Software Nerd

Friday, April 25, 2008

Unreasonable Search and Monitoring

A few years ago, a man returning from Philippines was stopped at LAX airport and his laptop was searched. Child porn was discovered and he was prosecuted. He claimed that the evidence could not be used because of his 4th amendment rights.
The right of the people to be secure in their ..., papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause,....

In 2006, the district court of California ruled in his favor. The ruling stated: "The government ... argues that, even if the minimal Fourth Amendment standard of reasonable suspicion applies to such searches, its search of Arnold's laptop... comported with that standard."

It might seem odd that returning from the Philippines is "reasonable suspicion"; but, the officers also questioned him. Without knowing the details, I'll simply assume that there was something suspicious about his answers. So, that part does not concern me.

What does concern me is something else the government claimed: "... that the border search of information stored in a computer hard drive is not subject to Fourth Amendment protection."

This claim is far more serious, because the government is claiming the right to search laptops of anyone at the border, without any suspicion whatsoever. Even if one grants the legitimacy of customs searches for contraband, how can the government claim the right to extend such a search beyond the physical?

The case then went to the circuit court, where the government won, with the court saying that the search was permissible under “the border search doctrine", and saying that the man "failed to demonstrate why the laptop search was “logically any different” from luggage searches,..".

So, can the TSA can search a laptop's contents -- more than just physically for bombs etc., -- on domestic flights? No, probably not yet, but the government is probably one step closer. I couldn't locate the text of the recent decision, so I'm not sure if the court made it abundantly clear that being a "border search" was the clincher.

Imagine this situation: Certain types of covert surveillance are not allowed without an order from a court. Now, in the wake of terrorism, a law is passed, allowing these types of surveillance, but leaving the situations open-ended to apply to all law-breaking. Given the existence of such a law, it is only a question of time before a government employee, trying to do his job, decides to use whatever legal means he can. He sees that the law is not restricted to terrorism, so he can use it to put a local drug-dealer under surveillance. Why would he not do so?

In the U.K., there is some talk of using their camera to fine people who are littering, even though that was far from the reason they were installed. And now, there's a story of a U.K. city-council that put a family under surveillance using the law originally written in the wake of terrorism. The suspected crime: claiming to be residents of the city, to get their kids into a good school district.

"The price of freedom is eternal vigilance." -- Thomas Jefferson

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Wednesday, April 16, 2008

The "Reservation" system in India

Indian castes: Traditionally, India had four major "castes": priests, warriors, traders/artisans and miscellaneous "lower" people (with many sub-castes within each of these). The lowest caste were dsicriminated against for centuries, treated as second class citizens.


Independence and Reverse Discrimination: On independence (1947), important India leaders wanted the government to help "untouchables" overcome centuries of being treated as second class citizens. Legal equality -- like allowing untouchables access to (say) the good village well -- is just. However, many wanted to give "lower castes" a leg up via special privileges. Faces with objections about such reverse discrimination, a compromise was reached: the government would practice some amount of reverse discrimination, but only for 10 years. Private companies were free do what they liked in this regard.


"Scheduled" castes: The government created a schedule, listing targeted sub-castes. It reserved a percentage of government jobs, college admissions, etc. for such "scheduled caste" folk. In addition, certain electoral districts were declared as only open to "scheduled caste" candidates for 10 years (even though the majority of the voters in them were not of those castes).

Vested Interests: Ten years later, the cry was "we need more time...these people are still underrepresented, etc. ". Fast forward to 2007, 60 years later, and the system is still in place, and getting stronger. Vested interests grew up around the system. Members of parliament who had been elected from "reserved" districts did not want to relinquish control. Other sub-castes began agitating to be included on the list, claiming that they too had been discriminated against in the past. The list grew, instead of shrinking. India now has "Scheduled Castes", "Scheduled Tribes", and "Other Backward Classes". The whole system is based on family heritage, not economic status.

By the 1980s, in some states more than half the college admissions (most colleges are government owned) were "reserved". In one state, 69% of seats are reserved. Since many of the richer, better educated families often traced their ancestry to the "higher" castes, children from these families had a hard time getting into colleges. (The Indian Supreme court recently ruled that a majority of seats cannot be reserved, so the maximum reservation must go down to 49.5%! )


Growing worse: Though all this, the government insulated certain elite institutions: the Indian Institutes of Technology (IITs) and the "Indian Institutes of Management (IIMs)", keeping reservations to a minimum. Finally these (government controlled) entities have given in. They worked out a "compromise": for a budget increase, they'll increase the total number of students, and also increase the percentage of reserved admissions. The IIT has also agreed to keep aside "only" 27%.

Another recent trend has been calls to extend the system to India's private sector.

Shifting to an economic base: Some of those to were admitted in the "reserved" quota, were good students, from well-off families, who used the quota as a way to get a final little edge in the extremely competitive Indian college entrance. This is bad, of course. However, now, people have begun to question why the system is based only on ancestry, and are suggesting that its intent is to uplift the poor. Therefore, the argument goes, anyone from a "scheduled caste" who has made it (has a decent family income), should not be allowed to use the quota. By keeping out those who were "gaming" the intent of the system (claiming incompetence where there was none), this new approach will allow even less competent people. This will make a bad system even worse.

An observation: Sometimes a friend will comment that attitudes in India are more capitalistic than in the U.S. , citing polls that show people in India reacting more positively to terms like "profit" and "capitalism". This is a mistaken view. Since the economy in India was so tightly controlled, what people are positive about are the new-found freedoms and the results. It does not follow that they want to be like the U.S. in politics. The basic political philosophy still aims for a mixed-economy, just not as socialist as before.

My personal visualization of this is : India is racing upward toward the "goal" that is Western Europe, while the U.S. is drifting downward toward that same goal.

A Lesson : A lesson I take away from India's reservation system, is that it's tough to rollback a government-given privilege. If I apply the lesson to U.S. politics today, I think it is critical not to allow the Federal government to make any significant move toward universal healthcare. If they do, it will become like public schools, where the NEA is a strong lobby against change, and where parents routinely vote against change from a fear of change.

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Saturday, April 12, 2008

Short- and Long-Term Interest Rates

S: Hi! Did you refinance your house?
H: Not yet. The bank wants to gouge me with a 6.5% rate

S: That's not bad today... rates didn't go below 5.75% even in 2002-03.
H: I know, but the Fed has been cutting rates, so the banks ought to be passing that on.
S: Why don't you take out an ARM [adjustable rate mortgage]? The rate will stay low for a few years.
H: Yeah, but then the Fed will raise rates again, and I'll be in trouble.
S: Aha! Isn't that's just what the banks are thinking?
H: What do you mean?.
S: If the bank borrows short-term at low rates to finance your 30-year mortgage they'd be the one's in trouble. They have to think about how short-term rates will be changed, not simply what they are today.


That imaginary conversation explains why short-term rates and long-term rates do not necessarily go hand in hand. It's a simplified view. There is some relationship between short and long rates, but not as obvious and immediate as many people assume. [I hope to post more on this topic later.]

Wednesday, April 09, 2008

The SCOTUS ponders Muni-bond exemptions

U.S. States are not supposed to favor in-state companies over out-of-state ones. This fits with the spirit of the constitution, and is referred to as the "dormant commerce clause". States do violate this, but usually with some type of excuse. So, for instance, a state might prevent internet-based liquor purchases, and say it's to protect minors.


There is an area where states routinely give themselves a preferences, and that is in municipal bonds. The interest on these bonds is exempt from Federal Income tax, but states typically only exempt interest on municipla bonds of their own state. Consequently, one has municipal bond funds that invest in the bonds of a single state.


Someone decided to question this, and a Kentucky court ruled the preference for in-state bonds as unconstitutional. The case is at the SCOTUS now. The best guess seems to be that the SCOTUS will let states favor themselves, holding this not to be a case of favoring an in-state business.

However, Justices Souter and Alito threw out a question about municipal bonds that are for private purposes. According to this Bloomberg article, such bonds represent 25% of all muni-bonds. "They finance mortgages, student loans, small-scale industrial projects, airports, hospitals, redevelopments and a variety of other causes."

Justice Ginsburg suggested that since the current case is not about private-use bonds, the SCOTUS could say that the preferential treatment was okay, and simply keep silent about whether it would be okay for private-purpose bonds.

Wouldn't it be nice to have at least one justice who asks: "wait a minute, are private-purpose bonds constitutional in the first place?"

Friday, April 04, 2008

Try High-Speed

The three lines in this graphic depict (from top to bottom), the relative bandwidth of typical home internet connections that use cable, DSL and dial-up, respectively.

Notice how dial-up is about 1/17th of the typical home-DSL connection. (about 1/8th of the cheapest DSL).

Dial-up is disappearing. Looking at the monthly analytics of one web site with almost 10,000 visits per month from all over the world (though predominantly U.S.), I found about 200 people visits that used dial-up. This number (2%) is so low, that many web-developers ignore this segment and design their sites on the assumption that visitors will use at least the lowest of the high-speed connections.

Dial up costs $7/month, cheapest DSL is about $20/month. My advice to anyone on dial-up: try DSL for a year (or shorter if you can get a trial subscription). I doubt you'll go back to dial-up.