Kevin Drum

Is Google a Little Bit Evil?

| Fri Aug. 6, 2010 4:00 AM EDT

"Net neutrality" is a principle that's guided internet development for decades. Put simply, it means that everyone has equal access to the net. If you send an email to Aunt Martha, it has the same priority as my Google search for Lady Gaga videos or Rupert Murdoch's latest multibillion dollar internet television startup. Data is data, and it all goes over the net equally quickly.

But net neutrality has been under attack from years. The battle lines shift, and sometimes get a little too complex to follow in detail, but the outline is pretty simple. Companies in the content business generally support net neutrality. They want their data delivered as fast as anyone else's without having to pay any special fees. Conversely, companies like Verizon or AT&T, who supply the pipes, want it to go away. They love the idea of being able to charge higher fees for better service.

During the Bush era, the FCC began to back off on net neutrality but still issued a set of "principles" that it expected service providers to adhere to. Then, last April, a court ruled that the FCC had no authority to regulate net neutrality at all. A month later, FCC chairman Julius Genachowski announced that he would try to reclassify internet providers in order to re-impose net neutrality rules on them, but this is a regulatory process that will take, at a minimum, months to complete.

In the meantime, net neutrality may be on the verge of unraveling completely. Google, once a fierce advocate of net neutrality and a company whose informal motto is "Don't be evil," has apparently decided that maybe just a little bit of evil is OK after all:

Google and Verizon, two leading players in Internet service and content, are nearing an agreement that could allow Verizon to speed some online content to Internet users more quickly if the content’s creators are willing to pay for the privilege.

....Such an agreement could overthrow a once-sacred tenet of Internet policy known as net neutrality, in which no form of content is favored over another. In its place, consumers could soon see a new, tiered system, which, like cable television, imposes higher costs for premium levels of service.

Any agreement between Verizon and Google could also upend the efforts of the Federal Communications Commission to assert its authority over broadband service, which was severely restricted by a federal appeals court decision in April.

The problem here is obvious: once Google does this, they set off an arms race. Can Yahoo or Microsoft really afford to be second class citizens? Or Disney or Fox? Not likely. Before long, pretty much every deep-pocketed content provider has signed a deal for special treatment and we officially have a two-tier internet. On one tier are the companies with money. On the other tier are all the rest of us. And make no mistake: if the major content providers get guarantees of better service, every other content provider will almost certainly end up with worse service than they have now.

I have a vested interest in this, of course, since Mother Jones isn't big enough or deep-pocketed enough to pay for top tier service, and that means that in two or three years delivery of this blog could end up pretty molasses-like. In a less parochial vein, I think the lesson of history is pretty clear: when common carriers are allowed to discriminate, the result is disastrous for everyone except the folks who currently dominate their market. If you have a startup search company that outperforms Google, but only if it's as fast as Google, well, what are the odds that Google won't pay to make sure that its service is always faster than yours? After all, ad revenue depends on getting eyeballs by hook or by crook, and it turns out they aren't quite as committed to not being evil as we once thought.

I'm not a net neutrality purist. I can see the case for offering tiered service for things like on-demand video streaming, which simply can't work commercially unless providers can guarantee reliable delivery. Beyond that, though, a free and open internet has worked pretty well and we abandon it at our peril. Time is running out on the FCC, and in any case, the FCC was never the right place for this anyway. Congress is. If we want to keep net neutrality in anything like its current form, Congress needs to get off its duff and set the rules of the road once and for all. Markey-Eshoo is a pretty good place to start.

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Myths and Realities About the Tea Party

| Fri Aug. 6, 2010 12:56 AM EDT

In his triumphant return to the Washington Post, Dave Weigel debunks five myths about the tea party:

  1. The tea party isn't a reaction to President Obama, it's a reaction to the bank bailouts.
  2. The tea party is racist.
  3. Sarah Palin is the leader of the tea party.
  4. The tea party is bad for Republicans.
  5. The tea party will transform American politics.

I think Dave is 90% correct. These are all myths, with the partial exception of #4. In the short term, he's right: "The tea party movement is giving Republicans a dream of an electorate, one in which surveys find more GOP-inclined voters enthusiastic about casting ballots than voters who lean Democratic. Democrats have done some damage to the tea party brand — its favorability has fallen in polls — but in general, the presence of a new political force that is not called Republican and is not tied to George W. Bush has given the GOP a glorious opportunity to remake its image, at a time when trust in the party is very low."

True. But in the longer term I think the tea party movement is more dangerous to Republicans than he lets on. There's a limit to how crazy a party can get and still win elections even occasionally, and the tea partiers are very rapidly taking the GOP to that point and beyond. It's probably a net benefit in 2010 — though even that's debatable — but beyond that I suspect it's almost pure millstone.

I'll have more on this in the next issue of the magazine. If I understand our production timetable properly, that shouldn't be too far off. But don't hold me to it. I might not have as good a handle on MoJo's print schedule as I think.

The Month in Review

| Thu Aug. 5, 2010 7:25 PM EDT

Here's a rough recap of the past month in news hysteria:

Week of July 12: New Black Panthers
Week of July 19: Shirley Sherrod, JournoList
Week of July 26: Ground Zero mosque
Week of August 2: Birthright citizenship
Upcoming Week of August 9: Gay marriage? Michelle's vacation in Spain? Take a guess!

Quite a summer we're having, no? Am I missing anything? What have liberals gotten hysterical about lately?

Quote of the Day: Minutemen in Utah

| Thu Aug. 5, 2010 5:19 PM EDT

From Economist reporter Andreas Kluth, after visiting a meeting of the Minutemen in Utah:

I had expected to be slightly scared. I was not. Instead, the atmosphere was somewhere between that of an Alcoholics Anonymous meeting and a geriatric home.

Better than the opposite, I suppose.

Crop Circles on Wall Street

| Thu Aug. 5, 2010 3:36 PM EDT

You've all heard of the Mandelbrot set, right? It's the fractal image shown on the right. It looks pretty ordinary, but if you zoom in you start to see a lot more detail. Zoom some more, and there's even more detail. You can zoom forever, and you'll keep finding more detail no matter how fine a microscope you use, much of it surprising and unpredictable. (Try it!)

Well, it turns out you can do much the same with stock market trading charts. Take a look at the chart for a single day's trading and you'll see a pattern. Zoom in to a single hour and you'll see a different pattern. Zoom in again to a single minute, or a single second, and you'll see something different still.

So how far down can you go? Last year's "flash crash," which saw the Dow plummet nearly a thousand points in a few minutes, was widely blamed on high-frequency traders who use computer algorithms to execute trades at very high speeds, and that made some folks at Nanex curious about what was really going on. Alexis Madrigal tells the story:

Most stock charts show, at best, detail down to the one-minute scale, but Nanex's data shows much finer slices of time. The company's software engineer Jeffrey Donovan stared and stared at the data. He began to think that he could see odd patterns emerge from the numbers. He had a hunch that if he plotted the action around a stock sequentially at the millisecond range, he'd find something. When he tried it, he was blown away by the pattern. He called it "The Knife."

....High-frequency traders do employ algorithms to look for patterns in the market and exploit them, but their goal is making winning trades, not simply sending quotes into the financial ether....The algorithms we see at work here are different. They don't serve any function in the market. University of Pennsylvania finance professor, Michael Kearns, a specialist in algorithmic trading, called the patterns "curious," and noted that it wasn't immediately apparent what such order placement strategies might do.

Donovan thinks that the odd algorithms are just a way of introducing noise into the works. Other firms have to deal with that noise, but the originating entity can easily filter it out because they know what they did. Perhaps that gives them an advantage of some milliseconds. In the highly competitive and fast HFT world, where even one's physical proximity to a stock exchange matters, market players could be looking for any advantage.

Donovan calls these patterns "crop circles," and he gives them all names: Castle Wall, The Waste Pool, Depth Ping, Boston Shuffle, BOTvsBOT, etc. Most of them involve sending out thousands of quotes per second, and you can see them all here. If Donovan is right, this isn't even high-frequency trading, which is iffy enough. It's high-speed quote stuffing and market spoofing designed primarily to screw up other traders, something that John Bates, a former Cambridge professor and the CTO of Progress Software, calls "algorithmic terrorism." That's a wee bit melodramatic, but it's still a nasty look at what's happening in our financial markets these days. This kind of behavior is hardly new, but it's certainly gotten a lot faster and a lot harder to detect.

Breitbart's Latest

| Thu Aug. 5, 2010 1:36 PM EDT

Meet Dr. Kevin Pezzi, the latest addition to Andrew Breitbart's stable of internet stars. Seriously. Click the link. You want to meet this guy. You can thank me later.

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What They Know

| Thu Aug. 5, 2010 1:22 PM EDT

The Wall Street Journal is running a good series this week on privacy in the digital age called "What They Know." This is from their piece today on cell phone tracking:

Global-positioning systems, called GPS, and other technologies used by phone companies have unexpectedly made it easier for abusers to track their victims. A U.S. Justice Department report last year estimated that more than 25,000 adults in the U.S. are victims of GPS stalking annually, including by cellphone.

....There are various technologies for tracking a person's phone, and with the fast growth in smartphones, new ones come along frequently. Earlier this year, researchers with iSec Partners, a cyber-security firm, described in a report how anyone could track a phone within a tight radius. All that is required is the target person's cellphone number, a computer and some knowledge of how cellular networks work, said the report, which aimed to spotlight a security vulnerability.

The result, says iSec researcher Don Bailey, is that "guys like me, who shouldn't have access to your location, have it for very, very, very cheap."

If you don't want to be tracked and think you might be, remove the battery from your phone. That's what domestic-violence shelters do: "As soon as victims arrive at shelters run by A Safe Place, 'we literally take their phones apart and put them in a plastic bag' to disable the tracking systems, says Marsie Silvestro, director of the Portsmouth, N.H., organization, which houses domestic-violence victims in secret locations so their abusers can't find them."

More generally, though, what do they know? The answer is: a lot. Probably more than you think, and the Journal's series is a good reminder that if you care about privacy, you should care at least as much about the private sector as you do about the government. Beyond cell phones, the Journal uncovers plenty of other good stuff too. For example, here's a story about the skyrocketing use of browser cookies to track your movements across the internet, and here's a graphic that shows which sites are the biggest abusers. The winner?, with and not far behind. Wikipedia is the only site they surveyed that uses no tracking cookies at all.

There's plenty of other good stuff at the main site, including advice on how to avoid being tracked (or, at least, how to avoid being tracked as much). It appears to be 100% accessible to nonsubscribers and it's well worth checking out.

How is Obama's Record on Trade?

| Thu Aug. 5, 2010 11:41 AM EDT

Dan Drezner tallies up Barack Obama's record on foreign policy, and as usual he's pretty underwhelmed on the subject of trade:

3) Trade: Blech. Let me repeat that — blech. I understand that the administration is on barren political terrain when dealing with this issue. Still, the phrase "Obama administration's trade agenda" is pretty much a contradiction in terms at this point. The Doha round is dead, and the only trade issue that has the support of policy principals is the National Export Initiative — and you know what I think about that. Unlike the other three issues, the administration hasn't even bothered to put much effort onto this one — though the recent pledge to get the Korea-U.S. Free Trade Agreement (KORUS) ratified is promising. GRADE: F

I don't expect to make much headway with Dan on this subject, but I think he's all wet here for two reasons. The first is that "barren political terrain" he acknowledges. No president can reasonably be expected to put a ton of political muscle behind a lost cause, and major progress on, say, the Doha round, was pretty clearly a lost cause from the day Obama entered office. In the face of a catastrophic global recession, there was never even the slightest chance of gaining support either at home or abroad for any major trade initiatives, and it's simply not reasonable to expect Obama to put any energy behind it. Not only would it have gone nowhere, it might even have been counterproductive. Better to wait until the global climate provides at least a bit of a tailwind.

Second, this isn't a classroom, where you get an F for not showing up. In politics, you get an F for actively damaging things. Obama hasn't done that. He's simply ignored trade as an issue. But he hasn't done any harm, and under the circumstances that's quite possibly about as much as a trade enthusiast could have hoped for.

I think Dan will be on firmer ground in a few years. When the economy picks up and trade issues get pushed back into the foreground, what will Obama do? We won't know until it happens, and in the meantime his (lack of) performance should earn him an Incomplete, not an F.

Help Coming for Homeowners?

| Thu Aug. 5, 2010 11:19 AM EDT

The Obama administration's program to address home foreclosures, HAMP, has been a pretty dismal failure. Only a small fraction of the money allocated to help homeowners has been spent and only a few hundred thousand loans have been modified. So what's next? James Pethokoukis passes along the latest dirt:

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages — one in five — are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

....Keep in mind the political and economic context. The nascent recovery is already running out of steam....The president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.

Maybe this happens, maybe it doesn't. But it would sure be an improvement over spending the money on "foreclosure mills," as Fannie and Freddie do now:

The business model is simple: to tear through cases as quickly as possible. (Stern's company handled 70,382 foreclosures in 2009 alone.) This breakneck pace stems from how the mills get paid. Rather than billing hourly, they receive a predetermined flat fee for the foreclosure — typically around $1,000 — plus add-ons for each of the related services. The more they foreclose, the more they make. As a result, consumer attorneys and legal experts say, even families who have been foreclosed upon illegally—and who can afford to make good on their mortgages—end up getting steamrolled. "It's 'How fast can I turn this file?'" says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, DC. "For these guys, the law is irrelevant, the process is irrelevant, the substance is irrelevant."

That's from Andy Kroll. Read the whole thing.

Prop 8 and the Courts

| Thu Aug. 5, 2010 10:32 AM EDT

Matt Yglesias on yesterday's court ruling that tossed out California's ban on gay marriage:

Whenever a favorable-to-progressives judicial ruling come down, the concern trolls come out of the woodwork to fret about the backlash. So in the wake of a win for the left on Proposition 8 in California, I wanted to go on record alongside Ryan as thinking such concerns are, when genuine, wildly overblown.

The American political system has a lot of features that differentiate it from most modern liberal democracies. These features include an unusually large number of veto points and also a greatly empowered federal judiciary. I’m not a huge fan of either feature, but the system is what it is and the interplay between the two means that responsible political advocates will always want to use all the levers at their disposal — including litigation — in order to get their way. Once laws are on the books, overturning them is generally an extremely cumbersome process. Merely persuading most people that you’re right doesn’t do the trick. And the system doesn’t really function in a “majoritarian” way at any level so the non-majoritarian aspects of seeking policy objectives through the courts don’t differentiate them from anything else.

I agree. There's no doubt that judicial decisions create backlashes, but the evidence is pretty thin that they create backlashes that are any worse than legislative or executive decisions. For better or worse, everyone involved in the American politics is now well aware that courts are an important part of the political process and they're fair game to be exploited as effectively as possible. That's just the way things are, and both sides play the game equally hard.

In this case, however, there's a different concern: using the judicial system might be perfectly kosher, but was it wise? The answer is: only if you win. And there are pretty substantial doubts that yesterday's victory will hold up all the way to the Supreme Court. Judge Walker's mountainous finding of facts aside, do we really think the Supreme Court is ready to rule that every state in the union is required to allow same-sex marriage? Maybe! But the odds seem long, and if we lose the case it's likely to be a decade or two before the court is willing to reconsider.

In the end, that might not be so bad. There's still a chance of winning, and a loss only means that we go back to state-by-state battles, which is exactly where we are now. But it's still a key question.