Tag Archives: Congress Watch

The FCC’s net neutrality proposal: A shameful sham that sells out consumers

By Tom Wheeler – Fighting against monopolization in the internet era…meet ideologically-driven “do what the big guys want.”

A fair and open internet is the backbone of the digital economy. The FCC has sold out to the wishes of the companies it is supposed to regulate over the consumers it is supposed to protect.

For more than a decade, previous Republican and Democratic FCCs have tried to bring fairness and balance to the delivery of the internet to consumers. Every one of those efforts has been opposed by the corporations that consumers rely on to deliver the internet. Now the Trump FCC has simply cut to the chase, there is no need for the big companies to sue—they’ll just be given everything they want.

The assertion that the FCC proposal is somehow pro-consumer is a sham that doesn’t pass the straight-face test. It is impossible to find anything pro-consumer in the expert telecommunications agency walking away from its responsibilities in favor of an agency with no telecommunications expertise or authority. more>

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Required reading to understand the tax policy fight

By Vanessa Williamson – First lesson: the top-heavy tax cuts on the policy agenda today are not the natural outcome of a widely held antipathy to taxation, or an admiration for wealthy people that is sometimes ascribed to the American public. Americans are more willing to pay taxes and are more concerned about economic inequality, than you might think.

Martin’s key insight is explaining how wealthy people managed to build broader constituencies for their tax cuts: by channeling frustration about other aspects of the tax code into support for policies that mostly cut rates at the very top.

So, what’s the takeaway? We can’t explain the tax reform on the table in Washington by looking at the preferences of most Americans. Instead, the impetus for top-heavy tax cuts comes from organized interests working strategically to disguise the regressive effects of the policies they have proposed, or by connecting their big-business-friendly policies with cultural and ethnic resentments that continue to motivate large swathes of the voting public. more>

Do Corporations Make Any Sense?

BOOK REVIEW

The Vanishing American Corporation: Navigating the Hazards of a New Economy, Author: Gerald F. Davis.

By Rick Paulas – On the last day of the year of 1600, the East India Company was created. It was the precursor to the modern corporation, an organizational idea that’s lasted more than 400 years. But will the corporation continue to be dominant forever?

To Gerald F. Davis, signs of the corporation’s futility began in the 1980s and ’90s, as the rise of financialization—in which financial services account for a higher share of national income than other sectors—transformed the American economy.

The transformation came through a dismantling of New Deal-era protections, including decades of court decisions that chipped away at the Glass-Steagall Act, the 1933 legislation separating investment and commercial banking. As Suzanne Burger, a political science professor at the Massachusetts Institute of Technology, put it in a 2014 piece: “[S]ince the 1980s, financial market pressures have transformed U.S. corporate structure itself.” Instead of manufacturing or services, Wall Street became the economy’s driving force.

Davis says the future of the economy can go in two directions, depending on how quickly and powerfully masses organize. The first is the nightmare scenario: A few chief executive officers from a handful of companies (Davis suggests technology giants Google, Facebook, and Amazon as the likely trio) wielding unchecked power.

“If Mark Zuckerberg wanted to sell Facebook to Vladimir Putin for one trillion dollars, he has the power to do so,” Davis says. “It’s a concentration of control we haven’t seen in American history before.” more>

Updates from Chicago Booth

How pricing strategy can affect a company’s indebtedness
By Alex Verkhivker – Highly indebted companies became a talking point in the 2007–10 financial crisis. How did so many companies—including corporate giants such as General Motors, which had an accounting leverage of more than 34 times and debt of more than $172 billion before its December 2008 bailout—take on so much risk?

One explanation could have to do with pricing. Companies that rarely change the price of their products or services are more likely to find themselves short of cash than those that are more flexible on pricing.

Consequently, when credit is flowing freely, the former are more likely to borrow, according to research by University of Maryland’s Francesco D’Acunto, University of California at Berkeley’s Ryan Liu, University of British Columbia’s Carolin Pflueger, and Chicago Booth’s Michael Weber.

When credit is tight, companies with flexible prices have higher debt levels—but when more credit is available, companies with inflexible prices lever up. That’s because companies with the stickiest prices are the most financially constrained. So when offered credit, they take on more debt. more>

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How Americans became vulnerable to Russian disinformation

By Kent Harrington – Last week, Congress unveiled legislation that http://blogs.strategygroup.net/wp2/economy/?p=63300&preview=truewould force Facebook, Google, and other social media giants to disclose who buys online advertising, thereby closing a loophole that Russia exploited during the election.

Strip away the technobabble about better algorithms, more transparency, and commitment to truth, and Silicon Valley’s “fixes” dodge a simple fact: its technologies are not designed to sort truth from falsehoods, check accuracy, or correct mistakes. Just the opposite: they are built to maximize clicks, shares, and “likes.”

Despite pushing to displace traditional news outlets as the world’s information platforms, social media’s moguls appear content to ignore journalism’s fundamental values, processes, and goals. It is this irresponsibility that co-sponsors of the recent advertising transparency bill are seeking to address.

Still, Russia’s success in targeting American voters with bogus news could not have succeeded were it not for the second problem: a poorly educated electorate susceptible to manipulation. The erosion of civics education in schools, the shuttering of local newspapers – and the consequent decline in the public’s understanding of issues and the political process – conspire to create fertile ground for the sowing of disinformation. more>

Broadband gaps impact every member of Congress

By Adie Tomer – Digital connectivity is the glue of the modern American economy. From rural farmers to city business leaders, every industry relies on broadband to track markets, connect with customers, and sell their products. The American household is equally reliant on broadband, whether its kids bringing home their digital classrooms, adults telecommuting to their jobs, or whole families streaming video content to their televisions. And governments at all levels can use digital platforms to improve service delivery and reduce costs.

Yet for all of broadband’s economic benefits, the country continues to face a significant digital divide at the household level.

Without seamless digital connectivity, many households are at-risk of falling further behind in the country’s advanced economy.

While Congress considers policies related to expanding broadband availability, there is little to no legislative activity related to broadband adoption. more>

The Disastrous Trump Tax Plan

By John T. Harvey – Designing a tax plan that will actually increase spending and therefore employment is really not all that difficult. All you have to do is meet two criteria:

1. The tax cuts must not be offset by spending cuts (or tax increases elsewhere).

2. The tax cuts must increase the incomes of those who will actually spend the money.

That’s it, that’s the whole story. And these give very clear guidelines regarding what to do in practice. For example, if you are cutting taxes, do it for the poorest people in the economy. Any increase in their income is guaranteed to create jobs because they will absolutely spend it.

“The rich donors who are part of the base would come out quite nicely from this proposal.”

Who in God’s name thinks this is a good idea? This does absolutely nothing to address the long-term problems from which the economy is suffering and very likely makes them worse.

The reasoning, we are told, is that when we cut corporate taxes they’ll invest and hire more workers. That represents a misunderstanding of the economic factors at work. more>

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Economic Growth Is No Longer Enough

By Manuel Muñiz – Macroeconomic data from the world’s advanced economies can be mystifying when viewed in isolation. But when analyzed collectively, the data reveal a troubling truth: without changes to how wealth is generated and distributed, the political convulsions that have swept the world in recent years will only intensify.

Most of the wealth created since the 2008 crisis has gone to the rich.

Employment, too, seems to be performing in anomalous ways. For example, most employment growth has been in high-skill or low-skill occupations, hollowing out the middle. Many of the people who once comprised the Western middle class are now part of the middle-lower and lower classes, and live more economically precarious lives than ever before.

The fundamental consequence of this is that wages are no longer performing the central re-distributive role they have played for decades. Simply put, gains in capital productivity are not being translated into higher median incomes, a breach of the social contract on which liberal economies rest.

The debate about solutions has only just begun. Reducing economic inequality will require reforms of education and taxation, with the tax burden shifting decisively from labor to capital. more>

Using “public interest algorithms” to tackle the problems created by social media algorithms

By Tom Wheeler – Technology and capitalism have combined to deliver us to a decidedly undemocratic outcome. The internet was once heralded as the great democratizing tool. That vision was smashed by the algorithms of the social media platforms. By fracturing society into small groups, the internet has become the antithesis of the community necessary for democratic processes to succeed.

This is bigger than the current discussion of political advertising rules for the internet. The questionable ads and postings are the result of the problem, not the cause of it. That problem is how the software algorithms that determine what you see on social media prioritize revenue over veracity.

In social media parlance, identifying users who like similar content is described as assembling a community. In reality, these groups are the un-community. Algorithms deliver only what they want to see, creating silos of prejudices and preferences that tear at the collective fabric required for a representative democracy. As the Russians demonstrated, organizing Americans into self-reinforcing echo chambers is ripe for exploitation.

Today, public interest groups of all political stripes monitor the mainstream media. With a public interest API they could also built public interest algorithms to accomplish the same for social media. To date, algorithms have been problem-creators.

It’s time for social media open APIs to enable problem-solving through public interest algorithms. more>

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How Technological Advancements Will Shape the Future of the Battlefield

BOOK REVIEW

Future War, Author: Robert H. Latiff.

By Robert H. Latiff – Battles of the future will not necessarily be fought on battlefields as we know them, but in cities, in ungoverned areas, in cyberspace, and in the realm of the electromagnetic spectrum. Even outer space will be a contested environment.

On the future battlefield, soldiers will look, and be, different. Technology will be employed, first externally, to give the soldier greater protection, greater situational awareness, and greater stamina. Some military pilots are already being given legally approved stimulants to increase their alertness during lengthy air missions. Function-enhancing drugs will become more common. Soldiers’ bodies will be modified for greater efficiency. They are likely to be artificially enhanced with exoskeletons to improve strength, drugs to improve cognition or alter memory, and surgery to implant microelectronic neurological aids.

Battles will not be well defined temporally. They will be spread out in space and time, and the adversary will rarely be readily recognizable. Battles may be subtle and take place over long periods, or they may be instantaneous and devastating.

We will fight over a larger, more diffuse, battlefield, in small units of highly specialized soldiers. In some cases, the soldiers may never have to leave their base to unleash destruction on an enemy. more>