Both Clinton and McCain have it wrong, I imagine they contacted their campaign advisors rather than their economic advisors before suggesting its repeal.

Apparently it’s at least in part true. Over here I found

John McCain, the presumptive Republican presidential nominee who should know better, was the first presidential candidate to endorse the gas-tax holiday for the summer driving season. Reportedly, the idea originated with a political pollster, not among Mr. McCain’s economic advisers.

The way I understand it, when the cost of a good goes down, demand increases due to an individual being able to purchase more of it with the same amount of money. This means there is less supply of that good since more is being purchased. This is especially true since in this case because the raw materials (oil) used in the production of this good (gasoline) is a finite resource that is controlled by a cartel (OPEC). So as a result the price of gasoline goes back up since there is less of it.

Here comes the economics.

All this is due to the demand for gasoline in the US is inelastic. That is demand hasn’t changed much with the increase in price this is because there is no realistic substitute for gasoline. There are options (E85, electric and etc) but they cannot yet be considered developed to the point of being a substitute for gasoline. Additionally gasoline is a normal good, this generally means that with the decrease in price there is higher demand. What I am talking about here is price elasticity of demand:

In economics and business studies, the price elasticity of demand (PED) is an elasticity that measures the nature and percentage of the relationship between changes in quantity demanded of a good and changes in its price.

Obama gets a gold star because in the end you have slightly lower prices in the short run and the same or higher prices in the long run. I imagine that a gas tax holiday would lower prices for a couple months (at most) and shortly there after we would be back to the same (if not higher) price we are today. The price will go back up because our demand of gasoline will likely not decrease from present levels, additionally when the price goes down we will likely see an increase in demand since the price is lower.

Also, we must not forget that we would be out millons/billons in tax revenue. At this point I don’t think the government has the cash to lose. We need it for Iraq, the helping our neighbors with the global food crisis and to help the people effected by disaster in Myanmar. So there are plenty better ways to spend the gas tax than on our poor oil addiction.

Interestingly (but not surprisingly) the effects of higher gas prices are causing increasing demand on smaller cars, which is a prime example of cross price elasticity of demand. Greg Mankiw’s blog has an example of this in a NYT article and how camels are making a comeback. He knows his stuff, is a Harvard prof and has a decent economics blog. He also wrote the text book for my macro class in college, it’s one of the few text books I didn’t sell after graduation.

Dear Mr. Williams:

Thank you for contacting me regarding efforts to revise the Foreign Intelligence Surveillance Act, also known as FISA. I appreciate hearing from you, and I welcome the opportunity to respond.

On February 12, 2008, after months of debate, the Senate passed the FISA Amendments Act of 2007 (S.2248) by a vote of 68-29. I voted in favor of this effort to modernize the 30-year-old FISA in order to allow us to effectively monitor terrorist communications overseas.

As the FISA Amendments Act was debated on the Senate floor, I voted in favor of three amendments introduced by Senator Feingold (D-WI), all of which sought to add further safeguards against Executive Branch surveillance on innocent Americans. Unfortunately, these amendments failed to garner enough votes to pass. However, the Senate-passed FISA Amendments Act does include several measures to improve our national security without violating the constitutionally protected privacy rights and civil liberties of law-abiding Americans. For example, it would require the government to obtain a warrant whenever the target of surveillance is a U.S. citizen as well as bolster the authority of the FISA courts to oversee the eavesdropping activities of the National Security Agency.

As you may know, I joined 18 other Democrats in voting against Senator Dodd’s (D-CT) amendment to remove provisions granting retroactive immunity to the telecommunications companies (telecoms) that cooperated with the Bush Administration’s wiretapping program. Please keep in mind that this is a limited immunity that applies solely to the telecoms, not the government. I just don’t think we should punish these companies for their good-faith reliance on government assurances that they were assisting in a legal effort to combat terrorism. If the government violated our surveillance laws by eavesdropping without the necessary warrants, then it is the Administration – not the telecoms – that needs to be held accountable. That’s why I supported Senator Specter’s (R-PA) amendment, which would have substituted the federal government in place of telecoms as the defendant in lawsuits, allowing existing legal actions to move forward in an appropriate manner. While this measure was rejected, the underlying legislation would still allow citizens to sue the government for past violations and telecoms for future violations of the new law. As your United States Senator, I remain determined to get to the bottom of any government misconduct.

Currently, the Senate-passed FISA legislation needs to be reconciled with the House-passed version. I will be sure to keep your thoughts in mind as Congress continues to debate this important issue.

Again, thank you for taking the time to share your thoughts with me. Please do not hesitate to contact me in the future regarding other matters of interest or concern to you.
All best,
Senator Claire McCaskill

Here is my response:

Thanks for your email regarding the FISA bill. I understand your argument regarding telecom immunity but humbly disagree. I am concerned that giving immunity sets a precedent that the executive branch can tell corporations what they need and the corporations will automatically get a trump card against any law suits should they give the executive branch what they asked for.

There are two issues here, one, the executive branch needs more oversight from the legislative. I hope that the bill proposed will do this. Two, corporations should consider the legality of their actions before taking them regardless of who is asking. The latter is something that this immunity directly effects, giving immunity allows them to act without thinking about the ethical and legal issues surround the actions.

From what I understand (http://www.usatoday.com/news/washington/2006-05-10-nsa_x.htm) Qwest communications was the only telecom to not comply according to the mentioned article “it was uneasy about the legal implications of handing over customer information to the government without warrants”. This type of protection of customer data should be commended and I wish the other telcoms would have done the same.

Lastly, as a consumer and citizen I believe that the wiretaps need to be investigated. Since everyones data (internet usage, email and phone services) was effected by these wiretaps we should know, as owners of that data, the extent of this operation.

I hope this finds you in good health and spirits. Thank you for taking the time to listen to a constituent.

-Joseph Williams

Support the EFF and Senator Dodd’s fight against telecom immunity and the encroachment on our privacy by our own government.

“It’s one thing to say it’s reasonable for government agents to open your luggage,” said David D. Cole, a law professor at Georgetown University. “It’s another thing to say it’s reasonable for them to read your mind and everything you have thought over the last year. What a laptop records is as personal as a diary but much more extensive. It records every Web site you have searched. Every e-mail you have sent. It’s as if you’re crossing the border with your home in your suitcase.”

If the government’s position on searches of electronic files is upheld, new risks will confront anyone who crosses the border with a laptop or other device, said Mark Rasch, a technology security expert with FTI Consulting and a former federal prosecutor. “Your kid can be arrested because they can’t prove the songs they downloaded to their iPod were legally downloaded,” he said. “Lawyers run the risk of exposing sensitive information about their client. Trade secrets can be exposed to customs agents with no limit on what they can do with it. Journalists can expose sources, all because they have the audacity to cross an invisible line.”

I have a business trip this spring, there is a good chance that I will be enabling filesystem encryption (easily done with Ubuntu at install time) on my machine should they confiscate it. In the end I would rather not get on the flight than hand over my laptop. They not only take your laptop and password, they take your privacy and rights as a US citizen away as well. If this happens to you inside the US, ask for a search warrant before handing anything over.

Support the EFF.

If you remember we had this whole scandal regarding the wiretapping of US citizens within our own borders. For one reason or another the case seemed to drop of the news radar, partially to legal delays and also because Miss America was caught being naughty. Regardless, those same news companies/organizations are arguing for the release of the secret documents to the public [Wired]. We can only hope that they are released. Should be interesting.

Check it out here.

Here’s an excerpt, from the prof’s view point:

We’re both talking about balance, but our equilibrium points are very different. You seem content if we can pay in lots of different ways to see the same movies on a constrained set of devices. I see balance in an ecosystem of big and small media and independent innovation of technologies around them. I want to see what iPod for movies and TiVo for radio look like, and not just from companies who can strike deals with the major movie studios and record labels before they start.

DMCA-backed DRM lets the majors dictate the terms, well beyond price, on which we can use and interact with media. It makes copyright’s limited monopoly into a technology regulation, a gate on hardware and software development through which only “approved” devices can pass. More sophisticated DRM will not improve that problem, just make the approvals more onerous and the range of consumer electronics smaller.

Nobody wants a door lock that locks its homeowner out too often. The law can support DRM in the short term, but as more and more honest people trip against its restrictions on their noninfringing activities, I predict they’ll press Congress to change the law to allow for creativity in media and technology again.

A good example is iTunes. This is a great store, a huge selection of music in all genres and if you don’t want to buy the whole album, just buy a song. This is a record store that many have been wanting for a long time. No more buying the whole album for that one song you love. Well done Apple. Something that you may not know is that each song you buy from iTunes contains DRM, this DRM not only protects the artist as stated above but also does the following: first, it locks you in. It locks you into the iTunes music player and into Apple branded music devices such as an iPod. “What’s so bad about that?”, you might say. There’s nothing wrong with that if you only want to use their software and devices. But what happened to the days when you have a dozen choices on what CD player to buy? This locking also locks out competition, that in turn locks out innovation that leads to better products. In the end you have music you can play in only a couple of ways, in an iPod or in iTunes. Think of it like buying a car that you can only drive on one road. If that road is ever neglected or found to be obsolete, you have a car that can’t go anywhere.

Second, the music also has another lock, a lock on the location you can play it. If you attempt to play music on another computer or etc, you will be asked to authorize the computer you are playing it on, with a limit of five computers that can be authorized at once (you can later de-authorize computers). So, get back into the car I spoke of, put in the CD you just bought. Wait a second, it’s not playing and won’t let you authorize it because you played it on your stereo at home, your computer and etc, hopefully you see my point.

iTunes and the like have made great progress in marketing and sales of music but in some ways have taken a step back, back to the days of illegal mix tapes and so on. But I digress, the issue here is not a specific company or industry it is interoperability and fair use of the products we buy. These two topics have close ties in this day of technological innovation. Interoperability is the means by which you can use a standardized product on different devices, a CD is an excellent example. Burn it, play it and use it where ever and whatever. It works on PC, Mac your DVD player and portable CD players, all of which are manufactured by different companies. My iTunes example above is exactly what interoperability is all about.

Fair use is a notion that if you buy something there are uses for it that are intended and are “fair” to the producer. For example, when you buy a car you expect to be able to open the hood and change the oil yourself, not take the vehicle home to find the hood welded shut and look in the manual to find that only the manufacturer can make repairs to the car. Fair use is what you can do with a product that does not infringe on what it is intended usage is for.

In the last month or two I have noticed more attempts at the media industry at large to encroach on our fair use of their products. A recent case has the music industry going up against the site youtube.com and its users. This site hosts videos ranging from video blogs, TV clips and home videos, all for free. They are not asking them (the creators of the videos) to take down music videos ripped from MTV or bootlegged videos from concerts but asking them to remove videos of kids lip-syncing there favorite songs. This seems a bit far fetched but true. The next logical step seems to be not permitting music listeners to hum their favorite song or to sing along with a song while driving. I cannot help but to think this is coming to close to home, if the music industry wants to stop piracy, great, make it happen the economy and artists will be better off. If they want to squash my rights as a consumer, stop, and let me do with my music and other goods as I please.

This all leads back to DRM, DRM is a way corporations can exercise control over something they produce without needing a physical way of enforcing it i.e. people. For instance, you purchase music on iTunes by clicking “buy” you are actually signing a license agreement to each song that you will abide by the rules that Apple sets. Apple is not the only culprit, as you probably have noticed, DVDs have warnings at the beginning, when you purchase that DVD you are doing the same. Another is the operating system on your computer, products like Microsoft Windows, Office, Nortons Anti-Virus and Apple OSX all have user agreements that when you purchase and install the software you agree to their terms. These are called End User Licensing Agreements (EULA). In the end these limit your fair use of the product like you anti-virus software in the same way that a car with the hood welded shut does.

Finally, I do not want this to come off as a rant, bashing large corporations and industries. It’s not, they make products we all use and most of them are very good products indeed. But I want everyone to think about what they purchase and what they sign, it may not be as hip as the Apple commercials lead you to believe.