February 5, 2009  ·  Lessig

So I’m the first to agree that the structure of compensation on Wall Street was begging for just this sort of disaster. But I don’t get the wisdom of the pay cap.

The pay cap means there will be two kinds of firms — one that can pay people whatever it wants; one that is capped (at different levels no doubt). But then the best employees from the capped firms can move to the uncapped firms, leaving the, well, not best employees overseeing the recovery of this now government invested firms.

Why do we want to be creating an incentive for not quite the best managers to be managing the recovery of firms we’re financing?

February 4, 2009  ·  Lessig

In the world of debates about network neutrality, consumption caps have an ambiguous status. Some see it as a kind of discrimination. Others, not. I’ve not been convinced they tend to support strategic behavior. But a recent experience in New Zealand did wonders to convince me of the harm they will do to the development of the Internet that could be.

I subscribe to TV series through iTunes. House is one of those series. When a new episode is released, my iTunes was configured to download it automatically, at least if iTunes was opened. The downloading happens the background.

In November, I was in New Zealand. After I arrived, I went to the hotel, signed up for (insanely expensive) Internet service, synced my iPhone, and turned to the task of answering the one billion emails that had filled my inbox in the time it takes to fly from SFO to New Zealand. About 30 minutes into my work, a message flashed on my screen that I had “violated the ethical rules” of the network to which I had just paid $50 for 1 days access. And because I had violated ethical rules, I was to be “fined” NZ $100 (about another $50).

Seems the service I had paid $50 to purchase had a 1GB download cap attached to it. My House episode was 1.5GB (stupidly, iTunes pushes you buy HD). So midway through the download, the service cut off my connection and charge my room the fine for unethical behavior.

No doubt, Internet in New Zealand is expensive (though more competition may help). And of course, 1GB is ordinarily quite sufficient for normal use (though when I prepare a talk, it is quite easy for me to consume much more than that as I find stuff (including videos) to include in my talk). And obviously, I had agreed to the contract, and whether intentionally or not, I had violated the limits of the conflict.

But the point is this: When companies like Time Warner suggest bandwidth caps are just about stopping “piracy,” that’s not quite true. They’re also about stopping lots of other business models that try to leverage the real potential of fast, cheap Internet access (assuming of course we can get fast, cheap Internet, or keep it where we’ve got it).

February 2, 2009  ·  Lessig

The New York Times has an excellent piece about the Daschle debacle. It points to the fundamental point missed by the obsession with whether the former Senator(‘s accountant) made an error in calculating his tax: The real problem is not people who can’t understand and follow tax rules (i.e., all of us, at least on the understanding part). It is a system in which former Members can trade their status as former Members for millions of dollars.

This system is an economy. It only works if those being paid millions deliver millions (plus something) in value in return. And as the business model of being a public servant more and more becomes the business of becoming a well-paid ex-public servant, public servants within the system will do whatever they can to make this economy work. Think of it as a political life insurance policy — paid out when your public political life ends.

Daschle, of course, is the most innocent in this guilty system. His plan was to serve the public as long as he possibly could. The voters in South Dakota terminated that plan. His desire is to return to public service, working on a set of issues that he feels passionate about. Indeed, issues he actually knows something about. So no doubt, he is a good soul in a bad system.

But his goodness doesn’t inoculate the system. And the system is why no one should count on real CHANGE till it, the system, gets changed.