A Philosopher's Blog

Apple, the FBI & Backdoors

Posted in Ethics, Law, Philosophy, Technology by Michael LaBossiere on February 19, 2016

Data breaches, hacking and device theft are a routine part of modern life. In order to help defend customers, Apple and Google added very effective security features to their phone operating systems. American law enforcement, who had grown accustomed to easy access to the treasure trove of evidence that is a smartphone, were generally dismayed by this—they could no longer get Apple or Google to unlock a phone because the phones were effectively unlockable.

In the light of revelations about the extreme ineffectiveness, egregious incompetence and privacy violations on the part of the state security apparatus, the public was generally in favor of the strong encryption offered by Apple and Google. The FBI, however, thinks it has found an ideal rhetorical tool to exploit against encryption: the murders in San Bernardino. The FBI has claimed that the work iPhone of one of the alleged attackers contains critical evidence and a judge has demanded that Apple write a special version of its iOS to enable the FBI to crack the phone. Apple, which has cooperated fully with the investigation to this point, has refused to create a means of breaking iPhone encryption. The company has made its case via a letter to the customers.

Since people have an irrational fear of domestic terrorism vastly out of proportion to the actual threat level, the FBI has chosen wisely with this case. They can try to make use of scare tactics and appeal to fear to get the public to unwisely side against Apple. Since I have argued at length against backdoors in general, I will not rehash those general, rational arguments here. Instead, I will focus on the situation at hand. Since I am not a lawyer, I will stick primarily to the ethics of the matter and leave the legal wrangling to those who have billable hours.

The standard argument in favor of giving the state access to private information, be it on a phone or written on paper, is based on security: the state needs that information in order to protect citizens from harm. In the case of the iPhone, the argument is presumably that the phone contains information the FBI needs to conduct its investigation. Since the person who knew the passcode is dead, the FBI cannot compel that person into allowing access to the phone. Either the FBI lacks the means to get into iPhones or has elected not to reveal that capacity, so they need to turn to Apple to access the data.

Others in law enforcement advance similar arguments: they have many phones that they think contains data relevant to cases and the argument from public safety should, they think, override all other concerns. Since the focus of the FBI and law enforcement in general is on finding and prosecuting criminals to protect the public, it makes sense that they would see the matter from that perspective. Apple and Google, as they see it, are helping the criminals and terrorists by providing them with unbreakable vaults for their data.

The argument from safety should not be simply dismissed.  After all, the primary function of the state is to protect its citizens and the usual utilitarian moral argument can be made in favor of endeavors aimed at reducing privacy in order to increase security.

The easy and obvious counter to this security argument is another security argument. If the United States government and law enforcement were the only ones who could access such data and could do so only via due process of the law, then it would be reasonable to allow such access. Unfortunately, such access cannot be limited to the United States and history has shown that the state has a rather vague notion of due process. Because of this, it seems likely that far more harm would be done by getting on the road the FBI wants Apple to walk. While law enforcement would, it is true, be able to crack some phones and get some information that would prove useful, this would be outweighed by the harm done to citizens by criminals and foreign states. After all, if law enforcement can get into an iPhone, then so can China and criminal hackers. It could, of course, be argued that my estimate is in error—that the harms prevented by allowing law enforcement into phones will vastly outweigh the harms that will occur from hackers getting into the phones of citizens and the harm done when foreigners decide to go with competing phones rather than risk using an American iPhone or Android phone. However, given the damage done by hacking and the fact that law enforcement can use other means of investigation (such as what they did before smart phones), this does not seem to be the case.

Another approach is to make use of stock conservative arguments against government overreach and in favor of rights. Conservatives routinely argue against government regulation, in favor of small government, against government intrusion and in favor of constitutional rights. While these arguments are usually employed against environmental regulations and in defense of gun rights, they would also apply with slight modifications to the matter at hand. Libertarians who grasp the concept of consistency are in favor of such encryption and against such intrusions into privacy rights. Unfortunately, some conservatives throw away their espoused principles in the face of overblown fears about terrorists and criminals. However, these principles need to be applied consistently and, if they were, conservatives should oppose such government overreach and intrusions into the freedom of businesses and into constitutional rights.

As a final point, consider the stock argument in favor of gun rights that citizens need guns in order to engage in self-defense and to do so even against the tyranny of the state. The same sort of argument would seem to apply in the case of phone encryption: it serves as a digital defense against criminals and terrorists, but also as a very real defense of the tyranny of the state. So, if citizens have a right to firearms to defend against the forcible acts of criminals and state tyranny in the physical world, they should have the right to encryption to defend against criminals and state tyranny in the digital world. What is needed is a suitable slogan on par with the NRA’s famous line about guns: “I’ll give you my data when you take my phone from my cold, dead hands.”


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Telework of the Future

Posted in Business, Ethics by Michael LaBossiere on April 3, 2015

While people have been engaged in telework for quite some time, ever-improving technology will expand the range of jobs allowing for this long-distance labor. This, naturally enough, raises a variety of interesting issues.

Some forms of telework are, by today’s standards, rather mundane and mostly (non-controversial. For example, teachers running online classes from home is a standard form of education these days. Other forms are rather more controversial, such as remote assassination conducted via armed drones.

One promising (and problematic) area of teleworking is telemedicine. Currently, most telemedicine is fairly primitive and mainly involves medical personal interacting with patients via video conferencing software (“take two aspirin and skype me in the morning”). Given that surgical robots are now commonly employed, it is simply a matter of time before doctors and nurses routinely operate “doc drones” to perform various medical procedures.

There are many positive aspects to such telemedicine. One is that such doc drones will allow medical personal to safely operate in dangerous areas. To use the obvious example, a doctor could use a drone to treat patients infected with Ebola while running no risk of infection. To use another example, a doctor could use a drone to treat a patient during a battle without risking being shot or blown up.

A second positive aspect is that a doc drone could be deployed in remote areas and places that have little or no local medical personal. For example, areas in the United States that are currently underserved could be served by such doc drones.

A third positive aspect is that if doc drones became cheap enough, normal citizens could have their own doc drone (most likely with limited capabilities relative to hospital grade drones). This would allow for very rapid medical treatment. This would be especially useful given the aging populations in countries such as the United States.

There are, however, some potential downsides to the use of doc drones. One is that the use of doc drones would allow companies to offshore and outsource medical jobs, just as companies have sent programing, manufacturing and technical support jobs overseas. This would allow medical businesses to employ lower paid foreign medical workers in place of higher paid local medical personal. Such businesses could also handle worker complaints about pay or treatment simply by contracting new employees in countries that worse off and hence have medical personal who are even more desperate.  While this would be good for the bottom line, this would be problematic for local medical personal.

It could be contended that this would be good since it would lower the cost of medical care and would also provide medical personal in foreign countries with financial opportunities. In reply, there is the obvious concern about the quality of care (one might wonder if medical care is something that should go to the lowest bidder) and the fact that medical personal would have had better opportunities doing medicine in person. Naturally, those running the medical companies will want to ensure that the foreign medical personal stay in their countries—this could be easily handled by getting Congress to pass tough immigration laws, thus ensuring a ready supply of cheap medical labor.

Another promising area of telework is controlling military drones. The United States currently operates military drones, but given the government’s love of contracting out services it is just a matter of time before battle drones are routinely controlled by private military contractors (or mercenaries, as they used to be called).

The main advantage of using military drones is that the human operators are out of harm’s way. An operator can also quickly shift operations as needed which can reduce deployment times. Employing private contractors also yields numerous advantages, such as being able to operate outside the limits imposed by the laws and rules governing the military. There can also be the usual economic advantages—imagine corporations outsourcing military operations and reaping significant savings from being able to keep wages and benefits for the telesoldiers very low. There is, of course, the concern that employing what amounts to foreign mercenaries might result in some serious moral and practical problems, but perhaps one should just think of the potential profits and let the taxpayers worry about paying for any problems.

There are various other areas in which teleworking would be quite appealing. Such areas would need to be those that require the skills and abilities of a human (that is, they cannot simply be automated), yet can be done via remote control. It would also have to be the case that the cost of teleworking would be cheaper than simply hiring a local human being to do the work. Areas such as table waiting, food preparation, and retail will most likely not see teleworker replacing the low-paid local workers. However, areas with relatively high pay could be worth the cost of converting to telework.

One obvious example is education. While the pay for American professors is relatively low and most professors are now badly paid adjuncts, there are still people outside the United States who would be happy to work for even less. Running an online class, holding virtual office hours and grading work require rather low-cost technology. The education worker would require just a PC and an internet connection. The university would just need access to a server running the appropriate learning management software (such as Blackboard). With translation software, the education worker would not even need to know English to teach American students.

Obviously enough, since administrators would be making the decisions about whose jobs get outsourced, they would not outsource their own jobs. They would remain employed. In fact, with the savings from replacing local faculty they could give themselves raises and hire more administrators. This would progress until the golden age is reached: campuses populated solely by administrators.

Construction, maintenance, repair and other such work might be worth converting to telework. However, this would require that the machines that would be remotely operated would be cheap enough to justify hiring a low paid foreign worker over a local worker. However, a work drone could be operated round the clock by shifts of operators (aside from downtime for repairs and maintenance) and there would be no vacations, worker’s compensation or other such costs. After all, the population of the entire world would be the work force and any workers that started pushing for better pay, vacations or other benefits could be replaced by others who would be willing to work for less. If such people become difficult to find, a foreign intervention or two could set things right and create an available population of people desperate for telework.

Large scale telework would also seem to lower the value of labor—after all, the competition among workers would be worldwide. A person living in Maine who applied for a telejob would be up against people from all around the world, ranging from Argentina to Zimbabwe. While this will be great for the job creators, it will probably be less great for the job fillers.

While this dystopian (from the perspective of the 99%) view of telework seems plausible, it is also worth considering that telework might be beneficial to the laboring masses. After all, it would open up opportunities around the world and telework would require fairly stable areas with adequate resources such as power and the internet (so companies would have an interest in building such infrastructure). As such, telework could make things better for some of the masses. Telework would also be fairly safe, although it could require very long hours and impose considerable stress.

Of course, there are still steps beyond telework and one possible ultimate end might be full automation of all jobs.


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The Cost of the Empty

Posted in Ethics, Philosophy, Politics by Michael LaBossiere on August 2, 2013
Government spending

Government spending (Photo credit: 401(K) 2013)

As the Washington Post notes, the US government spends at least $890,000 each year to maintain about 13,000 empty bank accounts. In terms of why such bank accounts exist , the gist is this: when the government gives out a grant an account is opened to distribute the money. When the grant ends, the account goes to zero. However, unless the account is closed, the government still has to pay the fees to maintain the account.

It might be wondered why the accounts are not simply closed. The answer is that closing an account requires that the grant be audited within 180 days of the account closing. Interestingly, there is actually no penalty for missing the deadline.

While $890,000 is a drop in the vast ocean of government spending, each drop adds to that ocean. Also, there is the fact that this spending literally yields nothing. While people do dispute the value of various programs ranging from food stamps to bridges to nowhere, at least that spending is for something. This is money for nothing and hence should be recognized as wasteful by both parties.

There are no doubt many other such expenditures that produce nothing and benefit no one. It would seem to be rather obvious that Congress should begin cutting the budget by dealing with all these empty expenditures. After all, eliminating such spending would be pure savings at no cost and there would be no special interests to battle or political agendas to address. While such expenditures will probably be relatively small, they would also add up. Also, there is the fact that even such relatively small amounts of money are relatively big in other contexts, such as small programs that do generate a valuable public good.

As might be guessed, the main reason such expenditures are not addressed is that it is easier to do nothing than to do something. This is, obviously enough, a bad reason.

It is, however, worth considering whether or not the cost of doing nothing exceeds the cost of doing something. Since the accounts must be audited before being closed, it could be argued that the cost of the audit would exceed the savings of closing the account. Thus, while it costs to keep them open, this is saving money.

One obvious reply is that the rules could be changed. After all, if the accounts can be left open indefinitely without an audit, then it would seem cheaper to forgo the audit rule and just close them to save money. After all, if no audit will ever be done, there seems to be no sense in requiring an audit when doing so merely costs money and does not have any positive benefit.

Another obvious reply is that it seems likely that the cost of an audit would not exceed the cost of keeping an account open indefinitely. After all, those payments could continue until the government ends and that could be quite some time.

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Obama’s Katrina?

Posted in Environment, Politics by Michael LaBossiere on May 27, 2010
A beach after an oil spill.
Image via Wikipedia

Interestingly enough, when Obama seems to be doing something wrong the pundits and others say that it is Obama’s X (where X is something bad that happened under the Bush administration). At this time the oil leak is being considered as a candidate for Obama’s Katrina. Katrina, as you will recall, was a paradigm of government inefficiency and poor crisis management. So, the obvious issue here is whether or not it is fair to compare the situations.

On one hand, the comparison seems apt. First,  mismanagement played a role in setting up both disasters. In both cases politicians had a hand in this. Second, both cases involved a delayed response on the part of the government. Third, the responses made in both cases tended to be inadequate.

On the other hand, the comparison does break down in some important ways. First, Katrina was clearly within the responsibility of the government. In the case of the oil spill, the initial responsibility was on BP and BP claimed it could handle the situation. Perhaps the administration should have assumed that BP was mistaken (or perhaps even being deceptive), but this is clearly an important difference. In the case of Katrina, there was no corporation that caused the storm-it was a straight forward natural disaster of the sort that the government is supposed to handle. The BP situation is a corporate disaster of the sort that the corporation should have been equipped to handle, which leads to the third point. Third, the government does not have the equipment that is needed to contain and repair such oil spills. This is because the government is not an oil company. BP is, which is why it makes sense that BP should have been able to handle the situation. True, the Coast Guard does have some very limited ability to deal with spills. However, this is what the Coast Guard has been doing.

However, the government has failed in two important ways. The first was in allowing BP to operate the well without having the means to effectively deal with such an accident. The second is the failure of the federal government to step in and do everything that it could do to address the situation. For example, the federal government should have started organizing the onshore cleanup (using BP’s money, of course) so that people would be trained, equipped and in place as soon as the oil hit the shores. As a second example, a comprehensive plan is needed to address the economic and environmental disaster that will arise from this situation. Plans and contingency plans should have been in place weeks ago.

There are some interesting ironies about this situation. One is that just as Obama was giving in to “drill, baby, drill” this disaster occurred. The second is that the pundits who have been slamming Obama for his alleged desire to expand government power and regulation are now slamming him for not getting “big government” involved right away and on a massive scale.

My considered view is that the situation is not yet Obama’s Katrina. As noted above, one important distinction is the cause of the disaster. Another is that while the government could have made a huge difference in New Orleans, the same is not true in this case. After all, the government does not have the equipment to do well repair at the bottom of the ocean. That is, obviously enough, something that BP should have been able to do.

That said, the situation is still developing. It does have the potential to be his Katrina or perhaps even worse.

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Posted in Politics, Technology by Michael LaBossiere on April 24, 2010
Lain's custom computer, which features hologra...
Image via Wikipedia

Back in the 1990s Cyberpunk was hot in science fiction. A central theme of this genre was battles in cyberspace. Fast forward to 2010 and the dystopic future envisioned in those tales has failed to materialize. However, the theme of cyber warfare was rather prescient. The internet is literally a war zone in which attackers try to breach the defenses of networks and individual computers. While much of this is done by criminals, there are also states playing this new game.

While criminals are a serious concern, the actions of nation states are also extremely worrisome. After all, software experts with the backing of a national budget could do considerable damage to another nation by attacking the private and governmental computer infrastructure. Financial systems, energy systems, defense systems and communication systems could be disrupted or even crippled. In theory, such attacks could be done anonymously. This would allow a nation to do damage and avoid retaliation.

China has shown that it is quite willing to use computer hacking (in the bad sense of the term) as part of national policy. While Google was the main target recently, there is no reason to think that China has any qualms about this method.  Other nations also seem to be willing and able to use such methods.

While the United States has been a center of computer and network innovation, the United States government has done rather poorly in the area of cyber security. This, obviously enough, needs to be rectified. Part of the problem is, no doubt, that our main focus has been on dumping money to counter the (non-cyber) terrorist threats (or to create the illusion that we are doing so), to fight our two wars, and so on. Another problem is that we have a hodge-podge system and lack a unified approach to this matter. There is also the concern that some government folks seem to be more concerned with downloading porn at work rather than focusing on the issue of security.

Whatever the reason, our country has a serious vulnerability in this area that must be addressed. Of course, this might be “addressed” by companies with high paid lobbyists getting fat contracts to provide useless security measures that will need to be repaired and patched to actually be effective.

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The Pentagon Shooter

Posted in Politics by Michael LaBossiere on March 5, 2010
The Pentagon, looking northeast with the Potom...
Image via Wikipedia

John Bedell was killed after shooting at police outside the Pentagon. His motivation seems to have been his distrust of the government and his apparently rather disturbed mental state. Bedell is being cast as a libertarian although, obviously enough, most libertarians do not advocate shooting police.

Interestingly, while Bedell saw patterns of conspiracy, some folks see him as being part of a pattern as well. As Northeastern University criminologist Jack Levin says, “Sadly enough, there is a pattern. He represents a much larger force in our society today. If one individual is paranoid, we call it mental illness. If thousands of people share the same paranoia, we call it ideology. There are thousands, maybe hundreds of thousands of Americans who are extremely angry with the federal government.”

Levin is correct in his claim that many people are angry with the federal government. However, it seems rather problematic to equate this anger with paranoia. After all, while there are people who are, in fact, paranoid, there are people who are rather angry at the government who are not mentally ill. A problem with this sort of remark is that it can be taken as dismissing those who are angry with the government as being mentally ill and hence most likely lacking in legitimate concerns.

While there are angry and paranoid people, the number of people who take violent action against the government is rather small. This is not to dismiss the danger presented by such people but rather to put it in perspective. Yes, we should obviously be concerned about people who will engage in such attacks, just as we should be concerned about possible attacks by foreign terrorists or actions by violent criminals. However, it is also important to keep the threat in a proper perspective. It would be a mistake, for example, to infer that because a few loners have done such acts of violence that there is a rather vast army of the paranoid waiting out there for the moment to strike. Also, it would be a mistake to dismiss those who are critical of the government as merely paranoid. After all, there are excellent grounds on which to be angry at the folks in the government. This anger does not, however, justify violence.

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Killing Americans

Posted in Ethics, Politics by Michael LaBossiere on February 17, 2010
Stock Photo of the Consitution of the United S...

Image by Rosie O'Beirne via Flickr

From both an ethical and a legal standpoint, the United States government can only kill Americans in a rather limited set of circumstances. These, obviously enough, typically involve criminal activity on the part of a citizen that justifies such a killing.

Interestingly, the government also has the legal right to assassinate American citizens who are involved in terrorism, provided that the proper procedures are followed. Not surprisingly, this might strike some as rather disturbing and perhaps unethical. After all, the good guys are not supposed to assassinate people and certainly not fellow Americans. However, there seems to be a moral basis for Americans killing American terrorists.

One case is rather obvious: when an American citizen is willingly part of a terrorist group and is killed in the course of operations against that group. For example, if an American joins a group of terrorists attacking a Marine unit in Afghanistan and he is killed by the soldiers, then that would seem to be morally acceptable under the usual moral rules governing war. After all, when a citizen willingly joins enemy forces as a combatant, then he falls under those moral conditions.

Of course, it becomes more controversial when an American is specifically targeted for assassination. After all,  as assassination is not the same sort of thing as killing in the course of a military engagement. In some cases, assassination could be seen as not being an actual assassination, but as a legitimate part of law enforcement. For example, when a police sniper takes out someone who is trying to kill a hostage, that is not assassination. So, if an American citizen was involved in an act of terror and had to be killed to protect others, that would be morally on par with the legitimate use of force on the part of the police.

Where it becomes very controversial is when it is a true assassination. That is, intentionally seeking out a specific person and killing him so as to kill him, rather than as part of dealing with a specific situation (such as a hostage situation) that requires force. Or, to be blunt about it, committing murder to achieve political goals. For example, targeting an American at a terrorist training camp with a missile strike.

It is tempting to justify such assassinations on the grounds that by killing the American terrorist the assassin is protecting America-just as the police officer who kills a hostage taker before he can kill his hostage. However, there is an important distinction: if the police went around killing criminals while they were merely planning or preparing for crimes, that would be both illegal and immoral. Likewise, assassinating an American terrorist in similar circumstances would also seem to be wrong. After all, he is still a citizen and thus still entitled to the due process of the law. Interestingly, it seems that arguments that could be given for assassinating American terrorists (or other political enemies) in such circumstances would also justify the proactive assassination of dangerous criminals. However, some folks might see this just fine-after all, they might say, real Americans cannot be bothered with all that legal stuff like due process and trials.

However, a citizen who becomes a terrorist or a vicious criminal  is still a citizen and hence assassination would not be a morally acceptable option. If we take the notion that people have a right to life seriously, that means that assassination would be quite out.  That said, it might still be ethical to kill such a person, but that would require the proper circumstances and due process (which, in some cases, might be a shot to the face during a firefight).

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Big & Small

Posted in Business by Michael LaBossiere on December 14, 2009
The emblem of Recovery.gov, the official site ...
Image via Wikipedia

Once staggering like wounded giants, the big financial players have one again stood up straight, their heads in the financial clouds. Part of this is due to the huge infusion of our money. Part of this is due to actual financial recovery. Part is due to…well, whatever it is that makes the economy go.

These giants are doing well-well enough that big bonuses and massive paychecks are being handed out to the top folks. In short, it is almost business as usual for these folks. Of course, nothing really has been fixed and nothing substantial has been changed-so we can expect the problems that occurred before will occur again.

While the giants are doing well (or seem to be doing well), the little people who dwell in their vast shadows are not doing quite so well. One obvious problem is that unemployment keeps increasing as more and more jobs are lost. While there are various reasons for this, one main factor is that small businesses are not doing well. One significant part of this is that small businesses have to really heavily on loans in order to start up, stay in operation and expand. But, the giants who have the money seem loath to part with their gold (except to give it to the CEOs and top folks). So, the little folks stare up the giants and their cries for help go unheeded. Meanwhile, the federal government seems unwilling to provide support to the folks who need it most and where it would do the most good-the small businesses that employ the majority of Americans (or used to).

The stimulus plan did stimulate the big players and their CEOs, but the small folks find themselves joining the ranks of the employed. True, the rate is slowing down. But, of course, once a body has lost enough blood the gusher will slow to a trickle because there is so little blood left. Of course, a better option might be to let the big players fail and thus open the way for new businesses-hopefully ones who will hire more people rather than being the sort of business that hands millions to a CEO while firing people to boost stock value.

So, what should the government do? Should it keep shoveling money into the big players? Well, the big players and their lobbyists surely think so. However, this approach seems to have benefited the folks on Wall Street and left the rest of us holding the bill. So, if the government folks are going to step in again, they should think a bit less about their buddies on Wall Street and think more about the majority of Americans. This can be done by applying pressure to the big players to loan some of that taxpayer money to the taxpayers.

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Do Hate Crime Laws Protect?

Posted in Law, Politics by Michael LaBossiere on November 1, 2009

President Obama recently signed a hate crime bill, making it into law. Roughly put, the law makes assaulting a person because of sexual orientation or gender identification a federal offense. It has been claimed that this law will help protect people.

Naturally enough, this raises the question whether such a law will help protect people. Presumably what is meant by “protect” is that the law will deter people from committing such assaults. This, of course, assumes that people who commit such crimes will be aware of the law and that the fear of the law will cause them to not engage in attacks they would otherwise conduct if the law did not exist.

On the one hand, people can be deterred by the threat of punishment-especially when the law is a federal law. People presumably have more fear of federal laws than they do of lesser laws because of the greater power of the federal government. As such, there is reason to believe that the law can deter-especially when a high profile case or two makes the law and its consequences widely known to the sort of folks who would be inclined to attack such people.

On the other hand, assaulting someone is already illegal and punishable by the law. Presumably the people who have been assaulting folks who are now protected by this law were aware of this fact, yet they acted anyway. Also, the sort of folks who would be engaging in hate crimes would seem to be the sort of people who are not rational calculators. That is, it seems unlikely that they weigh out the probabilities and consequences before acting. Presumably if they are committing hate crimes, they are driven by hate and would tend to just act on the basis of this emotion.

Of course, the same can be said of any law. When I was an undergrad, one of my professors pointed out that prisons did not really work as deterrents. After all, if they worked, then they would be empty. Of course, it can be replied that the law (and prisons) do not deter everyone, but they do have some deterrent value. As such, this law might deter those folks inclined towards hate crime who are capable of making rational assessments about punishment. Of course, those folks would probably be deterred by the laws relating to assault.

The law does, of course, provide a way to punish people more severely. While this does not necessarily enhance deterrence, it does give the law more retributive force-and perhaps that is part of the appeal.

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Posted in Business, Medicine/Health, Politics by Michael LaBossiere on October 13, 2009
MIAMI - SEPTEMBER 22:  Casey Cervoni (L) and R...
Image by Getty Images via Daylife

While the medical insurance companies seemed to be on board for health care reform, they recently commissioned and released a study that seems to be a shot at this reform. This study alleges that there will be a 111% increase in premiums from 2009 to 2016 if the Baucus plan passes. Of course, insurance premiums somehow always seem to increase, so the projected increase without the plan is 79%. The folks in the Congressional Budget Office take issue with the numbers presented by the industry study.

One obvious problem is that both the folks in industry and the folks at the CBO are interested parties in this matter. This does not entail that they are mistaken (though at least one of them must be), but it does provide reasonable grounds for being suspicious of their claims. While some experts have taken issue with the industry numbers, all of the speculation is just that-speculation. While some intelligent estimates can be made about future premiums and how they will be impacted by this or that, such predictions must be taken for what they are.

Of course, the industry claim that rates will increase can be seen not just as a prediction but also as something of a threat. I’ll run through the logic. As noted above, the industry seemed to have been on board with the plan, but dropped this bomb at the last minute. I suspect that the industry was on board with the part of the plan that required everyone to have insurance. After all, what industry would be against a plan that mandated by law that people would have to buy their product? Of course, the plan also required that insurance companies insure folks that have pre-existing conditions. Currently, insurance companies do not generally do that-after all, you don’t make much profit on insurance selling it to folks who will almost certainly need to use it. As far as I can tell, they were willing to make a trade-off: they would insure those with pre-existing conditions in return for the guarantee of all those new, legally mandated customers. Presumably a little number crunching revealed that the loses from insuring those with pre-existing conditions would be nicely offset by these new customers.

Of course, while people would be legally required to buy insurance, the current plan allows a way out. If someone does not buy insurance, then she must pay a penalty to the federal government. While this penalty is significant, apparently it is not harsh enough to ensure that enough people  (from the standpoint of the insurance folks) will purchase insurance rather than pay the penalty. After all, some people chose to go without insurance now and presumably some of these folks would make the same choice if the penalty was sufficiently less than the cost of insurance.

If enough people elect to take the penalty rather than get health insurance, then the industry will not (as they see it) have enough new income to offset the loss of insuring those with pre-existing conditions. As such, the reason for the last minute dissent is evident.

As a final point, I find it interesting that they are effectively telling us this: “If we don’t get what we want, we’ll jack up your rates 111%. If we get what we want, the jacking will only be 79%. You get jacked no matter what, but you should be used to that by now.”

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