Health care costs in the U.S. have been rising so steadily for so long that containment barely seems possible. Even optimists don’t dream of cutting the price tag. As its official name — the Patient Protection and Affordable Care Act — suggests, Obamacare aims for affordability, not radical reduction.But at a time when we’re all […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
Picture the scene. It’s 2020. You’re at the checkout in a convenience store with a carton of milk. But you’ve got no cash and you’ve left your cards at home. No problem. You scan your right index finger; the green light flashes. Purchase approved and you leave. Easy.Is this a realistic vision of the future, […]
After a week of reckoning about the American oil and gas boom… I’ve got to get something off my chest.I can’t stand it when a coworker takes credit for something I did.Whether it’s a special report I wrote or just a little investing trick I found on my own — if someone takes it and […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
What if I told you that the march of human progress could be traced in a direct line from the Epicureans of Ancient Greece… through the 18th Century’s cure for smallpox… to where Steve Jobs and Bill Gates found inspiration as scrappy teenagers… to the flying car of tomorrow?Stay with me and I’ll show you […]
Real progress happens through real people, ideas, and innovations. Not by legislation argued and debated in Congress. Right now, one of the most influential technologies is changing the way people do business. And reinventing the future in the process.
Innovation can change the world… if the world lets it. Unfortunately, society’s gatekeepers make it a point to constrain, regulate, and control these ideas. But their power is limited, and the power of innovation is too great. Unfortunately for regulators, there are some technologies they can’t control.
What’s the #1 reason a start-up fails?It runs out of money!And why would it run out of money?Because nobody wants the product it’s selling!For early-stage investors, this presents a bit of a conundrum:If a product doesn’t exist yet, how do you figure out if there’s demand for it?And how do you figure it out before […]
A cushy job in Hawaii that pays six figures. A beautiful girlfriend/boyfriend. Job security and professional experience that gives you plenty of future opportunities. Would you throw that all away to do what you think is right? Last year, one government contractor did just that. And now you see the world the government tried to hide from you.
Every time Bitcoin crashes, it winds up at a price greater than it’s previous high. Yet the experts still call it a currency fad that will fade away. But a little over a year since it really took up, the digital currency is still going strong, and is once again seeing its price rise. But is there another reason why people are buying Bitcoins.
According to some estimates, one man - whose name you're probably not familiar with - has saved over a billion lives. Who is he? And how has he influenced the current crop of innovators? Josh Grasmick explains...
Edward Snowden’s one year visa in Russia expires at the end of next month. With only a few weeks left before he finds himself without a safe country to live in, he sat down to give an exclusive interview. Here are the most important things he wants you to remember from his recent sacrifice.
Biotech breakthroughs and other transformative innovations are a few of the brightly shining spots in the U.S. economy. In fact, Paul Mampilly believes this is the golden age of biotech investing, and that you can earn massive returns while investing in companies with drugs that benefit all of humanity. Read on for his latest example...
Harold Hamm isn’t your typical entrepreneur. His life’s story shows you success in America doesn’t always depend on a fat checkbook
Obama recently claimed this was the “Decade of the Brain”. But it not the first time the government made that promise. The last time they did it, they wasted millions of your tax dollars. Now they’re back for round two. But this time, their failure could mean more than squandered money. It could mean making Alzheimer’s even worse for those who suffer from it.
Does owning a gun mean you’re guilty until proven innocent? Considering what happened to one man from Florida, that might be the case. But there’s more to this story than just a case of police overreach. Police departments across the nation could be implementing a new technology that puts the burden of innocence squarely on your shoulders.
American ingenuity. It’s the stuff of lore and legend, and it’s what drives the global economy. We literally bank on the next disruptive entrepreneur — and innovative new technology — to completely redefine or create new industries. It’s what America does really well, our goose that continues to lay golden eggs.And yet, maybe not.The truth […]
When Michael Lewis’ new book Flash Boys came out, the author caused a stir while making the media rounds to promote it. “The stock market is rigged,” he told 60 Minutes flatly. His comments set off a firestorm of debate as to whether sharp techies and their fast computers are screwing small investors.As titillating as […]
Last November, when the Environment Protection Agency (EPA) proposed moderating years of escalating mandates by reducing the amount of ethanol that must be mixed into gasoline, a top ethanol lobbyist seemed perplexed. “We’re all just sort of scratching our heads here today and wondering why this administration is telling us to burn less of a […]
Why Is U.S. Health Care So Much More Expensive?After years of research and many conversations with health policy experts, I see three key culprits of expensive health care in the U.S.In no particular order, they are the third-party payer system (i.e., employer-provided health care), malpractice suits, and administrative support costs/paperwork.The unintended consequence of institutionalized employer-provided […]
At the recently concluded Winter Olympics in Sochi, Russian security officials used state of the art facial recognition software to identify potential terrorists. Today, Byron King takes a closer look at this sophisticated new technology and what it means for the future of national security. Read on...
Back in the 1980s, John Nestor became infamous for single-handedly causing massive traffic jams on the Capital Beltway. But in his professional life, he created a completely different kind of traffic jam... one that may have contributed to the deaths of thousands of innocent people. Juan Enriquez has the full story. Read on...
Entrepreneurs innovate. Bureaucrats regulate. It’s the eternal struggle that exists in our modern economy/government. The people in power try to make the playing field as even and fair as possible. While innovators buck the rules and push the world toward a better tomorrow.
Technological progress moves the world forward. It finds ways to do things better, for less money, while using fewer resources. And if you ask any politician, they’ll tell you that’s the way to grow the economy and get America back on track. But if that progress threatens one of the government’s sacred programs, then that’s a different story. One that results in a crackdown on progress, and protection of the status quo.
Get this: The federal bureaucrat who last month started the litigation against Apple and book publishers for e-book pricing is the same person who, back in the stone age, represented Netscape in its lawsuit against Microsoft.
Recall that Microsoft was trying to give away its Internet Explorer to computer users for free. Netscape went nuts and got the government to clobber Microsoft for being so nice to consumers. It put the company through litigation hell and even demanded that Microsoft change its operating system code to untie it from IE.
The person’s name is Sharis Pozen, and she is acting head of the Justice Department’s antitrust division and a political appointee of the Obama administration. She claims that she is threatening state violence against Apple and publishers for pricing collusion — and that it’s her job to protect consumers.
Interesting. She began her career trying to protect the rights of an old-line company to rip off consumers. To her, a price of zero was unfair competition. She was sure that a browser should be a paid product. The progress of history flattens that argument. Today, dozens of companies beg you to download their browser for free. Browser use is all over the place, sort of like a free market. There is no Microsoft monopoly, contrary to the overheated predictions.
Given that history, one might suppose she would retire from public life and maybe go into flower arranging or something. Instead, she is still at it. Last year, she denied a proposed merger between T-Mobile and AT&T that would have improved your cell service. This year, she says that a deal between publishers and Apple is harming consumers, so she has to act.
Government had absolutely nothing to do with inventing the e-book. It didn’t invent the e-reader, either. The Nook, Kindle, iPad, and all the others were purely the products of private enterprise. So too the distribution system that makes millions of titles instantly downloadable with a quick click, storing your downloads in the cloud. The whole apparatus has given new life to the book itself, and represents a bigger shift in publishing than even the printing press.
But we are supposed to believe that Sharis Pozen knows exactly what the prices of e-books should be. She knows how the contractual relations between publishers and distributors are supposed to work. She knows when there’s competition and collusion. She knows how to protect the consumer against high prices because, of course, we stupid consumers are all sitting here completely clueless about whether $9 or $14 is too much to pay. We’d just mindlessly let go of our money, scammed by private enterprise, were it not for Sharis Pozen looking after our interests.
There is no arrogance in this world to compare with the government bureaucrats’.
There is no way that any mortal can know in advance how e-book pricing should work. For years, people tried to create a profitable market in selling PDF downloads. Some firms succeeded, but only in a limited way by selling to large institutions, and even then, the product add-ons had to be pretty impressive: fancy searches, large collections, citation help, and more. This model never penetrated the retail sector.
Why? It’s hard to say for sure, but in hindsight, one might speculate that the PDF format just isn’t very consumer friendly. It is fine for many purposes, and miraculous by any historical standard. But in the end, it was not commodifiable on a mass scale.
Then came the e-book. It had an HTML structure that allowed fonts to be increased and decreased. It allowed instant search. Navigation was a snap. It mimicked the page turn of a physical book. It was lightweight. For all these reasons, and probably some reasons that I haven’t thought of, the e-book became commodifiable. I never would have believed it, but there it is.
I know that I’m hooked myself.
But how does pricing work? A conventional government model would examine costs and presume that prices are marked up along a preset path. This model has a superficial, if fallacious, plausibility with physical goods, but it is wholly irrelevant to digital goods. With digital goods, in which the marginal unit cost of each additional item is effectively zero, the price is, very obviously, nothing but a point of agreement between buyer and seller, having nothing to do with costs of production.
So it’s anyone’s guess what the final price of an e-book ought to be. The market dictates this. At first, publishers were selling on a wholesale model and letting the distributors determine the prices. As the distributors do with physical books, they were pushing prices lower and lower, and the publishers started to complain.
That’s when Apple shifted to an agency model of pricing. The publisher sets any price and the distributor takes 30 percent. That way everyone can make a profit. This also allowed smaller publishers to get involved. Even a sole proprietor can get involved and push out e-books to the world.
So what’s the problem? Apple and Amazon have made it part of their contractual relationships with those using their services that they do not want to be undersold by another company. And why? Of course they want the business, but more tellingly, they are trying to incentivize producers to bring down prices in the interest of making deals.
This is standard procedure in Web pricing. If you are using a service, the service wants to be able to offer the best deal available. Actually, Amazon and others have been doing this for many years. The service user can accept or reject the deal.
Here’s the thing. If this is not the right model, it will hurt the service it delivers. Others can compete. Authors and publishers can establish their own systems. Markets work these things out for themselves. In this case, it appears that Amazon is the only complaining party: it does not want Apple to gain a foothold.
The e-book market is brand-new, for goodness sake. It is going to go through many changes before it is settled — and actually, here’s to hoping it never settles! Ceaseless change in economics and life is a good thing.
But bureaucrats don’t see it that way. They want to freeze everything in place and make all things conform to their model. And if Sharis Pozen had her way, we would all be paying Netscape for the opportunity to surf the Web. So much for caring about the consumer.