The Picture of An Old Lady

“Do you see my babies?” she asked.

It happened again: I visited with another nonagenarian, and found almost the exact same circumstances as last time, this time without the added agony of trying to sell a house in a depressed housing market. Otherwise, to the question: “And where are your children, that they may take care of you?” the answer came, “I have not heard from them in 46 years.” Loneliness again.

The last time I told the story, I told it in the form of a parable, trying to lighten the burden; this time, not. It’s a plea: for the love of everything virtuous, either have children yourself, or failing that, buy them.

We do not criticize, but we are instructed: the Depression era produced a class of people (not the whole generation, but a subset of people within it) who knew only work and saving. The work took them away from child-rearing, which is shorthand for civilization-making, which includes care for the elderly. The government, in their childhood, promised to take care of them, just so long as they promised to work hard and save money. It was a covenant, a treaty between two unequal parties, the one everlasting and potent, the other quite mortal and limited in power. And they did: they worked hard and saved money. And the government did: it took care of them with financial payouts.

I think they are surprised that they are lonely. The stories are endless narrations of work, work, and savings, followed by a nod of assent, as though some hidden authority had just shouted in excited affirmation, “Good work, Maude!” Present company excluded, this present evil generation is hence summarily judged. The doctors know nothing, the politicians know nothing, cleaning ladies know nothing, pastors know nothing, social workers know nothing, drivers know nothing. I cannot know for sure, but I think this round of summary condemnation is fear talking, some sort of stored-away childhood doubt percolating forth, namely (if I may be so bold to put a name to it) the government didn’t deliver what it promised.

What did it promise? Externally it promised financial subsidy. What were the internals? What did the vassals hear? Did they hear that the government would love them? And what was the price for government love?

There is an economics lesson, here, and I think last time I was too clever by half, disguising it too well in the local economy of Lockport, New York. A family structure is an economic structure: there are numerous exchanges occurring constantly, mostly in the emotional world, but also in the material world. The fewer the traders (no children or friends), or the less the trading (make Jack a dull boy), the less economic activity there can be, emotional and material. When the government or any other sprawling, everlasting institutional entity (e.g., the manufacturing plant) and a vassal make a covenant with each other to fulfill the economic structure of a family, then an entire marketplace has been eradicated, not the most insignificant quarter of which is love for neighbor.

Who is your first neighbor? The person you wake up nearest. Who are your alpha neighbors, those who are immediately next to nearest and dearest? Beta? Gamma? Do you have a neighbor network within which to exchange love and all its accoutrements?

“Do you see my babies?” she asked, pointing to two framed 8 x 10 portraits. They were lovely babies, smiling, adorable; nieces, I assumed. “I cut those out of magazines,” she continued. “They were so adorable, I couldn’t resist. Who knows? I could be a grandmother five times over, and a great-grandmother, but I’ll probably never know.” And she became silent, listening for that hidden authority to shout affirmation.

IMG_3274

It’s Raining Men. Hallelujah. Hosanna in the Highest.

Happily, my dear chum Adam finds much of my prattling about sacred spaces useful, if not exactly on-point. His criticism is an excellent one on the semantics of the thing. When I went a-rummaging through my lexicographical rucksack for a word that adequately covers what I wanted to describe, the nearest thing I could find was “sacred.” The trouble with this choice is that the antonym of “sacred” is “profane”, and the associated mood affiliation problem plagues the word choice.

Look people, no one goes to a crack den to preach the gospel. The errant faithful do go to a crack den to commune. Specialized vice is just as targeted, just as focused as specialized virtue.

So I agree with Adam that “sacred” is a lousy choice of words. What I want is a word that identifies a sense of separation from the mundane. Imagine Maslow’s Pyramid standing before a dark pond. The peak of the pyramid, bearing the inscription “Self-Actualization” is inverted in the reflection, perhaps the hieroglyphs scan as “Self-Abasement”, a corrupted ideal, but an ideal nonetheless. Instead of a rosary, the neck of the subject is encircled in an obedience collar; instead of a cassock, a gimp suit. It ain’t sacred, but neither is it profane. Or maybe it’s profane+, a negative one instead of a zero, so to speak.

As for Adam’s other criticisms, I agree that the existence of a physical location is irrelevant, but the OP was an effort to tease out why it is that strip clubs have unorthodox employment relationships with dancers. The club property itself is somewhat incidental to the value created between the performers and their clients, but time and tradition have appended rights of residual claimancy to land and the property thereon. In this one case (at least) these rights fail to properly reflect either the commercial or the “sacred” (and I’ll keep using this word until a better one occurs to me) transaction at hand.

And for this passage:

When parishioners offer their money to the sacred, they aren’t paying for a service rendered. They are providing support for something that is a crucial part of who they are. This can often be masked by actual services rendered here and there—and the sacred brand of which Sam speaks is inextricably linked with profane objects imbued with its wonder—computers, laptops, media players, smartphones, tablets. But the cult quality that Apple has managed to cash in on is derived from a body of faithful for whom the presence of the shining logo in their lives is a small but important piece of who they are. Apple’s success since the iPhone has actually shrunk the importance of this group—but they’re still out there. Believe me.

Forgive me, dear readers, but I had intended this to be my exact point the whole time. The peak of the pyramid, as well as its dark reflection, yield special value to both buyer and seller that can’t be easily explained by prosaic market valuation techniques alone. That’s why they’re rents and not mere revenue. There’s something intrinsically special about the brand affiliation, about the chemical pleasure, about the joy of transcendence that you don’t obtain with cheap imitators or hollow posturing. You don’t get drunk on the communion wine, and methadone is nothing more than a mock turtle dragon. There are rents in the depths of those dark waters, and that’s exactly why we warn our kids to stay away from the edge.

The US Can Do Better

My favourite country in the world is the United States of America, and it’s not just because of the cheap liquor and whores. It’s because the USofA creates uncompensated benefits for the rest of the world. And on top of that, she is always trying to do better, inspite of her best efforts.

So while reading David’s latest tour de force at my expense, I couldn’t help but feel he was dead right. Right that the US political landscape is a knot of non-cognitivism. Right that education, poverty and basic infrastructure could probably use some attention. Right that corruption and rent seeking at the highest levels is tolerated as if it were an intrinsic bug in democracy. But David is quick to remind me of the private sector. Yes, the US has an inadequate collective action mechanism, but don’t sweat it. It controls a mere 35% of a $17.5 trillion economy. And there’s a whole other 65!

The irony is that despite all that failure to collectively act, the US is one of the world’s greatest providers of the most basic public good of all: innovation. Innovation makes the world permanently richer through breakthroughs that all countries are free to copy. And there, Canada cannot compete. We may stand on guard for our affordable and high quality health insurance, but we’re also a small, exporting country with dismal R&D rates. Contrast this to the private capital and survival instinct that torrents through US medical institutions, and you’ll be left with the impression that Canada and the world at large enjoy a free-ride.

Yet the resilience of the US private sector is no reason to neglect the sorry shape of its public sector. On the contrary, it’s all the more reason to be dissatisfied. Everytime $4 billion gets spent on a handful of competitive senate races it’s a Human Genome Project that wasn’t. Every time a social program is sabotaged while a free market solution is outlawed, another cohort slips into the limbo of a safety net designed by taking the average of two incompatible philosophies. And as the world’s most productive economy, the US is not only shooting itself in the foot — it’s using the world’s most expensive bullets.

As David alludes to, the US federal government was not designed to be good at stuff. This leads some to conclude that the path of least resistance is a libertopia fait accompli to minimize loses. But times have changed. Wagner’s Law means a wealthy public demands its goods, which in turn means that so as long as the US is democratic it endogenizes a role for good governance. The Founders never anticipated the New Deal, much less the Affordable Care Act. We can only thank the grace of God that they checked the Bill of Rights for typos.

I also recognize that the US is not going to hold a constitutional convention anytime soon, much less apologize for sedition and crawl back to the crown. It’s just not in the dominoes. But it doesn’t need to be. The issue isn’t the vital need for a rationally constructed privy council. The issue is that the micromotives and macrobehavior of the US political economy are out of whack.

Social criticism is based on the premise that we can and should do better. And to that end, comparative institutional analysis is indispensable.

Sacred Identity, Wicked Arbitrage

Last week, our own Sam Wilson suggested that strip clubs might be sacred spaces, Apple stores might be like churches, patriotism might also share this quality, and wrapped up by surveying some economic and political implications of it all. To summarize: politicians are like Apple, Apple is a religion, religions are like strip clubs. Let it never be said that we shy from controversy here at Sweet Talk.

Sam focuses on the single-use nature of sacred spaces, and how this generates economic rents. The clerisy are the residual claimants on those rents, and the parishioners are the source of income. Over the screams of “PROFANING ECONOMIC DEVILS” that are provoked from such sentences, you have to admit there’s something there (though not everything). The resources which have sustained the Catholic church for centuries did not come from nowhere. Though the church often engaged in commerce, that was not, by and large, how it supported itself—or more accurately, how it was supported.

Still, I’m not sure I agree with Sam that it’s the single-use aspect that has much to do with it, nor that it needs to be single-use—or that there being a physical location is all that important.

What I’m driving at is hinted to by our friend David:

Participation in a ritual is a scary thing because the boundaries between individual and community become less-defined. Those lines which are drawn with a black permanent marker suddenly become gray chalk, smudged, imperceptible. Perhaps, as you look around while you are participating in a ritual, the boundaries are coextensive, and the self is absorbed into the community. Some days that is a welcome moment.

Daniel C. Russell speaks of virtue as being “embodied.” He draws on the literature on bereavement which contains endless examples of people speaking of the loss of a loved one as feeling like losing a limb—and, amazingly, amputees who make the reverse analogy. Real love, virtuous love, is a love so complete that you make your loved ones a part of your life, a part of who you are.

David’s ritual that melts us into the community does a great deal of work of internalizing not only the values of that community, but in a way, the community itself—it becomes part of who you are. Though given the relative sizes involved, and the fact that a community can persist long after today’s members are dead, perhaps David’s got the right of it in saying that it is we who are internalized by it.

Alasdair MacIntyre speaks of communities of “uncalculated giving.” He does not literally mean that no calculation is involved—people have to be prudent and make sure they don’t bankrupt themselves and leave everyone dependent on them in the lurch. He means that the extent of the possible obligation to one another is uncalculated. Certain relationships are sacred and we will do whatever we can to help the people involved, giving as much as we can and for as long as is necessary. We do so because of a debt to those who have supported us, the extent of which is not quantifiable. In MacIntyre’s vision there is a certain symmetry between parents who have a perfectly healthy, well behaved, and smart kid who grows up to be successful, and parents who have a kid who is crippled or incapacitated in some way that requires a great deal more direct care and time. The symmetry comes from the fact that we know the former would be called upon to perform the duties of the latter if the circumstances were the same, and so the child of the former has a debt of equal “weight”—or more accurately, equally unweighed—as the latter child. The latter parents are nevertheless honored, held up as paragons of parental duty and virtue, but the symmetry is there.

What does all of this have to do with Sam?

I think he is onto something, but I’m just suggesting that there’s more. And not just more in the sense of ethical implications, but more from the point of view of the economist. There’s far more going on than single-use sacred spaces.

When parishioners offer their money to the sacred, they aren’t paying for a service rendered. They are providing support for something that is a crucial part of who they are. This can often be masked by actual services rendered here and there—and the sacred brand of which Sam speaks is inextricably linked with profane objects imbued with its wonder—computers, laptops, media players, smartphones, tablets. But the cult quality that Apple has managed to cash in on is derived from a body of faithful for whom the presence of the shining logo in their lives is a small but important piece of who they are. Apple’s success since the iPhone has actually shrunk the importance of this group—but they’re still out there. Believe me.

This is also the quality that helps one straddle, perhaps even cross the threshold from customer to patron. It is the basis of Kevin Kelly’s theory of 1,000 true fans, a phenomena I have seen in the wild and participated in myself.

At the end of all this, I have to say that I think that Sam’s initial example is actually misplaced. It’s not because I’m a prude who thinks strip clubs are evil, but because it seems clear to me that the sacred is something that people want to shout from the rooftops about, while strip clubs are generally a down-low sort of affair. The rent that such spaces command may be the arbitrage value of going where angels dare not tread; the wages of sin if you will. Being plainer about it, the very fact that people find stripping distasteful, and want to be discrete about being a customer to such establishments, shrinks the competition in a similar way that the intrinsic desire to be an actor creates an surplus of talent in that industry.

I see this in my own industry. Those sacred brands of which Sam speaks will never, ever spend a dime advertising on a porn website, despite the many, many—many—eyeballs that can be reached there. Bountiful fields of eyeballs, left unbid on by the deepest pockets. As a result, those who are content to advertise there pay bargain basement rates by comparison.

The sacred and the profane mix, are internalized and segregated, in complex and interesting ways, with implications for philosophers, theologians, and economists alike.

In Praise of Parliament

I have had the great pleasure of working in Canada for eleven years now, commuting from my home in idyllic Tonawanda, New York, which lies between Buffalo and Niagara Falls, to St. Catharines, which is just west of Niagara Falls, Ontario. I work for an international charitable organization (which prudence forbids I name for their sake), so I have the opportunity to see some of the social welfare infrastructure on both sides. I commute by way of the Rainbow Bridge, which takes me past the sublime Niagara Falls.

When I pass over the border into Canada late on Friday mornings, I marvel at the sight of thousands of residents of Toronto making their way into the USA. For the longest time, I thought they must be coming for tourist reasons, to enjoy some of the natural wonders of Western New York, which are many and various, and are not developed at all, like Niagara Falls, Ontario, which has become, essentially, a miles-long gigantic menagerie of gentlemen’s clubs and hotels attached to the gaudy casino overlooking the Falls. But I was wrong, and I feel pity.

My good friend Sam Hammond is a Canadian, of The True North, strong and free, and the Canada he purports to live in is a nearly perfect Parliamentary System, where society is laid out according to a nearly strict Rationalist order, with restrictions on free speech to limit pesky questions from the fringe right or left, with restrictions on religion to limit any obstacles to the advance of benign technological progressivism, with restrictions on the press to limit knowledge of the machinations of government, which are almost perfectly pure, where society is forcibly compassionate, with a generous welfare system which distributes vast wealth to the underprivileged, to the losers of life’s lottery, with a system of free healthcare, accessible to all–it must be infuriating to have to line up at the border to enter the USA, waiting ninety minutes, every Friday during a ten-hour window, not including the drive time from Toronto, to dine affordably, to shop for groceries, to buy cheap booze, to acquire household amenities, and to get basic medical attention at our innumerable private health facilities, which vary between religious and for-profit (the horror!). The return trip is just as frustrating, finding that comfortable gray place between outright lying to the good people of your own Canadian Border Patrol about how much you’ve acquired, and merely understating the declared goods wrapped in blankets and towels beneath your feet and in the trunk. You’re just trying to have what’s best for your family, eh?

If I were in that queue, I’d be infuriated: I mean, America is the Forrest Gump of the nations, right? And to be quite frank, Niagara Falls, USA is a sphincter of Western New York. It literally smells bad, the result of some manufacturing process that exploits the Niagara River as a source for energy; the roads are worse, after a century of mafia-controlled graft; the routes are inscrutable, thanks to New York City’s own Robert Moses (Western New York’s Haman). Buffalo is revitalizing, but it fell a long way since its heyday, struggling against New York State’s suffocating politics. And Canadians know it; they know that Niagara Falls, USA is our Leah to America’s Rachel, and they love her. They’ve also seen the pictures of San Antonio, Dallas, Houston, Austin, Charlotte, Nashville, Jacksonville, Disneyland, and other growing cities of Texas and the Southeast. They know about the great medical institutions of St. Louis, Minneapolis, Chicago, and Boston, the cultural innovations of San Francisco, Madison, and Los Angeles.

And New York City: would those of you dwellers of Manhattan please start wearing colors so that Torontoans can stop wearing black?

Seriously, how did such stupid people–lookit: all those religious people in the Midwest and the Southeast–how? Just how? How did such stupid, superstitious, unthinking, uneducated, illiterate, gun-toting, Puritanical, and (miraculously) boorish people luck into such prosperity? Such advancement? Why do they persist in this quaint idea of their Founding Fathers, who, for some mysterious reason, eschewed the greatness of a Parliamentary System? The messiness of their elections, their intolerable populist shrieking, their government shut-downs without the friendly crafty plots of a Governor General, their tradition-less 300-year old culture (except murder; they’re good at murder), and their lack of stolen jewels for the monarch–how is it that they are the wealthiest, happiest people on the planet, so much so that droves of people pour in through their borders, enough to create an immigration crisis? Luck, or theft, or something, I dunno.

The Presidential System sucks.

Quack!

canadianflag

Unbundle Omnibus

My esteemed co-blogger forwards the proposition that the institutional bottleneck in ISP is right-of-way: (regulated) legacy utilities collude with local authorities to protect access rents, and that’s the only way Comcast can get away with extorting Netflix.

This is a manifestly plausible claim. As Mr. Blackstone notes in the Updates section, unbundling has been a boon to consumers in the places it’s been implemented. The organizational design that was optimal in the infancy of many industries, when regulations were first adopted is unlikely to stand the test of time. Regulatory lock-in tends to ossify the organization of firms, as the tale told by American heavy manufacturing can attest.

Elsewhere, I’ve suggested that this phenomenon has started to catch up even with relatively stable utility providers. Smart grid tech and the sharing economy of power generation is confronted with a utility Janus that on the one hand boasts decades of practical experience, but with the other hand keeps a death grip on the political rents it has extracted and will be loath to release.

AB’s proposal just so happens to fit mine pretty well. Consumers benefit from load sharing, particularly as the start-up costs of rooftop solar drop. But the marginal value pricing of the grid itself could be difficult for consumers to easily grasp. Right now, I pay my “electricity” bill to the firm responsible for both power generation and transmission. If I suddenly began to receive a separate bill for the coal I’m burning and for the wires carrying the current I consume, I might chafe a little. However, recall that here at Sweet Talk, we cherish the power of rhetoric, which implies that we’re open to changing the rhetoric of power. I’d probably be more alert to my marginal consumption if I had one check going to the relatively fixed costs of the entire right of way: power distribution, communications, gas, water, whatever; and other checks going piecemeal to the good people who pull natural gas from the ground, churn windmills, maintain protocols, whatever. Recall the purpose of price: to send signals back and forth between producers and consumers. A separated right-of-way goes a long way towards removing the noise from that signal.

Also, from a political economy perspective, we know that one way to overcome a transitional gains trap is to just rip the bandage off all at once. If you’re going to break local right-of-way monopolies, doing it all at once will block incumbents from wasting resources trying to protect their fiefdoms.

Net neutrality? Competition? Free enterprise? All of the above!

UPDATES: There’s been good discussion on Twitter regarding this post. I have added updates at the end.

Introduction:

Net Neutrality is great, but there’s an achievable policy that’s even better. Get the solution that provides consumer protection AND entrepreneurial innovation AND good Netflix download rates.

Main:

What’s going on?

The news of the day is that President Obama has announced that the FCC should reclassify Internet service providers (like Comcast, Time Warner, and Google Fiber) from “information services” to “common carriers”, essentially transforming them into something more like a utility (like your local Gas & Electric Company) than the competitive business you know today. The FCC is an independent agency, so Obama’s announcement isn’t policy, but of course the President’s words have weight and meaning.

The Problems

Of course, some readers are already scoffing. “Competitive business? What competition? Most local ISP markets are one-provider affairs. There’s no competition from the user’s perspective.” And that’s of course correct. I, myself, have the “choice” of Comcast or paying the same amount of money to AT&T for 1/5th the speed. Some choice, right? Real competition, eh? Hardly.

And precisely because many Americans are in the same situation as I, the suggestion that the government will regulate these carriers for basic fairness and non-discrimination of service has been met with a fair amount of good cheer. And understandably so! The recent dust-up between Netflix and the ISP companies is fresh in everyone’s mind, and it seems patently unfair that services selected by the consumer (Netflix) should be choked off by the middle-man in order to extract additional profit for said middle-man, when the consumer has already paid for both the service (Netflix) and the freight (the cable bill). From the consumer’s point of view, it’s as if the US Postal Service slowed down delivery of Amazon’s boxes (despite postage already being paid) until an additional payment was made by Amazon. It’s no better than banditry, or extortion. Bad Comcast! Naughty!

Obama’s announcement was not met with universal acclaim however. Without going full retard, there’s concern that innovation will slow down, or that once a local ISP becomes a regulated utility company, they’ll become even more in bed with the government spying apparatus than the phone companies are. And I think both fears are well founded.

Regarding innovation, let’s remember that AT&T was a regulated utility for decades and while this resulted in the whole nation getting phone services (yay!), it also produced high prices and stagnant feature development for decades. (Boo!) Many of you reading this were probably born (or at least, making the majority of your phone calls) in the post-Ma Bell Era, and so I’ll remind you that long distance calling used to be crazy-expensive, and features like voicemail and three-way calling weren’t rolled out until the local phone loop was unbundled and local phone companies had to compete for the consumer’s business.

Competition and innovation is good. Having “one” Internet utility could produce a lack of discrimination in the present (yay!), but it could also produce a lack of innovation and feature development in the long term (boo!). If this latter problem could be prevented, we should prevent it, right?

And as for the concern that a regulated company could become a point of control for the FBI or the NSA to spy on all Americans, I don’t think anyone reading this should take this threat lightly. We all live now in the post-Snowden Era, and we see the headlines about how the FBI wants a back door into every phone and mobile device. The government does not prioritize our privacy. If we can arrange our affairs such that all Americans have a choice of ISP, and they can choose the one that respects our privacy the most (within the law, but not an inch more), we should do that, right?

And competition between ISPs would have one further salutary effect, which brings us back to Netflix. If the average American had several ISPs to choose from, and switching between them was relatively painless, do you think those ISPs would intentionally degrade service in order to extract payments from Netflix or whoever? Not likely! Because they’d know that if they did this their customers would all just leave for the ISP that wasn’t doing it. Market competition, when combined with clear consumer information and meaningful power to switch and choose, is both a source of discipline against douchebag behaviour and an incentive to innovate better service and greater features over time.

Natural Monopoly 

But can there actually be competition between ISPs, or is internet service a natural monopoly? It almost seems like “common sense” that if someone is running a pipe to your house (whether that pipe is for cars (roads are sort of like a pipe), natural gas, water, sewage, telephone service, or electricity, then it makes more sense to make that one pipe be a common carrier than to pay for the cost of two pipes and make them compete with each other. The basic logic of natural monopolies is that the “one pipe as common carrier” route is always more efficient.

However, let’s recall, one of those things I just mentioned (telephones) was successfully made competitive at one point. And it’s possible to make internet service competitive as well without paying a significant penalty. The logic is as follows-

  • Most of the cost of internet service deployment isn’t the wire – it’s securing the rights of way for poles and underground pipes.
  • Wires and optical fiber are small. They’re not like a road or sewer where you can only fit one between houses.
  • Wires and optical fibers are relatively cheap. You can buy Cat6 cable by the spool for the cost of one month’s cable bill.
  • TCP/IP traffic (the computer protocol used to route internet traffic) can route around obstacles much faster and cheaply than water, roads, gas, or sewer. This means internet networks don’t need to be as efficiently laid out as a water main; they can wander if necessary.

Taken together, the above points lead to a possible solution where competition between internet service providers provide the consumer protections we all crave, while also keeping prices low and innovation high.

The Local Utility Problem

When Google Fiber enters (or considers entering) a market they provide a checklist to the city that wants their service. One of the three main points they emphasize is “access to infrastructure”. Putting up poles and buying rights of way is expensive, and it’s also unnecessary between the local electric and gas companies have already done this. If Google Fiber can run its little cable over those poles, then for the reasons I laid out in the previous section deployment can happen quickly and cheaply, and residents gain access to 1 Gb/s internet speeds for less than the price of a 50 Mb/s cable modem connection.

And that’s a key part of what’s holding back American internet deployment. Everyone knows Comcast conspires to keep prices high (and they do, and that’s crony capitalism at its worst), but what few Americans realize is that their local utility company is part of that conspiracy. The local utility companies, rather than acting as public services, act as profit maximisers, and they enter into exclusive contracts with Comcast, Time Warner, or [insert your local ISP monopoly here] in order to get a cut of the monopoly profits said ISP extracts from the end users. Your local ISP is no better than a police department that shortens yellow lights to increase ticket revenue, or engages in civil asset forefeiture. They’re not looking out for the public good – they’re just in it for the money and taking what they can get. They are betraying your public trust.

The Proposal

My proposal is fairly simple, and relies on a mix of civic organization and free market entrepreneurialism. The goal is to break the current monopoly on ISP service held by local cable companies in most of America, force the local utility companies to act in the public’s best interest, and bring some competition to the ISP business to keep prices low and innovation high.

Here it is:

Require that utility companies lease space on their poles to at least four ISPs, at cost.

(call it Pole Neutrality, or Open Leasing)

Wires are small and cheap. You can run a number of them on a utility pole. There’s no reason that a utility company should be allowed to offer “exclusive” rights to its poles to any internet service provider, nor, as a public utility, should they be acting as a profit maximiser. Their focus should be on maximising public access to a competitive market for internet service.

This proposal will all but guarantee ISP companies will not engage in the sort of strong-arm extortion that Comcast has forced on Netflix, when their customers can drop them for a real competitor at a moment’s notice. And if the ISP is that stupid, switching to a real competitor is easy.

This proposal will make sure that the ISP companies will not block access to popular websites or services (like VoIP calling), or charge extra for them, for the same reason as the above.

This proposal will ensure that competition between the four ISPs (or more, if the poles can handle it) will keep prices low and new features or speeds under regular development in order to attract and keep customers.

In Summary:

Consumer protection, Natural monopoly low costs, and entrepreneurial innovation, all in one short, simple legislative package.

Call your Federal and State representatives today.


UPDATES: I have received the following comments on Twitter, and would like to respond to some of them in longer form than Twitter allows.

My use of “utility poles” was not intended to imply this policy wouldn’t be helpful where methods other than “poles” are used. I meant it generically. Obviously where the wires are run through an underground conduit or some other means the same logic can apply. Cables are small. Anything you can send a technician into can hold many wires.

I only said Cat6 because that was the type of networking cable I am familiar with. I’m not a network engineer, and I don’t mean to gloss over the difficulty of running a network. Networking engineers certainly earn their salaries. But my general point remains, of the cost associated with deploying a wired network in suburban and urban environments, the material cost of the wire is small potatoes. It’s sort of like solar power – the cost of the solar panels is only a small fraction of the total installation costs, and those installations don’t even need to negotiate or acquire rights of way.

Indeed, this policy would probably not help rural areas too much at current network costs. But that’s true for electricity and traditional phone lines too. We achieved universal electrification and telephone service with a system of subsidies from urban to rural areas, and if we wanted to wire every farmhouse and cattle ranch with high-speed internet we would probably have to continue that practice. Either that or we just accept that rural areas will have to rely on future wireless connections, such as from a drone, balloon, aerostat, or satellite.

On the contrary, I think electricity rates would fall as the utility companies are able to spread their fixed operating costs around to more services.

Obviously there’s a great deal of variation in American infrastructure, from the old steam tunnels under New York City to the newly built exhurbs in Nevada and Arizona. Some areas will be better able to support this plan from Day 1. For the ones that cannot support it today, well, our government is currently paying (nearly) 0% interest on its bonds and the labor market is quite loose still. There’s no better time to invest in infrastructure.

Obviously any Federal funds that built out the capacity of local infrastructure to support competing data networks would have to be conditional on the local utility playing ball with the lease proposal.

What Tim is getting at here is unbundling. The best historical example of unbundling success in recent American history is no doubt the local loop unbundling that ushered in the era of competitive local phone service in the United States. This development lead to lower calling costs and feature innovation such as three-way calling. It allows for innovation at the service layer and in customer service and pricing. And it’s great. I’m a huge fan of unbundling and recommend it.

What unbundling doesn’t accomplish though is innovation at the physical network layer. The cables and switches and software that manages it all is just as important to innovate as the consumer-facing services and pricing plans. I don’t object to unbundling. In network areas where it’s not profitable to run more than one line (especially the more rural areas, as I discussed above) unbundling would be especially important for improving our network’s offerings. But I disagree with Tim that there isn’t an advantage to fostering physical network competition too. The recent innovations by Google Fiber are proof that innovation is still occurring in this market, and it would be foolish to assume this process of innovation has stopped.

Character, Moral Education, and the Good: A Response to Joseph Heath’s Dismissal of Virtue Ethics

As some of you are aware, I am currently working on a business book based on the virtue ethics framework. Knowing this, Samuel Hammond recommended his very favorite book on business ethics: Morality, Competition, and the Firm: The Market Failure Approach to Business Ethics by the formidable Joseph Heath.  From the very beginning of the book, I suspected Sam was up to something—I’m no fan of Pareto-type reasoning in moral matters, and that is basically all of what Heath had originally intended to offer on the subject of business ethics. I did greatly enjoy the chapter (which was originally this paper) in which Heath argued that we should treat agency theory (and by implication, most of game theory and economics) as a branch of critical theory. That is, we need not treat it as revealed truth, but rather as a series of thought experiments from which we can draw valuable lessons. Thus, while there is far less opportunism than agency theory would predict, the “fault lines” of major corporate scandals fall right where agency theory would lead us to believe they would be. This is a profoundly McCloskeyan perspective.

But when I got to the chapter on virtue ethics, I realized that old Sam had laid a trap for me, and I had walked right into it. Heath is ruthless in his dismissal of virtue ethics, calling it “debunked” and essentially no better than “folk psychology”. Ensnared in Sam’s machinations, I feel at this point helpless to do anything but see his diabolical scheme to completion. That is, I’d like to offer a response.

Heath offers three critiques: first, that psychology has demonstrated that character as virtue ethics understands it does not exist. Second, that sociology has demonstrated that the process of moral learning virtue ethicists embrace is at odds with reality. And finally, that the notion of the good in virtue ethics is at odds with liberal neutrality.

The Situationist Critique

Heath’s criticism from psychology is largely the same situationist argument that has been lobbed at virtue ethics for years, pursued especially by John Dorris. The long and short of this argument is that hundreds of psychological experiments have shown that people’s behavior is highly sensitive to situations. Moreover, people who seem to have a virtue in one area show little correlation with displaying the very same virtue in another area—the clearest case of this being Harshorne and May’s study demonstrating that many students who are honest in one context are frequently deceitful in another.

My response to this critique cannot compete with the many virtue ethicists who have already risen to the task. But I will draw on their responses, and defend them as decisive.

Heath argues that good behavior in an area where we have settled habits don’t “correlate in any significant way with behavior in other types of situations, even ones that are only slightly different.” This is odd, given that Harshorne and May’s finding was that there was typically a .23 correlation between any two areas where honesty was called upon, a correlation which I should think would be considered quite large in most areas of social science research. Situationists have a tendency to focus on the fact that those apparently influenced by the situation comprise a supermajority, and neglect the fact that a substantial minority do not fit this narrative. Those who invoke the Milgram experiment, for instance, forget that 45% of the participants refused to complete the experiment.

These experiments, moreover, have a few serious defects if the goal is to “debunk” the psychology behind virtue ethics. First, other than the Harshorne and May experiment, most of these were one-time affairs. The virtue ethics of Aristotle, and of people such as Julia Annas who emphasis the skill analogy of virtue, has moral learning as one of the central components. The problem with one-shot experiments is that we don’t get to see whether those involved took anything away from their own actions, once the point of the experiment was revealed. Second, in order for these experiments to have “debunked” virtue ethics, it must be supposed that virtue ethicists believe that most people have achieved complete virtue.

Aristotle certainly did not believe such a thing. Deirdre McCloskey may believe something like that, but I follow Christian Miller in thinking that most of us have merely developed a variable range of local character traits, but only a minority manage to develop global character traits—that is, most character traits for most people are domain-specific. Nevertheless, there is nothing about this which suggests that the domain cannot be expanded, and eventually become global. Moreover, this possibility is suggested by the minority of participants in psychology experiments who do exhibit good character in a number of circumstances.

Local character traits also answer another point made by Heath—that if full virtue is indeed rare, then:

Of course, it is then incumbent upon the virtue theorist not only to show that such rare individuals do exist, but that other people are able to identify them reliably (so that emulation of these persons can serve some kind of useful function in everyday morality).

But if the path to complete virtue (which most people never finish) involves developing a lot of local character traits along the way, then everyday morality would by and large involve learning from virtue as it is observed in local contexts. And indeed Annas emphasizes just this, without using the terminology of local character traits. In Intelligent Virtue, she argues that we grow to recognize courage in a variety of specific contexts—on the one hand, seeing one’s parents chase off a vicious dog, on the other, watching a video of the passive resistance tactics used during the civil rights movement. Two very different types of courage; each possible to develop in a local way. But the locality of each does not preclude the possibility of developing them into a more global character trait, with time and experience.

Following Annas, I also think that Heath significantly misunderstands what she calls the “intellectualist” aspects of Aristotelian virtue. Once it is understand that practical wisdom unifies the virtues through a combination of habituated dispositions and reasoning, Heath’s argument loses a lot of its bite. To quote Annas:

Doris gives an example where a colleague invites you to dinner when your spouse is absent, and an attempt at seduction is clearly in the offing. Only the situationist, he thinks, will have the intelligence to avoid the dinner at the outset; the person who relies on character feels ‘secure in the knowledge of [their] righteousness’ and goes along – only for it to be probable that their reliance will turn out to be misguided. Doris misses the point that the virtuous person would have an intelligent understanding of what fidelity requires, and would do just what Doris says the situationist would do. Only somebody clueless about what virtue required would rely on the force of habit alone.

“Lead me not into temptation” is a prudent, time-tested strategy for preserving one’s virtues.

This is particularly relevant to Heath’s observation that how people behave often has more to do with construal of a situation than with anything objective about the situation itself. He suggests that business ethicists could more productively focus on influencing how their students construe particular situations. But if this is possible—that is, if a professor is capable of teaching a student how to construe future situations in such a way that makes them behave ethically when they would not have—how can this be described as anything but a persistent character trait in the student? How is such a thing in any way at odds with the traditional conception of practical wisdom? Aristotle’s phronesis is quite literally the ability to read a situation—to determine how to do the right thing, in the right way, in relation to the right people.

The student-teacher relationship brings us to the second part of Heath’s criticism.

Peers Are More Persuasive Than Teachers

On the subject of moral education, Heath argues:

The concern raised by criminological studies is that virtue theory, despite being social, may be social in the wrong way. It emphasizes the “vertical” dimension of behavioral transmission, from parents or authority figures to children, instead of the “horizontal,” from one peer to another. It also assigns greater importance to interactions in the past—on the grounds that they produce habits, which sediment to form character—over interactions in the present. Criminological research suggests that this puts the emphasis on the wrong set of social interactions. When it comes to determining criminality, horizontal interactions appear to be far more important than vertical ones.

To the extent that virtue ethicists have over-emphasized the role of parents, teachers, mentors, and authority figures in general in moral development, this is an appropriate criticism. Like Protagoras, I believe that we spend all our lives teaching and being taught how to be virtuous by everyone we encounter. Our peer group is always much larger than our mentor group, and since we are of the same status it is them that we are expected to emulate (though our mentors obviously prefer us to emulate only the best of them).

Annas observed of skills in general that “Skilled dispositions are not static conditions; they are always developing, being sustained or weakened” and further argued that it is all too common for skills to “ossify and decay” when allowed to. Given the important role that peers within our skilled community play in providing points of reference for, and sometimes constructive criticism and error correction, it makes sense that our skills may languish if we fall into a peer community with low standards and a poor ethic when it comes to the maintenance of the skill in question. Practical wisdom is the skill necessary for the exercise of the virtues, and a peer group that lacks wisdom can inhibit one’s ability to hone and maintain that skill, or acquire it in the first place. Again, this is implicit in the important role that Aristotle gives to friendship and community, and explicit in MacIntyre’s own formulation.

Nevertheless I don’t think that crimonology is the best basis for drawing conclusions about people in general. Heath does, because of the conclusions about character he drew from psychology (which I contested above) and because he buys into Hannah Arendt’s theory that evil is banal, inspired by a patently false understanding of Adolf Eichmann’s character. The Milgram experiment is frequently invoked in discussions of the banality of evil, this in spite of the fact that the participants who went along with their instructions were often agitated and shell-shocked by what they were doing. They were hardly simple yes-men who were blasé to the apparent suffering they were inflicting or the possibility that they were doing something wrong.

A Neutered Liberalism

Heath’s final argument is that virtue ethics flies in the face of modern democratic liberalism because it posits a substantive notion of the good. Heath embraces Rawls’ “reasonable pluralism” and calls for neutrality “with respect to all ‘big-picture’ views” in political matters.

This is perfect rubbish. Liberalism is a notion of the good, and it must be. Otherwise, why not be neutral with respect to people’s choice to form a community of pedophiles, or a community where murder laws are not enforced? Attempts to take the very historically specific compromise under which modern liberal states emerged and justify them in terms of neutrality is a fool’s errand. John Rawls failed in the task, and so will anyone else that attempts it. The idea that a political order must be justified by some sort of consensus—real or the result of some ethical autoCAD—is itself a substantive idea of the good of politics. Equality, which Heath holds up as a cardinal liberal political virtue, is as far from neutral as it gets—and this goes for both the ideal of equality before the law and the ideal of equality in outcomes.

There are certainly pragmatic reasons to argue for greater or lesser variety in the conceptions of good that people are allowed to pursue within the bounds of the law. But we need a substantive conception in order to draw those boundaries—or else we fall into the problems found in pure narratives of federalism, where we find ourselves with no rationale for opposing slave-states and other horrors.

If You’re So Smart, Why Aren’t You a Saint?

Heath concludes the sociology section with the following:

Again, it is always possible to design a more sophisticated, cognitivist version of virtue theory, which would avoid any commitment to these discredited common-sense ideas about bad upbringing and deviant values. Yet this is an uphill battle, because the traditional Aristotelian-Thomistic theory of virtue is the primary source of these common-sense ideas in Western societies. Rather than trying to rehabilitate the old-fashioned vocabulary, there is a lot to be said for starting from scratch, with the empirical evidence, and developing a vocabulary that is better suited to accounting for what we know and understand about norm-conformity and social deviance.

In business, when you work closely enough with someone on a regular enough basis, it doesn’t take long before you can anticipate how reliable they will be in a number of respects. Will they recognize moments where they can take initiative in a valuable way, and do so? Will they do the bare minimum of what is asked of them? Will they fail to even do the bare minimum, and simply come up with an excuse after the fact?

These are observable regularities. The fact that I cannot show Heath or anyone else these regularities in perfectly sterilized and controlled experimental conditions does not eradicate their existence. Evidence is important but like McCloskey I believe that our idea of what should count as evidence is often excessively narrow. If the only perspective that is allowed to count is one that self-consciously steps outside of life as it is lived and puts people in highly contrived scenarios that they frequently have little prior context for, then human nature is going to look very unrecognizable indeed—because that is not the perspective from which most human lives are lived.

In short, I think Heath significantly overplays the extent to which the core of virtue and character have been “discredited”, though I do not think we should ignore the enormously valuable contributions of the researchers that Heath draws upon. I also reject his remark that most virtue ethicist responses to situationists make virtue ethics unfalsifiable—though I hope he doesn’t have an overly positivist idea of what falsifiability entails. Christian Miller’s response opens the door to a number of possibly fruitful avenues of experimental investigation.

As a parting thought, I’d like to suggest that “starting from scratch” in ethics has rarely worked out very well, and that perhaps the “old-fashioned vocabulary” has persisted for a reason.

The Welcome Opiate of Participation

Introduction to a series on ritual

Participation in a ritual is a scary thing because the boundaries between individual and community become less-defined. Those lines which are drawn with a black permanent marker suddenly become gray chalk, smudged, imperceptible. Perhaps, as you look around while you are participating in a ritual, the boundaries are coextensive, and the self is absorbed into the community. Some days that is a welcome moment.

Some quick distinctions to bring forward a frame:

  • Rite is a performative speech act which may have some associated ritual, but its focus is a change of status, e.g., “I now pronounce you husband and wife;” e.g., “I sentence you to be hanged by the neck till dead.”
  • Superstitious order may resemble ritual, but its focus is an individual’s invocation of good luck, e.g., a hockey player putting on his elbow pads before his shin guards; e.g., a degenerate gambler clutching his lucky rabbit’s foot while negotiating with the one-armed bandit.
  • Ritual is a set of elements arranged into an organic whole whose focus is the edification of a group of people, e.g., a family dinner at a major holiday; e.g., fantasy football draft day.

It might be more helpful to define ritual, instead of by what it might be, by what it does. Ritual creates an invitation into a closed society. For example, shotgunning beers before a college football game could be a ritual, but when you shotgun beers in the parking lot outside Bryant-Denny Stadium just before an Alabama Crimson Tide football game, you are most certainly relinquishing your self to a close and very elite society (WOOOOOOOOO! ROLL TIDE! <breath> woooooooooo <thunk>). Is it a ritual now? Yes. Likewise addressing a haggis during the celebration of Robert Burns’ birthday: you have given your identity, in part, to an enviable group, namely those who imbibe exclusively in scotch whisky, despite how the Japanese have polluted the market, and when the knife is plunged into that stuffed pig’s bladder, the identity of the society is reborn (Gah! What is tha’ stench?!?).

Now you are, at the very least, an initiate into a club/fraternity/religious order/lodge/etc. A healthy club has subsumed your self to it without actually reducing your value as an individual; you are not necessarily subverted to the club, but you cannot assert individuality without pressing against the boundaries created by the ritual. If you do not partake of a haggis, you really aren’t a member; you’re an observer, and you cannot receive the benefits of the club, which are mostly transcendental.

As an aside, “club” is transcendental to begin with, and cannot exist without ritual. If your club is equivalent to a building or a meeting room, it’s not a club; it’s a social gathering which gives no benefits, having no manifest identity. Thus, Calvin and Hobbes built a tree house, which was a meeting place, but it became a club (G.R.O.S.S.) only after a ritualistic costuming and recitation of a complex hymn to the transcendental ideals of G.R.O.S.S., which were both close and exclusionary at the same time. “Close” is the invitation, whereas “exclusionary” is the–well, not.

Moreover, the rituals evoke timelessness, at least insofar as the club can cohere. Some rituals are regrettable acts only beyond the confines of this timeless realm; i.e., shotgunning beers gives you the benefit of shouting certain slogans in the everlasting struggle against the Auburn Tigers, but the hangover manifests itself only after the fraternity has dissolved into incoherence, hopefully some time after the Tide has vanquished the Tigers. Perhaps the “a haggis” is consumed, and the club members must be dismissed to politely disgorge the wretched culinary abomination, hopefully some time after Robert Burns has been toasted. Outside timelessness, Robert Burns and his ode can be cursed; individuality can assert itself once again.

So, several components are present in ritual, wound together. When we disentangle them, we might be instructed.

Sacred Spaces

Press play before you begin reading.

As you listen to the ambient echoes of Messrs. Leeb and Fulber ca. 1994 wash over you, I want you to briefly close your eyes an imagine a sacred space. Describe it quietly to yourself. Is it austere? Serene? Placid? Momentous? Spiritual? If you are a confirmed Catholic, does it feature the Stations of the Cross? If you are a MOT, is there a Torah carefully hidden from view? If you serve the Emperor God, do you see an Imperial aquila overhead?

Perhaps you imagine dim neon lighting and loud house music. I asserted recently that a strip club could rightly be considered a sacred space of a sort. What I mean by that is that such a venue has one and only one correct use, and to use it for other purposes is, well, uncomfortable. How would you feel about using a strip club as an AARP bingo hall? How would you feel about using a mosque as a place of polling?

If you’ll grant me some leeway with my language, it is exactly this single-use characteristic that uniquely identifies a sacred space (I’d offer that if a sacred space contains a religious element, it becomes a holy place). So, yes, a tabernacle is a sacred space, but so is a bedroom shrine to Rainbow Dash, and so are secular monuments. If you squint a little at Neil Gaiman’s characterization of America in his novel American Gods, so are roadside attractions. After all, you go to roadside attractions for the specific reason of witnessing sacred American kitsch, not to eat, not to use the restroom (though you may perform these activities incidentally).

Contrast an Apple Store with a Wal-Mart. Apple has meticulously crafted its brand to mimic the sacred. When you walk into a place that boasts an electronic altar staffed by self-anointed “geniuses”, the parallel to Hellenic oracles is inescapable. Wal-Mart, contrarily, is altogether profane: it does not even momentarily pretend to be anything other than what it is—a mundane place of commerce. Squealing kids are not shuttled out of a Wal-Mart by red-faced parents. (Nearly) anything goes.

What import hath sacred space? Well, in economics, we call the return to a fixed asset a “rent”. Land is a fixed asset, so the returns to owning land is called “rent”. Political privilege is a fixed asset, so the returns to owning a senator is called a “political rent”. I’d say that it might be analytically useful to isolate sacred rents, to help understand why we see some of the peculiar institutional arrangements we see in the world. Tithing, for example. Tithing is a big part of those religions that have thorough systematic theologies. Catholics and Mormons tithe, Friends and Old World Mennonites do not. If the gathering place itself, as well as the institutions and organizations supporting it provide sacred rents, tithing is how the priesthood captures those rents. If the worship hall is naught but timber and glass, with the sacred space existing between the parishioner’s heart and the Word of God, then there is no intermediary to capture the rent.

Unfortunately, this proposal is tricky to clearly test empirically. You could make a little list of sacred spaces (including, perhaps retailers like Apple) and test land valuation in their vicinity, but it’s pretty tough to control for covariates, and it’s a question-begging exercise for the most part anyhow. But maybe you can sort of test it out yourself on your own. Find your sacred space and ask yourself how much you’d have to be paid to perform a profane act there. Ask yourself how much you’d be wiling to pay someone else to stop performing a profane act there. If your answer is greater than zero, you’ve got yourself an estimate of what the sacred rent value is in that place. Once you have that number in mind, maybe you can start thinking about why it is the huffly-puffly types in the Bay Area are all twisted up about profane Google bros invading their sacred granola-and-wookiee Mission District. Their mere presence is offensive, even if the individuals have committed no unseemly acts. Ditto US Soldiers stationed in Saudi Arabia.

Ditto lots of stuff. Also interesting to think about is how sacred institutions coevolve with sacred places. I’ve a few thoughts on that too, but this is already wordy enough, so I’ll let my fine fellows here at ST chime in with their own thoughts.

Blessings to all y’all.