Pocohantas and the Global Payments System

America is an important information node in the global payment system. #ElizabethWarren‘s calls for more regulation of #banks could mean less lending to the very constituents she claims to represent as banks use her anti-bank rhetoric as an excuse to jack up their lending rates while disqualifying lower income borrowers.

Globally, higher rates will run through the rest of the system. Banks, ironically, while lending less could offset less lending to middle class clients with higher interest revenues from more affluent borrowers, making the banks less risky and more profitable while less accessible to lower and middle income borrowers.

Pocohantas may prove herself a double agent for capital after all. Go Poco, Go, Poco.


Should Comcast and Verizon be allowed to enter the information mining game? Yes.


Proponents of the implementation by the Federal Communications Commission of net neutrality rules have been expressing outwardly that by ensuring no throttling of traffic from websites; no blocking access to favored and lawful websites; transparency when it comes to terms and conditions of service or network management; and the prohibition of favored treatment of one content provider’s traffic over another, that consumers of broadband services will be treated fairly and that edge providers will be able to innovate on the edge of the internet while competing with core providers.

While proponents have successfully convinced millions of Americans that net neutrality is about the consumer’s ability to democratize the web or have their voices equally heard among other, especially larger corporate voices, the real issue is whether core providers should be allowed to participate in the information markets or be kept out by making an 85-year old statute a barrier to their entry.

Battle in the Information Market

The statutory approach recommended by edge providers such as Facebook and Google to ensure that core providers such as Comcast and Verizon are reigned in is to apply Title II of the Communications Act of 1934. Edge providers make their bread and butter by mining information from visitors to or users of their website services and packaging that information into advertising products that they sell to businesses that are trying to get their services before as many eyeballs on the internet as possible.

The concern that the edge provider has with the core provider is that given the core provider’s “gateway” service and the core provider’s alleged monopoly or near monopoly control of the access to the internet, the core provider will then be able to capture consumer behavioral information that the edge provider has less access to.

The core provider, the edge provider will argue, is gathering this information from its telecommunications infrastructure; therefore, to ensure fairness, the core provider should not be allowed to call the telecommunications portion of his service an information service just so that they can skirt the information or data collection requirements under Title II.

By creating a net neutrality rule that says that core providers should treat access as a telecommunications service, the edge provider gets the government to apply a barrier to entry to the information market, a barrier that the edge provider has no confidence its superior information services can erect itself.

The Content Endgame: What Would Title II Do and Not Do

If Verizon wanted to use information “that relates to the quantity, technical configuration, type, destination, location, and amount of telecommunications service used by a consumer of a telecommunications service, that information, in general, would be limited in use to services related to the provision of telecommunications services. Verizon would not be able to use information related to the provision of telecommunications services to predict consumer demand for Verizon’s video streaming services.

Interpreting and applying Title II in this manner would help Hulu and Netflix keep Comcast and Verizon at bay. What it may also do is expose Hulu and Netflix’s pricing and cost structures during any public hearing resulting from Hulu and Netflix’s new roles as consumers of telecommunications services. Sections 204 and 205 of Title II provide the Federal Communications Commission the authority to set just and reasonable charges and to have hearings on those charges or on complaints regarding charges and price schedules. What Hulu and Netflix may not understand is that regulation of a market means scrutiny of both of its sides, and challenges to rates charged by a core provider means rebuttal that could include discovery of what economic rationale underlies an edge provider’s assertions. In short, Title II opens the Pandora’s Box for edge providers, too.

What Title II doesn’t do is tell Comcast or Verizon that they couldn’t collect consumer behavioral information from their websites or information portals. This “oversight” is further evidence of how arcane Title II is. A declaration by the courts that a core provider’s services are information services, from end user through a core provider’s entire network would be indication that the State recognizes that core and edge providers equally play in the information markets. Avoiding a balkanized, bifurcated view of broadband service provision would make regulation of advanced communications more efficient because of less time spent having to look at two separated pieces of internet service versus one.

The FCC’s Constitutional Quandry

But even if regulators continued down the two-prong path of regulating core providers, the end game would still be how to treat the content portions of their services. The Federal Communications Commission should not want to be in the position where it would take a hands-off approach to Facebook’s information mining techniques while taking a heavy handed approach to Verizon’s emerging content play. It would cause a constitutional dust up were the Commission to regulate the content of one service provider but not the content of another.


Core providers have the technical knowledge and desire to enter information markets and for that reason alone they should be allowed to profit from the development of content and the extraction and packaging of data that drives a modern economy. Core providers shouldn’t be punished because their basic business model includes the conveyor belts that information is placed on when being extracted. Imagine telling a coal miner that in order to foster competition, they will have to forego their conveyor belt and, like a firm that entered the market late and poorly capitalized, will have to use their hands and wheel barrel to move coal out of the mine. That is not competition but favoritism.

Determining where Klobuchar, Harris, and Warren stand on the Eastern Caribbean

U.S. Senators Amy Klobuchar (D-MN); Kamala Harris (D-CA); and Elizabeth Warren (D-MA), have been quiet when it comes to matters pertaining to the Eastern Caribbean. A review of their internet activity and U.S. Senate websites found the following:

Amy Klobuchar: Viva Cuba!

Overall, Senator Klobuchar has not expressed overt interest in the Eastern Caribbean. Her Caribbean focus has been on Cuba. Senator Klobuchar would like to modernize the United States’ relationship with Cuba including improving commercial links between the two countries. Improving the links also includes positioning Minnesota farmers to benefit from exporting agricultural products to the western Caribbean nation.

Senator Klobuchar has put her interest into legislative action when, during the 115th Congress, she introduced the Freedom to Export to Cuba Act which, according to Senator Klobuchar, would lift the trade embargo and eliminate legal barriers to Americans who want to do business with Cuba.

I have always been suspect of initiatives to increase commerce with Cuba, especially in the area of tourism. Tourism increased in the U.S. Virgin Islands during the early 1960s as a result of the U.S. trade embargo on Cuba and I would hate to see the USVI or nations in the Eastern Caribbean see a dip in tourist dollars as a result of a U.S.-sponsored tourism boost of Cuba,

On the other hand, initiatives like those of Senator Klobuchar are a wake-up call that smaller island nations have to be increasingly diligent in diversifying their economies in order to address inevitable competition.

Kamala Harris: She’s a Yardee

My review of Senator Harris’ record on the U.S. relationship with the Eastern Caribbean also finds the relationship sparse. Senator Harris has not opined on trade relationships with the Eastern Caribbean or offered any legislation that can boost the relationship.

However, if I expand the definition of trade relationship to include the labor market, Senator Harris has co-sponsored legislation (S.386), that amends the Immigration and Nationality Act to eliminate per country numerical limits for employment-based immigrants. The bill also increases the per country numerical limitation for family-sponsored immigrants.

The bill would, in theory, allow more Caribbean nationals to seek economic opportunity in the United States, but I believe, like all political packages, this bill is geared toward winning votes from the North and Central American Spanish-speaking community. Its primary intent was not to help the Eastern Caribbean but Eastern Caribbean nationals should take advantage of this legislation should it ever pass the U.S. Congress.

At this rate, I don’t expect much more from Senator Harris regarding U.S.-Eastern Caribbean relations.

Elizabeth Warren: Nowhere to be seen

Senator Warren’s track record on U.S.-Eastern Caribbean relations is non-existent. She has not sponsored or co-sponsored any bills that would shore up economic ties between the two regions. Should she become president, I expect her policies toward the region to be more reactive than proactive.


I chose these three women because, on a subjective basis, I see them as the very early front runners in a race for the Democratic nomination. From a Caribbean policy perspective, the U.S. has been reactive to the area for decades and I see no major proactive initiative anytime soon from the Democrats or the Republicans for that matter.

Prohibiting paid prioritization is a distraction from government’s true role

During last week’s U.S. House Committee on the Budget hearing regarding the Congressional Budget Office’s outlook on the economy, U.S. Representative Dan Crenshaw, Republican of Texas, raised the issue of what the role of government is. Mr. Crenshaw expressed doubt that government’s role is simply to maintain itself; that government served some other probably noble purpose.

Democrats may agree with Mr. Crenshaw on that point given their offer of more political packages for their lower to middle class constituents and their apparent willingness to raise taxes necessary for financing these packages.

And as much as Republicans argue for reduced budget deficits that are driven by too much spending on irresponsible social programs that serve irresponsible constituents, they too are complicit in crafting tax policies that favor more affluent taxpayers or the profit needs of the private sector.

The Current Role of Government

At the risk of being cynical, the current role of government as perceived by the taxpayer may be to dole out the promises that get a Congressman or Senator re-elected. That perception is, in my opinion, a result of a lack of education regarding the history of government or public administration. The role of government is to create an environment where resources can be managed in order to create taxable events. This environment must be stable and predictable.

Stability and predictability is ensured by implementing a universal cultural and social standard that has no room for diversity. Diversity and fragmentation are precursors for government’s implementation of a single cultural, social, and political standard, not an outcome to be pursued as in keeping with the philosophy of the Left. When making policy regarding communications infrastructure, government should keep in mind the goal of stability and predictability.

The Necessity of Stability and Predictability

For a nation to exercise its capacity to extract, organize, package, and trade resources, the area over which it exercises jurisdiction must be stable and predictable. Violence, theft, uncertainty of property ownership, unenforceable contracts, determination of liability for bodily or property harm make the trade of information and the goods and services that encompass information very difficult. For example, European nations that sought to extract resources from Africa and India determined that effective administration of these areas required the defeat of warring empires and merging disparate tribes under one set of rules for language, culture, legal and political engagement.

I imagine the construction and deployment of transportation infrastructure necessary for moving goods out of these regions could not tolerate local mores and values that slowed down or halted economic development according pursuant to Western philosophy. Diversity of legal, economic. or political thought could not be tolerated if government were to effectively administer public resources to encourage trade and commerce. Diversity is a distraction for public administrators and statutes should be promulgated in order to bring certainty. Net neutrality is one of those issues for which certainty is needed.

Reversing the Politicization of Net Neutrality

There is currently a diversity of thought around net neutrality. For the average internet consumer, net neutrality is about accessing your web content of choice without a broadband access provider throttling the content provider’s speed or blocking the subscriber’s access to content.

For the content provider, the net neutrality argument is about having regulators treat broadband access providers like telecommunications companies where content providers apparently want to be treated like business customers by either buying services out of an approved tariff or negotiating rates.

On the other hand, the broadband access provider wants broadband treated as an information service, much in the same way as a data storage or email service is treated, meaning, with the exception of consumer protection statutes enforced either in the courts or at the Federal Trade Commission, not regulated at all.

I believe what all the major stakeholders are really asking is how should the trade of data between consumer and content provider be regulated. Should data trade be regulated by free markets where content providers, network providers, and consumers set the prices or should government be more involved in the pricing aspect of the trade.

And, as we discussed earlier, government action should occur within its role as an ensurer of generated taxable events in a stable and predictable environment. Would a net neutrality policy based on classifying broadband access as a telecommunications service meet this goal? The answer is no because net neutrality skews data about how the market values data exchanged over a broadband access provider’s network.

Prohibiting Paid Prioritization Prevents Accurate Market Signals

Net neutrality proponents want all traffic treated equally, meaning that a content provider sending a subscriber a video shot of a beach gets the same priority as a doctor sending ultrasound images to a patient. Under paid prioritization, a content provider could signal a broadband network as to the value of their content by paying to have its content sent ahead of other packeted information. By prohibiting paid prioritization, networks will have less information as to the value of the data sent over networks and may not configure networks accordingly to account for higher valued traffic.

Is this skew in market signals something that government wants? Again, no. All things being equal, maximized revenues from clearer price signals increases revenues and increases the probability of greater taxes collected. Maximizing taxable events is the government’s role.


Network effects prevent broadband access providers from slowing down traffic from content providers or blocking subscriber access to content of choice. Throttling and blocking may discourage use of broadband networks and reduce their value. Allowing paid prioritization, however, sends signals to new broadband access provider entrants that content providers are willing to pay higher prices to get their traffic to their subscribers faster.

The U.S. Virgin Islands and the Global Clusterfuck

So, the U.S. Virgin Islands is facing a slight but increasing risk of being caught in the crossfire of an energy war masked by rhetoric about the importance of democracy in South America, rhetoric equally orchestrated by Nancy Pelosi, the Speaker of the U.S. House of Representatives, and a boisterous president of the United States, Donald Trump, who likens himself as the Don King of Manhattan real estate.

Both have given their support to the president of the Venezuelan legislature, Juan Guaido who has declared himself “interim president” eight months after the democratic election of the current and unarguably inept president. It does not faze the Speaker of the House that Mr. Guaido’s politics are more right-wing than the politics of the Democrats who are falling in line with Mrs. Pelosi.

Nor has it apparently fazed the newly elected administration in the U.S. Virgin Islands that Russia, given its energy and other economic ties to Venezuela, decides to piss on the Monroe Doctrine and orchestrate some type of military action, that the U.S. Virgin Islands, which has a couple Russian subs sitting outside of its harbors on any given day, would be a sitting duck, a perfect target for the Russian Bear.

Let’s face it, USVI, the United States didn’t shell out $25 million back in August 1916 just to have a few beaches to visit. The USVI is still at least a second tier, ready-made submarine base and taking the territory would make Vladimir Putin the new Jack Sparrow of the Caribbean.

While the likelihood of the above scenario is small, people of the Virgin Islands, especially those who have very limited means to exit, should have two takeaways from this discussion.

First, you are part of a geopolitical clusterfuck, and given the U.S.’s responses to the territory during hurricanes, you should not be surprised when the U.S. government treats you like so much spoiled milk and collateral damage during a military action.

Second, current leadership needs to grow some balls and think beyond carnival. When potential crises like this one arise, USVI leadership needs to be more forward thinking and outside the box…. assuming you think your people are worth it.

Nancy Pelosi is wondering if she can pull a “Juan Guaido” on Donald Trump….


I find it not only interesting how consensus by leaders of nation-states is needed before another nation-state’s leader is considered valid, but how the citizens of a nation-state never question why they should give a damn about the opinions of other world leaders regarding how they select their own.

The first response to the above query may be that without the blessing of Justin Trudeau or Vladimir Putin, it would be hard for a country to trade with others. That would imply that the only reason your nation-state exists is to create and transfer benefits of a nation-state to a global elite, the very elite that heavily influence who you choose as your next leader. Make the right promises and you can have your coup-d’etat supported by the right global leader.

Maybe Nancy’s political strategists are whispering this in her ears right now.

Kamala Harris’ relationship to the banks: Not very aggressive

Senator Kamala Harris, Democrat of California, yesterday announced her intent to pursue nomination as the Democratic Party’s candidate for president of the United States.  Senator Harris is renowned for going up against five major mortgage banks obtaining a national $25 billion foreclosure settlement while serving as California state attorney general in 2012.  According to The Los Angeles Times, California homeowners received approximately $9.2 billion in first and second mortgage relief amounting to 84,102 California families receiving reductions in their first or second mortgages.

Analysts argue that because a large portion of the loans that were forgiven were delinquent, banks were not going to recover their lost investment.  Either through short sales or reduction in monthly mortgage bills, California homeowners came away with the benefit of reduced financial stress.

One of the criticisms of Ms. Harris’ deal was that bankers in California did not see jail time for issuing predatory loans.  Another criticism concerned determining if the benefit of the settlement was being spread fairly among ethnic groups. According to the Los Angeles Times with no adequate tracking of the benefits dispersed from the settlement, it was hard to tell whether low-income or black American borrowers partook equitably in the settlement. 

Another likely criticism may be Ms. Harris’ inability to prevent then governor Jerry Brown from reportedly diverting proceeds from the settlement toward other areas of the budget.

A review of Ms. Harris’ campaign website lists no specific policy statements on banks or the financial services industry as a whole with the exception of her foreclosure settlement negotiations.  On her Senate website she did express opposition to the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, referring to the proposed bill as an attempt to roll back consumer protections instituted after the 2008 financial crisis.  The bill eventually became law on 24 May 2018.

A review of the American Bankers Association’s website found that no press statements have been released regarding the ABA’s position on Ms. Harris’ announcement.  

I cannot conclude that Senator Harris’ relationship with the banks is negative, aggressive, or acrimonious. I cannot conclude that it is warm either.  Senator Harris’ pledge not accept donations from corporate political action committees may not prohibit banks or their employees, however, from donating to non-corporate PACs.

I don’t see Nancy Pelosi’s State of the Union “power move” as a power move at all

Speaker of the U.S. House Nancy Pelosi yesterday sent President Donald J. Trump a letter withdrawing her invitation to the President to deliver his State of the Union address before the entire Congress in the House chamber. Mrs. Pelosi cited lack of funds to provide a secure venue for the event. The move has been cited by some as a power move that scores political points for Mrs. Pelosi and her Democratic Party as 2019 sees the potential challengers for the Oval Office come out of the wood works.

It is not necessary for Mr. Trump to deliver a report on the State of the Union via a speech before Congress. As Mrs. Pelosi herself pointed out, pursuant to Article II Section III of the Constitution the President, “shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient … ”

Mr. Trump can simply send an executive summary attached to a voluminous report addressing how the political economy of the United States is doing. The “State of the Union” is constantly on display, given access to economic material found online and the constant buzz of a 24-hour news cycle.

This move by Mrs. Pelosi could backfire even in light of the move scoring short term points with the party faithful. This is the era of the internet and the 24-hour news cycle previously mentioned. Mrs. Pelosi, rather than subjecting Mr. Trump to an Obama-Wilson moment where a Republican congressman from South Carolina, Joe Wilson, called former President Barack Obama a liar during an address before both chambers of the Congress in September 2009, seems to be letting Mr. Trump off the public embarrassment hook. Democratic boo birds would not have passed at the chance of subjecting Mr. Trump to vocal push back during a partial government shutdown.

Instead, Mrs. Pelosi risks having Mr. Trump look (or at least attempt to look) Kennedy-esque as when during June 1963, President John F. Kennedy addressed the nation in the aftermath of threats of violence at the University of Alabama in response to racial integration efforts at the university. Mr. Trump, ever the marketer, has options in the 21st century. He could, for example, pack a fairground or gymnasium with thousands of middle Americans and deliver his interpretation of the State of the Union without the blandness called for in the formal setting of Pelosi’s House. With cable news, C-SPAN, and the internet as his platform, Mr. Trump could signal a willingness to circumvent the Democratic-controlled House by speaking directly with no filter to the American people.

In the end, Mrs. Pelosi’s power move may end up looking like a sour move.

A quick thought on stablecoin, Facebook nation, and government pushback

Just had a thought on creating a digital nation and admittedly I am still just fleshing out the idea so bear with me.

Crypto currencies still have a chance at succeeding, but the issue commenters and the public continue to overlook is that as currencies, Bitcoin, Ethereum, Ripple, and whatever the hell else is out there have no underlying political economies to support them. Currency valuations transmit to the world the value and/or level of economic output a nation has. Bitcoin, for example, is not a nation’s currency. If it were, it would give Zaire’s currency volatility a run for the money. With the advent of stablecoin, particularly Facebook’s expected issue of the digital coin in 2019, we could see the beginning of a truly digital political economy.

Stablecoin is defined as a cryptocurrency pegged to some reserve currency like the U.S. dollar or another crypto currency such as Ethereum. No matter the model, the goal is to provide users with some stability in the coin’s exchange price. Consumers and investors may like the convenience of not having to check Bitcoin’s price every time they want to buy a cup of coffee or make a currency exchange. Stablecoins, at least in theory, helps to avoid all that.

Facebook will reportedly first play in India’s remittance market. As we descendants of the Commonwealth are all to familiar with, the remittance process can be emotionally taxing when the lack of necessary middlemen are not in place to get money to our relatives in Europe, Asia, and the Caribbean.

The blockchain technology platform that Facebook’s stablecoin will use is expected to provide the transparency and peer-to-peer capabilities that ensure that monies are sent and received under a system of trust, verification, and lack of intermediaries.

But I can see Facebook and even Amazon going beyond playing a relatively minor role in a country’s payment system. Not only could Facebook or Amazon issue digital currencies in the next ten years, they could and should go all out in developing their own digital nations.

Facebook could finally add some meat to his currently weak mission of “connecting the world” by leveraging every business and consumer in his network to engage with each other commercially by using his stablecoin. Consumers subscribing to Facebook or Amazon could be assessed annual membership fees or be charged a “tax” substantially less than the average state or local sales tax in exchange for exclusive access to every merchant listed on either platform with the medium of exchange being a stablecoin.

As one of the largest companies in the world with a 2.5 billion people user base, Facebook, via commercial exchange on its platform, can generate the value necessary for traders in currency to express enough faith in the currency to trade in it drive up its value. Unlike current crypto currencies, a “Facecoin” could exhibit more organic and trustworthy movement because it would be backed by a company large enough to be a national economy.

As for local, state, and federal governments, they could be left a few decades from now with nothing left to regulate and tax but physical infrastructure. Would government be understanding and wish more and more taxpayers a fare thee well, or would government act like the pharaoh in the Old Testament, chasing the people with its tax chariots.

The ensuing issue may be the legal relationship between the old State and the new Digital State that online platforms like Facebook and Amazon will hopefully morph into and how best to treat citizens who have to spend time in both worlds.

For Christmas, give yourself a new brand of representative democracy

Every two years we hear candidates for election argue that incumbent representatives are not accountable to the public; that incumbents make political and public policy decisions that are in opposition to the public interest. We hear arguments that incumbents have served in office too long and that they should be term-limited either by law or by the voters. But instead of change, we usually see voters sending incumbents back to office to continue the supposed damage. Maybe it is time to call the voters’ bluff. Maybe it is time to give the voter more control of the process by implementing a new indirect voting system for national leaders; a voting system where the voter is the troll under the bridge.

In my opinion, a more electorally effective voting system i.e. the troll system creates a concrete connection between state and national elections. An electorally effective voting system would put a U.S. congressman or senator’s electoral fate in the hands of state legislators and vice versa.

Specifically, the system would allow direct elections of state representatives by a state’s citizens, just like the states have today. However, instead of popular vote for representatives to either chamber of the U.S. Congress, state legislators would be responsible for selecting these federal representatives.

And instead of popular or electoral college vote for the president, the Congress would be responsible for nominating from their body candidates for president and vice-president. Preferably, the U.S. House would select the president while the U.S. Senate would select the vice-president who would continue her dual role as president of the senate.

One advantage of this system is that it ties the state and federal levels of representative government. If national representatives and the president fail in their management of the political economy, state representatives who hold the responsibility for vetting national representatives would incur heavy political liability up to and including removal from office. Removal or the threat of removal from state office would translate into lost support for national representatives who may find themselves heading out the door at the end of their terms.

Another potential advantage is a better alignment of political choices with the political values of the electorate. It has been argued and observed by pundits, commenters, and analysts that America is a center-right nation, yet the political noise has emanated from the fringe elements of its two major political parties or that the two major parties represent the more radical voices in the Left and Right of the electorate. Under my proposed system, state legislators may focus their search for national representatives on candidates who best represent a middle of the road, collaborative characteristic of governance and policy making, thus ensuring that national representatives are in line with the political culture of a plurality of the electorate.

Another advantage of the troll system is that it would severely reduce campaign expenses. Most campaign spending would occur on the state level as candidates vie for the state houses out of which national representatives will come. While the political action committee system that owes its success to its flyover view of the electorate would take a hit, the upside is that resources will have to be spent on the ground. Local advertisement as well as old fashioned “knocking on doors” campaigning will gain new life because voters would be able to impart consequences on elected officials more efficiently, with only one visit to the voting booth.

Another advantage to consider is that candidates on the state level may be forced to admit up front what their stances are on national issues thus further tying the consequences of poor national management of the political economy to state politicians. Candidates for state office will have to take a more holistic and cohesive view of the political economy; being more thoughtful of the role their jurisdiction plays in extracting, managing, and distributing resources.

I have merely scratched the surface on alternative views on democracy. An increasing number of commenters have been pondering democracy’s inability to allocate resources, capital, and opportunity to citizens and elected officials can only brush off how complicit they are in the problem but for so long.

The American voter bears significant burden as well. Her burden emanates from an unwillingness to promote evolution of the electoral system. So enamored or frozen by tradition that the voter believes that pursuing improvement of the system of change in leadership by replacing it is somehow heresy. It makes me wonder about a people who go bonkers every July 4th celebrating revolution but are lazy when it comes to electoral evolution, willing instead to suffer through the inequities in the name of tradition.