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Government should protect our on-line
privacy
By
Jack Kemp
Copley News Service
Would you rather trust Charles Schwab, Wal-Mart or L.L. Bean with your private
financial information, or the government? If you feel slightly queasy when a
waiter disappears with your credit card for 20 minutes, just think about the
Internal Revenue Service downloading your electronically filed tax forms and
leaving a "cookie" on your computer to follow you around the Web. If
you believe your privacy is secure in dealings with the government, you might
want to think again - particularly in light of a new report commissioned by
Congressman Steve Horn, chairman of the House Subcommittee on Government
Management, Information, and Technology. Drawing on information gathered by the
General Accounting Office and the various inspector generals serving throughout
the executive branch, Horn found that when it comes to protecting your privacy
with secure computer systems, the federal government as a whole earned a D minus
minus.
That's not very reassuring to citizens who are compelled to entrust their
government with very personal information such as Social Security numbers,
income tax filings, employment and immigration status and medical histories.
It's particularly disturbing when so many government officials and politicians
are complaining about the danger of private-sector misuse of personal financial
information.
Federal Trade Commission member Orson Swindle made a compelling point when he
congratulated the FTC for supporting industry guidelines for self-regulation
when it comes safeguarding privacy on the Internet. Swindle noted that the
commission contradicted itself in supporting self-regulation yet calling for
sweeping new regulatory oversight of Internet privacy practices. As he puts it,
"My colleagues, unwilling to accept a self-regulatory approach, find it
necessary to support a highly regulatory scheme for an entire industry. I fear
the legislative recommendations will create an incentive for industry to
discontinue seeking self-regulatory solutions."
In fact, as the Horn report now makes clear, if there is any need for new
oversight, we should start with the government itself. Horn and the GAO applied
the same industry-developed standards backed by the FTC, including notice to
customers of information collection, customer opt-out and security guidelines.
Of the 24 federal agencies held up to scrutiny, more than one out of four
received a failing grade, and only two (the Social Security Administration and
National Science Foundation) received as much as a ""B." In
practical terms, this means that you and I can't be sure we know when our
government is collecting information about us on-line, and we have even less
assurance that such information is protected from third parties.
Back in June, Wired News reported that many federal agencies are using
"cookies" to track and gather information on users of their Web sites,
including the Federal Reserve, the Immigration and Naturalization Service, the
Justice Department and the Energy Department. These practices were ongoing,
despite government-wide guidance issued by Office of Management and Budget that
was supposed to limit agency use of "cookies" to track people on-line.
Combined with the excellent work done by Horn, this gives our citizens little
reason to expect the government to be their best friend when it comes to
protecting on-line privacy.
What about the private sector? Despite the self-regulation guidelines
approved by the FTC, companies that provide goods, services and information
on-line are not generally required by law to follow specific practices and
procedures. Even so, private sector options for protecting your personal and
financial privacy are proliferating. As Jessica Melugin of the Competitive
Enterprise Institute points out, "The profit motive involved in protecting
privacy on-line is so strong that products for that express purpose are widely
available to consumers." Melugin cites, among other products, the
Anonymizer browser that blocks unauthorized parties from monitoring your on-line
activities, and the Enonymous Advisor, which rates Web sites' privacy policies
so consumers can evaluate their risks before they browse.
It's in the nature of the private sector, particularly in a time of rapid
technological change like the Internet era, to come up with a wide range of
solutions to new problems like on-line privacy and test them in the marketplace.
Not all of these products will survive, and not all will suit the needs of all
users. But it should be clear by now that we're better off trusting the market's
invisible hand to look out for our interests on-line than a one-size-fits-all
system of government regulation. Even if government bureaucrats could think
through all the problems and come up with objective solutions, they couldnt
possibly anticipate the way technology and the marketplace will change tomorrow,
next week or next year. The market is, by definition, much more responsive to
changes in the way we live, work and do business.
If you're still not convinced, remember that government has already collected
more information on us all than any private company ever could. If the
government has lax computer security and privacy policies, we're all put at
risk. If a private company invades our privacy, only a discrete set of customers
will be damaged. We need to minimize that risk, starting with the industry's
guidelines for self-regulation. But let's also read Horn's report and demand
that government earn our trust where protecting privacy is concerned. Government
has important work to do, but as Milton Friedman put it, "Hell hath no fury
like a bureaucrat scorned."
Jack Kemp is co-director of Empower America and Distinguished Fellow of the
Competitive Enterprise Institute.
Visit Copley News Service at www.copleynews.com.
(c) Copley News Service
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JACK KEMP COLUMN
Global government in retreat
By
Jack Kemp
Copley News Service
French President Jacques Chirac told
participants at the failed Hague negotiations on global warming that the Kyoto
Protocol, linchpin of the Third Way movement, was "the first component of
an authentic global governance." With the collapse of the Hague talks,
let's hope the tide is finally turning against Chirac and the Third Way global
government crowd.
The failure of the Kyoto negotiations in
The Hague is important because that agreement was designed to put in place
virtually a command-and-control system to manage energy and economic policy for
the whole world. Since that system would be ruled by unelected international
bureaucrats, it's no wonder Chirac invested so much political capital in
successfully implementing Kyoto.
Remember also that the Kyoto Protocol is Al
Gore's favorite exercise in international diplomacy, something he worked long
and hard to stuff down the throats of the American public, even though the
treaty would require Americans to reduce emissions by 5 percent below 1990
levels. Independent studies show that would cost the United States up to $300
billion a year, drive up gas prices as much as 65 cents, and hurt minority and
low-income households the most, consigning the poor to perpetual poverty.
The whole idea of Chirac-Gore globalism is
to leave important decisions to a self-appointed elite of experts and opinion
makers, not to the popular will of any nation. Too bad that elite doesn't pay
attention to sound science, either. Dr. Richard Courtney of the European Science
and Environment Forum points out that "measured" global warming is
confined to areas with sparse temperature data, and that U.N. estimates of
climate change can't distinguish man-made change from natural variability in
climate.
"Whatever that is, it is not
science," Courtney says.
The Kyoto setback may be a leading
indicator of a change in the wind, but it's far from the only one. Kyoto lost
credibility in the wake of fuel-price increases that hit both the United States
and Europe this summer, with the United Kingdom disrupted by protests against
outrageous gas prices. Since higher fuel costs are the key to any Kyoto-style
accord, the political message was loud and clear: The hypothetical risks of
global warming, resting on shaky science at best, just aren't worth sacrificing
a political career. This is particularly true in the developed nations since, as
James Glassman points out, "There was no serious discussion (in The Hague)
about developing nations - even though nine of the top 20 emitters of carbon
dioxide (including No. 2 China and No. 6 India) are exempt from the
treaty."
Ironically the trend in Europe this year
was toward tax cuts, not just in the United Kingdom (where the Blair government
threw fuel tax protestors a very small bone by freezing rates) but in France,
Germany, Italy and Russia. Tony Blair's ambivalence over the tax issue has given
the Tories a new lease on life, and despite the close election, the tax issue
clearly gave President-elect George Bush an edge: ABC News reported that Bush
had a 62 percent lead among the 15 percent of voters who saw taxes as the No. 1
issue.
With Kyoto in trouble, the global-warming
crowd is falling back to their original preference for direct taxes on energy
use. Gore pushed for a comprehensive energy tax in 1993, and now James Hammitt
of the Harvard Center for Risk Analysis writes in the Washington Post that
"A simpler and surer approach (than Kyoto) is a national tax on carbon
dioxide and other greenhouse gases."
Similarly, Gregg Easterbrook, one of the
more nonideological proponents of global-warming theory, told the PBS "Newshour"
that "The United States certainly could benefit from higher energy
taxes." That same day Paul Krugman said in The New York Tiimes that
"The most straightforward policy would be an across-the-board carbon
tax."
Bad ideas never die, but they will fade
away and lose currency if politicians are forced to respond to the legitimate
concerns of an informed public. For high energy prices and fuel taxes that may
be starting to happen. For other major items on the global government agenda,
like cross-border collusion on antitrust actions, regulation of biotechnology
and international environmental regulation, the political learning curve is not
so far advanced. For that reason alone, those of us who cherish freedom, limited
government and American sovereignty can't afford to relax.
Jack Kemp is co-director of Empower
America and Distinguished Fellow of the Competitive Enterprise Institute.
Visit Copley News Service at www.copleynews.com.
(c) Copley News Service
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JACK KEMP COLUMN
An open letter to Fed Chairman
Alan Greenspan
By
Jack Kemp
Copley News Service
Dear Alan:
A
while back I expressed concern that the economy was teetering on the verge of a
hard landing rather than the soft landing you envisioned when you announced 18
months ago you were going to slow down the economy in order to fight inflation.
You I have been friends for a long time, and I couldn't imagine that you really
believe that too much economic growth and too many people working cause
inflation.
But now I learn in Bob Woodward's new book,
"Maestro," that not only do you really believe this baloney but that
you actually compared your theory of a soft landing to Albert Einstein's theory
of relativity. Whoa, Mr. Chairman! Get a grip. Because so much is at stake, I
have decided to appeal to you publicly to reassess how and where you are
directing this economy.
Since I wrote that column, economic
indicators have revealed additional weakening in the economy. The NASDAQ, which
represents the new-era economy, now resides in negative territory for the year
after falling 40 percent to below 3,000, and the Dow Jones industrial average is
likely to close the year with a loss for the first time in 10 years.
Disappointing corporate profits reports are
the clearest sign yet that the Fed's decision 18 months ago to raise interest
rates has had a deleterious effect on the real economy. Recent industrial
production statistics reveal that the manufacturing sector is probably already
in recession, with manufacturing output falling 0.5 percent in October. The
high-tech sector is clearly in a slowdown. More than 130 dot-coms have closed
their doors this year, 20 in October alone. No evidence of inflation is anywhere
in sight, other than the price of oil, and we both know that is a supply
phenomenon, not a monetary phenomenon.
In October, the "core" producer
price index fell 0.1 percent, and the consumer price index has increased even
less than last year despite the run-up in oil prices. Notwithstanding the Fed's
repeated warnings about "cost-push" inflation due to tight labor
markets, there is no evidence of it even in the service sector where prices are
presumed to be sensitive to wage increases. Long-term interest rates are 100
basis points below overnight rates.
The chart shown here plots the Fed Funds rate and the price of gold. You have
said gold is one of the best inflation indicators, yet it is signaling
deflation, not inflation. Still, the Fed decided two weeks ago to deny the
economy much-needed liquidity by maintaining the Fed Funds rate at 6.5 percent.
The Fed also sent markets a worrisome signal that it will keep the economy on
short liquidity rations during the foreseeable future by maintaining its
so-called "bias" toward tightening on the grounds that the economy
might be growing too fast and inflation may be just over the horizon.
The Fed's stubborn insistence on fighting
phantom inflation by targeting the stock markets and choking off economic growth
is extremely dangerous. It causes me to worry that the Fed may be repeating the
same mistake it made back in 1989 and 1990 after waiting too long to drain
excess liquidity and then hiking up interest rates and keeping them too high for
too long, which contributed to a recession within a year.
Eighteen months ago, the Fed embarked on
another round of tightening that has raised the Fed Funds rate from 4.5 percent
to 6.5 percent. Only this time around, the Fed jumped the gun and exhibited
incredible hubris in professing to divine future inflation while the price of
gold and other inflation indicators were continuously falling. As the chart
suggests, the Fed may already have kept monetary policy too tight for too long,
giving one reason to fear that if the Fed does not lower interest rates
immediately, it will soon tip the economy into a recession.
Given the thin margin with which the next
president will have to govern, it is especially troublesome that he may be
taking office just when the economy is heading toward a possible hard landing.
The Fed's earlier refusal to lower interest rates now makes it urgent for
whoever enters the White House to move immediately both to cut tax rates and the
regulatory burden. I hope you lend the next president as much assistance in
cutting tax rates as you did the current president in raising them.
Jack Kemp is co-director of Empower
America and Distinguished Fellow of the Competitive Enterprise Institute.
Visit Copley News Service at www.copleynews.com.
(c) Copley News Service
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