Journal by Dr. David Gratzer of the Manhattan Institute – and a contributor to Reason Roundtable – that were based on 2000 OECD data. Gratzer admits the figures are now outdated -- although it is curious as to why he used 2000 figures in a 2007 article (he does provide an answer of sorts in a New York Post article linked below.) But Gratzer points out that Dobb’s comparison is based on overall mortality rates. That is, the percentage of all Americans who die of prostate cancer is similar to the percentage of all Britons.

However, Gratzer, who is also Rudy's health care policy adviser, notes, that this comparison misses the point given that a much higher percentage of Americans are diagnosed with prostate cancer than Britons. And the latest figures from Lancet Oncology, a respected journal, show that the five-year survival rate of people diagnosed with prostate cancer is much higher in the U.S. (99 percent) than in Europe (78 percent) and Scotland and Wales (71 percent). Britain’s latest figures are not yet available.

Gratzer’s detractors such as Eugene Robinson of WaPo, however, counter that the higher prostate cancer diagnosis in the U.S. is not the result of higher incidence of cancer -- but of early screening and detection. And that discredits Rudy and Gratzer how? Because very often this type of cancer is non-lethal and its detection bumps up U.S. survival rates among patients diagnosed with prostate cancer even when they are not treated or treated inadequately. Get it?

But even if these pundits were right that the higher diagnosis of non-lethal prostate cancer does artificially boost the survival rate of U.S. patients, can it account for the entire 22-27 percent differential between U.S. and European survival rate that the Lancet study found? Highly unlikely.

The bottom-line is that Rudy’s accusers have no fool-proof evidence of willful mendacity on his part. Rudy might have over-stated his case (Isn’t that shocking: a politician overstating!). But they have certainly engaged in over-kill.

All of which raises this interesting question: Where were these pundits when Al Gore was going around making movies claiming that global warming would cause sea levels to rise by 20 feet, when, in reality, the UN’s Intergovernmental Panel on Climate Change put the figure at no more than two feet: a ten-fold exaggeration?

How do you spell d-o-u-b-l-e s-t-a-n-d-a-r-d?

David Gratzer's column in the New York Post taking on his critics here:
http://www.nypost.com/seven/11052007/postopinion/opedcolumnists/uks_bad_medicine_901295.htm?CMP=EMC-email_edition&DATE=11052007

WaPo's Eugene Robinson's commentary here:
http://www.azstarnet.com/opinion/209570

The CEO of a privately-held broadband company called on the federal government to end low-interest loans for broadband to rural phone companies that face competition from cable companies and other service providers using alternative technologies.

Amy Tykeson, head of BendBroadband, a cable company serving rural Oregon, told a House subcommittee hearing yesterday the federal government had to stop providing loans to broadband providers interested in offering service to consumers who already have access to high-speed Internet access.

Here’s how Multichannel News reported the story:

Tykeson, echoing concerns raised by cable officials for several years, took aim at a Rural Utilities Service (RUS) program, claiming that funds intended for areas truly unserved were flowing to companies that compete with cable competitors. The RUS is an arm of the U.S. Department of Agriculture.

“Subsidizing competition is a waste of scarce RUS loans funds that should instead be targeted to areas where a market-based solution has not developed,” Tykeson said, noting that cable’s broadband lines pass about 94 million U.S. homes.

Tykeson, whose Oregon-based company is privately held, appeared before the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies.

The RUS, Tykeson said, made a loan to a company within BendBroadband’s own 60,000-home service area, which is also served by two other broadband providers, Qwest and wireless provider Clearwire.

“Notwithstanding this information, the RUS granted the application for a loan to offer subsidized service there,” she said.

I'm a big map collector, so something like this is right up my alley.

The World Freedom Atlas has varying measures of economic, personal and political freedom all displayed on a worldwide and interactive map. Very cool. It's the freedom version of Gapminder, which is pretty cool in itself.

Check it out.