Monday, January 24, 2005

Peer-to-peer file-sharing.

Let’s first start with some history and economy that will give the reader an idea of just how absurd some aspects of this issue are.

In the early 20th century, when the gramophone started to become a household item, some artist started to worry that people would stay at home listening instead of going to concerts. They therefore felt that their entire profession might be threatened. As we all know, the exact opposite happened; music, even live such, became more popular than ever, making the artist richer than ever.

Shortly after the gramophone came the radio. The first programs consisted mainly of talk radio mixed with music. When the newly born music industry realised that people could listen to the music for free instead of buying the records they reacted just as the artists had to the gramophone. Together with the artist, they basically proclaimed their own death. Again, as we all know, this did not happen, in fact the exact same thing happened: music became more popular, more records were sold, and everyone made more money.

Some time after radio became popular, the first tape recorders started to appear. To this fearsome new technology, which allowed people to copy their gramophone records and the music on the radio, the music industry reacted in a way I think most readers can predict by now…

Obviously there seems to be a pattern to the history of technology vs. the entertainment industry – technology which invariably has increased the profit of both those industries. Here is a short list of some of the most terrifying technology ever created: the gramophone, the radio, TV, VCR, BetaMax, and CD. Today’s beasts also go by terrifying combinations of letters: mp3, P2P, DivX – cue thunder and lightning, will you please.

For the readers who are still not convinced that the death of the entertainment industry isn’t coming up on us faster than you can cry “wolf”, I’ll explain some very basic economic principles. Economy can be studied from many different perspectives, on a macro level, however, some principles are elevated to tautologies, below I list the two most important.

1. The customer is always right.

We’ve all heard this expression, most people, however, probably haven’t quite realized what it means. First let’s see what is meant by “customer”, this term refers not just to people who buy the product, but also everyone who would like to buy the product at some price. This means that the people who are illegally downloading music and other copyrighted material, are also right. The implication of this is that the companies are providing the right product, because people want it, but the customers aren’t willing to pay for it.

A common misconception about the people, who illegally download music, is that they want free music. There are certainly people who want that, since they couldn’t afford to buy the product at any price – those people, however, wouldn’t be customers even if the internet shut down tomorrow. The vast majority of downloaders, who would be willing to pay, choose not to do so because of price. This leads to the inevitable conclusion that music, as the music industry provides it, simply is too expensive. This also goes for the other industries that are affected by illegal downloading.

2. If there is a demand, there will be a supply.

This is probably the hardest principle for people to accept, personally I believe this comes from the democratic principles that our society is built on – if there is something we don’t like, we have the power to stop it. Obviously this would make the principle harder to accept the more power one has, which most likely is why politicians seem completely incapable of it.

One example of how this rule works is drugs and the “war” against them. Because of this principle, the war against drugs can only be won at home, or through economic incentives to the suppliers. This means that the US will have to either decrease the demand for drugs at home, or pay the farmers of coca not to grow it. The only other alternative thankfully isn’t available to democracies; namely to summarily execute everyone involved in making or distributing drugs.

The relation between this principle and the illegal downloading of copyrighted material lies in the first rule; if there is demand for cheaper music, it will be provided. Just as for the US government, the only solutions available are to affect the popular opinion or to provide economic incentives. The problem for the music industry, and soon the movie industry, is that they’ve pretty much burned their bridges when it comes to getting sympathy for their cause, the reason is of course the heavy-handed way in which they’ve treated their customers. Therefore the only solutions to the problem are to lower the prices, or to provide more value, such as discounts for concert tickets for those who own the artist’s records.

By now I hope it is clear that file-sharing and illegal downloading is little more than an economic reaction to the badly priced products that the entertainment industry and the software industry are selling.

An argument the music industry often brings up is that for every big selling record there are ten badly selling ones. In order to counter this you need to perform market research, something that the internet is perfect for. If, for instance, the music industry wants to improve its profit per album they can create a freely available database of artist where people can register their own bands and upload their own songs, if a certain artist becomes popular they get to make an album.

Above I mention the software industry, being a computer scientist I would like to take this opportunity to criticize the pricing of software. According to rough estimates, something like 70% of the code in software products are reused from the previous generation of the product. This means that for every generation the customers are asked to pay for less. This follows from that the older the code is, the better it will have been tested and therefore requires less maintenance. This is clearly not a sustainable cycle, and should be broken before open source programs become too popular for a change to have the desired effect.

Conclusively, the industries I’ve mentioned in this post should be careful about how they act; the fact that they’ve been able to keep too high prices suggests a lack of competition. While competition might seem threatening, it is ultimately a form of cooperation, without which no one in the market gets the necessary information on whether they need to improve their efficiency or not.

Tuesday, January 18, 2005

The War in Iraq

There are several ways to view the United States’ and Great Britain’s nearly duolateral war on Iraq. The most commonly reported in European media is that the attack was uncalled for and violated the UN’s peoples’ right. The main question about the war, however, is why it was started. Below I give the five most prominent of the possible reasons.

1. The Bush administration wanted to get their hands on Iraqi oil.

Although this is a view quite widely held by the more anti-American people, it is a highly uninformed and overly cynical view. In order for it to become clear that, more or less literally, fuelling the US economy wasn’t the real reason for the war, one only needs look at the cost of the war. The current deficit, in part created by the war in Iraq, is a serous threat to the US dollar as a reserve currency; The Economist has a great article on this. This means that whatever short-term economic gain American business will experience through the rebuilding of Iraq is miniscule to the risk that the deficit puts the entire economy at. (Another reason for the US deficit are the badly planned tax cuts by Mr. Bush, this will be a subject for a later time, however.)

2. Messrs. Bush and Blair believed that Iraq had weapons of mass destruction.

This is a fully viable option, not least because the first UN inspection team found an immense amount of chemical weapons material, and the second inspections found nothing – not even evidence of the destruction of such material. In further defence of an attack based on suspicions of violations of the UN sanctions; the first UN inspectors were figuratively thrown out of the country – something that should have started a war, but NATO was busy in the Balkans at the time, an operation, which by the way, wasn’t supported by the UN either (Russia used its veto right in the security council).

3. The war was started to liberate the people of Iraq.

This, unfortunately, is an unlikely reason to go to war. Cynics would say that the US only liberates people who live in countries of interest, such as Kuwait. Although it is certainly true that NATO could act more often to try and stabilise, e.g., a lot of African countries, soldiers swear an oath to protect their own country, not others. Although this may seem callous, there would most certainly be fewer people willing to serve in the military if they thought they might be sent of and die for something they don’t believe in. The UN has peace-keeping forces for precisely this purpose, although there are way too few of them.

4. Intelligence suggested that Iraq had a connection to Al-Qaeda.

Saddam Hussein did have a connection to terrorists; he supported the families of suicide bombers in Israel. He did, however, not have a reason to cooperate with Al-Qaeda, not least because his government was secular and Al-Qaeda is a devotedly religious organisation. It is also doubtful whether Mr. Bin Laden would have trusted Mr. Hussein with information about Al-Qaeda operatives. Osama Bin Laden was trained by the CIA to fight the Soviets in Afghanistan, given such a background in guerrilla warfare, he most likely decided early on to organise his terror network in a similar way. That’s why Al-Qaeda is made up of small cells operating independently around the world, a system that benefit from minimal contact with bigger organisations like the Iraqi or Iranian government.

5. The war is part of a greater plan for the Middle East.

This, in my opinion, is the most important, if not the most probable, motive behind the war. From this standpoint the war may in fact turn out to be a strategic masterpiece. Iraq is situated in the middle of this highly unstable region, it therefore provides an opportunity to project force in the entire region. What most people don’t realise is that Iraq also sits on the most precious commodity in the region; fresh water, in the form of two rivers. This combined with the fact that the Iraqi people is quite secular compared to the other countries in the region, and that they hardly could be worse of than under Saddam’s rule, presents a golden opportunity to spread democracy and American goodwill in the region. Also, during the transitional faze between the fall of Mr. Hussein’s government and the establishing of law and order, terrorists from the entire Middle East would flock to the country in order to attack American soldiers. Although this certainly causes a lot of grief for the families of the soldiers, it does serve to reduce the amount of terrorists that will try to attack civilians in the US and Europe – something that the soldiers actually did sign up for.

There is, however, a problem for Messrs. Bush and Blair with this reason for the war, namely the explanation they gave for going to war (a combination of No. 2 and No. 4). The problem is whether is acceptable to send soldiers into harms way, without telling them why they’re being sent. This is a quite philosophical question, especially since telling the world that you’re going to try and reform the Middle East would be seen as exceptionally arrogant and might cause ill will in the region. Thereby if the troops had been told the truth about why they were sent, that goal may have been made unachievable – making soldiers die for nothing rather than an untruth.

First Post!

Yes! I got first post; I don't think that has ever happened before. Seems cheating isn't overrated after all...

The main topic for this blog is, as can be deducted from the title, is politics. I will especially focus on broad issues, and not get stuck in commenting on every current issue that comes along.
Since I don't have a lot of time right now, I will make my first serious post in the following couple of days. The topic I've decided upon is the war in Iraq, specifically why it may not be such a bad thing as most of my fellow Europeans believe.