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5 months ago

Don’t regulate Facebook — That’s what Zuckerberg wants

If Facebook disappeared forever this afternoon, I wouldn’t exactly be upset about it. I’m astounded when I see people post loads of personal information on the site, including posts about all their travel plans, their shopping habits, their daily routines, and their family members. Long is the list of people who have been harassed by law enforcement agencies or “child welfare” agencies in response to something they said or did on Facebook. And, given what we know about Big Tech’s willingness to collaborate with government agencies, people who are fond of posting their every move in Facebook might as well hand over their daily itineraries to the FBI.

Similar problems exist with other tech platforms as well, from Twitter to Google.

However, there is a fairly easy way to minimize the amount of information Facebook and other platforms collect on the user. The user can stop using the platform, or at least stop using it so often. Unlike the state, which is free to mandate that people use their “services,” consumers are still free to not use Facebook.

Also, it is still the case that producers are free to create new firms that will compete with Facebook. And many have done so. Recent data suggests that Facebook users are spending less time on Facebook, and younger users are preferring to spend their time elsewhere. Facebook is expected to actually lose users in the under-25 category this year. Some will keep using Facebook-owned Instagram, but many will go to services not owned by Facebook, such as Snapchat.

For whatever reason, whether it’s increased competition or a decline in social media use overall, Facebook is not bulletproof, and it is facing competition from others. True, none of Facebook’s competitors are just like Facebook. But that’s how competition works. Other firms offer a choice for consumers, and offer different products.

After all, we’ve already seen firms like Facebook be beat by competition in the past. Remember MySpace? It was once bigger than Facebook. And now it’s not.

If consumers want to use social media platforms that aren’t Facebook, and which offer different choices, the answer lies in greater competition. But, if greater competition is what we want, barriers to entry must be kept low, government regulations must be abolished or minimized, and consumers must be free to use or not use firms as they please. So long as this is the case, Facebook will never have a true monopoly. Consumer preferences can always change. And sometimes they change drastically.

Get Ready for More Regulation

Unfortunately, this week’s Congressional hearings with Facebook founder Mark Zuckerberg suggest that things are going in a direction that will only end with increasing whatever monopoly power Facebook currently has. Washington politicians are interested in regulating the social media world, and ultimately, this will only strengthen the big firms that dominate the industry now — while making things harder for smaller start-ups and future competitors.

Oh sure, politicians are making a big show of how concerned they are about everyone’s privacy, although it is embarassingly obvious that the elderly and out-of-touch-with-reality members of the Senate have no idea how social media works. They most they could do was read questions written for them by staff and try to understand Zuckerberg’s answers.

(These people, by the way, will be the ones voting on any future legislation that regulates social media.)

But even if members of Congress had a wonderful grasp of the internet and social media, would anyone benefit from any new regulations on the industry?

Well, yes, of course some people would benefit. Those who would benefit include the government agents who will get jobs as regulators, the politicians who can score political points for passing new legislation, and the large incumbent firms that now dominate the social-media market.

Dominant Firms Want Regulation

It should not surprise us, then, that even before he testified to Congress, Mark Zuckerberg was calling for his own industry to be regulated:

Facebook chief executive Mark Zuckerberg said on Wednesday that he’s open to having his company be regulated. “Actually, I’m not sure we shouldn’t be regulated,” Zuckerberg said in an interview…I actually think the question is more ‘What is the right regulation?’ rather than ‘Yes or no, should it be regulated?’” Zuckerberg told CNN.

But why so open to regulation? Zuckerberg cleared this up himself in one of his answers to questions from members of Congress:

I think a lot of times regulation puts in place rules that a large company like ours can easily comply with but that small start-ups can’t,” Zuckerberg said as he testified for the second consecutive day on Capitol Hill.

Indeed.

Government regulations such as minimum wages and financial mandates are especially burdensome on small firms because small firms have less access to capital and enjoy fewer benefits of economies of scale.

It’s far easier for a firm like Walmart, for instance, to pay higher wages than for a small start-up. And, should the economy fall on hard times, higher costs can be weathered better by large firms that can borrow large amounts to get through a crisis. Small firms have far less borrowing power.

One example of this can be seen in the decline of small banks in the wake of the new banking regulations found in the Dodd-Frank legislation. Compliance costs created by the new legislation have led to fewer small firms, fewer start-ups, and fewer community banks. Huge financial institutions have benefited greatly from additional legislation. Market share for small firms, meanwhile, is being destroyed.

These barriers to both entry and survival for small firms, end up destroying competition. Per Bylund notes: 

Regulated markets are different from open, free markets in that they have artificial barriers to entry: they redistribute costs of business to protect some incumbent firms by forcing the cost on (some) entrants. In other words, there are fewer new businesses and thus less competition.

Moreover, this decline in competition then means that the surviving large firms can afford to be less responsive to the desires of consumers. Efforts to reduce prices also fall by the wayside and competition wanes. Bylund continues:

Under interventionism, businesses do not always need to discover accurate consumer prices because the threat from new entrepreneurs entering the market is smaller than it otherwise would have been.

In other words, government regulations diminish consumer sovereignty by reducing both competition and thus the incentive to stay in tuned with what consumers want.

Dominant Firms Control the Regulators

The other great danger in regulation exists in the fact that regulatory bodies have a tendency to be taken over by the large dominant firms themselves.

This is a common occurrence in regulatory schemes and is known as “regulatory capture.” When new regulatory bodies are created to regulate firms like Facebook and other dominant firms, the institutions with the most at stake in a regulatory agency’s decisions end up controlling the agencies themselves. We see this all the time in the revolving door between legislators, regulators, and lobbyists. And you can also be sure that once this happens, the industry will close itself off to new innovative firms seeking to enter the marketplace. The regulatory agencies will ensure the health of the status quo providers at the cost of new entrepreneurs and new competitors.

Moreover, as economist Douglass North noted, regulatory regimes do not improve efficiency, but serve the interests of those with political power: “Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to create new rules.”

After all,  how much incentive does the average person have in monitoring new regulations, staying in touch with regulators, and attempting to affect the regulatory process? The incentive is almost zero. The incentive for regulated firms, on the other hand, is quite large.

So, once Congress begins its process of regulating social media firms, you can be sure that Facebook and the other major firms involved will be at the table, and will be key in writing the legislation, and in guiding it through the legislative process. And why wouldn’t they be allowed to be closely involved?  As The Verge has already shown, Facebook freely writes checks to members of Congress as “political donations.” And once the new regulatory bodies have been created, Facebook will be involved every step of the way, from selecting regulators, to writing new regulatory rules.

Needless to say, it won’t exactly be a priority for Facebook to make sure that start-ups and other small firms get a fair shake at slicing off a piece of Facebook’s market share.

Mark Zuckerberg isn’t pandering when he says that he welcomes new regulations from Congress. He doesn’t want Facebook to end up like MySpace, and new regulations are among the easiest ways to crush the competition.

Ryan McMaken (@ryanmcmaken) is the editor of Mises Wire and The Austrian.

2 hours ago

AL House Speaker Mac McCutcheon ‘can say for sure that you’ll see a lottery bill’ in 2019

With Mississippi recently adding sports betting to its legal gambling options, the pressure is on for Alabama to not only follow that lead, but to institute a state lottery as well.

While one prominent Republican state lawmaker already has predicted a sports gaming bill will be considered by the Alabama Legislature in 2019 yet be a long-shot to pass, Speaker of the House Mac McCutcheon (R-Monrovia) told WHNT that a lottery bill will definitely be on their agenda. However, its fate will be determined by the specifics of that now-hypothetical bill.

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“I can say for sure that you’ll see a lottery bill in the first session coming up,” McCutcheon said. “Now, I can’t determine what the vote’s going to be because I’ve got to see the bill.”

A sizable part of the debate will revolve around where the lottery proceeds would go: to education, the general fund or a combination of the two.

“Could be both, it’s hard to say at this point,” McCutcheon advised.

State Sen. Arthur Orr (R-Decatur), who chairs the important senate appropriations committee entitled Finance and Taxation Education, echoed that specifics will shape a lottery’s case, adding that education should be a part of the equation.

“I do think if you’re going to have a lottery, earmarking money for educational purposes tends to generate a more successful lottery than monies just going to the government,” Orr explained.

While McCutcheon knows a lot of the details are yet to be determined on a proposed lottery, he outlined what could sink the bill-to-be.

“If we have a lottery bill out there, it must be clearly defined so that the people of Alabama have no doubt what the lottery issue is going to be,” McCutcheon emphasized. “We don’t want to confuse that bill with other gambling interests. If it’s going to be a lottery, let’s make it a statewide lottery, so the people can look at it, and then let’s make a determination on how we’re going to vote on it.”

The lottery would go to a referendum of the people as a constitutional amendment if it was passed by the state legislature. The governor has no power to sign or veto a lottery bill.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

4 hours ago

VIDEO: Alabama Sen. Doug Jones’s easy out on Kavanaugh, Democrats must navigate state’s love of Trump, Alabama Socialist seek municipal office and more on Guerrilla Politics…

Radio talk show host Dale Jackson and Dr. Waymon Burke take you through this week’s biggest political stories, including:

— Will Judge Brett Kavanaugh be confirmed or not based on the he said/she said accusation?

— Does Sen. Doug Jones view his issues as a reason to vote against him or an excuse?

— How much does Alabama’s love of Trump effect Alabama Democrats’ chances?

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Jackson and Burke are joined by Republican candidate for State House (District 3) Andrew Sorrell.

Jackson closes the show with a “parting shot” directed at those who judge Kavanaugh’s accuser as telling the truth with no evidence.

6 hours ago

Rep. Gary Palmer warns Brett Kavanaugh brouhaha threatens America’s ‘experiment in self-government’ — ‘I think this is going to have consequences for the Democrats’

On Friday’s broadcast of Alabama Public Television’s “Capitol Journal,” Rep. Gary Palmer (R-Hoover) expressed his skepticism over the sincerity of Senate Democrats regarding the sexual misconduct allegations aimed at U.S. Supreme Court associate justice nominee Brett Kavanaugh.

Palmer warned that weaponizing a “scandal” in these situations may impact the country’s ability to self-govern.

“It looks to me like since the Democrats had this information as early as July, or maybe earlier than that, and they didn’t bring it forward — this was intended to derail the confirmation, not to do justice for an individual who claims to have been harmed,” he said. “And the thing that really concerns me about all of this, regardless of what side of the aisle you’re on, is how this impacts our ability to continue this experiment in self-government because when you weaponize scandal as a political weapon  — it’s very destructive to the process, not just the individuals involved, but the entire process.”

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He added that ultimately, this could backfire on Democrats.

“I think this is going to have consequences for the Democrats,” Palmer added. “At some point, you can cry wolf too many times. And again, I think this is dangerous for people that have been harmed. It will get to the point where it’s just another claim. And at the same time, you’ve got Keith Ellison, who I serve with in the House, who has a claim against him by a woman who is being totally dismissed by the left, even though there’s more evidence there. There’s text messages, documentation from her doctor — you see where this is heading? I’m very concerned for our country and what we’re doing to ourselves. I think it has dire consequences down the road.”

@Jeff_Poor is a graduate of Auburn University and is the editor of Breitbart TV.

8 hours ago

Rep. Martha Roby: Tax reform 2.0 gains momentum

Less than a year ago, Congress passed and the President signed into law the Tax Cuts and Jobs Act to simplify our complicated tax code and lower rates for all Americans. Thanks to tax reform and other pro-growth policies, our economy is booming. You don’t just have to take my word for it – here are some numbers from the month of August:

–U.S. employers added more than 200,000 jobs as wages increased at the fastest year-on-year pace since June of 2009.

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–Unemployment claims reached a 49-year low. The last time jobless claims fell to this point, it was December of 1969.

–Small business optimism hit a new record high.

–The number of individuals employed part-time who would prefer full-time work but could not find it has fallen to the lowest level since before the 2008-2009 recession.

–U.S. manufacturing grew at the fastest pace since May of 2004.

These numbers all serve as proof that the American people are better off now than they were just two years ago. I am eager to see this strong momentum continue, and I am glad to report that we aren’t slowing down our efforts to foster economic growth right here in the United States. Recently, the House Ways and Means Committee passed Tax Reform 2.0, a series of bills that would modify and build upon the Tax Cuts and Jobs Act.

The first bill in the series, H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018, would put in place several changes to the individual income tax rate. Since the Tax Cuts and Jobs Act provisions are set to expire at the end of 2025, perhaps the most important changes H.R. 6760 would implement are making the tax rate changes and the Child Tax Credit permanent.

According to a Tax Foundation study, making these individual income tax changes from the Tax Cuts and Jobs Act permanent would increase long-term Gross Domestic Product (GDP) by 2.2 percent and create 1.5 million new full-time equivalent jobs.

The second bill in the series, H.R. 6757, the Family Savings Act of 2018, includes a number of important reforms to retirement accounts. For example, individuals would be able to contribute up to $2,500 into a savings account annually, and any withdrawals would be tax free.

The third bill in the series, H.R. 6756, the American Innovation Act of 2018, would allow businesses to deduct their start-up costs. Businesses could either deduct the lesser of their start-up expenses, or for firms with more than $120,000 in expenses, deduct a flat amount of $20,000.

Our tax reform overhaul provides much needed relief to American families, creates jobs here in the United States, grows our economy, and allows hardworking taxpayers to keep more of their own money in their pocket. We now have a unique opportunity to continue delivering on our promise to give the American people more of the results they deserve.

Committee passage of Tax Reform 2.0 is just the first step in the legislative process to make parts of our tax overhaul permanent. I will continue to listen to the people I represent in Alabama’s Second District and work alongside my colleagues in Congress to improve this package of legislation as we move towards advancing these pro-growth policies to the House floor for a vote.

U.S. Rep. Martha Roby is a Republican from Montgomery.

9 hours ago

What you need to know about Alabama proposed constitutional amendments 3 & 4

On November 6, Alabamians will vote on four proposed statewide constitutional amendments. Although the first two amendments will likely receive the most attention (API’s analyses can be found on our website), amendments three and four deserve notice as well. They are, in fact, changes to the longest known constitution in the world.

We’ll start with Proposed Amendment Three, which addresses the University of Alabama’s Board of Trustees.

Currently, the Board of Trustees of the University of Alabama System – which governs UAB and UAH in addition to the Tuscaloosa campus – is composed of three members from the seventh congressional district (which includes Tuscaloosa), two members from each of the other six congressional districts, the governor and the state superintendent of education.

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If approved, this amendment would require that the Board continue to be made up of members of congressional districts as drawn on January 1, 2018. This means that, in the case that Alabama gains or, more likely, loses a congressional seat in 2020, the makeup of the board of trustees would not be affected nor thrown into disarray.

Additional stipulations include the removal of the state superintendent of education from automatic membership on the board and of the requirement that board members retire after their 70th birthday.

It is worth mentioning that the bill allowing this University of Alabama-specific amendment passed unanimously in both the State House and Senate.

Amendment Four, in contrast, will have a significantly wider impact if approved.

This amendment addresses something Alabamians have been hearing about for a while now–special elections. It is important to note on the front end, however, that it does not address special elections for the U.S. Congress like that of 2017. Instead, it impacts vacancies in the state legislature.

If accepted, legislative vacancies that occur on or after October 1 of the third year of a quadrennium (in other words, seats that become open only months before the final session of the legislature’s four-year term) would remain vacant until the next general election.

Currently, the governor is required to schedule a special election when state legislative vacancies occur. These elections cost the state money, create voter fatigue, and according to Senator Glover, the amendment’s sponsor, are “just bad government.”

In an interview with API, Senator Glover described one case where, thanks to a late special election, a legislator was sworn in on the last day of session. Cases like these, where relatively powerless legislators are added to the state payroll, will not occur if the amendment is approved.

The main purpose, according to Glover, is to “save some money and confusion.” He estimates that, if this language had been on the books earlier, the state would’ve saved “just under a million dollars” in 2018 alone. For example, this amendment would prohibit what will, come November, be four separate elections for Alabama’s 26 Senate seat in less than a year.

Additionally, the amendment received unanimous support when it passed the Senate and overwhelming support in the House earlier this year.

Although these two amendments are not as polarizing as amendments one and two, both are attempts to make the state better, and they should not be ignored.

Parker Snider is Manager of Policy Relations for the Alabama Policy Institute, an independent, nonpartisan, nonprofit research and educational organization dedicated to strengthening free enterprise, defending limited government, and championing strong families.