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November 27, 2006

Blog 12: Big Brother Society – Public Policies and Information Technology

We want you to flag your attention to this clip prior to reading this blog.

When one asks the question, “What is the difference between liberals and conservatives,” one might get an answer like, “liberals are more accepting, and conservatives are more traditional.” Well, the actual difference between the two groups actually stem from the differing viewpoints on the role of government: liberals advocate heavy government involvement in the society, while conservatives advocate a limited government involvement in the society. Both groups, however, do not deny the importance of a government’s role in building infrastructure, (i.e. roads, schools, currency, etc). Such consensus exists because government’s public policy can provide something that will not be provided by individuals otherwise, maximizing societal welfare. A widely debated upon topic in public policy, accordingly, is the debate of what maximizes societal welfare.

The rise of information technology has created a debate in the field of public policy. In the UK, for example, Traffic officers today began piloting a hand-held fingerprint reader which they believe will “dramatically reduce the time it takes to identify suspects stopped by police.” ( here.) What’s the economic effect? Since police will be able to identify suspects without taking suspect drivers for formal fingerprint identification at police stations, it saves a lot of money. On a broader stroke, this also inhibits – at least discourages – individuals from giving false identification, decreasing their willingness to participate in crimes. From a public policy standpoint, this is befitting in our definition of “the role of government.” Such application of IT has expanded beyond the boundaries of police enforcement. Electronically enhanced healthcare has long been promoted as, “reducing costs, improving quality and efficiency and treating more patients with the same resources” (Click here). This, in fact, is one of the key reasons why governments around the world are heavily investing in IT technology. In fact, European Joint Technology Initiative (JTI) announced that they will conduct research in embedded computing systems, with 3 billion euro expected to be spent on electronics and software from 2007-2013. You can read that article here.

Should investment in information technology be a concern of governments? Perhaps. Some investments are too costly for any individual to provide the infrastructure. The invention of a hand-held fingerprint reader, for example, is a very costly adventure that would cost millions of dollars in research and development. The invention of such tools, based on government expenditures benefit the society at large greatly. Could there be any downside to it? Definitely. First, there is a limited amount of capital that governments can spend. An expenditure in a certain area (i.e. information technology), necessarily takes away expenditure in another area (e.g. education). Second, history proves that excessive government involvement in the society has often led to the destruction of a democratic process. While the application of fingerprint readers or web-based CCTV cameras can save money, it comes at the cost of citizen giving up a right to check the power of the government. The absence of such check destroys government transparency, which many fear would lead to a “big brother” society. In the UK, for example, there is a pervasive fear that the government will implant microchips to its citizens so that people can be tracked. (You can read that article here). Such system would greatly reduce crime, since a suspect automatically becomes a convict. Yet, is that the kind of society we want?

What about the regulation of information technology? Internet has arguably been the greatest invention of the 20th century, having big effects on economy, information, and the society. Very little of the Internet is owned, operated, or even controlled by governmental bodies. According to Robert Kahn, the Internet indirectly receives government support through federally funded academic facilities that provide some network-related services. You can read that article here). Increasingly, however, the Internet communication services is being handled by commercial firms on a profit-making basis. How has this policy held? While that loosened government surveillance of internet, internet has been a platform for terrorist organizations, drug dealers, and child molesters. Moreover, identify thefts has become epidemic.

Why do these offences occur? Quite simply, the cost of violating the law online depends on the severity of punishment and the probability that they will get caught. While the government has legislated strict punishments against online violators, the probability that they will get caught is extremely low. This is the dilemma that public policy must address. At the end of the day, we believe that it is the role of the government is to strike the balance between its need to get involvement in the information technology industry and the citizens’ need to be protected from the government.

Posted by willmoon at 12:42 AM | Comments (0)

November 19, 2006

Blog 11: Internet a Haven for Political Crisis?

Internet and politics are closely related. Whether used to spread opinions and news, or the topic of discussions regarding censorship, there is a close connection between the two. In fact, Tony Blair’s strategy advisor, Matthew Taylor, recently spoke of fears that the internet may be “fuelling a ‘crisis’ between politicians and voters.” His advisor noted the benefits of the internet, and spoke of it as a way for politicians to be “more open and accountable.” Blogs and online interviews provided these benefits for constituents. (Click here)

The concern is that the internet community may be using the internet to “abuse politicians or make ‘incommensurate demands’...[instead of] encouraging the general public to use the internet to ‘solve problems.’” He claimed that modern politics focused on quality of life, and these changes were especially apparent amongst teenagers who were among the primary users in this new IT age.

While blogs were a positive way for people of all sorts to reach the general public, there were increasing concerns as the new attitude towards politics is becoming that politicians are out to get and take advantage of you. One of the main concerns he noted was that a major IT attitude centered on anti-establishment and libertarianism as people want more power.

Mr. Taylor recently said that in the changing culture, “it's important for people who understand technology, to move from that frame of mind, which is about attacking the establishment into one which is about problem-solving and social enterprise.” He strongly feels that technology should be used to improve the relationship and communication between politicians and voters.

It is very easy to see Mr. Taylor’s point. We agree that the internet is frequently abused. Online “jokes” criticize politicians and can indirectly lead to negative publicity and smear campaigns. However, in a free society it is important to understand that all of this is going to occur. People will always voice there radical opinions, however right or wrong they are. Younger generations will also always be “rebellious.” Free speech grants everyone the right to say what they wish, and in the US this even means allowing racist groups such as the KKK to have a website.

Also, the internet can reach an extremely large group of people at a very rapid rate. This allows ideas to quickly be passed on and spread from one individual to another. There is some inherent risk in this, as it does allow for the risk of radical views and opinions. But again, this falls upon the responsibility and maturity of individuals to know what is right and wrong. Society also plays a large role in this.

The main political issues we see with the internet concern countries that are on the brink of revolution or instable. In such places the internet can allow individuals, radicals or not, to reach out to others. It also allows for the spread of propaganda, which with instability can have horrible effects. This would especially be of concern in the Middle East, where the spread of political ideas can lead to political outbreaks and attacks between various groups. It also allows the spread of negative, racist attitudes, which can hurt an entire ethnicity or culture as whole. This is where responsibility comes into play.

At the same time, it is the responsibility of internet users to not abuse their rights. It is clear that some individuals do take this too far and can stir up unnecessary problems. The web is a way to express opinions and ideas, but people should be responsible and respectful. People may have strong opinions but when high officials and others try and better communicate with the public people cannot abuse this opportunity.

It is easy to see both sides of the argument, and in the end it comes down simply to responsibility. Jokes and negative views will always be expressed, as will positive ones. The main idea is that individuals need to separate fact from fiction and know when not to joke around and take things seriously. With issues such as censorship, and governments and societies adding fuel to the internet debate, it is important that people work together to make the internet a better, safer place that can in the future lead to a complete integration and globalization of all cultures, countries, and societies.

Posted by wienma at 03:57 PM | Comments (0)

November 13, 2006

Blog 10: Wikipedia Back in China, Though Still Censored

There are many political and social issues in the IT world. None have been as prolonged and apparent as those concerning China. While China does appear to show some signs of democratizing, its censorship has remained a major issue amongst activists and human rights groups. However, recently following a one year ban, Wikipedia has again become available in China. ( click here ).

Groups are extremely excited by the changes, however censorship exists. While “searches for apolitical terms turned up results, but searches for subjects taboo to China's Communist leadership, such as "June 4", remained blocked.” The reasons for the ban being lifted on Wikipedia are unclear. Many officials, however, have claimed that China is making new strides to support IT development and changes. China recognizes that it “now has 123 million users, making it the world's second-largest Internet market.”

Activist groups have been arguing that western companies have been “compromising their principles by censoring searches and blog titles in order to do business in China.” However, this issue remains controversial as others argue that small concessions and patience in dealing with China is the right plan, especially considering its large market. The Chinese government also recognizes the prevalence and importance of foreign business and does not want to do anything to curtail that.

We feel that these changes are extremely important. The Asian boom has been gaining international attention from all governments and businesses. While companies may oppose some practices of the Chinese government and its censorship, the country nonetheless remains rapidly growing. It is important that diplomatic relations remain positive as China continues to develop and change.

These changes, however little, are still a step in the right direction. While censorship still is a while away, improvements that allow the public to at least have some say will be great. Democratization and free speech are not instantaneous, but this is a start and its great to see these positive effects occurring in what will be one of the more influential countries in the coming years.

China's Internet Regulation
Figure – For the Chinese government, relaxing internet regulations could jeopardize their legitimacy.

We must remember that the means of social institution that we choose to live under (i.e. democracy and capitalism) is dictated by what the people wants. Essentially, communism in China was derived by the consensus that it was beneficial for the state to dictate the economic and political agendas of the country. In the contemporary era of global integration and technological advancement, state control has been a hard subject to achieve. In this sense, internet and information technology has propelled a powerful movement that can jeopardize the political control of China.

***************Update, CLICK HERE: Less than a week after the ban on Wikipedia was released in China, it was again reported blocked in several parts of China. This is a major setback, and continues to show the complexity and importance of the censorship and free speech issues concerning the internet in China.

Posted by wienma at 03:12 PM | Comments (0)

November 06, 2006

Blog 9 - Will DVRs Eliminate Political Advertising?

The upcoming mid-term elections have caused candidates to spend record sums of money on spreading their messages. Their most popular tool is TV ads; however, the recent technological breakthrough of DVRs might eliminate these commercials in the future ( click here ).

Advertisers are aware that most people dislike these ads; furthermore, most people find them annoying and uninformative. Why are they still used? The answer is simple: they are still economical. Although, bothersome and irritating these ads still increase candidates popularity in a manner that is worth the large amounts of money that is spent on them, at least that is what analysts say.

According to market penetration surveys only 10 million out of 110 million households own some sort of DVR, where TIVO is the most popular brand. Currently, marketers regard this segment group as a niche and insignificant in relations to the upcoming elections. However, this new technology has been increasing fear for the near future among marketers.

Surveys(click here) show that three-quarters of advertising leaders believe that the digital video recorder (DVR) ad skipping technology will have a dramatic effect on the landscape of TV advertising. Furthermore, they believe that this might eliminate the traditional 30 spot ads.

Figure – Tivo is the DVR market leader with market share of 30%-40%.

Marketers regard product-placement as the next revolution in advertising. TV producers will incorporate ads within the show itself. This will allow marketers a more subtle way of pushing their products to consumers. However, how will political campaigns be advertised if the conventional ads will disappear?

There are many speculations regarding the next generation of political campaigns. Some people believe TV shows and movies will be sponsored by politicians. Others consider this change as the end of political ads on television.

We believe only time will tell what will be the faith of political advertising on television. The only way, to our perception, of political ads remaining on TV is a change in their essence. People are not interested in political bickering or bashing. Moreover, people are interested in clear concise and straightforward messages. If politicians will continue using spin tactic and refrain from dealing with serious issues then people will fast forward their ads. However, if they will change their tactics and send messages that people would like to listen to, there is chance for these ads to remain economical.

As for products placement for political campaigns, we do not think it will happen. If it does, it will hurt Hollywood's credibility in the eyes of the public. The thin line between entertainment and politics should be kept and is beneficial to both sides. The combination of the two will only hurt TV shows and the politicians themselves.

Posted by orshotan at 03:55 PM | Comments (0)

November 01, 2006

Blog 8 - Youtube's Copyright Mess: An Economic Analysis

Admit it – many of us have downloaded copyrighted files illegally online. Here’s a surprise – you might get charged for it. Businessweek, on October 27th, reported that a Peer-to-Peer file sharing administrator, Gary Stanley was sentenced to 5 months in prison for copyright violations. Technological advances have brought commercial success for businesses. However, internet has also opened a venue where law is harder to enforce. Internet created a huge black market for music, which dramatically cut down on CD sales, upsetting RIAA and recording artists. In recent weeks, video-sharing site Youtube received center attention on that issue. We will perform an economic and social cost-benefit analysis of sharing copyrighted materials online.

Youtube is a litigation landmine, according to a NY Times columnist. Why? Youtube’s enormous popularity is based on its innovative service of allowing its users to upload, view, and share video files. The precise ingredient that allowed it to secure its popularity (and profitability) is haunting them back, as they face litigations from numerous groups. One of them is The Japan Society for Rights of Authors, Composers and Publishers (JASRAC), who has started by requesting 30,000 copyrighted video from being removed from its website. You can read that article here. Youtube has also settled a deal with three of the four major music companies — Vivendi's Universal Music Group, Sony and Bertelsmann’s jointly owned Sony BMG Music Entertainment, and the Warner Music Group. The entailed, among others, Youtube coughing up $50 million in exchange for legally using the copyrighted materials. You can read that article here. The Google acquisition of Youtube has exacerbated the “landmine” problem, as lawsuits against Youtube is piling up. What’s the dilemma here for Youtube?

Such benefits and costs are ones that should be taken into, when Youtube decides to restructure its business. It is, however, much more interesting to look at the societal benefits and costs of sharing copyrighted materials. Here’s an economic analysis: Giving copyrights to the producers of the material (e.g. a music industry) is de facto granting them monopoly power. What do we know about monopoly power?

Monopoly Welfare Effect
Figure – The Economic Model illustrates how monopoly results in a “social lost,” colored in Gray.

If you don’t read Economics, just know that the gray area in the graph illustrates the “welfare loss” to the society. So why does law provide copyright? Many believe that the large profit that monopolies derive will lead to innovation. For example, Rod Stewart will not be producing the quality of music he produces if he earns $20,000 per album. In that prospective, Youtube’s video sharing effort hinders upon innovation. Yet, we need to consider the societal benefit from allowing the copyrighted materials to be shared: it will benefit the consumers. For example, an urban teen, who cannot afford a TV, can be inspired to become a lawyer after streaming Law and Order on Youtube. These are what economists like to call “externalities.” In the end, it is impossible to measure the exact ramifications of Youtube’s technology.

On that note, we still need to consider the law. Internet has increasingly been an arena where the rule of law has been ignored by many. This point is illustrated by the number of identity theft industries, which is a clear violation of the law. In the end, Youtube’s illegal practices violate the law, and that threatens the moral fabric of our society. We believe that such is such an important point that should force youtube to abandon its’ illegal business.

Are we advocating that Youtube should shut down? Hardly. Its video sharing technology can be used for a good cause. According to a news article, “prominent and not-so-prominent political campaigns are taking advantage of YouTube’s free video hosting to disseminate messages too expensive or too controversial for broadcast television.” (Click here to read the article). Exposure to a large segment of the population, in effect, is an opportunity for businesses, politicians, and individuals. This "spread of information" effect at a global stage could enhance welfare for many citizens. So before blaming technology, why not look for better ways to utilize it? (By the way, Youtube’s business line is “Broadcast Yourself” – not “share your illegal video here.”)

Posted by willmoon at 01:02 AM | Comments (0)