BNET Intercom

That ubiquitous teenybopper vampire flick “New Moon” racked in over $140 million during its opening weekend.  Not a bad take, considering fans also had the unofficial option of streaming the video for free online, according to a report in the Chicago Sun-Times.

The Napster moment has arrived for the television and movie industries.

In the time it once took to download a three minute tune during Napster’s heyday back in 2001, fans can download an entire movie these days.  Last April, a pirated version of “Wolverine II” was downloaded over one million times before the flick even got to the theaters.

But there’s no real need to even bother downloading a song, television program or movie anymore.  Videos can be quickly uploaded anywhere on the planet and streamed on any browser.  And since most data lives in the cloud and not on desktops, the Motion Picture Association of America would be wasting its time going after illegal end-user libraries like the recording industry once did.

Hollywood will face its toughest test with the online networks that host streamable versions of its content.  Predictably, none of these sites claim to ever knowingly host illegal content and they will ultimately cooperate with copyright holders.  But as an article on Forbes notes, sites like Megavideo, which is conveniently registered in Hong Kong, pays its users to upload content. Therefore, whenever Hollywood cites a copyright infringement and illegal content is deleted, there’s still an incentive (and it would be naive to think that most digital pirates care about the money) for some other fan to upload another version of the file. There are now hundreds of illegal copies of every popular television show and movie available on the web for free viewing.

Third-party sites also provide user-generated indexes that help fans find out where specific content can be streamed online.   Even with those helpful directories, all the lawyers in the world couldn’t track and cite every infringement.

How should Hollywood deal with its Napster moment?  Please share your thoughts and bold predictions below.

Today on Esquire’s website, Daron Acemoglu, a professor at MIT, tackles an age-old question: Why are some nations wealthy while others are poor?

There have been plenty of sweeping theories to choose from, as Acemoglu notes.  In the 18th century, the French political philosopher Montesquieu was proposing that people in hotter places are just lazier. Today, in a similar way, Jeffrey Sachs of Columbia University’s Earth Institute says a lot of it boils down to geography and the weather.

But according to Acemoglu, while these theories may help explain aspects of poverty, they ignore the incentives that truly drive prosperity. In Acemoglu’s view, if countries create sound institutions and improve their governments, then their citizens can expect that their hard work will be protected by the rule of law and poverty can be fixed.  While rich nations may not be able to totally force their institutions onto other countries, according to Acemoglu, they can push for government reforms and even help the citizens of poorer nations by providing them with educational opportunities and technology.

Acemoglu’s connection between economic incentives and the rule of law is appealing but it ultimately fails to answer the initial question.  Certainly there is a correlation between good government and economic prosperity.  But why do some nations develop sound, transparent institutions while others settle for warlords or corrupt puppet governments?

And it can’t all come down to education.  Russia, for example, has excellent universities and a literacy rate close to 100 percent. Yet the International Finance Corporation ranks Nigeria and Pakistan as better places to do business.

Social scientists will keep on trying to isolate that single causal factor that explains wealth and poverty.  But what if there simply isn’t one to be found? After all, even Iraq was once home to the center of civilization.

If you’ve been following the healthcare debate, then you’ve probably heard of this WHO finding, which forms the basis of so many arguments for reform: “The U.S. health system spends a higher portion of its gross domestic product than any other country but ranks 37 out of 191 countries according to its performance.”

But scholars at the CATO Institute counter that those stats do not provide an accurate diagnosis of the health of America’s healthcare system.  When one factors in innovation (basic science, diagnostics and therapeutics), they argue, then the American system does not look so bad.  America has fewer people than the EU but we’ve recently won more Nobel Prizes in medicine and physiology and produced more pharmaceutical wonder drugs over the last few decades.

If an ambitious doctor is looking for fertile ground to find a better cure, America looks like it’s the best place to set up shop.  It follows then, that attempts to exert government control over the healthcare system could thwart innovation and also weaken one of the American economy’s strongest sectors.

However, the report’s authors mention an odd side effect of our system which I think weakens, rather than helps, their case:

Consider, for example, the frequent claim that European health systems achieve similar health outcomes to those of the United States at a much lower cost. That claim fails to consider that higher U.S. spending levels could be generating innovations that improve health outcomes in Europe and around the world.

As the CATO scholars go on to point out, the rest of the world is essentially getting a free ride off of our investments in medical innovations.  When these innovations can be controlled and patented, as is often the case with new drugs, then American companies and our broader economy both benefit overall.  But many investments in innovation, such as long-term health studies, end up as global public goods.  We pay the price to figure out a new procedure and everyone else gets to adopt it, free of charge.

Perhaps there is a better way for the world to share the costs of all these healthcare advances since the benefits don’t necessarily trickle down to Americans who can’t afford insurance.

According to a new report by the US Department of Agriculture, more than one in seven American families suffered from “food insecurity” sometime in 2008 and we should all be concerned that that figure is rising.  Many media outlets have eaten this report up at face value, blasting similar headlines about how more Americans are “going hungry.”

This hunger awareness drive is not new, though.  Feeding America, a nonprofit funded in large part by the food industry, and its partner, the Ad Council, have been running an Ogilvy-powered ad campaign for a year now which claims one in eight Americans “live with hunger.”  Feeding America even connected with Matt Damon to pitch its hunger talking points on the season finale of HBO’s Entourage.

Obviously, everyone is against hunger.  And whenever someone in a country as rich as America can’t afford food, it’s a disgrace. We clearly have the resources to keep everyone well-fed.

So here’s my problem: these hunger numbers just don’t seem to add up when you realize how many people in America are over-fed.

Just look at Feeding America’s own website.  Do their “faces of hunger” from across America look like they’re starving to you?

We don’t have a serious hunger problem in the land of the absurdly cheap one dollar double cheeseburger. We have an obesity epidemic.

Let’s check the government’s own data.  In 2008, only one state (Colorado) had an obesity rate that was less than 20 percent.  According to the latest CDC stats, 32.7 percent of American adults are now overweight, 34.3 percent are obese and 5.9 percent are are extremely obese.  I’m supposed to believe that roughly 14 percent of American families are “food insecure” when only 27 percent of American adults are not overweight or obese?

Many will counter that it must be poor people and the nation’s children who are “going hungry.”  But again, according to the government’s own data, around 17 percent of children are now obese. And paradoxically, many studies have confirmed a correlation between poverty and obesity. While the USDA claims that one in seven American families are “food insecure,” the CDC’s data shows that one of seven low-income, preschool-aged children is obese.

So why is Big Food trying to convince us that there is a huge hunger problem?  My theory is that Feeding America and its backers, which include Kraft, the Campbell Soup Company, Wal-Mart and ConAgra Foods, want to hype hunger so that no new regulations try to tackle obesity.  What politician would dare propose a new tax on fatty or empty calorie foods when the public thinks one in seven families can’t put enough food on the table?  And who is now going to try and stop the redistribution of tens of billions of our tax dollars to King Corn and his Frankenfood court each year?

One thing is certain.  President Obama’s controversial pick to lead the USDA, Iowa’s former Governor Tom Vilsack, and his friends at Monsanto, won’t be going hungry any time soon.

Two Seattle-based organizations illustrate how the distinction is blurring between charities and businesses.  Grist is a popular news blog and Groundwire is a consulting shop that helps organizations build up their online capabilities. Grist competes with every other new media site for eyeballs and advertising dollars while Groundwire has to battle with every other ad agency for new website contracts.

But both have an inherent advantage over other service providers in the field.*  Because they have an environmental component to their missions, they are both classified as nonprofits.  That means they avoid paying many federal income taxes and can supplement their operating budgets with tax-exempt donations.

First off, it is worth noting that there are disadvantages with establishing an organization as a nonprofit.  The group’s founders cannot sell or cash out, for example.  And it’s not necessarily easier to rely on donors rather than just customers.

And finally, I am not accusing either of these groups of doing anything illegal or unethical.  Both have to make their cases to the IRS that they should qualify as tax-exempt charities working solely in the public’s interest and they’ve both been approved.

However, I’m not convinced that nonprofits with this level of commercial activity deserve the exact same tax breaks as pure charities.  Perhaps it’s time for Congress to clarify the rules.

*Disclosures: I’ve helped an environmental group with a media buy on Grist before.  I also own a for-profit online news site as well as a consulting practice that helps environmental groups, among others, develop websites.

If you’re a single parent in Virginia, you’re probably going to take home a little less than $40,000 per year.  But oddly, due to various tax breaks and welfare benefits, your haul will be roughly the same, regardless of whether you’ve made $20,000 or $40,000 from actually working.

That’s according to an analysis of the “working poors’” implicit marginal tax rate from the Mises Institute, a libertarian think tank. The chart below has been popping up on other economics blogs this week, so I figured readers on BNET would be interested to see it as well.

This chart’s creator, Clifford F. Thies, is convinced slicing welfare/income data in other ways would still show the same result: for many, there is a disincentive to work for more money.

Here a few of the consequences of such government hand-out programs, in Thies’ view, even if they are well-intentioned:

For many of the working poor, the implicit marginal tax rate is greater than 100 percent. The long-run consequence of undermining the positive incentive to work is, of course, the creation of an underclass acclimated to not working; the supplement of cash and noncash benefits with income from crime and the underground economy; and the government resorting to negative incentives such as mandatory work programs.

Do you agree with Thies’ analysis?  Or do these programs and tax breaks create a necessary safety net?

The value of the dollar against other world currencies is hovering around a 15 month low. And it doesn’t matter whether the analysis comes from the left or the right: policymakers really want a weak dollar, despite lip service to the contrary.

From the New York Times:

Treasury Secretary Timothy F. Geithner continues to repeat that a strong dollar is “very important” for the American economy, but United States fiscal and monetary policy pushes toward depreciation. To bail out our banks, we need cheap money, and this implies some inflation. To finance our current account deficit, investors need to think they are buying inexpensive assets from us. Everything points to a cheaper dollar.

And a second from the Economist:

What, apart from talk, will America do to support its currency?

Raise interest rates? Well, that’s not up to Geithner but to the Fed, which is talking of an extended period of low rates. Raise taxes and cut spending to slash the deficit? Not going to happen anytime soon. Intervene to boost the dollar? That would involve the Fed in yet more meddling in the market, which might be politically unpopular, especially as Congress thinks the dollar is too strong against the Chinese currency.

 Loading ...

Of course, your alternative explanations are welcomed below.

Pro-choice groups are freaking out because Nancy Pelosi and other Democrats in the House “sold out” by tacking the last-minute Stupak amendment, which prevents federally-subsidized insurance plans from covering abortions, to the healthcare bill.  It’s easy for the punditocracy to now conclude that the abortion issue will become one big roadblock to reform as the bill heads to the Senate.

However, I’m not convinced that that’s the correct interpretation.  Isn’t it possible that the Democratic leadership has shrewdly kept the abortion/healthcare issue unsettled all these months in order to muddle the debate in their favor at the last minute?

If anything, the bill passed the House because of Stupak’s Amendment.  It gave 64 Democrats, many of whom represent conservative districts (plus one Republican), the political cover to vote in favor of the entire plan once federal abortion funding was eliminated.

It’s a classic negotiation technique.  Add a few bells and whistles to your proposal so some beancounter can then whip out his red pen and cross out the extras.*  The clients feels like they got a bargain and you got them to buy into everything you actually wanted all along.

“Rather than scrapping the Stupak-Pitts amendment, the president and congressional leaders should scrap Speaker Pelosi’s health care bill entirely and start over,” argued House Minority Leader John Boehner.

If only it were that simple, Rep. Boehner.  Instead of debating the public option, which found its way into the final House bill, we have another distracting debate over abortion.  This time, it looks like it’s the Democrats who are exploiting the culture wars in order to push through their economic agenda.

*If you want to know exactly how the Stupak amendment modified the original bill’s stance on abortion, check on a nuanced review in the Los Angeles Times.

Unless your a lefty activist, you’ve probably never heard of the online news site IndyMedia. But regardless of where you stand on the political spectrum, the First Amendment rights of the site’s citizen-journalist operators must be protected from federal interference.

Recently, US Attorney Tim Morrison sent a subpoena demanding “all IP traffic to and from www.indymedia.us” on June 25, 2008. The request also asked for IP addresses, times, and any other identifying information of the site’s visitors such as email addresses, physical addresses, registered accounts, Social Security numbers, bank account numbers and credit card numbers. And most troubling of all, the subpoena even instructed the site’s host “not to disclose the existence of this request,” even though it’s probably illegal to send such a gag order to a journalist.

As Declan McCullagh reports on CBSNews.com, the Justice Department has somewhat limited powers when dealing with the press. Its guidelines dictate that “no subpoena may be issued to any member of the news media” without “the express authorization of the attorney general.”

Morrison has since withdrawn his subpoena and there has been no official comment on why there was an investigation in the first place.  Perhaps Morrison disregarded protocol, since a Justice Department official claims the attorney general’s office in Washington never saw the subpoena.

In my opinion, President Obama’s Attorney General Eric Holder cannot stay mum on this issue.  There needs to be a clear reprimand from the top, not a string of “no comments.”  Otherwise, the Justice Department leaves the impression, even if it’s unintended, that they can continue to snoop on online news operations.

Related posts on BNET:

• Columbia U’s Call for Journalism’s “Reconstruction”
• FBI Wants Businesses to Rat on Their Customers
  
• Why Do Americans Hate the Media?

20 years ago today, the Berlin Wall came crashing down, taking with it the communist regimes that haunted Eastern Europe during the 20th century. World leaders are gathering in Germany’s capital to commemorate the reunification of Germany and the end of the Cold War.

Of course, the fall of the Wall has come to symbolize more than a political and military win for the West.  It also represents the idea that free markets work better than planned socialist economies.

However, a new global poll has found that today’s recession has many doubting pure capitalism.

According to pollster Doug Miller, “It appears that the fall of the Berlin Wall in 1989 may not have been the crushing victory for free-market capitalism that it seemed at the time — particularly after the events of the last 12 months.”

Here are the poll’s key findings:

Only 11 percent of people surveyed across 27 countries thought free market capitalism is working well, while 51 percent believed its problems can be solved with more regulation and reform, the poll said.

In only the United States (25 percent) and Pakistan (21 percent), did more than one in five people agree that capitalism works well in its current form, the poll conducted for the BBC World Service said.

A majority now believe free-market capitalism doesn’t really work.  Were the eulogies over socialism’s demise premature?  Share your predictions below.