regulation

We’ve said it before, and we’ll say it again: We consume a lot more sugar than is good for our health. Because of this, the next generation of Americans will struggle with obesity and diabetes more than any other. The most obvious culprit is the added sugar in sodas and other sugary beverages, like sports drinks or teas.

The latest idea from health advocates for reducing sugar intake is a warning label. Legislators in New York and in California are trying to emblazon sodas with a message that looks very similar to one you see on cigarette packages or alcohol bottles.

The backers of the idea argue that beverages that contain added sugar and have 75 calories or more in one 12-ounce serving should have to bear the label.

Is It Time For A Warning Label On Sugar-Loaded Drinks?

Photo Credit: California Center For Public Health Advocacy

There are an estimated 4,500 federal criminal statutes — and innumerable regulations backed by criminal penalties that include incarceration. Even if none of these were arcane, which many are, their sheer number would mean that Americans would not have clear notice of what behavior is proscribed or prescribed. The presumption of knowledge of the law is refuted by the mere fact that estimates of the number of federal statutes vary by hundreds.

Penn scientists identify patterns of RNA regulation in the nuclei of plants

In a new study done in plants, University of Pennsylvania biologists built on earlier work in which they cataloged all the interactions that occur between RNA and the proteins that bind to it. This time, they looked exclusively at these interactions in the nuclei, and simultaneously obtained data about the nuclear RNA molecules’ structure. By combining these datasets, their findings give a global view of the patterns that can affect the various RNA regulatory processes that occur before these molecules move into the cytoplasm, where they are translated into the proteins that make up a living organism.

In addition, the researchers have provided a vast, publically available set of data that other scientists can use to address questions about any genes and regulatory mechanisms that interest them, gaining a better understanding of the dynamics of the journey from DNA to protein.

Brian D. Gregory, an assistant professor in Penn’s School of Arts & Sciences’ Department of Biology, was senior author on the work, which will appear in the journal Molecular Cell.

Caption:  In a new study done in plants, University of Pennsylvania biologists give a global view of the patterns that can affect the various RNA regulatory processes that occur before these molecules move into the cytoplasm, where they are translated into the proteins that make up a living organism. Credit: University of Pennsylvania

A triumph of “free expression and democratic principles”? How stupid do they think we are?

It’s been painful to watch the gradual tightening of government control in the name of net neutrality. The Federal Communications Commission’s decision to rewrite the rules and declare the Internet as a public utility seals the deal. It cartelizes the industry and turns a “Wild West” into a planned system of public management — or at least intends to.
All the rest is a veneer to cover what is actually a power grab.

This whole plot has had all the usual elements. It has a good name and its supporters say it is about stopping private and public control. It’s had the backing of all the top names in content delivery, from Yahoo to Netflix to Amazon. It’s had the quiet support of the leading Internet service providers. The decision to impose the rule has been declared by a tiny group of unaccountable bureaucrats operating with the support of the executive lame duck.

The opposition, in contrast, has been represented by small players in the industry, hardware providers like Cisco, free-market think tanks and disinterested professors, and a small group of writers and pundits who know something about freedom and free-market economics. The public at large should have been rising up in opposition but people are largely ignorant of what’s going on.


Here’s what’s really going on. The incumbent rulers of the world’s most exciting technology have decided to locked down the prevailing market conditions to protect themselves against rising upstarts in a fast-changing market. To impose a new rule against throttling content or using the market price system to allocate bandwidth resources protects against innovations that would disrupt the status quo.

What’s being sold as economic fairness and a wonderful favor to consumers is actually a sop to industrial giants who are seeking untrammeled access to your wallet and an end to competitive threats to market power.
One person I know compared the move to the creation of the Federal Reserve itself: the creation of an industrial cartel in the name of improving the macroeconomic environment. That’s a good comparison.

Let’s back up and grasp the position of the large content providers. Here we see the obvious special interests at work. Netflix, Amazon, and the rest don’t want ISPs to charge either them or their consumers for their high-bandwidth content. They would rather the ISPs themselves absorb the higher costs of such provision. It’s very clear how getting the government to make price discrimination illegal is in their interest. It means no threats to their business model.

By analogy, let’s imagine that a retailer furniture company were in a position to offload all their shipping costs to the trucking industry. By government decree, the truckers were not permitted to charge any more or less whether they were shipping one chair or a whole houseful of furniture. Would the furniture sellers favor such a deal? Absolutely. They could call this “furniture neutrality” and fob it off on the public as preventing control of furniture by the shipping industry.

But that leaves the question about why the opposition from the ISPs themselves (the truckers by analogy) would either be silent or quietly in favor of such a rule change. Here is where matters get complicated. After many years of experimentation in the provision of Internet services — times when we went from telephone dial up to landlines to T1 connections to experimenting with 4G data coverage — the winner in the market (for now) has been the cable companies. Consumers prefer the speed and bandwidth over all existing options.

But what about the future? What kind of services are going to replace the cable services, which are by-and-large monopolies due to special privileges from states and localities? It’s hard to know for sure but there are some impressive ideas out there. Costs are falling for all kinds of wireless and even distributed systems.

If you are a dominant player in the market — an incumbent firm — you really face two threats to your business model. You have to keep your existing consumer base onboarded and you have to protect against upstarts seeking to poach consumers from you. A rule like net neutrality can raise the costs of doing business but there is a wonderful upside to this: your future potential competitors face the same costs.

As an established player in the market, you are in a much better position to absorb higher costs than those barking at your heels. This means that you can slow down development, cool it on your investments in fiber optics, and generally rest on your laurels more.
But how can you sell such nefarious plan? You call it a vote for the “open internet” that will “preserve the right to communicate freely online.” But when you look closely at the effects, the reality is exactly the opposite. It closes down market competition by generally putting government in charge of deciding who can and cannot play in the market. It erects massive new barriers to entry for upstart firms while hugely subsidizing the largest and most well-heeled content providers.

So what are the costs to the rest of us? It means absolutely no price reductions in internet service. It could mean the opposite. Watch your bills. I predict that it is not going to be pretty. It also means a slowing down in the pace of technological development due to the reduction in competition that will immediately follow the imposition of this rule. In other words, it will be like all government regulation: most of the costs will be unseen but the benefits will be concentrated in the hands of the ruling class.

There is an additional threat to how to the FCC has reclassified the internet as a public utility. It means a blank check for government control across the board. Think of the medical marketplace, which is now entirely owned by a non competitive cartel of industry insiders. This is the future of the internet under net neutrality.


If you look at how all this shakes out, this is really no different from how most every other sector in life has come to be regulated by the state, from food to money to medicine to education. It always shakes out this way, with sleepy public believing the propaganda, an elite group of insiders manipulating the regs for their own benefits, a left-wing intelligentsia that is naive enough to believe platitudes about fairness, and a right wing that is mostly ignorant and for sale to the highest bidder.

No, I don’t believe that this ruling means the end of times for the internet.

But it does mean that progress going forward in the digital age will be slowed compared with what it would otherwise be. Future generations will laugh in bemusement: it was the dawn of a new age and yet they believed it could be controlled the same as all that came before. Fools.

We All Lose

I’m sure you’ve heard about Ryan Block’s recent chat with Comcast about trying to disconnect his service. In short, the rep refused to disconnect the service without a reason from Block. This conversation of attrition went on for about 20 minutes, some of which was recorded. Listen to the exchange here.

The representative (name redacted) continued aggressively repeating his questions, despite the answers given, to the point where my wife became so visibly upset she handed me the phone. Overhearing the conversation, I knew this would not be very fun.

What I did not know is how oppressive this conversation would be. Within just a few minutes the representative had gotten so condescending and unhelpful I felt compelled to record the speakerphone conversation on my other phone.

Like many others, the call infuriated me. But I switched my tone after reading “Sympathy for the Comcast Rep From Hell” by John Herman.

If you understand this call as a desperate interaction between two people, rather than a business transaction between a customer and a company, the pain is mutual. The customer service rep is trapped in an impossible position, in which any cancellation, even one he can’t control, will reflect poorly on his performance. By the time news of this lost customer reaches his supervisor, it will be data—it will be the wrong data, and it will likely be factored into a score, or a record, that is either directly or indirectly tied to his compensation or continued employment. It’s bad, very bad, for this rep to record a cancellation with no reason, or with a reason the script should theoretically be able to answer.

[…]

Of course, it's absurd that a company like Comcast is able to force two humans into combat like this in the first place. If you don’t take the existence of a near-monopoly company like Comcast for granted—and why should we?—the situation is as clear as can be: The rep didn’t abuse Block, and Block didn’t torture the rep. Comcast, the organization, is tormenting them both.

I can’t help but applaud Herman’s final line.

I hope this tape gets played in front of Congress.

From shampoo to lotion, the use of personal care products is widespread, however, there are very few protections in place to ensure their safety. [This bill] will require [the] FDA to review chemicals used in these products and provide clear guidance on their safety. In addition, the legislation has broad support from companies and consumer groups alike.
Three Myths about Net Neutrality Regulation

With president Obama announcing yesterday that he wants the internet regulated as a public utility, many so-called net neutrality advocates celebrated. Unfortunately, their celebration is likely unwarranted because, in fact, government regulation will likely threaten, not improve, net neutrality and internet openness. Here are a few myths proponents of net neutrality regulation will proclaim:

Myth #1: Regulation is necessary because there is insufficient competition for broadband

Proponents often say that one reason why the Internet should be treated as a pubic utility because consumers face little choice in their internet provider, in fact it is commonly claimed in most instances it’s a monopoly. However, this is patently false. As Dr. Christopher Yoo of the University of Penn points out:

The most recent data collected by the FCC indicate that as of December 2012, 99 percent of US households live in census blocks with access to two or more fixed line or mobile wireless broadband providers capable of providing the benchmark speeds of 3 Mpbs down stream and 768 kpbs upstream. Some 97 percent have access to three or more providers. Faster service tiers are also becoming more competitive. For example, 96 percent of US households have access to two or more providers offering service at the higher standard of 6 Mpbs downstream and 1.5 Mbps upstream, and 81 percent have access to three or more. Even at the highest tear reported (10Mpbs downstream and 1.5 Mpbs upstream), 80 percent have access to two or more providers and 48 percent have access to three or more.

Yoo further points out that there is more competition coming from close substitutes to broadband like wireless LTE providers. He concludes:

Although these markets are not perfectly competitive, empirical studies indicate that markets with three firms are workably competitive, with most of the competitive benefit occurring with the entry of the second or third firm and minimal benefits resulting from entry into markets that already have three to five firms. One must also bear in mind that regulation is costly and typically falls short of replicating the performance of a perfectly competitive market. Regulation thus turns on a comparison of second-best outcomes. Although the poor performance of unregulated monopoly justifies the significant cost of regulation, an unregulated oligopoly performs sufficiently better at some point tips the balance in favor of deregulation.

Myth #2: Without regulation, net neutrality is almost certainly going to be destroyed as ISPs will create internet fast-lanes, which will make it impossible to access content from new start-ups

This myth ignores the fact that fast-lanes are not even all that profitable for ISPs. As Timothy Lee pointed out in a 2008 paper for the Cato Institute:

The fundamental difficulty with the “fast lane” strategy is that a network owner pursuing such a strategy would be effectively foregoing the enormous value of the unfiltered content and applications that comes “for free” with unfiltered Internet access. The unfiltered internet already offers breathtaking variety of innovative content and application, and there is every reason to expect things to get even better as the availabe bandwidth continues to increase. Those ISPs that continue to provide their users with faster, unfiltered access to the Internet will be able to offer all of this content to their customers, enhancing the value of their pipe at no additional cost to themselves.

In contrast, ISPs that chose not to upgrade their customers’ Internet access but instead devote more bandwidth to a proprietary “walled garden” of affiliated content and applications will have to actively recruit each application or content provider that participates in the “fast lane” program. In fact, this is precisely the strategy that AOL undertook in the 1990s. AOL was initially a propriety online service, charged by the hour, that allowed its users to access AOL-affiliated online content. Over time, AOL gradually made it easier for customers to access content on the Internet so that, by the end of the 1990s, it was viewed as an Internet Service Provider that happened to offer some propriety applications and content as well. The fundamental problem requiring AOL to change was that content available on the Internet grew so rapidly that AOL (and other proprietary services like Compuserve) couldn’t keep up. AOL finally threw in the towel in 2006, announcing that the proprietary services that had once formed the core of its online offerings would become just another ad-supported web-site. A “walled garden/slow lane” strategy has already proven unprofitable in the market place. Regulations prohibiting such a business model would be suprlusage.

We already have evidence that ISPs cannot even profit from such a slow-lane strategy in the past. It seems that net neutrality as we know it today is only the result of the market process. Why would regulation even be necessary to maintain it?

Myth #3: Regulating the Internet as a public utility will simply enforce net neutrality, it wouldn’t do anything else

This simply ignores the history of regulation and rich literature on how the regulatory process works. If one gives the FCC so much power to control the internet, there is nothing stopping companies like Comcast from lobbying the FCC to selectively force regulations, write regulations in their favor, or use regulations to erect barriers to entry to potential competitors. This is what is what public choice economists call “regulatory capture." If the FCC is allowed to regulate, the internet may be put in the hands of lobbyists, bureaucrats, and politicians who will use the regulations to benefit their interests. 

Regulatory capture has happened in many, many other similar instances. For example, with the Interstate Commerce Commission was originally created in 1887 to regulate the railroads using strikingly similar rationale to current net neutrality enthusiasts: they wanted to prohibit giving "undue or unreasonable preference or advantage” to particular customers. However, by the 1920s the ICC started establishing minimum and maximum rates, by the thirties congress gave it power to regulate truckers specifically to stop competition with the railroads. By 1970, it was being described by a Ralph Nader group as “primarily a forum at which transportation interests divide the national transportation market.” Effectively, the ICC became a means of promoting a transportation cartel.

Proponents of regulation ignore the possibility that regulation can be used by special interests capturing regulators as a means to stop regulation. Such an unintended consequence can be observed in history, why would it not happen with the internet?

In sum, regulation is likely not necessarily to encourage competition and internet fairness, and in fact will likely lead to a less fair, less open internet due to public choice reasons. Giving politicians, bureaucrats, and lobbyists control of the internet is not a good idea.

So here we are in 2015 with this massive, wondrous, global network called the Internet. It’s empowering billions of people, rich and poor, with a universe of knowledge and opportunities. While virtually everyone is going online for virtually everything, from education and entertainment to shopping and employment, here come the troglodyte regulators with their 80-year-old hammers, once again, planning to “fix” it for us. No thanks.

Consider the case of John Yates of Holmes Beach, Florida. In 2007, a state law enforcement officer boarded Yates’s ship in the Gulf of Mexico to inspect his catch of more than 3,000 fish. The officer accused Yates of catching 72 undersized red groupers and ordered him to bring the ship ashore, where he—along with several federal agents carrying weapons—counted only 69 groupers. Yates was accused of disposing of evidence by throwing fish overboard. Yates believes the fish were incorrectly counted, but even if the officer was correct, what happened next was bizarre.

A federal prosecutor charged Yates with violating the “anti-document-shredding” provision of the Sarbanes-Oxley Act passed in the wake of the Enron accounting scandal. The prosecutor argued that the statute prohibits the destruction of tangible evidence, and because 69 rather 72 groupers were counted upon re-inspection, Yates had likely run afoul of the law. The anti-shredding violation is punishable by up to 20 years in prison.