Tag Archives: economics

Personal Data Encryption vs Convenience

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It appears Anthem Inc may have made a poor decision.

Recall that Anthem, the health insurer, got hacked a few days ago, giving up Social Security numbers and other personal data for 80 million customers to those hackers. It turns out that Anthem had deliberately chosen not to encrypt those data. At all.

Scrambling the data, which included addresses and phone numbers, could have made it less valuable to hackers or harder to access in bulk. It also would have made it harder for Anthem employees to track health care trends or share data with states and health providers[.]

Apparently, the company considered convenience more important than the sanctity of the personal data which those 80 million victims had entrusted to Anthem.

Naturally, Kristin Binns, Anthem’s Vice President of Public Relations, as cited by The Wall Street Journal, is excusing the failure:

Anthem encrypts personal data when it moves in or out of its database but not when it is stored, which is common in the industry.

Everybody does it, therefor it’s OK. No, Madam, everybody doing it just makes the failure widespread.

She added

We use other measures, including elevated user credentials, to limit access to the data when it is residing in a database[.]

Plainly inadequate measures. Your IT department could have told you that. If they did not, that omission would seem grounds for their termination. If they did, and senior Anthem management chose to ignore them, that would seem grounds for termination of senior management.

Naïve or Incompetent?

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The European Union is targeting 19 individuals linked to the fighting in eastern Ukraine, including five Russians, in a new list of sanctions set for approval on Monday [9 Feb].

Yeah, that’ll show ’em.

The EU now has visa bans and asset freezes on 132 individuals and 28 entities.

This latest is in response to Russia’s and their rebels’ in Ukraine renewed offensives to expand the Donetsk Oblast territory they hold and to seize Mariupol, a key Ukrainian port on the Sea of Azov and a key city on the land bridge to Russian-occupied Crimea that Russia wants so desperately.

Never mind that these hand slaps haven’t bothered Russia’s MFWIC, Vladimir Putin. Never mind that he doesn’t think like western Europeans or Americans, and so is never likely to be bothered by the things that would bother western Europeans or Americans.

On the contrary, Russia has reacted with threats and so much sterner actions by the EU and the US are required. Unfortunately, the leaderships are too naïve or incompetent to take them. This…foolishness…is illustrated by our own Secretary of State John Kerry:

We are not interested in a proxy war. Our objective is to change Russia’s behavior[.]

All while ignoring the fact that to change Russia’s behavior, it’s necessary to (to coin a phrase) incentivize them to change their behavior: arm Ukraine so they have the wherewithal to defeat the Russian and Russian-backed rebels, drive the former out of occupied Ukraine, and recover their national integrity.

Update: The EU has chosen to delay even this latest round while French President François Hollande and German Chancellor Angela Merkel travel to Minsk, the capital of Belarus, to beg Vladimir Putin anew for peace.

A Fatal Flaw

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In a piece for Wired, FCC MFWIC Tom Wheeler offered rationalization for his decision to dismantle the Internet. He opened his apologia with this remarkable claim:

This proposal is rooted in long-standing regulatory principles….

That’s the problem. Regulatory “principles” proceed from the assumption that government regulation is a universal and primary good.

Of course, that’s precisely backward—and backwards. A free market is almost universally self-regulating: make a bad product, people find out and stop buying—the producer goes out of business. Lie about a product, people find out and stop buying—even if the product itself might be sound—and the producer or seller goes out of business. And so on.

Almost universally: yes, there are conditions within which government regulation is warranted. But such regulation must proceed from the fundamental assumption that regulating is bad or unnecessary, and the regulation proposer must prove—not merely justify—why this proposed regulation is necessary (not merely useful in some sense).

Wheeler’s regulatory travesty must be halted. Even its mere suggestion is sound reason for Congress to act—perhaps unsuccessfully until 2017 with a Republican President, too—now to reign in, to severely circumscribe, the regulatory authority of all Departments and Agencies.

The Party of Stupid on the Right

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A group of young conservatives, dubbed “reformicons,” are making inroads among Republican presidential candidates by arguing the party’s traditional reliance on broad-based tax cuts…isn’t enough to cure middle-class woes.
Instead, they are calling for crafting subsidies, tax credits, and other public-policy tools based on conservative philosophies and tastes to help the unemployed and other struggling middle-income households.

And

“For the past 10 years, our biggest issue was whether the top tax rate was 35% or 39.5%. I don’t care anymore,” said Michael Strain, 33 years old and an economist at the American Enterprise Institute think tank. One of his ideas gaining fans on the right: let employers pay some workers less than the minimum wage as an inducement to hire them and use the federal tax code to bump up salaries.

Leaving aside the abject surrender inherent in that “I don’t care” bleat, Strain’s small point—letting employers pay below-minimum wage rates under certain circumstances—is better achieved by curbing yet another government interference in the market, by getting rid of the minimum wage altogether.

Bob Davis’ article in The Wall Street Journal goes on in this vein, but you get the idea.

The larger point, though, is that these reformicons’ ideas are foolish. Using the tax code for social engineering or for favoring some Americans—which can come only at the expense of other Americans—is an inefficient and immoral use of people’s money. Even when it favors those Americans whom Republicans and Conservatives favor.

Government interference in the free market only inhibits the market, only caps what used to be equal opportunity, only reduces prosperity to the lowest common denominator rather than increasing the general prosperity by elevating the lowest common denominator.

These reformicons’ policies, worse, will only exacerbate the byzantine structure of our tax code and make it even harder to get to a single, low tax rate that every citizen pays; a rate based on all income, regardless of source and devoid of special treatment based on that income’s source; a rate devoid of gerrymandering with tax credits here, subsidies there, loopholes over there. A fair tax rate.

Threats

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Russian-backed rebels in eastern Ukraine and Russian troops there have renewed their offensive in an effort to expand their hold on the oblast of Donetsk and to seize the Ukrainian Sea of Azov port city of Mariupol as part of opening a land bridge from Russia to Russian-occupied Crimea. In response to this, western European leaders and President Barack Obama are making noises about extending existing sanctions and, perhaps, broadening them to include cutting Russia off from the international financial system. In response to this, Russia threatens.

Prime Minister Dmitry Medvedev said on Jan 27 that if Russia is cut off from the Swift international payment system as punishment for its actions in Ukraine, its response “will know no limits.” Andrei Kostin, the head of VTB, Russia’s second-largest bank, said excluding Russia from Swift would mean “war.” Igor Ivanov, the former foreign minister, said that a confrontation could involve nuclear weapons.

These are people with whom negotiation is impossible, with whom a negotiated withdrawal of Russia from Ukraine cannot be had.

Threats such as these should make any response impossible other than cutting Russia off from Swift, promptly. And arming Ukraine so they can defend themselves from this Russian aggression.