October 2010

In his latest display of no-self-awareness, Google's CEO Eric Schmidt, in an interview with the Atlantic, said:

• "China can be best understood as a large, well run business... and China has roughly the following objectives: It wants  to maximize its cash flow; becoming the creditor, if you will, the bank of the world. And Second it wants to maximize both its internal demand as well as export demand. And the entire country seems to be organized around that principle."

Is Google's CEO the only sentient being on the planet that isn't aware that China is organized around the principles of China's National Communist Party?

"If China is best understood as a large, well-run business," why does Communist China censor and imprison their Chinese "customers" if they object too much to China's products and services?

Google's blog post "What we're driving at" announced that Google has "developed technology for cars to drive themselves." Google stated: "Larry and Sergey founded Google because they wanted to help solve really big problems using technology... Our goal is to help prevent traffic accidents, free up people's time and reduce carbon emissions..."

This project raises some interesting questions no one has asked Google yet.

Google announced it is working on an economy-wide Google Price Index, but has not decided whether to make it public, per Google Chief Economist, Hal Varian, who spoke at the National Association of Business Economists conference this week.

• This development has under-appreciated implications for insider trading and also spotlights how Google's online dominance of market-relevant information suggests market failure and a new potential systemic vulnerability to the integrity of global capital markets.

I.  Insider Trading

In March, Google CEO Eric Schmidt said: "One day we had a conversation where we figured out we could just try and predict the stock market... and then we decided it was illegal. So we stopped doing that."

Now any hedge fund (or market regulator not born yesterday) understands that if Google is actively working on a Google Price Index, Google has not stopped trying to use its uniquely comprehensive and timely, repository of sensitive market information to predict information highly useful to predicting the stock market.

The current harm to consumers from the latest unnecessary incident of retransmission brinksmanship is the clear result of FCC regulatory failure.

Fellow ardent free marketer, Randy May of the Free State Foundation, has a dead on piece that I highly recommend that exposes that the current broadcast retransmission negotiating process -- as no "market" that a free marketer would recognize.

• A set of FCC rules that still fantastically assumes a monopoly video market exists, when one clearly has not existed for well over a decade, creates a profound regulatory failure that distorts the market and harms consumers.

The reason some consumers currently are blacked out from their favorite sports programming is because the FCC has known for a long time, that it has a broken, out-of-date, and counter-productive retransmission negotiation process, and that it has not done anything to bring the process into the 21st century or to correct the dysfunctional imbalance that causes predictable serial disputes that harm consumers.

Simply, if the FCC spent less time on trying to fix potential unproven problems, like net neutrality and Title II regulation for which the FCC does not have legal authority, and more time on fixing actual problems harming consumers on their watch that they do have the authority to fix -- American consumers would be much better off.

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