Author: Adam Mazik

Is inclusive volume for Spotify soon history?

The consumer should not be protected from himself. Instead, he or she should have the possibility to choose freely in offers.

When was the last time you used an FM radio? If your age is between 15 and 50, chances are it’s been a while. I can see you’re one of those streamers on Netflix, Amazon Prime, Hulu, and if you’re interested in sports, maybe DAZN or Skyticket.

The world has changed. The occasional exciting radio show interrupted every five minutes by a mix of dull lift music and repetitive supermarket ads have been replaced by hours of conversations on podcasts, always aimed at a specific niche. You don’t write letters to friends anymore; no, even e-mails seem very formal nowadays. You write to them on one of the messengers.

Naturally, some companies have been able to beat the competition by offering good service. For example, when it comes to streaming music, we think of Spotify (a European company, by the way), when it comes to videos, we think of YouTube, and when it comes to TV shows, we think of Netflix.

Especially when it comes to mobile internet, telecommunications providers are taking advantage of this information and adapting their offers: In addition to the monthly internet volume, packages are offered. Certain apps and services can be used without data limits. For example, a music lover can choose a package in which he or she can listen to Spotify, Apple Music or other contractually defined services without limit. At the same time, a series junkie can opt for a different package.

This is attractive for the consumer; after all, the internet does not grow on trees, especially not in digital developing countries like Germany.

But for the most part, that’s probably over now. On 15 September 2020, the European Court of Justice ruled that tariffs in which certain apps are excluded from speed throttling violate EU law. Specifically, the case concerns the Hungarian branch of the telecommunications company Telenor and the Hungarian Media and Telecommunications Authority, which issued two notices stating that its offers violated Art.3(3) of Regulation 2015/2120.

The court hearing the case referred a question to the European Court of Justice on the interpretation of Art.3(1-3) of the Regulation. The standards concern internet services and their use and the so-called “openness of the internet”, sometimes also called “net neutrality”. The legal norms are intended to secure the rights of end-users. The ruling states

“Moreover, that concept covers both natural or legal persons who use or request internet access services to access content, applications and services and those who provide content, applications and services employing internet access.”

According to the ECJ, agreements such as those of the company are suitable for restricting end-users rights. On the one hand, it is argued that the use of preferentially treated apps could be increased as a result. On the other hand, the other services, which can continue to be throttled, are disadvantaged and usage could decrease. It is argued that such agreements could cumulatively lead to a significant restriction of end-users rights.

Moreover, the unequal treatment is not based on objectively different requirements for certain services but on purely commercial considerations.

Thus, Telenorl’s agreements violate European law. The ECJ’s reasoning should not even be challenged here. If one looks at the standards, the ECJ’s line is quite compatible with them or very defensible. What is worthy of criticism are the norms themselves, as well as the philosophical and economic considerations behind them. First of all, it is not a malicious idea to provide everyone in the market with the same conditions. The advocates of “net neutrality” also mean well when they want to prevent discrimination and cartel-like actions in the market.

Unfortunately, few are interested in the fact that this is an encroachment on the private autonomy of telecommunications companies, service providers and consumers. The goal of an “open internet” for all seems more important than consumers and companies trying to do business with each other.

However, the offers and the unequal treatment make sense; they enable the carefree use of specific services that would otherwise mutate into volume guzzlers every month. The consumer does not have to worry about this with such a contract; he can use his preferred service without any restrictions (at least if he lives in a region with good network coverage).

If one bans such voluntary solutions, one first knows what the ban will not lead to: To unrestricted volume for all. It is certainly possible that the telecommunications companies will compete with the total volume. But 5 GB or not will make no difference if the work is only needed for a particular service, but without restrictions. The consumer should not be protected from himself. Instead, he or she should have the possibility to choose freely in offers.

Originally published here.

Climate change, nuclear power and security

Germany is a modern country that, for many, serves as an example of a functioning state. All the more astonished must be those who have observed our energy policy in recent years.

Not so long ago, when a pandemic did not yet dominate the world, there was one central issue in politics. Thousands of young people took to the streets every Friday to show their anger at politicians’ perceived inaction on the climate issue. Eventually, Greta Thunberg, the 16-year-old face of the movement, named Time Magazine’s “Person of the Year 2019” despite criticism. The award certainly shows how much momentum the movement had last year.

The solutions of NGOs, governments, scientists and the young demonstrators differ fundamentally among themselves. Still, there is one thing they have in common: all strategies have a reduction of greenhouse gases, especially CO2, as their goal. In doing so, governments are faced with a difficult task. After all, there are interests to be weighed up. Without a significant loss of prosperity, one cannot merely close all coal and gas-fired power plants and switch to wind.  

A safe, efficient, CO2-neutral alternative that could produce a lot of energy, as well as having been tested by years of experience from different countries, does not exist. 

Except, of course, nuclear energy. To say that nuclear energy is a safe alternative is almost like calling water low calorie. Even renewable energy sources, such as hydroelectric power plants, solar and wind power, tend to be inferior to nuclear energy in this respect. If you look at the data, it makes your head spin to think of the ideological battle that has been waged against nuclear power for years. The safety of energy sources is calculated by relating the number of deaths to energy production. For example, a 2016 study found that nuclear energy production kills about 0.01 people per terawatt hour. Just for comparison: with lignite, it’s approximately 32.72 people, and with coal, we’re talking about 24.62 deaths, according to a 2007 study.  This means that about 3200 times as many people die with lignite as with nuclear power – there are beautiful places inhabited by fewer people.

But how does nuclear power compare to renewables? In the 2016 study already cited above, solar energy comes in at 0.019 deaths per terawatt hour, hydropower at 0.024, and finally wind power at 0.035 ends. The research includes the traumatic experience of Fukushima. But how traumatic is it? One would think that the disaster would cause the numbers to skyrocket, but, at the time of the study, there was not a single death that was a direct result of the disaster – in 2018, the Japanese government reported the first death, one person died of lung cancer.

But what happens if we use a conservative, cautious methodology? The 2007 study cited above does just that. In the systematic comparison of energy sources at “Our World in Data”, both studies are quoted and compared. The authors of the 2007 study are quoted there:

“Markandya and Wilkinson (2007) include estimated death tolls from separate accidents (not including Fukushima) but also provide an estimate of deaths from occupational effects. They note that deaths:

“can arise from occupational effects (especially from mining), routine radiation during generation, decommissioning, reprocessing, low-level waste disposal, high-level waste disposal, and accidents. “

So the paper says that Markadya and Wilkinson use the LNT method (linear-no-threshold), which assumes that there is no harmless “minimum” and radioactive irradiation, but rather that the potential damage is linear to the radiation levels. This is a very conservative and cautious method, but we only arrive at a rate of 0.074 deaths per terawatt-hour of energy produced even with this study. 

One terawatt hour is about the amount of energy consumed by 27 000 people in the EU per year. If we assume the very conservative methodology, the converse is that we would need 14 years for one person in this group to die. This study includes one of the most significant nuclear accidents in human history, Chernobyl. It is highly probable that the processes that led to the super disaster in the Soviet nuclear power plant have very little to do with the responsible management of today’s nuclear power plants. Moreover, technological progress has brought about further safety improvements.

So if we take the less conservative approach, it would take about 100 years before we had the first fatality in this group of people. And this with a downward tendency, because we can assume that there will be further technical improvements in the future.

Against this backdrop, the German energy turnaround not only appears to be a defeat of politics, which cannot implement its goals, it is above all a failure of science and reason.

The targets set for the promotion of renewable energies have not been achieved. According to European statistics, Germany emitted 752.655 Mt of CO2 into the air in 2018. This corresponds to 9.146 t per capita annually. Just for comparison, France produced 323.279 Mt of CO2 in the same period, which is equivalent to 4.956 t of emissions per capita.

What about the reduction of CO2 and greenhouse gases? Germany was able to reduce CO2 emissions from energy production by 24% between 1990 and 2018. That sounds good, as long as you don’t know the data of your neighbour. In France, we read of a reduction of 27%. Between 2005 and 2015, Germany recorded a decrease of 8% for all greenhouse gases in this category. The model pupil from France can score here with 44% (!). Of course, there are several reasons for this. Among other things, France obtains a large part, namely 75%, of its energy from nuclear power. Unfortunately, there are plans to reduce this share to 50% by 2035, but this cannot be compared with Germany’s brutal nuclear phase-out. 

Steven Pinker, a world-renowned Harvard professor, is puzzled by the irrationality of the Germans. In a Spiegel Online interview, he argues that nuclear power plants are safe and that the German consensus on nuclear energy could soon be history. If you want to fight climate change, he says, it is simply irrational to forego a low-CO2 and safe option. 

It makes no sense to do without nuclear energy and at the same time continue to use fossil fuels, which are responsible for many more deaths every year.

In the USA, P.A. Kharecha and J.E. Hansen examined the historical impact of nuclear energy in 2013. According to their calculations, about 2 million lives were saved between 1973 and 2009 because nuclear energy was used instead of fossil fuels. They also try to quantify the impact of the German energy transition. For example, Stephen Jarvis, Olivier Deschenes, and Akshaya Jha calculated in a 2020 study that the Energiewende has cost 1100 lives a year.

It is really not easy to understand why, at a time when climate change is one of the main issues in politics, a safe and low-carbon alternative is being abandoned. 

Nuclear power is not a danger but an opportunity. Goals such as climate and environmental protection are an essential challenge of our time. The German nuclear phase-out harms Germany’s inhabitants and the climate, it also harms the entire world, as Germany has taken on a pioneering role.

It is to be hoped that the German consensus on nuclear energy will indeed be broken and that as few states as possible will follow Germany’s policy. Fortunately, the latter is unlikely due to the results of the energy turnaround so far.

Originally published here.

The German approach to freedom of expression and its absurd consequences

The Federal Republic of Germany is a democratic constitutional state in which basic civil liberties are protected by law and law enforcement.

The most important aspects of freedom of expression are mentioned in the Bonn Basic Law; they are the fundamental rights. That includes freedom of art, property, freedom of assembly, freedom of profession, freedom of opinion and other basic rights that we take for granted today. However, as history teaches us, they are not.

The German understanding of fundamental rights is characterised by a scheme that is self-evident for every law student after the second semester at the latest: these fundamental rights can be restricted, depending on the circumstances provided, or, in different terms: an encroachment on fundamental rights is permitted if there is a justification. Like the Federal Constitutional Court, every student therefore first asks in a case: is the complainant covered by the personal scope of protection of the fundamental right (does this fundamental right apply to everyone, or only to German citizens?)? Is the complainant’s conduct covered by the factual scope of protection of the fundamental right? If this is the case, the question is whether there is an encroachment, in order to ask in the third step whether this is justified (different for fundamental rights of equality and fundamental rights to benefits).

Freedom of expression protects expressions of opinion: statements that have an element of evaluation are therefore covered; statements of fact are not covered by the scope of protection of freedom of opinion. Furthermore, freedom of expression can be restricted by general law, laws for the protection of minors and the right to personal honour (in the realm of defamation lawsuits).

This is also the biggest difference to the second model, namely the USA. The differences already exist in the name of the fundamental right. Unlike in Germany, in the USA we speak of the “Freedom of Speech”. The First Amendment is unparalleled in its clarity. It states quite simply that the legislature may not establish a law that restricts freedom of speech. So it is the opposite of the German understanding: there cannot be any level of justification in the USA, because encroachments on freedom of speech by the state are simply forbidden by the constitution.

A brief example to illustrate the extent of the differences: “In an argument about the limits of the Basic Law, Max loses his nerve and calls his colleague Erika an idiot.”

If American law applies, this rude and insulting, but essentially harmless, statement entails no consequences. If German law applies, however, Max is liable to prosecution for insult under §185 StGB. If Erika files a complaint, Max faces a fine – and if Max is a repeat offender who has been punished with the paragraph many times in the past, he may even go to prison for it.

We are talking here about a quite clear example where one can argue very well for §185 StGB. But it is much more absurd. In the 1990s, for example, the courts had to deal with the question of whether a provocative “duzen” (the German informal “you”) should be regarded as an insult. The case went all the way to the Higher Regional Court in Düsseldorf. Those readers who find the case as absurd as I do can breathe a sigh of relief, because the Higher Regional Court ruled that this was not a punishable offence. 

The insult paragraph protects the legal good of honour, which is defined in various ways, which is not surprising because each of us will understand something different by honour. For example, the (probably) prevailing opinion defines honour as the “personal (“inner”) value of validity accruing to a person as a bearer of spiritual and moral values, on the one hand, and the social (“outer”) value of validity of a person, i.e. his or her actual good reputation in human society, on the other (definition: Urs Kindhäuser, Strafrecht BT I §22 Rn.2, 8th edition 2017; see also BGH, 18.11.1957 – GSSt 2/57, marginal no. 17).

In this context, according to the prevailing opinion, not only the honour of the individual is protected, but also that of associations of persons, such as companies, clubs, political parties, etc. It is claimed here that honour is a condition of existence in law, especially in the social, interpersonal sphere.

Even for insulting a company or another association of persons, one can be punished if a certain situation exists. This is because the prevailing opinion within jurisprudence argues that some of these associations can only function within a society if their work is not discredited, which is why they are equally worthy of protection as individuals. There are some problems with this argument, even when applied only to individuals.

On the one hand, the work, activity or even the entire person can be discredited without committing a criminal offence. So one can discredit another person even within the limits of the law. 

On the other hand, there are states in which the protection of honour has a much lower value than in the German legal system. A good example of this is the USA, where, for example, insulting someone is not a punishable offence. Yet the United States of America exists.

This part of the argumentation of the German lawyers is difficult to justify and that even with a careful interpretation of the statements… At most, one could argue that the criminal law protection of honour positively influences, or promotes, these activities and legal interests. However, this is difficult to prove.

Finally, the negative effects of such a legal system are often overlooked. As a result, it is incredibly difficult to distinguish a statement of fact from an evaluative statement. It is even more difficult to prove whether a statement is offensive: language and society are dynamic. Even if the courts are careful in their interpretation and use of criminal law (and fortunately this can indeed be said in Germany), so-called “freezing effects” arise even in a democratic constitutional state like Germany, where supposedly unpunishable statements are not made because of fear of a legal dispute, or of prosecution per se. So one prefers to be cautious and say nothing at all because one wants to avoid legal problems.

The example of the USA shows that it can be done differently. Insults, hate speech, flag burning is allowed in the USA and the state not only exists but is probably the wealthiest in the world. Criminal law is the “last resort” of the legal system and should be used as rarely as possible. In this isolated case, the American system does more justice to this principle; in others, the German system has clear advantages. We can and should learn from each other.

If one wants to achieve basic protection of honour, or of the person, against defamation and slander, civil law would be the far better alternative. It is far more important to compensate the victim for his or her damage than to put the perpetrator in prison. Because no one should be behind bars for making statements. Whoever thinks that should cast the first stone.

Originally published here.

How trade wars should actually be fought

Free exchange is not a zero-sum game.

States are in a certain amount of competition with each other. It is true that trade is not a zero-sum game and that trade wars, tariffs and other restrictions are therefore counterproductive. Nevertheless, it cannot be denied that different regulatory options lead to better or worse results. For example, a state that taxes its citizens and businesses less tends to be more competitive than a state with high taxation. A state that makes it easier to open a business will usually have more self-employed people than a state that imposes a high bureaucratic barrier. Only in an entirely free global market economy would these regulatory differences disappear.

But we do not have that starting position. The Beatles have disbanded. Sebastian Vettel will not become world champion with Ferrari, and parents sometimes do not love all their children equally. 

In this imperfect world, states are definitely in competition with each other. This leads to such pathological phenomena as protectionism.

Another kind of competition could be observed not too long ago in two Baltic states. In Estonia, for example, it was noticed that due to the higher alcohol taxes, many citizens decided not to buy alcohol in their own country but from their neighbour in Latvia. This led to lively trade, especially in the border areas, and businesses grew like mushrooms after a shower. The losses suffered by the Estonian state budget had an effect, as is often the case, and the government decided to reduce alcohol taxes by 25% in 2019.

This initially triggered a small diplomatic crisis. The Latvians were initially dismayed. The two countries had actually agreed years before that Latvia would increase alcohol taxes, which also happened gradually. The Prime Minister of Latvia initially affirmed that he did not want to enter into an alcohol war against Estonia. The Estonians’ bold action effectively forced Latvia to lower its alcohol taxes in return. The result was a 15% reduction in alcohol taxes. 

Such a tax cut does not necessarily mean that less revenue is collected.  

Poland decided in 2002 to radically reduce alcohol taxes by 30% in order to fight the “grey zones” where alcohol was produced illegally and uncontrolled. Because of the tax cut, the Polish state budget recorded significant revenues and was able to reverse a trend that had been going on for years. In 2002, taxes brought in 3.87 Mld PLN (881 Mln €), in 2003 it was already 4.09 Mld PLN (931 Mln €) and in 2004 the Polish state enjoyed 4.56 Mld PLN (1 Mld €). Likewise, it was possible to combat the grey areas where alcohol was produced in an uncontrolled manner.

The examples show two lessons. On the one hand, a tax cut does not always mean a loss of financial resources for the state. On the other hand, it is a suitable tool for international competition, with economic benefits for the consumer.

For such competition to emerge, certain framework conditions are needed. In the case of taxes levied on certain goods, this framework condition is the free market and freedom of movement. Both states are members of the European Union. The situation described above could only arise because it is possible for Estonians to travel to Latvia and buy goods there without significant bureaucratic and financial effort.

However, the principle is applicable to many types of taxes. Thus, states and regions can also compete against each other by cutting wage and income taxes, capital market taxes, property taxes and other levies. This principle can be seen on the European continent in the example of Swiss federalism. There, cantons compete against each other with, among other things, the tax burden. For instance, in Zug’s canton, which is located in the centre of the country, one tends to pay less tax than in the western areas close to France.

A larger country with a federal structure that favours tax competition is the USA. Nine states in the USA (Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida, Alaska) do not levy their own income taxes. This is a not inconsiderable difference from the state of California, which levies a tax of 13.3%. Differences also arise in details such as progression. States like Illinois, North Carolina or Minnesota do levy income taxes, but in the form of a “flat tax”, a line tax.

There are also significant differences in sales taxes and other levies.

In both the USA and Switzerland, citizens thus choose between different taxation models and can vote with their income and their own feet by selecting another place of residence.

This mechanism can also be observed in the EU. Such an advantage of European federalism must be preserved and strengthened. Instead of introducing minimum tax rates (which already apply to VAT, for example), the European Union should instead endorse competition. Benefits would accrue not only to individual taxpayers in the EU but to the free trade area as a whole. 

Lower taxation, which could be achieved through competition, would make European companies more competitive in the international market. So the EU should talk less about solidarity and more about federalism and decentralisation in the context of taxation. 

Originally published here.

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