I like my government flat

Posted on May 17, 2013 by

I like my government flat?  What does that mean?  I’ve been throwing around this idea for a few weeks now, trying to come up with a more appropriate role of government within, yes, a libertarian framework.  It came to a head this morning while attending Invest Atlanta‘s board of directors’ meeting. 

Invest Atlanta is the City of Atlanta’s economic development arm.  In a nutshell, Invest Atlanta incentivizes investment banks and private equity firms to underwrite businesses and other economic development projects in the city; projects that the city hopes can stimulate job growth.  Invest Atlanta itself may also fund businesses with loans or even grants I learned today.  In short, Invest Atlanta, an arm of local government, acts as a partner of the business and civic community, stabilizing and making attractive neighborhoods across the city in order to attract new residents and investment.

When I combine that role with the city’s other roles:provider of law and order; judicial services; and educational services; I envision a government acting as a partner with the community; attracting capital to have a positive social impact on its residents.  It’s a model that state and federal governments should exhibit more of. 

The government as partner is more horizontal. less onerous, and better focused on the needs of its partner community.  It can get flatter if it got rid of unnecessary rules that slow down a business’ entry into a market and slows down the access to capital.

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Is the Justice Department into choosing victims and victors?

Posted on May 15, 2013 by

The U.S. Department of Justice appears to be front and center lately when it comes to market interference.  For an agency that promotes competition in the markets, its recent interference with the information markets and expressed opposition to certain players in the market for spectrum gives the impression of an Obama administration that truly has a preference for being intrusive, showing no trust in the ability of market players to regulate themselves.

Take spectrum, the bands of electromagnetic energy that helps transmit wireless calls and other services between consumers.  The Justice Department recently opined on the process for auctioning off frequencies given up voluntarily by television broadcast stations, reallocating those frequencies for use by wireless telecommunications carriers.  The Department argued that rules ensuring smaller network operators have access to low frequency spectrum (the 700 MHz block) could improve the competitive dynamic among nationwide carriers.  In other words, increase the access to spectrum by carriers such as T-Mobile and Sprint at the expense of AT&T and Verizon.

The Justice Department also finds itself facing criticism for obtaining without notice phone records from a number of Associated Press reporters.  While the Department has not shared specific reasons for the seizure, it was widely held that the seizure may have something to do with leaked information to the media about a terrorist plot foiled by the Central Intelligence Agency.

My fear, especially with the seizure of reporter telephone records, is that the government may find itself struggling up the slippery slope, sinking further down into the murk we call violation of constitutional rights.  Given the role that the media plays in getting information from those who have and generate information to those who want and need to consume information, the Justice Department’s actions could make reporters think twice about which informants or information sources they talk to; how they correspond with those informants or information sources; and what types of articles they should write based on the information they obtain.  The policy of seizing information without notice taxes society with a negative externality of uncertainty and may deprive us of good, timely, beneficial information.

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@FCC. Why the delay in the #IPtransition trials?

Posted on May 14, 2013 by

Late last week. the Federal Communications Commission issued a public notice seeking comments on proposed trials for evaluating the transition from legacy wireline networks to wireless; from copper networks to fiber networks; and from time-division multiplexing to Internet protocol. According to the FCC, seeking comments on the IP transition is necessary to ensure the agency issues sound policy that balances the public interest of delivering quality of service and ensuring public safety services while allowing carriers to profit from the enhanced services i.e. audio, video, etc., that can be provided via IP networks.

The FCC believes voice-over-Internet interconnection should be more efficient and “has the potential to unleash new, innovative services and features.”

The FCC is less certain as to when the benefits of next generation 911 services would be seen as an IP transition takes place.

The FCC also wants to address the issue surrounding one provider’s proposal to test a transition from wireline services to wireless services.  The FCC would like comments on the consumer quality of service experience with wireless-only service and a consumer’s ability to go back to a wireline service upon conclusion of the test.

AT&T, while applauding the public notice as a “step forward”, expressed its disappointment at how tentative the FCC is approaching the IP transition especially given its national broadband plan goals.

I particularly share AT&T’s concern about how the FCC’s delay in implementing trials much less issuing this public notice may impact the flow of capital and investment.  Foot dragging creates uncertainty. Given the interstate commerce nature of the transition, waiting on the opinions of more than fifty states, territories, and Tribes only serves to impede progress.

As media companies and e-commerce sites seek to go mobile with their apps and services, the demand for a well thought out but quick transfer to IP networks becomes the more exigent.

Posted in AT&T, broadband, e-commerce, Federal Communications Commission, Internet, wireless | Tagged , , , | Leave a comment

I guess @KasimReed is running for #Congress …

Posted on May 12, 2013 by

Kasim Reed, current mayor of Atlanta, today just tweeted that we should watch out for a special edition of the Melissa Harris-Perry Show.  I guess he will make an appearance.  I stopped watching Dr. Harris-Perry’s show a few months after it debuted so i hesitate to double check and see if he actually shows up.  Not that I don’t like the sister.  her beauty and intellect are without question, but quite frankly I hear very little on that her show that has to do with moving this country.

Today may be an exception, though, as the show is dedicated to eradicating poverty.

We’ll see what Mayor Reed has to say about it, especially given the high level of unemployment and poverty in the West End.

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#Technology doesn’t drive growth. It’s the knowledge that flows through it that does

Posted on May 11, 2013 by

Eduardo Porter argues in a piece for The New York Times that technological innovation drives growth depending on how deeply embedded technology is in the things we do.  The piece also addressed the question if technology is showing up everywhere, why are we seeing a widening income gap between nations?

According to the article, Internet penetration in developing countries is estimated at 4% of the penetration we see in developed countries.  On the other hand, old technology like spindles achieved an equal level of penetration of use.  Modern technological innovations have shown lower levels of penetration in poor or developing nations.  For example, cell phones and personal computers saw a 40% and 25% penetration level, respectively, among poor or developing nations.

I think that question could be easily posed domestically given the widening wealth gap between minorities and whites in America or perhaps even locally given gaps between certain sectors of a given city.

On the surface, this may have more to do with technical or digital literacy.  Cell phone usage may be more of an infrastructure (cell towers, terrain) and income issue than it is a technical know how issue.  Internet adoption may also suffer from these constraints in addition to the constraint of relevance that hinders broadband adoption here in the U.S.

I would also add regarding the Internet, developed nations, which have a much more developed knowledge economy given the abundance of educational institutions, can create more supply of and demand for digital information transported via Internet infrastructure.

You need a power source or battery to push electrons over wire.  You need a battery of human capital first in order to push digital knowledge over the Internet.  Developing nations may need to continue working on this battery.

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Another challenge to the notion of home ownership

Posted on May 11, 2013 by

An article in The New York Times summarizes the arguments of two economists that concluded that increases in home ownership may lead to increases in unemployment.  I’ve always thought of home ownership as a waste of capital since people go out and borrow money to put into an asset that generates no income.

In my opinion the only beneficiaries are the banks that sell a consumer the money, and the initial landowner/developer that, though its affiliation with savvy real estate agents, that persuaded you to buy the property in the first place.

The economists mentioned in the Times’ piece describe home ownership as a negative externality on labor markets.  Think of an externality as either a cost or benefit accruing to society as a third party member to some primary transaction between buyer and seller.  In this case the externality is a negative because, according to the economists, home ownership may create a roadblock to further community development; the “not in my back yard mentality” that may prohibit the introduction of new businesses into an area.

I also found interesting the articles allusion to the negative impact home ownership may have on the flow of human capital.  If you are tethered to a 15-year or 30-year mortgage, are you going to move cross country to a job?  The best human capital may not be moving to areas of greater opportunity because it is tied to an investment of financial capital that is not performing in terms of generating income.

What does this mean for public policy?  It means that we have to examine why we turn a blind eye to policies that encourage us to stay stuck in debt versus move our capital around more freely.  The “ownership society” of former president George W. Bush was based on home ownership and President Obama is indirectly carrying that torch with the “preserve the middle class by modifying their mortgages” policy carried out by the Treasury Department.

The positions taken by the economists mentioned in the article are definitely in the minority and won’t be bought into the mainstream any time soon by policy makers or the general consumer public. Just look at those pre-2007 mortgage refinance ads popping up on TV more and more.  Telling Americans that their dreams of home ownership may be leading to a nightmare of economic morass won’t set well with them.

Posted in Economy, unemployment, debt, capital, labor markets, free markets, home ownership | Tagged , , , , , , | 1 Comment

Maybe City Hall needs to spend more time in the #WestEnd #Atlanta

Posted on May 10, 2013 by

Yes, I said it.  The 30310 is hurting with a poverty rate of 30% and an actual decline in the number of professionals that reside in historic West End. I contacted the good folks at Atlanta Emerging Markets, Inc., via e-mail, to ask about investment activity in the West End and the city’s vision for the area.

AEMI is owned by Invest Atlanta, an arm of Atlanta city government charged with stimulating the city’s economic activity.

While they have spent some $67 million over the past couple years on development, I haven’t seen near the activity that I have witnessed on the north side of Atlanta.

The West End is a part of the Cascade-Ralph David Abernathy-Georgia Avenue (Yes, DC, we have one, too.) corridor.  According to most recent data collected by AEMI, the corridor has seen a decline in population, falling from 60,403 residents in 2000 to 58,344 residents in 2005.  Although the percentage of residents employed has increased from 51.8% in 2000 to 54.2% in 2005, the percentage of residents holding college degrees, that percentage that has a higher incomes, fell between 2000 and 2005.  In 2000, the percentage of residents having a bachelor’s or a master’s degree was 11.3% and 8.7%, respectively.  Fast forward to 2005 and those percentages fell to 9.7% and 6.6%.

The city is touting a project called the Atlanta BeltLine as a major 25-year growth model for the city.  A $2.8 billion investment will get us a transit line running through a 22 mile corridor that loops the city.  The corridor will connect a number of neighborhoods and create 30,000 jobs during that period.  It will throw in a few parks and bike trails as well.

Nice, if you run marathons, but I don’t see how the BeltLine will bring continued economic activity to the West End, especially since it misses the area of the West End with the most capacity for commercial activity, that being the corners of Joseph Lowery Boulevard and Ralph David Abernathy; and Lee Street and Ralph David Abernathy.

If you are going to attract residents and visitors, you need to supply them with a culture/commercial center.  Ironically the corners I mentioned have the supporting infrastructure for that endeavor, including a rapid transit station, the West End Station, that would make accessing commercial activity an absolute breeze.

If there is an economic policy for the West End, it sure is not apparent.  It is so not apparent that last year city council member Cleta Winslow started her own economic initiative for the West End.

What this area needs is a little supply side economics.  Revamping the West End Mall into something akin to the Camp Creek Marketplace in East Point, the Edgewood market center in East Atlanta, or Lindbergh Center would work.  The current mall could be converted to provide shopping and office space, attracting small businesses and residents.

When it comes to the West End, someone in city hall isn’t listening.

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#Communitycapital should start with individual #capital

Posted on May 8, 2013 by

Community capital has been touted by some in the emerging impact investment markets as a new form of capitalism where the private, public, voluntary, and community sectors come together to help promote the use of economic, environmental, social, and human capital , to bring about a better society while providing socially oriented impact investors a some sort of financial return.  At the center of the impact investment model is human development.

I believe the model has a lot of potential.  Social impact investment is not new, but is going through a second incarnation as the private sector becomes more engaged in the concept and individuals, non-profits, and other groups learn to engage with a private sector that has been viewed as a bogey man for well over a century.

My cursory review of the players in the market has raised one concern; that even with human development supposedly at its core that the individual has been left out.  While business models are being developed to provide goods and services to the underserved, i.e., healthcare, energy, broadband, quality food, affordable housing, and education, I see the potential of a bottleneck for capital access by the individual.

The focus should first be on individual’s accumulation of human and social capital.  This gives him or her the opportunity to establish themselves as recipients of investment capital, the capital needed to put their entrepreneurial ideas into play.

Otherwise, I think the concept is a good start to reminding capitalists that our greatest returns come from bringing value to consumers and society overall in a way that exceeds just risk adjusted returns.

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Let larger #universities convert to pure #thinktanks

Posted on May 3, 2013 by

An interesting piece in The New York Times about the displeasure of a number of San Jose State University professors toward incorporating free online courses into their curriculum.  The online courses in question are developed by Harvard and sold to a number of schools.  A number of philosophy professors at SJSU believe that the use of such courses diminishes the quality of education at their schools and may relegate them to second rate status in the universe of academia.

I see their points.  I taught a few years as an adjunct at a community college and there is nothing more rewarding than engaging face-to-face with your students.  The business model of online courses makes sense in that it may help reduce the costs of delivering educational services and may fit with the lifestyles of working people with families who need to do school work at their own pace, but having taught online for a quick minute I rather the collegiality of exchanging ideas in the classroom.

I don’t see any overall policy implications on university education per se from the online trend.  I do see an opportunity to restructure the role of universities.  Many schools provide vast and valuable research that create innovative products and services, however, I think research universities should focus solely on being think tanks.  In addition, we should restructure schools to focus on developing three distinct categories of graduates.

The first category is the technical class.  We need highly trained and skilled producers.  Electricians come to mind.  Also coders or programmers.  Community colleges should expand their offerings to train these types of workers.  Associate degree programs could be expanded beyond their traditional two-year programs to a three-year curriculum where the last two years are focused on training and apprenticeship.  Definitely very little online training here.  I wouldn’t want to send an LPN or electrician into the field based on what they did on line.

The second class would be the professional class.  If you want o be a lawyer, why go through four years of undergrad and then trudge through another three years of law school.  A high school graduate that wants to pursue a profession applies directly to that school; goes through an accelerated underclassman curriculum and then takes the upperclassman (law, medicine, dentistry) curriculum in their last three years.  Again, given the fiduciary and ethical responsibilities these graduates will have to display to the public, the use of online curriculum would be marginal.

Finally there is the research category.  Junior wants to be a scientist.  That’s cool.  He applies to a research university where he commits to five to seven year program all the way to her PhD.  The research university’s role would be pure research with its students dedicated to learning those skills so that they can add value to the university’s research initiatives or, with their doctorates, go out and consult on their own or for an employer.  I expect a lot of online activity as researchers thrive on the amount of information that they can exchange.

I also gathered from the Times piece that the professors are concerned about the future of their profession as well as the future of how college education is delivered.  The best way to address this concern is to get out in front of the change and offer a radical approach that meets the needs of the economy and students.

Posted in education, Internet | Tagged , , | 1 Comment

Will Sprint abandon interoperability post Dish? probably not

Posted on May 3, 2013 by

I decided to reread the Federal Communications Commission’s notice of proposed rule making on inter-operability in the 700 MHz band.  Some commenters believe that a Dish Networks, Sprint combo would be a great fit given that their spectrum would be compatible and complement each other.

Dish bought some spectrum in the lower 700 for $712 million back in 2008 and argued to the FCC in an ex-parte meeting with staff that attempts to change power level rules in the E-block would negatively impact its intent to provide video services in the band and that current rules do not adversely impact inter-operability in the band.

Sprint, along with T-Mobile, which recently closed its deal to acquire MetroPCS, have been leading the charge for inter-operability in the lower 700. arguing that AT&T and Verizon are indirectly foreclosing opportunities for smaller carriers to build out networks in the lower 700 MHz band because they are cost prohibited from obtaining hand devices demanded by consumers that can also operate in that band.

In short, even if Sprint’s spectrum fortunes get better post a merger with Dish (assuming Sprint’s board decides to say sayonara to SoftBank), don’t expect Sprint to abandon smaller carriers.

Posted in AT&T, broadband, Federal Communications Commission, MetroPCS, T-Mobile | Tagged , , , , , , | Leave a comment