anomalyuk – Page 41

Seizure of Intellectual Property

Tweetable link: https://t.co/p20oSGnTV4?amp=1

There have been two stories recently involving governments seizing intellectual property.

In one, the US government was seeking to take ownership of the trademark rights over certain symbols or logos used by motorcycle gangs.

The problem with this, for me, is that it’s an abuse of trademark rights, albeit a familiar one. The purpose of trademark law is to protect consumers from being deceived about goods or services they are buying. There is no welfare justification in preventing me from painting a Nike whoosh on my own T-shirt, unless I attempt to sell the T-shirt to a mug who thinks it is made by Nike.

Therefore having trademarks would not allow the government to do anything useful (i.e. stopping gang members from wearing their gang colours) without abusing the trademark rights.

The second case is the State of Kentucky seeking to seize internet domain names used by gambling operators, as “gambling devices”. Now the question of whether a domain name is a device is very debatable, but aside form that, the rights to a domain name are assets, and can be seized by government if the law permits.

That does seem rather odd, but it really isn’t. The reason it seems odd is that a domain name is essentially an entry in a directory, and it seems odd that a directory entry can be controlled in that way. But, to get all Aristotelian for a bit, while it is essentially an entry in a directory, there is also accidentally something associated with it that is an owned, tradable right – the right to specify which IP address the name in the directory will be listed against. Since the domain name owner could, voluntarily, sell or hand over his rights to the domain name to the government, then, given appropriate legal power, the government can perfectly well take it.

If the domain name system were not accidentally based on tradable rights – if names were allocated arbitrarily and finally by a central domain authority, then there would be no basis for the State of Kentucky to order the domain authority to change the use of that domain name. The system could work that way, but as a matter of fact it doesn’t (at least, not for .com domains), and the State can order a body subject to its law to hand over the contractual rights to it, as it could order it to hand over physical property or assign other assignable contractual rights.

Whee – I was wrong again.

My argument would apply if the State proceeded against the owners of the domain names themselves. It appears, looking at the details, that they went directly to the internet registries, and demanded ownership of the domains, without reference to who actually owned them or used them.

My original rationalisation of the process was that the State was effectively forcing the owner of the domain name rights to transfer the rights to the State, under some law that gave them power to do so. To simply announce that the rights now belong to it, without asserting jurisdiction over, or even identifying, the owners, is something else.

With regard to actual devices physically present in the State of Kentucky, it is reasonable that the State might have the power to seize them irrespective of who owned or operated them. But without establishing jurisdiction over the owners of the domain names, it’s more difficult. It comes down to my point that the domain name itself (an entry in a register) is not the same thing as the contractual right to control that entry. Only the second is actually property, and therefore only the second can actually be seized. Even if, by a stretch, the domain name itself is classed as some kind of abstract “device” used in gambling, the rights are something else.

Courts generally try to be sensible, even when the formulation of the laws are downright weird. The 44-page PDF of the courts opinion contains justification for considering the domain names as property, and justification for proceeding against them without reference to who actually owns or controls them. It then goes very badly astray (emphasis mine):

As the evidence in the record stands, the Defendants 141 Domain Names transport the virtual premises of an Internet gambling casino inside the houses of Kentucky residents, and are not providing information or advertising only.

The reason for that conclusion is indeed the confusion between the domain name as a name, the domain name as an entry in a directory, and a domain name as a contractual right to control the entry in the directory.

The court reasonably concludes that the right to control the domain name’s entry is property. It then observes the name all over every page of the casino website, and concludes that “the presence of … the internet domain names … is continuous and systematic”. However, only the name itself has a continuous presence; the directory entry is only referenced once, by the name resolver in the user’s operating system when they first go to the site. That might be enough to justify seizing the trademark, as in the Mongols case, but not the directory entry.

Implications of a Knowledge Economy

The idea of an “information economy” is such a cliché that I’m bored of this article already, and I haven’t written it yet.

But all too often, the key implications are missed.

The central fact of the information economy is this: anything that we know exactly how to do can be done very cheaply.

The bulk of economic activity is now devoted to things that we don’t know exactly how to do – things that we have to work out as we go along.

The important implication is that management is now the largest cost. To improve efficiency from here on, the most important thing is to reduce the cost of management.

That’s an emphasis that’s never been taken before. “Measure twice, cut once” has always been seen as wisdom. But if cutting, and the stuff to be cut, are cheap, and measuring is ten times as expensive, then we need to work out how to get by without measuring twice.

There has been one long-term trend which has improved management efficiency, and that is the trend towards large scale. If a business goes from one steel foundry to ten, the steel foundries don’t become any more efficient, but you might spend less on management. It is easy to observe, that at ground level, large organisations seem to be less efficient than small ones, but this may be justified by reduced management costs. However, I think this trend has gone as far as it usefully can (if not further). A merged organisation may spend less on top management than its preexisting components did, but it has more layers of management, and the efficiencies can cancel out.

There is another trend that has to some extent concealed the increased cost of management, and that is the spread of managerial responsibility down the hierarchy. You do not need to have “manager” in your job title these days to be expected to devote a significant proportion of your time to managerial aspects of whatever process your organisation undertakes. Everyone fills in forms.

The important point is that a better managed operation is not necessarily a more efficient one – not if the cost of management outweighs the benefits. The old assumption that scrimping on planning will always cost more in the long run has to go.

This is not completely new – there is perhaps a parallel to the blitzkrieg or auftragstaktik innovations in the German army in the 1930’s. As I understand it (and military history is not my field), the old principle was that, on encountering an enemy, an advancing force would stop, gather as much intelligence as possible, make a plan, and then attempt to take on the enemy. The new doctrine was, on encountering the enemy, to immediately attempt to outflank. Sometimes the lack of planning and knowledge would leave the advancing force stranded in a blind alley, but war is a dangerous business at the best of times, and the benefits in speed and surprise of skipping the planning stage outweighed the costs.

I was triggered to write this by Simon Jenkins’ account of the 2012 Olympics (spit!). The budget for management of the Olympics has now hit £654 million, more than the cost of building the main stadium. This is partly the plain fact of the knowledge economy, and mostly the result of not recognising that doing something more efficiently, in today’s world, means managing it more efficiently.

There is a secondary point, which is that managers have greater political and social power than non-managers, and that therefore there is stronger pressure to cut non-management than to cut management. But I won’t be able to make that point better than chris dillow does, so I’ll leave it to him.

Uncontroversial Measures

The Landsbanki affair exposed the fact that the government can, under the anti-terrorism, crime, and security act 2001, seize the assets of any foreigner or foreign government, if it reasonably believes them to be likely to take action to the detriment of the United Kingdom’s economy.

Since I found this very startling, I’ve been digging around to see what was said about it at the time the bill was debated and passed.

This won’t be a long post…

While debating an amendment to add a sunset clause to the bill, Douglas Hogg said:

The plain truth is that, because of time constraints, we are not going to discuss the substance of any of the clauses in the group whose consideration terminates at 6 o’clock. We have reached only the first line in the marshalled list. At least new clause 6 would apply a sunset provision to all the other measures that feature in the marshalled list, but which will not be discussed at all. Some of them, such as the power of the Treasury to freeze people’s cash, the power of Customs to go to the magistrates to get a seizure order in respect of “terrorist cash” and the extension of disclosure obligations are of great importance.

I shall not seek to debate the merits of those issues as you, Sir Michael, would call me to order if I did so. I point out only that, from any viewpoint, they are extremely important obligations and powers that are backed by penal sanctions. Furthermore, they apply to people’s property and may also affect the property of innocent third parties. However, we are not going to discuss them at all. That is one of the arguments in favour of sunset clauses, which are a very imperfect way of dealing with the problem that we face. We should not be in this position, but as we are, we must do something to provide a remedy. A sunset clause is one way of at least expressing our dismay about the position.

That’s it. That’s the only mention that was made of the power that the government later used against Landsbanki.

Ah, but what about the committee stage. Surely the Home Affairs Select Committee at least discussed it?

Have a look

Why did they debate detention of suspected international terrorists, Asylum, Judicial Review, Religious Hatred, hoaxes involving noxious substances, and the EU third pillar, but not the abolition of property rights for foreigners? Chris Mullin explained:

it is not our intention to trawl through every detail of this Bill, much of which is uncontroversial, but to home in, in the limited time we have, on the three or four obvious issues that are likely to be more controversial

There we have it. It was an uncontroversial measure.

Voting – altruism and other motives

Voting once again seems to be under general discussion for some reason.

Alex Tabarrok at MR links to an article by Gelman and Kaplan, which points out that while the benefits of voting are small (because of the very tiny probability of one vote changing the result), they affect millions of people. If I am a little bit altruistic – say, if it is worth 10 dollars to me to make some other person 100 dollars better off – then the actual benefit of changing the result can easily be bumped up into the billions, which could make it worth heading off to the voting booth even with a one-in-ten-million or so chance of changing the outcome.

The fact that so many people make charitable donations – where doing 100 dollars of benefit costs 100 dollars plus some overhead – implies that the 10% coefficient I use above is very plausible.

(To be clear, we’re not just talking about cash benefits here. I might consider it a benefit worth $100 to me to have someone else sent to university, or treated for a disease)

The Gelman and Kaplan argument is so obviously correct – not just logically sound but the real reason why people do actually vote – that I’m embarrassed to have spent so much time looking for alternatives.

Is everything rosy with democracy then? Unfortunately, I think G & K stopped a bit too soon. After all, altruism is real, but it’s not the only motive out there on top of selfishness.

Let’s say I have a particular hatred of muslims. It might be worth $10000 to me to cause the death of a muslim. By changing government, I might kill thousands of them! That would be worth a lot more to me than a cut in sugar tariffs.

But is $10,000 realistic? It’s surely not that hard to get someone killed if you have a few grand to spend on it – we’d be up to our knees in corpses. But in normal life, the main cost of killing someone is the risk of being caught and punished. And plenty of people get killed anyway. Democracy isn’t just a way of having an effect (good or bad) on millions of people; it’s a way of doing so with total impunity.

The arithmetic I’m throwing around here isn’t really rigorous. What does it mean to say that I value a better house for a poor family at $200, or someone else prevented from playing online poker at $100, when I have no way of directly causing these things to happen? It doesn’t matter. The original question is: is it worth 30 minutes of my time to have a 1-in-10-million chance of causing a million poor families to get better housing, and to stop five million people from playing poker, and to cause 100,000 muslims to become dead muslims? (etc.) If those are the things I want, it might well be.

Is this good or bad? I think most people are more altruistic than anti-altruistic, at least towards their own countrymen. So voters should be expected to vote mostly for the general benefit as they see it, but perhaps be a bit on the warlike side. The impunity thing, though, has some nasty implications. The large-scale altruism expressed through voting is in some degree in competition with direct small-scale altruism, but the “effectiveness multiplier” of democracy is greater in the case of punishing others, because it detaches the harm from any responsibility.

Anti-altruism isn’t always a bad thing. A certain level of vindictiveness benefits society by discouraging anti-social behaviour, even in those circumstances where Homo Economicus would rather cut his losses. But I worry that when detached from the human scale, the natural willingness to punish individual enemies becomes a generalized animus against everyone resembling some enemy.

Finally, none of this contradicts Bryan Caplan’s critique of voters. The individual benefits come from the good feelings of believing I have had the influence I desired. I can still have those good feelings without putting in the effort to convince myself that the effects will be what I expect. “I personally stopped a million people from eating trans fats in restaurants”. If that gives me the good feelings, it would be silly to put lots of effort into working out whether it actually did anyone any material good. The costs of being wrong are tiny.

Value of politicians

Here’s a little factoid that I think is relevant to my politics as entertainment theme:

Three employees of our government, and their approximate salaries:

Gordon Brown, Prime Minister: £200,000

Mark Thomson, Director-General of the BBC: £816,000

Jonathan Ross, Entertainer: £6,000,000

Where is the power really in our system of government? Jonathan Ross’s earning power is the result of a “tournament” effect of the star system in entertainment, so maybe we should leave that out. But what does it mean that the manager of the BBC is worth four times as much as the PM?

Possibly he is better qualified? Wikipedia suggests not. (Brown has a PhD in history from the university of Edinburgh). Hmm, Gordon Brown took a doctorate in history and I never knew. Is there some significance in the lack of public attention given (by me, at least) to that? Isn’t it really quite important? Does the fact that the thesis was on a bit of the history of the Labour party make it less important?

Back to the pay, can we explain it away by saying that the mechanics of the different roles means that the director of the BBC needs to have special expertise, whereas the PM doesn’t, instead having (highly paid) civil servants to supply the technical expertise?

OK, perhaps this isn’t a big deal. Being Prime Minister certainly has perks beyond the salary. But the fact that taxpayers pay 30 times as much for Jonathan Ross than we do for a Prime Minister at least takes some of the ridicule away from my theory that politics provides more value as entertainment than as government.

Legislation – the details

I was planning, in relation to the previous post’s subject, to mention the government’s classification of an Icelandic bank as a terrorist organisation in order to freeze its assets.

As is so often the case, as I researched to fill in the details of exactly what happened, I found it wasn’t what I thought. As is occasionally the case, the truth is more interesting than the falsehood.

The order freezing the assets of Landsbanki, and section 4 of the Anti-terrorism, Crime and Security Act 2001 under which the said order was made, make no reference to terrorism, except in that the section is part of that act.

The government is not “misusing” anti-terrorism law to grab the money, they are doing precisely what they were empowered to do in 2001.

4. Power to make order

(1) The Treasury may make a freezing order if the following two conditions are satisfied.

(2) The first condition is that the Treasury reasonably believe that—

(a) action to the detriment of the United Kingdom’s economy (or part of it) has been or is likely to be taken by a person or persons, or

(b) action constituting a threat to the life or property of one or more nationals of the United Kingdom or residents of the United Kingdom has been or is likely to be taken by a person or persons.

(3) If one person is believed to have taken or to be likely to take the action the second condition is that the person is—

(a) the government of a country or territory outside the United Kingdom, or

(b) a resident of a country or territory outside the United Kingdom.

4.(2)(b) is not relevant since the order cited 4.(2)(a) instead, so no allegation of terrorism of any kind needed to be made. The government has the clear legal power to seize the assets of any foreigner who it believes is likely to take action detrimental to the economy of the United Kingdom.

Holy shit.

How did it get that? Well, the clue is in the act. This was the act that was passed in December of 2001, against the votes of many Labour MPs who objected to the detention-without-trial provisions. The “seizing the assets of foreigners for any economic reason” bit escaped any public debate.

This is the lesson that we have to take from the Landsbanki saga. The anti-liberty measures that get argued about on the 9 o’clock news are the tip of an iceberg of literally unbelievable powers being accumulated by the government, that will be unveiled in a few years when the fuss has died down, and used against people who you would least expect to be the target.

Authoritarian MPs

There are a couple of schemes in progress responding to the breakneck progress of the all-knowing, all-powerful state in Britain.

One is the sending of copies of 1984 to every MP, and another is the stroll that some bloggers have in mind for Wednesday.

Alarmed as I am by the situation, I think these protests are fundamentally misdirected.

I do not believe that the Labour Party is pushing in this direction (ID cards, national childrens databases, national ID databases, detention without charge, ID required for buying mobile telephones, etc. etc. etc.) because the MPs are a bunch of authoritarian bastards, despite appearances. It is not their aim to see all these powers gathered and used. I suspect they actually aren’t bothered about it one way or another, and, given the chance to offer their honest opinion, would probably say most of it isn’t worth doing.

They are pushing it all because they think it is a vote-winner, and for no other reason.

That being the case, demonstrating that there is a small group of people who are very strongly opposed serves no purpose. They know that, but we only have one vote each, and they don’t believe there are enough of us to matter.

The only way to win this is to gain the attention of the ordinary voter, and bring home to them the problems of having the all-powerful state monitoring their every move. The biggest publicity victory we have had so far was the news that local councils were using anti-terror surveillance powers to monitor people putting non-recyclables in recycling bins. That beats the by-election victory of David Davis and the Lords’ defeat of 42-day detention.

Even politics doesn’t help. It is true that, in the boxing match of electoral politics, the Conservatives have taken very good positions on most of these issues, and therefore, if they win, there should be some relief in the short term. But in the longer term, the fundamentals will reassert themselves. The Tories will find their pro-liberty positions a liability, and, in due course abandon them. Liberty simply isn’t what the MPs went into politics to fight for, and if push comes to shove, it will be sacrificed to improve electoral chances and therefore whatever it is that they are aiming for.

More personal information

Further to my last piece, on the unsurprising facts that people with access to others’ personal information use that access for any reason, including ordinary curiosity, a topical example has cropped up:

Helen Jones-Kelley, director of the Ohio Department of Job and Family Services, disclosed today that computer inquiries on Samuel Joseph Wurzelbacher were not restricted to a child-support system.

The agency also checked Wurzelbacher in its computer systems to determine whether he was receiving welfare assistance or owed unemployment compensation taxes, she wrote.

(Wurzelbacher, aka “Joe the Plumber” is currently enjoying 15 minutes of fame for asking Obama awkward questions in public)

While the searching of government databases on Joe is less surprising than that it was found out, its ordinariness makes it more significant. You can get away with a lot these days, provided you keep your head down. But stick your head over the parapet, by becoming an activist, or falling out with a government official of some kind, and you know that you will suddenly be subject to a degree of scrutiny that would otherwise be easily avoidable. I think that is a key reason why we do not have the democratic ideal of the “politically involved layman” – the risks involved in politics are too great to be taken on lightly; they’re only worth it if you are prepared to devote yourself to activism in a major way. It’s a soft barrier, but its one more barrier between the political class and the rest of us.

Personal Data

Schneier is shocked to find that people whose jobs are to handle other people’s personal data, actually take an interest in what they are doing.

Faulk says he and others in his section of the NSA facility at Fort Gordon routinely shared salacious or tantalizing phone calls that had been intercepted, alerting office mates to certain time codes of “cuts” that were available on each operator’s computer.

“Hey, check this out,” Faulk says he would be told, “there’s good phone sex or there’s some pillow talk, pull up this call, it’s really funny, go check it out. It would be some colonel making pillow talk and we would say, ‘Wow, this was crazy’,” Faulk told ABC News.

I’m sure anyone who’s worked for a telephone company, or an ISP, or a retail bank, finds that familiar. The information available is generally less interesting than actually hearing people’s phone conversations, but occasionally you get something worth mentioning – look at all the the sex-line calls on this bill, is this Fred Bloggs the Fred Bloggs that was on the telly, and so on.

If the personal information is more obviously sensitive, then there should be rules to limit how it is casually accessed. Of course, those rules will be broken from time to time – tax people are not supposed to investigate celebrities out of curiosity, here is a story from Britain, and one from the US. But in many cases it’s very much a grey area. A fraud investigator, say, or a programmer trying to track down a bug, would have more freedom to legitimately poke about where she wanted to than a call centre operator who would have little excuse to look up any information except on the calls received (although accidents can happen).

There will always be people whose access bypasses the checks – it is rare to have an in-house IT system that can work without the support staff being able to access the production system to fix it. The major regulatory/compliance effort within banks over the last five years or so has been restricting access to production data to fewer people, for the sake of Sarbanes-Oxley compliance, but it’s really hard to deny access to the people who write the software.

Now, the NSA ought to have very strong controls on access and use of information, with monitoring and spot checks and so on, but if the telephone interceptions are being carried on by the NSA in defiance of the law, it is hardly to be expected that appropriate rules will be applied to the staff.

Housing Policy

Mr Mouse claims in a comment that widespread home ownership is undesirable. I would not go quite so far; there are benefits to home ownership – primarily the removal of the costly landlord-tenant relationship. Having said that, we are in agreement that the situation where the typical person’s investment portfolio consists solely of a highly leveraged bet on his local housing market is undesirable to the point of insanity. The point has been made widely, e.g. by Shiller.

But even if we accept a public policy aim of increasing home ownership, making it easier for people to borrow money is not the obvious way of going about it. If we want more people to own, say, smoke alarms, the way we do it is to make smoke alarms cheaper. Similarly, if a government decided, rightly or wrongly, that it would be better for more people to own houses, the obvious approach would be to make houses cheaper.

Headline of today’s London Evening Standard: “Worst House Prices Fall for 18 years“. I don’t remember reading recently about the “worst oil price fall” or “Worst computer price fall”. How is this?

The answer is obvious: once you have started down the road of encouraging home ownership by increasing borrowing, rather than by reducing prices, there is no turning back.

If I buy a computer, I don’t care what happens to its market value after I bought it. I will use it for 5-10 years then throw it in the bin. It is a physical asset, not a financial asset. If I borrow money to buy something, however, it is not just a physical asset. It is collateral. If I have been encouraged to get into this position, then undermined by a deliberate policy of devaluing the collateral, I will feel betrayed.

And so the process is continued. Interest rates are held down. The private sector’s lending standards are attacked. The supply of housing is deliberately restricted. After a while, it becomes obvious to everyone that a crash must come sooner or later. But even that is not enough to stop it. By that point, not only the government but also a large proportion of the population and a significant proportion of the financial industry is dependent on the bubble continuing – not for ever, as that is obviously impossible, but for long enough for “something to turn up” to save any individual participant. To someone looking to profit from the inevitable, the question is the usual one: “will the market stay irrational for longer than I can stay solvent?”, but with a coalition of politicians, swing voters, rich bankers and the construction industry devoted to keeping the market irrational, the question is even more pointed than usual.