A victory lap, and credit where credit is due:  Even the White House is occasionally hit between the eyes with the 2 X 4 of reality and forced to recognize that it can sometimes be useful to allow the United States to act as the exceptional country that it is.    I refer to the decision of the Obama administration to abandon its headlong rush to cede its contractual control over ICANN (the Internet Corporation For Assigned Names and Numbers) to some group or body or consortium or whatever to be identified later.*  Of course it did not hurt the reversal-cause to have a push from the last remaining adult in the Democratic Party leadership, the First Gentleman-In-Waiting (Bill Clinton).

*See, http://www.mecmoss.com/is-the-golden-age-of-the-internet-about-to-end/

For a nominally Republican, conservative, supply-side economist, Glenn Hubbard (Columbia Dean and erstwhile Chairman of Bush 43’s Council of Economic Advisors) has presented in The Wall Street Journal (”Where Have All The Workers Gone?”, 4/5/14) a curious channeling of the central-planning statists who have gotten us into our current economic straits.  Our turgid government is already in near-collapse from micromanagement, and now we have Dean Hubbard offering us another set of micro-fixes.  Here is a brief summary of Dean Hubbard’s suggestions:

•  Expanding the Earned Income Tax Credit

•  Reforming (i.e., cutting back on) disability insurance under Social Security

• Tinkering with ObamaCare – giving a “broader tax reform that gives a more uniform subsidy for spending on health insurance and health spending”

•  Reforming unemployment insurance, so as to reduce the incentives to remaining unemployed

•  Eliminating the Social Security payroll tax on older workers, and eliminating the tax penalty on earnings of older workers

Yes, each of these suggestions is a nice idea, each would probably have a net positive effect.  But would any of these, or even all of them, turn our economy around?  Are these items enough to convince entrepreneurs and investors that it is time to get back into the game and put big chunks of time, effort, and capital into business opportunities out there in the stagnant US economy?  Are these steps going to reverse the passive, negative mentality that keeps us in no better overall shape than we were 5 years ago?   Would the business community get it, be inspired by it, act upon it?  I doubt it, and I wonder whether Dean Hubbard believes it would.  Where is the slashing, dashing Glenn Hubbard of the wonderfully successful Bush tax cuts?

Economists and financial analysts can (and regularly do) give us mountains of data suggesting that we should be turning the corner any day now, but this writer does not believe that is going to happen until the business community is given a convincing reason to change its feelings about where we are going.   The Hubbard menu is helpful, and if the country could stay in business long enough for its cumulative effects to emerge, it might be sufficient – but can we stay in business that long?  (FDR had 13 years of trying to micromanage us out of the Great Depression, and we were not totally out until both he and WWII had expired.)  Will the Hubbard agenda inspire any major changes in attitude and behavior?  I wonder.  I believe we need to think a lot bigger and simpler.  The Hubbard agenda is baby steps, not a game-changer. 

You want to get the animal spirits going again, here is what it would take: 

• Massive cuts in tax rates – income-tax rates, capital-gains tax rates, corporate-tax rates.  Even in the unlikely event that the cuts did not pay for themselves through the growth in taxable incomes they would generate, they would cost less – and be far more productive – than the Obama version of a “stimulus.”

•  Radical reform of the healthcare situation – everyone but the President (and Rahm Emanuel’s big brother) now knows what it takes, and people will continue to be frightened until that happens.

•  Approval of the Keystone XL pipeline, and a green light to American energy in general.

•  Issuance by the US Treasury of long-term Treasury bonds in exchange for substantially all of the presently outstanding short-term US Treasuries, a swap that would demonstrate our seriousness of purpose regarding our fiscal crisis.  It would increase our interest costs in the very short term but would lock in a relatively low rate-cap for decades and thus spare us from the runaway-debt catastrophe that is likely to occur when interest rates inevitably begin to soar (triggered by perceptions of incipient recovery, inflation, or weakness), and so it would buy us precious time in which to achieve fiscal order through the other three major reforms. (The debt-swap proposal was first presented by Prof. John H. Cochrane, in “Treasury Needs a Better Long Game,” The Wall Street Journal, Opinion, 3/4/13.) 

It would be great if we could also do Social Security reform, but the first four items are of more immediate concern and would pave the way for moving to fix Social Security and to implement Dean Hubbard’s proposals.  If we could achieve the four major items, or even just reach a credible, somewhat-bipartisan consensus to accomplish them, the results would be quick and dramatic – the Dow would record massive gains and you would see an almost-immediate resumption of economic growth.  

More on the subject of the announced intention of the Obama Department of Commerce to cede its control over ICANN (the organization that coordinates the Internet’s global domain-name system) to some yet-to-be-determined international group or organization:

As more critics of the move have stepped forward (e.g., L. Gordon Crovitz of the Wall Street Journal, and – of all people – former President Clinton), the Hard Left has figured out that it might not be able to blow this one by a technologically-ignorant public.  We now have one of the Left’s highest-level formulators of Newspeak, former FCC Chairman Julius Genachowski, offering us an Ivy-League level head-fake in support of the ICANN-emancipation movement.  Mr. Genachowski is perhaps best known for being lead advocate for the wonderfully misleading term, “net neutrality,” defined by Wikipedia as “the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication.” This definition omits one of the key elements of potential non-“neutrality,” volume of usage, but, whatever.  The point is, this soothing, appealing, innocuous word, neutrality, masks the central objective of the net-neut crowd: to prevent providers from charging users for usage of the internet based upon market forces, like supply and demand, and to subsidize certain customers at the expense of others – in other words, net-neut is not at all neutral, it is classical lefty economics brought to the Internet.   

The crafty Mr. Genachowski, in “ ‘Global’ Internet Governance Invites Censorship”  (The Wall Street Journal, 4/4/14), takes the inventive approach of going bipartisan on us, criticizing the DOC’s contemplated action and appearing to jump on board with conservative critics (and Bill Clinton).  But it turns out he is not really opposed to the ceding of control in and of itself, he merely is in favor of doing it just a bit differently from the way in which the DOC has proposed.  He starts out innocently enough, but then he goes all Harvard on us with loads of planned-economy, micro-managing provisions and lots of dependency upon the disinterested wisdom and good faith of the people and nations charged with the responsibility for implementation of his little Rube Goldberg contraption.  Tellingly, he never gets around to making any kind of a case for just why the US should give up even an inch of whatever controls and powers the US currently has at its disposal via its existing arrangement with ICANN.   

The ceding may be a big deal (per the conservatives) or a small deal (per the White House), but it is definitely something, or why would so many big shots be struggling with it?  So, why is it necessary –  I mean, what’s in it for us?   The computer, and its star offspring, the Internet, could prove to be the single biggest game-changer in the history of man’s efforts to master his environment.  It all happened on our watch, not under UN or international supervision. Why should we even think about doing this at all – because we are afraid that people won’t like us anymore?  Because this would somehow immunize us from international censure, from the kind of treatment we receive at the UN?    

Mr. Genachowski gives due recognition to the need for some device for preserving the unrestricted flow of information and data over the Internet, and he suggests the US should not yield any internet authority to another government or group or body, but only to “an entity that is protected from governmental interference and includes both private sector and civil society organizations . . . ,“ blah, blah, blah.   Like such an entity could even exist.  Like China or Russia could be held to any such guidelines once the US were no longer in charge.  Like you could lawyer your way through the practical impact of giving up controls, by writing enough rules about how the bad guys are supposed to behave once those controls have been given up.  Like there is such a thing as international law, once a China or a Russia decides to violate it, as in Crimea.  Like John Kerry would make sure we do not get pushed around.

Sorry, Mr. G, we guess you mean well, but, well, no, you are not one of the guys.  You are  not on our side in this issue.

Post Script to my post concerning the Obama administration’s decision to cede control over ICANN to some un-specified international body (http://www.mecmoss.com/is-the-golden-age-of-the-internet-about-to-end/  ):

a)      The announcement of the decision (http://www.ntia.doc.gov/press-release/2014/ntia-announces-intent-transition-key-internet-domain-name-functions ) was made by the U.S. Commerce Department’s National Telecommunications and Information Administration (NTIA) – which means, technically, that it was not literally made by the President.  To me, that carries about as much weight as saying that the IRS’s vendetta against conservative groups was technically not conducted by the President.  As in, aren’t these agencies of the executive branch of the U.S. government, meaning that the agencies and their leaders report to the President and that, as a matter of both legal and political responsibility, the President is responsible for their actions? 

b)     If anyone is imagining that the ceding of U.S. governmental control over ICANN is no big deal, and if it does not work out, we can just rescind and reverse the action, think again.  This genie, once out of the bottle, is never going back in, no matter what.  Not even a Republican President and a Republican-controlled Senate and House could regain ICANN control without the consent of whatever coalition or consortium or other assembly of foreign powers became the beneficiary of the give-away.  In other words, China and Russia would have to agree.  Think that is going to happen? 

While you are thinking, remember that the current structure, with various agencies of the U.S. government  in control of the various Internet-governance duties now performed by ICANN, has been working since Day One – essentially over the entire history of the Internet, which goes back to at least a couple of decades before Al Gore invented it.  Warts and all, and despite pledges by various politicians that eventually ICANN should mature into some kind of UN-type internationalist stature, the fact is that the entire, mind-bending, history-altering, economically colossal development of the Internet has occurred under the benevolent watch of the United States Government.  And now the Democrats want to change all that? 

And now Silicon Valley, birthplace of all those technology giants who are now in daily battle with the Chinese over every imaginable IT issue from IP theft to content censorship, is supposedly on board with this?  Remind you a bit of how the healthcare insurance companies, who are now on the verge of seeing huge chunks of their business being forfeited to the government’s silent agenda of single-payer, were originally on board with ObamaCare?

If so inclined, one could spend the rest of one’s life trying to understand the technology of the Internet.  The subject is breathtakingly complex and, for those who do not make their living in occupations that involve a mastery of high levels of information technology, almost incomprehensible.  If anyone claims to understand the technological functions of ICANN, the U.S. company that manages the registry of IP addresses and domain names and protocol parameters, you should check out the person’s technology background very carefully. 

When it comes to the existing arrangements for the legal regulation of the Internet, the subject is not nearly as complex, though if someone claims to understand the legal basis for ICANN’s authority to do whatever it is that it does, you should still be skeptical.  And if anyone tries to give you a list of reasons why it would be a good thing for the U.S., or the world in general, to unmoor ICANN from its legal/contractual connections (such as they are) with the US government, you should assume you are being offered assurances with approximately the same level of credibility as “you can keep your healthcare plan,” “you can keep your doctor,” and “this will save you money.”

Yes, ICANN performs its Internet-related services under a contract with an agency of the U.S. government.  Yes, that contract is due to expire shortly and does not have to be renewed by our government.  And yes, our Congress, were it so inclined (i.e., were the Democrats not still in nominal control of the Senate), could adopt legislation that, if not vetoed, would prevent the termination of ICANN’s Internet control by the U.S. government.  But in this case, because we are not talking about an active use (or abuse) of executive authority by our rogue President, but merely an election NOT to take executive action to renew an otherwise expiring contract, there is probably nothing illegal about the President’s apparent decision to apply the practical equivalent of a pocket veto – he can effectively terminate the U.S.’s control over the Internet by simply heading for the golf course and doing nothing.  Simple as that.  By just doing nothing, the President can effectively terminate the Golden Age of information technology!

Do I exaggerate?  The Lefties’ position, predictably, is that we are no longer living in the 20^th century, the Cold War era.  The U.S. is no longer an international force for world peace and stability and assistance for the needy and the victims of authoritarian horror.  Our past policy of interventionism was not based upon being a “do-gooder,” it was merely a way of advancing our economic interests and capturing resources of others, and now is the time to put a permanent end to our efforts to control commerce and behavior beyond our borders.  ICANN, under our control, has not done a perfect job.  We should be an unexceptional member of the international community, not an Internet monopolist that imposes its will upon others.

I disagree.  First of all, the power to control IP addresses and domain names and other aspects of Internet operations is critical – do you know what it means to the non-elites living/struggling in China, Ukraine, Venezuela, Syria (while there was still hope), etc., having to do all kinds of computer wizardry on a daily basis just to keep information lines open and do workarounds to deal with their oppressive governments?  What I foresee is that the “international community,” however defined, will inevitably include the world’s bullies and bad guys.  Not just North Korea, Iran, Cuba, the usual suspects, but the two big ones that everyone is afraid to include on the list:  China and Russia.  You think those nations would allow the international Internet to continue to operate as a more-or-less free medium?  You think they would not impose internationally the same standards of censorship and suppression and individual national interest they now impose internally?  Have you ever traveled to China and tried to use the Internet?  Do you really think that the U.S., for all its flaws, despite its greedy, capitalistic, Wild West private economy, does a worse job of managing the Internet than the Chinese and the Russians would do?  Do you believe the U.S. is a less-benevolent “dictator” of Internet regulation than the United Nations, or a Chinese/Russian veto-dominated consortium, would be?  Are you one of those utopian fantasists who still persist in the fiction of “international law,” as though it were not so consistently subordinated at the point of a gun? Do you really believe the people of Iran, Syria, Ukraine, and the rest of the former Soviet satellite states think they would be better off with an Internet operated under “international” control?  Do you think those people want the U.S. to withdraw from its limited role in regulating the Internet?

By the way, do you think it is a coincidence that the President’s decision was announced late on a Friday evening, when the US media were still preoccupied with a missing aircraft?