Dean Baker: Why Is Facebook, the World’s Largest Publisher, Immune to Publishing Laws? [feedly]

Why Is Facebook, the World's Largest Publisher, Immune to Publishing Laws?
http://cepr.net/publications/op-eds-columns/why-is-facebook-the-world-s-largest-publisher-immune-to-publishing-laws

Mark Zuckerberg may not think he needs a new job, but he does. It's long past time Facebook be classified as a publisher, where it can be held responsible for the content that appears in posts on its system.

The issue here is the special exemption to liability that Facebook and other internet platforms get from Section 230 of the Communications Decency Act of 1996. This law was passed in the early days of the internet and was intended to set up rules for governing communications that paralleled the ones for print and broadcast media. At the time, Congress decided to include Section 230, which protects Facebook and other internet platforms from the same sort of responsibility for content that print or broadcast media face.

To see what is at issue, suppose that a Facebook post becomes widely circulated saying that Donald Trump has stolen $20 million from charity. Imagine in this particular case, it happens not to be true, and Trump can prove this fact.

Because of Section 230, Facebook bears no responsibility for spreading this false accusation. In fact, it is not even obligated to remove the false accusation from its platform, although it would likely choose to do so under the circumstances. If Trump could determine who had initiated the post, he could pursue legal action against them, but Section 230 would protect Facebook from any liability.

By contrast, suppose that a newspaper had printed the same accusation. To make the situation parallel, assume that the accusation appeared in a column by someone not employed by the paper or in a letter to the editor. In other words, like Facebook, the newspaper itself was not the source of the accusation.

In this case, if Trump presented the paper with the evidence that the accusation was not true, they would be obligated to print a prominent correction and remove the libelous material from their website. Failure to do so would leave them vulnerable to a libel suit. (The fact that Trump never does sue for libel speaks to the credibility of his endless accusations of "FAKE NEWS!")

There is no good reason that Facebook should not be subject to a similar standard for posts that occur on its system. The basic rule would be that if the company is presented with evidence that a post is false and damaging, then it must remove the post from its system.

It also would be required to post a prominent correction so that many of the people who saw the libelous post would also see the correction. This would mean that individuals, businesses and organizations would be required to post a correction on their Facebook pages.

Facebook could ensure that they do this posting by simply adding a clause in those famous "terms of service" contracts that no one ever reads. That way, if someone objects that Facebook is requiring them to post a correction on their page, the company can explain that they agreed to such posting when they signed up in the first place.

There clearly is no free speech issue here. This would be transferring long-established rules on libel to the internet. If these rules don't pose a problem for newspapers and broadcast media, then it's hard to see why they would pose a problem on the web.

Facebook would of course object to this change in the law. It would require the company to devote a far greater amount of resources to following up on complaints about libelous materials and taking corrective measures when the claims are determined to be inaccurate. This would take a huge bite out of Facebook's profits. It could even put the company out of business altogether.

However, even if being held responsible for the damage caused by its posts does sink Facebook, it will not be the end of the internet as a means of communication. People will still have websites and email. Also, a platform that did not profit from its advertising, but simply acts as a common carrier (like a telephone company or an offset printer) would not have to worry about the risk of carrying libelous material.

The problem we have is, in effect, the world's largest publisher is acting with immunity from the laws that other publishers are required to obey. It's time for Mark Zuckerberg to join the publishing world. We'll see how well he does.

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Low-wage workers will see huge gains from minimum wage hike, CBO finds

https://www.epi.org/blog/low-wage-workers-will-see-massive-gains-from-minimum-wage-hike-cbo-finds/

Let Me Smackdown Jared Bernstein on International Trade Here... [feedly]

Moderator: Jared's crime was minor, although a bit numb politically as many Obama era critics are prone to be. However DeLong is right, IMO, that its never really been a secret that Pay the Losers is the correct adaptation to trade (and automation) adjustments =- pay them a lot--enough to become winners.. But there is a big political barrier getting past the "my hungry dawg hunts hawrder" crowd.

Let Me Smackdown Jared Bernstein on International Trade Here...
https://www.bradford-delong.com/2019/07/let-me-smackdown-jared-diamond-on-international-trade-here.html

I really, really wish Jared Bernstein would not do this. It is simply not the case—as he knows well—that policymakers "quickly forgot about the need to compensate for the losses" from expanded international trade. Democratic policymakers—of whom Jared is one—well-remembered this, but after November 1994 did not have the power. Republican policymakers did not see the need as a need at all: they did not forget it: they ignored it.

Do you want to know what I think? I think a lot of not completely consistent things. Here are three things to read:

2017: Gains from Trade: Is Comparative Advantage the Ideology of the Comparatively Advantaged?: The true arguments for free trade have always been a level or two deeper than 'comparative advantage': that optimal tariff equilibrium is unstable; that other policy tools than trade restrictions resolve unemployment in ways that are not beggar-thy-neighbor; that countries lack the administrative competence to successfully execute manufacturing export-based industrial policies; that trade restrictions are uniquely vulnerable to rent seeking by the rich; and so forth. The... internal misdistribution hole...[patched by] the late 19th C. 'social Darwinist' redefinition of the social welfare function as not the greatest good of the greatest number but as the evolutionary advance of the 'fittest'—that is, richest—humans.... 'Comparative advantage'... an exoteric teaching: an ironclad mathematical demonstration that provides a reason for believing political-economic doctrines that are in fact truly justified by more complex and sophisticated arguments... more debatable and dubious than a mathematical demonstration that via free trade Portugal sells the labor of 80 men for the products of the labor of 90 while England sells the labor of 100 men for the products of the labor of 110...

2016: The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High!: I figure that, all in all, not 5% but more like 30% of net global prosperity—and considerable reduction in cross-national inequality—is due to globalization. That is a very big number indeed. But, remember, even the 5% number cited by Krugman is a big deal: 4 trillion a year, and perhaps 130 trillion in present value...

2008: Brad DeLong: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: We have a world with multiple sectors and with substantial differences in factor endowment intensities... a fair degree of formal and informal cross-ownership—formal cross-ownership via property rights... the financing of the government... labor rent sharing, efficiency wages, monopoly power based on location, monopolistic competition, and all the other deviations from perfect competition that can give... stakeholders... effective claim on the cash flows.... Thus it seems a slam-dunk to presume that in the real world free trade is very likely to benefit the overwhelming majority of people in nearly every country, in spite of the intuitions generated by the two-good two-factor two-country version of Stolper-Samuelson...

And here is Jared:

Jared Bernstein: What Economists Have Gotten Wrong For Decades: "theory never said expanded trade would be win-win for all. Instead, it (and its more contemporary extensions) explicitly said that expanded trade generates winners and losers, and that the latter would be our blue-collar production workers exposed to international competition. True, the theory maintained (correctly in my view) that the benefits to the winners were large enough to offset the costs to the losers and still come out ahead. But as trade between nations expanded, policymakers quickly forgot about the need to compensate for the losses...

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Some Snapshots of University Endowments [feedly]

Some Snapshots of University Endowments
http://conversableeconomist.blogspot.com/2019/07/some-snapshots-of-university-endowments.html

  How much money do major universities and colleges have in their endowments? How are they investing the money? What returns are they earning? The National Association of College and University Business Officers does a survey of these questions each year, and here are some results for 2018. 

Here's a list of the 40 largest endowments for institutions of higher education. Harvard tops the list. It should be noted that these total endowments don't adjust for number of students. For example, the University of Richmond, which is #40 on this list, has an endowment of $686,000 per student, while the University of Pennsylvania, #7 on this list, has an endowment of $602,000 per student. Princeton has the highest endowment per student at $3.1 million.

How concentrated are endowments among the big institutions? Total endowments for all universities and colleges sum to $616 billion. The top 10 on the list above account for more than one-third of total endowments. The 104 institutions with endowments of more than $1 billion account for more than three-quarters of total endowments. More than two-thirds of all endowments are at private institutions.

How do these institutions invest their endowments? Institutions with big endowments are much more likely to use "alternative strategies," and less likely to be in domestic stocks. "Alternative" refers "Private equity (LBOs, mezzanine, M&A funds, and international private equity); Marketable alternative strategies (hedge funds, absolute return, market neutral, long/short, 130/30, and event-driven and derivatives); Venture capital; Private equity real estate (non-campus); Energy and natural resources (oil, gas, timber, commodities and managed futures); and Distressed debt."

On average, institution with endowments above $1 billion also earn higher returns. However, as the rows at the bottom show, any college which had invested its endowment completely in the S&P 500 10 years ago would have done considerably better than the average over any of the time horizons shown here.

Of course, it's always easy to note in retrospect that some alternative investment choice would have performed better.  Back int 2008, it certainly wasn't clear to many investors how much stock markets would rebound if and when the Great Recession ended. Moreover, a number of large-endowment Ivy League school had had great success with alternative investment categories in the 1990s and into the early 2000s. For a useful discussion of college endowment returns from 1992-2005, I recommend Josh Lerner, Antoinette Schoar, and Jialan Wang on "Secrets of the Academy: The Drivers of University Endowment Success," which appeared in the Summer 2008 issue of the Journal of Economic Perspectives. 

But it still seems worth noting that college endowments--which often hire high-priced talent to make these decisions--have substantially underperformed the S&P 500 benchmark for the last decade. If they had consistently overperformed the benchmark, I'm sure we'd be hearing a lot more about their investment strategies!

 -- via my feedly newsfeed

Payments from China for Foreign Intellectual Property [feedly]

Tim Taylor takes apart the foreign intellectual property debate down to the nub - guess what? Negotiation, not trade war, is warranted...

Payments from China for Foreign Intellectual Property
http://conversableeconomist.blogspot.com/2019/07/payments-from-china-for-foreign.html

Payments from China for Foreign Intellectual Property

It seems clear that China's government and firms have been aggressive in their pursuit of intellectual property from firms in other countries. Sometimes this aggressiveness comes from government rules that if a foreign firm wished to sell or produce in China, it needs to have a Chinese firm as a partner and to share technology with that firm. There are also widespread allegations of technology theft. I once chatted with a group of California tech executives who did business in China, and they all said that if they take a computer or a phone to China, they only take one where the memory has been previously wiped clean.

Measuring the total amount of technology transfer to China is, in its nature, hard to do. But one approach is to look at royalty payments from China to outside firms.  Ana Maria Santacreu and Makenzie Peake of the Federal Reserve Bank of St. Louis offer some data in "A Closer Look at China's Supposed Misappropriation of U.S. Intellectual Property" (Economic Synopses, 2019, No. 5).

The top panel shows China's payments for use of US intellectual property, which have risen sharply,  The second panel shows that this growth in China's payments has been faster than the growth of China's GDP.

Of course, the rise in payments doesn't mean that the appropriate level of payments is being made. Annual payments from China to the US of about $8 billion for intellectual property don't seem extraordinarily high. And given that China's economy has been shifting from reliance on low-wage labor to an economy based more in technology and services, the pattern of intellectual property payments rising faster than GDP is the pattern one would expect.

Here's some additional data from Nicholas Lardy at the Peterson Institute for Economic Economics (April 20, 2018). This This figure shows the rise total payments from China to all countries for the use of foreign intellectual property.


This figure, also from Lardy, shows countries ranked by how much they pay in intellectual property fees. This figure illustrates something rather odd: the two countries that pay the highest charges for intellectual property are the relatively small economies of Ireland and Netherlands. As Lardy explains: "However, licensing fees in Ireland and the Netherlands are paid mostly by foreign holding companies that are legally domiciled in these countries for tax reasons. Since the subsidiaries of these holding companies using the licensed foreign technology are located in other jurisdictions worldwide, China probably ranks second globally in the magnitude of licensing fees paid for technology used within national borders." (A few years ago, I offered a description of the famous "Double Irish Dutch Sandwich" technique for multinational firms to reduce their tax liabilities.) 



It may well be true that China should be paying more to other countries, including the US, for use of intellectual property. But the numbers in these tables suggest that in purely economic terms, a negotiated solution would be affordable and therefore possible. If a set of trade negotiations led to China doubling its royalty payments to the world as a whole, that additional $27 billion or so would certainly not cripple China's $13.6 trillion (converted at the current US dollar exchange rate) economy. On the other side, while this shift would be a nice windfall for some multinational companies around the world, it's not an amount that is likely to change the course of the $20.5 trillion US economy, either. Also, if the rules for making payments for foreign intellectual property were tightened up, it's likely that US firms already making such payments (as shown in the figure above) would see those payments rise, as well.

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Reducing Carbon Emissions Must Not Be Done on the Backs of the World’s Poorest [feedly]

Reducing Carbon Emissions Must Not Be Done on the Backs of the World's Poorest
http://cepr.net/publications/op-eds-columns/reducing-carbon-emissions-must-not-be-done-on-the-backs-of-the-world-s-poorest

By all appearances, the economic positions of the world's poorest people have improved considerably over the most recent three decades. Households living on $1.90 per capita per day have — on average — seen their real (inflation-adjusted) incomes grow approximately 4.2 percent per year for the last 30 years. Consequently, less than 10 percent of the world's population lives in extreme poverty today, compared to about 40 percent in 1989. Going forward, we must both understand how this came about and remove barriers to continued progress. Specifically, poverty reduction requires the world to address the threat of climate change— to open up additional space for growth in the Global South without making the entire planet uninhabitable to humans.

Considering that this fall in the poverty rate was about twice that in the three decades prior, this ought to feel like quite a victory. And yet, something feels off. One reason: $1.90 per day is a terribly low threshold by which to define poverty. More than half the world's population still lives on less than $7.40 per day — a mere $2,700 annually. Another reason is that almost all the accelerated poverty reduction took place in China and India.

These are very populous countries, and most of the world's poor lived in these two countries during this period. What about poor people residing elsewhere? Over the last 30 years, their incomes grew at an average of only 2 percent per year — certainly an improvement over the 1980s when their incomes grew less than 0.2 percent per year, but far from the more dramatic income growth enjoyed by their peers in China and India.

Indeed, outside of China, the world saw almost no progress in reducing the rate of extreme poverty between the late 1970s and early 1990s. But the rise of China masked this broader failure. Most interestingly, China's rise bucked the neoliberal "Washington Consensus." As I wrote in a recent piece, "The History of Poverty Worldwide":

the Chinese government played a central role in managing the economy. True, China has opened up to foreign investment; but it has done so with strong capital controls and foreign exchange management, imposition of myriad demands on would-be investors including significant transfer of technology, and lax enforcement of foreigners' so-called intellectual property rights. Nor can China's acceleration be attributed to neoliberal policy in the United States — see the negative economic experiences that most Latin American countries have seen with their increased exposure to the United States economy. Mexico, for example, had a higher poverty rate, and stagnant wages, after 20 years of NAFTA.

The rest of the world did eventually return to reasonable economic growth rates by the mid-2000s. By then, China had further accelerated its rate of growth, and — critically — amplified the effectiveness of growth in reducing poverty, bringing its poverty rate down toward 50 percent. Furthermore, India joined China in comparatively rapid economic growth, also pulling large numbers of people out of extreme poverty.

However, as the number of extremely poor people in these countries dwindles, global progress in poverty reduction necessarily slows. The world's remaining poor should not be left behind, nor should we be content to have such a huge percentage of the world's population living just above this poverty line. Rich countries would be outraged if significant numbers of their own people struggled with a mere $700 per month— let alone $700 per year. The very least bit of economic justice will allow the world's poor to increase their consumption, more fully reducing extreme poverty and lifting more of the world's poor out of poverty. This will mean either continued economic growth, a genuinely radical redistribution of global incomes, or some combination of the two.

Still, neither approach is sustainable without decarbonizing the world economy as rapidly as possible, with the intent to stave off catastrophe. As fast as carbon emissions have increased in the last half century, they must be cut twice as fast over the next two decades, and to zero by 2060, to keep the total increase in global warming above preindustrial levels under 1.5°C (2.7°F). Thereafter, we will need to remove — on net — carbon from the atmosphere. Because large-scale carbon capture technology is still out of reach, we must act immediately to minimize the damage by reducing emissions quickly and effectively.

It is possible for the world economy to continue growing without additional carbon emissions, but energy from coal, and thereafter petroleum, must be phased out as rapidly as possible. This means helping developing countries to invest heavily in renewable energy sources and to shift to less carbon-intensive forms of consumption. Land must be managed with an eye toward reducing emissions. (This means, for example, finding ways for Brazil to grow without permitting mining interests to deforest the Amazon.)

Finally, we may be able to extend gains in poverty reduction by slowing economic growth among the rich. The most productive economies in Europe compare favorably to the United States, but have lower emissions. In part, this is due to a social choice favoring leisure over consumption — converting productivity gains into longer vacations and shorter workweeks rather than bigger incomes in order to buy more goods. In the United States, this may also mean reducing inequality and addressing the high and rising cost of health care so that the bottom half of Americans see improvements in their standards of living.

This may buy us some time, but the time is now to address climate change head on and give developing countries space to grow and lift their populations out of poverty.

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David Rosnick is an economist at the Center for Economic and Policy Research (www.cepr.net) in Washington, DC. He holds a Ph.D. in Computer Science from N.C. State, a B.S. in Computer Science and Engineering Physics from the University of Illinois, and an M.A. in Economics from George Washington.

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