Author Archives: Stephen Littau

Today’s Nasdaq Illustrates the Phenomenon of Creative Destruction

Those of you who are old enough to remember the dot com bubble bursting some 15 years ago might also remember the handwringing about how Microsoft was becoming a monopoly. Microsoft was the juggernaut that could only be taken down with antitrust suits by the federal government. Other companies simply could not compete with such a well-established corporation; the free market was inadequate.

Fast forward to where Microsoft stands today. The once seemingly invincible company has succumbed to the realities of competition and now finds itself in third place on the Nasdaq index.

James B. Stewart writing for The New York Times explains:

The Nasdaq composite that peaked at 5,048.62 on March 10, 2000, in what turned out to be the height of the technology bubble, bears little resemblance to today’s Nasdaq index. Of the top 20 Nasdaq companies by market capitalization in 2000, only four — Microsoft, Cisco Systems, Intel and Qualcomm — remain in the top 20 today. Eight no longer exist as independent companies, most as a result of bankruptcy or acquisition, and several are shadows of their former selves. The current Nasdaq composite index has only about half as many companies as it did in 2000.

“Joseph Schumpeter was spot on when he said capitalism is all about creative destruction,” said Richard Sylla, an economics professor at New York University’s Stern School of Business and a specialist in the history of markets, referring to the Austrian-American economist who described the phenomenon in 1942 in “Capitalism, Socialism and Democracy.”

In the intervening 15 years, a new generation of entrepreneurs, newly public companies and entire industries have emerged and seized the dominant positions in the Nasdaq index even as their predecessors faltered. Apple, now the world’s largest company by market capitalization, barely registered in 2000, and the first iPhone was not announced until 2007. Over a billion smartphones were shipped in 2014.

The chart below which accompanies the article illustrates this creative destruction of the past decade and a half quite clearly.
Capture

What this tells me is that no matter how large these corporations get, they cannot rest on their laurels. They cannot assume that just because consumers like their product(s) more than the competition today that the same will be true tomorrow. How many people use Myspace today as opposed to Facebook?

It’s the creative destruction of the free market – not additional regulations which ultimately allow consumers to have more choices.

Recovered From the Memory Hole: Benjamin Netanyahu’s Prophesies of Doom

netanyahu

Benjamin Netanyahu is an incredibly gifted speaker – no question about that. Never can I recall any particular speech being met with so much anticipation, trepidation, and controversy as the speech that he delivered to a joint session of congress just days ago. What is it about this man – Benjamin Netanyahu, the current Prime Minister of Israel that causes emotions to run so high?

Among conservatives, evangelical conservatives in-particular, to be the slight bit critical of Netanyahu or his policies is akin to hating the Jewish people. We are told we must “stand with” or “support” Israel (whatever standing with or supporting entails) no matter what.

At the risk of being met with these criticisms and others, my position is that Benjamin Netanyahu is a politician who has a geopolitical agenda. Israel is another nation which has a government that has its flaws as all governments do. I do not intend these statements to be pejorative but to bring both the PM and his government back into the realm of the real world.

Let me call what Netanyahu’s speech what it was: a political speech. Political speeches, by their nature, are designed to promote a point-of-view. Stretching the truth to its absolute limits, hyperbole, and minimizing opposing opinion is part and parcel of political speeches. In this particular speech, we are to believe that the current negotiations will only “pave the way” for Iran to getting the bomb. Iran is years or even months away from getting the bomb.

The thing is, Iran has been years or months away from getting nuclear weapons for 20 or so years now according to Netanyahu. As Murtaza Hussain writing for The Intercept points out:

“The conclusion from this history is inescapable. Over the course of more than 20 years, Benjamin Netanyahu has made false claims about nuclear weapons programs in both Iran and Iraq, inventing imaginary timelines for their development, and making public statements that contradicted the analysis of his own intelligence advisers.

Despite this, he continues to be treated by lawmakers and media figures as a credible voice on this issue.”

Jon Stewart makes many of the same observations (below). Both Iraq and Iran were supposedly getting close to acquiring nuclear weapons. Obviously, nothing of the kind was ever found in Iraq following Operation Iraqi Freedom.

Obviously, I am no fan of the despotic theocratic regime in Iran. The idea of such a regime acquiring nuclear weapons is quite frightening. And while the concept of mutually assured destruction may or may not be an effective strategy, I see no harm in diplomacy and regular unannounced inspections of Iran’s nuclear programs.

Quote of the Day: Refreshingly Honest Edition

Julie B

I think age often brings humility. Back in the day, shoot- I thought I had all the answers. Now, I have to admit to myself that I’m still learning. I’m no longer afraid of saying, “I don’t know” when asked my opinion on something that I don’t understand. I’ve made it a rule to not comment unless I believe that I can defend my view if I’m challenged. I don’t understand the Israel/Palestine conflict enough. Net neutrality confuses me. Bitcoin sounds cool but I don’t get the mining part. It’s not me refusing to take sides because I’m scurred but rather: I’m ignorant and I’ll admit it. -Julie Borowski (Facebook status update)

It’s not possible to be adequately informed on every issue and it’s refreshing to see an intelligent person with a decent sized megaphone say so.

It so happens these very issues I don’t quite have a handle on either. Israel/Palestine is a much more complicated issue than most Americans understand (I don’t necessarily think Israel is always in the right and saying so doesn’t make me an anti-Semite). On Net Neutrality my instinct is just leave the internet alone; its working just fine as it is (but then again, this is just my instinct I could be wrong). Bitcoin – I like the idea and I hope it’s as good as advertised but I also worry it’s a giant “pump and dump” scam. Don’t buy more Bitcoin than you are willing to lose.

Sympathy for Paranoia

cat in the tin foil hat

The moon landing was faked by the U.S. government for propaganda purposes to win the Cold War. The terrorist attacks of 9/11 was actually an inside job as a pretext to go to war. Space aliens landed in Roswell, NM but the government has been covering it up. The Sandy Hook massacre was faked to increase support for new gun control laws; the “victims” were actually actors who are all alive and well today. The Illuminati is the secret entity which actually governs the whole world…

The natural response to these statements is to say “these people are mad barking moonbats” and to keep ourselves as distant as possible from the people making them. Those of us in the liberty movement who want to be taken seriously are very quick to renounce anyone who is within six degrees of Alex Jones or anyone else who states any of the above. It’s difficult enough to be taken seriously about legalizing drugs, the non-aggression principle, free markets, and freedom of association; the last thing we need is to be lumped in with “those people.”

While it is very important to defend the “brand” of the liberty movement, it’s also important to recognize the reasons why people believe some rather nutty things.

[W]hen I say virtually everyone is capable of paranoid thinking, I really do mean virtually everyone, including you, me, and the founding fathers. As the sixties scare about the radical Right demonstrates, it is even possible to be paranoid about paranoids. – Jesse Walker, The United States of Paranoia: A Conspiracy Theory, (p. 24) (Read my book review here)

Once one learns about some of the activities governments been proven to have been involved in, some conspiracy theories no longer seem as outlandish. I used to refer to conspiracy theories and wacky beliefs as “black helicopter” stories and I’m fairly certain that others used the same terminology. Once I learned that black unmarked helicopters were used in the assault by the FBI on the Branch Davidians in Waco, TX,(Napolitano, p.110) I stopped calling such ideas “black helicopter.”

Not everything that sounds crazy is.
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Georgia Legislature to Consider Modest Reforms for ‘No-Knock’ Raids

boubou3

On May 28th, 2014 around 3:00 a.m. in Habersham County, Georgia a SWAT team raided a house the police believed to be occupied by Wanis Thonetheva, an alleged drug dealer. In the chaos of the raid instead were four children and up to four adults. The youngest of the children, 19 month-old “Bou Bou” Phonesavanh was burned and permanently disfigured from a flash-bang grenade which set the play pen he was sleeping in ablaze.

No drugs or contraband of any kind was found in the home. Also absent from the residence was the man they were looking for.

Bou Bou was taken to Grady Memorial Hospital in Atlanta where he was put into a medically induced coma. Doctors were not sure if the toddler would ever wake up but fortunately, he did.

This is not by any means, the end of the Phonesavanh family’s problems with Bou Bou’s medical expenses around $1.6 million and surgeries into adulthood. These expenses, by the way, that will not be paid by the county or the departments responsible for severely injuring this child.

In the aftermath of this botched SWAT raid, several Georgia legislators are looking to reform the use of “no-knock” raids. Sen. Vincent Fort (D-Atlanta) introduced a bill he’s calling “Bou Bou’s Law” which would require a slightly higher standard for no-knock raids than required by SCOTUS. Bou Bou’s Law would require “the affidavit or testimony supporting such warrant establishes by probable cause that if an officer were to knock and announce identity and purpose before entry, such act of knocking and announcing would likely pose a significant and imminent danger to human life or imminent danger of evidence being destroyed.”

In the House, Rep. Kevin Tanner (R-Dawsonville) introduced a similar bill which would go even further by requiring that no-knock raids be conducted between the hours of 6 a.m. and 10 p.m. unless the judge issuing the warrant “expressly authorizes” another time. Tanner’s bill also requires that each department keep records of each raid which would be compiled with all the other records around the state into an annual report which would be sent to the Governor, Lieutenant Governor, and the Speaker of the House.

While these are laudable reforms which I would hope would pass any state legislature, these reforms do not go nearly far enough. Several of the articles I read in preparing this post had titles like “No Knock Warrants Could be a Thing of the Past.” In reading over these bills, I’m not quite that optimistic. As Jacob Sullum pointed out at Reason, its not at all clear that Bou Bou’s Law would have prevented the raid from happening. The police at the time thought their suspect was probably armed; it probably wouldn’t take much to convince a judge to issue the no-knock warrant.

As I took another look at Rep. Tanner’s bill, I saw no language that would restrict the hours of the standard knock and announce raids. His bill seems incredibly vague to my lay reading “all necessary and reasonable force may be used to effect an entry into any building or property or part thereof to execute such search warrant if, after verbal notice or an attempt in good faith to give verbal notice by the officer directed to execute the same of his or her authority and purpose”.

Its human nature to stretch and bend language in such a way that is favorable to one’s objectives. I can imagine the police “interpreting” this law to mean they could gently knock on the door at 3 a.m., speaking in a barely audible voice “Police, search warrant open up,” counting 1 Mississippi, 2 Mississippi, 3 Mississippi, CRASH!

There is some concern by those who think that even these modest reforms put the police in unnecessary danger – police lives matter. I’m of the opinion that ALL lives matter and propose some (admittedly) radical ideas as to how and when SWAT tactics and/or police searches should be used to protect the life and liberty of all concerned:

– If the reason for a surprise raid on a residence is that the evidence could be quickly flushed down a toilet or easily destroyed by other means, then this isn’t enough reason for such a raid in the first place. A couple of ounces of any drug flushed down a toilet is not sufficient reason to put the lives of those in the residence or the police at risk.

– SWAT should not be used at all unless its an active shooter situation, a hostage situation, or credible reason to believe there will be active, armed resistance to the search. Unless there is a very real clear and present danger, leave your military grade toys at the station.

– Each and every police officer involved in the search wears a camera (preferably on the head to have a true POV). All video from the search would be made available to the suspect’s defense attorney.

– The police departments involved are responsible for any and all “collateral damage” to life and property. In the event an innocent life is taken, the individual officer(s) responsible should be treated as anyone else who takes a life. Investigation/prosecution would be conducted by an independent investigators and prosecutors.

– Absolutely no raids or searches of any kind between 9 p.m. and 9 a.m. (though stakeouts and other activity which does not require interaction with the suspect(s) during these hours is permissible).

I’m sure that some if not all of these ideas are too radical for many lawmakers. If we really believe that “all lives matter”, however; these proposals should be thoughtfully considered.

If you would like to make a small donation to help pay Bou Bou’s medical expenses, go to this GoFundMe page which has raised nearly $43k so far.

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