Peter L. Berger's Blog, page 636

What’s Dirtier Than Coal and Is Gaining Popularity in China?

No, that isn’t the start to a riddle, but a question that itself raises doubts about Beijing’s newfound green motivations. The Christian Science Monitor reports on a particularly dirty fossil fuel that’s being increasingly used in China:

Petroleum coke, or petcoke, is a byproduct of petroleum refining that contains over 90 percent carbon and is high in thermal value. Chinese companies in various industries have increasingly turned to it since 2006, when the country experienced a fuel shortage. […]

“In China, the petcoke is little known to most of the statistics and even to the energy sector itself, so we cannot find the official data of the petcoke consumption in the national statistics book,” Wang Tao, resident scholar at Carnegie-Tsinghua Center for Global Policy, said in a Wednesday discussion at Carnegie Endowment for International Peace. “They don’t even have the category of petcoke until 2010.”

The United States, China’s partner in its joint statement outlining emissions reductions targets last November, is the predominant exporter of petcoke for China, and while data for China’s own usage are scarce, our numbers show Beijing bought more than 10 times as many barrels last year as compared to 2008.

This doesn’t doom China to a forever smog-covered future, but it does remind us that a countervailing narrative to that apocalyptic vision—that Beijing has suddenly turned over a verdant green leaf out of some deep appreciation for natural beauty—is equally specious. China’s target setting last fall was a savvy PR move, as the CCP saw a way to wrap national security concerns, like the reduction of dependence on foreign energy sources or growing social unrest over endemic urban smog, in green platitudes. But if and when Beijing moves to reduce its imports of American petcoke, it won’t be because it yearns to live more fully in harmony with Mother Earth, but rather because it wants to cut reliance on an American energy supply.Similarly, China’s plan to rapidly build out its nuclear energy industry has much more to do with energy security than eco-idealism. Breathless green observers would do well to keep those motivations in mind, as they’re a big reason why world’s nations won’t sign on to a binding international treaty in Paris this December.

Poles Suddenly Far Less Interested in Joining Euro

For years, ever-closer integration into the European Union has been one of the driving forces in Polish politics, widely viewed as a process that would finalize Poland’s place in the Western order. But suddenly—what could have inspired this?—opinion has taken a sharp turn against the euro in the run-up to the country’s general election. As both the NYT and the Financial Times report, the events in Greece have become a flashpoint in Poland, where the Law and Justice party will face the Civic Platform party this October. NYT:

The governing party in Poland, Civic Platform — whose members include Donald Tusk, the president of the European Council — has long favored a move to the euro, but lately has taken a decidedly more cautious tone.

“I have never said I would adopt the euro,” Prime Minister Ewa Kopacz said in a recent interview on state television. “Not today, not tomorrow, not in five years. We will introduce the euro when it will benefit Poles and Poland.”

The right-wing Law and Justice party, whose presidential candidate, Andrzej Duda, was just elected to a five-year term, has made its aversion clear.

“We reject this bad idea unless you want Poland to become a second Greece,” said Beata Szydlo, the party’s candidate for prime minister in parliamentary elections this fall. “Unless the eurozone deals with its own problems, there should be no discussion about Poland adopting the euro.”

The Polish people, t0o, seem to oppose the euro, even though their country is legally required to adopt it; the FT cites one survey of Poles showing that 54 percent of respondents don’t want the currency. Even the ruling party, for its part, is defending itself in anti-Greek terms, characterizing Law and Justice as offering “populist” and “carefree” spending prescriptions that will lead to Greek-style ruin.

Germans who believed that making an example of Greece would encourage others to follow the rules will doubtlessly be pleased by the ruling party’s criticism of Law and Justice. But the popular opposition in Poland to the euro poses a serious challenge to the traditional view of the way the EU is meant to work. The pan-European project is supposed to be a one-way ratchet. As each element of European integration falls into place, it would by internal logic—and popular appeal—drive the next. This is why Poland is still legally obligated to join the euro—the idea of ‘opt-outs’ under such a mental rubric is almost tantamount to heresy.But the disaster that befell Greece, and the straightjacket that the single currency has proven since the crisis first struck, is impossible to deny. To see Poles telling the FT that “If [the euro] was good, English people would be the first to have it in their country” should send a chill down the spine of every good eurocrat (The English are, needless to say, the nation of heretics, from an orthodox Brussels point of view.)The anti-euro sentiment in Poland points to why many experts claimed the Greek crisis would pose serious political risks to Europe no matter which way it was resolved. If Greece had been able to leave, the ideal of inevitable “ever-closer union” would have been falsified. But since it looks like it will have to stay under unpleasant circumstances, that ideal looks far less appealing to others.The peoples of Europe will have plenty of opportunities to make their views felt in this ‘year of elections‘, as Poles, Spaniards, and perhaps even the Greeks (again) head to the polls. How they vote, and how the EU’s leaders respond, will tell us a lot about just how deep this crisis goes.

What Does Cheap Oil Mean for the US Economy?

When the bottom fell out of the global oil market last fall, analysts wondered what cheaper crude might mean for the American economy. On the one hand, the bearish market threatened to contract the booming shale industry, whose relatively high costs made it less competitive in an oversupplied market. On the other, cheap energy is generally favorable to just about every other sector of the economy not involved in its production. Analysis from Barclays suggested that the price plunge would be a net benefit to the American consumer and by extension the economy. But as the WSJ reports, the numbers so far don’t bear that out:

[T]he sharp decline in drilling activity has led to a drop in investment and a weakening in the jobs market that has swamped the benefits of lower oil prices…Absent the decline in investment in mining exploration, shafts and wells—a category that is almost entirely oil and gas-related—gross domestic product would have grown at a 0.4% annual rate in the first quarter rather than contracting by 0.2%. […]

…[T]here have been spillover effects into all kinds of other jobs. One way to see this is by looking at jobs in the states of North Dakota, New Mexico, Oklahoma, Texas and Wyoming. Excluding the mining sector (again, mostly oil and gas), these states added a combined 112,500 jobs in the five months through May,—down sharply from the 236,000 added in the five months before that.

In other words, the ripple effects from bargain oil prices have resulted in a surprisingly high number of jobs lost, not just in the oil extraction sector, but also in the various industries that support that process. That said, there may be better days ahead:

Federal Reserve data released last week showed that the sharp downdraft in drilling activity eased in June. And after falling by more half in the first six months of the year, Baker Hughes’s weekly count of U.S. oil rigs has just leveled out…Layoff announcements in the energy sector have also fallen back lately. And [Goldman Sachs economist Zach Pandl] calculates that, adjusting for seasonal swings, initial claims for unemployment insurance in the five states above have also cooled off.

The U.S. oil industry has had to tighten its belt to stay profitable at $50-55 per barrel crude, and shrinking margins are taking their toll on our GDP. That said, shale production hasn’t crashed in the way the Saudis and the rest of OPEC’s petrostates may have been wanted, and companies are experimenting with new techniques to get more oil out of the ground for less money and time invested. It’s not inconceivable that the industry could grow comfortable with today’s prices as it continues to innovate new modifications to what is still a fledgling combination of drilling techniques. If and when that happens we could see oil production growing while the rest of the economy enjoys cheap prices—in other words, we could soon be able to have our cake and eat it, too.

Modi’s Reform Stumbles Continue

The Indian economy is already beginning to feel the hurt from the failure of Narendra Modi’s bid to pass a bill that would have made it much easier to find space for industrial or infrastructure projects. As it stands, seizing land requires virtually unanimous consent of all of the current owners, giving small landowners the power to obstruct major development projects—imagine trying to build a major U.S. highway with that standard, and you can see what the problem with India’s current system is. Modi has been trying to lower the barrier, so that if a prospective investor can get 80% buy in, the project can go ahead. But the land reform, a top item on the prime minister’s agenda since he took office, was held up in parliament for months. And as we noted last week, Modi has finally given up and conceded on the main issue.

Now, in the first of what are likely to me many casualties of the onerous status quo, a major steel concern that was planning to invest in a huge plant in India is taking it’s business elsewhere. The Wall Street Journal reports:

South Korean steelmaker Posco said Friday it has decided to put on hold a $12 billion project to build a steel plant in India, as part of restructuring to cut its overseas business amid a global industry slowdown.

“We have decided to shut down unprofitable local and overseas businesses as part of a restructuring plan aimed at boosting profit growth,” said a Posco spokesman. […]A Posco India spokesman said the company has so far acquired only around 600 acres out of more than 4,000 acres needed for the 12-million-tons-per-annum steel plant, billed as one of the largest foreign-direct investments in India.“There has been no progress on the site. We are not able to acquire land,” he said.The company isn’t planning to shift the steelmaking project to another Indian state, the spokesman added.

Meanwhile, India’s biggest unions are uniting in opposition to Modi’s plan to distill 44 labor laws down to just 4 in hopes of making it easier for businesses to hire, retain, and fire employees. The country’s 11 largest labor groups are calling for a nation-wide strike on September 2nd, a threat serious enough to earn their leaders a meeting with Modi today. The leader of India’s largest union, which has in the past supported Modi and the BJP party, threatened last week that “[i]f there’s no satisfactory reply from the prime minister, the strike will continue.”

If India wants to grow into the kind of power Modi and the many cheerleaders of his reform agenda want it to be, it cannot afford to miss out on huge, job-creating projects. Successive Indian governments have tried and failed to change things, and their failure bodes ill for a business-friendly future. Indeed, without major reforms to land law, interstate tariffs, the gobs of red tape that surround hiring and firing, and several more key issues, India will be unable to make it into the top circle of world powers.Glancing over to the sidelines, be assured that China could not be more thrilled that Indian reform isn’t going according to plan.

Chicago: Greece on the Great Lakes

Is there a cure for what ails Chicago? The city’s protracted meltdown—declared the “next Detroit” by the NYT nearly two years ago and dropped to “junk” by Moody’s this May—has been well-documented. In a critical look at the city’s “Great Financial Fire,” Aaron Renn lays out the dire facts and presents a cautiously optimistic best case scenario:

While some sort of refinancing may be required, the proposed debt issue contains maneuvers similar to those that helped get Chicago into trouble in the first place—including more scoop-and-toss deferrals, $75 million for police back pay, $62 million to pay a judgment related to the city’s lakefront parking-garage lease and $35 million to pay debt on the acquisition of the now-vacant site of the former Michael Reese Hospital.

Most dubiously, the city actually is borrowing the money to pay the first two years of interest payments on these bonds. In true Chicago style, the proposal passed the City Council on a 45-3 vote. Hey, at least the city is getting out of the swaps business.

And now the hopeful part:

Emanuel should not let this crisis go to waste but use the opportunity to accelerate, not defer, painful choices. This means declaring a hard stop on gimmicks like borrowing for current expenses and scoop-and-toss after the current bond issue and structurally balancing the budget now. Yes, aggressively defend the pension reform deals—but just as aggressively put the city on track to full funding even at the expense of current pain.

And a few more things: Join with Gov. Bruce Rauner to fight for legal changes at the state level to require all future local employees to receive 401(k)-style pensions only, and to prohibit any enhancements to existing legacy pensions, in order to prevent a repeat of the current problems.Easy? No. Painless? No. Which is why a strong leader like Emanuel should be taking them on.

While Rahm has, at times, looked keen to wish away, rather than face, Chicago’s deep pension crisis, options are beginning to run scarce. The way things are going, some of the proudest cities in America are going to be looking for bailouts: there won’t be much appetite in cities and states who have done the hard work to manage their finances well to bail out the bad actors. For Chicago and its peer cities nationwide, reform is on the way.

Understanding the New Germany

Remarks by Germany’s finance minister about Greece have everybody blaming Germany for “being mean.” The New York Times reports on the controversy around Wolfgang Schäuble, who has said that the Greeks would be better off leaving the euro for a while:

Mr. Schäuble, after helping to negotiate a deal expressly intended to keep Greece in the eurozone, has suggested several times that Greece would be better off leaving. He has come to represent, in many eyes, the hidden face of German power. In Greece, he is portrayed as a Nazi. Even an Italian weekly, L’Espresso, showed him on its cover with the headline: “This man scares us, too.”

It may be too soon to say for sure whether the harsher German tone signifies a turning point in its role within Europe or if it is the transitory result of circumstances. But for many in Europe, especially on the center left, the Greek crisis “revealed a more brutal Germany, embodied in Schäuble,” said Hans Kundnani, the author of “The Paradox of German Power.”

There are lots of things to criticize Germany for, as we have in the past. However, on this point, Schäuble has a defense: what he said was true. Greece really would be better off leaving the euro. Schäuble and others are hinting that it would be much, much easier to forgive a lot of Greek debt and give the country a boost if it gets out of the euro context, where everything needs to be done by the rules.

One can quibble with the rules that Germans want in the Eurozone, but there is really no way a group of very different countries at quite different places culturally and economically can share a common currency unless there are clear rules—and clear consequences for breaking them. It isn’t harsh or mean to say that; it is realistic and appropriate. German public opinion won’t support any other kind of currency union, and there is nothing wrong with German politicians speaking for the people who elect them.What is driving the French, Spanish, and Italian rhetoric here is as much as anything a hope of guilt-tripping the Germans into underwriting the deficits and debts of the Latin bloc. But it’s getting harder to guilt the Germans into writing big checks. Seventy years after the end of World War Two there are people of voting age in Germany whose great grandfathers were too young to have fought in Hitler’s war. What Hitler and the Nazis did can never and should never be forgotten or glossed over, but the link between Germans today and the Germans of 1944 is getting more tenuous all the time.Meanwhile, Germans have had to rediscover a sense of national identity. Without it, the unification of the country and the integration of east and west (still something of a work in progress, but much farther along than it was a decade ago) would not have succeeded. But the west Germans have had to pay through the nose for the privilege—something like $1 trillion spent and more still to come. That’s a lot of solidarity.Today, the new country is still developing its identity, which is very far from the kind of chauvinism of Hitler’s time or even the Kaiser’s era, but is also different from the relentless “post-nationalism” of the West German era. It’s anybody’s guess how this process will work out and how it will mesh with the European loyalties and associations that most Germans also feel. But it’s unlikely that all of Germany’s neighbors will welcome the change—especially France, which is Europe’s big loser under the new dispensation. In the old days, Germany’s self-imposed post-nationalist hair shirt allowed the French to indulge their own national egotism to the fullest, preening themselves as the leaders of Europe and seeing a divided, guilt-ridden Germany as an excellent horse on which France could ride.So far, Germany has done better with its eastern and northern neighbors than with Club Med. The Balts and the Poles are reasonably happy with the ideas that Germany wants to use in building a new Europe; the Finns and the Dutch if anything wish the Germans were just a little tougher on the garlic-eating miscreants of the sunny south.Americans for their part need to invest in understanding Germany—and even sympathizing with it. There’s no doubt that Germany, and Europe, are in trouble. The euro makes things worse; without the common currency there would be no need to try to run such a tight ship. Countries would have a lot more room to go their own way, and perhaps to grow a bit faster. Germany needs friends that it trusts enough to listen to when, as will inevitably happen, the burden of holding the continent together becomes financially challenging and psychologically demanding. Berlin doesn’t see that kind of friend in America today. When we criticize German policy there is a feeling that we haven’t put in the time and the effort to understand the German point of view, much less come to understand the difficult choices it faces and the responsibilities it bears.

140 Characters of Jihad

In the age when terrorists can recruit followers from halfway around the world, a question looms over social media companies: how to deal with content posted by jihadi groups. From WashPo:

As the Islamic State, also known as ISIS and ISIL, continues to hold large parts of Iraq and Syria and inspire terrorist attacks in more and more countries, it has come to rely upon U.S. social-media companies to summon fresh recruits to its cause, spread its propaganda and call for attacks, according to counterterrorism analysts. […]

“ISIS has been confronting us with these really inhumane and atrocious images, and there are some people who believe if you type ‘jihad’ or ‘ISIS’ on YouTube, you should get no results,” Victoria Grand, Google’s director of policy strategy, told The Washington Post in a recent interview. “We don’t believe that should be the case. Actually, a lot of the results you see on YouTube are educational about the origins of the group, educating people about the dangers and violence. But the goal here is how do you strike a balance between enabling people to discuss and access information about ISIS, but also not become the distribution channel for their propaganda?”

Striking a proper balance is an elusive task indeed. Even if there were a clear line of demarkation between “good” and “bad” content, technological shortfalls make it “difficult to distinguish between communiques from terrorist groups and posts by news organizations and legitimate users.”

A recent feature in our magazine’s pages addressed this issue, arguing that it’s high time the Western world takes aggressive action to expel such content from its servers and social media sites. James van de Velde asserts that “[w]ithout contesting extremist use of the internet, the United States and its allies will fail to defeat the Islamic State and to eliminate al-Qaeda, both of which are, let us remember, the stated goals of U.S. policy.” Furthermore, shutting down those sites and accounts isn’t a useless game of whack-a-mole—it can do significant damage to jihadi web presence and slow their operations down. The piece, which can be found here, is worth reading in full—this issue isn’t going away.

GM Tech Once Again Flexes Its Green Muscle

Researchers have figured out a way to use genetic modification to control the population of a pestilent moth species without the use of pesticides. Reuters reports:

[Scientists] from the Oxford University spinout company Oxitec…developed diamondback moths with a “self-limiting gene” which [sic] dramatically reduced populations in greenhouse trials.

The self-limiting gene technique has already been tested against dengue fever-carrying mosquitoes, cutting their populations by over 90 percent in trials in Brazil, Panama and the Cayman Islands.

This could be a welcome development for farmers, as the BBC reports that these moths are “notoriously difficult to deal with…because the moths quickly develop resistance to insecticides.” On top of that, this new technique isolates the intended target better than current methods, preventing other organisms from being affected—a common complaint levied against pesticides by environmentalists.

This isn’t the first time we’ve seen genetic modifications being touted as a better tool for combatting pests than current methods. The same company (Oxitec) that developed this approach for diamondback moths produced similar results for the common fruit fly last summer. Oxitec has also performed “extensive field trials with GM mosquitoes in Brazil in order to prevent the spread of dengue fever, killing 96% of the dengue-spreading mosquitoes.” If researchers figure out a way to safely introduce these genetic modifications into pests like mosquitoes, we’ll be able to use GM technology to do more than improve crop yields—we could potentially save millions of lives.This GM tech promises to reduce the use of pesticides, eliminate “collateral damage” in insect populations, and give farmers a more effective tool in protecting their crops from invasive species. Greens need to get over their bias against genetic modification research quickly. It is among the most promising solutions at hand to the problem of feeding humanity in an increasingly warm and crowded planet—and potentially quite useful for killing pests and saving lives.

Blocking the Robocallers

Adam Garfinkle: I’m speaking with Jason Flaks, the director of engineering at Marchex, in beautiful downtown Seattle, about new FCC regulations concerning robocalling that are about to kick in. Jason, before we get down to the nitty-gritty, tell is a little bit about what Marchex actually is, and what it does, please?

Jason Flaks: Sure, Marchex is a call analytics company. Our platform helps businesses and advertisers understand the performance and efficiency of advertising by measuring the phone calls that result from their marketing programs. As result of what we do, we know a fair bit about robocalling, and the technology that has come into play in recent years.AG: OK, so let me just ask you first about the new adjustments to Telephone Consumer Protection Act, which directs the way the FCC deals with robocalling. Could you tell what the main changes are, and why you think they have come about?JF: Sure. So, the primary change that the FCC is instituting is that it’s telling the phone carriers that they now have the legal right to block robocalling before calls ever reach the consumer. This basically has to do with a class of call that we call auto-dialers, which is technology or equipment that dials thousands of numbers more or less indiscriminately to play automated messages, or silence, or noise, or a variety of nuisance-type material to consumers. So, what the FCC is now saying to the carriers—because its been legally ambiguous in the past—is that you do not have to let these calls go through. You can offer technology solutions to block these calls from reaching end consumers.AG: Well, if the carriers are now permitted to spend money on technology to be able to do this, and offer a new robocall-blocking service to consumers, they’re obviously in a position to charge consumers for that service, right? Do you have any sense yet of what the technology is, and what it would cost a typical landline consumer like me to stop that “Bridget from card holder services” from pestering me?JF: We don’t know what the carriers would charge, or even if they would charge anything. They might just offer this as a service to their end customers as part of a normal package. It would amount to carriers adopting solutions like those Marchex itself offers to businesses, which is really about identifying fraudulent callers or spammers and blocking those calls from reaching the consumer before their handset rings. The point is to intervene technically so that the end consumer isn’t faced with the nuisance of either having to answer the call or deal with the ringing in their house. I’m sure you’ve experienced this personally in your own house.AG: Well, I just want to say from personal experience that in recent years it’s gotten much, much worse. There was a time, pretty recently, when “card services” was calling me two or three times a day, and scammers from India were calling me trying to take control of my computer, and lord knows what else. Since I work mostly from home these days, it was getting to be a serious nuisance. And I know other people, older folks, for whom getting up to answer the phone—thinking it might be a grandchild or someone else they really yearn to talk with—is tantamount to an extreme sport. I signed up on the FCC’s “no call” list, and it did absolutely no good whatsoever—and that leads me to my next question. A lot of people I think don’t realize it, but the Telephone Consumer Protection Act dates from 1991. 1991 is a reasonably long time ago, and yet it seems that this Act hasn’t done a whole lot of good during the 24 years of its existence. Is that mistaken?JF: What you’re really highlighting is that the Act is old and technology has dramatically changed. That has given the robocallers a distinct advantage over time. As technology has advanced it has become incredibly trivial for really any wrongdoer to install some simple software that can easily robodial thousands of people, and on top of that as VoIP technology has become more commonplace it’s becoming very easy to spoof your caller ID. What that allows people to do now is drive tens of millions of phone calls masked behind a caller ID that looks legitimate to you, or is unrecognizable; so you wind up answering the phone. That’s become very easy and inexpensive to do with off-the-shelf technology, which is why you’re seeing increases in this type of thing.AG: So what you’re saying is that there really wasn’t anything wrong with the law in 1991; it’s just that the law hasn’t kept up with the bad guys?JF: That’s exactly correct.AG: Has this kind of very annoying thing become as prevalent in other countries? If I were living in Britain, or Denmark, or Chile, or South Africa, would I be subjected to this kind of pestulance? Or are the perpetrators really aiming only at the U.S. consumer market?JF: Marchex is an international company, and we have seen some types of traffic like this in other countries. We operate in Canada, and there’s certainly calls like this that happen in Canada as well, especially since they’re on the similar number dialing plan as we are, it’s called NANPA. But we’ve also seen some type of traffic like this in European countries, as well. The scale of it over there isn’t quite as clear to us, but it’s not uniquely an American problem.AG: I read a few weeks ago that the Marketing Research Association’s director of government affairs, Howard Feinberg, warned that the best-case scenario is that the new technology “will block out most autodialed research calls.” The intimation here is that the new FCC rules would harm the ability of scholars to research Americans’ opinions on various political issues. Have you detected any reaction in the Congress or at the FCC to that complaint?JF: No, but that complaint strikes me as somewhat questionable, just in the sense that phone surveys based on robocalling are going to get biased results because of who answers the phone and who doesn’t. There are better techniques to use, so I’m not sympathetic to that line of argument.AG: I’m not either, because it turns out, if you dig a little deeper, that most of the people for whom Mr. Feinberg is speaking are not academic researchers but political consultants of various sorts, who want this information in order to offer their services for large sums of money to politicians. So this is not a selfless scholarly endeavor.Let me now ask about business-model angle of robocallings. I’ve got a landline; I’m just an ordinary consumer. But you have suggested that the new regulations could, if extended further, go some way to protect businesses from harassments that cost them more than $100 billion a year—costs that, of course, get passed on in one way or another to everyone in the economy. I’d like to know more about the small business and business angle of this problem, and what new regulations might do to help resolve that problem.JF: The main point is that the basic law is called the Telephone Consumer Protection Act, and the keyword there is “consumer.” Right now the law does not help businesses at all. And the new FCC rules changes do not actually change anything in terms of working with businesses. The key thing to note here is that businesses own hundreds of millions of toll-free lines, and these lines receive tons of robodial traffic as well, that amounts to upwards of $1 billion dollars each year—not $100 million—in phone charges as well as lost productivity just to answer those calls. It’s a big deal for business; the FCC could definitely be doing more to help protect businesses as well.AG: Do you have a language to propose to the FCC to amend the law or create a new bill in order to protect business? It seems like a “no brainer” that we should do something like that.JF: It would be easy to do: Just extend the current Telephone Consumer Protection Act to work for business to business phone calls as well.AG: That would not help Marchex much, would it? I’m assuming that, if robocalling is such an expensive nuisance for businesses, many avail themselves of your services. I’m assuming too that larger business have the funds to do this, while a lot of smaller businesses may not, right?JF: Many companies do come to a company like Marchex, and we do offer technologies like our Clean-Call technology that can find robocalls, and automatically detect the signatures of these spammy-type phone calls, and block them from reaching the end customer. There are several products out there that are quite effective at blocking these types of calls, even when the perpetrators are using caller ID spoofing technologies. But many businesses either don’t know about or choose not to afford these fixes. So the FCC could help everyone by extending the law, and companies like ours would still have plenty of business. We’re for an extension of the new regulations to protect businesses.AG: I remember reading on the FCC website, maybe a year or so ago, that some of the “card services scams” were found out, and indictments were brought, and some of them were shut down. But they didn’t seem to stay shut down for very long. Can you explain the business model of these scammers? People would not persist in this if they weren’t making some money out of it. So what’s the dynamic here? For example, is this a centralized effort, or more like a distributed system, with the technology out there so that eight or twelve or fifty people, perhaps in a dozen different countries, are doing this? How many Bridgets are there, in other words?JF: There are multiple business models that drive the various amounts of robocalls and spam in the market today. Some of it is pretty straightforward in that it is basically aggressive tactics trying to get people to buy into something, and the bad guys are basically trying to dial as much possible with some known odds that a certain percentage of customers will fall for a scam. There are other models out there built around telecommunications laws that allow some people to collect money from any kind of transaction or transfer down the pipe, and that incentivizes some types of illicit calling as well. In all these cases it is highly distributed. There are lots of bad actors and the truth is that the government is not really capable of going after all of them, because it’s very complicated for them to do it, and they don’t have the resources to do it. So like a lot of fraudulent activities that you see in the world, they knock one down and ten more pop up around the corner.AG: I wonder how many of these calls actually originate from outside of the United States? I guess a lot of them do, don’t they?JF: We have been made aware that some of these calls do appear to be coming from overseas. That is definitely an easier thing to do nowadays thanks to some of the VoIP technology. Calls can originate from outside of the United States and appear to look like they’re coming from within the United States. But some of them happen domestically as well.AG: Well thank you very much for clarifying a lot of this. I do hope that the new rules help people, and I certainly agree with you that business needs protection as well because those costs get passed on to everybody when business suffers from this kind of stuff.Just one more question, if I may—a kind of philosophical question. When I first started getting these calls, I thought “what a bunch of assholes these people are; they’re trying to take advantage of people who are credulous and gullible.” But then I remembered the old saw that “a fool and his money are quickly parted”, and I wondered if maybe those people dumb enough to fall for such scams deserve to be robbed. After all, hucksterism is as American as apple pie. But I’ve since come around full circle, and I’m now just as outraged by robocalling scams as I was to start with. Do you have any philosophical advice for how we think about this problem?JF: Well, I think of it this way. Suppose you’re at a retail business somewhere waiting in line to purchase something, and the guy at the register has to take time to answer the phone to deal with some robodialer—and you have to wait an extra five or ten minutes because he’s dealing with all that: That’s not the end of the world, but that’s also just not right. It’s less about the people that fall for the scam, it seems to me; it’s about all the innocent bystanders who are impacted by these calls. Whether that’s the guy that’s waiting on hold because there’s somebody else spam-calling a business, or it’s my wife and kids who are annoyed because I went to go answer the phone, leaving in the middle of a scintillating board game we’re playing. The implications of what happens for some small set of people who answer the phone, I think, is less important than all the implications of lost productivity and telephone costs and everything else that traversed the system, that are completely unnecessary and really do no good for society or anybody.AG: That’s a very helpful insight. Thanks very much, Jason, I really appreciate your talking with us. Maybe this will help persuade the FCC to take the next, useful step to protect businesses from the robocalling epidemic.JF: Yeah, it was great chatting with you.

Modi Admits Defeat on Key Reform

Just over a year ago Narendra Modi was swept into India’s highest office on a platform based on, among other things, an ambitious liberal economic reform agenda. Item one on that agenda: Update India’s onerous land laws at the federal level so that stubborn landowners can’t easily stand in the way of industrial and infrastructure projects deemed to be for the public good (roughly, what is in American parlance called ‘eminent domain’).

This reform, among others, was supposed to turn India’s lagging economy into the sort of dynamic “growth miracle” that China has been. But it isn’t quite working out that way. We’ve reported on some of Modi’s setbacks in parliament, where the charismatic leader hasn’t been able to shepherd through some of his most important bills, due mostly to his party’s not holding a majority in the upper house. And now, he’s finally throwing up his hands on the land bill issue. Reuters reports:

“We realise that currently we don’t have the numbers to pass it,” a leader in Modi’s ruling party told Reuters. “By reducing the heat on this we will be able to get other things passed.” […]

Having staked so much capital on an unpopular issue, Modi risks losing the initiative to the opposition and fuelling perceptions that his reform plans are not necessarily going to improve the lot of India’s 1.27 billion people.“This is a huge setback for Modi,” said Sanjay Kumar, an analyst at the Centre for the Study of Developing Societies. “This is an indication that if bills ae controversial, this government is going to find it very difficult to pass them.”

Modi’s party, the BJP, is still planning to press the issue in individual Indian states. But even if that’s successful, it’s a small consolation for the would-be miracle worker. Indeed, the symbolic loss here is nearly as bad for Modi as the actual consequences of the bill’s failure. This is the biggest item on his liberal economic reform agenda, and with several other major potential losses in that arena looming, his predicted legacy as a pivotal reformer is looking more and more shaky.